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Following is the speech by the Secretary for Economic Development and Labour, Mr Stephen Ip, at Hong Kong Toys Council Annual Dinner today (January 6) (English only):

Mr Chan, distinguished guests, ladies and gentlemen,

It is my pleasure to be invited to the Hong Kong Toys Council's 2004 Annual Dinner. I would like to take this opportunity to wish you all a very happy, healthy and successful 2004.

We all like toys and Hong Kong is no small player in the global toys industry. In fact we are the world's largest exporter of toys and games. The toys industry has remained an important pillar of our export sector. Our toys industry is renowned for innovation, design, trendiness, safety and high quality. In addition to traditional toys, we are also well known for electronic and high-tech toys and games. In terms of trade value, toys were our 4th major export item after electronics, garments and plastic products, accounting for 4% of our total exports in 2002.

The toys industry has been able to take advantage of Hong Kong's strategic location at the Pearl River Delta. Our manufacturers have set up manufacturing bases in the Delta region while keeping much of the product design, prototype production, quality control, marketing and production management functions in Hong Kong. Indeed, over the years, we have seen our toys industry diversifying from OEM (original equipment manufacturing) into ODM (original design manufacturing) and OBM (original brand manufacturing).

Last year was a year of challenges for both the toys industry and Hong Kong. For the toys industry, the first challenge was the participation of Hong Kong and the export industry in CSI, the United States Government's Container Security Initiative to counter terrorism. Our participation in the CSI was to ensure the smooth flow of outbound cargo destined for the United States and to demonstrate our commitment to enhancing the security of the global maritime trading system. So far, no complaint about delays in cargo shipments have been received. The CSI is a good example of how cooperation between the industry and the Government would minimise export disruption and facilitate trade.

The second challenge was the decline in exports of toys in the first nine months of 2003 due to the outbreak of SARS. Overseas orders had been put back and shipments had been delayed. But, I understand that full recovery is now on the way. Indeed, exports of toys have been improving over the past few months and we are hopeful of good outturns when statistics for the last quarter come in.

SARS has had a devastating impact on various sectors of our economy, particularly in the area of tourism, restaurants, retail and entertainment. But as usual, Hong Kong was back to business quickly. The unemployment rate has stabilised and inched down from a record high of 8.7% to 7.5%. And visitor arrivals have rebounded strongly. In July 2003, we welcomed 1.3 million visitors, up almost 80% over the June 2003 figure. The recovery continued. In November 2003, there were 1.69 million visitors, a 7% increase over the corresponding month in 2002. Hotel occupancy rates climbed from 18% in May to 88% in August. For November, the preliminary hotel occupancy rate rose further to over 90%. I hope you will agree that these figures are indications of better times ahead.

The mood in Hong Kong is as upbeat as ever. The conclusion of the Closer Economic Partnership Arrangement, better known as CEPA, the launch of the Individual Visit Scheme for Mainland visitors and the trial run of personal reminbi business, give a further boost to our economy. We should make the best use of these opportunities to sustain our economic recovery. As toys manufacturers or exporters, I hope you will take advantage of CEPA, which offers Hong Kong goods zero tariff status and preferential access to the Mainland market.

At this Annual Dinner of the Hong Kong Toys Council, I would like to commend your Council for its continued support and contribution to promoting and supporting the Hong Kong toys industry. Your Council, apart from being the bridge between the toys industry and the Government, has also helped to update the industry on Government's policies and regulations while communicating the trade's concerns. In this connection, I am grateful for your support for our proposal to amend and update the safety standards in the Toys and Children's Products Safety Ordinance to ensure children's safety and to facilitate trade. We will take into account the views of the industry expressed in the consultation process and we aim to introduce the proposed amendments into the Legislative Council later on.

I am also confident, as the industry has repeatedly demonstrated, that the toys industry will march into 2004 with innovation, creativity and handsome profit.

Ladies and Gentlemen, thank you very much for the free dinner tonight, although it is only once a year, and may I once again wish all of you a successful and rewarding Year of the Monkey.

Thank you.

Ends/Tuesday, January 6, 2004

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