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Following is the speech by the Secretary for Economic Development and Labour, Mr Stephen Ip, at the Business Administration Paper 2003 - Oral Presentation Day today (February 15)(English only):

Ladies and gentlemen,

It gives me great pleasure to be the function advisor of the Business Administration Paper project and to be here today for the oral presentation by the four most outstanding teams.

First of all, I would like to congratulate the Hong Kong Federation of Business Students (HKFBS) for organising this Business Administration Paper for the 18th year. Over the years, the HKFBS has played an important role in fostering interest and awareness of tertiary students in the economic development of Hong Kong. The annual Business Administration Paper provides an excellent forum for business students from different tertiary institutions to interact, to exchange views on the economy of Hong Kong, and to present their thinking and proposed solutions.

2003 was without doubt a roller-coaster year for Hong Kong. We were severely affected by SARS in the second quarter. Many sectors of our economy, for example tourism, hotel, airline, retail and catering industries, were especially hard-hit. Thanks to the concerted efforts of various sectors of the community and the can-do spirit of our people, our economy is now on the road to recovery. The unemployment rate has declined from a record high of 8.7% in the third quarter to 7.3% in the fourth quarter. Deflation, which has persisted for more than five years, is gradually easing. The tourism industry has rebounded distinctly. Despite the impact of SARS, we received over 15.5 million visitors in 2003, which was a drop of only 6% from 2002. In December alone, we welcomed about 1.8 million visitors and the hotel occupancy rate was 87%, way above the 18% low in May! The strong performance of the tourism industry is also benefiting directly and indirectly other sectors, thereby helping to improve the economy as a whole. For instance, retail sales dropped throughout SARS but gradually picked up since August. In December, the growth went up to 6.7%. The implementation of the Closer Economic Partnership Arrangement (CEPA) and the launch of the Individual Visit Scheme for Mainland tourists have helped to boost sentiment and the confidence of the public. This is partly reflected by the growth in domestic consumption in recent months.

The theme of this year's paper, "Improve Hong Kong - My City", is timely and appropriate to the present circumstances of Hong Kong. To consolidate Hong Kong's position as Asia's world city, we must capitalise on our existing advantages and strengths and develop new products to make Hong Kong even more competitive. Today, I would like to share with you some of our work in the areas of tourism, logistics and port development.

Initiatives to promote tourism

Tourism has always been an important contributor to our economy. As part of our Economic Relaunch Programme, we launched a Global Tourism Revival Campaign in June 2003. Some of our highly successful events include Strato-Fantasia, an advanced laser lighting show in Victoria Harbour, the Mid-Autumn Lantern Celebration, the International Musical Fireworks Competition, the International Chinese New Year Night Parade and A Symphony of Lights.

For those of you who are not familiar with A Symphony of Lights, it's is a world-class multi-media show that combines special interactive light and musical effects to showcase the key buildings along the waterfront of the Victoria Harbour. The show is a brand new tourism project and will become a permanent attraction and enhancement to our already spectacular harbour. In view of its success, we will proceed with Phase 2 of the project to include more buildings on both sides of the harbour.

We are also making good progress on a number of major tourism projects. Hong Kong Disneyland, the Tung Chung Cable Car, and the Hong Kong Wetland Park are all on schedule for completion in 2005/06. We are also taking steps to promote heritage tourism by converting the Central Police Station, Victoria Prison and the former Central Magistracy Compound in Central, as well as the former Marine Police Headquarters in Tsim Sha Tsui, into heritage tourism developments. All these will strengthen Hong Kong's status as Asia's leading tourist destination.

The speed of recovery in tourism after SARS has exceeded all expectations. This has much to do with the Central Government's decision to allow Mainland residents to visit Hong Kong in their individual capacity. Since the implementation of the "Individual Visit Scheme" in last July, over one million visitors have visited Hong Kong under the scheme. With the gradual opening up of the scheme to more Mainland cities, we expect the number of such visitors to continue to rise.

I understand that some of our participating teams today will speak on tourism. I look forward to hearing your insights and innovative ideas.

Port and Logistics

Now, let me turn to the port and logistics sectors. As the preferred international logistics hub in Asia, we have the advantages of a prime geographical location, world-class transport infrastructure, as well as excellent physical and information connectivity. In 2002, our container port handled a throughput of 19.1 million 20-foot-equivalent units (TEUs). Despite the outbreak of SARS, the port and logistics sector remained healthy and it is estimated that we had a throughput of 20 million TEUs last year. To keep pace with our port development needs, the first two berths of Container Terminal No 9 (CT9) have been in operation since July and October 2003. With a total of six berths, CT9 will become fully operational in 2005 and provide an additional capacity of over 2.6 million TEUs.

One of our key measures to enhance logistics infrastructure is to develop a value-added logistics park. This facility will enhance Hong Kong's capability to provide one-stop integrated logistics services and reinforce our status as the premier international logistics hub in Asia. We have identified a site on North Lantau, the strategic location of which will be enhanced by its proximity to the future Hong Kong-Zhuhai-Macau Bridge. We are consulting the logistics sector on the broad parameters.

Modern logistics is as much about communications as it is about physically moving merchandise. The Government has invited and completed assessment of proposals for the development and launching of a Digital Trade and Transportation Network (DTTN) System in 2005 to enhance the overall competitiveness of our logistics industry.

To facilitate the long-term development of our port, we commissioned a consultancy study called "Hong Kong Port - Master Plan 2020" which will update the port cargo forecast published in 2001. It will also propose a competitive and sustainable strategy and a master plan for Hong Kong's port development, including the feasibility of constructing Container Terminal 10. The study will be completed very soon and we will consult the stakeholders on the recommendations of the study and devise an implementation plan to strengthen the competitiveness of our port.

Manpower and Human Resources

Even with the best and most modern infrastructure, we cannot succeed without an equally exemplary software. Hong Kong people, are by far, the most valuable asset of the city. A well-trained, industrious, resilient, highly motivated and well-equipped workforce is what the community needs and expects. The main tool for promoting economic restructuring and establishing a knowledge-based economy is to invest substantially in education and to strategically raise the competitiveness of our workforce. Currently, education accounts for about 25% of government expenditure. Our objective is to transform the economy into a knowledge-based one and to promote life-long learning. To this end, the Government is establishing a qualification framework to provide learners with a clear articulation ladder. We have also launched the Continuing Education Fund with $5 billion in 2002 to subsidise those with learning aspirations to pursue continuing education and training programme. The Government has also put in substantial resources in manpower training and retraining. For instance, last year alone, some 222,000 training and retraining places were provided by the Vocational Training Council and the Employees Retraining Board. A lot has been done to help both the youth and the middle-aged to find work. Some of the successful examples include the Youth Pre-employment Training Programme, the Youth Work Experience and Training Scheme and Re-employment Training for the Middle-Aged. We will continue with our efforts to promote employment. As announced by the Chief Executive in his Policy Address last month, we will extend some 11,700 temporary jobs in the public sector to meet the operational needs of various Government Departments.

I understand that some of the participating teams today will touch on the employment issue. Again, any proposals you may have to promote employment are most welcome.

Certainly, none of the above initiatives can be realised without a stable political, economic and social environment. In this regard, I am proud to say that Hong Kong has the world's freest economy, supported by the rule of law, a low and simple tax regime and the successful implementation of "One Country, Two Systems". With our essential rights and freedom protected, Hong Kong is widely regarded as one of the best places to live and to do business. We shall continue our efforts to consolidate and develop our traditional strengths to foster economic growth.

Business Administration Paper 2003 Competition

Before I finish, I would like to congratulate the participants for your efforts and high standards. The future of Hong Kong rests on the younger generation. Today's competition provides a very useful forum for business students from different tertiary institutes to exchange views on issues pivotal to the development of Hong Kong. I hope you will make the most out of this project, and treasure the experience you gain. I'm sure you'll find yourself better equipped to face the challenges ahead.

Finally, I wish the Business Administration Paper project every success and all of you a healthy and successful Year of the Monkey ! Thank you.

Ends/Sunday, February 15, 2004

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