Following is a speech by the Secretary for Commerce, Industry and Technology, Mr John Tsang, at the Third Pearl River Delta Conference in Zhongshan today (November 1): (English only)
Mayor Li, Anthony, David, Distinguished Guests, Ladies and Gentlemen,
It gives me great pleasure to be here in beautiful Zhongshan today to address the luncheon gathering of the Third Pearl River Delta Conference. I like luncheon crowds. They are less demanding of substantive thoughts than dinner gatherings, and they are also less business oriented than breakfast groups. And in this audience today I see so many familiar faces. It is almost like we are back in Central.
I remember that when the Hong Kong General Chamber of Commerce and the South China Morning Post first started this conference two years ago, the focus was primarily set on the smaller geographical confine of the Pearl River Delta where Hong Kong investments have concentrated in the past 25 years. The Pan-Pearl River Delta concept did not even exist then. Within a span of just two years, the vision has expanded boldly and we are now adjusting our horizon from the PRD, to the Greater PRD and higher still, to the Pan-PRD. The speed in which the sphere of PRD's economic influence is radiating is remarkable indeed!
The Pan-PRD region, as you all know, encompasses what we call the "9+2" entities: the nine Southern provinces and the two SARs of Hong Kong and Macau. Covering an area of some two million square kilometres, it is comparable in size to that of the United Kingdom, France, Germany, Italy and Spain put together. Its population of some 450 million people is equivalent to the total of the 25 member states of the European Union. Last year, the region registered a collective GDP of US$630 billion, which is close to the combined total of the 10 ASEAN nations.
And what's more, there is tremendous potential for this economic strength to grow further, and to grow at a pace that is unmatched in recent memory. I say so confidently because our forecast figures suggest that the GDP in this region will exceed one trillion US dollars by 2010 and doubling to two trillion US dollars 10 years later in 2020. Moreover, I know that there is clear commitment and determination on the part of the leadership of the nine provincial and the two SAR governments to strive forward in this historical co-operative venture working closely together to achieve a win-for-all. It was exactly with this purpose in mind that the First Pan-PRD Forum was convened in June this year and a Framework Agreement signed by the "9+2" governments. This agreement laid a solid foundation for collaboration and mutual support in key areas such as infrastructure, tourism, trade and environmental protection.
Hong Kong's economic ties with Pan-PRD provinces date back many years. Hong Kong has as many as 120,000 enterprises in the Pan-PRD area with a total investment of US$150 billion, accounting for about half of the direct realised inward investment of these provinces. With the closer co-operation now envisaged under the Pan-PRD framework, we see great potential for Hong Kong enterprises to penetrate further into the region, which has now extended from just a massive production base to a huge market that is eager for quality products and services. Hong Kong is well placed to take advantage of its unique position as the service capital of the region and the principal gateway for Pan-PRD enterprises to venture into the international arena.
An essential step in promoting regional synergy is to raise the level of openness to allow for even greater, wider, and freer flow of people, goods and services within the "9+2" area. The implementation of CEPA between the Mainland and Hong Kong provides an excellent conduit in this regard.
CEPA has ushered in a new economic order for both Hong Kong and the Mainland. What's more, this is not a one-off deal and it is not static. It is a dynamic scheme that is constantly rolling forward. Following the implementation of the first phase of CEPA, the Mainland and Hong Kong governments have agreed on further liberalisation measures in the second phase of CEPA that will begin in January next year. Under CEPA II, the Mainland will apply zero tariffs to another 713 Hong Kong products on top of the 374 products identified in Phase I. These new products include aqua-marine products, foods and beverages, chemicals, textiles and clothing, metals, electrical and electronic goods. They have all been included at the request of Hong Kong businessmen. The Mainland has also agreed to grant preferential access in eight new service areas, in addition to broadening liberalisation in 11 of the existing 18 service sectors. And we are now getting geared up for the next phase.
CEPA is a win-win formula for both Hong Kong and the Mainland. From Hong Kong's perspective, the zero tariff preference for goods has potential to attract to Hong Kong manufacturing of brand name products with high added value. In addition, the WTO-plus liberalisation measures in the services market should give companies in Hong Kong a "first mover" advantage.
From the perspective of the Mainland, lower costs for imported Hong Kong products should benefit its consumers, and opening up the service industries to Hong Kong companies should attract more investments and talents into the Mainland. This helps to enhance the professional standards of these industries and accelerate the Mainland's full integration with the world economy at large.
With this new and promising economic backdrop, we see great opportunities for co-operation between Hong Kong and the other 10 Pan-PRD members. I would like to suggest how we could seek to maximise the opportunities available to us and achieve greater co-operation in five areas.
First, infrastructure planning. For economic development of the Pan-PRD region to take off, better co-ordination in infrastructure planning, particularly in terms of a transport network, is absolutely essential. Effective transport links are instrumental in facilitating the smooth movement of people and goods across the region. Improved access through better transport will present tremendous opportunities for the logistics sector, a pillar of our economy. With Hong Kong fast becoming Asia's premier logistics hub, and with our headstart in distribution, freight forwarding and logistics services accorded under CEPA, Hong Kong should stand to benefit from the accelerated opening up of the Pan-PRD region. But we need to improve further our logistics infrastructure, reduce costs, expand our supply chain management services, and fully apply our strength in business management.
Secondly, financial services. Hong Kong has a well regulated and efficient financial market which meets the highest international standards. We are the service capital of the region. Mainland enterprises looking to expand their reach could make use of our sophisticated service platform. Those seeking to expand their capital base through public listing in particular could well make use of our vibrant stock market. To us, the listings of Mainland entities in our market will help diversify and consolidate the international nature of our securities sector.
Thirdly, commerce. Hitherto, Hong Kong businessmen have concentrated their production activities in the Pearl River Delta. The Pan-PRD boasts rich natural and human resources and are ideal locations for Hong Kong businesses seeking new bases for production. At the same time, the growing prosperity in the region and the rising demand for high quality brand name products and services should provide the incentive as well as the opportunity for Hong Kong businessmen to develop their identities and establish a firm foothold in this part of the Mainland.
Fourthly, corporate governance. Hong Kong is operating at an advanced stage of economic development, and we have a great deal of valuable experience that we can share with our Mainland partners on building up a fair and open market through the practice of proper corporate governance. This is an important ingredient for business to thrive in the Pan-PRD region. This will gain even more importance as the Mainland opens up under its WTO commitments. We believe Hong Kong is well positioned to complement its Pan-PRD partners in areas of professional and value-added services, such as legal, accounting, information technology and management consulting, and in turn gear up the Pan-PRD region towards the development of a more advanced regional economy.
Lastly, tourism. The potential for regional co-operation on tourism is enormous. I hardly need to point out that the nine provinces and the two SARs all have their own unique features. We don't have to go far. Just right here in Zhongshan we have our share of history, culture, entertainment and charming landscape. The "9+2" region has available also resorts, theme parks, casinos, and an endless list of tourist attractions. Development potential is boundless. We believe that more economic activities in the "9+2" area will stimulate further the growth in traffic among those living in the region, boost tourism, and engender prospects for growth in the tourism-related sectors.
Ladies and gentlemen, we are living in an exciting region during exciting times witnessing the blooming of the most exciting regional economic entity in the world. I am delighted to be part of this process, and I can sense that you, too, are eager to play your part in the development of the Pan-PRD region. So let us contribute our share to this economic fellowship, and facilitate the successful realisation of the vision of a grand regional co-operation concept that is full of life, vitality and enterprise.
Ends/Monday, November 1, 2004