********************************************
Enhancement
Directions for Development: Enhancing Innovative and Value-adding Capabilities
19. With its rapid growth and development, the Mainland has become the economic engine of the Asia-Pacific region. Hong Kong is poised to leverage on the strengths of the "One Country, Two Systems" principle enshrined in the Basic Law. Our open markets, free flow of information and ideas, independent and sound judiciary, clean and efficient government, simple and low taxes, world-class regulatory framework and corporate governance system, creative and vibrant population, rich pool of professionals, and law and order are all strengths which have made us what we are today. The advantages they bring to Hong Kong are unique in the region.
20. Opportunities also bring challenges. We should therefore continue to promote our economic restructuring, move up the value chain and exercise creativity. The Mainland itself is growing at a fast pace, and will have different policy priorities for the various stages of its development, as in the case of its economic interactions with Hong Kong. We should identify those of our own strengths which can complement our motherland's development. I believe that taking this direction will contribute to our country's economic reform, sustain our own economic growth, accelerate the current restructuring and create more employment opportunities, thus achieving a win-win outcome.
21. For several decades, Hong Kong's economy has been undergoing structural changes. In recent years, our financial markets have, for example, evolved into the predominant fund-raising platform for Mainland enterprises. In the process, these enterprises have improved their corporate governance and promoted their brand names globally. Our professionals continue to provide more services to the Mainland and its overseas markets and, in so doing, make a positive contribution to our nation's development. Hong Kong's external trade has gradually shifted from re-exports to supply chain management and high value-added logistics services. This has contributed to the notable growth of our offshore trade.
22. The development of high value-added commercial, financial and professional services has stimulated growth in other sectors, such as convention and exhibition, electronic trading, transportation, hospitality and retail services, and has enhanced our status as a cosmopolitan city. Today, Hong Kong is an important hub promoting the flow of capital, people, goods and information worldwide. We cannot, however, afford to be complacent over our achievements. To progress further, we must continue to enhance our competitive advantages.
Economic Co-operation with the Mainland
23. The signing and implementation of the Closer Economic Partnership Arrangement (CEPA) with the Mainland has been the most significant development in furthering our economic co-operation. With the inception of its three phases, we have fully liberalised trade in goods between Hong Kong and the Mainland. As of the second week in February, Hong Kong and the Mainland had reached agreement on rules of origin for a total of 1 370 products. We have issued more than 10 800 certificates of origin covering exports valued at $3.7 billion. Within the first two years of implementation, our businesses have already saved a total of $240 million in tariffs. In respect of trade in services, the Mainland's markets have also been considerably liberalised under CEPA. Currently, 27 service sectors benefit, and more than 920 Hong Kong Service Supplier Certificates have been issued. We estimate that the implementation of CEPA in its first two years has brought about the creation of 29 000 new jobs.
24. The implementation of CEPA III from the beginning of this year will provide further business opportunities for our enterprises and professionals. Our focus for the year is to ensure the effective implementation of CEPA. If any Hong Kong business encounters implementation problems, these should be reported immediately to the Trade and Industry Department, which will actively follow up.
25. As a service-oriented economy, Hong Kong needs a vast hinterland market to promote its economic development. The implementation of the Pan-Pearl River Delta (Pan-PRD) Regional Co-operation Framework Agreement has greatly broadened the scope of our co-operation with the Mainland provinces and regions concerned, and will facilitate the use of Hong Kong as a gateway to the international market by Mainland enterprises in the Pan-PRD region.
Business Environment
26. To build the best foundation for business, we must take steps to maintain an orderly market and ensure that it provides a level playing field for all enterprises. SMEs account for 98 per cent of Hong Kong businesses. In order to promote their development, fair competition has become all the more important. As an advanced economy, Hong Kong must also move with the times in developing our competition policy. The Competition Policy Review Committee, which I appointed last year, is reviewing our existing policy and its effectiveness. We will consider the Committee's recommendations and how best to enhance fair competition once it has submitted its report in the middle of the year.
27. The Economic and Employment Council (EEC) and its Subgroup on Business Facilitation have, in the past two years or so, made a number of recommendations aimed at cutting red tape and streamlining procedures. The Government has adopted 38 of these recommendations, including simplifying land lease conditions and introducing a composite licence for ready-to-eat food and a provisional licensing system for cinemas. These measures should reduce the business sector's compliance costs and enhance efficiency.
28. Following the establishment of the Commission on Strategic Development, I disbanded the EEC at the end of last year and replaced it with the Business Facilitation Advisory Committee (BFAC) to focus on and advise the Government on business facilitation measures. This year, BFAC will conduct in-depth reviews of land lease and planning procedures affecting the construction industry, and licensing regimes for food premises such as factory canteens and alfresco dining facilities, theme parks and family amusement centres. The Committee will also look into the feasibility of implementing such measures as expanding the scope of application of temporary licences, composite licences and certification by professionals.
29. The Government should strive not only to look out for the interests of investors but also to protect labour rights. The Labour Advisory Board is now looking into the issues of minimum wage and standard working hours. We will give them objective and serious consideration.
(To be continued)
Ends/Wednesday, February 22, 2006
Issued at HKT 11:18
NNNN
