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Opportunities and Challenges
19. I would now like to discuss the opportunities and challenges ahead of us.
Comparative Advantages
20. First of all, let us consider Hong Kong・s comparative advantages. The rapid development of our nation is transforming the global economic landscape. After 30 years of reform and liberalisation, the increasing integration of the Mainland with the global economy and the urbanisation and industrialisation in the Mainland have progressively changed the mode of economic development, boosting domestic consumption in terms of both quality and quantity, driving manufacturing industries up the value chain and speeding up the development of the service industries. These developments have helped our economy shift towards higher value-added services, thereby supporting our economic growth.
21. Hong Kong has the unique advantage of having the Mainland as our hinterland while maintaining an international outlook. We have been fostering co-operation and integration with the Mainland through the Closer Economic Partnership Arrangement and the Pan-Pearl River Delta (Pan-PRD) Regional Co-operation Framework Agreement. With the gradual implementation of the Action Agenda put forward in the Economic Summit of ：China・s 11th Five-Year Plan and the Development of Hong Kong；, we can enhance our role in the development of our nation. In addition, by expanding the scope for functional division and co-operation between Hong Kong and Mainland cities, mutual benefit can be achieved. With these advantages, we can also attract investors from both the Mainland and overseas to use Hong Kong as a platform for developing regional and international business.
22. Hong Kong has a sound legal system, a free flow of information, a well-established, strong and effective global network, and entrenched intellectual property rights protection. Hong Kong also boasts an open and highly cost-effective business environment, and has a huge Mainland market as our hinterland. These are the key elements for Hong Kong to attract local and overseas investors. We must co-operate with the Mainland, in particular the Pan-PRD region, in promoting to these investors the overall package in order to enhance our attractiveness.
23. We must also further enhance our status as Asia・s world city and as a place for regional operating headquarters, and increase our co-operation with other cities in the region, so we can play our hub role more effectively, promoting the development of our nation and the entire region.
24. The Government is making untiring efforts to help our enterprises develop economic relations with emerging markets. In the past few months, we have led delegations of different sectors to Russia, Vietnam, India and the Middle East. We will continue to extend and strengthen these international ties. Later this year I will visit some major cities in Eastern Europe and South America to help our enterprises tap further opportunities.
Medium and Long-term Challenges
25. I would like to highlight some external and internal challenges.
Globalisation and Emerging Regional Economies
26. On the external front, globalisation and the emerging regional economies will bring increasing competition to Hong Kong. The global economic landscape has been changing rapidly in the past 20 to 30 years. The application of information technology, enhanced efficiency in transportation and logistics management, liberalisation and integration of financial markets in various economies and the rise of emerging markets all pose new challenges to Hong Kong. The Mainland economy is now at a crucial stage of change in its mode of development, with continuous restructuring and upgrading of Mainland industries. The rapid development and progress of Mainland cities will also bring more competition to Hong Kong.
27. In a report released at the end of last year, the International Monetary Fund pointed out that further financial liberalisation in the Mainland is likely to consolidate Hong Kong・s position as an international financial centre over the medium term. However, with the modernisation of the Mainland・s financial system and the development of other financial centres in the Mainland, Hong Kong・s comparative advantage in China-related intermediation may diminish. To maintain its long-term standing as an international financial centre, Hong Kong must build a geographically diverse base for its financial services in the region.
28. Apart from looking at expansion in regional financial services, we must maintain and promote Hong Kong・s role as an international cosmopolitan city. We will continue to expand our capacity to handle trading and financial issues and broaden our international horizon through access to more overseas markets and by establishing stronger international links. We will further ease business operations, improve the transparency of our regulatory regime, streamline procedures, encourage creative ideas and promote the use of technology. These will help economic restructuring, reduce business compliance costs and enhance our ability to meet the challenges brought by globalisation and by rapid integration with the Mainland economy.
29. For a highly developed city, global competition is ultimately a competition for talent. To consolidate Hong Kong・s position as Asia・s world city, we must nurture a large number of talented local people as well as attract talent from the Mainland and around the world.
30. The Government will continue to invest heavily in education and retraining as well as create more favourable conditions to attract talent from around the world. The completion of major infrastructure projects and various environmental improvement measures mentioned in last year・s Policy Address will also allow us to expand our business opportunities, raise economic efficiency and build a quality city with a quality living environment to enhance Hong Kong・s attractiveness.
(To be continued)
Ends/Wednesday, February 27, 2008
Issued at HKT 11:18
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