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Following is the speech by the Financial Secretary, Mr John C Tsang, at the Annual Dinner of the Federation of Hong Kong Industries today (March 19):
Clement (Chairman), Distinguished Guests, Ladies and Gentlemen,
Good evening.
It is a great pleasure for me to join you all tonight for the Annual Dinner of the Federation of Hong Kong Industries. Over the years, you have been a major contributor to this city's prosperity and a driving force behind our transformation into an international business and financial centre.
Last year, 2007, was a particularly good year for our economy. Our success is due in no small measure to the resilience, versatility and determination of the Hong Kong people. The feel-good factor has returned after several difficult years of doom and gloom. In 2007, our GDP grew by 6.3 per cent in real terms, following an average growth of 7.5 per cent during 2004 to 2006. Private consumption expenditure rose by 7.8 per cent in real terms in 2007, the fastest since 1993. Unemployment is at a near 10-year low and consumer confidence is strong.
For more than four decades, this Federation has provided solid support for our industries through the good times as well as the difficult periods. You have contributed to their transformation.
Today I will talk about some of the opportunities I see for our economy to continue to grow and prosper in the face of some significant challenges.
In his first major speech as Guangdong Party Secretary last December, Mr Wang Yang spoke forcefully about his ambition to reinvigorate our province next-door. He spoke of revitalising Guangdong's status as a pioneer in the country's reform process and of the need for innovation, economic development and improvement in people's livelihood.
Mr Wang went on to say, and I quote: "Guangdong has reaped the greatest rewards since China started to reform and open up in 1978. We have to get back to what made this place great and 'special'." End quote.
As neighbours and partners in the past few decades of Guangdong's rapid economic growth and development, we welcome Mr Wang's enthusiasm, as well as his commitment and vision.
Today, the message from the Central Government is clear. Our nation is moving into a new stage of opening up, and that requires new thinking and a new mode of development.
Hong Kong has benefited greatly from the Mainland's reform in the past 30 years, and I am confident that we will continue to do so in the next 30 years.
Our expertise in improving economic efficiency, in strengthening both hard and soft infrastructure, in developing services industries and in nurturing innovation are all valuable assets for our nation to draw on as she goes forward.
These attributes, taken together with our global standing and reputation as Asia's world city, place Hong Kong in a strong position to play a leading role in the next stage of China's development.
In my Budget speech last month, I estimated that we would be spending $21.8 billion on new infrastructure in the next fiscal year, creating some 27,000 new jobs. This includes the early work on projects that will improve cross-boundary connectivity, such as the Guangzhou-Shenzhen-Hong Kong Express Rail Link and a rail line between Hong Kong International Airport and Shenzhen Airport. Development projects at the new Liantang/Heung Yuen Wai control point and the Lok Ma Chau Loop have also been given priority status.
We are also co-operating and exchanging ideas with our counterparts in Shenzhen and Guangdong on areas such as the environment, public services, law enforcement, labour protection, technology co-operation, food safety and disease prevention.
So how do we take this cross-boundary partnership to a new level?
Since its launch in 2004, our free trade pact with the Mainland, the Closer Economic Partnership Arrangement, or CEPA for short, has been making good progress. CEPA was expanded at the start of this year, and now covers 38 services areas. The arrangement is a huge and on-going undertaking that covers the whole of the Mainland.
As our nation embarks on its new phase of development, we should consider ways to hasten the liberalisation and integration process, perhaps by starting in some chosen areas and on a smaller scale. One way would be for us to open up selected services industries or market accessibility in Guangdong first, before extending them to the rest of the nation. This could apply to the full spectrum of activities that would be of interest to both of us.
As an international city, we would not focus only on our neighbours. We should also consider the prospects in other emerging markets around the world. Recent missions to India, Vietnam, Russia and the Middle East have all generated positive outcomes. The demand for high quality products and services in these markets provides enormous opportunities for Hong Kong's businesses. To further our efforts on this front, I shall be leading business delegations to Central Europe and South America later on in the year.
Ladies and Gentlemen, I have spoken so far on the opportunities ahead, but please don't think that I have lost sight of the challenges that we are facing today.
The economic downturn in the US is already having an impact around the world, including here in Asia. With an economy as externally oriented as ours, we can expect to feel the pinch along with everyone else. This is another good reason to make sure that we don't miss the opportunities right here on our door-step, and that we develop in parallel with our nation, the world's fastest growing large economy.
I am also acutely aware of the current difficulties you are facing as leaders of industries across the boundary. Rising costs, new tax arrangements, a shortage of skilled labour and policy changes for the processing trade are all causing grave concern. In addition, there are increasingly stringent environmental protection requirements, and the implementation of new laws and regulations, such as the Labour Contract Law.
You are not facing these difficulties alone.
The Government has a whole range of measures to assist Hong Kong enterprises in these areas. A case in point is the Mainland's change in processing trade policy. Two working groups - the Task Force to Support the Processing Trade, and the Hong Kong/Guangdong Expert Group on the Restructuring and Upgrading of the Processing Trade - were set up last year to assist our enterprises.
We have also been helping the industry to consider other options. Last year, our Secretary for Commerce and Economic Development led two business delegations to Chenzhou in Hunan and Ganzhou in Jiangxi. These visits examined the feasibility of relocating processing trade enterprises from Guangdong to the central areas of the Mainland. More such missions will be organised in the coming months.
The Trade and Industry Department, the Trade Development Council and the Productivity Council are all helping industries to address issues, such as upgrading, restructuring and relocation. We also value the support of the trade associations in serving as a bridge between the Government and the industries. And we are particularly grateful for the Federation's support in this regard.
Ladies and Gentlemen, in his Policy Address last October, the Chief Executive spoke of a new direction and new opportunities for Hong Kong. We look forward to working closely with the Federation in future to ensure that we maintain the best conditions for your business to flourish so that we can all look forward to an even brighter tomorrow.
Thank you very much.
Ends/Wednesday, March 19, 2008
Issued at HKT 20:10
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