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D. Strengthening the Economy
147. After the financial tsunami in 2008, Europe and the US have lived under the menace of recession for the past two years. The pace of economic recovery in the US has slowed, and the sovereign debt crisis in Europe has deepened. The driving force for development has shifted to Asia and the BRICS (Brazil, Russia, India, China and South Africa). The global economic landscape is changing after the financial tsunami. During my overseas visits in recent years, I have observed that China's development has become the focus of world attention. To maintain Hong Kong's competitiveness, we must seize new development opportunities both in the Mainland and globally.
Complementing the 12th Five-Year Plan
148. In the National 12th Five-Year Plan, our country has expressed her support for Hong Kong to reinforce and enhance our status as an international centre for financial services, trade and shipping, and to develop industries where we enjoy competitive advantages. Apart from continuing to implement CEPA, our country supports the development of a financial co-operation zone led by Hong Kong's financial system, and an advanced global manufacturing and modern services base, under the Framework Agreement on Hong Kong/Guangdong Co-operation. It also supports the opening up of service industries in the Mainland to Hong Kong's service providers, starting with pilot programmes in Guangdong. We will take forward these policy measures actively, with emphasis on strengthening our co-operation with Guangdong.
Market Development
Emerging Markets
149. We will strengthen trade and investment co-operation with emerging markets and actively negotiate closer economic and trade arrangements with our trading partners, so as to expand market and business opportunities for our enterprises engaged in the trading of goods and services. Apart from exploring the possibility of a free trade agreement with Chile, we will soon negotiate with Russia an agreement on investment promotion and protection. We are also actively exploring the possibility of joining the trade and economic co-operation arrangements among East Asian economies, and strengthening our links with stock markets in the BRICS.
Mainland Market
150. To help Hong Kong enterprises tap the Mainland market, we propose setting up a dedicated fund of $1 billion to encourage them to move up the value chain and build brands by leveraging Hong Kong's strengths in design. We will seek to sign Supplement VIII to CEPA by the end of this year. The Central Government has clearly indicated that the markets for Hong Kong's trade in services will be further opened up and has set a target to basically achieve full liberalisation of trade in services for Hong Kong by the end of the 12th Five-Year Plan period. I have asked the Financial Secretary to follow up in earnest.
Regional Co-operation
Chengdu-Chongqing Economic Zone and Economic Zone on the West Coast of the Taiwan Strait
151. In the 12th Five-Year Plan, the development of western China, the Chengdu-Chongqing Economic Zone and the Economic Zone on the West Coast of the Taiwan Strait have been made key strategies of regional development. To capitalise on the opportunities in these areas, we plan to strengthen and deepen our multi-faceted co-operation with the Chengdu-Chongqing area and Fujian by setting up dedicated liaison units in Chongqing and Fujian.
Taiwan
152. We are actively preparing for the establishment of the Hong Kong Economic, Trade and Cultural Office in Taiwan, with a view to promoting multi-faceted, multi-level exchanges between the two places. Apart from enhancing economic and trade co-operation, the two places will also set up standing notification mechanisms on food safety and healthcare emergencies, strengthen legal co-operation in civil and commercial matters, and step up exchanges on education.
Development of the Six Industries
153. To diversify our economy, we will further develop the six industries where we enjoy clear advantages.
Medical Services
154. We have reserved four sites for private hospital development, and plan to put up two of them for tender in the first quarter of 2012. We will continue to identify sites for developing medical institutions of different scales. We will also attach conditions to the development of private hospitals to ensure that their services meet public needs. Such conditions will cover the scope of service, service level and price transparency.
Environmental Industries
155. We will adopt the following approaches to promote the development of environmental industries. First, a resource-driven approach. We have spent over $30 billion on environmental projects, creating numerous opportunities for the environmental engineering sector. Second, a policy-driven approach. Owing to our measures to promote waste reduction and recycling, the recycling industry in Hong Kong has taken shape. The enactment of legislation on energy efficiency of buildings will also bring about new business opportunities for the green building sector. Third, we will capitalise on Hong Kong's advantages to open up business opportunities in the Mainland for our environmental industries. The Government will support the industry's participation in such activities as environmental exhibitions and trade missions to help build local environmental brands.
Testing and Certification
156. The Government will implement the three-year development plan for the testing and certification industry to enhance its overall competitiveness. We will develop new services in four selected trades, namely, Chinese medicine, construction materials, food and jewellery. Also, we have secured the agreement of the Central Government to expand the scope of the pilot scheme for Hong Kong testing organisations to undertake product testing for the China Compulsory Certification System.
Education Services
157. To internationalise and diversify our higher education sector, we will attract more overseas students to Hong Kong, and extend student exchange programmes to cover the sub-degree level. We will also provide more hostel places through active collaboration with local institutions. We support the construction of college premises by post-secondary institutions through granting land and loans. The Queen's Hill site is expected to be put up for application next year. In addition, a $2.5 billion Self-financing Post-secondary Education Fund will be launched to provide scholarships and enhance the quality of teaching and learning. We also propose to extend the ambit of the Start-up Loan Scheme to support the development of student hostels by self-financing degree awarding institutions. The total commitment of the Scheme will be increased by $2 billion.
158. With four international schools coming on stream, we estimate that some 5 000 additional international school places will be provided in the next few years. We will continue to support the in-situ expansion of individual international schools or allocate suitable vacant school premises to them for short-term use.
Innovation and Technology
159. Since there is increasing global demand for data services, the Government has reserved about two hectares of land in Tseung Kwan O for data centre use. The first such site is expected to be put up for open auction in 2013 at the earliest. The Hong Kong Science and Technology Parks Corporation will review the use of industrial estates and promote their revitalisation to support data centre development. Furthermore, we will seriously consider the feasibility of developing data centres in revitalised industrial buildings. The Government will encourage the local industry to develop advanced cloud computing technologies and applications. In the next few years, we will develop a government cloud platform and procure public cloud services.
160. We will review the Research and Development Cash Rebate Scheme and the Small Entrepreneur Research Assistance Programme to better support the research and development efforts of small and medium enterprises (SMEs). During his visit to Hong Kong, Vice-Premier Li Keqiang announced the setting up of a Hong Kong branch of the Chinese National Engineering Research Centre and a High-tech Industrialisation Base in Hong Kong. We are following up on the matters. In addition, we have proposed to the Central Government the development of a National High-tech Industrialisation Base for green technology at the Hong Kong Science Park.
Cultural and Creative Industries
161. We launched the Arts Capacity Development Funding Scheme this year. The Scheme will provide annual funding of about $30 million to subsidise promising art groups and art practitioners as well as large-scale, long-duration activities. The scheme also features a matching grant element to cultivate a supportive culture for the arts in the community and to foster a tripartite partnership among the Government, art groups and the private sector. In addition, we will allocate resources to the Hong Kong Arts Development Council for the provision of art space at suitable industrial premises. Such space will be available for rent by artists at concessionary rates.
162. We will allocate more resources to enhance our support for the Hong Kong Design Centre. We plan to designate 2012 as "Hong Kong Design Year", which will encompass a number of mega events on design to consolidate Hong Kong's position as Asia's creative hub.
Pillar Industries
Boosting the Competitiveness of the Financial Sector
163. Hong Kong is strategically positioned as China's global financial centre. We will introduce measures to boost the competitiveness of our financial sector.
Offshore Renminbi Business
164. To reinforce our offshore Renminbi (RMB) business platforms, we will promote the use and circulation of RMB funds, and establish strong and extensive links with the Mainland's onshore RMB market by three "bridges", namely trade, direct investment and equity investment:
(i) On trade, we will encourage our banks to develop worldwide RMB business networks to consolidate Hong Kong's position as a global trade settlement platform;
(ii) On direct investment, with the introduction of measures for the administration of foreign direct investment in RMB, enterprises will have greater demand for RMB funds. We will further develop our RMB fund raising services in the form of bank loans and the issue of bonds and shares; and
(iii) On equity investment, the arrangements to facilitate investment in the Mainland's interbank bond market and investment by Qualified Foreign Institutional Investors will open up more investment channels for Hong Kong's RMB funds. We will strive to extend these arrangements further.
In addition, we will encourage the diversification of our financial markets and products, and actively promote Hong Kong's role as an offshore RMB business centre internationally.
Other Enhanced Measures
165. To diversify Hong Kong's listing platform, we will attract more enterprises from the European, US and emerging markets to list in Hong Kong by enhancing the regulatory regime, including enacting legislation within this legislative year to oblige listed corporations to disclose price sensitive information. We will also broaden and deepen our bond market, and seek to finish updating the Companies Ordinance in this legislative year. We will actively take forward the establishment of an independent Insurance Authority and enhance the regulatory regime for insurance intermediaries. We will also prepare proposals for the establishment of a policyholders' protection fund, which will form the basis of the relevant legislation.
166. We are actively following up on the measures related to financial services announced by Vice-Premier Li during his visit to Hong Kong.
Tourism Sector
167. Last year, I announced that the operation and regulatory framework of Hong Kong's tourism sector would be reviewed. We then issued a consultation paper and are now considering the views received. We will announce reform proposals by the end of this year. On tourism infrastructure, Ocean Park is now actively studying the feasibility of building an all-weather Water World and supporting facilities at Tai Shue Wan, while Disneyland is exploring further expansion. The new Kai Tak cruise terminal and its first berth will start operation in mid-2013.
Logistics
168. To help the logistics industry provide high value services, we progressively make available long-term sites for the construction of modern logistics facilities. The second logistics site at Tsing Yi is expected to be put up for open tender by the end of this year. To satisfy the development needs of the industry, we will continue our efforts to identify sites for backup facilities.
169. The Airport Authority has completed the public consultation on the airport's future development, including the construction of a third runway. It will submit recommendations on the way forward in late 2011.
Competition Bill
170. The Government has put forward the Competition Bill to protect consumer interests and maintain our competitive edge. The Government has been working closely with this Council to assist the Bills Committee in scrutinising the Bill since its introduction in July last year. I am aware that the business sector, in particular SMEs, have expressed concern about the Bill in its present form. The Commerce and Economic Development Bureau will soon propose amendments to the Bills Committee. I hope that the Bill will be enacted within the current legislative session.
Helping Small and Medium Enterprises
171. The recent sharp downturn in the external economy is more worrying than inflation. The sovereign debt crisis in Europe may have a sharp impact on the global financial system and trigger a recession. Our economy will face greater downside risks next year. We must brace ourselves for this and keep a close watch on changes in the external environment. We will pay particular attention to the difficulties of SMEs and introduce necessary measures to tide them over.
(To be continued)
Ends/Wednesday, October 12, 2011
Issued at HKT 12:40
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