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II. Economy
10. Hong Kong needs sustained economic growth to address issues such as poverty, housing, an ageing society, environmental protection and the upward mobility of our young people.
11. Hong Kong has a sound institutional framework and the rule of law. We have a free flow of goods, capital and information; a tradition that champions fair and open competition; superb infrastructure; world-class entrepreneurial talent; and, international professional services. Hong Kong ranks highly in global competitiveness and benefits from the many opportunities flowing from economic development in the Asia-Pacific region, the preferential treatment accorded by our country and the momentum provided by the Mainland's rapid development.
12. During my visit to the Mainland two months ago, I met a young Hong Kong entrepreneur. After earning his master's degree in Hong Kong, he was inspired by a lecturer and decided to venture into the wider world. He refinanced his property, dug into his savings and borrowed money from his relatives to head for Guangxi. After ten years, he now owns a company that manages a supply chain of imported red wine, coffee and other food items, with an annual turnover of over $100 million. Guangxi, the place where this young man set up his company, and the business he operates are both unfamiliar to Hong Kong people. He said that his Hong Kong background and global vision gave him an edge in negotiating the import of red wine and food items from Europe to Guangxi. This particular story shows us that with determination and tenacity, and by capitalising on the opportunities at home and abroad, young people can build a promising career in various markets and industries, new or traditional.
13. Over the past 35 years, Hong Kong's development owes much to our country's reform and opening up. More than two months ago, the Third Plenary Session of the 18th Communist Party of China Central Committee announced that our country would comprehensively deepen reform and open up further. This will bring new opportunities for Hong Kong. We have to seize these opportunities and properly respond to the changes.
14. The Central Government has announced the goal of basically achieving liberalisation of trade in services between the Mainland and Hong Kong by the end of the National 12th Five-Year Plan period. Both the Ministry of Commerce (MoC) and the Special Administrative Region (SAR) Government attach great importance to the goal and have made continuous efforts to realise it. The MoC and the Guangdong Provincial Government are also pressing ahead to achieve early liberalisation of trade in services between Hong Kong and Guangdong by the end of this year, with active support from the SAR Government. At the same time, the SAR Government has started preparations for the National 13th Five-Year Plan. We have initially identified some issues for study and will submit them to the National Development and Reform Commission for consideration after consulting the relevant sectors and committees.
15. We should capitalise on, consolidate and enhance our existing advantages, strengthen co-operation with the Mainland and overseas economies in every aspect, and foster diversity and robust growth in our industries.
Financial Services
16. Apart from directly creating 230 000 jobs in Hong Kong and contributing 16% of our Gross Domestic Product (GDP), the financial services industry provides a catalyst for the growth of related sectors such as professional and commercial services. Quality financial services also underpin our position as an international business hub. In addition to helping local enterprises seize business opportunities, the financial services industry also attracts Mainland and overseas companies to use Hong Kong as a platform for raising funds and developing regional business.
17. In last year's Policy Address, I announced the establishment of the FSDC to provide a high-level, cross-sectoral platform to advise the Government on ways to further develop Hong Kong's financial services industry. The FSDC has submitted its first set of reports to the Government which analyse the opportunities and challenges for Hong Kong's financial services industry. The reports discuss in detail Hong Kong's future positioning and strategic development as an international financial centre, and put forward proposals in respect of Renminbi business, asset and wealth management, and real estate investment trusts. The Government will examine and follow up on these proposals in collaboration with financial regulators. We expect the FSDC to keep consulting the industry on ways to promote the development of financial services and make further recommendations.
Trade
18. External trade links are crucial to Hong Kong. Currently, the Government has 11 overseas Hong Kong Economic and Trade Offices (ETOs). The Hong Kong Trade Development Council (TDC) and the Hong Kong Tourism Board (HKTB) also have overseas offices or employ local consultants to assist in the liaison and promotion work. Over the years, our overseas ETOs, the TDC and the HKTB have worked closely with each other to promote Hong Kong.
19. The Government will consider increasing the number of ETOs in Asia. The Trade and Industry Department will also strengthen our liaison work and tap new markets.
20. The Government will set up more offices in the Mainland. When we open the ETO in Wuhan in the second quarter of this year, the Government will have a more comprehensive network in the Mainland, with bases at Shanghai in the east, Guangzhou in the south, Chengdu in the west, Beijing in the north and Wuhan in the central region. The Government will set up more liaison units so that each Mainland office will be linked with one or two liaison units. Two liaison units, one in the north under the Beijing Office and another in the east under the Shanghai ETO, will be set up this year and next year respectively. Another liaison unit will be established in the central region some time after the Wuhan ETO has come into operation.
21. The Association of Southeast Asian Nations (ASEAN) provides impetus for regional economic growth in East Asia. With the support of the Central Government, Hong Kong has secured the ASEAN's consent to commence formal negotiations for a Hong Kong-ASEAN Free Trade Agreement early this year. Hong Kong has proposed a scope of negotiations and will actively follow up on the issue.
Tourism
22. Tourism is one of our economy's pillar industries. However, an excessive number or over-concentration of visitors may exert pressure on Hong Kong. The Government completed a comprehensive assessment of our capacity to receive visitors at the end of last year. The healthy development of the tourism sector can create a large number of jobs for lower-skilled workers and facilitate the diversification and growth of our economy. We must expand our receiving capacity, focusing on high-spending visitors, to achieve the greatest economic benefits with limited resources. We must also take appropriate and effective steps to ensure that the daily lives of our people will not be affected. The Working Group on Convention and Exhibition Industries and Tourism under the EDC has pointed out in particular that we must devise and implement a visionary plan for the "Kai Tak Fantasy" project at the Kai Tak New Development Area, a precious tourism and entertainment resource. In addition, with the commissioning of the Hong Kong-Zhuhai-Macao Bridge in the near future, we will actively study the possibility of building more hotels and leisure tourism facilities on Lantau Island.
23. The Government has discussed the Individual Visit Scheme (IVS) and multiple entry permit arrangement with the Central Government over the past year. We have also conveyed the different views of Hong Kong people about the expansion of the IVS. The Central Government has agreed to a temporary freeze on the number of pilot cities for the IVS and the scope of the multiple entry permit arrangement. The SAR Government will continue to communicate and co-ordinate with the relevant Mainland authorities to attract Mainland visitors in an appropriate and orderly manner in light of Hong Kong's economic and social situations.
24. The Government attaches great importance to the reputation of the tourism sector. We are drafting new legislation to set up a Travel Industry Authority and will introduce a bill into this Council in the next legislative session.
Professional Services
25. With a pool of highly qualified professionals and a robust system, Hong Kong has good potential and competitiveness for further global development.
26. The EDC's Working Group on Professional Services has formulated a framework to support the development of professional services. The proposals cover five themes: (i) to strengthen connections with the Mainland and overseas economies to secure more liberalisation measures and conclude more free trade agreements, so as to promote trade liberalisation in professional services; (ii) to promote alignment of the professional systems of the Mainland and Hong Kong, secure recognition of Hong Kong professional qualifications, and enable direct service provision in the Mainland by Hong Kong professionals and enterprises, which will facilitate early access of the professional services sector to the Mainland market and help foster the development of the Mainland's services sector to achieve a win-win outcome; (iii) to give full support to the sector to strengthen its competitiveness, enhance research and development, manpower development and business structure, and promote the Hong Kong brand in professional services; (iv) to explore the feasibility of building a business-friendly information platform and assist Hong Kong's professional services sector to explore business opportunities overseas in order to support the sector's access to emerging markets and key economies; and, (v) to foster the comprehensive development of cross-sectoral professional services and examine the feasibility of providing resource support and advisory services at strategic footholds all over the world.
Logistics Industry
27. The logistics industry has flourished in recent years. Ten hectares of land have been set aside in Tuen Mun West for logistics use. Land will also be earmarked in new development areas for the construction of modern logistics facilities. On air freight, the Hong Kong International Airport (HKIA) has been the world's busiest international cargo airport in the past decade. In the first 11 months of 2013, the HKIA handled 3.7 million tonnes of cargo, an increase of 2.6% over the same period in 2012. In addition, following the full operation of the third air cargo terminal last October, the overall cargo handling capacity of the HKIA has increased by 2.6 million tonnes, further strengthening Hong Kong's position as an international and regional logistics centre. The Government will continue to improve port facilities and enhance the efficiency of port operations, thereby seizing the opportunities brought by the growth of trade in the Mainland and Asia.
High Value-added Maritime Services
28. Hong Kong enjoys a competitive edge in developing quality and international maritime services, such as ship registration, management and broking, shipping agency, ship finance, maritime insurance, legal and arbitration services.
29. The consultancy study on Enhancing Hong Kong's Position as an International Maritime Centre has been completed. The study concluded that Hong Kong is well positioned to develop high value-added maritime services. It also proposed setting up a new statutory maritime body. In the coming year, the Government will work out the specific functions, structure and funding of the proposed new body and consult the industry. We will then take forward the necessary legislative procedures as soon as possible.
30. Amid the rapid development of the aviation industry, manpower training is essential to further strengthening our leading position as the major regional aviation hub. The Government will consider setting up a civil aviation training institute, as supported by the EDC's Working Group on Transportation, to develop human capital for both the local and regional aviation industries, promote exchanges and enhance the safety and efficiency of air services.
Dispute Resolution Services
31. Hong Kong has a fine tradition of the rule of law and a well-developed legal system. The Government will continue to actively promote Hong Kong's legal and dispute resolution services to enhance our status as a centre for international legal and dispute resolution services in the Asia-Pacific region. The Government will strengthen its promotion efforts overseas, continue to co-ordinate the development of mediation services through the Steering Committee on Mediation, and establish an advisory committee on the development and promotion of arbitration services.
Creative Industries
32. Hong Kong's creative industries have great potential. In recent years, they have grown at a faster rate than the overall economy. The Government will strive to enhance their overall competitiveness, especially by nurturing talent, tapping new markets, supporting new enterprises and promoting sustainable development. We injected another $300 million into the CreateSmart Initiative last year to sustain our support for the development of creative industries. In addition, we are reviewing the Film Development Fund to better support the local film industry.
Intellectual Property
33. Knowledge that has commercial value can be protected by law to become property. It can be traded freely, and such trading creates economic activities. In 2012, the Mainland recorded the highest number of filings in major types of intellectual property rights such as patents, trademarks and industrial designs in the world, surpassing that of the United States. A working group led by the Secretary for Commerce and Economic Development is studying ways to promote Hong Kong as a premier intellectual property (IP) trading hub in the region. It has formulated strategies to further explore supporting policies and measures in four areas, namely: (i) enhancing the IP protection regime; (ii) supporting IP creation and exploitation; (iii) fostering IP intermediary services and enhancing manpower capacity; and, (iv) pursuing efforts in promotion, education and external collaboration.
Innovation and Technology Industries
34. Innovation and technology are not only economic drivers, they can also upgrade our quality of life and enhance the efficiency of our community. Promoting innovation and technological development can provide wider employment opportunities for our young people. The Government attaches great importance to fostering the innovation and technology industries. We have given software and hardware support to enterprises and start-ups, and provided financial assistance for universities, research institutions and the industries to commercialise research and development results. We will continue to create an environment conducive to the development of innovation and technology, encourage investment in this area and enhance co-operation among the Government, industry, academia and research sectors.
35. It has been almost 15 years since the Innovation and Technology Fund (ITF) was set up. Through the ITF, the Government finances research and development of applied science, and enhances the technological level of industries. However, the development of science and technology in Hong Kong needs to further advance. The sectors concerned believe that the ITF should be more progressive and proactive in supporting enterprises with research and development as well as commercialisation. The Innovation and Technology Commission started a comprehensive review of the ITF operation in mid-2013. At the same time, the Government and the Hong Kong Science and Technology Parks Corporation are reviewing the effectiveness and long-term development direction of the Science Park and industrial estates.
36. The Working Group on Manufacturing Industries, Innovative Technology, and Cultural and Creative Industries under the EDC is actively studying different topics regarding the future development of creative industries as well as innovation and technology industries in Hong Kong. These topics include incubating start-up companies, assisting them in expanding markets, building brands, nurturing talent, and providing infrastructural support. The Working Group will make concrete recommendations after studies and discussions.
37. I have decided to re-initiate the setting up of an Innovation and Technology Bureau and work with various sectors to formulate the objectives and policies for the development of innovation and technology in Hong Kong. I earnestly hope that it will receive support from this Council.
Lantau Island
38. The Pearl River Delta (PRD) has seen rapid economic development in recent years. In the western PRD, places such as Zhuhai, Zhongshan, Foshan, Nansha and Shunde are endowed with rich resources and have enormous development potential. In the past, Lantau was an outlying island. Today, with the Tsing Ma Bridge, it remains the far end of our west-bound land transport network. When the 55-kilometre Hong Kong-Zhuhai-Macao Bridge and the entire 9-kilometre Tuen Mun-Chek Lap Kok Link are completed in 2016 and 2018 respectively, Lantau will become an essential connecting point for journeys to and from Hong Kong, Zhuhai and Macao. It will link Hong Kong Island, Kowloon, the New Territories and western PRD, and become the converging point of traffic from Guangdong, Hong Kong and Macao. This will bring fundamental change to Lantau's functions and development potential.
39. The artificial island for the Hong Kong-Zhuhai-Macao Bridge Hong Kong Boundary Crossing Facilities (HKBCF) has an area of about 130 hectares. With its proximity to the HKIA, it will serve as a gateway between Hong Kong and western PRD and will take on great value as a "bridgehead economy". The Government has carried out a preliminary review of the supporting infrastructure to explore the feasibility of developing major shopping, dining, entertainment and hotel facilities at the HKBCF. We will conduct a detailed study as soon as possible.
40. The HKIA will reach its full capacity in the next few years. There is an urgent need to construct a third runway to maintain our position as an aviation hub as well as our competitiveness. Planning work is being taken forward at full speed with a view to commissioning the third runway by 2023. The airport's North Commercial District, a large area of about ten hectares, has tremendous development potential and economic value. The Airport Authority Hong Kong is pressing ahead with the comprehensive and full development of the district.
41. The Government will explore ways to further develop the eastern waters off Lantau Island and neighbouring areas, with a view to developing an East Lantau Metropolis for accommodating new population. It will become a core business district in addition to Central and Kowloon East for promoting economic development and providing job opportunities.
42. To prepare the economic and social development strategy for Lantau Island, I have decided to establish a Lantau Development Advisory Committee. The Secretary for Development, in collaboration with relevant bureaux, will solicit proposals through the Committee to capitalise on the benefits brought by major infrastructure projects in the area and the synergy between Hong Kong and the PRD, while striking a balance between development and conservation.
Enhancing Co-operation with the Pearl River Delta
43. The Government will play an active role in the development of the PRD, support the establishment of a free trade zone in Guangdong and work with the province and various municipalities towards mutual success.
Agriculture and Fisheries
44. There is much our agriculture and fisheries industries can achieve provided they move towards high-tech, diversified and sustainable development. We announced last year the setting up of a $500 million Sustainable Fisheries Development Fund to enhance the overall competitiveness and sustainability of our fisheries industry. After extensive consultation with the industry, we have devised the Fund's scope of subsidy, as well as eligibility and assessment criteria. The Fund will be used to help local fishermen identify new fisheries resources and fishing grounds in the South China Sea, develop sustainable fishing operations and leisure fishing in Hong Kong waters, spearhead the modernisation of local aquaculture, promote local fisheries products and their certification, and increase fisheries resources. It will accept applications in the first half of 2014.
45. The Government will review its agricultural policy to enhance productivity and promote sustainable development. This will include introducing modern and environment-friendly agricultural technologies that help conserve our natural resources and the agricultural ecology, so as to supply quality produce to our people and promote the diversified development of the rural areas. Consultation will be carried out within this year.
(To be continued)
Ends/Wednesday, January 15, 2014
Issued at HKT 11:30
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