******************************

The Financial Secretary, Mr Henry Tang, said after chairing his first meeting of the Task Force on Employment today (September 3) that the Hong Kong economy was likely to recover further in the latter part of this year.

"Local consumer spending and inbound tourism were dampened considerably during the outbreak of SARS, leading to a visible slowdown of overall economic activities in the second quarter of 2003. Yet, exports of goods continued to fare strongly, thereby compensating this setback.

"With SARS brought under control, a steady pick-up is being observed in inbound tourism and related sectors, as well as in local consumer spending. With our enhanced co-operation with the Pearl River Delta, the conclusion of CEPA [the Mainland and Hong Kong Closer Economic Partnership Arrangement], the expansion of the programme to allow residents of more Mainland cities to visit Hong Kong in their personal capacities, as well as the gradual return of long-haul international travellers, Hong Kong's economic situation is likely to improve," Mr Tang said.

"Having regard to the current pace of upturn, the forecast growth rate in real terms of GDP for 2003 is revised upward from 1.5% to 2%. The continual improvement in the economic situation will have a positive effect on employment," he added.

Mr Tang pointed out that as an indicator of an improving labour market, there was a substantial 60% increase in the number of vacancies recorded at the Job Centres of the Labour Department in July this year as compared with the previous month. More important, the bulk of the new vacancies were from the private sector.

"It is encouraging to note that for the month of August, the number of new vacancies from the private sector registered with the Labour Department not only continued on an upward trend, but also represented the largest monthly figure ever recorded by the Department. Altogether, some 24,600 private sector vacancies were captured in August as against 21,700 in July. Compared to the usual daily average of 600 to 800 vacancies received by the Labour Department, the figure increased considerably to 1,000 in August. Furthermore, many of the newly received vacancies were from new employers, in particular small and medium sized enterprises. This reflected the growing recruitment needs of employers, along with the revival in economic activities," Mr Tang said.

Members were also briefed on the work of Invest Hong Kong. Since its establishment in 2000, Invest Hong Kong has assisted over 350 foreign companies setting up here, resulting in the creation of over 4,750 new jobs. While most of these companies may start on a small scale with only a few staff, additional job opportunities will be created after they have gained a solid foothold and grown steadily.

Invest Hong Kong plans to increase joint marketing activities with Pearl River Delta cities and boost efforts to attract Mainland companies to establish offices in Hong Kong. With its new promotion strategy, the department expects to complete successfully some 200 projects in 2004, compared with 117 projects in 2002 and 99 in 2001.

As part of the Government's overall effort to revive the local economy, Mr Tang reiterated the Government's commitment to attracting foreign investment.

"In promoting Hong Kong as a world-class city for doing business, Invest Hong Kong will continue to play an active role to attract more foreign corporations to do business in and with Hong Kong," he said.

End/Wednesday, September 3, 2003

NNNN