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Budget Speech by the Financial Secretary (9)

Tapping New Markets

106. Apart from promoting pillar industries and developing traditional businesses, we must tap new opportunities and markets.

Creative Economy

107. In last year's Policy Address, the Chief Executive indicated the new direction of accelerating the development of our creative economy.  Hong Kong enjoys a leading edge in many areas of the creative economy in the region.  There are now more than 170 000 people working in creative industries, with total value-added exceeding $53 billion a year.  The potential of the creative economy is immense.  To accelerate and expand its growth, however, we must expand the market abroad.  It is therefore of paramount importance for us to promote the achievements and brand names of our creative industries both in the Mainland and overseas.

108. Last November, to help our creative industries expand access in the Mainland market, the Secretary for Commerce and Economic Development led a delegation to Shanghai and to participate in an international exhibition on creative industries.  We will continue to work with the industry to carry out promotions abroad and in the Mainland.  Such promotion work includes coordination of the industry¡¦s participation in the China International Cultural Industry Fair to be held in Shenzhen this May, and the organisation of roving exhibitions for the "9707 Project", an impressive local design project that marked the 10th anniversary of reunification of Hong Kong with China.  The exhibitions will be staged in four major cities in Europe and the US to showcase the achievements and brand names of Hong Kong¡¦s design industry.

The World Exposition 2010 Shanghai China

109. The World Exposition 2010 Shanghai China (Expo 2010) is an excellent opportunity to promote Hong Kong's quality city life and its position as a creative capital.  In collaboration with the local creative industries we will participate in this event.

110. We are now holding a competition on the design concept of the Hong Kong Pavilion.  We have invited local professionals in the architectural, planning and design sectors to enter the competition so as to attract the best design concepts.  The winning entries will be adopted for detailed design of the Hong Kong Pavilion.  We have earmarked $69 million for designing and constructing the pavilion.

111. We are also applying to take part in the "Urban Best Practice Area" at Expo 2010.  About 30 cities with best practice cases will be selected for this area.  We will take this opportunity to showcase our achievements in urban living, which will also help to promote Hong Kong's brand names and tap new markets.

Wine Trading and Distribution Businesses

112. I now turn to wine trading and distribution businesses.  According to industry estimates, total spending on table wine in the Asian economies excluding Japan is around $55 billion, which accounts for about seven per cent of the global market.  The industry forecasts that there will be a considerable growth in table wine spending in this region and that the economies with the largest growth will include the Mainland, Hong Kong, Singapore, South Korea and Taiwan.

113. Hong Kong's advantageous geographical location, advanced transport and logistics infrastructure and rich experience in international promotion are favourable to the development of trading, storage and distribution of quality table wine. 

114. Currently, London is the trading and distribution centre of quality table wine for the world.  The industry indicates that many of the businesses there are owned by Hong Kong companies.  It is expected that by developing the various businesses in Hong Kong relating to quality table wine, our total business volume in trading, storage and auction of table wine may increase by as much as $4 billion.  We believe that, in the long run, this will create more favourable conditions for the development of such economic activities as catering services, tourism, brand promotion and exhibitions, table wine appreciation and related educational activities that can achieve synergy with table wine trading and create new jobs.

115. After taking into account the development potential and the job opportunities that can be created, I believe that we should support the further development of these businesses in Hong Kong.  The industry has indicated that the current duty on alcoholic beverages and the related administrative controls are the major obstacles to the development of the businesses.  I propose to exempt the duties on wine, beer and all other alcoholic beverages except spirits with immediate effect, and remove the related administrative controls upon amendment of the relevant legislation, so as to facilitate the import, export and storage of these alcoholic beverages.  The proposal will cost the Government about $560 million a year.

Developing Human Capital

116. The Government has been investing heavily to develop human capital, the most important resource in a knowledge-based economy.  Expenditure on education exceeds $50 billion a year, accounting for about one quarter of total government recurrent expenditure.  Education is the policy area that takes up the largest share of government resources.  As the resources we put into education are long-term investments that enhance the quality and productivity of our population, we will maintain our commitment in this area.

12-Year Free Education and Small-Class Teaching

117. As announced in last year's Policy Address, we will offer free senior secondary education from the 2008-09 school year.  Under the new senior secondary education structure, free education will be extended from nine to 12 years, and the additional expenditure on education for each school year will amount to $1.2 billion.  The Policy Address has also announced that small-class teaching will be implemented in primary schools in phases from the 2009-10 school year.  We will provide adequate resources in future Budgets to support this policy.

Research and Development

118. Diversified research and development (R&D) activities are essential to sustain economic growth and enhance competitiveness.  Research stimulates new ideas, and research-based innovation can promote high value-added economic activities.  The basic and applied research conducted by tertiary institutions helps other research institutes and the business community to master and apply new knowledge.  This is crucial to the sustained growth of our knowledge-based economy.

119. Therefore, our investment in this area is of great importance to Hong Kong.  In this connection, I propose two measures.

Places for Postgraduate Research Programmes

(a) First, I propose to provide 800 additional publicly funded places for postgraduate research programmes in phases from the 2009-10 school year.  This will incur additional expenditure of nearly $300 million a year;

Research Endowment Fund

(b) Second, I intend to provide a one-off grant of $18 billion to establish a Research Endowment Fund.  The Fund and its investment earnings will replace the existing annual funding granted by the Government to the Research Grant Council of the University Grants Committee.  Moreover, part of the funds will be used to finance appropriate research projects on specific themes.  I believe that the Fund will not only affirm the Government¡¦s continued support to R&D activities, but also provide steady, additional resources through its investment earnings for the institutions to conduct such activities.

(To be continued)

Ends/Wednesday, February 27, 2008
Issued at HKT 12:04


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