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Budget Speech by the Financial Secretary (6)

Regional Economy

Fostering Hong Kong/Guangdong/Macao Co-operation

33. The interaction between Hong Kong and the Mainland has been evolving over the past 30 years.  Today the two economies are highly integrated.  My confidence in Hong Kong's future is buttressed by our advantage in having the Mainland as our hinterland.  To effectively and speedily implement and follow-up on the "Outline of the Plan for the Reform and Development of the Pearl River Delta" (the Outline) published by the National Development and Reform Commission in January this year, Guangdong and Hong Kong have agreed to focus on four priority areas of co-operation, namely: the financial industry; service industries; infrastructure and town planning; and, innovation and technology.  At the same time, both sides have proposed to incorporate the concept of transforming the Pearl River Delta (PRD) region into a green and quality living area into the national 12th Five-year Plan.

34. At their first co-ordination meeting, senior officials from the Guangdong, Hong Kong and Macao governments discussed specific actions to implement the Outline and regional co-operation initiatives. The meeting reached consensus on major areas of work.  We will seek to identify economic opportunities in keeping with the Greater PRD region's effort to upgrade its industries. We will capitalise on the opportunities presented by the Outline to increase co-operation among the three places on all fronts so as to set directions and targets that are most beneficial to the long-term development of the Greater PRD region.

35. As a financial, trading and services centre for the region, Hong Kong must strengthen infrastructural link with the Mainland.  We will expedite the study and implementation of various major cross-boundary infrastructure projects, including the Hong Kong-Zhuhai-Macao Bridge, the Guangzhou-Shenzhen-Hong Kong Express Rail Link, the Hong Kong-Shenzhen Airport Rail Link, and the Liantang/Heung Yuen Wai Boundary Control Point.

"Three Direct Links" and Exchanges with Taiwan

36. The SAR Government supports the full implementation of the "Three Direct Links" across the Taiwan Strait.  Although the implementation may weaken certain intermediary roles of Hong Kong in the short term, I believe that in the medium and long term this will further liberalise the trade flows between the Mainland, Taiwan, Hong Kong and Macao.  Hong Kong will maintain its strategic position and reap greater economic benefits from the "Three Direct Links".  I have set up an inter-departmental steering committee to study and co-ordinate overall strategy and action plans on closer economic and trade ties with Taiwan.

37. The Taipei Office of the Hong Kong Trade Development Council commenced operation in late 2008.  It will step up efforts to promote trade and service industries in Taiwan.  Moreover, we are encouraging the industrial and business sectors and Taiwan businessmen in Hong Kong to set up a Hong Kong-Taiwan Business Co-operation Committee to provide opportunities for direct exchanges between enterprises from both places and to foster closer co-operation in areas such as trade, investment and tourism.

Hong Kong-Macao Co-operation

38. Hong Kong and Macao have always had a close relationship and both governments aim to strengthen our ties further.  Co-operation and liaison between the two SARs are now being enhanced by meetings between Hong Kong and Macao jointly chaired by me and Macao's Secretary for Economy and Finance.  The publication of the "Outline of the Plan for the Reform and Development of the Pearl River Delta" has provided more opportunities for co-operation between the two places.  We consider there is a need to strengthen our links with Macao in economic and other areas, especially in tourism and convention business, cross-boundary infrastructure and economic development in order to achieve synergy through complementing each other's strengths.

Promoting Sustainable Economic Development

39. Despite the impact of the global financial crisis and other external factors, we still enjoy a number of advantages, including a sound institutional framework, a large pool of talent, solid commercial fundamentals, and a favourable geographical location.  We will continue to capitalise on our strengths and to enhance the four pillar industries, namely financial services, logistics, tourism, and business support and professional services.

40. Human capital is the most valuable resource for our pillar industries and sustaining our economic edge.  We will continue to invest heavily in education to develop human capital.  The estimated expenditure on education will be $61.7 billion for 2009-10, which accounts for the largest share of government expenditure.

41. As a world city, Hong Kong must nurture biliterate talent and equip the younger generation with the abilities of self-learning, innovation and coping with changes.  In preparation for the new senior secondary academic structure to be introduced this September, we have earmarked about $7.5 billion to provide professional support to secondary schools and support tertiary institutions in preparing new courses and carrying out infrastructure projects.  Upon full implementation of the new structure, an additional annual recurrent funding of about $2 billion will be required to meet the new demand of secondary and tertiary education.  We plan to invest around $950 million in the next few years to implement measures supporting the medium of instruction arrangement for secondary schools and the teaching and learning of English in primary schools.  We also plan to invest an additional $21 million each year starting from the next financial year to promote national education, so as to offer more opportunities for teachers and students to join Mainland exchange programmes and study trips.

42. Measures to promote the co-operation between Guangdong, Hong Kong and Macao will foster economic development, creating ample business opportunities for the logistics and other service industries of Hong Kong.  At the end of last year, I led a business delegation, travelling by land from Nanning in Guangxi through the Friendship Gate to Hanoi in Vietnam.  The purpose of the visit was to increase our understanding of economic conditions and the business environment in these areas.  We explored business opportunities particularly in logistics and professional services.  We will enhance sea, air and land transport networks, including allocating additional resources for air traffic control and enhancing our Shipping Register service, thereby reinforcing Hong Kong's status as a regional logistics hub.  We will also strive to introduce more liberalisation measures for early and pilot implementation in the Guangdong Province under CEPA for service industries in support of the service sectors where we have a competitive edge, and continue to work closely with relevant organisations to give our business sectors greater support in expanding access in the Mainland and overseas markets.

(To be continued)

Ends/Wednesday, February 25, 2009
Issued at HKT 11:34


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