Speech by CE at Joint Business Community Luncheon 2015 (English only) (with photos/video)

     Following is the speech by the Chief Executive, Mr C Y Leung, at the Joint Business Community Luncheon 2015 held at the Hong Kong Convention and Exhibition Centre today (February 9):

     Thank you, Eddy. Ladies and gentlemen, good afternoon.

     I was on my feet for two solid hours a month ago in the LegCo Chamber reading out my Policy Address. Please relax this afternoon. It's not going to take that long.

     The theme of this year's Policy Address is "Uphold the rule of law, seize the opportunities, make the right choices". Our ultimate goal is to pursue democracy, boost the economy and, of course, improve people's livelihood. We firmly believe that a robust economy is the prerequisite for improving the people's livelihood. It is also the prerequisite to give Hong Kong the resources to deal with issues relating to housing, ageing society and the environment. Without a thriving economy and the resources it provides, all policy initiatives will be nothing but empty wishes. I therefore warned in the Policy Address against any complacency about the importance of economic development. Again I put the chapter on making money, namely the economy, before the chapters on spending money. And I set out a considerable set of initiatives to broaden our economic base and sustain our short- and long-term growth.

     The Hong Kong economy by and large has been doing well, given the slowdown on the Mainland and in the world at large. Our employment levels, and earnings, make a persuasive statement. In the fourth quarter of last year, Hong Kong's unemployment rate was at a low 3.3 per cent, and income growth rose across a variety of sectors and occupations. Average private-sector labour earnings in the first three quarters of 2014 rose 4.4 per cent, year on year. In particular, professional and business services, as well as finance and insurance, enjoyed notable payroll growth - about 7 per cent, year on year, through the first three quarters of 2014.

     We have, of course, our share of short- and long-term challenges. But we are dealing with them, putting together the policies and plans that can enhance Hong Kong's enviable place at the centre of Asia. Collectively, they speak of this government's commitment to boosting the economy and improving people's livelihood. That underlying agenda was at the heart of my Election Manifesto, and indeed the Policy Addresses in the past three years.

     In this year's Policy Address, I emphasised the need to diversify our economy. That demands creativity and innovation. Thankfully, we've got plenty of both. Cornell University's latest Global Innovation Index, to take one example, ranked Hong Kong among the top 10 in a survey of some 140 economies. We have also just been named by the Heritage Foundation as the freest economy of the world, 21 years in a row. Our free and innovative economy gives us ample space to build a fairer community for all.

     What we need to do is harness our innovation more collectively and effectively. Working with industry, academia and the research sector, we can create new opportunities in research and development, intellectual property, and science and technology.

     It's with this in mind that I'm injecting $5 billion into the Innovation and Technology Fund. I hope, too, that the opposition members of LegCo will come to their good sense, stop filibustering, ask the real questions, and approve the proposed Innovation and Technology Bureau, ITB. For Hong Kong to remain competitive, we need to provide the dedicated strategic leadership and co-ordination on innovation activities. ITB would be the key driver for Hong Kong's innovation in the years to come. And we are asking for a budget of only $35 million a year.

     When the two departments move across to the new ITB, the leadership of the Commerce and Economic Development Bureau will be able to focus more on matters such as strategising our positions under the 13th Five-Year Plan and in the new Free Trade Zones in Guangdong. It will also be able to devote more time and energy to forging stronger trade and economic ties with other countries, including negotiating the Free Trade Agreements with the ASEAN countries.

     Apart from innovation, we will continue to drive the growth of our pillar sectors: trading and logistics, tourism, the financial services, and professional services.

     When it comes to trade, we are justly proud of the global success of Hong Kong - the world's eighth-largest trading economy. And all from a city of just over 7 million.

     About half a million Hong Kong people energise the import, export and wholesale trading companies. And we will continue to help them find Mainland markets - through our $1 billion dedicated fund, brand-building initiatives and operation upgrading support.

     Fortune magazine offered a revealing spotlight on the Global 500 earlier this month. A decade ago, according to the publication, more than 40 per cent of the world's 500 biggest corporations were based in North America. Western Europe followed. Today, Asia boasts more Global 500 companies than North America. As for China, it also counts more than Germany, England and France combined. As the great eastward migration continues, Hong Kong stands to be among the biggest winners.

     We are, after all, armed with the double advantages of "One Country" and "Two Systems". With these advantages, we are the unique super-connector, between the Mainland and the rest of the world. When you are in Hong Kong, you are in China, but you are in a very special part of China that offers systems different from the other 660 Chinese cities. Any business operating in Hong Kong enjoys the benefits of being close to the fastest growing major economy in the world. And any business operating in Hong Kong enjoys at the same time the freedoms that Hong Kong is well known for, plus the rule of law, independent judiciary and the common use of the English language.

     That role will only grow in the years to come, creating opportunities for Hong Kong business and global companies that work with us. That super-connector role will also spread from trade and logistics and financial services to the traditional professional services, maritime services and innovation and design, which I highlighted in my Policy Address.

     Next month, the Central Government will formally announce the establishment of the pilot free-trade zones in Guangdong, Fujian and Tianjin. The Guangdong zone will cover Nansha, Hengqin and Qianhai. These free-trade zones, which follow the lead of the Shanghai Pilot Free Trade Zone, will deepen Mainland reform, promoting trade and investment throughout the country.

     Hong Kong is already the biggest investor in the Mainland, and that includes Guangdong Province. And Nansha, Hengqin and Qianhai are major co-operation projects for Hong Kong, thanks to the 12th Five-Year Plan. Given our long-standing business ties in the Mainland, particularly Guangdong, the new free-trade zones are sure to expand opportunities for Hong Kong companies. Your government has been proactively working closely with the Guangdong Provincial and Municipal authorities to map out a strategy that will benefit both sides. We are expecting a public announcement of some more details by the Mainland side in the next few weeks.

     For the tourism sector, we are moving ahead with a "hotel belt" alongside the Kai Tak Cruise Terminal. And we are actively considering the construction of a new convention centre by about 2020 to better position Hong Kong as the region's exhibition and trade-fair hub.

     In one way or another, financial services powers Hong Kong, one of the world's major financial centres. Hong Kong is also China's international financial capital. The sector employs 6 per cent of the workforce and contributes about 16 per cent of our GDP. While we recognise the need to broaden the base of the economy, we should never neglect the importance of this sector. More importantly we should never underestimate the competition. We have to run to stand still.

     The Shanghai-Hong Kong Stock Connect, launched just three months ago, is just the latest example of promise realised, of what this bold and ambitious sector can accomplish. We are now working on the Shenzhen-Hong Kong Stock Connect and hope to launch it in the second half of this year.

     But we have to expand our talent pool. If we don't, or if we can't in time, out growth will be constrained. Last month, the Financial Services Development Council produced a report dealing with the difficulty in finding enough financial services professionals in mid- and back-office operations. The Council has offered a number of initiatives to remedy the shortfall. We are giving serious consideration to the implementation of these recommendations.

     Our construction industry faces manpower challenges too. There are just not enough skilled workers to fill the jobs. The shortage of construction labour will constrain our supply of public housing units, old people's homes, school places, roads and railways and hospital beds. Experience has shown that delays will cost money and more money.

     We will consider launching further enhancement measures to the Supplementary Labour Scheme to address the demand for skilled labour without further delay. But the importation of labour will be done in ways that do not harm the interests of the local workforce. Together with the Construction Industry Council, we're working to upgrade the skills of our local workers and attract new entrants to the industry. In addition, I have earmarked in my Policy Address $100 million for the Council to strengthen its manpower efforts. We are also setting up a Construction Industry Recruitment Centre. It will provide career counselling, on-the-job interviews and, in general, help maintain our priority of employing local skilled workers.

     In short, expanding local manpower and boosting our pool of business professionals are central to sustaining our economic and social development. I spoke about this in the Policy Address, noting that our ageing society and smaller workforce are issues that must be recognised and tackled if Hong Kong is to fully realise its potential.

     In the Policy Address, I also laid out a multi-prong population strategy. Devised by the Steering Committee on Population Policy, the measures include:

* A concerted focus on local labour. We are extending the retirement age of civil servants and encouraging other employers to review their retirement-age policies. We are also increasing support to women who wish to work, quadrupling, to some 6,200, the number of subsidised child-care centres offering extended hours.

* With LegCo's approval, the Statutory Minimum Wage will increase to $32.50 an hour. Aside from benefiting thousands of lower-income employees, it will encourage more people to join the workforce. Here, I must share an encouraging fact with you. In the past five years, the number of people receiving CSSA on account of unemployment has fallen by 16,200 persons, a decrease of 47 per cent.

* We need, as well, to entice overseas talents to join us. We have created a pilot programme that is designed to attract the second generation of Hong Kong permanent residents who have emigrated overseas. We're also relaxing our stay arrangements to encourage talents to establish themselves here. In addition, we are considering creating a talent list to draw global talents to Hong Kong. We need all of them to help diversify our economy.

     The best and the brightest, of course, have their own needs and demands. And these often go beyond the job and its perks. Education can be a decisive issue. In this, I'm pleased to note that our School Allocation Exercise will soon be completed. Its goal is to create 1,250 more international school places by the 2016/17 school year - and 2,100 more by the 2018/19 school year.

     The environment is another significant factor. Here, I'm pleased to say, we're making notable progress. Over the past five years, scientific data tell us that our air quality has been improving. And, as I outlined in my Policy Address, all sea-going vessels will soon be required to use only low-sulphur diesel in Hong Kong waters.

     As for roadside pollution, we are designating three high-traffic areas - Causeway Bay, Mong Kok and Central - as low-emission zones for our franchised buses. They account, by the way, for a major share of traffic in these areas. Later this year, single-deck electric buses will also be tested.

     Ladies and gentlemen, everyone in Hong Kong deserves the same chances for a happy and rewarding life. The same opportunities for education, for jobs, security and, yes, housing.

     As I emphasised in the Policy Address, "Housing is the most critical of all livelihood issues" for us. For all of us, rich and poor, young and old, families, couples and individuals. Because of its all-encompassing impact, I count on your support in moving our land and housing initiatives forward, in helping achieve our target of building 480,000 public and private residential units in the coming decade.

     Because this Government believes in a caring society, because we are determined to realise - to the best of our abilities and resources - an inclusive community, my Policy Address also focused on the disadvantaged. On families and children in need, students with special education requirements, people with disabilities, ethnic minorities and new arrivals, and our elderly.

     For our elderly, our strategy is active ageing. The Elder Academy Scheme, together with about 200 elderly centres, will help. We are, as well, looking at expanding our university degree places in medicine, dentistry and other health-care specialties.

     I've also asked the Financial Secretary to set aside $50 billion to help protect Hong Kong people in need after retirement. It underscores this government's commitment on retirement protection.

     Constitutional development is no less important to Hong Kong society, to ensure that the people of Hong Kong play a critical role in shaping their future, our future.

     We have a historic opportunity in the next few months, an opportunity to give the 5 million eligible voters in Hong Kong the right to vote for their Chief Executive candidate, for the first time in Hong Kong's history. To change the method of electing the Chief Executive from the present Election Committee method, Annex I of the Basic Law requires that, I quote, "such amendments must be made with the endorsement of a two-thirds majority of all the members of the Legislative Council and the consent of the Chief Executive, and they shall be reported to the Standing Committee of the National People's Congress (NPC) for approval". Unquote. I have gone on record to say that I am committed, so my consent as Chief Executive is not an issue. The NPC Standing Committee has also given its green light in its Decision on 31st August last year. Now all eyes are on LegCo.

     Ladies and gentlemen, the new Lunar New Year is almost upon us. We all know the new year will be eventful. No doubt, there will be disagreements, large, small and everywhere in between, among us. Among the good people of Hong Kong. But I also know that Hong Kong will continue to create, attract and realise a wealth of opportunity. That our economy, and our community, will continue to be the beneficiaries.

     I wish each and every one of you good health, prosperity and much happiness in the Lunar New Year.

     Thank you very much.

Ends/Monday, February 9, 2015
Issued at HKT 16:29