2016 Policy Address by Chief Executive (1) (with photos/video)

     Following is the full text of the 2016 Policy Address - Innovate for the Economy, Improve Livelihood, Foster Harmony, Share Prosperity - by the Chief Executive, Mr C Y Leung, in the Legislative Council today (January 13):

Mr President, Honourable Members and fellow citizens,

I. Introduction

1. Since taking office, the current-term Government has focused its efforts on promoting democracy and boosting the economy.  We have also risen to the challenge and strived to pragmatically address livelihood issues such as housing, elderly care, poverty, support for the disadvantaged and environmental protection.

2. Despite the weak external environment, Hong Kong has achieved moderate economic growth and the Government has recorded satisfactory revenue in the past three years.  In 2014-15, profits tax and salaries tax both reached new highs.  Hence, the Government was able to implement initiatives to improve people's living quality.  In particular, we have devoted considerable effort and substantial resources to poverty alleviation, elderly care and support for the disadvantaged, which has enabled the underprivileged to live with dignity and helped foster harmony in the community.

3. Efforts to develop and increase land supply have begun to deliver results.  Property and rental prices have started to fall, and we can see the first glimmer of hope for solving the housing problem.  Hong Kongˇ¦s living environment, in particular air quality and water quality in the harbour is improving gradually.  They demonstrate the resolve and perseverance of the Government of the Hong Kong Special Administrative Region (HKSAR) in addressing livelihood issues and show effectiveness of our policies.

4. This year marks the start of the National 13th Five-Year Plan and the implementation of the Belt and Road Initiative, as well as the launch of various innovation and technology initiatives.  It will be a year of significant opportunities for Hong Kong's future.  Taking forward plans in hand, all HKSAR Government departments will be heavily engaged in their work.  The Government is determined to join different sectors to seize these rare opportunities that will provide fresh impetus to our long-term economic and social development.

5. The global economy still faces immense challenges.  To overcome the obstacles ahead, our society has a greater need for harmony and solidarity.  Together we will strive for a better life for Hong Kong people.  We will give our young people more career choices and better opportunities for upward mobility.  Joining hands, we will be able to chalk up even greater achievements for Hong Kong.

II. Economy

6. Last year, we saw the worst performance of the global economy since 2009 and the consequential slackening of our external trade.  That said, our economy registered moderate growth and we have an extremely low unemployment rate.  Uncertainties in the external environment will continue to impact on Hong Kong this year.  We must strive for excellence through unceasing efforts to enhance our competitiveness and improve the business environment.  We must promote the restructuring and upgrading of traditional industries, strengthen emerging industries, and widen and deepen our external economic and trade relations.  

7. By leveraging the combined advantages of "one country" and "two systems", industries in Hong Kong, regardless of scale, can perform their role as a "super-connector" to attract foreign technologies and investment.  They can also serve as a platform or partner for Mainland enterprises to "go global".  

Financial Services

8. Hong Kong is already a major international financial centre, and still has immense potential for further development.  The financial sector, an important economic pillar, provides the highest contribution to our Gross Domestic Product (GDP) per capita among all major industries.  In 2013, the financial services industry provided around 230 000 jobs, and accounted for over 16% of GDP.  The Government will continue to seize the opportunities flowing from the reform and opening up of our country and foster the diversification of our financial services industry.  

9. The Shanghai-Hong Kong Stock Connect and mutual recognition of funds will not only help reinforce our status as an international financial centre and a global hub for offshore Renminbi (RMB) business, it will also provide a wider choice of RMB investment products in Hong Kong.  The Government will continue to broaden the legal infrastructure and create a favourable tax environment to consolidate Hong Kong's status as a premier asset management hub in the Asia-Pacific region.  

10. The banking sector launched the e-Cheque service at the end of last year.  The Government is working with the financial sector, scientific research institutions and regulatory authorities to develop Hong Kong into a financial technology hub by providing policies and an environment conducive to the development of the industry.  

11. Since its establishment in 2013, the Financial Services Development Council (FSDC) has made specific recommendations to the Government to enhance the development of our financial services industry.  The Government values the FSDC's recommendations and will endeavour to implement those that are feasible.  The FSDC will conduct policy research with different sectors of the industry, and step up publicity and promotion activities in the Mainland and overseas.  The Government will continue to provide more resources to support FSDC's operation.  To this end, $100 million has been earmarked to implement a three-year pilot scheme for enhancing manpower training for the insurance sector and asset and wealth management sector.  

Transportation Services and Logistics Industry

12. Maritime services and the logistics industry accounted for 3.3% of GDP in 2013 and around 190 000 jobs.  

13. To further strengthen Hong Kong's edge as a major regional aviation hub, the Airport Authority will establish a civil aviation academy to nurture local and regional aviation management talent.  The Government is formulating measures to develop Hong Kong into a centre for aerospace financing.  

14. A high-level advisory committee has been formed under the Transport and Housing Bureau to help monitor the implementation of the three-runway system project at the Hong Kong International Airport by the Airport Authority.  

15. On maritime services, the Government has decided to merge the existing Maritime Industry Council and the Port Development Council to form a new Hong Kong Maritime and Port Board.  The Board, to be chaired by the Secretary for Transport and Housing, will promote manpower development, marketing and research on all fronts to develop a high value-added maritime services sector.  It will also assist the Government to formulate strategies and policies to enhance Hong Kongˇ¦s status as an international transportation centre and, in particular, to spur further growth of the maritime services cluster.  

16. To raise the quality of local and regional rail services, the MTR Corporation Limited (MTRCL) will set up an academy to train personnel in rail management and operation.  The Government welcomes the plan as it will further the development of the local transport professional services and support the Belt and Road Initiative.  


17. Tourism is a major industry in Hong Kong.  It accounted for 5% of GDP in 2013 and provided nearly 270 000 jobs.  However, we should not merely focus on the growth in tourist numbers.  Last year, I stressed that we should pursue a balanced, healthy and long-term development of the tourism industry, and move towards diversified and high value-added services.  While promoting tourism, the receiving capacity of various districts should also be considered.  In light of the above, the "one trip per week" Individual Visit Endorsements for residents of Shenzhen was implemented last year.  

18. Last year, the Hong Kong Tourism Board (HKTB) was asked to step up its overseas publicity efforts, especially in Southeast Asia.  To this end, $80 million was allocated to the HKTB.  A matching fund of $10 million has also been set up to support the overseas promotion efforts of our tourist attractions.  

19. These measures have begun to deliver results.  The overall number of tourists is largely stable.  Total visitor arrivals in 2015 fell slightly by 2.5% over 2014.  While there was a drop in inbound visitors from the Mainland, the visitors from other places, including Southeast Asia and long-haul destinations, showed signs of a pick-up with a year-on-year increase of about 5% in the fourth quarter last year.  

20. To move our tourism industry up the value chain, the Government will highlight the unique and diversified experiences Hong Kong offers and showcase our gourmet culture.  It will also promote cultural and creative tourism, organise mega events, and draw more conventions and exhibitions to Hong Kong.  In addition to taking forward planning studies on the Tourism Node at Kai Tak and Lantau, the Government is discussing the further development of the Hong Kong Disneyland Resort, including the Phase 2 expansion.  

Professional Services

21. Professional services accounted for 4.8% of GDP in 2013 and provided around 200 000 jobs.  Of these services, dispute resolution services have room for development and will enhance Hong Kong's competitiveness and image as a global financial, trade and business centre.

22. Good progress has been made in developing Hong Kong as an international legal and dispute resolution services centre in the Asia-Pacific region.  Apart from local organisations, related institutions at both international and regional levels, including the International Court of Arbitration of the International Chamber of Commerce, the China International Economic and Trade Arbitration Commission, the Hague Conference on Private International Law and the China Maritime Arbitration Commission, have set up offices or arbitration centres in Hong Kong.  In addition, in relation to the conduct of dispute settlement proceedings in the HKSAR by the Hague-based Permanent Court of Arbitration (PCA), the Central Government signed the Host Country Agreement and the HKSAR Government signed the related Memorandum of Administrative Arrangements with the PCA respectively last year.  The Department of Justice (DoJ) will continue to take forward the related work.  

Creative Industries

23. Cultural and creative industries employed some 210 000 people in 2013 and accounted for about 5.1% of GDP.  Development of these industries will help further diversify our economy.  The Government will inject an additional $400 million into the CreateSmart Initiative to develop creative industries and, in particular, nurture start-ups and talent.  

24. The Government plans to increase the admission quotas of the Design Incubation Programme.  From this year, pilot measures will be rolled out over three years to boost promotion of local fashion design and brands, provide technical training and support for the trade and launch the Fashion Incubation Programme.  

25. The Government continues to foster the development of the film industry, including encouraging more local film production, nurturing new talent, building up audiences and promoting the Hong Kong film brand.  We will also work to attract overseas production crews to use Hong Kong as a base for location filming, production and post-production activities.  The Government is actively considering the option of requiring developers to include cinemas in their development projects as appropriate in the terms and conditions of the land lease.  

Intellectual Property Industry

26. The total value of exports and imports of services related to the use of intellectual property (IP) has increased significantly in recent years and reached $20.2 billion in 2013.  The Government will continue to strengthen Hong Kongˇ¦s status as an IP trading hub.  

27. With increasing IP transactions, there is growing demand for dispute resolution services.  The DoJ will help strengthen Hong Kong's status as an international IP arbitration and mediation centre and consider amendments to relevant legislation.  

Agriculture and Fisheries

28. The value of agriculture goes beyond its economic contribution.  Developing local agriculture not only increases choices in terms of origin of food, it also helps optimise land use, improve the environment and hygiene in rural areas, and conserve the natural ecology.  The Government has decided to implement the New Agriculture Policy.  Major measures include establishing an Agricultural Park, exploring the feasibility of designating agricultural priority areas, setting up a $500 million Sustainable Agricultural Development Fund, providing better support and assistance to help farmers move up the value chain, in areas such as product marketing and brand building, and developing leisure and educational activities related to agriculture.  

29. So far, the Sustainable Fisheries Development Fund has granted subsidies totalling $28 million.  The Government will continue to encourage the use of the fund to provide technical support and training for those engaged in fishery operations, including the fishing and aquaculture industries.  

The National 13th Five-Year Plan

30. The Government attaches great importance to the National 13th Five-Year Plan and is participating actively in preparatory work under the principle of "one country, two systems".  The Steering Committee on Co-operation with the Mainland chaired by the Chief Secretary for Administration has been providing steer to and co-ordinating with relevant departments on relevant work.  

31. The Proposal on Formulating the National 13th Five-Year Plan promulgated by the Central Authorities in November last year expressed clear support for Hong Kong in leveraging our unique advantages to enhance our role and functions in our country's economic development and opening up to other countries, as well as in consolidating our status as international financial, transportation and trade centres, and in participating in our country's two-way opening up and in the Belt and Road Initiative.  The Proposal clearly supports Hong Kong in strengthening our status as the global offshore RMB business hub and in promoting high value-added financing services, business and commerce, logistics and professional services, etc..  At the same time, the Proposal states that the Mainland will step up efforts to further open up its markets to Hong Kong and Macao and expedite development of Guangdong-Hong Kong-Macao co-operation with particular regard to Qianhai, Nansha and Hengqin, etc., and enhance co-operation and exchanges between the Mainland and Hong Kong/Macao in the areas of social policies, livelihood issues, technology, culture, education, environmental protection, etc., as well as deepen regional co-operation in the Pan-Pearl River Delta Region.  

32. In line with the policy of "what the country needs, what Hong Kong is good at", the Chief Secretary for Administration will continue to lead various departments to fully demonstrate our role as the "super-connector" for our country, actively implement related policies and grasp new opportunities in the coming five years.  

Forging Closer Ties and Co-operation

33. The current-term Government strives to expand the network and enhance the functions of its offices in the Mainland, and will establish six more liaison units.  The aim is to have two liaison units under every Mainland office.  The Economic and Trade Office (ETO) in Wuhan will set up two liaison units this year, one in Hunan Province and another in Henan Province.  The Government will set up an Immigration Division under the Shanghai ETO and deploy dedicated staff to the Beijing Office to handle cultural matters.  Bureaux and departments will continue to foster diverse exchanges and co-operation with the Mainland.

34. The paragraphs relating to the HKSAR in the Proposal on Formulating the National 13th Five-Year Plan states that regional co-operation should be strengthened and Guangdong-Hong Kong co-operation is of utmost importance in this regard.  Currently, apart from the Hong Kong-Guangdong Cooperation Joint Conference co-chaired by me and the Governor of Guangdong Province, the three Guangdong Pilot Free Trade Zone regions, i.e. Qianhai, Nansha and Hengqin, also come under the auspices of the Hong Kong-Shenzhen, Hong Kong-Guangzhou and Hong Kong-Zhuhai co-operation meetings respectively.  These high-level co-operation meetings work to deepen sustainable collaborated development to capture immense opportunities.  The three regions each has its own unique characteristics, with Qianhai serving as the Shenzhen-Hong Kong Modern Service Industry Cooperation Zone; Nansha, with the largest physical area, focusing on promoting Guangdong-Hong Kong in-depth co-operation and establishing a technology and innovation transfer platform between the two places; and Hengqin attaching importance to development of cultural, creativity, tourism and leisure industries.  Having accumulated considerable international experience in these aspects and with a rich pool of professional talents, Hong Kong will be able to enhance our co-operative partnerships with Guangdong Province and the three regions under the principle of "one country, two systems", thus providing better and greater opportunities for Hong Kong people and enterprises.  

35. On the principle of achieving mutual benefits through active participation and joint planning, the Guangdong Province intends to draw on Hong Kong's experience in economic development and social management services when establishing the Guangdong-Hong Kong in-depth co-operation zone in Nansha.  The HKSAR Government will provide advice on planning concepts and other areas to Guangdong.  

36. The Government will also continue to negotiate with Macao on the establishment of a closer economic partnership arrangement.

37. On investment protection agreements, the Government will continue to negotiate with Russia, Chile and the United Arab Emirates, and will commence negotiations with Mexico this year.

(To be continued)

Ends/Wednesday, January 13, 2016
Issued at HKT 11:24