"The common goal of our community is to achieve long-term prosperity and stability. The most important task of the Administration is to lead Hong Kong out of the present economic difficulties and restore people's confidence in their future. This is our greatest challenge."

In the first Policy Address of his second term as Chief Executive of the Hong Kong Special Administrative Region, the Honourable TUNG Chee Hwa, has highlighted the following measures to revitalise the economy:

Promoting Economic Recovery
"Backed by the Mainland and engaged globally, we are building Hong Kong as Asia's World City."

"We will reinforce our strengths in our four main economic pillars-finance, logistics, tourism and producer services sectors. We should also capitalise on the rapid development of our Motherland to hasten our economic restructuring. These are important tasks, necessary not only for economic needs, but also for discharging our responsibilities and making good our pledges to the community."

Improving the Business Environment
"To overcome our economic difficulties, we must strive to attract foreign investment, retain domestic investment and boost local economic activities with a view to broadening our production capacity, creating employment, and expanding our tax base."

• Set up a high-level task force to examine new ways to further improve Hong Kong's business environment and enhance administrative efficiency, and put forward policy recommendations

Enhancing Core Industries

• Strengthen Hong Kong's role as a major international financial centre in Asia and the premier capital formation centre of China
• Improve our market structure and corporate governance to meet international standards
• Promote the development of the bond market and fund management businesses; facilitate the development of new financial products
• Further promote re-exports and develop Hong Kong as a multi-modal trade management and operations centre
• Facilitate the logistics developments at Hong Kong International Airport. Build a modern logistics park on North Lantau Island
• Enhance Hong Kong's information connectivity and upgrade the necessary infrastructure
• Start feasibility studies on Container Terminal 10 as soon as possible
• Attract more Mainland enterprises and multinational corporations to set up offices in Hong Kong
• Enhance our convention and exhibition facilities
• Enrich our cultural, recreational, sports and arts activities; preserve and promote our heritage and cultural relics to consolidate Hong Kong as a premier tourist destination

Encouraging Diversified Development
"The knowledge and wisdom of Hong Kong people, their innovative entrepreneurial spirit and agility combine to form a sound foundation for the development of creative industries."

• Devise a concrete plan to promote and facilitate the development of creative industries
• Actively support small and medium enterprises
• Promote the development of the local community economy

Human Resources Development
"Our people are our most valuable resource and the key to the development of a knowledge-based economy."

• Continue to invest in education; develop our own local human resources and encourage continuing education
• Facilitate Mainland talent and professionals to work and live in Hong Kong
• Attract Mainland entrepreneurs to invest in Hong Kong
• Promote cross-boundary professional services to accelerate Hong Kong's transition to a knowledge-based economy
• Encourage more overseas investors to settle in Hong Kong

Forging Closer Economic Co-operation with the Mainland

"We must seize these opportunities to elevate Hong Kong from its traditional role as an intermediary to a major hub connecting the Mainland and the international markets.

We can do this by supporting the Mainland's economic development and the opening up of its economy. At the same time, we will enhance our position as the financial and commercial centre of China."

Promoting Closer Co-operation

• Speed up discussions on Hong Kong entering into a Closer Economic Partnership Arrangement with the Mainland with a view to reaching an arrangement on the main parts by June 2003
• Aim to complete cross-boundary clearance on both sides within 30 minutes for passengers and 60 minutes for goods vehicles
• Improve conditions at Lo Wu and Sha Tau Kok
• Implement 24-hour passenger clearance at Lok Ma Chau/Huanggang from 27 January
• Accelerate the construction of the Shenzhen Western Corridor for target completion in the latter half of 2005
• Complete as soon as possible the Sheung Shui to Lok Ma Chau Spur Line to link up with the Huanggang Underground Railway
• Study with the Central Government further relaxation of restrictions to facilitate Mainland residents visiting Hong Kong, including allowing residents within Guangdong to visit in their personal capacity

Expediting Economic Integration with the Pearl River Delta (PRD)
"Today, much of the global competition is a contest of integrated strengths among different economic regions. A city is simply not strong enough to compete on its own. To advance its competitive edge, Hong Kong must pool its strengths with other cities in the region."

• Make the PRD the economic hinterland supporting development in the rest of the country
• Consolidate current achievements and venture into new areas of co-operation with the PRD
• Facilitate a study by the State Development Planning Commission into the feasibility of a bridge linking Hong Kong to Macau and the western part of the PRD
• Enhance Hong Kong's role as an international centre of business and trade by encouraging enterprises from the PRD and the US, Europe and Japan to set up offices in Hong Kong
• Promote the economic potential of Hong Kong and the PRD in the international arena

Decisive Action to Eliminate the Fiscal Deficit

"If not tackled immediately, it [the fiscal deficit] will become an insurmountable obstacle to our efforts to ride out the current economic difficulties. Therefore, solving the deficit problem is the Government's top priority."

"I have the responsibility, confidence and determination to take all necessary steps to progressively achieve fiscal balance within five years. We will proceed on the basis of a community consensus on responsibility sharing, fairness and reasonableness."

• Boost economic growth, cut public expenditure and raise revenue
• Reduce by $20 billion the Government's estimated operating expenditure of $220 billion by 2006-2007
• Reduce the civil service establishment by 10% to about 160 000 through natural wastage and normal retirement by 2006-2007
• Freeze the recruitment of civil servants across the board with effect from 1 April 2003
• Launch the second phase of the Voluntary Retirement Scheme as soon as possible
• Setting an example, the Chief Executive, the 14 Principal Officials, the Director of the Chief Executive's Office and the Head of the Central Policy Unit, will take a 10% pay cut from 1 April 2003

"For ourselves and our next generation, I sincerely hope we can all put the community's common interests first when we proceed along this path of development. We are all in the same boat and should, therefore, support and care for one another. We should, in particular, show our sympathy and do our best to take care of the disadvantaged in the community."

"We do not underestimate the challenges in pushing for restructuring and revitalising our economy. But we need to look beyond the immediate problems to see the bright future that lies ahead. The SARG and I are confident, determined and certain that we can lead Hong Kong out of its current difficulties and accomplish the mission of revitalising our economy. We will create a more prosperous Hong Kong under 'One Country, Two Systems'."