Policy Address 2004

19. The Government will actively facilitate the development and expansion of our core industries.

Financial Services

20. We have continued to consolidate Hong Kong's position as an international financial centre. The largest state enterprises in the Mainland have come to list in Hong Kong. Many private enterprises have also come here to raise capital and we expect more to follow. The Bank of China and the four major state-owned commercial banks in the Mainland have gradually relocated their international treasury and foreign exchange trading centres to Hong Kong. CEPA will encourage Mainland shareholding banks to do the same. The CPG has agreed to enable local banks, beginning this year, to operate personal renminbi businesses, including deposits, exchange, remittances and renminbi bank cards. CEPA provides further favourable conditions for our financial services sector to expand in the Mainland. We are working hard to establish Hong Kong as a major bond centre for Asia. We are continuing to raise the operational standards of the Hong Kong market, particularly in respect of reinforcing the corporate governance of listed companies and the professional standards of intermediaries.

Producer Services

21. Hong Kong is a renowned international city of commerce. Trading and related logistics coupled with professional services and other producer services account for more than 30% of our GDP. Since joining the World Trade Organisation, China's imports and exports have increased significantly. Last year, the Mainland's total external trade volume was the fourth largest in the world. It is maintaining a fast rate of economic growth and is now a major world consumer market. We have always played an active role in China's external trade because our comprehensive array of producer services makes us the best operating platform for linking markets abroad and at home. This provides greater opportunities in future to participate in process management, purchasing and supply, brand name building, marketing and related activities in the production chain.

22. An on-going joint study with the National Development and Reform Commission has confirmed the strategic importance of enhanced co-operation between the Mainland and Hong Kong in logistics and our position as the region's logistics hub. In terms of software for the development of modern logistics, our enterprises excel in supply chain management, providing fast and reliable services. In terms of hardware, we have a world-class international airport and container terminals, excellent transportation and communications networks as well as other supporting facilities. But we must bear in mind that, first, in neighbouring areas the logistics industry is developing very fast and competition is ever intensifying and, second, our operating costs are too high. We must redouble our efforts, otherwise we risk eroding the advantages we have. We will fully exploit the advantages of the Hong Kong International Airport by progressively liberalising our air services regime and actively exploring ways to strengthen our competitiveness to maintain our leading position in air transportation. For maritime transport, the remaining four berths of Container Terminal 9 will come on stream in 2004 and 2005. In order to raise our competitiveness in the long term, we will recommend building more container terminals.

23. For the long-term development of the logistics industry, we will continue to improve the hardware and supporting software for cargo clearance at our boundary crossings. We are actively expanding our transport network. The construction of the Shenzhen Western Corridor is scheduled for completion by the end of next year. Having confirmed the need and urgency for the Hong Kong-Zhuhai-Macao Bridge, a co-ordination group with representatives from the three governments has begun advance work for the project. Planning work for the Guangzhou-Shenzhen-Hong Kong Express Rail Link is proceeding. Despite the obvious increase in clearance capacities at our land boundary crossings, we will continue to add more facilities and adopt new technologies to ease the movement of goods. In terms of software, the Government is actively developing an electronic platform to facilitate joint use by supply chain participants. We are preparing for the launch of the Digital Trade Transportation Network System next year.

24. The new container terminals may be built on Lantau. The landing point for the Hong Kong-Zhuhai-Macao Bridge will be on northwest Lantau. In future, Lantau will not only have modern transport facilities, but also a Value-Added Logistics Park and tourist attractions such as Hong Kong Disneyland. To ensure that major infrastructural and developmental projects are completed on schedule, the Government has decided to establish a Lantau Economic and Infrastructural Development Co-ordination Task Force under the chairmanship of the Financial Secretary to comprehensively co-ordinate the planning and development of these projects.

25. Tourist arrivals have quickly recovered after the SARS outbreak. By the end of last year, over 670 000 Mainlanders had visited us under the Individual Visit Scheme, boosting consumption locally. The Scheme will be extended further this year. We expect an appreciable increase in visitors from the Mainland and overseas from now.

26. In support of tourism development, a series of major new tourist attractions, including Hong Kong Disneyland, the Hong Kong Wetland Park, the Tung Chung Cable Car System and the Harbour Lighting Plan will be completed over the next few years. Many projects to improve our tourist attractions will proceed according to plan. These include the Tsim Sha Tsui Promenade Beautification, Stanley Waterfront Improvement and the Peak Improvement projects. In addition, we are proceeding with heritage tourism projects at the former Marine Police Headquarters, and the Central Police Station, Victoria Prison and the former Central Magistracy Compound. Some 24 new hotels are scheduled for completion within the next three years. Another 35 new hotel projects have received Town Planning Board approval. Over the past year, we have organised major events such as the Arts Festival, the Rugby Sevens, the Hong Kong International Marathon, exhibition matches by worldrenowned soccer teams and HarbourFest. We will draw on this experience to actively plan and support the holding of more world-class events in Hong Kong. We will organise more cultural activities with local characteristics. We will continue to raise our quality of service to enhance our reputation as a 'shopping paradise' and 'gourmet paradise'. We will also step up collaboration with the Mainland, in particular the Pearl River Delta, to promote tourism.