Press Release - March 6, 2002

The Director of the Hong Kong Economic and Trade Office (Canada) of the Hong Kong Special Administrative Region Government, Mrs. Rosanna Ure, met the media today (March 6) to explain the main points of the budget just announced by the Financial Secretary, Mr. Antony Leung, and analyse the key observations which provide scope for more opportunities for Canadian businesses in Hong Kong.

The Financial Secretary revealed in the budget that Hong Kong��s economy grew by 0.1% in 2001 and was forecast to grow by 1% in 2002, both in real terms. A trend growth rate of 3% in real terms was predicted in the medium term (from 2002 to 2006).

Consumer prices fell by 1.6% in 2001 and were forecast to decline by 2.8% in 2002.

The Budget sets the target of restoring fiscal balance and bringing public expenditure down to 20% of GDP or below by 2006-07.

He said under the present economic conditions, we must contain public expenditure. He considered it inappropriate to make any major changes on the revenue front in 2002-03. Therefore, he plans to adopt some modest, non-livelihood related revenue proposals by increasing in 2002-03 the duty rate on wine from 60% to 80% (on ex-factory price) and reducing the amount of duty free cigarettes and wine allowed to be brought back into Hong Kong by residents.

As there will be annual budget deficits before 2006-07, the government needs to consider the necessity of increasing recurrent revenue. The Budget has only proposed the introduction of a Boundary Facilities Improvement Tax in 2003-04.
He said Hong Kong had to capitalize on its strengths and needed to focus on high-added-value economic activities in moving up the value chain. He believed that four economic sectors that could foster further economic development and create jobs �V financial services, logistics, tourism and producer and professional services.

He said to further develop Hong Kong as an international financial center, Hong Kong��s financial market needs to concentrate on two important areas:

- Increasing the liquidity of its financial market through joint efforts of the Government and the sector to attract more financial product issuers as well as capital and investor from the Mainland and overseas. The government is streamlining procedures and lowering associated costs so as to facilitate the development of the market and the introduction of new products;

- Continuing to modernise Hong Kong��s market system and making it more user-friendly through regular reviews. The Securities and Futures Bill, which is in its final legislative stage, will introduce a series of measures to streamline the licensing system, increase market transparency, promote a level playing field and facilitate product innovation.

On logistics, the Financial Secretary said Hong Kong��s future development should focus on speed and efficiency; and expansion of its cargo catchment area. It needs to develop high-value-added logistics parks to support low- or even zero-inventory mode of production in the region. In this regard:

- We will enhance our infrastructure. Phase 2 extension works at Lok Ma Chau Control Point are in full swing. The Shenzhen-Western Corridor targeted for completion in 2005 is under active planning.

- We are re-engineering the customs process.

- Its logistics Development Council is studying the establishment of a common platform to facilitate data exchange in the logistics industry.

On tourism, he said Hong Kong must develop more attractions/facilities, and different types of tourism (such a business tourism linked with exhibitions and conferences, family, ecological and cultural tourism). In this regard:

- On business tourism, the Government is planning to build a new international and exhibition centre at the Airport.

- On family tourism, the new attractions at Ocean Park, the Hong Kong Disneyland and the proposed Tung Chung cable car will promote family tourism.

- On ecotourism, Hong Kong is endowed with country parks, hiking trails and nature conservation areas.

- On cultural tourism, the concept plan for an exciting new cultural zone planned for West Kowloon has been selected, and the Government will soon start detailed planning for its early construction, to provide new attractions.

On producer and professional services, the Financial Secretary said Hong Kong needs to add value to these services by devoting more resources to research and development, being more innovative and making wider use of technology, especially information technology.

The Director of HKETO (Canada), Mrs. Rosanna Ure, believed that in the process of further developing these four sectors, Hong Kong would provide good opportunities for investors from overseas countries, including Canada, to achieve a win-win situation.

"Certain sectors in Canada such as information communication technology, biotechnology, biopharmaceutical, tourism and environmental technology have experience and expertise which will assist Hong Kong in developing these industries by investing directly into Hong Kong. China��s accession to the World Trade Organization enables Hong Kong to expand its scope of development. The Hong Kong economy will further integrate with the Mainland��s in the years to come and this would create more business opportunities. Canadian businesses interested in investing in Hong Kong should seize this excellent opportunity. HKETO will be happy to give our support and provide them with the necessary assistance," said Mrs Ure.

She noted that despite the budget deficit, the government would continue to invest in education. For example, recruitment of English native speaking teachers has commenced in Canada. The scheme aims to improve the English standard of secondary and primary students. Human resources management and infrastructure development will continue to be the foci of the government's long-term effort in enhancing Hong Kong's competitiveness and to create a favourable environment for future economic development.


For more information, please call: John Tam, Chief Information Officer of Hong Kong Economic and Trade Office at: (416)924-5544 or email: [email protected] or
Elison Chu, Senior Information Officer, [email protected].