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SCA speaks on HK's development opportunities on Mainland's Central and Western Regions

The Secretary for Constitutional Affairs, Mr Stephen Lam, said today (February 5) that the National 11th Five-Year Plan, and the Mainland and Hong Kong Closer Economic Partnership Agreement (CEPA) concluded between the HKSAR and the Central Authorities were two important foundations for Hong Kong to make inroads into the Mainland markets in future.

Speaking at the opening ceremony of the Hong Kong Economic and Trade Office in Chengdu of the HKSAR Government (Chengdu ETO), Mr Lam highlighted four key aspects about these two foundations.

He said that firstly, under the 11th Five-Year Plan, our country had attached great importance to the development of the Eastern, Central and Western Regions. The establishment of the Chengdu ETO by the HKSAR Government would enable us to capitalise on the opportunities arising from the development of the Central and Western Regions.

Hong Kong had consistently been the most important source of investment in the Mainland. The Western Region had become one of the main regions attracting direct investment from Hong Kong in recent years.

According to the statistics compiled by the Ministry of Commerce, Hong Kong business' investment in the Western Region amounted to US$875 million in 2005, an increase of 41 per cent when compared with 2004. This demonstrated that economic co-operation between Hong Kong and the provinces of Sichuan, Yunnan, Guizhou, Hunan, Shaanxi and the Chongqing Municipality was getting closer, and there would be a lot of opportunities for future development.

Mr Lam said that secondly, one of the key targets stated in the 11th Five-Year Plan was to step up industrial restructuring, conservation of resources and environmental protection with a view to alleviating the adverse impacts of economic development on the environment, and achieving the long-term goal of sustainable development.

At present, there were about 92,000 Hong Kong enterprises employing a workforce of 11 million in Guangdong Province. About 80 per cent of these enterprises, which were mainly small and medium enterprises, were located in the Pearl River Delta (PRD) Region, he said.

In the course of industrial restructuring, some Hong Kong enterprises would inevitably need to relocate from the PRD Region to nearby provinces and regions to capitalise on the local resources available and to fall in line with the Mainland's overall blueprint on industrial development.

Mr Lam pointed out that the Central and Western Regions provided a very good hinterland of industrial relocation for Hong Kong enterprises. The co-operation could also bring about invaluable opportunities for technological advancement for both Hong Kong enterprises and the provinces and municipalities concerned.

Citing some examples, he said that Sichuan was among the fastest growing economy in the Western Region. With its well-developed high-tech and heavy industries, it was the gateway for Hong Kong enterprises to enter the Western Region.

The manufacturing industry in Yunnan was developing steadily. Hong Kong's business sector had invested in a number of areas, including the pharmaceutical and chemical industries. The prospect of future co-operation was good.

Guizhou was rich in natural resources, such as minerals and Chinese medicine, offering attractive investment opportunities for Hong Kong enterprises.

Benefiting from its abundant supply of workforce and its prime location as the transportation hub in the Central Region, Hunan's industrial development had been advancing fast in recent years. The province offered very favourable conditions for Hong Kong's manufacturing enterprises.

Shaanxi was one of the provinces in the Western Region with a relatively strong industrial base.

Chongqing Municipality was an important industrial city with national strategic importance in the development of the Western Region. Its industrial sectors comprising the automobile, manufacturing equipment and chemical industries were well developed. It was an important base for Hong Kong's industrial enterprises to venture into the heavy, hi-tech and high-value-added industries.

Regarding the third important aspect of the two foundations, Mr Lam said that if the Mainland enterprises were to grow and excel, they had to match international standards in order to "go international". They needed capital and a platform to achieve this target. Hong Kong was in the best position to provide the related services.

In 2006, Hong Kong ranked second worldwide in terms of the amount of funds raised by companies listed on the stock market, which was over HK$300 billion.

He was confident that from now on, enterprises in the Central and Western Regions would have a lot of opportunities to make full use of Hong Kong as a channel to further develop the strengths of our country.

Mr Lam said that the fourth important aspect was that the overall direction of our country was to speed up the development of modern service industries. The 11th Five-Year Plan stated clearly that support would be given to Hong Kong's development on fronts such as financial services, logistics, tourism and information services, and the maintenance of Hong Kong's status as an international centre of financial services, trade and shipping.

Hong Kong had the established edge in service industries. The implementation of CEPA had provided a lot of room for economic and trade co-operation between Hong Kong and the Mainland. Sichuan, Yunnan, Guizhou, Hunan, Shaanxi and the Chongqing Municipality alone would widen the market of Hong Kong's service industries from a population of seven million to 300 million.

Mr Lam said that the establishment of the Chengdu ETO was an important milestone in the HKSAR Government's efforts in promoting further economic and trade co-operation between Hong Kong and the Mainland.

He hoped that the Hong Kong's service industries would continue to develop in Mainland provinces and municipalities, to provide professional services to Mainland enterprises and to help Mainland provinces and regions upgrade their industries.

Ends/Monday, February 5, 2007