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Speech by Secretary for Constitutional Affairs at Fourth Pearl River Delta Conference

Following is the speech by Secretary for Constitutional Affairs, Mr Stephen Lam, at the Fourth Pearl River Delta Conference held in Guangzhou this afternoon (September 23):

Hong Kong in Pan-Pearl River Delta Regional Cooperation:
Committed, Engaged and Working Hard

Eden, Amanda, ladies and gentlemen,

I am very delighted to be here today, having the opportunity to talk about Hong Kong's role in the Pan-Pearl River Delta (Pan-PRD) Regional Cooperation before a distinguished gathering of friends from Hong Kong and the Mainland.

I understand that this is the fourth year the Hong Kong General Chamber of Commerce and the South China Morning Post have come together to organise an annual conference relating to the Pearl River Delta (PRD). This year's attendance is unprecedented. It goes to show that the economic cooperation in the PRD and Pan-PRD is the focus of regional economic developments in future.

We in Hong Kong promote biliteracy and trilingualism. Amongst our audience, there are a number of expatriates. Allow me to extend greetings to them in English first.

China's Growth

To our expatriate friends, I wish to extend a very warm welcome. Your participation gives an added significance to today's event – it marks your vote of confidence in the economic development of the PRD and the Pan-PRD Region.

China is the fastest-growing economy in the world. As the Mainland continues to open up under its World Trade Organisation (WTO) commitments, it is becoming a most important driving force in the world's economic growth.

And Hong Kong is most well positioned to help feed that growth. We possess a depth and breadth of high value-added services and expertise that is unmatched in the region, and that the Mainland will have a growing demand for such services as its impressive growth continues.

Hong Kong as Asia's World City

We also continue to see increased interest from overseas companies in using Hong Kong as a springboard to the Mainland markets. Last year, there were more than 3,600 foreign companies with their regional headquarters or regional offices in Hong Kong, an all-time high figure and an increase of more than 43% since 1997.

The economy in the Mainland is set to quadruple its GDP by 2020. With annual growth running at 8% to 9% in recent years, and coastal areas achieving double digit growth, the goal looks very achievable.

This economic growth in the Mainland will lead to substantial growth in wealth accumulation and spending power. In turn, this will impact on tourism, consumption and real estate values in Hong Kong.

So I foresee more exciting days ahead. But Hong Kong is always exciting.

Hong Kong Disneyland was just opened about two weeks ago, joining Tokyo and Paris as the international home for some of the world's best loved characters.

In December, we will host the WTO's Sixth Ministerial Conference – a clear illustration of the important role Hong Kong plays in international trade.

Also in December, we will open Asia World-Expo – our new world class exhibition centre at the airport. That in turn will make it possible for us to host ITU Telecom World in December 2006, the first time ever that the International Telecommunications Union is holding this event outside Geneva.

So I hope that you will leave some time in your very busy diaries over the next year or so to take part in these very important international events. These events make Hong Kong truly Asia's World City.

I will now switch back to Putonghua and talk about Hong Kong's role in the Pan-Pearl River Delta Cooperation.

Pan-PRD Cooperation

The "9+2" governments within the Pan-PRD Region held the first Pan-PRD Regional Cooperation and Development Forum in Hong Kong, Macao and Guangzhou in June 2004.

This forum represents the largest regional cooperation initiative within China, which is made up of nine provinces and regions in the Pan-PRD Region, together with Hong Kong and Macao.

Although Pan-PRD is about co-operation between regions within a single country, it is comparable to many associations of nations or regions elsewhere in the world in terms of population, economic size, foreign trade and foreign direct investment.

In 2004, Pan-PRD had a population of 460 million people, making up of about one-third of the national population; the GDP of the Pan-PRD Region totalled 730 billion US dollars, surpassing countries such as Mexico, South Korea, India, and Holland; and its total trade volume reached 970 billion US dollars, higher than the corresponding figures of France or the United Kingdom.

The above figures demonstrate clearly that the development potential of the markets in the Pan-PRD Region is enormous. Furthermore, the cultural affinity of various provinces and regions, as well as the complementary strengths we have in terms of natural resources, production materials and industry make-up will bring about spectacular economic growth in the region.

Hong Kong's Roles and Priorities

In the past 20 years or so, our manufacturing industries migrated to the north, helping Hong Kong to transform its economy successfully. And now the Pan-PRD regional cooperation has further enlarged Hong Kong's economic catchment area. In particular, Hong Kong's services industries can expand new markets in the Mainland.

In the course of establishing the Pan-PRD Cooperation framework, I believe that Hong Kong can assume an active role in four aspects.

Firstly, participating in the planning and construction of infrastructural network. The development of a comprehensive transportation network connecting various provinces and regions is one of the key driving forces underpinning Pan-PRD Cooperation. Hong Kong is vigorously strengthening its transportation links with the PRD region and stepping up effort on major infrastructure works, such as the Hong Kong-Shenzhen Western Corridor, the Hong Kong-Zhuhai-Macao Bridge and the Guangzhou-Shenzhen-Hong Kong Express Rail Link.

From now on, we will be watching closely major infrastructural projects of the nine provinces and regions approved under the 11th Five Year Plan. We will take these across-the-border developments into account in our planning horizons, with a view to enhancing the connectivity of the region.

Secondly, assisting in raising capitals. Pan-PRD enterprises can strengthen its business activities by making use of Hong Kong's sound financial system and advanced financial services for fund raising. In end June 2005, a total of 80 enterprises from the nine provinces and regions were listed in Hong Kong's stock market, and nine of them got listed just after June last year. Given the economic vitality of the Pan-PRD Region, I am confident that there is plenty of room for these figures to grow.

Thirdly, using Hong Kong as a platform for the Mainland enterprises to access global markets. In support of the national policy of "going out" for Mainland enterprises, Hong Kong encourages Pan-PRD enterprises to set up offices in the territory to commence trade, investment and fund raising activities, and use Hong Kong as a base to access world markets.

Fourthly, speeding up the implementation of CEPA under the Pan-PRD cooperation framework. The SAR Government supported leveraging on the opportunities arising from Pan-PRD regional cooperation, in particular the preferential access given to eligible service sectors under the arrangement. It will enable the service providers of Hong Kong to gain quicker access to the Pan-PRD region and better promote the regional economy. As a matter of fact, the implementation of CEPA can lead to a win-win scenario, producing positive and phenomenal prospects for the Mainland and Hong Kong. The first phase of CEPA is believed to create about 29 000 new jobs for Hong Kong in the first two years, and as driven by CEPA I, investment in the Mainland by Hong Kong companies in 2004 and 2005 will amount to $6.7 billion.

After the second Pan-PRD Regional Cooperation and Development Forum was held in Chengdu in July, the SAR Government is following up on the success of the conference and striving to identify new room for cooperation. My colleague, the Secretary for Financial Services and Treasury will lead a delegation comprising representatives of the financial services sector to visit Fujian Province in end September to explore cooperation opportunities. The delegation will introduce to the Fujian Government and enterprises the strengths of Hong Kong as an international financial centre, and encourage Fujian enterprises to make better use of Hong Kong as a base for raising capitals.

Furthermore, the SAR Government will host a Pan-PRD Regional Cooperation Financial Services Forum in March next year to further explore cooperation opportunities in financial services within the Pan-PRD Region.

So, ladies and gentlemen, before I conclude, I would like to tell you a little story.

When we were in Chengdu to attend the second Pan-Pearl River Delta Forum, the Prime Minister of Thailand sent a delegation to observe our proceedings. This is because last year the Thai Prime Minister visited China. When he was in Guangdong, he was so impressed with developments here, and he was so attracted to the opportunities offered by "9+2", he took the initiative to send his Director-General of Trade to lead this observers delegation. In fact, Thailand wants to link up the economic opportunities offered by ASEAN and the Pan-PRD region.

Beijing is negotiating a free trade agreement with ASEAN. And I wish to remind this audience that when Premier Wen Jiabao was in Hong Kong in 2003 to witness the concluding of CEPA with Hong Kong, he undertook that any free trade arrangements offered to ASEAN would also be extended to Hong Kong under CEPA.

So opportunities for free trade are immense. We have gathered here today to study the way forward for the Pan-PRD region.

We should ask ourselves why people, countries and governments around the world form these free trade regions. In a nutshell, the propelling forces are simple and straightforward :

*people around the world want to pursue prosperity and growth;

*increasingly, more and more people around the world are convinced that unity and cooperation is a profound force for engineering positive change.

So in the era of globalisation, the world is getting smaller; product life cycles are getting shorter; but our vision must grow longer and wider. Cooperation in the Pan-Pearl River Delta helps us to achieve exactly that.

Thank you very much.

Ends/Friday, September 23, 2005