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Under the 'one country, two systems' principle, the HKSAR shall continue
to adopt economic, social and political systems distinct from those in
the Mainland following reunification in July 1997. The Basic Law, as the
constitutional law of the HKSAR, gives a firm protection to this principle.
The HKSAR shall continue to uphold the rule of law, maintain an effective
executive-led Government, sustain an efficient and clean Civil Service,
foster free enterprise and free trade, render a sound financial system
and a robust monetary regime, practise prudent public finance, and keep
a simple and predictable tax system with low tax rate. This serves to
provide a favourable overall business environment and helps instil confidence
for foreign investors coming to Hong Kong.
The Government firmly believes that the market can
allocate and utilise resources more effectively and has a greater capacity
to foster creativity, provide economic impetus and create employment opportunities.
Moreover, the Government is determined to enhance those areas of strength
instrumental to upholding Hong Kong's competitiveness as a premier business
hub in the region, as well as to remove obstacles to the economic growth
process. The guiding principle is the 'market leads and government facilitates',
as this ensures optimal resource usage and greater efficiency. Primarily
it is market forces that drive the overall economy forward. The role of
government is to create the best environment for business, and to facilitate
the smooth functioning and promote the healthy development of the market.
Throughout the past few years, the Government has taken proactive moves
to reduce rigidities in the economy, redefine its role, and minimise bureaucratic
'red tape'.
Meanwhile, faced with the challenges posed by globalisation
and closer integration with the Mainland, Hong Kong needs to restructure
and re-position itself, in order to stay competitive and attain sustainable
growth. Hong Kong by itself can hardly compete purely in cost terms. The
strategy to enhance competitiveness is to go up the value chain through
speeding up structural transformation to a knowledge-based economy, through
pursuing education reform and population policy to amass the pool of talent,
as well as through leveraging on the immense business opportunities in
the Mainland. The vision is to build Hong Kong as Asia's world city, by
consolidating its unique position in the region as well as reinforcing
its role as a pivotal gateway to the Mainland.
Focusing on areas where Hong Kong has a clear comparative
advantage is key in competing with the rest of the world. Financial services,
logistics, tourism, and professional and producer services are the four
high value added sectors in the economy in which Hong Kong possesses a
competitive edge. The Government strives to maintain Hong Kong's competitiveness
as an international financial centre, through streamlining the rules and
procedures to attract more financial product issuers, through increasing
the breadth and depth of the market, and through strengthening the infrastructure
for the market. On the logistics industry, the Government has support
measures including reinforcing facilities to expand sea transport and
liberalising air rights to create a broader mass in air transport. On
tourism, the Government, working closely with the trade, pursues a strategy
that enhances the attractiveness of Hong Kong and entrenches its markets.
As for producer and professional services, the Government continues to
remove business barriers, streamline licensing procedures, and provide
upgraded services for the business sector. CEPA is of much significance
in enabling the various professional services to gain a better foothold
in the Mainland economy.
Proximity to the Mainland is a key advantage that
should be well capitalised on. This is to be done through earnestly increasing
the cross-flows between Hong Kong and the Mainland. On flow of people
and goods, key measures include improving existing boundary crossings
and building new ones, shortening customs processing time, and enabling
more Mainland visitors to come to Hong Kong. On flow of capital, Hong
Kong is currently the Mainland's largest source of foreign direct investment
as well as major funding centre, and this role is expected to be enhanced
even further. Moreover, CEPA will help accentuate all these flows even
more.
On upgrading the quality of the workforce, the Government
is committed to education reform, and will continue to invest substantially
in education, training and retraining for advancing knowledge and skills.
These measures are aimed at facilitating Hong Kong's economic restructuring
and enhancing individuals' capability to gear in with the requirements
for a knowledge-based and skill-intensive economy. Apart from nurturing
local talent, the Government also strives to attract talent from all over
the world to live and work in Hong Kong. The population policy has eased
restrictions on the entry of Mainland talents and professionals. With
more professionals coming to Hong Kong, the vitality of the economy will
be engendered further, and this in turn will create more job opportunities
for the local workforce.
A high priority is attached to tackling the fiscal
deficit. The Government has set out to do this through containing public
expenditure, through introducing practical revenue measures, and through
revitalising the economy to yield better revenue growth. The Government
is determined to reduce its operating expenditure to $200 billion, to
restore fiscal balance, and to keep public expenditure to 20 per cent
of GDP or below by 2008-09. |
