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'CEPA, gov't policies help SAR out of woes'
By Louise Ho (HK Edition)

Effective government polices and the central government's support had helped Hong Kong's economy recover from the financial crisis and SARS outbreak, said Secretary for Economic Development and Labor Stephen Ip.

Ip is "prudently optimistic" about Hong Kong's future economic development.

"Hong Kong will make good use of its advantageous position as the door for the mainland to the world and will continue to increase co-operation with the mainland in areas such as tourism, logistics and aviation."

Recalling the financial crisis and the SARS outbreak in 2003, Ip said: "It was the most difficult time for Hong Kong. The rate of unemployment hit 8.6 per cent."

The government and the trade came up ideas such as "We love Hong Kong campaign", which helped restore people's confidence by spending more.

"Although it was a difficult period for Hong Kong, we were able to bring in our creativity and spirit of co-operation. The economy had gradually improved. It was a great feeling that if we can work together, we can overcome any difficulties."

The signing of Closer Economic Partnership Arrangement (CEPA) in July 2003 was instrumental to the recovery of Hong Kong's economy, especially in tourism and logistics.

Under the CEPA, Hong Kong companies were allowed to set up wholly owned subsdiaries and provide sea and land transport, logistics, storage and delivery services. Until May 2007, 492 companies in the transport and logistics industry have applied for the licences.

In 2003, the central government has introduced Individual Visit Scheme (IVS) to support Hong Kong's tourism industry. "The IVS has made visiting Hong Kong more convenient for mainland visitors and the mainland became the biggest market for Hong Kong's tourism," he said.

In 2006, 13.6 million mainland tourists had visited Hong Kong, six times of 2.36 million in 1997. The percentage of mainland visitors rose from 21 percent in 1997 to 54 percent in 2006.

Till April 2007, about 2 million mainland visitors have traveled to Hong Kong under the IVS.

Total expenditure related to tourism increased 53 percent from HK$7.78 billion in 1997 to HK$11.94 billion in 2006.

"The IVS has been extended to 49 mainland cities with a market of 0.2 billion visitors and the scheme still has a potential for growth," he said.

The central government also extended help when the new airport was built. There were some operational problems in its first week of operations in 1998. "We were very grateful that the central government allowed us to use Shenzhen's Huangshi airport," he said.

The SAR's economy has made remarkable progress over the last few years. Unemployment rate has dropped to 4.3 percent, the lowest in nine years. The government has introduced various employment services for different age groups, such as Youth Pre-employment Training Program in 1999 and Employment Program for the Middle-aged in 2003.

Currently the working population is 347 million. More than 330,000 people have got jobs for the past 10 years. The government has reviewed labor legislation periodically to increase employment protection, such as increasing the penalty on employer for not paying salary in 2006.

The Wage Protection Movement was introduced in October 2006 for cleaning workers and security guards and there has been improvement in the working conditions for people in the lower income group.

Till June 2007, a total of 940 companies have joined the voluntary scheme, he said. The government has promised to conduct mid-term and full-term reviews in October this year and next year respectively, he said.

After the implementation of CEPA, the talent and goods flow between the mainland and Hong Kong have become more frequent, he said. Passenger transport between the mainland and Hong Kong has increased from 4.86 million in 1997 to 9.34 million in 2006.

Hong Kong has also developed transport infrastructure. For example, two bridges that connect border control points in Hong Kong and mainland have been in service since January 2005.

Shenzhen Bay Port, which will start operations on July 1, will increase Hong Kong's ability to handle cross-border traffic.

(HK Edition 06/26/2007 page6)