Following is the full text of the 2017 Policy Address - Make Best Use of Opportunities, Develop the Economy, Improve People's Livelihood, Build an Inclusive Society - by the Chief Executive, Mr C Y Leung, in the Legislative Council today (January 18):

Mr President, Honourable Members and fellow citizens,

I.  Introduction

1.  The current-term Government upholds the vision of "Developing the Economy and Improving People's Livelihood".  We believe that only through economic development can we improve people's livelihood and promote social harmony and inclusion.

2.  The Heritage Foundation of the United States has rated Hong Kong as the world's freest economy for 22 consecutive years.  According to the Human Freedom Index 2016 published by the Cato Institute of the United States, Hong Kong has topped the ranking for six consecutive years.  The index measures the state of freedom in 159 jurisdictions based on 79 indicators covering such areas as the rule of law, freedom of movement, civil liberties and economic freedom.

3.  Over the past four years, Hong Kong's economy has seen moderate growth and receding inflation.  The Government maintains a sound fiscal position.  The working population increased in total by 160 000 while the unemployment rate remained at a very low level.  Apart from reinforcing the competitive edges of traditional industries, the Government also strives to promote the development of emerging industries.

4.  Land and housing supply for the short and medium terms has increased significantly while medium and long-term planning is actively pursued.  Many infrastructure projects are underway.

5.  In the past four years, the Government has made full efforts to alleviate poverty, care for the elderly, support the disadvantaged and encourage employment.  Over these four years, earnings for the employees in the lowest three income decile groups have increased by 5.2% after discounting inflation.  The number of Comprehensive Social Security Assistance (CSSA) cases has continued to drop and the poor population is shrinking.  The Government has invested heavily in healthcare infrastructure.  Air quality in our city and water quality in Victoria Harbour have improved notably.  Measures on climate change and waste management have been implemented progressively and important progress has been made in the protection and conservation of species and the rural environment.

6.  The world's political and economic landscapes are undergoing profound changes.  China is playing an increasingly prominent and leading role in the global economy.  Against this background, Hong Kong's dual advantages of "one country" and "two systems" and its role as the "super-connector" are becoming more apparent.  Leveraging the National 13th Five-Year Plan and the Belt and Road Initiative, Hong Kong enjoys endless opportunities, as we excel in "what the country needs, and what Hong Kong is good at".

7.  The Government attaches great importance to the executive-legislative relationship, and seeks to work with all Members of the Legislative Council (LegCo) of different political affiliations.  The community expects the executive authorities and the legislature to perform their respective functions and waste no time or opportunity in jointly promoting Hong Kong's social and economic development.

8.  Hong Kong is an inalienable part of our country.  There is absolutely no room for independence or any form of separation.  Under "one country, two systems", every one of us has the obligation to fully comply with the Basic Law and safeguard national sovereignty, security and territorial integrity.

II.  Economy

9.  Experience around the world clearly shows that economic growth and a low unemployment rate cannot be taken for granted.  Last year, Hong Kong's economy saw moderate growth and the unemployment rate remained at a very low level.  In the coming year, in view of the uncertain global economic outlook, the whole community must work to sustain economic development.  In tandem with reinforcing the competitive edges of our traditional industries, we should foster diversification of our industries, promote re-industrialisation and press ahead with our innovation and technology development to increase output value.

The National 13th Five-Year Plan

10.  The Dedicated Chapter on Hong Kong and Macao in the National 13th Five-Year Plan acknowledges the functions and positioning of Hong Kong in our country's development by pledging support for Hong Kong to consolidate and enhance our status as an international financial, transportation and trade centre.  The chapter expresses clear support for our professional services to move towards high-end and high value-added developments, and for the development of our innovation and technology as well as legal and dispute resolution services, etc.  The chapter emphasises deepening co-operation between the Mainland and Hong Kong and supports Hong Kong's participation in the country's two-way opening up and the Belt and Road Initiative, so as to explore new markets.

11. Other chapters of the National 13th Five-Year Plan also bring new opportunities for Hong Kong in areas such as innovation and technology, environmental and green industries, and urbanisation.

12. The National 13th Five-Year Plan states that the Central Government will advocate the upgrading of the Mainland's closer economic partnership arrangements with Hong Kong and Macao.  The Agreement on Trade in Services signed under the framework of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) was implemented in June last year to basically achieve liberalisation of trade in services between the Mainland and Hong Kong.  The Hong Kong Special Administrative Region (HKSAR) Government is exploring further with the Mainland the expansion and enhancement of CEPA in the areas of investment, economic and technical co-operation, etc.  We expect to achieve some concrete results by the middle of this year.

13. The outline of the National 13th Five-Year Plan clearly expresses the need to expedite development of co-operation platforms among Guangdong-Hong Kong-Macao such as Nansha, Qianhai and Hengqin. The planning of the Guangdong-Hong Kong in-depth co-operation zone (the co-operation zone) in Nansha has fully incorporated the concept, experience and advice shared by Hong Kong, and the construction of major transport facilities supporting the co-operation zone has fully commenced.  The HKSAR Government will continue to co-operate closely with the Guangdong Provincial Government under the Guangdong-Hong Kong co-operation mechanism and on the principle of achieving mutual benefits through active participation and joint planning, so as to better seize new opportunities for Hong Kong people and enterprises to start business, pursue employment and further career.

14. Qianhai serves as the Shenzhen-Hong Kong modern service industry co-operation zone.  With a number of preferential arrangements, such as easing market access and providing concessions on enterprise income tax, as well as being adjacent to Hong Kong, Qianhai is attractive to Hong Kong enterprises.

15. The concessions on enterprise income tax and other relevant liberalisation policy measures adopted by Qianhai have also applied to Hengqin.  The HKSAR Government will continue to make use of the co-operation mechanism between Hong Kong and Zhuhai to open up business opportunities for Hong Kong people and corporations during the process of Hengqin's development of the cultural, creativity, tourism and leisure industries.

Financial Services

16. Over the past four years, the Financial Services Development Council (FSDC) has released 26 reports, taking into account views from experts and putting forward an array of recommendations on the sustainable development of Hong Kong's financial market and financial services sector.  The Government will actively consider the recommendations on taxation, laws and regulations, nurturing talent, etc., and implement the feasible measures.  We will continue to provide the FSDC with the necessary resources, and fully support its work.  With offices around the globe, the Hong Kong Trade Development Council (TDC) has an extensive network in the Mainland and overseas, as well as solid promotional experience.  I have therefore decided to request the TDC to collaborate with the FSDC and the industry to strengthen the promotion of our financial services industry outside Hong Kong.

17. The Shenzhen-Hong Kong Stock Connect launched last month has further reinforced Hong Kong's status as an international financial centre of our country and a global offshore Renminbi (RMB) business hub.  The Government will promote the realisation of mutual access of exchange-traded funds to expand the scope of eligible securities for trading.

18. The National 13th Five-Year Plan has confirmed Hong Kong's status as a global offshore RMB business hub.  The demand arising from the Belt and Road Initiative and the Mainland-Hong Kong Mutual Recognition of Funds Arrangement will enable Hong Kong to further expand its RMB business.

19. The Asian Infrastructure Investment Bank (AIIB) promotes infrastructure development in Asian countries.  Hong Kong can support the AIIB in such areas as project financing, bond issuance, investment, financial management and foreign exchange management.  Hong Kong has been officially invited to join the AIIB.  We expect the relevant procedures to be completed by the middle of this year.

20. We also need to promote the development of financial technologies (Fintech) to establish Hong Kong as a hub for the application and setting of standards for cutting-edge Fintech.  The sector as well as research institutions and regulatory authorities are actively studying a number of projects on cyber security and "Blockchain", and building a pool of talent.

Professional Services

21. Professional services are an important economic sector.  Between 2005 and 2015, our professional services grew by an annual average of 9.0% in nominal Gross Domestic Product, a very fast rate.

22. Under CEPA, professionals in the construction and related industries have made good progress entering the Mainland market.  Liberalisation measures implemented in Guangdong, including allowing our professionals to register and practise and our enterprises to establish a business there, have now been extended to Guangxi and Fujian.  The Government will seek to extend Hong Kong's project management model, which is being practised on a trial basis in Qianhai, to Nansha and Hengqin.

23. The National 13th Five-Year Plan gives clear support for Hong Kong to establish itself as a centre for international legal and dispute resolution services in the Asia Pacific region.  The Government will continue to create favourable conditions, improve supporting infrastructure and enhance co-ordination.

24. The Department of Justice has earlier proposed two sets of amendments to the Arbitration Ordinance.  One seeks to clarify the arbitrability of intellectual property rights (IPR) disputes to enhance Hong Kong's status as an international IPR arbitration centre.  The other seeks to allow third-party funding for arbitration and mediation to widen the scope of relevant services in Hong Kong.

(To be continued)

Ends/Wednesday, January 18, 2017
Issued at HKT 11:21

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