Rising to Challenges
 
23. To seize the opportunities, we must look squarely into the problems of land and manpower, which have been hindering the economic and social development of Hong Kong. 
 
Land Supply
 
24. Hong Kong has been plagued by land shortage for years.  The problem not only affects people's livelihood, but also restrains our growth potential.  We must proactively address this problem with firm resolve.  The Task Force on Land Supply established last year is striving to forge a consensus in the community on this issue.
 
Human Capital
 
25. Furthermore, a shortage of workforce and talent has also impeded the economic development and competitiveness of Hong Kong.
 
26. The latest unemployment rate of below three per cent reflects a tight labour market in Hong Kong.  With a rapidly ageing population, our workforce will fall from its peak in the coming few years.  On the premise that local workers’ priority for employment will be safeguarded, we should consider increasing imported labour in a timely manner and on an appropriate scale to address the specific needs of individual sectors.
 
27. The Commission for the Planning of Human Resources led by the Chief Secretary for Administration will commence operation shortly.  Fostering collaboration across bureaux and various sectors, the Commission will examine and co-ordinate existing policies and measures from a macro perspective.
 
28. In parallel, the Government will continue to invest in education, training and retraining to enhance the quality and competitiveness of our workforce.  In order to cater for the development needs of various sectors and industries, we will also enhance our talent admission arrangements to attract talent from outside Hong Kong.  The Labour and Welfare Bureau is finalising the talent list, which is scheduled for completion in mid-2018. 
 
Building Consensus
 
29. The land and manpower problems in Hong Kong cannot be solved with financial resources alone.  We should not shy away from the different voices in the community.  Instead, in the spirit of "seeking common ground while shelving major differences", we should build consensus in a pragmatic and rational manner, and join hands to overcome constraints.  While there are vast opportunities for Hong Kong's development, they do not knock twice or wait for anyone.  We have to stay united and seize each and every opportunity.
 
The Government's Role
 
30. Our free and highly efficient market has won worldwide acclaim.  Under normal circumstances, the market is the most efficient mechanism to allocate resources.  One should therefore respect market forces when formulating economic policies.
 
31. That said, with the upsurge of I&T and fierce competition between economies, the current-term Government will examine Hong Kong's competitiveness, our economy as well as the current state and direction for development of our industries from a forward-looking and strategic perspective.  Playing the role as a "facilitator" and a "promoter", we will introduce timely and appropriate measures to support industries where we have strengths and development potentials, and tap new markets.  We will also review regulatory and tax requirements to remove red tape and create a business-friendly environment.  Our various initiatives in promoting I&T and financial development are some examples.
 
32. The Government will focus in particular on removing land and manpower constraints.  At the same time, we will maintain a simple and competitive tax regime as well as a transparent and efficient regulatory system, while encouraging investment and innovation.  Under the present macro environment in which opportunities abound, I am confident that we can find more drivers for growth to support the development of our society.
 
33. Now, let us review our economic performance over the past year.
 
Economic Situation in 2017
 
34. Throughout 2017, the global economic landscape continued to improve.  The economies of the US, Eurozone and Japan recovered further with a synchronised acceleration of growth.  The Mainland economy, sustaining strong growth momentum at 6.9 per cent, bolstered regional trade flows in Asia.  Hong Kong’s exports of goods registered appreciable growth of 5.9 per cent in real terms.  Exports of services also returned to a steady growth of 3.5 per cent in real terms.
 
35. Domestic demand remained particularly resilient.  Full employment, coupled with the positive wealth effect, drove strong consumer confidence.  Last year, private consumption expenditure grew by 5.4 per cent in real terms, the fastest since 2011.  Investment expenditure also increased by 4.2 per cent in real terms for the year.

36. Overall, due to the better-than-expected outturn in the external environment, Hong Kong’s economy grew by 3.8 per cent last year, higher than the forecast in last year’s Budget and the average trend growth rate of 2.9 per cent over the decade from 2007 to 2016.
 
37. In a state of full employment, the labour market further tightened in the latter half of the year.  The latest unemployment rate dropped to a 20-year low of 2.9 per cent.  Strong economic growth spurred a gradual increase in employment during the year, with broad-based improvement in wages and earnings in real terms.  The headline inflation rate for 2017 was 1.5 per cent, as inflationary pressure remained moderate.  Netting out the effects of the Government's one-off measures, the underlying inflation rate was 1.7 per cent in 2017, the sixth consecutive year of easing.

(To be continued.)

Ends/Wednesday, February 28, 2018
Issued at HKT 11:18

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