The Government should adhere to the principle of a free market economy and keep its role to a minimum, Financial Secretary Henry Tang told the Legislative Council. He added intervention is required only when the market fails.

In a speech to lawmakers, he said creating the best possible environment for business, to facilitate the market's operation and to promote its development are the key roles the Government should play.

In his maiden budget, he emphasised 'grasping our opportunities and constantly renewing our strengths'. This aimed to lay a solid foundation for our long-term economic growth by capitalising on the advantages brought by our closer economic ties with the Mainland and reinforcing Hong Kong's unique strengths, Mr Tang told lawmakers.

"I hope that through revitalising the economy, we can promote employment and improve people's livelihood. Various sectors of the community have generally endorsed the broad principles and directions set out in the Budget. I am deeply grateful to them."

CEPA best embodiment of 'market leads, Gov't facilitates'

While many support the principle that "market leads, Government facilitates", critics have called it too vague and generalised. Some have called on the Government to increase its intervention and others have suggested that we should have detailed planning for the future development of our economy, he said.

The Closer Economic Partnership Arrangement between Hong Kong and the Mainland is the best embodiment of the "Market leads, Government facilitates" principle, he stressed. Requests for CEPA's signing and introducing other measures for economic co-operation with the Mainland is not asking the Central People's Government for 'big gifts'.

The real gift from the Central government to Hong Kong is its unwavering commitment to implementing "one country, two systems", as Premier Wen Jiabao remarked on his visit to Hong Kong last year, Mr Tang added.

Hong Kong has been contributing to the opening-up and economic advancement of the Mainland and has been able to share the fruits of the Mainland's economic development -  the advantage Hong Kong can capitalise on under "one country, two systems".

Hong Kong gains much from CEPA

He also noted that since CEPA came into effect in January, more than 770 CEPA certificates of origin had been issued, with the value of products enjoying preferential treatment exceeding $300 million.

The Trade & Industry Department has also approved more than 220 applications for Certificate of Hong Kong Service Suppliers. The Government is doing its utmost, Mr Tang said, to promote the best use of CEPA as an open platform, and to continually expand the liberalisation measures under CEPA.

The department has already received more than 160 applications to extend the range of products that may enjoy zero-tariff treatment, covering over 300 tariff codes. Upon verification, the department will forward the relevant applications to the Ministry of Commerce and enter into discussion with the Mainland to enable such goods to be imported tariff-free into the Mainland under CEPA from January 1, 2005.

Liberalisation measures for services to be strengthened

The Government will continue to strengthen the liberalisation measures for services under CEPA, Mr Tang said. Earlier this week, the Government announced arrangements relating to the opening up to Hong Kong of the qualifying examinations and practices of patent agents in the Mainland.

The Government seeks to safeguard and promote Hong Kong's commercial and trade interests, Mr Tang said, noting that if the need arises, the Government will, on its own initiative, step in and play an active role.

It did this last year after Hong Kong companies were barred from exhibiting at the BaselWorld jewellery and watch fair in Switzerland following the the SARS outbreak. 

Gov't intervention gives exhibitors an edge

Following Government intervention, an agreement was with the BaselWorld organiser in September last year under which Hong Kong exhibitors were allowed to return to the Basel venue and exhibit at a prime location in a new exhibition hall. It also grants them more favourable terms, guaranteeing that they could exhibit at the main BaselWorld exhibition venue and at steady fees for the next six years.

This year, 333 Hong Kong companies exhibited at the show - the largest Hong Kong delegation on record.

Mr Tang told lawmakers that he had consulted the community widely in preparing his budget. "Decisions on public policies must be carried out in an open and transparent manner so as to engender a spirit of informed, rational and constructive debate, during which a consensus can be reached.

"I hope to follow out this spirit and work with all sectors of the community in creating a prosperous, vibrant and caring society."