Hong Kong's economic development is a history of constant changes and adaptations in meeting new opportunities and challenges.We have developed from a city focused mainly on export manufacturing to a predominantly services and knowledge-based economy.

This ability to continuously reinvent ourselves and respond positively to economic shifts is particularly important in today's volatile global economy.

I don't want to pretend that these adjustments are always easy. In fact, they are quite painful for selected sectors of our economy. But I believe this flexibility is one of the essential conditions for remaining an attractive location for companies, local and international companies alike, to conduct business.

The other conditions for success include sound economic fundamentals, combined with a regulatory environment that facilitates the conduct of business. Built around the cornerstones of free enterprise, free trade and free markets, Hong Kong is one of the most open, and most externally orientated economies in the world.

It has consistently been ranked as the world's freest economy by the Heritage Foundation and the Fraser Institute - and these endorsements underline the strength of our city.

HK embraces globalisation

Hong Kong also embraces globalisation of trade and services, and is an active participant in international organisations that promote such activities, including the World Trade Organisation, the Asia Pacific Economic Cooperation forum and the World Customs Organisation.

We are a duty-free port, where no quotas or tariffs apply. Underpinned by a strong financial system, money, goods and services flow freely without restriction.

Hong Kong taxes, at 16% for personal income and 17.5% for profits, are among the lowest in the world. We also offer an abundance of dedicated and skilled labour, as well as a pool of competent professional service providers, who are unrivalled in the region.

We have been able to maintain a corruption-free and efficient public administration, which is dedicated to creating a business environment where investors can operate with ease and certainty.

Press freedom, freedom of speech guaranteed

Hong Kong enjoys a constitutionally guaranteed free press and freedom of speech, and information does travel at the speed of light in Hong Kong.

More than 40 newspapers and 700 periodicals are published in a host of languages in a city that is home to some 130 media organisations, both local and international. The Financial Times of London established its regional publishing base in our city just a few days ago.

Life in Hong Kong is based on the rule of law and a level playing field for both individuals and enterprises. This guarantees a safe and predictable investment environment.

Intellectual property rights are also protected through a sophisticated legal framework and effective enforcement of the regulations. That was one of my priority objectives when I was the Commissioner of Customs & Excise, and it remains our priority today.

These fundamentals have helped to establish Hong Kong as one of the most attractive business hubs in the region. It is the second largest recipient of foreign direct investment in Asia after China, and 15th in the world, according to the World Investment Report 2003 published by the United Nations Conference on Trade and Development.

Hong Kong is the chosen base for over 3,000 regional headquarters and regional offices representing multinational companies from around the world. More than one-third of the multinational firms active in the Asia-Pacific area have their regional headquarters based in Hong Kong.

Korea has longstanding ties with HK

Korea has contributed substantially to Hong Kong's development and foreign investment. There are some 700 Korean companies doing business in Hong Kong, including chaebols such as Hyundai, LG, Samsung, Ssangyong, SK and many others.

The Bank of Korea and the Korea Trade-Investment Promotion Agency also maintain offices in Hong Kong. And they are all keeping up nicely with the long held Korean tradition of prosperity and profitability.

Apart from merchandise trade, many Korean companies in Hong Kong are also active in the services sector. These companies include the Seoul Bank, Korea Exchange Bank, LG Securities, Air Couriers, Hanjin Shipping, Hyundai Merchant Marine, Korea Travel Service, Dong Ah Construction and Korean Air.

In addition, eight Korean banks have branches or representative offices in our city. Like their goods counterparts, these service providers also fare extremely well in Hong Kong.

For many Korean, as well as other international companies, Hong Kong is the first choice for their high-value corporate activities. It is the place in the region where they carry out their corporate co-ordination and central management functions - including regional strategy formulation, sales, marketing and customer service.

CEPA opens up new, exciting business opportunities

On June 29, 2003, the Central Government of Mainland China and Hong Kong, as separate members of the WTO, signed the Closer Economic Partnership Arrangement. This opens up new and exciting opportunities for international investors. Let me tell you more.

CEPA covers three main areas:

* trade in goods;

* trade in services; and

* trade and investment facilitation.

On trade in goods, 273 Hong Kong products will enjoy zero tariffs in the Mainland market from January 1 next year, and all other products no later than January 1, 2006.

On trade in services, 18 sectors will have greater market access in the Mainland. They include telecoms, construction-related services, audio-visual services, advertising, medical services, logistics, legal services, accountancy, banking and insurance et cetera.

On trade and investment facilitation, we would be doing a great deal in making the usual regulatory procedures more user friendly to all concerned.You may wish to note that Chinese medicine is one of the items under this category, and given the strength of your ginseng market, I am sure you would find our arrangement of considerable interest.

This free trade agreement is the first for both Mainland China and Hong Kong. It creates immense potential for Hong Kong to become a centre for value added manufacturing and high quality services for a vast domestic market of 1.2 billion people.

HK's role as gateway to China stronger than ever

With China's accession to the WTO and the signing of CEPA, Hong Kong's role as an international trade and business centre and a gateway to China will be further strengthened. The emergence of Mainland China as one of the most dynamic economies in the world, especially the economic powerhouse that is the Pearl River Delta, has also offered a range of additional opportunities for businesses in Hong Kong.

With a combined population of 48 million and double-digit average annual growth for more than a decade, the Pearl River Delta is the fastest growing region of the fastest growing major economy in the world. Each day, an estimated US$300 million worth of goods are produced by thousands of factories in the region.

In fact, Hong Kong investors were the first to realise these opportunities and were the first to shift their manufacturing plants across the border when the region's Special Economic Zones were opened in 1979.

Today, Hong Kong firms in the Pearl River Delta region are employing more workers there than our entire population. In fact, the economic development of the Pearl River Delta is now driven by thousands of foreign invested companies producing competitively at internationally recognised quality and process standards, and exporting extensively to all quarters of the world.

Korean companies use HK's help to tap China market

Many Korean companies will be considering how to take advantage of the opportunities arising from the opening of the Mainland China market. Some companies will wish to use it as a low cost manufacturing base and then export elsewhere; others will want to tap into the largest consumer market in the world.

For multinationals looking to profit from a Hong Kong/Pearl River Delta strategy, Hong Kong-based companies are ideal partners. We provide considerable value, including capital, resources, long-standing relationships on the Mainland based on decades of experience, and broad affinity with the sharing of a common language and cultural background.

If you want to combine an international business environment with immediate access to the Chinese mainland, there simply isn't any match for Hong Kong. Our infrastructure, business and cultural links with the Mainland are like nowhere else. We also have the institutions, systems, regulatory environment and human resources that will provide you with what you need when you need it.

Overseas firms use HK logistics, finance facilities

As a result, many international companies perform their management, finance, information, co-ordination and logistics activities in Hong Kong, while overseeing their low-cost manufacturing facilities and sales operations in the Pearl River Delta.

The combination of Hong Kong's Western business practices and Guangdong's highly skilled and low cost workforce provide the winning combination for Korean firms.

With these words, I would like to welcome you all to come to the Pearl River Delta to do business, to maximise your opportunities and to achieve success. So pack your bags and come to Hong Kong, and see it for yourself. I am sure that you will like what you see.