Even though Hong Kong is small in physical size - only about 1,000 kilometres, and limited in natural resources - virtually none, it has consistently been ranked among the largest trading entities in the world. In 2004, our total trade amounted to more than US$530 billion, which was more than three times our GDP.  So we are a vivid example of the enormous benefits that free and open trade can bring.

International business has a strong presence here. We are the second-largest recipient of foreign direct investment in Asia, after Mainland China.

The rule of law, a level playing field, clean and efficient government, a low and simple tax system, excellent infrastructure and a large pool of talented and professional workers - these are the essential elements of the market economy we practise. And these are the essential elements for reinforcing our position in future as a leading international business hub, contributing to global and regional economic prosperity.

Above all, Hong Kong is the pre-eminent platform for doing business on the Mainland, a position that was strengthened with the launch of the Mainland and Hong Kong Closer Economic Partnership Arrangement last year. This free-trade agreement increases trade and economic flows across the boundary by removing tariffs from essentially all Hong Kong products imported into the Mainland.

Liberalisation measures surpass WTO commitment

At the same time, Hong Kong service providers enjoy preferential access to the ever-growing Mainland market in 26 service industries and professions. The liberalisation measures in CEPA are beyond China's WTO commitment and ahead of the proposed ASEAN+1.

I trust that you must also be familiar with the success story of the Pearl River Delta.  A substantial proportion of the imports and exports from the Delta are handled through Hong Kong.  In fact, Hong Kong industrialists nowadays employ more than 11 million workers in the PRD region, which is equivalent to three times our local workforce.

Last year we launched the Pan-Pearl River Delta initiative to extend our economic co-operation with the nine provinces of southern and western China and Macau. To give you a rough idea, the Pan-PRD region is home to about 450 million people, which is one-third of China's total population.

Pan-PRD enjoyed US$634b in GDP in 2003 

The region's combined GDP in 2003 was US$634 billion, accounting for about 40% of China's total output. To put that into perspective, Pan-PRD is comparable in size and economic activity to ASEAN.  In other words, it has the potential to be a formidable regional market and investment destination, and that is what we are working towards.

Hong Kong has contributed and benefited enormously in the industrialisation of China in the last quarter of a century. Moving forward, Hong Kong will continue to play a key role in China's development, adding value to the economic reform process.

Especially in financial services, Hong Kong has become the chosen capital formation centre for Mainland enterprises. Over the last 10 years, Hong Kong raised more than US$110 billion for Mainland companies. Indeed, Hong Kong ranked third in the world in terms of new capital raised last year.

Ten years ago, who would ever imagine that Hong Kong could raise more funds than London and Tokyo? Yet, this is actually happening and is gaining further momentum. Our pipeline of IPOs is full of heavyweight Mainland companies, including Bank of Communications, which is now just launching its public offer today.

World class financial infrastructure in HK

Our financial infrastructure and regulatory regime are all world class. It is not surprising that many Mainland companies seek to list on the Hong Kong stock exchange as a way to improve their corporate governance.

With CEPA giving Hong Kong's service providers easier access to the Mainland, they can bring special expertise, a global network and cutting-edge technology to that rapidly growing market. And the best way for overseas companies to take advantage of CEPA and Pan-PRD, and to tap into the huge potential they offer, is to establish their presence in Hong Kong, or to hook up with a Hong Kong partner. It is in a way a guide so that you can make fewer mistakes.

Free trade has made Hong Kong what we are today. And free trade is what we will continue to preach and practise. This meeting is therefore a very useful curtain raiser to the Sixth WTO Ministerial Conference to be held here in December. The Hong Kong Ministerial Conference will underline our long-standing active and constructive participation in multilateral trade liberalisation. 

MC6 to run smoothly

We will make every effort to pave the way for a successful ministerial conference, in terms of both organisation and substantive outcome. With the WTO entering its second decade, we all hope that the spirit of multilateral trade liberalisation will prevail, and that the Hong Kong Ministerial Conference will bear fruit. I anticipate that the discussions at this meeting will provide valuable insights into how this can be achieved.

Apart from trade and business, I am glad the council is also focussing on a host of issues associated with the global economy - financial health, corporate social responsibility, energy and environment sustainability, labour issues, terrorism, communicable diseases, natural disasters and so on. It is heartening to see these important topics on the agenda. 

As an engine for global economic growth, the Pacific Basin region is best known for its vision to steer, its versatility to adapt, and its resilience to rebound. 

I am sure that the Pacific Basin Economic Council, as the region's oldest and best established international business organisation, will continue to take the lead in finding ways to bolster trade and investment, lower trade barriers and boost prosperity for all in the region.