Hong Kong has been at the forefront in maintaining and promoting good corporate governance and high ethical standards in both the public and business sectors. We are one of the most competitive and freest economies in the world.

Among the factors underpinning our economic success are the rule of law upheld by our independent judiciary, a level playing field, an effective regulatory framework, and last but not least, a clean and efficient civil service.

Our achievements have been widely recognised by world-renowned think tanks and agencies. The Corruption Perception Index, released by Transparency International in October 2004, ranked Hong Kong as the second cleanest economy in Asia.

The World Economic Forum attributed Hong Kong's competitiveness in large part to its rule of law, the ability to keep corruption in check, and the honouring of contractual agreements.

The World Bank and Interpol have also consistently commended our ICAC for its anti-corruption efforts. In fact, the holistic, three-pronged approach of our ICAC has set a role model for many other anti-corruption agencies around the world.

Such accomplishments could not have been possible without the support of the community and the concerted efforts of both the business and public sectors.

We cannot, however, afford to be complacent. The prevention of fraud and corporate crime relies heavily on a robust ethical culture and a leadership that advocates the importance of high morals.

We must be ever vigilant against the risk of corruption. And business and public sector leaders not only have a duty to observe regulatory rules and standards, but also to nurture a corporate culture that embraces high standards of honesty, accountability and integrity.

Ethical governance is a major challenge facing the global business community. It has been widely recognised as a key factor in creating value and wealth on a sustainable basis. Good corporate governance can create value. On the other hand, corporate misconduct can destroy value in a short time. The demise of Enron serves as a constant reminder for us all.

As one of the world's leading financial centres, we are acutely aware of the need to maintain Hong Kong's financial stability and competitiveness. We have rolled out a series of reforms in recent years in close co-operation with our regulators and professional bodies.

These include upgrading the Listing Rules, a revamp of the regulatory regimes for Certified Public Accountants, and reforms relating to the directorship, shareholders' rights and corporate disclosure.

The Government is now pressing ahead further with two major legislative exercises on the corporate governance front. One is to give statutory backing to important listing requirements so that our Securities & Futures Commission could have more teeth to fight against market misconduct.

The other initiative is to establish the Financial Reporting Council, which will be tasked to enhance the oversight of auditors and ensure the quality of financial reporting of listed entities. Both moves will further enhance Hong Kong's position as a premier, global financial centre.

A sound system depends on the people who implement them. With commitment and sustained efforts, I am sure we can continue to stay at the forefront, maintaining Hong Kong as a paragon of good governance.

Acting Chief Executive Henry Tang gave this address at the opening of the Leadership Forum 2005.