Our country's rapid economic growth has brought both opportunities and challenges to the global arena of business and trade. While our country forges ahead, Hong Kong, as the southern gateway to the Mainland, is strategically located to "leverage the Mainland and engage ourselves globally".

One of the key areas of our economic development is to create a win-win situation through strengthening economic and trade co-operation with the Mainland and complementing each other's strengths.

In Premier Wen Jiabao's presence, the Mainland and Hong Kong signed the Closer Economic Partnership Arrangment, or CEPA, three years ago, creating a new, open platform for economic co-operation.

Following its implementation for two years or so, CEPA has achieved satisfactory results, including the following:

* All products of Hong Kong origin can enjoy tariff-free treatment when imported into the Mainland. Since the implementation of CEPA, Hong Kong products with a total value of $4.8 billion have been imported into the Mainland tariff-free.

* Under CEPA, Hong Kong service providers are granted preferential treatment in 27 sectors when setting up operations in the Mainland. In some sectors, like legal and banking services, the preferential treatment goes beyond China's WTO commitments.

* The Individual Visit Scheme has been implemented in 44 Mainland cities. So far, more than 13 million Mainland visitors have come to Hong Kong under the Scheme.

* Application procedures for Mainland enterprises to invest in Hong Kong have been streamlined. So far, about 380 Mainland enterprises have obtained approval to set up operations in Hong Kong, with investment totalling over US$2.2 billion.

* Mutual recognition agreements or arrangements for the exemption of professional examinations have been signed for 10 professions.

I would like to point out that CEPA was signed when Hong Kong's economy was going through its worst period in recent years. Coupled with the SARS outbreak, our economy suffered a major blow. The signing of CEPA undoubtedly added impetus to our economy and brought confidence back to our people during those difficult times. We remember this well. On behalf of the HKSAR Government and the people of Hong Kong, I would like to once again extend our gratitude to the Central Government.

Our economy has now fully recovered and regained its strong momentum. The unemployment rate has dropped to 4.9%, its lowest level in four years. Along with the efforts of Hong Kong people, the implementation of CEPA has been important in precipitating the rapid recovery.

We estimate that in its first two years of implementation, CEPA has created 29,000 jobs, and generated $5.4 billion in services receipts and $5.5 billion in capital investment for Hong Kong.

To deepen the economic and trade co-operation between the Mainland and Hong Kong, I am pleased to announce, on the third anniversary of the signing of CEPA, that further liberalisation measures will be introduced.

10 sectors to see liberalisation measures

For trade in services, 15 new measures involving 10 areas - legal, construction, information technology, convention and exhibition, audio-visual, distribution, tourism, air transport and road transport services and individually owned stores - will come into effect from next year. These liberalisation measures include:

* Expanding the scope of business activities that Hong Kong service providers can offer in the Mainland. For example, in the legal sector, Hong Kong residents qualified to practise law in the Mainland can engage in activities as agents in matrimonial and succession cases relating to Hong Kong. In the tourism sector, Hong Kong travel agencies operating in Guangdong can apply to run tours to Hong Kong and Macau for residents of Guangdong Province on a pilot basis;

* Further relaxing the level of capital participation by Hong Kong enterprises. For example, in the construction and air-transport service sectors, wholly-owned enterprises can be set up to provide consultancy services on construction cost and air-transport sales-agency services;

* Lowering the thresholds for Hong Kong enterprises to set up business or provide services in the Mainland. For example, in the information technology sector, the criteria for assessing qualifications of Hong Kong service suppliers wishing to be involved in the development and integration of computer systems in the Mainland will be relaxed. In the construction sector, the licensing requirement for setting up construction cost consultancy businesses will be relaxed.

37 more goods categories to enjoy zero tariffs

With regard to trade in goods, we have reached agreement with the Mainland on the rules of origin for another 37 categories of goods, including aquatic products, food and seasonings, and mechanical and electrical products. Starting from July this year, these goods can enjoy zero tariffs under CEPA provided that their corresponding origin criteria are met.

On trade and investment facilitation, the Mainland and Hong Kong have agreed to enhance co-operation in intellectual property protection, thus increasing the number of areas of co-operation under the CEPA framework from seven to eight.

Our country's 11th Five-Year Plan promulgated recently reaffirms Hong Kong's status as an international hub for financial services, trade and shipping, and supports Hong Kong's development in areas such as financial services, logistics, tourism and information services.

I am pleased to tell you that the State Council is earnestly studying the scope for further expansion of renminbi business in Hong Kong, which includes allowing Hong Kong importers to settle direct import trade from the Mainland in renminbi, and allowing financial institutions in the Mainland to issue renminbi financial bonds in Hong Kong on a pilot basis.

This is a rather complex exercise. The relevant authorities of the State Council are proceeding in full swing with the formulation of administrative arrangements in these regards to ensure smooth implementation of the new measures. This is a major policy initiated by the Central Government in support of the consolidation and development of Hong Kong's status as an international financial centre.

The Hong Kong Government will maintain close liaison with the Mainland authorities to expedite the preparatory work for an early launch of these two types of new business.

11th 5-year plan spotlights HK

I announced earlier that an economic summit would be held in Hong Kong this September to discuss how Hong Kong should respond to the 11th Five-Year Plan and to draw up a working strategy with practical actions. When I briefed Chairman Jia on the latest development of Hong Kong, he impressed upon us to seize the opportunity to speed up our development.

This opportunity stems from the inclusion of Hong Kong in the overall development framework of the country's 11th five-year plan. The plan has made specific references to the continuous implementation of CEPA and enhanced co-operation with Hong Kong in the areas of infrastructure, upgrading of industries, energy and environmental protection.

It also supports Hong Kong's development in areas such as financial services, logistics, tourism and information services to maintain Hong Kong's status as an international hub for financial and shipping services and trade.

I hope that through the deliberations in the summit, we will be able to draw up some practical recommendations that harness the current favourable situation and capitalise on our strengths.

Through these recommended measures, I hope Hong Kong will be better able to assist in our country's development, and to reinforce our position as an international hub for financial and shipping services and trade.

Looking forward, I am confident that the economic co-operation between Hong Kong and the Mainland will continue to achieve substantial results. I am confident that Hong Kong's status as an international metropolis will be maintained.

I am also confident that our bilateral relations with other trading partners will be consolidated and strengthened. I would like to take this opportunity to thank Chairman Jia for bringing to us the Central Government's care and concern.

Through the concerted efforts of the people of Hong Kong and the support of the Central Government, Hong Kong will be able to take full advantage of our strengths as well as our strategic position. This will not only enable us to further develop our economy, but also to contribute to our country's development.

Chief Executive Donald Tsang gaves this address at the opening of the "Mainland, Hong Kong & Macau Trade & Economic Co-operation Forum" at the Hong Kong Convention & Exhibition Centre.