Allow me to start with a macro perspective, and explain why 21st century Hong Kong is so reliant on strong education and the ability of our graduates. Our people are without doubt our greatest asset. This has been said many times about many places, but it is particularly true of Hong Kong.

Why? Firstly, because Hong Kong is a city with no natural resources of its own, except for our spectacular deep-water harbour. And secondly, in a small externally-oriented economy like ours, it is the vitality, entrepreneurship and hard work of our people that keeps us competitive in an increasingly competitive world.

In the long term, one of our biggest challenges will be coping with the combination of an ageing population and low birth rate, resulting in a shrinking workforce. This will place even greater focus on our education system and the talent it produces.

In Hong Kong, education takes up the largest share of government expenditure. In recent years we have spent more than $50 billion on education annually, accounting for about a quarter of our total recurrent expenditure. This year, we estimate that spending will rise to about $77.2 billion as we continue to implement education reforms.

To better equip our students for a rapidly changing world, we initiated an education reform programme about 10 years ago. This reform, together with the hard work of our teachers and students, is showing promising results.

Hong Kong students have scored well in various international assessments. Our 15-year-old students ranked second in science and third internationally in both mathematics and reading in the Programme for International Student Assessment 2006. And the Progress in International Reading Literacy Study 2006 placed our Primary 4 students second in reading literacy.

3 universities in world's top 60

Three of our universities placed in the top 60 of the Times Higher Education Supplement 2007. And an executive MBA programme offered by the Hong Kong University of Science & Technology was ranked as the world's best by the Financial Times of London last year.

Although we are pleased with the progress, the fine-tuning of our education system continues.

From the 2008-09 school year starting in September, free education in our public primary and secondary schools will be extended from nine to 12 years. The following year we will begin phasing in small-class teaching in primary schools.

These are just some of the ways we intend to nurture talent in a globalised world.

In parallel with our education policies, there are other measures to help raise the quality of our human capital so that we can achieve sustainable economic growth in the long term.

We are opening the door wider to overseas talent including students, business people, investors and those with special talents such as musicians, sports people and creative talents.

Barry Beck is a good example. The Vancouver-born former NHL star came to Hong Kong under our Quality Migrant Admission Scheme, or QMAS, almost a year ago. Since then he has been working to lift the quality and profile of ice hockey in Hong Kong. Yes, even in the heat and humidity of Hong Kong we have a regular ice hockey competition.

Canada's national sport is showing sign of thriving in the heart of East Asia. This may come as a surprise to some people. But hockey is growing in popularity at rinks across the city where Canadians take to the ice and test their mettle alongside people from all over the world including people in Hong Kong.

This is how our diverse and cosmopolitan city life works. It extends beyond the classrooms and office buildings to sports arenas as well as theatres, shopping arcades and places of worship.

Mr Beck is one of almost 500 people from a variety of professions who have been admitted to Hong Kong under the QMAS since its launch in June 2006. Other high-profile names include Chinese badminton player Zhou Mi, world-renowned pianists Lang Lang and Li Yundi, and actress Zhang Ziyi.

Others who have come to Hong Kong under the QMAS are less well known, but they all have one thing in common. They contribute to our multicultural society and the unique mix within our community that strengthens Hong Kong's status as an international city.

Recently we eased the requirements for the QMAS by relaxing the age restrictions and certain other criteria such as the length of work experience so that more people can apply.

We also have the Entry for Employment as Professionals Scheme, which has brought in more than 210,000 high quality people from different fields over the past decade.

This arrangement gives employers more flexibility in recruiting individuals from various fields having regard for changing markets and shifting demand for talent in different areas of expertise.

There is also a scheme for investors, which we call the Capital Investment Entrant Scheme. With a minimum investment of $6.5 million, overseas citizens can settle in Hong Kong. As at end-March this year, more than 2,000 applications had been approved. Since its launch in October 2003, the scheme has brought in total investment of almost $14.5 billion.

Highly skilled people from the Mainland of China can come to live and work in Hong Kong under the Admission Scheme for Mainland Talents & Professionals. It is an important area for us because Hong Kong's success depends as much on our relations within our nation as it does on our international relations with the rest of the world. The scheme has drawn more than 20,000 Mainland applicants since its launch in 2003.

What about students? We have already begun increasing in phases the quota of non-local students in publicly funded programmes. Non-local students in these programmes currently number about 7,300, or 10 per cent of the total number of students. By raising the quota to 20 per cent over time we can increase the pool of talent in the long run.

Hong Kong provides overseas students with a unique and exciting learning experience and opportunities that may not be available to them elsewhere. We offer high quality education with all the comforts of home. We have a good cultural mix of East and West in a welcoming, tolerant and progressive society.

In parallel, overseas students help to broaden the horizons of our local youngsters so they are better prepared for the outside world.  

In a new development, non-local students are now able to take up part-time jobs on-campus during their courses, and off-campus during the summer break. They will also be able to remain in Hong Kong for up to a year after they graduate so they have time to find a job and the chance to develop their careers in Hong Kong.

The door is also open to non-local students who have completed their studies in Hong Kong, left the city and are now keen to return. Under the Immigration Arrangements for Non-local Graduates they can return to Hong Kong within six months of graduating, even if they have not secured jobs. After six months away, non-local graduates can still return to Hong Kong to work as long as they have secured an offer of employment.

I have touched on some of the things we are doing in Hong Kong to attract and retain talent, but it is also imperative in this era of globalisation that we reach out to other countries and improve international collaboration in education.

Last month, I visited Norway and Finland to get a first-hand look at how these two countries are developing their education systems. I got a better feel of how they engage with the international community and explored new possibilities for collaboration.

I was deeply impressed by the dedication of teachers in Finland, and the Finnish proficiency in English. Proficiency in English is an area of great importance to Hong Kong in our role as a global centre for business and finance and a platform for international trade into and out of the mainland of China.

Here, Canada has a significant part to play. We estimate that about 15% of Hong Kong students undertaking higher education outside Hong Kong turn to Canada. Since 2003, Canada has issued more than 4,000 student visas to our young people wishing to study in this country.

Back in Hong Kong, about three-dozen Canadian teachers are involved in our Native-speaking English Teachers scheme. They teach English as a second language in our public primary and secondary schools.

The Canadian International School is an integral part of our education system. The school saw an opportunity to further broaden the horizons of its students when it decided to build the Leo Lee Arts Centre. I had the great pleasure of attending the centre's opening ceremony last month.

The arts centre is an impressive complex with a large auditorium and new teaching classrooms for visual and performing arts. The opening of this arts complex comes at a time when Hong Kong is promoting arts education to enhance life-long learning and develop artistic talent, creativity, innovation and teamwork - attributes that are vital to our long-term prosperity.

Canadian International School, with almost 1,500 primary and secondary school students, is the largest of five international schools in Hong Kong that follow the Canadian curriculum. Together, these five schools cater for about 3,070 students from North America, Europe and across Asia.

A vibrant international school sector is part and parcel of Hong Kong's reputation as Asia's world city. As well as the Canadian curriculum, the more than 50 international schools in Hong Kong offer curricula including German-Swiss, French, Australian, Singaporean, Korean and Chinese. Many schools also offer International Baccalaureate programmes.

To cope with strong demand for international school places, the government is working with the schools to expand capacity. This includes making more sites available to develop new schools, or expand existing ones.

Finally, let me talk about areas for further growth and co-operation.

As I mentioned, Hong Kong and Canada already enjoy sound educational ties, but we can do even better. Of the 7,200 non-local students enrolled in higher education programmes this academic year, just 16 are from Canada.

Our higher education institutions also have student-exchange programmes with more than 30 counterparts in Canada. Of the 2,900 incoming exchange students this academic year, 231 are from Canada, while 289 Hong Kong students have come to Canada. We welcome more Canadian students in both areas.

Another exciting area for further collaboration is research and development.There are more than 200 research projects conducted between institutions in Canada and Hong Kong's higher education sector. These cover areas such as biological sciences, physical sciences, engineering, IT and computer science and technology.

In his Budget in February, the Financial Secretary set aside $18 billion for a research endowment fund to support research and development activities at our tertiary institutions. I believe this will open up new areas for co-operation in research between Hong Kong and Canada.

Secretary for Education Michael Suen gave this address at a breakfast seminar entitled "Nurturing Talent in a Globalised World - Hong Kong's Game Plan and Opportunities for Canada" in Toronto.