At that time the sub-prime lending problem in the US was beginning to take hold, but no one could have predicted how deeply rooted the problem was or how quickly things would unravel in what some people like to describe as a "flat" world.

This year the forum has an added significance given the full-blown global financial turmoil that is affecting economies around the world, including Hong Kong.

This forum is a great chance to share expertise and reaffirm our collective commitment to economic growth and prosperity in Asia and beyond.

The overriding message from recent summits including the G20 Summit in Washington and the APEC Economic Leaders Meeting in Peru last November was a call for unity. More significantly, a call for a unified approach and greater international co-operation in bringing our economies back on an even keel.

I encourage you to use this forum as a stepping stone to achieving this goal.

The theme of the forum is: "The Changing Face of Asia". Despite the global financial crisis - and perhaps because of it - I see Asia changing for the better in terms of its long-term financial and economic prospects and potential.

In addressing the challenges of the financial crisis we have an added incentive - indeed an obligation - to break down barriers to trade so that we can make the most of the business opportunities in this dynamic region.

Although this region has not escaped the contagion effect of the financial turmoil - and we still have a long and difficult road to recovery ahead of us - the impact has been less damaging here than in the US or Europe.

Last year, the Asia Development Bank gave a positive outlook for Asia in its Strategy 2020 report. The report predicts that the Asia Pacific region will account for about 45% of global GDP by 2020 in terms of purchasing-power parity. It also forecasts the region will contribute about a third of world trade by 2020.

So what is Hong Kong's role in the "Changing Face of Asia"?

Although much has altered in the past 18 months - and confidence in the capitalist system has been shaken - the key elements of our economic success remain strong.

Hong Kong has been consistently rated as the freest economy in the world. Although this statistic means little on its own, it does reflect a critical element of our city's psyche.

We believe in open markets, free trade, low taxes and a free flow of people, ideas and information. We have a sound legal system, freely convertible currency, liberal immigration policies and a deep and broad pool of talent.

Today, more than 6,600 mainland and overseas companies have a base in Hong Kong and about 70% of the world's largest 100 banks have a presence here. Although our stock market has taken a battering over the past 12 months, it remains the seventh largest bourse in the world and the third largest in Asia by market capitalisation.

These are some of the credentials that affirm our position as the only international financial centre amid Asia and China.

We are working to strengthen this role on several fronts. One area is to further develop renminbi business in Hong Kong.

Hong Kong has a good deal of experience in renminbi business, which was launched here in 2004. This city remains the only jurisdiction outside the Mainland to provide renminbi banking services.

In 2007 we launched the first renminbi-denominated bond. Last month, the Central Government in Beijing announced a pilot scheme to settle trade outside the Mainland with Renminbi. Once the programme is up and running, trade between the economic powerhouses of Guangdong province and the Yangtze River Delta and Hong Kong and Macau will be able to be settled using renminbi.

Exporters in Guangxi and Yunnan Province will also be able to settle trade payments with the 10 Association of Southeast Asian or ASEAN nations in the Mainland currency. Through this scheme, Hong Kong will be able to increase the scope of financial services and expand its role as a financial gateway to the Mainland and as a leading financial services hub in Asia.

Hong Kong also has a vital part to play in taking forward the Mainland's opening up and reform programme that began in 1978. Earlier this month, the Central Government unveiled a development plan for the Pearl River Delta Region up to the year 2020. This plan promotes wider cooperation among Guangdong and the Special Administrative Regions of Hong Kong and Macau and gives us greater autonomy in deciding among ourselves the most effective areas for collaboration.

Here, the Central Government has set an ambitious goal of establishing the PRD Region as the most vibrant area in the Asia Pacific and one of the most competitive in the world. It will be a crucial frontier for China's opening up to the world. The plan paves the way for closer integration within the PRD in financial services, including supporting the listing of PRD companies on the Hong Kong stock market.

Other areas for closer co-operation and joint planning include shipping, logistics, tourism, conventions and exhibitions and the environment. Cross-boundary infrastructure and port and airport development will be enhanced by a more complementary and coordinated approach under the plan.

Hong Kong is already by far the largest trade partner of Guangdong province with import and export trade of  about US$140 billion in 2007. The PRD development plan reaffirms our city's key role in China's development. It also highlights areas where we can benefit from China's economic expansion, and contribute towards it at the same time.

In parallel with closer integration within our nation, we are also broadening our international horizons. As an international business and financial centre in the Asian time zone, we are reaching out to emerging markets and adding new services.

For example, Islamic finance is an exciting area for us and we are making good progress in establishing a platform for Islamic finance in Hong Kong.

This time last year I was about to embark on a visit to the Middle East. An important aim of the trip was to help promote Hong Kong's potential for Shariah-compliant products. I'm pleased to say it generated a great deal of interest.

I'm glad to note the positive developments as regards a number of Islamic finance initiatives since my trip last January. For example, our regulators have signed Memoranda of Understanding with the Dubai International Financial Centre Authority and the Dubai Financial Services Authority. This will help to foster mutual co-operation in developing Islamic finance between Hong Kong and Dubai.

In addition, we have seen the launch of a variety of Islamic financial products in the market, such as an Islamic banking window and indexes. An exchangeable Islamic bond, or sukuk, has also been listed on the local stock market. We still have much work to do.

A review of our tax law is underway to facilitate the launch of more Shariah-compliant products and put in place a level playing field for sukuk vis-a-vis conventional bonds. Islamic finance is a natural extension of our role as a global financial centre.

We possess the necessary credentials, such as a transparent regulatory regime, sound financial infrastructure and a large pool of professionals to make it work. 

I have covered some of the areas where Hong Kong can and will play a prominent role in shaping the changing face of Asia. Finally, I will say a few words about what we have been doing in Hong Kong to take the sting out of the global financial storm.

Since the last Asian Financial Forum in 2007, we have remained alert to the threat of the worsening turmoil in markets around the world, especially in the US and Europe.

The Hong Kong Monetary Authority, the Securities & Futures Commission and the Office of the Commissioner for Insurance have enhanced the regulatory framework for financial institutions. The Hong Kong Monetary Authority will continue to strengthen the supervisory framework to ensure that our authorised institutions can afford the risks they are taking.

We have helped maintain stability and confidence in our banking system by guaranteeing all bank deposits in Hong Kong until at least 2010. We have also set up a Contingent Bank Capital Facility to make additional capital available to banks should they require it.

In December, I announced a package of measures including a $100 billion loan guarantee for enterprises to help unfreeze credit and make more resources available to our businesses.

Another key element of the package was job creation. Rising unemployment is one of the biggest risks to economic recovery at the moment. I am confident we can create more than 60,000 new jobs this year, mostly through fast-tracking infrastructure projects that will help to provide some short-term relief from the economic down turn and contribute to our long-term development.

As I said earlier, we have a long and difficult road ahead of us in terms of economic recovery. We anticipate negative growth figures for the fourth quarter of 2008 and negative growth for the first half of this year.

Many pundits believe that there will be clear signs of recovery in the latter part of this year. However, this will depend on how the global economy responds to various stimulus packages and economic policy put in place to tame the financial turmoil. 

With our sound fundamentals, a high-quality labour force, the "can do" spirit of our people, and the new opportunities arising from the Guangdong, Hong Kong and Macau regional development, I am confident that Hong Kong will rebound strongly from the economic downturn. I encourage you to join us in exploring the opportunities that will undoubtedly emerge during these uncertain times.

Chief Executive Donald Tsang gave this address at the opening of the Asian Financial Forum.