As a city with virtually no natural resources, Hong Kong regards human capital as its main assets. Lots of efforts are being made to nurture our homegrown talent.

Like Singapore, Hong Kong places a high priority on education. Education has been the single largest area of government expenditure of Hong Kong. In his Budget this year, the Financial Secretary earmarked more than $61 billion for the education sector.

Hong Kong students have scored well in various international assessments. In the Programme for International Student Assessment 2006, our 15-year-old students ranked second in scientific literacy and third in both mathematical and reading literacy.

In Progress in International Reading Literacy Study 2006, our Primary Four students came second in reading literacy. In Trends in International Mathematics & Science Study 2007, our Primary Four students ranked first in mathematics and third in science, and our Secondary Two students ranked fourth in mathematics and ninth in science.

The performance of our universities is also encouraging. We have 12 local-degree-awarding institutions in our city. These include three universities that were ranked in the top 50 by the QS  Times Higher Education World University Rankings 2008.

The three are the University of Hong Kong, the Chinese University of Hong Kong and the Hong Kong University of Science & Technology. These universities also took three of the top four places in the QS.com Asian Universities Ranking published in May this year.

There is however no room for complacency. The recent financial crisis shows clearly what challenges we are facing as globalisation has taken hold. We need to capitalise our strengths, better equip our young people with broad-based knowledge, as well as lifelong learning attitude and skills to respond to this ever-changing world.

We have a commitment to provide opportunities for lifelong learning for all our citizens. This begins with 12 years of free education available to all our children. A qualifications framework, which was introduced last year, also enables people to structure their career development through continuing education.

The education reform we have been pursuing in the last decade is particularly timely in this perspective. In the next school year, we will enter a new phase in our road of reform.  

In September, we will begin implementing small class teaching in primary schools. This refers to classes of 25 students, instead of the current average of between 30 and 35. The initiative will be extended from Primary One to Primary Six in five years.

With a smaller class size and stepped-up professional support to schools, it is anticipated that teachers will use diversified teaching methods to attend to individuals' needs and to ensure better interaction in class. This will further strengthen the quality of our primary education.  

Also this September, we will introduce a new academic structure for senior secondary and undergraduate levels. We call the new structure 3-3-4 because it involves three years of junior secondary and three years of senior secondary education followed by a four-year undergraduate programme.

The new academic structure will also take some of the exam pressure off students. From 2012 onwards, secondary students will take the Hong Kong Diploma of Secondary Education. This will replace the current two exit exams, namely, the Hong Kong Certificate of Examination and the Advanced Level Examination.

Effectively, we will bring about a wider and broader senior secondary curriculum for our students, aimed at promoting the whole-person development and lifelong learning capabilities among them.

In addition to the English and Chinese language subjects, we have made mathematics and liberal studies core subjects for the entire cohort. We want our students to develop a more critical thinking mindset, with better problem-solving skills and higher social awareness, all of which are essential qualities in this knowledge world.

Students will also undertake elective subjects and take part in various community and voluntary services, known as other learning experiences. The purpose is to offer greater diversity and choices to suit the different needs, interests and abilities of students.

The new structure will also give our students an extra year of learning at the undergraduate level. This will provide a more balanced education to students, aiming for a broader knowledge base to support specialised learning. 

We do believe that all these will better prepare our youngsters for new opportunities. Apart from raising the standards of our own homegrown students, we do consider it important to attract high-calibre individuals from overseas to study and work in Hong Kong.

To attract more overseas students to Hong Kong, we have relaxed quotas for non-local students. We have also eased the rules to allow graduates to remain in the city for up to a year after their studies without restriction in order to give them plenty of time to find the right job.

In the last academic year, some 8,400 non-local students took part in programmes funded by our University Grants Committee. The greater majority of them come from nearby regions. I cannot say yet many of them come from Singapore. I would like to take this opportunity of addressing you here, to encourage more students from Singapore to join these programmes.

Talking about "Nurturing Talents for New Opportunities", we cannot afford to lose sight of the importance of research at the highest level, both for academic pursuit and for practical application. We believe that Hong Kong has an excellent prospect as an attractive place to conduct research.

Our unique position in China and our infrastructure are attractive to talents coming to teach and to conduct research. We recently established an $18 billion research endowment fund to support academic research activities.

We will also create additional publicly-funded research post-graduate places in the next three years. In particular, our Research Grants Council has recently established a postgraduate research fellowship scheme to target top-flight international students to undertake their postgraduate studies in Hong Kong.

We also welcome more research collaboration with universities in the Mainland of China as well as around the world, including Singapore. Currently, our universities are involved in more than 60 joint research projects with counterparts here in Singapore.

Finally, to attract top-notch business people and professionals to stay in Hong Kong, we need to attend to their children's schooling, which often assumes an important part of decision in favour of coming to Hong Kong. In this, we already have a vibrant international school sector.

There are more than 50 international schools in Hong Kong, including Singapore International School. Together they provide some 35,000 places for primary and secondary students. To meet ever increasing demand, we have identified four new sites for the expansion of existing schools and the building of new ones.

I have outlined some of the things we are doing to enhance our human capital. We have a mountain to climb during these tough economic times, but I am confident we are well equipped to seek out new opportunities.

All sectors of our economy, including education, benefit from Hong Kong's long-established strengths as a free and open economy. We have a low and simple tax system, sound financial infrastructure and an independent judiciary underpinning our tried and trusted common law legal system. With our strategic position as a gateway to Southern China, Hong Kong is also well placed to benefit from the ever-growing market of our motherland. 

Last October, at the height of the global financial crisis, our Chief Executive established a task force on economic challenges. Part of the task force's job is to identify new opportunities at an early stage in order to propel our recovery.

The task force recently identified six areas where our city has a clear advantage, including educational services. The other five areas are testing and certification, medical services, innovation and technology, cultural and creative industries and the environmental industry.

On educational services, we share Singapore's objectives of developing the education sector as an engine for economic growth.

In developing education as a priority industry, we already have internationally-recognised standards, high quality teaching staff and state-of-the-art facilities. We also have a trilingual environment, large potential demand across the boundary in the Pearl River Delta region, and a modern and cosmopolitan society.

As a city with an over 7 million population, we are fully aware of the limitation that we are facing in terms of land resources. The shortage of land could pose problem for further development of these priority industries.

As the Chief Executive announced a couple of weeks ago, we are determined to tackle the land-shortage problem. To this end, we will reserve two sites in the urban area for private tertiary educational purposes. 

In the years ahead, we will need our determination and creativity to steer Hong Kong in the right direction, and build on our foundations for a bright future for our city and our people.

To our business and trading partners including Singapore, Hong Kong remains a very attractive choice for you to invest, conduct transactions, and collaborate for the bigger market in Greater China. 

Secretary for Education Michael Suen gave this address at a dinner reception hosted by the Hong Kong Economic & Trade Office in Singapore.