Closer co-operation with the mainland is needed to capitalize on the new global opportunities, and Hong Kong is eager to be part of the Pan-Pearl River Delta (PPRD) region's 9+2 agreement to turn it into a driving force for the SAR's economic development.

Chief Executive Donald Tsang said this at the Second PPRD Regional Co-operation and Development Forum in Chengdu, capital of Southwest China's Sichuan Province.

The 9+2 agreement, or Regional Co-operation and Development Framework Agreement, covers the provinces of Fujian, Jiangxi, Hunan, Guangdong, Hainan, Sichuan, Guizhou, Yunnan, the Guangxi Zhuang Autonomous Region and the two SARs, Hong Kong and Macao. The PPRD region covers more than 2 million square kilometres, with a population of more than 450 million and its economic potential matches that of other advanced regional economies across the world.

But as the region crosses the eastern, central and western parts of the mainland, Tsang said, co-operation relies more on sound infrastructure facilities linking each other. Co-ordinated plans are needed to avoid repeated construction projects, unnecessary competition and waste of resources, and to start construction of major railways, highways and bridges as soon as possible.

Hong Kong is co-operating with the Shenzhen Special Economic Zone to build the Shenzhen-Hong Kong Western Passageway and jointly working on a Hong Kong-Zhuhai-Macao bridge and the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Railway.

Tsang said the projects would improve communication between Hong Kong and its neighbouring provinces and cities and boost co-operation in exchange of talents and logistics.

The co-operation with the PPRD region, a fast rising economic power with a huge economic hinterland, will help Hong Kong immensely in the long run.

Hong Kong's unique position as a regional economic centre will be of far-reaching significance to PPRD'a regional partners, Tsang said. Most of the 9+2 agreement members are wooing hefty investment into their infrastructure sector. Sixty per cent of Hong Kong's US$250-billion investment on the mainland has found its way into the PPRD region and has helped start 130,000 enterprises.

PPRD region companies could use Hong Kong's position as Asia Pacific's financial centre to attract funds, Tsang said.

Hong Kong has been the top international fund-raising centre for mainland enterprises - nearly 300, or most, of the companies are listed in the SAR after going public outside and they have raised more than HK$900 billion.

By the end of last month, 80 firms from the eight provinces and one autonomous prefecture in the PPRD region had been listed on the Hong Kong Stock Exchange.

Since the signing of the 9+2 agreement in June last year, the eight provinces and one autonomous prefecture have held 26 trade talks and promotion fairs in Hong Kong. They exported more than US$253 billion worth of goods via Hong Kong last year, up 21 per cent over the previous year. For this year's first quarter, the figure was about US$42 billion, up 8.2 per cent over the same period last year.

Tsang said the service sector accounts for 90 per cent of Hong Kong's economy, while some of the eight provinces and the one autonomous prefecture were major manufacturing bases. He welcomed their enterprises to invest, set up branches and do business in Hong Kong.

Financial service forum

Later at a press conference, Tsang announced Hong Kong would host a PPRD financial service development forum in March next year. It's aim would be to increase the "financial services co-operation with other PPRD region members and enrich their knowledge about Hong Kong's financial services so that they could take advantage of that to tap the global market."

The "One Country, Two Systems" policy has enabled Hong Kong, which enjoys many advantages, to contribute to the PPRD region's development, Tsang said. An independent judicial system, free flow of information, a level playing field for business and a free and highly efficient market economy are some of the advantages that Hong Kong enjoys.

Such a foundation has helped the city actively participate in all aspects of delta co-operation, particularly under the Closer Economic Partnership Arrangement (CEPA).

He said Secretary for Financial Services and the Treasury Frederick Ma would lead a financial sector delegation to Fujian Province, on the approval of Governor Huang Xiaojing, in September to boost the economic co-operation.

"CEPA has brought marked benefits both to the mainland and Hong Kong. We will continue, under the CEPA framework, to hasten the opening up of the market for the service industry in PPRD, remove all obstacles, and provide more professional services to the mainland, including accounting and legal services, in order to help boost the country's economic development," Tsang said.

With the world's busiest container port and the most efficient airport and rich experience in land-water-air transport, Hong Kong is capable of providing one-stop service, he said. In co-operation with other PPRD partners it could act as the leading logistics hub of the region.

Through Hong Kong's direct participation in regional co-operation, the PPRD region can sharpen its competitiveness in foreign trade, boost its economic growth and thus further establish the SAR's status as a global financial centre.

"Therefore, the successful implementation of "One Country, Two Systems" policy has made it possible for the PPRD to better utilize Hong Kong's externally oriented market regime and solid economic foundation to help foster the region's economic development and integration," he said.

The SAR's communication network with the rest of the world will be an asset to the PPRD's future economic expansion and development, the CE said. "We think Hong Kong... could play the key role as the bridge between the mainland and the global market, and contribute to the economic development and further opening of the PPRD region."

Editor: Yan