Hong Kong Special Administrative Region (HKSAR) Chief Executive Donald Tsang said economic development, wealth creation and improving people's livelihood will top the HKSAR government's agenda in the coming year.

Tsang outlined the government's priorities and strategies on issues like the economy, environment and education while pointing out three challenges ahead in the 2006-07 Policy Address at the Legislative Council Wednesday morning.

The annual address, titled "Proactive, Pragmatic and Always People First," is Tsang's second and last Policy Address of his term of office after he became chief executive of the HKSAR in June 2005.

Tsang said the central government continues to provide strong support to Hong Kong during the past year with new measures being introduced in the areas of trade and commerce, professional services and facilitation of investment under the CEPA framework, a free-trade deal between Hong Kong and the Chinese mainland.

"If Hong Kong is to embrace the era of globalization, our primary task must be to find an appropriately important role in the development of our country," Tsang said, adding the adapting to globalization and integrating with the Chinese mainland are not two contradictory paths for Hong Kong's development.

He said the National 11th Five-Year Plan states clearly that the central government will support Hong Kong's development on such fronts as financial services, logistics, tourism and information services, and the maintenance of Hong Kong's status as an international center of financial services, trade and shipping.

"This recognizes our dominant industries and their important function in our country's development," Tsang said. "Hong Kong's role is unique and irreplaceable among all the cities in China."

Tsang elaborated in detail on how the HKSAR government will tackle the environmental protection in the region.

Tsang said Hong Kong must adopt a forward-looking strategic approach by setting improvement goals for different stages while allowing for future new technology-induced improvements.

Tsang said Hong Kong must adhere to the "polluter pays" principle and that proper disposal of waste entails substantial recurrent expenditure, citing the emission caps on power plants at Castle Peak, Black Point and Lamma Island will be progressively tightened to meet the 2010 emission reduction targets.

"We shall not allow these firm targets to be compromised in anyway," he said.

He proposed in the Policy Address that the HKSAR government spend 3.2 billion HK dollars to provide an incentive for the early replacement of 74,000 pre-Euro and Euro I diesel commercial vehicles with Euro IV vehicles.

In the Policy Address, Tsang also clarified his recent remarks on pragmatic politics and the philosophy of public finance which have aroused some public discussion, saying "some people mistook our stopping to use the term 'positive non-interventionism' as a shift, or a U-turn, in our policy."

"This is not the case," he said. "For the sake of effective governance, I have always believed that we have to keep our feet firmly on the ground, and not be hamstrung by ideology or slogans."

Tsang outlines three challenges Hong Kong must handle in the future -- how to sustain economic growth, how to further develop a democratic political system, and how to build a harmonious society.

On the democratic development of political system in the HKSAR, Tsang said the SAR government has continued in its endeavor to move toward universal suffrage.

He said the HKSAR government will make all the necessary preparations for the elections of the Election Committee and the chief executive scheduled in December 2006 in order that they may be carried out smoothly according to the law in an open and equitable manner.

Editor: Donald