Hong Kong Financial Secretary Henry Tang said here Wednesday that the city will continue to enhance economic ties with the Chinese mainland, and the economic benefits of CEPA, a trade-facilitating pact between them, are gradually being realized.

"The Closer Economic Partnership Arrangement (CEPA) Phases I and II, signed by Hong Kong and the mainland in 2003 and 2004 respectively, are key milestones" in the process of their economic cooperation, Tang said when presenting the 2005-2006 government budget to the Legislative Council.

"By the end of February this year, products with a total value of 1.4 billion HK dollars were exported tariff-free under CEPA from Hong Kong to the mainland," he said. "According to the initial findings of the Government's economic benefit analysis, we expect to see the creation of more than 28,000 new jobs in the first two years of implementing CEPA."

Tang added that the Individual Visit Scheme has also led to the creation of about 16,500 new jobs in 2004 and generated an additional 6.5 billion HK dollars in tourist spending during the year.

He said the Hong Kong government's role in tapping into the mainland market is to reduce any policy obstacles so as to attract investment from the mainland, and facilitate market access for Hong Kong businesses and professionals. "This is beneficial to Hong Kong and meets the development needs of the mainland economy."

According to him, under both phases of CEPA, a total of 1,108 products have been granted tariff-free treatment. Taken together with the mainland's commitment on accession to the World Trade Organization, about 95 percent of Hong Kong's domestic exports to the mainland are now entitled to such treatment.

Under Phase II, the liberalization of trade in services has been extended to 26 sectors. Both sides have also agreed to enhance cooperation on trade and investment facilitation in seven areas.

He said CEPA provides a useful framework for Hong Kong companies to promote their businesses in the mainland, and for mainland companies to invest and identify suitable business partners in Hong Kong, which will then assist them to extend their business networks overseas.

Tang added that in late August last year, the mainland authorities introduced a new investment facilitation policy for mainland enterprises to invest and to establish their businesses in the Hong Kong and Macao Special Administrative Regions, describing them as important steps under CEPA to facilitate investment.

"Our objective is to develop and expand CEPA still further. To this end, the government is now soliciting the views of relevant business sectors and will be holding discussions with the appropriate ministries of the central government," he said. 

Editor: Olivia