ection Section II Chapter 6: The Changing Economy · 2018-01-24 · Section II Planning Vision and...

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Chapter 6: The Changing Economy

Section II Planning Vision and Future Challenges

The Changing Economy

Section II Planning Vision and Future Challenges

6The Changing Economy

“Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm

is past the ocean is flat again.”

–JohnMaynardKeynes

6.1 Economic Development in Historical Perspective

6.1.1 HongKonghasexperiencedmajoreconomictransformations–fromafishingvillagetoanentrepotinthe1950sand1960s,thentoalightindustrialbaseinthe1970sand1980s.ThepasttwotothreedecadessawtheopeningupoftheMainlandwiththeattractionoflowcostsoflandandlabour,aswellaspolicyandtaxincentives,resultinginbulkrelocationofHongKong’smanufacturingactivitiesnorthwards.Atthesametime,theserviceindustrieshaveexpandedandbecomethethrustofoureconomy,enhancingHongKongasamajorfinancial,business,tradingandtransportationcentreintheAsiaPacificRegion.

6.1.2 HongKong’seconomyhashaditsupsanddowns.Growthhasbeensustainedbyourfineinstitutions,diligentworkforceaswellasmaintainingasoneofthemostopeneconomiesintheworld.However,wealsohavehadbadtimes–morerecentlytheAsianfinancialcrisisofthelate1990s,whichwasaggravatedbytheSevereAcuteRespiratorySyndrome(SARS)incidentin2003,pushingoureconomytoitslowest(–3.4%inGrossDomesticProduct(GDP)growth).Fortunately,wehavebeenonasteadypathofrevivalsincethen.In2006,theGDPgrewby6.5%over2005tosome$1,472billion.Exportofgoodsandservicesrecordedagrowthof10.2%and13.4%respectively;fixedassetinvestmentrose(5.1%)furtherandconsumerspendingcontinuedtorise(4.8%).Withtheunemploymentratefallento4.8%in2006,totalpersonsengagedreached3.48million.

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6.2 Economic Restructuring Continues

6.2.1 Theprocessofeconomicrestructuringcontinuesthroughaconstantclimbupthevaluechain,demandinghigh-skillandhigh-technologyinputandhigh-value-addedservices.Inrecentyears,HongKong’sworkforcehasgrownat

anaverageannualrateof1%,whilethecorrespondingrateforthemorehighly-skilled,professionalandmanagerialworkforcehasbeencloseto4%.In2006,aboutoneinthreeofourworkingpopulationbelongedtothiscategory.

6.2.2 High-skillemploymentisfoundinthekeyindustriesoffinancialservices,producer/professionalservices,andtosomeextent,thetrading,logisticsandtransportationsector.ThesearealsosignificantcontributorstoourGDPgrowth.Togetherwithanotherimportantsector,tourism,thevalueaddedoftheseindustriesamountedto$740billionin2005,accountingforover55%oftheGDP.About1.55millionpersonswereengagedinthesefourkeysectors,accountingforabout46%ofthetotalemployment.Theyhavebeenthedrivingforceofoureconomicgrowthandareexpectedtocontinuetobeso.

6.3 Economic Prospects

6.3.1 Lookingahead,oureconomiclinkwiththeMainlandisstillundoubtedlyourgreatestadvantageinsustaininggrowthinthelongrun.Asnotedinthepreviouschapter,theMainland’svigorouseconomicgrowthandintensificationofreformsofferusunrelentingopportunities.Ourfuturestrategymustfocusonhowwecanleverageonthisadvantageformutualbenefits.

6.3.2 Asoneofthemostopeneconomiesoftheworld,HongKongalsoneedstolookconstantlyatglobaltrends.Theworld’seconomyisbecomingmoreglobalisedasaresultoffreetradeandadvancesininformation

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technology.TheconclusionoftheGeneralAgreementonTariffsandTrade(GATT)andthesubsequentestablishmentoftheWTOreflectprogressiveremovaloftradebarriersrelatingtogoodsandservices,althoughthisprocesshasbeentosomeextentstalledbyanotherwaveofprotectionisminthemaking.Atthesametime,technologicaladvancesincommunicationsandtransportationhavedrasticallyreducedthedistancebetweenmarkets.Transactionprocedureshavebeenstreamlined.Suppliersfromallcornersoftheworldnowengageinkeenerandmoredirectcompetition.HongKongneedstothinkofnewwaystocompeteintheworldmarketsuccessfully.

6.3.3 OneoftheplanningobjectivesfortheHK2030StudyistoenhanceHongKong’shubfunctionsbyprovidingsufficientlandreservestomeetthechangingneedsofdifferenteconomicsectors.WehavethereforeanalyseddevelopmenttrendsoftheimportantgrowthsectorsofHongKongtosetthescenefortheformulationofstrategiestomeetthisobjective.

6.4 Financial and Business Services

FinancialServices

6.4.1 HongKongisoneofthemostvibrantinternationalfinancialcentresintheworld.Ourfinancialsectorischaracterisedbyanintegratednetworkoffinancialinstitutionsandmarkets.Wearenowtheworld’sthirteenthlargestbankingcentreintermsofexternalassetsandthe6thlargestcentreforforeignexchangetrading.WehaveovertakenTokyosince2004astheleadingequityfundraisingmarketinAsia.Oftheworld’stop100banks,71haveoperationsinHongKong.HongKongalsooperatesoneofthemostactivephysicalgoldmarketsandoneofthemostopeninsurancecentresintheworld.

6.4.2 In2005,thefinancialservicessectoremployedabout180,000(5%)ofHongKong’sworkingpopulation,anditsactivitiesaccountedforaround14%ofGDP.

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6.4.3 Weenjoyanumberofadvantages,includingasoundregulatoryregime,anefficientandtransparentmarketandmanyfinancialprofessionalsfromaroundtheworldexperiencedinprovidingservicestoMainlandenterprises.Inthelongrun,thissectorislikelytoremainakeypillarinsustainingeconomicgrowthforHongKong.Governmenthasbeenactivelyexploringwaystoimprovethe“software”withregardto,forexample,expandingthescopeofrenminbi(RMB)business,facilitatingmarketdevelopment,upgradingthequalityofourfinancialmarketsandpromotingourbrandnameetc.

BusinessServices

6.4.4 Thebusinessservicesectorplaysanimportantroleinsupportingthecontinuousandrapidexpansionofourservicesoverthepasttwodecades.ThecontributionofthebusinessservicestoourGDProsefrom2%in1980toalmost5%in2005.

6.4.5 TheliberalisationmeasuresintradeinservicesagreedundertheMainlandandHongKongCloserEconomicPartnershipArrangement(CEPA)willpermitearlierandwideraccessofourservicesupplierstotheMainlandmarket,aheadofChina’sWorldTradeOrganisationtimetable.

6.4.6 TakingallphasesofCEPAtogether,theMainlandhasagreedtoprovidepreferentialtreatmenttoHongKongservicesuppliersin27serviceareas.Alltheliberalisationmeasurestookeffectfrom1January2007.ImplementationoftheCEPAhasthereforeofferednewbusinessopportunitiesintheMainlandforHongKongprofessionalsandserviceprovidersandpromotefurthergrowthinthissector.

TheCentralBusinessDistrict

6.4.7 Otherthanimprovingthe“software”,paralleleffortsareneededtostrengthenthe“hardware”required,forexample,throughcontinuedprovisionofanattractiveofficeenvironment,especiallyatthecentralbusiness/financialdistrict,whichnotonlycanenhancebusiness

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efficiency,butprovidethestatusandprestigedemandedbytop-endfirmsandmulti-nationalcorporations.Formanyofthesefirms,beinglocatedatthecentralbusinesscoreandaccommodatedwithinhigh-quality,iconicofficebuildingswouldbeconsideredmostessential.

6.4.8 Asuccessfulcentralbusinessdistrictrequiresanumberofattributes,includinggoodaccessibility,sufficientlandforacontinuedsupplyofhigh-gradeofficebuildings,aswellasadequatesupportingfacilities.Weneedtotakethesefactorsintoconsiderationinenhancingourexistingcentralbusinessdistrictand,ifnecessary,planforitsexpansion.

6.5 Trade

6.5.1 Withmorethan100,000tradingcompaniesandoneoftheworld'sbusiestcontainerportsandinternationalaircargooperation,HongKongrankseleventhlargestintheworldbothasatradingeconomyandexporterofcommercialservices.Totalexportsrecordeda9.4%gainin2006.

6.5.2 ThevibrantexportgrowthhasbeenunderpinnedbytheMainland’sstrongdemandforindustrialinputsforexportproduction,notablyelectronicspartsandcomponentsduetostronger-than-expectedglobaldemandforelectronicproducts,andsustainedconsumerdemandfromtheUnitedStatesandtheEuropeanUnion,especiallyforgarmentsamidquotaremoval.Atthesametime,unitvalueofHongKongexportsalsoroseby1%in2006,contributingtogoodexportperformance.

SecondaryOfficeNodes

6.5.3 Intermsofscaleofoperation,HongKong’stradesectorisdominatedbysmallandmedium-sizedenterprises(SME)1.

1 Definedasmanufacturingenterpriseswithlessthan100employeesornon-manufacturingenterpriseswithlessthan50employees.

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AsatDecember2005,therewereabout97,000SMEsconductingimport/exporttradesinHongKong,engagingover410,000persons.Thisaccountedforthebulkofalltradingfirms,andoverone-thirdoftotalSMEestablishments(268,000).

6.5.4 MostoftheSMEschoosetoestablishtheirofficesatsecondaryofficenodeswhichoffergoodaccessibilityandrelativelyaffordablerentallevels.AccordingtoaCommercialandIndustrialFloorspaceUtilisationSurvey2,around46%and70%ofthefloorspaceofthenon-Grade-Aofficeandtheindustrial/officebuildings,respectively,intheMetroAreaoutsidethecentralbusinessdistrictwereoccupiedbyimport/exportandwholesaletradingfirms.

6.5.5 Infactsincethemid-1980s,wehavebeenprogressivelyrelaxingtheplanningcontrolsontheuseofindustrialbuildingsinresponsetocontinuedtrendsforachangingeconomy.OldindustrialareaslikeKwunTong,CheungShaWan,KowloonBayandTsuenWan,transformedintosecondaryoffice/businessnodes,arenowaccommodatingmanyofthefirmsrelatedtothetradingsector.

6.5.6 InviewoftheimportanceoftradingfirmstoHongKong’seconomy,weshouldcontinuetoexplorefurtheropportunitiestooptimisetheuseofanysurplusindustriallandorobsoleteindustrialbuildings.Moreover,theexistingsecondaryoffice/businessnodescouldalsobeenhancedthroughvariousareaimprovementschemes.

ConventionandExhibitionFacilities

6.5.7 Underarobustenvironmentfortrade,HongKongisundeniablyanaturallocationalchoiceforavarietyofconventionsandexhibitions,includingtheworld’slargestleatherfair,eventsforwatchesandclocks,electronics,giftsandhouseware,jewellery,toys

andgames,opticalgoodsandcosmeticsetc.

2 Source:PlanningDepartment(2005)

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6.5.8 Tosupporttheseevents,wehaveprovidedanumberofworld-classconventionandexhibitionfacilities.TheHongKongConventionandExhibitionCentre(HKCEC)inWanChaiNorthprovidesaround64,000squaremetresofexhibitionspace.Awiderangeofotherexhibitionsites,includingthenearbyHongKongExhibitionCentreandtheHongKongInternationalTradeandExhibitionCentreinKowloonBayisalsoavailableforvarioustypesofevents.TheopeningoftheAsiaWorld-Expo(AWE)inChekLapKokin2006,withits70,000squaremetresofrentablespace,furtherstrengthensourattractivenessinhostingmajorevents.

6.5.9 Conventionandexhibitionactivitiesdonotonlyfacilitatetrade,theyarealsoanimportantboostertothetourismindustry.In2006,businesstravellersvisitingHongKongaccountedfor24%ofthetotalvisitorarrivals.Thebusinessvisitorshaveallalongbeenahigh-yieldsegmentspendingconsiderablymorethantheaveragevisitor3.

6.5.10 Withamplesupplyofexhibitionspaceandtheadvantageofbeingsituatedclosetotheproductionbases,ourneighbouringcitiesinthePRDarepresentinggreatchallengetothefuturedevelopmentofourconventionandexhibitionbusinesses.ContinuedeffortisthereforeneededtoreinforceHongKong’spositionasamajorconventionandexhibitionvenueoftheAsiaPacificRegion.PartofthiseffortincludestheAtriumLinkExtensionprojectoftheHKCEC,whichwhencompletedinearly2009,willprovideanadditional19,400squaremetresofexhibitionspace.Moreover,theAWEhasthecapacityoffurtherexpansiontoatotal100,000squaremetresofexhibitionspace.Considerationcouldalsobegiventothesettingup,inthelongerterm,ofmoreconventionandexhibitionfacilitiestoconsolidateHongKong’sroleasatradefaircapital.

3 AccordingtoasurveyconductedbytheHongKongTourismBoard,theintendedpercapitaspendingforexhibitionandconventionvisitorswas$10,349in2004,whereastheaveragespendingofallovernightvisitorswas$4,478.Source:AStatisticalReviewofHongKongTourism2004.

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6.6 Logistics

6.6.1 SouthChinaisamajorglobalmanufacturingcentreandHongKongisaninternationallogisticshub.Ourairporthastheworld’slargestinternationalcargothroughput,andourcontainerportisamongthebusiestintheworld.Nevertheless,inthefaceofcompetitionfromnearbyregions,HongKong’slogisticsindustryismakingeveryefforttoimproveefficiencyandprovidespeedy,reliableandfull-scalevalue-addedlogisticsservicessothatqualitycancompensateforcostdifferentials.

PortServices

6.6.2 In2005,theHongKongPorttogetherwithmid-streamoperationsandtheRiverTradeTerminalinTuenMunhandledsome22.6millionTwentyFootEquivalentUnits(TEUs)ofcargo.Itisnowservedbysome80internationalshippinglines,providingover400containerlinerservicesperweekconnectingtoover500destinationsworldwide.

6.6.3 TheporthascontributedsignificantlytoourGDPgrowthandemployment.Takingintoaccountinteractionsbetweencoreportindustriesandtherestoftheeconomy,theportcoresectorconstitutedaround4%ofHongKong’sGDPin2002.About110,000jobs,or3.4%oftotalemployment,aredirectlyorlooselylinkedtotheport.

Looking Ahead

6.6.4 AccordingtotheStudyonHongKongPort–MasterPlan2020(HKP2020Study)completedinNovember2004,thefuturemarketforportservicesismarkedbythefavourablegrowthprospectsofthecargobasebutincreasedcompetitionforHongKong.

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6.6.5 ResultsofthepreferredforecastscenariooftheHKP2020Studysuggestthat:

• TotalHongKongoceancontainerthroughputcouldincreasefrom13.9millionTEUsin2002to31.8millionTEUsin2020.However,asthebaseexpands,theannualgrowthrateisexpectedtoslowdownfrom5.7%during2010-2015to3.4%during2015-2020,withtheshareofSouthChinadirectoceancargobaseroutingviatheHongKongPortcontinuingtofallduetorisingcompetitionfromShenzhenports.

• HongKong’srivertradevolumeisexpectedtoincreasefrom5.2millionTEUsin2002to8.5millionTEUsin2020.

6.6.6 TheHKP2020Studyestimatedthatthemaximumcapacityoftheexistingcontainerport(CT1toCT9)isaround18.6millionTEUs,withapotentialtoincreasebyanother1.7millionTEUs.Intheshortterm,significantadditionalhandlingcapacitycanbeaddedtotheexistingcontainerterminalssothatnewcontainerberthswillnotbeneededatleastuntilthefirsthalfofthenextdecade.

6.6.7 WhileitisimportantfortheGovernmenttocontinueoptimisingtheefficiencyofthecurrentterminalsandmonitoringthemarketconditions,weneedtoplanaheadinresponsetothegrowthneedsofthissector.Indeed,therehasbeensomerequestfromthecommunityforstrengtheningourportandlogisticsinfrastructuretobetterservetheneedsoftheregion.However,portoperationplacesaveryheavystrainonlandresources,infrastructureandtheenvironment.Publicconcernsovertheadverseimpactscausedbyportdevelopmentandoperations,aswellastheproliferationofback-upusesintheNewTerritorieshaveintensifiedoveryears.Acarefulbalancebetweenportdevelopmentanditsimpactsonourresourcesandtheenvironmentisthereforeneededintheformulationofourfuturestrategy.

AirServices

6.7.1 HongKongisaglobalaviationcentre.TheHongKongInternationalAirport(HKIA)atChekLapKokhandlesmorethan700flightsaday

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operatedbyover80airlines.About50%oftheworld’spopulationislinkedtoHongKongwithinfivehours’flyingtime.

6.7.2 In1998,theHKIAopenedforbusinesswithone(south)runwayandaprojectedannualcapacityof35millionpassengersand3milliontonnesofcargo.Constructionofthesecond(north)runwayandcompletionoftheNorthwestConcourseofthePassengerTerminalBuildinginMay1999andJanuary2000respectively,increasedtheHKIA’spassengerhandlingcapacityto45millionayear.Thetworunwayscanhandleanultimatecapacityofover60aircraftmovementsanhour.

6.7.3 Thesignificantboostinrunwayandterminalcapacitiescoupledwiththeairport’s24-houroperationhasfacilitatedrapiddevelopmentofourairportservices.Thepassengerflowincreasedfrom33millionin2000to44.5millionin2006.Duringthesameperiod,cargothroughputalsorosefrom2.2milliontonnesto3.58milliontonnesandaircraftmovementsfrom182,000to263,000.

6.7.4 WiththeopeningofanewAirport-MainlandCoachStationaswellastheSkyPierairportferryterminal,theHKIAhasbeentransformedintoaninter-modaltransportationhubcombiningair,seaandlandtransport.Thecoachstationoperatessome200bus-tripsperday,whichcarrypassengersbetweenHKIAandsome40destinationsinthePRD.TheSkyPierprovidescross-boundaryferryservicestotheportsatShekou,Shenzhen,Macao,DongguanandZhongshan.Theprovisionofcross-boundarycoachandferryservicesisasignificantstepforwardinbroadeningtheservicecatchmentofourairport.

Airport Master Plan

6.7.5 In2001,theAirportAuthorityHongKong(AA)formulatedalong-termdevelopment,MasterPlan2020,fortheHKIA.Sincethen,AAhasbeenpursuingvariousinitiativestoenhancetheHKIA’scapacitytocopewiththecontinuinggrowthinairtraffic.Theseincludetheconstructionofasecondpassengerterminalbuilding,provisionofadditionalcargoparkingstandsandcargohandlingfacilities,constructionofapermanentcross-boundaryferryterminal,enhancementoftheflowandcapacityoftheexistingpassenger

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terminalbuilding,constructionofasatelliteconcourseforusebysmallaircraft,etc.

6.7.6 On21December2006,AAreleasedtheirupdateontheAirportMasterPlan(knownastheHKIA2025).TakingintoaccountlatesteconomictrendsinHongKongandtheregionaswellaspotentialcompetitionfromneighbouringairports,itisforecastedthatby2025,HKIAwillserve80millionpassengers,handle8milliontonnesofcargoand490,000aircraftmovementseachyear.Otherthanthefacilityexpansionalreadyplanned,thereportalsoindicatedthatinthelongerterm,itiscriticaltoenhanceHKIA’srunwaycapacity.TheAAhasinitiatedengineeringandenvironmentalfeasibilitystudiesontheconstructionofathirdrunwayatHKIA.Thedecisiontobuildthenewrunwaywilldependontheresultsofthefeasibilitystudies.

6.7.7 Separately,theplannedHongKong-Zhuhai-MacaoBridge(HZMB)willenhancetheconnectionbetweenPRDWestBankandourairport.Givenouruniquegeographicallocationandexcellentinfrastructure,especiallyafterthecompletionoftheHZMB,HongKong’sairservices,aircargoinparticular,arelikelytobeakeyareainsustainingourlong-termeconomicgrowth.Priorityneedstobegiveninstrengtheningthissectortoensurethatwecouldremainstronginthefaceofrisingcompetition.

6.8 Special Industries

6.8.1 Innovationandtechnologyareimportantdriversofthelong-termgrowthofaneconomyforbothproductionandservices.Improvedtechnologyinthemanufacturingsectorcouldresultinmoreefficientproduction,packaging,marketingordistribution,whichinturncouldleadtocostreductionandgreaterbuyerdifferentiation.TheGovernmenthasastrongcommitmentindrivingforwardinnovationandtechnologythroughestablishingastrategicframeworkwhich

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emphasisesfocus,marketrelevance,industryparticipation,leverageontheMainlandandbettercoordinationamongdifferentelementsoftheinnovationandtechnologyprogramme.Alsoimportantistheprovisionofsuitabletechnologyinfrastructuretofacilitatetechnologicalupgradinganddevelopmentoftheindustry,asfurtherdescribedbelow.

IndustrialEstates

6.8.2 TheindustrialestatesinHongKongofferawell-plannedlandscapedenvironment,withconvenientamenitiesandefficientcommunicationsnetworkformanufacturingandserviceindustrieswhichcannotoperateinmulti-storey

factoriesorcommercialbuildings.TheyhavehelpedbroadentheindustrybaseandupgradethetechnologylevelofHongKong.

6.8.3 Firstestablishedin1977,theindustrialestateswereoriginallytargetedatmanufacturingoperationsonly.Followingthechangingcharacterofthemanufacturingsectorandtheincreasingcontributionofserviceindustry,thescopeofactivitiespermissibleinindustrialestateswereextendedtwicein1990and1998respectively.Thefirstchangewastoincludethesupportingservicesformanufacturingindustries(e.g.researchanddevelopment,technicalcentresandprototypedesign),whilethesecondtransformationwastofurtherenlargethescopetoincludeserviceindustries(e.g.broadcastingindustry).

6.8.4 Atpresent,theindustrialestatesinTaiPoandYuenLongarefullyoccupiedwhiletheoneinTseungKwanOisabout60%fullasatOctober2006.Wewillneedtomonitorcloselythedemandforaccommodationwithintheindustrialestatesandreserveadequatelandforthepurposewhennecessary.

6.8.5 Specialindustriesareingenerallandextensiveandlocationsensitive,buttheproductionoflargepiecesofdevelopmentlandoftentakes

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alongtime.Thelandbankconceptisthereforeparticularlyrelevanttospecialindustrialuses.Inordertoreadilyaccommodatetheunanticipatedlandneedsarisingfrominvestmentorpolicychanges,weneedtoplanaheadandexaminetheneedforanyfurtherinfrastructure,suchasafourthindustrialestate.ThelandbankconceptwillbefurtherdiscussedinChapter9ofthisreport.

OtherTechnologyInfrastructure

6.8.6 TheGovernmenthasbeenpromotingtheuseoftechnologyanddesignanddriversforfurthereconomicgrowth.ThusfacilitiesliketheCyberportatTelegraphBay,theScienceParkatPakShekKokandInnoCentreatKowloonTonghavebeenestablishedtocreateclustersininformationtechnology(IT),hightechnology,researchanddesign(R&D),aswellasdesignandbranding.Toensurelong-termsustainableeconomicgrowth,considerationmaybeneededtofurtherreinforceourinfrastructureinthisarea.

6.9 Cultural and Creative Industries

6.9.1 Culturalandcreativeindustriesbroadlyrefer,inthecontextofHongKong,toindustrieswithvalueaddedthroughcreativity.ElevenindustrialsectorshavebeenidentifiedasthemajorcomponentsofHongKong’screativeindustries,namely,(1)advertising;(2)architecture;(3)art,antiquesandcrafts;(4)design;(5)filmandvideo;(6)digitalentertainment;(7)music;(8)performingarts;(9)publishing;(10)softwareandcomputing;and(11)televisionandradio.Someofthesemayalsocontaintechnologycontentandthereforeoverlapwiththosedescribedundertheprevioussection.

6.9.2 Culturalandcreativeindustriescouldprovideanenablingenvironmenttonurturecreativetalents(especiallyamongyoungpeople),arouseawarenessoftheimportanceofthissector,generateemployment,andsupportintra-regionalandinternationalculturalnetworks.

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6.9.3 Overseasexperiencesshowthatculturalandcreativeindustriescanhelpstrengthentheeconomicbaseandfacilitateasmoothereconomicrestructuringprocess.In2005,culturalandcreativeindustriesaccountedforonlyabout4%ofourGDP.Comparedwithothercountries,e.g.8%intheUnitedKingdom,therestillseemstobescopeforgrowth.

6.9.4 Asthissectorissodiverseintype,differentusesmayhaveverydifferentaccommodationrequirementsandinfrastructuresupport.Forexample,culturaleventswillrequirespecialperformingvenuessuchasthosetobeprovidedattheWestKowloonCulturalDistrict.Artanddesignerstudios,ontheotherhand,maytendtoscatteramongotherlanduses,e.g.commercial/residentialareasorindustrialdistricts.Weneedtocarefullyidentifytheparticularneedsofdifferentusersandplanfortheiraccommodationandinfrastructurerequirementsaccordingly.

6.10 Tourism

VisitorArrivalsinHistoricalPerspective

6.10.1 TourismisoneofthecoreenginesofHongKong'seconomicgrowth.Aboominthetourismindustrycouldimprovetheoverallmarketsentiment,boostgrowthinrelatedsectorsandcontributetotheoverallemployment,especiallyjobsrequiringalowerskillslevel.In2006,totalvisitorarrivalsincreasedby8.1%over2005to25.3millionandthetotaltourismreceiptincreasedfrom$106billionto$119billionduringthesameperiod.

6.10.2 WiththeMainland’srelaxationofthequotaforHongKongGroupTourSchemewhichtookeffectinJanuary2002andtheintroductionoftheIndividualVisitSchemefortravellersfromanumberofMainlandcitiestovisitHongKong,whichhasbeenimplementedbyphasesinceJuly

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2003,MainlandvisitorstoHongKongroseto13.6millionin2006,accountingfor54%ofthetotalnumberofvisitors.

PotentialforFurtherGrowth

6.10.3 TheWorldTourismOrganisationforecaststhatthenumberoftouristarrivalstoHongKongcouldreachabout57millionby2020withanannualgrowthofabout7%.Thatbeingthecase,HongKongwouldrankfifthamongthetopdestinationsoftheworldin2020.ItwouldalsobecomethesecondmostpopulardestinationintheEastAsiaPacificRegionbehindtheMainland(whichwillatthesametimerankfourthinoutboundglobaltravel).

6.10.4 Takingadvantageofourgeographicallocation,HongKongcanactasatourismgatewayofChina,capturingbothoutboundtravellersfromtheMainlandanden-routeinboundvisitorstotheMainland.ThereisscopetofortifythealreadyformedalliancewithourimmediateneighboursinthePRDregion,i.e.MacaoandGuangdong,formulti-destinationtoursforinternationaltravellers,forexamplethroughacontinuouscommitmenttoupgradeexistingattractionsandimplementationofnewtourismprojects.

6.10.5 Anumberofnewtourismfacilitieshavebeenputinplace,suchastheHongKongDisneyland,theWetlandParkatTinShuiWaiandtheNgongPingSkyrail.Newmajortourismresourcesarebeingexaminedundervariousseparatestudies,suchasthestudyontheLantauConceptPlan,theredevelopmentoftheOceanPark,theHarbourPlanandtheKaiTakPlanningReview(foranewcruiseterminalcumtourismnodeintheKaiTakrunwayarea)etc.

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GrowthofAlternativeTourism

6.10.6 ToattractnewvisitorstoHongKong,lengthentheirstaysandencouragerepeatedvisits,weneedalsotowidentherangeoftourists'experienceanddiversifyHongKong'svisitorattractionsforbusinessandleisurevisitors.Newthemes,i.e.ecotourismandculturaltourism,whichprovideopportunitiesfortouriststoenjoyouruniqueculturalheritageandnaturalbeauty,couldbestrengthenedforlong-termtourismdevelopment.

Ecotourism

6.10.7 BydefinitionoftheUnitedNationsEnvironmentProgramme,ecotourism,istourismwhichpromotesnaturalareas,educatesthosevisitingthem,andbenefitslocalpeopleandthelocaleconomy.

6.10.8 AlthoughHongKongisonlyaverysmallcity,ithasarichanddiverseecologyandwetlandsofglobalimportance.EcotourismcanbedevelopedandpromotedasoneofourdiverseattractionstoprovidevisitorswithanalternativeexperienceofHongKongthroughappreciationofitsbio-diversity.

6.10.9 Inordertocapitaliseonexistingresources,the23countryparksandfourmarineparksinHongKonghavebeencarefullyprotectedfornatureconservation,outdoorrecreation,countrysideeducation,tourismandscientificstudies.Moreover,theHongKongWetlandParkopenedinMay2006alsoaddstothisinventory.

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6.10.10 Weneedtocontinuetoseeknewopportunitiesfordevelopingandpromotingexistingresourcesandtoinvestinuniquenewattractions.Onthelatter,thepotentialforgreentourisminthePloverCove/ToloChannelareaandTungPingChauhasbeenexploredbytheTourismCommission.ThereisalsoroomtoenhanceexistingecotourismactivitiessuchastheDolphinWatchandthetouroftheMaiPoNatureReserve.

6.10.11 Indevelopingecotourism,carefulconsiderationshouldbegiventotheprovisionofappropriatefacilities,andbalancingdifferentneedsincludingconservation,sustainabledevelopmentandlocaleconomy.Mostimportantly,weneedtofosteracultureofrespectforthenatureinboththetouristsandtheoperatorsanddevelopsuitableprotocolswherenecessarytoavoiddamagetotheenvironmentthroughirresponsibleacts.

CulturalTourism

6.10.12 AfusionoftheEastandtheWesttogetherwithamixoftheoldandthenewhavemadeupHongKong’suniqueculturalcharacter.Tocaterforvisitors'interestinHongKong’suniqueculture,specialattentiontostrengthenourarts,cultureandheritageattractionsshouldbegiven.

6.10.13 Existingculturalattractions,includingmuseumsandgalleries,showcasemagnificentcollectionsofantiquitiesandmodernobjectsofinterest.Numerousperformingvenuesandprogrammesattractlocalandinternationalculturalperformances.TheWestKowloonCulturalDistrict,whichhasrecentlybeenre-planned,willalsoprovideanumberofworld-classartsandculturalfacilitiesappealingtolocalsandtouristsalike.

6.10.14 Heritageconservation,too,providesavividopportunitytopresentouruniqueculture.Anumberofhistoricalbuildings,suchastheKomTongHallinCentral,theMorrisonBuildinginTuenMunandthe

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LeungAncestralHallinYuenLonghavebeenconserved.HeritagetrailssuchasthePingShanHeritageTrail,theLungYuekTauHeritageTrailandtheCentralandWesternDistrictHeritageTrailhavebeenwellpatronisedbylocalresidentsandoverseastourists.

6.10.15 Similartoecotourism,inordertoachieveasustainableculturaltourism,acarefulbalanceisneededbetweentheconservationobjectivesanddevelopmentneeds.Creativemethodsneedtobeconsideredtoturnaconservedheritageintoalivingandfunctionalpartofthecommunitythatcouldbenefitourculture,communityandeconomy.

PlanningforHotels

6.10.16 Hotelsandotherformsofvisitoraccommodationareanessentialinfrastructureforthetourismindustry.AsofJune2007,HongKonghad139hotelsprovidingabout51,700rooms.Theaverageoccupancyratewas87%in2006.

6.10.17 OtherthanthosehotelswhichlinkwithmajortourismdevelopmentsliketheHongKongDisneyland,itisourpolicyintheplanningforhotelstoprovideflexibilityinlandusezoning,allowingthemarkettorespondtodemand,ratherthantoidentifyparticularsitesfortheuse.Hence,thereisnospecificzoningforhotels,butsuchdevelopmentsarepermissibleunderanumberofzonings,includingprimarily“Commercial”,“Residential”(GroupsA,BandE)”,“Recreation”andmostofthe“ComprehensiveDevelopmentArea”zones.

6.10.18 Inaddition,topromotebetteruseofindustrialbuildings,theTownPlanningBoard(TPB)introducedthe“OtherSpecifiedUses”annotated“Business”(“OU(B)”)zoneinOctober2000sothatindustrialbuildingscanbeusedorredevelopedforbothindustrialandoffice/commercialpurposesincludinghotels.Thishasprovidedanotherlocationalchoicefornewhotelprojects.FromJanuary2001toearlySeptember2007,theTPBhadapprovedatotalof48hotelsandtwohotel-cum-officedevelopmentswithinthe“OU(B)”zone.

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6.10.19 InJune2007,theHongKongTourismBoardestimatedthat42newconfirmedhotelprojects(includingadditionandalteration)willbecompletedbefore2011,providinganadditionofabout10,800rooms.However,asthelong-termsupplyofhotelsislesscertain,thehoteldemandandsupplysituationwillneedtobemonitoredonaregularbasissothatpotentialshortfallcouldbereadilyidentifiedtoensureadequatesupplythroughefficientmarketresponse.

6.10.20 Inaddition,differentcategoriesofvisitors(i.e.business,recreation,family-basedandindividual)exhibitfundamentaldifferencesinhotelchoices.Forexample,individualtravellersgenerallyfavourhotelslocatedattransporthubswhichalloweasytravelling.Businesstravellerswouldpreferprimehotelslocatedatthecentralbusinessdistrict.Inordertosatisfyvarioustargetgroups,itisimportanttoencouragethemarkettoprovidediversityinthetypesofaccommodation.

Cross-BoundaryInfrastructure

6.10.21 Hotelplanningaside,wealsoneedtoenhancetransportlinkageswithMainlandcitiessuchasthoseinGuangdongandShenzhentocapturetheexpandingtourismmarketintheMainland.Inthisregard,proposalsforadditionalcross-boundaryinfrastructureprojectsshouldbeexaminedalsointhecontextofthegrowthpotentialsofthetourismindustry.Wealsoneedtoidentifylandrequirementsfortheprovisionandexpansionofinter-modalchangingfacilities,e.g.cross-boundarybusterminals,coachparksandferrypiers.

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The Changing Economy The Changing Economy66.11 Human Resources

6.11.1 Otherthan“hardware”planning,thequalityofourhumancapitalalsohasadirectbearingonHongKong’seconomiccompetitiveness.Weneedtoensureanadequateworkforcetosustainoureconomicgrowth,notonlyinsize,butalsooftherightcalibre.

6.11.2 OuranalysisonpopulationgrowthtrendsindicatesthatHongKong’sworkingpopulationwillcontinuetoexpandinthenext10yearsorso.However,withpersistentlylowbirthratesandtheageingphenomenon,ourworkforcewillbegintoshrinkfromthelatterhalfofthenextdecadeonwards.Toensurewehaveadequateandsuitablehumanresourcesinthelongterm,theremayneedtobefurtherrefinementinthepopulationpolicy,forexample,encouraginghigherparticipationoffemale/olderworkersintheworkforce,facilitatingfurtherimportationoftalentetc.ThisissuewillbefurtherdiscussedinChapter7.

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