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Turning now to the services side of the economy, the same forces which have fostered the evolution of our manufacturing industries have contributed to the burgeoning of the service sector. The growing importance of the service sector to our economy, in terms of contribution to GDP and exports and the numbers employed is now well known. But the forces which have shaped this development are less well documented. We believe this development is attributable first and foremost to technology change, particularly the rapid development in telecommunications and information technology, which has made new ways of doing business and organising production possible. Technology advance has made cross-border production, whether of manufactured goods or service products, possible on an unprecedented scale. It has also increased significantly the opportunities for the sale of services across borders. Secondly, the continued strong economic growth of countries in the Asia Pacific region, together with the steady increase in intra-region trade and investment, have accentuated the need for a regional services centre of excellence such as Hong Kong, which is strategically located at the vortex of the dynamically growing Asia Pacific region, and which excels in the provision of a wide range of closely-related, specialised services in support of trade and investment expansion.
With these developments in mind, as the Financial Secretary has announced, we have commissioned a consultancy study into the extent to which Hong Kong's services will benefit from additional Government promotion. This study is about how Hong Kong can position itself for the global economy of the 21st century: an economy which will become increasingly globalised in nature and where the distinction between a manufactured product and a service product will become increasingly blurred. It is also about how Hong Kong can sharpen its comparative advantage for the future. Not being a low-cost economy, we no longer have any cost advantage in the production of low-value added mass merchandise. We need to examine critically how we can build on our existing strengths as a services provider. As the Asia Pacific region continues to develop, we need to continue to play a vital role in servicing the production and distribution networks across the region which our entrepreneurs have built up, and in servicing other budding regional economies.
The report of the consultants is being finalised and we should soon be in a position to consult the service sectors, as well as other interested trade bodies, on the recommendations in the final report. We are grateful to Members for the interest in the study, and look forward to working with Members and the representatives of the service sector in implementing the recommendations.
Thank you. Mr President.
End/Wednesday, March 29. 1995