Ladies and Gentlemen,

I am delighted to be here today to congratulate the participants of this year's awards who represent the new breed of outstanding manufacturers in Hong Kong.

Many people are still amazed by the development of Hong Kong's industries. Indeed, we had a humble beginning. Hong Kong had its first industrial venture in 1843, which was a small repair facility for cargo ships that passed by this part of the South China coast. A graving dock, two sugar refineries and a rope factory followed, all of which were catering to the seafaring trade. Few would have imagined that the small island of Hong Kong and the Kowloon Peninsular, with little natural resources, could one day become a major industrial base and a remarkable international trade and financial centre.

Talking about Hong Kong being an international financial centre, I would like to take this opportunity to reiterate the Government's tremendous determination in defending the Hong Kong Dollar and maintaining the Hong Kong-US Dollar link. We have full ability to do so, given our vast fiscal and foreign exchange reserves. Hong Kong has very sound economic fundamentals and the outlook is favourable. The economy will continue to benefit from strong growth in the Mainland economy. We can and we will maintain the link. I wish to emphasise once again that this is the fundamental policy and this will not change.

While the rapid development of our financial services sector has contributed significantly to our economic growth in recent years, a vibrant and competitive manufacturing industry will no doubt bring along stability and a more balanced outlook to our economy.

The growing importance of the services sectors is by no means an indication that Hong Kong businessmen have moved away from engaging in manufacturing activities. In fact, those operations and productions that require quick response to the market, high quality control, prototype testing and development are still retained in Hong Kong. In addition to that, our manufacturers have expanded their operations beyond this territory. If we take into account the production facilities owned and controlled by our manufacturers in Southern China and overseas, Hong Kong's manufacturing capacity has in fact increased significantly in the last ten years. For instance, in Southern China alone, an estimated workforce of over four million are working for factories operated by Hong Kong entrepreneurs. Hong Kong manufacturers of today have become a command and support centre for globalized production. While labour intensive and low value-added production is being shifted elsewhere to take advantage of lower land and labour costs, many high knowledge-based and value-added activities, such as management, marketing, design, and research and development and other industrial support services, are carried out in Hong Kong, providing challenging and rewarding employment opportunity for our workforce.

The key question is : How can we ensure the continued success of our manufacturing industry in today's increasingly severe and globalized competition? I think the answer lies in a close partnership between our manufacturers and the Government. As I have stated in my Policy Address, the Government will continue to improve the environment for the future industrial development in Hong Kong. For example, we will assist the small and medium enterprises in export through a pilot Credit Guarantee Scheme which seeks to help them secure financing from commercial banks for pre-shipment activities. We have since the inception of the Industrial Support Fund in 1994, supported 277 projects with a total funding commitment of $965 million. We have also supported 18 technology ventures under the Applied Research and Development Scheme with a funding commitment of $52 million taking from its seed money of $200 million. In order to step up our support for technological innovation, we stand ready to inject up to an additional $500 million to the Applied Research and Development Scheme to support the commercialisation of research in high technology fields. We will also endeavour to meet the needs of our industries in terms of land and human resources.

Turning to the entrepreneurs in our manufacturing sector, I am sure you will continue to strive to excel both in your role as producers locally and managers of our production bases overseas. Our ability to contain costs, hard work and extraordinary flexibility have contributed greatly to our past success. While we should preserve these remarkable qualities, we must at the same time develop our competitive edge in other dimensions - better quality, more advanced and sophisticated products, creative product design, technological innovation, novel marketing and packaging, greater productivity, and responsible manufacturing for the environment. Only if we do well in these other dimensions can we ensure the continuous success of our manufacturing industry in the future. Indeed, these are precisely the kinds of attributes which we aim to promote through our Awards of Industry.

This year is the ninth year of this annual awards. I note with immense pleasure that the number of entries for this year's awards has jumped 40 per cent over last year's. We have entrants coming from a wide spectrum of industries which, besides our major industries, includes construction materials, electroplating, metal and industrial coating, food catering and lubricant blending. Such wide-ranging participation speaks for the importance attached to all aspects of industrial performance by the manufacturing sector.

I congratulate the winners of this year's awards. You have done a fine job, and the award that you are going to receive in a moment represents the well-deserved recognition of your achievement by the Hong Kong community. You are leading the charge of our industries into the world markets with ever better products. In sharpening your competitive edge, you have pushed the frontiers of your operation in terms of product design, productivity, quality, marketing methodology, technological innovation and environmental friendliness.

I would like to thank the seven organisers who have worked together to make this year's awards a big success. I would also like to thank the members of the judging panels who had to make some very difficult decisions, and especially to Mr Anthony Leung for chairing all seven judging panels. Last but not least, I would like to acknowledge the contribution of the 24 sponsors of this year's awards. Your generous support is a very good indication of the community's appreciation of the contribution made by the manufacturing industry to our economy.

Thank you.