Looking back over Shenzhen, Dongguan, Zhuhai and Zhongshan's history, it is easy to understand why everyone always marvels at the pace of economic development in the Pearl River Delta. In just two decades, these booming cities have grown out of paddy fields into a production powerhouse manufacturing US$300 million worth of goods every day.

Their rapid rise also fans fears that they will soon overtake Hong Kong and leave the territory obsolete. But the Financial Secretary, The Hon. Henry Tang, believes that Hong Kong and the PRD are on the verge of a new cycle of growth and prosperity.

"It is a cycle that will be driven by closer economic co-operation between Hong Kong and Guangdong authorities, and the new opportunities offered under CEPA," he told the audience at a Chamber Distinguished Speakers Series luncheon at the PRD Conference on October 17.

In terms of trade in goods, he believes the main opportunities will come for Hong Kong manufacturers already in the Pearl River Delta, as well as Hong Kong and international businesses setting up new operations in Hong Kong to capitalise on tariff-free status under CEPA for 273 products. For Hong Kong companies already in the PRD, and any new entrants, CEPA provides an opportunity to access the burgeoning Mainland market.

"These concessions will be of particular benefit to industries engaged in the manufacture of brand-name products, or those requiring high intellectual property content where a high percentage of value-added work is carried out in Hong Kong," he said.

Tariff-free access for Hong Kong goods will also help spur opportunities in some of the 18 services sectors being opened up under CEPA, as stimulated demand trickles down to the service sector. Since CEPA was signed on September 29, Mr Tang said 1,200 companies have enquired about applications for the certification of "Hong Kong Service Suppliers to allow them to qualify under CEPA.

"I would like to point out that under CEPA we have also agreed to promote co-operation in trade and investment facilitation. This may not be as interesting as tariff-free or as sexy as enhanced access for services, but it is just as important," he said.

That is because CEPA is a first step for better access, it is not a substitute for other regulatory requirements in the Mainland. He hopes that through further consultations on the CEPA's third pillar, that is, trade and investment facilitation, government will also be able to help Hong Kong businessmen better navigate their way through the Mainland's trade, investment and business regulations and practices.