Chief Executive Donald Tsang Yam-kuen warned that economic growth could shrink to 2 per cent in 2012, compared with a forecast of 5 per cent for the full year in 2011.

He has repeatedly warned that the city's economic growth would slow down this year because of stagnant recovery in the US and the deepening debt crisis in Europe.

Against this backdrop, the two front runners to replace Tsang - Henry Tang Ying-yen and Leung Chun-ying - have vowed that if elected, they will do whatever is feasible to help the business sector weather the economic uncertainties. And, naturally, they both promised to be the right person to lead Hong Kong to a brighter economic future.

At his election rally last month, Tang promised 'to do the best preparations for the worst scenario', saying that his nine years' experience in the administration had given him a proven track record in tackling economic downturns.

Tang served as the minister for the Commerce, Industry and Technology Bureau [which was restructured in 2007] between 2002 and 2003, and then became financial secretary between 2003 and 2007.

'We fought off economic downturns and turned our budget deficit into a surplus ... we managed to reduce the unemployment rate from over 8 per cent [in 2003] down to 3 per cent [in 2011],' he said.

Leung's motto is: 'Seeking change while preserving stability.'

He vowed that his government would play a more active role in assisting enterprises to explore business opportunities on the mainland and overseas.

But a proven track record might be what Leung lacks.

Despite serving in the inner circle of the government's policy-making body - as a member of the Executive Council since the handover in 1997 and its convenor since 1999 - he has not served in any position in the city's administration, raising questions about his lack of experience. Professor Raymond So Wai-man, dean of the business school at the Hang Seng Management College, said Tang may have more experience than Leung in the administration. But the economic turnaround to which Tang referred could be attributed more to the general revival of the global economy rather than his own policies.

'For example, Tang failed to broaden the government income sources when he was the financial secretary. Hong Kong is still heavily reliant on the revenue of land sale and stamp tax, while the tax base is still narrow,' So said.

He added that government income this year could still fluctuate amid the economic uncertainties.

Both candidates have attended dozens of policy forums in the past few months to outline their visions. They said the survival of small and medium-sized enterprises (SMEs) - which employ more than 1.2 million people in the city's 280,000 firms - during an economic downturn would be their policy priority.

Another policy item on which the two candidates have agreed is the reintroduction of a special loan-guarantee scheme to help SMEs secure lending from banks.

The government initiated a HK$100 billion rescue plan in late-2008 that guarantees up to 70 per cent of loans companies receive from banks to save struggling businesses and protect jobs.

Leung went further to suggest that the government should help the city's companies to capitalise on opportunities on the mainland.

He proposed the formation of joint working groups comprising academics, representatives from the government and relevant industries to map out industrial policies. He also wants to strengthen the functions of Hong Kong Economic and Trade Offices on the mainland to help the city's companies there liaise with Beijing government departments and deal with red tape.

Leung was also urged at a forum organised by the pro-business Liberal Party to restructure government bureaus and to pay more attention to the city's industrial development.

He replied: 'The term 'industry' might not appear in the name of any bureau, but I would always bear this term in my mind.'

Wilson Shea Kai-chuen, president of the Hong Kong Small and Medium Enterprises Association, said the city's enterprises on the mainland have lacked support from the Hong Kong government when there are disputes with the mainland authorities.

'Many entrepreneurs are facing unfair competition on the mainland and we don't know where to seek help from,' Shea said. He urged the next administration to step up communication with the entrepreneurs and to understand their needs.

Tang, the son of a Shanghai textile tycoon, said he has an advantage in understanding the difficulties encountered by entrepreneurs.

'Because of my background in manufacturing, I understand how small and medium-sized businesses work. I understand that they are a vital part of our economy,' Tang said. 'Therefore, we will focus on real economy, giving special attention to SMEs and their potential to create jobs.' Tang proposed restructuring the government bureaus by re-establishing the Commerce, Industry and Technology Bureau in the next administration.

'I think that's a more integrated [government] structure to develop the city's economy,' Tang added.

Tang has also paid particular attention to developing innovation and technology-related businesses, in an effort to diversify the economy and to open up job opportunities for young people.

Critics have said the city's economy is heavily reliant on the booms in the financial industry and the property market, meaning that the city's job market and the government's income can be vulnerable to external influences at times of global economic turbulence.

There have also been calls for the government to diversify the economy by developing new industries to maintain the city's long-term economic competitiveness

In 2009, Tsang set up a task force to explore medium- and long-term economic opportunities in six new knowledge-based industries - testing, medical services, innovation, creative services, environmental services and education - to diversify the city's economy in the wake of the global economic crisis. But the government has since been criticised for the lack of follow-up policies, said professor So and Samson Tam Wai-ho, lawmaker for the Information and Technology sector.

According to government figures in 2009, the six new industries have contributed only 8 per cent to the total GDP, compared to the 55.6 per cent contributed by the city's four key industries - financial services, tourism, trading and logistics, and professional services.

Meanwhile, just 395,000 people, or 11.3 per cent, out of the 3.48 million workforce are working in the six new industries, compared to 1.65 million people - or 47.3 per cent - in the four key industries.

The government could not provide more updated figures as a spokesman said the survey was conducted on an ad hoc basis after Tsang's proposal.

Tang said the government should reposition itself as a 'facilitator instead of an observer' to help the new industries to grow faster. He also proposed the setting up of specialised schools to foster young talents in new industries.

He said graduates from local universities do not acquire the specialised skills required to address the ever-changing needs of the fast-growing industries.

Leung also suggested setting up a new bureau to oversee the development of technological and creative industries. But neither candidate set a clear five-year target - in terms of the contribution to GDP and the number of people employed - for the new industry developments.

Tam said he welcomed the initiatives proposed by the two front-runners, but was unsure about their commitment and the resources that would be allocated. 'The track record [in promoting the IT industry] of both candidates has failed,' said Tam.

Professor So said it would be important for the next leader to find suitable ministers with strong political will to push the development of new industries.

'In the US, we can predict the possible personnel in the next governing team according to the party line. Unfortunately, it's difficult to make such a prediction in Hong Kong, no matter who wins the top job,' he said.

Tomorrow: Henry Tang Ying-yen and Leung Chun-ying's views on welfare, and how they plan to confront social problems such as housing and the ageing population.

11.3%

The percentage of the workforce employed in the new 'knowledge-based' industries, compared to 47. 3 per cent in the city's key industries