A Market-led Approach 14. Hong Kong is a free market economy, and the prime mover of economic restructuring rests mainly with the private sector. While the Government has an active role in promoting the development of hard and soft infrastructure, the wider community must itself move to meet the new challenges posed by the knowledge-based economy. We need to apply new knowledge, technologies and innovative thinking, and to improve our services and management, so as to continually enhance our competitiveness. The Role of the Government 15. The economic restructuring that is sweeping through the world has highlighted the unique role of the government. Whether it is persuading trading partners to open their markets as part of the globalisation process, or promoting technological education to facilitate the development of the knowledge-based economy, governments in various countries have assumed a key role of driving the transformation process. As a highly open economy, the use of monetary and fiscal policies in Hong Kong to revitalise economic growth is unlikely to be effective. We have to focus instead on enhancing the competitiveness of our economy. Over the past five years, I have repeatedly stressed that the Government has to embark on important initiatives on a macro-level. These include investing heavily in education, upgrading economic infrastructure, promoting innovation and technology, improving the business environment, helping the business sector to develop new markets, actively protecting our ecology and environment and improving our quality of life. Concurrently, we will reinforce our strengths in our four main economic pillars - finance, logistics, tourism and producer services sectors. We should also capitalise on the rapid development of our Motherland to hasten our economic restructuring. These are important tasks, necessary not only for economic needs, but also for discharging our responsibilities and making good our pledges to the community. We will focus on the following areas: Improving the Business Environment 16. One of our urgent tasks is to further improve our business environment. To overcome our economic difficulties, we must strive to attract foreign investment, retain domestic investment and boost local economic activities, with a view to broadening our production capacity, creating employment, and expanding our tax base. Following the principle of 'big market, small government', we have to reduce business costs by cutting red tape, embarking on de-regulation, streamlining procedures and enhancing administrative efficiency. We believe we can do better. I therefore plan to set up a high-level task force to examine these issues and put forward policy recommendations.