Executive councillor Jeffrey Lam on Saturday said Hong Kong's economy now is at its best for five years, but warned the government against lowering its guard.

Speaking on a radio programme, Lam said many factors had helped the city's economy in recent months, including the start of the US Federal Reserve interest rate easing cycle.

But he noted that the SAR should not only rely on external factors, as he urged the authorities to further roll out favourable policies to stimulate the economy when the Chief Executive delivers his Policy Address next Wednesday.

"We are talking a lot about how to attract talent and investment into Hong Kong, so policy is one thing that will attract talent and investments to come to Hong Kong," he said.

"When investment comes to Hong Kong for the first time, we need some efficient policies to help them to get settled in Hong Kong. I think efficient and maybe a one-stop office should be set up as soon as possible to help the foreign investors to do everything within one office in one day."

Hong Kong and mainland earlier signed an agreement to amend the CEPA framework on trade in services, and changes will take effect from March 1 next year.

Another member of the Executive Council, Chan Kin-por, said the arrangement would lower the threshold and reduce qualification requirements, allowing Hong Kong firms to enter the mainland market much more easily, particularly small and medium-sized enterprises.