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Following is the speech (English only) delivered by the Financial Secretary, Mr Donald Tsang, at a dinner organised by Hong Kong Trade Development Council in Dubai today (Saturday):
Your Excellency, Distinguished Guests, ladies and gentlemen,
Thank you very much for your warm welcome. I am delighted to be leading this delegation from Hong Kong on my first visit to Dubai and the United Arab Emirates. I am happy to say that your hospitality lives up to its legendary generosity.
I believe Dubai is called the "Venice of the Gulf". Coming from Hong Kong, of course, I am also intrigued by your title "The City of Gold", which appears on advertisements for Dubai in Hong Kong. We are fine judges and collectors of gold in all its forms and I trust we can all glean some golden moments from this gathering.
For now, may I tell you a little about the Pearl of the Orient, Hong Kong. It is a commercial centre on one of the world's great trading routes, with particular expertise in financial services, and extremely well-placed geographically as the gateway to a large and growing region.
That description should sound familiar since it applies equally well to Dubai. Indeed, we have both achieved success in places that at one time were considered unlikely trading bases. Dubai emerged from desert sands beside the Gulf, Hong Kong grew on a what was called a barren rock at the mouth of the Pearl River.
Now you provide the gateway to Arabia, the Middle East and on to Europe, while we fulfil the same position in China and East Asia. And, of course, East Asia is the Gulf's main trading partner, taking 49 per cent of its exports and providing 27 per cent of its imports.
We are both diversifying and, if you will pardon me, refining our operations, especially in financial services, banking and infrastructure development. We can each learn and benefit from the other's experience and Dubai has some particular lessons for Hong Kong in your creation of a flourishing leisure industry.
As you know, Hong Kong returned to China's sovereignty on 1 July, 1997. Despite anything you may have heard since then, we are very much alive and doing pretty well.
We have inaugurated the unique constitutional concept of "one country, two systems". This arrangement guarantees Hong Kong at least 50 years of conducting its own affairs with a high degree of autonomy.
As the sovereign power, China handles matters relating to foreign affairs and defence and Hong Kong Special Administrative Region manages the rest under its constitution, called the Basic Law.
This clearly prescribes that the Hong Kong's social, political and economic systems shall be different from those on the Mainland.
The HKSAR exercises executive, legislative and independent judicial power, including that of final adjudication. We maintain the rule of law under our long-established Common Law system and anyone doing business with Hong Kong can be assured that they do so with all the certainty to be found in any other Common Law country.
Like Dubai, Hong Kong is a free port and we operate as a separate customs territory from mainland China. We have complete financial autonomy and an independent monetary system.
Using the name 'Hong Kong, China', we maintain and develop relations and conclude and implement agreements with foreign states and regions.
Under the same arrangement, we conduct relations with international organisations in areas covering economic matters, trade, financial and monetary affairs, shipping, communications, tourism, culture and sports.
In its own right, the Hong Kong SAR is party to 168 international multilateral treaties including civil aviation, customs, the war on drugs, health and human rights. Indeed, the UAE, Bahrain and Qatar are among the many countries with which we have signed Air Services Agreements.
I note with interest that the UAE plans to open a consulate in Hong Kong very soon. It will be a most welcome development.
We issue our own passports and 59 countries have granted visa-free entry to people holding them. I hope the UAE will soon be on this growing list.
Of course, our stable political situation gave us no immunity from the economic turmoil which swept the region and caused the most severe financial setback since World War Two.
No one realised how widely the impact would be felt when the Thai Baht fell on 2 July, 1997. It was a relatively small part of the world economy when but it went on to engulf every major player in our region and globally for the next 20-odd months.
This financial crisis was a watershed for Hong Kong. It shook us out of the complacency that developed in more than a decade of significant economic growth, increasing wages and escalating asset values.
We are now re-establishing our competitive edge and, compared with the problems of our neighbours, Hong Kong has fared pretty well.
Financial turmoil aside, 1998 was a significant year for Hong Kong for several other reasons:
We elected our first Legislative Council as a Special Administrative Region of China and saw a record turnout, despite some of the heaviest rains Hong Kong has ever recorded;
We opened a world-class airport, which is now acclaimed as one of the 10 most important engineering feats of the20th Century.
And we continued with business as usual, running Hong Kong under the "one country, two systems" concept.
Despite the sharp economic downturn, Hong Kong remains one of the most secure and stable cities in the world. In 1997, our crime rate fell to its lowest in 24 years. Last year it stabilised at 1,076 cases per 100,000 of the population. This was the second-lowest rate for 25 years and below that in most of the world's major metropolitan areas.
To provide a better future for those people who have already contributed to Hong Kong's, we are continuing to improve our infrastructure. Now that the airport is completed, we are embarking on an even more ambitious railway development programme. Dubai has also invested heavily in its infrastructure and some of the specialists with me on this will be seeking out their counterparts to share their knowledge.
Significant new infrastructure developments will further enhance our role as the pre-eminent gateway to the mainland of China and the communications and transport hub in the region.
One of these is the $1.7 billion US dollar Cyberport project, which will provide the essential infrastructure for the formation of a strategic cluster of information services companies, as well as a working and living environment of the highest standard.
Other facilities will include media laboratories, high-speed computers for computer graphics design, multi-media equipment and studio facilities for common use by the more than 100 small- to medium-sized companies which we expect to become tenants of the Cyberport. Larger firms such as Oracle, Microsoft, and IBM have already signed deals to set up in Cyberport.
Again, I find that Dubai is well up with the field since you are already working on the introduction of E-Commerce later this year.
In Hong Kong, planning is also well advanced for our Science Park project on a site bordering a beautiful harbour on our north-eastern coast. This 22-hectare site will be developed over the next decade and a half and aims to attract technology-based firms and activities to Hong Kong.
Throughout the financial upheaval, and despite the recession, the Hong Kong SAR Government has maintained its traditional fiscal prudence.
Usually we produce a budget surplus. However, as a result of the economic downturn, we are budgeting for a deficit of 4.7 billion US dollars in 1999-2000.
We plan to restore budgetary balance by 2001. In the meantime, our reserves of more than $120 billion US dollars give us the financial means to help alleviate the pain of adjustment for individuals and business.
Our banking industry and regulations are the best in Asia, fully comparable to the best in Western Europe or the USA. Our open, free economy has retained the Heritage Foundation's top world ranking for the fifth year running. In December last year, the World Trade Organisation acclaimed Hong Kong as an outstanding practitioner of free trade principles. The Cato Institute of the US also ranked us as the world's freest economy.
These realties highlight the enticing opportunities that exist in Hong Kong. I note that two Middle Eastern banks have established themselves in Hong Kong, which means they are laying the basis of their future success while others may well be missing out.
In other aspects of Hong Kong life, politics remain as active as ever. From the day of the Handover to March 31 this year, Hong Kong people held over 2,400 public marches and meetings. That is an average of four events every day when various groups of people freely express their views.
Our world-class communications facilities have encouraged international news agencies, newspapers with international readership and overseas broadcasting corporations have established regional headquarters or representative offices in Hong Kong.
Even during the difficult times we have seen, Hong Kong continued to open up its markets, encouraging more competition in the area of international telecoms and transport services.
There is plenty of potential for growth in many areas during the first decade of the new century. China's markets are continuing to open up and reform. They will need investment capital - and most investors will find that Hong Kong continues to provide the most effective and efficient entry to China.
Hong Kong aims to implement a three-pronged reform of its securities and futures market upgrading market infrastructure, regulatory reform and demutualisation and merger of the exchanges and clearing houses. We would be glad to share our experiences with you in the establishment of your Stock Exchange.
Like the UAE dirham, our dollar is freely convertible and is linked to the US dollar. I note that your exchange rate has been pretty stable since 1977. Our exchange rate has been pegged at 7.8 Hong Kong dollars to the US dollar since 1983 and I believe we have both experienced the benefits of that stability and certainty in our dealings abroad.
For both Hong Kong and Dubai, of course, the most important statistic is the rate at which we exchange business with each other. This will be enhanced even further when China joins the UAE in the World Trade Organisation, which we expect will be quite soon.
That will present opportunities on an even broader scale. In the meantime, I would greatly appreciate the opportunity to return your wonderful hospitality and I invite you all to come to Hong Kong and see for yourselves.
Thank you.
End/Saturday, June 5, 1999
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