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Following is the full text of a speech by the acting Director-General of Investment Promotion, Mr John Wan, at the Greater China Global Investor Conference today (February 16) (English only):
Good afternoon, ladies and gentlemen,
I am happy to be invited to speak at this very successful conference. Everyone wants to be associated with success and success stories. And success stories is what Hong Kong is all about.
In the next 20 minutes, I would discuss some of the success stories of Hong Kong, in the context of our ability to attract foreign direct investment, or FDI. I would then share with you what Invest Hong Kong seeks to achieve and how we intend to achieve our objectives. I would then try to take questions, or rather, discuss what you have seen and heard in the past few days in Shenzhen, Shanghai and in Hong Kong.
For many years now, Hong Kong has been the gateway to Greater China. Following reunification with China in 1997, our strategic importance has further strengthened.
Geographically, we are at the centre of action. The booming manufacturing region of southern Guangdong province that you saw something of on Wednesday, is a short train journey away or a trip by high-speed ferry - indeed, many Hong Kong people now commute regularly across the border. And scores of flights depart daily from our new, state-of-the-art international airport to Shanghai, Beijing and other major Chinese cities, and to Taipei. More importantly, one can make the trip and back within one day, if necessary. And many people do.
Hong Kong is - and has been for a long time - the largest foreign investor in China, accounting for more than 50 percent of its US$155-billion-plus total. Hong Kong companies and joint ventures directly employ some 5 million people in southern Guangdong province alone. And 95 percent of Hong Kong's re-exports originate from, or are destined for, China.
China is by far our largest trading partner. Thousands of international companies involved in China trade have established "beachheads" here. And this is a two-way street - there are more than 100 mainland companies listed on the Hong Kong Stock Exchange, and close to 2 000 mainland enterprises, including 19 banks, are operating here.
Apart from our unrivalled expertise in doing business with mainland China, Hong Kong has long established itself as a world-class financial and services centre and the undisputed regional hub for multinational companies wishing to do business in this part of the world.
Let us look at the figures. More than 3 000 overseas companies had regional offices here as of June last year, with more than 850 of them designated regional headquarters. About half of these companies are engaged in wholesale/retail and import/export activities, almost a quarter provide business and professional services in the legal, accounting and advertising fields, and the remainder are split between finance and banking, and manufacturing.
The situation is not likely to change - except for the better. A recent Economist Intelligence Unit report on a two-year study of more than 8 000 multinational firms in the region came to the conclusion that the preference for Hong Kong as a regional headquarters base can only strengthen in the years to come. It attributed five major factors for this bias:
1. Easy accessibility of information.
2. Transparency of government.
3. The tax regime.
4. Banking and financial facilities.
5. The rule of law.
There are more success factors actually, and to name just five more, Hong Kong is politically and legally stable; it is close to the major markets; it has an excellent infrastructure; it has a dense network of financial and professional service firms; and it has quality local management.
With so many advantages, how can we lose?
It is therefore no coincidence that over 3 000 overseas companies have chosen to have a regional representation in Hong Kong. The result is Hong Kong has the second largest share of FDI in Asia, after the Mainland. Its total of US$23.1 billion in 1999 represented 22 percent of developing Asia's total FDI, and the figure for 2000 had already reached US$33 billion after the first nine months of last year.
The United Nations Conference on Trade and Development (UNCTAD) World Investment Report that produced these figures noted that China's imminent accession to the World Trade Organisation was expected to significantly increase its share of FDI, because of the positive implications for Hong Kong as the recognised gateway to the mainland. So we can expect Hong Kong's FDI figures to continue to increase.
Now, let us look at what others are saying about us. Let us look at the independent sources. For example, the Heritage Foundation has for the seventh consecutive year ranked Hong Kong the freest economy in the world. The survey that produced this result, the 2001 Index of Economic Freedom, examined 10 broad criteria in 161 economies. We are happy that we came first overall. Not only that, we came out No. 1 in the categories of trade policy, monetary policy, foreign investment, banking and finance, property rights, regulation and black-market control.
And for the past six years, Hong Kong has been rated Asia's most open market by the annual Asian Intelligence survey. We think we have achieved this because we operate a level playing-field, with no distinction between local and foreign investors. Investors in general gravitate towards growth dynamics, in size and rate of growth. They would go where they can make the most money.
I should of course mention that Fortune Magazine, in its November 27 issue last year, chose Hong Kong as the best place in Asia to do business. And you all know that Fortune has chosen Hong Kong to hold its Global Forum in 2001. I hope to see you or your CEOs here in May.
Continuing on the Hong Kong Advantages, I must mention our user-friendly low and simple tax regime. Hong Kong effectively is a tax heaven. More importantly, there are no restrictions on capital flows, in or out of the territory, and no nationality restrictions on company ownership. Our communications systems, both local and international, are second to none. We are ideally situated between the time zones of the world's major markets. We practice the rule of law. Our legal system is based on common-law principles and administered by an impartial and independent judiciary. Our services back-up is unsurpassed - with some 1 300 accounting and auditing firms, 1 600 book-keeping firms, 1 200 legal firms and about 3 000 business-management and consultancy firms. And we have access to a free flow of uncensored local, regional and international news.
Going back for a moment to that level playing-field, I should also mention that Hong Kong has developed into one of the world's major arbitration jurisdictions since establishing our International Arbitration Centre in 1985. The Centre draws on a pool of highly experienced professionals including accountants, architects, bankers, engineers and insurance experts, in addition to lawyers, to arrive at just dispute settlements. In this context, our Independent Commission Against Corruption, or ICAC, founded way back in 1974, has been so successful in its ongoing battle against corruption that the model has been copied in many places.
Whether in the office, relaxing after work, enjoying your kids' progress in school, or taking care of domestic chores, everything works in Hong Kong. Many things that people take for granted in the United States or Europe can be a giant headache in developing Asia. But not in Hong Kong. Press a button and you have power - most Hong Kong people don't know what "brownout" means. Thirsty? Pour yourself a glass of tap water. In a hurry? Grab a cab. Need to make an urgent call? Use the mobile - wherever you may be, on the Mass Transit Railway, going through the Harbour Tunnel, or halfway up a mountain.
Turning to languages, English is of course the business language. Everyone, well almost, speaks English. And if that doesn't happen to be your native tongue, you can usually find someone who speaks your language, both literally and figuratively. Then we have our superb infrastructure. We have the world's busiest container port and one of the world's busiest airports. A Cyberport, purpose-built to accommodate leading-edge hi-tech companies, is under construction. As is a Disneyland, destined to become one of Asia's leading tourist attractions. And the commitment to a continuous upgrading of support structures can be seen from the government's plans to spend US$30 billion over the next five years on an expanded railway network, new land formation, roads, new-town developments, government buildings, schools, community facilities and environmental protection.
But the key to Hong Kong's success stories is our commitment to free enterprise. The Hong Kong Government believes that business is the engine of growth and prosperity. This is not going to go away, certainly not in the next 50 years.
This brings me to Invest Hong Kong, the organisation that I am pleased and proud to be working for. InvestHK was set up to promote inward investment in Hong Kong - The City That Means Business.
InvestHK is not just another Government Department. Let me take time to share with you the rationale behind its establishment, why it's different, and how it's relevant to you. It's a story of departures from the mindset, of the courage to change, and a determination to succeed, and of another success story of Hong Kong.
InvestHK has a completely different function from its predecessor. In the past, we handled investment enquiries coming in and passed them along.
We are now charged with being a high-profile pro-active promotional body. We're here to go out into the global economy and win investment for Hong Kong. We have top level government support. The Financial Secretary is full behind us. We have a budget and we have a mandate.
In particular, we want to do three things better and to excel in all three.
First, we seek to respond to our investors and our clients more speedily and with authority, bringing them to the top people in Government where necessary.
Secondly, we seek to focus on companies in the economic sectors that would benefit Hong Kong more. We refer to them as priority sectors. Right now, our priority sectors are Telecommunications, Media and Multi-media, Technology, particularly electronics and biotech, Information Technology, Tourism and Entertainment, Business and Professional Services, Trade Related Services, Transportation and Financial Services. This however does not mean we would turn people away. We welcome everybody, particular those who want to have their regional headquarters here.
Thirdly, we want to run an improved aftercare service. We want to take better care of the companies and investors that are already here.
Specifically, we are here to help businesses, to facilitate rather than regulate. Ask us any question, and the reply will always be, "Yes, We Can.".
Our greatest asset is access to information which we will gladly pass on to anyone interested to invest in Hong Kong as a base of operation or to the numerous fund managers and company investors present at this conference. Much of this information is also openly available at a click of a mouse on our new website, which can be easily remembered at www.investhk.gov.hk.
Thank you very much, ladies and gentlemen. If anyone has any questions, I am happy to try to answer them.
End/Friday, February 16, 2001
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