Following is the speech by the Financial Secretary, Mr Antony Leung, at the "Asia and Global Finance: New Opportunities" seminar today (May 8):
Distinguished guests, ladies and gentlemen,
It is a great pleasure for me to welcome all our guests and participants from around the world for this, the first business seminar we have organised to coincide with the Fortune Global Forum, which officially opens in Hong Kong tonight. And it is encouraging to see so many of you here this morning despite the rather early hour, especially if you arrived in Hong Kong only last night. I hope you've all been fortified with double espressos!
We have taken the opportunity of leveraging the presence of so many international visitors to Hong Kong at this time to highlight the benefits and advantages of doing business in Asia. To outline to you what we believe are some of the new opportunities opening up, particularly with the imminent accession of China to the World Trade Organisation, and hopefully, in the wider global market place.
Of course, in doing so, we cannot overlook the impact on the region of the economic slowdown that is becoming apparent in some of the world economies, particularly the United States, which up until last year had been the driving force behind much of the growth over nearly a decade. I am however cautiously optimistic about the future. There is no doubt the US economic fundamentals are strong and the aggressive stance taken by the Federal Reserve in reducing interest rates will have a positive effect. So, I for one, believe the outlook is far from bleak.
Nevertheless, the present economic climate does raise one major question. And that is - can Asia resume the high rate of growth that had been evident during much of the 90s? I can't promise to provide the definitive answer to the question. But I will try to paint a picture that I hope will elicit from you just one conclusion - you cannot ignore the Asian region.
But in order to do this, there are a number of building blocks that still have to be put in place. The first one is economic restructuring. Economic restructuring has been under way in the region ever since the Asian financial crisis. The reforms have been progressing at varying speeds in different economies. Good corporate governance, healthy banking system, open, efficient and well-regulated financial markets and responsible fiscal policies are benchmarks that are equally important to all economies, and not just in Asia.
It is also important for governments and markets in Asia to step up intra-regional co-operation. For instance, we need to encourage closer dialogue on monetary issues. And there needs to be a greater alignment and a general upgrading of the regulatory frameworks that guide market practices.
Another significant step to return to higher economic growth is to further develop the Asian capital markets. Clearly, there is a strong demand for developmental finances as countries in Asia continue to press ahead with strategies to raise the standards of living and to finance the projects that will bring this about. Indeed, we are fortunate that there is significant amount of capital in Asia that is available to be tapped. Nowhere else in the world are the domestic savings rates higher. Asia has half of the world's official reserves. Yet, the capital markets in Asia are not as well developed to channel the funds effectively and efficiently. We need to work hard to develop the Asian capital markets if we wish to take Asia's growth to the next stage.
So, I am pleased these issues and others that are central to the 'next stage of growth in Asia' will be discussed in today's forum. And I am sure you are looking forward to hearing from other speakers and sharing views with other participants in this distinguished audience.
But before doing that, I wish to give you a brief background report on Hong Kong and how we see ourselves in the overall regional context. Hong Kong has been playing the role of a regional financial centre for some time. Our integrated network of financial institutions and markets is characterised by a high degree of liquidity. They operate under effective and transparent regulations which meet international standards. Indeed, our financial markets have been very successful as a fund raising centre for the region. To give you one example, companies from the Chinese Mainland last year raised some US$44 billion through Hong Kong.
We also have been working hard to restructure our systems. We took advantage of the Asian financial crisis and the continuing worldwide movement towards globalisation to open our economy still further. We encouraged market liberalization in areas such as banking, the stock and futures markets and telecommunications. We have enhanced competitiveness and introduced innovation and efficiency.
We have also exploited information technology to further integrate the full range of financial services - securities, futures, clearing - through an open and secure electronic network. At the same time we have maintained the safety and integrity of the system. These measures have not only had a direct and positive impact on Hong Kong as a leading financial centre, they are a good pointer to Hong Kong as a market with increasingly attractive investment potential. On top of this, our financial institutions are supported by accounting, auditing, legal and consulting firms with strong international and local connections.
And we have our location. Hong Kong's growth and development is closely linked to China's own strong economic performance - a performance that has been characterised in recent years by low inflation, a healthy balance of payments and the dramatic changes that have occurred since the implementation of the open door policy in the late 1970s. The current five-year plan will see China grow by over 7% a year. And within the next two decades it is highly likely that China will become the second largest economy in the world. Hong Kong, as the leading financial centre of China, will stand to benefit.
Having said that, however, Hong Kong cannot be complacent. We must continue to improve our quality and efficiency as well as diversify our services. In harnessing the latest developments in IT and capitalising on China's accession to the WTO, we will keep ahead of market trends. We are well on the way towards completing what we call FinNet, a robust, efficient and secure network for financial market transactions. We have successfully launched the US dollar clearing system which includes the world's first Payment versus Payment foreign exchange transaction system. And we are raising our corporate governance standards and improve the regulations on securities markets through legislative means.
But achieving our goal will require having the necessary qualified and highly trained people. At present we have a strong pool of professionals. But we need more. We have traditionally adopted a liberal immigration policy which allows foreign nationals with the right skills to work in Hong Kong. Recently we announced plans to make it easier for talented professionals from the Mainland to take up employment in Hong Kong in two specific areas, financial services and information technology. This measure is necessary to overcome potential shortages, but it will not be at the expense of our own local graduates.
Indeed, we are very serious about education reforms. We are creating the environment in which we can educate our young people to be more creative, to think critically and independently and to embrace the concept of life-long learning. This also means ensuring that we have the right language skills for a modern, cosmopolitan society where English is the lingua franca of business. We are working with the schools, parents and the business community to raise our standards in writing and speaking English. Enabling our young people to be confident and fluent in both our official languages of Chinese and English.
Ladies and gentlemen, I don't want to take up much more of your time. During this Seminar, and also during the Fortune Global Forum, you will see and hear for yourself what we in Asia are doing to undertake reforms, to further open up to trade and investment and to improve the livelihood of our people. None of this is easy. But there is no other region in the world that offers so many opportunities and access to such growing markets. And Hong Kong is still, and will continue to be, your best point of access to these markets.
Thank you very much.
End/Tuesday, May 8, 2001