Following is the full text of the speech delivered by the Financial Secretary, Mr Antony Leung, at the Hong Kong General Chamber of Commerce Luncheon today (June 6):
Christopher, ladies and gentlemen,
I am honoured to be invited to speak at a luncheon of this venerable chamber which recently celebrated its 140th anniversary. That is quite an achievement in this day and age when the landscape can change virtually overnight. So, I am comforted by the fact there are still many familiar faces in the audience today!
Churchill once said "there is nothing wrong with change, if it is in the right direction". Hong Kong is a living example of it. We have gone through more changes in the past three decades than most cities have in a century. And each time, I believe, it has been in the right direction. The people of Hong Kong have adapted to change and adapted to it well. On occasions this may not have been easy, but once we set our sights on a target we usually score.
You only have to cast your minds back to the time when our entrepreneurs, operating out of nothing more than flatted factories, were capturing the world market for plastic flowers. And Hong Kong wigs of every style and colour were being worn by fashion conscious women in the world's capitals. No sooner had this fad slipped from popularity, Hong Kong-made electronic gadgets were the craze. And there was more to come. Hong Kong was a centre of change.
Then, as China began to slowly open its doors to the world, we were able to tap into a country rich in resources. Land was plentiful and labour abundant. Of course, you are all familiar with the rest of the story. Our manufacturing industries moved across the boundary and we began changing into a services economy. But we never lost touch with one of our greatest skills, trading.
Hong Kong was handling an ever increasing flow of trade into and out of China. Our far-sighted business men and women were continuing to exercise their uncanny ability to read the changing trends. And take advantage of them as they were about to happen.
Apart from some short-lived troughs, Hong Kong experienced a period of almost unhindered economic growth. This success story, fuelled by a bubble economy of ever rising property prices and speculative fervour, continued into the mid-1990s. Flushed with so much success, we perhaps became a bit arrogant. Some of our competitors may well have been hoping that we would trip and fall.
The crunch did come and it affected the whole region. We suffered our first full blown recession in recent memory. Five straight quarters of negative GDP growth. The younger generation had never lived through anything like this before. Many people were left in negative equity as a result of falling property prices. Unemployment, which hitherto had been at historically low levels, reached a new peak. It was only natural that people felt insecure. Their confidence has been sapped.
The recession also coincided with two other fundamental changes. The information age, which was being driven by the IT revolution, was ushering in a new era - the globalised knowledge-based economy. At the same time, we see the increasing integration of Hong Kong and the Mainland economies, the latter having tremendous cost advantage. The people of Hong Kong have always been able to embrace change. But the combined effects of the recession, the wide ranging reforms being undertaken to strengthen our systems, the switch to the new economy, and deflation as a result of adjustment to the price level of the Mainland, were proving quite daunting.
Indeed, there is probably no other economy the size of Hong Kong which has had to cope with so much change over such a short space of time. Even when our economy rebounded strongly, as it did last year, it was still not sufficiently broad-based to filter through to all sectors of the community. This year we have to contend with a slowing world economy. But, I remain optimistic about our long term potential. I am a Hong Kong believer.
Together we have come through a lot over the past few years. Now, we need to renew that faith in ourselves. Re-kindle the can-do spirit to meet the opportunities and challenges ahead. And change itself provides those opportunities. We have done this throughout our history. There is no reason why we can't continue doing it now by drawing on our inner strengths: the typical get-up-and-go entrepreneurial flair Hong Kong people have for achieving their goals without relying on the government to hold their hand.
I believe we are on the cusp of another exciting new era in Hong Kong's remarkable success story. I base this belief on the role we can play as a sophisticated knowledge-based economy and the unparalleled scope for developing trade, investment and jobs in the opening up of the Mainland economy. If this sounds like a mantra, it is because it contains such a fundamental truth.
We have laid the foundations to leverage this new era. We have built on our core strengths - the rule of law, a level playing field for doing business, a clean administration and the free flow of information. We have strengthened our position as a leading international financial centre. We have liberalised our telecommunications sector, making it one of the most open and advanced in the world.
We are setting new standards of corporate governance. Our people-and-business-friendly tax regime is the envy of many. We have a strong pool of professional expertise in many fields, such as banking, accounting, trading, legal and logistics. We have revitalised a scheme to bring in talented professionals from the Mainland to overcome shortages in the financial services and information technology disciplines.
And we are upgrading the skills of those employees who have been finding it difficult to secure work because of the shift to the knowledge-based economy. With this approach we are adhering to our strong belief in a free market economy. A philosophy in which government provides maximum support and minimum intervention. We are positioning Hong Kong to be Asia's world city. It is a city that is ready to explore and exploit the opportunities of change on the local, or global, scene.
We are all familiar with the great Hong Kong success stories. Companies and individuals who are now known throughout the world. Some of these people have come from less than privileged backgrounds. And this is still true of the not so high profile success stories of today. People who have had the courage to take a risk in the full knowledge that their idea may sink or swim.
I would like to take a minute or two to mention a couple of examples of this get-up-and-go attitude. During a recent district visit to Sham Shui Po, I met an enterprising businessman who, at the age of 20, had taken over a small wholesale knife-making business started by his father just after the war.
The young man went to Liverpool to study metal work and on his return to Hong Kong saw the potential to further develop his business. Today, he owns his shop in Sham Shui Po and a factory on Tsing Yi with a staff of 40. His products are exported to the U.S., Europe, Australia and New Zealand.
A new economy entrepreneur may be an unusual example to highlight in view of some of the high profile boom and bust stories since the dot-com bubble burst last year. But, I heard just the other day the story of a young man who, at the age of 20, was one of the youngest graduates of the Open University of Hong Kong.
After graduating in 1996 with a Bachelor of Science degree in Applied Computing, he became an analyst programmer in the university's IT unit so he could demonstrate to others what he had learned at OUHK. Last year he left his university job to set up his own Internet business in partnership with a friend. This small company has survived the dot-com meltdown and today employs 10 staff.
This may not be Bill Gates and Microsoft. But Hong Kong has long prospered on the back of small business, particularly when there is enough of them to form critical mass.
As you know, the simple point I want to make here is that Hong Kong has always been a city where opportunity knocks. If you have the right attitude and are prepared to have a go you can succeed.
In the immediate future, we should be looking at what more we can do to capitalise on the growing Chinese market. The Mainland's predicted GDP growth of around eight per cent this year is the shining beacon in an otherwise cloudy world economic outlook.
Hong Kong entrepreneurs are already the largest investors in every mainland province. According to one recent report, at the end of 1999 there were over 184,000 Hong Kong-funded projects throughout the country. And China's own statistics puts the cumulative value of Hong Kong's realised direct investment in the Mainland at 162 billion US dollars in June last year.
This involvement should give our enterprises a head start when China finally becomes a member of the World Trade Organisation. Our investors, particularly in manufacturing, have been a driving force in China's externally-oriented economy. This role should be maintained and even strengthened in the post-WTO era.
At the same time, the Mainland's trade is expected to double in the five years after it joins the WTO. This opens the opportunity for Hong Kong companies and their partners to sell their products not only on the world markets but, for the first time, to sell them on the huge Mainland domestic market.
It won't be easy, as they will face intense competition from multinational companies and from local enterprises in the Mainland. I hear it said that one reason Hong Kong people are less certain about their future is that our economy won't be able to keep pace with all of this competition.
I don't go along with that pessimistic feeling. It's not the way Hong Kong has risen to the challenges in the past. With the right preparation and a more positive mindset we can meet and master this challenge too. After all, we're no strangers to doing what they say can't be done.
The increased trade is expected to result in more cargo passing through Hong Kong in both directions and by sea, air and land. Opening up yet more opportunities and enhancing our role as a logistics and transportation hub for the region. Let's face it, we have the best physical infrastructure you'll find anywhere in the region - or for that matter anywhere in the world.
Our status as an international financial centre and fund-raising hub for the region should also be strengthened. Mainland-based companies, in particular, will want to use the Hong Kong market even more to raise capital for business expansion or modernisation plans. Last year alone they raised some 44 billion US dollars on the Hong Kong securities market. This is almost two-and-a-half times the amount of capital raised in China's own securities markets.
And the increased demand for banking services in the Mainland is expected to have a significant impact on Hong Kong's banking sector. Early projections indicate there could be a net expansion of about 30 billion US dollars in China-related banking services provided by our banking sector in the first 10 years after China joins the WTO.
These are random pointers to the opportunities and challenges we will face. Other benefits will be felt in the economy through Hong Kong's more intangible assets some of which I mentioned earlier, such as the rule of law and our free and open markets.
Many smaller companies from around the world wanting to do business with a China opening up more to the world will want to establish a presence here in Hong Kong. They will want to operate in a business environment that is familiar to them. And they will want to deal through people who have the cultural ties, the knowledge and experience of trading and investing in China.
As a government we are rolling out the infrastructure, upgrading it wherever necessary. Removing obstacles to doing business. Improving the connections with our neighbours in the Pearl River Delta. Encouraging more tourism. Looking at ways to increase the cargo flows across the boundary.
We are introducing major reforms to the education system to better equip our young people with the skills and knowledge they will need in the global economy. Providing a learning environment that stimulates curiosity and creativity. And cleaning up our living environment by improving both air and water quality. Turning Hong Kong into Asia's world city.
We will continue to explore investment programmes for the community, whether it is in areas such as education or a new infrastructure development. But they must be sound investments that will provide economic benefits for Hong Kong's future. We are playing our part to provide the right living and working environment for the people of Hong Kong, and to attract more talents to come to Hong Kong. We will explore ways to support our businessmen and professionals working and investing outside Hong Kong.
We have a lot of strengths - our system, our people, and the tremendous power of being hubs of cargo, information, people and capital flows. Coupled with the opportunities of a rapidly growing and restructuring hinterland, there are plenty of reasons to be optimistic. The key is to embrace change, compete with our strengths, maximize the opportunities provided by the Mainland, and aim for the world markets.
Ladies and gentlemen, with changes, the opportunities are here, and they are here for us to win, or to lose. I believe we will win, if we can just rely on what HK people are famous for: the can-do spirit.
End/Wednesday, June 6, 2001