Following is the full text of the speech (English only) by the Financial Secretary, Mr Antony Leung, at the Opening of the World Services Congress 2001 today (September 20):
Distinguished guests, ladies and gentlemen,
It is a great pleasure for me to welcome all our guests and participants from around the world to the second World Services Congress. In particular, I would like to personally thank the delegates from the United States who, despite the horrors of the terrorist attacks on New York and Washington last week and the tragic loss of life, have shown their determination to be with us in Hong Kong this week. Our thoughts and sympathies continue to be with those who have lost loved ones, colleagues or friends.
This Congress brings together countries and people with much in common - a desire to make globalisation work for the benefit of all, not just the few. Today and tomorrow, you will have discussions around themes of globalisation, liberalisation, the new economy and the China market - themes that are part of Hong Kong's lifeblood. In business, we talk about right place, right time, right people. In Hong Kong we have them all.
You are in the right place because Hong Kong is one of the freest and most open economies in the world. We are totally committed to the rules-based multilateral trading system under the World Trade Organisation. And we embrace the changes brought by globalisation. That does not mean we don't recognise there are opposing views which need to be addressed. We acknowledge that globalisation can be a mixed blessing at times. But this should not stop its progress.
Hong Kong is an externally-oriented economy. Our market is always open to competitors from all over the world. Hong Kong people are known to be adaptive to changes and responsive to challenges. We are committed to moving forward and positioning Hong Kong as a leading financial centre, logistics hub and tourist destination in the region.
And Hong Kong is well poised in assuming this role. Our good geographical location in the fastest growing region in the world and our well established financial and physical infrastructure are of course our major advantages. Equally important to the international business community are our institutional strengths, including our rule of law, level playing field, light handed regulators, free flow of information, fully convertible currency without any capital control, low taxes, and many more. These are unparalleled in the region.
You are in Hong Kong at the right time.
China's long march towards membership of the WTO is nearing the end. The way is now clear with the conclusion of the last round of the WTO Working Party meetings in Geneva earlier this week. The world is watching closely to see how such a major trading nation integrates into the world market. With prominent speakers from the Mainland, this Congress is perhaps a little like a final warm-up session for businesses aspiring to seize the early opportunities from China's accession.
China's entry into WTO matters to Hong Kong not only because we are a WTO member in our own rights, but also because we are the principal gateway to the huge China market. We handle about 40 per cent of China's foreign trade. We are China's largest external investor accounting for about half, or US$171 billion, of all realised direct investment in the Mainland. And our businessmen possess extensive market knowledge, network and experience in the Mainland of China, making them the best partner for companies unfamiliar with the Chinese market.
Of course we will also have the Fourth WTO Ministerial Conference in just two months' time. Expectations are high that a new round of multilateral trade negotiations will begin at that meeting in Qatar. We will be doing all we can in support of that new round starting in November. Through this Congress, we also hope to be able to generate further momentum to the on-going services negotiations.
As we are talking about services, you are connecting with the right people by meeting in Hong Kong.
Hong Kong is one of the most advanced service economies in Asia. Some 85 per cent of our GDP is generated by service industries which employ more than 80 per cent of the work force. So, it's not surprising that our people not only know the importance of the service sector, it's part of their psyche. In this context, the core theme of the Congress - Services : the Driver for the Global Economy - has a strong resonance in Hong Kong.
But the nature of services is changing rapidly as globalisation, trade liberalisation, and the new economy are being shaped by innovation and the application of information technology. With trade liberalisation, the world is increasingly linked through the import and export of merchandise and services. Advances in information technology followed by the dramatic drop in the cost of communications have created a global working environment that crushes time and space.
As an interesting aside, about four decades ago, a trans-Atlantic cable could carry about 140 simultaneous conversations. Today, a fibre-cable can carry up to 1.5 million. And two decades ago an average PC cost nearly US$3,000. Now, it is one-third the price and more than 100 times faster. So, what does this mean to the services sector and to governments?
First, it means that with cheap and efficient IT, companies have a greater ability to locate their production processes in different parts of the world, and still remain in close contact. It's a phenomenon that is no longer confined to manufacturing. In the services sector, banks, airlines and other companies are moving their back-office staff to cheaper cities with direct links to their front-office through satellite and various forms of communications.
Second, almost all kinds of information can be transmitted, much of it almost instantly, making services more tradable than ever. Producers and consumers of services don't have to meet face to face. The development of IT has blurred the line between manufacturing and services. Services are becoming more like manufacturing in that production and consumption no longer have to coincide in time and space.
In other words, the way that services are produced, delivered and consumed has changed as a result of globalisation and the IT revolution. New possibilities are being opened up which will be the subject of discussions over the next two days. The flexibility businesses have in choosing their places of production has exposed workers to much greater international competition. For the unskilled worker this is posing great challenges in moving into new sectors of employment. Upgraded skills are required for the new knowledge economy.
As a government, we have been encouraging the adjustment to the knowledge economy. We are providing the opportunities for unskilled workers to improve their skills through a variety of training and re-training programmes. In particular, we have been targeting employees in small and medium sized enterprises, as these companies are the backbone of Hong Kong's economy. We believe that assisting SMEs to enhance and upgrade their capability is the best way of helping them and their employees adjust to globalisation.
I mentioned earlier that trade liberalisation is one of the forces speeding up the movement of globalisation. China's accession to the WTO will provide a new dimension to this for both small and large businesses around the globe. It will mean a more market-oriented, more transparent and rules-based economy opening up for greater access by foreign companies. It will also enable the Mainland to fully integrate into the global marketplace enjoying the same benefits as the rest of the world. And if - as the World Bank predicts - China's membership will result in a doubling of its share of the world's external trade in five years, then business opportunities abound.
For Hong Kong, our strengths in the services sector, such as banking, insurance, finance, and logistics will be in demand. But we cannot be complacent as international competition for these services will be intense. That's why we have been working closely with the Pearl River Delta to further strengthen our economic ties. We will enhance the competitiveness of the region as a whole through further development of the synergy between the biggest manufacturing centre in the world and the leading financial and logistics hub in Asia. This will continue to be a formidable business and services centre for China and the region, and one that will have considerable impact on the global scene.
Ladies and gentlemen, globalisation like any other form of change is bound to foster a degree of uncertainty. This is only natural. But it is essential for all of us to adjust to the changing environment. The best performing economies will continue to be those that are open to trade, open to international competition, and develop and manage their knowledge assets more effectively.
I trust you will have a lot of interesting discussions in the next two days on how best different economies could take on these challenges. I wish you all a stimulating and rewarding conference and trust that you will have a successful outcome. Thank you.
End/Thursday, September 20, 2001