Following is a speech by the Chief Secretary for Administration, Mr Donald Tsang, at a reception hosted by the Hong Kong Economic and Trade Office Brussels in Luxembourg today (November 23, Luxembourg time):
Minister Grethen, distinguished guests, ladies and gentlemen,
I am so very glad that you could join us tonight. This reception is our small way of saying 'thank you' for the extremely warm welcome we have received here in this lovely city of Luxembourg. Back in Hong Kong, before I came on this visit, I had a quick 'look around' your country on the Internet. I discovered that Luxembourg covers just over twice the area of Hong Kong. On the other hand, we have managed to squeeze almost 7 million people into Hong Kong while Luxembourg has a population of about 450,000. So if ever you are looking for ways to conserve precious green areas just come to Hong Kong. We can show you how to fit the entire population of Luxembourg into what we call a New Town, and still have space to spare! So you definitely have the advantage as far as space is concerned.
The Luxembourg City Tourist Office also has a very good website that introduces all the attractions of your country and this fine city. They describe Luxembourg as 'Small but Great'. I thought it was a very nice catchphrase, and one that could easily be applied to Hong Kong. I think we are both small but great places. Luxembourg and Hong Kong have a lot in common, despite the distance between us and the differences of history and development. We both have an influence disproportionate to our size. Luxembourg is at the very heart of Europe, while Hong Kong is at the crossroads of the Asia-Pacific. We are both important financial centers. We have small, open economies heavily geared towards services. We have high living standards. We are rich in our own culture. All these similarities make it easy for me to appreciate all that Luxembourg has achieved as an economy and as a country. And I think it also shows that economies with a global outlook will prosper and be able to provide their citizens with a relatively high living standards.
My visit here has been most fruitful and enjoyable. It has included meetings with Prime Minister Juckner, the President of the Luxembourg Parliament, Mr Jean Spautz, Vice Prime-Minister Polfer and two of your senior ministers, Messieurs Grethen and Frieden. I also had an opportunity to meet other members of the Luxembourg Parliament and to visit the stock exchange.
In all these meetings I have tried to stress two points. The first is that Hong Kong is doing well under the 'One Country, Two Systems' formula. With the firm support of our national leaders, and the determination of Hong Kong people, we have transformed this unique concept into an everyday reality. The rule of law upheld by an independent judiciary, a free society which attaches great importance to the free flow of information, a level playing field for business and a clean, efficient administration continue to be the bedrock of our success.
My second point is that we are looking to do more to boost links between Hong Kong and Luxembourg. As I have just mentioned, we share many similarities. We can and should build on this synergy, particularly in the financial services area.
I was pleased to learn of a ground-breaking initiative by the Luxembourg Stock Exchange to forge strategic partnerships in Asia. I am happy to report that a Memorandum of Understanding has been signed between the Luxembourg and Hong Kong bourses to share information in the public domain on listed companies. This will be the first such MoU between Luxembourg and any other stock exchange in the world. I am sure it will prove to be a mutually beneficial undertaking.
We are also involved in discussions that will forge closer links between the Luxembourg Central Bank and our equivalent, the Hong Kong Monetary Authority. Detailed proposals have yet to be finalised but we will look at co-operation in areas such as banking supervision, economic research, payment systems, management of reserves and the exchange of the new Euro notes. Again, closer co-operation in these areas will benefit both of our banking systems.
I also discussed with Prime Minister Juncker and several other ministers the possibility of a double taxation agreement which will bring benefit to businesses in both Hong Kong and Luxembourg.
Another area - and one of vital importance for the future development of any economy - concerns education. Your Ministry of Culture and Higher Education is investigating the possibility of establishing Luxembourg's first university. At the moment, Hong Kong has 10 degree-awarding higher education institutions, of which eight are universities. We also provide a wide range of vocational education and technical training courses. My colleagues in our Economic and Trade Office in Brussels have visited Luxembourg officials to discuss ways in which we may be able to help. We would of course welcome a visit to Hong Kong by our friends in the Luxembourg Government to take a closer look at how we fund and operate our tertiary institutions. We are also about to begin a range of reforms within our education system that will affect the way we provide secondary and tertiary education, and these may also be of interest.
I have also been able to discuss the latest economic situation in Hong Kong and Asia. Of course many people have asked me about the implications of China's recent accession to the World Trade Organisation. On the economic front Hong Kong has been affected by the global slowdown, which has accelerated after the September 11 attacks in the United States. We are looking at marginal growth this year and we expect the domestic economy to get worse before it gets better. On the other had we have to expect that in Hong Kong because we are one of the world's most externally- oriented economies. And what happens in the US and Europe will inevitably affect us.
The longer-term outlook is excellent. Recent figures tell a story. Emigration from Hong Kong is at a 20-year low. International companies are coming to Hong Kong in record numbers - our latest survey shows that 3,200 overseas companies have a regional headquarters or office in Hong Kong. That's the most in Asia. In the past two years alone, almost 750 international companies have established regional operations in Hong Kong. About 10 Luxembourg companies have regional operations in Hong Kong, including Cargolux Airlines and Banque Generale du Luxembourg. Last year more than 140 billion Euros in external direct investment flowed in and out of Hong Kong, which highlights the strength of, and confidence in, our financial system to handle such large fund flows. And the influential Washington-based think-tank, the Heritage Foundation, has once again - for the 8th year running - rated Hong Kong as the world's freest economy. We regard all of these developments are a vote of confidence in Hong Kong's future.
No doubt, much of this renewed interest revolves around the opportunities that will follow China's accession to the World Trade Organisation. International companies are positioning themselves to benefit from a Mainland market that is more open and more closely aligned to the worlds multilateral trading system. We believe that Hong Kong is the best option for overseas companies wishing to access the Mainland market. We have years of experience dealing with Mainland partners and enterprises. We share a common language and culture. And we have a broad, deep pool of professionals with the contacts, acumen and working knowledge required to make a success of a business venture in China. What we also offer is a tried and trusted legal system, high standards of corporate governance, low-taxes, a stable and freely-convertible currency, the free movement of goods and capital and some of the best transport and communications infrastructure anywhere.
I am sure that Luxembourg's advanced financial services sector is looking very closely at future opportunities in China. There will be much greater access for foreign banks within the next five years. The insurance and securities and asset management sectors will also be opened up.
Ladies and gentlemen, you have been most gracious with your time tonight. I know how difficult it is to listen to a speech while standing up. But it is even more difficult when trying to enjoy a hard-earned drink at the end of a hectic working week. Once again, thank you all very much for your warm welcome. It is greatly appreciated. And we would of course love to see you all in Hong Kong some time.
Thank you very much.
Ends/Saturday, November 24, 2001