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Following is the speech by the Secretary for Economic Development and Labour, Mr Stephen Ip, at the Air Cargo Forum 2002 Welcoming Luncheon today (September 18)(English only):
Larry, distinguished guests, ladies and gentlemen,
Thank you very much, David, for your kind remarks.
On behalf of the Hong Kong Logistics Development Council, I have great pleasure in welcoming you all to Hong Kong, Asia's world city. It is indeed a privilege for Hong Kong to be hosting the world's premier air cargo conference. This is the first time we have had this honour, although our air cargo sector has been a major economic driver for many years. So, we are making up for that by hosting the biggest exhibition yet in the 42-year history of The International Air Cargo Association. And I can assure all of you, we will do our utmost to make it not only the biggest, but also the best Air Cargo Forum that has yet been held.
Today, I really only have one objective, and that is to provide you with a broad overview of what we are doing to make Hong Kong the preferred international logistics hub in Asia. This is, in fact, a key element of our positioning as the world city of Asia. We cannot achieve this goal if we do not provide sterling service as the region's leading logistics hub, taking Asian goods to the four corners of the globe. This is especially the case in the highly-competitive air cargo industry.
Logistics is one of four major sectors that we have identified in Hong Kong to foster development in other areas, spur economic growth and create jobs. The three other sectors are financial services, tourism and producer and professional services. Internationally, Hong Kong is already in the league of best performers in these four sectors, but we must keep working hard to give our customers more bang for their buck by boosting the value, efficiency and reliability of the services we provide.
There is no doubt in my mind that Hong Kong's logistics sector has enormous potential. And there are good reasons for this optimism. Our container port has been the world's busiest in nine out of the last ten years, with an expected growth of 70% over the next eight years. Our airport has been the busiest in the world for international air cargo since 1996, with an almost 20% surge in cargo volume so far this year. And the prospect for further expansion is right on the horizon: Boeing's longer-term forecast predicts that the Asian market will account for some 52% of the world's air freight by 2019, compared to 41% in 1999. That is phenomenal growth. The World Bank predicts that by 2020, China will become the world's second-largest trading entity, ahead of Germany and Japan. More trade and investment will flow into Southern China. Located at the southern door-step of China, Hong Kong is perfectly positioned to capitalise on that expansion.
So, we are not only working off an extremely well-established base. We are also looking forward to quite substantial cargo growth over the next two decades. Of course, we take nothing for granted. We will work doubly hard to ensure the prospects become reality.
As many of you know, Hong Kong has thrived on interaction with the global village and as the premier international gateway for trade and investment with, and in, the Mainland. Now, I know that some people believe that our role will be eroded with China's WTO accession. I disagree.
Hong Kong is part of China. But we are a very special part of this growing economic giant. Our advantages, some perhaps very familiar to you, include our sound and well-tested legal system, clean government, low and predictable taxes, a level playing field for business, open market, and the free flow of information as well as talents. These are the cornerstones of our success. The institutional safeguards are unique to Hong Kong in the entire China because here we practise "One Country, Two Systems". And we will guard them jealously.
But how does Hong Kong position itself against the staggering progress of the China market that is becoming more open and transparent? Now, consider this - within an hour's flight of Hong Kong there are about 270 million people. That's roughly the same population as the United States. So, in terms of sheer market size, there will be plenty of business to go around for us in Southern China alone - leaving aside for a moment the remaining one billion people in the rest of Mainland China.
The focus of our attention is closer to home, and within about a 100-kilometre radius of Hong Kong. The Pearl River Delta, or the PRD, as we call it, is home to about 50 million people. Often referred to as the "factory of the world", it is the fastest growing, most affluent and most open economic region in China, the country's single largest GDP contributor and largest exporter. It is also China's most popular destination for external direct investment. Hong Kong is not close to the PRD. We are a part of the PRD - at least geographically.
Gifted with a rapidly developing Hinterland, we attach top priority to enhancing our Connectivity with the PRD - both in terms of transport infrastructure and cooperation between governments. To achieve synergistic benefits, we will look beyond our own confines and maximise the scope for co-ordination with other parts of the PRD in developing inter-modal transportation links. New railways, road links, bridges and boundary crossings will be built over the next five to ten years to smooth the flow of people and goods between Hong Kong and the PRD. New container port facilities will come on stream within the next two years to cope with the expected increase in container traffic to and from manufacturing centres further up the Pearl River. New facilities will be developed at the airport to handle increased air freight and passenger flows to and from the PRD. Nothing ever stands still in Hong Kong.
Let me narrow the focus further still to talk about our air freight industry, which holds great promise and in which I know you are all interested. We are determined to further expand our air cargo sector - for the simple reason that it is such a high value industry: last year, our international airport handled about 47 billion US dollars worth of exports. This is 1.5% of our export volume, but almost a quarter of our total export value.
Located at the Hong Kong International Airport, SuperTerminal 1 is the world's largest stand-alone air cargo facility, with a current handling capacity of three million tonnes per annum. In the past 12 months to August 2002, it handled 2.3 million tonnes of cargo, breaking its past record of 2.24 million tonnes handled in the year 2000. When fully developed, it can handle nine million tonnes a year. A visit to this state-of-the-art facility will be a truly memorable experience - you will be amazed by the computer-controlled stackers at work and the computer system that keeps track of 3,500 containers at any one time.
Modern facilities are only part of the success formula. The strength of our air cargo industry must also be measured in terms of its ability to ensure an efficient and seamless flow of goods across boundaries. A comprehensive international aviation network, sound regulatory system, efficient and reliable services are all key ingredients.
Our international airport operates 24 hours a day, thus providing flight connections across time-zones, a vital ingredient in express cargo operations. Nearly 70 international airlines provide 3,900 scheduled flights every week to over 130 destinations around the world, including connections to 40 Mainland cities. To date, we have concluded air services agreements with 50 countries.
Hong Kong Customs operates what I believe is one of the most efficient and professional clearance regimes in the world at Hong Kong International Airport. The Air Cargo Clearance System handles large volumes of cargo through a direct electronic interface between Customs and cargo operators for manifests and clearance instructions. The system is being upgraded to further shorten clearance times and to cope with expected increases in demand caused mainly by hub operations and inter-modal transshipment activities. Working in partnership with the private sector, Customs is also developing other measures to facilitate inter-modal cargo transshipment via Hong Kong, including a one-stop clearance system for transshipment cargo to avoid repeated Customs checks during import and export at different control points.
The Airport Authority Hong Kong is also devoting considerable time and effort to enhancing Hong Kong's competitiveness as an air cargo hub. It has increased the number of cargo stands and will continue to provide more over the next five years to keep pace with growing demand. It plans to develop a dedicated express cargo terminal to cater for the expanding express cargo market. In February 2001, the Airport Authority concluded a deal for the development of a logistics centre at the airport for handling high value-added air cargo. The facility is expected to open in the first quarter of 2003 and will provide a significant boost to the logistics capabilities of our airport.
About 70% of all import and export cargo handled at the Hong Kong International Airport comes from, or is destined for, the PRD. That explains why the Airport Authority is actively seeking to extend the airport's cargo catchment area by improving inter-modal connectivity and enhancing co-operation with other PRD airports. In March 2001, a Marine Cargo Terminal with on-site one-stop Customs clearance service was built on the airport island to provide direct links with 20 river ports in the PRD, targeting specifically air-to-sea transshipment. Since July 2001, the Airport Authority has participated actively in the "A5 Forum", which brings together the five major airports in the PRD - Hong Kong, Macau, Guangzhou, Shenzhen and Zhuhai. Participating airports have already reached agreement on enhanced emergency co-ordination and support and joint promotion activities. They have also embarked on joint studies to simplify passenger and cargo handling procedures, with a view to attracting more traffic to the PRD. The setting up of the Forum will help develop the complementary strengths of the airports in the PRD in providing services which connect China with the rest of the world. With our well-established international aviation network, we see a special role for Hong Kong in the A5 Forum and will continue to play a constructive role in fostering cooperation among airports in the PRD.
Ladies and gentlemen, this January our airport was named "Cargo Airport of the Year" by Air Cargo News - an honour for Hong Kong, and a timely tribute to the Airport Authority for the tremendous amount of work it has done in making Hong Kong a trusted and valued partner for air cargo customers.
But the international air cargo sector remains highly competitive, and we can never rest on our laurels. We will continue to invest in both the hard and software of Hong Kong to boost our logistics capabilities. This is essential not only for consolidating our position as the preferred international logistics hub in Asia, but also for enlarging our market share and creating more jobs locally both in the logistics sector and in other related fields.
We fully recognize the importance and potential of the logistics sector in creating jobs and alleviating the unemployment problem in Hong Kong. The latest figures show that the transport logistics and warehousing segments alone provide jobs to nearly 100,000 persons in Hong Kong. The figure does not include jobs in other logistics-related sectors such as air-related logistics services, courier service, cargo insurance, management and IT services relating to cargo flow, as well as general logistics functions of the manufacturing and wholesale/retail sectors. Enhancing Hong Kong's logistics strengths is therefore a critical step towards securing existing logistics related jobs, and creating new openings for the currently unemployed. The Government is therefore actively exploring the business case for building value-added logistics parks, and examining the feasibility of developing a Digital Trade and Transport Network System, an open and neutral e-platform for exchange of data among logistics players in the supply chain. If these projects are found to be worth pursuing, jobs will of course be created during the construction phase. But more importantly, the new facilities will offer high value-added logistics services by employing semi or even low-skilled workers operating high-tech systems.
Before I drown your appetite for dessert completely with words, please allow me to thank The International Air Cargo Association and Airport Authority Hong Kong for bringing the Air Cargo Forum to our magnificent metropolis, for their excellent organisation and for granting the Logistics Development Council the honour of hosting today's Luncheon. I hope you have enjoyed this gathering, and wish you all a memorable and rewarding stay in Hong Kong. And please do return here often - the Logistics Heart of Asia.
Thank you very much.
End/Wednesday, September 18, 2002
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