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Following is a speech by the Financial Secretary, Mr Henry Tang, at the Credit Lyonnaise Securities (CLSA) Investors' Forum 2003 Closing Plenary Session today (September 22): (English only)
Good afternoon ladies and gentlemen,
Thank you very much Edmund for the kind introduction and for providing me with this forum to showcase our tremendous advantages that Hong Kong has as a place in which to make investments. Your invitation also gives me this opportunity to extend to you the warmest welcome to attend this Forum and to congratulate you on this new milestone which is your 10th anniversary. Your 10th anniversary and that you have continuously held this forum in Hong Kong speaks loud and clear of the pulling power of Hong Kong and the investment potential of the region and last, but not least, to showcase your devotion and your dedication to Hong Kong, for which I personally thank you.
For me, I'm very delighted to be able to address the CLSA Investors' Forum in my new role as Financial Secretary: and to reassure you that while I may still be finding my 'financial feet', Hong Kong's financial roots have continued to grow. We have opened up new prospects of new and exciting ventures for the long-term future of Hong Kong, our country, and Asia as a whole.
Of course, in the past few years, Hong Kong has experienced a lot of difficulties. We are not alone in being buffeted by the Asian financial crisis, the bursting of the dot.com bubble, and more recently, the SARS outbreak. However, none of these altered our fundamental strengths - these strengths make us such a stable environment for our investors, a stepping stone to the Mainland, and all that our country has to offer as its economy opens up to the world as a member of the WTO.
The Heritage Foundation and the Fraser and Cato Institutes have consistently ranked Hong Kong as the world's freest economy. We continue to attract a large amount of foreign direct investment - second only to the Mainland in the Asian region. However, there is much more to why global investors continue to maintain confidence in Hong Kong.
You know that we are a free and open society based on the rule of law - and you understand this law and you trust this. You also know we are a place where everyone plays on the same level playing field - there are no favours given and no corruptions tolerated. We are a place with a friendly environment to business and also a friendly government that maintains a low and simple tax regime.
We are also a place where true freedom is alive and well, and where protest, carried out within the law, is part of our city. Indeed, the demonstrations on July 1st - when an estimated half a million people took to our streets in a peaceful and sensible manner, without violence that often mars incidents in other capitals around the world - show how the people of Hong Kong value and respect our freedom. This freedom is also evident in the unfettered flow of news and information which are so vital for the smooth and fast conduct of business activities.
In this context, it is encouraging to see that our business prospects are picking up much faster than expected. We are renowned for our entrepreneurial spirit and we have demonstrated that power once again. Overall economic activity has been improving and this trend should continue for the rest of the year. That is one reason why we have revised upwards our GDP growth for the year as a whole to 2%. It's not as bullish as CLSA's revision, but I hope I am wrong and CLSA is right.
I have always had the greatest confidence in the future of Hong Kong. With the beginning of a recovery, there are great opportunities ahead just waiting to be seized. Nowhere is this more evident than through our enhanced co-operation with the Mainland. The signing of CEPA - the Closer Economic Partnership Arrangement between the Mainland and Hong Kong- offers tremendous advantages for the manufacturing and services sectors. It will be the catalyst for companies wishing to tap the vast potential of our mainland market; and gives us a head start on our competitors. CEPA is truly WTO plus and ahead of ASEAN. Already, our overseas Economic and Trade Offices have experienced a surge of enquiries by companies seeking ways to take advantage of this new platform through Hong Kong. We have been working hard with our Mainland counterparts to work out the implementation details of CEPA, which we are about to announce to get the ball running on the ground. It is no wonder that companies embracing the CEPA concept are leading the way in our stock market.
CEPA may be the most important development in our economic armoury in recent times, but it is certainly not our only initiative. Stronger co-operation with our Guangdong neighbour is underpinning our recovery and growth. This is not surprising given the quarter-of-a-century of interaction between Hong Kong and Guangdong. For instance, through the transfer of labour and also land-intensive production processes to the Pearl River Delta, we have moved up the value chain and emerged into an international financial and business services centre, providing major facilities such as ports, airports and key services such as finance, banking, insurance and logistics services. At the same time, the PRD has seen significant growth in economic strength and advancement of living standards.
Co-operation between Hong Kong and Guangdong extends well beyond economic issues to encompass infrastructure projects as well. Work is underway on the construction of the Hong Kong to Shenzhen Western Corridor and priority is being given to the bridge linking Hong Kong to Macau and Zhuhai. This will be an awe-inspiring engineering feat and will enable people and also goods to cross between here and the western part of the Pearl River Delta within half an hour, opening up endless possibilities for trade and commerce that will contribute to the growth of Hong Kong, as well as to the southern part of China.
These improvements to our economic fabric are enhancing our ability to act as the most strategic two-way platform between the Mainland and the world. I just want to use our financial services sector as an example. What we are proud of and continue to stress is the quality of our market. Financial institutions in Hong Kong, being well equipped with expertise in funding arrangements and also having broad exposure to the international markets, are playing a pivotal role for fund-raising by Mainland enterprises. By the end of June 2003, a total of 152 Mainland enterprises have listed their shares on the Stock Exchange of Hong Kong, raising a total of equity capital of US$95 billion.
At the same time, progressive relaxation of capital and foreign exchange control would stimulate further capital flows between the Mainland and Hong Kong. The QFII (Qualified Foreign Institutional Investors) Scheme, which allows foreign investors to invest in the Mainland stock markets, has begun to operate in June 2003. We are playing a facilitator role in this process.
To consolidate our success as an international financial centre, we will continue our efforts to promote a fair, efficient and transparent regulatory regime.
Ladies and gentlemen, as you can gather, I am cautiously optimistic that we have turned the corner. Our fundamental strengths remain as strong today as they have for decades; our strategic position has been enhanced by closer economic co-operation with the Mainland, in particular the Pearl River Delta, which is a strong and growing self-sustained regional economy. Let's not forget the Pearl River Delta alone has about 60 million people which is a good sized European country. We have positioned ourselves and will continue to position ourselves as the most strategic two-way platform linking the Mainland with the rest of the world and bringing the world to China's doorstep.
I believe we are offering more value for money than any other Asian cities. I don't just mean opportunities to make money. More important is the value we are adding through the institutional software I mentioned earlier: the rule of law upheld by an independent judiciary; a sound banking system; a well-regulated and liquid equity market; a clean civil service; complete free flow of capital and information; a freely convertible and stable currency; and no capital gains taxes. No other investment location in Asia can offer you all these. And certainly no other investment location has the world's potentially biggest market on its doorstep.
Thank you.
End/Monday, September 22, 2003
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