Following is the speech by the Secretary for Commerce, Industry and Technology, Mr John Tsang, at the Investment Promotion Event in Seoul, Korea today (October 23): (English only)
Ladies and Gentlemen,
The last time that I visited Korea was in 1999 when I was the Commissioner of Customs and Excise of the Hong Kong Special Administrative Region Government. I was invited by my friend, the then Korean Commissioner of Customs Mr Kim Ho-shik, who so generously showed me the many beautiful faces of Korea, from Ulsan to Kyongjiu to Seoul. The spirit of Korea made a deep impression on me, and the fond memories of the visit have remained with me all these years.
I am delighted to be back again, and I am pleased to note the great progress and massive strides you have made in the interim. Seoul is a stunning city that is so full of vitality, full of confidence, full of pride and full of opportunity. These are the ingredients that would energise denizens of any city, including my fellow citizens back in Hong Kong.
First of all, let me thank our hosts for allowing me to say a few words about Hong Kong, my home. We are especially pleased to be able to join our neighbours from the Guangdong province to tell you jointly about investment opportunities in the Pearl River Delta as a whole.
We have come here as a team, a team of players who complement each other's strengths, a team of players who make up an irresistible winning combination and a team of players who provide you with the solution that you have been looking for. My friend the Governor has told you about Guangdong province. I shall tell you a bit about Hong Kong.
Hong Kong's economic development is a history of constant changes and adaptations in meeting new opportunities and challenges. We have developed from a city focused mainly on export manufacturing to a predominantly services and knowledge-based economy. This ability to continuously reinvent ourselves and respond positively to economic shifts is particularly important in today's volatile global economy.
I don't want to pretend that these adjustments are always easy. In fact, they are quite painful for selected sectors of our economy. But I believe this flexibility is one of the essential conditions for remaining an attractive location for companies, local and international companies alike, to conduct business.
The other conditions for success include sound economic fundamentals, combined with a regulatory environment that facilitates the conduct of business. Built around the cornerstones of free enterprise, free trade and free markets, Hong Kong is one of the most open, and most externally orientated economies in the world. It has consistently been ranked as the world's freest economy by the Heritage Foundation and the Fraser Institute - and these endorsements underline the strength of our city.
Hong Kong also embraces globalisation of trade and services, and is an active participant in international organisations that promote such activities, including the WTO, APEC and the WCO. We are a duty-free port, where no quotas or tariffs apply. Underpinned by a strong financial system, money, goods and services flow freely without restriction.
Hong Kong taxes, at 16 per cent for personal income and 17.5 per cent for profits, are among the lowest in the world. We also offer an abundance of dedicated and skilled labour, as well as a pool of competent professional service providers, who are unrivalled in the region.
We have been able to maintain a corruption-free and efficient public administration, which is dedicated to creating a business environment where investors can operate with ease and certainty.
Hong Kong enjoys a constitutionally guaranteed free press and freedom of speech, and information does travel at the speed of light in Hong Kong. More than 40 newspapers and 700 periodicals are published in a host of languages in a city that is home to some 130 media organisations, both local and international. The Financial Times of London established its regional publishing base in our city just a few days ago.
Life in Hong Kong is based on the rule of law and a level playing field for both individuals and enterprises. This guarantees a safe and predictable investment environment. Intellectual property rights are also protected through a sophisticated legal framework and effective enforcement of the regulations. That was one of my priority objectives when I was the Commissioner of Customs and Excise, and it remains our priority today.
These fundamentals have helped to establish Hong Kong as one of the most attractive business hubs in the region. It is the second largest recipient of foreign direct investment in Asia after China, and 15th in the world, according to the World Investment Report 2003 published by the United Nations Conference on Trade and Development (UNCTAD).
Hong Kong is the chosen base for over 3,000 regional headquarters and regional offices representing multinational companies from around the world. More than one-third of the multinational firms active in the Asia-Pacific area have their regional headquarters based in Hong Kong.
Korea has contributed substantially to Hong Kong's development and foreign investment. There are some 700 Korean companies doing business in Hong Kong, including chaebols such as Hyundai, LG, Samsung, Ssangyong, SK and many others. The Bank of Korea and the Korea Trade-Investment Promotion Agency (KOTRA) also maintain offices in Hong Kong. And they are all keeping up nicely with the long held Korean tradition of prosperity and profitability.
Apart from merchandise trade, many Korean companies in Hong Kong are also active in the services sector. These companies include the Seoul Bank, Korea Exchange Bank, LG Securities, Air Couriers, Hanjin Shipping, Hyundai Merchant Marine, Korea Travel Service, Dong Ah Construction and Korean Air. In addition, eight Korean banks have branches or representative offices in our city. Like their goods counterparts, these service providers also fare extremely well in Hong Kong.
For many Korean, as well as other international companies, Hong Kong is the first choice for their high-value corporate activities. It is the place in the region where they carry out their corporate co-ordination and central management functions - including regional strategy formulation, sales, marketing and customer service.
On June 29, 2003, the Central Government of Mainland China and Hong Kong, as separate members of the World Trade Organisation, signed the Closer Economic Partnership Arrangement (CEPA). This opens up new and exciting opportunities for international investors. Let me tell you more.
CEPA covers three main areas:
(a) trade in goods;
(b) trade in services; and
(c) trade and investment facilitation.
On trade in goods, 273 Hong Kong products will enjoy zero tariffs in the Mainland market from January 1 next year, and all other products no later than January 1, 2006. On trade in services, 18 sectors will have greater market access in the Mainland. They include telecommunications, construction-related services, audio-visual services, advertising, medical services, logistics, legal services, accountancy, banking and insurance etc. On trade and investment facilitation, we would be doing a great deal in making the usual regulatory procedures more user friendly to all concerned. You may wish to note that Chinese medicine is one of the items under this category, and given the strength of your ginseng market, I am sure you would find our arrangement of considerable interest.
This free trade agreement is the first for both Mainland China and Hong Kong. It creates immense potential for Hong Kong to become a centre for value added manufacturing and high quality services for a vast domestic market of 1.2 billion people.
With China's accession to the WTO and the signing of CEPA, Hong Kong's role as an international trade and business centre and a gateway to China will be further strengthened. The emergence of Mainland China as one of the most dynamic economies in the world, especially the economic power-house that is the Pearl River Delta, has also offered a range of additional opportunities for businesses in Hong Kong.
With a combined population of 48 million and double-digit average annual growth for more than a decade, the Pearl River Delta is the fastest growing region of the fastest growing major economy in the world. Each day, an estimated US$300 million worth of goods are produced by thousands of factories in the region.
In fact, Hong Kong investors were the first to realise these opportunities and were the first to shift their manufacturing plants across the border when the region's Special Economic Zones were opened in 1979. Today, Hong Kong firms in the Pearl River Delta region are employing more workers there than our entire population. In fact, the economic development of the Pearl River Delta is now driven by thousands of foreign invested companies producing competitively at internationally recognised quality and process standards, and exporting extensively to all quarters of the world.
Many Korean companies will be considering how to take advantage of the opportunities arising from the opening of the Mainland China market. Some companies will wish to use it as a low cost manufacturing base and then export elsewhere; others will want to tap into the largest consumer market in the world.
For multinationals looking to profit from a Hong Kong/Pearl River Delta strategy, Hong Kong-based companies are ideal partners. We provide considerable value, including capital, resources, long-standing relationships on the Mainland based on decades of experience, and broad affinity with the sharing of a common language and cultural background.
Ladies and gentlemen, if you want to combine an international business environment with immediate access to the Chinese mainland, there simply isn't any match for Hong Kong. Our infrastructure, business and cultural links with the Mainland are like nowhere else. We also have the institutions, systems, regulatory environment and human resources that will provide you with what you need when you need it.
As a result, many international companies perform their management, finance, information, co-ordination and logistics activities in Hong Kong, while overseeing their low-cost manufacturing facilities and sales operations in the Pearl River Delta.
The combination of Hong Kong's western business practices and Guangdong's highly skilled and low cost workforce provide the winning combination for Korean firms.
With these words, I would like to welcome you all to come to the Pearl River Delta to do business, to maximise your opportunities and to achieve success. So pack your bags and come to Hong Kong, and see it for yourself. I am sure that you will like what you see.
Ends/Thursday, October 23, 2003