Following is a speech by the Permanent Secretary for Commerce, Industry and Technology (Commerce and Industry), Miss Denise Yue, at the "Business Opportunities in Malaysia" luncheon today (July 14) (English only):
Honourable Dato' Rafidah, distinguished guests, ladies and gentlemen,
I am delighted to be here this morning to welcome, on behalf of the Hong Kong Special Administrative Region Government, the Honourable Dato' Rafidah Aziz, Minister of International Trade and Industry of Malaysia, and members of the Malaysian Trade and Investment Mission to Hong Kong.
Dato' Rafidah and I have known each other for a long time. She is one of the longest serving trade ministers. Over the years, her dedication to the cause of international trade, her strong sense of integrity and her no-nonsense approach has earned her high respect in government and business circles around the world. I like to think that the friendship between Dato' Rafidah and myself reflects the close economic partnership between Malaysia and Hong Kong. And the Hong Kong Special Administrative Region Government is committed to further enhancing this close trade and investment relationship.
Malaysia is Hong Kong's 6th largest trading partner in Asia and our 9th largest partner overall. Our positive bilateral trade relationship has a solid foundation and we have seen sustained growth at an annual rate of 10% in the past five years. In 2003, total merchandise trade between the two places amounted to over HK$60 billion. In the first four months of this year, we sold more goods, up by 17%, to Malaysia over the same period last year and, reciprocally, we consumed 25% more goods from Malaysia. Malaysia is a favoured place for our investors. As at the end of 2002, the total stock of Hong Kong's foreign direct investment in Malaysia amounted to some HK$28 billion. Reciprocally, Hong Kong attracted a total stock of some HK$9 billion from Malaysia.
Ladies and gentlemen, your presence here in Hong Kong is the best testimony of Hong Kong's resilience and vitality after the SARS attack last year. Indeed the exceptionally swift recovery of our economy from the doldrums of the first half of last year caught every analyst by surprise. The recovery has gathered further momentum this year. Externally, our exports of goods surged by 14.8% in real terms in the first quarter of this year, compared with the same period last year. Locally, buoyed by improved employment conditions, a sustained surge in inbound tourism and a reviving property market, private consumption expenditure accelerated to a 5% growth in real terms in the first quarter of this year, compared with the same period last year. Our Financial Secretary forecasts that Hong Kong's GDP will grow by 6% in real terms this year. Our unemployment continues to trend downwards. In short, the outlook for our economy in the near future is very robust.
Confidence in the Hong Kong economy is premised on our strong economic fundamentals. We are currently the 11th largest trading entity in goods and the 15th largest in services in the world. We are the second largest recipient of foreign direct investment in Asia, after the mainland of China. We have the second largest stock market in Asia in terms of market capitalisation. We are an international transport centre with the world's busiest container port and one of the world's busiest air cargo hubs. We are strategically located at the doorstep of the mainland of China, the fastest-growing economy in the world. Our entrepreneurs have rich experience and know-how in doing business and establishing networks in the Mainland. They are the ideal partners for foreign businessmen looking to grasp the enormous market opportunities in the Mainland, made available through the increasing market liberalisation measures adopted by the Mainland Government following China's accession to the World Trade Organisation and the implementation of the Mainland-Hong Kong Closer Economic Partnership Arrangement, or CEPA in short.
CEPA is a unique free trade agreement in that it is concluded between two governments of the same country. CEPA draws institutional support from two rock-solid buttresses - the "One Country, Two Systems" principle and the separate membership of Hong Kong in the WTO, both of which are enshrined in the Basic Law, Hong Kong's mini-constitution. In business terms, CEPA provides for the elimination of tariffs for the imports of Hong Kong-made goods into the Mainland. Likewise, Hong Kong's service suppliers in 18 major service sectors, including transport and logistics, distribution, advertising, management consulting and convention and exhibition, enjoy preferential access to the Mainland market, ahead of and beyond the commitments of China in the WTO.
CEPA has been warmly welcomed by the business sector. Companies are very excited about its potential, for thanks to the nationality-neutral set of rules to determine Hong Kong goods and services under CEPA, investors from overseas and the Mainland alike are welcome and indeed encouraged to establish companies in Hong Kong, or join hands with Hong Kong companies to make the most out of CEPA. Although CEPA has been implemented for just over six months, more than 1,100 consignments or close to HK$500 million worth of products, ranging from pharmaceutical products to textiles and clothing, from plastic articles to jewellery and watches, have already entered the Mainland market tariff free. Import tariffs up to 25% of the value of the goods were waived because of CEPA. On the services side, preliminary results are also encouraging. More than 360 business entities in Hong Kong are planning to use the CEPA provisions on preferential access to establish legal, construction, advertising, film production, telecommunications, distribution, insurance, banking and logistics operations in the Mainland.
China is currently the fastest-growing major economy in the world. Within it, the Pearl River Delta (PRD) region is its southern engine of growth. To further enhance the economic development of this region, the governmental authorities in the nine southern provinces and the two Special Administrative Regions of Hong Kong and Macau have, last month, set up the Pan-PRD Regional Cooperation and Development Forum, which will bring the concerned authorities and businesses in the Pan-PRD region closer together and enhance their complementarities. The economic strength and potential of the Pan-PRD region may be illustrated by the fact that it has a total annual GDP of US$636 billion, equivalent to that of ASEAN, and a population the size of that of the enlarged European Union. And Hong Kong is extremely well-placed to reap the benefits and opportunities arising from the rapid growth of the Pan-PRD region. Malaysian enterprises can be part of the winning formula by teaming up with Hong Kong companies and using Hong Kong as the gateway to where the future fortunes lie.
Ladies and gentlemen, with the implementation of CEPA and the formation of the Pan-PRD Forum, the strong Trade and Investment Mission led by Dato' Rafidah cannot have picked a better time to visit Hong Kong. Doors have been opened. The opportunities for forging an even closer business relationship between Hong Kong and Malaysia abound. I have complete confidence that the entrepreneurs of the two places will not let such opportunities go amiss.
In closing, may I wish you, Dato' Rafidah and members of the Malaysian Trade and Investment Mission every success in your endeavours. Thank you.
Ends/Wednesday, July 14, 2004