Following is a speech by the Secretary for Commerce, Industry and Technology, Mr John Tsang, at the Seminar on Business Opportunities in Malaysia today (April 25): (English only)
The Honourable Dato' Seri Rafidah Aziz, Dr Fung, Distinguished Guests, Ladies and Gentlemen,
It is my great pleasure to join you all at this seminar. I would like to extend a very warm welcome to Minister Rafidah, who is a good friend and colleague in both the WTO and APEC. I know she has been busy leading our Malaysian friends to the US and Europe in the past six months making significant headway in opening up these markets for Malaysian business. We are most honoured to have her bring this trade and investment mission to Hong Kong. I hope you would find that business opportunities here are just as plentiful and profitable as those in the West.
Last year, Malaysia was Hong Kong's ninth largest trading partner, with total bilateral trade amounting to US$9 billion. Reciprocally, we were the fifth largest trading partner to Malaysia in 2003. Indeed, we have witnessed sustained growth of trade between our two economies in the past five years with an annual increase of more than 7%. The investment ties between us are also as strong as ever. Malaysia's stock of investment in Hong Kong has reached more than US$1 billion. Concurrently, our business sector has also been investing a staggering US$3 billion in Malaysia.
Hong Kong and Malaysia have a lot in common. As gateways to rich hinterlands in the Asia-Pacific region, both of us are externally-oriented economies thriving much on trade, foreign investment and tourism. Both of us are committed to promoting free trade through the rule-based multilateral trading system under the WTO and through regional co-operation with trading partners. Recent notable developments are, for you, the Agreement on the ASEAN Free Trade Area (AFTA) concluded among the 10 ASEAN countries; and for us, the Closer Economic Partnership Arrangement (CEPA) with Mainland China.
There are numerous benefits for Hong Kong and Malaysian companies to leverage on these two agreements. Hong Kong businessmen can certainly explore the vibrant ASEAN market through Malaysia. Malaysian firms can also capture the huge opportunities brought by CEPA, the first free trade agreement ever concluded by Mainland China and by Hong Kong. The preferential treatment CEPA offers are way beyond Mainland China's commitments in the WTO. What's more, CEPA provides for a mechanism to expand even further these liberalisation measures.
With the implementation of the second phase of CEPA since January this year, more than 1,000 Hong Kong products are now eligible for zero tariff when exported to Mainland China. Hong Kong service suppliers in a total of 26 sectors are also given preferential access to the Mainland market. I should add that CEPA is nationality blind and makes no distinction between companies as far as the source of capital is concerned. As long as they can meet a set of nationality neutral rules, Malaysian companies can enjoy the CEPA benefits.
On the investment facilitation front, the Mainland has streamlined application procedures for its enterprises to set up businesses in Hong Kong. This will help Mainland enterprises expand abroad and, at the same time, bring about many opportunities for Malaysian companies to do business with them in our City. We encourage more Malaysian firms to set up here, or team up with Hong Kong counterparts, or acquire Hong Kong enterprises to enjoy the advantages under CEPA. Our businessmen, with their profound experience in doing business in the Mainland, are certainly your ideal partners.
I would also like to highlight two further advantages of Hong Kong: our participation in the Pan-Pearl River Delta (PRD) regional cooperation and the conduct of Renminbi (RMB) business in Hong Kong.
Last year, the Pan-PRD Regional Co-operation Framework was established among Hong Kong, Macao and nine Mainland provinces neighbouring us. In 2003, the Pan-PRD region accounted for about 40% of China's GDP, with total foreign trade of more than US$800 billion. Its sheer economic size and foreign trade volume are close to those of ASEAN-10. The 11 Pan-PRD governments have agreed to strengthen co-operation in 10 areas, including infrastructure, business and trade, investment, and tourism. The development potential of Pan-PRD regional cooperation, and hence the prospects for foreign investors are enormous.
As a leading international financial centre, Hong Kong's scope of financial services has expanded to RMB business since last year. We are the first place outside the Mainland which is able to conduct personal RMB business, including deposit-taking, currency exchange, remittances and credit cards. As at the end of January this year, total RMB deposits in Hong Kong exceeded RMB13 billion. Such development will help underline Hong Kong's role as the launching platform to the Mainland for businessmen from other parts of the world.
I am, indeed, delighted to tell you that this is the best time ever to invest in Hong Kong because our economy has recovered, after years of contraction, with strong growth momentum. We recorded the fastest growth in four years at an 8.1% GDP growth rate last year. Local consumption is picking up strongly, and unemployment rate is thankfully declining steadily. Looking ahead, we are confident that the opening of the Hong Kong Disneyland, the implementation of the second phase of CEPA, the booming Mainland economy and the generally favourable global economic scene will contribute to a further solid GDP growth of 4.5% to 5.5% in Hong Kong this year.
Ladies and Gentlemen, I have set out for you a snapshot of Hong Kong's dynamic economy. I am sure that your Malaysian friends operating in Hong Kong will be able to tell you even more about why you should invest here. I sincerely hope that we can join hands in furthering trade and business exchanges between Hong Kong and Malaysia.
May I wish you all every success in your endeavours. Thank you.
Ends/Monday, April 25, 2005