Acting CE's speech at PBEC conference opening

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Following is the opening remarks (English only) by the Acting Chief Executive, Mr Henry Tang, at the 38th International General Meeting of the Pacific Basin Economic Council (PBEC) held at Hong Kong Convention and Exhibition Centre this morning (June 13):

David, Douglas, distinguished guests, ladies and gentlemen,

Good morning. It gives me great pleasure to join you at the opening of the 38th International General Meeting of the Pacific Basin Economic Council. On behalf of the Government and the people of Hong Kong, I would like to extend my warmest welcome to everyone here today, especially those of you from the Mainland and who have travelled from afar to visit us -- Asia's World City.

I have known David for a long time. Sometimes I admire his courage, but I always admire his vision. Very rarely do I wish that he was wrong. This is one of those occasions. But of course he is quoting from someone else, that this elite magazine whose cover always spells the death knell of an economy and it would soon go over the cliff. I should hope that as long as I am at the helm, I would steer it away from that cliff and on a steady path. Especially as a finance minister, what comes out of my mouth should be boring, predictable and consistent. So I hope I will deliver one of those today.

I am delighted that Hong Kong has been given this exclusive privilege of hosting this very important IGM, which brings together business and government leaders from both sides of the Pacific to discuss emerging business opportunities -- as well as the key challenges facing the region. Given the economic dynamism that has characterised Asia-Pacific growth, the theme of this meeting, "Pacific Basin: Setting the Pace for the Global Economy", is most fitting.

The theme is especially relevant to Hong Kong. Even though we are small in physical size - we are only about 1,000 kilometres, and limited in natural resources - virtually none. Hong Kong has consistently been ranked among the largest trading entities in the world. In 2004, our total trade amounted to more than US$530 billion, which was more than three times our GDP. So, we are a vivid example of the enormous benefits that free and open trade can bring.

International business has a strong presence here. We are the second-largest recipient of foreign direct investment in Asia, after the Mainland of China.

The rule of law, a level playing field, clean and efficient government, a low and simple tax system, excellent infrastructure and a large pool of talented and professional workers - these are the essential elements of the market economy we practise. And these are the essential elements for reinforcing our position in future as a leading international business hub, contributing to global and regional economic prosperity.

Above all, Hong Kong is the pre-eminent platform for doing business on the Mainland, a position that was strengthened with the launch of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) last year. This free-trade agreement increases trade and economic flows across the boundary by removing tariffs from essentially all Hong Kong products imported into the Mainland. At the same time, Hong Kong service providers enjoy preferential access to the ever-growing Mainland market in 26 service industries and professions. The liberalisation measures in CEPA are beyond China's WTO commitment and ahead of the proposed ASEAN+1.

I trust that you must also be familiar with the success story of the Pearl River Delta. A substantial proportion of the imports and exports from the Delta are handled through Hong Kong. In fact, Hong Kong industrialists nowadays employ more than 11 million workers in the PRD region, which is equivalent to three times our local workforce.

Last year we launched the Pan-Pearl River Delta initiative to extend our economic co-operation with the nine provinces of southern and western China and the Macao Special Administrative Region. To give you a rough idea, the Pan-PRD region is home to about 450 million people, which is one-third of China's total population. The region's combined GDP in 2003 was US$634 billion, accounting for about 40% of China's total output. To put that into perspective, Pan-PRD is comparable in size and economic activity to ASEAN. In other words, it has the potential to be a formidable regional market and investment destination, and that is what we are working towards.

Hong Kong has contributed and benefited enormously in the industrialisation of China in the last quarter of a century. Moving forward, Hong Kong will continue to play a key role in China's development, adding value to the economic reform process. Especially in financial services, Hong Kong has become the chosen capital formation centre for Mainland enterprises. Over the last 10 years, Hong Kong raised more than US$110 billion for Mainland companies. Indeed, Hong Kong ranked third in the world in terms of new capital raised last year. Ten years ago, who would ever imagine that Hong Kong could raise more funds than London and Tokyo. Yet, this is actually happening and is gaining further momentum. Our pipeline of IPOs is full of heavyweight mainland companies, including Bank of Communications, which is now just launching its public offer today. Our financial infrastructure and regulatory regime are all world class. It is not surprising that many Mainland companies seek to list on the Hong Kong stock exchange as a way to improve their corporate governance.

With CEPA giving Hong Kong's service providers easier access to the Mainland, they can bring special expertise, a global network and cutting-edge technology to that rapidly growing market. And the best way for overseas companies to take advantage of CEPA and Pan-PRD, and to tap into the huge potential they offer, is to establish their presence in Hong Kong, or to hook up with a Hong Kong partner. It is in a way a guide so that you can make fewer mistakes.

Free trade has made Hong Kong what we are today. And free trade is what we will continue to preach and practise. This IGM is therefore a very useful curtain raiser to the Sixth WTO Ministerial Conference to be held here in December. The Hong Kong Ministerial Conference will underline our long-standing active and constructive participation in multilateral trade liberalisation. We will make every effort to pave the way for a successful Ministerial Conference, in terms of both organisation and substantive outcome. With the WTO entering its second decade, we all hope that the spirit of multilateral trade liberalisation will prevail, and that the Hong Kong Ministerial Conference will bear fruit. I anticipate that the discussions at this IGM will provide valuable insights into how this can be achieved.

Apart from trade and business, I am glad that the council is also focussing on a host of issues associated with the global economy - financial health, corporate social responsibility, energy and environment sustainability, labour issues, terrorism, communicable diseases, natural disasters and so on. It is heartening to see these important topics on the agenda of this IGM.

As an engine for global economic growth, the Pacific Basin region is best known for its vision to steer, its versatility to adapt, and its resilience to rebound. I am sure that PBEC, as the region's oldest and best established international business organisation, will continue to take the lead in finding ways to bolster trade and investment, lower trade barriers and boost prosperity for all in the region. We all greatly appreciate David and Douglas's leadership, and the hard work of the organising committee, in bringing this IGM to Hong Kong.

Ladies and gentlemen, with the excellent programme and long list of distinguished speakers ahead of you, I am sure that you will find plenty to keep you occupied these two days. But I hope you will be able to find the time to immerse yourself in some of the magnificent sights and sounds of Hong Kong. You will not be disappointed.

I wish this IGM every success, and I wish you all a very pleasant stay in Hong Kong. Thank you very much.

Ends/Monday, June 13, 2005

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