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Following is the speech by the Financial Secretary, Mr John C Tsang, titled "Big Role for Hong Kong Professionals under CEPA" at the Annual Dinner of the Business and Professionals Federation of Hong Kong today (September 12):
Sir David (Akers-Jones), Mr (Wilfred) Wong, Distinguished Guests, Ladies and Gentlemen,
Good evening.
It gives me great pleasure to join you at the Annual Dinner of the Business and Professionals Federation. I am delighted to meet in one place so many outstanding business leaders and professionals. You are an integral part of Hong Kong's economic achievement.
Close Ties with the Mainland
Hong Kong's economic success is neither luck nor accident. It is the result of the efforts of our entrepreneurs and professionals. It is the result of our business friendly environment that the Government is committed to maintaining. Increasingly, it is also the result of our ability to leverage on the rapid economic development of the Mainland.
Our economy is now intertwined with that of the Mainland. Ever since the Mainland opened up her doors to the global market, we have served as that unique gateway for the world to do business with her. We are the import and export hub for goods traded between the Mainland and the rest of the world. The Mainland has topped our list of trading partners, involving in half of our total trade. We are also one of Mainland's largest trading partners, ranking fourth last year. In terms of investment, we are the largest outside investor for each other. In Guangdong alone, there are more than 90,000 Hong Kong-owned companies, employing over 10 million workers. A growing number of Mainland enterprises are, at the same time, coming to Hong Kong to raise capital and tap our global marketing network. Many of them also set up regional headquarters or regional offices in Hong Kong to manage their business in the Asia Pacific.
Challenges Ahead
For more than two decades, our geographical, cultural, language and historical ties with the Mainland have given us that unbeatable edge in serving as her gateway. To tap the land and labour resources available, Hong Kong manufacturers have moved their manufacturing operations across the boundary so that they can focus on their competitive advantage and move up the value chain. This modus operandi has long served both sides well. While Hong Kong has evolved into a logistics, finance and services centre, the Mainland has become the factory of the world. However, we cannot afford to dwell on our past success for too long. We must move on.
In the 11th Five-Year Plan announced last year, the development of the service industry has been given specific emphasis. In addition, the plan makes, for the first time ever, explicit reference to Hong Kong in the country's overall planning. It unequivocally supports the development of our service industries and highlights Hong Kong's status as an international financial, trading and shipping centre. It vividly demonstrates Hong Kong's unique and irreplaceable role in our nation's development roadmap.
In tandem with this development is the Mainland's gradual integration with the world economy. Partly arising from the universal trend towards globalisation, and partly arising from its commitments under the World Trade Organization, the Mainland has in the past decade been opening up its market to foreign businesses. And the Mainland's economy is integrating fast with the rule-based international trading system as well.
All these developments present unprecedented challenges to our position. We can no longer be merely a middleman. We need to re-orient ourselves to meet the changing needs of our hinterland. We must develop our potential to serve as a springboard for the Mainland, bringing in trade and investment from abroad, adding value to these transactions and taking Mainland trade and investment out to the world.
CEPA in fostering Economic Ties
The signing of the Mainland and Hong Kong Closer Economic Partnership Arrangement, or CEPA, in 2003, has fortified our strategic position in the Mainland's economic development. Through a "building block" approach, we have concluded four supplements to the main agreement to deepen and broaden liberalisation and co-operation. By providing tariff-free treatment to our products and WTO-plus preferential access to our service providers, it has laid a solid foundation for a new business relationship between the Mainland and Hong Kong.
At present, all Hong Kong products meeting the CEPA rules of origin can enter the Mainland market tariff-free. Hong Kong service providers in 27 sectors can set up their business on the Mainland under preferential terms. This will expand to 38 sectors when CEPA's Supplement IV comes into force next year. They include financial services, convention and exhibition services, tourism, environmental services, elderly services and public utilities. CEPA provides service providers with avenues to venture into new businesses on the Mainland. This preferential treatment is ahead of and way beyond the Mainland's commitments under the WTO. They allow our service providers to establish an early foothold in the Mainland market, and enhance their comparative advantage in face of intensified competition from foreign suppliers.
CEPA has strengthened the close economic ties between Hong Kong and the Mainland. Since its implementation in 2004, it has enabled more than HK$9 billion worth of Hong Kong products to enjoy free tariff treatment and more than 1,000 Hong Kong companies to set up business on the Mainland on preferential terms. It has induced HK$5.1 billion of additional capital investment locally, and created 36,000 new jobs for Hong Kong workers. It has also helped the Mainland attract HK$9.2 billion worth of additional capital investment from Hong Kong and created 16,000 new jobs for the Mainland. These positive effects are expected to grow in the coming years.
The significance of CEPA lies not in its immediate results, but rather in its long-term impact. Apart from reinforcing our role as a key service provider in developing the Mainland's service sectors and management capabilities, CEPA has also reaffirmed our position as her major partner as she integrates into the global economy.
Role of Professional Services
Professional services are a high value-added service area in our economy. They are the cornerstone to our financial, trading and shipping business. Through CEPA, our professionals may now enjoy incomparable advantages in entering the Mainland market through lowered entry threshold, enhanced ownership and presence, expanded business scope, relaxed qualification requirements, and so on. For example, our medical doctors will soon be able to establish medical institutions with a lower capital requirement; our construction firms will be able to set up wholly-owned operations for providing consulting services; while our lawyers will be able to operate jointly with Mainland law firms. The qualification requirements for our construction professionals have also been relaxed, whereas our doctors will be able to sit for the Mainland examinations. All these privileges are far beyond what foreign competitors could attain.
I must not mislead you to believe that CEPA only means new business. It is much more than that. CEPA is a conduit for nurturing co-operation and advancement as well. Through CEPA, Hong Kong and the Mainland have concluded 10 mutual recognition agreements covering areas like construction and engineering, securities and futures, insurance, patent agent services and accountancy. Apart from paving the way for local practitioners to enter the Mainland market, these agreements have also facilitated exchanges and strengthened connections, and in the process, helped upgrade the professional standards of both sides.
Indeed, after more than two decades of rapid economic growth, the Mainland market has become increasingly mature and complex, with an ever-growing demand for knowledge, professionalism, technological and management capability. Our well-developed professional services, backed by our solid knowledge base and entrepreneurial culture, are in a good position to meet these demands.
Meeting the Challenges Ahead
On the part of the Government, you can rest assured that we will spare no effort in helping our business and professionals rise to the new challenges. To enable you to make good use of CEPA, we have put in place a one-stop enquiry service; we have established a database on up-to-date Mainland rules and regulations; we have staged numerous seminars and roundtables; we have four offices on the Mainland that will help guide your way -- in Beijing, Shanghai, Chengdu and Guangzhou; we have the Pan-PRD Co-operation and Development Forum to unleash the southern China market; we have specific co-operation conferences with Guangdong, Shanghai and Beijing.
Notwithstanding the continuous liberalisation measures introduced and the efforts that I have just mentioned, I am aware that our practitioners do, from time to time, encounter difficulties, such as the Mainland local authorities being unfamiliar with the CEPA operation, inadequate transparency in the Mainland rules and regulations, and cumbersome procedures. I also understand that many of you would like to see further opening up of the Mainland market.
Let me give you my word. The Government fully recognises your concerns. We will continue our close liaison with the central, provincial and municipal Mainland authorities through different mechanisms with a view to ensuring a smooth and successful implementation of CEPA. We will also continue to engage our Mainland counterparts with regard to further liberalisation and co-operation.
Conclusion
Ladies and Gentlemen, Hong Kong is now entering a new phase of development, and our competitive edge remains second to none. We have a clear and well-defined role in our country's development blueprint. With CEPA and other initiatives, there are huge economic possibilities awaiting our exploration. I urge you all to grasp these opportunities. The key to our continued economic success lies in how best we can utilise the new opportunities ahead.
Before I conclude, I would like to put this to you - As Hong Kong's business leaders and professionals, it is incumbent upon you to lead this city from strength to strength. We count on you to make Hong Kong Asia's World City. Moreover, our nation counts on you to take part in her future economic development. As I look around this room, I see nods of agreement and smiles of support. With your enthusiasm, I know that in the years ahead, we will realise this vision. And for this, I am most grateful to all of you. Thank you.
Ends/Wednesday, September 12, 2007
Issued at HKT 20:42
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