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Following is the transcript of a question-and-answer session by the Chief Executive, Mr Donald Tsang, at the Hong Kong Association of Banks Distinguished Speaker Luncheon today (November 1):
Question: The Policy Address focussed on 10 major infrastructure projects and the role of Hong Kong as an international financial hub is truly welcomed by the community as they are going to reinforce Hong Kong's economic growth, competitiveness and integration with the Mainland. As Hong Kong continues to evolve in this direction, how do you envision Hong Kong's future positioning in the region, including Shanghai, Shenzhen and Singapore?
Chief Executive: First of all, I did not envision Hong Kong in a directly opposite position. These are the places like Shenzhen and Shanghai on the Mainland. I think all of us are financial centres at different stages of development. But we are an international financial centre. There are very strong complementarities between what Hong Kong and Shanghai and Shenzhen and Tianjin, for that matter, is trying to do. I see all of us in a complimentary and reinforcement role, helping our country grow into an economic superpower in the coming decade. For a country with an enormous economy like China, definitely we need more than one centre. But as far as an international financial centre is concerned, this is a different matter. I believe this role of ours, separated into three major time zones of eight hours each, we cannot sustain too many international financial centres. For instance, serving the Americas you have New York, serving Europe you have London. In Asian time zone I feel that we already have a head start. We have the best infrastructure, we've got the best people - people in this room - helping it grow and sustain its strength. We feel no competition, we welcome competition and I do believe Hong Kong will continue to be the premier international financial centre in our timezone. Hong Kong and Singapore are serving different markets and performing different functions with different market liquidities. You can see that we, up to now, were able to inspire confidence in the international investment community. As Hong Kong grows and how China continues to grow, in particular, and as Hong Kong continues to invest, including the Government, in infrastructure projects, it will, I'm sure, entice the public sector to do the same. All this will reinforce Hong Kong's competitiveness in the long-run. I'm sure what we are seeing in the short and medium term will reinforce Hong Kong's position in this regard. The important thing is, you, as bankers, the business community in general and the Administration working together, and I'm sure it will produce a better and more attractive financial sector for the Asian region and produce much better living standards for our own people.
Question: The development of Islamic debt financing is another very important initiative for Hong Kong's financial services sector. In which areas can the banking community participate more to further accelerate its development?
Chief Executive: This is a rather big subject and a subject we haven't been looking at in earnest. The size of the market is huge, somewhere between US$750 billion to US$1 trillion market and it's growing at a rate of between 15% to 20%, depending on the price of oil, today selling at US$96. Who knows how far it will go. It's an enormous market and I think Hong Kong can perform a very important role, particularly for the Islamic community because of our peaceful environment, with our religious equality here, with hardly any ethnic tension in Hong Kong. This is an area which should be of great attraction to Islamic countries who want to diversify their investment portfolio beyond the London and the New York of this world. For this reason we are working hard, particularly with the Islamic Financial Services Board. The HKMA is going to hold a seminar early next year and I will do a lot more promotion work as well. We are looking at our regulations, we are looking at our market infrastructure to ensure we produce the right environment for the Islamic investors to come and do trade. The bond market is our major initiative at the moment. I think this is something that would be very useful and attractive to Islamic investors. This is a new industry. We need concerted efforts and we need your effort to help us produce what is best, what is important to the Islamic world. I am seriously thinking of leading a mission to the Middle East early next year to make sure that your work in the infrastructure side and improvement in the market side will be complemented by promotion work at the highest levels of this Administration.
Ends/Thursday, November 1, 2007
Issued at HKT 16:20
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