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Following is the speech by the Financial Secretary, Mr John C Tsang, at HKTDC Business Seminar: "Your partner for success" in Mumbai, India today (December 12, Mumbai time):
Distinguished Guests, Ladies and Gentlemen,
Good afternoon.
It is a great pleasure for me to be here in Mumbai, India's business capital. Thank you also for the warm welcome. I have been looking forward to this trip for some time, and you have really helped make us feel at home.
I know it is not easy competing for attention in India when a Test series against Pakistan is in full swing. But, I promise to give it my best shot - and what better way to start than by congratulating India on its win in the Twenty20 World Cup in September.
For purists, there is nothing better than a Test match. But, the Twenty20 World Cup is a good example of how even cricket can be adapted to suit a changing world by becoming more dynamic and more globalised - or dare I say, more modern?
In Hong Kong, for example, our most popular cricket competition is the annual International Cricket Sixes, which India won in 2005. The International Sixes is a fast, efficient and exciting version of the sport - just as Hong Kong is a fast-reacting, efficient and dynamic economy.
That's what I want to talk about today - how Hong Kong fits into a rapidly changing world in which now, more than ever, speed, efficiency and value for money dominate. I will also talk about where Hong Kong is heading as a Special Administrative Region of China and the opportunity this presents for the Indian business community.
I can assure you that Hong Kong is firmly on the front foot when it comes to global finance, trade, logistics and tourism. This year we have been celebrating the 10th Anniversary of our Reunification with Mainland China. It has been a good opportunity for us to reflect on how far we have come in the past decade. It has also helped focus our minds on the work ahead in fulfilling our role as a global financial centre in Asia, and as a conduit for trade between the Mainland of China and the international business community.
Our history and culture, coupled with the entrepreneurial flair of our people, sets Hong Kong apart from other cities in China, and indeed Asia. Under the "One Country, Two Systems" concept for our reunification, Hong Kong has retained all the key attributes that underpin its success - our capitalist system and way of life, the rule of law upheld by an independent judiciary, a clean and efficient government, zero tolerance of corruption, and the free and unfettered flow of news and information. And like India, English remains the lingua franca of business and finance.
Also unchanged is the raft of freedoms that people in Hong Kong cherish. Freedom of belief. Freedom of association. Freedom of speech. Freedom of assembly. In the economic realm, we believe in the primacy of the market - that's why we have no investment restrictions in Hong Kong, that's why we are a duty-free port, and that's why we have a simple and low-tax system - no capital gains tax, no VAT, no estate duties, and only income sourced in Hong Kong is taxable. Profits tax is currently levied at 17.5% but will be lowered by 1% in our next fiscal year; similarly, salaries tax, which currently stands at just 16%, will be lowered to 15% from our next fiscal year.
All of this institutional software, and an unswerving commitment to a "Big Market, Small Government" philosophy has contributed to Hong Kong being consistently rated the world's freest economy in separate studies for well over a decade by the Heritage Foundation in the US and the Fraser Institute of Canada.
As the most open, free and cosmopolitan city in China, Hong Kong has a dual role to play. On the one hand, we are Asia's world city - a global centre for financial services, business services and trade. On the other hand, we are an international city in China, with a unique and irreplaceable role to play in our nation's continued opening up and engagement with the global village. We are both major investors in China, as well as an usher for investment in China from elsewhere. We are also helping Mainland companies to upgrade and move up the value chain by listing in our stock market, by drawing on our broad, deep pool of international best practices in key sectors, such as accounting and legal services, and by leveraging our global network of contacts.
Hong Kong's biggest single advantage is our landmark free-trade pact with China - our Closer Economic Partnership Arrangement, or CEPA for short. This is possible because under the concept of "One Country, Two Systems" Hong Kong remains a separate member of the World Trade Organization. CEPA was launched in mid-2003 and offers Hong Kong companies enhanced access to the Mainland - above China's WTO commitments - in both manufactures and services.
For manufactures, any product made in Hong Kong that meets origin requirements can enjoy tariff-free access. On the services side, currently 27 service sectors enjoy enhanced access - including prime sectors such as banking, insurance, logistics, and legal services. Another 11 service sectors will be added to the list from January 1 next year.
Because we have a nationality-neutral policy, foreign services firms incorporated in Hong Kong can leverage on CEPA to do business in the Mainland. For new arrivals wishing to benefit from CEPA, there are plenty of opportunities to partner with companies already in Hong Kong. It is also worth noting that CEPA applies nationally - in every province in China.
Ladies and Gentlemen, today I'm asking Indian companies to join us in Hong Kong, to make use of CEPA to access the Mainland market, and to look to our stock market as a source of capital and diversification for your fund-raising activities.
I am sure you will find Hong Kong a welcoming business partner. Indeed, Indian entrepreneurs are already well known in our city - we have about 1,500 firms operated by Indian business people. These include some big names such as Air India, the Bank of India and Infosys Technology. But, the list also includes many small and medium sized enterprises - entrepreneurial people, creative people, dynamic people who feel at home in a city where hard work and commitment are rewarded.
Hong Kong already has close social and cultural ties with India - let's make them stronger. We are home to a 30,000-strong Indian community - people who contribute to the pluralism and diversity that makes us Asia's world city. For Indian companies wishing to venture a little further East, our Trade Development Council and InvestHK can help you get established, or help you find a business partner. For individuals looking for a new challenge or new opportunities, we have immigration schemes to attract talented people, as well as investor migrants.
I have provided you with a broad overview. The other speakers today will fill in much of the detail. But before I close, I would also like to extend an open invitation to you all to come and see what we have to offer in Hong Kong.
On that note, I hope that my remarks today are just like a Twenty20 match - short and to the point!
Thank you very much.
Ends/Wednesday, December 12, 2007
Issued at HKT 19:01
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