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Following is the speech by the Financial Secretary, Mr John C Tsang, at a Punjab National Bank Dinner in New Delhi, India today (December 14, New Delhi time):
Dr Chakrabarty, Distinguished guests, Ladies and Gentlemen.
Good Evening.
It is a great pleasure for me to be here in New Delhi. We have had an enjoyable, busy and productive visit to India. I hope our visit has served to enhance the economic relationship between India and Hong Kong, paving the way for greater cooperation in the future.
I was delighted to learn that Punjab National Bank (PNB) has become a licensed bank in Hong Kong in May this year. I believe your first office will open next week on Monday, and so congratulations are in order. PNB's presence highlights the already strong ties between the Indian banking sector and the Hong Kong banking sector.
I believe there is no better time than the present for Indian banks to be joining the Hong Kong banking community. I shall talk today about some of the new opportunities for the banking sector in our city.
This year we have been celebrating the 10th Anniversary of the establishment of the Hong Kong Special Administrative Region. People often ask whether Hong Kong has changed much over the past 10 years. The answer is, of course, both yes and no!
Let's look at a few things that haven't changed. First and foremost, the city has lost none of its energy and enthusiasm for doing business. Hong Kong has remained the world's freest economy for well over a decade according to the Heritage Foundation, in the US, and first for economic freedom in the annual report co-published by the Fraser Institute and the Cato Institute. Under the unique "One Country, Two Systems" formula for our reunification with the Mainland, Hong Kong has retained its capitalist system and common law legal system. Also unchanged is a raft of freedoms that Hong Kong people cherish. Freedom of belief. Freedom of association. Freedom of information. Freedom of speech, and freedom of religion.
Now, to what has changed. Obviously, we have been reunited with our Motherland. Under the concept of "One Country, Two Systems", all the fundamental tenets that define our way of life are protected by our constitutional document, the Basic Law. We are once again an integral part of our nation - and that has changed the whole ball game as far as Hong Kong's future is concerned.
While the Basic Law protects our rights and freedoms, and the way of life, it also encapsulates our country's basic policies towards Hong Kong - that is, for Hong Kong to develop as an international financial centre, and an international centre for aviation, tourism, logistics and shipping.
The national government is also implementing policies to bolster Hong Kong's ongoing economic development. For example, Hong Kong became the testing ground for the internationalisation of the Renminbi - we are the only market, other than the Mainland of China, that can offer Renminbi bonds. Our banks are also allowed to offer certain types of Renminbi retail business. Hong Kong is also a main beneficiary of the Mainland's Qualified Domestic Institutional Investor scheme, the so-called QDII, allowing Mainland banks as well as securities and insurance companies to invest overseas. The Mainland is also working on a scheme that will allow individuals to invest money in Hong Kong stocks.
Hong Kong has also signed a free trade pact with the Mainland - what we call the Closer Economic Partnership Arrangement, or CEPA for short. This is an excellent example of how the concept of "One Country, Two Systems" works in practice - since Reunification, Hong Kong remains a separate member of the WTO. CEPA applies nationally, that is, in every province of China, and includes WTO-plus access to the Mainland market in key sectors such as banking, financial services, logistics, legal services, accounting. Because we have a 'nationality blind' policy in Hong Kong, CEPA applies equally to locally incorporated international companies - also another example of what we mean by a level playing field for business.
Riding on CEPA is another initiative, what we call the Pan-Pearl River Delta grouping. This brings together the nine southern provinces of China plus the two Special Administrative Regions of Hong Kong and Macau - that is why it is sometimes also referred to as the '9+2' grouping. This is basically an attempt to create a south China economic caucus that takes in a population of 470 million people and a land-area roughly one-third the size of the entire nation. Hong Kong is the financial and business nerve centre for this undertaking.
So, you can see that Hong Kong's unique advantages have not eroded at all, but are being put to good use to boost our economic progress, as well as to help the ongoing development and opening up of our country. At the same time, Hong Kong companies and entrepreneurs continue to be the largest single group of investors in the Mainland - accounting for some US$270 billion worth of realised investments in our country.
Before I finish, a quick word about why we are here.
In Hong Kong, we have the world's seventh largest stock market by market cap, and the third largest in Asia after Tokyo and Shanghai. According to the World Federation of Exchanges, Hong Kong's market cap at end-October was around US$3 trillion.
That's not a bad effort for a city such as Hong Kong, with a population of just seven million and a land area of 1,100 square kilometres. But, that's not good enough for us. We want to build on this solid footing to develop Hong Kong as a truly global financial centre on par with London and New York.
At the moment, nearly all of our listings are Mainland or Hong Kong companies. While that has brought us to where we are today, we need to expand our appeal and capital pool if we are to meet our global ambitions. So, consider this an invitation - we would like to see Indian companies listing in Hong Kong, and that, of course, includes Indian banks. And not just that, we'd also like to see you do business in Hong Kong, and to explore opportunities in China as well as the rest of Asia with us.
Ladies and Gentlemen, India and China are both growing in an incredible pace. They are the twin growth engines of the world in the decades to come. There is no better way to enhance the growth potential of the two economic giants then putting them to work together in a cooperative mode. And you will find no better partner or platform to bridge these two massive markets than Hong Kong.
Thank you.
Ends/Friday, December 14, 2007
Issued at HKT 21:07
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