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Following is the speech by the Chief Executive, Mr Donald Tsang, at the HK-Dubai Business Luncheon in Dubai today (January 31):
Your Excellencies, Distinguished guests, ladies and gentlemen,
As-Salaamu Alaykum (Peace be upon you).
It is a great pleasure to be here in Dubai, enjoying this city's wonderful hospitality. It is also a chance to see first hand the spectacular development of Dubai over the past decade or so. From what I have seen so far blooming out of the desert, nothing appears to be impossible.
This is the first visit by a Hong Kong Chief Executive to the Gulf States but I feel very much at home in your city. The transformation of our two places, Hong Kong and Dubai, from relatively barren lands into world-class cities gives us plenty in common.
I will not dwell on the similarities between Dubai and Hong Kong. Instead I will focus on ways we can grow our relationship, share our expertise and become even better places to live and work.
I am delighted to see a vibrant Chinese community in Dubai. No doubt preparations to ring in the Lunar New Year are well under way.
On February 7 we will welcome the 'Year of the Rat', which is said to be auspicious for new opportunities and good prospects. In the next few minutes I will tell you why I believe the opportunities and prospects for Dubai business and investors in our part of the world are bright for the year ahead, and beyond.
I'm sure many of you are familiar with the Hong Kong story, so I will be brief. Last year we celebrated the 10th Anniversary of our reunification with the Mainland of China. We had much to celebrate. Since reunification in 1997, Hong Kong people have been running Hong Kong with the promised high degree of autonomy. We remain a separate member of international organisations such as the World Trade Organisation. We have our own immigration procedures, and our own passport. We maintain our own tax system and our own freely convertible currency.
These days we have a dual role to play as a city in China and as Asia's world city. Although we are an integral part of our nation once again, Hong Kong has lost none of the characteristics that set us apart in Asia. Our capitalist system, common law legal system, clean and efficient administration and zero tolerance of corruption remain the foundations of our society.
The 'One Country, Two Systems' formula for our reunification, and our constitutional document the Basic Law, protect these important attributes and our way of life.
We believe in the free flow of news, information, goods and capital. Hong Kong people jealously guard their personal freedoms, such as freedom of speech, freedom of assembly and freedom of religion.
Earlier this month, the US-based Heritage Foundation ranked Hong Kong as the world's freest economy for the 14th year in a row.
But this is not the time to sit back and relax. We are working hard to remain at the forefront of international cities. Some 3,900 international companies maintain regional headquarters or offices in Hong Kong, making our city the location of choice for foreign firms tapping the market in Asia. Naturally, we'd like to see more Dubai companies joining them.
Hong Kong - like Dubai - is building for the future.
We continue to invest heavily in infrastructure to enhance the efficiency and competitiveness of our economy. A new airport, new road and rail links to the Mainland and new shipping terminals have all come on line since 1997.
Far-sighted planning and infrastructure development are vital to a city the size of Hong Kong, with about seven million people on a landmass of roughly 1,100 square kilometres, that's about a quarter the size of Dubai.
More projects will come on stream in the next five to 10 years including new bridges and highways serving our port; a bridge more than 30 kilometres long linking Hong Kong to Macao and the Mainland of China; a new express railway line to our neighbouring province of Guangdong; a new cruise liner terminal to boost tourism; and, enhanced links between Hong Kong International Airport and Shenzhen Airport. All of this is designed to boost the inter-connectivity between Hong Kong and the Mainland of China - and beyond.
The challenge for our engineers has been to expand their horizons in areas such as reclamation, construction and transport. They have excelled themselves, and gained unique experience and skills that may be useful to other cities, including Dubai. Earlier this month a delegation from the Dubai Roads and Transport Authority visited Hong Kong to learn more about our public transport and business models. Our Mass Transit Railway Corporation is already involved in training and project management services in Dubai ahead of the opening of your new metro system.
We have devised new and imaginative ways to enhance the management of properties, hotels and hospitals as well as improving logistics and port systems and technology. All of this is a resource that can be tapped here in the UAE.
New infrastructure is just one of the ways we are deepening our economic engagement within our own country. We have the equally promising opportunity to expand our role as China's global financial centre - and we are grasping it with both hands.
We already have a world-class financial services sector with a trusted and transparent regulatory regime, high concentration of international banks, and broad, deep pool of local and international expertise.
Dubai banks are among the 142 licensed banks in Hong Kong. Our stock market is the world's 7th largest in terms of market capitalisation, and the third largest in Asia. Although our stock market, like many others around the world, has been affected by recent global market volatility, this has not undermined the sound fundamentals of the Hong Kong economy. Indeed it has highlighted the efficiency, liquidity and reliability of our banking and securities market infrastructure.
We are also the largest funds management centre in Asia, as well as a leading insurance centre and one of the world's top gold markets. Hong Kong ranked 4th in the world for IPO funds raised in 2007. That's not bad for a city the size of Hong Kong, but we can and will do better.
We will more closely align the financial systems in Hong Kong and the Mainland of China. Most of our retail banks already offer Renminbi banking services. We are the only place outside the Mainland to have a Renminbi bond market, and qualified institutional investors in the Mainland are able to invest in our stock market.
Looking further afield, there are some new and exciting opportunities to improving our attraction as a global financial centre. We are making good progress in developing a market for Islamic finance in Hong Kong.
Our legal system is flexible and transparent and well adapted to supporting Islamic financial transactions.
Another competitive advantage is our unrivalled role in bridging the Mainland to the international market. There is a huge potential requirement for capital in the Mainland of China, especially for infrastructure development projects, which are well suited to Shariah-compliant financial products. Hong Kong can play a significant role in structuring and financing Islamic investment products to meet the needs of Mainland Chinese borrowers.
A large part of the demand for Islamic bonds has come
from non-Muslim investors who have found the yield and structure of these products attractive. Hong Kong offers a good platform to service these investors.
Many leading international banks in Hong Kong have already devoted considerable resources to the creation and servicing of Islamic financial products.
Recently, Hong Kong launched its first Islamic retail fund. By December last year, it had already attracted some US$45 million worth of orders.
We can learn a great deal from Dubai's expertise in the provision of Shariah-compliant services, and we invite Dubai banks to extend their global reach through Hong Kong.
Our geographical position, our mature and liquid market without any foreign exchange controls, offers Dubai the best partner in financial services within the Asian time zone. We bridge the gap in daily trading hours offered by London and New York. It is an important factor in financial risk management of any substantial portfolio.
Islamic finance is a relatively new venture for us but we are old hands when it comes to trade. The UAE is already Hong Kong's largest trading partner in the Middle East by far. In 2006, bilateral trade was worth US$3.4 billion, and Dubai - as a key entrepot to the Middle East - is a central player in this relationship.
One way to further this relationship is to leverage a unique free trade pact between Hong Kong and the Mainland of China, what we call our Closer Economic Partnership Arrangement, or CEPA for short.
Hong Kong service providers enjoy enhanced access to Mainland markets under the CEPA, in areas including banking, architecture, real estate, legal services, logistics and freight forwarding.
Foreign-owned companies incorporated in Hong Kong can enjoy these advantages because CEPA rules are nationality-neutral.
The free trade arrangement applies across the whole of China, covering 1.3 billion potential customers, including in particular the prosperous Pearl River Delta, that has a population of 50 million who form an excellent testing ground for those wishing to offer products and services in China.
The scale of this can appear daunting, especially for small businesses testing the water in the China market for the first time. They may be unfamiliar with the language, culture and way of doing business in the Mainland of China. A base in Hong Kong can fully equip you with all the assistance needed to get a good start. Our Trade Development Council has the expertise to connect firms with the most suitable business partners in manufacturing and services. We have members of the TDC in our delegation here, so don't hesitate to contact them if you have any questions.
In Hong Kong you will also find a well-educated, hardworking and entrepreneurial labour force that is always up to the challenge. The world famous 'can do' spirit of the Hong Kong people is very much alive and well.
Looking at the whole picture, our long-held fundamentals, our open door policy for trade and investment, our key role as a global financial centre and as an entrepot for our region is a recipe that is hard to beat.
Ladies and gentlemen, this is the last stop on what has been a very busy, enjoyable and productive visit to the Middle East. We have renewed old acquaintances and made new friends along the way. I believe this is the start of a positive and mutually rewarding relationship between Hong Kong and the Middle East, and especially here in Dubai.
I take this opportunity to invite you to visit us in Hong Kong. As many of you know, this year is an historic one for China with Beijing hosting the 2008 Olympic Games. We in Hong Kong play a role by staging the Olympic and Paralympic Equestrian events.
The UAE, with its history of fine horsemanship and current crop of talented riders, will be a team to watch at the Olympics. I am sure they can count on some strong home support from Dubai. We look forward to welcoming all the competitors, officials, spectators and visitors for the Games, so do come and help us celebrate the Olympic Spirit.
If you can't make it for the Olympics, come when you can. You will always be very welcome in Hong Kong.
Finally, I wish you all a very happy and prosperous Year of the Rat. Or as we say in Hong Kong; Kung Hei Fat Choy. Thank you.
Ends/Thursday, January 31, 2008
Issued at HKT 19:37
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