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Following is the speech by the Financial Secretary, Mr John C Tsang, at the opening of ING Conference today (May 18):
Distinguished guests, ladies and gentlemen,
Good afternoon.
Let me start by extending a warm welcome to each and every one of you. Thank you for coming to this wonderful city of ours. I am sure you will all have an exhilarating experience, soaking in the sights and sounds of Hong Kong - our famed harbour and skyline, the legendary shopping bargains, our fabulous nightlife, and, of course, our energetic people.
Not only are we Asia¡¦s world city, we are also the food capital of Asia. No doubt many of you will be a few pounds heavier by the time you leave¡Kbut what the heck, it¡¦s well worth it. You¡¦ll find our cuisine irresistible. You can always work off the extra pounds when you get home.
It is truly an honour for me to be here today speaking to such a distinguished audience.
I am delighted and excited that the ING Group has chosen Hong Kong for holding its first Board Meeting in Asia. We are grateful to you for giving us your vote of confidence.
You could not have made a better choice. What better place to gather for such an important meeting than in a city known for its knack for success, its resilience during tough times, and its status as the gateway to an economic phenomenon now unfolding in Mainland China?
Through good times, and bad, Hong Kong has remained on top of its game - keeping its position as Asia¡¦s most vibrant financial centre. We have achieved this thanks to what I like to call Hong Kong¡¦s unshakeable and unbreakable fundamental strengths: the international outlook of its government and people, our vast pool of talent, talent with extensive global experience, our fiercely independent judiciary which scrupulously upholds the rule of law, the free flow of information and capital, and, of course, our simple and low tax regime which makes our business-friendly environment even friendlier.
I¡¦m not a mind-reader, but I bet many of you are quite envious of our low tax system. With my latest round of reductions, our top rate for profits tax is now 16.5% and our top rate for salary tax is now 15%. I bet you¡¦re wondering why you can¡¦t have low taxes back home when we can and still be successful. I extend to you my sympathies!! But you can do something about that.
Well, here¡¦s something you won¡¦t have to wonder about: we will never lose sight of the principles I¡¦ve just listed. They make us stand out in a highly competitive world. They helped put Hong Kong on the map as the world¡¦s freest economy for 14 straight years in a row as ranked by the Heritage Foundation.
Why do you think we attract so many multi-national corporations looking to set up Asian headquarters? There are plenty of locations to choose from but they choose us. Our commitment to fair play and transparency in trade and commerce is plain for all to see. It is the bedrock of our success.
We have a sound banking system, with the presence of around 70 of the world's top 100 banks. Investors and fund-raisers from across the world flock to Hong Kong for financial intermediation. Foreign issuers dominate our highly globalised bond market. The combined fund management business of Hong Kong amounted to US$789 billion at the end of 2006, over 60% of which was sourced from Mainland and overseas investors. This confidence in us further energises us to meet the constant challenges that Hong Kong faces in maintaining our role as Asia¡¦s financial capital.
Time magazine recently coined the term NylonKong to describe New York City, London, and Hong Kong, three global cities linked by a common economic culture, three cities that have become models of globalisation. Located in three different time zones but connected by flights and fiber-optic cables, the NyLonKong triumvirate has created a financial network that ¡§lubricates¡¨ the global economy, as Time magazine put it. Not only that, the Hong Kong part of Nylonkong, in particular, has done much to ease Mainland China¡¦s integration with the world economy.
That brings us to the biggest, unmatched and unmatchable advantage that Hong Kong enjoys over other cities in Asia. Did someone say that you cannot have your cake and eat it too? Well, you can, if you are in Hong Kong!
We are a city that shows both sides of the coin all at once -- an Asian economic hub with an international mindset, and at the same time, a Special Administrative Region of China that is clearing a path for the success of the Pearl River Delta to reach the hinterland. We move easily between our two roles - between the one country and the two systems. You could say we¡¦re a city with two exciting tales to tell! That¡¦s right - a city of two tales, and not Dickens' tale of two cities.
After 30 years of reform, Mainland China is not just well-integrated with the world economy; it is of late the engine of global economic growth. Urbanisation and industrialisation have changed the face of our nation. The growth in domestic consumption has been phenomenal, and it is being measured not just in quantity, but also in quality terms. This has driven manufacturing industries up the value chain and speeded up the development of the service sector. This in turn has helped our economy shift towards higher value-added services.
Because Hong Kong sits at the cross-roads of the Mainland and world trade, we have gained great expertise in integrating the two financial systems in Hong Kong and on the Mainland. The increasing cooperation between the two is a win-win situation not only for us but for anyone who wants in on this exciting opportunity - like the chemicals giant DuPont which just this month picked Hong Kong to locate its research centre on solar power to provide renewable energy for the region. And just this month the Mainland authorities cleared the way for Mainland fund management companies to open offices in Hong Kong. Just think of the opportunities this can bring to corporations, like ING.
Investors from both the Mainland and overseas could use Hong Kong as a platform for developing regional and international business. Please note that our stock exchange has successfully hosted the largest IPOs of Chinese enterprises globally.
Hong Kong also has one of the most open insurance markets in the world, which - as senior executives of ING ¡V I¡¦m sure you¡¦ll all be glad to know!
Over the past five years, the Hong Kong insurance industry¡¦s growth in total premiums averaged 17.6% each year - a decent figure, I would say, by global standards. Our regulatory regime ensures a high standard of operation for the insurance companies. We now have 177 authorised insurers from all over the world, the highest concentration in Asia.
The rapid pace of economic development on Mainland China has brought with it enormous potential for growth in the region, not just in insurance but other financial services as well. The total premium income on the Mainland has increased by a highly respectable 25% to reach RMB 703.6 billion in 2007. The growth of the insurance market, in turn, helps broaden the scope of financial products for savings, risk management and wealth preservation. This is but one of numerous reasons why multinational corporations find Hong Kong so attractive a location for their regional presence.
But a city¡¦s greatness should also be gauged by its preparedness for future challenges. In this regard, we never take our eyes off the ball.
We invest heavily to develop human capital, the most important resource in a knowledge-based economy. Our expenditure on education accounts for about one quarter of total government recurrent expenditure. It is the single most expensive item in my budget.
We are constantly moulding our strengths and adapting them to tap emerging business opportunities.
Let me give you an example. Islamic finance has seen exceptional growth in recent years. Given the deep and liquid markets here, we see Hong Kong has a natural role to play as the ideal channel for funds from the Middle East to tap investment opportunities in China. In the other direction, we are well-positioned to serve as a centre for Middle Eastern issuers to raise capital by tapping the massive savings in the Mainland.
We have signed recently an MOU with Dubai International Finance Services Authority to cooperate in promoting and developing our respective Islamic capital market segments.
Our learning curve never ends. Wine trading and distribution business is another example. At present, Asian economies - excluding Japan - account for roughly 7% of the global market of about HK$55 billion. We believe spending on table wine in this region will boom - the main drivers being the Mainland, Hong Kong, Singapore, South Korea and Taiwan.
Once we have identified the potential of any business segment, we don¡¦t waste time. That¡¦s why I exempted the duties on wine and beer in my last budget in February this year to develop Hong Kong as a wine trading and auction hub. And our traders and merchants have been keeping busy ever since.
Ladies and gentlemen, these are some of the things that have been engaging us, but let me close by asking you this question: which city has the combined advantages of being a free port Asian financial capital with a low tax system, business-friendly mentality, an independent judiciary, a free media and sits a stone¡¦s throw from the next economic superpower? One hint: it does not start with the letter S.
Thank you all for listening.
Ends/Sunday, May 18, 2008
Issued at HKT 13:31
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