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Following is the speech by the Financial Secretary, Mr John C Tsang, at the Vietnam Global Investment Conference today (April 20):
Prime Minister, Distinguished Guests, Ladies and Gentlemen,
Good afternoon.
It is a great pleasure for me to join you for this Conference. A warm welcome to all our friends here today, and to those of you joining us from Europe and from around Asia via video link.
There is no escaping the unprecedented challenges each of our economies are up against. Only with clear vision, determination and a co-ordinated approach will we emerge from this financial crisis strong and in good shape to capture the opportunities that await us.
I am delighted that the Government of Vietnam has initiated this event today.
I had the great pleasure of visiting Vietnam last year and discussing the current challenges with the Deputy Prime Minister. During my visit, Hong Kong and Vietnam signed a Comprehensive Double Taxation Agreement, and we celebrated a new daily flight service between Hanoi and Hong Kong. On this occasion, we shall sign three Memoranda of Understanding covering education, trade promotion and finance.
Hong Kong remains the seventh largest investor in Vietnam, and last year our bilateral trade increased 23 per cent year-on-year to some US$4 billion.
We are determined to use this downtime for our economy wisely and effectively. Reaching out to markets in our region and beyond is one way to lay the groundwork for our recovery and long-term prosperity.
What's required is a global commitment to free trade and open markets. This is also a strong message that came out of the G20 Summit in London earlier this month as well as the APEC Summit in Peru last year.
With an economy that is consistently ranked as the freest in the world, Hong Kong will not shirk from the challenges of our time. We will continue to provide a sound, stable and transparent environment for investors at home and overseas.
We have a low and straightforward tax regime; a sound legal system, liberal immigration policies and a free flow of information and ideas.
But the path to economic recovery will be neither short nor easy.
We anticipate negative economic growth for Hong Kong this year of between minus 2 and minus 3 per cent. Some say that, perhaps that is rather optimistic, given the performance of some of our neighbors. More people will have difficulty finding job, as global demand for exports remains tight. And our financial sector will continue to face its sternest test in decades.
Our strategy in dealing with the downturn has been measured, timely and decisive.
In the past 14 months, we have lowered taxes to become more competitive, we have provided financial relief for homeowners, and we have bolstered re-training programmes and programmes for the less well off in our community.
As the full extent of the financial crisis became clear in mid-2008, we guaranteed deposits in local banks and made available additional capital to banks to restore confidence in the market.
We also provided loan guarantees to our small and medium enterprises, our SMEs, which are feeling the full force of the downturn. SMEs account for well over 90 per cent of the enterprises in Hong Kong, and so their performance is key to preserving employment.
And because jobs are likely to be the most important single factor for our community in the medium term, we are committed to creating more than 120 000 jobs, training opportunities and internships this year. That's equivalent to about 3 to 4 per cent of our current workforce.
So far, we have provided almost HK$70 billion to tackle the economic downturn. This includes initiatives in my last two Budgets as well as stimulus measures announced by the Chief Executive last year. We will not hesitate to draw on more of our financial resources to restore the health of our economy and ease the plight of our community as, and when, the need arises.
But we cannot afford to use our finances randomly and ineffectively. We have witnessed unprecedented events in global financial markets in recent months, and no one knows what difficulties we may have to endure before the global economy is back on a firmer footing.
Hong Kong's attractiveness for investors has traditionally been our proximity to, and close relationship with, the Mainland. Fourteen years after reunification with the Mainland, that relationship has become deeper, broader, more mature and more mutually beneficial.
We are our nation's international financial centre, with a freely convertible currency. The common law legal system in Hong Kong is underpinned by an independent judiciary; and we have zero tolerance of corruption and strong international connectivity.
These are some of the characteristics that make our city an ideal testing ground for the Mainland's continuing opening up to the rest of the world.
In only the last five years, we have introduced Renminbi banking services and launched a Renminbi bond market.
And earlier this month, the Central Government in Beijing gave the green light for Renminbi settlement for international trade. Over the weekend, Premier Wen has announced further measures. Given our experience with Renminbi, we aim to be the first city outside the Mainland to start settling trade using the Renminbi. This will provide more business opportunities for our banks and more certainty for companies in settling trade by reducing the risk of exchange-rate fluctuations.
As well as being China's most important city for international finance, Hong Kong is also a global financial centre in the Asian time zone.
About 70 of the world's largest 100 banks have operations in Hong Kong, and we have the largest concentration of insurers in Asia, as well as a deep pool of local and international talents. Despite the financial turmoil, our stock market remains the seventh largest in the world and the third largest in Asia by market capitalisation.
The importance of our well-developed financial sector is underscored in a framework announced by the Central Government in January to establish the Pearl River Delta as one of the most competitive regions in the world by 2020.
The framework supports greater co-operation between the Special Administrative Regions of Hong Kong and Macao and the Mainland Province of Guangdong. Areas covered by the framework include key sectors for Hong Kong, such as financial services, trade, shipping, logistics and high value-added services.
Once again, the focus is on streamlining our systems and opening up new opportunities for trade and services.
Ladies and Gentlemen, I have highlighted our close economic integration with the Mainland and the role our city has to play as the most competitive place to do business in our nation.
We shall continue to follow this strategy as we continue to open up our markets and create opportunities for our business community at home and overseas.
Once again, I would like thank the Government of Vietnam for initiating this Global Investment Conference.
I look forward to even stronger bilateral relations with Vietnam and to a more open and vibrant environment for all our investors.
Thank you.
Ends/Monday, April 20, 2009
Issued at HKT 19:10
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