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Following is the speech by the Financial Secretary, Mr John C Tsang, at the Council of Asian Shopping Centre Conference 2009 "Partnering for Riding out Adversity" at Harbour Grand Hong Kong this morning (September 3):
Michael (Tien), Distinguished Guests, Ladies and Gentlemen,
Good Morning.
It is indeed a great pleasure to join you all today. First of all, a very warm welcome to all our friends from around the region.
I hope that you do enjoy your stay here in our city, and that you are able to find time to do some shopping here.
It was once said, "if men liked shopping, they would call it research". I like shopping and not only do I call it research, I call it economics. With this in mind, allow me to begin with the results of a little economic research of my own.
In preparing for my talk today, I was interested to find a survey by Forbes Magazine published last year. The study highlighted the fact that eight out of 10 of the world's largest shopping malls in the world are located right here in Asia, including the Mainland of China, Malaysia and the Philippines. The 11th largest mall is in Thailand. A decade ago - according to the survey - the "Top Ten" list would have included four shopping malls in the US alone.
A more recent Online Consumer Survey by CNN International published in May placed Hong Kong top in the Asia Pacific region in three categories. These were for the most "vibrant city life", the "best nightlife" and "best shopping". Although Hong Kong doesn't have the largest mall in Asia, we must be doing something right as far as shopping is concerned.
Shoppers in our region are, indeed, spoilt for choice. From the biggest malls to the smallest corner shops, and from bustling markets to trendy boutiques, there is something for everyone. The retail sector also reflects our changing tastes and cultural diversity as well as the latest technology, such as online purchasing - considered by some as a real challenge to our traditional shopping habits.
So why is it important to maintain a reputation as a "shopping paradise"?
For a city the size of Hong Kong, with a population of slightly over 7 million people, providing a dynamic shopping experience enhances the vibrancy of the city and attracts huge numbers of tourists. Last year, we received more than 29 million visitors, equivalent to over four times our population. According to our Tourism Board, shopping topped the list of all spending items for our tourists last year, accounting for 57 per cent of their total spending here.
Last year's tourists included 17 million from the Mainland, making it the most important source of visitors for Hong Kong. Since 2003, people from across the boundary have been able to visit Hong Kong under the "Individual Visit Scheme", instead of having to join a tour group. Today, a catchment of around 270 million Mainland residents in 49 cities can visit Hong Kong under this scheme.
As well as tourists, a shopping hub also attracts designers, R&D specialists, advertising and marketing experts and manufacturers. It creates jobs and wealth and drives up living standards.
So what makes a "shopping paradise?" and how can shopping centres in Asia become partners for riding out adversity?
No doubt you will agree that there is healthy and intense competition in the retail sector between cities in the region. These days, shopping malls have restaurants and restrooms that would not look out of place in a luxury hotel. There are children's play areas and you can even swing a golf club or shoot some basketball hoops, all in the name of shopping - or if you prefer, "research".
Competition between shopping centres has encouraged greater variety and higher quality as well as a better value shopping experience for consumers.
We all know that - when it comes to making a sale - the customer is King, but what about the retailer? Governments have an important role to play in providing a favourable environment for the retail sector to thrive.
As the world's freest economy, Hong Kong is committed to promoting free trade and open markets. We have a low and simple tax system. Salaries are taxed at a standard rate of 15 per cent and profits tax is 16.5 per cent. Only income sourced in Hong Kong is taxed in Hong Kong. There is no VAT or GST so - when you go shopping here - you don't have to pay anything beyond the value of the goods and you won't have to bother with tax refund forms for purchases and those long queues at the airport before you depart.
Hong Kong is also an international financial centre with a free flow of capital and of information. About 70 of the world's largest banks have operations in Hong Kong. An independent judiciary underpins our common law legal system, and we have zero tolerance for corruption.
All this helps to promote Hong Kong as a highly attractive place to do business. Companies, including major retailers, from all over the world use Hong Kong as their base in Asia. Naturally, we would like to see more overseas firms in Hong Kong, so we will continue to listen and respond to the needs of overseas entrepreneurs.
This is a critical period for all our economies as we emerge from the global financial crisis. Hong Kong's small, externally-oriented economy has been hit hard over the past year. However, there is now light at the end of the tunnel. Figures released in recent weeks indicate that the worst of the financial crisis may be over. We are encouraged by the recent performance of our major trading partners. Economies in Europe and Asia as well as the US are emerging slowly from recession even though there is still a long way to go before we return to sustainable growth.
In the Mainland of China, the outlook is particularly bright. After experiencing the slowest growth in a decade at 6.1 per cent in the first quarter of 2009, the Mainland's economy grew 7.9 per cent in the second quarter. The positive effect of the 4 trillion Renminbi (US$586 billion) stimulus package launched last November has started to trickle down, reviving domestic demand and investment.
Here in Hong Kong, our economy grew 3.3 per cent in the second quarter of this year compared to the previous quarter. Although this is better than what we had expected, it still represents a 3.8 per cent contraction year-on-year, so there is still much work to be done.
Significantly, the decline of our exports narrowed to 12.4 per cent in the second quarter, from 22.7 per cent earlier this year. There was more good news for retailers with private consumption expenditure rebounding by 4 per cent compared to the first quarter.
In the past two years, the government has focused its efforts on tackling the financial crisis.
Since my first Budget in February 2008, we have announced stimulus measures totalling more than $87 billion (or US$11 billion). This is equivalent to about 5.2 per cent of our GDP. At the same time, we have provided more than $100 billion (US$13 billion) in loan guarantees to businesses to ease the credit squeeze.
To maintain market confidence and financial stability, we introduced a 100 per cent bank deposit guarantee in mid-2008. We also provided a standby facility of additional capital to banks if they should require it, to ensure that the banking system and individual banks remain robust.
Assistance has been provided to different sectors, such as research and development activities, tourism, construction and green industries. Licence fees for certain trades and industries directly hit by the crisis have been waived. We have also provided loan guarantees to small and medium enterprises (SMEs) to help them weather the storm.
At the same time, we should not under estimate the benefits of closer integration with the Mainland and our role as the premier gateway to China.
In January - at around the height of the global financial crisis - the Central Peopleˇ¦s Government unveiled its plan to establish the Pearl River Delta (PRD) as one of the most competitive regions in the world by 2020. This framework supports greater co-operation between Hong Kong, Macao and Guangdong to maximise our combined strengths and complement each other in developing a premier business hub.
We are forging closer co-operation within the PRD region on different fronts including key industries, such as shipping, logistics, tourism as well as conventions and exhibitions to enhance the competitiveness of the region.
Another area that has made great strides in recent months is our financial integration with the Mainland. In April, the Central Government in Beijing gave the green light to Renminbi settlement of international trade. The arrangement came into force in July this year. I am confident that this initiative will have far-reaching benefits for Hong Kong as the offshore Renminbi clearing centre and open up opportunities for our financial services sector.
Hong Kong already has a great deal of experience in Renminbi services. Our banks have been offering a variety of Renminbi services since 2004, and in 2007 we became the only place outside the Mainland to have a Renminbi bond market.
Looking a little further ahead, we are strengthening cross-boundary infrastructure to improve efficiency and open up new markets in the Mainland. We will soon start work on an express railway that will link up Hong Kong with two other major cities in Guangdong province - Guangzhou and Shenzhen. We also expect construction to begin this year on the mega Hong Kong-Zhuhai-Macao Bridge. The bridge will span 29-kilometres and connect Hong Kong with the western part of the PRD. Both these projects are important for our city's sustainable development.
Ladies and Gentlemen, I have mentioned some of the things that have earned Hong Kong a reputation as an international business and financial centre. Our city also has a role to play as a partner in the region for riding out adversity. Hong Kong provides a stable, reliable and highly competitive environment for businesses. We have strong ties with the vast Mainland markets through both soft and hard infrastructure. Perhaps most importantly, our residents and our visitors from the Mainland and around the world demand a shopping experience that provides high quality, good value and great variety.
I'm sure that this Conference will be a great sharing and learning experience for all involved. I wish you well in your research, and I hope you have an enjoyable stay in Hong Kong.
Thank you very much and have a good day.
Ends/Thursday, September 3, 2009
Issued at HKT 10:20
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