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Following is the speech delivered by the Financial Secretary, Mr John C Tsang, at the opening ceremony of the 4th MIPIM Asia held at the Hong Kong Convention Exhibition Centre today (November 18):
Paul (Zilk), distinguished guests, ladies and gentlemen,
Good morning.
It is my great pleasure to join you for this year's MIPIM Asia.
First of all, a warm welcome to our guests from around the world to Hong Kong - Asia's world city.
We are delighted to be hosting this event for the fourth time. I had the pleasure of speaking at the MIPIM Asia in 2007. Back then, we were celebrating the 10th anniversary of our reunification with the Mainland of China.
I spoke about how Hong Kong had retained all the ingredients that have underpinned our success over the years. These include our own unique style of market economy, wide ranging personal freedoms, the common law legal system and free flow of information, talent and ideas.
Today, I ask you all to look to the future - not only the future for our city but also the future for our region, which I think you will agree is bright. I also ask you all, especially our first time visitors to Hong Kong, to keep in mind that about 70% of Hong Kong is open countryside with about 40% designated as protected green space, including many stunning country parks and conservation areas. These are the green lungs of our city and our connection to nature and the environment.
First though, a few words about the global financial crisis, which has certainly shaken things up a bit in the past year.
For one thing, extremely low borrowing costs during the economic downturn have prompted investors to seek out opportunities in tangible assets, such as real estate. Hong Kong made headlines with record property prices last month, and there are concerns in the community that a property bubble may be emerging, particularly in the luxury sector.
We will monitor the situation closely and consider fine-tuning our land supply arrangements, if necessary. Our goal is to maintain a stable, transparent and self-regulating property market. We don't want a repeat of what happened during the Asian financial crisis a decade ago. Back then, a property bubble that had developed before the reunification in 1997 suddenly burst, leaving more than 100,000 homeowners feeling the pain of negative equity. We certainly do not want to see the recurrence of that kind of episode.
By and large, Hong Kong has learned important lessons from the Asian financial crisis, and these lessons have helped us weather the recent economic turmoil in pretty good shape.
Given the unprecedented nature and magnitude of the global financial crisis, we introduced a range of targeted and timely measures. These were aimed at stabilising the financial sector, helping small and medium-sized enterprises (SMEs), preserving jobs and assisting low-income families.
To maintain market confidence and financial stability, we provided full guarantee for bank deposits and provided banks with access to a capital facility, if necessary.
We introduced also special loan guarantee schemes targeted at small and medium-sized enterprises. Loan guarantees of some HK$55 billion have been provided to some 15,000 firms that hire a quarter of a million people.
Other initiatives include tax breaks and financial assistance to homeowners, lower-income families and the elderly.
In total, we spent over HK$87.6 billion on these relief and stimulus measures, which is equivalent to about 5.2% of our GDP.
We are starting to see positive results and signs of recovery. In September, our unemployment rate dropped by 0.1% to 5.3%. It was the first decline since mid-2008. Yesterday we announced a further drop of 0.1% to 5.2% for October. Retail sales recorded a small but significant year-on-year increase in September, after falling for seven months in a row. And our GDP rebounded from a dismal year-on-year drop of 7.8% in the first quarter to a gain of 3.5% in the second quarter of this year compared to the first quarter. We saw further improvement in the third quarter with a gain of 0.4% compared to the strong second quarter. We are witnessing a steady recovery, but we must still remain vigilant given the weak economic state of the advanced economies and the uncertainties ahead.
So, where do we go from here and what are the prospects for our property sector?
To borrow a phrase that is popular with the real estate sector, the three most important things are location, location and location. Also, allow me to add another element to the mix - timing.
Our geographical position in the heart of East Asia, and on the doorstep of China is second to none. But simply being here is not enough.
The global financial crisis has magnified the benefits of greater integration between Hong Kong and the Mainland for both our economies. We are our nation's irreplaceable global financial centre and an international hub for business.
Infrastructure development has enabled our relatively small city to expand its capacity over the years. Now, with the Mainland entering a new phase of reform and opening up, we must step up to the challenge.
We expect to begin construction by the end of this year on two of the many massive infrastructure projects that will enhance our cross-boundary connectivity and support further economic growth.
The first project is the Guangzhou-Shenzhen-Hong Kong express rail link. The line will provide high-speed rail services between our neighbouring cities, as well as link us up with the national high-speed rail network.
The express rail link will bring business people, tourists and students on both sides of the boundary closer together. It will also promote business opportunities and cultural exchanges, and enhance our city living.
Our most ambitious cross-boundary project is the massive 29-kilometre Hong Kong-Zhuhai-Macao Bridge. The bridge will help open up the less-developed western part of the Pearl River Delta. Construction of the bridge will commence in phases by the end of this year and be completed in 2015/2016.
We expect the Hong Kong part of the bridge and boundary crossing facilities will generate some HK$45 billion of economic benefits for an operation period of 20 years upon completion.
There are also plans for an express rail link connecting the Hong Kong International Airport with the Shenzhen Airport, passing through areas of high development potential in Hong Kong and Shenzhen. Such a link will help to provide even better synergy between the two airports and improve the efficiency of the region as a whole.
The timing of these projects is crucial. In January, when the global financial crisis was gripping its tightest, the Central Government in Beijing announced a Framework to establish the Pearl River Delta, including Hong Kong, Macao and Guangdong Province, as one of the most competitive regions in the world by 2020.
The Framework highlights Hong Kong's role as a global financial centre in the Asian time zone, and as a premier gateway to the Mainland for trade, services and investment.
The Framework also supports closer cross-boundary co-operation in areas such as town planning, environmental initiatives and innovation technology.
In Hong Kong, we have the experience, the talent and the motivation to lead by example in realising the objectives of this Framework in creating a dynamic, clean and green living environment for our city as well as our region.
The institutional strengths that have helped to make Hong Kong the city it is today also form the cornerstone for our continued success.
These include a stable investment environment, low and simple tax regime, clean and efficient government, independent judiciary, the rule of law and business-friendly policies.
We also have world-class services that are crucial to supporting an effective real estate market. These include legal services, project management, financing, construction and a broad range of professional services, which are essential components for a successful property deal.
And there is also a unique free-trade agreement between Hong Kong and the Mainland called CEPA, which stands for Closer Economic Partnership Arrangement. Among other things, CEPA can eliminate the capital threshold requirement for companies to provide real estate services in the Mainland.
CEPA rules are nationality neutral, so overseas companies incorporated in Hong Kong can enjoy the same preferential treatment in the Mainland as local companies.
Ladies and gentlemen, you will agree with me that we are well-positioned and we are ready to move forward.
Earlier this year, the US-based Heritage Foundation rated Hong Kong again as the world's freest economy for the 15th year in a row.
We also retained our number two ranking behind only Finland in the Milken Institute's Opacity Index. The index measures an economy's regulatory environment and compliance with international standards.
And, in terms of competitiveness, we ranked number two again behind the US in the 2009 IMD (International Institute for Management Development) World Competitiveness Yearbook.
Ladies and gentlemen, I hope that I have provided you with some interesting food for thought. The timing and location of this conference could hardly be better. Most economists agree that Asia, and in particular China, are set to lead the world out of the economic tailspin.
I encourage you to explore the exciting investment and business opportunities in Hong Kong and throughout the Asia Pacific Region.
I also hope you will find time to take in some of our spectacular countryside and, of course, hopefully you will be able to do some early Christmas shopping right here in Hong Kong.
Thank you very much.
Ends/Wednesday, November 18, 2009
Issued at HKT 11:35
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