********************************************************
Following is the speech by the Financial Secretary, Mr John C Tsang, at the Hong Kong Reception in Honour of the Financial Secretary hosted by the Hong Kong Trade Development Council in Jakarta, Indonesia today (March 23):
Chris (Jackson), Distinguished Guests, Ladies and Gentlemen,
Good evening. It is my great pleasure to join you all at the TDC Cocktail Reception. It is a fitting close to what has been an extremely busy day.
Since arriving in Jakarta this morning, I have held constructive and positive talks with my good friend, your Minister of Finance (Sri Mulyani Indrawati). I have met some of Indonesia's leading figures in banking and finance, we have signed an important Avoidance of Double Taxation Agreement between Indonesia and Hong Kong, and now I am very pleased to be here with you in this Hong Kong reception.
So, it has been a rather busy day. Even in Hong Kong terms. And if we can achieve all this in a few short hours, just imagine what Hong Kong and Indonesia, working together, can achieve in the future.
First and foremost, congratulations to the Hong Kong Trade Development Council on establishing an office in the great city of Jakarta.
This is an important leap forward in developing even stronger business ties between Hong Kong and Indonesia.
Trade between us has grown at an average annual rate of 8.8 per cent between 2005 and last year. Our total bilateral trade last year amounted to almost HK$35 billion, or almost US$4.5 billion.
Also last year, some US$2.5 billion (HK$19.5 billion) worth of trade between Indonesia and the Mainland of China was routed through Hong Kong.
These overall trade figures are healthy. I have no doubt that we can do even better, now that TDC's Jakarta office is up and running.
Indeed, the potential for stronger business relations is enormous.
Indonesia is the world's largest island nation with the world's fourth largest population. Hong Kong is the premier gateway to our nation, China, the world's fastest growing large economy with the world's largest population.
In other words, Hong Kong is the springboard for trade between two vast markets with abundant resources, two large and innovative populations with boundless potential for future economic growth.
Earlier today, we signed a Comprehensive Agreement for the Avoidance of Double Taxation, or DTA between Indonesia and Hong Kong.
The DTA represents tax savings for investors from both Indonesia and Hong Kong. It also provides a higher degree of certainty on taxation rights for investors from both places engaging in bilateral trade and investment.
It is a further sign of even stronger co-operation between our two Governments in building even more robust and business-friendly ties that will benefit our economies, and promote bilateral relations for many years to come.
So let me tell you about some of the things that we can look forward to in the years to come.
Last month, I delivered my annual Budget. It was my first Budget since the global financial crisis loosened its grip on our city and the economic growth trend returned to Hong Kong.
In my Budget, I forecast GDP growth for Hong Kong this year of between 4 and 5 per cent. This would be a significant turnaround from the 2.7 per cent GDP contraction last year during the height of the financial crisis.
Although Hong Kong has felt the full force of the financial crisis over the past two years, we have emerged in good shape. We are now ready to grasp some of the opportunities that have emerged from the economic downturn.
We have identified six new priority industries to spearhead our recovery and broaden our economic base. These industries are educational services, medical services, testing and certification, innovation and technology, environmental industries and cultural and creative industries.
Our aim is to promote a more broad-based economy and give extra back-up to our four pillar industries of financial services, trade and logistics, professional services and tourism.
With all these industries – the six new priority areas plus our four pillar industries – we are fostering creativity, innovation and diversity to lead our city's new phase of development. I encourage Indonesian businesses to join us on what promises to be an exciting and prosperous journey.
Another area that has really opened up for Hong Kong during the past year or so has been our closer economic integration with the Mainland of China.
In January last year, the Central Government in Beijing unveiled a framework to establish the Pearl River Delta, or PRD, as one of the most competitive regions in the world by 2020. This region includes the Special Administrative Regions of Hong Kong and Macao and the Guangdong Province in the Mainland.
We are currently working with our counterparts in the PRD on ways to consolidate our strengths to achieve this ambitious goal. In a nutshell, it involves further breaking down barriers to trade and investment between Hong Kong and the Mainland. This is music to the ears of our local and overseas business community because once the barriers are removed, we are looking beyond the 7 million population in Hong Kong to 50 million population in the PRD, and the 400 million in the Pan PRD
Hong Kong will also use its full clout as a global financial centre, shipping hub and high-quality services economy to drive the overall development of the PRD.
I mention this because it represents huge business opportunities, not only for our local entrepreneurs, but also for overseas investors, including Indonesian companies.
Although we have been up to our necks with the global financial crisis, Hong Kong has maintained its key competitive advantages. For us, as a small externally-oriented economy, that means maintaining a low and simple tax system. Companies pay no more than 16.5 per cent profits tax, and salaries tax is capped at 15 per cent. There is no capital gains tax, no VAT, no GST and no inheritance tax.
Among other things, we have the rule of law, a tried and trusted common law legal system, zero tolerance of corruption and a clean and efficient Government.
We are also fortunate to have the Hong Kong Trade Development Council to promote Hong Kong around the world as a unique and competitive trading partner.
I encourage you all to take full advantage of the TDC's office here in Jakarta. Through the office, you can easily join our many trade fairs, conventions and exhibitions each year; you can connect with the right business partners in the Mainland of China, and you can keep up to date with the latest business developments in Hong Kong.
Ladies and Gentlemen, although I have been in Jakarta for just a few hours, I have seen for myself – both this evening and throughout the day – the great enthusiasm for even stronger business relations between Hong Kong and Indonesia.
Now, with the global financial storm subsiding and new opportunities glaring at us on the horizon, I look forward to working even closer together and doing even more business between us.
Thank you.
Ends/Tuesday, March 23, 2010
Issued at HKT 20:48
NNNN
