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Following is a speech by the Secretary for Commerce and Economic Development, Mrs Rita Lau, at the 4th Annual Asia-Pacific Ireland Business Forum today (September 24):
Ambassador Kelleher (Mr Declan Kelleher, Ambassador of Ireland to China), Dr Mansergh (Dr Martin Mansergh, Minister of State at the Department of Finance, Ireland), Mr Walsh (Mr Padraig Walsh, Chairman of the Irish Chamber of Commerce of Hong Kong), distinguished guests, ladies and gentlemen,
It is a great pleasure to join so many prestigious speakers and guests at today's forum. For those who have come all the way from Ireland, a warm welcome to Hong Kong.
I understand that apart from this business forum, another highlight of the event is the Asian Gaelic Games, a traditional Irish sport, to be held over the coming weekend at King's Park. I must confess that I am not familiar with the game, but my colleagues told me that it is as interesting as, if not more than, soccer or rugby. I hope you will all have a good time at the games in Hong Kong.
Bilateral trade between Hong Kong and Ireland
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Sports can bring people together. So can trade. When we talk about our relations with Ireland, the first thing that comes to my mind is our trade relations. In 2009, Ireland was our eighth largest trading partner among the European Union (EU) member states. Reciprocally, we were Ireland's eighth largest trading partner outside the EU. Our total bilateral trade volume in last year was over US$1.4 billion. In the first seven months of this year, our bilateral trade volume already reached US$ 870 million, representing a 2.5% growth over the same period last year.
Hong Kong is an economy which thrives on trade. In 2009, Hong Kong ranked 11th among goods traders in the world, with a 2.7% share of global merchandise trade. For trade in services, we were the 15th largest services trading entity in the world last year, representing 2%of the global trade volume. The total value of our goods and service trade is nearly four times our GDP.
Hong Kong is a firm believer in free trade and pro-market policies. We have no barriers to trade, no restrictions on investments, no foreign exchange controls and no nationality restrictions on corporate ownership. As a free port, we do not levy any customs tariffs on imports or exports. There is also no tariff quota or surcharge. There are no value added or general services taxes. The Government attaches great importance to trade facilitation. We have been actively implementing measures to facilitate legitimate trade and movements of goods, while at the same time ensuring effective controls on cargo clearance.
I am very proud to tell you that for 16 consecutive years, Hong Kong has been voted the freest economy in the world by the Heritage Foundation. I also note that Ireland occupies the fifth place in this year's economic freedom world ranking, which is the highest among all European countries. Congratulations. Being the freest economies respectively in Asia and Europe, Hong Kong and Ireland definitely can work hand in hand to further develop the trade links between the two regions.
International Financial Centre
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Apart from economic freedom, Hong Kong is also renowned as one of the international financial centres in the world, alongside New York and London. Our stock market is the seventh largest in the world and third largest in Asia by market capitalisation. Last year, more than US$31 billion was raised in Hong Kong through IPOs, the largest amount in the world. Hong Kong is where the world buys into China. As of end 2009, 253 Mainland China enterprises were listed on the Hong Kong stock exchange, with market capitalisation at US$1,100 billion.
Hong Kong is also a regional fund management centre. In 2009, Hong Kong was ranked second in Asia-Pacific in terms of asset management business, after Australia and followed by Japan.
In recent years, Hong Kong has also developed into the offshore renminbi centre. Hong Kong is the first economy outside Mainland China to conduct renminbi banking, offering deposit-taking, currency exchange, remittance and debit/credit card services. Indeed, Hong Kong handles 75% of Mainland China's global cross-border trade in renminbi under the renminbi trade settlement pilot scheme, which allows Mainland China enterprises to settle their merchandise trade, service trade and other current account transactions with any part of the world in renminbi.
Economic development in Hong Kong
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Hong Kong has laid solid foundations for our trading and financial activities. But we are never complacent and have kept the momentum in our economic development. Last year, the Government identified six industries where Hong Kong possesses a competitive edge for further support and development. All of these are knowledge-based industries which will create quality jobs for our economy. I will briefly introduce some of those which are under my policy purview.
Innovation and technology
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The first one is innovation and technology. Our objective is to develop Hong Kong into an innovation and technology hub for the region through tailored policy as well as stronger funding and infrastructure support.
The Innovation and Technology Fund was set up in 1999 to fund projects that contribute to innovation and technology development. Since then, it has funded more than 2,100 projects with US$700 million.
In order to encourage private-sector investment R&D in Hong Kong, we launched a new R&D Cash Rebate Scheme in April this year. It provides a 10% cash rebate on the investment made by private sector companies in conducting applied R&D projects. To date, we have received more than 100 applications involving about US$250,000 of cash rebate.
In terms of infrastructure, we have established the Science Park to provide R&D facilities and advanced laboratories in a quality environment. Since its opening in 2002, over 320 local and overseas companies are operating in the first and second phases of the Science Park, which now has an occupancy rate of 88%. We have decided to proceed with the third phase development of the Science Park at an estimated cost of US$630 million, which will be completed by end 2013.
Creative industries
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The second sector I want to talk about is creative industries. At present, we have about 32,000 creative establishments including advertising, motion picture, television, design, architecture, animation and comics, and digital entertainment. These establishments employ more than 176,000 practitioners, creating an added value of over US$7.7 billion to our economy, which is about 4% of our GDP.
In order to drive the development of creative industries in Hong Kong, we established a dedicated office, "Create Hong Kong", in June 2009. This office administers the US$38 million CreateSmart Initiative, as well as other funding schemes including the US$32 million DesignSmart Initiative and the US$41 million Film Development Fund.
CEPA
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I cannot conclude my speech without mentioning our Mainland advantages. Hong Kong is strategically located at the heart of Asia. The world's fastest growing economy, the Mainland of China, is right at our doorstep. This is complemented by a unique free trade pact which Hong Kong signed with the Mainland, the Closer Economic Partnership Arrangement, or CEPA in short. CEPA covers three areas, namely trade in goods, trade in services, and trade and investment facilitation. For trade in goods, all Hong Kong products can enjoy zero tariffs on importation into the Mainland provided the relevant CEPA origin rules are met. For trade in services, preferential access in 44 services areas covering nearly 280 liberalisation measures in the Mainland market are provided to Hong Kong service suppliers.
Although I talked about "Hong Kong products" and "Hong Kong service suppliers", the beauty of CEPA is that it is indeed a nationality neutral arrangement. All foreign companies, including of course those from Ireland, can enjoy the CEPA benefits by registering your businesses in Hong Kong. In fact, we have seen an increasing number of foreign companies setting up their offices in Hong Kong to do business with the Mainland making use of CEPA. You can be one of them.
Setting up in Hong Kong
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I strongly suggest you talk to my colleagues in Invest Hong Kong if you are interested in setting up your presence in this part of the world. Simon Galpin, Director-General of Invest Hong Kong, and his colleagues are here today. Invest Hong Kong is the dedicated investment promotion agency which helps foreign companies set up their business in Hong Kong. In the past few years, Invest Hong Kong has helped eight Irish companies from different business sectors to set up or expand their business in Hong Kong. A recent example is Fexco, the world's leading provider of dynamic currency conversion services. From its base in Ireland, Fexco has grown to become a global company with offices in different countries including the UK, the US and Australia. Its new office in Hong Kong will serve as a hub for accessing the business opportunities in Asia. A very smart move indeed.
I will not talk about the services of Invest Hong Kong in detail as these have already been included in the package provided to you. I just want to highlight one point - all the services provided by them are free of charge. This is hardly a good business model for the Government, but definitely a good business model for you.
Closing
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Finally, I wish all of you a very fruitful discussion and an enjoyable stay in our Asian World City. Thank you.
Ends/Friday, September 24, 2010
Issued at HKT 16:12
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