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Following is the speech by the Financial Secretary, Mr John C Tsang, at a business luncheon co-organised by Hong Kong Economic and Trade Office in Brussels and Hong Kong Trade Development Council in Paris today (October 20, Paris time):
Minister Idrac, Distinguished Guests, Ladies and Gentlemen,
Good afternoon.
It is my great pleasure to be back in the wonderful romantic city of Paris.
Links between our two cities, Paris and Hong Kong, date back a long way.
French priests settled in Hong Kong in the mid-1800s. That was the beginning of a unique and deep friendship.
Tomorrow, we shall further strengthen our bilateral relations with the signing of an Avoidance of Double Taxation Agreement. I shall come back to the DTA a little later.
First, I would like to recap some more of the special moments that we share.
For example, in 1911, a French Farman IV (Four) aircraft made the first powered flight in Hong Kong. Today, of course, as a global aviation hub, we have expanded our portfolio with a broad spectrum of flying machines.
In 1894, Alexander Yersin – a young French scientist working in Hong Kong – isolated the bacillus responsible for bubonic plague. He was a student of Louis Pasteur, and the Hong Kong University Pasteur Research Centre continues to lead the global fight against viral infections – including SARS.
And earlier still, French herbalists, the Bauhin brothers, first discovered the elegant Bauhinia flower, which is now our city's emblem.
Today, Hong Kong is home to the largest French community in Asia, numbering some 12 000 people. We have Michelin starred restaurants, a growing appetite for French wine and we proudly host Le French May, the largest French arts festival in Asia.
I would like to take this opportunity to talk about a few of the ways Hong Kong is becoming an even more attractive place for French people to live, work and to visit.
First of all, Hong Kong has rebounded relatively strongly from the global financial crisis. Our unemployment rate has returned to pre-crisis levels of 4.2 per cent. Hong Kong exports rose 26 per cent in the first eight months of this year compared to the same period in 2009. Given the relatively healthy economic outlook for Asia, I recently revised upwards my GDP forecast for Hong Kong this year. I now expect our GDP growth for 2010 to be between five per cent and six per cent, and the up side looks strong.
On bilateral trade between Hong Kong and France, there is both good news and not so good news. The not so good news is that our bilateral trade slumped 17 per cent (16.9%) last year.
Perhaps that is not such a surprise, given that both our economies were feeling the full force of the global financial crisis.
The good news is that bilateral trade between us has rebounded a healthy 20 per cent (19.9%) in the first seven months of 2010 compared to the same period in 2009.
So, we are back on the growth track.
Earlier this year, our financial links took a new positive turn. A well-known fragrance and cosmetics company became the first French firm to list on the Hong Kong stock market. The company, L'Occitane, raised more than 500 million Euros (Eur 517 million/HK$5.5 billion) through its Hong Kong Initial Public Offering.
The IPO was well received, and I encourage more French companies to consider listing in our bourse. Despite the financial crisis, our stock market remains the 7th largest in the world and 3rd largest in Asia by market capitalisation. A listing in Hong Kong also opens up access to the deep and liquid markets in Mainland China and raises a firm's profile throughout our nation.
With French fragrances in mind, or perhaps I should say "bouquets", wine co-operation between Hong Kong and France is also producing – dare I say – the sweet smell of success.
Once again this year, Hong Kong hosted a highly popular Vinexpo Asia Pacific. This year's Vinexpo attracted some 880 exhibitors and 12 000 visitors. During this exhibition, we also signed a new Memorandum of Understanding (MoU) with Bordeaux to further deepen our partnership in wine promotion. A similar agreement with Burgundy will be signed this week (October 22). These are in addition to our MoU on wine co-operation with France signed in 2008.
In collaboration with Bordeaux, we launched the Hong Kong Wine and Dine Festival last year. It proved very popular and successful. This year's Wine and Dine Festival takes place later this month and will be even bigger than last year.
In my Budget in 2008, I eliminated duties on wine. My humble aim was to create more jobs locally, but my more ambitious vision was to establish Hong Kong as the trading and distribution centre for wine in Asia. Eliminating wine duties helped to pop the cork, so to speak, on new opportunities for the industry in Asia and especially in Mainland China.
In our last financial year, between April 2009 and March 2010, our wine imports from France jumped more than 30 per cent (31.4%). During that period, the value of our French wine imports reached 250 million Euros (HK$2.6 billion), much more than from any other country.
Also in 2009, Hong Kong overtook London to become the world's second largest centre for wine auctions, behind only New York. Famous French vintages are in popular demand at these auctions. Not only do they serve to satisfy Asia's increasing refined palate for fine wine, they also serve to provide for interesting investment opportunities.
In Hong Kong, our "No" or "Low" taxes don't stop at wine. Profits tax in Hong Kong is a flat 16.5 per cent and salaries tax is capped at 15 per cent. There is no GST or VAT, no capital gains tax and no death duties.
As I mentioned earlier, we shall be signing an Avoidance of Double Taxation Agreement (DTA) between Hong Kong and France tomorrow morning.
This DTA will eliminate double taxation on same source income, boost tax savings, and provide more certainty on taxation rights for investors from both Hong Kong and France. It will also further encourage the flow of investment, talent and technology between us.
Our low and simple tax regime is one of the main draw cards for overseas companies establishing a base in Hong Kong – including some 700 French companies which have operations in our city.
Other advantages for companies in Hong Kong include our free flow of information, capital and talent. We have a full range of high quality services and efficient infrastructure. An independent judiciary underpins our common law legal system.
At the same time, Hong Kong's unparalleled connectivity with the Mainland of China unlocks the door to huge markets throughout our nation.
This door was pushed open a little wider in April this year with the signing of a landmark agreement between Hong Kong and our neighbouring province of Guangdong. This agreement, signed in Beijing, is called the Framework Agreement on Hong Kong/Guangdong Co-operation.
The Framework Agreement covers a range of policies and facilitates the free flow of people, goods, capital and information. It will help to speed up the implementation of cross-boundary infrastructure projects and promote our goal to jointly create a world-class economic zone of a rather wealthy population of 55 million people.
This enhanced cross-boundary co-operation comes at a time of global economic change. In the wake of the financial crisis, the economic centre of gravity is shifting away from traditional markets in the West towards Asia. Much of the focus is on China, and its role in this changing economic landscape.
Hong Kong is already firmly established as the premier international gateway into and out of Mainland China. New opportunities in our part of the world have also attracted intense competition for a piece of Asia's growing economic pie.
We can look to France for inspiration on attracting more investment, talent and tourists to Hong Kong.
Again this year, France was named by International Living Magazine as the best place in the world to live. France has topped the rankings in the Quality of Life Index for the past five years.
I have mentioned a few of the French delights that add to the quality of life in Hong Kong. We have great French food, fine wine and a rich cultural scene spearheaded by Le French May.
And like France, Hong Kong too has efficient infrastructure, world-class health care, spectacular scenery and plenty of sunny days.
Under the Framework Agreement with Guangdong, we shall work together to promote a green and healthy environment, not only in Hong Kong, but also throughout our region.
This includes jointly setting – and achieving – emission reduction targets for the coming decade. We are already promoting cleaner production techniques for Hong Kong factories operating in the Mainland.
In my Budget in February, I introduced a series of measures to encourage the phasing out of old diesel vehicles and to promote the introduction of electric vehicles on our roads.
Our environmental efforts over the past decade are producing positive tangible results. Last year, ambient concentrations of various key air pollutants, such as sulphur dioxide, respirable suspended particles and nitrogen dioxide have reduced by 36%, 15% and 4% respectively compared with 2005.
We shall continue to update our Air Quality Objectives in line with World Health Organization guidelines, and co-operate under the Framework Agreement to improve air quality throughout our region.
Ladies and Gentlemen, we can also look to France for ideas on how to establish Hong Kong as a hub for arts and culture in Asia.
Our single most exciting project under way in Hong Kong is the West Kowloon Cultural District. A 40-hectare site of prime waterfront real estate has been set aside for this project. It will include a Grand Theatre, various performing arts venues, a world-class museum and much more.
As well as promoting arts and culture in Hong Kong, the West Kowloon Cultural District will entice the best performers and biggest shows globally to come to Hong Kong and delight audiences from around the world.
Three teams of world-renowned architects have produced different conceptual plans for the District, and a public consultation is currently under way to choose the ultimate design layout. Please check out these impressive designs on the Internet. There is no limit to our imagination or to our ambition for this project.
Who knows! Perhaps, once the West Kowloon Cultural District is up and running, Le French May could become Le French May, June, July and August.
Ladies and Gentlemen, French people, French culture and French business have played a part in Hong Kong since the earliest days of our city's development.
We still have a lot to learn from the country that is rated as the best place in the world to live.
At the same time, Hong Kong, also has much to offer as a great place for our residents, our business people and for the millions of tourists who visit us each year.
I hope you, too, will come visit us soon, and see for yourselves why Hong Kong is Asia's world city.
Thank you.
Ends/Wednesday, October 20, 2010
Issued at HKT 20:45
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