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Following is the speech by the Chief Executive, Mr Donald Tsang, at the Hong Kong-Guangdong Business Conference in New Delhi, India today (October 27):
Your Excellency Minister Sibal, Mr Ambassador, the Honourable Mr Huang Huahua, distinguished guests, ladies and gentlemen,
It is a great pleasure to be here in New Delhi for this Hong Kong-Guangdong Business Conference.
First of all, I would like to congratulate New Delhi on the great achievement of hosting the Commonwealth Games. No doubt, this will bring huge long-term benefits to this city and to the people of India.
I would also like to thank Governor Huang for bringing us all up to date with the exciting developments in Guangdong and the Greater Pearl River Delta region, or GPRD.
I am also delighted to have this opportunity to go into bat for Hong Kong. Although, it is also fair to say that when it comes to harnessing the potential of our region, Hong Kong and Guangdong are both batting for the same team.
I will talk about Hong Kong's role as a business hub in Asia, and how our city fits into a business expansion strategy for Indian firms - especially for Indian companies looking to the vast markets in Mainland China.
Hong Kong is only one hour away from the GPRD region. We are connected by cross-boundary roads, railways, air services and ferry services. We also have a shared history and a shared culture that helps to unite our communities.
The GPRD is known as the "factory of the world", and for good reason. The region is renowned for its production of electronic goods, electrical products, toys, garments and a range of other goods. The massive scale of the GPRD's export sector means that if it were a country, it would be the world's 18th largest trading economy ahead of countries including Belgium, Sweden and Switzerland.
Hong Kong is part and parcel of this success story: we are Guangdong's largest trading partner and its largest source of foreign direct investment, accounting for over 60 per cent of its total FDI stock. Hong Kong companies employ some 11 million people in the GPRD.
At the same time, Hong Kong has also benefited tremendously by transforming itself into a services-oriented economy to support the GPRD's development. Firms focusing on trading, logistics, financial and other professional services today contribute over 90 per cent of Hong Kong's GDP.
Hong Kong was recently ranked Asia's most innovative economy by the Global Innovative Index and the eighth most e-ready economy in the world by the Economist Intelligence Unit.
Our world-class ICT infrastructure connects people with each other, while our competitive financial centre connects companies to a deep pool of capital. Indeed, Hong Kong led the world in funds raised through initial public offerings last year. New listings raised a total of more than US$31 billion in 2009. This year we are on course to exceed that amount. The world's biggest IPO - Agricultural Bank of China - enjoyed a smooth and successful listing in July this year, raising over US$22 billion in Hong Kong and Shanghai.
Although Hong Kong is a relatively small city, our stock market is the seventh largest in the world and the third largest in Asia, with market capitalisation of US$2.3 trillion.
We couldn't achieve all this without a well-educated and hard working labour force that is multi-skilled in ability, multi-lingual in communications and multi-national in outlook.
The Hong Kong Government adheres to the principle of "big market, small government". In a competitive and fast-changing world, our Government's most important role is to remove obstacles to economic development and enhance Hong Kong's competitiveness. That way our business community can concentrate on what it does best - business.
One of our biggest attractions is Hong Kong's closer co-operation with Guangdong and the GPRD. Let me give you one example of how this works.
In 2008, global science-based products and services company DuPont set up DuPont Apollo. It is a wholly owned subsidiary incorporated in both Hong Kong and Shenzhen in Guangdong to support the rapidly growing solar energy industry.
The company's R&D Centre at Hong Kong Science and Technology Parks, and its new manufacturing facility in Guangming New District in Shenzhen, are now fully operational. This model makes best use of the advantages offered by Hong Kong and Shenzhen. This collaborative initiative has won international recognition. In September, the United Nations Conference on Trade and Development awarded first prize to our investment promotion agency Invest Hong Kong and Shenzhen Municipal People's Government for best practices in attracting green Foreign Direct Investment into Hong Kong and the GPRD.
I encourage India's high-tech companies to explore the benefits of establishing a base in our part of the world.
Hong Kong is the perfect place from which Indian companies can tap the enormous China market. But don't simply take my word for it.
Today, Hong Kong's Indian community amounts to more than 27,000 people - it is one of our largest expatriate communities.
Some of our city's leading entrepreneurs are from India. At the same time, many of India's leading companies have come to Hong Kong, looking to secure a foothold in the East Asian marketplace, and gain better access to Mainland China. At last count, some 1,500 Indian companies are doing business in Hong Kong including Bank of India, HCL Technologies, Satyam Computers, Tata Consultancy Services and Zee Entertainment Enterprises, to name just a few.
The Air Services Agreement signed between Hong Kong and India in 2007 has greatly facilitated air travel between the two places. There are now five airlines with direct flights between Hong Kong and India. Invest Hong Kong helped one of them - Jet Airways - to establish an office in Hong Kong in 2008. The airline's inaugural flight from Mumbai landed at Hong Kong International Airport on April 14 that year. I'm looking forward to hearing more about its experiences in Hong Kong from its Chairman Mr Naresh Goyal in his presentation later this morning.
All of these companies and their products and services are prime examples of the facilitation of business and leisure between India and Hong Kong, Asia's world city. They illustrate the popularity of Hong Kong as a leading global business destination and the strength of the commercial links between our city and key business centres in India.
Why is Hong Kong the right place for Indian companies to invest?
Apart from being right on the Mainland's doorstep, Hong Kong is a stable and dynamic global financial centre in the Asian time zones. We also share many of the characteristics that are cherished by entrepreneurs the world over. We have a free flow of information and ideas. We have a fully convertible currency and there are no restrictions on the flow of capital. Our common law legal system is based on the English system and underpinned by an independent judiciary.
In many ways, Hong Kong is a familiar place for Indian entrepreneurs. English is the language of our business communities, we have similar legal systems, and we share common goals of openness, diversity and fair play.
Our low and simple tax system is a great incentive for Indian companies. Salaries tax is capped at 15 per cent and companies pay no more than 16.5 per cent profits tax. There is no inheritance tax, no VAT, no GST and no capital gains tax.
Hong Kong remains a key destination for foreign direct investment (FDI). We attracted US$48 billion in FDI in 2009, according to the World Investment Report 2010. And we moved up the global rankings to be the world's fourth largest FDI recipient while remaining the second largest in Asia after Mainland China.
These numbers underscore Hong Kong's strong appeal to a growing number of international companies as a platform to reach Guangdong and the rest of the Mainland, as well as the Asia-Pacific region.
Invest Hong Kong and its team have been busy assisting new companies to set up in Hong Kong and existing firms to expand their operations. Their target is to assist 270 companies this year, which, on average is about one each working day. I am told they are on course to beat their target.
The Department provides a full range of services to help new companies get off to a great start in Hong Kong, from finding the best location to assisting with the paperwork regarding visas and business set-up, and finding school places for your children.
To open the door to opportunities in the Mainland a little wider, we also have the Hong Kong Trade Development Council, or TDC. The TDC organises more than 30 international trade fairs each year that help connect the international business community to suppliers in Hong Kong and throughout the Mainland. It has extensive contacts and much experience in matching overseas companies with the most appropriate partners in Hong Kong, which can help them expand their business activities into the Mainland.
Naturally, we can't guarantee that a business venture will succeed in Hong Kong. We leave that to the markets to decide. But we do provide a level playing field for all and a vibrant business environment to give enterprises the best chance of success.
Ladies and gentlemen, I have mentioned many of the attributes that have contributed to Hong Kong's ranking as the world's freest economy for each of the past 16 years by the US-based Heritage Foundation.
I have also highlighted how the strong co-operation between Hong Kong and our friends in Guangdong provides a winning combination for both local and overseas investors.
Given our nation's robust economic growth and Hong Kong's already deep ties with Indian investors, I am confident that our bilateral relations will continue to go from strength to strength.
Thank you very much.
Ends/Wednesday, October 27, 2010
Issued at HKT 15:54
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