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Following is the speech by the Chief Executive, Mr Donald Tsang, at a luncheon organised by the Western Australia Chamber of Commerce and Industry in Perth, Australia, today (June 20):
Distinguished guests, ladies and gentlemen,
Good afternoon, or perhaps I should say "G'Day",
It is my pleasure to be here in the great city of Perth. Thank you for the warm welcome.
Coming from Hong Kong, it is difficult to grasp the full scale of things here in Western Australia. Hong Kong would fit into WA almost 2,300 times. Yet our population of 7 million is three times the size of yours.
Both our communities speak English - although with different accents. We both love football - even if we play by different rules.
Perhaps the best way to explain the strong and growing relations between WA and Hong Kong is that "opposites attract".
It would take an hour or so to drive a car from one end of Hong Kong Island to the other. Yesterday I needed to catch a plane to visit an iron ore mine at Cape Preston. This operation is run by a Hong Kong company, Citic Pacific. I also visited the North West Shelf LNG Project. It supplies liquefied natural gas to Hong Kong, among other places.
Beyond the supply of energy, why is Hong Kong interested in the resources sector, and vice versa?
Last year, mining companies from Russia and Brazil took the plunge by listing in Hong Kong. Just last month, Glencore International - the world's largest commodities trading company - launched its Hong Kong IPO.
Hong Kong, with its liquid markets and attractive valuations, is a perfect fit as a capital-raising centre for resources firms, including companies from WA. For one thing, our nation China is a huge consumer of minerals and natural resources. WA is a major supplier.
In both of the past two years, Hong Kong has led the world for total funds raised through Initial Public Offerings. In 2010, IPO funds raised in Hong Kong exceeded US$58 billion.
I encourage companies from WA - well established companies from all sectors and of all sizes - to consider Hong Kong's potential as a capital raising centre.
Listing in Hong Kong is a great way for overseas firms to tap Hong Kong's advantages as an international financial hub in the Asian time zones. It also gives more exposure to companies and their products and brands in Mainland China and throughout Asia.
Ladies and gentlemen, I would like to thank the Chamber of Commerce and Industry Western Australia for its work in connecting Australian businesses to Hong Kong. I can assure you that the opportunities in our back yard are especially bright.
After being battered around by the global financial crisis, our economy grew by a very healthy 7% in 2010 compared to the previous year. In the first quarter of this year, our GDP expanded 7.2%. We expect full year GDP growth of between 5 and 6%.
I understand that the vast majority of the Chamber's members represent small and medium enterprises. These are exactly the companies that tend to flourish in Hong Kong's open and diverse environment. SMEs account for some 98% of all businesses in Hong Kong. They also employ almost half of our total private sector workforce.
For many of these companies, particularly overseas enterprises, Hong Kong provides a familiar, effective and low risk entry point to the vast markets in Mainland China.
People tell me that most Australians enjoy the occasional glass of wine. I mention this for a number of good reasons.
First, because - at least for my taste - some of the best wine comes from this part of the world.
Second, because Australia is our third largest source of wine imports.
And the third reason is that the wine industry is a great example of how Hong Kong works best.
We have a relatively small and nimble economy with great connections to Mainland China and overseas. That means we have to keep our finger on the pulse of new trends locally, regionally and internationally.
In particular, we need to adapt to the changing tastes brought about by increasing prosperity in Mainland China. One such taste is a growing appetite for wine - both for consumption and for investment purposes.
Responding to this trend, we eliminated duties on wine in 2008. This was a crucial step towards establishing Hong Kong as a wine trading and distribution centre in Asia.
It appears to be working!
In 2010, our total wine imports grew 73%. This followed strong growth in each of the previous two years. Also last year, Hong Kong overtook New York to become the largest wine auction centre in the world.
Large scale wine fairs and a new wine and dine festival have helped to connect international wine merchants to buyers from across China.
Today Hong Kong is the talk of the international wine world. This is not "breaking news" for the Australian wine trade. Indeed, last year Australia was our partner country for the Hong Kong International Wine and Spirits Fair. Australian wine imports have soared 116% since we eliminated duties in 2008. This is just one example of the potential for stronger business links between our two economies. Those business links are underpinned by the legendary flexibility and entrepreneurship of the Hong Kong economy.
I like to highlight our experience in developing the wine industry. It provides a snapshot of our tried and trusted formula for creating business opportunities in Hong Kong.
First, we have a low and simple tax system. In Hong Kong, salaries tax is capped at 15%. Profits tax is never more than 16.5%. There is no VAT or GST, no capital gains tax and no death duties. Only income sourced in Hong Kong is taxed in Hong Kong.
We have free flows of capital, information and talent. Indeed, Hong Kong has been ranked as the world's freest economy for the past 17 years by the US-based Heritage Foundation.
We also have world-class infrastructure that supports a strong logistics industry. Our seaport is among the busiest anywhere. Last year our airport was the world's busiest for air cargo, handling more than 4 million tonnes of airfreight. It was also one of the busiest in terms of passengers with more than 50 million people passing through its terminals last year. This included around 650,000 Australian visitors.
Although Hong Kong is a relatively small place - at least compared to WA - we are home to some 6,500 companies from the Mainland, Taiwan and around the world. This includes more than 600 Australian enterprises.
We welcome more Australian firms to come and take advantage of our business-friendly environment. Size really doesn't matter. There is plenty of room in Hong Kong for more Australian companies, large and small.
As well as a premier gateway to Mainland China for trade, Hong Kong is also China's global financial centre. One key role for us today is to provide a testing ground for the liberalisation of the Mainland's currency, the Renminbi.
Since 2004, our banks have been offering a wide range of Renminbi services. And in 2007, companies were given the green light to raise capital by issuing Renminbi bonds in Hong Kong. So far, foreign firms including McDonald's, Caterpillar and ANZ Banking Group of Australia have issued Renminbi bonds.
Hong Kong's positioning as an offshore centre for Renminbi business is more than a business opportunity - it is a national policy. One of the newest services is Renminbi trade settlement for foreign firms. This initiative was introduced by the Central Government in Beijing in 2009. Last year it was expanded to cover 20 Mainland provinces and cities. Hong Kong is a reliable and efficient platform for overseas firms to settle their Mainland trade using Renminbi. Australian firms are welcome to take advantage of our experience in this area. I hope you will consider using Hong Kong for all your Renminbi services including banking, raising capital and trade settlement.
Ladies and gentlemen, last year, bilateral trade between Hong Kong and Australia reached AUS$ 7.6 billion. That represents a year-on-year increase of almost 5%. The value of our bilateral trade with Western Australia last year amounted to almost 23% of the total trade.
I hope I have provided some food for thought on ways to build business relations between us. By combining the unique strengths of our two economies we can produce a win-win situation for businesses in WA and in Hong Kong.
I thank the Chamber for giving me this great opportunity to talk to you today. I also look forward to many more vintage years of close friendship and strong trade links between us.
Thank you.
Ends/Monday, June 20, 2011
Issued at HKT 16:59
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