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CE's speech at Scottish Development International luncheon in Edinburgh (English only) (with photos/video)
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     Following is the speech by the Chief Executive, Mr Donald Tsang, at the luncheon with the Scotland business community hosted by Scottish Development International in Edinburgh today (September 15, Edinburgh time):

Ms Anne MacColl (Chief Executive of Scottish Development International), distinguished guests, ladies and gentlemen,

     It is my great pleasure to be here in bonny Scotland and this spectacular city of Edinburgh.

     First of all, a big thanks to Anne and her colleagues at Scottish Development International for organising this luncheon.

     When I was told that the venue for this event would be a library, I wasn't quite sure what to expect. However, I do know that Scotland is full of wonderful surprises and the Signet Library proves the point.

     Let me begin with an observation from the 19th century historian James Anthony Froude. He once said, and I quote, "No people so few in number have scored so deep a mark in the world's history as the Scots have done." End quote.

     You need look no further than Hong Kong to see the truth of this statement. There has been Scottish influence in Hong Kong since the 1840s, and you will find Scottish connections all around our city.

     We have an Edinburgh Place right in the heart of town. You can go sightseeing in Aberdeen. Or you can walk along the scenic MacLehose Trail, which is named after one of a number of former Hong Kong governors from Scotland. And whenever there is an important celebration in Hong Kong, you are likely to find the Hong Kong Police Pipe Band in their splendid Mackintosh Tartan.

     Even our economic thinking is aligned with that of Adam Smith, who was born not far from here in Kirkcaldy.

     As one of the earliest influential economists, Adam Smith was a great advocate of free trade and open markets. This philosophy has served Hong Kong well over the years.

     In fact, Hong Kong has consistently been rated the world's freest economy. We have been ranked Number One for each of the past 17 years by both the Fraser Institute in Canada and the US-based Heritage Foundation.

     This ranking is based on, among other things, our free flows of capital, information and talent; our level playing field for business; and our zero tolerance of corruption.

     We also have a low and simple tax regime, which is a great attraction to business. Salaries tax is capped at 15 per cent and profits tax is no more than 16.5 per cent. In Hong Kong, there is no capital gains tax, no death duties, no VAT or GST, and no tax on foreign-sourced income.

     All this helps to promote competition and business activity.

     Since our reunification with China in 1997, Hong Kong has continued to evolve as the premier international gateway to China. Herein lies great potential for stronger business links between Scotland and Hong Kong.

     Amid the recent economic turmoil, Asia, and particularly China, has maintained steady growth. In Hong Kong, our GDP expanded 6.3 per cent in the first half of this year compared to the same period last year.

     Last year, Hong Kong was the third largest recipient of foreign direct investment in the world according to the "World Investment Report 2011" released by the United Nations Conference on Trade and Development. We were also ranked second in Asia, behind only Mainland China.

     With China's rapid development over the past three decades, some of you may ask why bother with Hong Kong at all? Wouldn't it be better just to go straight into the Mainland market?

     The short answer is that Hong Kong is fully geared up to provide overseas firms with their best chance of success in China and the wider Asian region.

     In Hong Kong we combine our deep local knowledge as a major city in China with our global experience as a truly international city.

     Companies rely on our world-class services including banking and accounting services, legal services, logistics, advertising and hospitality. We have advanced telecommunications that connect our city to the rest of the world. We practise common law familiar to global businessmen. And our judiciary is wholly independent.

     Our physical infrastructure is renowned for being among the most efficient in the world. Roads, railway lines and bridges connect Hong Kong to the Mainland of China.

     Hong Kong is also home to one of the busiest and most efficient seaports anywhere.

     Our international airport is consistently ranked among the best and busiest in the world for both passengers and airfreight. Flights from Hong Kong connect to over 150 destinations worldwide, including more than 40 cities in Mainland China.

     Speed, efficiency and reliability are the key ingredients for Hong Kong as a trade and business partner for Scottish firms.

     Of course, our location in the heart of one of the most dynamic regions on the planet is also a great advantage.

     All of this has attracted more than 6,500 companies from Mainland China, Taiwan and around the world to establish a base in Hong Kong.

     For some 3,600 of these firms, Hong Kong serves as their regional headquarters or offices.

     We welcome more Scottish companies to come to Hong Kong and to enjoy the benefits of being based in a major city in China, but a city with its own distinct systems and way of life.

     We take our role as a gateway to China very seriously. The Government constantly strives to break down barriers to trade, investment and services between Hong Kong and the Mainland.

     Our greatest asset is a unique free trade pact called the Mainland and Hong Kong Closer Economic Partnership Arrangement - what we call CEPA. You can think of this as a short cut to Mainland markets and a way to get ahead of the competition. And because CEPA rules are nationality-neutral, Scottish companies incorporated in Hong Kong can enjoy the same benefits as local firms.

     These benefits include early access to Mainland markets for goods, services and investment; tariff-free entry to the Mainland for a wide range of products, and enhanced access to 42 service areas throughout China.

     Ladies and gentlemen, for many generations, Scots from all walks of life have thrived and prospered in Hong Kong. They have contributed to Hong Kong's development and fully embraced our city's cultural vibrancy.

     Given the enormous opportunities brought about by the global financial shift from West to East, the rapid opening up and growth of our nation China, and the ongoing economic rise of Asia, I am confident that relations between Hong Kong and Scotland will scale new heights.

Ends/Thursday, September 15, 2011
Issued at HKT 22:24

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