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Following is the speech by the Director-General of the Hong Kong Economic and Trade Office, London, Mrs Agnes Allcock, at the VTB Capital Investment Forum in Moscow, Russia today (October 6, Moscow time):
I am delighted to be invited to speak at this prestigious forum, alongside so many economic and financial heavyweights and experts.
Today, I would like to tell you the Hong Kong story, share with you some secrets of the success of that story, and invite you to make full use of Hong Kong as the gateway to China and Asia.
The Hong Kong Story
First, the Hong Kong story. Hong Kong has been consistently rated as the world's freest economy by independent institutions in the past three decades.
Hong Kong is a small territory of just over 1 000 square kilometres, and seven million people. It has been a Special Administrative Region of China since 1997. This status, and Hong Kong's location on the coast of southern China, gives its unique advantage as a gateway to China and Asia.
It emerged quickly from the last financial tsunami and has recorded a real GDP growth of 7% last year.
Its unemployment rate is 3.2%, amongst the lowest in the world. The GDP per head is US$32,000.
The Hong Kong Government has a budget surplus, I repeat, a surplus, of 4.3% of the GDP last year, envy of many governments.
Hong Kong is closing the gap quickly with London and New York as the top international financial centre.
Last year, Hong Kong was the world's third largest recipient of Foreign Direct Investment (FDI) flows, and the second largest recipient of FDI in Asia, second only to China.
For the past two years, Hong Kong was the most active centre for Initial Public Offers (IPO). In 2010, funds raised through IPO in Hong Kong reached a record high of US$58 billion.
Since we abolished wine duties in 2008, Hong Kong has become the world's largest wine auction hub, and is quickly establishing herself as the world's leading art auction hub as well.
I have often been asked, "How does a small place like Hong Kong achieve all these?"
Secrets of our success
Let me share with you some, but not all, of our secrets.
Hong Kong is an externally-oriented economy. We need a very robust, tried and tested formula to ensure we are well equipped to face the volatile world.
We are fortunate to have found a unique formula: the "One Country, Two Systems" principle. This principle is entrenched in our mini constitution, the Basic Law, when sovereignty of Hong Kong was reverted back to China in 1997.
Under this principle, Hong Kong is able to maintain those core values which have stood the test of time and have seen Hong Kong through various crises in the past.
Core values such as the rule of law, an independent judiciary, a clean and efficient government, a level playing field for business, strong fiscal discipline, and a commitment to free trade. Hong Kong enjoys a high degree of autonomy and continues to consolidate on her strengths as an international trade and financial centre and utilise fully her global connection.
At the same time, we are now part of China, the world's second largest economy. Not only do we benefit from our extensive network in Mainland China based on years of trading and investing there, we also enjoy new preferential arrangements with the Central Government. For example, we have entered into a free trade pact with Mainland China to provide greater access to its huge market for Hong Kong's goods and services. This arrangement is called the Closer Economic Partnership Arrangement (CEPA). The beauty of CEPA is that foreign companies are able to enjoy the preferential treatment so long as they are incorporated as a Hong Kong company or partner with one, after satisfying some basic requirements.
Perhaps the most significant milestone in our relations with Mainland China is that, in recent years, China has been using Hong Kong as a testing ground to internationalise the Chinese currency, the Renminbi (RMB). Hong Kong is now the platform for clearing RMB for 180 banks. These include branches of overseas banks as well as Mainland banks. This RMB payment and settlement network covers over 30 countries. This year, the total value of China trade settled in Hong Kong is likely to exceed RMB1.5 trillion.
Hong Kong also offers a wide range of RMB-related products to both corporate and personal customers.
Hong Kong is, no doubt, China's most important offshore RMB centre. China places great confidence in Hong Kong because she understands the advantages that Hong Kong has to offer as a truly global financial centre. In Hong Kong, we have sound and transparent regulations, a freely convertible currency, superb real-time, multi-currency settlement infrastructure, low and simple taxes, a fair and open legal system, free flow of information and capital, and a critical mass of world-class talent in finance, equities, banking, insurance and corporate law.
It is not difficult to see why Hong Kong prosper - it is the only place in the world where the China advantage and global advantage converge in one single city.
Take advantage of Hong Kong's role as the gateway to China and Asia
Hong Kong is the gateway for foreign businesses to enter China and Asia, and also the platform for Mainland Chinese businesses and capital to go global.
May I urge you, seasoned businessmen and investors in Russia, to come to Hong Kong and see for yourselves the opportunities which we have to offer.
Get listed in our Stock Exchange. Follow the footsteps of your fellow businessmen in UC RUSAL and IRC Ltd. These two Russian companies were listed in Hong Kong last year. Like them, you will soon find out that there is no shortage of liquidity in the market there. And what's more, you get more attractive valuations, direct access to investors in Asia, and free advertisement of your brand to half of the world's population.
Use Hong Kong's RMB platform to settle your business deals with Chinese companies, in order to save significant transaction costs. In the first seven months of this year alone, the Hong Kong banking system handled RMB953 billion cross border trade settlement.
Issue bonds in RMB. VTB Capital S.A. has done it. It issued bonds worth one billion RMB last year, along with other multinationals such as McDonald and the Asian Development Bank. The RMB bond market in Hong Kong is developing rapidly. In the first half of this year, bond issuance exceeded RMB42 billion.
Use CEPA to gain preferential entry into the Mainland Chinese markets for your goods and services.
Come and set up a presence in Hong Kong and immediately get connected with the hundreds of Chinese businesses that are already in Hong Kong and are eager to do business with Russia.
Take advantage of our world class asset management services. There are abundant investment opportunities in Asia. Hong Kong's premier asset management industry can help you capture the opportunities presented by the shift of the international financial gravity from the West to the East.
Conclusion
Ladies and gentlemen, these are all good reasons to make use of Hong Kong as your gateway to China and Asia.
The bilateral relations between Russia and Hong Kong have reached new heights after the visit to Hong Kong by President Medvedev in April this year.
And it is now easier than ever to fly between the two places. There is no need for tourist visa anymore and there are 13 direct flights from Moscow to Hong Kong per week.
The organiser of this forum, VTB Capital, will open a new office in Hong Kong in November this year, a good example of what I have been telling you this afternoon.
In January next year, a high-level Asian Financial Forum will be held in Hong Kong. Hong Kong warmly welcomes you all to that forum. We look forward to seeing many of you there.
Spasiba!
Ends/Friday, October 7, 2011
Issued at HKT 01:02
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