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Following is the speech by the Financial Secretary, Mr John C Tsang, at the Marshall School of Business at the University of Southern California (USC) in Los Angeles today (November 8, Los Angeles time):
Distinguished guests, ladies and gentlemen,
Good morning.
It is a great honour for me to join you all here today.
I had the distinct pleasure of speaking at USC's Global Conference in Hong Kong last month.
On that occasion, I made reference to the USC Trojans. It was the eve of their game against the Golden Bears, and President (Max) Nikias assured me in no uncertain terms that evening that the Trojans would win. And they certainly did.
So today, it is great to be here in person and see for myself the spirit of Troy alive and well right here in the USC's Marshall School of Business. On that note, I should also mention that the Trojan Marching Band has performed at our Chinese New Year Parade on several occasions.
While these connections may seem a little light on the surface, they go to the heart of what's important in our globalised world - positive engagement, understanding and mutual respect.
I am pleased to have this opportunity to share my thoughts with you all today. I hope to deepen the understanding between us and add another building block to the relationship between the Marshall School of Business and my home city of Hong Kong.
I will give you a brief overview of the business environment in Hong Kong and the opportunities in our part of the world. Then I will do my best to field any questions that you may have.
Here in the US, as well as in Hong Kong and in our nation China, and, indeed, in towns and villages around the world, the way of doing business has been transformed in the past decade or two.
This transformation has quickened in recent years due to rapid advances in technology and the unstoppable march towards globalisation combined with the impact of the recent global financial crisis.
Although Hong Kong came through the worst of the economic turmoil of the past couple of years in pretty good shape with our economy growing at 7 per cent last year and 6.3 per cent in the first half of this year and unemployment remaining at 3.2 per cent, we are not totally out of the woods yet.
Our financial markets have been on a roller-coaster ride recently with uncertainty over the US recovery and the Euro Zone debt crisis. Latest indications are that our export growth in volume terms will drop as much as 10 per cent in September compared to a year ago. We face also the risk of an asset bubble forming and, like our neighbours, the pain of inflation as well.
The point is that we are all in this together. What happens here in the US affects markets in Hong Kong and around the world. This connectivity will become increasingly pronounced in months and years to come. We must all be prepared. And the best way to do that is to better understand the way of the business world, not just here in the world's largest economy, but around the globe.
President Obama acknowledged some of the challenges when he set up the US National Export Initiative, or NEI, in 2010. The NEI aims to double US exports within five years, with a focus on emerging markets in Asia and particularly Mainland China. It also cautions that cultural differences, bureaucratic differences and barriers to market access are potential stumbling blocks for US businesses venturing into Asia.
Of course, this is a two-way street. Linguistic, cultural and bureaucratic differences are equally troublesome for many Asian and Mainland Chinese companies seeking opportunities overseas.
Hong Kong has a distinct edge in this regard, and I believe we have an important role in helping both the US and emerging Asian economies meet their international trade and investment goals.
As a city in China but outside the Mainland, Hong Kong has grown up differently from the rest of our nation. Under the "One Country, Two Systems" principle for Hong Kong's reunification with Mainland China in 1997, Hong Kong enjoys the best of both worlds.
We have our own low and simple tax system. In Hong Kong profits tax is capped at 16.5 per cent and people pay no more than 15 per cent in salaries tax. There is no VAT, no GST, no capital gains tax and no inheritance tax. We even have zero duties on wine!
We maintain our own unique style of capitalism and way of life that has evolved over many decades. We have our own currency, the Hong Kong dollar, which has been pegged to the US dollar since 1983. We have our own financial system with free flow of capital, information, ideas and financial talent.
We also maintain our own legal system which is separate from the system in the Mainland. Hong Kong follows the common law system which is based on the English system and underpinned by an independent judiciary.
Perhaps most important of all, Hong Kong is a cultural mix of East and West. This provides a familiar environment for investors from the West entering unfamiliar territory in the East.
By aligning our rules and regulations to international standards and codes of best practice and maintaining a level playing field for business, Hong Kong has become the premier international gateway into and out of Mainland China. We are also a reliable and efficient platform to do business throughout Asia.
My Government, unlike many of our neighbours, does not pick winners. We leave that to the markets to decide. Instead, we do our best to provide support from the supply side to ensure that Hong Kong is one of the most competitive cities in the world from which to do business. The World Bank ranked Hong Kong second in the world again this year in its "Ease of Doing Business" report. Hong Kong has also been rated as the world's freest economy by the US-based Heritage Foundation for each of the past 17 years.
Today, almost 7,000 Mainland and overseas companies operate in Hong Kong. Some 840 US firms use Hong Kong as the base for their regional operations. Many of these firms have at least one eye on the vast markets in Mainland China.
Importantly, Hong Kong's development also has the full support of the Central Government in Beijing. The National 12th Five-Year Plan, which was adopted earlier this year, pledges to maintain Hong Kong's stability and prosperity under the "One Country, Two Systems" principle. It gives full support to Hong Kong's development as a trade and shipping centre and as China's global financial centre.
Today, Hong Kong is the focal point for the rapid liberalisation of the Mainland currency, the Renminbi. The Five-Year Plan supports Hong Kong's emergence as the offshore hub for Renminbi business. This includes Renminbi banking, which we launched in Hong Kong 2004; Renminbi bond issuance, which began in 2007; and being a centre for offshore trade settlement using Renminbi.
Ladies and gentlemen, I have set out some of Hong Kong's strengths as a free and open platform for trade and investment in our region. I have also mentioned some of the areas where our city will continue to refine and advance its position as the premier international gateway to Mainland China for trade and investment as well as for innovation, creativity and cultural interaction.
Of course, the best way to learn about the opportunities in our backyard is to come and visit our city, which many Marshall School of Business students and alumni have done.
I also encourage you to consider furthering your studies in Hong Kong. No fewer than three of our nine government-funded universities are ranked in the top 50 of the renowned QS World University Rankings 2010. The Hong Kong University of Science and Technology together with the Kellogg School of Management hosts the world's number one Executive MBA programme.
There are lots of possibilities for stronger links between Hong Kong and USC's Marshall School of Business. There is also great potential for co-operation between Hong Kong and the US in achieving our mutual economic and financial goals in times of prosperity as well as in times of uncertainty, like the present.
So thank you for your keen interest in Hong Kong and please do come and visit us soon.
And of course, "Fight On Trojans!"
Ends/Wednesday, November 9, 2011
Issued at HKT 12:19
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