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Following is the speech by the Chief Executive, Mr Donald Tsang, at the lunch hosted by Export New Zealand, Employers and Manufacturers Association (EMA) and Hong Kong New Zealand Business Association (HKNZBA) in Auckland, Zealand, today (April 12):
Distinguished Guests, Friends, Ladies and gentlemen,
I am delighted to be here in New Zealand, home to a wonderfully diverse culture, some of the world's finest wine, and, among other things, the rugby world champions.
First of all, a heartfelt "thank you" to you all for your warm welcome and to Export New Zealand, Employers and Manufacturers Association (EMA) and Hong Kong New Zealand Business Association for hosting this luncheon.
I am very pleased to have this opportunity to meet with you all and talk about some of the latest developments in Hong Kong.
Our relationship with New Zealand is a long and fruitful one. It is based on our shared values of openness and fair play and on our mutual friendship and commitment to progress.
Similar to our friends here in Auckland, we Hong Kongers cherish our unique culture, which is a fascinating blend of East and West. We are also not afraid of rolling up our sleeves and getting down to the basics of sheer hard work.
When it is time to relax, fine New Zealand vintages or a game of rugby are high on the list. Just last month, sports fans had the thrill of watching the All Blacks reach the final of the world-famous Hong Kong Rugby Sevens. Although the All Blacks were pipped at the post by Fiji, it was a very exciting end to another wonderful Hong Kong Sevens weekend.
I mention this, not just because New Zealand are perennial crowd favourites in Hong Kong, but also because the rugby sevens is a good reflection of Hong Kong's business ethos.
Allow me to explain.
Compared to the more traditional 15-a-side game, sevens rugby is designed for open and fast-flowing action. Players have a little extra space to show their skills, pace and ingenuity. As for the Hong Kong Sevens tournament, it brings together teams from around the world to compete on a level playing field.
Naturally, some teams, including New Zealand are stronger, faster and more experienced than others on the rugby pitch. Nevertheless, every nation is able to exploit its specific talents and own style of play to compete.
It is a similar case for our open and competitive business community. Although Hong Kong is a relatively small place, size really doesn't matter. Companies of all sizes and from all sectors can make their presence felt. That¡¦s because we go the extra mile to ensure all companies compete on an equal footing.
In Hong Kong, there is no restriction on nationality of ownership or investment and we keep red tape to an absolute minimum.
Our externally-oriented and highly open economy has been ranked as the freest in the world for each of the past 18 years. That is according to both the US-based Heritage Foundation and the Fraser Institute in Canada.
This is important to us, not just because it is nice to be number one, but more important because it means we are on the right track in providing a highly competitive business environment.
We have free flows of capital, information and talent. Our common law legal system is underpinned by an independent judiciary, our civil service is clean and efficient and we have a steadfast commitment to the sense of fair play as a core value.
This gives businesses the freedom to invest and innovate as they wish. Naturally, we can't guarantee the success of a business venture, we leave that to the markets to decide, but we do provide all the necessary ingredients for enterprises to succeed.
This environment clearly suits the Kiwi entrepreneurial spirit.
Our bilateral trade last year grew to over NZ$1.2 billion (HK$8.2 billion). That is an 11 per cent increase year-on-year.
With an especially strong relationship between New Zealand and Hong Kong, I am sure that the flow of business will continue to grow. For one thing, New Zealand was the first place to sign a Free Trade Agreement (FTA) with Hong Kong. We call this the Closer Economic Partnership Agreement, or CEP for short.
The CEP was signed two years ago and came into force in January 2011. It is an extensive and high-quality agreement that complements New Zealand's FTA with Mainland China. While the CEP is not the sole reason for our growing trade links, it has undoubtedly opened up new doors for trade and investment between us. It also enhances Hong Kong's position as a springboard for New Zealand firms to reach markets in Mainland China.
I encourage you to explore opportunities under the CEP.
For most companies, Hong Kong's favourable tax system is our strongest drawcard. Low and simple taxes give companies more time, and of course money, to focus on what they do best, business!
Hong Kong's corporate tax rate is capped at 16.5 per cent and people pay no more than 15 per cent salaries tax. We don't impose capital gains tax or inheritance tax, and only income sourced in Hong Kong is taxed in Hong Kong.
In fact, almost 90 per cent of our companies don't need to pay any tax at all.
There is even zero duty on wine in Hong Kong, which is music to the ears of New Zealand's wine merchants.
Since eliminating duties on wine in 2008, the value of our wine imports from New Zealand has increased by 188 per cent. The value of wine imported from New Zealand last year reached US$10.7 million, a 25 per cent increase compared to 2010.
Our decision to eliminate wine duties was a significant step towards establishing Hong Kong as a premier wine trading and distribution centre with unparalleled links to markets in Mainland China.
Our close proximity to the Mainland and deep connections with markets across China have drawn investors to our city for many years. Despite the recent global financial crisis, there are no signs of this trend slowing down - in fact more companies are coming to our city. Around 7 000 Mainland and overseas firms have operations in Hong Kong. More than half of them run their regional operations out of our city.
To fully understand Hong Kong's potential as a premier gateway into and out of Mainland China, it is important to understand our recent history.
This year, we are celebrating the 15th anniversary of Hong Kong's reunification with the Mainland after more than a century as a British colony.
Since the establishment of the Hong Kong Special Administrative Region of China in 1997, Hong Kong has thrived under the principle of "One Country, Two Systems".
In a nutshell, "One Country, Two Systems" preserves all the unique characteristics that have spurred Hong Kong's development as a vibrant international city. At the same time, we have become far more integrated with our sovereign culturally, politically, financially and in all aspects of our development.
This provides the best of both worlds - what we call a convergence of the China advantage and the global advantage.
New Zealand firms can make good use of this win-win situation to expand their operations in Asia and reach new markets throughout our region. New Zealand entrepreneurs will find Hong Kong to be a familiar and reliable base, with a common law legal system which is similar to the system here in New Zealand. Both Chinese and English are official languages in Hong Kong, while English is the language of choice for our business community.
We also have a unique free trade pact that is helping to break down barriers to trade between Hong Kong and the Mainland. We call this the Closer Economic Partnership Arrangement, or CEPA. CEPA has been expanded and fine-tuned every year since its launch in 2004.
Under CEPA, all products of Hong Kong origin enjoy tariff-free entry to the Mainland market. Hong Kong companies also benefit from preferential access to the vast services markets in the Mainland.
CEPA currently covers 47 service sectors, including key sectors such as banking, tourism, legal services, medical, accounting, conventions and exhibitions, and transport and logistics services.
Important for New Zealand firms, CEPA rules are nationality neutral. In other words, overseas firms incorporated in Hong Kong can enjoy the full benefits of CEPA. In fact, almost half of the companies that have successfully applied for the Hong Kong Service Suppliers Certificate are overseas interests.
We estimate that the total value of tariff savings for trade in goods under CEPA amounted to US$426 million by the end of 2011.
Not only does CEPA reduce operational costs, it also sharpens the competitive edge for quality "Made in Hong Kong" products entering the Mainland. So this really is an initiative worth exploring for your companies.
Another dimension is Hong Kong's position as an international financial centre in the Asian time zone. Our stock market is the 6th largest bourse in the world and 2nd largest in Asia by market capitalisation.
We also have a proven track record as a capital-raising centre. For each of the past three years, the Hong Kong stock market has led the world in funds raised through Initial Public Offerings or IPOs. Last year alone, total IPO funds raised reached US$33 billion. Listing in Hong Kong is a reliable and effective way to attract wealthy investors in the Mainland and across Asia. And because Hong Kong is committed to upholding international standards, listed firms are able to raise the profile of their brands in our region.
An increasingly popular way for overseas firms to raise capital for operations in the Mainland is through Renminbi bonds. Hong Kong is the first and only place to issue offshore Renminbi bonds. These are sometimes called "dim sum" bonds, after a popular type of Hong Kong cuisine. Last year, there were 91 "dim sum" bond issues in Hong Kong. The total issuance value was almost 108 billion Renminbi (RMB107.9 billion) or over NZ$20 billion. I see strong potential for New Zealand companies to raise Renminbi capital in Hong Kong to fund operations in the Mainland.
In closing, allow me to turn to a topic that is close to the hearts of people in Auckland as well as Hong Kong. That topic is tourism, which is one of our four pillar industries alongside financial services, trade and logistics and professional services.
Last year, we welcomed over 42 million visitors to Hong Kong, which is about six times the size of our population. We welcome more Kiwi visitors to experience our culture and unique city living.
Although we cannot compete with your country's natural beauty and extraordinary wildlife, Hong Kong has a style all of its own.
We offer some of the most sought-after shopping and dining experiences in Asia and the party never seems to stop in our top entertainment districts, even after the Rugby Sevens has finished.
A lesser known fact is that 70 per cent of Hong Kong is green countryside with some magnificent secluded beaches and country parks that provide a respite from the hustle and bustle of the city centre.
The Government invests heavily in our tourism infrastructure. This includes a new cruise terminal. When operational in 2013, the terminal will be able to handle the world's largest cruise liners and enhance our city's reputation as a cruise destination.
So please do take this as an invitation to come and visit us in Hong Kong. We welcome you to come with family or friends or combine business with pleasure by attending one of our many annual trade fairs.
I should also mention that, while the Hong Kong Rugby Sevens is held at the end of March every year, our city is always open for business.
Thank you very much.
Ends/Thursday, April 12, 2012
Issued at HKT 11:23
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