************************************************************
Following is the speech by the Chief Secretary for Administration, Mrs Carrie Lam, at a business luncheon in Bangkok co-organised by the Hong Kong Trade Development Council and the Hong Kong Economic and Trade Office in Singapore today (September 5):
Distinguished guests, ladies and gentlemen,
Good afternoon.
It is indeed my great pleasure to be here in Thailand. I would like to thank the Hong Kong Trade Development Council and our Economic and Trade Office in this region for co-hosting this luncheon event.
We had the privilege of hosting Prime Minister Yingluck (Shinawatra) in Hong Kong in February this year. Her visit was a very positive sign of the joint commitment from our two governments to promote and enhance the strong links between Thailand and Hong Kong. Our connections have become much stronger and deeper over many decades of engagement. Both sides are keen for this trend to continue.
During her stay in Hong Kong, Prime Minister Yingluck joined our Chief Executive, Mr C Y Leung, to witness the signing of an important new bilateral accord, called the Cooperation Arrangement on Strengthening Trade and Economic Relations between Hong Kong and Thailand. I said that this is a new additional bilateral arrangement because we already signed with Thailand, in 2005, two very important agreements. One is on investment promotion and protection and the other is on comprehensive agreement for the avoidance of double taxation, both of which are very important for our business people.
This Cooperation Arrangement targets many of the key areas of interest between us. Areas included, such as trade in goods and services, investment, trade-related rules and regulations, collaboration of small and medium enterprises (SMEs) - I emphasise small and medium enterprises because we are very keen to work with SMEs in Thailand in the same way that Hong Kong's business sector is actually predominated by SMEs. Other areas include logistics and transport, tourism, information and communications technology, R&D (research and development), human resource development and capacity building, intellectual property rights and, last but not the least, the development of our creative industries, as I was told that Thai designers are very, very good in this particular area. We look forward to strengthening our ties in all these areas.
Hong Kong is keen to deepen our involvement in the economic development of Southeast Asia, in particular the Association of Southeast Asian Nations, ASEAN, of which Thailand is an important member. Indeed, one of the purposes of my trip to Thailand this time is to seek the Thai government's support for the ASEAN-Hong Kong free trade agreement (FTA). Thailand together with the other nine ASEAN Members States have recently agreed to negotiate a bilateral FTA with Hong Kong. The first preparatory meeting has already taken place and formal negotiations are expected to commence in early 2014. The ASEAN-Hong Kong FTA will be among our top priorities in promoting the economic development of Hong Kong, and I wish to thank the Thai government for its support in this regard.
So what does Hong Kong bring to the ASEAN table?
I believe that Hong Kong has a great deal to offer the region as the ASEAN Economic Community moves towards becoming a reality in the next few years. The ASEAN bloc is already Hong Kong's second largest partner in terms of goods trade and fourth largest partner in terms of trade in services. We expect the ASEAN-Hong Kong FTA to produce a win-win result for both sides.
Hong Kong companies can be a trusted partner of Thai businessmen in exploring and connecting to the vast Mainland China market. As a premier international financial and business centre, Hong Kong has been and will continue to play the important role of an effective gateway.
Hong Kong has been a staunch supporter of free trade. Nobel Prize-winning economist Milton Friedman once said, "If you want to see capitalism in action, go to Hong Kong", describing Hong Kong as "the best example of a free market economy". And it is important to share with you that these virtues of a free market economy and capitalism remain exactly the same after 1997's reunification with the Mainland of China under the Basic Law. Hong Kong has been occupying the top place in Heritage Foundation's Index of Economic Freedom for 19 consecutive years. We have been maintaining our role as a facilitator by reducing red tape, ensuring a level playing field and upholding the rule of law, while leaving businessmen to do what they are best in.
We create an environment that is conducive to business operation. In addition to a low and simple tax system, we also have an efficient and robust regulatory environment, making it easy and fast for investors to set up a business in Hong Kong. Hong Kong, as you know, is a duty-free port, and is a place that allows free flow of capital and information, with our legal system underpinned by an independent Judiciary. These are the fundamentals that uphold Hong Kong's position as an international business and financial centre.
Furthermore, the Hong Kong and Thai governments, as I mentioned earlier, entered into a comprehensive avoidance of double taxation agreement (CDTA) back in 2005, making it one of the earliest CDTAs between Hong Kong and a foreign state.
Thai companies setting up in Hong Kong will be able to enjoy all these advantages to establish a strong foothold at the doorsteps of Mainland China before expanding further.
A presence in Hong Kong means that Thai entrepreneurs can showcase their goods and services, not only to the 7 million Hong Kong residents, but also to our tens of millions of visitors each year. Last year alone we received 48 million visitors from around the world, including almost 35 million visitors from the Mainland of China. Top of the to-do list for many of our visitors is to go shopping and dining. This represents a great opportunity for Thai companies and Thai restaurants to introduce themselves to a wide audience in Hong Kong and to build their brand and cuisine identity, especially amongst Chinese consumers.
This explains why over 7,200 companies from Mainland China and overseas have established operations in Hong Kong, with more than half of them actually setting up their regional headquarters and regional offices in our city.
Hong Kong has been contributing to, and at the same time benefiting from, the economic growth of China in the past few decades. Hong Kong has used its free trade experience and international connectivity to support the Mainland's opening up to the world. In addition to being the largest investor in the Mainland, Hong Kong has also taken up a new role in recent years to help Chinese companies and brands to "go global" through our sophisticated service industries in key areas of finance, insurance, accounting, legal services and much more.
The economic integration between Hong Kong and our motherland was further enhanced by the Mainland and Hong Kong Closer Economic Partnership Arrangement - in short, CEPA - which was launched in 2003 with 10 supplementary agreements signed afterwards. The latest one was actually signed last week. Under CEPA, all goods made in Hong Kong enjoy tariff-free access to the Mainland, while Hong Kong incorporated firms enjoy preferential treatment in accessing 48 service areas in the Mainland. Thai companies establishing themselves in Hong Kong will be able to benefit from CEPA on exactly the same terms because CEPA is nationality blind. So as long as some basic criteria are satisfied, there is absolutely no distinction between the place of origin of that particular company.
The current term of the Hong Kong SAR Government put huge emphasis in strengthening the economic and trade relations with the Mainland by enhancing government-to-government co-operation and our economic partnership with provinces and municipalities on all fronts. For this, we are strengthening our Economic and Trade Offices (ETOs) in the Mainland and, in addition to offices in Beijing, Chengdu, Shanghai and Guangzhou, will open a new ETO in Wuhan, Hubei Province, plus liaison points in other cities.
In addition to CEPA, we are working to achieve full liberalisation in services trade with Guangdong Province, our next-door neighbour, by next year. We are also working with the Central People's Government to extend the pilot measures initiative beyond Guangdong Province to include the entire Pan-Pearl River Delta region, which accounts for one-third of our country's population and GDP.
In addition to economic integration, the connectivity between Hong Kong and Mainland China will also be greatly enhanced as a result of three large-scale cross-boundary infrastructure projects that are currently under construction. One is the Hong Kong-Zhuhai-Macao Bridge which is, in fact, a network of bridges and tunnels spanning almost 50 kilometres and connecting Hong Kong to key cities in the western part of the Pearl River Delta region. Upon completion, travelling time by car from Hong Kong to Macao or Hong Kong to Zhuhai will be a mere 45 minutes. The second mega-project is a 26-kilometre Express Rail Link that will connect Hong Kong to Shenzhen and Guangzhou and from there plug into the 16,000-kilometre high-speed rail network in Mainland China. Upon its completion, it will take passengers only just about 20 minutes to reach Shenzhen. The third is a new boundary control point in the eastern part of Hong Kong and Shenzhen called the Liantang/Heung Yuen Wai control point. This is a new control point to serve an increasing number of cross-boundary travellers, totalling some 600,000 every day at present. A presence in Hong Kong, therefore, will mean that you are just a stone's throw away from a huge consumer market.
A free trade agreement between Hong Kong and ASEAN will facilitate Thai companies to make use of all these advantages that I have just mentioned to you to reach and flourish in the Mainland market. At the same time, it also facilitates Hong Kong businessmen to invest in Thailand and other parts of ASEAN.
Since the implementation of the Investment Promotion and Protection Agreement between Thailand and Hong Kong in 2006, Hong Kong's Foreign Direct Investment outflow to Thailand increased by almost 60 per cent, from US$334 million in 2005 to US$527 million in 2011.
We see good opportunities for closer co-operation in opening up the Greater Mekong Sub-region, which is an area of some 2.6 million square kilometres comprising Thailand, Laos, Cambodia, Vietnam and Myanmar as well as Yunnan Province and the Guangxi Zhuang Autonomous Region in the Mainland of China. Just three months ago, my colleague, the Financial Secretary, visited Myanmar and Cambodia with a business delegation to strengthen contacts with these two emerging economies and to highlight opportunities in this region for Hong Kong investors.
Through Hong Kong's role in the opening up of the Pearl River Delta region, our investors have learned a great deal about the challenges and opportunities of unlocking the potential of new markets. They have become very eager and knowledgeable participants in related ventures, not least in providing the necessary hardware and software.
The massive infrastructure programme announced by your government last October also presents huge opportunities for Hong Kong business people. In achieving its infrastructure goals, Thailand can tap into Hong Kong's experience in rolling out the Government's 2 trillion Baht, or US$90 billion, infrastructure scheme, which includes high-speed railways, bridges and roads, as well as upgrading ports and airports.
My final point today is about Hong Kong's role in the financial connectivity of our region. Here, our city has a dual responsibility both as an international financial centre in Asia and as China's global financial hub.
In particular, Hong Kong serves as a testing laboratory and launch pad for the internationalisation of the Mainland currency, that is the Renminbi.
China's currency liberalisation is moving at full pace with more companies and financial institutions around the world getting involved. As an international financial centre, we are working with our counterparts in Europe, the United States, Australia and elsewhere to promote the wider use of Renminbi overseas. This involves building up a large pool of offshore Renminbi capital, introducing new Renminbi-denominated products to the market and promoting the Renminbi as an effective trade settlement currency.
Thai companies can use Hong Kong's Renminbi experience to settle trade with their partners in Mainland China using Renminbi instead of a third currency. They can also issue Renminbi-denominated bonds in Hong Kong to raise capital for their operations in China. And Thai financial institutions can play a larger part in Hong Kong's Renminbi clearing platform and offer a broad range of Renminbi products and services to their customers.
So the trends are clear. In the first half of this year, there were 66 Renminbi bond issuances in Hong Kong compared to 100 for the whole of last year. Also, in the first five months of this year, the value of offshore Renminbi trade settlement handled by banks in Hong Kong exceeded RMB1.4 trillion, accounting for 84 per cent of total offshore Renminbi trade settlement.
With Mainland China's growing influence on the world economy, offshore Renminbi business is set to become increasingly important to regional and international markets, with Hong Kong taking centre stage.
So, ladies and gentlemen, there are indeed many promising areas for our stronger bilateral ties. As a free and open economy, Hong Kong looks forward to playing a full role in the integration of our region. Many of our strengths I have mentioned today are made possible by the "One Country, Two Systems" formula for Hong Kong's return to China in 1997.
We also enjoy a strategic location, with less than three hours' flying time from Bangkok, which is just one of the reasons that so many Hong Kong people love to spend their holidays here in Thailand, and vice versa for Thai visitors to come to Hong Kong.
Last year, roughly half a million people travelled in each direction between Hong Kong and Thailand. All this activity provides a welcome boost for our shops, hotels and restaurants. It has also generated a significant increase in travel and transport services trade between Hong Kong and Thailand.
One development area for Hong Kong's tourism industry is the cruise sector. Just three months ago, our brand new Kai Tak Cruise Terminal was opened for business. As some of you may know, this cruise terminal was actually built on the runway of the old Kai Tak Airport. Of course, cruise ships have been calling at Hong Kong for many years, but this terminal, upon full operation, is capable of handling two largest cruise liners at the same time, right in the heart of the city.
We look forward to developing the cruise sector and to welcoming more businesses and leisure visitors from Thailand to our city. You could come on a cruise or you could catch one of the over 200 flights that operate between Thailand and Hong Kong every week. So please do come and pay us a visit in Hong Kong soon. You will be most welcome in Asia's world city in the same way that in over the last 24 hours I have been very much welcomed by friends and officials I met in Bangkok, and I look forward to seeing more of you more often in the days ahead.
Thank you very much.
Ends/Thursday, September 5, 2013
Issued at HKT 23:43
NNNN
