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Following is the speech by the Financial Secretary, Mr John C Tsang, at the Opening Session of the "Think Asia, Think Hong Kong" symposium in Milan today (October 30, Milan time):
Thank you very much, Jack, distinguished guests, ladies and gentlemen.
Good morning.
It is indeed my great pleasure for me to be here in Milan, fashion capital of the world. That said, I confess to being a little hesitant about what to wear today. In the end, I decided on what we call "fashion diplomacy" and put on a made-in-Hong Kong business suit.
I am sure you are all aware that pup tents and overnight camping have become part of Hong Kong city life at the moment. We are working hard, I assure you, and with a great deal of patience to bridge our differences with the protesters in finding a way forward. That is why our Chief Executive is unable to join you today. He sends his apologies, and he has asked me to underline Hong Kong's importance as Asia's business city.
For that, my thanks to the Hong Kong Trade Development Council - for organising its signature trade promotion event here in the business heart of Italy. This gathering is, I am told, the largest Hong Kong promotion ever held in this city.
Hong Kong/Italy Bilateral Relations
With me today is a delegation of nearly 100 high-powered business people from Hong Kong and the Mainland. I hope you would find an opportunity to speak with them on areas of interest to you and to your business. We are here for good reasons. Here, because Italy has long been a valued trading partner. Our ties are deep and our ties are longstanding. Over the years, we have come to know each other, to trust and understand each other. And that, in any language, translates into attractive opportunities for business on both sides.
The numbers bear that out. Italy is our fourth-largest trading partner in the European Union. Over the past five years, merchandise trade between us has grown by more than 7 per cent per year, reaching nearly 7.3 billion Euros in 2013.
The vibrant Italian business community in Hong Kong has played a significant role in our economic development. More than 150 Italian companies have a presence in Hong Kong. Italian companies are well represented in Hong Kong. They range from leading international companies to SMEs and start-ups of all kinds.
Italian restaurants and food shops are particularly visible on the streets of Hong Kong, and in the malls. And nothing goes better with fresh pasta or crossiants than Italian wine. Indeed, last year Hong Kong imported 3.1 million litres of Italian wine. That accounted for more than 6 per cent of all our wine imports. And the opportunities for boosting those numbers are excellent, since I abolished, once and for all, all wine duties in 2008. Since then, Hong kong has emerged as the region's hub for wine-trading as well as for wine distribution.
So if Hong Kong is the city where West meets East, it does so with a decidedly Italian flavour.
Growing Opportunities in Asia
The growing Italian presence in Hong Kong reflects the business promise of Asia, particularly the business potential of the Mainland China and the emerging ASEAN economies. It also underlines Hong Kong's role as the natural springboard to these buoyant markets. Consider, for example, your trade with Mainland China. Last year, it came in at US$5.1 billion. Of that total, 11.5 per cent was routed through Hong Kong.
Today's symposium was created to help more Italian companies capitalise on Asian business opportunities through Hong Kong. For me, on my first official visit to Italy, this is an opportune moment to summarise the Hong Kong advantage for you, and to explain to you in detail what we can do for you and for your business.
Hong Kong - Your Asian Partner
Hong Kong has long been the global business centre of Asia, the city where talent and capital come together.
Consider our prime location and sophisticated infrastructure. We are strategically located at the heart of Asia - at the doorstep of Mainland China and the ASEAN region. Half the world's population can be reached within five hours' flight time of Hong Kong. If you don't have an atlas handy right now, that covers all of China, along with Japan, Korea, most of the ASEAN countries and even eastern Russia. Every day, about 800 flights connect Hong Kong and these regional destinations, with hourly services to a dozen Asian destinations.
It should not surprise you that some 7 500 overseas and Mainland Chinese companies have a presence in Hong Kong. More than half of them are regional headquarters and regional offices.
We are geographically, we are culturally and economically connected to the Mainland, the world's fastest-growing economy, with a rapidly expanding consumer market. Hong Kong business people are the biggest foreign investors in every province of the Mainland. We know the Chinese market better than anybody else in the world.
We are also a key player in the emerging ASEAN economies, home to some 600 million people, and a young and ambitious workforce together with a growing middle class. In Hong Kong, you can always find ready partners, knowledgeable professionals and valuable advisers to help expand your business into the Mainland and Southeast Asia.
At the same time, Hong Kong is an international business and financial services centre, blessed with fundamental strengths familiar to many Italian business people. We make it easy for you to explore the Asian region's lucrative business opportunities.
The Hong Kong way is your way. Ours is a system based on the free flow of news and information, based on the free flow of people and capital. In short, we bring to the world, to Italy, both global standards and unlimited Asian opportunities.
We, in Hong Kong, follow the common law legal system, which is fearlessly guarded by our vocal and unfettered media. Judicial independence is guaranteed by the Basic Law, which is our constitution. We even invite senior judges of other common law jurisdictions to sit on our Court of Final Appeal in making an ultimate judgment on cases. And we embrace the internationally recognised codes of practice, in business and commerce, familiar to all of you.
Our government is clean and efficient. We do not tolerate corruption. In a latest annual survey, only 1.2 per cent of respondents said they had experienced some form of corruption in the past year. This proportion is low, even among advanced economies.
We also guarantee a level playing field for all companies. Big or small, local or international, they are all treated equally. Foreign firms, like their local counterparts, can enjoy the same privileges under our bilateral trade agreements. That includes CEPA, our unique free trade agreement with the Mainland. CEPA offers preferential treatment in accessing a wide array of service sectors across the country. I encourage Italian companies to look to CEPA and its advantages in exploring Mainland markets.
Capital flows freely in Hong Kong. And that has helped make us one of the world's leading financial centres, ranked currently third behind New York and London in the latest Global Financial Centres Index.
We are the world's premier offshore Renminbi centre. From personal banking services and bond issuances to trade settlement and financing, and the marketing of innovative investment products, Hong Kong plays a critical role in the Renminbi's process of internationalisation.
Hong Kong is a major asset management centre as well. Assets managed from Hong Kong amounted to more than US$2 trillion at the end of last year, which is an increase of 27 per cent over the 2012 total. Whether you are an experienced fund manager or looking to enhance your assets, Hong Kong is where you want to turn to.
Hong Kong is also the window on the world for Chinese consumers and a lifestyle trendsetter for the Mainland and Southeast Asian consumers. Last year, more than 54 million people visited Hong Kong. That is more than seven times our total population. Over 40 million of them came from the Mainland, with about 9 million visiting from the rest of Asia.
Many of them came to Hong Kong for one, and just one, compelling reason: to shop, to buy brand-name products from all over the world, and to imitate the trends set in Hong Kong. Italian brands are particularly visible, and in sectors ranging from luxury goods to food and wine.
These advantages, together with our central location, our sophisticated transport networks and highly efficient customs procedures, have helped make Hong Kong Asia's logistics hub. This is particularly true in regional distribution and inventory management for high-value goods. Brands like LV, Burberry, Tiffany, A&F, Philips, Canon, Timberland and Schneider Electric have all set up regional bases in Hong Kong to enable just-in-time delivery throughout the Asian region.
As I mentioned earlier, you know the Hong Kong way. With, perhaps, one exception. We have low taxes and a simple tax system, which is, I am rather embarrassed to say, not quite the case here. Our maximum salaries tax rate is 15 per cent - one-five - and the corporate profits tax is a flat 16.5 per cent. We have no VAT, no GST, no capital gains tax, no tax on dividends. And, of course, no tax on wine. That helps keep the compliance and enforcement costs low, and I have been able to return a budget surplus every year since I became Financial Secretary in 2007. It also encourages productivity, innovation, labour participation and, of course, business co-operation.
Closing
So, ladies and gentlemen, few places in the world are blessed with the advantages Hong Kong can bring to international business. To your business.
This morning's symposium, and the full slate of seminars this afternoon, will tell you more. I hope the useful information that you will receive will help you find your way to Hong Kong and to your business future.
Thank you very much and have a great day.
Ends/Thursday, October 30, 2014
Issued at HKT 19:25
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