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Following is the speech by the Financial Secretary, Mr John C Tsang, at a business luncheon in Warsaw on "Exploring Business Opportunities under the Belt and Road Initiative" today (September 23, Warsaw Time):
Mr Arendarski, ladies and gentlemen,
Good afternoon.
It is my great pleasure to be here in Warsaw today, which happens to be the first day of autumn. Yes, the September Equinox has arrived, I'm told, at 10.22 this morning. Happy autumn!
And what better place to celebrate the new season than right here, in Warsaw, the political and cultural capital of Poland. A city steeped in history's turbulence, Warsaw today teems with life. And music. So much music. From the outdoor Chopin concerts at the Royal Lazienki Park, to "Jazz at the Old Town", the Festival of Old Music, and Warsaw Autumn, an ode to new and contemporary music - and it so happens that all these wonderful happenings are taking place this week.
Unfortunately, my schedule doesn't seem to include sitting on the grass by the Chopin monument, or even taking in an evening concert. Rather, I am here, along with the high-powered business mission that I have brought from Hong Kong, intent on expanding our business and trade relations with Poland - for the benefit of everyone here today, of course. Money, somehow, makes its own music that is pleasant to our ears.
Speaking of which, Poland is the only member of the European Union to have survived the 2008 global economic crisis without seeing its economy shrivel or shrink. Rather, Poland's GDP doubled from 2003 to 2013, and rose 3.3 per cent last year, making it one of the EU's fastest-growing economies.
Bilateral trade between Hong Kong and Poland has shown impressive growth in recent years, I'm pleased to note. Our trade soared by more than 12 per cent a year, on average, between 2010 and 2014. Last year, total trade between us amounted to some US$1.4 billion (about HK$10.8 billion).
And I'm confident that trade and co-operation between us will continue to expand in the coming years. That's thanks, in part, to the ambitious concepts of the Silk Road Economic Belt and the 21st Century Maritime Silk Road, launched by President Xi Jinping of China in 2013. The linked initiatives put the 60-plus economies along the Belt-Road in the international spotlight as never before.
The Belt-Road was created to expand transcontinental connectivity, to promote economic, political and cultural co-operation from Asia through Africa and on to Europe. And I believe it has the potential to become the driving force of the world economy in this 21st century.
The widespread interest in the establishment of the Asian Infrastructure Investment Bank, the AIIB, underlines that belief. In good time, the AIIB will become the key financial institution supporting Belt-Road infrastructural development, and more.
Poland clearly recognises the immense business opportunities presented by the initiative. Your country was the only Central European country on the list of the AIIB's founding members. The region's largest economy, Poland has the potential to reap the massive benefits that this initiative would bring.
Certainly, you enjoy a unique location on the Belt-Road, with all freight-train routes connecting China and the European Union flowing through Poland. And the two cargo train routes now connecting Poland and Mainland China - Chengdu-Łódź and Suzhou-Warsaw - offer fast and safe transport options for business. The Silk Road will make such connections even more important as trade, construction and co-operation between Asia and Europe expand.
Allow me, for the next few minutes, to share with you some of my thoughts on how Hong Kong can support Polish business. How we can help you capitalise on the wealth of opportunities emerging from the Belt-Road.
Through the Belt-Road, we expect to see soaring investment in infrastructural facilities, deepening financial integration, expanding trade and the building of people-to-people bonds on a global scale.
Hong Kong can help make it happen, thanks to the unique advantages presented by our "one country, two systems" arrangement. Among many other things, the arrangement allows Hong Kong to maintain our own social and economic systems. For example, Hong Kong has its own currency which is different from the Mainland Renminbi and is fully convertible. And capital, from the Mainland as well as capital from all over the world, including Poland, flows freely in and out of Hong Kong on a fair and equitable basis.
Hong Kong is China's international financial centre and we are also one of the world's financial capitals. We have the experience, the expertise and the connections to serve as the fundraising and financial management hub for the Belt-Road.
Financing options offered in Hong Kong range from public offerings and loan syndication to private equity funds and the raising of funds through Islamic finance.
We run the world's seventh-largest stock market in terms of market capitalisation, and we rank second, globally, in equity funds raised through initial public offerings.
Hong Kong is also the world's largest offshore Renminbi business centre. Our Renminbi services range from cross-border trade settlement to bond issuance. As trade and other economic activities along the Belt-Road expand, so, too, will the demand for Renminbi trade settlement. And Hong Kong's Renminbi trade settlement system is well placed to respond to that demand. After all, we have been handling the lion's share of Renminbi trade since its beginnings in 2009.
Our Renminbi debt market has grown rapidly in recent years. It provides a reliable channel for companies issuing Renminbi bonds to meet project funding needs. In 2014, the issuance of Renminbi bonds in Hong Kong totalled about RMB200 billion, a year-on-year increase of 69 per cent.
The growth of Islamic financial services should be equally promising, given the large Muslim population living along the Belt-Road. This past year, Hong Kong issued two Shariah-compliant sukuk, demonstrating our capabilities in this specialised financial offering, as well as revealing the confidence that international investors have in Hong Kong's economic fundamentals.
Asset and risk-management services will also be needed once the Belt-Road projects start their engines. Hong Kong's wealth and asset-management business, I'm pleased to note, has soared in recent years. Indeed, Hong Kong is ideally positioned to act as a global centre for asset management, risk management and corporate treasury functions.
Hong Kong also boasts a wide variety of insurance services and derivative products. They offer sound reasons for Polish companies to manage their risks by setting up captive insurers in Hong Kong.
Our pool of world-class professionals is deep and talented, with expertise in finance, accounting, law, architecture, engineering management and more. They have the experience to lead consultancies, construction projects, and the operation and management of infrastructure projects under the Belt-Road.
Our legal professionals work with a world of business every day. They conduct due diligence, ensure contract enforcement and help resolve disputes, all done under the rule of law and our independent judiciary. That makes Hong Kong an ideal centre for resolving potential commercial disputes in business collaborations.
Logistics is also powering Hong Kong's future as an international business centre. Indeed, Hong Kong boasts the world's fourth busiest container port, providing some 350 services a week to more than 500 destinations worldwide.
About 700 shipping-related companies call Hong Kong home. They offer a wide range of services, from ship management, broking and chartering to finance, marine insurance, legal, arbitration, and other support services.
The Maritime Silk Road will create fresh demand for shipping services. With its many seaports on the Baltic coast, Poland is strategically set to become a hub connecting other inland destinations in Europe. Polish logistics companies will find it advantageous to establish a presence in Hong Kong, using our maritime services to tap into the Belt-Road markets.
In Hong Kong, air cargo is king. Hong Kong International Airport has been the busiest air cargo airport in the world for more than 15 years. Last year, it handled some 4.4 million tonnes of cargo, running about 1 100 flights a day.
From Hong Kong, you can reach all major Asian economies within four hours' flight time. Half the world's population is just five hours away. And we are planning for the future¡Vin the form of a third runway. It will increase our airport's handling capacity to some 100 million passengers and 9 million tonnes of cargo a year by 2030.
In all, Hong Kong is home to about 14 000 logistics companies. Most serve the trade between China and the world. All provide customised supply-chain solutions.
Hong Kong's free-port policy and our efficient customs clearance, rule of law, strong intellectual property protection and level business playing field provide formidable support for our logistics sector, regardless of individual nationalities.
Tourism, too, will rise in the world of the Belt-Road. And Hong Kong is ready for the future, expanding our cruise tourism market, promoting cruise itineraries in the region. This will lay a foundation for the development of long-haul sailing¡Vfrom Mainland China all the way to Europe.
Beyond our pillar industries - trading and logistics, financial services, professional services and tourism - we see opportunity as a regional training hub in upgrading the quality of human resources and developing talent for the emerging economies.
And I believe that new markets will open up for our technology and creative sectors, including the film and cultural industries, education and healthcare services as well as product testing and certification.
Take advantage, too, of Hong Kong's deep Asian ties. Consider, for example, CEPA, Hong Kong's free-trade agreement with Mainland China. CEPA provides preferential treatment to Hong Kong service providers, again regardless of nationality, as well as tariff-free treatment for products of Hong Kong origin. Working with Hong Kong, Polish companies can gain the same access to the markets of the Mainland - your ticket to the massive Chinese consumer market that is becoming more middle-class in their preferences and consumption behaviour.
We are also strengthening Hong Kong's trade and economic relations with our Asian neighbours, negotiating free-trade agreements and Investment Promotion and Protection Agreements. These serve to enhance the confidence of companies looking to invest in Asia and Hong Kong. They also help protect business people in Hong Kong making investments in the region.
In short, Hong Kong has what you need in a strategic partner for the 21st century. We welcome Polish investment and talent to come to Hong Kong, where you can take advantage of our low taxes, our world-class business environment and our reassuring legal framework.
Ladies and gentlemen, the Belt-Road will be built on collaboration¡Von deepening the bonds between nations, economies and cultures. On the rewarding future it can offer the companies, and the people, of Hong Kong and Poland. All of us. Every one of us.
My thanks to the Polish Chamber of Commerce, the Hong Kong Trade Development Council and the Hong Kong Economic and Trade Office in Berlin for hosting this luncheon, for bringing us together today. I look forward to welcoming our Polish friends here to Hong Kong.
Thank you.
Ends/Wednesday, September 23, 2015
Issued at HKT 20:36
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