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Following is the speech by the Financial Secretary, Mr John C Tsang, at the high-level business luncheon co-organised by the Hong Kong Economic and Trade Office in Berlin and the Hong Kong Trade Development Council in Dusseldorf, Germany, today (September 25, Dusseldorf time):
Consul General Feng, distinguished guests, ladies and gentlemen,
Good afternoon.
It is my great pleasure to be here with you all today in amazing Dusseldorf. I arrived here yesterday morning, thrilled to find myself in one of Europe's most dynamic and delightful cities. I've read, of course, that your city is a city steeped in history, in music, literature, art and - no less alluring - the art of life. I read of living the life along your boutique-lined boulevards, and in the parks, restaurants, clubs and beer halls of this grand city on the storied banks of the River Rhine.
Yes, I've done my reading. Noted, too, that Dusseldorf is one of the three German cities that are ranked in the top 10, out of more than 200 global cities, in this year's Mercer Quality of Living rankings. And, in between my wall-to-wall meetings, I've definitely glimpsed the good life. Seen Dusseldorfers doing it - living the life, I mean. What I have yet to do is experience it for myself.
Thankfully, there are now direct passenger flights between Hong Kong and Dusseldorf. And if the good life here is just beyond my grasp, it's reassuring to know that I can return. On holiday. And soon.
To be fair, I am not here to chase bratwurst with an Altstadt (old town) beer. Rather, I'm here - together with a high-profile business mission from Hong Kong - to better appreciate the global business and international trade face of Dusseldorf. To find out more about this city at the very heart of Europe. And, through Dusseldorf, to expand our business and trade relations with Germany.
Those ties are, of course, strong and long-standing. Last year, Hong Kong and Germany did some 14 billion Euros (about HK$130 billion) in trade together, making Germany our largest European trading partner.
Hong Kong's geographical location, at the southern gateway to Mainland China, gives us unparalleled trade opportunities. Our free-market focus, simple and low tax rate and free flow of information and capital comprise all the essentials that business needs to thrive in Hong Kong, in the Mainland and throughout Asia.
German business takes good advantage of Hong Kong's gateway role to reach the vast markets of Mainland China and across the Asian region. Last year, 10 billion Euros (HK$91.4 billion) in trade between Germany and the Mainland was routed through Hong Kong.
And the ambitious concepts of the Silk Road Economic Belt and the 21st Century Maritime Silk Road, launched by President Xi Jinping of China less than two years ago, promise so much more for our two economies. This bold initiative targets more than 60 economies connecting Asia, Africa, the Middle East and Europe.
The Belt-Road was set in motion to expand connectivity, to promote economic, political and cultural development in vast areas of three continents. With time, determination and a great deal of capital, it can, I believe, become the force that drives the global economy in the 21st century.
The enthusiastic response to the establishment of the Asian Infrastructure Investment Bank, the AIIB, underlines that belief. The AIIB will support the infrastructure development needed in countries along the Belt-Road, and more.
Germany, the EU's economic powerhouse, has much to gain from the Belt-Road. Given its location - at the western tip of the Silk Road Economic Belt and the Chongqing-Xinjiang-Europe International Railway - Germany can serve as the essential connection between the Belt to the east and the rest of Western Europe to the west.
As for Dusseldorf, it can reap the benefits of the Belt-Road developments, thanks to the city's location, together with its state-of-the-art transport and logistics infrastructure.
In the next few minutes, allow me to share some of my thoughts with you on how Hong Kong can support German business, how we can help you capitalise on the wealth of opportunities set to emerge from the Belt-Road over the next few years and through this century.
The Belt-Road will trigger soaring investment in infrastructural facilities. It will deepen financial integration, expand the flow of trade and the building of people-to-people bonds on a global scale.
Hong Kong, I'm here to tell you, will help make it happen - thanks to the unique advantages presented by our "one country, two systems" arrangement, under which Hong Kong maintains our own social and economic systems, while being part of China.
Consider, for example, Hong Kong's financial system. Hong Kong has its own currency which is different from the Mainland Renminbi, and is fully convertible. Capital from the Mainland, as well as capital from all over the world, flows freely in and out of Hong Kong. Fairly, efficiently, and confidently.
And for good reasons. Earlier this month, the "Economic Freedom of the World" report, produced annually by Canada's Fraser Institute, once again named Hong Kong "the most economically free jurisdiction in the world". And, in January, the Washington-based Heritage Foundation named Hong Kong the freest economy in the world - for the 21st year running.
Hong Kong is among the world's leading financial capitals. Hong Kong is also China's international financial centre. Indeed, the Global Financial Centres Index, which rates the competitiveness of the world's financial centres, ranked Hong Kong third, just behind New York and London, earlier this year.
In short, Hong Kong has the experience, the expertise and the connections to serve as the fundraising and financial management hub for the Belt-Road. Our financing options range from public offerings and loan syndication, to private equity funds and the raising of funds through Islamic finance.
We have the seventh largest stock market in terms of market capitalisation and rank second, globally, in equity funds raised through initial public offerings.
Hong Kong is also the world's largest offshore Renminbi business centre, providing international investors with Renminbi services ranging 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. Hong Kong can respond to that demand. After all, we've been handling the lion's share of Renminbi trade settlement since its beginnings in 2009.
Our Renminbi debt market has grown rapidly in recent years as well. It provides a reliable channel for companies looking to issue Renminbi bonds to meet project funding needs. Last year, the issuance of Renminbi bonds in Hong Kong amounted to about RMB200 billion - a year-on-year increase of 69 per cent.
We expect the growth potential of Islamic financial services to be equally promising, given the large Muslim population living along the Belt-Road. This past year, the Hong Kong Government has successfully issued two Shariah-compliant sukuk. That underscores our capabilities in sukuk issuance. Equally important, it speaks of the confidence international investors have in Hong Kong - in our economic fundamentals and in our financial expertise.
Asset and risk management services will also be in demand once the Belt-Road infrastructure projects get going.
And I'm pleased to note that Hong Kong's wealth and asset management business has soared in recent years. I'm confident when I say that Hong Kong can serve as a global centre for asset management, risk management and corporate treasury functions.
Hong Kong boasts a wide variety of insurance services and derivative products as well. They offer good reasons for German companies to manage their risks by setting up captive insurers in Hong Kong.
Our multicultural, multi-talented pool of services professionals - in finance, accounting, law, architecture, engineering management and more - is another Hong Kong advantage. They have the international experience to lead consultancies and the operations and management of Belt-Road infrastructure projects.
Then we have our legal professionals, who work with a world of business every day. They conduct due diligence, ensure contract enforcement and help resolve disputes. And they do so under a system supported by the twin foundations of the rule of law and an independent judiciary. I'd say that makes Hong Kong an ideal centre for resolving potential commercial disputes arising from business collaboration.
Logistics is no less central to Hong Kong's strengths as an international business centre. Hong Kong is the world's fourth busiest container port, providing about 350 services a week to more than 500 destinations worldwide.
The city counts about 700 shipping-related companies, featuring services ranging from ship management, broking and chartering to finance, marine insurance, legal and arbitration and other support services.
The Maritime Silk Road will expand the demand for shipping and quality maritime services. And I have no doubt that overseas maritime companies wanting to tap into the Belt-Road will find it advantageous to establish a presence in Hong Kong.
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. Let me add that Hong Kong 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 a third runway, scheduled to open in 2023. The addition is expected to boost our airport's handling capacity to some 100 million passengers and 9 million tonnes of cargo per year by 2030.
In all, Hong Kong is home to about 14 000 logistics companies. Most of them serve the trade between China and the world. All are adept at providing 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 powerful support for our logistics sector, regardless of individual nationalities.
Tourism, too, will find a promising future along the Belt-Road. And we are expanding our cruise market, promoting Asian itineraries that will lay a foundation for the development of long-haul sailing - from Mainland China all the way to Europe.
Beyond our traditional pillar industries of 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.
I'm confident, too, that new markets will open up for our technology and creative sectors, including the film and cultural industries, as well as our education and healthcare services, together with product testing and certification.
Ladies and gentlemen, Hong Kong was built on trade, and we remain one of the world's great trading economies. Hong Kong is well equipped to be your strategic partner as you venture into the vast markets of the Belt-Road. In fact, Hong Kong is already home to more than 600 German companies, more than half of which base their regional operations in Hong Kong.
I invite you to join them, to join us in Hong Kong. With the new door-to-door flight service between Dusseldorf and Hong Kong, you won't get lost.
My thanks to the Hong Kong Economic and Trade Office in Berlin and the Hong Kong Trade Development Council for organising today's luncheon, and for giving me this opportunity to speak with you. I look forward to welcoming our German friends here to Hong Kong.
Thank you.
Ends/Friday, September 25, 2015
Issued at HKT 19:40
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