Speech by SCED at 2016 Annual Conference of In-House Lawyers of Law Society of Hong Kong (English Only)
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President So (President of the Law Society of Hong Kong, Mr Thomas So), Mr Chan (Chairman of the In-House Lawyers Committee, Mr Grand Chan), distinguished guests, ladies and gentlemen,
Good morning. I'm more than delighted to have the opportunity to join you all at this important annual conference of in-house lawyers. This is not just a standard opening line. As some of you may know, I was a practicing solicitor before joining the Government some eight years ago. It therefore gives me great honour and pleasure to share with my fellow legal professionals some of the latest development in the business arena and invite all our professional in-house lawyers to join the effort to take advantage of the massive opportunities engendered.
Global Economy
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The unexpected Brexit in June has shocked the financial markets globally. While the markets somewhat managed to stabilise, Brexit and its palpable uncertainties are now firmly on the growing list of concerns for the global economy, together with the anxieties over the timing and the pace of the US (United States) interest rate hike, the worryingly fragile Japanese and Eurozone economies, as well as the divergent policies among major central banks. These volatilities and uncertainties will likely continue through this year, and even in the next few years, given that the negotiations between the United Kingdom and the European Union on the exit terms are expected to be difficult and protracted.
The good news for us is that Asia will continue to be a key source of growth for the global economy. The global economic centre of gravity has been gradually shifting to the East in recent years. This trend is particularly evident amid the slow and punctuated recovery of the advanced economies following the global financial crisis in 2008. Indeed, Asia has achieved outsized success over the last 30 years. In 1980, developing Asia accounted for only 7 per cent of the world GDP at the current market exchange rate. By 2015, it has captured more than 20 per cent.
The Belt and Road Initiative
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There are obviously more stimulating opportunities ahead for Asia. As projects launch one after another, both the local and international community has started to get more familiar with the far-reaching and visionary Belt and Road Initiative - the Silk Road Economic Belt and 21st Century Maritime Silk Road in full. The Initiative, first announced by President Xi back in 2013, aims to promote policy co-ordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people bonds among 60-plus countries spanning Asia, Africa and Europe.
Although spearheaded by China, the Belt and Road Initiative is clearly more than just a national strategy, it is a global initiative which aspires for a long term and fundamental change to world dynamics. It will not only bring massive potential for the development of countries along the routes, it also has the potential to become a powerful driving force for the growth of the world's economy.
Hong Kong's unique role
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It is not an overstatement that the Belt and Road Initiative offers unprecedented opportunities to all. And that is exactly the reason why it has drawn wide attention and gained a positive response from the international community. While the Belt and Road will boost co-operation in a great many sectors, the heart of the Initiative is about promoting integration and connectivity, about strengthening connections among people and markets from different places. On that, I believe, few others are able to do it better than Hong Kong. Hong Kong must act swiftly to exploit, and to partner with other economies to capitalise on the wealth of golden opportunities set to emerge from the Belt and Road in the years ahead.
Hong Kong has always been one of the most globalised cities in the world. Our international and friendly business environment, our sound and resilient market structure, our free and unfettered flow of information, our good mix of talents and cultures from the East and West, as well as the unparalleled connectivity with the rest of the world, are the key fundamentals underlying Hong Kong's continued success.
With these characteristics, it is clear that Hong Kong is best placed to play an active role to facilitate the implementation of the Belt and Road Initiative. I'm saying this not because every cook praises his own broth. Mr Zhang Dejiang, Chairman of the Standing Committee of the National People's Congress, when attending the inaugural Belt and Road Summit in Hong Kong in May, not only expressed clear support for Hong Kong to participate in the Initiative, but also affirmed that Hong Kong, with its various unique advantages, would be able to make important contributions to this endeavour. Our diverse and advanced professional service sector is, of course, one of these valuable advantages.
Chairman Zhang, in his keynote speech, outlined four areas in which Hong Kong can contribute. First, in building a platform of comprehensive services; second, in facilitating capital flows, Renminbi internationalisation, and the development of an investment and financing platform; third, in promoting cultural exchanges; and fourth, in deepening co-operation with the Mainland to explore markets along the Belt and Road.
Legal and Dispute Resolution Services
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When we talk about building a platform for comprehensive services, legal and arbitration services certainly play an important part. As we can imagine, economic activities under the Belt and Road Initiative and the financing arrangement by the Asian Infrastructure Investment Bank (AIIB) for infrastructural projects will create a huge demand for high-end cross-boundary legal and dispute resolution services.
Globalisation and regional integration have changed the landscape of dispute resolution drastically. Nowadays, business people tend not to litigate in a foreign place and be subject to an unknown foreign legal system.
In line with the global trend and for the benefit of businesses that wish to resolve their commercial disputes swiftly in an amicable manner, the Department of Justice has been promoting the use of dispute resolution methods, such as arbitration and mediation other than litigation, to resolve civil and commercial disputes in general and in specialised areas of intellectual property, maritime and investment.
The Central Government's 13th Five-Year Plan, promulgated in March this year, expressly supports Hong Kong in establishing itself as a centre for international legal and dispute resolution services in the Asia Pacific region.
In the Belt and Road context, we encourage businesses to specify Hong Kong, the only common law jurisdiction within China, as the dispute resolution venue in the commercial and investment agreements. Hong Kong is a perfect neutral venue for efficient and reliable dispute resolution service for disputes involving Mainland parties and other economies along the Belt and Road. Members of the business sector could choose Hong Kong law as the applicable law in their contracts. We also encourage overseas enterprises to make use of Hong Kong's legal and dispute resolution services when taking forward their business activities under the Belt and Road Initiative.
The Professional Services Advancement Support Scheme
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Apart from legal services, the Belt and Road Initiative will also create huge demand for other high-end professional services. Our world-class professionals in accounting, risk assessment, engineering, consulting, project management and many other sectors are all highly regarded for their professional ethics, competence and global outlook.
To support exchanges and co-operation of Hong Kong professionals with their counterparts outside Hong Kong, we have recently set aside HK$200 million for setting up the Professional Services Advancement Support Scheme, as known as PASS. PASS will provide funding support for non-profit-making projects aiming at enhancing exchanges and co-operation of Hong Kong professionals with their counterparts in external markets and promoting relevant publicity activities. Projects which seek to enhance the standards and external competitiveness of the Hong Kong professional services sector will also be eligible. With PASS rolling out soon, we look forward to increased collaboration between professionals and businesses from Hong Kong and other economies in the near future.
Trading
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Access to opportunities brought about by the Belt and Road Initiative is by no means limited to professionals. Hong Kong was built on trade, and we remain today one of the world's greatest trading economies. Our geographical location, at the southern gateway to Mainland China, gives us unparalleled trade opportunities. As one of the world's most business-friendly cities, Hong Kong is the best platform for foreign enterprises to establish their businesses along the Belt and Road.
Hong Kong’s openness and competitiveness have been well recognised by renowned international institutes, including the Washington-based Heritage Foundation, which named Hong Kong the world's freest economy for 22nd year in a row. We are open also in terms of our receptiveness of different cultures and values, and our boundaries which are open for people mobility. Our long history of openness has connected us to various places in the world and equipped Hong Kong as one of most friendly and adaptive international cities.
Trade Agreements
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I am sure you are all familiar with the advantages of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), which provides preferential treatment to Hong Kong service suppliers as well as tariff-free treatment for products of Hong Kong origin. With CEPA, businesses can gain greater access into the Mainland market through Hong Kong.
Besides CEPA, we are also taking steps to strengthen Hong Kong's trade and economic relationships with our neighbours in Asia through the negotiation of free trade agreements (FTAs) and Investment Promotion and Protection Agreements (IPPAs). These agreements enhance the confidence of companies looking to invest in Asia and Hong Kong. Similarly, they help protect businessmen in Hong Kong when making investments in these regions. We are currently pressing ahead with our FTA negotiation with the Association of Southeast Asian Nations (ASEAN) and we look forward to the conclusion of negotiation within this year, such that businessmen and investors of both sides can soon reap the benefits of this important FTA.
Trade Single Window
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As I mentioned earlier, connectivity is a key aspect of the Belt and Road Initiative. One of the measures recommended under the Initiative is to establish a Trade Single Window in all Mainland border ports to contribute to unimpeded trade and enhance information exchanges with countries along the route. Those of you working in trade-related companies would be particularly interested in this subject.
Globally, customs jurisdictions around the world are also setting up Single Windows to facilitate trade in goods. This is championed by the United Nations, World Customs Organization, World Trade Organization and the Asia-Pacific Economic Cooperation.
Hong Kong embraces such opportunities. In his Budget Speech this year, the Financial Secretary announced the Government's plan to establish a Single Window to provide a single electronic platform for the one-stop lodging of all 51 business-to-government (B2G) documents for meeting regulatory requirements of importing and exporting goods.
Currently, nine different Government agencies are involved in receiving, processing and approving these 51 B2G documents required for public policy reasons, such as statistics, levies and duties, anti-smuggling, public safety and health, and security purposes. They are subject to different submission arrangements, with over half of them remaining in the paper mode.
The Single Window will be everything about connectivity. The Single Window will connect traders with the Government. It will be run round the clock all year round, and will obviate the need for traders to approach different government agencies individually and keep traders posted of the status of their submissions. Information collected will be harmonised and standardised, and may be reused conveniently within the Single Window system, minimising data input efforts and errors.
The Single Window will connect all relevant Government agencies, including various authorities responsible for processing different trade documents, and the Customs and Excise Department responsible for front-line oversight duties. This will facilitate business process streamlining, computer system integration, risk profiling and management, and enforcement actions in case of untoward incidents.
The future Single Window of Hong Kong may connect with Single Windows developed and being developed by many other economies, notably those along the Belt and Road. This will facilitate customs exchange of trade information subject to traders' consent.
The future Single Window, as a unified B2G interface of the public sector, may also connect with B2B (business to business) platforms in the private sector. Planning ahead, we will ensure technical capability to enable connections as may be driven by market forces.
In overall terms, the smart connectivity will bring about business efficiency in the trading community, seamless cargo clearance in Hong Kong and outside Hong Kong through customs co-operation, and improved co-ordination among traders, logistics operators and parties alike along the whole supply chain. This will go a long way to upholding Hong Kong’s competitiveness in trade in goods and position as a logistics hub.
Mutual recognition of Authorised Economic Operators
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We are also discussing with economies along the Belt and Road mutual recognition of Authorised Economic Operators (AEO) for customs facilitation. So far, we have concluded mutual recognition arrangements with the Mainland, India, Korea, Singapore, Thailand, Malaysia and Japan, and we will continue to pursue negotiations with other trading partners actively.
Ladies and gentlemen, we know that the Belt and Road Initiative brings great development potential to the Asia Pacific region and the world. We also know what Hong Kong is good at, and that our strengths are some of the keys to unlocking the potential of the Belt and Road. The emerging markets along the Belt and Road corridors are now playing a much more important and influential role as the global economic centre of gravity shifts towards the East. Hong Kong is now revving up its financial and business engines, and we are readying to take our place in the fast lane of the Belt and Road Initiative.
With our distinctive advantage operating under the unique "one country, two systems" framework, Hong Kong has what overseas businesses need in a strategic partner as they venture into markets of the Belt and Road countries. As in-house lawyers who play crucial roles in the strategic development of your respective organisations, Hong Kong counts on your support in this exciting journey that promises to be full of rewards and opportunities.
Last not but least, I would like to thank the In-house Lawyers Committee of the Law Society of Hong Kong for giving me this opportunity to share my views with you all. I can see from the programme that you will certainly have a fruitful and informative conference today.
Thank you.
Ends/Wednesday, September 21, 2016
Issued at HKT 11:50
Issued at HKT 11:50
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