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Following is the speech by the Chief Executive, Mr Tung Chee Hwa, at the opening of 2001 Spring Membership Meeting of the Institute of International Finance today (June 1):
Sir John, Charles, distinguished guests, friends, ladies and gentlemen:
Good morning. Let me first extend a very warm welcome to you all. It is indeed a great honour for Hong Kong to welcome you back after your very successful annual meeting here in 1997. Many of the banks and financial institutes that you represent have branches or offices here and therefore you are no strangers to Hong Kong. But I do look forward to this opportunity to talk to you about some of the major developments that Hong Kong has gone through in the last four years.
Managing change is the biggest challenge to any organisation, and how well we manage change determines our success or otherwise. In the nearly four years that has gone by, we have managed in Hong Kong not only one, but two momentous changes. I am pleased to say that we have not only managed these changes successfully but also created new opportunities for Hong Kong.
The first of these changes was the establishment of the Hong Kong Special Administrative Region following our proud reunification with China. As you can witness for yourselves during your stay here, Hong Kong is full of energy, vibrancy and continues to be one of the most cosmopolitan cities in the world. The "can-do" spirit, which is so characteristic of Hong Kong people, is alive everywhere. With the firm support of the Central Government, the commitment of Hong Kong people and the guiding principles of the Basic Law, our mini constitution, we have turned the concept of "One Country, Two Systems" into an everyday reality. Making the "One Country, Two Systems" concept a dynamic, working reality is no small challenge. In this effort, we have been focusing on ensuring that those quintessential qualities that have made Hong Kong such a unique and successful city are rigorously protected. These qualities include the rule of law, the civic freedoms and the commitment to allow the market to lead, with the government facilitating with the provision of the essential infrastructure. Our commitment in these important aspects of governance is total and unflagging, and will remain so going forward.
The second huge change was brought about by the impact of the Asian financial crisis. The bursting of the economic bubble brought Hong Kong its worst recession in memory. Yet again, the underlying strengths of Hong Kong - our open and free economy, the resilience, enterprising spirit and self-reliance of Hong Kong people, coupled with the fiscal measures which the Government introduced to boost the economy, have served us well. We have emerged from the crisis successfully with a strong recovery. The economy grew by 10.5% last year. Affected by external factors, first quarter GDP figures released last week indicated that we can expect growth of about 3% this year. That is 1% lower than our original forecast. Of course, the final out-turn will depend very much on the performance of the US, Japan and European economies. But we remain optimistic because we have a positive factor to our advantage and that is the rapidly opening up and expanding Mainland China economy, which is forecast to grow by 7 - 8 % this year and indeed the years to come.
The success of "One Country, Two Systems" and the confidence for Hong Kong is best demonstrated by the strong flow of capital and the flow of people. Last year, there was an inward flow of 64 billion US dollars of foreign direct investment into Hong Kong. A significant proportion of it was funds raised here for investment in Mainland China, indicating the excellent infrastructure and attraction of Hong Kong's financial markets and our unique position as a leading financial centre in China. Another sign of confidence in the success of the "one country, two systems" is that Hong Kong people who had emigrated before 1997 are returning by the thousands every year.
While managing these two momentous changes, we have not lost sight of our future. The Asian financial turmoil has exposed some underlying weaknesses in our economy, namely the high cost structure and over-reliance on the property market. We have seized the opportunity to introduce reforms and initiatives in areas that are essential to maintain our competitiveness: in the financial markets, in telecommunications, education, information technology, tourism, civil service reform and in some other essential areas too.
Economies of many Asian countries are still going through the necessary restructuring and would take time to recover. However, I am confident that recovery will come in due course. This, together with the rapid development of the economy of the Mainland of China, will ensure that Asia will remain in the 21st century a region of tremendous growth potential, expanding markets and people with aspirations to improve their livelihood.
Let me now share with you a few thoughts how we plan to build on our strengths and position Hong Kong to help you grow your business in Asia and China. First, after spending several days here in Hong Kong, I am sure that many of you will agree that Hong Kong is so multi-faceted and rich in colour, it is not easy to describe. Let me share with you our description - Asia's World City. We believe that this phrase captures the essence of Hong Kong and the role we are playing on the world stage. Indeed, our vision is to make Hong Kong playing the same role as London plays for Europe and New York plays for North and South America.
The second point I want to make is that Hong Kong is not only an international financial centre but a centre where multi-national companies have chosen to make their Asia Pacific headquarters. Last year, the number of multinational corporations having their regional headquarters or offices in Hong Kong grew from 2500 to 3000. Hong Kong remains the ideal location to capitalise on the expanding business opportunities on the Mainland. For the past 20 years, Hong Kong has prospered from, and contributed to, the rapid modernisation of China.
Following China's accession to the WTO, and opening of western region of China, the level of China's external trade and the amount of foreign direct investment into the Mainland are both forecast to double within this decade. This growth in trade will add significant traffic to our airport and our container port, which are already among the busiest in the world. The growth in investment will further enhance our role as a financial centre. Already of the 59 billion US dollars raised in our stock market last year, three-quarters were for companies from the Mainland.
Furthermore, with China's accession to the WTO, Hong Kong's professional and service industries will take full advantage of the opening of different sectors of the Mainland economy. This will provide new opportunities to our service industries, and the financial and banking sector will be one that will benefit the most from this process.
Additionally, continued prosperity in the Mainland, and increasing affluence in the coastal regions, are fuelling growth in the domestic consumer market. And Hong Kong's knowledge of the Mainland manufacturing sector, as well as our ability to understand Mainland's domestic market, is a great asset to multinational companies wishing to enter the Mainland market.
This brings me to my third point. We are actively investing in our physical infrastructures, building new roads, railways, and container terminals. At the same time, we are also investing in our soft infrastructure, in particular, our human resources. We will double the participation rate of our young people for tertiary education from 30% to 60% within 10 years. We are actively promoting IT and telecommunications industries, not only as an economic driver but also as a way to improve our productivity and efficiency. Our broadband penetration to homes at 95% is one of the highest anywhere in the world. The construction of first phase of the Cyberport and the new Science Park, both of which will create the necessary cluster effect, are progressing well. My key message here is that if you invest in Hong Kong, the facilities, infrastructure and human resources you require are already here, and they will continue to improve.
Our infrastructure developments also include development for tourism industry. Hong Kong is the top tourism destination in East Asia. Last year, we received more than 13 million visitors. Within this decade, we will build more tourist attractions, the core of which is, of course, the Disneyland which is due to open in 2005. With world class facilities, we expect Hong Kong tourist arrivals to make quantum leap.
Fourth, in addition to the emphasis we place on economy and business, we are firmly committed to raising the quality of life for people throughout our community. On the environmental front, we have adopted a full range of initiatives to improve our air quality. Fresh strategies are being created to deal with solid waste and sewage treatment. On the cultural front, we are designing a world-class cultural complex in Western Kowloon, so that in the future, after finishing your business all day long here in Hong Kong, you will be able to enjoy productions ranging from Broadway musicals to Peking operas.
I hope that when you do leave Hong Kong in a day or two, you will leave Hong Kong with the knowledge that this is a vibrant, dynamic community committed to freedom and to the rule of law. This has been made possible and will continued to be guaranteed by the concept of "One Country, Two Systems", institutionalised by the Basic Law.
Furthermore, in pursuing our vision, we will certainly maintain our commitment to free market principles. For seven years in a row, the Heritage Foundation has rated Hong Kong as the world's freest economy. The Fraser Institute and Cato Institute have rated Hong Kong as the world's most economically free jurisdiction for much longer.
Finally, you have just seen our "Brand Hong Kong" presentation. The brightly coloured and lively dragon is Hong Kong's new international brand and represents the dynamism and creativity of our city. It is the visual identity of a strategic, long-term programme to promote Hong Kong's strengths in a more consistent and focused manner. You will be seeing more of the dragon in the months and years ahead. And when you do I hope you think of Hong Kong and all that we offer as Asia's world city.
Ladies and gentlemen, thank you once again for coming back to hold your annual meeting here in Hong Kong. I wish you a very interesting and fruitful discussion in the day ahead. I hope you will come back many more times to experience our hospitality and to renew and strengthen our links and friendship. My hope is that together with Hong Kong, your business will continue to grow and prosper!
Thank you very much.
End/Friday, June 1, 2001
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