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Following is the speech by the Chief Executive, Mr Donald Tsang, at the business luncheon in Seoul, Korea, today (February 20):
Distinguished Guests, Ladies and Gentlemen,
Anyong haseyo (good afternoon).
It is a great pleasure to be here in Seoul. Thank you for your warm hospitality. Korea is known as the "Land of the Morning Calm" - and a calm and determined approach is exactly what's required as we tackle the worst global economic crisis in a generation.
My visit is a timely one, because this year marks 60 years of consular relations between Hong Kong and Korea. Over the past six decades we have forged closer bilateral trade ties, enhanced friendship and understanding between our communities and we have welcomed a dash of Korean flair to our city.
Last month, one of your top soccer teams, Suwon Bluewings, helped us celebrate the "Year of the Ox". The team took part in our annual Lunar New Year Cup. We also look forward to seeing a strong Korean team in Hong Kong later this year for the East Asian Games.
Your athletes are sure to get a warm welcome at the Games in December from our 12,000-strong Korean community. Hong Kongers also have an affinity for Korea through your high quality brands, rich culture and of course, great cuisine.
I am delighted to be here to see for myself the vibrancy and natural beauty of Korea.
My last official trip to Seoul was in 2003. At the time Hong Kong was recovering from the Asian financial crisis. Our economy had also been badly dented by the SARS outbreak earlier that year. They were difficult times, but we learned some important lessons and rebounded quickly.
If there is one thing that we have learned from previous crises, it is that we will bounce back faster and stronger by choosing co-operation over isolation and free trade over protectionist measures.
In the face of the current economic turmoil, Hong Kong remains fully committed to the open market and free trade principles that have brought us success in the past and will bring more success in the future. And we will continue to co-ordinate our economic recovery efforts with our partners in the region, including Korea.
We are also working with the international community to reach a consensus on a new financial architecture to better suit our globalised world. This includes greater transparency and co-operation among the world's regulators to prevent a repeat of the contagion effect that has been a feature of this economic crisis.
At home, we are expanding our public spending programmes to create jobs, strengthen hard and soft infrastructure and improve the environment. To stabilise the banking sector, we have guaranteed bank deposits, and made additional capital available to banks should they need it.
Although our banking system remains stable and our economy is relatively sound, we expect a difficult few months ahead.
So where do we go from here?
In the next few minutes, I will talk about four main areas that are key to both our short-term economic recovery and long-term sustainable development. These areas include closer integration with the Mainland of China, stronger international relations, promoting a green and clean living environment and expanding our talent pool.
First, closer co-operation with the Mainland.
Last month, the Central Government in Beijing set out a framework to establish the Pearl River Delta, or PRD, as one of the world's most competitive regions by 2020. Under the framework, Guangdong Province and the Special Administrative Regions of Hong Kong and Macao will use our combined strengths to become a premier hub for business and finance.
This includes speeding up cross-boundary infrastructure projects to enhance global access to Mainland markets through Hong Kong.
Next year, we will begin construction of a massive 29-kilometre bridge connecting Hong Kong to the less developed western part of the PRD. And this year construction will start on an express rail line that will link Hong Kong to the high-speed rail network on the Mainland. We will also strengthen co-operation between our ports and airports, which are already among the busiest in the world.
As China's premier international financial centre, Hong Kong has an important part to play in the Mainland's new phase of opening up and reform. We will continue to streamline our financial system and promote Renminbi banking business. Last December, the Central Government announced a pilot scheme to expand Renminbi settlement for international trade with the Mainland. This is a good opportunity for us to enhance our role as an off-shore centre for Renminbi business.
Perhaps the biggest advantage for overseas firms is our free trade pact with the Mainland, what we call the Closer Economic Partnership Arrangement, or CEPA. Under CEPA, foreign firms incorporated in Hong Kong, including Korean firms, can enjoy superior access to Mainland markets. CEPA was expanded last year and now covers 40 services areas including tourism, conventions and exhibitions, financial services, logistics, education and professional services.
My second point is about building stronger international relations.
We like to call Hong Kong "Asia's world city". People from all over the world contribute to our city's vitality. They have helped to expand our horizons, broaden our pool of talent and generate a vibrant cultural blend of East and West.
Today, there are more than 6,600 Mainland and overseas companies in Hong Kong, and there is plenty of room for others to join them.
Our surveys consistently tell us that a low and simple tax system is the number one reason for overseas firms establishing a base in Hong Kong. Last year, we lowered profits tax to 16.5% and salaries tax to 15%. In Hong Kong you don't pay VAT, death duties or capital gains tax.
Allow me to give you an example of how low taxes - or no taxes -, together with a little creative thinking, has helped to stimulate our economy.
A year ago we eliminated duties on wine. Hong Kong immediately became the only free wine port among major economies. Our aim is to establish the city as a wine trading and distribution centre in Asia.
The results so far have been encouraging. Since scrapping wine duties, we have seen a flurry of high-profile wine auctions in our city. Last August, we staged the first Hong Kong International Wine Fair. There are new state-of-the-art wine storage facilities and we plan to turn some heritage sites into venues for wine appreciation, education and training.
Also last year, Korean wine merchants attended the Vinexpo Asia Pacific in Hong Kong. There was a lot of interest in Korean wine during tasting sessions at the event.
In 2007, we imported just a few dozen cases of Korean wine valued at less than US$1,500. Since eliminating wine duties last year, the value of wine imports from Korea has increased seven-fold. Last year, the total value of our wine imports from around the world reached US$370 million representing a year-on-year increase of almost 80%. This is an example of how a little imagination and determination can go a long way during an economic downswing.
The Vinexpo Asia Pacific and the Hong Kong International Wine Fair were two of more than 300 major international events in our city last year. We expect to host a similar number of events this year as we focus on developing meetings, incentive travel, conventions and exhibitions - or what is often called the MICE sector.
MICE events are a good opportunity for Korean entrepreneurs to network with likeminded people from around the world and share ideas on the latest innovations, trends and technologies. So please do mark a few of our events in your diaries.
My third point is about the environment.
I have made it a top priority for my administration to develop a green and quality living environment for our city. For us, this means promoting green industries including recycling, renewable energy and low carbon technologies. We are also building more energy-efficient buildings and rejuvenating "old" Hong Kong.
We have linked up with our neighbours in Guangdong Province to meet ambitious emission-reduction targets by next year. We are also promoting more efficient production techniques for our companies across the boundary. Going forward, green initiatives will play an important part in establishing the PRD as one of the most competitive regions in the world.
Korea has a great deal of experience in exploring practical solutions to environmental issues. I am confident there will be opportunities for closer co-operation between us on this important issue and trade opportunities for Korean companies.
My fourth and final point today is attracting more international talent to Hong Kong.
Competition for experienced professionals is intense in this part of the world. I have already outlined some of the ways that Hong Kong is good for business. But we also have to be good for business people and their families.
Improving the environment is one area. Another is education. The Korean International School is an important member of our international school sector, which includes more than 50 schools in total, for Australian, for the Canadian, for Singaporean, for the Swiss, for German, for French, for British, you name it. We are also increasing the number of overseas students at our universities and making it easier for them to remain in Hong Kong after their studies to find the right job. Last year, the respected QS World University Rankings ranked three of our universities in the top 50 in the world.
Of course, our door is open to professionals from around the world through our liberal immigration policies as well as our points-based scheme to attract high-quality talent.
Ladies and gentlemen, I have outlined some of the things we are doing in Hong Kong to lessen the impact of the global economic crisis and become a more efficient and effective business partner in the region.
I look forward to deeper economic ties with Korea during the tough months ahead and during the good times that will surely follow. We must remember the crisis brings hardship. This crisis also brings opportunities, particularly opportunities for Asian economies including Korea and Hong Kong.
Thank you very much.
Ends/Friday, February 20, 2009
Issued at HKT 14:49
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