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Richard (Eu), distinguished guests, ladies and gentlemen,
It is a great pleasure to join you this evening. My heartiest congratulations to the Hong Kong-Singapore Business Association on its 15th Anniversary.
The Association was established in 1994 with 17 founding members. Today there are about 180 members, including quite a few new names on the membership list this year, which is extremely encouraging. Thank you all of you for your commitment to building strong business relations between Singapore and Hong Kong.
Our two cities have a long history of friendly rivalry and, as the saying goes, competition breeds excellence.
So today I will talk about the excellent business opportunities in our part of the world, especially now that the worst of the global financial crisis appears to be behind us. I emphasize "appear".
After four straight quarters of negative growth, the Hong Kong economy rebounded in the second quarter of this year. Our GDP grew by 3.5 per cent in the second quarter compared to the first. We have been looking forward to the release of third quarter GDP figures, which came out only a few hours ago.
Hot off the press, I am pleased to tell you we remain on the growth track. Our economy expanded a further 0.4% in the third quarter compared to the second quarter of this year. So we are no longer sinking.
Although we are not out of the woods yet, the picture is much clearer than it was this time last year. Maintaining our competitive edge for business will hinge on three main areas; first, closer integration between Hong Kong and the Pearl River Delta (PRD), second, broadening our economic base and third, focusing on our enterprise as a global financial centre.
First, closer integration with the PRD. The sharp economic downturn has focused a great deal of attention on our cross-boundary relationship. On the one hand it highlighted Hong Kong's role in facilitating manufacturing upgrading on the Mainland and promoting the service sector in Guangdong and the PRD. At the same time, greater access to Mainland markets continues to offer enormous potential for Hong Kong businesses.
Over the past year we have been fast-tracking projects for greater physical cross-boundary integration. These include a series of mega infrastructure projects that will help to open up markets across the boundary, create jobs and bring more tourists and business travellers to Hong Kong.
We expect to begin construction this year on a massive 29-kilometre bridge that will connect Hong Kong with Macao and Zhuhai in Guangdong. When completed it will help unlock the potential of the less developed western part of the PRD region.
Another large-scale project is the Guangzhou-Shenzhen-Hong Kong Express Rail Link that will plug Hong Kong into the high-speed rail network in the Mainland. On completion in 2015, it will reduce travelling time to Guangzhou to about 50 minutes and directly connect us with major cities including Shanghai, Wuhan, Beijing.
We are also exploring the possibility of a rail link between Hong Kong International Airport and Shenzhen Airport to improve the efficiency of both facilities, facilitate cross-border travelling and benefit the region as a whole.
As you know, our city would provide a large number of international connections within Hong Kong, and Shenzhen has a very extensive connectivity with the rest of the nation. If the two airports are to join together by a fast rail link, they will produce effect much more powerful than you can see from LaGuardia and the international airport in New York. So there you are, we can see that this is how things will go.
Last January, at the height of the global economic crisis, the Central Government in Beijing announced an outline plan to further develop the PRD, with the aim of making it one of the most competitive regions in the world by 2020. The outline plan supports enhanced co-operation between Hong Kong and the PRD. For the first time the economic integration between Hong Kong and the PRD is clearly and comprehensively laid down on the Central Government's policy agenda.
The outline plan reaffirms Hong Kong's status as a global financial, trading and logistics centre. It also leverages on our competitive edge as a high value-added services centre in the region. And because we want the PRD to be a green and vibrant example for the rest of our nation, the outline plan covers co-operation in a wide range of areas including environmental protection, education, healthcare, social security, culture, and intellectual property right protection.
We also have a free trade pact with the Mainland called the Closer Economic Partnership Arrangement, or CEPA, covering an entire portfolio of goods, services and investment with the Mainland. CEPA currently covers 42 services areas including key areas such as tourism, IT, legal services, banking, insurance, conventions and exhibitions and logistics. In addition, there are a number of liberalisation measures that are applicable only in Guangdong Province in the form of pilot schemes. We expect more pilot schemes in the services sector to be introduced in Guangdong.
My second point is about broadening our economic base. The global financial crisis has opened our eyes to the fact that we can no longer rely solely on our established core industries of financial services, trade and logistics, tourism and professional services in order to achieve balanced and sustainable growth.
To foster broader-based growth, we have identified six industries where Hong Kong has a clear competitive advantage and strong potential for development. These industries are: educational services, medical services, innovation and technology, testing and certification, environmental industry and cultural and creative industries.
This does not mean we are going to start picking winners. Far from it. We remain firmly committed to the principle of "Big Market, Small Government". Ultimately, market forces will determine whether these industries sink or swim. However, we can play a part in clearing the runway as a government for these industries to take off by removing obstacles to their development.
At the same time, our closer integration and co-operation with Guangdong will directly benefit each of these knowledge-based industries.
My final point is about Hong Kong's role as a global financial centre.
Here, our main strategies are to attract more international capital, financial institutions, products and talent to Hong Kong. We will also strengthen Hong Kong's role as a testing ground for Renminbi products and the internationalisation of the Mainland currency. Another area is to serve as the preferred capital-raising centre for Mainland enterprises as well as strengthen links between Hong Kong and Mainland financial markets.
In the past year, we have seen remarkable developments in connecting our financial system with that in the Mainland.
In September, the Central Government in Beijing issued sovereign bonds in Hong Kong totaling 6 billion Yuan. This is the first time that our nation has issued sovereign bonds outside the Mainland.
In July, our banks began offering trade settlement transactions using the Renminbi. This cross-boundary trade settlement scheme underscores the growing importance of the Renminbi internationally. It is also a major step for Hong Kong in becoming an offshore clearing centre for Renminbi transactions.
Also over the summer, Mainland subsidiaries of some Hong Kong-licensed banks became the first non-Mainland entities to issue Renminbi-denominated bonds. This opens up new Renminbi business opportunities Hong Kong and deepens Hong Kongˇ¦s role as an offshore centre for Renminbi business.
Ladies and gentlemen, Hong Kong will continue to provide a stable and low tax environment for companies operating in Hong Kong, where they can also enjoy free flow of information, ideas and capital. We will strengthen economic integration with the Mainland of China while at the same time building stronger ties with our trading partners in the region, including our friends here in Singapore.
Once again, I congratulate the Hong Kong-Singapore Business Association on its 15th Anniversary. I am thankful also for the opportunity of updating you on the latest development of Hong Kong. The most important messages lie in us, alive and kicking, so is Singapore. There is a lot we can do together with Singapore in regional growth, particularly when China and India, for instance, are emerging as the regional economic platform. In this regard, Hong Kong and Singapore can play a vital role. I'll speak more on that later on during my stay in Singapore. Thank you very much for your invitation and please come to Hong Kong to see for yourself.
Thank you.
Ends/Saturday, November 14, 2009
Issued at HKT 01:31
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