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Following is the speech by the Chief Executive, Mr Donald Tsang, at ETIG Knowledge Forum "Hong Kong: Gateway to China and East Asia", in Mumbai, India today (October 29):
Distinguished guests, ladies and gentlemen,
It gives me great pleasure to join you all today.
First of all, I would like to thank the Economic Times and HSBC India for co-organising this Knowledge Forum.
Please also remember the old adage - "knowledge is only useful if you put it into practice".
With this in mind, I congratulate you on selecting a topic that is tailor-made for generating closer bilateral links between India and Hong Kong.
The theme of this forum "Hong Kong: Gateway to China and East Asia", aptly describes Hong Kong's gateway role in bridging the East Asian region including China to the rest of the world including India. The Hong Kong gateway opens up two-way flows of people, goods, services and ideas.
To get the most out of this Forum, may I encourage everyone to keep an open mind so that we can stimulate a two-way dialogue.
Of course, we want the Indian business community to listen to why Hong Kong is such an ideal springboard for your companies to gain access to markets in Mainland China and East Asia.
We also want to hear from you how we may become an even better platform for Indian companies.
Ladies and gentlemen, I have a relatively easy job here today. In the next few minutes I will give a broad overview of Hong Kong's strengths as an international business and financial centre. I hope this will help to get the ball rolling and set the stage for a fruitful Forum.
First, some background.
Our two nations, India and China, are the world's most populous nations, and home to about 40 per cent of the human race. Most economists predict that our economies will provide a twin-engine for global economic growth in the 21st Century.
In 2009, India was our seventh largest trading partner in the world while Hong Kong was India's sixth largest export market. In the first eight months of this year, our bilateral trade increased 43 per cent compared to the same period last year, reaching almost US$12 billion.
Last year, US$3.6 billion, or 8.2 per cent of the total trade between India and the Mainland of China, went through Hong Kong.
Indeed, Hong Kong is already a well-established premier gateway for trade between our region and India.
This is no surprise and no coincidence.
Hong Kong thrives on maintaining a business-friendly environment.
We are a duty-free port and we treat foreign and locally-owned companies on an equal footing. Our currency is wholly convertible and there is no foreign exchange control. We have a transparent regulatory regime, low and simple tax system, free flow of capital and information, independent judiciary, common law legal system, quality infrastructure and a deep pool of local and overseas talent.
These are some of the reasons for Hong Kong's ranking as the world's freest economy for each of the past 16 years, according to the US-based Heritage Foundation.
Currently, more than 6,500 companies from Mainland China, Taiwan and around the world have a base in Hong Kong. More than half of these companies use Hong Kong as their Regional Headquarters or Regional Offices, firmly establishing our city as a location of choice for international firms in Asia.
Hong Kong is also a global financial centre in the Asian time zones. Our co-host, HSBC, is among 70 of the world's largest 100 banks that operate in Hong Kong. And, since 2005 the Hong Kong Monetary Authority has granted banking licences to eight Indian banks.
Although we are a relatively small city - our population of 7 million is about half that of Mumbai - our stock market is the 7th largest in the world and 3rd largest in Asia by market capitalisation.
Our aim is to further internationalise our stock market by encouraging more overseas companies to list in Hong Kong - especially those from emerging economies such as China, Russia, India and other fast growing South American economies.
Earlier this year, the first Russian firm listed in Hong Kong. I am confident Indian companies could also tap into our city's strength as a capital-raising centre.
Last year, total funds raised through initial public offerings in Hong Kong exceeded US$31 billion, more than any other bourse globally. This underscores our experience in handling IPOs of all sizes, as well as our access to the liquid capital markets in our part of the world.
An area of great potential for Hong Kong as a global financial gateway to and from the Mainland is Renminbi business.
Since 2004, Hong Kong banks have been offering a growing range of Renminbi banking services.
We are working with the relevant Mainland authorities, our financial regulators and the trade to attract more Renminbi liquidity. We aim to build a market offering a broad range of products and services in the Mainland currency.
How can this serve Indian companies?
One area is Renminbi trade settlement. In July this year, the Central Government in Beijing gave the go-ahead for overseas companies, including Indian firms, to settle their trade with the Mainland using Renminbi.
Indian firms can leverage on our experience and financial stability in settling their Mainland trade in Renminbi.
Hong Kong is also the first and only place outside the Mainland to have a Renminbi bond market. In August this year, US fast food company, McDonalds Corporation, became the first non-financial foreign company to issue a Renminbi corporate bond to raise capital for its Mainland operations.
These are some examples of how Hong Kong can serve Indian companies as a stable, efficient and reliable financial gateway to China.
Now, I would like to highlight some areas of great potential for inward investment opportunities from India.
First, transport and logistics.
Indian logistics companies may partner with Hong Kong firms to capture the business opportunities of the rising trade volume between India and China.
With the growing number of Indian companies in Hong Kong, which currently number about 1,500, there are good prospects for relocation, logistics and shipping companies to access the opportunities in Hong Kong.
The Air Services Agreement signed between Hong Kong and India in 2007 has facilitated air travel between our two places.
The establishment of offices of Jet Airways and Kingfisher Airlines in Hong Kong in the last two years has also brought about a positive impact on business travel between Hong Kong and India.
Another area is tourism and hospitality.
Improved economic conditions have led to an exponential growth in tourists in both directions.
With more direct flights to and from India, Hong Kong can expect an increasing number of business and leisure visitors from India. Tourism and hospitality firms may expand their presence in Hong Kong to take advantage of this growing market.
Turning to professional services. Given the already strong links between our two economies, Indian accounting firms, law firms, consultancies and companies providing professional services to their Indian clients may find Hong Kong an increasingly attractive platform for business.
Finally, I would like to introduce our unique free trade pact between Hong Kong and the Mainland, what we call the Closer Economic Partnership Arrangement, or CEPA.
CEPA gives Hong Kong companies a "first-mover" advantage in the Mainland and provides enhanced access to markets throughout China.
The key to CEPA for Indian firms is that it is nationality-neutral. Foreign companies, including Indian companies incorporated in Hong Kong, can enjoy the same benefits of CEPA as our local firms.
CEPA currently covers more than 40 services areas, including tourism, logistics, conventions and exhibitions, financial services and professional services.
I encourage you to explore how CEPA can benefit your business.
Ladies and gentlemen, thank you for this opportunity to highlight Hong Kong's unique advantages as a gateway to Mainland China and East Asia.
No doubt you will be covering some of the topics I have mentioned, and others, in more detail during the panel discussions later.
I look forward to hearing more about your ideas on how to further strengthen Hong Kong's role as a gateway to China and East Asia.
I wish you all a very successful Forum, and encourage you to soon put into practice the knowledge you gain from this event.
Thank you very much.
Ends/Friday, October 29, 2010
Issued at HKT 14:50
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