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Speech by STH at Japan-Hong Kong Logistics Cooperation Symposium organised by HKTDC in Tokyo (English only)

     Following is the speech by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, at the Japan-Hong Kong Logistics Cooperation Symposium, held in Tokyo, Japan today (September 6):

Mr [Yukio] Kato, Mr [Akimitsu] Ashida, Ms [Shigemi] Furuta, distinguished guests, ladies and gentlemen,

     Good afternoon. It is my great pleasure to be invited to this logistics seminar. Thank you for giving me the opportunity to speak to such a prominent audience of industry players from Japan and Hong Kong.

Hong Kong - Japan trade relations

     As we all know, Japan and Hong Kong have maintained close trade relations for decades. Last year, Japan was Hong Kong's second largest source of imports, the third largest market for exports in the world, and despite the 2009 global financial crisis, our bilateral merchandise trade grew by 2.3 per cent per annum on average in the past five years. Japanese premium food is so popular in Hong Kong that according to one report we are the biggest destination for food and live animals exported by air from Japan.

     To Japan, Hong Kong is not only an important export market, being the sixth largest export market, we are also a trade and logistics hub through which Japanese products are re-exported to Southern China and Southeast Asia, and vice versa. Trade between Mainland China and Japan via Hong Kong has recorded a cumulative increase of 13.5 per cent over the past five years. Last year, 12.5 per cent of the total trade between Japan and the Mainland of China was routed through Hong Kong.

Hong Kong - the gateway to the PRD

     All this comes as no surprise, given Hong Kong's strategic geographic location right at the estuary of the Pearl River, acting as a gateway to South China. The Pearl River Delta (PRD) is one of the most vibrant economic regions of the Mainland and Hong Kong benefits from having the PRD as its economic hinterland. Though the PRD occupies less than 1 per cent of the total land area of the country, its GDP in 2012 accounted for 9 per cent of China's total, amounting to US$759 billion. Between 2006 and 2011 its per capita GDP more than doubled, from about US$5,900 to US$12,000.

Regional economic power house

     On top of cross-boundary trading activities, in the past five years visitors from Mainland China to Hong Kong have been growing by an average annual rate of 17.7 per cent. Last year alone, nearly 35 million Mainland Chinese tourists visited Hong Kong. We are the most popular outbound tourism destination of Mainland visitors, particularly those from the PRD. To many Mainland people, "Made in Hong Kong" and "Shop in Hong Kong" are synonymous with quality and reliability. This is also true for other discerning consumers across Asia. The Greater PRD, counting also Hong Kong and Macau Special Administrative Regions, represents a regional power house with a population of some 64 million, offering immense consumer spending potential yet to be fully unleashed.

Hong Kong as a logistics hub

     Because of Hong Kong's central location in the Asia-Pacific region, passengers and goods can reach all major Asian cities by air within four hours, and half of the world's population within five hours. With this unrivalled position, we are the de facto regional hub for both passenger and cargo flows.

     In terms of cargo traffic, the PRD is one of the major manufacturing bases in China, and in tandem with the economic boom in China in recent years, import and export of goods and materials for either manufacture or consumption use in and out of South China have generated great demand for logistics services in the region. The PRD accounts for the bulk share of national output in IT and electronics/electrical appliances e.g. mobile telephones, hi-fi equipment and electrical fans.

Hong Kong's strengths

     Apart from its geographic location, Hong Kong's role as China's gateway and the region's logistics hub is also underpinned by a range of institutional strengths, or soft strengths. Let me highlight some of them here. Hong Kong is a free port, levying no tariff on imports, including wine. We have a simple tax system with low tax rates. We practise the common law system which is widely recognised by many jurisdictions internationally, and our rule of law is well-entrenched. There is free flow of capital and information. Fully exposed to the latest international knowledge and management know-how, Hong Kong has a ready pool of professional talents conversant in English, Putonghua and Cantonese, and provides quality services to enterprises in Hong Kong and Mainland China as well as to multi-national companies from around the world. Moreover, we maintain a level playing field for all. Indeed, Hong Kong has consistently been ranked among the freest of all economies. Our overall standard of governance is ranked highly by the World Bank's governance indicators.

Efficient handling of high value cargo

     As a logistics hub, Hong Kong has transparent customs procedures and efficient customs clearance - for an air cargo consignment which requires customs inspection, examination is completed within 80 minutes of receipt of the cargo with proper documentation. On top of that, our logistics services providers maintain tight security all along the supply chain and intellectual property protection is vigorously enforced. Our logistics environment is ideal for precious goods, brand-name products and pharmaceuticals. You may like to know that Hong Kong is home to the largest community of shipping, freight forwarding and logistics operators in Asia.

Third party logistics and hub port

     Because of Hong Kong's long history as a trading hub, our logistics service providers have accumulated a wealth of knowledge and experience in handling a variety of goods, from wines to heavy construction machinery and from art treasures to racehorses. Hong Kong has developed as an inventory management centre for valuable goods and our logistics service providers offer tailor-made supply chain solutions and comprehensive value-added services such as bar-coding, price-tagging, pick and pack, quality control and customs clearance for clients from around the world. As the gateway to China, Hong Kong enterprises have a common language, cultural affinity and long-time experience with Mainland business and government organisations. At the same time, Hong Kong is closely linked to the rest of the world as our service providers are well-versed in international business protocol. They are instrumental in enhancing and furthering Hong Kong's position as a hub port.

Multi-modal transport and connectivity

     Let me now turn to the infrastructural developments that result in our world class air, sea and land connectivity and enhance our hub status. Hong Kong International Airport is the busiest cargo airport in the world. It is served by some 7 000 flights every week to about 180 destinations worldwide. It is also one of the busiest passenger airports in the world. Planning is underway to build a third runway which, upon completion, will increase the practical maximum capacity of the airport to 620 000 flight movements per year, accommodating about 97 million passengers and close to 9 million tonnes of cargo per year, double the current level.

     On the maritime side, Hong Kong's container port is among the busiest in the world. Last year, we handled over 23 million twenty-foot equivalent units (TEUs). Our port is served by some 410 weekly sailings to about 520 destinations. We will commence dredging works later this year to increase the navigable depth of our container port channel to 17 metres by 2016 so that the new-generation ultra-large container vessels can berth at all tides.

     On the land side, Hong Kong has an extensive road and rail infrastructure connecting it to all major cities in the PRD, such as Shenzhen and Guangzhou, the capital city of Guangdong Province. At present, there are four land crossings along the boundary of Hong Kong and Guangdong, with an average of about 21 000 goods vehicle crossings every day. A fifth one is under construction, due for completion in 2018.
     To further expand our transportation network into the western part of the PRD, we are building a mega-bridge that will link up Hong Kong, Macau and Zhuhai city. Scheduled for completion in 2016, this bridge will enable most areas of the western PRD to be reachable within a three-hour commuting radius from Hong Kong. For example, travelling time from Zhuhai to Hong Kong International Airport will be cut from four hours to 45 minutes.

Hong Kong - good business location for Japan's logistics firms

     Looking at Hong Kong/Japan trade relations, I wish to assure the Japanese business community that Hong Kong welcomes you all the time and we have a lot to offer. A conveniently located, business-friendly and well-connected hub like Hong Kong is a favourite springboard for Japanese enterprises seeking to expand overseas. Three months ago the Japanese house-ware company, Talk Co Ltd, announced the opening of its first overseas showroom in Hong Kong.

     To quote a couple more examples, Nissan has located the global headquarters of its Infiniti luxury car brand in Hong Kong, and Mitsui O.S.K. Lines, one of the MOL group businesses operating a fleet size of over 100 container ships, has also recently relocated its global headquarters to Hong Kong.

CEPA - Hong Kong's free trade arrangement with Mainland China

     In case you ask what more Hong Kong can offer, I would like to add that foreign companies which establish businesses in Hong Kong or partner with Hong Kong companies stand to benefit from a unique trade agreement that Hong Kong has established with Mainland China, known as CEPA - the Closer Economic Partnership Arrangement. CEPA is essentially a free-trade arrangement which allows Hong Kong products to enjoy zero tariff on importation to the Mainland, and gives Hong Kong-based foreign companies greater access to the Mainland market. Further information could be obtained from our Tokyo Economic and Trade Office or the Hong Kong Trade Development Council.

Concluding - welcome to ALMC 2013

     Before I close, may I extend a warm invitation to each of you here to the Third Asian Logistics and Maritime Conference, to be held in Hong Kong on November 7 this year. The Conference is expected to receive some 1 400 guests, not only from Hong Kong but also from the maritime and logistics sectors of Mainland China, Asia, Europe and America. The conference has been very well received in the past two years. Apart from inviting distinguished industry players to share their insights on industry developments and trends regionally and globally, the forum will also provide networking opportunities for you to meet with potential business partners from different parts of the world. I look forward to seeing you there.

     Thank you.

Ends/Friday, September 6, 2013
Issued at HKT 17:17


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