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Speech by FS at Hong Kong Association Lunch in London (English only) (with photo)

     Following is the speech by the Financial Secretary, Mr John C Tsang, at the Hong Kong Association Lunch in London today (November 18, London time):

Lydia (Chairman of the Hong Kong Association, Baroness Dunn), your Excellencies, distinguished guests, members of the Hong Kong Association, ladies and gentlemen,

     Good afternoon,

     It's a great pleasure for me to be back in London - a city that introduced me to the delights of warm beer and even warmer hospitality while I was Director-General of the Hong Kong Economic and Trade Office here in the late 1990s right after reunification.

     I am, indeed, pleased to see so many old friends here today. I would also like to thank the Hong Kong Association and its members for their tireless support and promotion of Hong Kong here in the UK. This is my first official visit to the UK for a couple of years, and I am really pleased to see on this occasion that the economy here is finally picking up pace.

     We are all familiar with the unique and historic relationship between Hong Kong and London, and this relationship has garnered a few extra column inches in the media recently.

     A month ago, we welcomed Mayor Boris Johnson to Hong Kong, and by all accounts, he had a great time, including a trip on the Star Ferry and a helicopter tour. He was his usual energetic self and the media just loved it. Mayor Johnson was also keen to drum up support for even closer links between London and Hong Kong - and that is something I would wholeheartedly support and pursue.

     I understand Mayor Johnson will be speaking to this esteemed group in three weeks' time. No doubt he will give you a full account of his trip to our neighbourhood back home. As someone with a keen interest in financial matters, I could not help but notice the Mayor's lunch next month is priced at 75 Pounds a head - and that today's get-together is priced at 70 quid, which only goes to show that even here in London, Hong Kong still offers great value for money.

     On the subject of money, I am beginning to prepare my Budget for 2014-15, my seventh, to be delivered at the end of February. So this is a good opportunity for me to share with you Hong Kong Government's thinking on how to get great value out of every dollar that we spend.

     Economic development always comes first for Hong Kong's small and open economy.

     To nurture, attract and retain talent, we need to give people the opportunity to not only find a good job, but to find the right job - a job that pays the bills, a job that is rewarding and a job that encourages people to work hard, fulfil their potential, and make a fuller contribution to our economy, but more importantly, a job that still allows them to keep most of what they earn with only the smallest possible amount going to general revenue.

     Our pillar industries of trade and logistics, professional services, financial services and tourism are all in good shape, but we cannot afford to stand still. We are continuing to invest time and money in areas that will expand the capacity for these industries and add further value to our economy.

     And we are constantly working together with Mainland authorities to liberalise the bilateral trade in both goods and service, which benefit both Mainland and Hong Kong. Take for example, in August, I signed the 10th Supplement to CEPA which included more than 70 additional liberalisation measures - more than any previous Supplement since CEPA was launched ten years ago in 2003.

     CEPA is just one way that Hong Kong continues contributing to and benefiting from Mainland China's economic reform and opening up. At the Third Plenum in Beijing last week, our nation's leaders set out a clear strategy for further economic liberalisation. This includes a greater role for the markets to play in pricing, establishing a more rule-based market system, and allowing greater market access.

     In September, four areas in Shanghai were designated as free trade zones. They are intended to be a model for other Mainland cities to replicate in future. Some people think these initiatives will take the shine off of Hong Kong's competitive advantage, partly because the intermediary roles of Hong Kong may diminish over time.

     I don't think so. As the world's freest economy, Hong Kong is often the first place to enjoy the fruits of any Central Government's liberalisation measures. Hong Kong has the experience and the local-knowledge to contribute to and reap potentially huge rewards from these liberalisation activities in the Mainland of China.

     The expanding middle-class of Mainland means a huge number of eager customers who are willing to pay more for higher quality goods and better services. This provides enormous opportunities for Hong Kong companies supplying end-user products and services as well as those providing services to business.

     Of course, there will be keener competition. But competition is part of Hong Kong's DNA. Our city has always thrived on change and competition in becoming a better, easier and more efficient place to do business. And many of you have personally contributed to this process.

     We are also knocking on doors of other emerging economies, such as member states of ASEAN with whom we are negotiating a Free Trade Agreement. I led a delegation of Hong Kong business leaders to Cambodia and Myanmar this summer. With abundant supply of land and labour, these emerging economies are increasingly attractive for Hong Kong manufacturers and their business partners.

     In addition, we also seek to create new opportunities that will complement our pillar industries and establish new pillars for our sustainable economic growth.

     Creative industries, for example, can make a huge contribution to Hong Kong's economy while offering an attractive career alternative to many of our young people. We have a great environment that encourages creative ideas with robust intellectual property rights protection and access to promising local and regional markets for designers, advertisers, artists and new media entrepreneurs to generate, test-drive and commercialise new innovations.

     Under our CreateSmart Initiative, the Government has helped to fund about 150 creative programmes since 2009. But what is really encouraging is the expanding international dimension of creative opportunities in Hong Kong.

     Next month, we shall be hosting the 11th edition of our Business of Design Week with Belgium as this year's partner country. This event brings together people from around the world and across all sectors of the design industry under one roof. Its value to the industry is that it connects creative minds and talents with the right investors and partners. In fact, this event has become so important to the international design community that it even attracts Royalty to take part.

     We also have the West Kowloon Cultural District which will begin opening the first of its 17 major venues in 2016, starting with the Xiqu Centre for Cantonese opera.

     West Kowloon is an unprecedented opportunity for people with a passion for arts and culture to find their ideal career in areas from performing arts, to advertising, event promotion, cultural management and much more. The ultimate success of the project depends on training, attracting and retaining the best people for the task.

     We also want to make better use of the remarkable talent we have in Hong Kong, both home-grown and expatriate, in improving Hong Kong's overall living environment. In this connection, we are well aware that many of you have expressed concerns about Hong Kong's air quality.

     The Government has taken bold steps to improve the city's air quality in the last decade. This includes adopting new Air Quality Objectives (AQOs) that will take effect from January 1st next year and are benchmarked against international standards.

     We have been working closely with the Guangdong authorities and successfully reduced various pollutants in the ambience. The two power companies, which are the biggest local emitters of most air pollutants, are using cleaner fuels and retrofitting their generators to reduce emissions.

     We are also working to improve roadside pollution with initiatives to reduce harmful emissions from old commercial vehicles, and to test electric buses for the first time. I budgeted more than $10 billion for these purposes in my Budget this year. I believe that in a few years' time, you would be able to observe remarkable improvement.

     Attracting more overseas talent is important for Hong Kong to maintain its broad international perspective which is such a vital component of our city's competitive edge.

     Hong Kong is a city in China, but we are unlike any other Chinese city. What's interesting these days is that the current generation of school leavers is too young to remember what Hong Kong was like prior to the reunification.

     Yet, they are as committed as anyone to preserving and practising our city's core values and freedoms - not least the freedom of speech, of procession and of demonstration. On occasion, I only have to walk out of my office building to be reassured that these freedoms remain firmly intact!

     More than 16 years after the establishment of the Hong Kong SAR, we cherish as much as ever its long-standing values of the rule of law, our common law system and our independent judiciary. We also protect our capitalist way of life, free media and free flows of ideas and talent.

     And because our city's core values are aligned with global values, they identify Hong Kong as an international city. They form part, an important part, of Hong Kong's competitive advantage that adds value to all our business partners, not just from advanced economies such as UK, but also those from the Mainland. We shall spare no effort in strengthening these core values.

     Looking ahead, one of the biggest challenges for Hong Kong its our ageing population. The number of people living in Hong Kong is expected to increase from just over seven million today to almost 8.5 million in 2041. By then, roughly one third of our population will be aged 65 or above - when the candles start costing more than the birthday cake.

     In Hong Kong, we have a relatively low birth rate and a longer life expectancy than even the UK. Our labour force is expected to decline after 2018 when the baby-boomer generation begins reaching retirement age.

     We need to act now to prepare for the challenges, financial and social challenges, of an ageing population. Nurturing our young talent and attracting high-quality professionals to Hong Kong are just a couple of ways to address the complex issues. And because this affects the whole community, we recently launched a public consultation on our population policy.

     My final topic, however, is something slightly different, namely, constitutional reform. You are likely to hear and read more about this issue in the next few months and years as we move towards universal suffrage in the elections of the Chief Executive and Members of the Legislative Council. The timeline for democratic reform is widely agreed and understood by all parties.

     The question that is being hotly debated in Hong Kong now is the nomination procedure for candidates running for Chief Executive. As you can imagine, views on the matter stretch from one end of the scale to the other. Our challenge is to find the equilibrium, where most people agree or perhaps more precisely, fewer people object.

     Ladies and gentlemen, I have updated you on some of the key developments in Hong Kong.

     We continue to make the most of our advantages under the principle of "One Country, Two Systems" and as a city in China but outside the Mainland. We look forward to people enjoying more opportunities, a healthier environment and truly world class living in Hong Kong.

     Naturally, we shall continue to offer excellent value for money for visitors from UK. So please do come and visit us soon.

     Thank you very much.

Ends/Tuesday, November 19, 2013
Issued at HKT 00:59


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