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STH's speech at seminar on "Hong Kong as a Regional Logistics Hub - the Best Link in Your Global Supply Chain" in Kuala Lumpur (English only) (with photos)

     Following is the speech by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, at the seminar on "Hong Kong as a Regional Logistics Hub - the Best Link in Your Global Supply Chain" in Kuala Lumpur, Malaysia, today (December 4):

Distinguished speakers and guests, ladies and gentlemen,

     Good morning everyone. I would like to thank the Hong Kong Trade Development Council and our Economic and Trade Office covering this region for organising this seminar. It is always my pleasure to visit the beautiful country of Malaysia. On this visit I am leading a delegation from the Hong Kong Logistics Development Council and the Hong Kong Port Development Council, with a special mission to enhance Hong Kong-Malaysia friendship and to strengthen our economic co-operation.

Hong Kong-Malaysia relations

     Malaysia has been an important trading partner of Hong Kong. Our bilateral merchandise trade has grown at an average annual rate of 4.1 per cent over the five years from 2009 to 2013.

     Hong Kong treasures the economic relationship with Malaysia. In December 2009, we took the first step towards exploring the feasibility of entering into a bilateral free trade agreement (FTA) by signing a Joint Declaration on Strengthening Economic Co-operation. The Joint Declaration facilitates our co-operation in promoting and enhancing trade and investment, mutual visits and trade fairs and exhibitions.

     In April 2012, Hong Kong and Malaysia signed an agreement on the avoidance of double taxation, which provides added incentives for the business communities of both sides to engage in closer co-operation. In June this year, the Malaysian Investment Development Authority and Invest Hong Kong signed a memorandum of understanding to affirm our mutual commitment to investment promotion.

The negotiation of the Hong Kong-ASEAN Free Trade Agreement

     In the near future, we hope to achieve another milestone in solidifying our regional economic ties through reaching a Hong Kong-ASEAN Free Trade Agreement (HK-ASEAN FTA). The negotiations commenced in July this year and have been progressing smoothly. We expect the FTA to give further impetus to the flow of goods, services and investment in the region, thereby enabling both ASEAN and Hong Kong to participate more efficiently in the global supply chain and in raising our global competitiveness.

     Given Hong Kong's unique role as the pioneer international city of China, the HK-ASEAN FTA will no doubt also contribute to the further expansion of trade and business relations between ASEAN and China.

The new opportunities from ASEAN and China

     The global economic scene is in Asia's favour. In October 2014, the International Monetary Fund (IMF) further cut its global economic growth forecast for 2014 to 3.3 per cent, from 3.4 per cent in July. This is the third mark-down since the beginning of the year. Amid signs of a global economic slowdown, Asia's performance stands out, supported by surging international trade in the region. The IMF has forecast the GDP of 29 Asian developing economies to grow by 6.5 per cent in 2014 and 6.6 per cent in 2015.

     Economic growth in China has consistently outperformed major advanced economies; its GDP is forecast by the IMF to grow by 7.4 per cent in 2014 and 7.1 per cent in 2015. Such development accentuates the significance of Hong Kong as the natural springboard to the China market. Hong Kong now hosts over 7,500 regional headquarters and offices of foreign firms. Seventy of the world's top 100 banks also operate in Hong Kong. All of this sustains Hong Kong's role as an important regional base for international companies. Last year, Malaysia's trade with China was valued at some US$106 billion. Of that amount, 9.7 per cent or US$10 billion, was traded through Hong Kong.

     With international trade shifting to Asia, both Hong Kong and Malaysia stand to benefit. ASEAN and China together make up a huge market of around 2 billion people with a combined nominal GDP of over US$11 trillion. The rising living standards and increasing purchasing power of ASEAN and China will bring about ample business opportunity and strong growth momentum in the region. At this seminar I am sure the speakers and the audience will explore how Malaysia and Hong Kong can work together to leverage on the economic power of a rising Asia for mutual benefit.

Hong Kong's strategic location

     Hong Kong's logistics development enjoys the staunch support of the Central Government. China's 12th Five-Year Plan expressly affirms Hong Kong's role as an international transportation centre, a high-value goods inventory management and regional distribution centre.

     Hong Kong is strategically situated at the heart of Asia. We can reach all major Asian (including Chinese) cities within four hours' flight time from Hong Kong; and also within five hours, we can reach out to half of the world's population. Benefiting from our long trading history, Hong Kong has firmly established itself as the gateway to China and a regional logistics hub.

Hong Kong's institutional strengths

     Under "One Country, Two Systems", Hong Kong has continued to be one of the most open and vibrant cities of the world. We, as a Special Administrative Region of China, enjoy a high degree of autonomy with rights and freedoms. Our status as a free port and a separate customs territory is safeguarded. We maintain separate legal and judicial systems well-entrenched in the rule of law. Our taxation rate is low and our tax system is simple. Capital and information continue to flow freely.

     For the past 20 years, Hong Kong has been consistently ranked the world's freest economy by the US-based Heritage Foundation. Hong Kong ranks fourth in the World Competitiveness Rankings 2014, released by the Lausanne-based International Institute for Management Development, which attributed our success to exports, business efficiency and innovation. We are the third most liveable city in Asia, after Osaka and Tokyo, according to the Economist Intelligence Unit's Global Liveability Ranking released in August 2014.

Hong Kong's efficient logistics services

     As an international maritime centre, Hong Kong is home to the largest community of shipping, freight forwarding and logistics operators in Asia. We have transparent customs procedures and efficient customs clearance. Our logistics services providers maintain tight security along the supply chain and intellectual property protection is enforced vigorously, ideal for precious goods and brand-name products.

     Our logistics services providers further offer tailor-made supply chain solutions and comprehensive value-added services like bar-coding, price-tagging, pick and pack, quality control and customs clearance. Since Hong Kong has a long history as a trading hub, we have accumulated immense knowledge and experience in handling all sorts of goods, from wines to heavy construction machinery, from art treasures to racing horses.

     Our traders and service providers have a common language, cultural affinity and long-time experience with business and government organisations on the Mainland of China, while being fluent in English and well-versed in international business protocol.

Hong Kong - a global hub with excellent international connectivity

     Multi-modal connectivity is the cornerstone of a logistics hub. Hong Kong's logistics industry is well-supported by world-class road, air and sea connectivity that allows flexibility in supply chain solutions.

Land transport infrastructure

     On the land side, we connect extensively with Southern China, in particular the Pearl River Delta (PRD) region, which alone contributed to 9.3 per cent of China's GDP last year. Given Hong Kong's extensive road and rail infrastructure, it offers excellent connections to all major cities in the PRD. We are expanding our transportation network into the western part of the PRD, so as to reap its booming trade and logistics opportunities.

     The building of the Hong Kong-Zhuhai-Macao Bridge commenced in 2009. This mega-bridge, running 42 kilometres in total from one boundary facility to the other, will link up the cities of Hong Kong, Zhuhai and Macau. Upon the commissioning of the bridge, travelling time from Zhuhai to Hong Kong International Airport will be significantly reduced from four hours to 45 minutes and from Zhuhai to Kwai Tsing Container Terminals from three and a half hours to 75 minutes.

     The Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link, which is now under construction, will connect us to China's fast-expanding national high-speed rail network. When commissioned, it will greatly shorten cross-boundary journey time. For example, it will take only about 48 minutes to reach Guangzhou from the current two hours, about eight hours to Shanghai from the current 19 hours, and about 10 hours to reach Beijing from the current 24 hours.


     On the air side, Hong Kong International Airport is the busiest cargo airport and one of the busiest passenger airports in the world. Each week, there are over 7 000 flights linking Hong Kong to about 180 destinations worldwide, including about 40 cities in Mainland China. Last year, it handled 4.13 million tonnes of cargo throughput. In order to cope with the forecast air traffic demand in the long run, we are planning for the development of the three-runway system, which will more than double our cargo and passenger handling capacity by the 2020s, reaching up to 8.9 million tonnes and 100 million passengers respectively.


     On the maritime side, Hong Kong Port (HKP) is among the world's busiest container ports. In 2013, it handled some 22.4 million TEUs (twenty-foot equivalent units). We now operate about 380 weekly sailings to some 550 destinations worldwide. We are working closely with the terminal operators to implement a series of enhancement measures in the port's back-up areas to further enhance the port's efficiency. At the same time, we are undertaking dredging works to deepen the depth of the Kwai Tsing Container Terminals and the approach channels to 17.5 metres, so that the new-generation ultra-large container vessels may berth there at all tides by 2016.

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

     Apart from excellent connectivity, Hong Kong companies now enjoy privileged access to the China market under the Closer Economic Partnership Arrangement (CEPA). CEPA is a free trade agreement with Mainland China implemented since 2004. Under CEPA, foreign companies which establish businesses in Hong Kong or partner with Hong Kong companies stand to benefit from favourable treatment (such as zero tariff for goods of Hong Kong origin) in the export of goods, trading of services and investment facilitation. We welcome Malaysian enterprises to reap the benefits of CEPA through establishing operations in Hong Kong or partnering with Hong Kong companies.

Hong Kong - level playing field for all

     Ladies and gentlemen, in the increasingly globalised business world, the management of supply chains can be a real challenge. Hong Kong, which has thrived as a trading port for over a century, has continued to help shape and reshape world business through our well-established institutions, values and practices. We are also a super-connector between China and the rest of the world. We believe in free trade and offer a level-playing field. We care for quality service and efficiency. Professionalism is key to our business ethos.

     With the breadth and depth of our logistics services and our ever-improving connectivity, you can rest assured that you will find the right partner in Hong Kong to provide you with effective supply chain solutions to support your business endeavours, whether in the region or globally.

     On this note, thank you for coming to this seminar and the following luncheon.

Ends/Thursday, December 4, 2014
Issued at HKT 13:15


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