Budget Speech by the Financial Secretary (4)

Augmenting Competitiveness

61. With continuing economic reform for over three decades, China's remarkable achievements have been impressive.  The success of Hong Kong's four pillar industries, namely trading and logistics, tourism, business and professional services and financial services, which are internationally competitive, is attributed not just to their innovation and upgrading efforts over past decades, but also to the economic development of the Mainland.  We need to capitalise on today's opportunities to add value to our already competitive pillar industries, keep pace with the times and get ready for challenges, taking a role in fostering China's prosperity.

"One Belt One Road"

62. The Central Government has put forward the initiatives of building the Silk Road Economic Belt and the 21st Century Maritime Silk Road, or "One Belt One Road" in short.  These economic co-operation corridors, spanning different regions in Asia, Europe and Africa, will promote co-development among countries and foster co-operation in the political, economic and social areas.  The initiatives feature "five links" in the arenas of policy, facilities, trade, capital and culture.

63. Many countries along the "One Belt One Road" have great development potential.  To strengthen trade ties with these markets, Hong Kong should expand co-operation, organise exchange visits, gain a deeper understanding of these countries, as well as pursue negotiations on Free Trade Agreements, Investment Promotion and Protection Agreements and Comprehensive Avoidance of Double Taxation Agreements.  Trade facilitation and investment promotion to secure business opportunities in various aspects should also be developed.

64. Hong Kong can work with Mainland provinces and municipalities to stage roadshows in these countries to facilitate trade and investment flows for regional economic integration.  This will create more favourable conditions for our goods, services and investment to access overseas markets.

65. While the Mainland is further strengthening its economic and trade ties with countries along the "One Belt One Road", Hong Kong, as an important financial, commercial and maritime centre in the world, can provide Mainland enterprises that seek to "go global" with a wide range of professional services in the financial and legal arenas, including international investment, cross-border trade settlement, Renminbi (RMB) bond issuance and asset and risk management services.

66. Last October, over 20 countries signed a memorandum of understanding in Beijing and formally announced a plan to establish the Asian Infrastructure Investment Bank (AIIB).  We shall endeavour to leverage our strength in financing and asset management to support its establishment and operation, and pursue actively the possibility of our joining AIIB.

67. A two-pronged approach should be adopted to further develop our pillar industries.  On the one hand, we shall capitalise on the new opportunities created by the "One Belt One Road" initiatives of our nation.  On the other, we shall endeavour to speed up the pace of moving our industries up the value chain.

Trading and Logistics Industry

68. Strategically located, and with an extensive trading network as well as a simple and open trading system, Hong Kong for years has been a regional trading and logistics hub underpinned by a well-established international transportation network.

69. We are among the world leaders in terms of both air and port cargo throughput.  Last year, Hong Kong's visible trade, including re-exports, domestic exports and imports of goods, amounted to $8.4 trillion, approaching four times of GDP.

70. To cater for the demand in modern supply chain management, the trading and logistics industry needs to develop towards the provision of high value-added services.  In this respect, air cargo services are of growing importance.  The cargo handled by the Hong Kong International Airport accounts for less than two per cent of our total freight volume by weight, but makes up nearly 40 per cent of our exports and imports by value.

71. With rising passenger and cargo throughput at the Hong Kong International Airport, the existing two-runway system will reach its maximum capacity in a few years.  It is imperative for us to take forward the development of a three-runway system (3RS) in order to meet our long-term air traffic demand, and to maintain our status as an international and regional aviation centre in the face of fierce competition from other airports in the region.  Having gone through the environmental impact assessment process, the Airport Authority (AA) has submitted its recommendations on the planning of the 3RS to Government.

72. I envisage that the construction works for the 3RS could commence in 2016 for commissioning in 2023.  AA estimated that, with full operation of the system, the airport could handle 100 million passengers and 9 million tonnes of cargo annually by 2030.

73. Aerospace financing is crucial to the development of high value-added aviation services.  Asia sees the fastest growth in demand for aviation services, and an intense need for aerospace financing.  We shall ride on the experience of other jurisdictions and explore possible measures that can promote aerospace financing business in Hong Kong.

74. The lack of back-up land is a big problem confronting our logistics industry.  The Transport and Housing Bureau has completed technical assessments for the ten hectares of logistics site reserved at Tuen Mun West.  We shall consult the local community as early as possible and release the site for the use of the industry by phases.

75. Apart from hardware, supporting software is also essential to strengthen our connection with overseas markets.  We are examining how best to further streamline departments' handling of import/export documents.  The provision of one-stop customs clearance service through a "Single Window" will closely follow mainstream international development.

76. The burgeoning of internet banking, electronic payment instruments and e-cheques in recent years has spurred the development of e-commerce.  With regard to cross-border trade, Government will explore with the industries the feasibility of promoting the use of electronic letters of credit to reduce cost.

77. While the strong growth of e-commerce generates business opportunities for the provision of logistics and delivery services, the prevalence of e-communication poses a challenge to traditional mail delivery business.  We shall review the business operation of Hongkong Post with the objectives of enabling the department to further support the development of the logistics industry in Hong Kong and expand its service offerings in response to market needs.

78. Hong Kong, the first among all members of the World Trade Organization (WTO), joined the Trade Facilitation Agreement (TFA) in late 2014.  TFA will motivate WTO Members to improve and harmonise the import/export and customs procedures, thereby bringing down trading costs and speeding up goods movement.

79. The Association of Southeast Asian Nations (ASEAN) is Hong Kong's fourth largest trading partner in terms of services and second largest in terms of goods.  We started the free trade agreement negotiations with ASEAN in the middle of last year to secure favourable access of our goods, services and investment to this market of enormous potential.

80. To enhance economic co-operation and integration between Hong Kong and Macao Special Administrative Regions, we are exploring a closer economic partnership arrangement with Macao.  Such arrangement, coupled with those already signed respectively by Hong Kong and Macao with the Mainland, will constitute a new economic and trade co-operation platform for the region.


81. Tourism, making up five per cent of GDP and employing 270 000 people, has been driving the growth of many industries.  In 2014, visitors to Hong Kong exceeded 60 million, an increase of 12 per cent over last year.  Total spending went up by nine per cent to more than $350 billion.

82. Our tourism industry would continue moving up the value chain to attract high-spending visitors.  We shall explore the construction of a convention centre above the Exhibition Station of the Shatin to Central Link to draw in more international business visitors.  We shall also work with the Guangdong and Macao authorities to promote multi-destination tourism for overseas visitors, and invite neighbouring ports to join the Asia Cruise Fund with a view to encouraging cruise companies to include Hong Kong in their itineraries.

83. On tourist facilities, Government will discuss with the Walt Disney Company the Phase 2 development of the Hong Kong Disneyland Resort.  This phase will cover an estimated area of 60 hectares, similar to that of Phase 1, with attractions, hotel development and retail facilities.

84. The construction of the "Iron Man Experience" in Hong Kong Disneyland and the waterpark at Tai Shue Wan in Ocean Park is expected to complete in 2016-17.  The new Central harbourfront will add new elements to the renowned scenic views of Victoria Harbour.  In addition to sightseeing facilities such as the Observation Wheel, a variety of carnivals, exhibitions and open-air concerts will take place from time to time.  These new facilities at the harbourfront will provide novel experiences that will keep visitors and locals amused.

85. The new hotel projects in Hong Kong Disneyland, Ocean Park and the airport's North Commercial District will come on stream, providing a total of over 2 200 rooms.  Ocean Park has also invited expressions of interest for the development of the proposed Fisherman's Wharf Hotel.  Furthermore, the sites facing Victoria Harbour within the "hotel belt" adjacent to the Kai Tak Cruise Terminal will be made available to the market starting from the end of this year.

86. Hong Kong has many locations suitable for alfresco dining where visitors can enjoy delicacies and Hong Kong's spectacular scenery at the same time.  I have asked relevant departments to implement as early as possible the proposal to facilitate alfresco dining operation, and to consider introducing Food Trucks, which is popular abroad, to the mix of Hong Kong's existing food scene.

(To be continued.)

Ends/Wednesday, February 25, 2015
Issued at HKT 11:40