Speech by CE at session of Boao Forum for Asia Annual Conference 2015 (English only) (with photos/videos)

     Following is the speech by the Chief Executive, Mr C Y Leung, today (March 27) at a discussion session on opportunities for multinationals and the role of Hong Kong in "One Belt and One Road" at the Boao Forum for Annual Conference 2015 in Hainan:

     Thank you very much, Victor (Victor Fung), distinguished guests, ladies and gentlemen.

     The topic I am going to address very briefly is the Silk Road Economic Belt and the 21st Century Maritime Silk Road. In short, "One Belt, One Road". So the Belt is the Road and the Road is the maritime route. You see what I mean, opportunities for multinationals and the role of Hong Kong. It's a great pleasure to be here, at the Boao Forum for Asia Annual Conference, once again. Like everyone else, I am eager to discover what Asia is up to today. What Asia's countries, regions and cities, its businesses and institutions, and its people, are planning. What they're thinking about. And how we can find common ground, common interest and common projects. How we can work together, grow together and prosper together.

     Our session this afternoon puts a timely spotlight on the Silk Road Economic Belt and the 21st Century Maritime Silk Road. These linked initiatives were introduced a little more than a year ago, as Victor said, by President Xi, and are expected to tremendously transform the economic and trade landscape of participating countries and markets. For the next few minutes, I'd like to tell you more about Hong Kong's role, as I envision it, in this far-reaching plan of engagement and economic development.

     When it comes to the original Silk Road, many of us harbour impressions centred on trade over vast periods of time and great distances. These hazy impressions are generally populated with camels and nomads plying their trade under an unforgiving desert sun.

     The Silk Road initiatives that are emerging will be less reliant on camels. In this modern day Silk Road initiative, "One Belt, One Road" is about creating economic co-operation through vast regions of Asia, Africa and Europe. The plan will open up a wealth of opportunities for a great number of countries and regions.

     Bringing together countries and economies on such a huge scale demands infrastructure - and the capital to build it - on an equally grand scale. Hong Kong can help make it happen.

     We have the capital markets to finance large-scale infrastructure projects throughout the region. Hong Kong is the world's seventh-largest stock market in market capitalisation and second in equity funds raised through initial public offerings.

     China's major international financial centre, and one of the world's financial capitals, Hong Kong has the experience, the expertise and the connections to serve as "One Belt, One Road"'s fundraising hub - the "super-connector" between the Mainland and the rest of the world.

     Take, for example, the Asian Infrastructure Investment Bank (AIIB), which is expected to be in place by the end of this year. Another example is the US$40 billion Silk Road Fund, along the lines of a long-term private equity venture, which was launched in 2014. Hong Kong's strengths in international financing and asset management can help support the new bank and the new fund's operation.

     That we can do so is testament to the "One Country, Two Systems" principle that shapes Hong Kong. That makes Hong Kong unique, allowing us to maintain our own financial system, entirely separate from that of Mainland China. Our currency is fully convertible, while capital - from the Mainland and from all over the world - flows freely in and out of Hong Kong. And that's critical to our role as a testing ground for the Mainland's continuing financial liberalisation. It's also critical to our central place in the internationalisation of the Renminbi.

     We are the world's offshore Renminbi hub. Hong Kong can provide Mainland enterprises and international investors with Renminbi services ranging from cross-border trade settlement to bond issuance. And, as trade and other economic activities along the "One Belt, One Road" expand, so, too, will the demand for settling trade in Renminbi, if only to reduce exchange risks. Hong Kong's highly efficient Renminbi trade settlement system is well in place to respond to that demand. After all, we've been handling the lion's share of Renminbi trade settlement since its beginnings in 2009. Renminbi trade settlement managed by Hong Kong banks last year came in at RMB 6.3 trillion - a jump of 60 per cent over the previous year. It is expected to grow further with the "One Belt, One Road" initiatives.

     Our Renminbi debt market has grown rapidly in recent years as well. It provides a reliable channel for enterprises looking to issue Renminbi bonds to meet project funding needs. In 2014, the issuance of RMB bonds in Hong Kong amounted to about RMB 200 billion, representing a year-on-year increase of 69 per cent. Hong Kong, I'm pleased to note, hosts the world's largest pool of Renminbi liquidity. At the end of January, it amounted to more than RMB 1.1 trillion. And that pool is steadily growing. Hong Kong can help companies raise funds in Renminbi to finance the transportation networks and other infrastructure projects that will make "One Belt, One Road" a ringing reality.

     The scheme will also encourage more and more Mainland enterprises to "go global" in pursuit of "One Belt, One Road"'s opportunities. As they do so, their asset and risk management service demands will rise accordingly. Hong Kong's wealth and asset management business has soared in recent years. And, once the mutual recognition of funds arrangement between the Mainland and Hong Kong is in force, and it is something we are discussing with the Central Authorities, it will enrich our investment funds.

     Hong Kong also boasts a wide variety of insurance services and derivative products. They offer sound reason for Mainland enterprises to manage their risks when investing in "One Belt, One Road"'s large-scale infrastructure projects.

     Hong Kong's services professionals can help beyond the provision of financial capital and expertise. Our legal professionals work with the world of business every day. They conduct due diligence, ensure contract enforcement and help resolve disputes, all under a system supported by the twin foundations of rule of law and an independent judiciary.

     Hong Kong was built on trade, and we remain today one of the world's greatest trading economies. Our geographical location, at the southern gateway to Mainland China, gives us unparalleled trade opportunities.

     And, I can tell you, we've taken full advantage of these opportunities. Hong Kong businesspeople have been trailblazing in Mainland China's economic development for decades. Today, some 20 per cent of the Mainland's international trade is handled by Hong Kong. Again, we serve as the "super-connector", enabling overseas companies to enter the China market, while assisting Chinese enterprises in going global.

     That longstanding expertise isn't going to go away. Indeed, I expect that Hong Kong will play an even stronger role in the years, and decades, ahead, as "One Belt, One Road" takes root and flourishes on three continents.

     In fact, we are taking steps to strengthen Hong Kong's trade and economic relationships with our neighbours in Asia, further consolidating our role as the "super-connector" to the Mainland. We are negotiating a free-trade agreement with the Association of Southeast Asian Nations (ASEAN), and are looking to set up a new Economic and Trade Office in Asia. We have concluded Investment Promotion and Protection Agreements (IPPA) with Bahrain and Myanmar. Later this year, we will begin negotiations on an IPPA with the United Arab Emirates, while continuing IPPA talks with Russia. These agreements enhance the confidence of companies looking to invest in Asia and Hong Kong. Similarly, they help protect Hong Kong businesspeople making investments in these regions.

     We are strengthening our economic and trade ties between Hong Kong and the region's promising markets in other ways as well. The Hong Kong Trade Development Council, our official trade promotion organisation, is exploring a variety of business opportunities arising from the "One Belt, One Road" initiatives. They include large-scale events in ASEAN, India and the Middle East this year.

     Logistics goes hand-in-hand with trade. And when it comes to "One Belt, One Road", I believe we are particularly well-situated along the Maritime Silk Road.

     Consider, for example, maritime cargo. Hong Kong is the world's fourth-busiest container port. The average annual container throughput exceeded 23 million TEUs over the past 10 years. Hong Kong Port provides comprehensive liner shipping services, with about 350 services a week connecting to more than 500 destinations worldwide.

     Thanks to Hong Kong's long maritime history, we have a strong base of ship owners and a cluster of diversified maritime services. These include ship agency and management, ship finance, ship broking and marine insurance, finance, ship registration, and maritime legal and arbitration services. As the Maritime Silk Road finds its sea legs, it will create fresh demand for shipping services, as well as quality maritime services. Hong Kong will be ready.

     As for air cargo, Hong Kong International Airport is the busiest air cargo airport in the world. Last year, it handled 4.4 million tonnes of cargo, running about 1,100 flights a day.

     Hong Kong can reach all major Asian economies within four hours' flight time, and half the world's population within five hours. And we are planning for a third runway. That will increase our airport's handling capacity to some 100 million passengers and nine million tonnes of cargo per year by 2030.

     The story doesn't end here. Hong Kong counts about 14,000 logistics companies, most of them serving the trade between China and the world. All of them are adept at providing supply chain solutions to fit the customised needs of global companies. Hong Kong's free-port policy, our efficient customs clearance, rule of law, strong intellectual property protection and level playing field provide strong support for our logistics sector.

     And for the executives of Multinationals here today, a piece of advice - if you are to take a slice of this promising initiative, what better place to service and support your business than Hong Kong, situated at the door-step of southern China and the "super-connector" to the Mainland of China, as well as the Chief Information Officer and Chief Knowledge Officer of the vast Country?

     Ladies and gentlemen, I am certain of Hong Kong's central place in the "One Belt, One Road" future. Being the "super-connector" to the Mainland, Hong Kong stands to benefit from, and has much to offer, to this 21st Century Silk Road initiative.

     I look forward to the forthcoming discussion with my follow panellists and other participants. Thank you.

Ends/Friday, March 27, 2015
Issued at HKT 18:44