Speech by Acting CE at Hong Kong-Japan and Japan-Hong Kong Business Co-operation Committees 36th Plenary Session luncheon (English only)
Chairman Cha (Chairman of the Hong Kong-Japan Business Co-operation Committee, Mr Victor Cha), Chairman Nagayasu (Chairman of the Japan-Hong Kong Business Co-operation Committee, Mr Katsunori Nagayasu), distinguished guests, ladies and gentlemen,
Good afternoon. It gives me great pleasure to join you today at the 36th plenary session of this enduring and productive partnership between Hong Kong and Japan.
March is, of course, a gorgeous time in Japan, with blooming sakura, budding leaves and plenty to see, hear and feel. It is also the best time for hanami-lovers to visit the country, as I am sure many Hong Kong people would readily agree.
Tourism has always been one of the growing ties between Hong Kong and Japan. Indeed, Japan is one of the most popular tour destinations for Hong Kong people. This explains why the travel balance is heavily in Japan's favour. Last year, more than 1.8 million Hong Kong people visited Japan, up by some 21 per cent over the previous year, whilst about 1.1 million Japanese visitors came here, up by about 4 per cent year-on-year.
Business is another well-established bond between us. For decades, Japan has been among our most important trading partners. Last year, Japan was our fourth largest trading partner in goods, with total merchandise trade at US$47 billion. Japan was also our fourth largest trading partner in services trade in 2014, with a total value exceeding US$10 billion. In investment, Japan was Hong Kong's ninth largest source of inward direct investment in 2015, with a stock amounting to US$29 billion.
Switzerland's International Institute for Management Development ranked Hong Kong as the most competitive economy around the globe last year. Quite proudly, Hong Kong has been rated the world's freest economy for 23 years in a row by Washington's Heritage Foundation. We embrace all things free: a free market economy, free trade and a free flow of capital and information. We have in place a low and simple tax regime, an independent judiciary, the rule of law, a robust intellectual property regime and first-rate information technology and communication infrastructure. We are also one of the safest cities in the world. Our crime rate of 825 per 100 000 population last year was the lowest since 1972. Like the world at large, many Japanese companies turn to Hong Kong as one of the safest and most business-friendly cities worldwide to house more than 1 300 offices or headquarters of Japanese companies.
No less important is our ability to connect. Throughout history, Hong Kong has always been a strong connector, from being an entrepot for trade with China in our early stage of development, an international hub offering all kinds of services before the turn of the century, to becoming a "super-connector" between the Mainland and the rest of the world since Hong Kong's return to Chinese sovereignty.
As a Special Administrative Region of the People's Republic of China, Hong Kong actually has the best of both worlds under the "one country, two systems" principle.
Specifically, under the first limb of "one country", Hong Kong enjoys preferential access to the Mainland market. Through the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), we have reduced, or even eliminated, in many cases, the barriers to trade in goods and services between Hong Kong and the Mainland. As CEPA is nationality neutral, Japanese companies incorporated in Hong Kong can gain tariff-free entry into the Mainland market for goods produced in Hong Kong. These companies also enjoy preferential treatment in accessing the Mainland's services sectors. Last June, CEPA's Agreement on Trade in Services came into operation, meaning that liberalisation of trade in services has basically been achieved.
As for the second limb of "two systems", Hong Kong practises "the other system" that is different from those of Mainland cities. We maintain our own social and economic system, a truly open and highly international society as well as worldwide business connections. This has made us an excellent partner for Mainland enterprises looking to invest or expand business overseas - in Japan, Asia, Belt and Road countries and other parts of the world.
The combined advantages of "one country" and "two systems" that Hong Kong enjoys are without parallel in the world. For example, finance - one of the pillar industries of Hong Kong - is also a good model to demonstrate our unique role of being the "super-connector". We are the world's largest offshore Renminbi centre, handling 70 per cent of global offshore Renminbi payments. Six Japanese banks and corporations have already issued Renminbi bonds here. And we are a global financing centre, with a stock market that is linked now with both the Shenzhen and Shanghai stock markets. Our Stock Exchange topped the world in terms of funds raised through initial public offerings.
We have also sharpened our edge as a premier asset management centre. Last December, the Securities and Futures Commission signed a mutual recognition of funds arrangement with Switzerland - the first time that Hong Kong funds gained direct access to the European market. We also successfully sought approval from the Legislative Council of a bill to provide a legal framework for open-ended fund companies. A bill to extend profits tax exemption to onshore privately offered open-ended fund companies is now under way. Premier Li Keqiang just announced two weeks ago that a bond market connect scheme will be established between Hong Kong and the Mainland this year. There are therefore abundant opportunities in Hong Kong.
Meanwhile, we will step up efforts in promoting the development of the financial sector. As announced in this year's Policy Address, the Government will consider the Financial Services Development Council's recommendations on taxation, laws, regulations, nurturing talents and other areas. This Council will work with the Trade Development Council in promoting Hong Kong's financial services to the world.
As for trade and commerce, we are in search of collaboration opportunities with international partners, including Japanese companies. Just last month, our InvestHK team visited Tokyo to encourage Japanese investors and companies to set up business in Hong Kong. Our Economic and Trade Office (ETO) in Tokyo, together with the Trade Development Council, organises trade promotion events in Japan regularly.
To strengthen our physical presence in our major overseas markets, we are fast expanding our network of Economic and Trade Offices. We established an ETO in Jakarta last year. A new one in Seoul is in the pipeline. We are working on the establishment of ETOs in India, Mexico, Russia, South Africa and the United Arab Emirates. Our goal is to take the number of ETOs in foreign countries from 11 - the number when the current-term Government took office - to a total of 18, up by over 60 per cent.
While we are expanding our international network, we have not lost sight of strengthening our connection within the Mainland of China to provide better support to Hong Kong companies and their business partners in the Mainland market. To this end, we will be adding four new liaison units under the five ETOs in each of the Mainland's five regions. By the middle of this year, we plan to set up liaison units in Tianjin, Zhejiang, Guangxi and Shaanxi, bringing the total number of liaison units to 11, compared with three before the current-term Government took office, and establishing our presence in 16 Mainland cities.
To live up to the challenges of the 21st century, we need to move up the value chain towards a high value-added, high-technology and knowledge-based economy.
That is why innovation and technology (I&T) has been placed at the forefront of this Government's policy agenda. I&T will be Hong Kong's future growth engine, not only creating jobs for our young people but also making our industries more efficient, productive, and competitive.
This Government has given unprecedented policy and financial support to drive the development of I&T. We set up the Innovation and Technology Bureau in 2015 and have invested some US$2.3 billion to fund start-ups, finance research and development, expand the Hong Kong Science Park, build a smart city and encourage high-technology production.
I am happy to say that our efforts are bearing fruits. Last year, Hong Kong counted nearly 2 000 start-ups, up by 24 per cent over the previous year. World-renowned research institutes and enterprises have established a presence here, including the Massachusetts Institute of Technology and Sweden's Karolinska Institutet.
This year, the Government will work to accelerate the growth of the I&T sector, including considering tax and financial concessions to attract I&T enterprises to Hong Kong. We are also pressing ahead with the 87-hectare Hong Kong-Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop. This new Park, four times the size of the Hong Kong Science Park, will open its doors to I&T sectors - not only from Hong Kong and the Mainland of China but also other parts of the world.
I see plenty of collaboration opportunities between Hong Kong and Japan in this respect, for Japan has always been a global leader in science, research, innovation and technology. We welcome your graduates, professionals, start-ups and corporations to set up business in Hong Kong. You can find here world-class talents, abundant capital, worldwide connections, and access to the vast and growing market of the Mainland. So please bring the message home and spread it far and wide.
Ladies and gentlemen, there is much to look forward to, much to celebrate between Hong Kong and Japan. I thank you all, and the Trade Development Council, for your continuing support and commitment to this important bilateral partnership and win-win relationship. I wish you all good health, every happiness and prosperity in the many years ahead.
Ends/Friday, March 24, 2017
Issued at HKT 14:42
Issued at HKT 14:42