Speech by FS at Business Seminar on "Belt and Road Initiative: Connecting China, Hong Kong and Indonesia" (English only)
Mr Dino (Founder of Foreign Policy Community of Indonesia, Mr Dino Patti Djalal), Mr Hu (First Secretary of the Economic & Commercial Counsellor's Office of the Chinese Embassy in Indonesia, Mr Hu Xiaoshan), Your Excellencies, distinguished guests, ladies and gentlemen,
Selamat pagi! (Good morning!)
A warm welcome to you all to this seminar focusing on the Belt and Road Initiative. This is my first visit to Indonesia since I became Hong Kong's Financial Secretary in January. I am delighted to have this chance to meet you all today.
This seminar, co-organised by the Hong Kong Economic and Trade Office in Jakarta and the Hong Kong Trade Development Council (HKTDC), underscores the importance that we place on strengthening links with Indonesia, links that are crucial to the success of our two economies.
Indeed, it was here in Jakarta in 2013 when our President, Mr Xi Jinping, proposed for the first time the development of the 21st Century Maritime Silk Road.
As many of you probably know, the grand and visionary Belt and Road Initiative, comprising the ocean-going 21st Century Maritime Silk Road and the land-based Silk Road Economic Belt, encompasses some 60 countries across Asia, the Middle East, Africa and Europe. These countries together represent 60 per cent of the world's population, one-third of the world's GDP and one-third of the global merchandise trade.
Inspired by the ancient Silk Road, the Belt and Road Initiative is a collaborative and inclusive strategy that aims to promote infrastructural connectivity and policy co-ordination, thereby boosting trade and investment, and to deepen friendship and cultural exchanges among participating countries. It will be the driving force of the global economy in the 21st century. By enhancing infrastructural connectivity and stimulating international trade and investment flow in a collaborative and mutually beneficial manner, it will benefit the economic development of participating countries and deepen understanding and friendship among the people of different economies.
I am glad to see that the Initiative is gathering much momentum. To date, more than 100 countries and international organisations have shown their support, in one way or another, for the Belt and Road Initiative.
In May, 29 state leaders, including your president, Mr Jokowi, attended a high-level Belt and Road Forum in Beijing, to foster closer co-operation for mutual benefit under the framework of Belt and Road. I also joined the Forum, together with some 1 200 representatives from more than 130 countries and 70 international organisations.
Indonesia, for sure, is a key player in the Belt and Road Initiative, given its fast growing economy, its strategic location in Southeast Asia, as well as its vast human and natural resources.
Hong Kong, a long global model of free trade and free enterprise, also has what it takes to serve what the Belt and Road needs, under the unique arrangement of "one country, two systems".
Infrastructural connectivity is at the heart of the Belt and Road Initiative. A recent study by the Asian Development Bank estimates that developing Asia would need to invest US$1.7 trillion annually in infrastructure until 2030 to maintain growth momentum, reduce poverty, and address climate change.
As Asia's international financial capital, Hong Kong has the experience, expertise, international connections and deep liquidity to serve as the fundraising and financial management hub for those mega projects.
We can provide a wide range of financial services, from initial public offerings (IPOs), loan syndication, to private equity as well as Islamic finance. For the past 15 years, Hong Kong had been ranked among the top five globally, and in fact in the past two years, ranked number one globally, in terms of the amount of funds raised through IPOs.
Given the substantial Muslim population along the Belt-Road corridors, Islamic finance is expected to grow rapidly. Over the past three years, Hong Kong has issued three sukuk, attracting strong interest from investors in the Middle East and around the world. The successful issuances showcased not only Hong Kong's financial versatility, but also the confidence international investors have in us.
Tackling the infrastructure financing gap requires creative thinking, as well as concerted multi-disciplinary efforts. Last year, we set up an Infrastructure Financing Facilitation Office under the Hong Kong Monetary Authority, a designated platform bringing interested stakeholders together to facilitate the exchange of market information and to enhance collaboration in infrastructure investment. More than 60 key stakeholders, including multilateral banks, asset managers, commercial and investment banks, insurance companies, pension funds, infrastructure developers and operators, and professional services firms, have joined the Office as partners.
Besides, Hong Kong became a member of the Asian Infrastructure Investment Bank (AIIB) last month. Through participation in the work of the AIIB, Hong Kong shall be able to contribute in many ways to a variety of infrastructure projects in the region.
We have also been at the forefront of the Mainland's financial liberalisation for more than a decade. Today, Hong Kong is the world's leading offshore Renminbi business hub, with the largest pool of Renminbi liquidity outside the Mainland. In fact, around 70 per cent of offshore Renminbi trade settlement has been handled by banks in Hong Kong.
Hong Kong is also well-connected with the Mainland's capital markets, through the Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, as well as the Bond Connect launched earlier this month. Through Hong Kong, you can access financial products offered by Chinese business or authorities.
There is much more that Hong Kong can offer. Alongside our financial services prowess, we have a deep pool of world-class professionals across different disciplines - in law, accounting, engineering, architecture, management and consulting.
As a matter of fact, Hong Kong enterprises are already participating in quite a number of infrastructure and development projects in regions along the Belt and Road. Hong Kong professionals have been involved in projects such as airports in Cambodia and Sri Lanka, power plants in Thailand and Vietnam, a waste management system in Bangladesh, as well as a wind farm in Georgia and a metro system in Saudi Arabia.
The MTR Corporation is an example demonstrating the resourcefulness and versatility of Hong Kong companies. The publicly listed company is the operator of Hong Kong's renowned public railway system, and at the same time is engaged in the development and management of residential and commercial properties above the train stations. This unique "rail plus property model" has enabled the company to be self-sustaining and profitable, while keeping fares at affordable levels for Hong Kong citizens. The company has also been taking part in the building, operation and management of railway systems in the Mainland of China, the United Kingdom, Sweden and Australia.
The international community is familiar with Hong Kong's common law system, underpinned by an independent judiciary as well as a robust intellectual property regime. Given the Belt and Road's multilateral design, and the size and complexity of infrastructural projects, Hong Kong is perfectly positioned to serve as the Belt-Road's hub for legal matters and for resolving business disputes. Arbitration awards made in Hong Kong are enforceable in over 150 jurisdictions including the Mainland of China.
Of course, Hong Kong has many other compelling pro-business advantages - our open market with free flows of capital, information and people, a clean and efficient government, and a low and simple tax system with profits tax capped at 16.5 per cent and salaries tax at 15 per cent. There is no sales tax, no VAT or GST, no capital gains tax nor inheritance tax in Hong Kong.
These perhaps explain why around 8 000 overseas and Mainland companies have set up operations in our city, which is consistently rated as one of the world's freest economies and most competitive economies.
Ladies and gentlemen, there is clear synergy and advantages for Hong Kong and Indonesia to work together to grasp the unprecedented opportunities that are emerging along the Belt and Road corridors.
In fact, Hong Kong and Indonesia already have strong and well-established business relations. Last year, our bilateral trade amounted to nearly US$5 billion. A double taxation agreement between Hong Kong and Indonesia has been in force since April 2013, and in June this year we signed an agreement on the automatic exchange of financial account information for tax purposes.
We also look forward to expanding our trade and investment links with ASEAN.
ASEAN is Hong Kong's second largest trading partner in terms of merchandise trade. The value of trade between Hong Kong and ASEAN has grown by 72 per cent over the past 10 years, reaching US$107 billion in 2016.
The negotiation of the Hong Kong-ASEAN Free Trade Agreement has almost concluded and we hope to sign the agreement within this year. This will further facilitate the flow of trade and investment between ASEAN and Hong Kong. In other words, it will make it easier for companies in ASEAN and Indonesia to use Hong Kong's services platform to tap opportunities along the Belt and Road.
Hong Kong's professionals and enterprises have already had a broad footprint along the Belt and Road and are ready to work with you. You will be able to find more useful information from the compendium distributed to you today as well as from our designated Belt and Road website.
Our new Economic and Trade Office in Jakarta, together with the HKTDC office here, stands ready to assist you to take advantage of Hong Kong's premier financial, professional and high value-added services.
I wish you all a fruitful seminar today and every success in the future.
Terima kasih! (Thank you!)
Ends/Wednesday, July 26, 2017
Issued at HKT 13:04
Issued at HKT 13:04