Speech by SCED at 34th Annual General Meeting Luncheon of Hong Kong Retail Management Association (English only)
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Thomson (Chairman of the HKRMA, Mr Thomson Cheng ), Peter (Chairman of Hong Kong Tourism Board, Dr Peter Lam), distinguished guests, ladies and gentlemen,
My pleasure to be with you today.
Across the world, news headlines say retailers are facing strong headwinds, as they try to reconcile a brick-and-mortar presence with that online. Retail business is of course subject to the bigger economic and trade climate. The global economy, though recovering since the last financial crisis, does not seem to have a uniform growth across markets in different continents.
I came back yesterday from Marrakesh after attending the World Trade Organization (WTO) Informal Ministerial Gathering, and I brought back with me quite a depressing readout that after over two decades of discussions, the Doha Development Agenda, that was supposed to further liberalise trade and lower market barriers, is nowhere within reach of agreement, making the coming Ministerial Conference have a rather gloomy outlook.
When we read the international trade news, protectionalistic measures, trade conflicts, regional instability are not uncommon headlines. We also have trade conflicts looming big between two trade giants, with one trying to redefine fair trade as surplus that it could find favour with. On the other side of Atlantic, the mist of Brexit still clouds both the UK (United Kingdom) and the EU (European Union) and there seems no clear sight of any certainty as to how the break-up could end up.
Against such a backdrop of the global economic trade climate, Hong Kong seems to be doing fine. Yes, indeed we are. Not only are we doing fine, we seem to have ridden out of the storm and the figures today actually paint quite a promising picture:
- GDP near 4 per cent growth in first half of the year, stronger than expected;
- A persistently low 3.1 per cent unemployment representing full employment;
- 8 per cent strong growth in trade showing a clear sign of robustness;
- Clear rebound of 2.7 per cent and 3.2 per cent growth in retail sales and volumes compared with last year;
- And a 2 per cent growth in tourist figures both from the Mainland and overseas
The above is by no means soft. The question is whether we can do even better and if so, how.
To address the above questions, we must reflect on ourselves. The fact that we are doing fine is fundamentally due to our strength, but no less for the reason that Hong Kong is enjoying the neighbourhood of fast growing, steadily opening, pro-trade regions of Asia. Twenty years ago, Hong Kong's major trading partners, in the order of value, were China, the US (United States), the EU and Japan. Today, ASEAN has surpassed the US, EU and Japan to come second. And China alone has grown from the 11th trading entity two decades ago, gained access to the WTO, entered into FTAs (free trade agreements) with a number of key partners and stands tall today as one of the top two trading entities in the world.
Clearly, the growth of ASEAN trade is also a result of increased trade and investment with China, and that many of ASEAN countries also followed the footprint of China in opening themselves up for trade and investment. If the past figure is any yardstick to go by, Hong Kong's economic growth was a direct benefit of riding on the tide of more open trade in our region.
Looking ahead, we are seeing such a high tide of trade and investment that activities would surely increase - and in multitude, scale and volume with our country's Belt and Road Initiative, and the proposal to develop Hong Kong, Guangdong and Macao into an integrated Bay Area Economic Region.
It is worth noting that for the Belt and Road Initiative, we are not talking about a one-way street of Chinese enterprises and investment going out, but an interactive process of trade and investment using Hong Kong as the centre for capital funding, deal making, risk assessment and possible arbitration for commercial dispute. It has also developed quickly into a global movement widely received now by over 100 countries. One must realise that we are talking about an initiative to connect over one-third of the global population and eventually two-thirds of global trade, businesses and global income. And Hong Kong is well placed as the launching pad for this initiative with our unique strength in finance, investment, trade and professional services that could serve as the engine for the new shuttle that will travel along the Belt and Road.
The Bay Area proposal, on the other hand, puts Hong Kong right at the hub of a new economic region with a population of 66 million and an aggregate GDP roughly the size of Australia, not to mention the strong complement between Hong Kong and the nine adjacent cities on all economic and social fronts.
Hence, the Government has highlighted in the recently released Policy Address that we must seize the golden opportunity of these two national initiatives as the twin engines for our economic development. In this regard, we are finalising an agreement to be signed with the National Development and Reform Commission (NDRC) on advancing Hong Kong's full participation in the Belt and Road Initiative, outlining areas that we believe Hong Kong is good at. In addition, we will shortly set up a joint working mechanism to work together with the CPG (Central People's Government) authorities, including the NDRC, MoC (Ministry of Commerce) and MFA (Ministry of Foreign Affairs) on following through with the implementation of the agreement once signed. These government to government connections are there to reinforce our role as the facilitator for the businesses through securing a good and solid grasp of the policy direction and deliberation of the Central Government.
In parallel, we are expanding and intensifying our external trading relationship through the signing of free trade agreements, investment promotion and protection agreements, as well as comprehensive agreements for the avoidance of double taxation with targeted overseas countries. The recently concluded FTA with ASEAN, and the current FTA negotiation with Australia and our strategic trade dialogue with the UK are examples of another level of government to government facilitation to enhance market access and investment protection. Our future plans on the above agreements will also be guided by the trade and economic prospects to arise from our participation in the Belt and Road Initiative.
In addition, we are seeing the TDC (Hong Kong Trade Development Council) advancing its role in its participation in the Belt and Road Initiative, including organising trade missions, developing research and data, organisation of the annual Belt and Road Summit for business matching, and large scale exhibitions. The exceptionally good turnout of over 3,000 participants from over 50 countries at the Belt and Road Summit held last month spoke for itself on how our overseas partners see Hong Kong as the marketplace for this development.
Closer to home, we are seeing a number of Policy Address initiatives that will bring value to the retail business, and they include:
- Our blueprint for upgrading and strengthening tourism in Hong Kong;
- Our promotion of creative industries and design to develop Hong Kong into a capital of design, including the injection of $1 billion to the CreateSmart Initiative, the development of a design base for fashion industries making use of the cluster of fashion-related industries and retailers in Sham Shui Po; and
- Our decision to expand the Hong Kong Convention and Exhibition Centre (HKCEC) in Wan Chai, bringing about 38,000 square metres to sustain Hong Kong's leading role in the convention and exhibition businesses.
On tourism, there is a strong connection between the performance of the local tourism and retail sectors. In 2016, tourist spending on shopping accounted for about 35 per cent of total retail sales in Hong Kong. Our plan is to upgrade and strengthen Hong Kong as the world city of tourism through enriching both the tourist attractions and mega events that are welcomed by tourists. We will be riding on much-improved transport infrastructure with the completion of the Hong Kong-Zhuhai-Macao Bridge and the high-speed railway to pursue multiple destination tourism with Hong Kong as the base. So doing would increase the span of stay of tourists, especially those who are medium and long haul visitors. We will also expect to see a much enhanced list of tourist attractions, including the heritage and cultural development of the former Central Police Station and West Kowloon Cultural District, just to name a few. We will also do city dress-up along selected tourist routes, promote green and geo tourism, and support smart tourism by way of innovation and technology applications.
For the convention and exhibition businesses, the badly needed shortage of space will be caught up by the decision to allow the HKCEC (Hong Kong Convention and Exhibition Centre) to expand by building across to the Wanchai Government Tower site and on top of the new MTR station, bringing a total of 38,000 square metres additional space. Conventions and exhibitions will bring business into retail, and we notice that the average spending of MICE visitors amounts to $7,700, which is well higher than an ordinary traveller.
Creative industries, on the other hand, could also help retail. The emphasis of design in products; problem solving in process re-engineering; and smart marketing and service improvements by adopting a more customer-friendly design, are all possible enhancements that could be brought to the retail trade.
And providing a more competitive business environment, especially for SMEs, micro SMEs and start-ups, is central to the theme of this Policy Address. The unprecedented and substantial cut of the profits tax and substantial tax rebates for innovation and research are the clear determination of the new Government for Hong Kong to remain the most competitive city for business in the world.
In a wider context, what the Policy Address intends to bring out is that Hong Kong’s economic prospect is hopeful of a brighter future if we pull our acts together in focusing on what we can do and what Hong Kong is good at. There is a strong sense of hope that we could instill among young people - be they on the job or aspiring to be a boss some day.
Together with our traditional strengths, can-do spirit, and the intrinsic advantage of "one country, two systems", we believe we can afford to dream bigger and do better.
The above is by no means an exhaustive list, but I am sure the HKRMA is well placed to advise the Government on what we can do more of in working together with the business sector.
With this brief outline, I am happy to take questions from the floor.
Thank you.
Ends/Friday, October 13, 2017
Issued at HKT 17:43
Issued at HKT 17:43
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