Speech by the Financial Secretary
John C. Tsang
at the Young Presidents’ Organization Membership Dinner
(9 Dec 2013, Monday)
Patrick (Wong), Spencer (Fung) , Distinguished Guests, Members of YPO, Ladies and Gentlemen,
Good evening,
It is my great pleasure to join you all at the Young Presidents’ Organization Membership Dinner. It is always exciting for me to meet with our young business leaders, and hear your ideas.
Before starting talk, I thought it would be a good idea to frisk everyone here for hidden eggs. Please pass them to the front.
Actually, the egg incident brought back quite a bit of interesting memories from the time that I had the feeling of raw egg rolling in my ear and all over my face. That experience, which I had sworn not to divulge, was connected to certain activities that I was engaged in over 40 years ago as a member of my fraternity in college. I never thought such feelings could happen more than once in any lifetime.
Preparing for this event, I was reminded of a quote from Amazon CEO Jeff Bezos who is full of new ideas. He once said, and I quote: “In business, what’s dangerous is not to evolve.” End quote. What jogged my memory of this line was a recent story about Amazon’s latest innovation: package delivery by flying drones. Clearly, when it comes to evolving the online retail business, Mr Bezos not only talks the talk, he also walks the walk, and perhaps more specifically, flies the drones. I suspect, however, that the aviation authorities will have a few questions before Amazon’s latest idea gets off the ground, so to speak.
As a champion of economic freedom, Hong Kong walks the walk of open market and fair play. This philosophy has underpinned Hong Kong’s economic stability, growth, and prosperity over many years. It has also provided us with much-needed flexibility to overcome crises of various proportion that, at times, have shaken the foundation of our economic well-being. This flexibility is essential for our city to constantly regenerate itself and evolve to keep pace with the rapid developments in our region.
For Government, economic freedom is about more than maintaining low taxes and discarding red tape. It is also about protecting the rule of law, promoting intellectual property rights and establishing the right regulatory environment for an effective market system.
The US-based Heritage Foundation has ranked our city as the world’s freest economy for 19 consecutive years. Canada’s Fraser Institute consistently rates Hong Kong number one in its Economic Freedom of the World Index. While the Government strives to provide the right business environment, any free and open economy is only as successful as the companies that operate in it. Fortunately, for Hong Kong, we have a lot of successful companies, and our city continues to attract new investments.
With a level playing field for foreign and local investors alike, Hong Kong is the preferred destination for international trade and investment in Asia. Last year, Hong Kong was the 3rd largest recipient of foreign direct investment in the world, after only the US and Mainland China. That is not bad for a city of just seven million people.
Importantly, many of the world’s largest financial institutions use Hong Kong as their regional base in Asia. There is huge potential to further develop our financial services industry. Just last month, the newly established Financial Services Development Council delivered its first batch of six reports. These reports, prepared by senior practitioners of the financial services industry, contained concrete and well thought-out recommendations for the development of financial services in Hong Kong. These recommendations are consistent with our overall thinking. In fact, we are already in the process of implementing many of the proposed initiatives, including offshore development of the Renminbi business, asset management business and Real Estate Investment Trusts.
Hong Kong’s gateway role to and from the Mainland of China and our strategic location in Asia is a magnet for foreign firms seeking to expand their operations in Asia. Yet, we must continue to evolve to stay competitive. We must continue to enhance our connectivity with our hinterland. Mega cross-boundary infrastructure projects under construction, including the 29 kilometers Hong Kong-Zhuhai-Macau Bridge and the Guangzhou-Shenzhen-Hong Kong Express Rail Link, will serve as new corridors for future business opportunities.
Looking a little further ahead, we have plans to expand the Hong Kong International Airport. We are also developing a whole new CBD at Kowloon East which will provide some 4 million square metres of additional office space in the heart of the city. To put this in context, that is about twice the amount of office space currently available in Central. These are just few of the areas where Government is working to expand the economic capacity of our city.
Hong Kong’s deepest roots are those of a trading port. Today, high-quality services and state-of-the-art logistics infrastructure support Hong Kong’s position as a leading regional hub for trade, logistics, distribution, and transportation. Our airport and container ports are among the busiest and most efficient anywhere in the world. We are currently the world’s 9th largest trading entity with total goods and services trade equivalent to more than 4 times our GDP.
Hong Kong is able to punch well above our weight in economic terms, not least because we have Mainland China firmly in our corner – or, perhaps more precisely, just across the boundary. The China factor is an opportunity that we are continuing to exploit at every turn. Our position – both geographically and geopolitically – makes Hong Kong the convenient first stop for overseas enterprises that are keen to access the Mainland markets and, increasingly, for Mainland companies to “go global”.
As a node in the global trade, finance and business network, Hong Kong handles about 13% of Mainland China’s external trade. Hong Kong is the largest investor in the Mainland, accounting for a good portion of the stock of realised direct investment in the Mainland at end-2012. We are also the largest recipient of outward direct investment from the Mainland. These statistics tell an important tale of the reciprocal benefits from the two-way relationship between Hong Kong and the Mainland, a relationship that both sides cherish and are developing together.
We also work actively on the G2G level on a number of critical areas including: the internationalisation of the Renminbi; expanding and improving the implementation of CEPA; liberalising cross-boundary trade in the Pearl River Delta region and developing a new innovation hub at the Lok Ma Chau Loop.
Besides having the advantage of a unique relationship with the fast growing large economy in the world, we must seek to enhance Hong Kong’s competitive advantage as an international business and financial centre in Asia. We have the necessary world-class hardware and software to compete on the global stage. Over many years, we have adopted international values of fair play, the rule of law, transparency and corporate social responsibility. We have adopted these values, not just because it is the right thing to do, but because it is the best thing for Hong Kong. We look to our company CEO’s and Directors to uphold these values day in and day out, as well as from the boardroom to the shop floor.
At the same time, Government is resoluting in protecting Hong Kong’s core values under the principle of “One Country, Two Systems”. These include our common law system underpinned by an independent judiciary, a liberal immigration regime, a clean and efficient civil service and a free, and often vocal, media. Maintaining these values is important to Hong Kong because they provide the unique identification for our city as truly international marketplace, unlike any other in Asia.
Ladies and Gentlemen, Hong Kong’s economic model has evolved over the decades from a manufacturing base to a services centre, and more recently, towards a knowledge-based economy. At the same time, we have remained true to the principle of promoting a highly open business-friendly environment.
Our CEOs are well-versed in the opportunities in making money in a free and open economy right on China’s doorstep. The Government welcomes ideas and advice from you, our business leaders, on how we can do even better.
I am “all ears” as I prepare my Budget for the next financial year. With this in mind, I would like to share with you some free financial advice from one of the world’s wealthiest CEO’s, Warren Buffet. Apparently, Mr Buffett lives by just two simple rules: “Rule number 1: never lose money. Rule number 2: never forget rule number 1”.
Thank you very much. Have a Merry Christmas and a prosperous 2014.
December 9, 2013
