Monday, 4 May 2015

HK an ideal base for EU companies

Chief Secretary Carrie Lam

Over the past five years, Hong Kong-Belgian trade has averaged growth of nearly 9% a year. And, last year, of the total trade between Belgium and Mainland China, some one billion euros' worth of goods was routed through Hong Kong. That represents more than 5% of Belgium's trade with the Mainland.


That, as they say, was yesterday. As for today, and tomorrow, well, to take a phrase from Chinese President Xi Jinping, a "new normal" seems to be settling into the world's major economies. According to the International Monetary Fund, the global economy is expected to grow only about 3.5% in 2015. That's pretty much the same as last year.


For Mainland China, the "new normal" is a GDP growth target of about 7%, with the Mainland focused on sustainable growth and continuing market reforms. Given Hong Kong's deepening economic integration with the Mainland, those reforms will continue to create significant prospects for Hong Kong. Equally, they will offer considerable opportunity for the economies, and companies, that work with Hong Kong.


Offshore renminbi hub

Money itself is one major opportunity. I'm referring, of course, to China's currency, the renminbi, and Hong Kong's status as the world's largest offshore renminbi centre. Last year, renminbi trade settlement handled by banks in Hong Kong totalled more than RMB6.2 trillion. That's some 930 billion euros. It represents a staggering increase of about 63% over the previous year.


Our Renminbi Real Time Gross Settlement system links the Mainland, Hong Kong and other major financial centres. It assists well over 200 banks from all over the world in making renminbi payments in real time. I welcome Belgian banks to make use of the system for renminbi trade settlement and other renminbi-driven financial transactions. It is sure to help boost Belgium's trade with China.


I also welcome Belgian companies to issue renminbi bonds in Hong Kong. The range of issuers continues to expand, with issuances coming from Hong Kong, as well as from multinational companies. They include McDonald's, which issued renminbi bonds in Hong Kong to finance its operations in the Mainland, and the Caterpillar Financial Services Corporation, which has also issued renminbi bonds in Hong Kong.


Global connector

Then there's the Shanghai-Hong Kong Stock Connect, launched just last November. Thanks to the programme, investors from Belgium, and from all over the world, can now use the Stock Exchange of Hong Kong to trade, directly, in more than 500 A-shares listed on the Shanghai Stock Exchange.


The world, I'm pleased to note, is doing just that. Both northbound and southbound turnover enjoyed record-breaking days in the past few weeks.


We are now working to launch the Shenzhen-Hong Kong Stock Connect. The point is clear: Hong Kong is your connection to China and China's connection to the world. This is what our Chief Executive calls our role as "super-connector".


Links expand, deepen

Those links continue to expand and deepen. Our merchandise and services suppliers, for example, enjoy preferential treatment in doing business in the Mainland, thanks to the Mainland and Hong Kong Closer Economic Partnership Arrangement, or CEPA. That advantage applies equally to European companies that set up in Hong Kong or partner with Hong Kong companies.


In March this year, under CEPA, Hong Kong and Guangdong Province realised basic liberalisation of trade in services. Guangdong, of course, is a key investment centre for Hong Kong companies. Indeed, about one-third of Hong Kong's outward direct investment in the Mainland is focused on Guangdong.


The ground-breaking agreement enables Hong Kong investors to take early advantage of the opening up of Guangdong's services sectors. The agreement also creates a model for the liberalisation of trade in services to Hong Kong companies right across Mainland China.


In short, Hong Kong is there, doing business in Mainland China, where the world wants to be.


Unlimited prospects

Where China wants to be has become clear, as well. Details of the new Silk Road Economic Belt and 21st Century Maritime Silk Road programmes, known as "One Belt, One Road", were revealed in March. Collectively, they offer unlimited growth prospects.


Spearheaded by President Xi himself, the initiatives look to expand China's transcontinental connectivity and promote economic, political and cultural development among countries spanning three continents. The Silk Road Economic Belt will link China with Europe via central and western Asia, while the maritime Silk Road will deepen the Mainland's connections with southeast Asia, Africa and Europe.


President Xi and Premier Li Keqiang announced the Asian Infrastructure Investment Bank (AIIB) initiative during their respective visits to southeast Asian countries in October, 2013, not only to complement and support the Belt and Road's development, but also to provide financial support for the development of infrastructure and other productive sectors in Asia.


Twenty-two Asian countries signed a memorandum of understanding in Beijing last October and formally announced a plan to establish the AIIB. At present, 57 prospective founding members are working on the draft Articles of Agreement for the AIIB.


Hong Kong endeavours to leverage our strength in financing and asset management to support the establishment and operation of the AIIB, and is actively pursuing the possibility of our joining the AIIB.


Meeting services demand

Apart from finance, Hong Kong's professional services will certainly play an important part in these strategic initiatives, which will create immense demand for a range of high-level services.


Our highly qualified professionals can help beyond the provision of financial capital and expertise. Our legal professionals work with the business world every day. They conduct due diligence, ensure contract enforcement and help resolve disputes, whether in court or through mediation and arbitration.


To provide technical support to the large-scale infrastructure projects along the "One Belt, One Road", Hong Kong can also leverage our competitive edge in trade and logistics, architecture and engineering project management as well as environmental and risk assessment.


Thanks to Hong Kong's global business and trade expertise, our standing as China's international financial centre and our world-class services sectors, Hong Kong has much to offer the economies that will eagerly embrace this grand, 21st century vision. Equally, we have much to gain. Partner with Hong Kong, and so, too, do you.


Business-friendly city

Hong Kong, after all, has created the world's most business-friendly environment. Our tax regime is low and simple; information, trade and capital flow freely and our transportation and communications links are superlative. All these are underpinned by an unwavering commitment to the rule of law. Our judiciary is staunchly independent and our intellectual property protection regime as robust as any in the European Union.


Earlier this year, Hong Kong was again named the world's freest economy by the Heritage Foundation and The Wall Street Journal. That makes 21 years in a row. That's why, as of last June, nearly 7,600 mainland and overseas companies were based in Hong Kong. That includes more than 50 Belgian companies and, collectively, well over 1,900 companies from the European Union.


I invite you to join them in Hong Kong. Whatever your business, whatever your business plans. And that certainly includes start-ups, whether you plan to swallow Alibaba or to sell Belgium frites from a designer food truck. More than welcoming start-ups, Hong Kong needs them.


Startups nurtured

Keeping fledgling start-ups going is another issue, one that demands private-sector investment. In his 2015 Budget, Financial Secretary John Tsang announced the creation of a Corporate Venture Fund by the Hong Kong Science & Technology Parks Corporation. Through the fund, the Science Park will invest in start-ups on a matching basis with private funds.


Over the years, the Science Park and Hong Kong Cyberport have helped many companies spread their wings, providing them with affordable working space in an inspiring environment. Helping them find financing, as well.


We are now seeing an upsurge in private incubators and accelerators. And our efforts in supporting technology start-ups are beginning to pay off. A recent InvestHK survey revealed more than 1,000 start-ups in 23 working spaces and four incubators in Hong Kong. That's up 30% over 2013 totals.


Overseas talent welcome

Like Japan, and many European countries, Hong Kong's population is rapidly aging. Indeed, I chair the Steering Committee on Population Policy in Hong Kong. And we are actively formulating plans, and policies, to respond to our demographic realities, to minimise their impact on the economy, and the community of Hong Kong.


That means nurturing our local manpower, unleashing their full potential, taking better advantage of all sectors of our society. It also means encouraging talent from outside Hong Kong. And we are doing just that.


A variety of enhancement measures will soon be introduced to the admission schemes which are designed to attract bright, young - and not so young - professionals and entrepreneurs to come and stay in Hong Kong. For their future and for the future flourishing of Hong Kong.


Chief Secretary Carrie Lam gave these remarks at the Belgian Business Leaders Luncheon in Brussels.

Otmane El Rhazi
Department of Commerce
Economic Development
Text/Mobile, +44 7414 782 320

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