Tuesday, 5 May 2015

Tap HK's unique advantages to succeed

Chief Secretary Carrie Lam

It is a great pleasure to be here, in Dublin, a city that beautifully balances timeless and contemporary culture with the fine art of making money. And does both on a global scale.

 

I've enjoyed an eventful day in Ireland's capital. Among many other things, I've visited the Centre for Digital Content Platform Research and the Trinity College, had meetings with three government ministers, and this evening I have met Mr Harris, and signed a memorandum of understanding on cultural cooperation between Hong Kong and Ireland.

 

In general, our relations are encouraging. While our trade is modest - Ireland is Hong Kong's 15th largest trading partner among the 28 European Union member states - it is growing. Last year, our total trade exceeded 730 million euros. That's up nearly 9% over 2013.

 

Some of that increase may well be attributed to the opening, last year, of the Consulate General of Ireland in Hong Kong. Consul General Peter Ryan is working very hard to build trade and investment ties between Hong Kong and Ireland. He certainly has enthusiastic support from our local business community, and indeed from the Hong Kong Special Administrative Region Government.

 

HK-Irish ties strengthened

While the Irish community in Hong Kong is small, it's involved - and brilliantly so - in just about every sector of Hong Kong society. There is, of course, the Irish Chamber of Commerce Hong Kong, but there's also the Hong Kong Gaelic Football club, and the Celtic Connections, which boasts both a choir and an orchestra devoted to Celtic and contemporary music.

 

Back in the 1930s, the Irish Jesuit started running the two Wah Yan Colleges in Hong Kong, which evolved into two of the most elite and prestigious boys' schools in Hong Kong. I am thankful for the high-quality education brought by the Irish Jesuit fathers as both of my sons are graduates of Wah Yan Primary School.

 

And the St Patrick's Society of Hong Kong does its part, promoting Irish culture, as well as a grand annual ball, attended last year by your Minister for Public Expenditures & Reform, Brendan Howlin.

 

This year was particularly memorable for our Irish community, which held the very first St Patrick's Day parade in Hong Kong. I can assure you there was plenty of emerald green to marvel about, from the hairpieces on parade to the celebratory pints at Hong Kong's Irish pubs.

 

This year was noteworthy, as well, for the visit to Hong Kong of Simon Harris, your Minister of State, Department of Finance, who has kindly agreed to join us this evening. Mr Harris attended the Asian Financial Forum, Hong Kong's annual financial summit, in January this year. He addressed an audience of more than 2,600 global financial and business professionals at the Forum.

 

He also spoke at a seminar on finance, noting that Hong Kong could help Ireland in its new strategy of promoting the country's international financial services. To quote Mr Harris: "I see Hong Kong - a key financial centre in Asia - as an important partner in the future implementation of this strategy... The internationalisation of the fund industry in China represents the largest opportunity within fund management this decade and next."

 

I'm here to tell you that Hong Kong can, indeed, play a valuable role in the development of Ireland's financial sector, helping it find opportunity in Asia and, especially, in Mainland China. Hong Kong is, after all, China's international financial capital. Thanks to our "one country, two systems" arrangement with the Mainland, Hong Kong has advantages no other economy can hope to equal.

 

Offshore renminbi hub

That's particularly true in financial services, where our deepening economic integration with the Mainland means first-mover advantages. Consider, for example, the renminbi. It's been 11 years now since Hong Kong was given the opportunity to build the renminbi's presence and acceptance internationally.

 

Today, Hong Kong is the world's largest offshore renminbi centre, handling some 70% of the world's renminbi payments. Through cross-border trade, direct investment and portfolio investment, Hong Kong links offshore and onshore renminbi markets, promoting the healthy circulation, and development, of renminbi funds.

 

In 2014, renminbi trade settlement managed by banks in Hong Kong exceeded RMB 6.2 trillion. That's about 930 billion euros. It's up a bullish 63% over the previous year. Our Renminbi Real Time Gross Settlement system connects the Mainland, Hong Kong and major financial centres, helping more than 200 international banks make renminbi payments in real time. Irish banks are welcome to use the system for renminbi trade settlement and other financial transactions. I'm confident it will boost your trade with China.

 

Seamless conduit

Then there's the Shanghai-Hong Kong Stock Connect, launched last November. Under the programme, investors from Hong Kong, and overseas, can now trade in more than 500 Shanghai-listed shares through the Hong Kong Stock Exchange, directly, for the first time. Similarly, Mainland investors can use onshore renminbi funds to invest in shares listed on the Hong Kong Stock Exchange.

 

And they're doing just that. Last month, both northbound and southbound turnover enjoyed record-breaking days. Like the offshore renminbi business, the Stock Connect showcases Hong Kong's strengths as a seamless conduit between the Mainland and the rest of the world.

 

And there's more China news in our financial horizon. We are working with Mainland officials on the Shenzhen-Hong Kong Stock Connect, and that launch is likely to take place in the second-half of this year.

 

Turning to broader business promise, Hong Kong has enjoyed free trade with Mainland China for more than a decade now. The Mainland and Hong Kong Closer Economic Partnership Arrangement, or CEPA, gives Hong Kong products and services preferential treatment in the Mainland.

 

For Irish companies, the good news is that CEPA is nationality neutral, which means that foreign companies incorporated in Hong Kong can realise the same advantages that local companies enjoy. You need only set up in Hong Kong or partner with Hong Kong companies, the vast majority of which are small and medium-sized enterprises.

 

SMEs bolster economy

In fact, there are some 320,000 SMEs in Hong Kong. They account for 98% of our companies and employ 50% of our private-sector workforce. Their success is our success, which is why, in the 2015-16 Budget, our Financial Secretary revealed a range of support measures for Hong Kong SMEs, calling them "the mainstay of our economy."

 

I'm pleased to learn that it's very much the same in Ireland, where SMEs make up more than 99% of active companies. Put our SMEs together, and I'm confident that good things can happen. The opportunities are certainly there for us.

 

Consider, for example, the latest CEPA development. In effect since March, it gives Hong Kong's services trade liberalised access to Guangdong Province, the richest of the Mainland's provinces and regions. Hong Kong is not only the largest investor in the Mainland, it's also the largest single investor in Guangdong. In 2013, the province accounted for about one third of our outward direct investment in the Mainland.

 

The agreement enables Hong Kong investors to take early advantage of Guangdong's service sector openings. And there's more promise here, as well, thanks to the new Guangdong Free Trade Zone. Established just a couple of weeks ago, the Guangdong FTZ will supercharge Hong Kong business and investment in Guangdong.

 

Initiatives boost connectivity

Hong Kong prospects go well beyond Guangdong. Details of Mainland China's new Silk Road Economic Belt and 21st Century Maritime Silk Road programmes - known as "One Belt, One Road" - were made public in March. Collectively, the initiatives are designed to expand Mainland China's transcontinental connectivity, to promote economic, political and cultural cooperation and development from Asia through Africa and into Europe.

 

The Asian Infrastructure Investment Bank initiative, led by China, is also capturing the world's attention. The AIIB will not only complement and support the Belt and Road's development, but also 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 has much to offer the countries that will embrace the "Belt-Road" vision. We offer a low and simple tax system and world-class logistics and communications, all built on judicial independence and a robust intellectual property protection regime.

 

Our pool of highly qualified professionals in legal, accounting, architecture and engineering sectors, together with our expertise in project management as well as environmental and risk assessment, allow Hong Kong to provide professional and technical support to the strategic initiative.

 

Freest economy

Capital, information, trade and people flow freely in and out of Hong Kong. Indeed, for the past 21 years, the US-based Heritage Foundation has named Hong Kong the world's freest economy. Hong Kong endeavours to leverage our strength in financing and asset management to support the establishment and operation of the AIIB.

 

That's why almost 7,600 Mainland and overseas companies are based in Hong Kong, ranging from established multinationals to fledgling start-ups and everything in-between.

 

Indeed, Hong Kong's start-up sector is beginning to soar, thanks in part to an open and international start-up culture; thanks, as well, to keen government interest and expanding incentives. A recent InvestHK survey revealed that Hong Kong is home to more than 1,000 start-ups in 23 working spaces and four incubators. That's up some 30% over 2013 totals.

 

Technology start-ups are particularly promising, many nurtured by the Hong Kong Science & Technology Parks Corporation and Cyberport. And our recent budget has earmarked an additional HK$5 billion - that's nearly 600 million euros - to our Innovation and Technology Fund. It will, of course, help Hong Kong start-ups find their wings. It can also support smart Irish start-ups eager to base their future in Hong Kong.

 

Global talent welcomed

Hong Kong's start-up trend is clear and encouraging. But it's fighting another trend, a demographic one. 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 emerging population realities and to minimise their impact on the economy, and the community, of Hong Kong.

 

That means taking better advantage of all sectors of our society - young and old, male and female, single, married, with or without children. It also means encouraging international talent - professionals and new graduates alike - to turn to Hong Kong for their future. And we're doing so, refining and enhancing admission arrangements to attract bright, young - and not so young - entrepreneurs to Hong Kong from all over the world.

 

Indeed, our youth are learning from each other, thanks to the Hong Kong-Ireland Working Holiday Scheme, which celebrated its 10th anniversary in March.

 

Through 2014, some 850 Hong Kong youths and about 250 from Ireland have participated in the Working Holiday Scheme, enjoying all that Irish and Hong Kong culture, business and people have to offer. A great deal, I'd say.

 

I hope we can expand the programme's reciprocal annual quota, and I know our two sides are looking into this. What benefits our youth, benefits us all.

 

Chief Secretary Carrie Lam gave these remarks at an Irish business leaders dinner in Dublin.


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

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