Wednesday, 18 November 2015

Maritime services enhance market access

Financial Secretary John Tsang

Hong Kong-Romanian relations have come a long way in the last few years. Since the reopening of the Consulate General of Romania in Hong Kong in 2008, the number of Romanian citizens living in Hong Kong has picked up, as has our bilateral trade. Last year, total trade between our two economies exceeded US$380 million. That's an increase of more than 30% over the amount in 2013.

 

The opening of the office of the Romanian Chamber of Commerce in Hong Kong two years ago is another clear testimony of our growing bilateral trade and the potential that it presents.

 

An online feature article - "Seven Reasons Why We Should All Be Moving to Romania Right Now" - recently caught my attention. Those reasons included Romania's "fast and cheap" Internet, the generally highly affordable cost of living, and, of course, the "fantastic" people and, no surprise here, the "tasty, plentiful and uncostly" wine.

 

All good reasons for considering Romanian residency. And we are clearly aware of the excellent quality of the Romanian wine. Thanks to a Memorandum of Understanding on Hong Kong-Romanian co-operation in the wine industry, Hong Kong's wine lovers - and there are many - can now enjoy your fine wine in Hong Kong.

 

Yes, Mr Florin Vodita, your State Secretary in the Ministry of Economy, Trade & Tourism, was in Hong Kong in June this year to sign the wine MOU. With that agreement in place, more consumers from Hong Kong, Mainland China and right through the Asian region will soon be discovering, and enjoying, Romania's fine wine. And doing so plentifully, I'm sure.

 

The MOU is sure to encourage more Romanian wine producers to make good use of Hong Kong's advantages as a duty-free port with zero duty for wine imports, a regional logistics and business hub, and the world's largest wine auction centre.

 

The good news doesn't stop there. This morning, I signed a comprehensive agreement on the avoidance of double taxation with Romania. The agreement means tax certainty for Romanian and Hong Kong investors and companies doing business in each other's jurisdictions. No less important, it elevates our bilateral relations to a new level.

 

And I'm confident our co-operation will only expand in the coming years, thanks to the ambitious and visionary initiative of the Silk Road Economic Belt and the 21st Century Maritime Silk Road, commonly known as the Belt & Road initiative that was spearheaded by President Xi of China in 2013.

 

This grand and far-reaching initiative aims to expand trans-continental connectivity, to promote economic, political and cultural co-operation from Asia through Africa and on to Europe. I believe it will emerge as a driving force of the world economy in this 21st century.

 

The widespread interest in as well as the enthusiastic response to the establishment of the Asian Infrastructure Investment Bank, the AIIB, underlines that belief. In good time, the AIIB will become a key financial institution supporting infrastructural development all along the Belt & Road.

 

Allow me, over the next few minutes, to share with you some of my thoughts on how Hong Kong can support Romanian business, how we can help you capitalise on the wealth of opportunities emerging from the Belt & Road initiative.

 

Through the Belt & Road initiative, we expect to see soaring investments in infrastructural facilities, deepening financial integration, expanding trade and the building of people-to-people bonds on a global scale.

 

Hong Kong can help make it happen, thanks to the unique advantages presented by our "one country, two systems" arrangement. While being part of China, Hong Kong maintains its own social, financial and economic systems.

 

We have our own currency, which is different from the renminbi of the Mainland, and it's fully convertible. Capital from all over the world flows freely in and out of Hong Kong on a fair and equitable basis.

 

According to the United Nations World Investment Report 2015, Hong Kong, for the first time, came second in global foreign direct investment, with record amounts of inflows and outflows, at US$103 billion and US$143 billion, respectively.

 

More than just a city of China, Hong Kong's favourable and transparent business environment, as well as the open and level playing field, has attracted companies from all over the world to establish offices and conduct business in Hong Kong.

 

Traders in all sectors, and from all jurisdictions, can trade freely in Hong Kong. And all persons, businesses and organisations, regardless of their nationality, are treated exactly the same. Every business in Hong Kong can enjoy the same privileges and benefits provided by our international agreements.

 

Consider, for example, CEPA, Hong Kong's free-trade agreement with the Mainland of China. CEPA provides preferential treatment to Hong Kong service providers, regardless of nationality, as well as tariff-free treatment for products that have been conferred the Hong Kong origin. Working with Hong Kong, Romanian companies can gain the same access to the markets of the Mainland. It's your ticket to the massive Chinese consumer market and its fast-rising middle class.

 

As an international financial centre, Hong Kong has the experience, the expertise and the connections to serve as the fundraising and financial management hub for the Belt & Road initiative. Hong Kong's financing options range from public offerings and loan syndication to private equity funds and the raising of funds through Islamic finance.

 

We run the world's seventh largest stock market in terms of market capitalisation, and we rank second, globally, in equity funds raised through initial public offerings.

 

At the same time, Hong Kong is also the world's largest offshore renminbi business centre. As trade and other economic activities along the Belt & Road expand, demand for renminbi trade settlement will also rise. Hong Kong's renminbi trade settlement system is well placed to respond to that demand.

 

Our renminbi debt market has grown rapidly in recent years. It provides a reliable channel for companies issuing renminbi bonds to meet project funding needs. Last year, the issuance of renminbi bonds in Hong Kong totalled some RMB200 billion, a galvanising year-on-year increase of 70%.

 

The growth of Islamic financial services is also promising, given the large Muslim population living along the Belt & Road. In the past 14 months, Hong Kong has issued two Shariah-compliant sukuk. They demonstrate our capabilities in this specialised financial offering. They also reveal the confidence international investors have in Hong Kong's economic fundamentals.

 

Asset and risk-management services will also be in demand once the Belt & Road projects start their engines. Hong Kong's wealth and asset management business, I'm pleased to note, has soared in recent years. Indeed, Hong Kong is ideally positioned to act as a global centre for asset management, risk management and corporate treasury functions.

 

Hong Kong boasts a wide variety of insurance services and derivative products as well. They offer sound reason for Romanian companies to manage their risks by setting up captive insurers in Hong Kong.

 

Our pool of world-class professionals is deep and talented, with expertise in finance, accounting, law, architecture, engineering management and more. They have the experience to lead consultancies, construction projects, and the operation and management of infrastructure projects.

 

Our legal professionals work with a world of business every day. They conduct due diligence, ensure contract enforcement and help resolve disputes, all done under the rule of law and our independent judiciary. That makes Hong Kong an ideal centre for resolving potential commercial disputes in business collaborations.

 

On that score, a recent survey by London's prestigious Queen Mary University named the Hong Kong International Arbitration Centre the third most preferred arbitral centre in the world, just behind London and Paris.

 

Logistics is another key industry that has been driving Hong Kong's development as an international business centre. Hong Kong boasts the world's fourth busiest container port, providing some 350 services a week to more than 500 destinations worldwide.

 

About 700 shipping-related companies call Hong Kong home. They offer a wide range of services, from ship management, broking and chartering to finance, marine insurance, legal, arbitration and many other support services.

 

The Maritime Silk Road will create fresh demand for shipping services. With its plan to build a Black Sea-Caspian Sea Freight Corridor, Romania is set to become a hub connecting other inland destinations in Europe to Central Asia and eastwards to China. Romanian logistics companies will find it advantageous to establish a presence in Hong Kong, using our maritime services to tap into the markets of the Belt & Road.

 

Hong Kong offers also unparalleled connectivity for multinational businesses and corporations. Hong Kong International Airport has been the busiest air cargo airport in the world for more than 15 years. Last year, it handled some 4.4 million tonnes of cargo, running about 1,100 flights a day. From Hong Kong, you can reach all major Asian economies within four hours' flight time. Half the world's population is just five hours away.

 

Hong Kong has what you need in a strategic partner for the 21st century. We welcome Romanian investment and talent. In Hong Kong, you can take advantage of our low taxes, our world-class business environment and our reassuring legal system, as well as our knowledge in tapping the massive Asian markets.

 

The Belt & Road will be built on collaboration - on deepening the bonds between nations, economies and cultures. On the rewarding future it can offer the companies, and the people, of Hong Kong and Romania.

 

My thanks to the Chamber of Commerce and Industry of Romania and the Hong Kong Trade and Development Council for hosting and supporting today's seminar, for bringing us together today.

 

I look forward to welcoming our Romanian friends to Hong Kong. And I hope to visit this captivating city again soon - for the fresh lake air in Herastrau Park, a biking trip to Mogosoaia Castle and, certainly, an inviting glass of Romanian wine in the Old Town. On second thought, let's make that a bottle. Or two.

 

Financial Secretary John Tsang gave these remarks at a business seminar in Bucharest, on Opportunities under the Belt & Road Initiative on November 18.

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