SCED's speech at "Think Global, Think Hong Kong"Symposium in Osaka
Following is the speech by the Secretary for Commerce and Economic Development, Mr Gregory So, at the "Think Global, Think Hong Kong" Symposium in Osaka today (May 17):
Governor Matsui, Vice Governor Kanazawa, distinguished guests, ladies and gentlemen,
Ohayou gozaimasu (meaning "Good morning" in Japanese).
First of all, a warm welcome to everyone to this "Think Global, Think Hong Kong" Symposium.
Also congratulations to Fred and his team at the Hong Kong Trade Development Council on organising this event as part of our large-scale promotion in Japan.
It is a great pleasure to be here in Osaka, a city with which Hong Kong has deep connections.
Hong Kong is proud to be Osaka's first Business Partner City. This affiliation was established in 1988 to promote economic exchange. The network has since expanded to cover cities throughout the Asia-Pacific region.
Hong Kong and Osaka are both famous port cities with bustling harbours that support an enormous amount of regional and international trade.
Osaka is also the birthplace of some of Japan's brightest ideas and most successful companies. There are also many small and medium-sized enterprises, or SMEs, eager to build up their businesses and expand overseas. This "Think Global, Think Hong Kong" Symposium is for all of you. Whether you are a large multinational or an ambitious SME, Hong Kong can help you spread your wings further and reach out to overseas markets, and especially the vast markets in Mainland China.
The distinguished speakers at this event will cover key topics and opportunities for closer collaboration with partners in Hong Kong.
It is my job today to give you an idea of the overall state of play in Hong Kong and why our city is so popular with Japan's business community.
This year we are celebrating the 15th anniversary of the establishment of the Hong Kong Special Administrative Region of China. Our successful reunification with the Mainland in 1997 is underpinned by the principle of "One Country, Two Systems".
Under "One Country, Two Systems", Hong Kong has preserved all its unique characteristics as a free and open economy. In fact, we have been ranked as the world's freest economy for the past 18 years by both the US-based Heritage Foundation and the Fraser Institute in Canada. At the same time, we have become far more deeply integrated with the Mainland. Our people-to-people, business-to-business and government-to-government contacts are more robust than ever.
In other words, Hong Kong is where global advantages and China advantages converge.
First, global advantages.
Hong Kong is home to around 7 000 companies from Mainland China and around the world. Over 1 000 of these companies are Japanese firms, which is second in number behind only the US. Around 650 Japanese enterprises have set up their regional headquarters or regional offices in our city. More Japanese firms are coming to Hong Kong. According to my colleagues at InvestHK, our department responsible for Foreign Direct Investment, the number of Japanese companies that they assisted to set up in Hong Kong during the first three months of this year represented a 78 per cent increase over the same period last year.
Because Hong Kong ensures a level playing field for all business, local and overseas firms are treated equally. They all enjoy the same low and simple taxes. That includes profits tax of no more than 16.5 per cent and salaries tax capped at 15 per cent. There is no capital gains tax, no inheritance tax and no VAT or GST in Hong Kong.
We have our own common law legal system and an independent judiciary. Our financial system is also separate from that of the Mainland. We have our own freely convertible currency and there are no restrictions on the flow of capital into or out of Hong Kong.
Our location in the heart of East Asia places Hong Kong within five hours' flying time of half the world's population, including Osaka.
We have superb infrastructure and are fully connected to the global, regional and Mainland China markets. And we have an abundance of well-educated and hard-working people who are full of energy and fresh ideas.
As well as being an international player, Hong Kong has an indispensable role to play as a premier gateway into and out of Mainland China.
We are constantly strengthening ties and breaking down barriers to trade and investment between Hong Kong and the Mainland. This began in earnest over 30 years ago, when the Central Government in Beijing embarked on polices of reform and opening up to the rest of the world. This process continues to gather pace today. Often it begins with pilot initiatives between Hong Kong and our immediate neighbours in Guangdong Province, before going nationwide. And because Guangdong alone has a population of around 100 million, it already represents a huge potential market.
We also have a free trade pact with the Mainland, what we call the Closer Economic Partnership Arrangement, or CEPA. CEPA is unique as it is the only instance of a city having such an arrangement with its sovereign. This is possible because, under "One Country, Two Systems", Hong Kong and the Mainland are separate members of the World Trade Organization. Allow me to briefly outline three important points about CEPA.
First, under CEPA, products made in Hong Kong that comply with CEPA rules of origin criteria enjoy tariff-free entry to the Mainland.
Second, CEPA covers 47 services sectors providing for enhanced access to markets across the whole country. These include key sectors such as financial services, legal, tourism, information technology and trade and logistics services, to name just a few.
The third and perhaps most important point for our Japanese friends is that CEPA is nationality neutral. Foreign firms incorporated in Hong Kong, including Japanese firms, can enjoy the same benefits of CEPA as local companies.
Please do investigate the opportunities that CEPA can bring to your companies.
For the final part of my talk, I will turn to Hong Kong's status as both an international financial hub and as China's global financial centre. This is another example of where international advantages and China advantages converge in Hong Kong.
In recent years, we have been encouraging more foreign firms to list on the Hong Kong stock market. Hong Kong has led the world for funds raised through initial public offerings (IPOs) for each of the past three years. Last year alone, total IPO funds raised in Hong Kong reached US$33 billion. Leading fashion brands from France, Italy and the US have successfully launched IPOs in Hong Kong in the past three years. We welcome Japanese companies to list in Hong Kong to raise capital and gain more exposure for your brands across our region.
Another important area for us is the internationalisation of the Mainland currency, the Renminbi. Today, Hong Kong is by far the largest centre for offshore Renminbi banking, bond issuance and trade settlement. As at end-January 2012, there were a total of 187 banks participating in Hong Kong's Renminbi clearing platform. Among these participating banks, 12 were branches and subsidiaries of Japanese banks.
Our efficient and reliable clearing platform provides an ideal opportunity for Japanese enterprises to settle trade transaction payments with their business partners in Mainland China using Renminbi.
Ladies and gentlemen, thank you for this opportunity to talk about some of the ways Hong Kong can assist Japanese businesses to go global.
It can be daunting for SMEs taking their first steps into the international market, and especially into the complex China market. Hong Kong represents a dynamic and reliable platform with a full range of services, the rule of law, low taxes and strong links with markets in Mainland China and around the world.
For all companies, including the multinationals that have put Osaka on the global business map, I encourage you to consider using Hong Kong as an ideal place to expand your brand presence, raise capital and conduct Renminbi trade settlement with your partners throughout Mainland China.
Please do take full advantage of this Symposium to learn more about the opportunities in our city, and don't forget to "Think Global, Think Hong Kong".
Thank you very much.
Thursday, May 17, 2012