SCED's speech at Connect Hong Kong business seminar in Auckland
Following is the speech "Hong Kong - The Best Platform for Business Engagement with China and Asia" by the Secretary for Commerce and Economic Development, Mr Gregory So, at the Connect Hong Kong business seminar organised by the Hong Kong New Zealand Business Association in Auckland, New Zealand, today (August 5, Auckland time):
Distinguished guests, ladies and gentlemen,
I am delighted to be here in the great city of Auckland. Thank you for coming to this Connect Hong Kong business seminar. It is very encouraging to see so many of you here today.
As the first speaker I have the privilege - so to speak - of "opening the batting" for Hong Kong. Allow me to take this opportunity to set the scene for this Connect Hong Kong seminar.
Connect Hong Kong is a simple concept with multiple scoring opportunities. We are very proud of our Kiwi connections, not just through business activities and our bilateral free trade agreement but also through our community of New Zealand expatriates, quality New Zealand products and services and the large number of tourists who come to visit Hong Kong from New Zealand.
Hong Kong provides the shortest and most reliable route for New Zealand companies to do business in the Mainland of China. We are also an effective connector to markets across our region. This is particularly significant given that China became New Zealand's top export market in the first quarter of this year, overtaking Australia for the first time.
Compared to our neighbours, Hong Kong is a relatively small place with a population of just 7 million people. Yet, our city is the seventh largest market for New Zealand goods exports. In just the past decade, the value of New Zealand goods exported to Hong Kong has increased by around 40 per cent to NZ$870 million last year.
Our city provides a familiar financial, legal and cultural environment for New Zealand firms to reach markets in Mainland China. Both English and Chinese are official languages in Hong Kong, with English being the language of the business community. All this is important for New Zealand firms to use Hong Kong as a reliable stepping stone to the vast and complex China market as well as to other emerging markets in Asia. They can take advantage of our city's prime location and business-friendly environment to promote the New Zealand label to a wide audience in our part of the world.
Last year we welcomed 48 million visitors to Hong Kong, including almost 35 million from the Mainland of China. Many of our Mainland visitors come with a long shopping list of things to buy or experiences to try. In particular, they seek out premium overseas brands and new tastes, high fashion and the latest hi-tech gadgets. It is an excellent environment for New Zealand firms to set out their stall to attract new consumers.
Importantly for all companies, if you look a little deeper into the Hong Kong "shop window", you will find a comprehensive network of services to support business operations, including financial services, legal services, accounting services, logistics and IT services, hospitality services and much more.
Since its earliest days as a trading port and throughout its modern development, Hong Kong has always reached out to markets way beyond its boundaries.
Playing to our strengths, Hong Kong's biggest advantage is its unparalleled access to the Mainland China market. Over more than three decades of China's reform and opening up policies, we have been able to build up the right experience, the best contacts and a great deal of know-how in doing business across the boundary. All this has become a valuable asset that we are keen to share with our friends here in New Zealand and elsewhere.
New Zealand has a special place in the modern history of Hong Kong's economic development. We signed our first bilateral free trade agreement (FTA) with New Zealand in 2010 called the Closer Economic Partnership Agreement, or CEP for short.
The CEP came into force in January 2011. It is an extensive and high-quality agreement that complements New Zealand's FTA with Mainland China. While the CEP is not the sole reason for our growing trade links, it has undoubtedly opened up new corridors for trade and investment between us. It also enhances Hong Kong's position as a springboard for New Zealand firms to reach markets in Mainland China. I encourage you to explore the many opportunities available under the CEP.
The CEP also highlights Hong Kong's unique characteristics under the principle of "One Country, Two Systems" for our city's development as a Special Administrative Region of China since 1997.
Under "One Country, Two Systems", Hong Kong is able to negotiate its own bilateral trade agreements. That is because Hong Kong remains a separate customs territory and an individual member of the World Trade Organization.
Sixteen years after Hong Kong's return to China, the "One Country, Two Systems" formula continues to serve our city well. Among other things, it has helped to maintain our position as the world's freest economy for each of the past 19 years. That is according to both the Heritage Foundation in the US and the Canada-based Fraser Institute.
Under "One Country, Two Systems", Hong Kong continues to maintain its own common law system underpinned by an independent judiciary. We have our financial system with a freely convertible currency. The Hong Kong Dollar has been exchange rate-linked to the US Dollar since 1983.
Businesses are attracted to Hong Kong's low and simple tax regime which includes salaries tax capped at 15 per cent and profits tax at 16.5 per cent. There is no capital gains tax, no inheritance tax and no VAT or GST. In fact, about 90 per cent of companies don't need to pay any tax in Hong Kong at all.
We even eliminated tariffs on wine imports in 2008 to help develop Hong Kong as a wine trading and distribution hub in Asia. Since then, the value of New Zealand wine exports to Hong Kong has almost doubled to NZ$18.4 million last year.
This brings me back to my main theme today: Hong Kong as a showcase for New Zealand brands. Whether it is duty free New Zealand wine, food produce or the latest fashion designs, our city is a reliable, familiar and attractive showcase to reach consumers in China and across Asia.
New Zealand firms can also use Hong Kong as a base to keep pace with the rapid developments of China's financial liberalisation and the internationalisation of the Renminbi. Hong Kong's stable and transparent financial system makes the city an ideal testing ground for developing and promoting offshore Renminbi business.
Hong Kong was the first place outside Mainland China to provide Renminbi banking services in 2004, the first place to issue offshore Renminbi bonds in 2007, and in 2009 we were the first place to conduct offshore Renminbi trade settlement. Since 2009, banks in Hong Kong have handled about RMB5,750 billion worth of trade settlement. Companies around the world, including here in New Zealand, can now settle their trade with partners in every province of China using Renminbi.
Ladies and gentlemen, as Commerce Secretary I am always keen to "go into bat" for Hong Kong. Thank you for this opportunity to talk about some of the key areas for developing stronger business links between New Zealand and Hong Kong.
My fellow keynote speakers will discuss some of these and other topics in more detail.
It just remains for me to wish you a fruitful business seminar and I hope that you will all stay connected to Hong Kong and come to visit us soon and often.
Thank you very much.
Monday, August 5, 2013