SCED's speech at HKTDC networking luncheon in Mexico (English only)
Following is the speech by the Secretary for Commerce and Economic Development, Mr Gregory So, at the networking luncheon with the Mexican business community organised by the Hong Kong Trade Development Council in Mexico City, Mexico, today (August 27, Mexico City time):
Distinguished guests, ladies and gentlemen,
I am so happy today to be in Mexico City, the political, cultural, educational and financial centre of Mexico. This is my first official visit to Mexico, and indeed Latin America, since I took up the role as Secretary for Commerce and Economic Development of Hong Kong in 2011. Since I arrived yesterday morning, I had the chance to meet with government officials and business and professional organisations to exchange views on the opportunities for business and collaboration in different areas.
Although our two cities are thousands of miles apart, Hong Kong and Mexico City do share something in common. Hong Kong is known as an international financial centre and trading hub. Just like your beautiful city, Hong Kong is very vibrant, cosmopolitan and blended with different cultures and ideas. We both enjoy superb locations, which enable us to become the gateways in Latin America and Asia. And we both have a lot to offer to investors, traders and tourists.
Mexico and Hong Kong have long been good business partners. We are both staunch supporters of the multilateral trading system, pursuing policies to create favourable business environments for our traders through trade liberalisation. We are also members of Asia-Pacific Economic Cooperation and share many common goals.
Mexico is Hong Kong's largest export market in Latin America and is our third largest source of imports in Latin America. I am delighted with the continued and steady growth in our bilateral trade and the very promising potential. In the years between 2010 and 2014, our bilateral trade grew on average around 20 per cent annually. Underpinning such an increase in bilateral trade is the even more spectacular growth in our air cargo traffic. Since 2013, there is a cargo flight between Hong Kong and Guadalajara, and the flight has increased from two weekly in the beginning to five now. In 2014, the throughput between Hong Kong and Mexico increased significantly by 12.4 times over a year earlier.
I am also glad to share with you that Secretary Ildefonso Guajardo and I announced yesterday that Mexico and Hong Kong will commence negotiations on an Investment Promotion and Protection Agreement, or IPPA in short. An IPPA between Mexico and Hong Kong will reassure investors of both sides that their investments in the counterparty economy are protected, and provide for a mechanism for the settlement of possible investment disputes between investors and the counterparty government. I trust that the IPPA, when in place, will encourage more investment flows between Mexico and Hong Kong, benefiting the economic development and enhancing employment in both places. It will bring Mexico - Hong Kong trade relations to a new and higher level. I look forward to the early and successful conclusion of the IPPA negotiations.
An increasing number of Mexican companies have set up their business in Hong Kong, and I am delighted to know that the growing Mexican business community has formed its own chamber of commerce, which is now playing a key role in facilitating and deepening the bilateral economic and trade relations between Hong Kong and Mexico. Your Consul General in Hong Kong has done a very good job in pulling together Mexican businesses and facilitating their work.
Hong Kong represents a large market for Mexican products. Our insatiable appetite for seafood is well known, and we have huge demand for Mexican abalone, lobsters and other kinds of seafood. We are interested in Mexican alcoholic beverages too. And our interest has already attracted some of Mexico's wineries to participate in the Hong Kong International Wine and Spirits Fair. With a population of just 7 million, Hong Kong received about 61 million visitors last year, including more than 47 million from Mainland China. It is no secret that Mainland Chinese visitors recognise brands and products they see in Hong Kong as something reliable and of premium quality. Considering the number of visitors that we receive, Hong Kong is an ideal platform for Mexico to showcase its premium products, which go far beyond just food and beverages.
More than that, with our prime location and international connectivity - serving as China's global financial centre and the premier gateway for business into and out of Mainland China, Hong Kong has a lot to offer to Mexican businessmen who want to gain access to the huge Mainland market and set a foothold in the East Asian marketplace.
First, we are an investment conduit. Hong Kong is both a prominent source and destination for foreign direct investment (FDI). According to a recent report of the United Nations Conference on Trade and Development, Hong Kong ranked number two in global FDI inflows, second only to Mainland China. We were also the world's second largest outward investing economy, second only to the United States. In particular, we have a very significant volume of trade and investment flows with Mainland China.
The Central People's Government of China has established a policy of helping enterprises in the Mainland and Hong Kong to "go global" together. With that, we are confident that Hong Kong would remain the most important investment conduit for Chinese businesses. Chinese companies nowadays are very eager for opportunities to invest and establish a presence overseas. The potential investment from Mainland China to Mexico through Hong Kong could be enormous.
And I must bring to your attention China's "Belt and Road" initiatives. The "Belt and Road" is a very important development strategy designed to enhance connectivity and co-operation, and integrate China more fully into the world economy. The "Belt" refers to the New Silk Road Economic Belt, which will link China with Europe through Central and Western Asia. The "Road" is the 21st Century Maritime Silk Road. It will connect China with Southeast Asian countries, as well as Africa and Europe.
The "Belt and Road" will generate demand and increase the volume and intensity of international trade and investment flow among countries on the routes, as well as the two-way traffic in and out of China. Hong Kong is well placed to serve as the "super-connector" for all these exciting developments. For example, being an important financial, commercial and maritime centre in the world, Hong Kong will provide a wide range of professional services for Chinese enterprises to "go global" in pursuit of the "Belt and Road" opportunities.
For Mexican companies with investment and operations in Hong Kong, the "Belt and Road" initiative represents new business and new opportunities. We encourage Mexican businesses to make use of Hong Kong as an investment springboard or a logistics hub when they venture into the markets of the "Belt and Road" countries.
Apart from being an investment conduit, Hong Kong also serves as an excellent base for Mexican companies to manage their operations in the region and to tap into the markets of Asia and the Mainland. Hong Kong is strategically located at the heart of Asia - at the doorstep of Mainland China and the ASEAN (Association of Southeast Asian Nations) region. We have an open and business-friendly environment with low and simple taxes. We practice the rule of law, underpinned by judicial independence. We embrace the internationally recognised codes of practice in business and commerce. And we guarantee a level playing field for all companies, and free flows of capital, information and talent. In a nutshell, Hong Kong provides the right financial, legal and cultural environment for Mexican firms to access a wide audience in our part of the world. Indeed, you would expect nothing less from an economy that is consistently ranked as the freest in the world. We have retained the top spot in the Heritage Foundation's Index of Economic Freedom for 21 years in a row. This status reflects real advantages for doing businesses with Hong Kong and in Hong Kong.
Mexican companies may also take advantage of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), which is our free trade arrangement with Mainland China. CEPA provides preferential treatment to Hong Kong service suppliers as well as tariff-free treatment for products of Hong Kong origin. With CEPA, companies from Latin America can gain greater access into the Mainland market through Hong Kong.
What's more? I notice that there are a number of technology companies in the audience today. Mexican technology companies are welcome to leverage on Hong Kong for market and R&D (research and development) activities in Asia. Hong Kong has multiple edges - a sound legal system and a robust IP (intellectual property) regime, close proximity to the huge Mainland Chinese market, world-class tertiary institutions, outstanding R&D talents, excellent infrastructure and communication networks. These are all important for start-ups and tech enterprises. And we are aware that they also need support in terms of seed funding, office space, work visa facilitation, communities network, business development support, design support, promotion platforms, market access and serial investment, etc. That is why we have in place an excellent network to address such needs. We have different types of public and private initiatives especially designed to nurture start-ups and attract talents, including incubation programmes, government funding schemes, networking communities and co-working spaces. I would encourage tech companies here to explore and develop the Asian market using Hong Kong as their base.
Ladies and gentlemen, Hong Kong has always been the "super-connector" connecting Mainland China with the rest of the world. As your friend and business partner in Asia, Hong Kong is ready to facilitate your ventures and help grow your businesses. I invite and encourage you all to make greater use of Hong Kong's unique advantage in terms of our physical proximity with the Mainland, as well as our first class infrastructure and our highly competitive business and professional services.
Last but not least, I would like to thank the Hong Kong Trade Development Council, or TDC, for organising today's lunch. The TDC has a great deal of expertise in matching overseas companies with the right partners in the Mainland. I know its representatives here today will be happy to share their experience and insights with you.
Thank you very much. Muchas gracias! ("Thank you very much" in Spanish.)
Ends/Friday, August 28, 2015