Speech by FS at Hong Kong-Iran Business Co-operation Forum
Following is the speech by the Financial Secretary, Mr John C Tsang, at the Hong Kong-Iran Business Co-operation Forum today (November 9, Tehran time):
President Asgaroladi (Mr Asadollah Asgaroladi, President of the Iran-China Chamber of Commerce and Industries, distinguished guests, ladies and gentlemen,
It is my great pleasure to be here with you all today in Tehran, the dynamic economic, cultural and political capital of Iran. More than the second-largest economy in the Middle East, Iran is a nation rapidly readying to engage with international businesses and to take its rightful place in the global economy. I have very fond memories of my first visit to Iran 16 years ago. I am glad to have the chance to come here on this occasion to see again the kindness of Iranian people, the strength of the Iranian economy as well as the beauty of the stunning mountain range.
Indeed, that is the reason why a delegation from the Hong Kong General Chamber of Commerce visited Iran in April this year to see for themselves the massive potential of the world’s largest remaining untapped market.
And that, ladies and gentlemen, is why I am here with you today, leading another mission of high-profile business leaders from Hong Kong, to obtain first-hand information about the enormous opportunities in a wide range of sectors for Hong Kong companies and professionals.
We are here to talk business with you, to further strengthen the co-operation between Hong Kong and Iran. Our bilateral trade, to take one example, has grown about three per cent a year, on average, over the past five years. And I am confident that our two economies can build on that, seizing the opportunities available to us in everything from trading to manufacturing, and from services to tourism.
Yes, tourism. Iran is blessed with natural and historic sites that attract an enthusiastic interest and create a sustainable tourism industry for Iran. For example, I was honoured, yesterday, to tour the extraordinary Treasury of the National Jewels and to see a collection of precious and rare jewels created by extraordinary artistry and exquisite craftsmanship over the colourful history of your ancient nation.
Speaking of history, the ancient Silk Roads contributed to the development of many of the world's great civilisations. Including Persia. And I am confident that the modern-day Silk Roads – I am speaking of China's grand and visionary Belt and Road Initiative – will become a driving force of our global economy in this 21st century.
The far-reaching initiative embraces some 65 countries spanning Asia, Europe and Africa, accounting for some 30 per cent of both global GDP and the world's merchandise trade. The Belt and Road Initiative was created to promote infrastructural connectivity and, in so doing, boost trade and investment, deepen policy co-ordination and create stronger people-to-people bonds among participating countries.
Iran, I am pleased to note, is among the founding members of the Asia Infrastructure Investment Bank that was launched in January this year to assist financing of infrastructure project along the Belt and Road.
These essential infrastructure will include high-speed rail links running through Central Asia and Iran and on to European markets. Those links will boost Sino-Iran trade, while contributing to your country's emergence as a rising Eurasian trade hub. Beyond high-speed railways, and infrastructure in general, the Belt and Road Initiative will spur Iran's natural gas and oil pipeline development.
Hong Kong, too, sees unprecedented promises in the Belt and Road Initiative. Working together, I believe that there is much that our two economies can accomplish.
In the next few minutes, allow me to share with you some thoughts on that.
Hong Kong's unique advantage is our "One Country, Two Systems" arrangement with the Mainland. Under this framework, we maintain our own social and economic systems, while remaining an integral part of China.
We are a global city, and we fly the flag of free trade. That means an open and level playing field for all businesses, wherever they come from, whatever they do. Provided that they are legal, of course.
This year's IMD World Competiveness Yearbook ranked Hong Kong the most competitive economy in the world. Apart from our favourable business environment, the many advantages of Hong Kong include the rule of law, with its independent judiciary, as well as our simple and low tax system and our intellectual property rights protection regime.
Hong Kong also maintains our own currency, which is fully convertible. Capital from the Mainland, and from all over the world, flows freely in and out of Hong Kong.
Our stock market is the eighth-largest in the world in terms of market capitalisation, and Hong Kong ranks first, globally, in equity funds raised through initial public offerings.
We are an international financial centre with the essential experience, expertise and connections to serve as the fundraising and financial-management hub for the economies of the Belt and Road region.
More than that, Hong Kong is China's international financial capital channelling foreign investment and capital to fuel the Mainland's extraordinary growth.
Our deepening economic ties with the Mainland, in the form of the Shanghai-Hong Kong Stock Connect, the Mainland-Hong Kong mutual recognition of funds arrangement, as well as the Shenzhen-Hong Kong Stock Connect which will be launched soon, will help accelerate the opening up of China's capital markets to the world.
Trading activities between Iran and China have long been strong. Indeed, China has been Iran's top trading partner for the past seven years. During President Xi's visit to Iran in January, China and Iran agreed to expand bilateral trade more than tenfold, to US$600 billion, in the next decade.
Iran businesses can turn to Hong Kong for that expanding demand in the use of Renminbi services.
Hong Kong is the world's leading offshore Renminbi business hub, with the largest offshore Renminbi liquidity pool at some 730 billion Yuan at the end of August. In the first half of this year, some 70 per cent of the world's Renminbi payment transactions were processed in Hong Kong.
Through Hong Kong, international investors enjoy a wide variety of Renminbi products, including those for cross-border trade settlement and Renminbi financing.
Islamic finance is fast becoming an essential strategy in the international financial system, with a growing presence in Muslim and non-Muslim communities.
Given the substantial Muslim population living along the Belt and Road corridors, we expect Islamic financial services to be equally promising. Over the past two years, the Hong Kong Government has issued two successful global sukuk.
The issuances drew strong interest from the global financial industry and investors in the Middle East, showcasing our financial expertise and economic fundamentals. Equally important, they underlined the confidence international investors have in Hong Kong. We are, let me add, working on our third sukuk issuance.
Asset and risk management services will also be in demand once the Belt and Road Initiative finds traction. Our combined fund-management business amounts to more than US$2 trillion in assets, with close to 70 per cent of the funds sourced from overseas investors. That is why I am confident in saying that Hong Kong can serve 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 good reasons for Iranian companies to manage their risks by setting up captive insurers in Hong Kong.
In July this year, the Hong Kong Monetary Authority established the Infrastructure Financing Facilitation Office to help Belt and Road projects find foreign investment and financing. To date, more than 40 organisations have joined the Office as partners.
They include multilateral financial agencies and development banks, public and private sector investors and asset managers, commercial and investment banks, infrastructure-project developers and operators, and professional services firms.
Our multicultural, multi-talented pool of services professionals – in finance, accounting, law, architecture, engineering management and more, have the international experience to lead consultancies, as well as construction projects along the Belt and Road corridors. And we look forward to working with companies from Iran.
Logistics will help power Iran's role in the Belt and Road Initiative. The southeastern port city of Chabahar will serve as a critical juncture linking land routes to shipping lanes. And the Yiwu-Tehran freight rail link offers an attractive option for exporters, importers and regional distributors, enabling rail transport for goods between China and Iran that take about one-third the time as shipping by sea.
Logistics is no less central to Hong Kong's strengths. Hong Kong has one of the world's busiest container ports. And Hong Kong International Airport has been the busiest cargo airport in the world since 2010. Last year, our airport handled some 4.4 million tonnes of cargo, running some 1 100 flights a day. From Hong Kong, you can reach half the world's population by air within just five hours.
And we are expanding the airport into a three-runway system to boost our airport's handling capacity.
For Hong Kong and Iran, there are clear advantages in expanding our business collaboration, in fast-tracking our growing ties. In this regard, I look forward to the beginning of negotiation towards an Investment Promotion and Protection Agreement between our two economies.
Yesterday, I signed an MOU on economic co-operation with Dr Ali Tayyeb Nia, your Minister of Economic Affairs and Finance.
The agreement will accelerate co-operation between us in areas ranging from trade and industry to innovation and technology, as well as financial services and banking, environmental protection, intellectual property, film, education, tourism and more.
My thanks to the Iran Chamber of Commerce, Industries, Mines and Agriculture and Iran-China Chamber of Commerce and Industries, as well as the TDC (Hong Kong Trade Development Council), for organising today's Forum.
This is the beginning of a profitable relationship between our two economies, and our two peoples, one that will reward both sides in the years ahead.
I wish you all the best of business, and I look forward to welcoming you to Hong Kong.
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