Speech by FS at networking luncheon organised by HKTDC in Dubai
Following is the speech by the Financial Secretary, Mr John C Tsang, at the networking luncheon organised by the Hong Kong Trade Development Council (TDC) in Dubai today (November 6, Dubai time):
Your Excellencies, distinguished guests, ladies and gentlemen,
It is my great pleasure to be here with you all today in dazzling Dubai, a glamorous city with a got-it-all lifestyle that you cannot find elsewhere.There are so many things you can do here in one single day, from fishing, surfing and snorkeling in the sensational shorelines, to golfing, playing ice-hockey and even skiing in a fancy resort.
So many remarkable reasons to visit Dubai – and we have not even mentioned shopping. But, in truth, we are here for the world-class business promises that Dubai offers.
As we all know, Dubai is the business hub of the Gulf Region and the gateway to the fast-rising, resource-rich Middle East. And Hong Kong is the ideal gateway to the Mainland of China and Southeast Asia – both blessed with a huge, and expanding, consumer class.
More to the point, economic ties between us are strong and growing stronger by the day.
The UAE (the United Arab Emirates) is Hong Kong's largest trading partner in the Middle East. Over the past five years, bilateral trade between us has soared by some 10 per cent a year on average.
As encouraging as those numbers are, there is still plenty of room on which to expand. That's why I am here with you today, together with a mission of senior business delegates from Hong Kong. They come from a variety of sectors, including finance, logistics, infrastructure and real estate, telecommunications and technology, tourism and hospitality, as well as major chambers of commerce.
We are here to talk business with you, to further strengthen our cooperation. And I can't think of a more promising mutual opportunity than the Silk Road Economic Belt and the 21st Century Maritime Silk Road initiative, spearheaded by President Xi of China.
The ancient Silk Roads contributed to the development of many of the world's great civilisations. And I am confident that the modern-day Silk Roads – 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 coordination and create stronger people-to-people bonds among participating countries.
The countries of the Middle East – and the UAE standing out prominently – are an integral part of the Belt and Road Initative where the silk roads of land and sea merge. The UAE, 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 in infrastructure project financing.
And your Minister of Economy, Sultan bin Saeed Al-Mansouri, was in Hong Kong in May, leading a high-profile UAE delegation to the Belt and Road Summit that we have organised. There, he voiced his strong support both for the initiative and for the expansion of Hong Kong-UAE ties.
Certainly, both the UAE and Hong Kong have what it takes to be a key business and logistics hub for the Belt and Road region. 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 of my 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. For the past 22 years, the Washington-based Heritage Foundation has named Hong Kong the world's freest economy.
That means an open and level playing field for all businesses, wherever they come from, whatever they do. Provided, of course, that they are legal.
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. And our intellectual property rights protection reassures international business.
English is an official, and commonly used, language, our society is free and open, and our lifestyle a sophisticated melding of East and West.
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.
More than an international financial centre, Hong Kong is China's international financial capital. We have the experience, the expertise and the connections to serve as the fundraising and financial-management hub for the economies of the Belt and Road region.
We are the first-mover in the Mainland's continuing economic reforms. Indeed, mutual access between the Mainland and Hong Kong has soared since the opening of the Shanghai-Hong Kong Stock Connect in late 2014, and the introduction of the Mainland-Hong Kong Mutual Recognition of Funds Arrangement last year.
With the launch of the Shenzhen-Hong Kong Stock Connect, expected by year end, Hong Kong will become even more important in accelerating the two-way opening up of the Mainland's capital markets.
Trading activities between the UAE and China have grown more than ten times over the past decade. Coupled with the expansion of trade and other economic activities along the Belt and Road corridors, the demand for Renminbi services will certainly expand.
Hong Kong can respond to that demand fully. Thanks to our deepening economic integration with the Mainland, Hong Kong is the world's largest offshore Renminbi business centre. Through Hong Kong, international investors enjoy a wide variety of Renminbi products, including those for cross-border trade settlement and Renminbi financing.
We have 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.
Islamic finance is fast becoming an essential financial 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. And I am pleased to note that Hong Kong's wealth-and-asset-management business has maintained its strength, despite a tumultuous year for global markets.
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's 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 Middle East 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 – is another Hong Kong advantage.
We have the international experience to lead consultancies, as well as construction projects along the Belt and Road region. And we look forward to working with companies from the UAE.
There is more. Our legal professionals work with a world of business every day. They conduct due diligence, ensure contract enforcement and help resolve disputes. And they do so under a system supported by the twin foundations of the rule of law and an independent judiciary. That makes Hong Kong an ideal centre for settling potential commercial disputes.
A trading and transportation hub in the Middle East and North Africa, Dubai is the region's largest container handler. The linking of East Asia with the Middle East through dedicated railway projects will present huge opportunities for UAE maritime port operators, in linking land routes to shipping lanes.
Logistics is no less central to Hong Kong's strengths as an international business centre. 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.
Dubai and Hong Kong are, of course, aviation hubs. Through Dubai, a global commercial aviation centre, you can reach virtually any destination on this planet, directly, without transit or transfer. As for Hong Kong, half the world's population is just five hours away. Currently ten daily flights flow between our two hubs. I am sure that we can do better than that.
And we are expanding our airport into a three-runway system. Construction is now underway, with completion scheduled for 2024. The addition is expected to boost our airport's handling capacity to 100 million passengers and nine million tonnes of cargo a year by 2030.
For Hong Kong and the UAE, there is huge and clear synergy in expanding our business collaboration, in fast-tracking our growing ties.
Speaking of which, our Comprehensive Avoidance of Double Taxation Agreement came into force last December, and we look forward to signing the Investment Promotion and Protection Agreement with the UAE in the near future.
Moreover, the signing of an MOU between the Hong Kong Trade Development Council and the Ministry of Economy of the UAE tomorrow will boost bilateral trade promotion efforts. And that can only broaden trade prospects between the UAE and Hong Kong.
In short, you will find more good reasons to work with us, here and in Hong Kong.
My thanks to TDC for organising today's networking luncheon, for bringing together high-profile business leaders from Hong Kong and the UAE.
I am confident that relations between our two economies, and our two peoples, will continue to prosper 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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