Wednesday, 25 November 2015

HK-Korea partnership mutually beneficial

Secretary for Transport & Housing Prof Anthony Cheung

Every year, we organise promotion missions to overseas economies to update our business counterparts on our latest logistics development. You may wonder why we have chosen Korea as the destination of this year's delegation visit. Well, the question should not be why, but why not.


Since the 1960s, our two economies have consistently maintained high levels of economic growth, fueled by increasing exports and rapid industrialisation, which enabled us to join the ranks of the world's developed nations and be dubbed as Asia's Little Dragons by the mid-1990s.


Hong Kong is now among the leading financial centres worldwide, while Korea is an important hub of global manufacturing in automobiles, electronic components and telecommunications equipment.


Some common characteristics of our two economies include an educated population and high savings rates. Our economies have also proven to be resilient enough to withstand regional and global economic crises, such as the Asian financial crisis of 1997-98 and the global credit crunch of 2008.


Global growth

Resilience is important, in particular at a time when the global economy is uncertain. Last month, the International Monetary Fund revised down its global economic growth forecast for this year, 2015, to 3.1%, 0.4% lower than that made in January. Yet the economic sentiment in emerging Asian economies is still positive. The IMF estimated that developing Asia still maintains growth of 6.5% this year and China 6.8%.


Although Mainland China's exports and imports declined in the first three quarters of this year, its domestic demand still held up well. Contribution of domestic consumption to GDP rose from 51.2% last year to 58.4% in the first three quarters of this year.


This will continue to bring about demand for high-end products and create opportunities for Korean manufacturers and Hong Kong's services and logistics providers. In this respect, it is worth noting that Korea's exports of consumer goods to Mainland China rose by close to 30% per annum on average during the past five years.


HK-Korea links

Hong Kong and Korea are close trading partners. Last year, Korea was Hong Kong's sixth largest trading partner. The average annual growth rate in bilateral merchandise trade over the five years from 2009 to 2014 was 10.2%. Hong Kong was Korea's fourth largest export market and third largest investment destination, following the US and the Mainland of China.


Some 140 Korean companies have set up regional headquarters, regional offices or local offices in Hong Kong, including Korean Air and Hanjin Shipping. Hong Kong's logistics companies, such as Kerry Logistics, have also co-operated with Korean enterprises in setting up joint businesses in Korea.


Hong Kong has strong transportation linkage with Korea. The air services operated by our respective home carriers between Hong Kong and Korea increased significantly over the past years. To illustrate, this week (week of November 25), there are 194 passenger and cargo scheduled flights between Hong Kong and Korea, up 45% as compared with a similar week in 2011, just four years ago.


Nowadays, every week, we have 44 container vessel sailings to Korea, connecting Hong Kong to seven sea ports of Korea, including Busan Port and Incheon Port. Good connectivity facilitates further business investments and logistics co-operation.


Hong Kong people like visiting Korea and vice versa. Last year, Korea was Hong Kong's third largest visitor source market and we are your fifth. We received some 1,251,000 visitors from Korea, an increase of 15.5% over 2013, while over 558,000 Hong Kong people visited Korea, 39.4% more than in 2013. The annual quota of the Hong Kong-Korea Working Holiday Scheme for young people has also just been increased last week from 500 to 1000, to promote more cultural and educational exchanges among our younger generation.


If you've been to Hong Kong, I suppose you would have noticed that Korean TV dramas, movies, K-Pop artists and of course, Korean food are becoming more popular day by day.


I've just met your Minister of Land, Infrastructure & Transport and we both believe that there's more room for co-operation between Hong Kong and Korea.


Super-connector role

Other than that, Korean electronic and cosmetic products are among the most sought-after brands in Hong Kong, as well as in Mainland China. These high-value products are time- and temperature-sensitive, the handling of which requires tailor-made supply chain solutions. And that is the reason why we are here, to share with you how Hong Kong can be your best link in your global supply chain.


Located at the southern gateway of China, Hong Kong is the best partner for Korea's companies to enter the South China market by providing quality shipping and logistics services.


The Pearl River Delta is one of the richest regions of China, alone contributing 9.1% of Mainland China's GDP last year. The merchandise trade between Korea and Guangdong Province (just next to Hong Kong) picked up by a rapid average growth of 19% per annum in the past five years. It is estimated that around 30% of such merchandise trade is routed through Hong Kong, generating notable demand for our logistics services.


In terms of product types, electrical machinery and telecommunications apparatus together accounted for 60% of our total trade with Korea last year. These products are usually shipped by air. Given Hong Kong's outstanding global connectivity and excellent aviation services, there is much room for Hong Kong-Korean logistics co-operation, especially in tailor-made logistics services for high-value goods.


Home to an international maritime community for over 150 years, Hong Kong plays a leading role in the global shipping industry. Our shipowners together own or manage about 9% of the deadweight tonnage of the world's merchant fleet.


There are over 700 shipping-related companies operating in Hong Kong, providing a great variety of quality maritime services ranging from ship owning, ship agency and management, ship finance, ship broking and marine insurance to maritime legal and arbitration services.


Of the top 10 ports in the world, seven are in China, including Hong Kong, and of course Busan Port is also among the top 10 in the world. And Hong Kong has what it takes to become an important international maritime services hub for China and the Asia-Pacific region.


Institutional strengths

Hong Kong is your good business partner also because we have very good fundamentals. According to the World Economic Forum's Global Competitiveness Report recently, Hong Kong ranks first in infrastructure out of 140 economies. From Hong Kong, we can reach all major Asian cities within four hours' flight time.


We have a highly skilled workforce and relatively low costs of doing business. Thanks to the ‘One country, two systems’ constitutional framework, Hong Kong is not just any Chinese city, because we practise "the other system", that provides us with distinct characteristics and advantages.


We enjoy a high degree of autonomy. We have our own currency, the Hong Kong dollar, which is internationally convertible. With our independent judicial system and our well-entrenched rule of law, Hong Kong is a prime centre for solving disputes by arbitration.


We are a free port with a simple tax regime and our tax is low, and we have been ranked by the Washington-based Heritage Foundation as the world's freest economy for the 21st consecutive year.


Logistics hub

Hong Kong continues to enhance its multi-modal connectivity such that its position as a regional logistics hub is sustained. Hong Kong International Airport is the busiest cargo airport in the world and the third busiest international passenger airport in the world after Dubai and London Heathrow.


More than 100 airlines operate flights from our airport to over 180 destinations worldwide, including more than 45 in the Mainland of China. Last year, our airport handled 63.3 million passengers and 4.38 million tonnes of cargo. Currently, our airport operates on two runways, which are not enough.


In order to cope with the forecast air traffic demand in the long term, we are planning for a Three-Runway System involving capital investment of some $141.5 billion (or roughly US$18 billion). This will vastly expand the airport's capacity to handle around 100 million passengers and close to 9 million tonnes of cargo annually by 2030.


Air transport aside, Hong Kong is supported by extensive road and rail infrastructure, offering excellent connections to all major cities in China. Together with our neighbouring cities - Zhuhai and Macau - we are building the Hong Kong-Zhuhai-Macau Bridge. This mega bridge will extend Hong Kong's hinterland to the newly booming Western Pearl River Delta and beyond to Yunnan Province.


When the bridge is commissioned - in 2017 according to the latest assessment - the perk of having this link is a much shortened commuting time from one city to another. For example, a four-hour land journey from the city of Zhuhai to Hong Kong International Airport will be compacted to only 45 minutes.


In a world where time is of the essence and efficiency does matter, the completion of this bridge will further enhance Hong Kong's competitiveness.


Port enhanced

Last year, Hong Kong Port handled some 22.2 million TEUs, ranking fourth in the world. We now operate about 350 weekly sailings to some 510 destinations worldwide. By next year, dredging works to deepen our Kwai Tsing Container Terminal Basin and its approach channel from 15 metres to 17.5 metres will be completed, enabling unrestricted access for new-generation ultra-large container vessels to Hong Kong.


All these infrastructural upgrades can enhance our multi-modal connectivity as well as our capacity to cater for growing logistics services demand, whether in China or the region.


With this connection, the newly launched Belt & Road initiative of China will promote wider regional connectivity and the free flow of goods among more than 60 countries spanning Asia, Europe and Africa, on a scale never seen before. Through upgrading the infrastructural links between the Belt & Road countries, connectivity can be strengthened and regional economic co-operation better facilitated. This will boost demand for international logistics services. With Hong Kong being a regional logistics hub and an international maritime centre, this is another golden opportunity for us to leverage on our comprehensive logistics and transportation network to play an active role in the Belt & Road initiative.


We look forward to closer partnership and collaboration with our Korean counterparts, to fully capitalise the opportunities to be brought about by the Belt & Road initiative of China.


Secretary for Transport & Housing Prof Anthony Cheung gave these remarks at a luncheon seminar on Hong Kong as a Regional Logistics Hub - The Link in Your Global Supply Chain in Seoul.

Monday, 23 November 2015

Bureau to leverage emerging ICT trends

Secretary for Innovation & Technology Nicholas Yang

It is indeed my great pleasure to join all of you at the opening of the Hong Kong International Computer Conference 2015, to be among many old and new friends of the information and communications technology, or ICT, industry.


We are here today with one common goal: to take ICT innovation and technology development to the next level in an increasingly Internet-driven global economy. In its 38th year, the HKICC has again brought together strategists, industry leaders, innovators, trend-setters and business players from Hong Kong, the Mainland and overseas, to share vision and insights on the latest ICT technology advancements. This year's innovative theme is hashtag "digital economy", powered by innovation.


The Internet has certainly transformed our world over the past two decades. We all live in a digital economy today, seeing many products, services and business processes undergo incredible transformation. According to the Boston Consulting Group, the digital economy is expected to contribute more than US$4 trillion to the gross domestic product of G20 nations in 2016.


The digital economy permeates the world in the form of e-commerce, e-learning, smart devices, social media platforms and so on. Today's Internet-driven global economy is powered by innovation and technology. Innovation and technology can bring economic growth and employment opportunities, and can also improve people's quality of living and help on social development.


Hong Kong certainly stands out in today's global digital economy. We have been ranked first in technological infrastructure globally by the World Competitiveness Yearbook for five consecutive years. In terms of innovation, Hong Kong ranks second in Asia-Pacific and 11th in the world in the Global Innovation Index 2015.


Innovation hub

As an ICT hub, Hong Kong has high broadband and mobile penetration rates that top the world. Our intellectual property rights are protected by the Copyright Ordinance. Our Personal Data (Privacy) Ordinance ensures the protection of personal data during collection, usage and transfer. The Electronic Transactions Ordinance provides a robust framework for conducting secure e-business. All in all, Hong Kong is a great place for innovation in today's digital economy.


We all know the establishment of the Innovation & Technology Bureau last Friday will pave the way for Hong Kong's transformation to a knowledge-based economy. The bureau will provide stronger and more focused policy co-ordination together with the understanding and support of Hong Kong people to capture the opportunities from our digital economy, leveraging on the rapidly evolving innovation and technology environment.


I would like to congratulate the Hong Kong Computer Society for staging another flagship international conference. I am sure the two-day conference will facilitate in-depth sharing on the latest developments of our digital economy, and inspire us with further insights on using innovation and technology to drive sustainable economic growth. I wish all of you an enjoyable and fruitful sharing at the HKICC 2015.


Secretary for Innovation & Technology Nicholas Yang gave these remarks at the Hong Kong International Computer Conference (HKICC) 2015.

HK has key roles in Belt & Road

Secretary for Commerce & Economic Development Gregory So

What will China look like in the year ahead? Let me quote your founder Michael Bloomberg. This is what he said two months ago in New York at the Navigate the New Silk Road Seminar: "China was very introspective, and now it's looking out to the world in a really unique way. I think there's a lot of opportunity, and I think for those of us who deal with China, there's also a lot of opportunity."


I couldn't agree more. The visionary and ambitious concepts of the Silk Road Economic Belt & the 21st Century Maritime Silk Road, or Belt & Road in short, will present the world with an abundance of business opportunities in an unprecedented way.


This grand strategy encourages closer economic as well as cultural co-operation among some 60-plus economies, particularly those emerging economies spanning Asia, Europe and Africa. Belt & Road is, in essence, an invitation to the international community to join hands to take global and regional co-operation to new heights, in particular in terms of enhancing policy co-ordination, strengthening infrastructural facilities connectivity, facilitating unimpeded trade and investment, deepening financial integration and building people-to-people bonds.


Belt & Road will provide the much needed boost for the global economy to overcome its growth bottleneck and become the new growth momentum of the world. The big question for us is what we need to do to leverage on these new opportunities. And that is, I suppose, why we are here at this forum today, to brainstorm and map out a strategy to tap the massive opportunities in the year ahead in China.


Open to all

I know that some of you may come from countries that are not geographically covered by the Belt & Road and are generally not associated with the Silk Road. Belt & Road is nonetheless open to all. It is not confined to countries with a specific proximate geography, a specific historical circumstance or a specific economic situation.


By creating an open, inclusive and balanced regional economic co-operation architecture, jointly building the Belt & Road is definitely in the interests of the international community.


Allow me to spend the next few minutes sharing with you what makes Hong Kong a great partner for overseas businesses as they step out of their geographical boundaries and venture into the vast Belt & Road market.


First of all, Hong Kong may serve as the facilitator in financial activities. Belt & Road will trigger soaring investment in infrastructural facilities. As China's international financial centre, and one of the world's leading financial capitals, Hong Kong has all it takes, from our world-class market infrastructure and unparalleled business network to the robust legal system, to serve as the fundraising and financial management hub for countries along the Belt & Road.


Specifically, Hong Kong is the world's largest offshore renminbi business centre, providing international investors with renminbi services ranging from cross-border trade settlement to bond issuance. As trade and other economic activities along the Belt & Road expand, so, too, will the demand for renminbi trade settlement. Hong Kong can respond to that demand. After all, we've been handling the lion's share of renminbi trade settlement since its beginnings in 2009.


Facilitating finance 

Hong Kong may also serve as the facilitator for trade and businesses. Our strategic geographical location, at the southern gateway to Mainland China, gives us unparalleled trade opportunities. Today, some 20% of the Mainland's international trade is handled by Hong Kong. We are serving as the super-connector, enabling overseas companies to enter the China market, while assisting Chinese enterprises in going global.


From air to road to sea, we provide shippers and suppliers with reliable transportation. Within five hours' flight time from Hong Kong, we can reach half of the world's population and most of Asia's thriving economies. Our port is among the top five busiest in the world. Our international airport is the world's busiest cargo airport.


What's more? Hong Kong may serve as a professional services hub as well. Hong Kong is blessed with a large pool of world-class professionals, with expertise in areas such as accounting, law, architecture, engineering management and more. These professionals can provide high-quality services beyond the provision of financial capital and expertise. They possess the requisite competence and experience to lead consultancies, construction projects, operations and management of the many infrastructures along the Belt & Road.


For Hong Kong to capitalise on the wealth of opportunities of Belt & Road that I just mentioned, we need to learn and understand the business opportunities and potential areas of collaboration with different markets, especially the many emerging markets dominating the landscape along the Belt & Road. We are thus moving proactively to strengthen the ties with these countries on the government-to-government level and to foster a deeper understanding of the political, economic and cultural make-up of these economies.


For example, our negotiation of the Hong Kong-Association of Southeast Asian Nations free trade agreement is progressing smoothly and we are looking forward to its successful conclusion in the coming year. The free trade agreement will provide a stable and transparent framework in which regional trade and investment can flourish.


Expanding networks

We are also actively expanding our networks of investment promotion and protection agreements, comprehensive avoidance of double taxation agreements and agreements on double taxation relief arrangements for shipping income, with a view to protecting and facilitating business co-operation between Hong Kong and countries along the Belt & Road. These exchanges will no doubt facilitate the drawing up of Hong Kong's specific strategies in seizing the opportunities ahead of us.


The Belt & Road initiative is not only set to fuel the development of the 60-plus economies along the routes; it will also bring great potential to other economies globally. China has offered the world this compelling vision. It will be up to you to explore and grasp the historic opportunities arising from it. Hong Kong is ready to make good use of our unique advantages to facilitate your journey into the Belt & Road.


Secretary for Commerce & Economic Development Gregory So gave these remarks at a forum organised by Bloomberg Businessweek.