Thursday, 28 May 2015

Belt-Road initiatives benefit HK

Chief Executive CY Leung

We have a long history of friendship with Australia. That's evident in our strong trade and investment links, and our extensive people-to-people links. Last year, for example, our bilateral merchandise trade came in at nearly US$6.6 billion.


And, at last count, more than 600 Australian companies were operating in Hong Kong. They are a vibrant and diverse group: prominent in financial and professional services, transportation, construction, design, retail, and of course, food and beverage, among many other sectors. And they contribute to Hong Kong's success - to our diversity, our creativity and our cosmopolitan lifestyle. They are also part of the unique role of Hong Kong.


Hong Kong may be small, in area and in population, but we have thrived as an open, market-based economy. More than 7,500 overseas and Mainland Chinese companies maintain offices here. About half of them use Hong Kong as regional headquarters or offices.


Enduring advantages 

We are a dynamic global city thanks to a number of enduring advantages. These include the rule of law supported by an independent judiciary, a low and uncomplicated tax system. It should take most professionals and business people no more than 10 minutes to fill out their annual salaries tax return. And we have free flow of information and uninhibited political and economic commentary that come with it, and free flow of capital and goods, and 21st century communications and logistics infrastructure. They connect us to a world of business - globally, regionally and throughout the Mainland of China.


We maintain a level playing field for all market players and have a seek-and-destroy mindset when it comes to red tape. The government here does not compete with businesses as we don't have government-linked business corporations. Unless of course you happen to be in the railway or theme park businesses as we do own part of the Mass Transit Railway Corporation and Disneyland. And we stop at that. Add it up, and you can understand why the Washington-based Heritage Foundation has named Hong Kong the world's freest economy for the past 21 years. And the International Institute for Management Development has just moved Hong Kong two notches up as the second most competitive economy, only after the United States. And I am pleased and flattered to note that government efficiency in Hong Kong has been ranked number one in the world.


Super-connector role

And then there's our unique role. We are the "super-connector" between the Mainland of China and the rest of the world. Thanks to the "one country, two systems" arrangement, when you are in Hong Kong, you are of course in China. And then you are part of our "system", which makes us different from other Chinese cities. So Hong Kong offers the combined advantages of both "one country" and "two systems". Hong Kong has the most extensive and the longest history of economic ties with the Mainland of China. And we were there as soon as the door of China reopened in the late 1970s.


Over the past three decades, Hong Kong used its free trade expertise, experience and international connectivity to support the Mainland’s opening up to the world. So modestly, we say to our foreign business partners we have some experience and business connections to share. And we are happy to share as we believe in getting the pie bigger rather than getting a bigger share of a small pie. Hong Kong has open borders, more importantly our people including our business people have open mind. We welcome new partners from all parts of the world and that of course includes Australia. We also welcome new partners from the Mainland of China too. So we are also the launching pad for Mainland Chinese companies and brands looking to go global.


Renminbi hub

More than one of the world's major financial centres, Hong Kong is China's international financial capital. We are also the world's China financial capital. The Renminbi, Mainland China's currency, is a prime example of our "super-connector" role.


Eleven years ago, we were given the opportunity to internationalise the renminbi. Today, Hong Kong is by far the world's largest offshore renminbi hub. Through cross-border trade and direct and portfolio investment, Hong Kong connects renminbi markets on the Mainland and around the world, expanding both the currency's circulation and its convertibility.


In 2014, banks in Hong Kong managed renminbi trade settlement exceeding RMB 6.3 trillion. That was up more than 60% over the previous year. Hong Kong banks now handle some 70% of global renminbi payments.


Connecting markets

Today, the Shanghai-Hong Kong Stock Connect may be the most visible of Hong Kong's "super-connector" role between Mainland China and the rest of the world. Under the scheme, running smoothly since its launch last November, investors in Hong Kong, and from around the world, can invest, directly, in more than 500 Shanghai-listed shares through the Hong Kong Stock Exchange. And Mainland investors can use onshore renminbi funds to invest in shares listed on the Hong Kong Stock Exchange.


Shanghai-Hong Kong Stock Connect is only the beginning. Last week, we have announced the Mainland-Hong Kong Mutual Recognition of Funds, to be implemented in July this year. The arrangement will deepen the exchange and co-operation of the Mainland and Hong Kong asset management industries, and enhance the competitiveness of the Mainland and Hong Kong fund markets. And there's more to come. We expect the Shenzhen-Hong Kong Stock Connect to be up and running later this year.


Our "super-connector" role is about more than high finance. We have a free-trade agreement with Mainland China known as CEPA. It gives Hong Kong companies tariff-free access to the Mainland for goods produced in Hong Kong. It also offers Hong Kong service suppliers preferential access to the vast and rapidly growing Mainland market. CEPA is nationality neutral. Australian companies are welcome to partner with Hong Kong companies to take advantage of CEPA's benefits.


Belt-Road initiatives

Hong Kong is also closely watching the progress of the Mainland's ambitious Silk Road Economic Belt and 21st Century Maritime Silk Road programmes. The Belt-Road initiatives will certainly expand China's transcontinental connectivity, and promote economic, political and cultural cooperation and development from Asia through Africa and into Europe.


The Belt-Road initiatives will generate huge demand for services. And that's good news for Hong Kong. Our financial, trading, legal, accounting and other professional services, as well as our infrastructural project management, environmental consultancy, and transport and tourism services, give us clear, competitive edges.


The Belt-Road is also likely to increase the volume and intensity of international investment flow, as well as investment traffic in and out of China. In this, too, Hong Kong is well-placed to serve as the "super-connector" and take advantage of the surge in investments.


Of course there are now plenty of direct flights from Australia to the Mainland of China, but the shortest and easiest business routes between China and any other country in the world is still the route through Hong Kong.


Chief Executive CY Leung gave these remarks at the AustCham Westpac Australia China Business Awards Gala Dinner 2015 on May 28.

Otmane El Rhazi
Department of Commerce
Economic Development
Text/Mobile, +44 7414 782 320

Saturday, 23 May 2015

HK leads in mediation, IP trading

Secretary for Justice Rimsky Yuen

It is my great pleasure to welcome you all to this Intellectual Property Mediation Seminar jointly organised by the Department of Justice and the Intellectual Property Department.


Over the years, different institutes and organisations have organised countless seminars and workshops concerning mediation. This seminar, as far as we reckon, is the very first seminar in Hong Kong focusing solely on evaluative mediation for resolving intellectual property, or IP, disputes. Let me briefly explain why the Department of Justice and the Intellectual Property Department find it desirable and appropriate to make this breakthrough.


The first reason is a matter of policies. To be more precise, it is a marriage of two important policies of the Hong Kong SAR Government, namely, the policy to enhance Hong Kong's status as a leading centre for international legal and dispute resolution services in the Asia Pacific region, and also the policy to reinforce Hong Kong's role as a premier IP trading hub in the region.


In the course of searching for new areas of development, the Steering Committee on Mediation sees the potential synergy in marrying these two policies. We believe mediation, including evaluative mediation, can be an appropriate and effective means of resolving IP disputes. In this regard, the Working Group on Intellectual Property Trading shares our view. In its recently published report, the Working Group highlighted the need to promote the use of mediation as a means to resolve IP disputes and also the desirability to explore the use of evaluative mediation in addition to facilitative mediation.


The second reason is one of huge market potentials.


IP applications proliferate

In the past decades or so, Asian companies have become more acutely aware of the commercial value and importance of IP protection. Asia is currently the fastest-growing region in the world in terms of the number of IP applications. Besides, the growing number of government agencies and industry multipliers from Japan, Korea, Malaysia, Taiwan and Thailand are bringing more innovative and original IPs from Asia as well as fostering the development of IP trading in the region.


There is also the China factor. Hong Kong has long been serving as a strategic gateway to the Mainland market, not just for trade and investment but also for ideas and innovations. In addition, the Central People's Government has been constantly introducing new measures to diversify the country's economic growth. The National 12th Five-Year Plan commits to transforming China's rich cultural heritage into a "pillar" industry for the country.


We accordingly see more and more efforts made by the relevant Mainland authorities in this direction. One recent example is the fact that the Ministry of Culture sent, for the very first time, a delegation of 40 Mainland culture-related enterprises to take part in the Asian Licensing Conference held in Hong Kong in January this year, which is the largest conference of its kind in Asia, seeking to export their intellectual properties relating to indigenous and profound culture and creations.


Services demand rising

Such examples of expanding demand for licensing in the Mainland will naturally boost the demand for incidental services in Hong Kong, including dispute resolution services such as mediation.


Of course, we should not forget the domestic market in Hong Kong. Indeed, many industries in Hong Kong are actual or potential users of IP mediation services. Take the example of the toy industry. Hong Kong enjoys a good reputation as an international supplier of toys and a global centre for toy product design, production planning, marketing and management. Just for the period from January to October 2014, Hong Kong's total toy exports amounted to more than US$5.4 billion.


A recent trend in the Hong Kong toy industry is the growing interest in and demand for licensed products. This is because Hong Kong toy exporters are increasingly producing high-quality toys with overseas industry giants and licence holders. This trend means that the number of licence disputes is likely to increase, and that licence disputes is one of the types of IP disputes that are suitable to be resolved by mediation, including evaluative mediation.


This brings me to the third reason, namely, mediation, including evaluative mediation, can in appropriate circumstances be an effective means to resolve IP disputes.


Mediation can resolve global disputes

A recent court judgment handed down recently concerning a dispute over a famous trademark, it was revealed that the parties had been engaged in trademark litigations and disputes against each other in places outside Hong Kong for over 10 years. Not only is this case illustrative of how protracted IP litigation can be, it also shows how proceedings could proliferate in multi-jurisdictions, not to mention the substantial legal costs that would have to be incurred.


For multi-jurisdictions and cross-border IP disputes, mediation provides an opportunity for the dispute to be resolved globally and saves the parties the trouble to take the disputes to the courts in all the relevant jurisdictions.


Further, it is pertinent to note that mediation has been widely used by the World Intellectual Property Organisation, or WIPO, in resolving IP disputes. The mediation cases so far administered by the WIPO Centre cover a wide range of subject matters, including disputes concerning artistic production finance agreements, art marketing agreements, information technology agreements and trademark licensing agreements.


On the whole, we have no doubt that mediation is a suitable means for resolving IP disputes. It is against this background that we see fit to take one step further to consider what types of mediation would be best suitable for resolving IP disputes.


Evaluative meditation a fresh option

While facilitative mediation, which is the most common type of mediation used in Hong Kong, is a possible candidate in appropriate cases, we also see the potential and advantages of using evaluative mediation when the nature of the disputes calls for an evaluation of the issues involved, such as cases involving disputes over IP rights as well as cases involving complex or technical issues.


In short, the promotion of evaluative mediation is to offer an additional option, on top of facilitative mediation, to the end users in the IP field so that they can consider which type of mediation can best serve their needs. In other words, we are not seeking to diminish the importance of facilitative mediation. Instead, we only want to provide more choices for the end users.


It is for this reason that we have, for the purpose of today, invited Professor Nadja Alexander, an internationally renowned expert on mediation, to introduce the concept of evaluative mediation. In addition, we have arranged a mock evaluative mediation to demonstrate how it can be used to resolve IP disputes.


As I said earlier, this seminar is the first of its kind in Hong Kong. I can guarantee that this will not be the last. Indeed, IP disputes is one of the key areas which the Department of Justice will be focusing on in our future promotion of mediation and arbitration. Further promotion activities will be launched in the future, and we welcome views from all the stakeholders so that we can better serve your needs.


Secretary for Justice Rimsky Yuen gave these remarks at the IP Mediation Workshop - An Evaluative Approach, jointly organised by the Department of Justice and the Intellectual Property Department.

Otmane El Rhazi
Department of Commerce
Economic Development
Text/Mobile, +44 7414 782 320

Wednesday, 20 May 2015

Multi-pronged strategy to tackle land shortage

Financial Secretary John Tsang

It is my great pleasure to join you all today for the Annual Conference of the Royal Institution of Chartered Surveyors Hong Kong, highlighting the theme "Building Hong Kong's Capacity for Sustainable Growth - What can be done to stay competitive?" There is one word in this year's theme, in particular, that has caught my attention.


That word is "capacity", and the basic definition of this meaningful word actually goes all the way back to the Middle Ages. It is defined as "the maximum amount that something can hold or produce".


In Hong Kong, that "maximum" is restricted by our size; in area, we count just around 1,100 square kilometres. While the built up area accounts for less than one-quarter of our total land mass, the remaining land resources, I was told by KK and his people in the Planning Department, are mainly woodland, grassland, wetland, barren land, water bodies, country parks, special conservation areas, remote areas, outlying islands, steep slopes and other land categories that are not quite suitable for development.


That is the land card that we have been dealt. It is not going to change. We have to work with what we have.


That's where the other major definition of "capacity" comes in; and that is "the ability and power to do something".


In that regard, Hong Kong is as big, as capacious, as all Asia - and then some. Over the years and decades, the people of Hong Kong have shown that there is little that we cannot accomplish.


Today's focus is on creating sustainable growth - on what we can do to stay competitive. And that is what I would like to share with you in the next few minutes.


As I said in my Budget Speech earlier this year, I want to capitalise on Hong Kong's strengths, to explore new ideas in ensuring the health of our long-term economic development.


Land shortage is a long-standing issue in Hong Kong. It is a major constraint which adversely affects our economic competitiveness. To overcome this hurdle that is standing in our way, we are pressing ahead with a multi-pronged land-supply strategy.


Maximising land use

We are maximising the use of the limited land supply that we have by taking forward ambitious land-use planning and development projects that include the Kai Tak Development and the West Kowloon Cultural District in the urban area, as well as the North East New Territories New Development Areas, the Hung Shui Kiu New Development Area and the Tung Chung New Town Extension in the rural area. Just to mention a few.


We have applied co-ordinated planning to these large-scale projects, each involving tens to hundreds of hectares of land, striking an optimal balance between increasing land supply for residential and economic activities as well as improving the quality of the urbanised environment.


Apart from large development areas, we are also reviewing the planning intention of individual sites to allow more beneficial uses that better meet community priorities. These include sites of obsolete government premises, deserted or de-vegetated green belt sites and under-utilised industrial buildings.


Through these intensive search exercises, we have identified more than 60 sites that are suitable for residential use. After the statutory rezoning process that could take some time, they provide a total area of over 100 hectares, capable of producing more than 55,000 residential units. We are continuing with these efforts.


In addition, Kowloon East is now transforming from an industrial district into another core business district. It has the potential to supply office floor area of four million square metres, which is twice the current size of Central. Major commercial and retail nodes will also be available in the Kai Tak Development, and the North Commercial District on the airport island.


Given the scarcity of land supply in Hong Kong, we should make full use of land available. We are seeking to increase development intensity of individual sites, taking into consideration practical needs such as traffic capacity, environmental, visual and air ventilation impacts of the neighbourhood.


All these aside, as a long-term vision, the Government is studying the feasibility of the East Lantau Metropolis concept. Geographically, it is close to our central business district on Hong Kong Island. More than locational advantages, it boasts strategic transport infrastructure. Indeed, it has the potential to rise as a new urban centre for the future.


Infrastructure investment

You are probably aware that the World Economic Forum's Global Competitiveness Report has ranked Hong Kong first in infrastructure for five consecutive years. We are continuing to invest heavily to upgrade our infrastructure. It is worth noting that when keeping price levels constant, current construction expenditure, which is quite high close to $80 billion this year, is only about 80% of that of the Airport Core Programme era in the 1990s.


Our infrastructure, in particular transport infrastructure, is not just an engineering achievement that we should all be proud of. It is also at the centre of our sustainability development strategy.


Our high-density developments are mainly connected by railway, which is an efficient, low-carbon mode of public transportation. This greatly reduces the demand for private cars, thereby minimising fuel consumption and emissions. You should not be too surprised to know that Hong Kong, on a per-capita basis, has one of the lowest transportation carbon footprints in the world.


The West Island Line is now fully opened. Four other lines are under active construction. When completed, more than 70% of our population will be within the catchment of our railway network. Last September, the Government released its Railway Development Strategy 2014, which provides a blueprint for the further expansion of Hong Kong's railway network.


Sustainable development

There is huge potential, too, in sustainable development through the construction of green buildings. To promote green building, the Government is offering developers gross floor area concessions in new buildings - if they incorporate sustainable design elements and provide related information.


Benchmarks have been set under the Buildings Energy Efficiency Ordinance. There are also energy-efficiency design standards for key building-services installations. And commercial buildings are required to conduct energy audits.


We are leading by example. The Government has released a comprehensive, target-based environmental performance framework for new and existing government buildings. New government buildings with a construction floor area of more than 10,000 square metres must achieve one of the two highest ratings in BEAM Plus.


To become "Energy Aware" and "Energy Wise", energy saving will need to have a centre-stage role not only in government policy, but also in how businesses operate and how individuals live.


The Environment Bureau has recently published an Energy Saving Plan for Hong Kong's Built Environment which sets for Hong Kong our own target for reducing energy intensity by 40% by the year 2025. It shows our commitment to environmental protection, and to drive energy saving through a combination of measures, especially for buildings and inhabitants, to become highly energy efficient.


Beyond some of the specific responses I have outlined so far today, we are also updating Hong Kong's territorial development strategy. And the Director of Planning will tell you more about this - specifically about "Hong Kong 2030 Plus" - in just a few moments.


Ladies and gentlemen, yes, we have our fair share of constraints right here in Hong Kong. And we are, indeed, facing a great number of challenges. But I am confident that we do have the capacity to meet our constraints and challenges head-on. Today's conference - and each and every one of you - will, I am sure, help move Hong Kong along towards a prosperous and sustainable future.


Financial Secretary John Tsang gave these remarks at the Royal Institution of Chartered Surveyors Hong Kong Annual Conference 2015 on May 21.

Otmane El Rhazi
Department of Commerce
Economic Development
Text/Mobile, +44 7414 782 320