Speeches

Business seminar on Hong Kong and Belt and Road Initiative: The Gateway for Medan to go to the World Market

Following is the speech by the Director-General of the Hong Kong Economic and Trade Office in Jakarta, Mrs DO PANG Wai Yee, at the business seminar “Hong Kong and Belt and Road Initiative: The Gateway for Medan to go to the World Market” in Medan, Indonesia today (November 3):

Drs H. Dzulmi Eldin Msi (Mayor of Medan), Pak Rusmin (Regional Chairman of the Indonesia-Hong Kong Business Association (IDHKBA)), James (Chairman of IDHKBA), Kwan Ho (Director of HKTDC in Indonesia), Ladies and Gentlemen,

Selamat Sore! Thank you for attending this seminar and giving me a chance to introduce Hong Kong to you.

Let me introduce myself first. I assumed the position of Director-General, Hong Kong Economic and Trade Affairs, Jakarta in mid-September this year. Our office is also new and I have only been in Indonesia here for a month and a half. I have mainly stayed in Jakarta as that is the base of our office.

In fact, Medan is the first city I have visited in Indonesia apart from Jakarta. I have heard so many good things about Medan, for example its multiculturality and nice food. I am very eager to know more about the city and I feel greatly honoured to meet and be at the same stage with the Mayor of Medan on my first day here.

Despite my short time in Indonesia, it has impressed me as a vast and friendly country which has lots of potential. I am very pleased that the Hong Kong Government has chosen this wonderful country to set up the newest Economic and Trade Office. Let me tell you a little bit more about our new office.

The new Economic and Trade Office

There are currently 12 Economic and Trade Offices around the globe. Economic and Trade office is the representative office of the Hong Kong Special Administrative Region (SAR) Government in that country as well as the region it covers. It seeks to promote Hong Kong’s economic and trade interest by liaising closely with a wide range of interlocutors and contacts. The Economic and Trade Office also handles all bilateral matters relating to economic, technology and cultural issues, etc. between Hong Kong and the respective countries under the office’s purview.

In the past, there were only two Economic and Trade Offices in Asia; one in Tokyo covering Japan and Korea and one in Singapore covering the ten ASEAN countries. With the shift of the global economic development to the Asian region and the rise of ASEAN economies, we see a strong and practical need to strengthen our representation and profile in this region so that we can forge closer ties with our ASEAN partners.

Our new office in Jakarta commenced operation in June this year and we represent the Hong Kong SAR Government in matters between Hong Kong and ASEAN as a whole, and handle in particular matters between Hong Kong and four countries, namely Indonesia, Malaysia, the Philippines and Brunei. The remaining six countries will be continued to be covered by Singapore ETO.

I must stress that while our office is based in Jakarta, we are keen to get to know all major cities in Indonesia, and Medan is definitely one of our top priorities. We really hope to build closer relations with all cities in Indonesia.

Hong Kong and ASEAN

Our presence in Indonesia is very timely. The ties between Hong Kong and ASEAN have been growing stronger in the past few years. In 2015, ASEAN was our second largest partner in merchandise trade. From 2011 to 2015, the bilateral goods trade between Hong Kong and ASEAN grew at about 3.2% on average every year. ASEAN was also our 4th largest partner in service trade in 2013. The average annual growth rate was about 11% from 2009 to 2013. To strengthen economic relation with ASEAN and contribute to regional economic integration, we have commenced negotiations of the ASEAN - Hong Kong Free Trade Agreement in July 2014. It is hoped that the Free Trade Agreement will enhance economic ties between ASEAN and Hong Kong by facilitating the flow of goods, services and investment. We are hopeful that the negotiations will be concluded soon.

Indonesia, being the home of the ASEAN secretariat, is naturally the place where we should set up the shop. In short, Indonesia is a very important strategic partner for Hong Kong as we embark on our journey of deeper integration with Asia.

Hong Kong and Indonesia

Indonesia is currently Hong Kong’s 23th largest export market in the world and the 6th largest market in ASEAN. In the first three months of 2016, Hong Kong’s exports to Indonesia amounted to US$588 million whereas for the same period, Hong Kong’s imports from Indonesia amounted to US$570 million. The figures are more or less even.

Apart from trade, Hong Kong has also increase its share in foreign direct investment in Indonesia. According to the latest data from the Investment Coordination Board here, Hong Kong has leapt from ninth to fourth place in terms of foreign direct investment in the January to September period. Total foreign direct investment from Hong Kong stood at US$1.6 billion.

We believe there is huge potential for Indonesia and Hong Kong to build closer relations. And this is not only limited on trade, investment and business, but also cultural exchanges and people to people link.

Today, I would like to use this opportunity to introduce Hong Kong to our new friends here. For friends who are familiar with Hong Kong, I would also like to give an update on the recent development.

Hong Kong – One Country Two Systemss

There are many things which make Hong Kong unique but one of the key characteristics that makes Hong Kong stands out is that we are a Special Administrative Region established pursuant to the “One Country, Two Systems” principle. Put it simply, the concept is that while Hong Kong is part of Mainland China, the “One country”, Hong Kong would enjoy a high degree of autonomy, the “Two systems”.

The “One Country Two Systems” in Hong Kong is implemented through the Basic Law. The Basic law is a piece of national legislation of the People’s Republic of China and it is the most important constitutional documents of the Laws in Hong Kong which provides the legal basis for establishing the Hong Kong Special Administrative Region. Thus far, Hong Kong is thriving under “One Country Two Systems” where our strong tradition in the rule of law, our free and open economy, our capitalist system prevail.

Rule of Law

In terms of rule of law, Hong Kong continues to adopt the common law system. We also enjoy independent judicial power where the power of the final adjudication of court cases in Hong Kong rest with the Court of Final Appeal there. Our judicial independence has received international recognition.

Fundamental human rights are fully respected in Hong Kong. The right to liberty and security of person are firmly guaranteed under the Basic Law and the Bills of Rights and citizens are guaranteed the freedom of expression.

Capitalist City

From the economic perspective, the Basic Law also provides that Hong Kong continues the capitalist system. This means that there is –

Free flow of capital and that Hong Kong’s markets for foreign exchange, gold, securities and futures will continue;

The policy of free trade which safeguards the free movement of goods, intangible assets and capital, and that Hong Kong SAR can participate in relevant international organizations and international trade agreements; and

Protection of private ownership of enterprises, legitimate right of inheritance and foreign investment.

The rule of law is an indispensable element for the development of Hong Kong and it has greatly facilitated our economic development. This is because naturally, investors would seek to invest in places where, among others, their money would be well protected by a robust, transparent and enforceable legal framework; and where they could compete on a level-playing field as all players are bounded to obey the same set of rules.

With the free flow of capital safeguarded, Hong Kong has been able to attract a large volume of foreign investment in the past 20 years. According to the United Nations World Investment Report, Hong Kong ranked second in global foreign direct investment in 2015, with record amounts of inflows and outflows at US$103 billion and US$143 billion respectively. There are also nearly 8,000 overseas and Mainland companies keeping their offices in Hong Kong.

Further, for the past 22 years in a row, Hong Kong has ranked first in the Index of Economic Freedom, published annually by the Heritage Foundation. We also regained our position as World’s No.1 in terms of economic competitiveness as rated by the Swiss-based International Institute for Management Development in its World Competitiveness Yearbook 2016. We are happy to say that these help to prove that Hong Kong has been maintaining our economic competitiveness and ease of doing business.

Other edges of Hong Kong

In fact, Hong Kong is one of the best places in the world to do business. Hong Kong is one of the most internationalised cities in the world, with English as one of our official and commonly use languages. Our society is free and open, and our lifestyle is a blend of East and West.

Our currency, the Hong Kong dollars, is fully convertible and capital from the Mainland, as well as from all over the world, flows freely in and out of Hong Kong. We have a simple and low tax regime. In fact, the tax rate in Hong Kong is one of the lowest in the world with the highest level of personal flat tax rate standing just at 15%.

We have the experience, the expertise and the connection to serve as the fundraising and financial hub for different economies, especially for the Belt and Road economies which I will talk about later. Our financing options range from public offering and loan syndication to private equity. To illustrate my point, our stock market is the eighth largest in the world in terms of market capitalization and Hong Kong ranks first, globally, in equity funds raised through initial public offering.

We also take pride in being China’s de facto international financial capital and that we are the first mover in Mainland’s continuing economic reforms. Hong Kong is the world’s largest offshore Renminbi business centre. We also have international investors with a wide variety of Renminbi products, including those for cross-border trade settlement and Renminbi financing.

Furthermore, Hong Kong has also been keen to explore Islamic Financial Services. Over the past two years, we have successfully issued two global sukuk, or Islamic bonds and we are now working on the third.

All in all, Hong Kong has a good story to tell. Being an international financial center, we consider that we are also well-positioned to contribute towards the Belt and Road initiative which brings me to this interesting topic. So please allow me to spare a few minutes to briefly introduce this initiative.

Belt and Road

The Belt and Road strategy encourages closer economic as well as cultural co-operation among some 60-plus economies, particularly those emerging economies spanning Asia, Middle East, Europe and Africa. Belt and 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.

We believe the Belt and Road initiative will be a driving force of the global economy in the 21st century. It will generate demand and expand international trade and investment flow. The Belt and Road Initiative covers various aspects and proposes co-operation in many sectors, but fundamentally the Initiative is about making connections.

We think that Hong Kong is well-placed to play this facilitator role as a super-connector, largely because of the unique advantages I mentioned earlier. We also have unique physical and intangible connectivity to the Mainland with privileged trade and social access. In addition, our well-established system connects us to the international community in terms of our legal system, language, trade practices as well as lifestyle which international traders are familiar with.

Besides, the Belt and Road initiative will also catalyse the movement of people and goods, boosting demand for reliable logistics services. In this, Hong Kong is also well placed to serve. Our airport has been the busiest cargo airport in the world for more than 15 years. From Hong Kong, you can reach half the world's population in five hours, including Jakarta which is just a shave off five hours away. We boast the world's fifth busiest container port, providing some 350 services a week to more than 500 destinations worldwide. Our 700 shipping-related companies offer a wide range of services, from ship management, broking and chartering to finance, marine insurance, legal, arbitration and many other support services. We think that the Maritime Silk Road will create fresh demand for shipping services.

Indonesia, being in the critical gateway in the Maritime Silk Road will be a key player in the Belt and Road initiative. With the big-ticket infrastructural development, from highways and railways to maritime and aviation transport being rolled out by the Government here, there is real synergy with the Belt and Road initiative. Hong Kong will have a lot to offer and expertise to share when it comes to international co-operation on infrastructural projects envisaged under the Belt and Road.

This is because we have a deep pool of talented professionals, from engineers and surveyors to architects, designers and planners, not to mention other professionals specialised in financing, insurance, arbitration, risk management and project consulting. All of them are experienced and eager to partner with overseas businesses, to take part in the development, management and operation of infrastructural projects. We believe there would be many areas we can work together and there is much our economies could accomplish.

Looking Ahead

In conclusion, I will invite all of you to consider Hong Kong as your first choice in seeking partnership to expand regionally or internationally, whether it is for capitalization or setting up offices. I would also recommend to you our professional services which cover a wide-range of talents from engineer to accountants to legal experts, all with ample international exposure as well as knowledge of working locally in Asia. For our part, the Jakarta office will do our upmost to promote Hong Kong to our friends in Indonesia and ASEAN and vice-versa to establish closer ties between us.

I would love to learn more about Indonesia and in particularly Medan from you all. So please share with me any insights you have on how Hong Kong and Medan can work closer together.

Finally, I would like to thank the Indonesia-Hong Kong Business Association for organizing this seminar. As I said, I feel very honor to meet with the Mayor of Medan on my very first day here. I am sure this is a promising beginning of a closer relation between Hong Kong and Medan.

Thank you. Terima Kasih!

Ends/Thursday, November 3, 2016