Dear friends,
Hong Kong Business Environment – Unique Advantages and Unlimited Opportunities
I would like to share with you the "Report on Hong Kong's Business Environment: A Place with Unique Advantages and Unlimited Opportunities", published by the Hong Kong Special Administrative Region (HKSAR) Government on 27 September 2021. The Report (available on the "Hong Kong Economy" website) reviews and sets out Hong Kong’s current business environment and advantages following the events over the past two years. It also describes the development opportunities available to Hong Kong under China’s new phase and pattern of development.
Hong Kong and the ASEAN have long been enjoying close bilateral ties in a multitude of arenas, from trade and investment to cultural and people-to-people ties. The tremendous potentials in Hong Kong buoyed by the support of the Central Government and under the “one country, two systems” principle are of much relevance to not only our city but also our friends here in the ASEAN. In this regard, I would like to apprise you of the salient aspects of the Report and the many attractive opportunities that Hong Kong has to offer.
The black-clad violence that occurred from mid-2019 to early 2020 dealt a severe blow to the society and economy of our city, upset Hong Kong's business environment, and raised business sectors' concerns over Hong Kong's outlook.
Fortunately, following the implementation of the Hong Kong National Security Law (NSL) in mid-2020, peace and stability were promptly restored in our society. People's lives and economic activities have returned to normal, and the business environment has also been restored. The subsequent improvement of Hong Kong's electoral system safeguards the full implementation of "patriots administering Hong Kong", enhances the effectiveness of the HKSAR Government's governance, and enables the steadfast and successful implementation of "one country, two systems".
Our economy has always been positioning itself to leverage the support from the motherland while engaging with the world. Hong Kong has developed into an international centre for finance, commerce and trade, a home for corporate headquarters, as well as a major hub of investment, transportation and logistics. Despite the trials and tribulations during the past two years or so, our economy has turned the corner, rebounding by 7.8% in the first half of 2021. Hong Kong's institutional strengths and other inherent strengths remain intact, thanks to the solid support of our country. These include the common law system; a clean and efficient government; a low and simple tax regime; a robust financial system; free flows of goods, capital, talent and information; a level playing field; well-developed infrastructure and digital facilities; a wealth of talent; alignment with the international community; and a safe and quality metropolitan environment with a blend of urban and rural lifestyle. It is particularly noteworthy that the implementation of the NSL has reinforced the sound and robust rule of law and judicial independence.
Since the implementation of the NSL, our financial market has remained stable, and the Linked Exchange Rate System and various segments of the financial market have been functioning well. There have been net capital inflows into the Hong Kong dollar market. The banking system has remained robust, with the capital adequacy ratio and the classified loan ratio staying at healthy levels. The financial services sector is on a positive trend, and financial institutions will continue to proactively grasp development opportunities in Hong Kong and the Mainland. In fact, many international financial institutions, including insurance companies, banks and wealth management companies, continue to expand their business in Hong Kong.
Local chambers of commerce consider that the NSL has helped stabilise the investment environment. At the same time, foreign chambers of commerce remain confident in Hong Kong’s business environment. For example, American Chamber of Commerce, Austrian Chamber of Commerce, British Chamber of Commerce, and Malaysian Chamber of Commerce agree that Hong Kong remains an ideal place to do business.
On the horizon, with the local epidemic situation having stabilised, tremendous potentials abound. Most notably, the National 14th Five-Year Plan and the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) development are bringing countless new opportunities.
The National 14th Five-Year Plan promotes high-quality development and aims to accelerate the establishment of a new development pattern featuring dual circulation, which takes the domestic market as the mainstay while enabling the domestic and international markets to interact positively with each other. This implies an expanding and improving domestic market, an enlarging middle-class consumer group, persistent upgrading of industries and further upgrading of external economic connections. As highlighted in my recent letter to you, the National 14th Five-Year Plan sets out clear positioning for the development of our city. It supports Hong Kong in consolidating and enhancing our status as an international financial, transportation and trade centre as well as a centre for international legal and dispute resolution services in the Asia-Pacific region, while at the same time supporting our city's development in four emerging areas, i.e. as an international aviation hub, an international innovation and technology (I&T) hub, a regional intellectual property trading centre, and a hub for arts and cultural exchange between China and the rest of the world.
Meanwhile, the GBA development has become the country's key strategic development. It has a population of 86 million and a GDP similar to that of the world’s 9th largest economy. Hong Kong provides a direct entry point into the huge Mainland market and an international gateway to the GBA.
Looking ahead, the shift in global economic gravity to the East will be sustained. With our unique positioning provided by the National 14th Five-Year Plan, together with the GBA development, Hong Kong presents new impetus for economic development. There will certainly be unlimited business opportunities for local industries and foreign enterprises in our city. Hong Kong will continue to serve as the gateway connecting our country and the rest of the world, perform the functions of a “super-connector”, a high-value-added services platform, an international talent and capital pool and more, as well as be an internationally preferred place of doing business. Hong Kong will also participate in the domestic circulation of the national economy, thereby opening up opportunities for further development.
In addition, HKSAR Government will strive for institutional and policy innovation to assist local and overseas enterprises in Hong Kong to capitalise on all these new potentials. We hope that our friends here in the ASEAN would ride on the overall development direction to grasp the new development opportunities and share the fruits of development.
As always, we are most grateful to you for your interest in and support for Hong Kong. You are most welcome to get in touch with us for more information about the substantial opportunities that our city has for the ASEAN.
Sincerely,
Law Kin-wai
Director-General
Hong Kong Economic and Trade Office
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