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Following is the speech by the Chief Secretary for Administration, Mrs Carrie Lam, delivered at the Hong Kong Trade Development Council Annual Dinner on November 14 (London time):
Lord Green, Jack (So), Distinguished Guests, Ladies and Gentlemen,
Good evening everyone and thank you very much for coming tonight.
It is always a pleasure to come back to London, a great city that I called home for a couple of years in the not too distant past.
There's no doubt I feel a sense of deja-vu tonight - and perhaps just a few nerves. Like all of you, I am more used to sitting down and listening to the speech at the TDC Dinner rather than having to get up and sing for my supper.
But it is an opportunity that I embrace. I welcome the chance to catch up with so many friends and to make some new ones as well. Thanks for such a warm welcome.
So much has happened - so much is still happening - in Hong Kong that it is difficult to know where to start tonight.
Under normal circumstances - for want of a better description ﷿ I would probably use this year's 15th Anniversary of our return to China as a peg for what follows.
On one level, Hong Kong people have taken all of this in their stride. The elections went smoothly and were clean, transparent and open. The legislature has been sworn in, and is back into the full swing of work.
The civil service continues to deliver public services with its trademark efficiency and "can-do" approach. With so much political change taking place it is reassuring to know that Hong Kong's civil service remains a force of stability in society with its ingrained sense of integrity, commitment and dedication.
But this year has been far from "normal". We have had an unusual alignment of the stars - celebrating not just the 15th Anniversary but also the election of a new Chief Executive, the swearing-in of the Fourth Term Hong Kong SAR Government, and the election of a new Legislative Council under an expanded electoral system, all happening within the last 12 months.
You might say one celebration, and a triple whammy of change. And you might well ask, what does it all mean for Hong Kong in the next five years? Well, let me take this opportunity to provide you with some insight into that very question.
Our independent judiciary continues to uphold the rule of law - a bulwark of Hong Kong's development now and certainly in the future - in a fair, impartial and open way.
Our free and unfettered media continues to probe, challenge, comment and criticise in the same way it always has - reflecting a wide spectrum of views and opinions from all strata of society.
Facebook, YouTube, Twitter, Weibo, chat rooms and forums are abuzz with all the latest news and gossip - accessed 24/7 by a population with one of the highest penetration rates of mobile phone use in the world - not to mention the ubiquitous pads, tablets and readers of various shapes and sizes that people love so much in Hong Kong.
In that respect Hong Kong today, 15 years after our return to China, is still the same vibrant, energetic, frantic and - yes - argumentative city that it always is.
I take great comfort in the fact that Hong Kong people do feel so strongly about protecting their rights and freedoms. That they do speak up for what they believe in. That they do care about the high degree of autonomy promised under the Basic Law. And that they do want to make a success of "One Country, Two Systems".
So, the 15th Anniversary is also a celebration of Hong Kong's DNA ﷿ the unique combination of systems, experience, culture, connections and lifestyle that make Hong Kong what it is. That is, a free and open society under the rule of law, with a global outlook, clean and efficient government, a superb business environment, world-class and modern infrastructure and ... an ancient pedigree rooted in Chinese culture and tradition.
That does not mean we do not change or evolve.
Anyone who has lived in, or visited, Hong Kong will know that change is perhaps our middle name. A quick glance at our skyline, or the hive of construction activity on either side of our famous harbour, is proof enough that Hong Kong is always evolving, changing, improving, and adding value.
But we do so from a solid foundation, and this brings me to the triple whammy of change I just mentioned ﷿ the new Chief Executive, Mr C Y Leung; the new governing team since July 1; and the new legislature elected in early September.
These changes are significant because it is the first time since 1997 - and perhaps the only time for another 20 years - when a new Chief Executive, a new governing team and a new legislature all change in the same year.
With change, of course, comes uncertainty, anxiety and a certain degree of resistance. This is a true reflection of the first few months of the new administration.
The challenge is how we cope with and manage that change. It has been a daunting task sometimes, as the new team settles into its routine. But, it is thoroughly worth all and every effort for the sake of Hong Kong﷿s future, and despite any bumps or bruises we might pick up along the way. That's what we and I have signed up for, that's what's worth fighting for.
The fact is, we do have a new Chief Executive who has a vision, embodied in his Manifesto not only for the 1,200-Member Election Committee who elected him but a solemn pledge to the 7 million population, for an appropriately proactive government which seeks change while maintaining overall stability.
What I want to stress, though, is that regardless of the different approach we may take, or the different priorities, or indeed the differences in opinion that will inevitably emerge under that vision, there is an unswerving commitment from the Chief Executive, from myself, and from the new governing team to uphold the core values and way of life that I spoke about earlier.
I think it is important that I explain what this government stands for, and particularly tonight with such an audience, our commitment to maintaining Hong Kong as a leading international centre for finance and business. The two actually go hand-in-hand.
A vital part of this equation - the key - is protecting the full scope of advantages we enjoy under "One Country, Two Systems". These are non-negotiable because they are the essence of our success - for the past, the present and into the future.
I hasten to add that Hong Kong's separate system and way of life under "One Country, Two Systems" is also cherished by our sovereign, not least because it represents national policy on Hong Kong's future.
There is no doubt that our sovereign wants nothing more than for Hong Kong but to shine and succeed. This is because Hong Kong has an important role to play in national development - in the continued opening up and reform of the Mainland market - and as an international metropolis that acts as a bridge between China and the rest of the world, and vice versa.
If experience over the past 15 years is anything to go by, then we can see through action and deeds that the Central People's Government has adopted a strategic approach to its support for Hong Kong through initiatives that have a national significance but also provide new room for Hong Kong's economic development. And this also means new opportunities for international business to explore, including the British companies.
A good example is the Mainland and Hong Kong Closer Economic Partnership Arrangement, what we call CEPA. Many of you are probably familiar with this free trade pact that allows Hong Kong companies - and that includes overseas companies incorporated in Hong Kong - to enjoy preferential access to the Mainland market for goods and services.
CEPA provides tariff-free access to the Mainland for Hong Kong-made products and enhanced access in 48 service sectors, including banking, tourism, construction, legal, medical, accounting, convention and exhibition and transportation. CEPA is nationality-neutral which means that UK companies with Hong Kong subsidiaries can also leverage this preferential access.
This is important because it not only provides new business opportunities for Hong Kong companies, it also helps to upgrade the services sectors in the Mainland in a systematic and gradual way through the addition of new players and access to international best practices.
The Central Government has also reaffirmed Hong Kong's role as a gateway for Mainland enterprises to "go global" and invest abroad. CEPA has aided this process because it helps connect Mainland companies to those with established international networks and experience - such as the many UK companies in Hong Kong.
Hong Kong's further development as an international financial centre has also been high on the agenda. As an open economy with no capital restrictions and a freely convertible currency, Hong Kong has a unique and irreplaceable role to play in the globalisation of the Mainland currency, the Renminbi, and its integration into the world financial system.
Hong Kong is the pre-eminent testing ground for these efforts and is now home to the largest pool of RMB funds outside the Mainland. This has provided the foundation for Hong Kong to develop into a global centre for offshore RMB trade settlement, financing and asset management.
But, we need reliable international partners to take this process forward. We are encouraged by the City's interest in extending the reach of the RMB. We are very keen to explore greater co-operation with London in offshore Renminbi business ﷿ in clearing and settlement mechanism, trade settlement, as well as product development. We already have a long and fruitful relationship with the UK's financial services sector - RMB business would enhance the breadth and depth of that relationship.
Again, you can see the strategic approach that is being taken in terms of how to leverage Hong Kong's strengths and advantages to create economic opportunity for Hong Kong and our country, as well as our partners around the world.
The new administration under Mr Leung is very much committed to enhancing our links with the Mainland - in areas of traditional strength such as finance, business services, transport and logistics and tourism; but also in sectors with very good growth potential such as education, healthcare, innovation and technology, testing and certification, creative industries and environmental technology and industries.
What this means also is that we are committed to enhancing our links with our international partners such as those here in the UK who have so much to offer in most, if not all, of the areas I have just mentioned. Institutions within the Hong Kong family, notably the Hong Kong Trade Development Council, Hong Kong Tourism Board, Invest HK, Science & Technology Parks Corporation, West Kowloon Cultural District Authority, Hong Kong Design Centre, and of course the Government's Economic and Trade Offices, all stand ready to help build those links.
However, if Hong Kong is to continue to attract that strong overseas interest, the new administration must be very alert to the international business community's concerns. As far as I could gather, these come from important areas such as the environment, especially air quality, international school places, support for small and medium enterprises and the cost of doing business in Hong Kong. I can assure you that we are moving forward with plans in each of these areas.
The Chief Executive has stated that we will vigorously improve air quality and carefully formulate our clean air policies based on public health. We are considering a number of initiatives such as the eventual phasing out of old buses and commercial diesel vehicles, re-aligning traffic routes, regulating the use of marine fuels, and making polluters pay.
This is just part of an overall policy commitment to make Hong Kong an even better city to live in, with a good balance of development and heritage protection, and the preservation and protection of the Victoria Harbour - our abundant natural heritage - one of our most valuable assets and best kept secrets. We want Hong Kong to be a great place to live, as well as to do business.
By world standards, our business environment is pretty good. Our corporate profits tax rate of 16.5% is highly competitive, and we are constantly looking for ways to reduce red tape. But an uncertain global environment will always impact on an economy like Hong Kong, which is so externally oriented. That is why we are taking short and long term measures to help business through these uncertain times, as well as provide more office space for business.
Just last month we introduced new measures to help cool the residential property market, which has witnessed robust growth but is at risk of developing an asset price bubble. We are keeping a close eye on both the residential and commercial real estate sectors because persistently low interest rates, coupled with limited supply, have distorted the market somewhat. Prices have gone up too quickly, as have rents, and people are finding it more difficult to get a foothold on the housing ladder and businesses are finding it more expensive to rent accommodation.
These measures are mainly aimed at curbing speculation and injecting some stability into the market for buyers and renters. They are also aimed at ensuring adequate prudence within the banking sector. We know from bitter experience back in 1997 and 1998 what happens to bank balance sheets and personal wealth when an asset bubble bursts. Perhaps you can say it﷿s a case of "once bitten, twice shy". In a perfect world we would not need to take these preventive measures. But the market at the moment is far from perfect and an asset price bubble ﷿ in the short and long term - is no good for the Hong Kong economy, no good for business and certainly no good for our people.
For Small and Medium Enterprises - which make up 98% of business establishments - we also provide strong support to help them weather the current difficulties, as well as explore new markets and opportunities. This includes the many UK-linked SMEs based in Hong Kong. Various schemes offer help with loan and finance guarantees, export marketing, industry and brand development, research, productivity and export credit insurance.
Looking further ahead, you may be pleased to hear that we are developing a new CBD at Kowloon East, around the old airport site at Kai Tak and adjoining areas. This prime area will eventually add about 4 million square metres of floor space to Hong Kong's commercial real estate stock, or about double the size of the commercial space in Central.
This new CBD2 will not only provide more office space options and an alternative business and commercial hub on Kowloon side, it will re-energise adjoining neighbourhoods and add to the vibrancy of our world-famous Victoria Harbour.
A centrepiece of this new development will be a state-of-the-art cruise terminal, which will come into operation next year. A major sporting complex is planned, as well as retail, leisure and tourism facilities.
For those coming to Hong Kong with families, I know finding a school place for your children has often been one of the hardest - and most worrying - issues to resolve. There have been encouraging developments in this regard over the past couple of years.
This year, the renowned Harrow School opened an international school campus in Hong Kong. It is our first international boarding school, and will eventually provide 1,500 international school places. Eleven other projects coming on stream from 2009/10 will provide over 5,000 places - with more than 1,500 places coming on stream by the start of the next school year.
Ladies and gentlemen, these are just some of the initiatives and changes taking place in Hong Kong - changes in the leadership; changes that will improve our attraction as a global business centre; changes that will ultimately make Hong Kong an even better place in which to invest, to live and to bring up a family.
Hong Kong and the UK share a unique history, and a common past. I invite you all to look at the opportunities we offer in so many areas, to come and invest and set up businesses in Hong Kong and to help us forge an even more prosperous future together.
Thank you very much.
Ends/Thursday, November 15, 2012
Issued at HKT 07:13
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