On The Record

Leverage HK's edge for success

(October 14, 2015)

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Chief Executive CY Leung

It is a great pleasure to be here, with you, in Tel Aviv, here for the formal opening of the Hong Kong Trade Development Council's new office, the first in the great State of Israel.
 
The new HKTDC consultant office is a clear recognition that Hong Kong and Israel are doing good business together. Indeed, that business has been expanding for some time now.
 
Between 2010 and 2014, our bilateral trade grew, on average, 14% a year. Last year, it soared more than 16%. In 2013, Hong Kong was Israel's third-largest trading partner and second-largest export market. Last year, Israel was Hong Kong's second-largest trading partner in the Middle East.
 
Encouraging numbers, those. But the new HKTDC office speaks of much more than business and trade today. It tells us that we - Hong Kong and Israel - expect our bilateral business to get bigger and stronger in the months and years to come. That confidence is not misplaced, I can assure you.
 
As Israeli companies increasingly look to Asian markets for their world-class technology and design products and services, they are turning to Hong Kong. For good reasons.
 
HK advantages
One of the world's largest trading economies, Hong Kong is located at the southern doorstep of China and in the heart of Asia. Hong Kong can connect you, and actually super-connect you, to the vast markets of the Mainland of China, thanks to our ‘One country, two systems’ arrangement.
 
From a business standpoint, the combined advantage of "one country" and "two systems" is unparallel and unrivaled. It gives us and our business partners advantages no other economy in the world can offer: Hong Kong of course is part of China, when you do business with Hong Kong, you do business with China. But Hong Kong is distinct from other Chinese cities.
 
We enjoy the free flow of capital, robust intellectual property right protection, a tradition of common law system, the popular use of English, and a strong commitment to a level playing field for all businesses.
 
It is particularly important that Hong Kong as a city has been given a high degree of autonomy by the Chinese Central Government under the Basic Law. This means that Hong Kong can negotiate and enter into treaties with other countries and regions on our own.
 
Hong Kong has signed agreements on avoidance of double taxation and investment protection with an array of countries. We have free trade agreements with New Zealand, Chile, Norway, Iceland and Switzerland, for example, and are in talks with all member states of ASEAN for a free trade agreement.
 
CEPA broadens opportunities
Above all, as well as a clear and compelling demonstration of our ‘One country, two systems’ advantage, is the Mainland and Hong Kong Closer Economic Partnership Arrangement, or CEPA, a free trade agreement concluded by the Mainland and Hong Kong.
 
CEPA gives Hong Kong companies tariff-free access to the Mainland for goods produced in Hong Kong. It also gives our services suppliers preferential access to the Mainland. And, since CEPA is nationality neutral, Israeli companies need only partner with Hong Kong companies to take advantage of its singular benefits.
 
To cap it all, let me also say this. Hong Kong received over 40 million Mainland Chinese visitors last year, and I say 40 million. Most of them come to Hong Kong to find out what is the best value for money in our shops and showrooms. Our experience is simple and compelling: What sells well in Hong Kong will sell well in the Mainland of China. So sometimes I say this, between friends, tongue-in-cheek, give Hong Kong some free samples.
 
Belt & Road expands connectivity
And more for the future, China's grand initiatives of Belt & Road would bring Hong Kong, and Israeli companies, more opportunities.
 
China's Silk Road Economic Belt and 21st Century Maritime Silk Road strategies, collectively known as the Belt & Road, are devised to expand transcontinental connectivity, to promote economic, political and cultural co-operation from Asia through Africa and on into Europe.
 
Belt & Road is premised on a win-win approach through bilateral and multilateral trade, enhanced market access, increased technology exchanges and transfers and greater investment opportunities, better infrastructure and more efficient operations in participating economies.
 
Connectivity is the key in this initiative. Along the way, Hong Kong has much to offer, and Israel has much to gain, through Hong Kong, in the development of Belt & Road.
 
The advance of Belt & Road will no doubt induce merchandise trade across the borders. As the well-known aviation, maritime and logistics hub of the region, Hong Kong is well placed to serve Israeli companies to manage their supply chains. Our airport lies at the heart of Asia that puts half of the world's population within a five-hour flight. Our port serves more than 500 destinations worldwide. We are well connected by road and rail to Guangdong Province and the Pearl River Delta.
 
HK a logistics hub
And it's not just the hardware. Software-wise, Hong Kong is home to about 14,000 logistics companies, most serving the trade between China and the world, all adept at providing customised supply chain solutions for global companies, for your company taking the opportunities brought by the Belt & Road.
 
Adding to that, Hong Kong is China's international financial centre, and the world's China financial capital. We can offer Israeli investors and companies multiple channels of fund-raising, be it IPO, refinancing after listing, private equity financing, issuing bonds, or bank loans.
 
And if you need renminbi to settle your business with the Mainland or to support your operations, Hong Kong is the place to be. Last year, renminbi trade settlement handled by banks in Hong Kong reached RMB6.3 trillion, up 63%, year on year. We have, as well, the world's largest offshore pool of renminbi liquidity.
 
Our renminbi financing activities are also buoyant, the amount of outstanding renminbi loans increasing from RMB116 billion at the end of 2013 to RMB188 billion at the end of 2014, an increase of 62% a year. We are, after all, the world's largest offshore renminbi centre.
 
Pool of professional talent
Equally important, Hong Kong is blessed with an enviable pool of multicultural and multi-talented professionals, from banking to finance, from law to architecture, and to infrastructural management and engineering. We can, as well, be the Belt & Road's dealmaker, and in areas running from the enabling of trade, to investment protection and promotion, intellectual property protection and professional services and dispute resolution. As always, we stand ready to provide top-notch service to Israeli companies.
 
And let's not forget, Hong Kong is the world's freest economy - and has been for years. That's according to the Washington-based Heritage Foundation and the Vancouver-based Fraser Institute. And tax system in Hong Kong is decidedly simple with a low tax rate - our profits tax ceiling is 16.5%.
 
Some 7,600 overseas and Mainland companies have already taken the advantages Hong Kong offers - they chose to be based in Hong Kong. I welcome, and indeed encourage, all of you to join them, to explore the tremendous market potential of the Mainland and Asia, with the help of Hong Kong as your super-connector and to grasp the opportunities brought about by the Belt & Road initiative.
 
Finding common ground
And now that we have an HKTDC consultant office right here in Israel, in Tel Aviv - the fast-beating business and financial heart of Israel - it will make it much easier for our companies to connect, to find common ground, to partner in pursuit of the promise, and the rewards, of Asia.
 
I am also pleased to see that the Hong Kong-Israel R&D Cooperation Programme will soon be launched, another shining example of Hong Kong-Israel co-operation. It is the joint effort of the governments of the Hong Kong SAR and Israel to provide financial support for collaborative industrial R&D projects, and I strongly encourage Israeli and Hong Kong companies to make good use of the programme in enhancing their competitiveness in the global markets.
 
With the establishment of the TDC consultant office and the launching of the R&D Cooperation Programme, I look forward to stronger, and more profitable, ties between Israel and Hong Kong.
 
Chief Executive CY Leung gave these remarks at a cocktail reception for the opening of the Tel Aviv Consultant Office of the Hong Kong Trade Development Council in Tel Aviv, Israel.