Our exporters have always been determined, forward-thinking and resilient. We will need these qualities in double doses in the weeks and months to come. I can assure you the Government will do everything necessary to lessen the impact of the global slowdown on our economy and on our exporters.
The theme of this luncheon, "Finding ways to sustain Hong Kong's exports amid global economic changes", will remain a top priority for the Government.
To achieve this, we must first face some hard facts. Orders from traditional markets in the US and Europe have declined sharply in recent months. We have even seen goods shipped to the buyer, and then being returned.
Although year-on-year export growth in October was still a relatively healthy 9.4%, we anticipate a challenging period for our exporters in the coming months.
APEC leaders addressed some of the issues facing exporters at their summit in Peru last month. At the summit, leaders agreed to avoid using protectionist measures, as this would exaggerate the impact of the economic slowdown.
They also pledged not to introduce new import restrictions or measures that would hurt export growth. Similar commitments were made by G20 leaders when they held the summit in Washington DC.
Gov't measures support exporters
Here in Hong Kong, there is a consensus for the Government to act. In October, we announced measures by the Export Credit Insurance Corporation, or ECIC, to strengthen support for export trade. The ECIC will be as flexible as possible given the higher insurance cover for exports.
The corporation will continue to provide cover for the payment risks even if buyers fail to take delivery of goods. There will be no increase in premiums for ECIC insurance facilities, and the processing time will be shortened to four days, or even less in certain circumstances.
We also want exporters to continue to explore emerging markets including South America, Eastern Europe, Middle East and Africa. The ECIC has increased the country rating for some new markets, including the UAE, Kuwait, Czech Republic, Malaysia, Brazil and Chile. A lower premium will be required for exports to these emerging markets.
Business 'as usual'
Our Trade Development Council is working doubly hard to maintain its high level of trade fairs and exhibitions each year. This is a most effective way for buyers to reach new markets. I encourage small and medium enterprises to take advantage of the Export Marketing Fund subsidy to make the most of these events.
We also need to keep our capital markets well oiled. As the financial crisis spread from the US to Europe and on to Asia, we have taken a series of preemptive steps to shore up confidence in the financial markets and ease the credit tightness.
These steps include guaranteeing all local bank deposits until the end of 2010. We have also set up a contingent bank capital facility to make available additional capital to local banks if necessary.
Our task force on economic challenges is advising us on ways to limit the damage from the financial turmoil and looking at how we can take advantage of the current situation to improve our overall competitiveness in the long term.
Global co-operation key
In a borderless financial meltdown such as this, we require solutions that go well beyond our own boundary. We are in full support of the agreement reached by leaders at the APEC summit in Peru last month and the pledge to pursue open trade and global co-operation. The Hong Kong Government will continue to co-ordinate efforts with other governments and financial regulators to overcome the downturn.
Seeing out the financial storm will require a collective effort from the entire community. We have done it before and we will do it again. It is inevitable that some jobs will be lost during this difficult time.
However, remembering that a company's success is the collective efforts of its staff, retaining staff must be a priority for businesses, and downsizing only the last resort. This will help to restore confidence and lessen the destructive force of the financial storm on the overall economy.
That way, we can all look forward to a happy new year and a bright 2009.
There is a well-known phrase in Chinese, which says: "貨如輪轉". Roughly translated it means: "The turnover of goods is as fast as a rolling wheel." Let's all work hard to keep turnover high.
Chief Secretary Henry Tang gave this address at the Hong Kong Exporters' Association Christmas luncheon.
