Gov’t fostering an inclusive society

Hong Kong is a cosmopolitan city with over 260,000 non-Chinese ethnic minorities of diverse backgrounds. The Indian, Pakistani and Nepalese communities have established roots in Hong Kong for more than a century. Generations of ethnic minorities have contributed greatly to the social, economic and cultural development of Hong Kong. However, owing to cultural difference and language barriers, they usually form separate community clusters, among which there is little interaction.


I am delighted to see that the federation, which is the first of its kind, is formed to unite various ethnic minority communities in Hong Kong and pursue the common goal of contributing positively to the betterment of Hong Kong. I note that the federation has members from the Indian, Pakistani, Nepalese and Bangladeshi communities and welcomes other ethnic minority communities with open arms.


The current-term Hong Kong Special Administrative Region Government is committed to building an inclusive and caring society to bring together people from different backgrounds to live and work here. In view of the increasingly diverse needs of our ethnic minority communities, we have set up a Steering Committee on Ethnic Minority Affairs, chaired by myself as the Chief Secretary, to enhance cross-bureau collaboration and will be spending over $500 million starting from 2019-20 to strengthen support on all fronts for ethnic minorities.


We are committed to providing support services to help ethnic minorities integrate into the community. To facilitate barrier-free access to these services, the HKSAR Government will improve the Administrative Guidelines on Promotion of Racial Equality for application to all government bureaus and departments as well as related public organisations providing services to ethnic minorities.


At present, the Home Affairs Department has commissioned non-government organisations to operate eight support service centres for ethnic minorities which provide a wide range of services, including language classes, integration programmes and counselling services. Over 96,000 people can benefit from these centres each year. Starting from 2019-20, the services of these centres will be further strengthened, particularly those services catering for ethnic minority new arrivals and youths.


One of these centres, the CHEER Centre, provides translation and interpretation services to connect ethnic minorities to public service providers. Additional funding has been earmarked to enhance its existing services for seven ethnic minority languages and introduce new services in Vietnamese.


To encourage interaction and exchange between the ethnic minority and local communities, we will engage all relevant stakeholders such as ethnic minority organisations and district organisations to organise more district-based activities. We wish that these activities can help break the ice between ethnic minority and Chinese residents.


We are also mindful of the needs of some ethnic minorities for support in seeking employment. Some of them may still grapple with challenges such as language barriers and cultural differences when finding jobs.


Over the past years, the Government has implemented various measures to promote employment for the ethnic minorities. The Labour Department seeks to provide employment support services which cater for the needs of ethnic minority job seekers. Dedicated services such as special counters, resource corners and tailor-made employment briefings are in place at all job centres. Experienced employment officers who are familiar with the local employment market can offer them personalised employment advisory services, such as job search advice and job matching services. Free interpretation services are also provided for job seekers who can neither speak Chinese nor English to facilitate their access to Labour Department’s employment services.


In parallel, riding on its employer network spanning different industries and occupations, Labour Department actively canvasses suitable vacancies for them. It also organises inclusive job fairs targeting at ethnic minority job seekers to enhance their employment opportunities.


The Labour Department has also implemented the Employment Services Ambassador Programme for Ethnic Minorities to encourage trainees of the Youth Employment & Training Programme who are proficient in ethnic minority languages to undergo six-month on-the-job training at job centres, industry-based recruitment centres and job fairs. The programme aims to help the Labour Department better serve ethnic minority job seekers while enhancing young trainees’ work experience and benefiting their job search in the open market. The Labour Department has so far employed 127 young trainees since the launch of the programme.


I must stress that the Government spares no effort in maintaining close connection with the ethnic minority communities and relevant service providers to explore new avenues to explore new opportunities for ethnic minorities. To further capitalise on the community network and experience in serving the ethnic minorities, the Labour Department will launch a pilot programme in conjunction with NGOs to provide one-stop employment services for ethnic minority job seekers through a case management approach to help remove hurdles to their employment and upgrade their skills.


To facilitate our non-Chinese speaking community’s access to public services, we have published a leaflet on the support measures for ethnic minorities in English, Chinese and six ethnic minority languages. 


To build a harmonious and inclusive society, Government’s effort alone is not enough. We need the support of the community. We will launch the second phase of the Member Self-recommendation Scheme for Youth next month. I would like to take this opportunity to invite aspiring ethnic minority youths to actively participate in the scheme and bring your voice into the Government.


Chief Secretary Matthew Cheung gave these remarks at the Inauguration Ceremony of the Federation of Hong Kong Ethnic Communities on November 16.

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Economic freedom key to success

Hong Kong is an open and free market. For 24 consecutive years, Hong Kong has topped the Heritage Foundation’s Index of Economic Freedom. In the 2018 Index, Hong Kong came first in a number of categories, including business freedom, trade freedom, financial freedom and fiscal health.


Freedom is not just a privilege enjoyed by large and established corporations. Across the city, small and medium enterprises thrive, and startups are bourgeoning. To provide a level-playing field for businesses to grow, Hong Kong establishes safeguards and regulations needed for healthy competition to take place, so that good performers stand a fair chance to win market share, while those who cannot make it can try again. For this reason, Hong Kong has long been amongst the top five markets in the World Bank’s Ease of Doing Business global ranking, which places great emphasis on market health for small and medium enterprises.


Competition safeguards
One key building block to maintaining a level-playing field in Hong Kong is our competition regime. Competition is a key driver of growth and one of the pillars of a vibrant economy. A robust competition regime ensures that the most efficient and innovative market players, big or small, can thrive, and new players may also enter the market with no barrier. To this end, the Competition Ordinance in Hong Kong came into full effect in 2015. The ordinance prohibits anti-competitive practices such as bid-rigging, price-fixing, market-sharing and abuse of market power. It is gradually making its mark across the economy. 


Established under the ordinance as an independent authority, the Competition Commission has achieved a number of important milestones across its various facets of work, including taking a number of anti-competitive cases to court, in less than three years. Besides enforcement, the Competition Commission has also spared no effort in public education and giving sector-specific advice on compliance. As a result, both the business sector and the general public in Hong Kong are increasingly aware of the ordinance and how it works. There have also been concrete changes in business practices and culture. I trust that you would agree with me that rather than tying the hands of businesses, the Competition Ordinance provides better safeguards for them to develop and expand freely in Hong Kong.


The HKSAR Government never takes Hong Kong’s economic freedom for granted. It is the bedrock of our success, the basis for growth, and the prerequisite for economic and social progress. In practice, this means regulations should be made and implemented to the effect that companies are not subject to unreasonable compliance risks and can realise their full potential as compliant businesses.


Balanced regulation
In deciding whether to regulate and if so, how much, Government bureaus and departments need to strike the right balance between protecting the citizen and limiting the impact on those being regulated, especially small, medium and micro businesses. Considering what form of regulation if any is needed throughout the legislative process requires careful regulatory impact assessments.


The purpose of regulatory impact assessments is to explain the objective of the regulatory proposal, the risks being addressed and the likely costs and benefits of options for delivering the objective. To this end, the HKSAR Government has a long-established mechanism to assess the implications of legislative proposals from different perspectives. The key elements include evaluating a range of options, including not regulating, and encouraging self-regulation where feasible. If regulation is needed, relevant policy bureau and departments need to consider how to ensure compliance by those affected.


While many believe that regulation can safeguard citizens, promote a prosperous economy and protect the environment, regulation can also impose costs on businesses, charities, voluntary organisations, and ultimately the citizen. And the effort involved in understanding and implementing new regulations can bear particularly heavily on small, medium and even micro businesses that are more vulnerable to changes in the business environment.


This is the reason why Government policy bureaus and departments are required to assess thoroughly the impact of every legislative proposal, including whether it is in conformity with the Basic Law as well as relevant provisions on human rights, any impact on the binding effect of the existing laws, as well as implications on the financial, economic, productivity, environmental, sustainability, family, gender and civil service. An assessment of the implications of a legislative proposal needs to be set out clearly in writing for consideration during the legislative process.


The HKSAR Government takes it upon itself to ensure that legislative proposals are put through proper and thorough consultation with the public, which includes the business community. In addition, the Legislative Council maintains its critical function of scrutinising bills and subsidiary legislation for any unintended or adverse impact on the business or other sectors. This system keeps regulatory impacts in check for business in Hong Kong.


Pragmatic government
Indeed, the current-term Government takes a pragmatic approach to “care”, “listen” and “act” while being “innovative”, “interactive” and “collaborative” in implementing our policy initiatives proactively. A case in point is the proposal to abolish the arrangement for “offsetting” severance payments and long service payments with Mandatory Provident Fund benefits. As you are aware, the Government has decided to further enhance the Government’s financial support for employers, particularly the micro, small and medium-sized enterprises.


We will extend the period of the second-tier subsidy to 25 years. Together with the 12-year first-tier subsidy, the financial commitment of the entire government subsidy scheme will be significantly increased to $29.3 billion. We believe that the arrangement of significantly extending the period and increasing the commitment will go a long way in helping MSMEs (Micro, Small and Medium Enterprises) make preparation relating to possible severance payments or long service payments payable by them.


Another good example is the proposal to extend the statutory maternity leave from the current 10 weeks to 14 weeks. If an employee is entitled to maternity leave pay under the Employment Ordinance, the employer will, together with the current 10 weeks’ statutory maternity leave pay, also provide her with maternity leave pay for the additional four weeks’ statutory maternity leave. The rate will be maintained at four-fifths of the employee’s average daily wages and be subject to a cap of $36,822 per employee. The cap may be adjusted from time to time. Employers may apply to the Government for reimbursement of the additional four weeks’ statutory maternity leave pay.


Chief Secretary Matthew Cheung gave these remarks at the “Designing an Effective Regulatory Impact Assessment Framework for Hong Kong” seminar hosted by the Hong Kong General Chamber of Commerce on November 15.

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HK committed to free market

When we talk about multilateralism, the World Trade Organization (WTO) immediately comes to mind. The establishment of the WTO in 1995 was a landmark development, a giant step towards a rule-based multilateral trading system, which is the foundation for the liberalisation of global trade and investment. Indeed, trade volume in goods and services has tripled since then. Global foreign direct investment flow is up more than four-fold over the past 22 years. Developing economies, in particular, rose almost six-fold.


The results are clear and compelling: the flow of goods and capital has unleashed immense productivity growth worldwide. In doing so, it has raised incomes and the living standards of billions of people. World GDP has grown an average 3.8% a year in real terms over the past 22 years, with per capita GDP also doubling.


For developing economies, globalisation through multilateralism has helped them integrate into the global value chain, in the process lifting a great many people out of poverty. Indeed, nearly 1.1 billion people have moved out of extreme poverty since 1990, according to the World Bank.


That’s not to say that globalisation is problem-free. Some of the world’s poorest economies have been left behind; their paucity of resources, skills, equipment and infrastructure leave them unable to seize the opportunities. As for advanced economies, there is the real challenge of job losses, in part because of widespread outsourcing and the relocation of lower-skilled, labour-intensive production to developing economies.


At the same time, efforts to expand multilateralism have foundered in recent years because of profound differences among WTO members. The global financial crisis in 2008 has also had an unsettling impact, from protests against free trade to calls for de-globalisation in some advanced economies. In short, the multilateral trading system set in motion by the WTO has encountered fierce opposition, and that resistance has only swelled in recent years.


As I noted in my speech here last year, the fundamental solution lies in making economic development more inclusive, in boosting the benefits we create for our people. I outlined a number of measures essential to building an inclusive community, and I won’t repeat those this morning.


Rather, let me say that I am very concerned about global trade developments over this past year. Last year at this occasion, I said that I saw worrying signs of rising protectionism. I am afraid that now we see more than signs, with the United States introducing unilateral trade measures against other economies. The unilateral actions taken by the United States and inevitable retaliatory actions by other economies will surely raise the barriers to trade and investment, risking a widespread economic slowdown or even a global recession.


I’m pleased to note that the second largest economy in the world, that is Mainland China, is providing the much needed support for the multilateral system. This year marks the 40th anniversary of China’s reform and opening up. By the way, many of you in Hong Kong would know that I just came back to Hong Kong on Monday after leading a delegation of over 160 members from various sectors of the community to visit Shenzhen and Beijing to celebrate this anniversary. In this milestone year, the inaugural China International Import Expo was held in Shanghai last week. Actually, Hong Kong actively participated in the Expo. We set up a Hong Kong Exhibition Area, and over 160 enterprises joined the Enterprise & Business Exhibition, showcasing our unique role as a strategic gateway and important hub for the opening up of the country.


The Expo is the world’s first import expo held at the national level. Some of you may have picked up the figures about the achievements in this Expo. This reaffirms my belief that sometimes the Chinese people approach the subject of trade in a way very different from the American people, that we emphasise deeds rather than rhetoric. At the opening ceremony of the Expo, President Xi Jinping delivered a keynote address entitled “Work Together for an Open Global Economy that is Innovative and Inclusive”. He said that the Expo “demonstrates China’s consistent position of supporting the multilateral trading system and promoting free trade”, and “it is a concrete action by China to advance an open world economy and support economic globalisation”. President Xi emphasised that “openness and co-operation will remain essential for continued human progress”. He named five concrete aspects that China will step up efforts to broaden its opening up, one of which is to promote international co-operation at the multilateral and bilateral levels. In particular, he said that China will continue to advance the Belt & Road Initiative through international co-operation in the spirit of consultation and collaboration for shared benefits.

Active national role
Hong Kong is determined to play an active part in the country’s noble efforts to build a community with a shared future and usher in an even better tomorrow for mankind. First of all, we will continue to promote free trade, both by supporting the rule-based multilateral trading system, which is the most effective safeguard against protectionism, and by expanding our network of free trade agreements. Let me make it clear: whatever the changes to the global economic landscape, we are committed to keeping Hong Kong markets free and unfettered, our economy open wide to global business and investment.


And we will promote international co-operation through our participation in the Belt & Road Initiative. Hong Kong is prepared to offer our expertise in professional services for countries and enterprises seeking to participate in the Initiative. Our expertise covers infrastructure development, financial services, engineering, consultancy, accounting, law, etc. These services will be in considerable demand for infrastructure and other projects arising from the Belt & Road Initiative.


Let me add that we will leverage our unique advantages under “one country, two systems” to promote multilateralism and people-to-people bonds in the global environment, which is one of the key objectives of the Belt & Road Initiative. One area that Hong Kong can contribute, which we are doing, is capacity building. We have huge experience in many areas of city management, including town planning, flood prevention, slope stabilisation, railway operation, aviation safety and emergency services. We have also built institutions to fight against corruption, promote equal opportunities and deal with administrative complaints. We are willing to share our experience in those aspects with emerging economies and help build their capacity. In fact, many of our departments and institutions, such as the Independent Commission Against Corruption and the Fire & Ambulance Services Academy, are already offering training or experience sharing with their counterparts from emerging economies, including those along the Belt & Road. We believe that such capacity building efforts will help promote inclusive growth, which in turn will strengthen the confidence in the multilateral system.


Ladies and gentlemen, economic globalisation is an irreversible trend. The rule-based multilateral trading system is one of the pillars that enable freer flows of trade and investment across economies that provide the very impetus to global economic development. At the moment, it is being tested, threatened by a wall of protectionist rhetoric and lamentable action. Through dialogue, through gatherings such as today’s, I’m hopeful that we will surmount those obstructions, that we will find our way to an open and inclusive global economy.


Chief Executive Carrie Lam gave these remarks at the AsiaGlobal Dialogue 2018 held at the University of Hong Kong on November 15.

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Business, labour sectors supported

This Policy Address is a very lengthy and wordy Policy Address running into 40,000 words in English and 59,000 characters in Chinese. But if you look at the chapter on Diversified Economy, it actually is the most substantive section in my Policy Address, taking up almost 22% of those words. And in the chapter on Diversified Economy, one of the first things I said is I want to reaffirm my Government’s additional roles which I have been championing in the past 15 months, that in addition to being a provider of public services and a regulator, I want my Government to be a facilitator and a promoter. True to that advocacy, in the last 15 months there are many initiatives and many actions that fall in line with that mission for the Government to facilitate the work of the business and to promote, together with the business chambers, the Hong Kong success and the Hong Kong story.


I have been on 11 overseas trips since taking office, and on many of these trips I was accompanied by business leaders. So this promotional role of the Government and the business community is actually very aligned. The second point I made in this particular chapter on the economy is that the Government will do her utmost to help the business sector to seize the many opportunities under the Belt & Road Initiative and also the Guangdong-Hong Kong-Macao Greater Bay Area, and also to better integrate into the national development. And on this front, I hope everyone in my 165-strong delegation to Beijing recently, in fact two days ago, should feel very excited and very encouraged by what President Xi Jinping said about his hopes for Hong Kong and his recognition of the strong contribution made by the business sector as well as other sectors over the past four decades of the reform and opening up of the country. We will lose no time and spare no effort in incorporating the President’s four hopes into the work of the HKSAR Government in order to create more opportunities for our business sector.


Tackling land and labour issues

The third point which you should appreciate is I did acknowledge that we have problems, so not everything is fine. I did acknowledge that we have a shortage in land and labour. On land, we have launched short to medium measures especially in providing more premises for the business sector, relaunching a very successful policy to revitalise the old industrial buildings. Since then, I have received some positive feedback from the business sector that this would perhaps provide some immediate relief. And also, in relaunching this revitalisation of industrial buildings, or what we call 2.0, we have put in some additional measures in order to create more capacity as a result of the revitalisation.


On the longer term initiative, nothing of course is more important than my vision on Lantau. This Lantau Tomorrow Vision will create for Hong Kong a third Core Business District (CBD). You all know our traditional CBD is in Central, providing no more than 3 million sq m of Grade A office supply. The second CBD, which was also conceived by me when I was Secretary for Development in 2009, is Energizing Kowloon East, which is doing very well. And when everything is completed in Energizing Kowloon East, we could expect 6 to 7 million sq m of office space. But we still should look ahead to provide more commercial spaces and office towers for Hong Kong’s continued and sustainable development. And that is where the third CBD comes into the picture.


In Lantau Tomorrow, we are planning on the basis of a 4 million sq m CBD, which is actually very close to Central, it’s only 4 kilometres away from Central, and with rail and road it will be very well connected to Hong Kong’s financial district. So I hope I will get the support for executing my vision on Lantau Tomorrow.


On labour, I appreciate and I understand that more needs to be done, so I said this morning in the Legislative Council question and answer session that when things settle down a bit and come 2019, I, together with the Secretary for Labour & Welfare, will actively engage the business sector as well as the labour sector with a view to come up with clear directions for resolving Hong Kong’s labour shortage. But in the meanwhile, we are giving additional support to vocational and professional education and training, we have introduced a tech talent admission scheme for bringing in technology talents, we have launched a Talent List under the Human Resources Planning Commission headed by the Chief Secretary for Administration, and we will do all the other things necessary in order to address labour shortage.


Prioritising market access

The fourth point in this chapter is we will be more proactive in conducting government-to-government work. So entering into bilateral and multilateral agreements in order to provide that environment, that expanded market access and environment, for the business sector is one of our priorities. You will remember that at end of last year we signed the Free Trade Agreement (FTA) with the 10 member nations of ASEAN. This will come into effect early next year. Right now, we are in advanced negotiations with Australia on another FTA and we have indicated interest to negotiate with the United Kingdom after Brexit and we have also indicated interest to negotiate FTA with the Pacific Alliance, the four South American countries. So the FTA will provide better access for our goods and services into the new markets. Beyond the FTA, I know someone will compare us to Singapore in terms of comprehensive agreement on the avoidance of double taxation, which I understand we have more catching up work to do. Now we have 40; I have given them a target of 50 within the next two, three years. The same applies to investment, promotion and protection agreement.


Meanwhile, we are also putting in a lot of efforts to do overseas promotions. Some of the business leaders have taken part in our recent mission to Japan. This five-day promotional visit to Japan was very well received in the words of Ambassador Kuninori Matsuda, the former Consul-General of Japan in Hong Kong. He told me that as a result of this five-day visit and the many meetings, gala dinners and seminars, Japan has rediscovered Hong Kong.


There are a lot of opportunities in Hong Kong, especially on the innovation and technology side. We have not forgotten our interactions and engagement with the Mainland authorities because the Mainland of China will continue to be a huge market for our business and a place where we will continue to invest quite heavily. So within a year, 2018, I have started or restarted the bilateral, high-level co-operation platform with Sichuan Province, with Beijing, with Shanghai and later this month with Fujian. And also added to it will be the pan-Pearl River Delta regional co-operation. We will continue to do that in order to provide more opportunities.


On the sector-specific initiatives, the chapter on Diversified Economy has actually attempted to cover more sectors than we did previously. For example, the movie people were telling me that this was the first time that they got such a high-profile treatment in the Policy Address. There was a whole section on how we could assist and promote Hong Kong’s film industry. The maritime people will hopefully tell me when I go to attend their 50th anniversary Shipowners Association gala dinner that for the first time the maritime sector has been given very significant treatment in my Policy Address with a list of initiatives that we want to promote high-value-added services in the maritime industry. Beyond that, of course in financial services we will not lose sight of this very important sector of Hong Kong. We will be doing more green financing, issuing of government green bonds and riding on this continued opening up and reform in the Mainland’s financial services sector, to get Hong Kong onto that platform of providing more services to the Greater Bay Area and beyond.


Tourism, I&T, legal services and other areas of the creative industries have also been given due attention in the chapter on Diversified Economy. The only sector which legitimately has a complaint is agriculture and fisheries. I’m afraid that despite my utmost efforts, I find it quite difficult to come up with very substantive measures to promote Hong Kong’s agricultural and fisheries industry. But perhaps I will try harder in next year’s Policy Address.


Caring for employers and employees

But now let’s not just focus on this chapter on Diversified Economy. If I want to convince you that this Policy Address is a pro-business Policy Address, I will encourage you to look beyond the chapter on Diversified Economy. For example, the chapter on education, on nurturing talents, I am equipping and nurturing people to support business. We are putting in a lot more money and attention into quality education, so you will have the right manpower in time to come.


About promoting employees’ benefits and support, this is a very tricky area. I understand some business people are unhappy about my section on promoting labour benefits, because labour benefits somehow have been equated as anti-business. I don’t take that view. I hope business sector does not take that view and have what my Secretary for Labour & Welfare called reverse thinking. Put yourself into the shoes of the workers, and understand that if workers are being treated well, they will be your loyal and dedicated staff that could create value for the company. But even then in my pro-labour initiatives, I have put in a lot of money. I have put in $29 billion in order to implement the evolution of the offsetting arrangement in the Mandatory Provident Fund. And I’m picking up the bill – almost every dollar – for the four extra weeks of maternity leave, by providing reimbursement for companies to come to claim that extra four weeks of maternity leave salaries for their female employees. I hope there should be no complaint about these pro-labour benefits and measures in my Policy Address.


In order to boost everybody’s confidence, let me end by sharing a few of the positive developments in the past year or so. In the first half of this year, Hong Kong has achieved 4% real growth in our economy. And that is quite encouraging because in the past decade our average growth is 2.7%. Property prices have started to moderate. Property prices have moderated since August after my announcement of a package of housing initiatives on the 29th of June by about 2% to 3%, and hopefully rentals for commercial premises will also be moderated in due course. In the first 10 months of this year, our Hong Kong exchange has achieved the world’s number one in terms of IPO, raising a total of HK$250 billion. We are very confident that we will be the world’s number one in the year 2018.


Our latest survey indicates that we have seen a 6.4% increase in the number of Mainland and overseas companies setting up in Hong Kong – total number has now reached 8,754. In particular, the growth was even more prominent in companies which are using Hong Kong as their regional headquarters. We have seen an 8.2% increase in the number of overseas and Mainland companies using Hong Kong as their regional headquarters – now the number totalled 1,530. And this was across the board. The top five countries with companies in Hong Kong, that is Mainland, Japan, America, UK and Singapore, all registered increases in the number of companies set up in Hong Kong in the past 12 months.


We have of course retained the title of being the world’s freest economy ranked by the Heritage Foundation and the Fraser Institute. In the London-based international financial centre index, we remain number three but the difference between ourselves and London and New York has narrowed. We are the second most competitive economy in the world as assessed by the Lausanne-based Institute for Management Development. In the World Economic Forum (WEF) competitiveness report, we are number seven. Last year, we were number six, but this is not a deterioration of our performance. It’s a change of methodology. You’ll be pleased to know that we have moved one rank up in the World Bank’s 2019 Doing Business report – we are now the world’s number four in terms of the ease of doing business.


Despite these positive developments, let me assure you that the Government is not complacent. I’m fully aware of the downside risk arising from the US-China trade tension and dispute. Our Secretary for Commerce & Economic Development, Edward Yau, has been meeting chambers for almost 10 times now in the last six months, and we have rolled out various support measures before the Policy Address and beyond the Policy Address. So as and when we see that the Government needs to act to help the businesses to ride out the storm, especially amongst the small and medium-sized enterprises, you can be assured that we will do it without waiting for this and waiting for that.


The most important or most gratifying message you can take home is our attitude. We will continue to be very humble and put in a lot of efforts to engage the business sector. We are very caring and we love to listen to you but then we will act. 


Chief Executive Carrie Lam gave these remarks at the Joint Business Community Luncheon on November 14.

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Proactive gov’t benefits banking

It has always been my conviction that Hong Kong’s fundamentals are strong and Hong Kong people are talented. Despite being a small and open economy susceptible to global uncertainties, we are blessed with deep capital markets and a robust regulatory framework that will minimise any financial fallout. Indeed, the Hong Kong banking sector performed well in the first half of 2018. Of course in the same way the Hong Kong economy performed well in the first half of 2018, making a real growth of 4%. The aggregate profit of retail banks increased by nearly 25% in the first half of this year, year-on-year, while capital and liquidity positions remained strong. The average capital adequacy ratio of locally incorporated banks stood at 19.4%, well above the international minimum requirement of 8%.


But I believe the banking sector, like other sectors, will benefit from a more proactive government that stands ready to not only provide public service or regulate the market, but serve as a “facilitator” to create an environment that will enable our financial services sector to flourish while also acting as a “promoter” to market Hong Kong’s strengths and competitiveness. Talking about promotion, I have brought with me a new publication on Hong Kong’s financial connectivity and you can all pick up a copy when you leave this luncheon. We also need to play a more tech-savvy role to encourage innovation and technology in the banking sector. With this objective in mind, financial technology, or fintech, is a priority of my Government. As I outlined in my Policy Address last month, the Government believes in fintech. In order to accelerate its development, we have adopted a five-pronged approach: promotion, facilitation, regulation, talent and funding.


New-era payment system

Our long-awaited Faster Payment System is very much part of that approach. Launched in September, it sets in motion a new era for payment. The system is unique in supporting multi-currencies, instant payments on a round-the-clock basis and full connectivity between banks and stored-value facility operators. A common QR code standard was also launched. This enables retail payments across a variety of e-wallets, offering convenience to merchants and customers alike. By providing an open platform for access by retail banks and stored value facility operators in Hong Kong, the faster payment system provides a level playing field for healthy competition among banks and payment service providers, promoting innovation and bringing a more efficient and user-friendly service to the public, which will in turn benefit the banking industry as well. At last count, 21 banks and 10 stored-value facility operators have embraced the system. As the system is still young, we will need to work together – government, regulators, the banking industry and the business community in general – to ensure that the system runs seamlessly for all concerned.


Another important development is the promotion of virtual banking, a much anticipated innovation with the promise of promoting financial inclusion by serving the retail segment, including SMEs. More than 60 local and overseas companies have indicated interest in applying for a virtual bank licence, and about 30 applications have been received to date. The Hong Kong Monetary Authority (HKMA) is now evaluating the applications and hopes to begin granting licences to virtual banks by the first quarter of next year.


As the Belt & Road Initiative gains momentum, demand for Hong Kong’s financial services will surely proliferate. To help manage the demand, and create a clearing house for market information and communications, the HKMA set up the Infrastructure Financing Facilitation Office, the IFFO. To date, more than 90 stakeholders, including many from the banking sector, have joined the office as partners. Indeed, the Hong Kong Association of Banks, in co-operation with the Office, organised in May a “Building a Sustainable Belt & Road” seminar, focusing on the potential for Belt & Road “partnership between Hong Kong banks and development banks”.


My Government is also working to promote Hong Kong’s advantages. We have many, from our extensive corporate and investment banking networks to our deep capital markets, including the world’s largest offshore renminbi market, and sophisticated financial and business services. Add our competitive and simple tax regime, and excellent communications and transportation networks, and it’s clear we have what it takes to manage the treasury activities of multinational and Mainland corporations investing in the Belt & Road.


To create an even more tax-friendly environment for corporate treasury operations, we recently amended the Inland Revenue Ordinance, allowing interest deductions under profits tax for corporate treasury centres. The amendment also reduces the profits tax of qualifying entities by 50%. Industry feedback has been positive, with more than 140 corporations benefiting to date.


Risk management is essential to the projects of the Belt & Road, and we have the potential to emerge as the Belt & Road’s risk management centre. A number of multinational insurers and reinsurers in Hong Kong have the experience and knowledge to underwrite major infrastructure risks. In this regard, the Insurance Authority and the China Banking & Insurance Regulatory Commission have come to an agreement. When a Mainland insurer cedes business to a qualified Hong Kong professional reinsurer, the capital requirements of the Mainland insurer will be reduced. This will increase the competitiveness of Hong Kong reinsurers in capturing reinsurance business ceded by Mainland insurers.


Greater Bay Area potential

The Insurance Authority is also setting up the Belt & Road Insurance Facilitation Platform. It will bring together key stakeholders to provide insurance and reinsurance services. It will also help Mainland companies taking part in Belt & Road projects find the insurance services they need right here in Hong Kong.


As for the Guangdong-Hong Kong-Macao Greater Bay Area, with nearly 70 million people and a collective GDP of about US$1.5 trillion, Hong Kong as an international financial centre is well placed to provide the financial services to support its development.


While physical connectivity in the Greater Bay Area has been much enhanced by the recent opening of two major cross-boundary infrastructure projects – the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong high-speed train and the Hong Kong-Zhuhai-Macao Bridge, we plan to boost demand for cross-boundary financial services, thereby creating more opportunities for the financial services sector. We are also exploring ways to provide more financial services to Hong Kong residents living in the Greater Bay Area, from simplifying procedures for opening a bank account to allowing the use of Hong Kong e-wallets.


Indeed, some connectivity has already taken place. Hong Kong Fintech Week, which ended early this month, illustrates the promise of innovation and technology for Hong Kong and the Greater Bay Area. This five-day event, which drew more than 8,000 professionals from more than 50 economies, became the world’s first cross-border fintech gathering, moving the proceedings to Shenzhen on the final day.


It’s estimated that there are about 35 companies in the Greater Bay Area with a value of more than US$100 billion. My Government is committed to enhancing the competitiveness of our financial services sector so as to unleash the potential of these Greater Bay Area companies. We are determined to stay ahead of the curve, welcoming a new economic environment, while making Hong Kong’s listing platform more attractive to issuers from a great variety of jurisdictions. That’s why, earlier this year, we expanded our listing regime to allow the listing of companies from emerging and innovative sectors. As at the end of October, two companies with dual-class share and four pre-revenue biotech companies have listed on our stock exchange under the new regime. And by the way, also for the first 10 months of this year, Hong Kong ranked the world’s number one in terms of funds raised through IPOs amounting to HK$250 billion.


The Greater Bay Area development is a great opportunity to cement our position as the key international gateway to the Mainland. With the support of the Central Government, multiple mutual access arrangements between Hong Kong and Mainland financial markets are in place. The launch of Stock Connect, Bond Connect and the mutual recognition of funds arrangement over the last few years are testimony to Hong Kong’s indispensable role in the internationalisation of the renminbi and the opening up of the Mainland markets. And it was gratifying to hear President Xi himself acknowledging Hong Kong’s contributions. Through the Greater Bay Area, we hope to expand further the channels for two-way, cross-border renminbi fund flow, strengthening financial co-operation within the region.


These, and many other promising opportunities, cannot become reality without the talent to drive them. With that in mind, I welcome the HKMA’s recommendation which we have accepted to establish an Academy of Finance in Hong Kong in mid-2019. The academy will develop tomorrow’s financial leaders, while serving as a centre for monetary and financial research.


The HKMA also launched the Fintech Career Accelerator Scheme with the Hong Kong Applied Science & Technology Research Institute and 12 banks in 2017-18 to expand the fintech talent pool in Hong Kong. The accelerator scheme was upgraded in January this year to help nurture talent at varying degrees of career development, offering a full-time placement programme, summer internships and a graduate programme organised with Cyberport and Hong Kong Science Park.


We also welcome fintech talent from the Mainland and overseas. Indeed, Hong Kong’s first Talent List, which was launched in September to attract quality people from around the world in a more effective and focused manner to support Hong Kong’s development, features 11 targeted professions, including fintech.


Ladies and gentlemen, I am confident that talent, coupled with the unwavering commitment of this Government as well as yours, will bring the banking and financial services sector as well as the Hong Kong economy to new heights. I look forward to working closely with you all as we take forward initiatives to consolidate Hong Kong’s leading position as an international financial centre.


Chief Executive Carrie Lam gave these remarks at the Hong Kong Association of Banks Distinguished Speaker Luncheon on November 14.

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Innovation to boost construction

The construction industry contributes more than 5% to Hong Kong’s GDP, while employing about 9% of our workforce.


The results are visible, and visibly impressive. The Hong Kong-Zhuhai-Macao Bridge, now the world’s longest sea crossing, was commissioned only last month. The previous month, the Express Rail Link, connecting Hong Kong to the national high speed railway network, opened for business – and pleasure as well. Next year, the Liangtang/Heung Yuen Wai Boundary Crossing Facility will be up and running.


From a regional perspective, these links enhance our overall connectivity with the Mainland. In particular, they deepen our integration with the Guangdong-Hong Kong-Macao Greater Bay Area, while strengthening our singular position as Asia’s world city.


During the construction stage, these infrastructure projects expand employment opportunities. And, upon completion, they boost economic prospects and improve our overall living environment.


It’s not surprising, then, that the Government’s annual infrastructural investment has soared from about HK$20 billion to more than HK$80 billion over the past decade. In the coming five years, the contract value of public and private construction works in Hong Kong altogether is estimated to reach HK$250 billion to HK$300 billion per year.


One of the upcoming major infrastructure projects we have in our plan is of course the Lantau Tomorrow Vision.


The plan will see artificial islands developed in stages. These could provide about 260,000 to 400,000 housing units, with about 70% as public housing, accommodating a population ranging from about 700,000 to as much as 1.1 million.


We will also build Hong Kong’s third core business district on the artificial islands, creating some 340,000 employment opportunities.  


We therefore need your help, to be sure. A stable supply of quality construction materials is essential for the upcoming reclamation projects – and for the many other infrastructure projects in the planning stage or on the horizon that will give shape and substance to Hong Kong in this 21st century.


The future must be built on productivity, on quality, safety and environmental performance. This demands innovation – from you, and from the construction industry as a whole.


That’s why the Government now advocates “Construction 2.0”, smart movement towards automation, industrialisation and digitalisation.


I’m pleased to hear that your industry has been developing, and promoting, the use of environmental and sustainable construction materials.


The adoption of manufactured sand to replace natural sand in cement plastering and reclamation work is a good case in point. M-sand, a by-product of aggregate production, is an environmentally friendly material in comparison with natural sand.


Since last month, the Development Bureau mandated the use of M-sand for plastering, rendering and screeding in new public works contracts. Working with the materials industry, the Government is exploring a wider application of M-sand and other green materials, including recycled glass and bitumen, in Hong Kong construction.


I understand that your association, working with a Rebar Processing Solution Committee, is promoting the use of off-site steel prefabrication. That’s a step in the right direction. And the recently launched HK$1 billion Construction Innovation & Technology Fund will support the wider application of innovative construction methods and technology. Indeed, the use of prefabricated steel products is a designated item under the fund.


Financial Secretary Paul Chan gave these remarks at the Construction Materials Association Annual Dinner on November 13.

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HK ideal for wine trade

Many of you may already have local partners here or some of you may be looking for exploration of new terrain. Now, with Hong Kong as a gateway to the flourishing Asia-Pacific wine market, you will find us an ideal testing ground for you to establish a foothold and expand your market share in our part of the world. Not only do we charge no wine duty, GST (goods & services tax) or VAT (value-added tax), Hong Kong is also well known for our world-class commercial infrastructure for the wine industry and business to thrive. We have multi-talented wine and culinary professionals, sommeliers, and the world’s first wine storage certification scheme, just to name a few.


Now, speaking of the Mainland market, which is indeed our top wine re-export destination, we have shipped more than HK$2.2 billion worth of bottles in the first eight months of this year. Apart from our obvious proximity and our thorough knowledge of the Mainland market, wine traders based in Hong Kong can also enjoy instant customs clearance when they move the wines into the Mainland under our wine customs facilitation scheme.


Hong Kong has been maintaining close relationship and partnership with major wine-producing countries and regions. The success of the fair bears testimony to the fruits, or rather vintages, of such co-operation over the years. And I understand that 11 years ago, we started with 200 exhibitors and now we have 1,075 today. We believe that our new memorandum of understanding with the Bordeaux region will further foster ties between the two places. 


Acting Financial Secretary James Lau gave these remarks at the Hong Kong International Wine & Spirits Fair 2018 opening ceremony on November 8.

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Human rights fully protected:CS

Human rights in the Hong Kong Special Administrative Region are fully protected by the Basic Law, Hong Kong Bill of Rights Ordinance and other laws. The rule of law, an independent judiciary and freedom of speech are amongst Hong Kong’s core values. 
Recent concerns over some aspects of our human rights situation are unwarranted, unfounded and unsubstantiated. They arise from misconception and a lack of understanding of our real situation. Let me explain.
Under “one country, two systems”, Hong Kong enjoys a high degree of autonomy. Fundamental rights and freedoms are all guaranteed by the Basic Law. 
We are firmly committed to protecting press freedom. We do not exercise any censorship. On a recent work visa extension case, we will not comment on any specific decision on our immigration control. All such decisions are made by our immigration authorities under the laws and prevailing policies, having regard to individual circumstances of each case. Any concerns that Hong Kong’s freedom of speech and of the press is under threat are totally groundless. On the contrary, we maintain an environment conducive to the operation of a free and active press. Some 80 foreign media organisations operate in Hong Kong and rigorously perform their role as a watchdog.  
As for the eligibility for running in the Legislative Council election, upholding the Basic Law and swearing allegiance to the HKSAR is a basic legal duty of a legislator. One cannot do so if one promotes “Hong Kong independence” or “self-determination” or advocates independence as an option. These run counter to the constitutional and legal status of the Hong Kong SAR. Article 1 of the Basic Law stipulates that the Hong Kong SAR is an inalienable part of the People’s Republic of China. It is our duty to safeguard our country’s sovereignty, security and development interests.
On speculations of authorities of other jurisdictions taking law enforcement actions in Hong Kong, our Police have investigated and found no evidence in support of such claims.  
On the decision to ban an organisation under the Societies Ordinance, as an appeal has been lodged, we will not comment further. But let me stress that Hong Kong people do enjoy freedom of association and expression but, like any other jurisdictions, such freedom is not absolute. The International Covenant on Civil & Political Rights (ICCPR) provides that restrictions may be imposed by law if this is necessary to protect national security or public safety, public order, or the rights and freedoms of others. This is mirrored in the Hong Kong Bill of Rights. 
On the misunderstanding that some protesters were targeted for exercising their civil rights, I must clarify that these protesters were convicted not because of their beliefs or their exercising civil rights, but because of their disorderly or violent conduct in breach of the law. They have crossed the line separating the lawful exercise of constitutional rights from unlawful activities subject to sanctions. I must say that the number of public meetings and processions in Hong Kong last year was ten times over 1997, and the overwhelming majority of these activities were orderly and peaceful. This demonstrates that freedom of peaceful assembly is fully respected.
On interpretation of the Basic Law, the Standing Committee of the National People’s Congress has the ultimate authority to do so under Article 158 of the Basic Law. This is part of our constitutional order. Our Court of Final Appeal agrees that the Standing Committee’s interpretation is valid and binding on our courts. 
As for Article 104 relating to oath-taking when assuming specified public offices, the Standing Committee’s interpretation simply explains clearly the meaning of that article without changing its content. 
Since the establishment of the Hong Kong Special Administrative Region in 1997, Hong Kong has remained the world’s freest economy, a vibrant international financial and business centre, a thriving logistics and tourism hub, as well as one of the safest cities in the world. We are committed to building a caring and fair Hong Kong, with the Government investing heavily in education, medical services, welfare, infrastructure, poverty alleviation and helping the ethnic minorities.  These remarkable achievements are underpinned by our core values and unique institutional strengths which make Hong Kong tick.
Mr President, Hong Kong will continue to forge ahead as Asia’s world city with openness, inclusiveness and diversity under the successful, innovative, and well-tried “one country, two systems”. 


Chief Secretary Matthew Cheung made these remarks at the Universal Periodic Review mechanism of the United Nations Human Rights Council meeting on November 6 in Geneva, Switzerland.

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I&T a new driver for growth

This parallel session is on trade and innovation, and the topic – Seizing the Opportunity of the Fourth Industrial Revolution & Promoting New Drivers for Trade Growth – is certainly timely and promising. In his book The Fourth Industrial Revolution published in 2016, Prof Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, reminded us that we are at the beginning of a revolution that is fundamentally changing the way we live, work, and relate to one another. By the same token, President Xi Jinping said in his speech in May this year, at the Academician Meeting of the Chinese Academy of Sciences and the Chinese Academy of Engineering, that science and technology have never as profoundly affected the country’s future and destiny and the people’s welfare as it has today.


True, while the exact impact of technological advances such as AI, robotics, Internet of Things, big data, etc, has yet to be fully grasped, we are already seeing major changes, or disruptions, in how we conduct business, arrange transactions, make payments, and even interact with each other. These changes inevitably have placed unprecedented demands on governments and institutions charged with planning and managing the economy and looking after the welfare of the people, ranging from education to health care. Technology can and will create winners and losers. If governments don’t get it right, if we can’t stay on top of the innovation and technology curve, if we can’t ensure inclusion, our industries, our workers, our societies will pay the price. Some shared understanding among governments is particularly crucial if we are to find collective win-win solutions.


Hong Kong is acutely aware of the critical importance of I&T in today’s world, and we are focusing on developing I&T not only as a new driver for our economic growth, but also for applications in managing our city and looking after our elderly. I have therefore put in place an ambitious, eight-pronged strategy to drive Hong Kong’s I&T movement three months after I took office last July. These include increasing resources for research and development; pooling together technology talent; providing investment funding; providing technological research infrastructure; reviewing existing legislations and regulations; opening up government data; promoting innovation in government procurement and strengthening popular science education. We are also moving ahead on a comprehensive Smart City Blueprint for Hong Kong.


We are investing heavily on the above. Over the past 15 months, the Hong Kong Special Administrative Region Government has committed a total of US$10 billion to support the above-mentioned strategy. In addition, we have halved the profits tax rate to a single digit of 8.25% to support small and medium-sized enterprises and startups while incentivising private businesses to invest in R&D through super tax deductions. Our goal is to double Hong Kong’s R&D expenditure from the current 0.73% to 1.5% of our GDP within a period of five years.


We know that Hong Kong cannot do it all alone. Part of the funding committed is for setting up two research clusters, one for healthcare technology, the other for artificial intelligence and robotics at the Hong Kong Science Park. Institut Pasteur from France, the RWTH Aachen University of Germany as well as the Guangzhou Institute of Biomedicine & Health and the Institute of Automation in Beijing under the Chinese Academy of Sciences have already expressed interest in joining the clusters to strengthen collaboration with Hong Kong.


Equally important, we are strengthening our co-operation with Mainland China on I&T. In September, we entered into a comprehensive Arrangement with the Ministry of Science & Technology of the nation, which will serve as an action guide and framework for us to take forward the various co-operation initiatives in such areas as scientific research, development of platforms, nurturing of talents and transfer of results.


There is also the Guangdong-Hong Kong-Macao Greater Bay Area, which comprises Hong Kong, Macau and nine other cities in the Guangdong province. Leveraging on Hong Kong’s unique strengths under “one country, two systems” while emphasising on complementarity of the cities, Hong Kong is destined to play an important role in the bay area’s rise as Asia’s Silicon Valley.


Technological advancement will no doubt drive growth in trade. From railways and steamships to the computer, technology has long renewed trade and the economic and social growth it can stimulate. The technologies of this 21st century, from artificial intelligence and blockchain to the Internet of Things and so much more, will surely reshape and re-imagine global trade. The rise of e-commerce is a case in point. And we have heard from the World Bank President in his speech this morning on how e-commerce has helped to lift people out of poverty in a province in China. I am sure later on we will hear more from Jack Ma of Alibaba. Global retail e-commerce sales reached US$2.3 trillion last year, up 25% over 2016. At the same time, trade will create demand for products and services, which will in turn provide the incentive for innovation.


The World Trade Organization’s World Trade Report 2018, focusing on how global commerce is being transformed by digital technologies, also sees great promise in the future of trade. The report notes that trade could grow by 1.8 to two percentage points more a year until 2030, thanks to plummeting trade costs realised by new technology.


The potential is there for all to see, but in order to realise it, free trade has become ever more important. As a founding member of the WTO, Hong Kong has over the years been one of the freest and most open economies in the world. We have benefitted immensely from free trade for decades, which is instrumental in developing Hong Kong into the international trade and business centre as it is today. It is the reason why we continue to promote free trade, both by supporting the rule-based multilateral system, and expanding our network of free trade agreements.


Chief Executive Carrie Lam gave these remarks at a parallel session of the Hongqiao International Economic & Trade Forum themed on Trade & Innovation in Shanghai on November 5.

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HK welcomes Austrian business

Established in December 2003, AustroCham (Austrian Chamber of Commerce) has been playing a significant role in fostering closer ties between Austria and Hong Kong. Apart from bolstering business exchanges, AustroCham has been enriching our cosmopolitan city life by bringing us Austrian wine, cuisine and music, and like tonight, the fabulous live performance by the Vienna Boys Choir Academy Concert Choir.


On the business front, Austria is one of our valuable trading partners in Europe. Hong Kong also serves as a window to facilitate trading between Austria and Mainland China, around 7.8% of the total trade between Austria and Mainland China last year was routed through Hong Kong.


Our good and close trade and economic relationship is certainly reflected in the visit of many senior Austrian officials to Hong Kong lately. We are particularly pleased to have received Mr Sebastian Kurz, the Federal Chancellor, and his delegation, comprising three Federal Ministers, in Hong Kong in August 2018.


We are deeply impressed by Vienna’s development as a smart city. As you know, Hong Kong is now actively pressing ahead with the development of innovation and technology, as well as smart city projects. We can certainly learn a lot from Vienna’s experience.


We do not just settle with being an international trade and financial centre. Capitalising on the advantages of “one country, two systems”, our strategic location at China’s doorstep, rule of law, level-playing field for all business, simple and low tax system, superb infrastructure and free flow of capital and information, intellectual property, research and development capability, we have huge potential to become an international I&T hub as well.


Hong Kong has also been ranked first in economic freedom by the US-based Heritage Foundation for 24 consecutive years and the Fraser Institute of Canada since 1996. We are also named the second most competitive economy in the world by Swiss-based International Institute for Management Development this year. Hong Kong ranked fifth for ease of doing business out of nearly 200 economies in the World Bank’s Doing Business 2018 report.


Hong Kong is the most ideal gateway for Austrian business to tap the Asian market. Riding on the memorandum of understanding on co-operation in technology startup ecosystems signed between Hong Kong and Austria in 2016, I am confident that businesses of the two places, in particular I&T companies and startups, could join hands on even closer collaboration.


The Mainland & Hong Kong Closer Economic Partnership Arrangement further offers Austrian companies set up in Hong Kong, preferential treatment to access the Mainland market. In addition, we forged with Association of Southeast Asian Nations (ASEAN) last November a free trade agreement and an investment agreement. Expected to enter into force in January 2019, the two agreements will create new opportunities for business and bolster trade and investment flows between Hong Kong and ASEAN.


With two mega national initiatives, that is the Belt & Road Initiative and the development of the Guangdong-Hong Kong-Macao Greater Bay Area, being actively pursued by the Central People’s Government, Hong Kong’s active participation and strategic location will serve as the most ideal springboard for overseas companies, including Austrian companies, to tap the resources and markets in the Belt & Road countries as well as Mainland cities in the bay area. And on the Greater Bay Area development, Hong Kong’s connectivity to the Mainland is further strengthened since the Hong Kong Section of Guangzhou-Shenzhen-Hong Kong Express Rail Link and Hong Kong-Zhuhai-Macao Bridge came on stream. The two important infrastructure will bolster the synergistic effect and create more business and development opportunities for Hong Kong, the Asia region and beyond.


Acting Chief Executive Matthew Cheung gave these remarks at the Austrian Chamber of Commerce Hong Kong: 15th Anniversary Heurigen on November 2.

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