Smart production to spur growth

Secretary for Innovation & Technology Nicholas Yang

“Industry 4.0” is certainly one of the hottest buzzwords in the innovation and technology sector this year. Just last month, I addressed local leading industrialists on the same subject at a forum organised by the Federation of Hong Kong Industries. It is a matter of great interest among the participants. Everyone showed much enthusiasm and was very positive about Hong Kong’s potential to seize the many opportunities offered by Industry 4.0. I also received the same response when I talked to various professional bodies and local and overseas chambers of commerce in Hong Kong in the past few months.


As we all know, developed economies can no longer afford to compete on price and cost alone. With the growth of the Internet-driven economy in recent years, economies have placed a strong focus on innovation and technology-oriented and high-value added manufacturing to stay competitive globally.


Originating in Germany, Industry 4.0 promotes smart manufacturing through the integration of a software-intensive manufacturing system and process, big data and the Internet of Things to form an intelligent and highly efficient network. Gains achieved include enhancing business productivity, efficiency and quality. Since then, different countries have built on this concept and charted their own paths. Today’s conference offers participants a great opportunity to learn from each other, especially from our distinguished speakers from Germany, the United States, Japan, Korea and the Mainland of China.


In the same vein, the Chinese Government has formulated the “Made in China 2025” strategy in 2015, setting out a blueprint for innovation-driven development and paving the way for China to become a world manufacturing power. “Made in China 2025” aims to enhance our nation’s foundation in high-tech industries and strengthen its high-end manufacturing through innovation and technology and adoption of intelligent manufacturing technologies and processes. Sectors such as information technology, robotics, biotechnology, medical devices and alternative energy are all involved.


Here in Hong Kong, we also attach great importance to promoting Hong Kong’s “re-industrialisation” to drive further economic growth for Hong Kong. To grasp the opportunities brought by technology development, we hope to spur the growth of a new generation of high-value added industries in Hong Kong, and facilitate the upgrading and transformation of Hong Kong industries to smart production. This will not only increase labour productivity, lower production costs and raise our global competitiveness, but create more quality and diversified employment for our young people. Industry 4.0 will be the lynchpin in successfully “re-industrialising” Hong Kong.


In terms of hardware, the Hong Kong SAR Government will enhance support for science, innovation and technology based industries by providing suitable premises in the industrial estates. Having obtained the funding approval of our Legislative Council, we are actively pursuing the development of two pilot projects, namely an Advanced Manufacturing Centre and a Data Technology Hub in the Tseung Kwan O Industrial Estate, at a total cost of about $8.2 billion. Together, these new projects will provide an additional gross floor area of over 130,000 square metres for high-value manufacturing and data technology operations, creating also some 7,500 jobs. Through our public funding programmes and infrastructure such as the Hong Kong Science Park, we are also promoting R&D in specific technology directions where Hong Kong has an edge or the demand, such as robotics, healthy ageing and smart city.


Turning to our host today, the Hong Kong Productivity Council has been supporting our local industries to enhance their productivity since 1967. The HKPC has witnessed the economic transformation of Hong Kong and made significant contribution in adapting our industries to the ever-changing environment. I am sure the HKPC will continue to be our industries’ best partner in helping them to capitalise on the opportunities arising from Industry 4.0.


Secretary for Innovation & Technology Nicholas Yang made these remarks at the International Conference on Industry 4.0 cum Smart Seminars opening on July 26.

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Youth orchestra to tour world

Chief Secretary Carrie Lam

Founded in 1990, AYO (the Asian Youth Orchestra) is committed to and has accomplished the vision of creating an orchestra that can unite young musicians across the region, inspire them to unleash their full potential, and celebrate the excellence of their talent. Since its inaugural performance 26 years ago, the orchestra has performed in over 360 concerts in Asia, Europe, the US and Australia to an audience of more than 1 million concertgoers. Under the guidance of its Board of Directors, the total dedication of its Executive Committee and the selfless efforts of its administration staff, AYO has become a leading youth orchestra that comprises the finest young musicians in Asia.


Every year, the orchestra runs a three-week rehearsal summer camp in Hong Kong followed by a concert tour to different cities. The cultural exchange programme offers Asia’s brightest young musicians exceptional opportunities for study and performance in an international environment. This year, we have with us 110 gifted musicians from different parts of Asia including Mainland China, Taiwan, Macau, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Thailand, Vietnam and of course Hong Kong. I am particularly delighted to learn that 18 of them are our local youngsters. After all, Hong Kong has been the home base of the orchestra over the last 26 years.


The orchestra will open its concert tour with performances in Hong Kong and continue on to 10 other cities in Asia. The performances celebrate the rich cultural life of the city. Though the tour will be exhausting, I am sure our young musicians will find it most enjoyable and rewarding. What is most valuable is not only the opportunity to perform, but the friendship that will emerge from such a diverse gathering of young people sharing the same interest and passion.


Next year marks the 20th anniversary of the establishment of the Hong Kong Special Administrative Region. To commemorate this important stage of historic significance to Hong Kong, the Government is collaborating with AYO to stage an ambitious world tour in 2017 to major cities in the Mainland, Europe, the US and Asia, showcasing the vibrancy of our arts scene, recognising the achievements of the younger generation and projecting this Asian friendship to the world.


I would like to express my sincere thanks to all sponsors and donors in Hong Kong and across Asia for their staunch support for the orchestra. Your kindness and generosity have helped the orchestra flourish in the past 26 years, and opened the way for our young musicians to achieve their full potential and make their dreams come true.


Chief Secretary Carrie Lam gave these remarks at the 26th Asian Youth Orchestra Summer Festival opening ceremony on July 18.

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HK, the new French village

Financial Secretary John Tsang

Earlier this year the French newsweekly Le Point called Hong Kong “the new French village”, and I think the presence of the people here demonstrate the very fact, noting that the growing French community here appreciates “Hong Kong’s many advantages for doing business, the lack of red tape, the feeling that anything is possible”.


They love, as well, Hong Kong’s “shops and restaurants, and the quality of life” that prevails here.


Of course, their very presence – more than 12,000 French nationals are registered officially with the Consulate – adds superbly to Hong Kong’s business acumen and continuing economic diversification. But given the amount of French that I hear all over Lan Kwai Fong, I am certain that many more are surely not accounted for.


Some 800 French companies keep offices here, using Hong Kong as their base to do business with Hong Kong and, through Hong Kong, with the Mainland of China and elsewhere in Asia. Hardly surprising, then, that the French Chamber of Commerce & Industry here is the largest European chamber in Hong Kong, counting more than 1,000 members.


There is much that Hong Kong can learn from France – besides all the good things in life, there is also technology, aerospace, engineering and more. Much room for co-operation between us, given our decision to move ahead with a third runway for the Hong Kong International Airport.


As Hong Kong continues to expand as an aviation hub, supporting aviation education and promoting offshore aircraft leasing, we look forward to more collaboration between Hong Kong and Airbus.


More broadly, our collaboration with France reflects our concerted drive to create a global centre for innovation and technology in Hong Kong.


Indeed, I allocated some US$2.3 billion to innovation and technology in my Budget Speech earlier this year. That will only help fuel our I&T agenda, one that has gained considerable momentum thanks to our first-rate technology infrastructure, our world-class financial and professional services and our sound legal system. And that certainly includes our robust intellectual property protection regime.


It helps, too, that our start-up scene is alive and thriving, with more than 1,600 companies from Hong Kong and from all over the world. That is up 50% in just two years’ time, and counts, I am pleased to note, French Tech Hong Kong, which set up office here earlier this year.


In May, a delegation of start-ups from Bordeaux and Aquitaine visited Hong Kong, looking for local partners and investors, looking to take advantage of our buzzing start-up scene.


They were joined by French Minister of State for Foreign Trade Matthias Fekl, who took up in Vinexpo, Asia’s leading wine fair. I am sure that he was pleased with the Hong Kong show – particularly the show of French wine here and throughout Asia.


France has been Hong Kong’s top wine supplier for many years, last year accounting for more than 62% of our total wine imports. That, by the way, was up 53% over the previous year.


No less important, our wine re-exports to the Mainland soared last year – up 87%, year-on-year. That has a great deal to do with the unique arrangement of instant clearance that we have with the Mainland customs, as well as our well-known marketing experience, our branding expertise as well as business connections.


May was also notable, here in Hong Kong, for Le French May, the annual festival of French arts and culture – and food and wine, too. They call it Le French May, though it dazzles right through June as well.


Clearly, we can’t get enough French culture here in Hong Kong.


Financial Secretary John Tsang gave these remarks at the French National Day 2016 reception on July 14.

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CE encourages Olympic athletes

Chief Executive CY Leung

I am very pleased to be here for today’s Flag Presentation Ceremony. Here to honour the gifted, dedicated young men and women participating in the Rio 2016 Olympic Games on behalf of Hong Kong.


I know qualifications are continuing in a few cases but, as of today, 37 Hong Kong athletes will be competing in eight sports at the Rio Olympic Games.


Some are already in Rio for final preparation. The rest of you will be on your way soon enough, there to join more than 10,000 other athletes from around the world for the very first Olympic Games to be held in South America.


Winning at the Olympic Games is perhaps the great dream – the biggest dream – of most athletes. But on that point, let me say that, competing in the Olympic Games is a tremendous achievement in its own. Whatever the result, Hong Kong is proud of you. Each and every one of you. In the words of Nobel Peace Prize winner Nelson Mandela, here I quote: “I never lose. I either win or learn.” Unquote.


Our athletes will do the same, and more. They will inspire the youth of Hong Kong as to the value of passion, commitment and hard work. The joy of competition and the true spirit of sportsmanship.


I am, indeed, very pleased to see an increasing interest in sports in Hong Kong over the years. And the Government is making every effort to better support our athletes. The recently redeveloped Hong Kong Sports Institute provides state-of-the-art training facilities, sports science and other kinds of support. We also help our athletes to undergo training overseas and participate in international competitions.


And we are pressing ahead with building Hong Kong’s largest multi-purpose sports complex in Kai Tak – this Sports Park has a footprint almost 50% larger than that of Victoria Park. There, we will see a wide variety of sports facilities, satisfying the different needs of the community – from casual joggers to elite athletes, from family enjoyment to school sports events. I look forward to building a Hong Kong that is healthy, energetic and athletic.


My thanks to the Sports Federation & Olympic Committee of Hong Kong for organising the delegation to the Rio 2016 Olympic Games. We are, of course, aware of concerns over the health conditions in Brazil. On this, my colleagues in the Home Affairs Bureau and the Department of Health have been working closely with the Committee. Our goal is to ensure that Hong Kong’s Olympic athletes and coaches are provided with the best advice and support around.


I wish the delegation a successful and enjoyable Games. And rest assured that all of Hong Kong looks forward to watching, and cheering on, our athletes as they participate in the greatest sports show on earth.


Chief Executive CY Leung gave these remarks at the Flag Presentation Ceremony for the Hong Kong, China Delegation to the Rio 2016 Olympic Games on July 11.

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Maths vital for all-round growth

Secretary for Education Eddie Ng

As the Secretary for Education of the HKSAR Government, I see the importance of mathematics for the all-round growth of our future generations, for the development of our respective societies.


Mathematics is an age-old discipline. It is critical to science and technology, crucial to financial literacy, and central to daily lives. It is more than just numbers and formulas. It embraces logic and reasoning to resolve complicated, interlocking issues. Many decisions made, in the public and private sectors alike, rely to some extent on the use of mathematics. That is why mathematics is an integral part of general education, and one of the big four academic disciplines namely science, technology, engineering and mathematics commonly known as STEM.


I am sure the countries and regions represented here today attach as much importance to mathematics and related education as we do in Hong Kong. Mathematics knows no boundaries.


Let us educators all work together to unlock our youngsters’ mathematics potential. Show them, through mathematics, how to think critically and creatively; lead them, using mathematics as a key, into a world of possibilities and opportunities.


For the most gifted students, the IMO is the highest platform. This is not the first time Hong Kong has the privilege to host the IMO. As mentioned earlier, the last time was in 1994, when we played host to 69 participating teams. Today, after 22 years, I am proud to say that the scale of the 57th IMO is unprecedented, with 110 countries and regions from around the world taking part. I thank you all once again for your engagement and support.


I would also like to thank all members of the IMO Hong Kong Committee, in particular Professor Shum, and all those involved in the organisation and sponsorships of the 57th IMO.


My thanks also go to the unfailing support of Professor Tony Chan and the Hong Kong University of Science and Technology (HKUST) in making the IMO a success. Young people, since you are here in Hong Kong and visiting HKUST, in case you would like to consider pursuing further studies, this is a very good option in front of you.


May I wish the leaders and contestants the very best of luck in the competitions. Do not forget to enjoy the side programmes. Have a taste of the culinary and cultural part of Hong Kong as the Asia’s world city. Be pampered by the hospitality of our local helpers who are all teacher and student volunteers. Perhaps more importantly, make friends with fellow contestants who come from very different corners of the world. With the common language of mathematics, who knows you would not start some lifelong friendship here.


Secretary for Education Eddie Ng gave these remarks at the 57th International Mathematical Olympiad opening ceremony on July 10.

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Innovation benefits HK

Chief Secretary Carrie Lam

As one of the world’s most densely populated cities, it is no exaggeration to say that Hong Kong is the perfect venue for this new initiative to take root and for exchanging views and experience about sustainable urban development. Put simply, our passion and aspiration are grounded in our conviction in balanced development and our pursuit for excellence.


Like many mature metropolitan cities in other parts of the world, Hong Kong is facing a number of changing circumstances and challenges including the evolving global and regional dynamics, a rapidly ageing population, pressing demand for housing, economic activities and community facilities, as well as a growing aspiration for more living space and better quality of life. All these challenges call for innovative solutions.


It is therefore encouraging to see this tripartite platform founded today by six of our universities, 10 government departments and 20 industry organisations with a shared vision to develop and implement technologies and systems to fully realise Hong Kong’s potential in a sustainable way, and to contribute to sustainable urban development in the Mainland.


Development of a low-carbon sustainable city is a multifaceted endeavour. I would like to focus on three aspects of work with recent initiatives contributing to this global agenda, and they are smart city, green transport and green buildings.


Smart city

It is our vision to develop this compactly built city into an efficient, practical and smart metropolis. Kowloon East is our testing ground for this. We aim to transform the district into a sustainable business core that befits the concept of sustainability by making use of smart data and technology, creating a low-carbon green community and enhancing walkability and mobility. The Energising Kowloon East Office is undertaking a consultancy study to chart the way forward. Our newly established Innovation and Technology Bureau will provide the necessary inputs. We welcome advice from experts of this Consortium on the possible solutions and collaboration opportunities to take forward this smart city development.


Kowloon East comprises the Kai Tak development area and the regeneration of two adjacent former industrial areas – Kwun Tong and Kowloon Bay. Steered through the Energising Kowloon East initiative I launched in 2011, Kowloon East has demonstrated how a holistic, integrated, people-oriented and place-making approach has tremendous potential for sustainable urban development. As we embark on new development areas in the northern parts of the New Territories, at Kwu Tung, Fanling North and Hung Shui Kiu, that same smart city approach should be embraced. The potential for quality and sustainable development should also not be overlooked in our urban regeneration efforts. So I look to CS Wai, who has recently assumed the position of the Managing Director of the Urban Renewal Authority, to play a leadership role in such endeavours.


Green transport

The transport sector accounts for about 17% of our total greenhouse gas emissions. To improve our urban living conditions, we have developed a well-connected, comprehensive and inter-modal public transport system. Each day, about 90% of passenger journeys – around 12 million trips – are taken care of by public transport. The majority of the emissions come from fossil fuel usage in commercial diesel vehicles and petrol-driven private cars. Under an $11 billion initiative to phase out pre-Euro IV commercial diesel vehicles, over 42,000 such vehicles have been removed from our roads, bringing noticeable improvements to our air quality.


For environmental and economic reasons, it is our policy to use railways as the backbone of our passenger transport system and to integrate transport and land use planning. To expand the transport infrastructure, we are taking forward three Mass Transit Railway lines and the cross-boundary express rail link that will connect Hong Kong to the national high-speed rail grid. Upon their completion by 2021, our railway network will cover more than 270 kilometres and areas inhabited by more than 70% of the population.


But our transport network development does not stop here. The Railway Development Strategy 2014 recommended that seven other railway projects be implemented by 2026. When these are completed, the total length of the railways will increase to over 300 kilometres and cover areas inhabited by 75% of the local population and 85% of workplaces of our population. The share of rail transport patronage will then rise to some 45% to 50% of public transport modes by 2031.


In parallel, the Government will continue to manage the private car fleet size and improve co-ordination of different modes of public transport to suit passenger demand, minimise wasteful competition and avoid duplication of resources. A good example is the joint efforts with bus operators since 2013 on bus routes rationalisation to enhance network efficiency, ease traffic congestion and reduce roadside air pollution. By the end of 2015, a total of 30 bus routes with low patronage were cancelled or merged with other routes. Some 250 routes have been truncated or had their frequencies reduced.


We are also keen to promote the wider use of electric vehicles (EVs) as they have no tailpipe emissions. The Financial Secretary chairs a high-level Steering Committee on the Promotion of EVs to draw up an overall strategy to complement specific measures to promote the use of EVs in Hong Kong. Key measures implemented include waiving the first registration tax, allowing enterprises which procured EVs to enjoy profits tax deduction, establishing a $300 million Pilot Green Transport Fund, and allocating $180 million for franchised bus companies to purchase single-deck electric buses for trial runs.


Green buildings

But it is in buildings that some of my efforts as the Secretary for Development are bearing fruits. Buildings in Hong Kong consume 90% of our electricity and thus account for 60% of our greenhouse gas emission. The enhancement of the environmental performance of our building stock is therefore key to promoting a sustainable built environment.


We have implemented a range of policies and measures to improve the environmental performance of our building stock including legislation, incentive programmes and government leadership.


To enhance the energy efficiency performance of buildings, we have already implemented legislation to require new buildings and buildings that are undergoing major retrofitting to comply with minimum energy efficiency standards. Hotels and commercial buildings are further required to comply with a statutory standard to reduce heat transfer through building envelopes, and thereby saving energy consumption for air-conditioning. The mandatory standards are developed with reference to the latest developments in technology and practices and are subject to regular reviews. We are also an international pioneer in requiring commercial building owners to carry out mandatory energy audits once every 10 years, and to publish the audit results.


To take the lead, the Government has set specific electricity reduction targets for some 8,000 government buildings and has cut energy use by 15% over the past 12 years, and is now working towards a further 5% saving by 2020 using 2014 as the base year. We also require all newly built government buildings to obtain at least the second highest grade under the Building Environmental Assessment Method Plus rating system – BEAM Plus in short – operated by the Hong Kong Green Building Council. Up to now, some 80 government building projects have received BEAM Plus certification.


To encourage the private building sector to take part in improving the performance of private buildings, we have promulgated a set of Sustainable Building Design Guidelines under which developers may obtain gross floor area (GFA) concessions in new buildings by incorporating sustainable design elements and providing eco-related information. We have also promoted the BEAM Plus system by requiring all new private buildings to register for BEAM Plus certification in order to obtain bonus GFA for certain green features. Up till now, about 700 private development projects have gone through or registered for such certification.


Our journey in promoting green buildings in Hong Kong is, in my view, a very good case I often deploy to illustrate Hong Kong’s can-do spirit. My awakening to the importance of energy efficiency in buildings started in 2008 when I led a Hong Kong delegation to attend the World Sustainable Building Conference in Melbourne. I came home with the idea that we should take a bigger step in this aspect and in less than a year’s time, the Hong Kong Green Building Council under the helm of its inaugural chairman Dr Andrew Chan was up and running. In the few years that followed, we introduced policy measures, updated legislation, created Hong Kong’s first Zero Carbon Building, enhanced the BEAM mechanism and put in place other related measures. In 2011, we were in the subsequent World Sustainable Building Conference held in Helsinki sharing our vision and actions. I am therefore extremely gratified that Hong Kong will host the next World Sustainable Built Environment Conference next year. Such experiences have given me the confidence that as long as Government sets a clear goal, displays the needed leadership, mobilises support from related professionals and engages the public, we will continue to excel.


Climate change

We must now adopt a similar mindset and approach in tackling a global issue head-on, and that is climate change. We are mindful about the significant impact of the extreme weather conditions caused by climate change in our society, our economy as well as our daily life. 


Climate change is high on the Government’s policy agenda. We have implemented a wide range of measures to combat climate change including some of those I mentioned earlier that enable Hong Kong to become climate ready.


In recognition of the imminent need to step up climate action and to draw up long-term policies, the Steering Committee on Climate Change has been set up, and its members are drawn from 13 policy bureaus and government departments. I personally chair this committee and will host a stakeholder engagement forum next Tuesday to gauge the views of key players on combating climate change. We plan to draw up an enhanced climate change work plan and set a carbon reduction target for Hong Kong by the end of this year.


Our ultimate objective is to design and produce a strategic vision that befits Hong Kong’s landscape, population and development needs that can stand the test of time and remain resilient in an ever-changing world.


The University-Government-Industry Consortium has brought together the best and most creative minds of this very important subject of sustainable urban development. I have every confidence that the consortium’s work will bear fruits and will provide Hong Kong with innovative and smart solutions to help us make this city that we love and call home a better, more habitable and more sustainable place to live. I am also confident that this good work and experience can be shared with our counterparts in the Mainland and even the new markets along the Belt & Road Initiative that are awaiting us to explore.


Chief Secretary Carrie Lam gave these remarks at the University-Government-Industry Consortium launch ceremony on July 6.

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HK to profit from Asian growth

Financial Secretary John Tsang

The unexpected Brexit has brought significant shocks to the financial markets initially, with the markets somewhat stabilised in the last few days. On top of the anxieties over the timing and the pace of the US interest rate hike, the worryingly fragile Japanese and Eurozone economies, as well as the divergent policies among major central banks, we can now formally add Brexit and its palpable uncertainties to that growing list of concerns for the global economy. So talk about the perfect storm. We certainly have all the ingredients now.


The volatilities and uncertainties that we are experiencing right now will likely continue through this year, and even in the next few years, given that the negotiations between the UK and the EU on the exit terms are certain to be difficult and protracted.


The good news is that Asia will continue to be a key source of growth for the global economy. The global economic centre of gravity has been gradually shifting to the East in recent years. This trend is particularly evident amid the slow and punctuated recovery of the advanced economies following the global financial crisis in 2008.


Asia has achieved outsized success over the last 30 years. In 1980, developing Asia accounted for only 7% of the world GDP at the current market exchange rate. By 2015, it had captured more than 20%. A three-fold increase.


During that period, the Mainland’s economy ascended in a phenomenal way to become the world’s second largest economy as well as the number one manufacturer. Apart from the Mainland, the economies of ASEAN and India have also expanded, on average, better than 6% per year, far outstripping the performance of major advanced economies in the West.


Of the top 500 global companies ranked by Fortune in 2015, 190 were Asian-based, up by some 60% from just a decade ago.


The strong trade performance has been significant for the region’s flourishing economies. Goods trade in developing Asia in 2015 reached US$6 trillion, about five times that of 2001. The quick upsurge in trade was accompanied by rapid industrialisation as well as high productivity gains.


And thanks to globalisation, foreign investment has poured into Asia, bringing technology as well as capital. In 2014, the stock of inward foreign direct investment in Asia amounted to some US$6 trillion, more than one-fifth of the world’s total. That same year, FDI inflow reached an historic high of nearly half a trillion US dollars, accounting for more than one-third of the world’s FDI inflow. The high domestic savings rate in Asia has also helped supercharge investment expansion.


Last year, Asia’s population came in at about 3.7 billion people, which is about half the world’s total. With the expanding middle class in Asia as well as its growing appetite for high-end goods and services, to say the region’s purchasing power is enormous is a gross understatement. Domestic demand in the region will for sure play an even more vital role in the continued development of the Asian economies.


Given the vastly different comparative advantages enjoyed by different parts of Asia, there is clear synergy and obvious benefit for Asian economies to strengthen co-operation in forming an efficient, region-wide supply chain with effective division of labour.


Southeast Asian economies are agriculture-rich, while central Asia and some ASEAN countries are abundant in minerals. Wages and skill levels differ markedly in the region, from advanced economies such as Japan and Korea to low-income countries like Cambodia and Bangladesh.


South Asia’s huge young population could, potentially, become a rich source of labour, complementing Asian economies that are, or will soon be, confronting an ageing population.


Looking ahead, Asia, and in particular China, will continue to be the main engine of growth for the world economy in the 21st century. In its recent report released in early April, while the IMF has lowered its forecast of global growth in 2016 to 3.2%, it also indicated that emerging and developing Asia will contribute about 60% of the world’s GDP growth this year. And that trend will continue, with growth expected to average 6.3% a year in the next five years, markedly higher than the 3.7% predicted for the world over the same period.


As for the Mainland’s economy, it is on track to meet its target of 6.5% to 7% GDP growth this year, while it continues with structural reform and rebalancing from an investment-led economy to one that is consumption-driven.


Coming back to Hong Kong, our enviable location at the heart of Asia and our extensive economic and cultural connections make us well positioned to profit from Asia’s growth.


In particular, as an international financial centre with a well-developed capital market, Hong Kong has a unique edge in directing capital between Asia and the rest of the world.


Last year, Hong Kong ranked first in equity funds raised through IPOs. According to the UN World Investment Report 2016, Hong Kong continues to rank second, after the US, in global FDI inflows. Our foreign direct investment inflows in 2015 amounted to US$175 billion, a year-on-year surge of 53.5%.


Among other things, we have seized the opportunity to become the world’s largest centre for offshore renminbi business. The renminbi liquidity pool in Hong Kong, which amounts to some RMB820 billion, is the largest globally. Our diversified and mature range of services covers personal banking to asset management, as well as cross-border trade settlement to bond issuance.


We are also the largest renminbi bond market outside of the Mainland. Our “dim sum” bonds have consistently attracted an extensive range of issuers, including global institutions such as the Asian Development Bank and the World Bank.


Hong Kong is also the springboard for many Mainland companies looking to expand overseas, as well as an ideal base for overseas companies looking to gain a foothold in the Mainland.


Our wealth management and asset management business is looking good, too. Between 2010 and the end of 2014, the combined fund management business in Hong Kong expanded by 75%, reaching a record high of US$2.3 trillion.


And, just last month, we enacted legislation to allow the establishment of an open-ended fund-company structure. This new structure will widen the choices of funds, helping us meet global market demand and compete with other major fund centres.


Hong Kong has long been a choice location for corporate treasury operations, given the strength of our financial, banking and professional services, as well as our deep capital market for liquidity and portfolio management.


In May, we passed legislation to provide a half-rate profits’ tax concession for dedicated corporate treasury centres in Hong Kong. The legislation also provides profits tax interest deductions for the intra-group financing business of corporations.


And there are more stimulating opportunities ahead for Asia, in the form of the far-reaching and visionary Belt and Road Initiative spearheaded by the Mainland.


Speaking in Hong Kong less than two months ago, Zhang Dejiang, Chairman of the Standing Committee of the National People’s Congress, made it clear that the Central Government was counting on Hong Kong to play a significant role in the initiative.


Infrastructure connectivity is the core driving force of the Belt & Road Initiative. And that will serve as a catalyst in promoting connectivity in trade and investment, as well as people-to-people bonding in the region.


According to the Asian Development Bank, Asia will need about US$800 billion a year to cover infrastructure investment needs from now to the year 2020, for a wide range of projects including railways, highways, ports, power plants, waste management and more.


Governments, to be sure, play a key role in capital project investment. Multilateral and regional development banks, such as the World Bank and the Asian Development Bank, also play an instrumental role in channelling funds into infrastructure projects, particularly for emerging markets.


The Asian Infrastructure Investment Bank, the AIIB, which started operation in January this year, will certainly play a significant role as well. I was in Beijing a week or so ago to attend the first annual meeting of the AIIB’s Board of Governors as a member of the Chinese delegation.


At that meeting, the AIIB approved a total of US$509 million for investing in its first four projects. They include the power grid upgrade in Bangladesh, a slum renovation in Indonesia and highway construction in Pakistan and Tajikistan.


As the international financial centre in Asia, Hong Kong has the essential expertise, experience and connection to serve as a fund-raising and financial management centre for these big-ticket projects in the pipeline.


We have just established under the Hong Kong Monetary Authority a new Infrastructure Financing Facilitation Office, the IFFO, to serve as a designated platform to facilitate the exchange of market information and to enhance co-operation among stakeholders, with the aim of bridging funding gaps and catalysing infrastructure investment in the region.


The office started operation yesterday. I am glad to note that it already has the support of more than 40 partners including investors, banks, multilateral institutions, project developers as well as professional services firms from the Mainland, from Hong Kong and also from overseas.


Global economic growth remains uncertain. But it is clear that there is a rising need for financing in Asia. For us in Hong Kong, that spells opportunity.


Our many compelling advantages, from our mature financial infrastructure, favourable business environment, the rule of law, the open and level playing field to our simple and low tax regime, will continue to serve businesses in the region well.


When it comes to cashing in on promising opportunities, Hong Kong’s track record is sterling.


Financial Secretary John Tsang gave these remarks at the Boao Forum for Asia Financial Co-operation Conference luncheon on July 5.

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Belt & Road drives capital flow

Chief Executive CY Leung

In this year’s 2016 World Competitiveness Yearbook, Hong Kong was placed first among 61 economies by Switzerland’s International Institute for Management Development. Not only did we top rankings in government and business efficiency, we were also ranked first in terms of finance efficiency. The report gave high regard to our banking and financial services, stock market, regulations and management of financial risks.


Indeed, Hong Kong has always taken pride in the soundness, and fineness, of our financial system. Despite global economic uncertainties – exacerbated by Britain’s exit from the European Union – our financial system has remained sturdy and resilient. We have sufficient liquidity in the system, our financial institutions have passed their stress tests, and our financial regulators have put in place prudent risk management measures. I have every confidence that the Hong Kong financial sector will stay strong and robust, and that our businesses, investors and professionals will turn the challenges into opportunities.


The role of finance in stimulating growth in the real economy – the theme of today’s conference – is something we have long believed in, and well-practiced here in Hong Kong.


Finance works for us in many ways and on many levels. That includes fundraising. Last year, we topped the world in raising funds through initial public offerings. In doing so, we supported expansion of a wide range of companies, from Hong Kong, the Mainland of China, Asia and around the world.


Hong Kong is also a leading fund management centre. Some 70% of the assets under management here are sourced from Mainland Chinese and overseas investors. They place their assets here in Hong Kong because they place their faith here in Hong Kong.


Hong Kong is a hub for foreign exchange transactions as well – in renminbi, in US dollars and many other currencies – enabling investors and companies to complete their cross-border investment and trade transactions.


In that, and more, is the real economy we have in mind.


The role that Hong Kong plays in using finance to stimulate growth in the real economies of our partners is a “super-connector” role. We are the “super-connector” between the Mainland of China and the rest of world. We enjoy, and share with our business partners, the advantages of both “one country” and “two systems”. We are part of China and offer the China advantage. At the same time, we practice “the other system” and therefore offer the “two systems” advantage. It is hardly surprising that we are both the world’s China financial capital and, at the same time, China’s international financial centre.


We earned this position by working for decades with the Mainland of China. Hong Kong has the richest China experience, and the broadest connections. We also helped, since the very early days in the late 1970s, the country’s market reforms.


Hong Kong’s strength in finance is exemplary of our “super-connector” role – and that role is expanding. We stand to play a key role in China’s Belt & Road Initiative. This project is far-reaching – it covers more than 60 economies, two-thirds of the world’s population, and spans Asia, Europe and Africa.


The aim of the initiative is to drive policy co-ordination, infrastructure connectivity, trade and investment, financial integration and people-to-people bonds in the Belt & Road regions. In each of these areas, Hong Kong sees huge opportunities – in finance, in particular.


The countries along the Belt & Road are, of course, at varying stages of development. Their savings-investment balance is equally diverse. Economies with considerable savings are looking for outlets for their funds, while other economies seek foreign investment to kick-start growth-driving projects.


We expect that Belt & Road economies will open up their capital accounts and financial systems, working together to promote a freer flow of capital. In such a way, savings can secure decent returns in the long run. They can be directed to gainful deployment in economies and projects with good potential.


Indeed, foreign direct investment is an important source of external finance. It also brings production capacity, new technology, management know-how, and connectivity to international marketing networks.


Hong Kong plays a prominent role as a conduit of foreign direct investment. The value of direct investment made from Hong Kong to the Mainland of China and overseas markets is almost five times our annual GDP – a good indication of our investment-friendly environment.


Finance can also help stimulate growth through infrastructure financing – one of the central goals of the Belt and Road Initiative.


Infrastructure development across Belt & Road economies varies greatly, to be sure. PricewaterhouseCoopers forecasts that, by 2025, the required infrastructure investment in emerging Asia and Central and Eastern Europe could rise to some US$5 trillion a year. In this, the financial sector has a huge role to play.


That is why the Hong Kong Monetary Authority’s Infrastructure Financing Facilitation Office was created – as Norman will share more with you. Opened just yesterday, the Office will strengthen Hong Kong’s role in bringing investors, banks and the financial sector together to drive infrastructure projects in countries along the Belt & Road.


Finance can also support the real economy through cross-border trade settlement. A stronger, more open system of international trade and payments is critical to economic growth. As China becomes the world’s largest trading nation and the renminbi a more popular currency, the use of the renminbi in settling cross-border trade is burgeoning. Today, one-fifth of the Mainland of China’s merchandise trade is billed and completed in renminbi payment – an impressive growth given the renminbi’s cross-border trade settlement began only seven years ago.


The International Monetary Fund’s decision to include the renminbi in its Special Drawing Rights currency basket was an important milestone. It surely expands the renminbi’s acceptance as both a trading and an investment currency.


Hong Kong, I am happy to note, has contributed much to the renminbi’s internationalisation. We have been enhancing market infrastructure, consolidating financial platforms and expanding our contacts with Mainland authorities to spur the circulation of renminbi funds between onshore and offshore markets. Our renminbi Real Time Gross Settlement system operates over 20 hours a day. That gives financial institutions in European and American time zones an extended window for settling offshore renminbi payments via Hong Kong.


Indeed, Hong Kong manages a lion’s share of trade settlement in the renminbi. Last year, the value of such transactions handled by banks in Hong Kong was close to RMB7 trillion. Hong Kong will continue to work with Mainland and overseas counterparts to boost our role as the world’s offshore renminbi trading hub.


In that, we have the Central Authorities’ full support – as Zhang Dejiang, Chairman of the Standing Committee of the National People’s Congress, said at the inaugural Belt & Road Summit here in Hong Kong a couple of months ago.


Hong Kong’s experience as an international financial centre amply demonstrates that collaboration is essential to building a global financial system – one that stimulates the real economy, and one that creates wealth for the people.


Chief Executive CY Leung gave these remarks at the Boao Forum for Asia Financial Co-operation Conference opening on July 5.

via Moroccan Trader Belt & Road drives capital flow

HK best placed to raise funds

Financial Secretary John Tsang

I announced the setting up of IFFO (Infrastructure Financial Facilitation Office) in my annual government budget delivered in February this year. We came up with that idea because infrastructure investment is at the heart of the Belt & Road Initiative, and we see a genuine need, as well as a golden opportunity, for a dedicated platform to support the financing of infrastructure and other projects along the Belt & Road corridors.


As the global economic centre of gravity shifts gradually towards the East in recent years, the emerging markets along the Belt & Road corridors are now playing a much more important and much more influential role in the global economy.


IMF (International Monetary Fund) predicts that emerging and developing Asia will contribute about 60% of the world’s GDP growth this year, and the Mainland will continue to be a driving force of the global economy.


The continued urbanisation along the Belt & Road corridors as well as the expanding middle class in the economies in East Asia and the entire Asian region will propel investment through infrastructure construction as well as home building.


As the Belt-Road initiative finds traction, we expect to see more and more infrastructure projects, in the form of railways, highways, ports, power plants, dams and much more, going forward.


Indeed, the Asian Development Bank has estimated Asia’s overall infrastructure investment needs at US$800 billion a year until 2020.


With our unparalleled ties with the Mainland, our ready access to Asian markets, as well as our wide-ranging prowess as the regional international financial centre, I believe that no economy is better placed than Hong Kong to serve as the centre for fundraising, for project financing and asset management for these big-ticket items.


Hong Kong currently runs one of the largest stock exchanges in the world. Last year, our stock market ranked first overall in equity funds raised through IPOs. We are also the world’s largest offshore hub for renminbi business.


And according to the UN (United Nations World) Investment Report 2016, Hong Kong continues to rank second, only to the US, in global foreign direct investment (FDI) inflows. Our FDI inflows in 2015 amounted to US$175 billion, a year-on-year increase of 53.5%.


In short, Hong Kong is a magnet for overseas capital from around the world looking to take advantage of the unprecedented business opportunities arising from the Belt & Road Initiative and developing Asia.


We believe that with IFFO, we can fortify our strong relations with the key players in infrastructure financing, in developing Hong Kong into a major centre for infrastructure financing.


The IFFO will make that happen through capacity building, through exchange of market information and through the gathering of stakeholders.


I am pleased that, to date, about 40 major banks, investors, project developers and professional service firms from the Mainland, from Hong Kong as well as from overseas have given their support to IFFO, joining as our business partners.


There’s an old Chinese saying that success depends on “天時、地利、人和”. Roughly translated, it means that success depends on choosing the right time, the right place and the right people. I have every confidence that with IFFO and all your support, we have all the boxes ticked for continued success down the Belt & Road.


Financial Secretary John Tsang gave these remarks at the Monetary Authority Infrastructure Financing Facilitation Office launch reception on July 4.

via Moroccan Trader HK best placed to raise funds

Gov’t to uphold HK’s core values

Chief Executive CY Leung

Today marks the 19th anniversary of the establishment of the Hong Kong Special Administrative Region and the fourth anniversary of the current-term Government.


Since the current-term Government took office, we have put into practice the concept of “being appropriately proactive and seeking change while maintaining stability”. We have strived to promote economic development and improve people’s livelihood.


Over the past four years, thanks to the concerted efforts of the community, the Government has maintained a sound fiscal position, inflation has been mild, and the unemployment rate has stayed at a low level. In the previous financial year, the Government collected record-high profits tax. This, in its own, reflects Hong Kong’s economic situation.


In the coming year, much will remain uncertain in the global economy, and we have all the more reason to focus on economic development. Hong Kong people are hardworking, flexible and adaptable. As long as we make good use of the development opportunities in the country and in the region, we can certainly overcome challenges large and small. Over the past 30 years or so, thanks to the opening up and reform of the Mainland, many Hong Kong wage earners have become business owners, and small enterprises have developed into large national enterprises. In the coming 30 years or so, Hong Kong’s new generation can take advantage of overseas opportunities arising from the Belt and Road initiative, in addition to those in the Mainland. The young generation will be able to further expand Hong Kong enterprises into global enterprises. 


In order to enhance Hong Kong’s competitiveness, we are pressing ahead with various new projects, apart from the large-scale infrastructure projects to be completed in the next few years. These new projects include land supply projects beyond 2030, development and conservation of Lantau, the building of the three-runway system at the airport, the planning of seven new railway schemes and the construction of Hong Kong’s largest multi-purpose sports complex in Kai Tak.


When the current-term Government took office, some people doubted our commitment and capability in resolving housing problems. After four years of hard work, property prices and rentals have dropped from their peak levels. Despite numerous obstacles, land and housing supply have increased significantly. In the five-year period from 2015-16 onwards, total public housing production will be higher than the production in the previous three five-year periods. Regarding private residential units, first-hand supply over the next three to four years will hit a record-high since the first regular release of statistics in 2004.


The current-term Government will remain resolute in its work on poverty alleviation, elderly care and support for the disadvantaged. This financial year, the Government’s recurrent expenditure on social welfare reaches $66.2 billion, a marked increase of 55% over five years ago. We have provided strong support for working-poor household members, low-income families, the elderly, the disabled, and those known colloquially as “N have-nots”. The size of poor population has fallen for the second consecutive year. At the end of April this year, the caseload under the Comprehensive Social Security Assistance Scheme had registered a continuing decrease over the past 61 months. Low-earning cases had decreased continuously for the last 86 months. Unemployment cases had registered a continuing decrease over the past 80 months. I am very proud of the spirit of self-reliance of the Hong Kong people.


The current-term Government has implemented the free quality kindergarten education policy, and has subsidised more young people to participate in internship and exchange programmes outside Hong Kong. We will invest $200 billion to implement a ten-year hospital development plan. We have strived to control air pollution, and over 40 000 diesel commercial vehicles have already been phased out. Over the past five years, the overall air quality in Hong Kong has improved significantly. The Harbour Area Treatment Scheme Stage 2A was fully commissioned at the end of last year, and the overall water quality of Victoria Harbour has further improved. We will stay committed to our work on environment protection, with a view to building a pleasant environment for Hong Kong – one with a blue sky, white clouds, green hills and clear water, and one blessed with both urban diversity and an inviting countryside.


While substantial progress has been made, we still face a number of challenges. 


First, we must promote the transformation of traditional industries. These industries must move towards high value-added services if we are to raise the income level of the Hong Kong people. This is especially true for the tourism industry.  


Second, we should abandon the mindset of resting on our laurels. We should nurture emerging industries to enhance the upward social mobility of our young people, and to create diversified and better jobs. With this in mind, the SAR Government established the Innovation and Technology Bureau over seven months ago, and allocated $18 billion this year to promote innovation and technology. The Government will continue to encourage the development of creative industries, such as film and fashion design industries.


Third, we need to proactively tackle the challenges of an ageing society, and to deal with controversial issues such as retirement protection. The Government will make every effort to address the community’s varying aspirations. I hope we can set aside differences, find common ground, and try our best to reach a consensus. 


The No. 4 alarm fire broke out on Ngau Tau Kok Road last week was a tragic lesson in fire safety. As with several hundred other old industrial buildings in Hong Kong, the industrial building on fire lacked an automatic sprinkler system. Fire hazards are particularly high when an industrial building is used as mini-storages. The SAR Government has taken immediate inter-departmental follow-up actions and stepped up enforcement. We will also study amending the law as soon as possible to strengthen regulation and to ensure the safety of the Hong Kong people and our frontline firefighters.


During the fire, Senior Station Officer, Mr Thomas Cheung, and Senior Fireman, Mr Samuel Hui, passed away on duty battling the blaze. On behalf of the SAR Government and the Hong Kong community, I would like to express our deepest sorrow for the passing of these two outstanding colleagues, and extend our sincere condolences to their families. 


I would also like to thank other colleagues in the Fire Services Department. They had made tremendous contributions and selfless sacrifices in protecting the lives and properties of the Hong Kong people. They are role models for us all, and we take pride in every one of them. 


Fellow Hong Kong people, distinguished guests and colleagues, the SAR Government will continue to improve people’s livelihood through economic development in the coming year. We will continue to administer Hong Kong in accordance with the law, uphold the core values of Hong Kong, and promote the stability and prosperity of Hong Kong. We will continue to implement “one country, two systems”, “Hong Kong people administering Hong Kong”, and a high degree of autonomy in accordance with the Basic Law. Building on the recently established foundation, we will continue to facilitate and promote communication, exchanges, interactions and co-operation of various sectors and political parties in Hong Kong with the Central Authorities and the Mainland, and to deepen the mutually beneficial relationship between Hong Kong and the Mainland. I believe that as long as we stay united and work together, Hong Kong will continue to progress and develop, and Hong Kong people will enjoy a better life and a more prosperous future.


This is a translation of the speech delivered by Chief Executive CY Leung at the reception for the 19th anniversary of the Hong Kong Special Administrative Region on July 1.

via Moroccan Trader Gov’t to uphold HK’s core values