Speeches

Speech by the Director-General of Trade and Industry, Ms Salina Yan, at American Chamber of Commerce in Hong Kong workshop (English only)
Wednesday, May 8, 2019

Following is the speech by the Director-General of Trade and Industry, Ms Salina Yan, at the workshop "Smart Strategies for SMEs - Opportunities and Risks" organised by the American Chamber of Commerce in Hong Kong today (May 8) :

Thanks Barrett for the kind introduction and for hosting me a second time. In January last year, I was invited by AmCham's Trade and Investment Committee to share with the audience the Free Trade Agreement (FTA) Hong Kong signed with the 10 ASEAN member economies. Since then, we have signed two more FTAs - one with Georgia in June 2018 and the other with Australia in March this year. To date, Hong Kong has signed eight FTAs with 20 economies, including the Closer Economic Partnership Arrangement (CEPA) signed between the Hong Kong SAR and the Mainland some years back and kept renewed almost annually. We will continue our efforts to negotiate more FTAs with our trading partners.

I note that the title of this morning's workshop is "Smart Strategies for SMEs - Opportunities and Risks". I can point to at least two aspects that the FTAs and the Investment Agreements (IA) that usually accompany the FTAs when they are signed are relevant to the ensuing discussions. First, FTAs and IAs are legally binding documents. The governments concerned have to abide by the market access commitments made in trade in goods, trade in services, and observe the agreed rules and obligations. This will provide businesses with market opportunities, as well as legal and policy certainty for them to manage their commercial risks. Taking the Hong Kong-Australia FTA as an example, it is a comprehensive, high quality agreement that allows tariff-free entry of goods meeting the origin rules into each other's market. It also offers market access for a wide range of services sectors and importantly a common undertaking to cut red tapes and facilitate trade.

You may ask, are these relevant to small and medium enterprises (SMEs)? My answer is Yes. And this brings me to the second point about Smart Strategies. The rise of the digital era is opening up markets previously beyond the reach of the usually resources limited SMEs. Now with web-based and hand-held devices, there are more affordable ways for SMEs to expand their business globally through on-line platforms and cross-border supply with the support of modern logistics and e-commerce tools. There are already many success stories globally and locally.

Our FTAs are also catching up with the times. They need to remain modern and relevant to new business models and technology advancements. For example, our recently signed FTA with Australia contains a dedicated chapter on electronic commerce which recognises especially "the value of competitive markets in electronic commerce for enhancing consumer choice and supporting the growth of SMEs." Specifically, the two sides agree not to impose customs duties (tariffs) on all electronic transmissions including content transmitted electronically. There are also other forward-looking provisions to facilitate e-commerce, including electronic signatures, paperless trading, protection of personal information, and freedom of locality of computing facilities.

Technology has indeed revolutionised the global supply chain and we are keen to help SMEs to participate in the process. We are well aware that the rise of technology and innovation can be a two-edge sword in business ventures. While it opens up new opportunities, it also gives rise to new risks and challenges. Legal, contractual, security, financial risks are common challenges to our businesses especially SMEs when they venture into overseas markets including through on-line platforms and other e-commerce tools.

Studies revealed that high legal cost and language barriers associated with dispute resolution pose significant challenges to SMEs involved in international trade. In the regional context, Hong Kong, as a separate member of APEC, has been spearheading the development of an APEC-wide cooperative online dispute resolution (ODR) framework for SMEs in business-to-business transactions and the use of modern technology for dispute resolution and electronic agreement management.

The proposed ODR will make use of blockchain technology and smart contracts to facilitate the prevention and resolution of contractual disputes as well as enhancement of contract management. This will support SMEs, which have limited resources to deal with costly litigation process, to have speedy dispute resolution in cross-boundary trade. The initiative has gained wide support in APEC. Hong Kong, together with a growing number of interested economies, has been gearing up for the launch of a pilot ODR platform under the framework. We will try our best to take forward the initiative with a view to having the pilot platform rolled out as soon as practicable.

A key to support e-commerce and e-trade is modern logistics. On this, we are sparing no effort in promoting trade facilitation initiatives to further reduce the time and cost in particular for cross-boundary deliveries. Again, for example, our FTA with Australia allows Hong Kong producers and Australian importers to make self-declaration concerning the products' origin, saving their need and time to obtain Certificates of Origin (COs) from the competent authorities.

We are also modernising and including new trade facilitation initiatives under CEPA that we have with the Mainland. As you may be aware, the Mainland and Hong Kong signed in December last year a new Agreement on Trade in Goods under CEPA which not only fully implements zero tariffs on imported goods of Hong Kong origin, but also introduces trade facilitation measures for the development of the Greater Bay Area (GBA). These measures include commitments to further shortening the overall customs clearance time for goods, implementing facilitation measures for food processed in Hong Kong with materials originating from the Mainland, etc.

One particular initiative that I should highlight is the "Single E-Lock Scheme". The Single E-Lock Scheme uses single e-lock technology and GPS devices to reduce the number of duplicated inspections of shipments at the land control points, which seeks to achieve streamlined clearance processing and speedy cargo flow in the GBA. The Scheme on the one hand enables our Customs Authorities to enforce a robust regulatory system, and on the other offers trade facilitation by streamlining the customs process. Since January this year, the number of clearing points under the Scheme in Guangdong Province has increased from 32 to 51, covering a number of Mainland cities in the GBA including the first customs clearance point set up in Zhuhai.

I should add that CEPA is a living document. Introduction of further liberalisation measures under the CEPA framework is one of the initiatives supported by the Outline Development Plan for the GBA. With the target of advancing full liberalisation of trade in services in the GBA, the Government will proactively work with the relevant Mainland authorities to further enrich the content of CEPA, with a view to providing Hong Kong businesses, especially our SMEs, with better market access to the nine Pearl River Delta municipalities in the GBA.

Without saying so, thus far, I have introduced to you two aspects of the work of my department, namely promoting Hong Kong's commercial relations with trading partners through active participation in the WTO and APEC and through negotiations of FTAs and IPPAs, as well as providing various licensing, certification and registration services in fulfilment of Hong Kong's international and bilateral obligations.

The third important element of our work is to provide support services to enhance the competitiveness of SMEs and their long-term development. The Support and Consultation Centre for SMEs (SUCCESS) in my department on the 13th floor of the Trade and Industry Tower in the Kai Tak area regularly organises seminars/workshops on topics of interest to SMEs. Over the past two years, close to 40 seminars have been organised on topics related to e-commerce opportunities, digital marketing, expansion of overseas markets such as opportunities in the Mainland and ASEAN, managing market risks and financial management such as banking matters, etc.

The Small and Medium Enterprises Committee (SMEC) also organises activities to help SMEs make use of digital technologies and e-commerce in business. Seminars have been organised on topics such as bank account opening and maintenance, the international landscape and regulatory requirements in anti-money laundering, Fintech initiatives such as Faster Payment System, Virtual Banking and Common QR Code, etc.

Apart from these, my department has also been supporting the development of SMEs through measures including administering funding schemes to assist enterprises, in particular SMEs, in obtaining finance, exploring export markets and enhancing their overall competitiveness.

I would encourage you to visit my department's website, www.tid.gov.hk, for more information about the FTAs and our support programmes for SMEs. We look forward to continue working closely with AmCham and keeping in contact with the trade and businesses. You are most welcome to contact us to provide any feedback and let us know how we may assist the trade further.

I notice that AmCham is hosting a few seminars this month around the theme "smart", including the workshop this morning and another one to be held around noon today on Smart Infrastructure. And tomorrow, there will also be one on digital technologies. These are very well chosen topics and I would leave the time to the panel experts to share their practical advice and insights on how to grasp the opportunities and manage the risks. I wish you all a fruitful workshop this morning. Thank you.

Ends