Speech by DGTI at ASEAN Community Reception (English only)
Thursday, September 27, 2012
Following is the speech by the Director-General of Trade and Industry, Mr Kenneth Mak, at the ASEAN Community Reception today (September 27) :
Distinguished guests, ladies and gentlemen,
Good evening. It gives me great pleasure to attend this reception and to have a valuable opportunity to meet representatives of governments and business leaders from ASEAN countries. ASEAN is Hong Kong's close neighbour and a very important trading partner. Hong Kong enjoys a good relationship with ASEAN and is continuously working to strengthen its partnership and co-operation with ASEAN in many areas of mutual interest.
To further this objective, last November Hong Kong made a formal request to join the ASEAN-China Free Trade Area (or the ACFTA in short). The ACFTA is an evolving platform for progressive liberalisation of trade and investment between ASEAN countries and China, with the ultimate objective of fostering closer economic integration and sustainable economic growth in the East Asian region. Allow me to take a few minutes to brief you on why Hong Kong wishes to join the ACFTA, and the benefits that our joining will bring to ASEAN and its business community.
As you all know, Hong Kong is a free and open economy serving as a regional trading, financial and logistics hub. I believe many of our ASEAN business friends present today have invested in Hong Kong for this reason. In particular, owing to its unique position, Hong Kong is an important conduit of trade and investment between ASEAN and the Mainland of China. Bilateral trade between ASEAN countries and Mainland China amounted to some US$360 billion in 2011 and has been growing rapidly. A significant portion of this trade was physically routed through Hong Kong, or was arranged or financed by Hong Kong. Hong Kong's participation in the ACFTA will improve the efficiency of such trade, and more generally the flow of capital, entrepreneurship, technology and people within the region, enhancing the overall competitiveness of the ACFTA. This will be a win-win situation for all of us.
At present, Hong Kong adopts a policy of zero import tariffs and has few restrictions on services trade and foreign direct investment. Hong Kong's participation in the ACFTA will bring legal certainty of such policies to ASEAN enterprises selling their goods and services to Hong Kong, or investing in Hong Kong. I believe businesses would love certainty in government policies and regulations. By the same token, with the investment promotion and protection provisions in the ACFTA, Hong Kong investors will have an even greater incentive to channel more investments into the ASEAN region, creating more jobs and contributing to economic development in the host countries, particularly the relatively lesser developed ASEAN member states. As some of you may be aware, Hong Kong was the world's fifth largest and Asia's second largest provider of foreign direct investment in 2011, with total outflow of direct investments from Hong Kong amounting to US$82 billion. I have no doubt that the proportion of such investments going into the ASEAN region will increase significantly after Hong Kong becomes a party to the ACFTA.
As I mentioned earlier, Hong Kong is a key trading and logistics hub in East Asia, serving as an important platform for trade and investment between ASEAN and the Mainland of China. For Hong Kong, becoming a member of the ACFTA will enable us to strengthen this intermediary role, as well as to be a strong catalyst for better connecting East Asia with markets in other regions. With more than 3,700 multinational companies having set up their regional headquarters or regional offices in Hong Kong, we are well-positioned to serve in this role. Furthermore, being a global financial centre and the pre-eminent offshore Renminbi centre, Hong Kong may provide high-quality financial and management services for trade and investment activities between ASEAN, Mainland China and the rest of the world.
In gist, Hong Kong's participation in the ACFTA will create positive synergies and bring about a bigger pie, benefiting all the parties concerned. It will not be a zero-sum game. This is well supported by the positive findings of two economic studies recently commissioned by the ASEAN Secretariat and the Hong Kong Chinese General Chamber of Commerce respectively.
We are glad that governments of ASEAN countries are generally positive towards Hong Kong's request to join the ACFTA. Individual ASEAN governments are conducting domestic consultations with a view to assessing the overall implications. We hope that the ASEAN business community would share our vision. We appeal to you for supporting us, by conveying to the relevant authorities of your home country the positive benefits of our participation, so that all parties may reap those benefits as early as possible.