Speech by FS at Hong Kong - Myanmar Business Luncheon in Yangon, Myanmar

Hong Kong (HKSAR) - Following is the speech delivered by the Financial Secretary, Mr John C Tsang, at the Hong Kong - Myanmar Business Luncheon in Yangon, Myanmar, today (June 27):

President Aung, Ambassador Yang, distinguished guests, ladies and gentlemen,

I am pleased to be here in Myanmar and to meet you all today.

My thanks to the organisers of this luncheon for bringing us together for this important occasion.

Since the reforms in Myanmar began just over two years ago, this country's attractiveness as a global business partner has been perhaps one of the world's worst-keptsecrets.

Frequent media reports and first-hand experiences all point to Myanmar as a must-be place for business opportunities. This is the case today and, because of our region's great potential, it will continue to be the case for the foreseeable future.

In terms of first-hand experience, I understand that we had some difficulty in booking a hotel in Yangon. A lot of the hotels were already full, or close to full.

No doubt, this huge demand for rooms is a true reflection of the interest from overseas business people to come to Myanmar and learn more about the new opportunities in this country.

Fortunately for us, everything has worked out well.

Our hotel is great and the warm hospitality that we have received here in Yangon has been encouraging. This is my first visit to Myanmar, so thank you for this great introduction to your country.

I look forward to seeing much more of the country and to meeting business and political leaders in the next couple of days.

Of course, our business community needs no new introduction to Myanmar. Among other things, our Hong Kong Trade Development Council has arranged several missions for our business people to come here and explore the great potential in different sectors.

The Hong Kong SAR Government fully supports these and other initiatives to promote business and financial links between us.

Indeed, we believe that Hong Kong can play an important role in connecting markets across our region as Asia, especially Southeast Asia, continues to grow, develop and become even more interconnected.

We are also grateful for the full support we have received from Myanmar for Hong Kong's ambitions to pursue a Free Trade Agreement (FTA) with the 10 member states of ASEAN.

Hong Kong already has strong ties with ASEAN, including Myanmar. As a trading bloc, ASEAN is Hong Kong's second largest trading partner in terms of goods trade and fourth largest in terms of services.

An ASEAN-Hong Kong FTA will enable us to strengthen these links and ensure that our city can contribute more deeply to the sustainable economic growth of our region. Throughout our city's development we have gained valuable experience in manufacturing, in developing effective supply chains, in adopting new technologies and in identifying new growth markets.

We are eager to share these experiences with Myanmar as your country embarks on a new phase of development.

As the world's freest economy, Hong Kong thrives by maintaining open borders, open competition and an open mind to new ideas.

The Hong Kong Government does its best to ensure a vibrant and level playing field for business. Companies from Hong Kong, from the Mainland of China and from around the globe all compete side by side on an equal footing in our unique corner of China.

Hong Kong is unique because it is an international city in China but outside the Mainland. Since Hong Kong's return to China in 1997, we have continued to develop under the principle of "One Country, Two Systems".

On the one hand, we have all the advantages of being one country, which is China.

At the same time, we maintain our own tried and trusted systems, separate from those in the Mainland. We have our own legal system, our own financial system and our own style of capitalism based on free flows of people, goods, services, money and information.

With Hong Kong's level playing field, all companies, local and foreign firms, can enjoy our low and simple tax system. The maximum rate of profits tax in Hong Kong is a 16.5 per cent flat rate and salaries tax is capped at 15 per cent.

We have no capital gains tax, no inheritance tax and no GST or VAT. Only income sourced in Hong Kong is taxable in Hong Kong.

In its latest "ease of doing business index", the World Bank rates our city as the second easiest place on earth to do business. We have an effective rule of law and an independent judiciary underpinning our common law system.

We have a highly educated and also very hardworking labour force.

In Hong Kong it is easy to start a business without any minimum capital requirement. It is easy to make the right business contacts and it is quick and easy to file a tax return. All this leaves entrepreneurs with more time and money to focus on the important job of getting their business ventures off the ground.



This business-friendly environment has transformed Hong Kong from a once "barren rock" into a hotbed of economic activity. Over 7,200 companies from the Mainland and overseas operate in our city. More than half of these companies have their regional headquarters or regional offices based in Hong Kong.

Under "One Country, Two Systems", Hong Kong is an ideal location for international businesses looking to the markets in Mainland China.

At the same time, Chinese firms use Hong Kong as a launch pad to reach international buyers, suppliers and consumers.

With this in mind and Hong Kong's traditional excellence in service delivery, it is little surprise that the Hong Kong International Airport is the world's busiest for air cargo, one of the busiest for passenger traffic and, more importantly, one of the best in terms of traveller experience. An airport expansion plan is under way to cope with growing demand, including demand for new direct flights between Hong Kong and Yangon by Dragonair that began operating in January this year.

More flights enable more people and more cargo from Myanmar to connect directly to markets in Hong Kong. And because we are an international transport hub, these connections extend by air and by sea to destinations worldwide, including cities across Mainland China.

Beyond business and logistics, Hong Kong is a focal point for our region's financial connectivity.

Around 70 of the world's largest 100 banks operate in Hong Kong. We are a leading asset management centre. The Hong Kong Stock Exchange is the second largest stock market in Asia, behind only Japan in terms of market capitalisation.

The first company from Mainland China listed in Hong Kong in 1993.

Twenty years later there are now 740 Mainland enterprises listed in Hong Kong, which account for almost half of the total number of listed firms.

As China's global financial centre, we also have a key role to play in the internationalisation of the Mainland currency, the Renminbi. With open capital markets, transparent regulation and international connectivity, our city is the Central Government's preferred testing ground for currency liberalisation.

The first offshore Renminbi banking services were launched in Hong Kong in 2004. The first offshore Renminbi bonds were issued in our city in 2007.

And in 2009, Hong Kong companies became the first to settle offshore trade with Mainland partners using Renminbi.

Today, companies here in Myanmar and around the world can take full advantage of Hong Kong's position as the primary centre for offshore Renminbi business. They can raise capital by issuing Renminbi bonds in Hong Kong.

They can settle trade with Mainland partners using Renminbi instead of a third currency. Myanmar's financial institutions can build up their Renminbi portfolios and offer a range of Renminbi-denominated products to their clients.

As Myanmar's economy continues to expand and open up, new opportunities for co-operation will undoubtedly arise in financial services as well as logistics, infrastructure, professional services, manufacturing and many other key areas.

Don't just take my word for it. Among the Hong Kong business delegation here with me in Myanmar, we have high-powered representatives from the financial services, real estate and infrastructure sectors.

They are keenly aware of the potential for stronger business links with Myanmar.

After Mainland China and Thailand, Hong Kong is the third largest source of foreign direct investment into Myanmar, accounting for 15.5 per cent of your country's FDI stock as at the end of last year.

I am pleased to tell you that Myanmar and Hong Kong have agreed to explore the possibility of entering into a bilateral Investment Promotion and Protection Agreement (IPPA). This will send a positive message to our business communities that both governments are committed to promoting bilateral trade and investment that will bring economic benefits to both sides.

I hope that we can start formal negotiations on a Hong Kong - Myanmar IPPA before long.

Hong Kong has a great deal of experience in opening up new markets and establishing strong links with partners around the world. For more than three decades, our city's commitment to free and open trade has contributed to the opening up and reform policies in Mainland China.

We have world-class infrastructure in terms of transport and information technology that connect Hong Kong to the rest of the world.

Over many years, we have developed a full network of services, including legal, financial, logistics, design and tourism services, just to name a few.

We welcome more companies from Myanmar to take full advantage of Hong Kong's strengths to connect with new markets in Mainland China.

Because we maintain a level playing field for business, foreign firms incorporated in Hong Kong can enjoy the same benefits as local firms under our unique free trade pact with the Mainland of China. This is called the Mainland and Hong Kong Closer Economic Partnership Arrangement, or CEPA for short.

CEPA provides tariff-free access to Mainland markets for goods that carry the "Made in Hong Kong" label. In most cases, meeting the rules of origin criteria for CEPA is relatively straightforward.

Also under CEPA, Hong Kong-incorporated firms enjoy preferential treatment in accessing 48 services areas in the Mainland.

Since CEPA was launched in 2003, over HK$50 billion worth of goods have received tariff-free treatment. This has saved companies a total of some HK$3.5 billion in tariffs. CEPA not only breaks down barriers to trade with China, it could save money for your companies too.

Ladies and gentlemen, these are extraordinary times for Myanmar's development.

Our region, including our nation, China, is also at an exciting growth phase. In the next few years, we can expect economies across Asia to become even more interconnected and interdependent.

We look forward to meeting the challenges ahead and to grasping the opportunities that this transition will undoubtedly bring. In particular, we look forward to using our advantage as a free and open economy to connect the possibilities in Myanmar with the opportunities in China and with our business partners around the world.

Thank you very much.

source: 7th Space
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