Hong Kong is known for our commitment to free trade. That commitment extends to cross-boundary trade in the form of our Closer Economic Partnership Arrangement with the Mainland, what we call CEPA for short. CEPA is a unique free-trade pact that opens up Mainland markets to Hong Kong companies. Under CEPA, all products of Hong Kong origin have started to enjoy zero tariffs in the Mainland market since January 1, 2006, upon applications by local manufacturers and upon the CEPA rules of origin (ROOs) being agreed and met.

And because CEPA rules are nationality neutral, foreign firms incorporated in Hong Kong enjoy the same benefits as local companies. As at end-February this year, more than 31,000 Certificate of Origin applications under CEPA had been approved. Textile and clothing products accounted for almost 28 per cent (27.8%) of them. Indeed, textiles and clothing companies have been among the biggest beneficiaries of CEPA, with an export value of goods concerned amounting to more than HK$1.6 billion.

Currently, almost half (45.7%) the companies leveraging CEPA are of foreign interest. We welcome more overseas enterprises to join them; there is still plenty of room. Remember that CEPA applies nationally, to the whole of China and its 1.3 billion people, so just imagine what it could do for your customer base!

CEPA has consolidated our unique role as a two-way platform between the Mainland market and the rest of the world, placing us at the centre of sourcing activities in the region. With our substantial regional production knowledge and professional management skills in the textiles and clothing industry, we will continue to serve as a sourcing hub for quality and value-for-money products to cater for diverse customer preferences.

As you all know, the textiles and clothing industry – in Hong Kong, in Asia and around the world – faces a range of challenges, from supply chain coordination to identifying the right markets for finished products. Since 2005, quota restraints affecting international trade in textiles and clothing are largely gone. Local companies have since been looking at ways to reposition themselves, move up the value chain and explore new markets. Yet high tariffs and other forms of trade barriers still dog us. These will continue to be the subject of negotiations under the World Trade Organization (WTO).

WTO Members have set clear goals for the Doha Round of negotiations which – when adopted – will slash tariffs and open up new opportunities for the textile and clothing industry. As a staunch supporter of free trade, Hong Kong participates in the negotiations and supports tariff cuts and the removal of trade barriers.

Indeed, you would expect nothing less from an economy that is consistently ranked as the freest in the world. We have retained top spot in the Heritage Foundation’s Index of Economic Freedom for 14 years in a row. This status reflects real advantages for businesses in Hong Kong, such as a low and simple tax regime. In his Budget last month, the Financial Secretary lowered profits tax by one percentage point to 16.5% and salaries tax also by one percentage point to 15%. We have no VAT, no inheritance tax, no capital gains tax and zero tax on investment. And for those wine lovers, no wine tax.

Importantly for trade, there are no tariffs on imports or exports and we don’t offer export subsidies. We have found that the best way to promote a business-friendly environment is to establish a level playing field for all and let market forces play out.

We are on the right track, but we can always do better. We will continue to diversify into services which are complementary to textiles and clothing manufacturing, such as design, logistics, merchandising, marketing, brand building, financing activities, and strategic planning. Our local textiles and clothing industry will continue to move up the value chain towards Original Brand Manufacturing. Design and innovation, in particular, fashion design as well as research and developments in advanced technologies for textile materials and textile processing, will be part and parcel of our textiles and clothing sector. By further developing on such scores, we are confident that our brand names will continue to grow into overseas markets.

Thank you and I wish all of you will find Hong Kong your best trading partner.