Interview with Mr Frederick Ma

Mr Frederick Ma
Mr Frederick Ma
Secretary for Commerce and Economic Development
Commerce and Economic Development Bureau, Govt of Hong Kong Special Administrative Region
Commerce and Economic Development Bureau, Govt of Hong Kong Special Administrative Region

Beginning as a trading port in the 19th century, Hong Kong has developed into a leading financial centre. The country maintains a highly capitalist economy built on a policy of free markets, low taxation and government non-intervention. Hong Kong is the world's eleventh largest trading entity, with the total value of imports and exports exceeding its gross domestic product (GDP). During 2004 to 2007, the GDP grew at an average annual rate of 7.3% in real terms, to HK$1,627.5 billion (US$208.7 billion) in 2007. Per capita GDP reached HK$235,134 (US$ 30,157). The textiles industry is one of Hong Kong's major export earners, accounting for 3.1% of total domestic exports and employing 7.2% of the local manufacturing workforce (2006). Commerce and Economic Development Bureau of the Hong Kong Special Administrative Region comprises the Commerce, Industry and Tourism Branch, the Communications and Technology Branch and the Office of the Government Chief Information Officer. The Commerce, Industry and Tourism Branch is responsible for policy matters on Hong Kong's external commercial relations, inward investment promotion, intellectual property protection, industry and business support, tourism, consumer protection and competition. In addition to this, the Bureau also oversees the operation of ten executive arms, namely the Invest Hong Kong, Intellectual Property Department, Trade and Industry Department, Hong Kong Observatory, Post Office, Innovation and Technology Commission, Television and Entertainment Licensing Authority, Radio Television Hong Kong, Office of the Telecommunications Authority, and the overseas Hong Kong Economic and Trade Offices. Textiles and Clothing industry falls under the regime of Trade & Industry department of the Bureau. Mr Frederick Ma is the Secretary for Commerce and Economic Development since July 2007. His policy responsibilities include external commercial relations, inward investment promotion, intellectual property protection, industry and business support, tourism development, consumer protection, competition, information and telecommunications technology, broadcasting and film services, overall view of creative industry, innovation and technology issues. Prior to his present post, Mr Ma was Secretary for Financial Services and the Treasury for five years. He has also served on key posts in Pacific Century Cyberworks Limited, J.P. Morgan Private Bank, Chase Manhattan Bank, Kumagai Gumi (HK) Limited and RBC Domini

Skimming through history, we see the period 50s to 60s had witnessed Textiles serving as the backbone for the entire economy and dominating all other sectors of Hong Kong’s GDP. How about present times?

The textile and clothing business is still central to Hong Kong’s economy, accounting for 39% of our domestic exports and 11% of our re-exports among all merchandises in 2007.

Taking the talk further, can we have a broad summary on Textiles and Clothing industries in Hong Kong?

Hong Kong has emerged as a sourcing centre for a variety of industries, including textiles and clothing. A growing number of international trading houses are coming to the city to establish buying offices or intermediaries here. Advanced infrastructure and world-class professional services combined with the tacit knowledge of our enterprises – covering international rules and regulations, customer preferences, and regional sourcing knowledge – make for short lead times for delivery of quality clothing.

Although we have worked hard to establish a positive trading environment, we could not have planned or predicted our biggest competitive advantage – our proximity to the Mainland of China. We just happened to be in the right place at the right time! Today, the Pearl River Delta is known as the ‘factory of the world’, and many of our manufacturers have been operating across the boundary for decades. And as people in the Mainland become increasingly well off, on the back of China’s booming economy, the increasingly affluent middle-class have emerged as a new target market for high quality products and the latest fashion trends.

In your view, what all are the possible repercussions of globalization on your country's Economy?

Hong Kong – like many of our competitors in the region – has had to move with the times. As Asia’s world city, we have attached great importance to our role as an international business centre. Recently, TIME magazine has recognized Hong Kong as a lynchpin of the globalised economy, along with New York and London. The magazine coined the name “Nylonkong” to describe the interconnectivity between the three cities in our globalised world. Our international role has greatly enhanced the quality, range and efficiency of services we can provide to the textiles and clothing industry.

Can you please acquaint us and our millions of readers & visitors on CEPA Provisions and Trade Measures by Hong Kong government affecting Textiles & Clothing?

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.

Traversing towards success, which all are/could be the hurdles Hong Kong’s textile and clothing industry faces today or tomorrow?

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.

Concluding the talk, can we have your parting message for our millions of readers, visitors and investors worldwide?

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.

Published on: 05/05/2008

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of