Mr Mojs, ladies and gentlemen, Good afternoon. Thank you for ...

- 2 -Mainland China routed through Hong Kong. We are wellaware that the huge growth of Mainland China’s economyalso offers exciting possibilities for building greater tradelinks between Hong Kong and Slovakia.For many years, Hong Kong has served as the main gatewayfor international enterprises entering the Chinese market. Lastyear, around 80% of cargoes handled by Hong Kong weregoing to, or coming from, South China. Around 20% ofChina’s total imports and exports are handled by Hong Kong.In recent years, neighbouring ports in South China have beengearing up their logistics capabilities and offering services atlower costs. Competition is a fact of life for Hong Kong, and Ibelieve the same applies here in Europe.In Hong Kong, these challenges keep us on our toes in ourefforts to maintain our position as the springboard toMainland China. By moving up the value chain, andleveraging on the business-friendly environment created bythe Hong Kong SAR Government, our logistics companies areable to stay ahead and to capitalise on the flourishing Chineseeconomy. To a considerable extent, Hong Kong’s continuingadvantage as a preferred logistics centre is due to the ongoing

- 3 -modernization of our operations, and the constant efforts tooffer improved and value-added services.Nowadays, global sourcing is prevalent. Supply chainsoften cover various parts of the same country, differentcountries, or countries in different continents. Sourcing,manufacturing, consolidation and transportation are highlyspecialized, and interwoven. A small hiccup in any onepart of the supply chain can cause any number of bigproblems: missed berthing slots, re-adjusted schedules,production bottlenecks, extra warehousing costs, and worstof all, missed delivery deadlines and tarnished credibility.In view of this, logistics companies are specialising moreand more in the provision of supply chain managementservices. Speed, efficiency, reliability and transparency arekey success factors for these value-added logistics services,and have increasingly become the profit drivers for allkinds of businesses.Recent developments in the logistics industry play to HongKong’s strengths. So, I’d like to take the opportunity to briefyou on some of these points.

- 4 -Firstly, we have a strong transportation network, which offersmaximum flexibility and efficiency in supply chainmanagement. Our air, sea and road links are well developedand well connected. Our airport is the world’s busiest forinternational air cargo and operates around-the-clock. Lastyear, it handled 3.58 million tonnes of cargo.On the maritime side, Hong Kong’s port saw record highcontainer throughput of 23.5 million TEUs in 2006 – thesecond highest in the world.Our port and airport are supported by a smooth flow of roadtraffic between Hong Kong and Mainland China. We have ahighly efficient and transparent Customs regime, whichprovides round-the-clock service at control points. Around90% of our cross-boundary goods vehicles can complete allclearance procedures within one hour.We recognise that, to fully exploit the advantages ofinter-modal transportation, then state-of-the-art informationtechnology is required. Given the complexity of modernlogistics operations, and the large number of parties involved,the adoption of information technology is all the more

- 5 -important because it allows for seamless informationconnectivity between all those concerned.Hong Kong is a technologically advanced city. Our digitalinclusiveness ranks 5 th in the world. Our mobile penetrationrate of 129% is one of the world’s highest – there are actuallymore mobile phones than people in Hong Kong. Ourbroadband networks cover virtually all commercial andresidential buildings, while household penetration ofbroadband is about 67%.Our logistics industry is striving to build on these peripheralstrengths through increased automation. For instance, theDigital Trade and Transportation Network System, launchedin 2005, provides an open, neutral and secure electronicplatform for logistics players to exchange information in anefficient, reliable and low-cost manner.All of this infrastructure, physical or electronic, contributes tomaking Hong Kong a leading logistics hub. Yet, as Imentioned earlier, neighbouring ports in Southern China arefast catching up with us. So, we constantly need to innovate tostay ahead of the pack. Aside from moving up the value chain,

- 6 -there are other factors that give Hong Kong an edge andunderpin our past and future success.We have a clean and efficient government with strong respectfor the rule of law and an unwavering commitment to creatinga business-friendly environment. We have a tried and trustedlegal system, upheld by an independent judiciary. Ourcommon law system provides a secure environment and alevel playing field for business. Hong Kong has also beendeveloping its role as a regional centre for dispute resolution.Certainly, since China’s accession to the WTO, Hong Konghas become the venue for regional arbitration. Today, awardsmade in Hong Kong can be enforced in more than 130jurisdictions, while wards made in Hong Kong or MainlandChina are reciprocally enforceable.Our business environment is welcoming and friendly. HongKong has been rated the world’s freest economy by theHeritage Foundation every year since the index was firstpublished in 1995. We believe in free trade and the free flowof capital. We do not have any foreign exchange control andour currency is freely convertible. Our taxes are low and ourtax system simple. Profits tax is only 17.5%, while salaries tax

- 7 -is on a sliding scale capped at 16%. We don’t have anyvalue-added or sales tax, nor any capital gains tax. And, onlyHong Kong-sourced income is taxable.Hong Kong is not just a platform for international businesseswanting to enter the China market; we are also the location ofchoice for Chinese enterprises wanting to enter the globalmarket. So, you get the best of both worlds in Hong Kong. Wehave a huge pool of entrepreneurs with experience inMainland China and a strong international business network;they are ready and able to bring together Chinese enterprisesand foreign trading partners, and create opportunities for bothparties.Another advantage that only Hong Kong offers is ourenhanced access to the Mainland in terms of goods andservices. In 2004 we implemented a Closer EconomicPartnership Arrangement with China, commonly known asCEPA. This is just like a free trade agreement between HongKong and China. Under CEPA, Mainland China imposes zerotariffs on Hong Kong manufactured goods, and enhancedaccess in 27 services areas. Because we have a level playingfield for business, CEPA is ‘nationality neutral’. For