Chief Executive Carrie Lam
Today, the Silk Road has once again been reborn in the form of the Belt & Road Initiative. The Belt & Road Initiative embarks upon a new vision, connecting countries and people from the East through the Central and Middle East to the West. This initiative has become a highly inclusive and a non-static growing platform, as more and more countries are interested in joining.
Central Asia has long been the ancient Silk Road's East-West bridge for goods and cultural exchange. Take for example Samarkand of Uzbekistan. It is one of the major Silk Road cities that have been at the crossroads of world cultures, and having a history of more than two and a half millennia. Its historical monuments are listed UNESCO heritage sites, underlining the significant role played by Eurasia countries in the furtherance of economic and cultural linkages.
Similarly, Hong Kong has for centuries served as a converging point of East-West trade routes, an entrepot for Mainland China, and a melting pot of cultures. Today, Hong Kong continues to be a central East-West link. And under the Belt & Road Initiative, that role is now expanding, creating new horizons for Hong Kong.
We are actively seeking out closer ties with Eurasian countries. Last year, we signed an Air Services Agreement with Kazakhstan and, earlier this year, we entered into Comprehensive Double Taxation Agreements with Russia and Belarus. Hong Kong's trade with the region is also expanding. In the first six months of this year, year-on-year increases have soared - from 37% with Russia to 97% with Kazakhstan.
Designed for promoting connectivity, including trade and investment flows as well as infrastructure connectivity, countless collaboration opportunities have emerged under the Belt & Road Initiative. It is up to all of us to capitalise on them.
In this regard, Hong Kong has many strengths to offer. We are amongst the world's leading financial capitals, as well as a major regional asset-management centre. For the past two years, the Hong Kong Stock Exchange has led the world in funds raised through initial public offerings.
We handle some 70% of global renminbi transactions, providing a wide range of renminbi services and products - from dim sum bonds to insurance. Our financial talent pool is deep, multilingual and as connected with the money markets of the Mainland as with the world at large. Hong Kong is, in short, ideally positioned to serve as the Belt & Road's fund-raising and risk-management capital.
We are built on a much broader base than finance alone can provide. Under "one country, two systems", Hong Kong is both part of China and blessed with our own economic, social and legal systems. We are a global city with an open market, happily married to the free flow of capital, goods and information. Our free enterprise system benefits from the rule of law and our independent judiciary. We are simply the world's freest economy. A city that has long attracted business from the Mainland and throughout the world creates confidence, and confidence is what business wants.
Indeed, we are home today to over 8,200 foreign and Mainland companies, more than 1,400 of which serve as regional headquarters. Eurasian companies are most welcome to join us here in Hong Kong, where the playing field for business is always level, always open to companies wherever they come from.
It helps that our taxes are as low and uncomplicated as you'll find anywhere. And, I'm pleased to say, they're about to go even lower. In my maiden Policy Address delivered last month, I announced new tax measures geared to benefit small and medium-sized companies. Specifically, our profits tax rate on the first $2 million - that is just under US$260,000 - of a company's profits will soon be cut in half, to 8.25%. In addition, we will give companies a 300% tax deduction on the first $2 million of their research and development expenditure, with the remainder set at a 200% deduction.
It is in such a dynamic business environment that the fast-emerging opportunities presented by the Belt & Road will rise and multiply. Among others, infrastructure development is the driving force of the Belt & Road Initiative. In this respect, Hong Kong has much to offer in professional service areas such as consultation, planning, design, construction, project development, operation management and capacity building, etc.
We have abundant seasoned professionals in such different sectors, and more importantly, our professionals have proven experience in working on such large-scale, international projects. As well, here you can find a wide range of world-class professional services including insurance, accounting, business and legal services, all of which combined creates a comprehensive and modern services platform that should be useful for Belt & Road pursuits.
The Belt & Road Initiative is the new driving force of the global economy over the next few decades, with strong emphasis on international co-operation. It will attract more international interactive trading systems and investment flows. Now is the time for us to awaken to the Belt & Road chimes. I believe with us jointly acting together, the initiative will materialise into reality.
Chief Executive Carrie Lam gave these remarks at the Belt & Road Innovation & Development Forum on November 3.
