HONG KONG: Chief Secretary of Administration Henry Tang said during an address yesterday, that the impact of the Dubai debt crisis on the Asian market was "not going to be huge."

The reason he said is that the Middle East is not a major market of banks in Hong Kong or other Asian regions.

Tang indicated that the Dubai crisis surprised many people because it happened as signs of recovery became more encouraging. That, he said, accounts for the immediate rise in tension in the stock market caused by the Dubai crisis.

He also said he believed the United Arab Emirates (UAE) to be capable of working out the problems, without Dubai's falling into bankruptcy. "In the long term, I am not too worried about the situation," he said.

On the other hand, Tang warned that many countries had printed a lot of money since the recession began, which could cause inflation and asset bubbles.

Tang spoke before an audience of 230 business associates from 23 countries at the Hong Kong Forum of the Hong Kong Trade and Development Council (HKTDC). Tang also promoted the unique significance of Hong Kong during a time of global rebalancing.

Tang held that opportunities will emerge from the financial crisis for Hong Kong, since the global growth engines are indeed shifting away from traditional markets and towards Asia, and China in particular.

As the single largest investor on the mainland and the world's freest economy, Hong Kong, Tang said, was the best place for worldwide companies to enjoy greater access to markets throughout China.

Tang described Hong Kong's position in China's rapid economic growth as "a perfect fit." "They (the mainland) have natural resources and abundance of labor, space and everything in terms of resources. We have the know-how expertise, financial capacities and marketing capacities," he said.

Tang also stressed the "low and simple tax system" of Hong Kong. Companies pay no more than 16.5 percent in profits tax under the system. Death duties were also abolished, he said.

As one benefit of the tax policy, Hong Kong has become the world's second largest auction centre for wine. That's a result of the government's reducing the duty on wine to zero, Tang said.

Tang also cited the six key industries in which Hong Kong seeks to achieve global standing. He noted, the new industries are expected to broaden the city's economic base.

Nevertheless, concerns were also raised about whether Shanghai poses a threat to Hong Kong's position as the gateway to the mainland. Tang said China soon would be the world's second largest economy, with multiple service centers. "The pie will be big enough for everyone to share," he said. "We will be realistic and focused," he added.

(HK Edition 12/02/2009 page4)