Secretary for Commerce & Economic Development Gregory So
The Belt & Road Initiative is a global and broad vision to boost co-development by better linking up economies ranging from the sophisticated to the emerging ones. The Initiative inspires us to think beyond conventional geography and geo-political confines.
Through promoting stronger policy co-ordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bonds among economies spanning Asia, Europe and Africa, the Belt & Road Initiative seeks to generate a new driving force of development in this 21st century.
As new markets open up, investments and capital can find new outlets and risks are diversified; while infrastructure improves, connectivity will be expanded and trade barriers reduced; and increased trade flow across countries will bring economic prosperity and enhance social integration across regions, just as the old Silk Road did in ancient times.
Let us look at Hong Kong. Where do we fit into all this? If integration through trade and co-operation is the ultimate objective of the Belt & Road Initiative, Hong Kong is well-positioned to help in both tangible and intangible ways.
Trade is Hong Kong’s lifeblood. We have a long history of international trade over the years. According to the latest world trade survey done by the World Trade Organisation, Hong Kong is the sixth largest exporter of world merchandise, and the eighth largest commercial services exporter. At the same time, we import an enormous amount of goods and services, ranking the fifth and 12th respectively in the world. We trade with over 100 economies globally, in various forms and combinations.
Connectivity is one of the golden threads running through the Belt & Road Initiative, and I am proud to say that facilitating connections is also what Hong Kong is good at. This is how we see Hong Kong will contribute to, and benefit from the Belt & Road blueprint.
As a special administrative region of China that provides the combined advantages of “one country” and “two systems,” Hong Kong is an international gateway to Mainland China which offers unique physical and intangible connectivity to the Mainland through privileged trade and social access. In physical terms, we are located literally at the heart of Asia and at the gateway of Mainland China, enabling us to reach out to both Mainland China and 48% of the Belt & Road population within five hours.
Hong Kong is also a conduit through which the international community and Mainland China makes connections.
Sound fiscal footing
As with all large investment and development programmes, having a sound financial and investment platform is crucial to success. As a global financial hub, Hong Kong hosts 70 of the world’s top 100 banks; our well regulated, open capital markets make us an ideal base for fundraising and investment; and as the world’s largest offshore Renminbi centre and one of the world’s top ODI (outward direct investment) hub, we are ready to aggregate global and Mainland Chinese capital for Belt & Road-related projects.
Going hand-in-hand with our financial prowess is our stable legal system and free flow of information. Together with the wide use of English and established trade practices, Hong Kong is the ideal base for global investment, risk management, dispute resolution and project management. Our people too, are multicultural, highly skilled and have extensive networks reaching both the Mainland and the world.
These advantages have made Hong Kong the “super-connector”, bringing together the rest of China and the rest of the world, and that, of course, includes economies along the Belt & Road. This also makes us a magnet for business because we are a preferred venue for regional headquarters or representative offices for multinational companies. At last count, about 8,000 international companies have a commercial presence in Hong Kong, with 3,798 regional headquarters and regional offices established in Hong Kong by parent companies from other economies last year.
The direct benefits of this global cluster are many: engaging over 250,000 people in Hong Kong, these companies not only create employment in the city, but also boost and sustain the international experience of our workforce. Hong Kong is also open in terms of our people’s receptiveness of different cultures and values.
Our long history of openness has connected us to various places in the world and rendered Hong Kong one of the most user-friendly and adaptive international cities, with a global view of the world.
As a driver of the Belt & Road Initiative, Mainland China will invariably be interacting with a global footprint of countries. To facilitate this interaction, I must mention here the advantages of doing business through Hong Kong. The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), implemented 13 years ago, provides preferential market access to Hong Kong service suppliers as well as tariff-free treatment for products of Hong Kong origin. That means international businesses established in Hong Kong can enjoy this preferential treatment as with our domestic suppliers. CEPA has become one of the nexus connecting foreign businesses to China through Hong Kong, and will continue to be a freeway serving traffic of the Belt & Road.
We ask foreign investors every year why they choose Hong Kong to place their businesses. The response has been consistent over the years – top reasons are low and simple tax, free flow of information, corruption-free government, rule of law, independent judiciary, productivity of our workforce, followed by stability and security, free port status, geographical convenience, communication and transport infrastructure.
Hong Kong has achieved all these with our institutional heritage, and I am confident that the same set of strong institutional advantages will make Hong Kong a reliable and beneficial partner to industries and businesses from the Belt & Road, and those who are looking for a well-paved platform to connect their businesses to other Belt & Road economies.
In playing a role in the Belt & Road Initiative, we as a government will continue to build infrastructure that facilitates the free flow of investment, trade and people. We are also keen to continue encouraging further trade and investment liberalisation. These include, for example, establishing more free trade agreements, investment promotion and protection agreements, double taxation avoidance arrangements, as well as other formats of regional, plurilateral and multilateral trade rules. The economies where my distinguished panellists come from are all engaging with Hong Kong in some of these trade liberalisation or facilitation negotiations, and we are seeking similar agreements with a wide range of economies along the Belt & Road.
Physical infrastructure and logistics networks remain a high priority to help boost connectivity. In this, Belt & Road countries are also well-served by going through Hong Kong. Hong Kong boasts one of the world’s busiest container ports, providing some 350 services a week to more than 500 destinations worldwide.
Our 700 shipping-related companies offer a wide range of services, from ship management, broking and chartering to finance, marine insurance, legal, arbitration and many other support services. Our airport has been the busiest cargo airport in the world for more than 15 years. In the years to come, you will see further leaps of quality and handling capacity in our transport and logistics infrastructure.
Of course, advanced infrastructure requires the right people to manage it. Hong Kong attracts some of the world’s best professionals, from engineers and surveyors to architects, designers and planners, not to mention other professionals in financing, insurance, arbitration, risk management and project consulting. All of them are excited to take part in the development, management and operation of infrastructural projects under the Belt & Road Initiative. I am very encouraged to hear the supportive keynote speech affirming the Central Government’s support for Hong Kong to play an active role in these areas. Many of them have already gained very visible presence in overseas projects.
Take an easy example, our subway system, the Mass Transit Railway (MTR), other than carrying five million passengers every weekday in our domestic lines, it is also managing many mass transit systems in the Mainland of China, Asia and Europe. That includes managing the Crossrail of the UK, which is a significant infrastructure project currently in Europe. The MTR will also set up an academy to train personnel in rail management and operation.
The global economy is in need of a new and strong driving force in the 21st century. We believe that the Belt & Road Initiative will be that much-needed force. With inherent attributes and a unique advantage as the gateway between China and the world, Hong Kong has a clear role, and we are keen to take part in this endeavour.
Secretary for Commerce & Economic Development Gregory So gave these remarks at the Belt & Road Summit “Investment in Belt & Road Countries: Policymakers’ Perspective” panel session.
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