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| Logistics hub: Employers manage air cargo handling at the Hong Kong International Airport. Hong Kong is gearing up to seize business opportunities generated by the introduction of China’s “One Belt, One Road” infrastructure development initiative. (Courtesy of Hong Kong Air Cargo Terminals Ltd. ) |
Government and business leaders here have been gearing up to make Hong Kong the platform for financial, trade and professional services for the new business opportunities expected to be generated by the implementation of China’s ambitious “One Belt, One Road” (OBOR) infrastructure development initiative to link Asia and Europe.
Hong Kong is organizing what it calls the first Belt-and-Road summit to be held on May 18 where government and business leaders, including those from Indonesia, will discuss business opportunities arising from the initiative.
“Hong Kong will play an important role in supporting infrastructure development as well as facilitating China’s investment along the Belt-and-Road route covering more than 60 countries”, Francis Ho, the associate director general of InvestHK, told journalists from ASEAN countries in a pre-summit briefing here last week.
Ho said Hong Kong would bank on its strategic role as the gateway to the world’s second economy--mainland China-- its efficient regional logistics hub for sea and air cargo and its position as the world’s third-largest financial center.
The ambitious OBOR initiative was launched by Chinese President Xi Jinping in early 2014 to link China with Europe through central and western Asia by inland routes and with Southeast Asia by sea routes. Since then China’s policy banks such as China Development Bank, China Exim Bank have been quite aggressive in lending to infrastructure projects in Southeast Asia, especially Indonesia.
William Chui, director of international relations at the Hong Kong Trade Development Council (HKTDC), the summit organizer, said infrastructure development in the ASEAN region would be one of the main themes of the summit.
The OBOR initiative certainly requires huge investment and project contracting and will drive big demand for a wide range of professional services.
“In this connection, Hong Kong should be able to find a considerable array of opportunities in financing, project risk management, infrastructure and real estate services,” Chui added.
Led from the highest levels of the government the OBOR push is backed by substantial financial firepower from the US$50 billion Silk Road Development Fund, the $100 billion Asian Infrastructure Investment Bank that has now been joined by almost 60 other countries, including Indonesia, as shareholders.
Ho cited another important role of Hong Kong as what he called the conduit of investment between mainland China and the rest of the world.
“More than 50 percent of China’s investment overseas was made through Hong Kong,” Ho said, adding that last year alone $58.5 billion worth of mainland China’s investment overseas was made through Hong Kong.
These numbers, Ho pointed out, highlighted Hong Kong’s role as a super-connector, in which foreign companies use Hong Kong as a base to invest in mainland China, and mainland Chinese companies increasingly use Hong Kong as a platform to make global investments and acquisitions and to raise funds.
Latest data at the HKTDC showed that as of last year, 1,400 foreign companies used Hong Kong as their regional headquarters.
Hong Kong is also the second-largest stock exchange in Asia after Tokyo, and is the sixth-largest hub for foreign exchange trading.
“In fact, last year the Hong Kong stock exchange (HKEX) was the largest in terms if initial public offerings with 138 new listings, raising US$30 billion in fresh funds,” HKEX’s vice president for publc reations Scott Sapp said.
More than 1,885 companies were listed in the Hong Kong exchange as of March.
Philip Yang, honorary chairman of the Hong Kong International Arbitration Centre, elaborated the experience and legal expertise of the thousands of local and international legal firms in Hong Kong that are important for firms intending to do business in mainland China.
“We have deeper understanding of the laws, culture and business practices in China which are key to minimizing the risk of commercial disputes,” Yang said, giving an assurance that the arbitration center was politically independent.
HSBC’s senior executive George Leung agreed that its long international business experience and knowledge about China made Hong Kong the best partner for foreign companies to do business with or in China and for mainland Chinese companies doing business around the world.
The renminbi (RMB) has become an international currency after the IMF’s decision last December to include the RMB in the Special Drawing Rights (SDR), the basket of currencies used by the IMF as its unit of account, joining the US dollar, euro, pound sterling and the yen.
“Hong Kong is the largest center for international RMB transactions and the renminbi liquidity here now amounts to more than 1 trillion [US$154 billion], “ Leung added.
C.C. Tung, Chairman of Orient Overseas Ltd. (OOL), the holding company of one of the world’s largest integrated logistics service providers, cited the role of Hong Kong’s seaport as the world’s fifth-busiest container port, which last year handled 20.1 million twenty-feet equivalent units (TEUs), with 256.6 million tons in total port throughput.
“The efficient port services make us the most popular sea-transportation hub in Asia, which can arrange multi-stage cargo routes,” Tung pointed out.
Orient Overseas Container Line Ltd., one of OOL’s integrated logistics service providers, is also active in Indonesia.
On top of that, the Hong Kong International Airport is also the busiest air cargo hub in the world, claimed Mark Whitehead, the chief executive of Hong Kong Air Cargo Terminal Ltd.
Last year, according to HKTDC, the three Hong Kong air cargo terminals, which operate around the clock, all year long, handled 4.38 million tons of freight.
