Getting ahead of the game

Hong Kong is poised to play a role in offshore yuan financing, institutional intermediation, legal arbitration and other professional services provision to facilitate the Belt and Road Initiative, the China Daily Asia Leadership Roundtable heard on Wednesday.
However, the city must learn fast, and the government needs to do much more than its competitors, in view of the Belt and Road Initiative which promises to be a game-changer, panelists at a forum said.
The roundtable forum, themed “Belt and Road Initiative: Implications and Opportunities for Trade and Investments” — held as part of the Asian Logistics and Maritime Conference — took place on Nov 17 and 18.
Various panelists from the banking, academic, aviation and regulatory sectors examined the opportunities and challenges ahead for Hong Kong.
Proposed by President Xi Jinping in 2013, the Belt and Road Initiative is the national strategy that aims to enhance connectivity for 4.4 billion people from more than 60 economies with a gross economic volume of around $22 trillion. Since its announcement, more than $250 billion worth of infrastructure projects have been contracted.
“Banks in Hong Kong need to revitalize the old-fashioned businesses, such as maritime cargo insurance, shipping finance and aircraft leasing, to capture businesses with more opportunities. The Belt and Road Initiative also involves Islamic financing and, luckily, the city has started this business, otherwise, we may be out of the game,” said Andrew Fung Hau-chung, executive director and head of global banking and markets at Hang Seng Bank.
The world’s largest offshore yuan liquidity is also a niche area banks in Hong Kong can leverage on, Fung said. “It provides new opportunities for banks in Hong Kong to use the yuan for the liability. Hong Kong is lucky in this regard.”
Academicians highlighted Hong Kong’s role in institutional intermediation and legal arbitration, besides financing.
“Many Russian business firms have already come to Hong Kong to take advantage of the city’s deep connections and institutional framework,” said Thomas Chan Man-hung, head of the China Business Centre at Hong Kong Polytechnic University.
Mega Maldives Airlines Chief Commercial Officer Sandeep Bahl noted that aviation will provide an important connector to achieve people-to-people bond and cultural exchanges advocated by the Belt and Road Initiative.
“Once we have people-to-people and cultural exchanges, these things will grow and then we have super-connection within five hours anywhere you go from Hong Kong and this may even get down to two-and-a-half hours,” Bahl told delegates at the roundtable.
“The Belt and Road Initiative helps mainland enterprises’ capital and production capacity to go out, but these firms do not know much about foreign markets. Hong Kong can offer professional services in mergers and acquisitions, as well as financing and legal expertise, to help mainland companies go out,” Shenzhen Qianhai Authority’s Principal Liaison Officer for Hong Kong Affairs Witman Hung Wai-man noted.
However, Hong Kong also faces various challenges ahead under the Belt and Road Initiative.
“Hong Kong’s challenges lie in learning and re-engineering, that is to acquire new languages, knowledge and capabilities for non-Anglo-Saxon practices and civilizations, so that Hong Kong can upgrade local knowledge to provide intensive services by becoming an open platform for firms and talents from the Eurasian and South Asian countries,” Chan cautioned.
Hong Kong should learn from London, Chan said. “See how London resurges to become the top financing center since 1950. We must take a holistic approach on how to improve our services,” he envisaged.
People have to look at tax treaty/tax treatment regarding cross-border leasing activities, according to Fung. “We are left behind it,” he said.
Hung said it was not enough for Hong Kong to just play “super-connector”.
“In the Internet age, the business value decreases if we are only the intermediary. Hong Kong has to provide additional services related to various initiatives,” he added.
Contact the writer at oswald@chinadailyhk.com
Source: http://www.chinadailyasia.com/2015-11/20/content_15347311.html