Hong Kong： “Super Conductor”of Belt and Road Construction

Tian Yuan

Last November， Hong Kong and ASEAN signed a free trade agreement as well as an investment agreement to further promote the investment and economic and trade cooperation of countries participating in the Belt and Road Initiative. Recently， China Report ASEAN conducted an exclusive interview with Mrs Do Pang Wai-yee， director-general of Hong Kong Economic and Trade Affairs in Jakarta， on topics such as the development of economic and trade cooperation between Hong Kong and ASEAN member states and the unique role that Hong Kong plays in the construction of the Belt and Road.

>>China Report ASEAN： What are some of the highlights of the economic and trade cooperation between Hong Kong and ASEAN member states in recent years？

Mrs Do Pang Wai-yee： Since July 2017， the Hong Kong Economic and Trade Office in Jakarta （HKETOJ） has been performing various functions conferred by the Government of the Hong Kong Special Administrative Region. The HKETOJ represents Hong Kong in the handling of matters between Hong Kong and the ASEAN Secretariat—Indonesia， Malaysia， Brunei and the Philippines—especially to advance the economic and trade cooperation and cultural and people-to-people exchanges.

ASEAN has become Hong Kongs second largest trading partner and fourth largest services trading partner. From 2012 to 2016， the annual average growth rate of trade scale had reached 3.4 percent. In 2016 alone， the total volume of trade between the two sides was US$107 billion. From January to September 2017， the total volume of trade between Hong Kong and ASEAN was US$88 billion， up 13 percent compared to the same period of 2016.

In 2016， the value of trade between Hong Kong and Indonesia was US$5 billion. From January to September 2017， the figure reached US$4.1 billion， an increase of 18 percent over the same period in 2016.

Mutual investment between Hong Kong and ASEAN reached US$99 billion in 2015， and the two sides are each others sixth largest source of investment. According to statistics from the Indonesia Investment Coordinating Board， Hong Kong invested US$2.2 billion in Indonesia in 2016， becoming Indonesias fourth largest source of investment after Chinas mainland. From January to September 2017， Hong Kong injected US$1.4 billion of investment into Indonesia， making it Indonesias sixth largest source of investment.

It took three years for Hong Kong and ASEAN to reach consensus before both sides signed a Free Trade Agreement （FTA） and a related Investment Agreement in November 2017. The two agreements will take effect after necessary procedures are completed.

>>China Report ASEAN： What is special about these two agreements compared to past documents？

Do： The agreements are comprehensive in scope， encompassing trade in goods， trade in services， investment， technical cooperation and dispute settlement mechanisms， as well as other related areas. The agreements will bring about legal certainty and better market access for cooperation between China and ASEAN.

On investment protection， agreements will be based on fair and equitable treatment and facilitate further promotion of bilateral trade and investment exchange.

In services trade， the FTA will create more business opportunities and market access with better legal certainty for the service sector and service providers from both sides.

In addition to specific exemptions， other items to be removed or reduced include restrictions on the proportion of external funds， types of service providers or businesses， value of service transactions， number of employees， legal entity categories and regulations on joint ventures. Business travelers， internal-transfer personnel， contracted service providers， independent experts and professionals will be allowed to enter the country temporarily on a basis of individual promise.

ASEAN member states have committed to opening market to Hong Kongs competitive service sectors. Sectors to benefit include professional services， telecommunications， engineering， education， financial services， tourism， transport and arbitration services. Hong Kong also made a reciprocal commitment to allow comprehensive service industries from ASEAN countries to enter its market.

Alongside investment facilitation promoted by the Investment Agreement， both sides are also committed to providing non-discriminatory treatment and investment protection for non-service sector investment， allowing free transfer of investment and earnings. Compensation will be provided in case of investment losses due to expropriation， war， armed conflict， internal strife or similar events.

The agreements also designate specific chapters for technical cooperation. Hong Kong and ASEAN agree to conduct technical cooperation in five major fields， namely customs cooperation， professional services， small and medium-sized enterprises cooperation， trade facilitation and logistics and e-commerce， to enhance execution efficiency of the agreements.

>>China Report ASEAN： Could you please elaborate on the main reasons behind such extensive work on Hong Kong-ASEAN economic and trade cooperation？

Do： Since the Belt and Road Initiative was proposed by China in 2013， Hong Kong， a “super conductor” of the Belt and Road， has seized the opportunity to strengthen economic and trade cooperation as well as connectivity with countries along the Belt and Road. Hong Kong has ensured its professional services effectively cooperate on construction of the Belt and Road in terms of policy coordination， financing facilitation， consulting and accounting and development of human resources.

Secondly， deepened high-level exchange and interaction between Hong Kong and ASEAN member states has been conducted frequently. Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor made visits to Singapore， Thailand and Myanmar shortly after taking office in July 2017. Lam attended Asia-Pacific Economic Cooperation meetings in Da Nang， Vietnam， in November 2017. Indonesia President Joko Widodo and Rodrigo Duterte， president of the Philippines， visited Hong Kong in 2017.

Thirdly， Hong Kong is starting to realize the importance of ASEAN member states. In the past， only one Hong Kong Economic and Trade Office in Singapore offered consulting and services for economic and trade cooperation in the ASEAN region. But now， HKETOJ is fully operational and Hong Kong is planning to set up an Economic and Trade Office in Bangkok.

Fourthly， people from the Hong Kong business community are confident about the markets of Southeast Asia.

>>China Report ASEAN： What is your outlook on the economic and trade cooperation between Hong Kong and ASEAN in 2018？ Will the HKETOJ introduce new measures and services？

Do： ASEAN is a key hub of construction of the Belt and Road， and will receive a large investment injection from Chinas mainland this year. So， connectivity of economic and trade sectors， especially the linking of professional services， will expand rapidly.

For instance， the ASEAN Secretariat is based in Indonesia， which is not only the economic and political center of Southeast Asia but also the largest economy in ASEAN. Indonesia has a large population of young people and its ever-expanding middle class represents vast potential of future development.

Therefore， Indonesia is a focal point for Hong Kong to conduct foreign economic and trade cooperation because it serves as the hub of our economic network covering entire Southeast Asia as well as a pivot to link the Indo-Pacific. So Hong Kong will use its brand strength and services with its own characteristics to promote our business opportunities and construction of the Belt and Road in ASEAN.

First， Hong Kong will design a roadmap for business expansion from capitals and top-tier cities of ASEAN member states to second- and third-tier cities.

Secondly， Hong Kong will hold economic and trade fairs and workshops and sponsor a variety of cultural activities to attract more partners in trade and investment from ASEAN and the world at large to look to Hong Kong and attract more young students from Southeast Asia to study in Hong Kong.

Thirdly， Hong Kong will present a series of themed events with Hong Kong characteristics to echo Chinese New Year celebrations， the 18th Asian Games 2018 in Jakarta and Palembang and annual meetings of both World Bank and International Monetary Fund in Bali.

Fourthly， Hong Kong will continue to shine in its role as a contact point for construction of the Belt and Road and fully promote connectivity and cooperation in various fields in the countries along the Belt and Road to make big contributions to the joint construction of a community with a shared future and a stable and prosperous Asia.