Thursday, 23 July 2015

Belt-Road will drive global economy

Financial Secretary John Tsang

The global economy has long been yearning for a vision that is powerful enough to create the necessary momentum to bring us out of the global financial gloom that began in 2008. The world economic outlook, as we speak, is still clouded by considerable uncertainties and volatilities. Demand in the advanced economies remains lackluster. Growth potential anemic. The key markets are expected to encounter varying degrees of economic slowdown this year. But we do see this glimmer of hope along the not so distant horizon.


The One Belt, One Road initiative can provide the world economy with a fresh and much-needed impetus to the otherwise mundane global growth outlook. Judging from the overwhelming participation by nations from different continents in the establishment of the Asian Infrastructure Investment Bank, the AIIB, which is the key financial institution supporting the development of the Belt-Road initiative, I think it is apparent that the global market regards this vision as the driving force for the world economy in the coming years.


HK’s advantages

I have every confidence that Hong Kong can help implement and help deliver in full the enormous possibilities and opportunities presented by the Belt-Road initiative. We have all it takes, from the perspectives of history, geography, financial and human resources, market infrastructure and network, as well as business and professional know-hows, to contribute to the successful and sustainable development of this valuable package.


Hong Kong is blessed with the unique advantages offered by the "One Country, Two Systems" framework.  We enjoy a special intimate working relationship with the Mainland. As one of the international financial and business hubs of the world, we are extensively-connected with markets around the world. These attributes firmly place us as the principal gateway connecting the Mainland market with the 60 plus economies along the Belt-Road, in particular those emerging economies that dominate the landscape.


For us in Hong Kong, the Belt-Road initiative is an once-in-a-lifetime opportunity that brings to us and to the world in an unprecedented way immense business opportunities. To put things in context, the Belt-Road initiative could likely be the guiding path for us, for our economic development for the next 30, or even 50 years.


Hong Kong's pillar industries - trade and logistics, financial services, professional services as well as tourism - together with some of our emerging industries, including the creative and technology sectors, all stand to benefit from different aspects of the Belt-Road initiative.


Hong Kong is an international business centre that boasts an extensive market network. Business conventions and exhibitions, some of which are the largest of their kind in the world, are staged right here in Hong Kong. Coupled with our status as Asia's major aviation and maritime hub, we are the premier centre for business facilitation and high-end logistics services.


On the finance side, Hong Kong is the world's largest offshore renminbi business centre and Asia's largest asset management centre. The financing options that are offered here in Hong Kong, from public offerings and loan syndication, to private equity funds and raising funds through Islamic finance have already attracted a large pool of quality capital seeking reasonable returns. Hong Kong's financial sector can serve the Belt-Road initiative by providing countries with the necessary funds for infrastructural and business development at reasonable cost.


Professionals and experts

Another one of Hong Kong's prominent strengths is the large pool of world-class professionals with expertise in areas such as accounting, law, architecture, engineering management and more. These professionals boast the requisite competence and experience to lead consultancies, construction projects, operations and management of the many infrastructural projects under the Belt-Road initiative.


I am certain all the legal experts present here today would agree that with our well-recognised and robust legal system, Hong Kong is the ideal centre for resolving potential commercial disputes arising from business collaborations and inevitable disagreements among different parties.


Tourist attraction

Hong Kong has always been a popular destination for tourists. Last year, we welcomed over 60 million visitors. As a shopping paradise and a culinary capital, Hong Kong will have plenty of appeal to people living along the Belt-Road.


Beyond our traditional pillar industries, Hong Kong can also take up, for example, the role as the training hub in the region for developing talents for emerging economies. Potential new markets will also open up for our technology and creative sectors, including the film and cultural industries, our education and healthcare services as well as product testing and certification services.


To translate the potential of the Belt-Road initiative into economic benefits, I think it is important for us to follow three guiding principles.


Development guideline

First of all, we must abide by market rules, and let the market decide what is the most efficient way to allocate resources, to pursue reasonable returns, and to manage risks in a prudent manner. The Government, on the other hand, should play the part of facilitator, and engage itself in a more active role only when the market has found it difficult to operate.


Secondly, we should seek to achieve long-term, sustainable benefits for all the participants in different collaborations under the Belt-Road initiative. The services offered and products generated should be environment-friendly, as well as commercially viable.


Finally, we must ensure fair and equitable treatment of capital regardless of origin. This, in a way, will reinforce the credibility and sustainability of the collaborations under the Belt-Road initiative.


With the collective wisdom of the business sector, academia and governmental organisations, we can seek to understand more about the different perspectives of the Belt-Road initative, and become better prepared in consolidating ourselves in seizing the opportunities ahead of us.


Financial Secretary John Tsang gave this speech at "One Belt One Road" International Forum.

Otmane El Rhazi
Department of Commerce
Economic Development
Text/Mobile, +44 7414 782 320

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