KUALA LUMPUR: A senior Hong Kong official is advocating using the special administration region (SAR) as a launchpad for Malaysian companies tapping into China’s Belt and Road Initiative (BRI) projects.
“Hong Kong is an international financial, trading and logistics hub that can be a springboard for success for Malaysian companies,” said Edward Yau, secretary for commerce and economic development from the Hong Kong SAR government.
“Hong Kong is a strong partner and neighbour that Malaysian companies could capitalise on. With Hong Kong being a free port, Malaysia’s exports can reach and pass through our city without any tariffs or duties,” Yau added.
He outlined a slew of other reasons to support his call and they included the city-state’s status of “one country, two systems”.
“Hong Kong is considered one of the best cities to establish and run a business. It scores high on strategic location, productive work-force, stable economic and political environment, attractive tax regime, pro-business environment, world-class infrastructure, and an effective legal system,” Yau said at a session with Malaysian businesses and media on opportunities in Hong Kong last week.
The World Bank, he noted, recently ranked the city-state as third among 190 economies for ease of doing business in 2019, improving from its fourth position in 2018.
On its “One country two systems”, Yau said: “Hong Kong will continue to have its own governmental system, legal, economic and financial affairs, including trade relations with foreign countries, all of which are independent from those of China.”
Under the US-Hong Kong Policy Act of 1992, Washington treats Hong Kong as a separate region from mainland China even after the former British colony transferred to Chinese rule in 1997. That includes treating Hong Kong as a separate customs territory.
Therefore, Hong Kong exports to the US are not subject to the tariffs that US President Donald Trump’s administration has imposed on goods from mainland China.
Yau said Hong Kong is also the world’s leading offshore renminbi business hub.
Currently, about 60 per cent of mainland China’s outbound investment goes to or through Hong Kong.
As more funds go into BRI projects, Hong Kong’s world-class services would be increasingly called upon to support new deals and investments, he said. There were no restrictions on inward and outward investments, no foreign exchange controls and no foreign ownership restrictions.
Furthermore, businesses that are set up in Hong Kong (i.e. any Hong Kong company regardless of nationality) can now benefit by gaining preferential access to the mainland China market from the Closer Economic Partnership Arrangement (CEPA), a free trade agreement between Hong Kong and mainland China.”
Yau said Hong Kong continued to be a leading international financial centre thanks to its deep liquidity and premier financial infrastructure that are still intact and growing.
Hong Kong is home to almost 80 of the world’s top 100 banks, he said, adding that its asset and wealth management sector managed about US$3.1 trillion with nearly two thirds of that coming from non-Hong Kong investors”
“There are many ways our professional services can partner with you in Malaysia as your country embarks on different large scale development projects. Hong Kong engineering and architectural consultancy services could help with project planning, preliminary design, feasibility studies and more.
“Malaysian companies that are searching for cutting edge technology or starting a new business that is innovation and technology oriented, will find the Greater Bay Area a new base to grow and succeed.
“The Guangdong-Hong Kong-Macao Greater Bay Area, which comprises Hong Kong as well as Macao and nine municipalities nearby, is developing itself as a global technology and innovation hub. We are now exploring many different exciting endeavours with our Mainland China counterparts, including the development of the Guangzhou-Shenzhen-Hong Kong-Macao,” he added.
Last year, total bilateral trade between Malaysia and Hong Kong was valued at almost US$29 billion, up 56 per cent from 2017.
Malaysia is Hong Kong’s eighth largest trading partner and second largest trading partner in the Asean bloc, with which Hong Kong now enjoys a free trade agreement. Hong Kong-Asean trade totalled US$137 billion last year.
Hong Kong was the third largest source of foreign direct investment in Malaysia at US$18 billion (RM75.03 billion) in 2018.