Hong Kong cannot afford to miss opportunities offered by the Asian Infrastructure Investment Bank

City will be required to contribute billions as it seeks membership, but the returns from playing a key role in the lender will be worthwhile

PUBLISHED : Tuesday, 12 April, 2016, 11:00pm
UPDATED : Tuesday, 12 April, 2016, 11:00pm

Hong Kong’s strengths have been used to great economic advantage when it comes to the mainland. Those same assets are our advantage as China’s “One Belt, One Road” policy gathers pace. The Asian Infrastructure Investment Bank, an integral part of the strategy, is an important door to opening those opportunities. Membership has obligations, but they are ones that should be embraced if our city is to move forward and thrive.

Non-sovereign areas like Hong Kong were unable to become founding members of the Beijing-based bank, which was launched in January with 57 nations signed up. But with the bank’s structure in place, new members can be considered and our city is among several dozen entities that have shown interest. The lender’s president, Jin Liqun (金立群), has been promoting the idea that our international financial position could be leveraged to raise and manage funds. There is no doubt that the expertise exists; what is uncertain is whether lawmakers will support membership conditions.

Asia’s infrastructure market has huge potential, with an estimated US$60 billion required each year until 2022 to fulfil the region’s needs. The transport and energy sectors require the most investment and expertise. With US$100 billion in capital, the AIIB can play a significant role. Hong Kong’s global connectivity, experience, resources and geographical location make it perfectly placed to be a financial management hub for the bank.

Highways, railways, ports and power plants are the core of Asia’s needs. Hong Kong is skilled at dealing with such large-scale projects, having expertise in investment, financing, bond issuance and foreign exchange management. With experienced consulting and legal firms, a role can be taken in negotiating, preparing contracts and arbitration.

Hong Kong could join the bank as a sub-sovereign member by the end of the year, should discussions go smoothly. There would be a financial commitment, likely to be in the billions of dollars. Pan-democrat lawmakers have been putting politics ahead of our city’s well-being and using filibustering to stall funding for essential projects; doing that with AIIB membership would damage growth prospects. With regional economies slowing and warnings like the British commercial think-tank Z/Yen’s downgrading of Hong Kong to fourth place behind Singapore in its latest global ranking of financial centres, there is every need to grasp opportunities.