Hong Kong set to invest HK$1.2 billion for stake in Asian Infrastructure Investment Bank
City will submit funding application to Legco in second quarter of the year
The city’s government will soon seek approval from the Legislative Council to buy HK$1.2 billion worth of shares in the Asian Infrastructure Investment Bank (AIIB) over five years, in the clearest sign of the city’s participation in the institution.
According to government documents to the Legco, the central government had submitted the AIIB application on behalf of the city. Non-sovereign applicants have to go through existing members that look after their international relations.
Membership to the institution is open to members of the Asia Development Bank, of which Hong Kong is part.
The money will be paid in five instalments – HK$240 million per year – for 7,651 shares out of one million, translating to an about 0.7 per cent stake in the bank.
The AIIB, headquartered in Beijing, is considered to be part of China’s “go global” strategy. It aims to support infrastructure developments in Asia, estimated to cost US$40 trillion (HK$310 trillion) from 2015 to 2030.
The Hong Kong government’s plan to join the AIIB appeared to have support across the political spectrum. “It is a good opportunity for Hong Kong professionals to be able to engage in work sponsored by AIIB, be it in engineering, consultancy, financing and project management, just to name a few,” said Kenneth Leung of the accounting constituency. “The HK$1.2 billion is calculated based on a percentage of our GDP, and is a reasonable commitment,” said Leung, who is also the financial affairs panel’s deputy chairman.
Abraham Razack, a pro-establishment lawmaker representing the real estate sector, said it would help to promote the city’s status as an international financial centre.
“We need to find new ways to grow our economy – whether it is One Belt, One Road or Asia, they are big markets that are developing with big opportunities,” said Razack, a member of Legco’s financial affairs panel.
The government also said that if Hong Kong is unable to join as a full member, it can still attend AIIB functions as a member of the Chinese delegate. But this would not be an ideal way to reflect the city’s unique status under the “one country, two systems.”
The city did not make it to the list of 57 countries that formed the AIIB in December 2015, but at the end of 2016, AIIB decided to recruit new members and there are now about 30 potential new members.
Legco’s financial affairs panel will discuss the issue on March 16, and the government plans to submit a funding application to the finance committee in the second quarter of this year.