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Hong Kong economy

Tech and public works to drive growth for Hong Kong businesses in Southeast Asia, commerce minister says after visit

Transport and infrastructure projects supplanting traditional industries in region that accounts for hefty share of city’s trade

PUBLISHED : Sunday, 25 March, 2018, 4:35pm
UPDATED : Monday, 26 March, 2018, 11:53am

Focusing on transport and infrastructural projects in Southeast Asia will pay off for Hong Kong professionals and businesses, the city’s commerce minister said, as the region’s economy is more driven by technological and public works investments than traditional industries.

Secretary for Commerce and Economic Development Edward Yau Tang-wah also expressed confidence that Hong Kong would maintain strong trade ties with Vietnam, despite analysts describing the China-Vietnam relationship as complicated. He believed Beijing’s relationship with the country had remained “cordial”.

Yau spoke exclusively to the Post at the end of his five-day trip to Cambodia and Vietnam last week. He led a delegation of more than 40 leaders from the city’s major business chambers, professional bodies, start-ups and manufacturers, and met Vietnam Prime Minister Nguyen Xuan Phuc as well as Cambodia’s commerce minister Pan Sorasak and public works minister Sun Chanthol.

It was Hong Kong’s first official trade delegation since the city signed two long-awaited free-trade agreements in November with the Association of Southeast Asian Nations (Asean). The deals allow Hong Kong businesses to enjoy lower tariffs, fewer restrictions and better protection in the bloc’s 10-member countries in future.

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Yau said the delegation saw how Cambodia and Vietnam were now keen to attract overseas professionals and financiers, not just manufacturers, to work on large-scale infrastructure projects, including railways and ports.

“In the past decade or so, Asean has grown to become Hong Kong’s second-largest trading partner, and surpassed the United States and the European Union,” he explained.

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“What it needs from Hong Kong changed from simply direct investment on manufacturing to a more diversified portfolio [including professional services].”

In 2016, bilateral trade between Hong Kong and Asean was HK$833 billion (US$106 billion), or 11 per cent of the city’s total bilateral trade. That was second only to mainland China, which accounted for half of Hong Kong’s total trade.

That year, the total trade between Hong Kong and Vietnam was HK$126 billion (US$16 billion); between the city and Cambodia, it was HK$9 billion (US$1.15 billion).

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Yau said while Cambodia was still seeking to attract manufacturers, the country’s officials had been more eager to work with overseas legal, accounting, insurance and architectural firms to push infrastructural and investment projects forward.

He explained Vietnam previously relied heavily on Hong Kong’s investment in manufacturing, but now it needed the city to help develop technologically.

As a “one-stop shop” for financial and professional services, Hong Kong was well-placed to tap into business opportunities with Asean, Yau added.

According to the Asian Development Bank, as much as US$1.7 trillion per year is needed for infrastructure development in Asia until 2030.

China has been pushing its Belt and Road Initiative in recent years to encourage trade and investment from Asia to Europe.

They need Hong Kong to play an active role in national economic development
Edward Yau, commerce minister

Beijing signed a free-trade pact with Asean in 2010 and maintained an amicable relationship with countries such as Cambodia. But it has been at odds with others in the region, including Vietnam,over competing claims in the South China Sea, through which US$5 trillion in shipping trade passes annually. The sea is believed to sit atop vast gas reserves.

Last November, Hanoi and Beijing agreed to keep the peace in the waters during a state visit by President Xi Jinping.

But tensions resurfaced earlier this month when the US aircraft carrier Carl Vinson visited Vietnam for five days.

Yet Yau harboured no worries about the city’s trade with Hanoi being hindered by the diplomatic complications.

“[Vietnam’s] prime minister met us, and the local newspapers made it clear they need Hong Kong to play an active role in national economic development,” he said, adding that both Vietnam and Cambodia recognised the city’s strengths under the “one country, two systems” principle.

Under the principle, Beijing guaranteed the city would have an independent judiciary and its capitalist system and way of life would remain unchanged for 50 years after it was returned from British rule in 1997.