LCQ5: Efforts in taking forward Belt and Road Initiative
Following is a question by the Hon Christopher Cheung and a reply by the Secretary for Commerce and Economic Development, Mr Gregory So, in the Legislative Council today (June 1):
The Silk Road Economic Belt and 21st Century Maritime Silk Road (the Belt and Road Initiative) is a concept of multi-national economic co-operation proposed by our country in the recent two years. The Chief Executive has indicated in his Policy Address this year that a steering committee for the Belt and Road (Steering Committee) and a Belt and Road Office (the Office) will be set up, with the former responsible for formulating strategies and policies for Hong Kong's participation in the Belt and Road Initiative, and the latter responsible for taking forward related studies and co-ordinating work between government departments and local organisations, as well as liaising with the central ministries and provincial and municipal authorities. Besides, the Asian Infrastructure Investment Bank (AIIB) is an integral part of the Belt and Road Initiative. The Government has indicated that it will send officials as part of the delegation of China to attend AIIB meetings and participate in the preparatory work for establishing AIIB, and it has also seconded experts to AIIB to support AIIB's operation. In this connection, will the Government inform this Council:
(a) of the progress of the preparatory work for the Steering Committee and the Office; the government department responsible for the preparatory work for the Office, and how that department handles the co-ordination work; the progress of the Government's participation in the preparatory work for establishing AIIB;
(b) whether the Steering Committee and the Office will examine Hong Kong's edge in taking forward the Belt and Road Initiative, especially how the development deliverables in innovation and technology in Hong Kong can be leveraged to consolidate Hong Kong's status as a treasury centre in the Asian region and as an international financial centre, foster the long-term development of Hong Kong, and increase employment opportunities for the young people in Hong Kong; and
(c) whether the Government, apart from bidding successfully the organisation of the Belt and Road Summit in Hong Kong last month, will seek to conduct ministerial conferences relating to the Belt and Road concept in Hong Kong in future, so as to give further play to Hong Kong's role as an international metropolis?
The Belt and Road Initiative has an extensive coverage. It promotes common development of countries along the Belt and Road and strengthens exchanges and co-operation in the areas of social, cultural, economic, finance and infrastructure through policy co-ordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bond.
After consulting relevant policy bureaux and departments, my reply to the Hon Christopher Cheung's question is as follows:
(a) The Government is setting up an inter-departmental steering committee for the Belt and Road led by the Chief Executive, which will be responsible for formulating strategies and policies for Hong Kong's participation in the Belt and Road Initiative. A Belt and Road Office will also be established to take forward related studies, and co-ordinate work among government departments and other organisations, such as the Hong Kong Trade Development Council (HKTDC) and the Hong Kong Tourism Board. It will also liaise with the central ministries, provincial and municipal authorities, as well as various sectors, professional bodies and community organisations in Hong Kong. In addition to the Chief Executive and the three Secretaries, the steering committee will also comprise certain Directors of Bureaux. The actual composition and size of the steering committee will be decided having regard to the development of strategies and policies. The HKSAR Government is currently formulating the work plan for the first stage, and will then map out the organisation and functions of the steering committee and the related Office. Details will be announced in due course.
Regarding progress of work of the HKSAR Government's participation in the preparatory work of the Asian Infrastructure Investment Bank (AIIB), we have been participating in the preparatory work and attending the meetings as a member of the Chinese delegation. In response to the request of the AIIB, we have also seconded two officers to the AIIB as professional specialists to assist the AIIB in the setting up of systems and drawing up of standards and procedural manuals. The Financial Services and the Treasury Bureau will continue to discuss with the Central Government and the AIIB the specific arrangements for Hong Kong to join the AIIB as a non-sovereign territory.
Hong Kong's capital markets and asset management professionals and various financial products can support the operation of the AIIB in areas such as project financing, bond issuance, investment, financial management and foreign exchange management. Moreover, Hong Kong has expertise in project negotiation, works contracts preparation and management, international law as well as professional arbitration services, enabling us to take part in the planning, implementation and operation of such projects.
(b) The emerging markets along the Belt and Road have good growth potential and their demand for financial services will correspondingly increase. Hong Kong can make best use of its strengths in financial integration by promoting Renminbi internationalisation and the development of a Belt and Road investment and financing platform. Hong Kong can provide countries along the Belt and Road with financial services for the investment, fund raising and asset management of infrastructure projects and help expand their financing channels.
At the same time, taking advantage of technical advancement in mobile communications technology and artificial intelligence, financial technologies (Fintech) can offer consumers novel experiences in managing their finances and improve operational efficiency of financial institutions. As an international financial centre with a highly developed information and communication technology sector, Hong Kong is an ideal place for developing Fintech products.
In February, the Financial Secretary announced an array of measures in his Budget to support Fintech development in Hong Kong. Good progress is being made in implementing the measures. In particular, the Hong Kong Monetary Authority (HKMA), Securities and Futures Commission, and Office of the Commissioner of Insurance have already established their respective dedicated Fintech platforms to enhance communication between regulators and the Fintech community; Invest Hong Kong will soon establish its dedicated Fintech team to organise international events and assist start-ups, investors and research and development institutions to establish their presence in Hong Kong.
The Government will monitor the progress in implementing Fintech-related initiatives, and continue to keep track of the latest market developments as well as examine policies that are conducive to Fintech development.
In addition, to attract more multi-national and Mainland corporations to set up treasury centres in Hong Kong, the Legislative Council just passed the amendments to the Inland Revenue Ordinance to allow, under specified conditions, the deduction of interest expenses in calculating profits tax for the intra-group financing business of corporations, and reduce the profits tax rate for relevant profits of specified treasury activities of qualifying corporate treasury centres by 50 per cent. This will provide a favourable environment for attracting multi-national and Mainland corporations to centralise their treasury functions in Hong Kong, thereby enhancing the competitiveness of our financial markets.
A major area of the Belt and Road Initiative is to promote the development of infrastructure projects along the Belt and Road. Asian Development Bank estimates that Asia requires around US$8 trillion investment in infrastructure over the 2010-2020 period. Hence, we expect the demand for financing and fund management in the Belt and Road will bring about enormous business opportunities to the financial services sector in the region.
In fact, with Hong Kong's unique advantage, Hong Kong can develop into a major financing platform for infrastructure and related projects in the countries along the Belt and Road. In this connection, the Financial Secretary has in the Budget requested the HKMA to set up the Infrastructure Financing Facilitation Office (IFFO), to provide a platform for pooling the efforts of investors, banks and the financial sector to offer comprehensive financial services for various infrastructure projects. The HKMA is working on the establishment of the IFFO, which is expected to be formally inaugurated this summer.
(c) The inaugural Belt and Road Summit held last month brought together government officials, representatives of international organisations and leaders from multi-national corporations and related trades from the Mainland and countries and regions along the Belt and Road to explore opportunities under the Belt and Road Initiative.
To continue exploring and promoting business opportunities brought about by the Belt and Road Initiative, the HKTDC plans to organise the Summit again next year. Key officials and business leaders will continue to be invited to attend the Summit.
In addition to the Belt and Road Summit, the HKSAR Government will also continue to organise in Hong Kong other major international forums and expositions with themes on areas related to the Belt and Road Initiative.
For example, we will continue to invite countries and regions along the Belt and Road to participate in the Eco Expo Asia to be held in October this year. The Expo will serve as a co-operation platform in areas such as environmental protection, energy saving and carbon emission reduction, as well as combat of climate change to facilitate exchanges and co-operation among government officials, environmental professionals and green enterprises. The Belt and Road Initiative is also planned to be featured in the Asian Logistics and Maritime Conference to be held in November this year. Moreover, we will continue to organise the Asian Financial Forum in January 2017, under the theme "Asia: Driving Change, Innovation, Connectivity". The Forum will provide a high-level platform to bring together public and private sector leaders from around the world to examine opportunities arising from the growth in Asia as well as other economies along the Belt and Road.
Ends/Wednesday, June 1, 2016