December 7, 2023
HONG KONG – Hong Kong is the platform connecting capital and expertise that can facilitate two-way investment flows between the Chinese mainland and ASEAN (Association of Southeast Asia Nations), as well as technology transfer from the mainland, senior management from ASEAN companies reckon.
On Dec 4 and 5, 20 representatives of 15 ASEAN enterprises from countries including Indonesia, Malaysia, Thailand and Vietnam joined the first business networking visit organized by the Hong Kong Special Administrative Region government for enterprises of Belt and Road countries operating in Hong Kong. The companies represent industries such as investment, finance, tourism, construction, environmental protection, energy and infrastructure.
Led by Secretary for Commerce and Economic Development Algernon Yau Ying-wah, Commissioner for Belt and Road Nicholas Ho Lik-chi, and other senior management from Hong Kong government agencies, the delegation visited mainland technology companies such as BYD Company, Tencent Holdings, Huawei Technologies Co
The senior management of the ASEAN companies emphasize this is a fact-finding trip, and so there is no current viable investment project related to the Chinese mainland in the pipeline.
Bangkok Bank Public Company, the sixth largest bank in Southeast Asia and the largest bank in Thailand by total assets, is one of the participants in this networking trip.
As the leading provider of corporate finance in Thailand, the bank says it can play a role in capturing potential business arising from digitalization, the rise of modern technology companies in Guangdong-Hong Kong-Macao Greater Bay Area, and the emerging trend of cross-border investment flows between the Chinese mainland and ASEAN. And Hong Kong can play a very significant role in connecting capital and technology.
“Customers from Thailand, Singapore and Indonesia can choose to make investments in the mainland directly. But they can also use Hong Kong as a springboard: setting up a company in Hong Kong to invest in the mainland that makes things more convenient and easier,” said Sitthichai Jiwattanakul, senior vice-president and general manager of Bangkok Bank Public Company.
“Besides, paying Hong Kong tax is cheaper and the city has the common law system and professional services such as accounting and legal services that you need,” he added.
Looking ahead, the bank will concentrate on “business opportunities arising from cross-border investment flows as the lender has diversified its customer base to mainland companies amid the rising trend of outbound investment from the Chinese mainland Southeast Asian region as the mainland is the largest overseas source of foreign direct investment in Thailand,” Jiwattanakul noted.
The bank will also make “huge” investments in digitalization to transform business operations in Hong Kong in order to be competitive so that it can provide services to clients in ASEAN and the mainland. It will use the mainland office to serve clients onshore, and use Hong Kong office to serve customers offshore, depending on customer appetite. Hong Kong office was the bank’s first overseas branch, opening in 1954.
Venture capitalists also attach huge importance to the role of Hong Kong.
“The city has always been a financial hub and the gateway to the Chinese mainland. The governance structure of Hong Kong, backed by the common law system, and the free movement of capital is important to the venture capital business. Hong Kong allows a good mix of Chinese mainland and the world that make us comfortable,” said RHL Ventures Managing Partner Rachel Lau.
Lau added the firm has been negotiating with the Belt and Road Office to set up an office in the city.
Based in Malaysia, RHL Ventures is a multi-family private investment firm founded in 2016, focusing on multi-stage (from seed to growth) venture capital investment in small and medium-sized companies across different sectors and industries in ASEAN. The multi-family office is also looking for investment opportunities in other regions.
To maintain Hong Kong as an international finance center, Lau argued that the city should attract more sources of capital into the market. For example, the city should not just focus on luring capital from global family offices, as they are not consistent in capital deployment as institutional investors, and family offices alone are not enough to change the investment landscape.
In addition to capital linkage, participants also highlighted the role of Hong Kong in facilitating technology transfer from the mainland to ASEAN.
“We use some professional services provided by Hong Kong to get expertise and knowledge in sustainability solutions to satisfy compliance demands. Hong Kong still plays a very important role because the city has the essential knowledge and expertise,” Yoma Strategic Holdings Alternate Director Cyrus Pun said.
Established in 2006, Yoma Strategic Holdings is a diversified investment holding company based in Myanmar, engaging in real estate, financial services, automotive and heavy equipment, healthcare, retail and tourism. The conglomerate is the first Myanmar enterprise listed in Singapore.
Pun added: “Hong Kong can play the connector role in connecting companies to companies, enabling investment on the mainland, as well as facilitating responsible investment into Myanmar that can add long-term value to the economy of the country, and take a long-term investment horizon and view of the Myanmar market.”
Led by Secretary for Commerce and Economic Development Algernon Yau Ying-wah, Commissioner for Belt and Road Nicholas Ho Lik-chi, and other senior management from Hong Kong government agencies, the delegation visited mainland technology companies such as BYD Company, Tencent Holdings, Huawei Technologies Co, and other organizations such as the Belt and Road Environmental Technology Exchange and Transfer Center (Shenzhen) in Shenzhen and Guangzhou to learn about the ecosystem and development potential of the Greater Bay Area.