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LCQ14: The "Belt and Road" Initiative

     Following is a question by the Hon James Tien and a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, in the Legislative Council today (February 17):


     In the Policy Address he delivered last month, the Chief Executive stated that "[t]he HKSAR Government will play an active role to facilitate the implementation of the 'Belt and Road' Initiative", "Hong Kong has strong complementarity with the Belt and Road countries, and great potential to create synergy with them", and "[b]y leveraging the combined advantages of 'one country' and 'two systems', industries in Hong Kong, regardless of scale, can perform their role as a 'super-connector'".  In this connection, will the Government inform this Council:

(1) of the industries and types of enterprises which are included in the "industries regardless of scale" quoted above, and the specific meaning of the term "super-connector";

(2) whether, since our country announced the development ideas and blueprint of the Belt and Road Initiative in March 2015, the authorities have conducted any survey and study on the strategies and role to be taken by Hong Kong in participating in the Belt and Road Initiative; if they have, of the details; if not, the basis on which the aforesaid remarks in the Policy Address were made;

(3) how Hong Kong's small and medium sized enterprises as well as micro-enterprises can participate in and benefit from the development of the Belt and Road Initiative;

(4) as the Government has announced in the Policy Address that it will set up a steering committee for the Belt and Road to be chaired by the Chief Executive, as well as a Belt and Road Office, which will be responsible for the strategies, policies and co-ordination work relating of the Belt and Road Initiative, of the reasons why the Government does not task the existing government organisations (such as the Economic Development Commission, the Commission on Strategic Development, the Central Policy Unit, etc.) with such responsibilities and, instead, sets up these two new organisations; and

(5) whether it has drawn up a specific timetable for the implementation of the various strategies and measures gearing to the Belt and Road Initiative; of the resources expected to be put in in each of the coming five years, as well as when this will start to bear fruit and the expected results?



     My consolidated reply to the question raised by the Hon Tien, after consulting relevant policy bureaux and departments, is as follows:

(1) and (3) Hong Kong, being an externally-oriented economy, must continue to develop diversified external economic relations in the long term.  The Belt and Road Initiative, aiming at forging connectivity with countries along the routes in five areas, namely policies, facilities, trade, finance and people-to-people bond, will boost development of the major sectors of Hong Kong, including trading and logistics, tourism, financial services, and professional and infrastructure services.  For instance, the 40 prominent Hong Kong business leaders in industrial, commercial, financial and professional sectors who joined the Chief Executive's visit to India in early February have expressed interest in deepening economic and trade ties with India, one of the countries on the Maritime Silk Road.

     Similar to other strategies which promote economic and trade co-operation between Hong Kong and other economies, the Belt and Road Initiative will open up markets for various sectors, boost business and investment activities, as well as enhance people flow, goods flow and tourism development, thus benefiting various industries and sectors.  We believe that small and medium enterprises, which account for over 98 per cent of the business establishments in Hong Kong, will either directly or indirectly benefit from the Initiative.

     There are over 60 countries along the Belt and Road, which include the Association of Southeast Asian Nations (ASEAN), our second largest partner in merchandise trade, as well as the more mature European economies.  As a "super-connector", Hong Kong may, leveraging on our combined advantages of "One Country" and "Two Systems" and capitalising on our talent and extensive international experience, promote our role as a platform for the Belt and Road countries to communicate, develop and invest, for Mainland enterprises to "go global" via Hong Kong, and for enterprises from various places to explore into the Belt and Road markets using Hong Kong as a springboard.  Moreover, Hong Kong can also deliver its "super-connector" function by connecting between governments; enterprises; organisations in the educational, technological and cultural areas as well as among peoples of Mainland China and of overseas countries and regions, so as to promote the mutual development and improvement of Hong Kong and other places.

(2) On Hong Kong's role under the Belt and Road Initiative, the Government has made reference to the views of the Central Policy Unit and relevant advisory and statutory bodies, including the Commission on Strategic Development, Economic Development Commission, Consultative Committee on Economic and Trade Co-operation between Hong Kong and the Mainland and International Business Committee, as well as the research findings, views and recommendations provided by private think tanks and academics.

(4) The Government needs to co-ordinate and steer its various work related to the Belt and Road Initiative, and these functions cannot be met by the committees mentioned in the question.

(5) The Chief Executive announced in his 2016 Policy Address a host of polices and measures related to the Belt and Road Initiative.  Details of the major measures are set out below:
Platform for Capital Formation and Financing

     The Government will continue to discuss with the Central Government and the Asian Infrastructure Investment Bank (AIIB) possible arrangements for Hong Kong to join the AIIB and for Hong Kong to be one of the resolution centres for contractual and commercial disputes specified in AIIB's standard contracts.  Hong Kong Government officials will continue to attend AIIB meetings as part of the delegation of China and participate in the preparatory work for establishing the AIIB.  We have also seconded experts to the AIIB to support its operation.  The progress of our work will depend on the decisions and arrangements made by the AIIB.  The expenditure involved will be absorbed within existing resources.

Trade and Logistics

     Hong Kong has signed Air Services Agreements or international Air Services Transit Agreements with 40 out of about 60 Belt and Road countries. The Government will continue to take into account the air services demand to different regions for establishing Air Services Agreements with the governments of the Belt and Road countries.  The specific timetable will depend on the progress of the negotiations, and the expenditure involved will be absorbed within existing resources.  Signing or expanding bilateral Air Services Agreements will provide a legal footing for air transportation services between Hong Kong and the Belt and Road countries so that the air carriers of Hong Kong can launch related business with those of our aviation partners.  This will reinforce Hong Kong's position as an international and regional aviation hub.

Trading Environment

     To strengthen government-to-government communication, the Government plans to establish an Economic and Trade Office (ETO) in Jakarta in 2016 and another one in Seoul as early as practicable.  We are conducting relevant preparatory work, and will earmark sufficient funds in the 2016-17 Budget to meet the expenses required for setting up the ETOs.  The establishment of an ETO in Jakarta will help strengthen our ties with Indonesia and other ASEAN countries, and an ETO in Seoul will enhance our trade and cultural exchanges with Korea.

     Regarding establishing free trade agreements (FTA), the Government aims at concluding the negotiation with the ASEAN in 2016.  We will also continue to explore the possibility of joining the FTAs signed, or to be signed, by our country with its trading partners, including the Belt and Road countries.  Meanwhile, the Government will expand its networks of Investment Promotion and Protection Agreements (IPPA), comprehensive avoidance of double taxation agreements and agreements on double taxation relief arrangements for shipping income.  Regarding IPPA, Hong Kong will continue the negotiations with Russia and the United Arab Emirates this year and is prepared to commence negotiation with India.  As the said negotiations are part of our overall work on external relations, it is hard to quantify the resources involved separately.  Signing these agreements will protect and facilitate business co-operation between Hong Kong and these countries.

     The Government will step up research efforts and establish databases for the reference of the business sector.  The Hong Kong Trade Development Council (TDC) launched a Belt and Road Portal in December 2015 for industries to access information about the business conditions of various emerging markets when making their business plans.  The expenditure involved will be absorbed within existing resources.  Besides, the Government is discussing with the construction and professional sectors the establishment of an information and communication platform, by identifying or setting up an organisation, to collect and release technical and business information which can facilitate the sectors' participation in the Belt and Road infrastructure projects.  We expect to implement the measure in 2016/17 while the resources required are to be confirmed.  The platform will enable the construction and professional sectors of Hong Kong to grasp the market pulse on the Belt and Road directly, as well as strengthen the collection and dissemination of technical and business information for professional services agreements to be established.

Platform for Professional and Infrastructure Services

     The Government plans to allocate $200 million to support the professional services sector of Hong Kong in enhancing their exchanges and co-operation with the Belt and Road countries, and promote related publicity activities.  We are now working on the details and developing proposals.  We are yet to decide on the timetable, and the resources required are to be confirmed.  This measure will help the sector capitalise on the strong demand for professional services from the Belt and Road countries and from other regions outside Hong Kong.

Strengthening People-to-people Bond

     To attract more outstanding students from the Belt and Road regions to pursue undergraduate studies in Hong Kong, the Government will inject $1 billion into the HKSAR Government Scholarship Fund.  We will make use of the investment income thus generated to provide 100 offers in phases for students under the Hong Kong Scholarship for Belt and Road in the current Targeted Scholarship Scheme.  Each awardee will receive a scholarship of up to $120,000 per annum to cover his or her tuition fee.  Following the launch of the Hong Kong Scholarship for Belt and Road Students (Indonesia) in the 2016/17 academic year, we plan to expand the Scholarship by phases to cover other Belt and Road regions starting from the 2017/18 academic year.  Since the Hong Kong Scholarship for Belt and Road Students involves co-operation with the governments of the countries concerned, there is no definite timetable at this stage.  For the 2016/17 academic year, we plan to provide up to 10 additional offers under the Hong Kong Scholarship for Belt and Road Students for outstanding students from Indonesia.  This will incur expenditure of up to $1.2 million for the first academic year while the resources required for each of the following years is subject to the number of awards to be offered each year.  Encouraging more students from the Belt and Road countries and regions to pursue university studies in Hong Kong will be conducive to greater internationalisation of local institutions.  In the long run, it will facilitate the establishment of a platform for educational, cultural and youth exchanges between Hong Kong and the Belt and Road countries and regions, which will in turn benefit Hong Kong.

     Furthermore, the Government proposes that the Belt and Road Initiative be included as one of the priority themes under the Quality Education Fund in the 2016/17 academic year.  The Fund plans to announce the details of the priority theme and hold seminars in March 2016 to encourage the education sector to apply for the Fund for their projects.  The resource to be put in each year will depend on the number of projects and the funding amount approved for the year.  The Fund encourages schools to help students, through studying different subjects and taking part in project learning and visits, to understand more about the Belt and Road regions and the potential contributions that Hong Kong can make.  We will evaluate the effectiveness upon completion of the projects.

     On youth initiatives, the Government expects to extend the International Youth Exchange Programme to cover more Belt and Road countries in 2016/17, and plans to organise thematic study tours to Belt and Road countries under the Summer Exchange Programme 2016.  Resources required are yet to be confirmed.  These programmes will provide our young people with visit and exchange opportunities to experience for themselves in the Belt and Road countries so that they can learn and understand more about the regions.

Steering Committee and Office

     The Government will set up an inter-departmental steering committee for the Belt and Road.  The Chief Executive will chair the committee, 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 between government departments and other organisations, such as the TDC 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.  We will consider the composition of the steering committee as well as the organisation and functions of the related office carefully.  Details will be announced in due course.

Ends/Wednesday, February 17, 2016
Issued at HKT 12:33


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