A rejuvenation in Hong Kong tie-ups

January 23, 2023 | 00:54
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During his visit to Vietnam as part of the biggest trade and investment promotion delegation between Vietnam and Hong Kong in years, Algernon Yau, Secretary for Commerce and Economic Development, talked to VIR’s Linh Le about economic cooperation opportunities between Vietnam and Hong Kong.

What was your first impression of Vietnam’s economic landscape during this visit?

Upon arrival, I could already sense the vibe of a very energetic city. Hanoi is full of power, like it doesn’t seem to have been affected by the pandemic at all. It was clear that there were many tourists, and hotel rooms are full.

The traffic was very heavy, and the evening looks very fantastic with all these neon lights all around. It has been a great experience watching the city thrive after the lockdown period.

A rejuvenation in Hong Kong tie-ups
Algernon Yau, Secretary for Commerce and Economic Development

What has been achieved during your visit in terms of strengthening the economic relations between Hong Kong and Vietnam?

There were a few missions that I had to achieve during this visit. The most important was for me to speak with the government regarding cooperation opportunities between Hong Kong and Vietnam on bilateral trade between the two parties.

This is also a good opportunity for me to understand the economic development of Vietnam. I went to visit some industrial parks (IPs) in Hung Yen province and had meetings with its leaders. This has helped me understand the current development in Vietnam, what opportunities there are for Hong Kong businesses to come over, and on the flip side, what opportunities we can offer to the companies in Vietnam doing business in Hong Kong.

The past few years witnessed the rise of Hong Kong’s investors in Vietnam. As of December 20, 2022, Hong Kong emerged as Vietnam’s fifth-largest investor, with the total registered capital reaching $29.5 billion, and 2,164 officially registered projects.

What is your insight about the emerging trends of Hong Kong’s corporations investing in Vietnam?

Hong Kong’s companies are truly interested in Vietnam because we share many things in common in terms of culture and tradition. Vietnam is well-connected with the world geographically, and well-connected with China as well. Aside from that, Vietnam has all these talents and resources, especially in manufacturing, and there are many IPs. This presents the availability of strength for Hong Kong companies to come over to Vietnam.

Vietnam offers superb opportunities for the business sectors in Hong Kong, especially in manufacturing, tourism, and finance. I think Hong Kong’s companies, in general, are interested in tapping into the economic development of Vietnam, which is strong.

Vietnam is now the second-largest trade partner with Hong Kong among all ASEAN members, with a trade volume of up to HK$220 billion ($28.17 billion) in 2021, which was very significant.

Innovation, green tech, and green finance are the trends for Vietnam to develop in the long-term future. Many companies are also targeting to participate in this kind of business in Vietnam, especially for new technologies.

Business links are being re-established rapidly, especially in ASEAN. It has been a joint effort for the bloc to rebuild the economy of the region, and especially with the formation of the Regional Comprehensive Economic Partnership (RCEP), there will be better opportunities for progress.

We understand that Hong Kong authorities have introduced new initiatives to attract investments. Could you please tell us more about this?

We have formed an office called OASES (Office for Attracting Strategic Enterprises), aiming to attract strategic enterprises and invite them to settle down in Hong Kong.

We prioritise companies with strength in technology, AI, health science, data science, new manufacturing, and new energy. However, it doesn’t preclude other businesses which we see will have long-term benefits for the long-term development of Hong Kong.

Hong Kong is going to offer incentives, measures, and policies, which include land and taxation incentives, financial assistance, joint development opportunities, visa issuance, and also schooling for children and families. We have set a fund of HK$30 billion ($3.84 billion) for joint investment.

Companies identified by us will be invited to come to Hong Kong, and we will offer a bespoke package to them. It will be a one-stop shop arrangement for these enterprises.

What are the implications of this for Vietnamese investors?

If companies in Vietnam are interested, they will be contacted, and we will start the negotiation with them. This is an excellent opportunity for Vietnamese companies to come and build regional offices, or even headquarters, in Hong Kong, and use the location as a platform to get into the Greater Bay Area. That has a population of 86 million, with GDP accounting for about 13 per cent of the total GDP of China.

Having a regional office or head office established in Hong Kong would also help Vietnamese companies go overseas, with Hong Kong being the third-biggest global financial centre and fifth-largest in terms of global trade.

Vietnam is expected to register a considerable amount of trade and income gains through ASEAN-Hong Kong Free Trade Agreement (AHKFTA) as well as the Regional Comprehensive Economic Partnership (RCEP). How do you assess the importance of these deals?

The AHKFTA is an excellent agreement concluded by the 10 ASEAN members, allowing us to do business freely with a reduction in tariffs, no custom boundaries, protection on intellectual property, and more trade. It creates superb opportunities for not only the overall economic development of the region, but also for the companies to do business elsewhere.

It also supplies Vietnamese companies with a strong business environment for them to do business in Hong Kong. With the RCEP, the connection will be even stronger, as we have other markets participating such as Australia, New Zealand, and Japan.

Vietnam has vowed to reach net-zero carbon emissions by 2050, what can be done by Hong Kong investors to assist with this effort?

With experience in new technologies and innovation, Hong Kong investors can bring in knowledge and technology to facilitate and help Vietnam develop both the business side environmental, social, and governance aspects. A real-life example would be the Sunwah Group, a well-known business in Vietnam that is also investing in these areas.

The world is changing and we have to be innovative – and technologies like AI and data science are essential in building the future.

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By Linh Le

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