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Speech by SDEV at Hong Kong Institution of Engineers Conference - "Our Hub · Your Future in Belt and Road" (English only) (with photo)

Following is the speech by the Secretary for Development, Mr Eric Ma, at the Hong Kong Institution of Engineers Conference - "Our Hub · Your Future in Belt and Road" today (April 7):

Professor Zhou (Vice Chairman of the Shanghai Committee of the Chinese People's Political Consultative Conference, Professor Zhou Hanmin), distinguished guests, our fellow engineers, ladies and gentlemen,

Good morning. Thank you for inviting me to speak on this very timely and important topic of the Belt and Road. I am here as an official privileged with responsibilities for land, planning and infrastructural development in Hong Kong. With great honour, I am also a fellow member of the Hong Kong Institution of Engineers. So it is from these dual positions and different angles that I would like to share my experience with the audience here today: what we have done, how we can seize the new opportunities, and my confidence in Hong Kong being able to make the most of our country's very forward-looking Belt and Road Initiative.

Being an engineer, I am always proud of our profession in our expert knowledge, versatility, dynamics and - perhaps one more description fitting us in Hong Kong - our business acumen. We have contributed extensively to building the hard and soft fabrics of Hong Kong.

On a very small piece of land, we house 7.4 million people. The average household living space is small, but the facilities - transport, electricity, telecommunications - are modern, efficient and reliable. We continuously renew our urban areas by upgrading and replacing old buildings and facilities while preserving those with cultural historical value.

As engineers, we are all eager to contribute to our society and help improve people's livelihood. But is today's topic, the Belt and Road, too grand or too remote for us?

Many people have been talking about the Belt and Road. It is a national policy with the objective of inviting collaboration, trade and investment spanning over 60 countries, engaging half of the world's population and generating economic value worth trillions of dollars. But to a small place like Hong Kong on the national map, to our young engineers in particular: What benefits does it bring about, to the average citizens and to us engineers? How can we contribute? Where do we start?

Well, I would like to start with the increasing contacts with the Mainland, how it came about, and what Government and the industry have been collectively doing to explore opportunities. We have been saying that Hong Kong has a lot to contribute to the Mainland, but to truly create opportunities for ourselves, we have to be able to turn these advantages to become also the Mainland's advantages. Gradually, we have been making an impact through participation in the Free Trade Zones, pilot projects in Qianhai, and more recently the Guangdong-Hong Kong-Macao Big Bay Area development plan. It is from this very global perspective that we should be receiving the Belt and Road and seizing the opportunities.

In response to market opportunities, particularly following the reunification, we have been exploring opportunities in the Mainland and other neighbouring economies. Our engineers reached out to cities and countries in Southeast Asia and the Middle East, undertaking projects such as resorts and casinos, ports and airports, highways and railways, and commercial and residential buildings.

As early as 2004 a mutual qualification recognition agreement was reached with the Mainland engineering authorities facilitating the first batch of 250 engineers from Hong Kong to practise in the Mainland. These voluntary efforts by the industry led to more frequent collaborative efforts, the Closer Economic Partnership Arrangement (CEPA) and the many supplements thereafter, allowing Hong Kong wider access and other preferential trade and investment benefits.

Initially, the number of engineers and contractors making their way into the Mainland market might not be as many as we had hoped. One will also be reminded of the practical issues that these "new entrants" faced, when, with the "main doors" opened, they still needed to go through many "small doors" satisfying further registration requirements, shareholding ratios and residency, etc, etc.

Looking beyond the access and facilitation measures, we see solid ground work being done in the form of people-to-people contacts, understanding the respective systems, overcoming obstacles and jointly exploring more opportunities.

Opening up is not confined to the Mainland/Hong Kong border. Foreign investors keep a keen eye on the Mainland market and come to Hong Kong to understand more about China. We see increased collaboration with overseas consultants and contractors, through their representative offices, mergers and acquisitions, and joint ventures.

Meanwhile, we continue to extend our footprint to other countries. In a recent survey that we have conducted through the Association of Consulting Engineers of Hong Kong, for the past five years, Hong Kong consulting firms have taken part in over 70 engineering projects in countries including Indonesia, India, Sri Lanka, Poland, Egypt and Saudi Arabia. A number of these overseas projects were partnered with the Mainland contractors or investors under the banner of "going global".

In the quest of the Mainland's opening up, we see the progressive setting up of Free Trade Zones. To many people, Free Trade Zones mean good business. Yet, the implication is much, much deeper. By allowing businesses to flourish, the Mainland is also minded to use the Free Trade Zones as testing grounds to open up the world market, understand their practices and blend in with them. So far as Hong Kong is concerned, we find ourselves in a clearly defined role. In the State Council announcement for the launching of the Guangdong Free Trade Zone, it is declared that "Hong Kong and Macao be embraced and their exemplary practices be followed to serve the continuing opening up of the Mainland".

Again at national level, a chapter is dedicated in the Outline of the 13th Five-Year Plan of the People's Republic of China to set out the aim to "deepen collaboration between the Mainland and Hong Kong/Macao" and leverage the Mainland's and our respective advantages to "go global".

People have used the term "the best of both worlds" to describe our unique advantages. Under "one country" we receive trade access, preferential treatment and investment facilitation. Under "two systems" we benefit from maintaining our autonomy, ways of living and rule of law.

The word "benefit" may give the narrow meaning that it flows only one-way. From a broader perspective, the benefit is mutual. According to the messages enshrined in the Free Trade Zones and the National 13th Five-Year Plan, the Mainland benefits as much by adopting Hong Kong's systems and leveraging them for further opening up. This win-win scenario sends the clearest message that, as far as the Mainland's market continues to open up and develop, and as far as we could maintain our advantages ahead of our competitors, Hong Kong will be assured of a place to contribute and in turn benefit from the Mainland's development and "going global".

The momentum of the Mainland's development is of course enormous. During the past decade, China's GDP has increased by threefold. It is now the second largest economy in the world, spending more on economic infrastructure annually than North America and Western Europe combined. By 2035, 70 per cent of the Mainland's population will live in urban areas. This rural-urban transformation will in turn generate massive infrastructure investment opportunities.

Few will doubt our country's ability to repeat the wonders that we managed to create for the past decades. Against this backdrop, the Belt and Road comes as a timely policy setting out visions and strategies on connectivity and co-operation. Five areas of connectivity are advocated, namely policy co-ordination (政策溝通), facilities connectivity (設施聯通), unimpeded trade (貿易暢通), financial integration (資金融通), and people-to-people bonds (民心相通).

These terms may seem abstract. But to those who are more experienced, the wisdom is self-evident. In the early years, when we started our contacts with the Mainland, we might not have had any particular business initiatives or investment plans in mind. We only set out to gain acquaintance hoping to see if there would be any potential areas for co-operation. That was the earliest form of 民心相通 (people-to-people bonds) and 政策溝通 (policy co-ordination). Increased communication and understanding led to opportunities for specific business co-operation and cross-border services. Hong Kong's knowledge and experience on international practices, tendering systems, project management and dispute resolution techniques were shared with our Mainland counterparts. Business-to-business communications evolved to business-to-government, and government-to-government levels, leading to further facilitative measures for 資金融通 (financial integration), 設施聯通 (facilities connectivity) and 貿易暢通 (unimpeded trade).

On the other hand, we do understand that working with the Mainland requires some new skill sets. Working in the Mainland means adapting to a totally new environment. The infrastructure projects under the Belt and Road are seen to be too big for the small and medium enterprises. In terms of "going global", it may not be easy for a Hong Kong consultant or contractor to find a Mainland partner. There is still a considerable gap between the business practices of the two places.

Given our strategic advantages and the robust network that we have just outlined, I am confident that Hong Kong is better placed than any of our competitors and will get the most of the opportunities ahead.

By way of policy co-ordination, the Development Bureau will continue to further business access and facilitation. Through "negative listing" under CEPA, engineering practices and contractors are already entitled to national status in setting up businesses in all provinces and cities in the Mainland. Our professional qualifications are now recognised for practice in Guangdong, Guangxi and Fujian. We are working proactively with the Mainland for further extending the professional qualification recognition arrangement. We also aim to simplify practice and registration requirements. The pilot scheme of adopting Hong Kong's full-range design and project supervision model is operating smoothly in Qianhai and the foreign-aid projects in Cambodia and Nepal. We are discussing with the Mainland bureaux for wider adoption of these systems to other Free Trade Zone areas and other projects. We are hopeful that, with the "Hong Kong model" being introduced and accepted in the Mainland, our engineers and contractors will find it easier to invest and practise in the Mainland. We will keep a watchful eye on the huge volume of infrastructure construction arising from the Guangdong-Hong Kong-Macao Big Bay Area proposal. We will maintain close communication with the Mainland to attract maximum participation by Hong Kong engineers and contractors.

Just in November 2016, we rolled out the HK$200 million Professional Services Advancement Support Scheme to support our professional services sector to carry out worthwhile projects to spearhead proactive outreaching promotion efforts and to improve service offerings. We work closely with the Hong Kong Trade Development Council and the Asian Infrastructure Investment Bank to showcase the industry capability and access to market intelligence. Relevant information about project planning, finance and recruitment is published in dedicated websites.

We organise trade missions and visits to allow the investors and engineers to have first-hand information and establish contacts in Mainland cities and countries along the Belt and Road routes. With the setting up of the Belt and Road Office, it is hoped that the industry will be better informed and better co-ordinated in responding to the opportunities arising from the Belt and Road.

Ladies and gentlemen, from what I have briefly shared with you, on the high quality of our services, the robust network that we have built up in the Mainland and the gradual introduction of our services to the Mainland market, I have every confidence in our readiness to seize the opportunities and meet the challenges of the Belt and Road.

In the very limited time, I have only focused on the broad strategic issues. I do hope that some initiatives that I have reported for extending the breadth and depth of our services to the Mainland will facilitate further business integration.

I am sure that there are many issues meriting further debate and deliberation. I look forward to active participation from all and wish you a very successful conference.

Thank you very much.

Ends/Friday, April 7, 2017
Issued at HKT 12:05

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