As a key link for the Belt and Road, Hong Kong boasts multiple advantages for doing business in Asia and beyond, featuring top-ranked international expertise in a full spectrum of legal, financial, and professional services, an independent judiciary, and a safe, stable, international, culturally rich and business-friendly environment that continually attracts top global talent.
Hong Kong enjoys an ideal location as a gateway to and from China. World-class construction and logistics engineering have improved and amplified Hong Kong’s natural advantages: its deep-water port has developed into one of the world’s busiest; and every major city in Asia lies within a five-hour radius by air, with flights departing and arriving at the world’s busiest cargo airport. The public transportation network is efficient, extensive and constantly expanding, enabling one of the most integrated social and commercial living spaces on the planet.
All this has come about thanks to Hong Kong’s vital role in connecting the Chinese mainland to the rest of the world, first through trade (still one of the city’s main economic engines), and ultimately, in its unique position as Asia’s international financial centre.
Geographically, Hong Kong is the spot where the inland Belt intersects with the maritime Road. It is also the anchor of the Guangdong-Hong Kong-Macau Bay Area, a macro-region with a population of close to 70 million and a GDP of US$1.5 trillion.
All of these advantages and strengths make Hong Kong a natural partner in the Belt and Road Initiative; but what really stands out is the solid legal and financial platform on the one hand, and the quality of Hong Kong’s professional services practitioners on the other.
In his opening remarks at the luncheon plenary of the Belt and Road Summit held in Hong Kong this June, Financial Secretary of the Hong Kong Special Administrative Region (HKSAR) Paul Chan highlighted the breadth and excellence of Hong Kong’s professional services, saying that Hong Kong is “strategically positioned to serve as multiple service platforms for the Belt and Road.”
Chan elaborated on the scope of top professional services available, with application to nearly every phase of the typical Belt and Road infrastructure construction project: “Our world-class professionals in engineering, architecture, urban planning, surveying and consulting have the experience and knowledge to lead Belt and Road projects. . . . Legal, regulatory and political risks can undermine the feasibility of a project, and risks in construction and cost overruns will negatively impact a project’s profitability. Hong Kong’s deep pool of multicultural talent in law, accounting and finance can help manage these risks.”
Chan also touched on one of the most important and unique advantages offered: that Hong Kong is the perfect locale for resolving Belt and Road business disputes, with arbitral awards enforceable in more than 150 jurisdictions, including the Chinese mainland.
It is also important to have experts, licensed mediators and arbitrators with specialised knowledge and experience pertinent to the Hong Kong context. That means professionals like Mary BL Thomson, a mediator, arbitrator and solicitor with more than 20 years of experience with the Hong Kong Maritime Arbitration Group. Thomson pointed out that, for example, since 90% of all goods will be transported by sea, the Belt and Road Initiative would do well to study maritime disputes, which comprises an important set of precedents in commercial law.
William Wong, Chairman of the Committee on Arbitration and Chairman of the Committee on International Laws of the Hong Kong Bar Association, extolled the independence of Hong Kong’s judiciary as its greatest advantage in dispute resolution.
It is important that Hong Kong be specified in contracts as the venue for resolving potential disputes—the “champagne clause,” as explained by Teresa Cheng Yeuk-wah, Secretary for Justice of the HKSAR. Hong Kong’s implementation of common law, along with its independent judiciary, foster confidence on the part of investors and stakeholders.
Cultural as well as systemic legal differences come into play when the parties making the deal or settling the dispute hail from different countries and cultures. A presentation by Amirali B. Nasir, Founding Principal of Nasirs and Vice President of the Law Society of Hong Kong, reminded Summit participants that Hong Kong has, significantly, modified its laws to allow Islamic financial instruments such as sukuks (Islamic bonds), and there is expertise here to advise companies operating in Muslim countries.
Hong Kong is a top centre for international dispute resolution. Belt and Road projects can benefit from agreeing to settling disputes on neutral ground, where impartiality is guaranteed and the quality of service is unparalleled. The arbitration and mediation industry in Hong Kong is comprised of highly-specialised and experienced professionals, practitioners and advisory organisations. In 2017, the most recent year for which data is provided, the Hong Kong International Arbitration Centre (HKIAC) carried out 532 cases, of which 297 were handled by arbitration, 220 were domain name disputes, and 15 were mediation disputes, with an aggregate value of close to HK$40 billion. Cases ranged from corporate and finance, maritime and international trade to construction and professional services disputes.
On the subject of operating across different jurisdictions and legal systems, Hannah Ha, Partner at Mayer Brown, pointed out that one can easily find lawyers in Hong Kong with knowledge and experience in multiple jurisdictions, including those of Belt and Road countries.
Hong Kong is a centre of excellence for accounting and taxation as well. Apart from access to a large pool of practitioners familiar with multiple regions and systems, one advantage of establishing a contract in Hong Kong is the source-based taxation policy. “Hong Kong will not tax profits derived from outside Hong Kong,” mentioned Steven Sieker, Partner at Baker McKenzie. “If I’m in the money-lending business, I can lend to foreign entities, receive interest and pay zero tax on interest income.”
Hong Kong’s community of professionals is culturally and technically diverse, an advantage again when making deals and arranging transactions across the distances encompassed by the Belt and Road Initiative. Yet Hong Kong’s elite professionals are also known for their expertise and experience with the Chinese mainland. In addition, Hong Kong has close ties with the ASEAN countries, which are currently the largest recipients of Belt and Road-related investment.
From project planning, architectural consulting and engineering; dispute resolution, legal contract drafting and deal making; investment and financial services, auditing, accounting and tax consulting; to trade and logistics management, Hong Kong’s professions are stocked with world-class talent, with multicultural knowledge as well as China-related experience.
Avron Boretz, Kaya Consulting International
Click here for more event highlights and speaker insights from the Belt and Road Summit held in Hong Kong on 28 June 2018.