Finishing touches are being applied to a special agency that will drive infrastructure development across the Asia-Pacific, says Hong Kong financial secretary John C Tsang.
Dedicated to promoting schemes devised under the ‘belt and road’ scheme – a transformative effort that aims to spur sweeping reforms in public amenities throughout the region – the Infrastructure Financing Facilitation Office will be housed at regulator the Hong Kong Monetary Authority, which will coordinate its work.
According to Tsang, the Office will bring together a wide range of stakeholders from the public and private sectors so they can:
The Office is set to consolidate Hong Kong’s position as a major resource of capital. Speaking at a multilateral Belt and Road Summit luncheon on 18 May, Tsang said that his department was “now in the final stage” of establishing the facility, and expected it “to be up and running in a couple of months' time”.
He explained: “The Belt and Road Initiative – spanning more than 60 countries in three continents that count for 65% of our planet’s population – can indeed inject the much-needed impetus and direction into our global economy in the 21st century.
“It begins, of course, with the infrastructure projects that would serve to strengthen connectivity among economies… in the form of railways, highways, ports, power plants and more. According to an Asian Development Bank (ADB) statistic, Asia will need $800bn every year just to cover infrastructure investment needs from now to the year 2020.”
As an international financial centre, Tsang stressed, Hong Kong has the required experience, expertise and network to host the Office as the centre of fundraising, project financing and asset management for Belt-Road’s “big-ticket items”.
“Our international and friendly business environment, our sound and robust market structure, our optimal mix of talents and cultures from the East and West, as well as our unparalleled connectivity with the rest of the world, make us the natural hub of the Belt-Road region, be it financial, business or trade,” he said.
On purely financial matters, he pointed out: “Today, renminbi liquidity in Hong Kong – which is the largest offshore pool globally – amounts to some ¥900bn. Our available portfolio of services covers a broad, diversified and mature range, from personal banking and asset management to cross-border trade settlement and bond issuance.
“Hong Kong’s renminbi bond market is the largest of its kind outside the mainland. Our dim sum bonds, I should add, consistently attract an extensive range of issuers, including global institutions such as the World Bank and the ADB.
Equally “clear and promising” market potential exists for Hong Kong’s management of Islamic finance, Tsang noted, given the Belt-Road region’s large Muslim population.
“We have been working hard to develop Islamic finance,” he said, “and we have made a good start of it. In the past 20 months, we have twice issued Islamic bonds – most recently this time last year.
“Both issuances were well received, demonstrating Hong Kong’s capability in supporting Shariah-compliant financial products that meet specialised financing needs. As I have indicated earlier this year, we shall be issuing our third sukuk in the foreseeable future.”
Tsang added: “While funding requirements for infrastructure projects [in] the Belt-Road region are sure to be substantial, we see a need to create a focal point here in Hong Kong that would help facilitate the [promotion of] critical investments.”