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Monday, August 07, 2023, 10:26
Emerging ASEAN offers huge opportunities for HK enterprises
By Sun Hongyou and Kacee Ting Wong
Monday, August 07, 2023, 10:26 By Sun Hongyou and Kacee Ting Wong

Because of Hong Kong’s determination to seize business opportunities in Southeast Asia, the economic relationship between Hong Kong and the Association of Southeast Asian Nations (ASEAN) has attracted more media coverage. 

In addition to Finance Secretary Paul Chan Mo-po’s visit to Southeast Asia in March, Chief Executive John Lee Ka-chiu recently visited Singapore, Indonesia and Malaysia, aiming to foster stronger economic ties with ASEAN as well as rallying support for Hong Kong to join the Regional Comprehensive Economic Partnership (RCEP).

There are many economic opportunities around the world, but those offered by ASEAN are more worthwhile. First of all, Lee predicts that the 10-member ASEAN and the wider region will become the biggest economic engine globally.  ASEAN has managed to deliver peace and economic growth to Southeast Asia, as the fifth-largest economy in the world with a combined GDP of $3 trillion (Kishore Mahbubani, The Asian 21st Century (Open Access Publications, 2022).

With a projected annual growth rate of over 5.5 percent, ASEAN is forecast to overtake the European Union and Japan to become the world’s fourth-largest economy by 2050 (US-ASEAN Business Council, What is ASEAN-Growth Projections). This projected growth is supported by a favorable diamond-shaped demographic pattern, political stability, the “China-plus-one” strategy adopted by many multinational companies, sustainable urbanization, improvements in educational sectors and an emerging middle class in more-developed ASEAN countries. The emerging ASEAN offers huge economic opportunities for Hong Kong enterprises. 

Secondly, most ASEAN members do not want to take sides in the US-China rivalry. They want Southeast Asia to remain a zone of peace, stability and economic prosperity. Economic development is their top priority. As a politically neutral bloc detached from geopolitical minefields, ASEAN can enable Hong Kong to seize economic opportunities in the region without national security considerations. A near-universal consensus suggests that the deep economic interdependence between China and ASEAN is too important to be undermined.

Even the Philippines, which has established close military ties with the US, does not want to reduce its economic links with China. In spite of territorial and historical disputes with China, Vietnam is eager to maintain close economic ties. Most importantly, Vietnam does not allow foreign countries to establish military bases on its territory. Like China, ASEAN’s pluralistic world view holds that Anglo-Saxon democracy is not the only way to achieve good governance.

Thirdly, the traditional business concept based on personal and family connections is embedded in the consciousness of many Chinese businesspeople in Southeast Asia. In addition to having deep economic roots in Hong Kong and other Asian markets, they have forged close personal ties across the region. 

For example, both Peter Woo Kwong-ching, former head of Hong Kong’s Wharf Holdings, and Edgar Cheng Wai Keung, head of Singapore’s Wing Tai Holdings, are married to daughters of late shipping tycoon Pao Yue-kong. “Sugar King” Robert Kuok sent one of his sons to study at a Catholic secondary school in Hong Kong. Sue Kuok, a daughter of Robert Kuok, is married to Malaysia’s Rashid Hussain, founder of RHB Bank. 

Fourthly, the economies of Hong Kong and most ASEAN countries are complementary as the latter are moving up the value chain and require more and more financial services provided by international financial centers. Even Hong Kong and Singapore do not compete with each other in all areas. As Terence Chong Tai-leung, an economics professor at the Chinese University of Hong Kong, pointed out, Hong Kong’s Northern Metropolis project can probably attract Singapore’s high-tech firms to invest (SCMP, July 24, 2023) in it. Hong Kong can also act as a bridge between ASEAN and the Guangdong-Hong Kong-Macao Greater Bay Area. Besides being a promising market for ASEAN, the area is an innovation powerhouse.

Finally, and perhaps most importantly, Hong Kong is determined to drum up support for its entry into the RCEP. China’s top diplomat Wang Yi also threw his weight behind the city’s efforts to join this huge regional trade pact. As Lee pointed out, Hong Kong has already signed a free trade agreement with ASEAN, so it has very good foundations for its RCEP membership. Generally speaking, ASEAN nations do not want to shut Hong Kong out of the RCEP. But the positions of Japan, South Korea and Australia may thicken the fog of uncertainty hanging over the negotiation process. Hong Kong needs more patience to navigate in troubled geopolitical waters and negotiate a feasible path to full membership.  

During Lee’s recent trip, seven memorandums of understanding (MOU) were signed between Hong Kong and Singapore, 15 with Indonesia and 11 with Malaysia. To cite an example, Hong Kong Exchanges and Clearing signed an MOU with Indonesia’s stock exchange to promote cross-border listings, product development, and environmental, social and governance initiatives. Lee said the 33 bilateral agreements signed with the three countries were sufficient proof that Hong Kong was given exceptional attention.

When ASEAN was formed in 1967, some commentators called it a “talk shop”. During the Asian financial crisis of 1997, many Southeast Asian elites experienced a high degree of anxiety over the region’s economic future. But ASEAN has undergone an impressive metamorphosis in the past two decades. ASEAN is now an economic growth engine, and enjoyed an average 4 percent annual increase in GDP over the past decade. The RCEP, according to Mahbubani, has the potential to become the biggest free trade zone in the world.

Although the elites in the US believe that the 21st century will still be the American century, history has quietly turned a corner. Momentum is building for a transition to the Asian century. ASEAN is embracing the shifts in economic power from the West to the East. By adopting the “ASEAN Outlook on the Indo-Pacific”, ASEAN has made it clear that it does not want the anti-China containment policy of the US to divide the region (Kishore Mahbubani, op cit). Mahbubani predicts that the containment policy will fail (Kishore Mahbubani, Containment of China will only lead to US being isolated in the world: Global Times, July 22, 2023). Though Hong Kong still needs to rely on its traditional Western markets, the peaceful rise of the Chinese mainland and the emergence of ASEAN as a growth engine has offered huge economic opportunities to Hong Kong.

Sun Hongyou, an associate professor, is director of the Common Law Center of Beijing Normal University, Zhuhai; and strategic development and legal academic adviser of the Chinese Dream Think Tank. 

Kacee Ting Wong is a barrister, part-time researcher of Shenzhen University Hong Kong and Macao Basic Law Research Center, and chairman of the Chinese Dream Think Tank.

The views do not necessarily reflect those of China Daily.

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