Anisha Bhaduri says in the current global climate it makes sense to explore fresh pastures, widen regional engagements and showcase the city’s intrinsic strengths

On the day Chief Executive John Lee Ka-chiu delivered his fourth Policy Address, the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) announced the exchange of a memorandum of understanding (MoU) on banking supervisory cooperation.

While the two regulatory authorities share years of close collaboration on banking supervision, according to the HKMA, “The MoU strengthens the supervisory cooperation and facilitates the exchange of information and mutual assistance for supervisory purposes between the two authorities.”

Closer regulatory collaboration and deeper policy oversight are essential as Hong Kong steadfastly pursues wider financial markets connectivity.

Such MoUs not only strengthen the fight against financial crime but also serve a wider regional oversight engagement at a time when the chief executive is looking to tap the HKMA to help Chinese mainland enterprises go global. In his Policy Address on Wednesday, Lee announced setting up the Task Force on Supporting Mainland Enterprises in Going Global with Hong Kong as the springboard.

The fact that the secretary for commerce and economic development has been put in charge underscores the importance the current administration attaches to enhancing the city’s gateway status and its commitment to accessing overseas channels of sustained structural engagement.  

The latest pact is timely and significant in light of the chief executive’s clear directive to the HKMA in his latest Policy Address to encourage the banking sector, especially mainland banks, to set up regional headquarters in Hong Kong in order to help them expand into markets in Southeast Asia and the Middle East. Lee also envisages such entities opening corporate treasury centers in Hong Kong for cross-boundary settlement, remittance, financing and related functions.

This apart, the HKMA has been tasked with collaborating with the Hong Kong Association of Banks, the Hong Kong General Chamber of Commerce and the Federation of Hong Kong Industries to lead delegations of banking representatives and small and medium-sized enterprises to explore Southeast Asian markets.  

Lee’s regional focus is clear. Hong Kong’s open invitation to the Asian Infrastructure Investment Bank (AIIB) to set up an office in the city was iterated in the Policy Address. As widely reported, after Hong Kong joined the multilateral organization in June 2017, Financial Secretary Paul Chan Mo-po proposed that part of the AIIB’s operations — such as the treasury — be moved to the city.

And, this regional focus is evidently not fragmented. Just as the HKMA has been issued clear directives, so has Hong Kong Exchanges and Clearing Ltd (HKEX). The chief executive has asked HKEX to “deepen cooperation with Southeast Asian exchanges, attracting Southeast Asian issuers to seek secondary listings in Hong Kong and encouraging asset management companies to issue products in their local markets, thereby spurring asset allocation in our market”.

Case in point, the HKMA and Saudi Arabia’s sovereign wealth fund — Public Investment Fund — signed an MoU to set up a $1 billion fund to invest in manufacturing, renewables, fintech and healthcare for Hong Kong and other cities’ enterprises in the Guangdong-Hong Kong-Macao Greater Bay Area that are seeking to establish a foothold in the Gulf nation.

As for Hong Kong’s engagement in the Belt and Road Initiative (BRI), it is in in line with national strategic priorities. The chief executive pledged to set up a BRI sustainable green development training center in Hong Kong in 2026 and announced that the Hong Kong Jockey Club will support training for BRI personnel with funding of HK$100 million ($12.8 million). Hong Kong’s merchandise trade with BRI-participating countries stands at $280 billion with direct investment up to $133 billion.

On Wednesday, the chief executive announced plans to explore the signing of new investment agreements with Saudi Arabia, Bangladesh, Egypt and Peru. A new economic and trade office (ETO) will be opened in Kuala Lumpur this year to deepen engagement with the Association of Southeast Asian Nations (ASEAN) region, while expansion of ETO coverage to Latin America and Central Asia has also been pledged.

As Commerce and Economic Development Secretary Algernon Yau Ying-wah told CNBC last week, “…putting another ETO in Malaysia is a way to strengthen our relationship with ASEAN countries. Actually, we have 14 ETOs around the world, they are looking after different countries and putting one in Malaysia, that means we would like to make our connection with ASEAN stronger. And also, the Middle East is our target.” Hong Kong’s merchandise trade with ASEAN stood at $128 billion in 2024 with a direct investment of up to $79 billion.

But it’s not just trade.  

So that trade engagements dovetail with superior people-to-people exchange experiences, the authority will launch a funding program for a half-rate certification fee capped at HK$5,000, for restaurants with halal certification, the chief executive announced.  

Two measures announced in the Policy Address may help further consolidate Hong Kong’s formidable regional, if not global, stature especially in the light of stiff regional competition: tax concessions for commodity traders and a target to enhance store gold storage capacity to more than 2,000 tons in the next three years with a central clearing system in the city.

In the current global climate, it makes a lot of sense to explore fresh pastures, widen regional engagements with a global focus and showcase intrinsic strengths with targeted policies. As Yau told CNBC, “…we are looking for new markets, like in ASEAN and Central Asia, and also the Middle East. So there are a lot of things that we need to prepare for and to look into for the future development of Hong Kong.”

The region and the world are waiting.

The author is an award-winning English-language fiction writer and current-affairs commentator.

The views do not necessarily reflect those of China Daily.