How Hong Kong's May Help In­done­sia Ben­e­fit from China's Belt and Road Ini­ati­tive


As China’s spe­cial ad­min­is­tra­tive re­gion, Hong Kong has played a key role in con­nect­ing Chi­nese com­pa­nies with the out­side world for many years. Le­ung Kwan Ho, Di­rec­tor of In­done­sia of the Hong Kong Trade De­vel­op­ment Coun­cil (HKTDC), ex­plains how China’s Belt and Road Ini­tia­tive af­fects Hong Kong- In­done­sia re­la­tions.

Peter Cai, a non-res­i­dent fel­low and an ex­pert on China’s Belt and Road Ini­tia­tive at Lowy In­sti­tute, writes in his Un­der­stand­ing China’s Belt and Road

Ini­tia­tive anal­y­sis that the Belt and Road Ini­tia­tive is one of Pres­i­dent Xi Jin­ping’s most am­bi­tious eco­nomic and for­eign poli­cies, which aims to strengthen Bei­jing’s eco­nomic lead­er­ship through an ex­ten­sive pro­gram of in­fra­struc­ture build­ing through­out China’s neigh­bour­ing re­gions.

Many for­eign pol­icy an­a­lysts see this ini­tia­tive, how­ever, largely through a geopo­lit­i­cal lens, see­ing it as Bei­jing’s at­tempt to gain po­lit­i­cal lever­age over its neigh­bours.

The anal­y­sis fur­ther states that one of the pri­mary ob­jec­tives of the ini­tia­tive is to ad­dress China’s in­creas­ing re­gional dis­par­ity as the Chi­nese econ­omy mod­ernises. Among the least un­der­stood as­pects of the ini­tia­tive is China’s de­sire to ex­port its engi­neer­ing and tech­no­log­i­cal stan­dards which Chi­nese pol­i­cy­mak­ers see as cru­cial to up­grad­ing the coun­try’s in­dus­try. In­done­sia is one of the key strate­gic part­ners in the Belt and Road Ini­tia­tive.

Le­ung Kwan Ho, Di­rec­tor of In­done­sia of the Hong Kong Trade De­vel­op­ment Coun­cil that deals with the busi­ness-to-busi­ness sec­tor, says that the Belt and Road Ini­tia­tive is a per­fect match for both In­done­sia and China. “In­done­sia re­ally need[s] lots of in­fra­struc­ture in­vest­ment and de­vel­op­ment, and I think the gov­ern­ment and the cit­i­zens agree, ” Kwan Ho ex­plains. “And one of the key area[s] of China’s Belt and Road Ini­tia­tive is in­fra­struc­ture in­vest­ment. In prin­ci­ple, we’re head­ing in the same di­rec­tion, and what China of­fer[s] is ex­actly what In­done­sia needs.”

Ac­cord­ing to The Nikkei Asian Re­view in Fe­bru­ary 2018, China has be­come In­done­sia’s sec­ond largest in­vestor in its in­fra­struc­ture drive as the Belt and Road in­vest­ment in In­done­sia reaches up to hun­dreds of tril­lions of ru­piah. On­go­ing projects in In­done­sia that are un­der the Belt and Road Ini­tia­tive in­clude power plants and toll roads in sev­eral In­done­sian prov­inces.

“Although China has very good ex­pe­ri­ence in in­fra­struc­ture de­vel­op­ment and ob­vi­ously has fund­ing, many Chi­nese com­pa­nies and some sta­te­owned com­pa­nies still don’t have the in­ter­na­tional ex­pe­ri­ence,” Kwan Ho ex­plains, adding that such ex­pe­ri­ence refers to in­ter­na­tional fi­nanc­ing and in­ter­na­tional project man­age­ment.

There­fore, the di­rec­tor says that Hong Kong, China’s spe­cial ad­min­is­tra­tive re­gion, could play an im­por­tant role as a fa­cil­i­ta­tor when it comes to the Belt and Road Ini­tia­tive. Hong Kong has a dif­fer­ent cur­rency and fi­nan­cial sys­tem for project fi­nanc­ing to those of the Chi­nese cen­tral gov­ern­ment in Bei­jing. He cites the ex­am­ple that although there is a lot of fund­ing in China, use of the Chi­nese cur­rency ren­minbi is still quite re­stricted for in­ter­na­tional fund­ing. Hong Kong, he adds, could play a strong role with its bank­ing and fi­nan­cial fa­cil­i­ties for project fi­nanc­ing, thanks to Hong Kong’s free­dom of cap­i­tal trans­fer.

In the last 30 to 40 years, Hong Kong has also been serv­ing as a gate­way link­ing China to other coun­tries for in­ter­na­tional trad­ing, in­ter­na­tional ship­ment and lo­gis­tics pur­poses. “So Chi­nese com­pa­nies, be they big or small com­pa­nies, have been us­ing Hong Kong to reach the world,” he says.

Kwan Ho ad­mits that the HKTDC is not a pro­fes­sional body in terms of in­fra­struc­ture , how­ever it has an in­ter­na­tional net­work. It usu­ally be­gins by re­fer­ring in­ter­ested par­ties to rel­e­vant part­ners, for ex­am­ple those in the bank­ing and fi­nan­cial fields. They can also pro­vide ex­per­tise in other ar­eas such as project con­sult­ing and/or fea­si­bil­ity stud­ies.

When Chi­nese in­vestors ask what projects are avail­able in In­done­sia, HKTDC pro­vides feed­back and links them with po­ten­tial part­ners. The HKTDC cur­rently has 50 world­wide of­fices, with 13 of those in main­land China.

In 2016, the Hong Kong gov­ern­ment opened the Hong Kong Eco­nomic and Trade Of­fice in Jakarta for gov­ern­ment-to- gov­ern­ment mat­ters. Fol­low­ing the Belt and Road Ini­tia­tive the re­la­tions be­tween Hong Kong and Jakarta, he says, have changed but at a rel­a­tively slow pace.

“The mu­tual un­der­stand­ing be­tween Hong Kong and In­done­sia needs more en­hance­ment. And

Hong Kong peo­ple don’t know too much about In­done­sia, in par­tic­u­lar about the coun­try’s busi­ness op­por­tu­ni­ties,” Kwan Ho tells In­done­sia Ex­pat.

This lack of un­der­stand­ing means that Hong Kong busi­nesses pri­ori­tise other coun­tries like Thai­land and Viet­nam over In­done­sia be­cause they know these coun­tries bet­ter. How­ever, he be­lieves that the Hong Kong Eco­nomic and Trade Of­fice and Hong Kong Trade De­vel­op­ment Coun­cil could im­prove the re­la­tion­ship be­tween In­done­sia and Hong Kong.

Kwan Ho hopes In­done­sia could be more aware of Hong Kong and the Belt and Road Ini­tia­tive, and that the Hong Kong Trade De­vel­op­ment Coun­cil could link Hong Kong and Chi­nese in­vestors to work­able projects in In­done­sia. He thinks that the in­vest­ment un­der the Belt and Road Ini­tia­tive is a good thing be­cause it aims to im­prove lives and build friend­ships be­tween China, Hong Kong and In­done­sia.

“Be­sides mak­ing a profit and do­ing busi­ness, we are also try­ing to do some­thing good for this coun­try,” he says. “We’re good part­ner[s] in the in­ter­na­tional arena. We want In­done­sia to progress to­gether.”


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