My visit to Indochina Peninsula: some thoughts on talent, Renminbi and people-centred green transformation

In December I visited three cities in two countries on Indochina Peninsula, namely Vietnam’s capital Hanoi, Ho Chi Minh City and Laos’s capital Vientiane, as part of our continued efforts to tell good stories to the international community about Hong Kong’s financial development, seeking collaboration with and greater access to the potential-laden Southeast Asian markets with a view to contributing to the national Belt and Road (B&R) strategy.  

Forging closer economic and trade ties with these two countries is of vital strategic significance to Hong Kong.  Hong Kong has a long-standing economic and trade co-operation with Vietnam.  Last year, Vietnam was Hong Kong’s seventh largest goods trading partner, with trade value totalling over US$32 billion, whereas Hong Kong was Vietnam’s fifth largest overseas investor.  President Xi Jinping announced during his visit to Vietnam that a new characterisation of relationship would be in place for the two countries to join hands in building a China-Vietnam community with a shared future.  The two countries would, on the basis of practical partnership, align themselves with the eight major steps for high-quality B&R collaboration, and expand co-operation in such emerging areas as digital economy and green development.

Riding on a wave of the fruitful results yielded from President Xi’s visit to Vietnam, including the signing of documents of mutual co-operation covering more than 30 areas, Hong Kong can definitely seize the opportunity to promote closer co-operation with Vietnam at a higher level.  As for Laos, an emerging market in the region, on the political front it will succeed Indonesia as the rotating chair of ASEAN next year; on the economic front, the commissioning of major infrastructure projects such as the Laos-China Railway has transformed the country from being “landlocked” (i.e. without a coastline) to “land-linked”, bringing about visible socio-economic benefits.  Our intended negotiations with Laos on a comprehensive avoidance of double taxation agreement will serve as a starting point to provide tax certainty for cross-border investment between the two places and lay a solid foundation for future bilateral economic and trade co-operation.  In my opinion, Hong Kong can co-operate with Vietnam and Laos to create a new situation that benefits all parties in three key aspects, namely talent, Renminbi (RMB) and people-centred green transformation.

Talent exchange is an important jumping-off point for all areas of co-operation.  In this connection, the Chief Executive announced in his Policy Address that the visa policy for Laotian talent in respect of employment, training and study in University Grants Committee-funded institutions in Hong Kong would be relaxed.  Besides, the visa policy for Vietnamese talent in respect of employment in Hong Kong and the application criteria for “multiple-entry visas” for business and travel would also be relaxed.  Specifically, Vietnamese nationals who have genuine needs to visit Hong Kong frequently and have made at least three trips to two or more countries or territories in the past 36 months/have previously landed in Hong Kong for training, residence or study, etc. in the past 24 months may apply for multiple-journey visit visas valid up to 24 months for a stay of not more than 14 days for each journey.  The vibrant development of Vietnam’s economy in recent years, with a GDP growth of 8% last year, has attracted investors from different regions (including Hong Kong) to increase their investments in Vietnam.  Meanwhile, some Vietnamese innovation and technology companies are also attracted to establish a presence and expand their business in Hong Kong.  The new visa arrangement will facilitate more talent interflow and deepen mutual understanding, thereby fostering the implementation of more business projects in Hong Kong.

The cross-border use, investment and financing of RMB are important areas of bilateral financial co-operation.  Last year, the amount of cross-border RMB settlements between China and B&R countries rose by 4.4% year-on-year to RMB 7.1 trillion, accounting for about 16.9% of the total amount of cross-border RMB settlements over the same period.  China has entered into bilateral currency swap agreements with 30 B&R countries, and established RMB clearing arrangements with 17 such countries.  In October 2023, the RMB clearing bank in Laos, the fifth of its kind authorised by our country in Southeast Asia, commenced operation officially.  As the world’s largest offshore RMB business hub, Hong Kong processes about 75% of global offshore RMB payments and has the largest offshore RMB liquidity pool of around RMB 1.1 trillion.  It has also established a comprehensive ecosystem of RMB products covering stocks, bonds, funds and insurance, etc.  This may help Vietnam and Laos explore more opportunities in RMB investment and financing in the future.  During my interactions with representatives of the governments, regulators and enterprises in Vietnam and Laos, I introduced to them the persistent growth trend of RMB bond issuance in Hong Kong this year, with the issuance amount reaching RMB 388 billion in the first ten months, exceeding the total issuance amount of RMB 263 billion last year.  I encouraged the governments and enterprises of both countries to take note of the interest cost advantage of issuing bonds in RMB over other foreign currencies, and consider issuing offshore RMB bonds in Hong Kong in the future.

Green and sustainable finance is another financial area in which Hong Kong can collaborate with Vietnam and Laos.  Similar to Hong Kong, Vietnam has undertaken to achieve carbon neutrality before 2050.  As such, the securities regulator in Vietnam, apart from advocating green transformation in real economic activities such as manufacturing and commuting, is also planning to promote the relevant disclosures among listed companies through the regulatory regime and statutes, with the aim of facilitating investors to carry out green investment and financing with more useful and comparable data.  Hong Kong is working on a clear roadmap in this respect, which includes the amendments to the listing rules concerning the enhancement of climate-related disclosures by listed companies, scheduled for implementation in January 2025 by the Hong Kong Exchanges and Clearing Limited.  In addition, the International Sustainability Standards Board published in June this year its finalised Sustainability Disclosure Standards, which serve as a global baseline for the disclosure of information required by investors.  We will ensure that the disclosure requirements in the local market are in line and compatible with the global baseline, and will share our experience with Vietnam to help it formulate appropriate regulatory frameworks and disclosure requirements based on local enterprise and investor situations.  The Vietnamese government is also planning to set up a voluntary carbon emission trading market through the Hanoi Stock Exchange in an attempt to drive the country towards carbon neutrality through institution building.  A well-designed system that allows investors and fundraisers to conduct transactions in a regulated market and trusted environment is highly conducive to the development of the real economy.

With the advantages under “One Country, Two Systems” and the strong support from our country, Hong Kong has in place internationally recognised frameworks and regimes for market regulation, from initial public offerings of traditional stocks and bonds to the emerging voluntary carbon emission trading.  We stand ready to actively align ourselves and share our experiences with Vietnam, Laos and many other B&R countries in our role as a staunch collaborator for Southeast Asian and B&R countries.

21 December 2023