Yoking Hong Kong economically with its neighbouring cities ought to provide plenty of opportunities for the local maritime community. The latest instalment in our series of our articles from Splash’s Hong Kong special.
First conceived in 2017, the Greater Bay Area (GBA) is up there with the Belt Road Initiative in terms of mega, overarching economic plans laid out during the tenure of Xi Jinping as leader of China. In a way it harks back to previous Communist times, what Deng Xiaoping called: “Crossing the river by feeling the stones” – a way of bridging divides for greater, mutual strength long-term
The Guangdong-Hong Kong-Macao Greater Bay Area comprises the two Special Administrative Regions (SARs) of Hong Kong and Macao, and the nine municipalities of Guangzhou, Shenzhen (pictured), Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing in Guangdong Province. The total area is around 56,000 sq km, population 86m and the combined GDP approaching $2trn, bigger than many G20 economies.
The objectives are to further deepen cooperation amongst Guangdong, Hong Kong and Macao, fully leverage the composite advantages of the three places, facilitate in-depth integration within the region, and promote coordinated regional economic development.
It is a project that excites many in Hong Kong, though there are plenty of people who have their own concerns about this planned integration.
“A closer integration of the economies in the GBA has the potential to make the combined output larger than the sum of the parts,” argues Bjorn Hojgaard, the head of shipmanager Anglo-Eastern.
“If you remove frictions to the free movement of people, of goods, of capital and of ideas, you spur innovation and growth, and with that come new opportunities,” he reckons.
If you remove frictions to the free movement of people, of goods, of capital and of ideas, you spur innovation and growth
Under the GBA initiative, Hong Kong will continue to be an international financial, maritime, trade, dispute resolution and legal services centre, something Rosita Lau, a lawyer for Ince and member of the Hong Kong Maritime and Port Board, says the city is perfectly suited to carry out.
“I say so with full confidence because Hong Kong is the most international component of the GBA cluster of cities, and has long been an international maritime centre,” Lau tells Splash, pointing to the scale and efficiency of the city’s ship registry, the plethora of P&I club offices, and the range of tax concessions on offer to a wide range of maritime businesses.
“I do not see any other component city of the GBA has such strength in these regards,” she says.
Matthew McAfee, who heads up local shipowner Fairmont Shipping, tells Splash that Hong Kong’s maritime and finance expertise will be “vital” in developing the GBA.
Angad Banga, chief operating officer at Hong Kong-based trader The Caravel Group, says he is “very bullish” about GBA prospects for Hong Kong’s maritime community.
“The vast population and expected growth in GDP per capita within the GBA means this is a very significant opportunity for businesses both within our industry and those which need our services,” he says.
“We believe the enhanced interconnectivity and exchange of people between the cities will also address the talent shortage issues that the city has been facing,” says Hing Chao, the chairman of local shipowner, Wah Kwong.
“The legacy strengths of Hong Kong in its unique and highly regarded common law legal system and various strengths as a financial and business hub incentives maritime companies to establish operations in Hong Kong, and to raise capital with debt and/or equity financing,” explains Damien Laracy, a partner at law firm Hill Dickinson.
With its integration into the development of the GBA, Hong Kong can optimise the allocation of resources in the region, benefit from the complementary advantages, and focus on the development of high-end shipping services, jointly building a complete and efficient emerging shipping ecological chain with the rest of the GBA, argues Wellington Koo, the chairman of the Hong Kong Shipowners Association.
Outlining what each of the major cities brings to the GBA, Koo says: “Hong Kong has the financing advantages, Shenzhen has the outstanding achievements in technological innovation and manpower training, and Guangzhou has a strong shipbuilding industry. Shipping needs new technologies and new energy to achieve the decarbonisation goals. Hong Kong, together with other cities in the GBA, may create a new shipping industry chain amid the massive changes.”
With a ports perspective on the GBA, Horace Lo, who heads up Modern Terminals, a company with facilities in both Hong Kong and across the border in the Pearl River Delta, has plenty of thoughts on how the economic zone could work out.
The total container throughput in the GBA exceeds 70m teu per annum. Over the years, the port of Hong Kong and other ports in the GBA have developed into an important cluster of ports, each with its own distinctive role and positioning.
“We have to efficiently coordinate terminal capacity in the GBA to achieve a proper balance between supply and demand in view of evolving market needs,” Lo advises.
Despite the effusiveness above, there are some words of caution for all those that think the formulation of the GBA will be a panacea for Hong Kong maritime.
“Performance must be quantifiable,” stresses Gautam Chelleram, the chairman of dry bulk owner KC Maritime. “I do not think the verdict is out yet on the synergy between Hong Kong and the Greater Bay Area from a maritime perspective. Hong Kong has a lot on its plate, and I would not recommend spreading itself too thin on expanding itself regionally,” he advises.
Ince’s Lau also points out that despite the fact the GBA plans have been in existence for five years now, the authorities have yet to stipulate that Chinese shipping companies should use Hong Kong law as the governing law and that Hong Kong arbitration or Hong Kong court proceedings be the governing mode of dispute resolution.
“This is a measure of top priority which has to be taken without delay in order to make the initiative successful,” Lau concludes.
This article appears in Splash’s Hong Kong Market Report 2022, distributed across multiple events at Hong Kong Maritime Week. Splash readers can access the full magazine for free by clicking here.
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