Conventus Law (CL): How can Hong Kong benefit from GBA?
BLF Lawyers (BLF): GBA offers a platform for being one of the world’s largest leading innovation centres. The GBA has a combined gross domestic product of US$1.34 trillion, representing 14% of China’s national economic aggregate back in 2016, and probably more today with Guangdong’s fast pace expansion.
Hong Kong, as the most international city in the Greater Bay Area, has a business-friendly environment, a strong tradition of the rule of law, a free economic structure, a well-established information technology infrastructure and financial system, and a wealth of high-end talents and professional services with a comprehensive understanding of international markets.
Hong Kong enjoys a fortuitous geographic advantage and is a world city leveraging on Mainland China while engaging the world. Moreover, Hong Kong is well connected to Asia’s key markets, making it an ideal location for businesses to tap into the abundance of opportunities in the Mainland and Asia-Pacific region.
In practice, it notably means that Hong Kong has an edge in developing vertical markets based on three fundamental factors: status as an international financial centre, multiculturalism, and a robust data protection environment.
“The GBA Project allows Hong Kong to reinvent its regional role. On the one hand, Hong Kong’s position as an international link should allow the city to promote the GBA plan internationally and attract more finance and talent. On the other hand, Hong Kong should take use of its financial leadership and the companies and entrepreneurs in the region will get access to something unique: an interconnected region where the best of technology, finance, law and creativity is accessible in several cities all accessible within a few minutes of transportation”.
Matthieu Bonnici, partner, BLF Law Group
CL: What are Hong Kong’s key roles in the GBA initiative?
BLF: Along with Macao, Shenzhen, and Guangzhou, Hong Kong is one of the GBA’s four “core cities.”
Hong Kong’s reputation as an international leader in finance, transportation, trade, logistics, aviation, and innovation and technology is envisaged in the GBA Project. It also envisions the city as a global centre for legal and dispute settlement.
The expansion also aligns with the Belt and Road Initiative’s goals, since Hong Kong businesses’ international experience can aid GBA firms in their aspirations to “become global.”
Hong Kong’s role will be to leverage its traditional strengths to contribute to the overall GBA project: First-rate international finance knowledge, a tried-and-true legal framework, and available capital and information flow.
Hong Kong may be well-positioned to diversify the economy and flourish as a global innovation and technology powerhouse if it capitalizes on the GBA’s overall growth.
CL: What are the main challenges and opportunities of operating in the Greater Bay?
BLF: The GBA Project allows Hong Kong to reinvent its regional role. On the one hand, Hong Kong’s position as an international link should allow the city to promote the GBA plan internationally and attract more finance and talent. On the other hand, Hong Kong should take use of its financial leadership and the companies and entrepreneurs in the region will get access to something unique: an interconnected region where the best of technology, finance, law and creativity is accessible in several cities all accessible within a few minutes of transportation.
Obtaining international talent, balancing infrastructure cost and value, cross-border payments and data transfers, regional taxation, and laws on foreign-direct investments would all be challenges in operating in the Greater Bay.
To exploit the GBA’s unrealized potential for the next stage of economic development, bridging these gaps would be crucial.
CL: What should Hong Kong be doing to be a more effective connector between Belt, Road and GBA?
BLF: With its distinct characteristics, Hong Kong is ideally positioned as a “super-connector” in capital raising and infrastructure finance projects for the Belt and Road Initiative and the Greater Bay Area. Hong Kong should fully embrace its heritage as a nexus between China and the rest of the world. Despite the numerous benefits, there is a need to manage risks, locate new financial sources and build a financial services ecosystem that includes commercial and policy banks, insurance companies, legal firms, auditing firms, and consulting firms to turn non-profitable projects into profitable ones.
CL: The GBA initiative will have an impact on movement of goods, the movement of labor, and the movement of capital. What does this mean to foreign companies and investors?
BLF: Developments in this respect remain ongoing, and it will take time to realize and apprehend the unlimited potential of GBA fully. Foreign companies still have to choose whether to set up a company in Hong Kong or, for example, Shenzhen, and these are still considered separate jurisdictions and ecosystems in our generation. As a result, we may anticipate that foreign investors will not travel to Hong Kong or Guangdong in the future, but will instead come to GBA to access the finest of all resources it has to offer, regardless of whether these resources originate in Hong Kong, Shenzhen Guangzhou, or elsewhere.
CL: With the GBA initiative’s drive to be a cluster for innovation, increased connectivity and integration, can we expect more economic reform to facilitate this?
BLF: People with various backgrounds and expertise come together to create new things, which is how innovation occurs. Therefore, all policies that make it easier for people with varied qualifications, education backgrounds, and interaction abilities would help strengthen GBA. The central government will, without a doubt, support any reforms necessary to attain the GBA aim.
CL: What should companies be aware of with regards to personal data protection when doing business in the Greater Bay Area?
BLF: Personal data protection is now a major topic of legal developments in PRC and HK. Even if GBA aims to create a regional ecosystem, companies shall not neglect that PRC and HK have their legal systems. Both Mainland China’s Personal Information Protection Law and Hong Kong’s Personal Data (Privacy) Ordinance require the proper handling of personal data. The transfer of personal data between the two should be considered cross-border transfer subject to specific compliance procedures. This matter is an ongoing and evolving topic. More than ever, monitoring the latest legal developments in personal data protection is critical.
For Further Information, please contact:
Matthieu Bonnici, partner, BLF Law Group