Macao’s integration into the national development plan was highlighted in the Macau SAR Government’s Policy Address for Fiscal Year 2022. Among other things, the development of the Guangdong-Macao In-depth Cooperation Zone at Hengqin, as well as the promotion of adequate economic diversification and the development of nascent industries and modern finance, are essential to the development of regional cooperation.
Conventus Law: Can you tell us a bit more about the Hengqin In-depth Cooperation Zone?
Bernardete Fan: The Hengqin In-depth Cooperation Zone is an area of land located on Hengqin Island, which is just across a narrow channel from the city of Macau. The zone is being developed as a way to promote greater economic cooperation between Macau and the neighbouring Guangdong province in Mainland China.
The zone is planned to be an expansive area, with plans to connect it to the rest of mainland China, Hong Kong and Macau through various infrastructure projects.
This area also aims to be a hub for various industries, such as finance, tourism, and technology. The goal is to promote economic diversification and to develop new industries in the area, with a particular focus on technology and innovation. In addition, Hengqin is expected to play a critical role in the development of the Greater Bay Area, which is a national development plan that aims to connect the cities of Hong Kong, Macau, and Guangzhou into a single economic and business hub.
“Macau’s financial institutions can also benefit from the development of Hengqin as an international financial center, particularly with its planned development as a hub for trade and investment between China and Portuguese-speaking countries, which could further increase investment opportunities for Macau financial institutions.”
Bernardete Fan, Founding Partner, CFB
What opportunities does the Cooperation Zone at Hengqin offer to Macau, Hong Kong and to international investors?
The Hengqin Cooperation Zone offers a number of opportunities for Macau, Hong Kong, and international investors.
Firstly, it provides a platform for Macau and Hong Kong businesses to expand into Mainland China and access the country’s huge market and manufacturing capabilities. The zone offers preferential policies and incentives for businesses and investors, such as tax breaks and streamlined regulations, to attract investment in the area.
Secondly, and as previously stated, the zone is expected to play an important role in the development of the Greater Bay Area. By investing in the zone, businesses and investors can gain access to a wider regional market and a more comprehensive range of business and investment opportunities.
Thirdly, Hengqin is also poised to be a new hub for various industries, such as finance, tourism, and technology. As a result, the zone could offer new opportunities for investment in these sectors, along with the opportunity to participate in the development of new industries in the area with a focus on technology and innovation
Lastly, since it’s located near the major economic hub cities, it can offer benefits of proximity, such as reduced transportation and logistics costs, easier access to suppliers and customers, and an increased pool of skilled workers, all of which can help companies to lower their operational costs, which can in turn, increase profits for the investors.
How does the Cooperation Zone on the island of Hengqin present great opportunities for the finance industry in particular in Macau?
The Cooperation Zone on the island of Hengqin presents a number of opportunities for the finance industry in Macau.
First, the zone is expected to be a hub for the development of modern finance and new financial technologies, such as fintech. This can create opportunities for Macau’s financial institutions to invest in and participate in the development of these new technologies, which can in turn help to improve their competitiveness and efficiency.
Second, the zone is also expected to be a platform for cooperation between Macau and mainland China on financial supervision, which would help to enhance the stability and development of the financial markets in both places. This can in turn create opportunities for Macau’s financial institutions to access new forms of funding, investment and other financial services.
Lastly, Macau’s financial institutions can also benefit from the development of Hengqin as an international financial center, particularly with its planned development as a hub for trade and investment between China and Portuguese-speaking countries, which could further increase investment opportunities for Macau financial institutions.
“ The launch of the cross-border wealth management connect service and the participation of financial institutions like ICBC (Macau) in offering all five services of the connect program is certainly a sign that Macau’s finance sector is opening up and cooperating with Mainland China and Hong Kong to boost the internationalization of the renminbi and improve fund flow communication.”
Bernardete Fan, Founding Partner, CFB
What still needs to be done to adapt the current legal system and provide a legal basis for developing the offshore economy in the Hengqin In-depth Cooperation Zone?
In order for the Hengqin In-depth Cooperation Zone to fully realize its potential as a hub for regional cooperation and economic development, certain steps will need to be taken to adapt the current legal system and provide a legal basis for developing the offshore economy in the zone.
Firstly, there will need to be a clear legal framework that lays out the rights and responsibilities of investors, businesses, and other stakeholders in the zone. This framework should include laws and regulations on issues such as land use, taxes, and intellectual property rights.
Secondly, the customs laws, immigration laws, and exchange control laws of Hengqin will need to be harmonized with the regulations of Macau and Mainland China in order to ensure smooth cross-border trade and investment flows.
Thirdly, in order to attract foreign investment, a sound legal and regulatory framework for the protection of intellectual property rights will need to be established, including patents, trademarks and copyrights.
Fourthly, the legal system of the zone should be supportive of the development of modern finance and emerging technologies, such as fintech, to ensure that they can be fully exploited.
Finally, the legal framework will also need to be compliant with international standards and best practices to ensure the stability, predictability, and transparency of the zone’s legal and regulatory environment.
All this needs to be done to establish a conducive environment for businesses and investors, which would encourage them to invest in the area.
With the cross-border wealth management connect service, the central government has shown substantial support for the Guangdong-Hong Kong-Macao Greater Bay Area, as well as for successful cooperation between mainland China, Hong Kong and Macao. As of October 2021, ICBC (Macau) was the first financial institution in Macau to offer all five services of cross-border wealth management connect. Can this be seen as a sign that Macao’s finance is opening up and cooperating in order to boost the internationalisation of the renminbi and improve fund flow communication?
The launch of the cross-border wealth management connect service and the participation of financial institutions like ICBC (Macau) in offering all five services of the connect program is certainly a sign that Macau’s finance sector is opening up and cooperating with Mainland China and Hong Kong to boost the internationalization of the renminbi and improve fund flow communication.
The cross-border wealth management connect service, which allows individuals and institutions in Hong Kong and Macau to invest in Mainland China’s wealth management products, and vice versa, represents a significant step towards greater financial integration within the Greater Bay Area.
Furthermore, this initiative is aligned with the strategy of the Chinese government to internationalize the Renminbi, which would help to promote greater use of the currency in global trade and investment, and also helps to increase the usage of the RMB in Macau, as well as in the region.
“ There are indeed differences in laws and regulations between Hengqin and Macau, and it is important to address these differences to ensure smooth cooperation and integration between the two regions. Promoting more exchanges in the legal field would help to ensure that the legal systems in the two regions are more closely aligned, making it easier for businesses and investors to operate in both regions.”
Bernardete Fan, Founding Partner, CFB
In recent years, Macao has built up its securities market including the launch of the Central Securities Depository (CSD). What other changes would need to be implemented within Macao’s capital market?
While the launch of the Central Securities Depository (CSD) in Macau is a significant step towards developing the territory’s securities market, there are several other changes that will need to be implemented to further strengthen and expand the market.
Firstly, Macau needs to increase the number of listed companies and the volume of securities traded on its exchanges. This can be achieved by encouraging more companies to go public and by creating an environment that is conducive to attracting domestic and foreign investment. This could involve measures such as simplifying listing requirements and providing more favourable tax policies for listed companies.
Secondly, more sophisticated financial products and instruments need to be offered. A well-developed and diverse securities market will require a variety of products and services such as derivatives, bond market, and mutual funds. This would offer investors more opportunities to manage risk and increase returns, which would further enhance the market’s attractiveness.
Thirdly, a well-functioning market requires a robust regulatory framework and effective supervisory system, which would guarantee the quality and transparency of the market, this would help to ensure that the securities market is safe and secure for investors.
Lastly, the market infrastructure should be enhanced, the development of a modern and efficient trading and settlement system, as well as improvement in the legal, fiscal and regulatory framework to make it more supportive of the market. This could involve improving market data dissemination, introducing new technologies and expanding the capacity of existing financial intermediaries and institutions.
All these changes would help to deepen and broaden Macau’s securities market, increasing its liquidity and attracting more investment which in turn would further develop the economy and finance system of Macau.
The Guangdong-Macao In-depth Cooperation Zone in Hengqin is a new platform to boost Macao’s appropriate economic diversification. What can we expect to see happening in the next 12 months?
It is likely that we will see significant progress in the development of the Guangdong-Macau In-depth Cooperation Zone in Hengqin over the next 12 months.
Firstly, we can expect to see further progress in the construction and development of infrastructure projects in the zone, one important project that will be completed by 2024 is the Light Rail Transit (LRT) system, connecting the Macau peninsula directly with Hengqin island. This will make it easier for people to move in and out of the zone, which will be a significant boost to economic development.
Secondly, more and more businesses, especially high-tech companies, are expected to move into the zone. As more companies set up operations in the zone, this will lead to the creation of new jobs and the development of new industries in the area.
Lastly,, as the zone develops, we can expect to see an increase in the number of tourists visiting the area, which will boost the local economy. The zone’s plans to develop the tourism industry will be a big draw for tourists and will further contribute to the diversification of the region’s economy.
Hengqin is the only free trade zone on the Mainland connected by road and bridge to Hong Kong and Macao. Due to favorable policies introduced, the Guangdong-Macao In-depth Cooperation Zone is attracting a large number of international talents, businesses and industries. Can you tell us a bit more about these types of business and industries you are seeing being attracted to the zone?
The Guangdong-Macau In-depth Cooperation Zone in Hengqin is attracting a wide range of businesses and industries due to its unique location, infrastructures and the favourable policies that have been introduced.
The zone is particularly attractive to innovation-based businesses, such as new-generation information technology, bio-medicine, manufacturing, logistics, trade-related industries and environmental protection. The zone’s favourable policies and its close proximity to both Hong Kong and Macau make it an ideal location for businesses in these sectors to access mainland China’s huge market and manufacturing capabilities, while also leveraging the expertise and resources of the surrounding regions.
Furthermore, the zone is also expected to be a major center for the tourism industry, due to its proximity to Hong Kong and Macau, which are major tourist destinations, as well as the zone’s planned developments in the tourism industry, such as the theme parks, cultural and sports facilities and the MICE (Meeting, Incentive, Conference and Exhibition) facilities.
There are differences in laws and regulations in Hengqin and Macao. Do you think there is a need to promote more exchanges in the legal field between the two regions and promote internationally the key points to investors?
There are indeed differences in laws and regulations between Hengqin and Macau, and it is important to address these differences to ensure smooth cooperation and integration between the two regions.
Promoting more exchanges in the legal field would help to ensure that the legal systems in the two regions are more closely aligned, making it easier for businesses and investors to operate in both regions.
It is also important to promote internationally the key points of the legal systems of both regions to investors, to give them a clear understanding of the legal environment in which they will be operating, and to address any concerns they may have. For example, by providing information on the legal framework for protecting intellectual property rights, investors can have more confidence in the security of their investments.
Overall, the development of Hengqin Cooperation Zone, as well as the Greater Bay Area, requires a legal and regulatory environment that is predictable, stable, and transparent.
According to the Overall Development Plan for Construction of the Guangdong-Macao In-Depth Cooperation Zone in Hengqin, Zhuhai will continue to partner with Macao to promote its economic diversification by 2035. Over the next few years, what other milestones can we expect to see?
Over the next few years, we can expect to see several key milestones in the development of the Guangdong-Macau In-Depth Cooperation Zone in Hengqin. Some of the key milestones that we can expect to see are:
Completion and commissioning of the major infrastructure projects that connect the zone to Macau, such as the Light Rail Transit (LRT) system.This will significantly improve transportation in the region, which will in turn boost economic development.
An increase in the number of companies and businesses operating in the zone. As more and more businesses set up operations in the zone, this will lead to the creation of new jobs and the development of new industries in the area.
Continued development of the zone as a center for modern finance and emerging technologies, which will boost the growth of finance and technology sectors in the zone.
Development of the zone as a center for trade, logistics, and tourism. As the zone continues to develop, it will become an increasingly important hub for trade, logistics and tourism, which will provide new business and investment opportunities for the region.
Thus, becoming an increasingly important part of the Greater Bay Area, which ultimate objective is to connect the cities of Hong Kong, Macau, and Guangzhou.