With world-class infrastructure, Hong Kong could become the Smart City leader in the Greater Bay Area, but its R&D is lagging behind.
(Photo: Joachim von Amsberg, Vice President, Policy and Strategy of AIIB delivering his keynote address. Credit: Ashley Kong)
The American Chamber of Commerce in Hong Kong’s annual China Conference was held earlier today (8 September) at Four Seasons Hotel. Speakers shared insights on the role of Hong Kong in the Greater Bay Area initiative. According to some of them, with excellent infrastructure, Hong Kong could become the leader of Smart City development in the area.
The Greater Bay Area and Smart City opportunities
The Greater Bay is an initiative that seeks to economically integrate Hong Kong with the rest of the Pearl River Delta, akin to the San Francisco Bay Area in California, the United States. In the future, Hong Kong would be more closely connected to Guangdong cities such as Guangzhou and Shenzhen economically and physically.
Richard Lancaster, CEO of CLP Holdings Ltd, suggested that the Greater Bay Area initiative could present an opportunity for Hong Kong to develop clean energy.
“If we are trying to introduce renewable energy or future fuel mix in Hong Kong, we’re very much constrained by the amount of land that’s available to us,” he explained. “By opening up our thinking and our borders, we can site renewable energy facilities in a much bigger area.”
Lancaster also added that Hong Kong’s broadband and power infrastructure could facilitate the development of Smart City locally and in the Greater Bay Area.
“Hong Kong […] is already blessed with very high quality infrastructure, so we don’t have to worry about the speed of broadband, mobile phone coverage, quality of electricity supply, or quality of the transport system,” he said. “I think Hong Kong has tremendous opportunity to be the leader in Smart City developments.”
However, Tony Chan, President of Hong Kong University of Science and Technology, noted that Hong Kong’s investment in research and development (R&D) is far from world-class.
“Hong Kong’s investment in R&D is among the lowest in developing countries,” he commented. “China invests 3% [of its GDP in R&D], South Korea and Singapore 2%.”
Chan also warned that politics could be a challenge.
“Politics could be a challenge. […] Now we have ‘One Bay, Two Systems’, would it work?” he remarked. “In some people’s minds there is still stigma in working with or working in China. That’s something to deal with.”
AIIB upon Hong Kong’s Joining
At the luncheon session, Joachim von Amsberg, Vice President, Policy and Strategy of AIIB, delivered a keynote address on AIIB’s insights from Beijing upon Hong Kong’s joining.
Von Amsberg pointed out that emerging countries face the problem of “infrastructure-finance paradox”, in which there is a significant demand for infrastructure but no channel to invest in it.
“The paradox is, there is a huge demand for infrastructure in finance,” he explained. “And on the other hand, you have asset managers sitting on tens of trillions of dollars. Some of them significantly shelf it, yielding zero investment returns, and yet very little of that flow to infrastructure and research.”
According to von Amsberg, upon Hong Kong’s joining, the AIIB successfully engaged with a “critical mass” of people who are stationed in the city and who could aid the bank’s cause.
“Hong Kong is an important financial centre. […] We are very happy about Hong Kong’s joining, so that we can benefit from the financial functions that are well performed in Hong Kong,” he noted. “We need an ecosystem of governments, project managers, equity investors, lawyers, consultants, banks, and institutional investors. […] We see that Hong Kong is one of the few places where this critical mass is there.”
Von Amsberg also added that AIIB will continue to maintain its lean business model that relies on partnerships and outsourcing, rather than creating a large-scale bureaucracy.