HK to promote trade ties with Indonesia, other Asean countries
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Hong Kong will further strengthen its economic relations with Asean, which will establish a common market at the end of this year.
Fong Ngai, the director of the Singapore-based Hong Kong Economic and Trade Office for the Asean region, said in Jakarta on Wednesday that Hong Kong, the world’s 10th largest trading economy, had the technology and resources to promote its economic relations, especially in the service sector.
During the 1960s and 1970s, Ngai said, Hong Kong companies established many factories in the Asean region, including in Indonesia.
However, the situation changed in the late 1970s and early 1980s as the Chinese market started to open up.
“We also saw political instability in the region at that time. So most of our factories moved out of the region to mainland China,” Ngai told The Jakarta Post on Wednesday.
Entering the 21st century, Hong Kong saw a positive trend in the past 10 years, when Asean grew its economy between 5 and 6 per cent annually, the highest average growth compared to other regions in the world, Ngai said.
In addition, Ngai said there was now a trend of manufacturing relocation and expansion returning to the Asean region, which provided an abundant supply of labour due to the region’s large population.
The decade-long period of progress in Asean was reflected in trade between Hong Kong and the region, which grew at least 8 per cent annually to exceed US$100 billion as of last year, according to Ngai.
“Asean is getting more important for Hong Kong and has been our second largest trading partner since 2010 after mainland China,” Ngai said.
Ngai said Hong Kong was also expecting to enhance its relations with Indonesia, which had the largest population and economy in the region, as the trade volume between both parties had reached over US$5 billion.
The amount, Ngai said, consisted of a relatively balanced portion of exports and imports of coal, intermediate goods, telecommunication devices, electronics and electrical components as well as textiles.
Along with its partners in Asean, Indonesia is negotiating a free trade agreement (FTA) with Hong Kong with talks, which began last July, already entering a third round. The city government expects the agreement to be in place by 2016.
As a service-based economy with 93 per cent of its gross domestic product contributed by the service industry, Hong Kong was interested in offering its expertise in two basic service industries — finance and law — Ngai said.
On the financial side, Hong Kong, the largest offshore renminbi currency centre outside mainland China, expects to encourage more traders in Asean and Indonesia to use the Chinese renminbi as their settlement currency, which is deemed less volatile than the US dollar.
“In the legal sector, Hong Kong could be the best neutral location for arbitration and mediation, because once you have more trade and investments, you are bound to have more business disputes,” Ngai said.
Ngai said further that the maritime-based economy of President Joko “Jokowi” Widodo’s administration had also attracted Hong Kong, which was famous for its logistics and was home to the world’s fourth largest container terminal.
Ngai cited a joint venture agreement between Hong Kong-based Kerry Logistics Ltd. and Indonesia’s Puninar Saranaraya (Puninar Logistics) as a good sign of logistics improvement in the country.
Ngai said further that the Hong Kong Economic and Trade Office for Asean was discussing the issue with Indonesian officials and planned to hold an economic forum and exhibition this year.
