Strengthening Economic Ties: Hong Kong’s Strategic Engagement with the Middle East (1/2)
On July 16, 2024, a pivotal moment unfolded as a Memorandum of Understanding (MOU) was signed between Invest Hong Kong (InvestHK) and the Abu Dhabi Chamber of Commerce and Industry. This agreement is a testament to the deepening economic relationship between Hong Kong and the Middle East, marking a significant chapter in Hong Kong’s strategic outreach to the Gulf Cooperation Council (GCC) economies. The MOU symbolizes Hong Kong’s commitment to fostering inward and outward investments, and it is part of a broader strategy to diversify and strengthen its financial and professional services sectors.
Diversification and Collaborative Opportunities
Christopher Hui, Secretary for Financial Services and the Treasury, emphasized the importance of diversifying Hong Kong’s economic partnerships. He highlighted that Hong Kong seeks to broaden the sources of funding and collaborative opportunities while expanding the market for its services sector. The Middle East, particularly the GCC economies, presents a wealth of opportunities as these nations aim to reduce their reliance on oil and invest in innovation and infrastructure. Hong Kong’s robust financial services sector, combined with its expertise in infrastructure development, positions it as a valuable partner for the GCC’s ambitious projects, such as Saudi Arabia’s Vision 2030 and the construction of The Line, a futuristic linear city.
Hong Kong’s Role in Meeting Talent Needs
Hui also pointed out that Hong Kong can play a crucial role in addressing the talent needs of the GCC countries as they diversify their economies. The Middle East’s shift from an oil-dependent economy requires skilled professionals who understand international markets and can bring innovative solutions. Hong Kong’s ability to quickly adapt and its deep understanding of global standards make it a key player in this transformation.
Expanding Family Office Businesses in Hong Kong
Another area of focus for Hong Kong is the expansion of family office businesses. As of the end of 2023, approximately 2,700 single-family offices were operating in the city, with over half managing assets exceeding US$50 million. Hui emphasized that Hong Kong’s world-class financial infrastructure and professional services provide a strong foundation for wealth accumulation and generational wealth transfer. The government’s initiatives, such as tax concessions for family-owned investment holding vehicles and streamlined processes for charity recognition, have further solidified Hong Kong’s position as a global hub for family offices.
Navigating the Virtual Asset Industry
As the virtual asset industry continues to grow, Hong Kong has adopted a risk-based approach to regulation, adhering to the principle of “same risk, same regulation.” Hui addressed concerns about policy consistency, affirming that Hong Kong has remained steadfast in its approach to regulating virtual assets. The licensing regime for virtual asset trading platforms, implemented in June 2023, is part of a broader regulatory framework that also includes licensing requirements for virtual asset operations and stablecoin issuance. Hui stressed the importance of ensuring that virtual assets are well-regulated to protect investors and promote sustainable growth in the sector.
Other aspects will also need to be reviewed such as the inwards re-domiciliation regime and the role of accountants in Hong Kong’s economic development, so keep following us to know more about it in our next week’s article.
References
- InvestHK and Abu Dhabi Chamber MOU signing: July 16, 2024: https://www.info.gov.hk/gia/general/202407/16/P2024071600386.htm
- Saudi Arabia’s Vision 2030 and The Line project: Ongoing initiatives with completion targeted by 2030: https://www.vision2030.gov.sa/en
