The Corner for Political & Business Views - Responsibility of Government to Assist SMEs in Belt and Road

President Xi Jinping proposed the Belt and Road Initiative in 2013. Afterwards, China has invested 90 billion USD directly into the Belt and Road countries within 5 years (from 2013 to 2018). Despite the effort China put into developing the Belt and Road, many SMEs, including those in Hong Kong, still have not yet got the full picture of what it is. And very often, they have doubts and are clueless regarding how to invest and contribute.

For instance, the countries along the Belt and Road are comparatively underdeveloped. The political situations and economies of many of them are unstable, and their legal systems are far from satisfaction. The risk to invest in them therefore is very high. The fact that business environments of these countries have not improved much even after the Belt and Road was announced in 2013 is another reason why many SMEs are holding back.

In my opinion, if the authorities want more SMEs to go and invest in the countries along the Belt and Road, they should adopt a multi-pronged approach. In order to attract investments, incentives and removal of obstacles are both necessary. For example, China could take WTO trade agreements as reference and establish with those countries an intact business framework and platform, in which qualified companies can join as a member.

Under such framework, countries along the Belt and Road should offer the members the most favored business treatment and reach agreement on establishing consistent business conditions, including but not limited to aspects such as human resources management, law and exchange rate, so as to provide a more business-friendly environment and enhanced security for private investment capital. The authorities can also offer more local support to qualified individuals and enterprises as incentive for investors. For instance, they can refer to methods used in the past to attract foreign investment such as fast application approval and tax concessions.

Apart from that, the HKSAR government should, by means of establishing better communication with the mainland, try providing more opportunities for enterprises in Hong Kong to cooperate with their counterparts in China. For example, pair those who have the same interests to work together and explore “their way out”. The authorities should also organize frequent seminars to help local businesses understand the development of Belt and Road better; more specific investment strategies should be provided to build up confidence.

In addition to the contribution of the authorities, enterprises should also keep an open mind. In order to seize the opportunity of the Belt and Road, participation, understanding and attempts are all essential.

Chairman of Asia Allied Infrastructure

Dominic Pang

(This is a Chinese-to-English translation by Corporate Communications Department. The original article has been published in Headline Daily on 29 July 2019.)