South China Morning Post | 9 February 2023
Free-trade agreement ‘logical next step’ for Hong Kong and United Arab Emirates, city leader John Lee says
by Natalie Wong
A bilateral free-trade agreement will be the “logical next step” for Hong Kong and the United Arab Emirates (UAE) to boost investment ties, the city’s leader has said during his visit to Dubai.
However, the UAE government has yet to commence formal discussions with its Hong Kong counterparts over a possible agreement, the Post has learned.
Memorandums of understanding (MOUs), meanwhile, have been signed between the Hong Kong Science and Technology Parks Corporation and its counterpart in the UAE, as well as between a local architectural firm, a home-grown tech start-up and an Abu Dhabi smart city operator.
Chief Executive John Lee Ka-chiu said the two economies and their respective firms “have much to gain” from a free-trade agreement (FTA) while addressing a business forum in Dubai on Wednesday night. The UAE is already Hong Kong’s largest trading partner in the Middle East.
“An FTA between Hong Kong and the UAE, therefore, is the logical next step in our relations. I’m confident it would substantially boost trade and investment ties between us,” he told hundreds of businesspeople attending the gathering.
An official source told the Post the UAE government might take months to decide whether to enter formal negotiations with Hong Kong.
“I think it’s a matter of time. Both Hong Kong and the UAE, as some of the most open economies in the world, have endorsed the added certainty and communications that come with trade agreements,” the insider said.
The UAE’s minister of state for foreign trade, Thani bin Ahmed Al Zeyoudi, said business exchanges at the forum were an important step in enhancing the prospects for bilateral cooperation in a wide range of sectors, especially shipping, logistics, services and air transport.
“Strengthening investment and trade partnerships with Hong Kong supports the strategic cooperation between the UAE and China and contributes to opening new business fields,” he said.
Hong Kong has signed eight free-trade deals with 20 economies, including a unique accord with mainland China called the Closer Economic Partnership Arrangement. Others were with economies including New Zealand, members of the Association of Southeast Asian Nations and member states of the European Free Trade Association.
The financial hub also commenced its first round of free-trade deal negotiations with Peru last month, covering trade in goods, services, investment and e-commerce.
The UAE already signed an Investment Promotion and Protection Agreement with Hong Kong in 2019 that committed both economies to a fair and equitable treatment of investors.
The value of foreign trade between the UAE and Hong Kong amounted to about 32 billion dirhams (US$8.7 billion) during the first nine months of last year, up 36 per cent compared with the same period in 2021.
Hong Kong was among the top 10 trading partners for the UAE in 2021, with a contribution of more than 2 per cent of the country’s total non-oil trade.
The Hong Kong Economic and Trade Office in Dubai opened in October 2021, the city’s first in the Middle East.
MOUs were also signed at the forum including one between an Abu Dhabi smart city, Masdar, and its start-up accelerator Catalyst, and two Hong Kong companies. They are HPA, an architectural firm co-owned by one of the Hong Kong delegates, Nicholas Ho Lik-chi, and a Cyberport start-up, Negawatt.
HPA is set to incorporate new materials and coatings to reduce carbon blueprints in the smart city project funded by the Mubadala Development Company, while Negawatt plans to integrate a cloud-based Internet of Things “carbon wallet” to collect and report building performances for sustainability in the district.
“With our engagement application and the right incentives, we want to change how people eat, shop and work. All can be tokenised based on quality data,” Negawatt CEO Arthur Lam told the Post.
HPA chairman Ho said his team would head back to the Abu Dhabi smart city within two months to identify sites to start applying and testing their solutions.
At the event on Wednesday, Dubai Chambers announced the opening of an international office in Hong Kong, and also exchanged an MOU with the city’s Trade Development Council. The other MOU involved the Hong Kong Science and Technology Parks Corporation and Sharjah Research Technology and Innovation Park in the UAE.