Speech by CBR at the Meeting on Regional Energy Cooperation in Asia (RECA), on “The Regulation of Energy Investment along the ‘Belt and Road’”(English only)
Following is the speech by the Commissioner for Belt and Road, Miss Yvonne Choi, at the Meeting on Regional Energy Cooperation in Asia (RECA), organised by the Chinese University of Hong Kong, Konrad Adenauer Foundation and International Energy Charter, on “The Regulation of Energy Investment along the ‘Belt and Road’” (February 23, 2017):
Professor (Fanny) Cheung, Professor (Chris) Gane, Dr (Peter) Hefele, Dr (Masami) Nakata, distinguished guests, ladies and gentlemen,
Good afternoon. I am honoured to be one of the keynote speakers to set the scene for this conference on regional energy cooperation in Asia.
Energy cooperation is one of the foci of the bold and visionary Belt and Road Initiative championed by President Xi Jinping. The “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road” promulgated by China in 2015 set out specific directions on energy cooperation, encompassing the construction of oil, gas pipelines and power network, use of renewable energy on top of conventional fossil fuel, and advancement of the relevant technology and equipment.
Energy cooperation is highly influenced by geopolitics and economic ups-and-downs. I understand experts and scholars will discuss these issues from various angles in subsequent sessions of this conference. I am keen to learn from you how to mitigate risks and settle disputes from a multilateral perspective, especially as I was actively involved in the World Trade Organization's negotiations on behalf of Hong Kong.
Today, I would like to share with you how Hong Kong could contribute to energy cooperation under the Belt and Road Initiative by financing energy investments, taking part in the building and operation processes and protecting such investments using our world-class legal services.
Growth of Energy Investments
Notwithstanding the possible risks, energy investments along the Belt and Road are huge and growing. To name just a few major projects to illustrate the scale of investments:
Hong Kong companies have moved fast to capture the tremendous opportunities brought by energy cooperation under Belt and Road Initiative. For example, the Hong Kong offices of international consultancy firms have participated in building the Karot hydropower plant and planning the development of Thar coalfield respectively in Pakistan, both of them are the projects of CPEC.
China Light and Power, CLP, has been investing in a number of power plants in India. It also invested in and constructed Lopburi solar plant in Thailand, and is co-developing two coal-fired projects in Vietnam as well. Power Asset, the other power company in Hong Kong, invested in Ratchaburi electricity plant in Thailand too.
The examples show that Hong Kong companies have the financial strength and expertise to invest in, build and operate energy facilities.
As an international financial centre, Hong Kong is the ideal place to raise funds and to find investment partners to tap the energy markets along the Belt and Road. Hong Kong has a diversity of financing channels and a large pool of experienced financial professionals that can satisfy all sorts of needs.
According to the Global Financial Centre Index, Hong Kong is ranked the fourth among 87 cities under survey. Hong Kong is the world’s largest offshore RMB business hub handling about 70% of all off-shore RMB transactions, with the world’s largest pool of offshore RMB funds and the widest variety of RMB-denominated investment products.
To further promote Hong Kong as a hub for financing infrastructure projects, our Hong Kong Monetary Authority has set up an Infrastructure Financing Facilitation Office (IFFO). And I am proud to say that Hong Kong has been officially invited to join the Asian Infrastructure Investment Bank. We expect the relevant procedures to be completed by the middle of this year. This will further strengthen Hong Kong’s position as an international financial centre and an effective financing platform for energy as well as other development projects along the Belt and Road.
The investments in energy projects bring new challenges as their viability is affected by many geopolitical and macro-economic factors due in part to the diversity of cultures and systems. This calls for mechanisms to help protect the investments and settle disputes in manners that are acceptable to the parties concerned.
The Energy Charter Treaty, which came into force in April 1998, provides a multilateral framework for energy cooperation. It aims to promote energy security through the operation of more open and competitive energy markets, while respecting the principles of sustainable development and sovereignty over energy resources. It (a) facilitates the protection of foreign investments, based on the extension of national treatment, or most-favoured nation treatment; (b) provides non-discriminatory conditions for trade in energy materials, products and energy-related equipment based on WTO rules; and (c) allows the resolution of disputes between participating states, and between investors and host states in such investments.
In May 2015, Nur Bekri, the Vice Chairman of the NDRC-cum-Minister of the Chinese National Energy Administration, led the Chinese delegation to join the Energy Charter Ministerial Meeting held in The Hague, where he signed the new International Energy Charter Declaration on behalf of the Chinese government. Pursuant to the declaration, China became an “association” of the treaty, thereby taking an important step towards closer involvement in global energy governance.
These developments demonstrate the significance of global energy governance and increasing international attention to mitigating risks, settling disputes and protecting investments by internationally accepted legal rules.
Under “one country, two systems”, Hong Kong maintains the common law system which is generally preferred by the international community in enforcing multi-jurisdictional contracts. We have a strong legal infrastructure supported by the twin foundations of the rule of law and an independent judiciary. We have over 10,000 local solicitors and barristers, and over 1,300 foreign lawyers from some 30 jurisdictions, who are well-versed in international laws and experienced in dealing with a wide range of multi-jurisdictional disputes.
Arbitral awards made in Hong Kong are enforceable in over 150 jurisdictions that are contracting parties to the New York Convention; and can be enforced in Mainland China and the Macau SAR through reciprocal arrangements.
Hong Kong is therefore well-equipped to provide the needed legal services for various energy projects in Belt and Road countries, and indeed across the globe.
Core Advantages of Hong Kong
Hong Kong has the following advantages in playing a role in energy and other projects along the Belt and Road:
We are uniquely poised to act as a “super-connector” in the Belt and Road Initiative, serving as the major platform for financing, trade and logistics, high-end professional services, arbitration and litigation, and new industries and technology for sustainable development of the Belt and Road region.
Finally, I would like to wish this 3-day conference every success. I look forward to seeing more Belt and Road countries explore cooperation opportunities with Hong Kong in future. Thank you.
Ends/Thursday, February 23, 2017