Thailand is to use Hong Kong as a gateway to China’s Greater Bay area while Hong Kong will use Thailand as a gateway to the ASEAN market. This was one of the goals laid out in broad brushstroke briefings by Thai government officials at the end of the week. Key points in the new agreements or understanding are measures to encourage further investment by Hong Kong firms in Thailand, increased trade between the two economies, a cross-listing of firms on the SET and Hong Kong stock exchanges and work to commence in 2020 on a free trade pact.
Hong Kong’s chief executive Carrie Lamb was in Bangkok at the end of the week as Thailand and the Chinese territory unveiled ambitious new plans for deeper economic cooperation and set the ball rolling on work towards a free trade agreement between Hong Kong and the kingdom which is expected to come into force before 2023.
Embattled Hong Kong leader Carrie Lam enjoyed some respite from political pressure at home as she arrived in Thailand on Thursday for a short visit to the kingdom.
Ms Lam is the Beijing appointed Chief Executive of the former British colony who in recent months has become the subject of a popular backlash following efforts by the city’s government seen as increasingly aligning the territory with the Chinese mainland.
Hong Kong leader repudiated this week by the electorate in the city in local elections
This week, Hong Kong’s normal routine and low profile district elections showed a resounding rejection of her leadership as nearly 90% of Hong Kong voters supported pro-democracy parties who in turn campaigned on the key demands of the protest movement which include real universal suffrage in the territory.
The election showed that there is sympathy and a broad agreement among the public with the demand for more democracy in Hong Kong and a stronger guarantee of autonomy from the Chinese mainland.
Deputy PM Somkid Jatusripitak invited Ms Lam to Thailand after a recent visits to the former UK colony
On Thursday, Ms Lam was guest of honour at an event organised by the Thai Board of Investment in Bangkok which was addressed by Thailand’s Deputy Prime Minister Somkid Jatusripitak who recently met Ms Lam on a visit to Hong Kong and invited her to Thailand.
High-level meeting at Government House on Friday
On Friday, the Thai economics czar and Ms Lam attended a high-level meeting at Government House of the Hong Kong High-Level Joint Committee.
The two leading officials signed a memorandum of understanding on proposed further and deeper cooperation between Thailand and Hong Kong on economic matters.
Hong Kong has traditionally had a very strong relationship with Bangkok and of course China itself. This is an old trading relationship which today’s leaders wish to build upon.
Courtesy call on the Prime Minister Prayut Chan ocha
Reports suggest that the memorandum of understanding deals with a variety of initiatives including the cross-listing of securities between Thailand and Hong Kong as well as human resources, startups, innovation and creativity.
Ms Lam made a courtesy call on the Prime Minister Prayut Chan ocha in Government House on Friday evening.
The Thai prime minister offered the moral support of the Thai government to authorities in Hong Kong as it deals with its internal crisis and said that Thailand was monitoring the situation carefully.
Closer relationship with Hong Kong will bring Thailand closer to China and its economy
The deputy secretary-general at the Office of the Prime Minister Kobsak Pootrakool provided briefings to the media in the course of the visit.
Any improved ties with Hong Kong will also see Thailand forging closer links with China and moving closer into its orbit. This is true in particular for the project being put forward by the Chinese leadership, being the Greater Bay area.
New economic zone the Greater Bay area being fashioned as an engine for Chinese expansion
It is understood that the Chinese plan to develop nine cities in 9 Chinese provinces in conjunction with the special territories of Hong Kong and Macau.
‘Deepened cooperation will greatly benefit Thailand, which can be a gateway for Hong Kong to Cambodia, Laos, Myanmar and Vietnam, while Hong Kong can be a gateway for Thailand to China’s Greater Bay Area,’ Mr Kobsak explained to reporters.
Chinese economic planners have highlighted the China Bay area as a new area of intensive growth and innovation.
The area alone had a GDP output of $1.5 trillion last year and grew by nearly 11% for the last decade. It has a population of 70 million people.
May observers see this sort of diplomacy from China, including its promotion of high-speed rail connections as an extension of its key Belt and Road initiative which is nothing less than the outward expansion of Chinese economic power and influence.
Thailand’s existing trade relationship with Hong Kong is a substantial one which benefits the kingdom
The top official at the prime minister’s office has also revealed that trade between Thailand and Hong Kong last year was valued at over ฿455 billion with Thai exports coming in at ฿370 billion and imports at ฿85 billion.
Mr Kobsak confirmed that a study into the prospects for a free trade agreement between Thailand and Hong Kong would commence next year.
This will lead to negotiations in 2021 and it is expected that sometime in 2022 or 2023 that the free trade agreement will come into effect.
Hong Kong leader Carrie Lam sees strong potential
The Hong Kong chief executive described plans for a stronger Thai Hong Kong bilateral relationship as one with many strong potential benefits particularly in what is becoming a more unpredictable and competitive trade environment.
Thailand is particularly interested in attracting manufacturing arms of Hong Kong concerns to the kingdom.
On Friday, the Thai Board of Investment revealed that in the last 10 months, 31 projects valued at ฿15 billion had been approved which have links to firms in Hong Kong.
Deputy Prime Minister Somkid bullish about Thai Hong Kong partnership and increased trade
Deputy Prime Minister Somkid Jatusripitak was also bullish about prospects for two-way trade between Thailand and the trading city.
Even in the next 12 months, he is predicting a 33% boost in trade bringing overall trade with Hong Kong from $15 billion currently to $20 billion.
‘Intra-trade is likely to reach the $20 billion mark faster than expected because trade is expanding to various sectors such as IT, the service sector and creative economy, especially in the film industry, as Thailand is very keen on post-production,’ Mr Somkid disclosed.
Mr Somkid was particularly enthusiastic about active cooperation between Thailand and Hong Kong on post-production film work and the fashion industry.
Companies to be cross-listed on the SET and Hong Kong stock exchange and help for startups
A very significant aspect of the plan being developed is for a cross-listing of securities on the SET index and the Hong Kong stock exchange.
There is also cooperation proposals in line with the Thai government policy of powering the Thai business sector and also in assisting startup ventures in Thailand.
The planned co-operation includes measures to foster the development of human resources in Thailand in areas from agriculture to science and technology as well as the creative industries such as media and fashion.
Further reading:
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Cambodia’s recall of diplomatic passports linked to press reports of Yingluck’s Hong Kong dealings
