How Asean can grab the opportunities offered by the Greater Bay Area

As more Greater Bay Area companies look to offshore production, Asean can boost its workforce training and infrastructure to make the region more attractive
Meanwhile, Asean companies can learn from Greater Bay Area innovations and sell to the region’s fast-growing middle class

Peter Wong

Published: 6:45pm, 30 May 2021

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In a global economic landscape battered by Covid-19, China’s Greater Bay Area development plan is a beacon of opportunity and growth for all of Asia.

And as China forges ahead with the plan to integrate Guangdong, Hong Kong and Macau into a globally competitive world-class metropolis, the corridor for trade, investment and innovation is likely to expand between China and Asean.

The pandemic and growing regionalisation in recent years has added momentum to the trend of China-based manufacturers shifting production to Southeast Asia. Last year, the 10-member Association of Southeast Asian Nations surpassed the European Union to become China’s largest trading partner. China-Asean trade reached US$684.6 billion, up 6.7 per cent year on year.

The economies of the Greater Bay Area and Asean are complementary. The Greater Bay Area is a powerhouse when it comes to finance, manufacturing and innovation, but the region has relatively high labour costs and few raw materials. In contrast, most members of Asean have an abundance of labour, land and raw materials.

The benefits will flow both ways as the Greater Bay Area develops further. For a start, companies based in the Greater Bay Area will want to move their labour-intensive production elsewhere as costs rise, as well as find new markets.

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We are already seeing China-based textiles, garments and electronics manufacturers build alternative production sites in the Asean region as they seek to lower costs while remaining close to China’s massive consumer market.

In return, companies in the Asean region will be able to learn from Greater Bay Area innovations and sell to the region’s fast-growing middle class.

To take advantage of the opportunities being opened up in Greater Bay Area, Southeast Asian countries should focus their resources on two interconnected areas. First, they should invest in improving the skills of their workforce. Secondly, they should boost their infrastructure to make themselves a more attractive destination for automated, data-driven, higher-value-added manufacturing and assembly.

The Greater Bay Area is where the future of finance and technology is being written and start-ups in the Asean region can learn from its experiences. It has become the epicentre of global advances in a broad range of transformational innovation, from digital payments, robotics and biotechnology to artificial intelligence and quantum computing.

Although the size, economic potential and interconnectivity of the Greater Bay Area will create significant opportunities, we must recognise that this plan is spread across three separate customs territories, with different currencies and legal frameworks, adding significant complexity. The absence of truly free cross-border flows of people, goods, services, capital and information risks capping the area’s potential.

Talent flow is a major challenge facing the Greater Bay Area. To facilitate the growth of the services industry, the people of Guangdong, Hong Kong and Macau should enjoy the same treatment as local residents in terms of medical services and education, and receive expatriate support in areas such as tax arrangements and cross-border finance. As the flow of talent gathers pace, demand for the services industry will also increase.

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Hong Kong has a large role to play in helping the broader region along the road towards greater integration. Its status as an international business thoroughfare makes it the link between the opportunities in the Greater Bay Area and the potential of the Asean region.

The Greater Bay Area is a grand plan that still needs time to coalesce. Southeast Asian economies should heed this important development. This cluster of cities is not only a significant centre of global production and innovation, it may well also become a global centre of commerce and economic growth in the post-pandemic era.

Peter Wong is deputy chairman and chief executive of The Hongkong and Shanghai Banking Corporation Limited, and chairman of The Hong Kong General Chamber of Commerce

This article appeared in the South China Morning Post print edition as: How Asean can thrive in Greater Bay Area

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