Promoting and improving infrastructure connectivity between the 11 cities that make up the Greater Bay Area, including Hong Kong, and the rest of the world are critical to the long-term success of the Greater Bay Area plan.
With China’s unprecedented economic growth and urbanization that began nearly 40 years ago, the major cities of the Pearl River delta now intersect to such an extent that they are collectively viewed as a mega city. It is, therefore, encouraging to see that promoting infrastructure connectivity is one of the seven key cooperation areas under the framework agreement of this bold plan.
With a population of nearly 70 million and an economy larger than Russia, Australia and Spain, the Greater Bay Area needs the infrastructure to match. The Greater Bay Area initiative provides a framework to improve the already high-quality infrastructure that exists in the Greater Bay Area so that it can become an even more important contributor to innovation and the global economy.
For Hong Kong, strengthening the transport links throughout the Greater Bay Area should improve the flow of people, goods and information between it and other sections of the Greater Bay Area and beyond. This, in turn, can increase the efficiency and decrease the cost of moving goods and services to global markets and vice versa. It may also help encourage more tourists to visit Hong Kong and the rest of the Greater Bay Area, enhance Hong Kong’s global role as a center for infrastructure financing, and improve the livability of Hong Kong and the broader Greater Bay Area.
Key infrastructure projects currently being built will do much to improve connectivity in the Pearl River Delta, such as the Hong Kong-Zhuhai-Macau Bridge, the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the New Guangdong-Macau Link. However, these major pieces of infrastructure alone cannot achieve the objectives of the Greater Bay Area plan.
As the framework agreement points out, infrastructure covers everything from safe water supply to information and communications networks, and world-class port and airports.
To build on and improve the infrastructure of the Greater Bay Area to support greater connectivity between the 11 cities and the global economy, CPA Australia member experts have put forward the following suggestions for consideration:
• Establishing a Greater Bay Area intergovernmental working party to coordinate infrastructure planning and the most efficient use of existing infrastructure.
• Creating a body with a mandate to prioritize and process infrastructure projects that are significant to the development of the Greater Bay Area. Such a body could provide research and advice to all governments involved in the Greater Bay Area, as well as investors and owners of infrastructure, on the projects and reforms to improve the region’s infrastructure. Various models exist internationally, including Infrastructure Australia, which could be considered in establishing such a body.
• Founding a body to improve the integration of critical infrastructure across the Greater Bay Area and assist local governments to develop better local links to critical infrastructure. This body may be the same body as the one above.
• Establishing a joint working party to coordinate planning across the Greater Bay Area to increase and improve housing supply, including infrastructure to support that increased supply.
• Creating a Greater Bay Airport Authority to improve coordination between the major airports of the Greater Bay Area and improve airspace coordination.
• Conducting research into how best to promote public private partnerships (PPP) to encourage the private sector to become more involved in the building, delivery and management of infrastructure.
• Researching the feasibility of providing tax relief to investors into government-led infrastructure projects for PPPs and asset-backed securitization (ABS) arrangements. This could involve providing investors in government-led infrastructure projects in the mainland section of the Greater Bay Area relief from the turnover tax and income tax consequences arising from the asset transfer-in and transfer-out of a project company under a PPP arrangement. It could also involve similar tax relief for ABS arrangements for funding infrastructure projects in the Greater Bay Area.
• Researching the feasibility of allowing investors in approved infrastructure projects to claim refunds for input VAT credits. Such infrastructure projects should be in the Greater Bay Area and involve long construction periods and long investment recovery periods. This would help relieve cash flow pressure and financing costs of such projects and could help encourage more infrastructure projects to be undertaken in the Greater Bay Area.
The Greater Bay Area is an exciting initiative seeking to enhance the region’s already impressive contribution to global growth, innovation and finance. Having the right infrastructure to underpin that strategy is essential – and it involves (as the framework agreement states) not just large-scale infrastructure projects such as the Hong Kong-Zhuhai-Macau Bridge but smaller projects such as safe energy supply.
– Contact us at [email protected]