austcham news Issue by The Australian Chamber of Commerce in Hong Kong

香港及澳門澳洲商會

The Australian Chamber of Commerce Hong Kong and Macau

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austcham news • Issue 200 | JULY 2018 10 Innovation: the Race to the Future with 2018 Australian of the Year 12 AustCham Taking Our CGT Campaign to Canberra 18 First Australian delegation to the Daya Bay Nuclear Power Station

Innovation: the Race to the Future Where Business, People and Ideas Connect

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Chairman's Column

t the midpoint of 2018, it is timely to reflect on some of the recent achievements and work undertaken so far this year by the Chamber. I have been particularly pleased to see the progress on the Capital Gains Tax advocacy campaign that gathered momentum on a global scale through the support from you, our members, and the efforts of the Secretariat. This campaign saw engagement with Australian Government and business stakeholders throughout Asia and included two delegations to Australia to lobby Federal politicians in Melbourne and Canberra. The Chamber is also focused on the education sector and as such we have recently launched the 2018 Internship Programme which will match talented students with Hong Kong-based companies across a diverse range of industries. The objective of the program is to provide our members with first access to leading undergraduates studying at Australian universities while establishing a platform for students to build Asia capability through valuable work experience in Hong Kong. We appreciate the support from our members who have joined and for those who would like to be part of this landmark initiative, applications can be made through the Secretariat. This year’s highly sought-after Mentor Programme is now accepting applications. Now in its seventh year, this fantastic program would not be possible without the support from the University of Wollongong who have committed to the program for the second consecutive year. I was pleased to speak at one of the sessions last year on “The Journey to the Boardroom” where I met and shared some of my experience with the participants. If you are an aspiring professional seeking an extraordinary learning and development opportunity or if you are a senior executive who would like to share your experience and wisdom, I encourage you to register today. In addition to engaging with our Members, the chamber is also committed to giving back to the community. You can read a feature interview on P.22 with one of our CSR partners, the Fred Hollows Foundation’s new Chief Representative in Hong Kong and ASEAN, Laura Lee to talk about the foundation’s new strategic plan and how it has restored sight to more than2.5 million people globally in the past 25 years.

austcham news issue 200

Cover Story 6 Innovation: the Race to the Future

Innovation: the Race to the Future with 2018 Australian of the Year

Making an Impact Building Influence: AustCham Taking 12 Our CGT Campaign to Canberra

Looming Tax Bills for Expatriates

Obituary

Hong Kong Focus 16 To Combat Rising Costs, the Asian Construction Sector must Invest in Digital Innovation

Greater Bay Area Focus First Australian Delegation to 18 the Daya Bay Nuclear Power Station

China’s Not-so-secret Competitive 20 Advantage

Feature Interview

AustCham UOW Mentor Programme

Committee Comment 26 Committees in Action 29

On a personal note, I will be travelling to Cambodia for charity work for a week. Giving back to the community is rewarding and I see it as one of the greatest life lessons we can teach ourselves and our children. With the summer holiday season coming, I encourage you to think of how we can give back in to your community in a meaningful way.

Industry Insights 32

It is on this vein that I want to close by paying tribute to Martin Darveniza, AustCham Board member, who passed away last month after a short illness. Martin’s life in Fiji, Australia and Macau was marked by an enduring commitment to give back. We will miss his contribution and extend our condolences to our Macau friends and to his family. We pay tribute to his commitment to “community” on P.15

On the Scene 35

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Yours sincerely,

Andrew Macintosh chairman@austcham.com.hk

New Members 33 Corporate Profile 34

austcham news Online version

Chamber Chatter

What’s Trending

ecent weeks have seen AustCham Hong Kong and Macau mark two firsts for members – and both very different. The first was our visit to Canberra where our Deputy Chair and Head of Financial Services Tax, KPMG in China, Darren Bowdern and I had the privilege of meeting senior politicians and bureaucrats to lobby on your behalf. This is part of the Board’s longer-term strategy to deliver value to our members, by building influence and awareness of the important role the Chamber has in Australia’s engagement with Asia. You can read more about the visit on P.12, but it was an honour to represent you, our members, as we met in the Treasurer’s office in Parliament House, as we watched Question Time in the House of Representatives and as we met senior officials at the Department of Foreign Affairs & Trade RG Casey head office. And with the focus on AustraliaChina relations, the timing of the Australia China Business Council’s annual networking day was ideal, providing us with an opportunity to hear from political leaders of both sides on this important issue. We also reminded stakeholders that Hong Kong operates within “one country, two systems”– that Hong Kong companies ought not to be automatically regarded in the same way as companies from the Mainland. Hong Kong companies operate under a very different system which is founded on the rule of law, operating within a market which is open and transparent and has earned deep-seated institutional trust worldwide. I want to take this opportunity to acknowledge the support of Darren and Andrew Weir at KPMG who go well beyond their Platinum Patron support to assist the Chamber in so very many ways. Darren’s advocacy on your behalf – particularly in terms of his technical knowledge on tax around the Double

EVENTS UPDATE

AustCham UOW Mentor Programme opens for application! JULY AT A GLANCE… Tue, 31 July, 8:00am – 9:30am 19th CEO Forum with Dylan Alcott Meeting Room, Herbert Smith Freehills, 23/F, Gloucester Tower, 15 Queen's Road Central, Hong Kong

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AustCham Technology and Business Programme Series III July 2018

Taxation Agreement and the proposed amendment to the Capital Gains Tax on non-resident family homes - lent significant weight to our argument. And while we might not have got the answers we wanted during the visit, we are now better informed and equipped to continue our campaigns on both fronts. The second visit was to CLP’s Daya Bay nuclear power plant just over an hour away from Hong Kong. This was the first visit to a nuclear reactor for all on the delegation, and offered an extraordinary experience to learn more about nuclear energy, the technology used, global best practice and the focus on safety, particularly in the wake of the Fukushima disaster. Not only was it a first for us, but it was a first for CLP. It was there we learned from Chi Cheung Tang (CC), Managing Director of Daya Bay, that we were the first delegation from Australia to visit the plant, which provides around a quarter of all Hong Kong’s energy. CC, originally from Western Australia, was delighted to welcome us and he and his team shared the unique experience of touring the reactor’s simulation training centre, which is an exact replica of the operations centre (not dissimilar to the role of a flight simulator used to train pilots). We are indebted to Richard Lancaster and Austin Bryan at CLP for making this field trip happen. It was certainly one few of us will forget. So from Federal Parliament to a nuclear power reactor (some might say you need a hard hat for both), it’s been quite a month. And of course, it has been capped off with the terrific news last week from Hong Kong’s highest court to grant same sex dependency visas. This is a real boon for many of our members whose ability to attract the best and brightest talent from around the world has been hampered by this constraint. Enjoy the (Northern Hemisphere) Summer holiday and see you all after the break. Jacinta Reddan, Chief Executive, AustCham

AUGUST AT A GLANCE… Thu, 16 August, 12:30pm – 2:00pm How to build your own Effortless Property Empire *Independent Event Delivered Through AustCham's Event Management Service AustCham Business Centre, 3/F, Lucky Building, 39 Wellington Street, Central, Hong Kong Wed, 22 August, 6:30pm – 9:00pm 68th InterCham Young Professionals Cocktail Rula Bula, 58-62 D'Aguilar St, Central, Hong Kong Wed, 29 August, 7:00pm – 9:00pm AustCham Women in Business Network Summer Drinks To be confirmed

A Letter from Canberra When many Australians think about space, their thoughts go to Apollo 11, one giant leap for mankind, the Dish, Star Wars and fabulous galaxies light years away. But since the 1960s, space has become more than lunar modules and alien life forms. Today, space is an integral part of our economy, providing many of us with the data to pay our bills, connect online and navigate our way around the world. Space has been in the headlines in Australia in recent months thanks to a review of the sector and significant investments in establishing an Australian Space Agency, improving our global positioning accuracy from five metres to 10 centimetres and commercialising Geoscience’s fully corrected, digital library of satellite data. The global space economy is worth over US$340 billion a year. But Australia has less than a one percent share in that market. With billions of dollars of existing space-related infrastructure and world class researchers, analysts and communications, Australia has the foundations, and the history, to dramatically improve that share. But to do that, we need to develop a national vision and strategy to harness our home grown talent. We need to focus the skills and attention of government agencies, small, medium and large businesses, industry and educators on realising the opportunities for Australian innovation, technology and manufacturers in a sustainable way. And we need to provide the necessary support for innovation and start ups in artificial intelligence, the Internet Of Things, robotics, quantum technologies and next-generation propulsion systems. ‘Space 2.0’ offers exciting opportunities to draw on Australian ingenuity to play a leading edge role as a responsible global citizen and respected space expert.

Published By: The Australian Chamber of Commerce in Hong Kong and Macau Room 301-302, 3/F, Lucky Building 39 Wellington Street, Central, Hong Kong Tel: +852 2522 5054 Email: austcham@austcham.com.hk Editorial Committee: Karen Wu Jacinta Reddan Advertising: Karen Wu Email: karen.wu@austcham.com.hk

Where Business, People and Ideas Connect The Australian Chamber of commerce in Hong Kong and Macau is Australia's largest international chamber with about 1,400 members representing about 500 Australian and Hong Kong based companies. It's the largest Australian business grouping outside the country and the second largest of 28 International Chambers of Commerce in Hong Kong. The AustCham mission is: To promote & represent business & values while enabling members to connect, engage & grow bilateral relationships. Disclaimer: The views expressed in this publication are not necessarily those of the Australian Chamber of Commerce in Hong Kong and Macau, its members or officers. The Australian Chamber of Commerce in Hong Kong and Macau takes no responsibility for the contents of any article or advertisement, makes no representation as to its accuracy or completeness, and expressly disclaims and liability for any loss however arising from or in reliance upon the whole or any part of this publication.

We have what it takes. We now need to unleash the innovation that played the central role in broadcasting those famous first steps on the moon nearly 50 years ago. Gai Brodtmann MP, Federal Member for Canberra and Shadow Assistant Minister for Cyber Security and Defence

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Cover Story

Innovation: the Race to the Future A conversation with 2018 Australian of the Year – Professor Michelle Simmons - Tracy Hansen

nternationally recognised as one of the leading lights in quantum physics, Professor Michelle Simmons is optimistic Australia has a leading role in the quantum ‘global space’ race. The remarkable 2018 Australian of the Year and her team are racing to be the first to develop a silicon-based quantum computer: a radical new form of computing set to transform the future. Speaking at the sold out AustCham CBA Innovation luncheon on Thursday 21 June, Professor Simmons said Australia’s culture put the nation at the forefront of innovation research. “One of the great things I love about Australia is its collaborative spirit. We are enthusiastic collaborators and we compete hard,” Professor Simmons said. She was invited to Hong Kong courtesy of the Commonwealth Bank (CBA). Michelle Simmons aims to build a quantum computer capable of solving complex problems, which would usually take thousands of years, in just minutes. The new technology has the potential to revolutionise everything from drug design to weather forecasting, self-driving vehicles, artificial intelligence and so much more. To achieve her goal, Simmons’ team at the Centre for July 2018

Quantum Computation and Communications Technology (CQC2T) at UNSW Sydney collaborates with a number of quantum research institutes and international centres across the globe, as well as partners in technology, industry and government. By identifying potential problems, end-users are also important in the collaborative process in which the team design hardware specifically for the applications that end-users wish to employ. Simmons believes that Australia has the added advantage in the race as a consequence of deliberately choosing silicon at a time when other people were looking at different materials. Australia was first to establish a quantum computing research centre back in 2000 and now boasts six centres of excellence in which quantum technologies are at the core, including a software centre with approximately 1,000 researchers working on quantum technologies at any one time.

Essentially any industry that involves data and lots of variables will be affected by quantum technology. The stakes are high Over the past decade, there has been enormous investment in quantum technology, including from the US, the EU, Denmark, the Netherlands and Singapore. Very recently China announced a new university dedicated exclusively to quantum science, with Chinese funding for quantum research now reportedly dwarfing that of the US. Back in Australia, the Commonwealth Bank and Telstra have both demonstrated a strong commitment to quantum technology. In 2015 CBA pledged A$10 million over five years to support UNSW Sydney's research, and Telstra then matched the bank's injection, also pledging A$10

million over five years. At the same time the federal government allocated A$26 million of its A$500 million science funding to support its work in quantum computing, made available under Australia's A$1.1 billion National Innovation and Science Agenda. “Essentially any industry that involves data and lots of variables will be affected by quantum technology.” Professor Simmons urges us not to wait too long before we learn to understand quantum technology and its immense possibilities, because not only is this breakthrough predicted to disrupt 40% of Australian Industry, it also has the potential to transform our future. cont P.8

Quantum Coding for Pre-schoolers

urrently a practice in the UK and Singapore, with Australia likely to follow, Professor Michelle Simmons wholeheartedly supports the concept of introducing children to coding as early on as kindergarten. “Young children have never lived in a world without tablets and smartphones. They’re already learning from computer devices much faster than we ever did, are undaunted by technology and more than happy to experiment. The key is to get them using their devices constructively, to create things and solve problems rather than just using the technology for games and social media,” says Simmons, who believes it will be easy to get pre-schoolers into coding. There are simple Apps out there that use drag and drop coding blocks to teach the fundamentals of coding. Youngsters can program their own interactive stories and games. “Once children discover they can create a 3D picture or program a robot and see the impact they can have, the reality is they will engage. In the process, they learn to solve problems, design projects, and express themselves creatively,” she added.

Photo credit: Australian International School in Hong Kong

Simmons is passionate about encouraging young people, both boys and girls to pursue careers in science. “For some reason, girls in particular seem to lose interest between the ages of 14 and 16,” she says. “I’m still trying to figure out why this happens. In part, I believe it is because there is concern about what a career in science looks like. The reality is that picking up skills in science, maths and computing brings flexibility and widens your career choices. In an age where information technology is undergoing rapid transformation I want to ensure girls don’t miss out.”

Cover Story cont from P.7

Quantum vs. classical computers

Quantum computers are not designed to replace our laptops or do our word processing. Quantum technology enables applications in machine learning, big data, prime number factorisation and quantum simulation. Quantum technology also solves highly mathematical optimisation problems for particular applications in which many companies are interested. For example, Simmons cites the case of UPS, a nationwide parcel delivery service in the United States. The firm is interested in optimisation algorithms to find ways to save on transport costs. If they could cut just one mile from each couriers’ daily travel, it could result in a hefty US$50 million a year in savings for UPS. The race is on – and diversity helps There is huge competition in the global race to reach “quantum supremacy,” but Professor Simmons is not daunted. Her Australian research team has reached the first five out of seven milestones identified in a roadmap to build the quantum computer states. The professor attributes much of the team’s success to its diversity (30% are Australian and 70% are from overseas). “It is critical to have different cultures, ideas and perspectives - working within such a diverse team is essential for our creativity and problem solving,” she told the audience of about 130. Over the past decade the team has published over 500 papers with 45 granted patents in silicon based quantum computing. In May 2017, the Australian Government, the Commonwealth Bank, Telstra, UNSW and the NSW State Government

partnered to form Silicon Quantum Computing Pty Ltd (SQC); a start-up company tasked with building a 10-qubit integrated circuit on the way to a full silicon processor. The start-up sits alongside the university's Centre of Excellence, which, as of 2018, has been funded for another seven years to conduct fundamental research, engineering, and algorithm development around how UNSW will operate and run the quantum computer. Professor Simmons speaks to students at the Australian international School in Hong Kong While in Hong Kong, Professor Simmons shared her passion for physics with students at the Australian international School Hong Kong, advising them to gain lots of different skills. “It is important to recognise that the biggest barriers you have are your own, so try to take risks and push for the hard things,” she recommends. “I always find these to be the most rewarding.” Simmons emphasises the need to start encouraging kids to study coding, physics, maths and statistics at a young age advocating that kindergarten is not too soon to start. “The quantum information field is incredibly intense in these subjects”, she explains. “For example, if you’re already writing software code on a classical computer, you can’t simply switch to quantum. In addition to coding, you will need to have a physics background”. Simmons also stresses that teachers and school career counsellors need specific training so they can help students become more aware of the immense opportunities available to them in the quantum information field. “It is a new industry that is incredibly interesting, exciting and deeply rewarding” she says. “It’s important for students to know about this now, so they can start planning.”

2018 Australian of the Year Professor Michelle Simmons at the Innovation lunch: Guiding Personal Principles 1. Do something hard 2. Set yourself high expectations 3. Take risks 4. Do something that matters

July 2018

About Professor Michelle Simmons Impressed by Australia’s world-class research facilities and advanced technologies, Prof Michelle Simmons moved from the UK to Sydney in 1999. She is one of just a handful of researchers in Australia to have twice received a Federation Fellowship and now a Laureate Fellowship, the Australian Research Council’s most prestigious award of this kind. Simmons won both the Pawsey Medal (2006) and Lyle Medal (2015) from the Australian Academy of Science for outstanding research in physics and was, upon her appointment, one of the youngest fellows of this Academy. Simmons was named Scientist of the Year by the New South Wales Government in 2012 and in 2014 became one of only a few Australians inducted into the American Academy of Arts and Sciences. In 2015 she was awarded the CSIRO Eureka Prize for Leadership in Science and in 2016 the Foresight Institute Feynman Prize in Nanotechnology for her work in the new field of atomicelectronics, which she created. Recently recognised by the American Computer Museum as a pioneer in quantum computing, Prof Simmons is Editor-in-Chief of Nature Quantum Information, the 2017 L’ORÉAL UNESCO Asia-Pacific Laureate in the Physical Sciences and, in May this year, was elected a Fellow of the Royal Society of London.

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Innovation: the Race to the Future with 2018 Australian of the Year

ustCham and the Commonwealth Bank of Australiaâ&#x20AC;&#x2039;partner to bring the 2018 Australian of the Year Quantum Physicist, Professor Michelle Simmons to Hong Kong to share her vision and the power of quantum computing.

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Photo coverage If you missed the speech, don't miss the replay on our Facebook fan page! Speech

Fireside Chat

Making an Impact

Building Influence: AustCham Taking Our CGT Campaign to Canberra

ustCham took to Canberra to meet with senior Government and Opposition members as part of a longer-term program to raise awareness on issues that matter to members.

The visit, the first such engagement AustCham has undertaken, aims to enhance the chamber’s influence and to build greater understanding of the role of the chamber and the needs of its members. Chamber representatives discussed core issues including the lack of Asia capability in corporate Australia, the Double Taxation Agreement between Hong Kong and Australia and the much talked about proposed Capital Gains Tax amendment which will hit offshore Australians, should they sell their family home after July 1 next year. “We want to be sure that key stakeholders in Canberra understand the value and insight our members bring to core discussions around trade, investment and peopleto-people engagement,” said Jacinta Reddan. “When Government, Opposition or policymakers are framing conversations on these core issues, we want to be sure that we are consulted and that our insight is taken into account.” Jacinta and Darren Bowden, Deputy Chair of AustCham and Head of Financial Services Tax KPMG in China, travelled to Canberra for a series of meetings with senior officials and to attend the annual Australia China Business Council of Australia’s (ACBC) annual networking day. The pair met with Government ministers including the Treasurer Scott Morrison and Minister for Financial Services Kelly O’Dwyer, as well as Shadow Treasurer Chris Bowen. July 2018

AustCham Depu ty Chair Darren Bo wdern and Chief Execut ive Jacinta Reddan at the Parliament Hous e in Canberra.

Capital Gains Tax campaign It was disappointing that the Treasurer maintained that the CGT amendment was government policy on housing affordability and that it was too late to change the proposed bill, which has now been debated in both Houses of Parliament. Reddan states, “In our view, it’s never too late if poor policy and lack of adequate consultation fails to identify a major unintended consequence, and we will continue to lobby on this unfair tax burden.” Follow up letters have been sent to respective politicians restating concerns and urging action, highlighting the impact on a variety of sectors of the Australian community. A briefing of AustCham members discussed the need to develop a grassroots campaign, highlighting the impact of the CGT changes not only on non-resident Australians, but on migrant communities across Australia. Members interested in taking part are encouraged to contact Steve Douglas at SMATS (steve@smats.net). AustCham also urged Treasury to progress on the long-awaited Double Taxation Agreement between Hong Kong and Australia, arguing that the agreement would provide certainty for many Australia and Hong Kong investors.

In addition, Jacinta and Darren also highlighted the deep Asia experience amongst the AustCham membership – a resource which was under-valued in Australia. The lack of Asia capability in corporate Australia is an issue high on the agenda of Shadow Treasurer Chris Bowen who launched the Opposition’s Future Asia policy last year. Australia–China Relations The relationship between Australia and China was high on the agenda at the ACBC Canberra Networking event. Chaired by ACBC president, John Brumby, the day-long event attracted high level speakers and featured an address by Prime Minister Malcolm Turnbull about Australia’s relationship with China. The event opened with a keynote speech by China’s Ambassador to Australia, Cheng Jingye. The ACBC event, held at Parliament House, also included speeches by Foreign Minister Julie Bishop and her

1 & 2 Joining the Australia China Business Council networking day in Canberra.

3 & 4. AustCham brought the CGT Campaign and Double Taxation Agreement to Treasurer Scott Morrison and Shadow Treasurer Chris Bowen. 5.

AustCham Chief Executive Jacinta Reddan and Deputy Chair Darren Bowdern met Minister Kelly O’Dwyer.

Opposition counterpart, Penny Wong, Minister for Trade and Investment Steve Ciobo, Opposition spokesman Jason Clare and the Shadow Treasurer Chris Bowen. Expert panellists from across industry also discussed issues around international education, China ecommerce and the role of soft diplomacy through sport and the arts. Some speeches from the program can be found online via the links below. A special thank you to Steve Douglas of SMATS Group for helping to drive this campaign and to Helen Sawczak of the Australia China Business Council.

HE Cheng Jingye, China Ambassador to Australia http://au.china-embassy.org/eng/zagx/t1470709.htm The Hon Malcolm Turnbull, Prime Minister of Australia https://www.malcolmturnbull.com.au/media/remarks-to-theaustralia-china-business-council-canberra Senator The Hon Penny Wong, Leader of the Opposition in the Senate https://www.pennywong.com.au/speeches/australia-chinabusiness-council-parliament-house-canberra/ The Hon Steve Ciobo MP, Minister for Trade, Tourism and Investment http://trademinister.gov.au/speeches/Pages/2018/sc_sp_180619.aspx The Hon Jason Clare MP, Minister for Justice http://www.jasonclare.com.au/media/speeches/3990-speechto-australia-china-business-council

Making an Impact

Looming Tax Bills for Expatriates - James Dunn, CPA Australia

ustralians who work or retire abroad face higher – and possibly retrospective – tax bills if they sell their Australian homes. Accountants may need to warn clients.

Is it still worth taking a foreign posting? Australian employers wanting to send staffers abroad are already getting pushback following proposed measures to retrospectively tax expatriates who sell their home in Australia. A measure intended to improve local housing affordability runs the risk of penalising Australians taking postings abroad and migrants who return to their countries of origin, by stripping from them the main residence exemption (MRE) from capital gains tax (CGT). A bill before the Senate seeks to retrospectively remove the main residence exemption from CGT for non-residents from the time the property became the taxpayer’s main residence, instead of from the time they became a non-resident. Expatriates caught in housing affordability net The Senate is still considering Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No.2) Bill 2018. “The government’s position is that if you’re from overseas and you buy property in Australia, but you remain a nonresident for tax purposes, you won’t get the CGT MRE,” says Robyn Jacobson FCPA, senior tax trainer at TaxBanter. “They’re trying to make it less attractive for foreigners to buy houses here, trying to make more houses available to Australians, and trying to improve housing affordability. “I get that. But as the proposed legislation stands, it also applies to Australian expatriates who have taken a job posting overseas and are non-residents for tax purposes, as well as Australian citizens who have chosen to retire overseas,” says Jacobson. If someone from either of these groups sells the dwelling that was their home for many years, and they happen to be a nonresident at the time of the CGT event – that is, when they sign a contract to sell the property – they will not be entitled to the MRE for the entire period they owned the home. Retrospective laws on expat homes Moreover, the loss of the MRE for these groups is retrospective, says Jacobson. “When you change tax policy, it should start from the date it is announced or a future date. But as this proposed amendment currently stands, the loss of the MRE potentially goes all the way back to the date from which CGT has applied, which is 20 September 1985,” she says. July 2018

Jacobsen believes the retrospectivity is unfair. People were not to know when they bought their home that when they sold it, as a non-resident, they would have a taxable capital gain going back to when they bought it. The proposed measures do not allow for any pro-rating of the period during which the person was a tax resident and lived in the home. They cannot use the market value of the home on the date they became a non-resident, and confine the taxable capital gain to that which arose since that date, nor can they apply the six-year absence rule. Tax laws currently allow people to maintain the CGT exemption on their main residence if they have a temporary absence of up to six years, as long as they are not claiming another property as their main residence at the same time. Thousands of expats affected by tax on homes Inadvertently or not, the Bill affects “hundreds of thousands of Australians living and working offshore,” says Jacinta Reddan, chief executive of the Australian Chamber of Commerce in Hong Kong and Macau. “This simply has not been thought through. Firstly, we’re living in an increasingly globalised world, and the expatriate diaspora is both an enormous benefit to the Australian economy, because people return bringing with them increased skills, and to the nation’s engagement with the world.” Secondly, she says, being an expatriate does not mean immunity from unexpected life events such as divorce or loss of a job, illness or death. “These can hit us all regardless of where we live, and we often don’t have a choice about when to sell our homes. Making all of the gains from a property sale taxable just because the person is a non-resident at the time of disposal is penalising Australians for living and working offshore, which is manifestly unfair,” says Reddan. The Chamber is seeing a backlash from corporate members who report resistance from staff offered critical offshore postings. Read more: https://www.intheblack.com/ articles/2018/06/20/looming-tax-bills-expatriates Source: The above is an abstract taken from the article published on CPA Australia’s INTHEBLACK Magazine.

Obituary

Martin Darveniza 1962 - 2018 15

ustCham Hong Kong and Macau lost a good one with the sudden passing of board director Martin Darveniza.

Martin lost a battle with aggressive cancer which was diagnosed soon after he hosted our Rugby Sevens Cocktails. Those who attended will recall Martin delivered a very entertaining interview with his good friend and rugby legend John Eales, and it was a fitting final event for a man who loved rugby deeply. A memorial service at Galaxy in Macau was attended by Acting Consul General Sam Guthrie, senior executives of Galaxy, the Chamber representatives and members, Martin’s staff and wide network of friends who were joined by his family from Brisbane. Martin pushed the cause of lifting the profile of cooperation between Australia, Hong Kong and Macau through his engagement in the Chambers’ activities when he became one of the first Macau Business Network members established about three years ago. Martin through his enthusiasm, skills and his generosity of time was a key individual in pushing forward the establishment of the Macau chapter, that at its core was about promoting all great and positive Australian qualities, as well as creating a closer bond between Australian and Macau SAR communities. With Martin’s legal background, he played a key role in working through the legal process of establishing Macau as

a separate legal AustCham entity (as required by Macau law), with the Chamber to remain closely affiliated with AustCham Hong Kong. This project, including the drafting of the Articles of AustCham Macau, with the purpose to make sure members benefits are maximised and protected, required a good deal of patience, attention to detail and an ability to bring people along with him, is nearing its conclusion thanks to Martin’s tenacity. Acting Consul General and fellow AustCham board director Sam Guthrie described Martin as a “unique person of character and generosity who brought people together.” He said Martin exemplified a true sense of a community, an example of those who “showed up” and contributed, time and time again. Martin was appointed to the AustCham board in May last year. He became a direct connection between Macau based members and the Board, where Macau based members’ voices were heard. His hard work was well recognised by all of us, in Macau and Hong Kong. Martin is survived by his children, much loved parents Professor Mat & Mrs Irene Darveniza and sisters Elspeth and Anne.

Hong Kong Focus

To Combat Rising Costs, the Asian Construction Sector must Invest in Digital Innovation - Francis Au, Head of Hong Kong and Macau at Arcadis - Sze Boon, Head of Cost Management and Quantity Surveying Singapore at Arcadis

ong Kong retained its position as the most expensive city to build in Asia despite falling one position to number 3 in the 2018 International Construction Cost, just after San Francisco and New York.

If you’re working in construction, there are some indexes you’d rather not top, and Hong Kong remaining the most expensive Asian city to build in is one of them. Singapore isn’t far behind in fourth place. The 2018 International Construction Cost was heavily influenced by the relative strength of the U.S. dollar which in turn placed North American cities higher in the index. In Asia, a strong mix of high cost of labor, materials and expensive finishes continue to drive up costs in leading cities such as Hong Kong and Singapore. Singapore’s construction market has started to pick up after several years of continuous correction caused by oversupply and a slowing economy. Demand is higher and there has been a change in market sentiment as construction cost levels are no longer dropping. The upturn is leading to an optimistic outlook, and construction cost movement for 2018 is anticipated to range between -1% and +2%. This year’s construction demand forecast is currently estimated to be between S$26bn and S$31bn and some notable projects in the pipeline for Singapore include the Deep Tunnel Sewerage System, the North-South Corridor, July 2018

Singapore's first integrated transport corridor, and Terminal 5 at Changi Airport. On the other hand, Hong Kong’s construction market is slowing down and this is partly due to several large infrastructure projects being completed in 2018, such as the Hong Kong-Zhuhai-Macau Bridge. Construction output is estimated to grow at a rate of around 2% per annum up until 2020-21, with new infrastructure and residential projects being the main sources of demand. While in the medium term, predictions for growth are positive, in the short term, the market is very likely to experience negative movement. Hong Kong is juggling a raft of other factors that lead to high costs such as site logistics and limited site space, which in turn creates a need for off-site storage, having to build upwards and the use of traditional construction methods. Chief Executive Carrie Lam recently said that scarcity of land was the biggest issue facing Hong Kong. Developers are in agreement, as they consider there is not enough land for them to build and bid, while contractors complain there are not enough works around both in public and private sectors.

Technology and Innovation as part of the solution to lower construction cost With constrained capacity in many markets in the region, the only way to deliver is to do things differently. To tackle Hong Kong’s low productivity in infrastructure and building works, the government made commitments in the 2018-19 budget announcement to make available HKD$1 billion for a Construction Innovation and Technology Fund to promote the adoption of technologies such as Building Information Modelling (BIM), which will be applied in the design and construction of major government capital works projects; and piloting Modular Integrated Construction (MiC) in public projects. Another positive development in Hong Kong has been the government’s piloting of the Buildability Evaluation System (BES) in capital works, taking advantage of buildable designs to ensure practicality and effectiveness of methods well in advance, and thereby lowering construction costs during the early design stages. A short plane journey away, the Singapore construction sector is further along its digital transformation journey. Most of the credit is due to the government’s foresight in promoting new technology to reduce labor-intensive work as part of its far-reaching Smart Nation initiative. Last year Minister of State for National Development Koh Poh Koon told Parliament, "to survive and thrive, the industry must consider new ways of doing things." Singapore has made BIM submissions mandatory for all projects of gross floor area exceeding 5,000 square metres, and the government aims to adopt Design for Manufacturing and Assembly (DfMA) technology in 40 per cent of construction projects by 2020, up from 10 per cent today. An additional highlight of the government’s funding includes the S$800 million

17 for the BCA’s Construction Productivity and Capability Fund (CPCF), which benefits more than 9,000 firms in technology adoption, skills development and better integration across the value chain1. The adoption of MiC in Hong Kong and other technologies such as DfMA and PPVC in Singapore is having or will have an impact, yet the infrastructure isn’t quite ready to meet the region’s changing demand as there is only a limited pool of suppliers to deliver the works. While there are challenges to overcome, the benefits are clear: by adopting new technology, the construction industry throughout Asia can enjoy more productive, profitable and safer ways of working. We can’t easily produce more land in Hong Kong or Singapore, but we can improve the way we work by embracing innovation. For full report, please visit: https://bit.ly/2yL46Xy

Source: https://www.bca.gov.sg/CPCF/cpcf.html

Greater Bay Area Focus

Greater Bay Committee: First Australian Delegation to the Daya Bay Nuclear Power Station

A 18

ustCham led the first Australian delegation to the Daya Bay Nuclear Facility, which provided an extraordinary glimpse into the power plant which supplies 25% of Hong Kong’s energy. We were very pleased to be joined by our friends from AustCham South China as part of our GBA committee collaboration, during the June field trip. The Daya Bay nuclear power station is CLP’s first largescale commercial nuclear facility in the mainland that joins hands with the Chinese Government. It has been supplying 70% of its energy to Hong Kong and the remaining 30% to Guangdong province since first operation in 1994. The guided tour was led by Mr CC Tang, Senior Director of Nuclear at CLP Holdings, Mr CS Lee, First Deputy General Manager at DNMC and Mr James Lam, Technical Manager at HKNIC, which included an overview of the power plant with visits to the operation room, simulation room and training centre. This once-in-a-life time experience for our members was aimed at gaining a better understanding regarding the role of how the global nuclear industry plays a vital role in enabling environmental sustainability. In addition, Mr Tang also emphasised the importance of safety on site where all the staff members, including managers, must be trained on nuclear safety. A big thank you to CLP for hosting such an educational and insightful trip for AustCham members.

July 2018

Event Sponsor:

Committee Sponsors:

CLP publishes monthly relative prices of the fuels which have been used to provide electricity to their 2.5 million customers. e.g. energy cost per unit for May 2018: Energy Cost per Unit Sent Out

¢/kWh

Coal

Gas

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113

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https://www.clp.com.hk/en/community-andenvironment/green-tools/energy-costs

Greater Bay Area Focus The GBA nine Guangdong cities plus Hong Kong andand Macau Thecomprises GBA comprises 9 Guangdong cities plus Hong Kong Macau Major airport

Companies headquartered: • China Southern Power Grid, • China Guangfa Bank, • GF securities, • NetEase (in 2019)

New area *

Planning

Companies headquartered: • TCL Manufacturing base of: • BYD

Zhaoqing Guangzhou

20 Foshan

Huizhou

Dongguan

* Nansha

Shenzhen Qianhai

Zhongshan

Jiangmen

Lok Ma Chau Loop*

HK Hengqin

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Companies headquartered: • Huawei, • ZTE, • Tencent, • Ping An Insurance, • China Merchants Bank, • BYD

China’s Not-so-secret Competitive Advantage 4

Source: ANZ Research

- Betty Wang, Senior China Economist at ANZ A successful experiment of China’s market - Raymond Yeung, Chief Economist Greater China at ANZ

ecent trade tensions between the United States and China prompted by trade restrictions from the US pose two key challenges to China's current development model. The first is how China will address the West’s concerns about its market economy, state capitalism and intellectual property issues as it seeks to further integrate into the global economy. "The GBA initiative aims to help the region regain its leading role and drive China’s manufacturing sector.” The second is how China will upgrade its core competitiveness and move up the value chain to achieve sustainable growth in the face of global competition. In ANZ Research’s view, the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) initiative is a platform for China to address the above issues and pilot the country's economic transition and integration into the global economy. Outstanding issues include whether the initiative will fuel income inequality in the region and how to integrate with Hong Kong smoothly. July 2018

In addition to openness, the region also enjoys policy fle Initiative holding companies. These factors have helped it become

The GBA covers the Pearl River Delta (PRD) region (nine Maintaining market reforms and encouraging private sect cities) of Guangdong Province and Hong Kong and Macau. region’s future economic success. The former (or GBA 9) is the most liberalised region and the biggest beneficiary of China’s opening up since late 1970s. Market forces matter m Theregion regionhas hasfewer fewer state-holding state-holding companies companies than The thanothers others Assets of state-holding enterprises as % of total industrial enterprises

GBA is

initiative. manufacturers’ investment, winning the region theGBA name of ‘global factory’.

Guangdong province has taken the lead in t Connecting China and the rest of the world R&D expenditure in different provinces asin% of nation-wide, 2016 International ports a big advantage to the region R&D expenditure different provinces as % of nation-wide, 2016

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14.4 during the last five years amid diminishing labour and cost Guangzhou TheMany GBA idea was first mentioned 2015 when Chinaand joint-stock domestic securitiesinfirms, funds, banks are headquartered in Shenzhen Hong Kong advantages. GDP growth has fallen to 7 per cent to 8 per publicised the Belt and Road initiative. In March 2017, and Guangzhou. Others cent in recent years from double-digit growth prior to 2012. Premier Li Keqiang highlighted the GBA in his Government Source: Guangdong Stats, NBS, ANZ Research 10.8 The Shenzhen Stock Exchange has a market capupgrades, (equities) of USD3.5trn compared Work Report, formally initiating the idea as a(SZSE) city cluster 8.9 Industrial technological innovation and 8.7 with Hong Kong’s USD4.3trn. development plan. development of modern services, advocated by the GBA initiative aim to help the region regain its leading role and drive 8 Source: CEIC, Guangdong ANZ Research of Guangdong province, In July 2017 theislocal governments ChiNext aStats, NASDAQ-style board of the SZSE, attracting many start-ups and From 1st May 2018, China’s manufacturing sector from low to high dailyvalue-added. trading quota Hong Kong, Macau and from NDRC signed the of official venture capital the rest the cooperation country.

SH-HK Stock Connect

has quadrupled to framework document of the GBA. The region’s detailed This will also help boost producer services and modern CNY52bn (Northbound) and development outline is expected to be announced in the first services in the region, as Guangdong holds the largest share CNY42bn half of 2018. (Southbound) Financial market integration of China’s tertiary sector.

The GBA’s total gross domestic product is about the same as Market capitalisation of different stock markets Australia and Canada. It has a larger population and land area when compared to other bay areas in the world. However, its growth scale and GDP per capita are still lacking, indicating room for catching up.

Shenzhen-Hong Connect Shenzhen-HongKong KongStock Stock Connect

Past and future The PRD region spearheaded China’s growth miracle with GDP per capita rising from $US2,825 in 2000 to $US20,616 in 2017, thanks to the rapid development of the local manufacturing sector which benefitted from the wave of investment from global names.

Advantages of low value-added manufacturing have diminished

addition to openness, theitsregion alsoitsenjoys policy GuangdongInhas consistently outperformed peers, but advantages (especially in low value-added manufacturing) have diminished dueof to the rising costs and labour shortage. flexibility, helped it become one fastest-growing The contribution of Guangdong’s manufacturing sector to national manufacturing declined Source: CEIC, Bloomberg, ANZ Research regions ininthe country. from a peak of c.20% 2004 to 2016’s 11%. This raised concerns that China may face a ‘premature de-industrialisation’ and fall into the middle income liquidity trap. Guangdong's industryoutperforms outperforms other provinces Guangdong’smanufacturing manufacturing industry other provinces After China launched the opening-up policy

After China joined the WTO

Will there be another upturn?

From 1st May 2018, daily trading quota SH-HK Stock Connect has quadrupled to CNY52bn (Northbound) and CNY42bn (Southbound)15

The GBA initiative is meant to make more people affluent, but there is risk it may worsen income inequality. Elsewhere, the widening gap in working conditions and wage distribution between Los Angeles and the San Francisco Bay Area in the US is a good example of such a possibility. The many differences between Hong Kong and China (including two legal systems, two customs, two currencies and monetary systems) could also pose big hurdles for the GBA initiative. Source: This article was originally published at ANZ Bluenotes. The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

Source: CEIC, ANZ Research

Feature Interview

AustCham CSR Partner: Fred Hollows Foundation As an aid worker for more than a decade, what is the most rewarding aspect of this job? One of the best things about working in the aid world is knowing that whatever tasks you perform, no matter how mundane, they serve to help someone. I’ve also been privileged to meet incredible colleagues and donors from all walks of life who demonstrate the best of humanity: compassion, generosity and a wider awareness of the world.

Laura Lee, Chief Representative in Hong Kong and ASEAN, Fred Hollows Foundation

he Fred Hollows Foundation is an Australiangrown global development organisation working in more than 25 countries. The Foundation aims to continue the enormous legacy of Professor Fred Hollows to end avoidable blindness. Over the past 25 years, the Foundation has restored sight to more than 2.5 million people worldwide. In 2015, The Foundation established a new office in Hong Kong to support its work in Asia. In a recent interview with Laura Lee, the new Chief Representative in Hong Kong and ASEAN, we learnt more about the Foundation’s incredible progress and how the amazing team in Hong Kong is supporting a new strategic plan and building the sector’s capacity to succeed. What inspired you to work in humanitarian aid? I have been very fortunate to be born in a stable and supportive environment. From a young age, my parents drilled into me the importance of not taking things for granted and giving back where you can. It might sound clichéd, but I believe we have a responsibility to alleviate suffering where we can.

You have spent some time in the corporate world working in a private bank philanthropic role – how does this compare with the NGO world? One of the biggest lessons I learnt serving as a philanthropy advisor to private banking clients is how to help aid organisations and their supporters grow together. In the NGO world, people (even fundraisers!) sometimes don’t truly understand donors’ interest and needs, but it’s important to take these into consideration if you’re expecting someone to make an investment in your work. At the same time, it’s not reasonable for donors to request NGOs to change their practices or expand their activities beyond their scope without taking the time to really get to know the organisation and making the financial commitment to support them. I am thankful to have had a platform to raise awareness on both sides of the coin and pleased that The Fred Hollows Foundation stresses accountability to donors and works to build long-lasting relationships with supporters. What is it that makes Fred Hollows so special to Australians? Not being Australian yourself, how do you relate /understand why he was so loved. Professor Hollows displayed some of the best human values: compassion, ingenuity, skill, and a sense of adventure! His very ‘Aussie-ness’ is a major part of his appeal – he had a very down-to-earth, hardy, daring and often irreverent ’let’s cut all the unnecessary talk and get to work’ attitude – which appeals a lot to someone like me.

What sets The Foundation apart from other aid organizations? The Foundation has a strong focus on training local doctors, nurses and community health workers so they don’t just treat, but train others and educate schools and communities. The Foundation works with local partners, governments How did you enter this competitive field? and other stakeholders towards sustainable models of care I started volunteering at age 15 and was lucky to secure a that can be replicated elsewhere. As Professor Hollows said: position within a United Nations aid agency a year after graduation. I then studied part-time for a Masters in International “Teach the teachers first, then the teachers can teach others.” Human Rights Law, and that helped open new opportunities. We also recognise the value of sight restoration to families, People seeking to join this field must demonstrate a strong communities and economies. Our research demonstrates that passion for serving, commitment, a strong work ethic, and a every dollar invested in restoring sight generates on average high level of professionalism and creativity. four dollars economic return. So helping people to see goes beyond just health. The gift of sight is about productivity and July 2018

economic growth. It is also about gender equality because more women suffer from blindness than men. Could you briefly talk about The Foundation’s new strategic plan for Asia in the coming 5 years? Where does your focus lie? The Foundation has been working in the region for two decades. We remain committed to eliminating avoidable blindness in Asia but the way we do this is changing. Many countries now have public health systems and social insurance so there’s less need for the same level of surgical support. Therefore, we are expanding to become a centre of expertise, a coordinator and a funder of research. We are also taking a greater interest in myopia and diabetic retinopathy. China, for example, has one of the highest rates of myopia in the world. Research shows that more than half of all 10-year olds require vision correction, which escalates to 90 percent among high-school graduates. Being strategically located in HK allows our office to raise awareness and support for these pressing issues. What are the biggest challenges for the Fred Hollows Foundation and the work you are trying to do? Why is the incidence of curable blindness expected to increase despite the work of the Foundation? A constant challenge is overcoming the perception that eye health is very niche. Poor vision is the largest unaddressed disability in the world today. Some 2.5 billion people world-wide are struggling with some form of vision impairment and 36 million are blind. Tragically, four out of five people who are blind don’t need to be. Blindness not only affects individuals – it has severe repercussions for families when people are unable to work and caregivers give up work or school to look after family members. As populations age, we are seeing more cases of diabetic retinopathy. This is why, despite the positive results generated by The Foundation and our partners, we cannot afford to be complacent. How do you engage to gain wider support for The Foundation? What are some opportunities and challenges associated with recruiting in Hong Kong? Hong Kong’s economy, professional culture and regional position presents outstanding opportunities to build the profile of The Fred Hollows Foundation. The Foundation has a strong proposition to donors – as little as HK$150 can restore someone’s sight and transform lives. We also have a mature supporter base of Australians and Hong Kong residents with personal and professional connections to Australia.

We are eager to deepen engagement with our donors and continue to raise awareness and support for The Foundation’s sight-saving work around the world, especially here in Asia. We have started planning next year’s Humanity Awards which encourage HK school children to demonstrate the values of Professor Hollows. The Foundation will also shortly launch a new corporate partnership program for companies interested in building a meaningful, low-financial cost CSR relationship with an internationally-renowned aid organisation. This can help forge stronger links between Hong Kong and Australia and raise the profile of The Fred Hollows Foundation in Hong Kong. Anyone interested in this program should contact our office. What do you enjoy doing when you’re not working? Work is busy as The Foundation builds its profile in HK. In my free time I relax by reading, swimming and enjoying the great food that HK has to offer. But my Aussie colleagues have influenced me in becoming more athletic and outdoorsy, so that has been an unexpected bonus of working at Fred Hollows!

AustCham UOW Mentor Programme

Connect, Give-Back and Grow The Programme now in its seventh run, is one of Hong Kong’s leading Mentor Programmes, offering unparalleled learning and sharing opportunities and providing access to senior executives and thought leaders through monthly workshops.

Summer Fang, Mentee of Class 2017 24

What were some of your goals and objectives you were hoping to achieve before joining the Mentor Programme? To gain a ‘personalised’ learning opportunity to grow faster both individually and professionally as well as to meet like-minded people to network with and share with. How did the Mentor Programme help you achieve those goals? There are things that can’t be learnt or understood thoroughly by googling or reading. Some knowledge takes experience. This programme matches senior executives who have that experience and, more importantly, have the willingness to share, with people who are eager to listen and learn. I am very lucky to have met my mentor Helen. She’s a trusted mentor, a supporter and a friend who I can be honest and open with. When she shared her personal and professional life stories I realised we were similar in many ways. Our regular indepth conversations strengthen my confidence personally and professionally.

Applications for 2018/2019 are now open! If you are interested to join our programme, please submit your application by 10 August. For details please check AustCham website: www.austcham.com.hk/services/ austchamuowmentorprogramme

How frequently did you meet with your Mentor? About once every four weeks besides the regular AustCham session. How have you applied the skills you have gained in the programme to your professional and/or personal life? I guess the biggest take-away from this mentor-mentee relationship for me is not one or two specific skills – but a clearer, stronger mentality towards career and life: clarify what’s important, work hard for it and be patient. Life is not an A to B journey. In between you zigzag, and that is ok. Never forget what got you started in the first place and always strive hard for it. What types of characteristics do you value in a Mentor? Kindness, integrity and business acumen. What were some of the highlights of the programme? 1. The panel discussions – they brought a variety of topics under the spotlight: personal growth, equality, bias, social responsibility, etc. The discussions themselves ‘mentor’ you in a different way as well. 2. The networking opportunities. 3. An engaging ‘mentor circle’ – we have a group of three pairs of mentors and mentees, who constantly talk and share. To whom or what types of people would you recommend to participate as a Mentee in the Mentor Programme? Those who are interested in personal growth; curious about new things; comfortable with being very honest and open; able to invest the time and be committed to holding up their responsibilities in the relationship.

July 2018

Patrick Acheampong, Mentor of Class 2017 Why did you decide to participate as a Mentor in the programme? I have had mentors in the past, and I know what a big difference they made to my life and my career. I wanted to be able to have the opportunity to try and make the same difference to someone else. What did you learn from your relationship with your Mentee? I learnt that even though I was the mentor, there were still things I could learn from my mentee. It wasn't a one way process. How has participating in the Mentor Programme and developing a relationship with your Mentee added to your time in Hong Kong? It has given me the opportunity to give back in ways other than my usual 9-5 job. It has also enabled me to establish relationships with people in different industries and networks that I wouldn't have otherwise established. How were you able to help your mentee to achieve some of their goals? I was able to successfully advise on a career change by getting my mentee to focus on what was important to them in a career besides the finances, and to take a longer term view of where current choices could take them. I'm happy to say their new career choice is working out well. I was also able to advise on strategies for managing a difficult employee as a first time manager. What was the most rewarding experience as a Mentor? Being able to make a tangible difference to the careers of my mentees and watching them grow as a result. To whom or what types of people would you recommend to participate as a Mentor in the Mentor Programme? Anyone with valuable and diverse experiences, that is open both to teaching and learning. Someone who is a good communicator and also has a strong EQ.

Committee Comment

“The Times they are a Changin” …… and Business Needs to Respond

Photo credit: www.undp.org

- Mark Devadason, Senior Advisor, Business for Social Responsibility™ "The order is Rapidly fadin'. And the first one now Will later be last For the times they are a-changin’.” Bob Dylan 1964

ost of us work for some form of company; we believe in their unique characteristics and we espouse and promote their brands. Hopefully most of us are also proud of what we do. However, you will also have noticed that increasingly business is not trusted and no longer seen as performing a useful social function. This is something that will have to change if the future of capitalism and the free market has a role to play in this increasingly globalised world. When looking for the cause of this discontent, you only need to look at the fact that eight men own the same wealth as the 3.6 billion people who make up the poorest half of humanity! In Davos in 2017, a report by Oxfam showed that the gap between rich and poor is far greater than had been feared. It detailed how big business and the super-rich are fuelling the inequality crisis by dodging taxes, driving down wages and using their power to influence politics. They called for a fundamental change in the way we manage our economies so that they work for all people, and not just a fortunate few. July 2018

We are also seeing macro demographic issues such as mass urbanization and migration from the farms, to growing concerns over food and water security. There is recognition of a need for a fundamentally more inclusive economic growth model. Billions of women globally are excluded through lack of empowerment and education and millions of people are still being trafficked into forced labour; in many cases to advance profits in the modern supply chain. We are also witnessing the rapid emergence of artificial intelligence, machine learning and robotics potentially presenting huge threats to the future of work but equally presenting amazing opportunities which will change the face of commerce. And of course the accelerating impact of decarbonisation as economies implement measures to combat global warming where we are seeing a rapid and fundamental shift in the energy mix. This is changing the way we think about transport systems, the role of energy companies and the design of sustainable cities.

In this short paper I wish to share a few emerging themes that need to be understood by boards and C-suite executives that will determine how their brands are perceived and which will determine the winners and losers of the next few decades. 1. The first that we have entered into a period where there is a clear roadmap for sustainable business practices for companies to follow. The announcement in 2015 of the 17 Sustainable Development Goals (SDGs) have defined a powerful global agenda for business, civil society and governments to implement over the next decade and beyond. Each of these goals are backed by a series of individual targets and worthy of detailed study.

1.2.SDG9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation (Reference https://sdgcompass.org/sdgs/sdg-9/) 1.3.SDG11: Make cities and human settlements inclusive, safe, resilient and sustainable ( Reference https://sdgcompass. org/sdgs/sdg-11/)

And so why is this idea of purpose or shared value important? Social purpose led companies are building priceless brand value with customers and importantly

"When quality and price are equal, social purpose ranks as the most important factor in brand selection" Edelman, Good Purpose study 2012

Research groups like Edelman are also showing that customers are differentiating brands and when price and quality are equal then consumers are making buying decisions, or withdrawing their custom, based on perceptions of social purpose. 3. My third point is that private sector supply chains must take responsibility for the human rights impacts of their activities. Itâ&#x20AC;&#x2122;s hard to believe but there are now more slaves than in any other time in human history. Of a recently assessed 40.3 million victims of modern-day slavery, seven out of ten are in Asia and 70% are directly related to the private sector, making the products we buy or food harvested. These are people exploited for labour both bonded or forced. It is also a $150 billion business. Highly profitable and second only in scale to the illicit drug industry. As the main gateway through which 70% of forced labour flows, the private sector is in a unique position to turn the tide in the fight against modernday slavery.

Government pressure in this space is also building. The UK government passed the Modern Slavery Act in 2015 which is having far reaching consequences on any company wishing to trade with or participate in the supply chain of any UK company. Countries like Australia and France are rapidly developing their own versions of the Modern Slavery Act.

Being aware of potential human rights and modern slavery issues in their supply chain and addressing those proactively can save firms from material brand and reputation damage and potential loss of license to operate particularly in heavily regulated industries.

How companies choose to react to these drivers of change will have a profound impact on their multiple stakeholders from employees, to investors and to customers.

2. Let me now touch on the idea of Social Purpose. An increasing number of companies are thinking hard about their underlying purpose as a company. They are thinking that there must be more than the singular pursuit of profit and the payment of dividends. This is a potential alternate direction for business where it is recognised that societal and corporate success can be inextricably linked. It is where companies establish differentiated strategies that address a social challenge but simultaneously create value for both the business and society.

The AustCham Sustainability Committee has decided to plan our annual agenda around the following three key SDGs that we feel will be most relevant to the Austcham members and their business in HK and the region. We will build our sustainability events and programmes around highlighting and debating these SDGs over the coming months: 1.1.SDG8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. (Reference https://sdgcompass.org/sdgs/ sdg-8/)

attracting and retaining talent. Research is showing that "Millennials" are making decisions about which firms they will work for or indeed remain with based on their understanding of the companyâ&#x20AC;&#x2122;s commitment to doing good. And remember that millennials are already 4050% of the workforce and will be running businesses in the next 10-15 years.

So by way of conclusion I suggest that Boards should now be thinking more of business strategies with sustainability thinking written into their core business models and embedded within operational processes. There are powerful social, environmental and governance forces challenging the role of business in society and I encourage boards to engage with this thinking. Those that do and act on it I believe will be the winners of the next few decades.

Committee Comment

Australia: ASIC Proposes to Repeal Passporting Relief in Favour of New Foreign Financial Services Licence - Stuart Johnson and Tze Ting Liew of MinterEllison

T 28

he Australian Securities and Investments Commission (ASIC) has released its proposals regarding to current exemptions for foreign financial service providers (FFSPs) providing financial services in Australia. ASIC proposes to repeal the existing exemptions for FFSPs (FFSP Exemptions) and require FFSPs to obtain a new ‘foreign financial services licence’ (Foreign FSL) to continue operating in Australia. A Foreign FSL would only be available to FFSPs who provide services to wholesale clients and are regulated by a foreign regulatory regime which ASIC has determined is equivalent to the Australian regulatory regime. Foreign regulators previously assessed by ASIC do not need to be reassessed, e.g. the US SEC, the UK FCA, the Singapore MAS and the Hong Kong SFC. Under the proposed new regime, an FFSP that holds a Foreign FSL will be exempt from certain laws in Australia regulating the provision of financial services and providers where ASIC considers their regulatory requirements to be equivalent to the Australian requirements. The FFSP will also still be subject to the existing requirements under the FFSP Exemptions to notify ASIC of significant changes to the FFSP’s foreign authorisation, significant exemptions and significant enforcement action. ASIC is currently consulting with industry on the proposed new regime and proposes the following transitional arrangements for implementing the new regime:

July 2018

from 27 September 2018 to 30 September 2019, ASIC will extend the existing FFSP Exemptions; from 30 September 2019 to 30 September 2020, ASIC will implement a transitional period during which FFSPs can apply for a Foreign FSL; and from 1 October 2020, the Foreign FSL regime will begin. FFSPs relying on an FFSP Exemption should monitor these developments and assess their Australian operations when the new regime is settled. Source: Deacons

Committees in Action

Women in Business Network: The Power of Parity

acqui Tan of McKinsey shared highlights from their latest study The Power of Parity: Advancing women’s equality in Asia-Pacific which reveled that closing the gender gap could bolster the Australian GDP by an increase of 12%! The fascinating discussion at the Bloomberg office was joined by Telstra’s Darrin Webb, Next Chapter’s Nicole Denholder and Bloomberg’s Hayden Majajas.

Women in Business Network sponsors:

Committees in Action

Marketing and Media Committee: Design Thinking - Donna Hampton, CAPITOL Productions

reative problem solving has always been part of my business and to extend this process in a Design Thinking Workshop with the highly skilled PwC Experience Centre team was a great opportunity and incredibly valuable. Thank you to the AustCham Marketing and Media Committee for being forward thinking in providing such opportunities for members and companies.

30 Hear what the attendees say about the section on our YouTube channel: Special thanks to Bill McQueen from LIME Content Studios and Donna Hampton from CAPITOL Productions for the video production.

July 2018

Committee sponsors:

People Forum: Managing Reputation in 2018

018 has already seen an array of highprofile, incendiary crises engulf well-known corporations, Governments and individuals and reputation has never been more fragile and reputational threats are increasing exponentially. Crisis management at the organisational level is no longer enough, how can businesses and industry bodies prepare and plan?

Charles Lankester of Ruder Finn Asia reviewed some recent Asia-Pacific and international controversies and proposed practical planning and solutions for corporations doing business in the region. He was joined by Anna Whitlam, one of Australiaâ&#x20AC;&#x2122;s top female entrepreneurs who shared some of the major cases facing corporate and political leadership in Australia.

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Industry Insights

Work-life Balance But Not As You Know It - Philip Morris International

nsuring employees’ wellbeing is always easier said than done, so is fostering an inclusive and innovative workplace. This is particularly true when it comes to a fast-paced and highly competitive city like Hong Kong. In Corporate Patron Philip Morris International (PMI), this is achieved by bringing the two elements together so that each and every employee can take part in shaping his or her ideal working environment – one that is inspiring, motivating and fulfilling. PMI is home to more than 82,000 employees speaking over 80 languages worldwide. Here in Hong Kong, the 140 staffs under the banner of Philip Morris Asia Limited (PMAL) are collaborating like never before to achieve a new ambition - that one day the company can replace all cigarettes with non-combustible/ smoke-free products for the good of public health. It is therefore essential to create excitements and positive energies within the organization to shape a new culture, shared identity, mindsets and behaviors. In terms of work-life balance, it comes to the company’s duty to offer the best wellbeing package both at work and off work. Consumers deserve the right to make their choices, so do employees when it comes to work-life effectiveness. PMAL launched its FLEXability program in 2015 to offer compressed work week of 4.5 days, flexi-hours, Friday remote working, part-time offer and sabbatical leave of up to 12 months. This program was further enhanced in April 2018 under an industry-leading initiative to extend its maternity leave from 10 weeks to 18 weeks and paternity leave from 3 days to 10 days. In addition, the recent enhancement of PMAL’s flexible benefits program offers its staff the freedom to customise features according to their own needs. They can select different combinations of life and health insurance coverages and well-being options, including health check, optical and vaccination services, for themselves and their registered dependents. July 2018

Enhancing work-life balance, in this sense, is the enablement of employees to best utilise their available benefits off-work through injecting a level of flexibility, or, in other words, maximizing the ‘life’ element as a separate parameter in the equation. Offering benefit options alone, however, may not be optimal if the policy focus does not take into consideration employees’ needs. This is why in PMAL, work-life balance is also achieved in a form of work-life synergy, or, in other words, maximizing the ‘life’ element as a correlating parameter with ‘work’. User-centricity is key from this perspective. For instance, to better sketch and meet employees’ expectations on benefits, PMAL held Hackathon to collect ideas from the users themselves as well as external creative minds. This serves as the basis for the upgrade of the aforementioned FLEXability program. Birthday leave, family leave and community leave are among those being added to the existing leave portfolio under such an approach. PMAL and its staff club organise regularly onsite health consultations and seminars and various relaxing and leisure activities including festive gatherings, cooking classes, wine tasting sessions, massages, and overseas trips. With diversity and inclusion in mind in an upcoming renovation in the Hong Kong offices, more facilities will be put in place in addition to the existing mothers’ room, prayer room and disabilities toilets to meet the needs of our diverse workforce. PMAL’s efforts to build an employee-caring and prideinstilling workplace as an essential part of people’s lives have received recognitions. In April 2018, the company was awarded HR Asia’s Best Companies to Work for in Asia for the second year in a row. All in all, while Australia often tops the list when it comes to work-life balance, sometimes one doesn’t really have to look far or ‘down under’ to find his or her ideal job.

New Members New Member Listing

Get Connected! Welcoming New Members

Platinum Patron ANZ Hong Kong Victoria Qian

oining AustCham membership is the first step, we are here to help you maximise the value and benefits of your membership.

This orientation session provides an opportunity for new members to meet the Secretariat and learn more about member benefits, the Chambers’ activities and advocacy, ways of promoting your businesses and how you can engage to the Australian business community. Thank you Commonwealth Bank of Australia for providing us the venue.

Telstra Melanie Bell Howard Cheng Ivan Leung Florin Pustea Kisharn Worsley Corporate Patron MinterEllison Candice Cheung Vistra Hong Kong Andrew Jacobs Corporate Member Port Adelaide Football Club Andrew Hunter Shane Smith Queen's College Stewart Gill Nicole Crook

AustCham Member Benefit Program 2018

Food & Beverage Dining Concepts: Enjoy 15% off on all a la carte dining.

In 2018, AustCham is launching a new year-round member offer to replace the current monthly single member benefit or discount. We provide a marketing opportunity for member's company to promote their products and services. In the meantime, AustCham members can enjoy offers on dining, travel, retail and more.

Marco Polo Hotels - Hong Kong: 15% off at Cucina, Cafe Marco, Three on Canton and add@Prince

For details please check AustCham website: www.austcham.com.hk/membership/ membershipecardandspecialoffer

Membership eC

Island Shangri-La Hong Kong: 15% discount on regular-priced items Retail PAGODA: Use code “aussiepagodalife” to enjoy 20% off Travel Qantas Airways: Extra 5 kgs baggage allowance from Hong Kong to Australia Hotels Grand Hyatt Hong Kong: Special offer on F&B and Plateau Spa

ard Terms and conditions apply.

Ovolo Hotels: 20% off on the Best Available Rate

Corporate Profile

Egon Zehnder 34

www.egonzehnder.com Egon Zehnder is one of the leading leadership advisory firm, sharing one goal: transforming people, organisations and the world through leadership. With more than 450 consultants located in 68 offices across 40 countries, we are experienced former business leaders. We know what great leaders can do, and we’re passionate about delivering the best leadership solutions to our clients. Because we operate as one collaborative team, we merge our individual talents with the collective expertise of our global network, we bring our individual strengths together to form one powerful global team. We are uniquely positioned to bring our collective power to every client, every time. What are the main skills of your job? Advising people in difficult situations. Being thoughtful.

Neil Waters Partner, Board and CEO succession

What’s your firm’s connection to Australia? The Australian practice was the second practice opened outside Europe after Japan (an interesting first choice when you reflect on lifetime employment etc in the 1960s…). We are a thriving well established practice that does board and CEO succession across almost every aspect of the economy.

What does your firm do really well? Help make the best of people and help them to be better, and place them in roles where they thrive, in so doing making our clients deliriously happy.

How would you describe your workplace and colleagues? The environment is quiet and thoughtful, though informal internally to balance the external professionalism. My colleagues are a diverse group of amazing people who thankfully think very differently to me but we are all bound by the golden thread of the values of the firm we serve.

What is the vision of your firm in 10 years? To maintain our positon as the leading adviser to our clients on people issues that make or break, and in doing so to be a central cog of every community in which we operate.

What’s your favourite place to go on the week-end? A toss up. To a Geelong game in Melbourne, to dinner with my family and for a run with my wife.

What’s the most unusual thing you have had to do as part of your job? Lead a board in a meditation or smuggle a candidate into a hotel teeming with financial journalists vying for a scoop.

What’s something most people don’t know about your firm? We are a completely communist structure, a totally equal global partnership with one profit centre. We all share in that one pool and do not reward ourselves differentially on individual performance, we are the ultimate collective, very rare in our industry which generally promotes the opposite. We behave very differently as a consequence!

July 2018

On the Scene

he Chamberâ&#x20AC;&#x2122;s Mix at Six gathered over 100 members and friends for a fun and restful Thursday evening at Mr. Wolf, cheering for the Aussie World Cup Team.

Event Sponsor:

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Upcoming date: 3 to 7 September 2018 W Hong Kong, 1 Austin Road West, Kowloon Station, Kowloon

Enrol today at companydirectors.com.au/icdc

Education Special Edition

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