austcham news 170 - February 2015 by The Australian Chamber of Commerce in Hong Kong

NEW YEAR EDITION

香港及澳門澳洲商會

austcham news Issue 170, FEBRUARY 2015 www.austcham.com.hk

Hong Kong looks to Asia to fuel economic growth in 2015

he final months of 2014 were full of bad news in the financial media. Oil prices tumbled, the Russian Rouble collapsed and the European and Japanese economies were wobbling. Yet by mid-January 2015, when thousands of the world’s leading financial and economic experts arrived in Hong Kong for the Asian Financial Forum, the mood was turning. Speakers and panellists at the two-day event were generally upbeat about prospects for 2015, believing that the recovery underway in the US economy along with stable growth in China would drive global growth for the year. More importantly, many believed that economies in Asia had the brightest prospects in 2015. The views from the podium, however, contrasted with those in the audience. When audience members were polled, only 30 per cent reported being optimistic about the coming year while 23.5 per cent were pessimistic. A year earlier, only 10.8 per cent of respondents reported feeling pessimistic. The top threats to growth identified in the audience were: volatility created by diverging central

bank monetary policies; increasing geopolitical tensions; collapsing energy and commodity prices; and a hard landing of the Chinese economy.

“More economic dividends are expected from the Mainland’s ongoing reforms and many of our emerging neighbours are likely to see further growth,” he said.

In his opening address to the forum, Hong Kong Chief Executive C. Y. Leung said that even though much of the developed world was still dealing with the fall out from the 2008 global financial crisis, Asia’s dynamic emerging markets would provide excellent growth opportunities in 2015.

“Such trends will continue to bring massive opportunity for Asian business.” Leung said he would try to capitalise on Asia’s rise by building even stronger ties with regional economic partners.

cont. P2

2 | COVERstory growth in China could ripple through the local economy. “Higher interest rates in the US will result in higher interest rates in Hong Kong,” Nomura economist Young Sun Kwon told Bloomberg. “That could be negative for Hong Kong property.” Some analysts have predicted that property prices could drop up to 20 per cent in Hong Kong in 2015.

“We in Hong Kong will continue to enhance our physical infrastructure, invest heavily in education for our young people and streamline efforts to attract and retain entrepreneurs and talent from around the world.”

confident and capable of achieving this.”

“What we need now is talent, rather than capital.”

Leung said the Government planned to spend HK$5 billion boosting the local innovation and technology sector by expanding a fund to support research and development.

Leung’s speech at the forum contained many of the same themes he used in his annual Policy Address, where he set out his vision for Hong Kong in 2015. In that speech to the Legco on January 14, he urged residents to be “vigilant” and not take the city’s recent economic growth and high levels of employment for granted. He said one of the biggest challenges facing Hong Kong was a lack of quality labour. “We don’t really need to attract capital investment at the moment as we have seen excessive capital in some areas such as in the property market,” he said. Housing and boosting competitiveness were other central themes of his address. “Housing is the most critical of all livelihood issues in Hong Kong,” he said. “The current-term Government is not only determined to avert the supply-demand imbalance progressively but is also

He said Hong Kong had plenty of land but was short of “developable land” so “society as a whole must make hard choices” about how to improve the housing situation.

“In the coming year, we still anticipate economic growth and full employment,” On the economy, Leung said he hoped to boost trade by negotiating and concluding new free trade agreements as well as pushing for deeper financial integration with the Mainland in 2015. He said he hoped to achieve basic liberalisation of trade in services between the two economies by the end of 2015. “The HKSAR Government and I will spare no effort to create favourable conditions for various trades, different local communities and people from all walks of life to start new ventures, sustain business and seek employment.” While Leung made the bullish case for Hong Kong, it was evident at the AFF that the city’s prospects in 2015 would still be determined by what happened in the world’s two largest economies: the US and China. Although the US is looking up, there are concerns that a predicted US interest rate rise would increase the cost of borrowing in Hong Kong while slowing

Other drags on the local economy are a corruption crackdown in China that has led to severe cuts in luxury, travel and dining spending. Political troubles following on from the Occupy Central movement that bought parts of Hong Kong to a stand still last year could also affect the economy. A Bloomberg news survey of economists forecast that a 1 percentage-point slowdown in China’s growth would cause Hong Kong’s GDP to fall by 1.06 per cent. The economists also predicted that an extra 1 percentage point of growth in the US economy would help Hong Kong’s GDP to expand by an additional 1.25 percentage point. Hong Kong’s economy was forecast to expand 2.95 percent in 2015, according to the median estimate of economists surveyed. The government has predicted that growth will push towards, and possibly beyond, 3 per cent in 2015. The Hong Kong economy regained some momentum in the third quarter of 2014, growing by 2.7 per cent in real terms over a year earlier.

- Michael Wray is a former News Ltd journalist now based in Hong Kong.

Chamberchatter | 3

CHAIRMAN'SCOLUMN

elcome back from the holiday season … to Hong Kong, to work or school, or perhaps just to AustCham News. The quiet time during December and early January was used to work on the Chamber’s submission to the Chief Executive’s office as input to the 2015 policy address and budget consultation for Hong Kong. That submission, delivered in mid-January, represented a team effort that was spearheaded by AustCham’s Finance, Legal and Tax Committee. The submission makes many recommendations. Some of the highlights include: • A call to review the existing tax base to determine whether it is sufficiently robust to address the fiscal needs of Hong Kong into the future. We note that the volatility of the Hong Kong Government’s revenue income poses challenges to the management of fiscal demands. As such, we suggest that there needs to be a decrease on the reliance on tax collected from certain

types of revenue and we call for more saving for the future, including the possible establishment of a ‘Future Fund’ as one means of investing surplus revenues for future needs. • On research & development – we suggest that Hong Kong should drive innovation by local companies and position Hong Kong as more attractive to foreign direct investment by introducing an enhanced R&D tax incentive. • On education – we note that continued investment in the education sector is imperative due to the growing demand for international school places. AustCham encourages the Government to continue to work with education providers to meet the demands from both Hong Kong citizens and expatriates for quality education. • On i n f r a s t r u c t u re – Au s t C h a m encourages the Government to ensure that recent problems with approvals in both the Legislative Council Finance Committee and its Public Works Subcommittee do not hold up infrastructure investment. • On the environment – we note that some progress has been made on key

environmental issues that affect the liveability of Hong Kong including air quality, water quality, access to green spaces and management of waste, but that more progress would be welcome. In respect of air quality, in the same way that there is an incentive scheme for the purchase and use of electric vehicles, the use of biofuels in construction plant and for commercial and domestic vehicles could be better promoted. Also, water resources remains a key concern and AustCham reiterates its call to consider initiatives that implement more realistic price signals around water consumption, especially in commercial premises. Further information on this and other Chamber submissions to the Hong Kong government is provided on AustCham’s website, or is available by contacting the Chamber. I hope that you will connect with the Chamber this month in some way, and that you will continue to share your views on how best the Chamber can serve you. Richard Petty chairman@austcham.com.hk

COMMUNITYCORNER

Habitat for Humanity: A world where everyone has a decent place to live

abitat for Humanity is a non-profit organisation working on eliminating poverty housing worldwide and building communities for all faiths and ethnicities. Their mission is to provide safe, decent shelters to the 1.6 billion in need and their goal is to transform 25 million lives by 2020. In Hong Kong they estimate 250,000 elderly live in run-down, unhygienic homes. Habitat improves living conditions for the aged,

handicapped, underprivileged families and schools with free repair, renovation and cleaning services every week. Recently, in the Asia Pacific region, Typhoons Haiyan and Hagupit struck the Philippines, Chiang Rai was struck by an earthquake, Jammu and Kashmir Floods in India and flash floods in Teluk Bango, Indonesia. In response, Habitat provided emergency supplies and relief as well as helped families rebuild or repair homes.

Help them mobilize resources - volunteers and funds – so that everyone has a decent place to live. Check out their Valentine (Couples) BUILD, Women BUILD, Youth BUILD, Family BUILD, Global Village and disaster simulation camp Under No Roof. For video and comments of volunteers in a recent program, please check http://bit.ly/1ChuaAu. To find out how you can help, visit www.habitat.org.hk or call +852 2520 4000.

AustCham is a non-profit organisation and provides this space free of charge to other, selected non-profits or charities.

4 | Chamberchatter A word from Wellington

elcome back to Hong Kong if you have been away for the Christmas New Year period, and Happy New year for both 2015, and the Year of the Goat (Ram? Sheep? ). Although the AustCham office was closed for a brief spell during the holiday season, the first part of the new year has been hectic, with Australia Day celebrations, The Year Ahead Seminar, Asian Financial Forum, seminars for our Small Business Network, our regular CEO Forum, our first Mix @ Six and Macau Mingler for 2015, and the opening of Nominations for The Australia-China Business Awards. Australia Day was a great success due in no small part to your support, but also to our guest Ita Buttrose AO OBE, who fully engaged everyone present with her charm, wit, and extraordinary anecdotal address. Ita also offered some pointers and guidance to our AustCham Women In Business Network

during her stay in Hong Kong, and I take this opportunity to thank her for her time and support. In this new year we have the pleasure of launching our AustCham Women in Business Network, with the steering committee actively guiding participants to a number of informative leadership development and diversity engagement initiatives, beginning with the International Women’s Day Cocktails on March 4th. We are also beginning our Macau Business Committee, with our first steering meeting this month, so the Chamber can better engage with the strong Australian business interests in the Macau SAR. I am excited about our committee activity, and engaging our membership community at new levels. More exciting is the opening of nominations for this year’s Australia-China Business Awards, and I’m sure you have seen the advertisement on our Broadcast

Partner and Platinum Patron, Australia Plus. As ACBA’s are hosted by Hong Kong this year, I encourage you to consider nomination in the various categories available for these high profile awards, and showcase your business’ success. Please go to www.austcham-china.com for details, or ask any of the AustCham staff. It is with sadness we farewell Chloe from our dedicated and tight-knit staff, as she leaves to pursue other avenues, but with equal pleasure we welcome Charlotte as she joins our team. I hope you all wish Chloe the best in her new role, and get the opportunity to meet Charlotte as you continue to engage with the Chamber. Happy New Year, everyone. Drew Waters Chief Executive

MEMBER CLASSIFIEDS Australia Registered Tax Agent in Hong Kong

Holistic Business Consulting Pty Ltd. Chartered Accountant We specialise in tax planning for Australian Expatriates, tax returns preparations, private rulings for deductions. www.myoztax.com Call Tommy Ip on +852 69018136 or email: tommy@myoztax.com

Who To Blame? 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 any liability for any loss however arising from or in reliance upon the whole or any part of this publication.

Chamberchatter | 5 AustCham Card Membership e Every month: one big discount

FEBRUARY

AustCham members can enjoy 15% discount off the entire fullyear The Inside Out Mentoring program. Multi-award-winning entrepreneur Mary-Anne Waldren brings four decades of business experience and wisdom to this full-year mentoring program. The Program is designed for those who want to grow in order to flourish in business and in life, and will enable you to unlock your emotional and mental archetypes and achieve your aims. Email maw@maryannewaldren.com.au for more information. www.maryannewaldren.com.au Tel.: +61 412340622 *Terms and conditions apply.

JANUARY

Thank you Lizard Island for providing AUD$100 resort credit to AustCham members in January. Lizard Island is Australia’s northernmost island resort on the Great Barrier Reef, with 24 pristine private beaches. The resort is recently refurbished; the interiors are understated luxury and sit as one with the beauty of the tropical beach backdrop. www.lizardisland.com.au Tel.:+61 3 94267540

A letter from Canberra

anuary is normally a quiet month in politics as Australians and their elected representatives head to the beach, tune into the cricket and tennis, gather around friends and family and fire up the barbeque. But just weeks into the new year and Australia has been abuzz with political activity. In the last month there has been a Ministerial reshuffle, a State election in Queensland, multiple backflips on changes to Medicare and an advertising campaign launched for the Abbott Government’s higher education reforms. Days before Christmas the Prime Minister announced he would be taking a new team with him into 2015 in an effort to reset, refocus and scrape some of the barnacles from the ship of state.

- by Gai Brodtmann

Kevin Andrews was named the new Defence Minister. Scott Morrison was appointed Minister for Social Services and will oversee the government’s proposed paid parental leave scheme. Josh Frydenberg was named Assistant Treasurer. Peter Dutton was moved to Immigration and Border Protection and his former portfolio of Health was given to Sussan Ley. The reshuffle saw an additional woman in Cabinet, taking the total to two. 2015 will be a challenging year for the Abbott Government as public disenchantment and disengagement grows. Despite the Prime Minister’s best laid plans to reset and refocus, if my conversations over summer are anything to go by, it would appear even Coalition loyalists have got their fingers in their ears, their eyes tightly closed and they’re humming loudly.

6 | Chamberchatter

EVENTSUPDATE February at a Glance… Thu 12 Feb Mix at Six 6:00pm – 9:00pm Red Bar and Restaurant, 4/F, IFC Mall, 8 Finance Street, Central Hong Kong

March at a Glance… Wed 04 Mar Wit & Wisdom: A conversation with Michelle Guthrie - International Women’s Day Cocktail 6.30pm – 8.30pm Harcourt Room, The Hong Kong Club 1 Jackson Road, Central Tue 10 Mar Make A Change, A Better Travel Program for Your Organisation in 2015 12:30pm – 2:00pm AustCham Business Center, 3/F, Lucky Building, 39 Wellington Street, Central Thu 12 Mar Mix at Six 6:00pm – 9:00pm Mira Moon Hotel Hong Kong, 388 Jaffe Road, Causeway Bay Thu 19 Mar Joint Business Luncheon with Financial Secretary of the HKSAR, The Honourable John C Tsang 12:30pm – 2:00pm Convention Hall, Hong Kong Convention and Exhibition Centre (old annex), Wan Chai Thu 26 Mar Rugby Sevens Lunch 12:00nn – 3:00pm Grand Hyatt Hong Kong 1 Harbour Road, Wan Chai

AustCham’s Tom Crooks looking for new role

any of you will have heard from or met Tom Crooks over the past few months. He’s been working on the 2015 AustCham Members Directory and has been a regular face at AustCham events. Tom’s contract finishes in mid-February and he’s looking for his next challenge here in Hong Kong. Q: So Tom, what brought you to Hong Kong? A girl – it always starts with a girl! My partner moved here for work and I followed. It’s been 6 months since I left Sydney and I’m absolutely loving it here. Q: What’s your professional background? I have more than 6 years experience in client management, business development and operations through working with corporate and not-for-profit organisations. My last role in Sydney was business development and partnership building for the Australian Heart Foundation’s Tick Program. Prior to that I worked for the Immigration Department in Australia.

Q: What’s your academic background? I completed a Bachelor of International Studies degree at the University of New South Wales, which included one-year at the world’s oldest university in Bologna, Italy. I’ve completed project management and business analysis training and I’m a qualified counsellor through my volunteer work at Lifeline Australia. Q: What opportunities are you looking for? I’m really interested in the international education sector, CSR and roles that develop relationships between corporate and not-for-profit organisations. I’d also like to use my Australian client management experience and strong communication and partnership building

skills to help local companies manage their Australian business interests and customers. Q: What’s the best way to contact you? You can contact anyone at AustCham, email me directly at tomcrooks07@gmail. com, or you can find me on LinkedIn.

“Tom’s been a great asset to us over the last few months, and I am very keen to help him into a new role. He has been very successful with our members directory, and has fit into the team really well” Drew Waters, AustCham Chief Executive

AUSTRALIAFOCUS | 7

Think tank urges rebalancing of Australian economy as mining boom ends

ne of the world’s leading public policy think tanks has warned that the Australian economy is entering a “potentially difficult rebalancing process” as the mining boom ends and the government attempts to boost growth in non-resources sectors. The Organisation for Economic Co-operation and Development’s (OECD) biannual review of the Australian economy, released in mid-December 2014, reported that falling commodity prices and softening terms of trade had thrust the economy into a period of post-boom adjustment. It urged the government to implement long-term economic, social and environmental reforms so Australia could maintain its high standard of living. However, the Paris-based group found that Australia faced the challenge from a position of strength as it had a “well-managed and successful economy” that had steadily progressed upwards in OECD wealth tables over the past 25 years. “Ensuring a smooth economic transition in the wake of the mining boom and raising average living standards over the long run primarily requires broad-based shifts up the productivity ladder with policy helping through strong macroeconomic and structural framework conditions for business, improvements in workforce skills, and attention to public-service efficiency,” the report said. Some of the key measures suggested by the OECD included: • Changing to a more “growth friendly” tax mix • Ensuring price and financial stability • Pursuing fiscal consolidation and ensuring efficient tax and public spending • Improving framework conditions for business • Encouraging employment, deepening skills

and addressing inequality • Tackling environmental challenges The OECD said the Government was right not to pursue more budget cuts in order to chase a surplus in the face of falling revenues. And the report recommended that the Government should look at increasing the tax take from the GST. It suggested doing this by either raising the level of the GST or broadening the base through reducing the list of exempt items, which currently includes food, healthcare, education and some financial products. “With a rate of only 10 per cent and fairly widespread exemptions, GST raises only half the revenues (as a share of GDP) compared with the OECD average and significantly less than the countries making the most use of such tax,” the OECD said. T h e O E C D ’s s e n i o r e c o n o m i s t w i t h responsibility for Australia, Philip Hemmings, told the ABC that shifting the focus of the taxes from income towards consumption was “one of the key rooms for improvement in the Australian tax system”. Prime Minister Tony Abbott, who entered office promising not to increase the GST, came out after the report was released and confirmed that commitment. “The GST will not change in this term of Parliament and it cannot change in any term of Parliament without first of all the support of all the states and territories including Labor states and territories and without effectively a parliamentary consensus,” he told radio 2GB in Sydney. However, the GST is shaping as a key battleground in the next election with Opposition Leader Bill Shorten saying that if Abbott wanted to increase the GST he should “take it to an election”. The Australian Chamber of Commerce and Industry’s director of economics and industry policy, John Osborn, said Australians could not

be complacent about their high standard of living because the report showed the country was “at risk of falling behind the world in key reform areas”. “Failure to maintain economic reform momentum will cost jobs and harm living standards,” he said. “We need a comprehensive tax package that improves the efficiency of the tax mix and makes us more competitive. If adjusting the GST makes that possible then we should be considering it.” “The report shows that Australia’s long standing 30 per cent company tax rate has failed to keep pace with the OECD average that has dropped from above Australia to an average around 25 per cent with some countries much lower. Comparatively high company tax rates put Australian business at a disadvantage and encourage complex and wasteful minimisation arrangements that stifle local entrepreneurship.” Richard Denniss, executive director of the Australia Institute, a progressive think tank, wrote in the Canberra Times that it was unsurprising that the rate of the GST was below the OECD average because Australia’s “overall level of tax and public spending was also far below average”. “You might think that calls to increase the GST would be used to reduce the budget deficit or increase spending on essential services,” he said. “But this week’s report from the OECD was used instead as just another opportunity to call for tax cuts to the corporate tax rate.” The report also urged the government to ensure its new carbon emissions reduction fund was robust enough to meet 2020 reduction targets. - Michael Wray

8 | AUSTRALIA DAY2015 a

j k

AUSTRALIA DAY2015 | 9

1. Michael Ball of National Australia Bank, James Rickward and Maaike Steinebach of Commonwealth Bank of Australia.

ear 400 guests celebrated Australia Day at the Chamberâ&#x20AC;&#x2122;s annual luncheon at Island Shangri-La Hotel on Friday 23 January. Special thanks to title sponsor National Australia Bank, for their 13th year of sponsorship of this very popular event.

2. Kean Chung, Laura Chung and Nyree Chung of FTI Consulting. 3. Dano Chan and David Garcia of Hope Dairies Ltd. 4. Shareen Hellen with Michelle Woo of Vistra Hong Kong. 5. Steven Wright of WTP (Macau) Ltd with Toby Brown, Keith Fletcher and Mark Van Beers of WT Partnership. 6. Anne Davis of Razorfish and Recbecca Simpson, Megan Pearce and Tracey Nicole Batty of Pure Support Professionals. 7. Happy Australia Day! 8. Daryl Johnson, CEO Asia of National Australia Bank opens the show. 9. Ivan Au of CPA Australia and Paul Lyons of Ambition. 10. Sarah Powell of Absolute HK and Ly Gour of Commonwealth Bank of Australia. 11. Nick Lee, Danny Mohr of CBRE and Lynda Aurora of Plus Partnership. 12. Phillip Waugh of Australian International School, Anthony Wilson with Shana Buchanan of Idecorate. 13. Mike Rowse of Shanton Chase International and Ian Smith of Thyssenkrupp Elevator AG Asia Pacific Office. 14. AustCham Chairman Professor Richard Petty, DeputyChair Tom Corkhill and Director Paul Scroggie. 15. Arun Nangia and Grace Mak (right) of event sponsor National Australia Bank with guest speaker Ita Buttrose. 16. Australian Consul General Paul Tighe with Andrew Hunter of Cheung Kong Infrastructure Holdings Ltd. 17. Dale Hoy with Callum Brown of Flight Centre. 18. Frank Jahnke of QBE Mortgage Insurance and David Christmas of Australian International School. 19. Pete Kelly performs for guest during the lunch. 20. Mark Sellier and Greg Armstrong of OneSteel Recycling. 21. Michael Madigan, Julia Broughton of The Three Marketeers, Nicole McMillian and Andrew Cartwright. 22. Guest speaker, 2013 Australian of the Year, Ita Buttrose. 23. Elizabeth Dorrough of Treasury Wine Estates and Thomas Crooks.

Thank you to our exclusive wine partner Treasury Wine Estates and Penfolds.

10 |Committeesin action �� Watch out for the 2015 Mentor Program

he 2014 Mentor Program, sponsored by ANZ, is quickly coming to a close with the final luncheon scheduled for Tuesday, March 10. More than twentyfive pairs of mentors and protégés have spent the last ten months meeting, planning, and achieving. Feedback from both mentors and protégés has been excellent and inspiring. We’ll share graduates’ success stories in the March and April newsletters. In the meantime, the planning for the 2015 program is already under way. Program improvements include monthly morning coffees for mentors, monthly social evenings for protégés, and ongoing volunteer opportunities for the length of the program. Sample speaker topics for 2015 are: Art of Social Media and Your Brand, Speak like a CEO, Changing Career Paths, and Financial Literacy: Planning

for Your Future. Applications for both mentors and protégés will be available on the AustCham website (www.austcham. com.hk) beginning Monday, March 2; applications close Friday, March 27. Accepted participants will be notified by Friday, April 17. There are no specific requirements for either mentor or protégé, with the exception of a dedicated spirit, enthusiasm for learning, and the desire to gain new perspectives. There are up to 30 spaces available for each group and applicants need not be members of the Australian Chamber of Commerce. Please contact Mary Barbara Hanna, Mentor Program Manager, at mentor@austcham.com.hk for more information.

AustCham 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: Drew Waters, Karen Wu Printing: Colour Max Commercial Printing Co. Ltd. Tel: +852 2891 7917 Email: marketing@colourmax.com

CORPORATENEWS FINANCIAL TIMES RANKS MGSM’S MBA NUMBER ONE IN AUSTRALIA

orporate Member Macquarie Graduate School of Management (MGSM) has been ranked Australia’s leading MBA school, according to the world’s seminal rankings indicator – the Financial Times. MGSM placed number one in Australia (68 globally), followed by UNSW’s Australian Graduate School of Management (75) and Melbourne Business School (90). In 2014 MGSM moved up six places, to be ranked 49 in the world in The Economist Which MBA? 2014 rankings survey. The school was also ranked third in the world for increase in salary in this survey. The rankings are determined by evaluating a number of factors including the gender balance and international spread of students as well as a students pre and post MBA salary. MGSM recently launched its Women in MBA (WiMBA) program, in which it sets out to be the first business school ranked in the top 100 globally to achieve gender balance in its MBA program. In 2015 MGSM is offering up to 100 scholarships to women to complete their MBA in partnership with their employer. The MGSM MBA program is delivered in Sydney and in Hong Kong, with faculty flying between the two locations to deliver faceto-face content.

INDUSTRYINSIGHTS | 11

Office Market Outlook 2015 Demand for HK office leasing to improve in 2015 The Hong Kong office market is expected to gather momentum in 2015 after net absorption moved back into positive territory last year. Ben Dickinson, Head of Markets at JLL, Hong Kong, said: “We expect leasing demand to continue to improve in 2015 on the back of an improved economic growth outlook for Hong Kong,”

The office leasing market began to show signs of improvement last year with net absorption in the overall market amounting to 724,000 square feet, compared with a net withdrawal of 269,300 sq ft in previous year. Although net absorption remained below the historic long-term trend level of 2 million sq ft per annum for the third consecutive year, there were some green shoots in the market.

Central office rents grew for the first since 2011 The Central office market returned to growth in 2014, led by relatively stronger demand for offices in the top-end of the office market in buildings such as Two IFC and Cheung Kong Center. Demand in Central was supported by improved tenant affordability—punctuated by the relocation of several whole-floor tenants into more expensive offices—and expanding presence of PRC companies, which accounted for close to one third of all new lettings in 2014. Central office rents grew for the first time since 2011, up 2.6% last year as the vacancy rate dropped from 4.2% at the end of 2013 to a 3-year low of 3.7% by the end of

Improving economy will underpin office market’s growth Looking ahead, the stronger global economy and improving IPO market should underpin growth in the city’s office market. “By sector, the finance, insurance, real estate and business services (FIREBS) sector will remain as the main driver of leasing demand though requirements will likely continue to be restricted to partial floor units,” said Dickinson. PRC companies from this sector are also expected to be active as they continue to expand their business in overseas markets. Business centres were one of the few tenant groups that sought whole floor premises in 2014 as they continued to expand to

year. Top-tier (i.e. Grade A1) office rents grew by 8.8% as the vacancy rate fell below 2% with rents at Two IFC surging 6.1% in the second half. Outside of Central, expansion requirements from the insurance and merchandise trading and sourcing sectors along with the planned redevelopment of several older buildings helped underpin leasing activity in non-core locations. “The vacancy rate in the overall market was down to as low as 3.9% at the end of the third quarter before rising slightly to 4.2% by the end of last year on the back of returning stock and the completion of new supply”.

meet the strong demand for smaller, cost-effective workplaces. This trend is likely to continue into 2015 along with landlords looking at innovative ways to build occupancy, including leasing to destination retailers, medical centres, gyms and education service providers. Demand is also likely to be supported by en-bloc purchases by corporates for self-occupation. Dickinson said: “Citigroup’s acquisition of the East Tower of One Bay East in Kwun Tong has led several international banks to reconsider their long-term real estate options in the city and some are already looking at office space in non-core locations,”

Office rents will grow 0-5% Looking into 2015, an estimated 2.0 million sq ft of new Grade A office supply is scheduled for completion though office supply in core business areas remains tight and most new supply will be located in non-core business areas. With the vacancy rate

entering the new year at relatively low levels—at just 1.1% in Tsimshatsui and 1.3% in Hong Kong East—the rental market should continue to post another year of moderate growth. Dickinson expects office rents in major business districts to grow 0-5% this year but rents in Kowloon East will likely continue to face some downside risks brought about by new supply.

Hong Kong Prime Office Indicator -- % Change Submarket Central Wanchai/Causeway Bay Hong Kong East Tsimshatsui Kowloon East Overall

Capital Values ▲0.3% ▲0.3% ▲0.7% ▲1.3% ▲1.6% ▲0.6%

(Preliminary)

Rents (Preliminary) ▲2.6% ▲1.6% ▲1.4% ▲2.6% ▲0.5% ▲2.0%

2015 Rental Forecast ▲0-5% ▲0-5% ▲0-5% ▲0-5% ▲0-5% ▲0-5%

To save on your lease renewal or find office space for your business, contact Platinum Patron member JLL on 2116 8118, or visit www.jllproperty.com.hk

12 | CHAMBER'sVOICE ��

ollowing on from the Phase I consultation in which general support was obtained from the

public on the need for a Habourfront Authority for Hong Kong, the AustCham Sustainable Development Committee re s p o n d ed t o t h e H a rb o u r f ro n t Commission’s (HC’s) Phase II Public Engagement exercise in December 2014 regarding the objectives, remit and framework of such a Harbourfront Authority (HFA), with specific focus on environmental and sustainability concerns.

The overall proposed objectives of the HFA are as follows: • Protect, preserve and enhance Victoria Harbour; • Promote an attractive, green, accessible and sustainable harbourfront; • Recognise Victoria Harbour as a working harbour but balance with a unique urban space for public use; and • Promote the concept of sharing for a diversified and inclusive public space. These objectives of the HFA are overall supported by AustCham’s Sustainable Development Committee and it is noted that there are numerous international examples, including Sydney, to justify that the setup of a HFA is necessary to provide a world class harbour that would be an asset to Hong Kong. It is also considered that ‘sharing’ is an important concept in order to achieve a vibrant and diverse water front and was fully advocated. However, it was the committee’s view that in order for these objectives to be fully met, the HFA would need a full executive role for the majority of areas occurring within the “Victoria Harbourfront”, as opposed to the ß split executive and advisory depending

on the land area. It is considered that it will not be possible to meet the key objectives of connectivity and vitality if areas of Harbourfront land use (which have the potential to affect the success of the revitalized areas) are controlled by others with conflicting objectives, with the HFA having an advisory role only in these areas. It is also considered that developing separated smaller pockets of land would not be as effective as having a set of interlinked areas creating a more continuous and diverse space. The consultation digest has indicated that it would be desirable for the HFA to keep a balanced portfolio of projects with some sites potentially generating an income and becoming financially selfsustaining. However, it is our view that the success of the harbour areas could be compromised if generating income become a pre-requisite or priority for the harbour sites’ development and this should be a secondary factor only. Hong Kong can be slow to adopt new technology for sustainable benefits until it has been piloted and proven, despite the fact that often such initiatives are adopted successfully overseas. Thus, we

strongly suggested that the HFA pioneer the use of state of the art technology for sustainability advancements. Key factors in this respect are considered to be: • That wind, solar and other renewable forms of energy are used for future lighting wherever possible such as on streets, promenades and piers; • Recycling and general waste collection points are readily available around the harbour and associated development areas; and • That an environmental assessment is carried out for all future developments. Recommendations for water taxis to provide vital connectivity between the harbourfront areas and also bicycle hire schemes were made as part of the response. In summary, the need for and overall objectives of the HFA were supported but, in addition to the specific points noted above, the Sustainable Development Committee stressed that an overarching planning strategy for the Habourfront areas would be vital before funding and implementation plans can be progressed. - Helen Cochrane, Vice-Chair of AustCham Sustainable Development Committee

Chamber’s Voice – AustCham represents the views, values and interests of Members to government departments, private thinktanks, and other leading organisations in Hong Kong, Macau and Australia. The Chamber is an active member of the International Business Committee which meets regularly with the Chief Secretary and other senior Hong Kong Government officials.

CHAMBER'sVOICE | 13

AustCham Chairman Professor Richard Petty (first row, second from the left) and Chief Executive Drew Waters(second row, second from the left)attended the International Business Committee (IBC) meeting on 6 February. IBC comprises leaders of the major international chambers of commerce and business organisations who meet regularly with Chief Secretary for Administration Mrs Carrie Lam and other senior Hong Kong Government officials.

_________________________________________PlATINUM Patrons PROFILE After starting with one shop in the early 1980s, the Flight Centre Travel Group (FCTG) has enjoyed remarkable growth to become a AU$15 billion business consisting of more than 30 brands. As one of the world’s largest travel agency groups, it has company-owned operations in 11 countries and a corporate travel management network that spans more than 95 countries. It employs more than 15,000 people globally and has a total of 2500 stores. In Hong Kong, FCTG’s presence includes its Flight Centre (leisure travel), FCm Travel Solutions (corporate travel) and cievents (conference & events) brands; operating through more than 12 shops and businesses. Flight Centre Hong Kong 7/F Island Place Tower 510 King’s Road, North Point Hong Kong Key chamber representative: David Fraser, Managing Director

Why did you choose to join AustCham as a Platinum Patron? We wanted to deepen our relationship with Australian’s and Australian related business here in Hong Kong. What does your company do really well? FCTG is a growth focused and entrepreneurial company and as a result have been successful

at identifying market segments and tailoring our business and/or one of our brands to target that particular segment. In addition to that we are good at hiring, motivating & rewarding, and retaining the best people in the industry which in turn helps give our customers great service and advice. Something that has helped FCm Travel be recognised for the 4th year in a row as the number 1 travel management company in the world, and Flight Centre experience such rapid growth here in Hong Kong. What’s something most people don’t know about your company? Flight Centre started out travel in Australia that was discounting airfares – something that was illegal at the time - and has now grown into one of the worlds largest travel agency groups.

What’s your company’s connection to Australia? FCTG was established in Australia over 30 years ago and is listed on the Australian Stock Exchange. How would you describe your workplace and colleagues? FCTG has a strong and quite unique corporate culture where our company philosophies are central to everything that we do. These cover a range of things from our team based & flat organisation structure, reward & recognition culture, individual ownership & accountability, egalitarianism, our staff and & customers, as well as a few others. What do you do in your spare time? Most of my spare time is centered around my family. That aside, I enjoy travelling, good food & wine, and golf.

14 | MEMBERPROFILE �� What’s the most unusual thing you have had to do as part of your job? Sing “Man Down Under” to a hall full of Fijians in Fiji, as my choice of national song. PCCW Global 33/F, PCCW Tower Taikoo Place, Quarry Bay Hong Kong www.pccwglobal.com Chamber Representatives: Marc Halbfinger, Chief Executive Officer, PCCW Global Craig Price, Senior Vice President, International Projects

Craig, what are the main skills of your job? The ability to relate to a variety of business people including commercial, technical and professional; to negotiate at all levels for a mutually beneficial outcome and also the ability to lead others to achieve outcomes.

What does your company do really well? We own and operate one of the world’s most extensive communication networks covering 140 countries and 3,000 cities and we provide exceptional communications services to enterprises and service providers and have won various Awards and Recognitions in past years. In November 2014, we won “Best African Wholesale Operator” and “Best Asian Wholesale Service Operator” at Telecom Review Summit. How would you describe your workplace and colleagues? Work place is varied with people from all over the world, and often for me my workplace is in other countries, with my base in Hong Kong. My colleagues are cosmopolitan, bright and intelligent. What’s something most people don’t know about your company? We have real strength and depth in emerging growth markets of Asia, Africa and Middle East and are now offering a whole suite

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of value added services on top of our extensive network including - Content Delivery Solutions for broadcasters and media service providers, Cloud Services and Managed Network Services for multinational companies and Mobile Wholesale Services for Mobile operators such as VoIPX, data roaming and messaging. What’s your company’s connection to Australia? PCCW Global’s network is covering more than 3,000 cities and 140 countries, including Oceania regions, supporting a portfolio of integrated global communications solutions. Why do you live in Hong Kong? Love the lifestyle, restaurants, its mixture of east and west, old and new, around each corner there is a surprise so an exciting place to work and play. What’s your favourite place to go on the week-end in Hong Kong? Sheko, love the beach, BBQ and local bars and restaurants with great vistas you feel on a tropical island. What’s your favourite place to eat lunch? Tivo in Kennedy Town, great food and atmosphere.

OnTHE SCENE | 15 THE NEW YEAR MIX AT SIX WAS HOSTED BY OUR FINANCIAL, LEGAL AND TAX COMMITTEE, HELD AT FRITES WANCHAI. THE EVENT ALSO COINCIDES WITH THE CLOSE OF ASIAN FINANCIAL FORUM.

Dominic Meagher of Fung Global Institute and Aaron Lim of Flight Centre.

Sam Benjamin of Allan Gray and Danielle Dinse of Telstra.

SPECIAL THANKS TO THE EVENT SPONSORS:

Caroline Hong of CH Asia Australia Pty Ltd and Malcolm Brocklebank of M&MS.

David Thomas of Think Global Consulting and Iain Reed.

Chris Penny and Jonas Tam (right) of National Australia Bank and Cloris Long (middle) of HKTDC.

Cathy Wong and John Barclay of PRIMASIA, prize sponsor Patrick Trainor of Cornerstone Strategic Partners and Kathleen Trainor.

Digby Ross of event sponsor TMF KCS, prize sponsor Benjamin Rappard of Langham Place Hotel with lucky draw winner Daisy Tam and AustCham CE Drew Waters.

Peter Black of Peter Black Coaching and Matthew Deayton of One Space.

AUSTCHAMâ&#x20AC;&#x2122;S FIRST MACAU EVENT IN 2015, MACAU MINGLER WAS HELD AT CONRAD MACAO IN LATE JANUARY. THANK YOU TO THOSE WHO CAME ON THE NIGHT!

Grand Padula of Melco Crown Entertainment and Rashid Suliman of Transact Technologies.

Matt Humphreys of Aristocrat Technologies and Stuart Kennedy of Dallmeier International.

AustCham Board Directors Dan Tebbutt and Paul Scroggie (right) with Construction, Property & Infrastructure Committee Chair Paul Scott (middle).