Hong Kong and Saudi Arabia Announce US$1 Billion Investment Fund to Forge Closer Ties

The Hong Kong Monetary Authority (HKMA) and Saudi Arabia Public Investment Fund (PIF) have signed an MoU establishing a US$1 billion investment fund aimed at strengthening their economic relationship.

By Giorgia Sgueglia

On October 31, 2024, Hong Kong and Saudi Arabia announced the establishment of a US$1 billion investment fund aimed at strengthening their economic relationship. This initiative was formalized through a memorandum of understanding (MoU) signed between the Hong Kong Monetary Authority (HKMA) and Saudi Arabia’s Public Investment Fund (PIF) during the Future Investment Initiative (FII) held in Riyadh.

Recent developments in economic relations

In recent years, the economic and trade relations between Hong Kong and the Middle East have deepened significantly, largely due to the ongoing efforts of the current-term HKSAR government to promote cooperation in various sectors, including economy, trade, and finance. Over the past two years, the HKSAR government has made multiple visits to the Middle East. Notably, in 2022, Chief Executive John Lee participated in the FII meeting in Saudi Arabia, where he successfully lobbied for the first FII Priority Asia Summit to be held in Hong Kong in 2023. This summit marked a milestone as it coincided with the listing of the first Saudi exchange-traded fund (ETF) on the Hong Kong Stock Exchange.

In September 2024, Lee announced plans for the HKSAR government to establish an office in Riyadh, Saudi Arabia’s capital. This office will enhance the government’s ability to serve the region and assist Hong Kong businesses looking to explore opportunities in the Middle Eastern market. The progress made in strengthening ties between Hong Kong and the Middle East has been achieved step-by-step, involving dedicated efforts from various sectors.

Opportunity for Hong Kong

The signing of the MoU represents a significant opportunity for Hong Kong to enhance its economic ties with Saudi Arabia. By establishing this investment fund, Hong Kong aims to position itself as a key player in facilitating investments from the Greater Bay Area (GBA) into the Middle East. This partnership will enable Hong Kong-based companies to access new markets and opportunities, particularly in sectors such as manufacturing, renewable energy, fintech, and healthcare. The fund is expected to create highly skilled local jobs and drive economic growth while solidifying Hong Kong’s role as a vital link between the Middle East and mainland China.

Benefits for Saudi Arabia

For Saudi Arabia, this investment fund aligns perfectly with its Vision 2030 initiative, which seeks to diversify the kingdom’s economy away from oil dependency. By partnering with Hong Kong, Saudi Arabia can attract foreign investments and expertise in various sectors. The fund will facilitate the entry of innovative companies from Hong Kong into the Saudi market, fostering technological advancements and enhancing local capabilities. This collaboration not only supports economic diversification but also promotes cultural exchange and strengthens bilateral relations.

Visa-free access

An essential aspect of this partnership is the visa-free access that both regions offer each other’s citizens. Hong Kong passport holders can enter Saudi Arabia without a visa for stays of up to 30 days. This ease of access encourages business travel and tourism, fostering stronger ties between the two regions. For Saudi Arabia, allowing visa-free entry for Hong Kong citizens promotes investment opportunities and enhances cultural exchange.

Conversely, Saudi Arabian citizens can also visit Hong Kong without a visa for short stays. This reciprocal arrangement facilitates greater interaction between businesses and individuals from both regions, allowing for smoother collaboration and partnership development. The ability for both nations to travel freely encourages business exchanges and tourism, ultimately contributing to deeper economic ties.

Broader context of cooperation

The announcement of this investment fund is part of a broader trend of deepening financial collaborations between Hong Kong and Saudi Arabia, which aligns closely with Saudi Vision 2030. This vision aims to diversify the kingdom’s economy away from oil dependency and foster sustainable development across various sectors.

Recently, Hong Kong has seen an increase in exchange-traded funds (ETFs) tracking Saudi equities, allowing investors to engage more directly with the Saudi market. Additionally, there are plans for a Hong Kong Stock Exchange office to be established in Riyadh by 2025.

Despite these positive developments, challenges remain for Chinese companies operating in Saudi Arabia. Issues such as technology-sharing requirements and cultural integration have posed difficulties for firms like Alibaba and SenseTime as they navigate the local business landscape. These challenges highlight the importance of mutual understanding in cross-cultural business ventures.

Conclusion

The creation of this US$1 billion investment fund marks a pivotal moment in the relationship between Hong Kong and Saudi Arabia. As both regions continue to explore investment opportunities together, this partnership has the potential to foster significant economic growth and innovation.

• Previous Article Understanding the KSA National Address System
• Next Article UAE Public Holidays 2025: Official Schedule and How Businesses Can Prepare