KUALA LUMPUR (Nov 26): The smooth process of Hong Kong's district council elections on Sunday (Nov 24) is a sign that things are finally getting back to normal, says its Secretary for Commerce and Economic Development Edward Yau Tang-wah.

"We have seen success in a very smooth, peaceful conduct of a major district level election (recently) with phenomenal turnout. We hope that with this successful election, it will gradually (restore) the economy," he told a press conference after attending a business forum here today.

"The situation in Hong Kong can be restored and businesses will come back, but that would be a matter for the Hong Kong government, Hong Kong community and our own society to handle.

"I think we might still suffer a bit of a setback in the remaining part of this year into next year, but with the easing of overall global (downturn) and bilateral trade relations, hopefully we will bounce back," added Yau.

Yau is urging Malaysian businesses to explore opportunities of investment in Hong Kong despite the social unrest that has taken place over the past several months, noting that better value has been created for potential companies coming in as cost of doing business is now lower.

The World Bank recently ranked the city-state as third among 190 countries for ease of doing business in 2019, improving from its fourth position in 2018.

The city-state has been battling with occasionally violent anti-government unrest over the past six months, causing a political crisis, disrupting business operations and steering away tourism. This has adversely impacted Hong Kong's economic growth during the third quarter when it contracted 2.9% year-on-year.

Hong Kong is a unique special administrative region of China where it operates as part of a "one country, two systems" structure, granting its residents legal and economic freedom that citizens in mainland Chinese are not privy to.

For businesses, Yau said Hong Kong's strategic location next to China acts as a "two-way street" which allows companies to penetrate other nearby markets such as China as a means of going global.

This is also the case for exporting to the US, said Yau, as Hong Kong exports to the US are not subject to US tariffs.

He said as a financial hub, Hong Kong remains business friendly, scoring high in global surveys on strategic location, productive work-force, attractive taxes, pro-business environment and world-class infrastructure as well as an effective legal system.

"The free trade agreement recently signed between Hong Kong and Asean will also help further strengthen trade with Malaysia. In a time of trade conflicts, I believe this agreement sends a strong signal to our businesses that are in dire need of certainty and clarity," he added.

Malaysia and Hong Kong have long enjoyed close relations. Malaysia is Hong Kong's eighth largest trading partner and second largest trading partner in the Asean bloc, of which Hong Kong benefits from a free trade agreement.

Last year, total bilateral trade between the two places was valued at almost US$29 billion, a 56% jump from the previous year. Hong Kong is also the third largest source of foreign direct investment (FDI) in Malaysia, amounting to US$18 billion as at end-2018.