Ivan Liew at Belt and Road Pioneer Forum
 

3 November 2017, Friday

Secretary General Alimov, ambassadors, ladies and gentlemen.

Good morning, I am Ivan Liew representing Kaisun Energy Group Limited to share with you our journey on being a pioneer in the Belt and Road from the perspective of an Independent and Non-Executive Director. I hope to give a glimpse of the hardship and difficulties Kaisun has endured over the years to get to where we are today. This is not to say we are painting a rosy picture of our accomplishments. No, it is far from that but I can say for certain we are constantly making improvements and we are now at a much better position than we were 6 years ago when we first invested in Belt and Road.

But first, let me take a couple of minutes to talk about Kaisun’s operations. We are a Hong Kong GEM board listed company, and before we diversified into Belt & Road operations and investment portfolio which includes Mining & Machineries Manufacturing; Agriculture; supply chain Management; and some New

Economy business, we started out as a minerals and energy company with our coal mining operation in Inner Mongolia of China back in 2008. But in 2010, there was a nation wide consolidation of coal industry so we had to make the decision of either acquiring more coal mines and to continue mining coal in Inner

Mongolia or we could sell our coal mine and look for other opportunities.
At that time the Board decided it would be best to take profits on investment as we do not see further growth potential in the coal mining industry within China for at least in the next 5 years and we made a good move as we were proven correct with that decision. What happened next was that the Group then acquired the mining rights of a few coal mines in Belt & Road countries. This occurred because we believed in the “going-out strategy” of China – which is actually the predecessor of the Belt and Road Initiative. A few Board members who are experts in minerals and energy assisted the Company on the investment due diligence. After visiting the sites, they were really impressed with the Coal quality and resources. One of the coal mines was actually a world class anthracite mine with a potential 158 million tonnes of resources. Having that knowledge, everybody was excited with the potential of making a lot of money. Unfortunately, that plan did not work out and instead became a very costly and painful move for Kaisun.

But before I continue with that story, allow me to explain the role of an Independent Non-Executive Director. As an INED, we add value to the company by providing expertise and input from an external and independent point of view in order to protect the interests of the shareholders. In other words, we are internal gatekeeper that do not interfere with day to day operations but serve as a monitoring role to make sure strategic directions, values, and standards are being followed, and to ensure goals and objectives are met while risks are properly managed.

But, as an INED, we share the same duty of care as any other Board member. The Stock Exchange of Hong Kong made sure we knew about it and by putting it in black and white in the Corporate Governance Code, stating INED have the same legal responsibilities as the executive directors of the company. So as an INED, going into the Belt & Road is not something that I am totally comfortable with as the company treads on unfamiliar territories and it is something the regulators had little idea about.

Hence, for the growth and future of the company the Board decided to journey into Belt and Road. In the first instance, all seemed well and the Group was very eager to have feasibilities studies completed and constructions underway because we were all eager to see the production in place asap. But, as more and more financial and human resources were invested, the more problems and difficulties the Group encountered.

The biggest problem we encountered was language because the locals spoke both their local language and Russian language while our team were mostly English and Chinese speakers. So communication presented a huge issue. And to rectify this problem we quickly hired translators but that caused other problems because there was no way we could have known if the messages have been delivered properly or even worse is that if information were being misrepresented. From this, the Group has learnt to establish a local team and hired our own in-house experts to ensure proper communication flows. That was one of the major lessons in the Belt & Road - effective communication. And we are not just talking about communication but we also need our people to understand the culture because only by respecting the local culture, then can we succeed in achieving our goal.

A year in and the Group was still experiencing problems but we have learnt to deal with them one at a time. We never really felt we were in total control of the whole situation and felt very reactive as we could only deal with new problems whenever they arose. One fine example is a lawsuit in regards to our anthracite mine. This mine is actually located at very high altitude and we needed expertise and financial help in developing it. So we invited one of our mining peers from Xinjiang to co-develop this coal mine. We have entered into a non-binding memorandum of understanding for Kaisun and our peer to co-develop the mine. To avoid any confusion, the announcement of this memorandum clearly stated that this was non-binding and will require a further agreement to make this into a proper contract.

However, once the invested country saw this announcement they immediately requested us to pay a very hefty sum of Taxes based on a potential deal. This tax was not justifiable and we thought it was simply a huge misunderstanding because that was the first time we have heard about paying taxes based on a MOU.
So naturally, we hired a lawyer to represent us. Through the local lawyer, we tried to explain the situation but the tax department did not listen and took us to court. By that time, no local lawyers were allowed to represent us because they were all afraid to fight against the authorities, so we were forced to hire Russian lawyers.

Management of the Group were very disheartened as we had made conscious efforts to promote the country, we created jobs for the locals, educated the locals and in return we were treated worse than criminals. We were disillusioned and desperate for intervention. We then realized we could turn to our Country to seek help for a way out. But despite going through all this, Kaisun still believes in the potential of Belt and Road and til this day we are still actively promoting it and doing business in the region.

The court case was one of the hardest and most costly lesson for the Group to truly learn how to survive in the Belt and Road. So through this lesson we realized it was important that we take matters into our own hands and be proactive instead of waiting for things to change. So the Group decided to spread our investments into a diversified portfolio in the Belt & Road. Now, as a result, the Group has businesses and investments, in Central Asia, Xinjiang, Shandong, Shenzhen, Macau, Vietnam, the U.K. and of course Hong Kong.

Given our knowledge and experience gained over the years, maybe we should have taken extra considerations on managing the investment risks in Belt and Road. But from an objective perspective, the Board understands that Belt & Road development is the only way forward especially for Hong Kong. Since it is a national strategy promoted by the government, we are now faced with a new dimension of global business opportunities through connectivity and cooperation.

Hong Kong is in the best position to capture these opportunities as we are an international financial center in a strategic location.
Despite the hardship we have been through over the years, we count ourselves very blessed that we have built many strong and opened relationships with both local and international partners. We have met many talented, intelligent and wonderful people along the way and I hope our collaborative efforts, will help us all to share the potential impact on growth and prosperity together.

以下為中文譯文供參考（以英文為准）：

        大家早上好!

        我是凱順能源的獨立非執行董事劉瑞源。我非常開心作為「一帶一路」倡議的支持者。多年來，凱順能源成功征服許多困難，從而走到今天。雖然我們現在已經較六年前站在更好的位置，但我們還是希望在未來進一步去成長及完善。

       首先，我想向大家介紹凱順能源。凱順能源是一所香港企業。早在2008年就開始在中國內蒙古開採煤礦業務，成為一家礦產能源公司，以礦產和能源起家。在2010年的時候，中國煤炭行業面臨一個非常巨大的改革，那時我們需要考慮是進一步在內蒙古購買更多礦產，或是把煤炭產業業務出售。當時董事會認為中國煤炭行業在未來5年內沒有進一步增長潛力，於是決定把煤炭產業出售，從中獲利。而往後事實也證明瞭我們的決定是正確的。

       接下來，由於我們相信中國的「走出去戰略」，也就是「一帶一路」倡議的前身，集團投資人獲得了「一帶一路」國家的幾個煤礦採礦權。董事會的一些成員是礦物和能源方面的專家，能協助公司進行投資調查。參觀了幾個煤礦後，他們都對那些煤礦質量印象深刻。其中一個煤礦更擁有1.58億噸資源。當時，董事會每個人都為未來潛在利益而感到興奮。不幸的是，這個計劃並沒有成功，反而成為一次非常昂貴和痛苦的投資。

       在繼續說這件事前，或許先容許我介紹一下獨立非執行董事的角色。作為獨立非執行董事，我們通過提供外部和獨立角度的專業知識和意見來增加公司價值，保障股東的利益。換句話說，我們是內部守門人，不會干涉日常運作，而是擔當監督角色，確保戰略方向、價值觀和標準得到遵守，並能管理風險，實現目標。但獨立非執行董事任何其他董事會成員一樣有著同樣的義務及責任，例如獨立非執行董事與公司執行董事具有相同的法律責任。

       其後，為了公司的發展和未來，董事會決定進入一帶一路。一開始，一切都很順利，集團非常希望能夠完成可行性研究和建設工作，因為我們都迫不及待地想要看到生產。但是，隨著投入更多的財力和人力資源，集團面臨的問題和困難越來越多。

       我們遇到的最大的問題是語言，因為當地人普遍說本地語言或俄語，但我們的團隊大多是講中文與英文的，結果我們在一帶一路沿線國家投資時，便產生很多的問題。於是我們開始聘請翻譯，可是聘請翻譯的過程也產生一些問題，因為我們未能確定我們的資訊是否被正確的翻譯出去，我們的這個資訊又是否會被誤讀。因此我們需要建立本地團隊，並聘請我們自己的內部專家來確保正確的溝通。「有效的溝通」是我們在「一帶一路」重要的一堂課。而且我們還要求我們的工作人員瞭解當地的文化，因為只有尊重當地的文化，我們才能與當地的工作人員攜手同心。

       現在集團依然會遇到一些問題，然而我們學會了怎樣一步步解決問題。我們目前非常積極主動去解決不同的問題，一旦問題出現，我們就會尋找解決方案。

       一個很好的例子就是有關我們煤礦的訴訟。有一個礦井的海拔非常高，我們需要經濟和技術的支持方可開發，於是我們在新疆請了合作夥伴，共同去征服這個礦井。我們簽署了一份不具約束力的諒解備忘錄，備忘錄的公告中明確指出，這沒有約束力的，需要進一步協議才成為正式合同。

       然而，該國家看到這一消息，他們立即要求我們就這次潛在交易支付高額稅款。這個稅收極不合理的，我們一開始認為這只是一個誤解，因為這是我們首次聽說就諒解備忘錄需要繳納稅款。我們聘請律師代表我們，試圖解釋情況，但稅務部門並沒有聽取我們的意見。

       當地的律師也非常害怕幫我們與當局談判，所以我們被迫聘請了俄羅斯的律師。這種阻滯讓我們十分沮喪，雖然我們提供非常多的就業及教育機會，讓當地更繁榮，但我們受到的對待幾乎比罪犯差。最後我們也要向我地祖國求助，詢問如何去處理這個事情。

       哪怕我們遇到如此多的事故和問題，凱順依然希望借助「一帶一路」倡議來進行擴展。這次事件是本集團在「一帶一路」投資中最困難，最昂貴的教訓之一。通過這一教訓，我們意識到我們要把事情掌握在自己手中，而且要積極主動，而不是等待事情的改變。因此集團決定將投資分散到一帶一路的多元化投資組合。 現在，集團在中亞，新疆，山東，深圳，澳門，越南，英國，當然還有香港，都有企業和投資。

       鑑於這些年的經驗，我們確實應該慎重考慮及管理「一帶一路」的投資風險。然而，一帶一路的發展是香港惟一前進的依靠。由於這是政府推動的國家戰略，而香港正處於抓住這些機遇的最佳位置，面對全球商機。

       總結而言，儘管多年來歷盡艱辛，但我們還是覺得非常幸運。因為我們在發展的過程中，擴張自己的影響力，也遇到了更多的合作夥伴，建立了強大的合作關係。在困難當中，也遇到了很多人才和幫助我們的人。

       最後，希望透過合作與努力，我們共同發展，共用繁榮。謝謝大家。