A math whiz who grew up in Shau Kei Wan, Tony Chan holds a BS in Engineering and MS in Aeronautics from the California Institute of Technology and a PhD in computer science from Stanford University. Chan’s academic career has been stellar. Before moving to Hong Kong in 2009 to head the Hong Kong University of Science and Technology, he was Assistant Director at the National Science Foundation in the US and Dean at UCLA.
In September 2018, he left HKUST to lead Saudi Arabia’s King Abdullah University of Science and Technology (KAUST), a graduate research university an hour’s drive from Jeddah. Here he talks with AmCham HK about Hong Kong’s potential role in the Middle East as well as the critical place his new university has in shaping Saudi’s future.
Even across the virtual distance of a Zoom interview, Tony Chan, former president of HKUST, current president of its Saudia Arabian counterpart, KAUST, comes across as a whirlwind with a sense of humor. He is modest about his own extraordinary story, growing up in Shau Kei Wan on Main Street East, near where the Hong Kong Museum of Coastal Defence is now. His father was an engineer in the quarry, across the street from the shipyards and near the fish market. He walked to the Salesian School on Chai Wan Road.
Since Salesian lacked Forms 6-7, he took the certificate of education examination and barely did well enough to get into the storied Queen’s College, the oldest government secondary school in Hong Kong, founded in 1862.
“That was transformative,” he says. “It was not a rich school, but it attracted some of the best students.” Upon graduation from Queen’s, he wanted to study with Richard Feynman, the Nobel prize winner and theoretical physicist, at Caltech, where he graduated with a degree in Engineering. He then went to Stanford for his PhD, taught at Yale, the University of California at Los Angeles, went to the National Science Foundation in Alexandria, Va., where he was involved with strategy and planning before moving to Hong Kong as president of HKUST in 2009 and then to Jeddah, as president of KAUST from 2018.
And now here he is at the center of another transformation, as Saudi Arabia builds a series of “giga-projects” under the leadership of its crown prince, HRH Mohammed bin Salman, popularly known as MBS.
MBS has been using the kingdom’s massive fund of petro-dollars, managed through the $900 billion Public Investment Fund (PIF), to spark massive building projects, from “The Line”, a linear city in Saudi Arabia’s northwest Tabuk province, stretching 170 km, running entirely on renewable energy, and connected by high-speed rail, to the Oxagon, a floating city with a sustainable port, residential community and research campus, to Trojena, a ski resort 50 km from the Gulf of Awaba coast with 36 km of ski slopes and 3,600 hotel rooms and the site of the 2029 Asian Winter Olympic Games.
These are managed by NEOM, “a global hub open for business” chaired by MBS. And despite Saudia Arabia’s wealth, it can’t do them alone.
This is where Hong Kong, China, and KAUST come in. Saudi Arabia not only needs Chinese capital but also the experience of Chinese companies in building large infrastructure projects. Saudi Arabia also needs foreign investment, and with US sanctions hobbling western investment in Chinese funds, Chinese private equity and venture capital is looking to the Middle East’s huge sovereign wealth funds like PIF. “Funds in China are interested in expanding on a global scale, and the Middle East is virgin territory,” Chan says. “Saudi Arabia is a good landing pad for the whole Islamic market.”
“Is it a match of convenience or a match made in heaven?” Chan asks. “It’s like a green light was turned on” after President Xi Jinping’s visit to Saudi Arabia in December 2022, he continues. “Delegations are coming from Chinese provinces, cities and public and private organizations.
For example, the mayor of Shenzhen led a delegation of 50 people to visit Saudi Arabia. The 10th Arab-China Business Forum in Riyadh in June 2023 drew over 1,000 participants from China. Hong Kong’s Chief Executive John Lee led a delegation of 60 people to Riyadh in February 2023. I was a guest of the delegation, and there were many people I knew – architects, government officials, entrepreneurs, and bankers.”
Hong Kong began exploring roles in Islamic finance in the mid-2000s, when it floated three sukuk bonds totaling $3 billion between 2014-2017 (sukuk bonds are based on asset sharing rather than interest payments, which are against Islamic Sharia law), but it was not until the past year that the opportunity for Hong Kong began to take shape. As the world’s leading center for renminbi intermediation and a global financial hub, Hong Kong’s capital markets as well as professional expertise could help shape the emerging engagement between Beijing and Riyadh.
This was the message as Saudi Arabia’s Future Investment Initiative (FII) forum, which is chaired by the head of the Public Investment Fund, Yasir Al-Rumayyan, held its first conference in Asia in Hong Kong from December 7-8, 2023. The forum is only seven years old, with its first event in October 2017 in Riyadh, but it is rapidly gaining traction on the international circuit of major events attracting investors, CEOs and entrepreneurs.
Modeled after the Annual World Economic Forum in Davos, Switzerland, the FII conferences in Riyadh quickly became known as “Davos in the Desert” and began attracting attention as MBS’s projects ramped up.
The fact that Hong Kong was chosen as the location for FII’s first conference in Asia was significant. Chan, who is on the board of FII Institute, which oversees FII, was in Hong Kong for two weeks during the FII conference. “Today, the attendance of FII is bigger than Davos,” he says. “Numbers, of course, are different from influence. Davos is still the most influential of these forums.”
“Like Davos, which has satellite events, including the summer Davos in China, the one in the Middle East in Jordan, FII, starting last year, started to organize satellite events. The first one was in London, on Environment, Society and Governance (ESG). The second one was in New York City. The third was in Miami. It is natural that FII wanted to expand in Asia.
But where in Asia? If you were sitting on the board of FII, you might be thinking maybe Shanghai, maybe Tokyo. But with those two locations, there was political sensitivity. Singapore would be a top choice, western-friendly and positioned between East and West. But out of all of these, Hong Kong was chosen.”
“In my view, Hong Kong has the advantage that it is part of China, but not exactly China. It has its own currency, its own legal system, and international business experience. The other reason Hong Kong was chosen is that it made a concerted effort to get it. Paul Chan, the financial secretary, Laura Cha, the chair of Hong Kong Exchanges and Clearing Ltd (HKEx), Nicolas Aguzin, the CEO of HKEx, plus Victor Fung, were in Riyadh for the FII conference in October 2022, followed by Chief Executive John Lee’s delegation in February 2023.
I’d guess that the hosting of FII in Hong Kong was discussed during those visits. In Davos, which is more exclusive, and Hong Kongers have to travel a long way. But with FII in Hong Kong, Hong Kongers have some advantage.”
Chan moderated a roundtable event at the FII conference including Matteo Renzi (former Prime Minister of Italy), Ronnie Chan (chairman of Hang Lung Group), Jean-Pascal Tricoire (the chairman of Schneider Electric) Richard Li, (chairman of Pacific Century Group), Laura Cha, and Kevin Sneader (president of Goldman Sachs, Asia Pacific ex Japan).
Whether Hong Kong gets the next FII conference in Asia is up in the air, but meanwhile Chan has a unique role to play as president of KAUST and past president of HKUST. Both Hong Kong and Saudi Arabia have recognized the importance of basic science and technology in stimulating downstream industrial applications. Chan says:
“The founding of KAUST is intimately related to development of Saudi Arabia. The younger half-brother of the late King Abdullah is King Salman, and one of his sons is Mohammed bin Salman. Fifteen or 16 years ago, King Abdullah realized that oil would run out, and wanted to diversify the economy from oil. Science and technology was one of the obvious directions”.
“KAUST was founded in 2009, some say in the image of Caltech, but a Caltech without undergrads. That was one part of the vision. The other was to revive the Islamic House of Wisdom. A thousand years ago, the Middle East preserved wisdom and human knowledge during the European dark ages.”
“KAUST is to be a beacon of knowledge to the rest of the world, and contribute not only to Saudi Arabia but also to rest of world. These are our two aims.”
Now in its 15th year, Chan says that KAUST is gradually becoming known internationally, although it has yet to spawn major companies like Stanford or MIT has done. In addition to being a graduate school only, it is also focused on four research pillars – energy, the environment, water and food. Chan has also launched two new pillars, health and the digital revolution.
“How does KAUST fit into the national ecosystem?” Chan asks. “We were different from day one. Saudi Arabia has over 60 universities. But KAUST was formed as a bold experiment. There are no undergrads. Two-thirds of the students are PhDs. We were co-educational.
We were formed to be one of the best universities in the world.” It provides the science and technology knowledge, as well as the talent pool, to contribute to the national transformation of Saudi Arabia, including “giga-projects” such as NEOM, to provide global credibility to help attract outside investments, and to offer a new perspective on Saudi Arabia, which tends to be seen outside in one-dimensional terms, according to Chan.
“Saudi Arabia is often misunderstood internationally,” Chan says. “There is often a lack of knowledge of the Kingdom. It may sound incredible but some people in Hong Kong actually asked me if Saudi Arabia is in Dubai! It’s no different than when I first came to the US from Hong Kong and people asked me if Hong Kong was in Tokyo! It doesn’t help that mainstream media does not always cast Saudi Arabia in the best light.”
Chan’s experience with HKUST is not necessarily a template for his role at KAUST, but it does augur well for the relatively new research institution.
“When I was at HKUST from 2009-2018, it was a golden period for the university,” Chan says. “Now HKUST is facing strong competition from both ends, from other universities in Hong Kong and also from universities in China – Tsinghua is now the number one ranked university in Asia. Just as at Amcham is facing its own challenges – why do companies need to come to Hong Kong? Why do faculty and students want to come to HKUST?”
“For me the quintessential challenge for Hong Kong is that it has lost a little bit of its mojo. It’s trying to recover it. I’m still optimistic about Hong Kong. I wasn’t here in 2003, but I was told it was a little bit down then too but Hong Kong recovered well. Now it has had Covid-19, and now Shenzhen has surpassed Hong Kong in GDP. The Greater Bay Area may be the last hope. I have used the following analogy: Hong Kong is like San Francisco, and Shenzhen is like San Jose.
San Francisco was historically the financial center and the tourist center, but there were few technology companies in San Francisco. But most of the people who worked in Silicon Valley wanted to live in San Francisco and after a while people wanted to form new companies and they chose to stay there.”
“This is Hong Kong’s best hope, especially with software. Hardware is difficult for Hong Kong due to space limitation, but you can do software. I was worried about the apparent lack of night life when I was in Hong Kong for the FII conference. That was the vibrancy of Hong Kong. Even Watson’s in busy areas like Wan Chai closes as early as 8pm! When I was in Central, it was quieter than before. What I felt, what I heard, was more tourists, and I heard relatively little Cantonese.”
“By the way, I take tremendous pride in having spun off at least six or seven university presidents from HKUST when I was president there, including Eden Woon, the President of AmCham, who was at HKUST before he became president of the Asian Institute of Technology. I tried to hire the best people.”
“And that’s what KAUST is doing,” Chan continues. “It’s attracting people who knew little about Saudi Arabia before. They come to KAUST and say wow, this is better than I had expected, so they sign on. We have a lot of international students, and 30% stay in Saudi Arabia after they graduate. Some work for big companies and others start their own businesses.”
As we are about to end the conversation, Chan reminds me to ask another question: “What is it like living in Saudi Arabia?”
“The important aspect is the culture,” he says. “There is a lot of sand and desert in Saudi Arabia of course but it is not all that. Go to Google maps and turn on satellite view. The west coast of Saudi Arabia bordering the Red Sea is like the west coast of the US. There are hundreds of volcanoes, it snows and there are forests in the south. There are also a lot of historical and archeological sites – six of which are UNESCO World Heritage sites.”
“I encourage you to watch the classic movie, Lawrence of Arabia, which is based on true historical events and the desert sceneries are very representative of what I have seen in the Kingdom. Saudi Arabia is also a very safe country, much safer than the US objectively, partly because of Sharia law. Nobody has guns other than police or military.”
“And Saudi society is very Americanized. The reasons for it come from both American popular culture and geopolitics. Most of the people I interact with speak fluent American English. America helped Saudi Arabia discover oil. Aramco is an acronym for the Arabian American Oil Company. The only thing I miss is Chinese food. No pork for Chinese food is difficult. Shangri-La has a new hotel in Jeddah, but there is still no pork – it makes char siu with chicken meat. Not the same taste! When I come to Los Angeles or Hong Kong the first thing I do is go for dim sum.”
At that point, we sign off, after a fast tour through geopolitics, new directions for Hong Kong and China as massive projects take shape in Saudi Arabia, and a new appreciation of the global talent that Hong Kong has produced over the last few decades, as a boy who grew up near a quarry and a fish market is shaping a new generation of talent in the Middle East, and along the way advising royalty, CEOs and heads of state.
Chan likes to quote Guan Zhong, a statesman during the Warring States period in China (770 BCE-476 BCE) who wrote about the importance of higher education: “It takes 10 years to grow a tree, but 100 years to grow a person.” Chan is only 72, and we can only imagine what he will accomplish in the next three decades.