SFST's speech at High-level Dialogue cum Dinner - "Hong Kong's Unique Position as the Green Finance and Fintech Capital of Asia" in Brussels, Belgium (English only) (with photo)
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Distinguished guests, ladies and gentlemen,
Good evening and hello from Hong Kong! I am very excited to be here in Brussels, which is the first stop for my trip this time in Europe. I am happy to tell you that Hong Kong has fully returned to normalcy, and I would like to take the opportunity tonight to share with you our latest development in financial services, in particular green finance and fintech.
Green finance
Reducing carbon emissions and realising sustainable development are high priorities for governments, institutions and communities all over the world. I noticed that the EU (European Union) sets out a "Fit for 55" package, which is a set of proposals to revise and update EU legislation and to put in place new initiatives with the aim of ensuring that EU policies are in line with the climate goals agreed by the Council and the European Parliament. The European climate law makes reaching the EU's climate goal of reducing EU emissions by at least 55 per cent by 2030 a legal obligation. EU countries are working on new legislation to achieve this goal and make the EU climate-neutral by 2050.
Hong Kong earnestly shares the global vision in pursuit of a greener world. Our country is advancing towards the "3060 Dual Carbon Targets". The HKSAR (Hong Kong Special Administrative Region) Government also announced Hong Kong's Climate Action Plan 2050 in October 2021, targeting to reduce Hong Kong's carbon emissions by 50 per cent before 2035 and achieve carbon neutrality before 2050. Behind the recent Budget's numbers and initiatives is the importance the HKSAR Government places on high-quality development, and that includes transformation to a green economy. We will also position Hong Kong as an international centre for green tech and green finance.
The global pursuit to carbon neutrality has created a huge demand for innovative and technological solutions to reduce, mitigate or offset carbon emission, ranging from environmental engineering and carbon sequestration to the production of more environmentally friendly products.
The global market for green technology is forecast to reach more than US$410 billion by 2030. That is more than 11 times the total from just two years ago. The opportunities for green finance are hence boundless. It has been estimated that the green financing needs in Asia alone would reach US$66 trillion for the next three decades. For Mainland China alone, US$14.5 trillion.
Hong Kong is a leading player in green finance. In 2022, green and sustainable debts arranged or issued in Hong Kong amounted to over US$80.5 billion. The HKSAR Government has issued nearly US$16 billion government green bonds since 2019, including US$2.5 billion (HK$20 billion) retail green bond in May last year, as well as US$101 million (HK$800 million) tokenised green bond in February this year, the first of its kind released anywhere in the world by a government, as our attempt to further entrench the awareness of sustainability issues in combination with technology.
We are establishing a Green Technology and Finance Development Committee, which will be tasked to work out an action agenda on a number of areas, namely:
(a) building a green technology ecosystem to attract top-notch enterprises or start-ups to set up their operations in Hong Kong;
(b) continuing to develop green financing, helping green projects and companies get the capital they need faster and easier;
(c) promoting green certification and green standard setting and converging the Mainland and international standards;
(d) nurturing talents, through providing local training as well as attracting talents from all over the world; and
(e) enhancing collaboration with the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and the international markets.
Moreover, the launch of Core Climate by the Hong Kong Exchanges and Clearing Limited last October for the trading of international voluntary carbon credits signifies a critical step forward in the development of carbon marketplace in Hong Kong. Carbon credits on the platform come from internationally certified carbon projects from around the world, including carbon avoidance, reduction and removal projects. All projects listed on Core Climate are verified against international standards.
Fintech
Turning to Fintech development in Hong Kong. The Fintech landscape in Hong Kong is incredibly diverse and dynamic. We are now home to over 800 fintech companies and over 3 900 start-ups, offering a wide range of innovative services such as mobile payments, cross-border transfers, intelligent financial consultancy, wealth management, virtual asset trading, and blockchain. We were the pioneers in issuing virtual bank and virtual insurance company licences. Currently, we have eight such banks and four such insurance companies.
Talking about insurance, the HKSAR Government issued the Development Roadmap for the Insurance Sector in Hong Kong in December last year, which outlines our visions and missions in developing the insurance sector, including:
(a) to sharpen our competitive edge as a global risk management centre, and boost the synergies between different financial sectors to provide holistic risk and wealth management solutions facing a global clientele;
(b) to enlarge the market accessible by our insurance sector through proactive policy initiatives and facilitative legislation;
(c) to achieve balanced development of long-term and general businesses, strengthening Hong Kong as a sophisticated insurance hub;
(d) to leverage on our unique advantages under the "one country, two systems" principle and integrate the insurance sector into national development riding on the "Dual Circulation" strategy; and
(e) to give full play to the distinctive role of insurance in providing comprehensive risk management and mitigation solutions to all members of the public, thereby unleashing its social value.
In fact, insurtech is a field that we strive to foster in Hong Kong. Our Insurance Authority has launched the Fast Track and Insurtech Sandbox in this regard to facilitate the insurtech development in Hong Kong. We observe that traditional insurers are seeking partnership with insurtech start-ups or technology providers to develop new products, models and tools, covering various aspects of the insurance value chain. From the Insurtech Survey done earlier, about 70 per cent of insurers would sustain investment in insurtech over the next three years.
Hong Kong has one of the highest consumer fintech adoption rates (67 per cent) in the world, ranking above markets including France, the US (United States) and Japan. It also has a high B2B adoption rate of fintech with 66 per cent of fintech companies focusing on the B2B market. The city also serves as a platform for Mainland China, the world's top consumer market for fintech, with 51 per cent of companies operating or planning to expand in the GBA.
To facilitate the incubation of innovative financial products, we launched the Fintech Proof-of-Concept Subsidy Scheme (PoC Subsidy Scheme) in February 2021, granting subsidies to fintech institutions to partner with financial institutions to test new and practical fintech solutions. A new round of PoC Subsidy Scheme was also rolled out in September 2022, and the scheme has been expanded to research institutions. The two rounds of schemes have approved over 140 projects.
I would also like to talk more about virtual assets. I understand that the EU has reached agreement on groundbreaking Markets in Crypto-Assets rules for licensing and supervision. In fact, in October last year, we also published a Policy Statement on Development of Virtual Assets in Hong Kong, which sets out policy stance and approach towards developing a vibrant sector and ecosystem for virtual assets in Hong Kong. We will put in place timely and necessary guardrails to mitigate actual and potential risks in line with international standards, so that virtual asset innovations can thrive in Hong Kong in a sustainable manner. We have passed the legislation to introduce a licensing regime for virtual asset service providers with a view to ensuring that relevant services and service providers will be subject to appropriate supervision. Moreover, we have so far three crypto asset ETFs (exchange-traded funds) listed in Hong Kong, representing average daily turnover of about HK$7 million in February 2023.
Hong Kong has what it takes to rise as a world leader in green finance and fintech to support an integrated and dynamic green industry cluster with a complete value chain.
Both the EU and Hong Kong are pioneers in the area of green finance and we understand how new financial technologies facilitate access to financial services and improve the efficiency of the financial system for better development of green economy despite challenges under the worsening macroeconomic environment.
We look forward to collaborating with the EU to promote a better greener world by making use of technology. We welcome EU enterprises and talent to collaborate with Hong Kong in fintech, a force for growth in financial services sector, towards the direction of sustainable finance and development.
Thank you very much.
Ends/Friday, April 14, 2023
Issued at HKT 10:00
Issued at HKT 10:00
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