Acting SFST's opening remarks on financial services at LegCo Finance Committee special meeting
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Chairman and Honourable Members,
I will briefly introduce the estimates of expenditure for financial services and our key areas of work in the coming year.
Estimates of expenditure
The allocation to the Financial Services Branch and departments under its purview for 2023-24 is about $1.8 billion. The amount represents a reduction of about $0.35 billion over the revised estimate of last year, which is mainly due to the reduced cash flow requirement of the e-MPF Platform project under the Branch's general non-recurrent account.
Key areas of work
In the coming year, we will on one hand focus on safeguarding Hong Kong's financial stability and on the other, continue to develop our financial market. On the latter, there are three main areas, namely, enhancing market competitiveness, seizing new opportunities, as well as promoting financial inclusiveness and nurturing talent.
(A) Enhancing market competitiveness
The Budget has set out a basket of measures to consolidate Hong Kong's position as an asset and wealth management hub. We have introduced legislative amendment to provide profits tax exemption for family-owned investment holding vehicles managed by single family offices in Hong Kong. We have successfully held the "Wealth for Good in Hong Kong" Summit on March 24 to establish direct connection and foster co-operation with global family offices. The Government will work with regulators to refine the regulatory measures and review the existing tax arrangements to create a facilitative environment for meeting the development needs of the industry. We will also attract more new capital and talent to Hong Kong through the new Capital Investment Entrant Scheme.
On the development of offshore Renminbi (RMB) market, the focus is to promote the issuance and trading of RMB securities in Hong Kong. The Government has already made legislative amendments to exempt the stamp duty payable for market makers so as to support the launch of dual-counter market maker regime by Hong Kong Exchanges and Clearing Limited (HKEX). Mutual market access with the Mainland is the unique advantage of Hong Kong. We are actively making preparations to set up an RMB securities trading counter under Southbound Trading of Stock Connect, and will continue to take forward expansion of mutual market access and enhancement arrangements, such as enhancing the Bond Connect and the Cross-boundary Wealth Management Connect Scheme in the Greater Bay Area (GBA), as well as exploring the provision of more risk management products for offshore investors, including the issuance of Mainland government bond futures in Hong Kong.
Regarding the insurance market, we will extend the Pilot Insurance-linked Securities Grant Scheme for two years to continue attracting more issuing institutions and nurturing talent, with a view to supporting industry development and assisting our country in the expansion of channels for risk diversification and management.
On the securities market, we will continue to enhance the listing and trading mechanisms. After consulting the market, HKEX has launched the listing regime for specialist technology companies from end-March, expanding the listing channel for issuers. HKEX will put forward specific reform proposals for the Growth Enterprise Market (GEM) within 2023 for formal consultation, and further enhance the Listing Rules including relevant arrangements concerning share buy backs by issuers. In addition, HKEX will also explore various measures for refining the trading mechanism of the stock market, so as to facilitate transactions of investors and respond to the market trend.
On the bond market, we will encourage more Mainland local governments at different levels as well as Mainland and overseas public and private institutions to issue offshore RMB bonds in Hong Kong. In this connection, we have made an Order to extend the coverage of profits tax exemption to the debt instruments issued in Hong Kong by all Mainland local people's governments at any level with effect from March 31 this year. We will also consolidate the experience gained from the recent issuance of tokenised government green bonds, explore the potential of using financial technology (Fintech) to improve the bond issuance process, and consider policy initiatives to promote the wider use of tokenisation technology in Hong Kong's capital market.
(B) Seizing new opportunities
The Financial Secretary will set up a Green Technology and Finance Development Committee for promoting the development of Hong Kong into an international green technology and finance centre. We will promote green finance application and innovation, facilitating green projects to obtain capital more conveniently and flexibly through financial innovations. As regards Fintech, we will continue to take forward the application testing and preparatory work for various Fintech infrastructure projects, which include "e-HKD", "e-CNY", the use of the Faster Payment System and PromptPay by visitors from Hong Kong and Thailand for local payments respectively, as well as the continuous enhancement of the Commercial Data Interchange. In addition, following the Government's issuance of a policy statement on Development of Virtual Assets in Hong Kong, the Financial Secretary will set up a Task Force on Virtual Assets Development to spearhead the next step.
At the same time, we plan to introduce a company re-domiciliation mechanism to facilitate companies domiciled overseas, particularly enterprises with a business focus in the Asia-Pacific region, for re-domiciliation to Hong Kong. We started consulting major stakeholders in March. Upon taking into account stakeholders' views, we will formulate the details of the legislative proposal with a view to presenting it in 2023-24.
(C) Promoting financial inclusiveness and nurturing talent
As regards the Mandatory Provident Fund (MPF), to provide scheme members with more investment choices, the Government plans to accord priority to investment by MPF funds in a certain portion of future Government issuances of institutional green and infrastructure bonds, while the Hong Kong Monetary Authority (HKMA) and Mandatory Provident Fund Schemes Authority are studying options to set up an MPF fund with stable return at low cost. In addition, we are preparing for the implementation of the proposed increase in tax deduction for employers' voluntary MPF contributions for their employees aged 65 or above.
On retail bonds, the Government plans to issue no less than $50 billion of Silver Bonds and $15 billion of retail green bonds in the current financial year, so as to facilitate market development and at the same time offer to members of the public investment options with steady returns.
On training of talent, the Government will launch a Fintech internship scheme for post-secondary students which aims at facilitating students studying Fintech related subjects to acquire practical work experience in Fintech enterprises in Hong Kong and the GBA. We will also extend the Pilot Programme to Enhance Talent Training for the Insurance Sector and the Asset and Wealth Management Sector for three years, to nurture more talent for the industry and enhance the professional competency of practitioners.
Chairman, my colleagues and I will be happy to answer any questions from Members.
Thank you.
Ends/Wednesday, April 12, 2023
Issued at HKT 14:53
Issued at HKT 14:53
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