Financial secretary Paul Chan Mo-po announced the special administrative region’s budget on 28 February to the Hong Kong Legislative Council.
The financial service and insurance industries were referred to several times throughout his speech, as he highlighted the important roles they play for Hong Kong’s economy.
Chan said Hong Kong has become the “premier listing” and fundraising platform for mainland China enterprises.
He said he had set aside a dedicated provision of HK$500m (£45.8m, $63.9m, €51.9m) for the development of the financial services industry over the next five years.
“We have played an unparalleled role in connecting the Mainland and the international markets and investors and achieved significant development in the process.
“Looking ahead, our financial services industry will have ample room for more diversified development. We will map out a development blueprint for it,” Chan said.
Key features of the blueprint include developing green finance.
Chan said, to demonstrate its commitment, the government is proposing to launch a green bond issuance programme with a borrowing ceiling of HK$100bn.
Sums borrowed would be credited to the Capital Works Reserve Fund to provide funding to green public works projects by the government.
“The government will submit a resolution to the Legislative Council (LegCo) as soon as possible so that the inaugural government green bond can be issued in 2018-19,” Chan said.
Chan added that he would be asking the recently created Insurance Authority (IA) “to explore ways of enhancing Hong Kong’s competitiveness as an insurance hub, including tax arrangements and other regulatory requirements, in collaboration with the industry”.
The chairman of the IA, Moses Cheng, said he welcomes the initiative and will work closely with the government on the matter.
“Our goal is to promote Hong Kong as a regional insurance hub, and strengthen Hong Kong’s role as a risk management centre for the Mainland and the infrastructural projects under the ‘Belt and Road Initiative’, ” Cheng said.
Additionally, Cheng said the IA supports the budget initiative in offering tax concession to encourage the development of the deferred annuity market and to give people more financial planning options for their retirement.
He said the IA will consult with the industry in developing the guidelines in implementing the tax concession for contributions made to deferred annuity products.
Asset and wealth management
The government had introduced a number of initiatives in recent years to “sharpen the competitive edge” of Hong Kong’s fund industry and diversify the management platform, Chan said.
These initiatives include removing constraints in the existing legal structure, providing a more facilitating tax environment and expanding the distribution network.
“It is expected that the regime for open-ended fund companies to be used as a fund vehicle and the relevant tax exemption arrangements can commence operation later this year.
“Besides, we will review the existing tax concession arrangements applicable to the fund industry with regard to international requirements on tax co-operation. The government will also examine the feasibility of introducing a limited partnership,” Chan said.
Looking ahead, Chan said China will continue to take centre stage in global driving economic development and Hong Kong must upgrade its pool of financial talent to maintain its leadings edge.
To achieve this, Chan has asked the Hong Kong Monetary Authority (HKMA), in collaboration with the Financial Services Development Council, to make plans to set up an academy of finance.
The chair of the HKMA, Norman Chan, said his initial view was that an academy seemed feasible.
“Competition among International Financial Centres (IFC) is always fierce.
“The ability to expand and upgrade one’s professional talent pool and enhance soft power in a sustainable manner will differentiate the true winners.
“Establishing an academy of finance will not only nurture top notch talents in the field of finance, but enhance Hong Kong’s competitiveness as an IFC,” he said.