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Following is a speech by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, at the SCMP Fund Manager of the Year Awards 2005 today (February 20):
Mr Kathpalia (Surinder), Ms Valiente (Nancy), distinguished guests, ladies and gentlemen,
It is my pleasure to join you tonight at this important landmark event of the fund management industry. I understand that this year's competition is very keen and the judging panel had a hard time picking the winners. I am glad and treasure very much that we have such a strong pool of outstanding fund managers in Hong Kong.
Indeed, I am grateful to our fund managers for their invaluable efforts in maintaining Hong Kong a leading asset management centre in Asia. In 2004, our asset management business amounted to HK$3,618 billion, of which HK$2,269 billion or 63% were sourced from overseas investors. In addition, more than 80 international fund houses from the US, the UK, Japan, Singapore, Switzerland, France and other parts of the world have set up operations in Hong Kong, casting a vote of confidence in Hong Kong's asset management industry. I have also noted that some local and regional private banks are strengthening their business in Hong Kong. In the years to come, I have full confidence that our fund management profession will continue to flourish considering the great development potential of our asset management business.
Prospects for Further Growth
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Thanks to the rise in personal wealth and greater awareness of early retirement planning, Hong Kong has witnessed increasing demand from people from all walks of life for a greater variety of investment tools to fulfill different investment objectives. According to the World Wealth Report 2005, the total wealth of high net worth individuals in the Asia-Pacific Region is expected to grow at a rate of 6.9% per annum from US$7.2 trillion in 2004 to more than US$10 trillion in 2009, outpacing the global growth rate of 6.5%. This sustained and substantial increase means huge potential for Hong Kong to expand our asset management business further.
Another opportunity is undoubtedly in the Mainland. We note that the Mainland authorities are taking steps to allow overseas portfolio investment. For instance, the Mainland authorities have allowed insurance companies and the National Social Security Fund to invest overseas including using Hong Kong as a platform. Given our proximity as well as cultural and linguistic affinity with the Mainland, Hong Kong is best positioned to capitalize on the opportunities arising from the opening up of the Mainland economy.
In the light of the great development potential, the Government has spared no efforts in promoting our asset management business.
Abolition of Estate Duty
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Among others, we have recently abolished estate duty, with retrospective effect from July 15, 2005. We believe that with the abolition of estate duty, more local and overseas investors will be attracted to hold assets in Hong Kong and to use our asset management services.
Exemption of Offshore Funds from Profits Tax
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Another initiative is our legislative proposal to exempt offshore funds from tax for profits derived from "specified transactions" in Hong Kong. When the proposal is implemented, Hong Kong's tax treatment of offshore funds will be on a par with other international financial centres such as the US and the UK and even more favourable than some other places. The House Committee of the Legislative Council has agreed to resume the second reading of the Bill next week.
The Government's Promotional Efforts
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In addition to the tax concession measures, we have also stepped up our promotional efforts. Last month, I visited Kuala Lumpur to promote to the Malaysian investment community Hong Kong's unique strengths as an international financial centre and major asset management centre. Later this week, I will join a Trade Development Council delegation to visit Dubai to promote Hong Kong's financial services. The Middle East economies have experienced tremendous growth as a result of the rising oil prices and, at the same time, they are looking for overseas investment opportunities. As an international financial centre with expertise in a wide array of quality financial services, I believe Hong Kong is well positioned to attract the Middle East funds.
Concluding Remarks
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Ladies and Gentlemen, we see a bright future for Hong Kong as an international financial centre. While the Government is committed to promoting our asset management business, I trust that you would join force with us in pursuing further success. Last but not the least, my heartfelt congratulations to all award winners today for your well-recognized achievements in the past year. Thank you.
Ends/Monday, February 20, 2006
Issued at HKT 20:33
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