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International Financial Hub
21. In parallel with these 10 major infrastructure projects, we will reinforce our position as a global financial centre to help the economy power ahead. The financial sector is an important pillar supporting our economic development. We need sustained improvements to further consolidate Hong Kong's status as an international financial hub. Our country's rapid development and the opening up of its financial sector have presented unprecedented opportunities for Hong Kong's financial services sector. We will continue to promote integration of the financial systems of Hong Kong and the Mainland through complementary development, mutual co-operation and interaction. We are confident that with the strong support of the Central Government, Hong Kong's financial market will be more vibrant. It will become a broader and deeper market, further strengthening our position as a global financial centre.
A Consolidated and Diversified Financial Market
22. We will actively facilitate Mainland enterprises and investors to participate in Hong Kong's stock market through the Qualified Domestic Institutional Investors Scheme and the pilot scheme for Mainland individuals to invest directly in securities in Hong Kong. We will also upgrade our market infrastructure, promote financial intermediation, encourage financial reform and launch new financial products to attract more overseas enterprises to list in Hong Kong.
Continuous Development of the Renminbi (RMB) Market
23. We will further enhance the capability of Hong Kong's financial system to handle RMB-denominated transactions through continuous expansion of RMB business in Hong Kong. The HKSAR Government is actively exploring with the Mainland authorities the introduction of new types of RMB business in Hong Kong, which include settling in RMB the accounts of imports from the Mainland.
Strengthening Co-operation with the Mainland Financial Market
24. The Government will continuously strengthen the financial market linkage and interaction between Hong Kong and the Mainland, including multi-level contacts with the Central Government and related authorities, to step up our co-operation in the financial sector with a view to enhancing the scale and efficiency of both financial markets. We will also strive to expand the scope of business for Hong Kong's financial institutions in the Mainland, and encourage frequent use of Hong Kong as a platform for more outward investment by Mainland funds, investors and financial institutions.
Developing an Islamic Bond Market
25. Islamic finance offers huge potential for development. To further consolidate Hong Kong's position as a global financial centre, we should actively leverage on this new trend by developing an Islamic financial platform in Hong Kong. Apart from stepping up our efforts to promote Hong Kong's financial services to major Islamic countries and regions, we will focus on developing an Islamic bond market. The Hong Kong Monetary Authority, in conjunction with the financial sector, has set up a dedicated team to study related issues and make recommendations for the early introduction of Islamic debt offerings in Hong Kong.
Promoting International Arbitration Services
26. A sound judicial system and comprehensive legal services for dispute resolution are indispensable for an international financial centre. We have endeavoured to develop Hong Kong into an arbitration centre in the Asia-Pacific region. With increasing demand for arbitration services in Hong Kong and the region, the number of cases handled here is on the rise. Hong Kong-based arbitral bodies and their arbitrators, with their status well recognised, are committed to promoting the development of arbitration services. An enhanced arbitral environment will help to further develop our arbitration services. To strengthen Hong Kong's competitive advantage, we have been forging closer ties with international arbitral bodies. By updating our legal mechanism, we will add to Hong Kong's appeal as a prime jurisdiction for arbitration. We will consult the public on the new Arbitration Bill, which seeks to align local legislation with international laws and make our arbitration legislation and procedures more user-friendly.
Economic and Trade Development
27. The National 11th Five-Year Plan states clearly, for the first time, that support will be given to Hong Kong's development on such fronts as financial services, logistics, tourism and information services, and the maintenance of Hong Kong's status as an international financial, trade and shipping centre. The Plan recognises Hong Kong's industries with a competitive advantage and our unique as well as irreplaceable role in our country's development. The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) and its four supplements have laid a sound foundation for the mutual economic co-operation between Hong Kong and the Mainland. In parallel, the success of Hong Kong enterprises in restructuring, upgrading and relocating their businesses as well as their brand building in the Mainland will not only contribute to the overall economic development of our country, but also spur the growth of Hong Kong's service industries in line with the Plan.
Restructuring of Hong Kong Enterprises Operating in the Pearl River Delta
28. Many Hong Kong enterprises have actively capitalised on the enormous opportunities in the Mainland market - but they are also facing unprecedented challenges. This is particularly the case for Hong Kong enterprises with manufacturing operations in the PRD. The recent policy adjustments on processing trade in the Mainland call for an overhaul of the modus operandi adopted by our industries for more than two decades. Our industries need to gear up for this new challenge. Industrial restructuring, upgrading and relocation need to be seriously considered.
29. The Government has been working closely with industry and taken a multi-pronged approach to tackle the situation. We relay to the Central Government industry concerns as well as our assessment of the policy adjustments on Hong Kong's economy; propose to the Central Government other flexible measures to match with the policy adjustment; explore with the provinces and industry alternative operating bases and help investors obtain first-hand information about the investment environment.
30. In addition, we plan to improve the Small and Medium Enterprises Funding Schemes and help industries upgrade production facilities and explore new markets. To date, our efforts have paid off. For example, we are most grateful that the Central Government has allowed alternative arrangements regarding the Guarantee Shadow Margin Account requirements.
Implementing the Action Agenda of the National 11th Five-Year Plan
31. The HKSAR Government held the Economic Summit on "China's 11th Five-Year Plan and the Development of Hong Kong" in September last year. The Summit's four Focus Groups submitted a forward-looking Action Agenda to me in January this year. The Action Agenda contains 50 strategic proposals and 207 action items on how we can enhance our competitiveness in areas where we are strong and also support the development of our country. The Government has taken prompt follow-up action on these various recommendations and taken steps to implement about 100 items. For the remainder the Financial Secretary is taking the lead to sort out specific arrangements with the parties concerned, including the Mainland authorities. These action items can achieve a win-win situation for the economic development of both Hong Kong and our country.
A Level Playing Field
32. One of Hong Kong's advantages is a level playing field for business. This is crucial to sustaining our economic vitality. To maintain a free and competitive business environment, we have reviewed our competition policy. A public consultation exercise on the findings of the review was launched early this year.
33. While the public generally supports the introduction of a competition law, there are concerns in the business sector that the new law may adversely affect normal business operations, in particular those of small and medium enterprises. To allay their worries, we will announce the details of the proposed legislation for public discussion and scrutiny before introducing the bill. Our target is to introduce the bill in the 2008-09 legislative session.
Strengthening the Management of Government Owned Assets
34. It is necessary to enhance the efficiency of our management of Government assets acquired through our considerable investments in local infrastructure over the years. I have asked the Financial Secretary to undertake a study to clarify the Government's role, and its level of participation as a shareholder, in the management of its assets operated on commercial principles. Our purpose is to achieve higher returns and better governance.
(To be continued)
Ends/Wednesday, October 10, 2007
Issued at HKT 11:38
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