LCQ3: "Belt and Road" comprehensive services platform
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Question:
On August 31 this year, the Vice Premier of the State Council clearly expressed the hope that Hong Kong strengthens its professional services, provides professional services such as legal, maritime, financial, and consultancy services for the "Belt and Road" (B&R) Initiative, and builds a B&R comprehensive services platform (the comprehensive platform). Regarding the professional financial services to be provided by the comprehensive platform, will the Government inform this Council:
(1) whether it has drawn up plans on the professional financial services to be provided by the comprehensive platform; if so, of the details, including the implementation timetable, the anticipated outcome (e.g. the number of investors to be attracted to invest in B&R projects), and how Hong Kong can consolidate its status as an international financial centre through provision of such services;
(2) how the Infrastructure Financing Facilitation Office under the Hong Kong Monetary Authority and its partners (including the Silk Road Fund) will dovetail with the building of the comprehensive platform, so that the platform can provide distinguished professional financial services for the B&R Initiative; and
(3) whether the Government has put in place other complementary policies and measures to attract and facilitate overseas financial institutions and investors to, through the professional financial services to be provided by the comprehensive platform, participate in the financing of B&R infrastructure projects; if so, of the details; if not, the reasons for that?
Reply:
President,
Thanks for the Hon Yung Hoi-yan's question. My consolidated reply to the three parts of the question is as follows:
President Xi stated in his important speech delivered on July 1 this year that the Central Government fully supports Hong Kong in its effort to seize the historic opportunities offered by national development and actively dovetail itself with the 14th Five-Year Plan and other national strategies such as the development of the Guangdong-Hong Kong-Macao Greater Bay Area and the high-quality development of the Belt and Road. Indeed, the HKSAR Government attaches great importance to the opportunities brought by the Belt and Road Initiative, and will continue to make a good use of Hong Kong's mature and efficient financial market as well as professional prowess to contribute to the Belt and Road development in the financial service aspects. Details are as follows:
(i) Infrastructure Financing Facilitation
The Hong Kong Monetary Authority (HKMA) set up the Infrastructure Financing Facilitation Office (IFFO) in 2016 to connect key stakeholders for promoting infrastructure investment and financing. IFFO now has nearly 100 partner institutions from the Mainland, Hong Kong and the overseas. Since its launch, IFFO has organised more than 30 large-scale conferences, seminars and workshops on infrastructure investment and financing to share relevant information, experiences and best practices of Belt and Road.
Since the establishment of the Infrastructure Financing and Securitisation Department in 2019, the Hong Kong Mortgage Corporation (HKMC) has invested in infrastructure loan assets of over USD800 million as at the end of last year, covering projects in the Belt and Road countries. HKMC is taking forward a Pilot Infrastructure Loan-Backed Securitisation (PILBS) scheme expected to issue up to USD450 million of PILBS products in the institutional market within this financial year, with the objective to channel market capital into high-quality infrastructure projects for promoting regional economic development and consolidating Hong Kong's position as the regional infrastructure financing centre.
(ii) Offshore Renminbi Business
The Mainland's economic and trade connectivity with the Belt and Road countries and regions keeps strengthening and is increasing the use of Renminbi (RMB) in bilateral trade and investment. As at August this year, RMB deposits (including outstanding Certificates of Deposit) in Hong Kong was at about RMB990 billion, providing liquidity support to offshore RMB transactions and financial activities in the Belt and Road countries and regions, and globally. Statistics of the Worldwide Interbank Financial Telecommunications (SWIFT) also indicate that about 75 per cent of global offshore RMB payments are processed in Hong Kong.
We will continue to take forward the relevant work and enhance market infrastructure, with a view to enhancing our strengths as the largest offshore RMB business centre.
(iii) Asset Management and Corporate Treasury Centre
We are endeavouring to attract corporations in the Belt and Road countries and regions to set up Corporate Treasury Centres (CTCs) in Hong Kong. In this regard, we have launched a series of measures, including the Limited Partnership Fund regime and the fund re-domiciliation mechanism, and tax concessions for carried interest issued by eligible private equity funds. We will also offer tax concessions for family-owned investment holding vehicles managed by single family offices in Hong Kong. The HKMA will also continue to actively promote the strengths of Hong Kong as a CTC hub to corporations.
(iv) Green and Sustainable Finance
To encourage more entities to make use of Hong Kong's capital markets as well as financial and professional services for green and sustainable investment, financing and certification, we launched the Green and Sustainable Finance Grant Scheme in May last year to provide grants for eligible bond issuers and loan borrowers to cover their expenses on bond issuance and external review services, encouraging more green financing activities to be conducted in Hong Kong.
The Hong Kong Exchanges and Clearing Limited launched a voluntary carbon trading platform last week, on which eligible participants can trade voluntary carbon credits to neutralise or compensate for the buyers' carbon emissions. Corporations in the Belt and Road countries and regions can make use of this platform to trade high-quality voluntary carbon credits and facilitate capital flow to green projects.
(v) Risk Management
There are many multinational insurers and reinsurers with rich experience and knowledge in Hong Kong which can provide diversified professional services for enterprises participating in Belt-and-Road-Initiative-related infrastructure and investment projects. We encourage Mainland entities interested in making a foray into the international market to establish captive insurers in Hong Kong to elevate their consolidated corporate risk management capabilities.
In addition, through setting up the Belt and Road Insurance Exchange Facilitation platform and the Hong Kong Specialty Risks Consortium, the Insurance Authority has pooled together stakeholders including enterprises, insurance companies, insurance intermediaries, industry associations, experts, etc. to promote information exchange and facilitate matching of specialty risk owners with service providers, thereby fostering the Belt and Road Initiative and promoting the sustainable development of the Hong Kong insurance industry.
(vi) Accounting Services
Hong Kong's accounting sector is renowned for its high professional level, with the professional standards and regulatory regime all at international standards. The new regulatory regime of the accounting profession in Hong Kong has been in operation since October 1 this year, which has vested the regulatory powers over Hong Kong's accounting sector with the Accounting and Financial Reporting Council, a regulator independent from the profession, bringing the regime in line with international developments. The accounting profession of Hong Kong can provide high-quality accounting, auditing and assurance services to enterprises and projects in the Belt and Road countries and regions, helping these enterprises and projects align with international financial reporting and governance standards.
We will continue to make good use of Hong Kong's strengths in financial and professional services and further Hong Kong's participation in the Belt and Road Initiative.
Thank you, President.
Ends/Wednesday, November 2, 2022
Issued at HKT 14:19
Issued at HKT 14:19
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