Speech by FS at CIMA Annual Dinner 2022 (English only) (with photo)
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Deputy Director-General Li Xuhong (Deputy Director-General of the Department of Administration and Finance of the Liaison Office of the Central People's Government in the Hong Kong Special Administrative Region), Jasper (Chairman of the Hong Kong Special Administrative Region Area Committee of the Chartered Institute of Management Accountants (CIMA), Mr Jasper Chung), distinguished guests, fellow accountants, ladies and gentlemen,
Good evening. It is a great pleasure to join you all today at CIMA's 2022 Annual Dinner. As one of the world's largest professional bodies of management accountants, CIMA has been an important contributor driving innovation and development of the global accounting profession. Its joint venture with the American Institute of Certified Public Accountants in 2011 and establishment of the Chartered Global Management Accountants designation in 2012 are two striking examples of CIMA's dedication to harness the full potential of accounting talents and to satisfy the demands of the fast-changing global economy.
I must say that the theme of the annual dinner tonight is most relevant - leading us to discuss and explore how management accountants could drive and excel in competitiveness, innovation and sustainability. Indeed, they are as much the mission of management accountants as the accounting profession, the Government and Hong Kong as a whole.
The external economic environment is rapidly worsening in the midst of geopolitical tensions, trade disputes, the COVID-19 pandemic, rising inflation, and tightening monetary policies. I just returned from the G20 Summit in Bali, Indonesia – and during the Summit, I could feel the heat of geopolitical tensions which had dominated the Summit's agenda.
The outlook of the global economy is gloomy – the International Monetary Fund has lowered the growth forecast of the global economy to 2.7 per cent in 2023; the World Bank's figure is 0.5 per cent. Headwind for Hong Kong brought by external factors will be there – almost certainly.
But our fundamentals remain strong and steadfast. The steady development of our country's economy has provided Hong Kong with the most solid support. Under the "one country, two systems" principle, Hong Kong maintains close connection with the world market and strong support from the motherland. Our distinctive advantages also include the rule of law and judicial independence, free flow of capital, free trade and investment, a simple and low tax system, a favourable business environment with an internationally aligned regulatory regime, and a proactive and efficient government.
Over the years, Hong Kong is among the top of different competitiveness tables issued by world-recognised institutions, ranging from our strengths as an international financial centre, to economic freedom and the rule of law.
And the "one country, two systems" principle is here to stay in the long run, as said by President Xi Jinping in the celebrations of the 25th anniversary of Hong Kong's return to the motherland, and reiterated as part of the country's governance system under the 20th National Congress of the Chinese Communist Party. And the Central Government fully supports Hong Kong in its effort to maintain its distinctive status and edges, including, among other things, to keep our business environment free, open and regulated, in alignment with international best practice, and to maintain the common law system.
Therefore, despite short-term challenges, our economic prospects remain promising. But we need to work hard to make this materialise. As evident in the Chief Executive's maiden Policy Address announced in October, this Government has been embarking on new directions and taking bold measures in order to secure better prospects of our future and our economy, and, more importantly, for a better livelihood of the people.
First, it is to transform our governing philosophy.Hong Kong had long been heralded as an exemplar of laissez-faire, but in a rapidly changing world full of uncertainties, and where competition for enterprises, talents and innovation is very keen, we must play a more proactive, catalytic role. As President Xi reminded us, we must combine the strengths of a capable government and an efficient market.
One way in which this is manifested is our approach to viewing the relationship with enterprises. While we continue to maintain a fair, open and transparent business environment based on the rule of law, we have also become much more proactive in attracting and nurturing industries, enterprises and sectors that are of strategic importance to Hong Kong.
Bold measures have been announced in the Policy Address to attract strategic enterprises. It includes the establishment of the $30 billion Co-Investment Fund, which would help Hong Kong to proactively attract, make co-investment into and gain returns from key and strategic enterprises.
Indeed, over the past few years, I have also announced in the Budget the establishment of the Hong Kong Growth Portfolio, the Greater Bay Area Investment Fund, and the Strategic Tech Fund to tap the respective investment opportunities that are conducive to enhancing Hong Kong's competitiveness and productivity.
At the same time, in this year's Policy Address, much more aggressive talent admission schemes have been rolled out to get the right talents to power our economic engine.
Second, it is to further strengthen our conventional strengths and hit new growth areas that will sustain Hong Kong's quality economic development. Take financial services for example – which is certainly of the greatest interest to our fellow accountants. We have done much to enhance the competitiveness of our listing regime, including the listing of emerging and innovative companies with weighted voting structures, secondary listing of China concept stocks, the listing of SPACs (special purpose acquisition companies), etc.
We will undertake more reforms and facilitation in this respect. For instance, next year, the Hong Kong Stock Exchange (HKEX) will revise the Main Board Listing Rules to facilitate fundraising by advanced technology enterprises which have yet met the existing profit and trading record requirements. HKEX is also exploring the proposition of providing small and medium enterprises as well as start-ups with a more effective fundraising platform.
As you all know, the Connect Schemes – be it Stock Connect, Bond Connect, ETF Connect – are important channels for linking the Mainland market and international capital, and vice versa. They are deepening and expanding, which will provide more liquidity into the Hong Kong market and assist in the internationalisation of the Renminbi. We are offering more offshore risk management tools for investors when they participate in the Mainland equity and bond markets. We are most pleased to see another major milestone development with the announcement of three initiatives by the China Securities Regulatory Commission earlier in September. I am sure you are fully aware of the details.
To broaden the development of our financial markets, we are also keen on developing our bond market. Through measures such as issuing government bonds, providing tax relief and subsidies, as well as strengthening our ties with the Mainland market through the Bond Connect, the bond market of Hong Kong has seen rapid growth in recent years. Hong Kong is the premier issuance location among Asian institutions and for Asian international bonds.
Meanwhile, as the largest offshore RMB centre across the globe, we will build a vibrant ecosystem by promoting the launch of more RMB-denominated investment and risk-management tools and upgrading the related market infrastructure.
There is just boundless potential for Hong Kong as a premier fund raising platform with high connectivity with Mainland and international capital, as well as an offshore RMB centre. During my recent trips to the Middle East and Indonesia, I took the opportunity to meet with senior government officials, business leaders and senior management of large conglomerates. One common insight we have got is their ambitious infrastructure plans, including those related to green transition, for their burgeoning economies. They also feel a strong need and desire to diversify their investments to this part of the world, in particular, the Mainland. Apart from our financial services, Hong Kong's world-class professional services are simply in the best position to reap the benefits of this wave of opportunities.
Our efforts in recent years in green and sustainable finance are yielding remarkable results. Hong Kong has the vision to become a premier centre for green and sustainable finance that serves the green transformation in the Mainland, the region and the world. Last year, we became the first Asian government to issue 30-year and 20-year green bonds denominated in US dollars and euros respectively, which were the longest tenor of Asian government bonds at the time. Mainland provincial and municipal governments have started using Hong Kong to issue green and sustainable bonds as well. In May this year, we issued the inaugural retail green bonds of HK$20 billion, which was also the largest globally. In many ways, we are setting benchmarks and standards for green finances in Asia.
Crucial to our success is our alignment with high international standards. Our reporting and disclosure standards are on par with international best practices. Currently, we are working to adopt a green classification framework along the Common Ground Taxonomy. Last year, our green and sustainable debt issued or arranged reached US$56.6 billion, four times the figure in 2020, which is a testimony to the trust by global investors in our green offerings.
Virtual assets (VAs) and cryptos are unstoppable new financial innovations. It is clear that we need to embrace them – indeed we have proposed several projects, including the tokenised offering of a new tranche of green bonds for institutional investors. But we are also keenly aware of the risks of VAs on financial stability, consumer protection, as well as money laundering and terrorist financing. This is all the more true in light of the collapse of crypto assets and the recent bankruptcy of certain major exchanges, the rippling effect of which is causing a lot of concern. We issued a policy statement on VAs recently, aiming to establish a comprehensive regulatory framework for the VA industry. It actively promotes technological innovation and application while ensuring that risks are appropriately managed. With these in place, we can ensure the long-term stable and sustainable development of this industry. In short, we must strike the right balance between promoting innovation and setting up guardrails against the risks.
Ladies and gentlemen, what I have outlined above are some examples of the bountiful opportunities that management accountants can harness. There are many more areas in which we are working for developing strong impetus for Hong Kong's economic development.
As we have reiterated over the years, professional accounting is the backbone to the effective operation of our financial markets and businesses. Management accounting, in particular, is a highly versatile stream of the profession, and management accountants like yourselves play a multifaceted role in all kinds of businesses and organisations, public and private, small and large. With your professional expertise, experience and integrity, I am in bright hope that you will all join us to contribute to and benefit from the Hong Kong's prosperous future.
I wish you all an enjoyable dinner and the best of business and health in the coming year. Thank you.
Ends/Thursday, November 17, 2022
Issued at HKT 21:03
Issued at HKT 21:03
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