HK ideal wealth-management hub

Secretary for Financial Services & the Treasury Prof KC Chan

Hong Kong’s asset and wealth management industry is on a very sound footing. According to the Securities & Futures Commission survey, the total combined fund management business has more than doubled in the past five years, growing from $8.5 trillion in 2009 to $17.6 trillion in 2014.


The number of corporations licensed for asset management under the SFC grew by 8.5% year on year to 1,031 corporations, with overseas investors accounting for over 70% of our business.


The expansion of the industry is driven by a number of factors. Asia is expected to contribute a large share of growth worldwide and capital continues to come to this region to take advantage of the investment opportunities. Combining the location and superb connectivity, Hong Kong is the ideal location for these investors to base their business.


At the same time, we also benefit from the growth and sustained reforms in the Mainland. As the world’s second largest economy and the largest trading nation, gone were the days when the Mainland was considered just a destination for foreign investment.


After years of growth, Chinese companies and individuals are keen to invest their accumulated capital outside of their homeland. Hong Kong is often their first stop on their way to “go global”. With a track record of cross-border regulatory co-operation, Hong Kong is also the ideal platform for successive opening measures including the RQFII (Renminbi Qualified Foreign Institutional Investor) scheme, the Shanghai-Hong Kong Stock Connect and, more recently, the mutual recognition of funds arrangement.


Capturing opportunities

At home, we are taking on a few legislative initiatives to help the industry capture these opportunities. First of all, we are preparing a legislative proposal to introduce the open-ended fund company as a fund vehicle. By giving the industry an alternative to the unit trust form, we seek to attract more funds to domicile here and develop Hong Kong into a comprehensive fund service centre.


To attract more private equity funds to expand their business in Hong Kong, we have also extended the profits tax exemption for offshore funds to the private equity sector. This will in turn drive demand for other relevant professional services.


First introduced in Hong Kong in 2011, the RQFII scheme has become a major channel for offshore renminbi investors to access the Mainland capital market. The arrangement is playing a central role in the development of the renminbi as an international investment currency.


As of September, there are already 79 Hong Kong financial institutions qualified under the scheme, with the approved quota reaching RMB270 billion. Out of these 22 are RQFII ETFs (exchange traded funds) with a total of RMB31.6 billion under management. These are complemented by 72 unlisted retail funds utilising the RQFII or Renminbi Stock Connect scheme, managing another RMB22 billion. RQFII products are now an indispensable part of our asset-management industry.


Streamlined procedures

Meanwhile, the mutual recognition of funds arrangement is the first such scheme between the Mainland and a market outside the Mainland. Implemented on July 1, 2015, the arrangement allows qualified Mainland and Hong Kong funds to offer directly to retail investors in each other’s market after obtaining authorisation or approval under streamlined procedures.


The SFC received 14 applications for authorisation on the first day, and more applications subsequently. Meanwhile, the China Securities Regulatory Commission has received 17 applications so far. With the close co-operation of both regulators, we hope to see the first recognised fund under the mutual recognition of funds arrangement to be offered in the markets soon.


The mutual recognition of funds arrangement will allow Hong Kong and international investors to access the Mainland’s diverse pool of public funds. On the other hand, many asset managers are already getting themselves ready for distribution in the Mainland by strengthening their Hong Kong operation, establishing distribution networks and getting familiar with the Mainland markets.


More funds will come to domicile in Hong Kong and help strengthen our fund manufacturing capabilities. This will complement our existing fund distribution network and help develop Hong Kong into a full fund service centre.


Shared regulatory standards

From a broader perspective, the mutual recognition of funds arrangement will also help the Mainland and Hong Kong regulators to develop a shared set of regulatory standards and broaden cross-border investment channels. It will also help promote the use of the renminbi as an investment currency and reinforce Hong Kong’s position as the preeminent offshore renminbi centre.


As a transparent, liquid and low-cost product, the exchange traded fund is useful for investors who are investing in new markets or asset classes for the first time. As financial integration continues to deepen in Asia, the role of the exchange traded fund as a tool to facilitate cross-border fund flows will continue to grow. To help promote the exchange traded fund industry, we have waived all stamp duty on the transfer of exchange traded funds this year.


As of September, there are 26 ETF issuers and a total of 131 ETFs listed in Hong Kong, growing from just 24 in 2008. Tracking more than 100 different investment benchmarks, ETFs in Hong Kong had a total market capitalisation of $340 billion in March. They contribute to some 8% of the stock exchange’s cash market turnover, compared with about 10% and 25% in Europe and the US respectively.


Concentrated transactions

However, ETF transactions in Hong Kong were highly concentrated, with the top five funds accounting for over 95% of the average daily turnover in March. Similarly, the top five funds represented more than 70% of all ETF assets. Investors’ interest in funds tracking non-Hong Kong and non-China A-shares indices remains very limited.


Retail investors, in particular, are not familiar with the use of ETFs as a cost-effective way to diversify and manage risks.


While investors in many markets demonstrate a certain degree of home bias, it is important for the investing public to appreciate the need to diversify in order to better manage risks in the long run. I trust and I hope the industry will continue to develop suitable products and educate investors about their benefits.


Looking further ahead, ETFs are also good candidates to be included under the Stock Connect scheme, so that Mainland investors could also diversify across different markets using ETFs listed in Hong Kong.


Distribution challenge widespread

Distribution is, in fact, a challenge shared by the entire asset management industry. Compared to more mature markets such as the US and Australia, Hong Kong investors have generally underutilised investment funds as a tool to invest and save for retirement. There is perhaps something we can learn from other markets where new platforms and technologies are used to help investors make better use of investment funds.


For example, the Australian Stock Exchange has introduced the mFund platform to provide order routing, settlement and custody services for unlisted fund products. Launched last year, the electronic platform allows investors to buy and sell a broad range of fund products from multiple fund providers through their brokers. There are already 125 funds from 35 asset managers available on the platform, covering equities, fixed income, currencies, commodities and real estate.


In Korea, the web-based Fund Supermarket Korea was launched last year to allow investors direct access to a variety of products offered by multiple fund houses. Collectively owned by the industry, the platform has resulted in management fees as low as a third of the cost of funds sold elsewhere.


New platforms mooted

We understand that the SFC is in the early stage of discussion with our stock exchange about the possibility of similar exchange-based platforms for retail investors in Hong Kong and will also look at other similar platforms with the fund industry.


The SFC has also identified the need for more guidance on our approach to suitability and “know your clients” requirements as a prerequisite to the more widespread use of electronic fund distribution platforms. Regulators facing similar challenges have turned to new technologies for solutions. The Securities & Exchange Board of India, for example, launched a central know-your-clients registration system to streamline the due diligence process.


As a centralised pool of investor details, clients would go through the due diligence process just once and all market intermediaries would be able to access the results. This will also help regulators perform anti-money laundering supervision.


Lastly, I want to turn to another favourite subject of mine, the Mandatory Provident Fund scheme. With more than 2.5 million participants and $620 billion under management in June, the MPF scheme is an integral part of our asset management industry.


MPF core fund set

In order to simplify the decision-making process for scheme members, we are going to introduce a legislative proposal to mandate a standardised default investment strategy, dubbed the “core fund”, across all MPF schemes, with the management fee capped at 0.75% per annum. The goal is to provide scheme members with a simple investment approach fit for long-term retirement savings objectives.


The “core fund” with a fee cap will help address the public’s concerns over the high fees and complexity of MPF schemes. I believe this new arrangement is not only good for the MPF scheme, but also the investment fund industry. With greater confidence in the system, employers and employees will be more willing to make voluntary contributions and make better use of the system as an investment and retirement saving tool.


Finally, human resource is the fundamental driver behind the growth of the asset management industry. However, we understand from the industry that students and graduates are often not aware of the full range of functional posts and career prospects within the sector. As a result, it is often challenging to attract new talents to join those relatively technical functions such as risk management, compliance and operations.


Attracting fresh talent

To help tackle the problem, the Government is planning to allocate $100 million to enhance training for the asset and wealth management industry as well as the insurance sector, subject to approval of the Legislative Council. It’s a matter of timing.


We will reach out to university students to showcase the variety of roles within the front, middle and back offices of the industry. There will also be sponsorship for summer internships at Hong Kong asset and wealth management institutions. We are also going to put in place a financial incentive scheme for professional training to help in-service professionals beef up their skills and knowledge through further training.


There are great opportunities ahead of us as Mainland China continues to move forward with its opening up and reform policies. Today’s programme is packed with speeches by industry experts and leaders, and I trust that you would make the most out of the Annual Conference. As we move on to the next stage, we look forward to working closely with the industry to capture opportunities arising from increased competition and opening.


Secretary for Financial Services & the Treasury Prof KC Chan gave these remarks at the Hong Kong Investment Funds Association 9th Annual Conference.

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HK to unleash Belt & Road prospects

Chief Executive CY Leung

I am pleased to be here, to have this opportunity to address the China Daily Asia Leadership Roundtable, to share some of my thoughts on how Hong Kong can best position itself for the Belt & Road initiative.


The theme of today’s roundtable – Hong Kong Unleashing the Potential of the Belt & Road – has been cleverly crafted. For the country, it is an unprecedented strategic vision. And while its promise for Hong Kong is equally outsized, we are a relatively small economy, despite our international standings. And it may seem disproportionate, at first thought, to say that Hong Kong can unleash the potential of the Belt & Road.


On second thought, however, I believe our strength, all along, has been the ability to establish ourselves as an indispensable player in the global economy, as well as the national development of China, despite our modest size, despite our relative lack of natural resources.


Our success has been powered by the twin engines of China and the world: by our ‘One country, two systems’ arrangement and the deepening economic integration this has won us, and by our strong connections with the rest of the world. In both cases, by the super-connector role we play for them.


The international landscape, however, is changing fast. Developed and developing countries alike, confronted with growth bottlenecks, are looking everywhere for growth prospects. To stay relevant, to remain competitive, Hong Kong must also adapt. Belt & Road timely provides us the opportunities.


Can we help set the Belt & Road in motion and, once that’s achieved, can we accelerate its progress? I believe we can.


High degree of openness

I think we have what it takes, starting with the high degree of openness that characterises Hong Kong. That includes, of course, our economy, which has been consistently recognised as the freest in the world.


We are also open because people and businesses from other parts of the world with widely different cultures and values find us welcoming. International businesses know that our playing field is level. Our competitors know that the Hong Kong Government does not own businesses that compete with them.


Hong Kong is surely the only city in the world where both English and Chinese are official languages and, more important, widely used. Also, we are the only city in the whole of China where universities, and many high schools, use English as the teaching medium.


A few weeks ago, I made an official visit to Indonesia, a country of 250 million people, and met separately with the President and Vice President. One of the follow-ups is education. Already we host more than 200 full-time Indonesian students in our universities. We see good potential in the future as more students want to study in Hong Kong, and that is Hong Kong, China, in English.


Open minded people

And we have open minds, too. Many Hong Kong people, especially the younger ones, are enthusiastic about acquiring additional languages for work, for study, or simply to become better acquainted with an overseas culture that interests them. A case in point is the Working Holiday Scheme. Since its inception in 2001, over 65,000 Hong Kong youths had participated in this scheme and spent their holidays working in our partner economies. What they have learned and the friendship they have gained certainly is a key asset, allowing us to stay connected to the Mainland while reaching out to the world.


That level of connectedness, of enthusiasm in the world beyond Hong Kong, is underlined by our dynamic civil society. The businesses, organisations, institutions and individuals of Hong Kong have created, and continue to expand, their international networks. Those ties are invaluable social capital. They also pay far better dividends than most investments.


I highlight these aspects because they are like air and water to us. Because of that, we sometimes overlook their critical importance. The Belt & Road initiative covers a great many aspects and sectors. Fundamentally, however, the initiative is about making connections.


Highly connected

If we can leverage on our social capital, we will be the best-placed Chinese city to contribute to the Belt & Road, certainly in enabling people-to-people bonds, or in Chinese, “民心相通”, one of the five themes of the Belt & Road initiative. We can turn Hong Kong into a platform of facilitating understanding and fostering friendship among peoples, peoples coming from not only Belt & Road countries, but from all over the world.


What’s more, the Basic Law readily promotes our international standing. Chapter VII of the Basic Law, on external affairs, states that, using the name “Hong Kong, China”, we can maintain and develop relations and implement agreements with foreign states and regions and relevant international organisations in areas ranging from the economy, trade, finance and monetary matters, to shipping, communications, tourism, culture and sports.


We are certainly not reluctant to do so. Hong Kong actively participates in APEC and the World Trade Organisation as an individual member economy, and we negotiate and seal bilateral and multilateral agreements in trade, investment and avoidance of double taxation, as well as maritime and air services arrangements with foreign states.


Unleashing potential

More than a city of China, Hong Kong maintains a reputable standing and valuable connections in the international arena. And that sets us apart from other cities in the Mainland and overseas. And that’s how we can help unleash the tremendous potential of the Belt & Road.


Now let’s take a look at some of our other strengths – advantages that are also directly relevant to unleashing the potential of the Belt & Road.


Finance is as good as any place to begin. Hong Kong is China’s international financial centre and one of the world’s financial capitals. We run the world’s seventh largest stock market in terms of market capitalisation, and we rank second, globally, in equity funds raised through initial public offerings. We have the experience, the expertise, the capacity and the connections to serve as the fund-raising and financial management hub for the Belt & Road.


Hong Kong is the world’s largest offshore renminbi business centre. Our renminbi services range from cross-border trade settlement to bond issuance. And as trade and other economic activities along the Belt & Road expand, demand for renminbi trade settlement will also rise. We are well placed to respond to that demand.


Islamic bond centre

Islamic financial services will feature large under the Belt & Road, given the significant Muslim population embraced by the initiative. Hong Kong is emerging as a regional centre for the issuance of sukuk, or Islamic bonds. Indeed, we’ve issued two major sukuk in the past 13 months, clearly demonstrating our capabilities in this specialised financial offering.


Asset and risk-management services will also be needed once the projects of the Belt & Road get going. Hong Kong’s wealth and asset-management business has soared in recent years, making Hong Kong a global centre for asset management, risk management and corporate treasury functions. We also boast a wide variety of insurance services and derivative products to help international companies manage their risks.


And not just finance. International trade induced by closer co-operation among Belt & Road economies demands logistics it can count on. That’s another plus for Hong Kong. We boast the world’s fourth busiest container port, providing some 350 services a week to more than 500 destinations worldwide. About 700 shipping-related companies call Hong Kong home. They offer a wide range of services, from ship management, broking and chartering to finance, marine insurance, legal, arbitration and other support services.


Logistics hub

Hong Kong International Airport is the world’s busiest air cargo airport, running about 1,100 flights a day. In all, Hong Kong is home to about 14,000 logistics companies, most of them enabling the trade between China and the world. So you know that Hong Kong will provide the Belt & Road with all sorts of customised supply-chain solutions.


Beyond our traditional pillar industries, our technology and creative sectors have much to offer to the markets of the Belt & Road. In this, I’m thinking of our cultural industries, including film, as well as education, healthcare services and product testing and certification.


We can, as well, develop talent for the emerging economies along the Belt & Road, and in areas beyond trade and finance. Building on the strength of our social capital, we can serve as a regional hub for scientific research, education, the arts and culture.


The Belt & Road will help power the future – for the Mainland of China, for the more than 60 economies along its linked corridors and for Hong Kong.


I urge you to find your place in Hong Kong – the Belt & Road’s fast lane. You, and I, and all of us, can take part in this once-in-a-lifetime journey if we seize the opportunity today. I’m confident that it will be both worthy, and rewarding, for all concerned.


Chief Executive CY Leung gave this address at the China Daily Asia Leadership Roundtable – Hong Kong Unleashing the Potential of Belt & Road Initiative.

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Belt & Road initiative to drive global growth

Financial Secretary John Tsang

This is, indeed, the right moment as well as the right place for us, to seek to understand more about the different perspectives of the Belt & Road initiative, in particular the business environment and investment opportunities in the emerging markets in Central Asia.


I say this is the right moment because the outlook of the global economy, as we speak, is still full of uncertainties. In fact, the long-lost growth momentum of the world economy since the global financial crisis in 2008 is having no sign of a recovery.


While the US economy is at long last showing some encouraging signs, there are grave concerns over the slowdown of the economies of the Mainland as well as other emerging markets. There is also hardly any progress made in the recovery of the Eurozone and Japan. Demand in the advanced economies is expected to remain lacklustre for the foreseeable future.


The visionary and ambitious concepts of the Silk Road Economic Belt and the 21st Century Maritime Silk Road, spearheaded by President Xi, can fill the void and become the much-needed driving force of the world economy in this 21st century.


This initiative presents the world with an abundance of business opportunities in an unprecedented way. With this grand strategy encouraging closer economic as well as cultural co-operation among some 60-plus economies, particularly those emerging economies spanning Asia, Europe and Africa, we envisage soaring infrastructure investment, deepening financial integration, expanding trade flow and growing people-to-people bonds.


Massive opportunities

With their strategic locations, the member states of the Shanghai Cooperation Organisation in Central Asia, together with other observer states and dialogue partners of the Organisation, are indeed well positioned to tap the massive opportunities arising from the Belt & Road initiative.


I say this is the right place, because Hong Kong, with our distinctive advantage operating under the unique ‘One country, two systems’ framework, can play a central role in delivering fully the enormous opportunities presented by the Belt & Road initiative.


As China’s international financial centre, and one of the world’s leading financial capitals, Hong Kong has all it takes, from our world-class market infrastructure and unparalleled business network to the robust legal system, to serve as the fundraising and financial management hub for countries along the Belt & Road.


Clearly, the experience and expertise of Hong Kong’s high-end professionals in the fields of accounting, law, architecture, engineering management and much more can offer solid support to the management and operation of infrastructural projects that serve to boost connectivity among the countries, including but not limited to railway, airport, port as well as power supply.


Collaboration key

For Hong Kong to capitalise on the wealth of opportunities of the Belt & Road initiative, we need to learn and understand the business opportunities and potential areas of collaboration with different markets, especially the many emerging markets dominating the landscape along the Belt & Road.


We are moving proactively to strengthen the ties with these countries on the G2G level and to foster a deeper understanding of the political, economic and cultural make-up of these economies. These useful exchanges will no doubt facilitate the drawing up of Hong Kong’s specific strategies in seizing the opportunities ahead of us.


Last month, I led a first-of-its-kind Belt & Road business delegation from Hong Kong to visit Hungary, Poland and Germany, and met with a number of senior government officials as well as prominent business partners of the three countries during my six-day visit.


I am glad to note that these three countries have all drawn up strategies and are gearing themselves up in participating in the grand plan of the Belt & Road.


Poised to reap benefits

In June, Hungary became the first country in Europe to sign an MOU with the Mainland on promoting the Belt & Road. As for Poland, it was the only Central European country on the list of the founding members of the Asian Infrastructure Investment Bank, the AIIB.


And as Europe’s most powerful economy and China’s biggest trade partner in the region, Germany has all the essentials, in particular in the logistic infrastructure and railway network that extends all the way to the south-eastern part of China, to reap the enormous benefits of the Belt & Road initiative.


We are now actively preparing for a visit to Central Asia to gain a first-hand view of these resourceful economies so that our investors from Hong Kong would be able to grasp the massive opportunities that are waiting to find the right collaboration.


Financial Secretary John Tsang gave these remarks at the Conference on Silk Road Strategy – Focus on Tajikistan at the Hong Kong Polytechnic University.

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HK keen to build versatile workforce

Secretary for Labour & Welfare Matthew Cheung

In a world increasingly propelled by knowledge and innovation, human talent has become one of the most valuable and much sought-after assets for any corporation and economy. That is why gathering and stimulating thoughts on how to attract and, indeed, reward talents is a most timely, practical and crucial issue for discussion and cross-fertilisation.


This is, indeed, also a topic that bears much relevance to Hong Kong. As a city with very little natural resources, Hong Kong’s continuous success and long-term competitiveness depend on our people – our single most valuable asset. I would therefore like to take this opportunity to salute our unsung heroes in the field of human resources.


By luring global talents and grooming local recruits and employees, incentivising them for better performance as well as equipping and retaining them for sustainable corporate development, you have played an important and strategic role in fuelling Hong Kong’s economic development and maintaining our competitive edge as Asia’s world city.


As a matter of fact, the double demographic challenges of an ageing population on one hand and a shrinking labour force on the other also make it imperative for Hong Kong to devise robust human capital strategies for our economy so that we can continue to be vibrant and competitive. Sitting on our hands is a non-option. And to stand still is to stagnate.


The world is rapidly greying and Hong Kong is no exception. Like many developed economies elsewhere, Hong Kong is at the threshold of a large demographic shift as the post-war generation of baby boomers starts to retire.


Ageing population

Improvements in health and shrinking fertility rates also add to our rapidly ageing population. The life expectancy at birth in Hong Kong is currently 81.2 years for males and 86.9 years for females, almost the highest in the world. According to the latest population projections released by the Census & Statistics Department about a month ago, these figures will rise to 87 years for males and 92.5 years for females by 2064 in 50 years’ time.


There were 1,065,300 people aged 65 or above in Hong Kong, meaning one out of seven Hong Kong residents is a senior citizen. These figures will rise to a staggering 2,525,000 in 2044 and 2,582,000 in 2064, translating into a ratio of one in three. The ageing trend is also revealed by the increasing median age of our population, which will jump from 43.7 in 2014 to 53.5 in 2064, excluding foreign domestic helpers.


Based on the updated labour force projections, the total labour force, excluding foreign domestic helpers, is projected to increase slightly from 3.60 million in 2014 to 3.65 million in 2018, and then taper off to 3.43 million in 2031. The labour force is then projected to hover between 3.42 million and 3.43 million until 2038, before dwindling to 3.11 million in 2064.


The overall labour force participation rate, i.e. the proportion of the labour force in the population aged 15 and over, is projected to fall from 59.3% in 2014 to 48.6% in 2064. These are rather stark statistics and constitute an effective wake-up call for policymakers and human resources practitioners alike. There is simply no room for inaction, let alone complacency.


Nurturing local talent

To ensure that this vibrant city continues to forge ahead and remain competitive as an international financial and business centre, in the face of the two-pronged demographic challenges the Hong Kong Special Administrative Region Government has put at the top of its policy agenda the tasks of nurturing local talent and making the best and full use of our own people.


This is where education comes into play. Of course, to replenish our local workforce and to ease sectoral bottlenecks in local labour supply, we need to suitably bring in expertise and experience from outside Hong Kong. This will enhance our competitiveness and maintain our international complexion.


For obvious reasons, we need to continue to open our doors to foreign talents and skilled labour as appropriate while according priority of employment for local citizens.


In this financial year (2015-16), spending on education alone accounts for a significant 22% ($71.4 billion) of the Hong Kong SAR Government’s annual recurrent expenditure – the lion’s share of all policy areas. This covers academic studies, vocational education and training, skills upgrading and lifelong learning.


Life-learning emphasis

To build a system whereby young people of different interests, backgrounds and talents can thrive and realise their potential to the full, we have put much emphasis on teaching life-learning in schools and at the community level. We are working to promote a culture whereby both vocational education and academic education would be seen by students, parents and employers as equally promising paths to a prosperous future for young people.


We have also announced the establishment of a $1 billion fund to provide long-term support for the development of the Qualifications Framework, which seeks to promote lifelong learning and skills upgrading.


To enhance the employability and overall competitiveness of different sectors of the local workforce, the Government injected $15 billion into the Employees Retraining Fund in early 2014 to finance the long-term operation of the Employees Retraining Board. All these speak volumes about our commitment to nurture local talent and provide opportunities for upward social mobility.


Unleashing workforce potential

The current-term Government has also mapped out a holistic, comprehensive and visionary population policy. Our 50 policy initiatives cover the main areas of promoting sustainable growth, unleashing the potential of the local workforce, enhancing the quality of home-grown talent, attracting foreign investors and talent, fostering a family-friendly environment and embracing opportunities in an ageing society.


We will leave no stone unturned in facilitating, enabling and attracting women, the “young old”, new arrivals, ethnic minorities and persons with disability to join or rejoin the workforce. We invite all our human resources experts to join hands with us to build a versatile and diverse workforce for Hong Kong.


Everywhere around the world, economies, corporations and organisations are vying for the best of talents. Besides offering attractive rewards, an important pull factor for drawing and retaining these talents is to provide an employee-friendly culture whereby all statutory labour rights are keenly observed.


The Government attaches great importance to safeguarding the statutory labour rights and ensuring the occupational safety of Hong Kong’s workforce. Our policy is to improve employees’ protection progressively at a pace commensurate with the socio-economic development of Hong Kong and, more importantly, strike a reasonable balance between the affordability of employers and the interests of employees.


Family-friendly employment promoted

For example, to promote family-friendly employment arrangements in ways reasonable to employers, especially those operating small and medium-sized enterprises, the Government has introduced the statutory paternity leave since February 27 this year.


Specifically, male employees with a child are entitled to three days’ paternity leave to be taken consecutively or separately. Employees who are qualified for paternity leave pay may receive a daily rate of four-fifths of their average wages as paternity leave pay.


Let me conclude by making one further but important point. While government spending on social welfare has been rising steadily in recent years and will hit a hefty $59.6 billion in 2015-16, representing 18.4% of the Government’s annual recurrent expenditure and just after education, let me stress that Hong Kong will not go down the route of a welfare city.


It is true that the current-term Government is determined to tackle poverty and enhance elderly care in preparation for a fast ageing society. It is also true that we believe that Hong Kong should and can do more to build a caring, compassionate and fair society.


But we will not go down the slippery path of populism. We will adhere to our well-tried and cardinal philosophy that limited public resources must be targeted at helping the most needy in our society. We will strike an appropriate balance between responsiveness to community needs and responsibility for prudent public spending.


Secretary for Labour & Welfare Matthew Cheung gave these remarks at the Aon Hewitt & Radford Annual Rewards Conference.

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HK shares green building experience

Chief Executive CY Leung

The World Green Building Council Congress has been called the “World Cup” of the green building industry. So it is, indeed, a great honour for Hong Kong to be hosting this year’s Congress, this green building industry “World Cup” – and for the first time.


Most sports have an international federation to champion and administer at the global level. In the green building industry, that federation is the WorldGBC. My thanks to the WorldGBC, and our local hosts, for your splendid organisation, for bringing so many global leaders and experts to Hong Kong, here to exchange the latest developments on government policy and industry best practices.


While this “World Cup” is held in the highest esteem, it does present a fundamental departure from football traditions. You are not playing against each other on a football field. At least not this morning. Rather, you are fighting as one against a common foe: climate change.


I don’t have to tell you that our opponent is more elusive, and far more dangerous, than an entire team of Messis and Ronaldos, and anyone else you might like to add. That said, I have no doubt that your remarkable resolve gives you – gives us, all of us – more than a fighting chance.


The power of collaboration, of working together, can make all the difference.


We’re working hard and well together, in Hong Kong. When we first made a start in energy saving, some years ago, we began with our buildings. That’s because they account for 90% of our electricity consumption and 60% of our greenhouse gas emissions. The next step – a little harder to agree on – was how we should go about it.


Towards energy-efficient buildings

Of course, the Hong Kong Government has a major responsibility in pursuing energy-efficient measures that benefit the community at large. And, in adopting energy-efficient building features for government buildings, we lead by example. Still, that affects only a small part of the city’s building stock. Without the active buy-in of industry and business, the Government’s best efforts won’t add up to much.


Thankfully, we have their support. Our industry partner, the Hong Kong Green Building Council, HKGBC, was founded in 2009. Despite its relative youthfulness, the council has taken us to skyscraping heights, thanks to BEAM Plus, a holistic green-building labelling scheme. Thanks, too, to the council’s success in raising community awareness of green building measures.


With the industry’s support, the Government has pledged a 40% reduction in energy intensity by 2025, using 2005 as the base. Now you can see the Government’s commitment to the global green building movement.


The business sector has the potential to do a great deal more too, and it should be. It is my view that the Government should be appropriately proactive, to help business commit to green initiatives when market forces may not be effective. And we are doing just that.


If property developers want to gain gross floor-area concessions, they must register for the BEAM Plus building environmental assessment.


Sharing experience regionally

Our collaborative efforts are not limited to Hong Kong. As the super-connector between the Mainland of China and the rest of the world, Hong Kong is perfectly positioned to use our connections, and our experience, on a regional level.


Ever since the Mainland began to open up to the world, more than 30 years ago, we have not strayed far from the wisdom of “crossing the river by feeling the stones”, so the Chinese saying goes. Indeed, it is through this step-by-step approach that Hong Kong and the Mainland have flourished.


Protecting the environment and combating climate change is also high on the agenda of the Central People’s Government. China’s 13th Five-year Plan is expected to include an even more substantial commitment to protecting the environment.


That, to be sure, will require huge resources and considerable international expertise. As the business conduit between the Mainland and the world, Hong Kong can help the Mainland gain international experience, and showcase global expertise and experience in the Mainland.


There’s another huge opportunity ahead of us too – that’s China’s Belt & Road grand strategy. The far-reaching initiative emphasises facility connectivity. That is only possible, however, if standards are aligned across the region.


Belt & Road opportunities

Since the infrastructural standards of most Belt & Road countries are only at the start-up stage, it would be opportune for the Mainland of China to share green practices with its regional partners through the Belt & Road corridor. Hong Kong can also contribute by sharing our experience in green construction and design.


Hong Kong has in fact come a long way in a short time. Last year, we took part in the World Sustainable Building Conference in Barcelona, with our Secretary for Development leading a delegation of 110. And here we are this week hosting the WorldGBC Congress.


Well, there’s much more to come. In 2017, we welcome the inaugural World Sustainable Built Environment Conference to Hong Kong. It underlines our determination to become global leaders in driving the sustainable built environment. We are eager to share with the world our experience in promoting a sustainable built environment. I hope to see you all at the conference, here in Hong Kong, in June 2017.


I am sure you have heard about this – “The best time to plant a tree was 20 years ago. The second best time is now.” It wisely speaks of our presence here today. Of our work and our shared vision. And by hosting the WorldGBC Congress, Hong Kong demonstrates our resolve to plant the trees, with all of you, together.


Chief Executive CY Leung gave these remarks at the World Green Building Council Congress 2015 Hong Kong.

via Moroccan Trader HK shares green building experience

Gov’t keen on green initiatives

Chief Executive CY Leung

It is a pleasure to be here today for the opening of Eco Expo Asia, this year celebrating its 10th anniversary. A big welcome to those who have travelled a long way to join us for this special occasion.


I am particularly grateful for the strong support from the Mainland of China, here with more than 30 delegations. They represent every level – central, provincial and municipal. That only underlines the importance the Mainland places on environmental issues and, no less important, the value they see in this event – in Eco Expo Asia. That also underlines Hong Kong’s special role as the super-connector between the rest of the country and the rest of the world.


We all know why we are here. Environmental protection is the key to quality living, to sustainability. Since its launch, in 2006, Eco Expo has served as a premier showcase for the latest environmental products and services from Hong Kong, the Mainland of China, throughout Asia and around the world.


The Expo’s scale has more than doubled over the past decade, going from some 130 exhibitors at its launch to more than 300 exhibitors this year. At the same time, the number of product zones has expanded to cover virtually all aspects of the environmental agenda.


For that, and more, I am grateful to the Hong Kong Trade Development Council and Messe Frankfurt (HK), along with everyone else who has contributed to making Eco Expo Asia the region’s must-attend environmental fair.


The show brings together a world of exhibitors and buyers, here to network and to do business. It also attracts leaders and environmental professionals from government, business and technology, in Hong Kong to discuss environmental issues of common – and critical – concern.


I am pleased, too, to see that the fair’s Public Day continues to grow, to spread environmental awareness to students and the general public. Taking the message to the community is essential, if we are to realise our environmental protection goals in the long term. I am sure those lucky 500 secondary students will enjoy their Dialogue with the Secretary for the Environment. And I have no doubt that their input will be both challenging and constructive.


Green commitment

One thing is clear. And that’s this Government’s commitment to green technology and the wider use of green products and services. We continue to support the environmental sector through a variety of financial incentive schemes, along with substantial investment in environmental infrastructure projects.


On the funding side, we recently rolled out a $1 billion Recycling Fund, designed to support the sustainable development of the recycling industry. We have also allocated $11 billion for the phasing out of all pre-Euro IV diesel commercial vehicles in Hong Kong. This will improve roadside air quality and help protect public health.


In addition, we have set up a $300 million Pilot Green Transport Fund. This will support the testing of innovative technology for the public transport sector.


We have, as well, extended the Cleaner Production Partnership Programme for five years, to 2020, in response to positive industry response. For this, we have earmarked $150 million. That money will be used to encourage Hong Kong-owned factories in Guangdong to adopt cleaner production technologies and practices.


We are taking forward the design and construction of several major waste-management infrastructure projects, including Phase 1 of an integrated-waste management facility. It will have the capacity to treat 3,000 tonnes of municipal solid waste a day. The estimated project cost is $18 billion. We are also planning for the development of a number of organic waste treatment facilities; they will recycle food waste into biogas for energy recovery and compost products.


And there’s more on the environmental horizon, including a recycling facility for waste electrical and electronic equipment at the EcoPark in Tuen Mun. Total project cost is $2 billion.


Enhancing quality of life

All these are not expenditure. They are investments in environmental infrastructure and they demonstrate the commitment the Government has in improving the environment and in enhancing the quality of life for the people of Hong Kong.


And I’m sure you are aware, the National 13th Five-Year Plan of the country, charting the course of our country’s development between 2016 and 2020, will be made public early next year. Environmental protection and sustainable development will likely continue to receive high-level attention in the new plan.


That will bring even more importance, more value, to Eco Expo Asia, as companies look to this fair to help them tap the Mainland’s fast-growing environmental market.


And we will continue to encourage Hong Kong’s environmental industry to make good use of the liberalisation measures available under CEPA, a closer economic partnership agreement – our free-trade arrangement with the Mainland. Those advantages, of course, are available to any company, anywhere in the world, that partners with Hong Kong or sets up a company here.


Chief Executive CY Leung gave these remarks at the opening of the 10th Eco Expo Asia on October 28.

via Moroccan Trader Gov’t keen on green initiatives

Gov’t responds to PAC reports

Chief Secretary Carrie Lam

Laid on the table today is the Government Minute responding to Reports No. 63A and 64 of the Public Accounts Committee (PAC).


When presenting Reports No. 63A and 64 on June 3 and July 8 to the Legislative Council, the Chairman of PAC gave comments on four chapters in the Director of Audit’s Reports:


* Administration of the air traffic control and related services;

* Buildings Department’s actions on unauthorised building works;

* Operation of the Government Flying Service; and

* Public cooked food markets managed by the Food & Environmental Hygiene Department.


I am grateful for the time and efforts that PAC has devoted to investigating these subjects. The Government basically accepts PAC’s various recommendations and has set out in detail the specific responses of the relevant bureaux /departments in the Government Minute. Today, I would like to highlight the key measures that the Government has taken in these important policy areas and the progress.


Air traffic control administration

When presenting Report No. 63A to the LegCo on June 3, the chairman of PAC gave comments on Chapter 4 of the Director of Audit’s Report concerning the administration of the air traffic control and related services.


First of all, I agree fully with PAC that, for the purpose of protecting life and property, air safety must not be compromised under any circumstances. As a professional department in charge of air traffic management, the Civil Aviation Department (CAD) has the responsibility to ensure air safety.


As regards PAC’s very severe criticisms against CAD and the Director-General of Civil Aviation, the senior management of the Government will certainly give them very serious attention and deal with them properly.


The Government accepts PAC’s various recommendations and has set out in detail the specific responses of the Transport & Housing Bureau (THB) and CAD in the Government Minute.


Regarding the administration of the air traffic control and related services, the Government attaches great importance to the observations and recommendations of PAC and the Audit Commission (Audit).


Maintaining the safety of air traffic is our topmost priority as far as the planning and operation of air traffic control is concerned. Therefore, the safety and efficacy of the new Air Traffic Control (ATC) system must fulfill the highest standards and must not be compromised in any case. CAD will ensure the safe, reliable and stable operation of the new ATC system before its commissioning.


All the acceptance test events of the new Air Traffic Management System have been conducted in accordance with the requirements specified in the contract in order to ensure that the system operation complies with the contract conditions and CAD’s safety requirements. CAD was generally satisfied with the test results.


Since 2012, CAD has engaged an independent consultant from overseas for providing safety assessment for the new ATC system to ensure that the contractor keeps up with the international quality standards and the International Civil Aviation Organisation’s safety requirements in the process of system development.


Furthermore, the Secretary for Transport & Housing has decided to have another overseas consultant appointed by THB to advise the Secretary directly and independently. The consultant will assess whether the operations of the new ATC system and the operational staff are both prepared, to ensure that both the system and the operational staff are completely ready before the new system could be commissioned. The recruitment procedure has commenced.


In view of the current progress, the new ATC system will be ready for operation in the first half of 2016. In parallel, CAD has stepped up the maintenance measures for the existing ATC system to keep it in smooth and reliable operation and at the best international standard until the new ATC system is in service.


Separately, Government departments have strictly followed the rules and procedures as stipulated in the Government Stores and Procurement Regulations and the Agreement on Government Procurement of the World Trade Organisation during major procurement projects, and timely consulted the Department of Justice and the Government Logistics Department to ensure impartiality and fairness throughout the procurement process.


In response to the comments made by PAC and Audit, CAD has implemented various measures to enhance internal control and alerted its staff the lessons learnt from the audit findings.


Regarding the management of the precision runway monitor project, CAD has devised mechanisms and updated the Departmental Project Procedures Handbook to incorporate Audit’s recommendations to ensure prudent use of public funds and the cost-effectiveness of the equipment procured in future.


In addition, CAD will provide the LegCo with sufficient information regarding the pros and cons, as well as the potential risks, of the proposed project in future funding applications, so that members could make informed decisions. As a matter of fact, we stress the same importance of transparency and timely reporting for all the funding applications made by other Government departments to the LegCo.


As the Hong Kong International Airport is expanding and air traffic keeps growing rapidly, the demand for CAD’s regulatory work and services will increase sharply. To ensure that the administrative management, resource planning, liaison and co-ordination work involved can be conducted effectively, the Government will consider allocating additional resources to strengthen the senior management of CAD.


We expect that the commissioning of the new ATC system will further strengthen Hong Kong’s status as an international and regional aviation hub, and meet the robust growth in air traffic and also the rapid development of Hong Kong’s and the regional aviation industry.


Unauthorised building works actions

The Government welcomes the comments made by PAC and Audit on the Buildings Department (BD)’s actions against unauthorised building works (UBWs) and generally agrees with their recommendations. The Government has taken proactive follow-up actions to implement the recommendations as far as practicable.


The UBW problem in Hong Kong is prevalent and complex. Despite our past efforts in tackling UBWs, including the removal of over 400,000 UBWs between 2001 and 2010 through various enforcement programmes, there are still UBWs in the order of tens of thousands pending clearance.


Tackling UBWs in accordance with the law is meant to ensure building safety and also to uphold the rule of law. Formulation of enforcement policies based on prioritisation is also required to ensure building safety on the one hand, and deter further UBWs on the other hand.


If some owners are allowed to carry out UBWs to increase their usable floor areas and are left unpunished with the excuse of not imposing any risk to building safety, would it be fair to other law-abiding owners?


To this end, the Government has been taking a multi-pronged approach over the years to tackle UBWs, comprising legislation, enforcement, assistance to building owners, and publicity and public education.


It is our goal to develop a culture in the community that puts emphasis on building safety, through measures such as raising public awareness of the potential severe consequences caused by UBWs and deepening public understanding of the statutory provisions related to the building plan approval process and the simplified procedures for minor works control, such that the public will, on their own volition, remove their UBWs and comply with the Buildings Ordinance when carrying out any building works. We believe this is the best solution to the problem in the long run.


But certainly, before such long-term goal is attained, BD’s ongoing and effective enforcement actions against UBWs must go on. In view of the sheer quantity of existing UBWs, BD must take a “risk-based” approach to prioritise its enforcement actions. Specifically, BD will take priority enforcement actions against “actionable” UBWs, which comprise UBWs constituting obvious or imminent danger to life or property and newly built UBWs.


As for “non-actionable” UBWs, BD may issue warning notices and register non-compliant notices at the Land Registry (LR); or issue advisory letters and refrain from taking enforcement actions for the time being. The UBWs in the two categories are reviewed from time to time, taking into account the changing needs and community concerns. It is the Development Bureau’s policy objective to progressively tighten the control regime by expanding the category of “actionable” UBWs.


We understand PAC’s concern over whether BD has sufficient resources to carry out the Government policy against UBWs. As a matter of fact, BD has a rather demanding workload in recent years. In particular, the multi-pronged efforts introduced since lately, together with several major building safety incidents, have deepened public understanding of UBWs. This has led to a significant surge in the number of case reports to BD, and hence an unprecedented increase of its workload.


The drop in the number of UBWs removed since 2011 is not indicative of a decline in the amount and effectiveness of BD’s work. In fact, with the completion of the aforementioned programmes between 2001 and 2010, most of the UBWs on external walls of buildings were removed.


On the other hand, the UBWs being tackled by BD at present, such as in sub-divided flats, pose greater challenges against enforcement, as more time and resources are needed for BD personnel to gain access to the relevant premises, or arrange for the removal of occupants. The decrease in the number of UBWs removed is understandable.


PAC has recommended that the Government provides BD with sufficient resources or reviews the policy on UBWs. We also note PAC’s recommendation that BD should consider exploring other effective means to clear the large number of long-outstanding removal orders, such as granting amnesty to UBWs constituting no obvious or imminent danger to life or property.


We are of the view that we must be cautious in making any major change to the existing UBW policy, lest causing confusion to the public or even conveying a wrong message to the community that the Government has no determination to combat UBWs. The Government has no plan at this stage to introduce any major change to the existing UBWs policy.


BD will continue to take a multi-pronged approach to tackle the problem of UBWs. Apart from existing measures including instituting prosecution, imposing surcharge on default works, operating validation schemes and financial assistance schemes, and providing support through social service teams, BD will explore other effective means to encourage owners to remove their UBWs.


BD will also endeavour to raise its efficiency and reprioritise its work as necessary, such as by adjusting the number of target buildings under large scale operations (LSOs) or focusing its resources on conducting LSOs against buildings with higher risk owing to the existence of UBWs. The Development Bureau will monitor BD’s work progress and continue to reserve the needed resources for BD.


We are grateful to PAC and Audit for their various recommendations to enhance BD’s work against UBWs. BD has established a Task Force to consider PAC and Audit’s recommendations, BD’s manpower situation and workload, et cetera, and propose specific enhancement measures in respect of each stage of actions such as dealing with non-compliant removal orders, devising strategies and targets for combating “actionable” UBWs, registering removal orders at LR, instigating prosecution against and carrying out default works for those in breach of orders, encouraging owners to remove UBWs, et cetera, with a view to enhancing the effectiveness of BD’s efforts in combating UBWs.


The progress made by the Development Bureau and BD in implementing PAC and Audit’s recommendations has been set out in the Government Minute. The Government will continue to monitor closely the effectiveness of the work against UBWs, and report to PAC further progress of implementing the recommendations.


Government Flying Service operation

Regarding the operation of the Government Flying Service (GFS), I agree with the observation of PAC that GFS performs a number of roles including the provision of round-the-clock air rescue and search, firefighting, supporting law enforcement agencies, aerial surveys and passenger-carrying service.


This makes GFS unique among its international counterparts. In recent years, there has been a significant increase in service demand. In the past five years, the flying hours of emergency call-outs have increased by 25%. At the same time, the wastage of some experienced pilots has also considerably constrained the department’s operation and training capacity.


The Security Bureau (SB) and GFS both welcome and attach importance to the various recommendations made by PAC and Audit. In view of the ever increasing demand for services and to address shortage of manpower, GFS has implemented a number of measures, including expediting the recruitment of civil servants and engaging more contract staff as a stop-gap measure.


Also, SB has commissioned the Efficiency Unit to conduct a management study on GFS for exploring room for improvement in the areas of manpower deployment, workflow, automation, administrative support, service scope and so forth. The study is expected to be completed in the first half of 2016.


Other recommendations made by PAC and Audit have been implemented or are being actively followed up by GFS.


I have visited GFS to learn about the department’s work and talk with the staff. On September 23, I met Mr Liu Zhigeng, the Vice-Governor of the People’s Government of Guangdong Province and Director of the Guangdong Provincial Maritime Search & Rescue Centre, who visited Hong Kong to thank GFS for its assistance.


Mr Liu highly commended GFS for saving all 20 Chinese crew members from the two vessels in distress in two maritime rescue operations on July 21 this year. The Government fully understands that adequate manpower resources are the key to maintaining the highly efficient services of this excellent team. The Secretary for Security and I are personally handling the problems faced by the department.


Managing public cooked food markets

The Food & Health Bureau and the Food & Environmental Hygiene Department (FEHD) generally accept the comments and recommendations made by PAC and Audit regarding the management of FEHD’s public cooked food markets including Cooked Food Hawker Bazaars (CFHBs), Cooked Food Markets and Cooked Food Centres.


We recognise the need to formulate exit plans for CFHBs with high vacancy rates to ensure that scarce land resources are released for redevelopment. CFHBs were meant to serve as a transitional arrangement and hence were not built in the first place with an intent for long-term use. We have since 1972 stopped issuing new hawker licences under normal circumstances.


Barring exceptional circumstances, we would not issue licences to newcomers to fill the stalls left vacant by hawker licensees who have passed away or surrendered their licences. As such, a progressive increase in the vacancy rate is inevitable over time.


Taking into account the fact that most of the hawker licensees operating in CFHBs are coming from the grassroots, the Government has been adopting a relatively accommodating approach and consciously refrained from forced eviction to avoid causing significant social acrimony. This gives rise to the present state of high vacancy rate.


Having said that, FEHD has stepped up its efforts to actively formulate improvement or exit plans for individual CFHBs, having regard to their business viability, community needs, resource availability and competing priorities with a view to ensuring better utilisation of scarce land resources.


FEHD will also fully take into account the implications for stakeholders when pursuing closure of CFHBs. FEHD has started to discuss the exit plans with the affected cooked food hawkers of two CFHBs, and will also discuss the exit arrangements with the affected hawkers of another CFHB within 2015.


FEHD is also following up with relevant departments in a proactive manner on the recommendations in relation to fire safety measures and the study on upgrading electricity supply. FEHD will continue to step up its efforts in enhancing the overall management of public cooked food markets, with due regard to the historical background of public cooked food markets and the concern of stakeholders.


The Government generally accepts the recommendations of PAC and Audit on market rental, rates and air-conditioning charges. Although our proposals put up in the last couple of years on the market rental adjustment mechanism and the recovery of air-conditioning charges did not have the support of the LegCo, we will continue with our effort in identifying a suitable rental adjustment mechanism and setting up arrangements to recover the rates and air-conditioning charges. We aim to revert to the LegCo Panel on Food Safety & Environmental Hygiene with a proposal in 2016.


Chief Secretary Carrie Lam presented this Government Minute in response to the Reports of the Public Accounts Committee No. 63A and 64 in the Legislative Council.

via Moroccan Trader Gov’t responds to PAC reports

HK vibrant broadcasting hub

Chief Secretary Carrie Lam

The fundamental strengths of Hong Kong for a vibrant broadcasting business, namely the rule of law and the freedom of expression, are as robust as ever.


This is another year of exciting development for the broadcasting and creative industries in Hong Kong. To quote an example, we are delighted to see the recent joint-venture partnership between Warner Bros Entertainment Inc and China Media Capital to establish its headquarters in Hong Kong to develop, produce and distribute films to the global market.


This collaboration is a vivid example to demonstrate how the industry uses the uniqueness of Hong Kong, namely its openness, unique fusion of Western and Chinese influences and international network, to conduct international business here.


On the broadcasting front, the migration from analogue to digital terrestrial television has been progressing smoothly. In Hong Kong, we have achieved virtually complete digital signal coverage for the spectrum-based free TV service, reaching at least 99% of Hong Kong households, with around 85% of them upgraded from analogue to digital systems.


Our public broadcaster, Radio Television Hong Kong, also launched its digital terrestrial TV with three high-definition channels last year. We currently plan to completely switch off the analogue free TV service in 2020.


Regarding the pay TV market, all our three existing pay TV operators have completed digitalisation of their transmission networks and they are now providing a plethora of 391 pay television channels for Hong Kong subscribers to choose.


Some of the operators have gone the extra mile and launched innovative services such as ultra high-definition TV, 3D TV and interactive programmes. The number of high-definition TV channels provided by pay TV licensees has significantly increased from 58 in 2013 to 85 in 2015.


Broadcasting hub

Hong Kong is a broadcasting hub in the Asia-Pacific region. We are an ideal place for uplinking satellite television services to the Asia-Pacific region, thanks to its excellent infrastructure and pool of talents. Currently, there are 18 non-domestic television programme service licensees, providing about 270 satellite television channels for the Asia-Pacific region.


There are also over 400 free-to-air satellite television channels available for reception in Hong Kong. Hong Kong audiences can receive unencrypted satellite television programme channels uplinked from Hong Kong and elsewhere.


As one of the freest economies in the world, Hong Kong imposes no limits on foreign direct investment in pay TV services and transmission platforms or wholesale provision and import of pay TV programmes.


We have no restrictions on business models of pay TV services such as subscription rates, channel packaging and advertising time. All these contribute to an open and facilitative environment for regional and international broadcasters alike to develop their businesses here.


Mobile data usage doubles

With the advent of new digital technologies and availability of higher transmission capacities and speeds, the traditional boundaries between broadcasting and telecommunications are becoming increasingly blurred. The two sectors are converging quickly.


Hong Kong prides itself in the mobile penetration rate, at about 229%, which is one of the highest in the world. The huge popularity and ownership of smartphones has dramatically boosted mobile data consumption, and mobile data services have continued to be the principal engine of market growth.


Indeed, the mobile data usage has been doubled since 2013. As at June 2015, there were 16.7 million mobile subscribers, of which more than 12 million are 3G or 4G service users. The provision of 4G Long Term Evolution, or LTE, services has greatly enhanced user experience, enabling the provision of a variety of innovative and high-speed mobile data services for consumers.


Hong Kong now has broadband Internet access to virtually all commercial and residential buildings, with the household penetration rate reaching 83% as at June 2015.


Innovative offerings

Recently, an operator has begun to offer the world’s first 10 gigabits-per-second fibre-to-the-home broadband services, which enables smooth display of high-quality multimedia content and speedy storage and retrieval of information through a cloud-based network.


To cater for the need of those living away from the urban hub, another operator is rolling out a wireless fixed broadband network to provide higher-speed broadband services at competitive prices to village houses in rural and remote areas.


According to the State of the Internet 1st Quarter, 2015 Report published by Internet content delivery provider Akamai in June 2015, Hong Kong’s fixed broadband service is one of the fastest in the world, with an average peak connection speed of 92.6 megabits per second.


For those on the move, public Wi-Fi hotspots are easily accessible as we have more than 38,600 public Wi-Fi hotspots all over Hong Kong.


Creative industry promoted

Television, or the entertainment industry in a broader sense, is one of the major components of Hong Kong’s creative industries. The film, TV, radio and music sectors have generated an added value of about US$1.5 billion, accounting for over 10% of the total value added of Hong Kong’s cultural and creative industries.


A dedicated Film Development Fund is there to offer support to the film sector while our CreateSmart Initiative targets to provide funding support for other creative sectors. The funds available from the Film Development Fund and the CreateSmart Initiative have enabled the trade to champion initiatives to promote the development of our creative industries.


Creative talents are the key in driving the growth of the broadcasting industry. We have been sponsoring the Community Outreach Programme of the CASBAA Convention since 2010 through the CreateSmart Initiative.


The programme enables small and medium enterprises to attend the CASBAA Convention free of charge each year. The initiative provides opportunities for SMEs to network and exchange views with their fellow experts in the field.


As an effort to encourage new blood to join the industry, the programme also sponsors local tertiary students pursuing TV and media-related programmes so that they can gain insights from speakers and participants of the event, getting a taste of what a career in the television and content industry will be like.


Content exporter

Hong Kong has a long history of being an active TV content exporter. With the introduction of the Closer Economic Partnership Arrangement, or CEPA in short, Hong Kong service providers are given preferential treatment to co-produce TV dramas with Mainland China and Hong Kong artistes, and production crews now play an active role in Mainland TV dramas.


In addition, many experienced TV practitioners have established a new base in the Mainland as a result of the rapid development of TV and cable channels there.


It is anticipated that the emergence of online and mobile viewing platforms will further intensify the demand for quality programme content and our TV talents could surely benefit from the development.


Chief Secretary Carrie Lam gave these remarks at the Cable & Satellite Broadcasting Association of Asia Convention 2015.

via Moroccan Trader HK vibrant broadcasting hub

Economy to grow about 3%

Financial Secretary John Tsang

As an externally oriented economy, we are highly susceptible to global uncertainties. And with that in mind, I am forecasting a modest growth of Hong Kong’s economy in the range of 2% to 3% this year.


In spite of all the recent turmoil in global financial markets, the local markets are continuing to operate in a smooth and orderly fashion. I take comfort in that, and have not seen any liquidity problem in our banking system. For that, we can thank the virtues of our regulatory framework, built on the rule of law and benchmarked against the highest international standards.


On Basel III, the rules made under the Banking Ordinance providing for capital buffers, liquidity standards and disclosure requirements, have begun operation this year. I’m glad to see that our banking system remains strongly capitalised, with a total ratio of 17.5% as of June this year, doubling minimum international requirements.


Although the case for stricter banking regulation is well argued, especially during turbulent times, I fully understand that it will add to the operating costs of banks, and is naturally a concern to you all. The Government will seek to facilitate the market in this regard as far as possible.


For banks’ compliance with Basel III’s capital requirements, we are preparing legislative amendments that will clarify the tax treatment of regulatory capital securities. Capital instruments complying with Basel III requirements, that is to say, Additional Tier 1 and Tier 2 instruments, will be provided with debt-like treatment for profits-tax assessment under the Inland Revenue Ordinance.


Accordingly, related transactions will be exempt from stamp duty. I hope this greater tax certainty will lessen your compliance burden. I count on the Association’s support when the relevant legislative proposals are introduced into the Legislative Council later on in this legislative session.


We are also planning to introduce a bill next month to enhance the Deposit Protection Scheme, providing better protection for our depositors. Our intent is to adopt a gross payout approach in determining compensation in case the Scheme is triggered; this will achieve faster, and more effective, payouts.


While we have, fortunately, never needed to trigger the scheme, this legislative proposal should help to boost the confidence of depositors and further enhance the stability of the banking sector. For banks, there is the prospect of saving IT and compliance costs, because data and other relevant requirements will be streamlined under the gross approach.


Anti-money laundering (AML) is no less vital to the stability and integrity of our financial system. AML and KYC (“know your customers”) are now buzzwords in your daily operations. Indeed, our AML laws and relevant regulatory framework follow the requirements of FATF, the Financial Action Task Force.


I can imagine the effort that is required in internal risk assessments, due diligence and risk-mitigation controls. But since banks are the first line of defence against the illicit flow of funds, I look to you to ensure compliance with AML requirements, including those covering cross-border transactions. There is no place for dirty money in Hong Kong. Your vigilance is of paramount importance in protecting Hong Kong’s reputation as a well-regulated and clean financial centre.


We are working hard in meeting other evolving global regulatory requirements as well, including AEOI, the automatic exchange of information; BEPS, Base Erosion and Profit Shifting Project; and the regulatory framework for the over-the-counter (OTC) derivatives. In addition, we are preparing a legislative proposal to establish a resolution regime for Hong Kong’s financial institutions.


These regulatory measures are not meant to stifle the market. They constitute the essential fortress that protects the market, enabling it to rise and thrive.


Beyond vigilance and caution, Hong Kong’s winning formula includes our well-demonstrated entrepreneurial spirit, well-honed business acumen, as well as the sheer audacity that powered our ventures into so many new markets before. The business community of Hong Kong always knows exactly where the opportunities are.


The visionary and ambitious concepts of the Silk Road Economic Belt and the 21st Century Maritime Silk Road, spearheaded by President Xi, will present the world, and I think Hong Kong economy, with an abundance of business opportunities in an unprecedented way. Indeed, I believe the initiative has the potential to become the world economy’s driving force in this 21st century.


And we, Hong Kong, are in a privileged position to tap these opportunities. Spearheaded by our “one country, two systems” framework and unparalleled proximity to and knowledge of the Mainland, the banking sector can both contribute to, and benefit from, the development of the “Belt & Road” initiative.


The “Belt & Road” initiative was created to expand transcontinental connectivity, to promote economic, political and cultural co-operation from Asia through Africa and on to Europe. And we can expect exuberant demand in infrastructural investment as well as the wholesale upgrading of connections among the 60-plus markets along the two economic corridors.


Hong Kong indeed has the expertise, the experience and the connections to be the fund-raising hub and professional services go-to intermediary for the “Belt & Road” initiative.


As China’s international financial centre and the world’s major financial capital, we can do it all, providing the full range of services from public offerings and loan syndication to private equity funds and fund-raising through Islamic finance, for example.


And as more and more multinational corporations and Mainland enterprises see the benefits of centralising their treasury functions both onshore and offshore, Hong Kong is well placed to handle it for them. We have, after all, a mature market infrastructure and a wealth of professional talent.


In this regard, we are working to provide greater incentives for multinationals and Mainland companies looking to establish corporate treasury centres here in Hong Kong. That would include interest deduction as well as tax concessions.


At the same time, the Renminbi will continue to play a crucial role in Hong Kong. We are, and we seek to remain, the world’s largest offshore Renminbi business centre.


While the recent changes in the Renminbi exchange rate regime may have raised some eyebrows, the Mainland’s commitment to sustain the structural reform, to internationalise the currency and to open up the capital markets remains staunch and unswerving.


There have been some notable breakthroughs this year. The People’s Bank of China, for example, allowed offshore banks to conduct repo transactions in China’s interbank bond market, expanded the range of foreign-exchange transactions that can be done onshore for Renminbi position squaring, and relaxed the rules on two-way Renminbi cash pooling for multinationals. These measures can only expand the cross-border circulation and use of the Renminbi.


And that’s not all. The Hong Kong-Shanghai Stock Connect, which was launched last November, and the Mutual Recognition of Funds Scheme, in effect launched since July this year, are unprecedented. These and other initiatives open up additional channels for the use of Renminbi funds. They also present the industry with significant opportunities to develop a wider range of products and services.


Technology is another game changer. You are experiencing that first-hand, I am sure. Internet banking and mobile banking are post-millennium products and they are fundamentally reshaping consumer behaviour and the business landscape.


The further application of advanced technological innovations in the financial services industry has helped foster new modes of financial services, and, in many ways, enhanced the operational efficiency of financial institutions.


Confronting tomorrow’s challenges with Fintech and other new technologies, the Government’s focus seeks to nurture an environment that can accommodate innovation, in a risk-controlled way. In short, we seek to maximise common industry good while ensuring the protection of consumers.


To ensure Fintech’s development, I have set up a steering group on Fintech in April to look into how best to foster a Fintech-friendly environment in facilitating the operation of our financial services industry. The Steering Group is collaborating with regulatory authorities, and tapping experts from the banking and other financial services sectors, as well as academia and our R&D institutions.


Meanwhile, the Bill to prescribe a licensing and supervisory framework for stored-value facilities and retail payment systems will be put to vote in the Legislative Council soon. Once it’s up and running, I look forward to seeing more innovative payment solutions, bringing convenience to consumers while stimulating e-commerce, which will no doubt become the business modality of choice for the future.


Ladies and gentlemen, all the exciting opportunities and innovations I have mentioned just now would not be captured or materialised in a fruitful manner without the right people, the right talents. People like yourselves. People who possess the competence and, at the same time, the right values.


Banks must cultivate a culture that emphasises customer interests in the face of profit maximisation and excessive risk-taking. And it is crucial that these values are inculcated from top management down to the front lines.


In this regard, I welcome the Hong Kong Monetary Authority’s initiative to commission a study with experts on the corporate governance of banks. Their job is to look into what independent non-executive directors of banks can do to help nurture good governance and culture in banks.


The launch of the Enhanced Competency Framework has made a good start in strengthening the professional competence of industry practitioners. And I am delighted to see another such framework, to be launched in 2016, focused on anti-financial crime and compliance.


Besides quality, our talent pool cries out for quantity as well. We need a bigger financial talent pool, a sustainable one covering not only front-line positions but also intermediary and back office roles as well. In my Budget earlier this year, I announced the allocatation of $100 million to launch a three-year pilot programme. That initiative will help expand our talent pool in the financial services industry. It will also improve professional standards in the asset and wealth management sector as well as the insurance industry.


The programme will feature career talks and internship placements for university students, enabling them to better understand the work and the prospects of various industry roles. I look forward to your Association’s continuing support in building another great generation of talent for our financial services industry. For Hong Kong.


I am confident that working together we can create the optimal environment to help you manage today’s challenges while seizing the promises of tomorrow.


Financial Secretary John Tsang gave these remarks at the Hong Kong Association of Banks luncheon on October 26.

via Moroccan Trader Economy to grow about 3%

Gov’t promotes lifelong learning

Chief Secretary Carrie Lam

Lingnan University has always cherished its motto, Education for Service. Over the years, it has been a training ground for whole-person education for members of our community. Lingnan is renowned for its promotion of liberal arts education, in particular the emphasis on instilling a sense of civic duty in students.


Lingnan also plays an active part in promoting international exchange programmes, thereby broadening students’ horizons and enhancing their ability to meet various challenges after graduation.


The SAR Government shares Lingnan University’s vision for the development of liberal arts education. In fact, the expansion of undergraduate programmes to four years in the new academic structure allows our university students more time for learning activities beyond lecture rooms.


These activities not only enrich students’ college life and experience, but also broaden their horizons and enable them to achieve lifelong learning.


The Government has been committed to supporting the development of post-secondary education in Hong Kong, and will continue to invest heavily in higher education.


Apart from progressively increasing the annual senior-year undergraduate intake in funded institutions, starting from the last academic year, we provide a subsidy of up to $15,000 for each eligible post-secondary student as an incentive for joining exchange programmes outside Hong Kong, so as to ensure that no students will be deprived of opportunity to make the most of their post-secondary life due to a lack of means.


Chief Secretary Carrie Lam gave these remarks at the Walking with Lingnanians Fundraising Walkathon 2015 starting ceremony at the Kwun Tong Promenade.

via Moroccan Trader Gov’t promotes lifelong learning