HK legal system globally recognised

Hong Kong is renowned for having a sound and mature legal system, supported by an independent judiciary and a strong rule of law tradition. Hong Kong is the only jurisdiction within China practicing common law, as entrenched in the Basic Law. The common law system in Hong Kong has a history of 150 years with ample precedents. Hong Kong cases are frequently cited in overseas jurisprudence, reflecting the quality of our judiciary and legal system.

 

The respect our independent judiciary enjoys is evidenced and supported by eminent judges from other common law jurisdictions sitting on our highest court, the Court of Final Appeal. As Lord Sumption, a former judge of the United Kingdom Supreme Court and a Non-Permanent Justice of the Hong Kong Court of Final Appeal remarked: “The presence of foreign judges on Hong Kong’s Court of Final Appeal is one of the most striking pointers to the standing of Hong Kong as a world city.” He further observed that the permanent judiciary of Hong Kong is completely committed to judicial independence and the rule of law.

 

Additionally, Hong Kong is home to legal, dealmaking and dispute resolution professionals from all over the world, symbolising the international connectivity of the profession. As of March, there are 1,540 registered foreign lawyers in Hong Kong from 33 jurisdictions and 86 registered foreign law firms.

 

The strength of Hong Kong law, especially in the civil and commercial fields, is internationally recognised. In the World Competitiveness Yearbook 2020, Hong Kong’s ranking remained first globally in the “Business legislation” subfactor and in the indicator “Legal & regulatory framework”.

 

We must however not be complacent. Riding on the “one country, two systems” policy, we establish unique arrangements with Mainland China that no other jurisdiction in the world would be otherwise entitled to.

 

In arbitration, under the interim measures arrangement and the supplemental arrangement on the enforcement of arbitral awards we have concluded with the Mainland, parties to Hong Kong arbitrations can seek protection measures from the Mainland courts such as the freezing of assets and injunction during the arbitration, and at the start of the court proceedings for recognition and enforcement of the Hong Kong awards. These arrangements are unique to Hong Kong.

 

By an arrangement with the Mainland on the reciprocal recognition and enforcement of civil and commercial judgments, Hong Kong court judgments will be enforceable in the Mainland. Going one step further, beyond what the Hague Judgments Convention currently provides, this unique arrangement additionally includes mutual enforcement of certain intellectual property judgments.

 

The most recent unique arrangement arising out of the “one country, two systems” policy is in the area of insolvency and restructuring. Under a new co-operation mechanism between Hong Kong and the Mainland, liquidators and provisional liquidators from Hong Kong may apply to a court in Shanghai, Xiamen and Shenzhen for recognition and assistance. On the other hand, bankruptcy administrators from the Mainland may continue to apply to our High Court for recognition and assistance according to the existing common law principles in Hong Kong. Hong Kong is the only jurisdiction to establish such a unique co-operation mechanism with the Mainland in this area.

 

On the domestic front, our laws are continuously updated to attract businesses. One of the strongest infrastructures in Hong Kong is its financial system and as you will hear later, we have recently passed the Limited Partnership Fund Ordinance to introduce a new entity type for private equity and venture capital funds for Hong Kong. Further amendments have been introduced to the Inland Revenue Ordinance to allow for tax concessions for carried interest of private equity funds operating in Hong Kong.

 

Secretary for Justice Teresa Cheng gave these remarks at the Why Use Hong Kong Law webinar on May 31.

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SJ hails electoral system benefits

The Improving Electoral System (Consolidated Amendments) Bill 2021 was passed in the Legislative Council on Thursday. The amendment to the ordinance was made in accordance with the decision of the National People’s Congress on improving the electoral system of the Hong Kong Special Administrative Region and the amended Annex I and Annex II to the Basic Law with a view to fully implementing “patriots administering Hong Kong” and safeguarding the overall interests of society and the constitutional order as set out in the Constitution and the Basic Law. This would synthesise a new democratic electoral system suited to Hong Kong’s actual situation and with Hong Kong characteristics.

 

When improving the electoral system of a place, one would take into account the historical background, cultural diversity, political thoughts, and inevitably the historical and current state of political development and the actual circumstances there. The National People’s Congress Standing Committee (NPCSC), in deliberating the amendments to Annexes I and II to the Basic Law, has already taken into consideration the actual situation in Hong Kong. Certain overseas politicians alleged again that the legislation defies the objective of universal suffrage as set out in the Basic Law. However, it should be pointed out that the ultimate aim of universal suffrage, to be achieved in light of the actual situation in Hong Kong and in accordance with the principle of gradual and orderly process, as specified in Articles 45 and 68 of the Basic Law, remains unchanged.

 

The NPCSC adopted the amended Annex I and Annex II to the Basic Law on March 30. Since then, my colleagues and I have met with various organisations and individuals from the legal and dispute resolution sector to explain to them the improvements to the electoral system. At the bills committee meetings, the Government categorised the policy with the related main ordinance and subsidiary legislations, which offered LegCo members a good grasp of the content and its implementation in the course of scrutiny.

 

The Election Committee is now entrusted with two new functions: (1) electing 40 legislators, and (2) nominating candidates for LegCo election. These are two important aspects of the electoral system. Through the reconstituted Election Committee, the balanced and orderly political participation of the Hong Kong community is enhanced and broader representation is ensured. As such, the Election Committee is like the ballast of the new democratic electoral system, ensuring the overall interests of society, so as to fully and faithfully implement the policy of “one country, two systems”.

 

The newly established Candidate Eligibility Review Committee will be responsible for assessing and validating the eligibility of candidates for the Election Committee members, the Chief Executive and LegCo members, ensuring their qualifications are in conformity with the Basic Law, the Hong Kong National Security Law, NPCSC’s interpretation of Article 104 of the Basic Law, the decision by the NPCSC on the qualification of Hong Kong SAR LegCo members, and provisions of relevant local laws, which fully reflect the implementation of “patriots administering Hong Kong”.

 

The improvements to the electoral system should bring an end to the chaotic scenes at LegCo. Radicals with anti-Chinese sentiment and those who attempted to collude with external forces to meddle in Hong Kong’s affairs are less likely to enter the political structure through elections. The operation of LegCo will resume normality. People who are devoted to serving the community will be able to participate in policy discussions in a rational and objective manner and offer constructive suggestions to the Government.

 

Last but not least, I would like to express my sincere gratitude to colleagues who participated in the local legislation for their full support to the Constitutional & Mainland Affairs Bureau. To ensure that the three coming elections can be held as scheduled, the Department of Justice will continue to work closely with other government departments for the preparatory work.

 

Secretary for Justice Teresa Cheng wrote this article and posted it on her blog on May 30.

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HK promotes mediation

We started the “Mediate First” Pledge campaign in 2009. As you all know, the “Mediate First” Pledge is a non-legally binding commitment where the pledgee pledges to explore the use of mediation first before resorting to other means of dispute resolution.

 

Up to this year, we have now over 700 pledgees in Hong Kong from different sectors. I wish to express my gratitude to all the pledgees for their immense support. I would also like to extend my congratulations to the 34 “Mediate First” Pledge Star Logo awardees for their active involvement in this meaningful campaign.

 

Today’s theme is Mediate First – Anchoring the Future. In order to anchor a successful future, one needs to do a lot to pave the path. The Department of Justice (DoJ) has started paving the path for a prosperous future for the mediation community for more than a decade. We have put in place a strong regulatory framework with the implementation of the Mediation Ordinance and the Apology Ordinance, coupled with an industry-led accreditation body for mediators, the Hong Kong Mediation Accreditation Association, to ensure the quality of mediators in Hong Kong.

 

The department’s past initiatives have been well received by the mediation community. Mediation has been undergoing rapid development and the DoJ has spared no effort in promoting mediation both locally and internationally.

 

Investment Mediation and the CEPA Mediation Agreement

A well-trained and professional investment mediator will be able to facilitate the parties to reach mutually beneficial, creative and forward-looking settlement arrangements. The most special feature of mediation is that remedies are limitless and they are not limited to monetary damages, ie, the mediated solution can be multi-dimensional. Mediation allows parties’ non-monetary needs and interests to be taken into account when reaching a settlement, and by having a frank discussion about the issues, the parties will have a greater chance of restoring their relationship and continuing to collaborate in the future.

 

Recognising these benefits, a Mediation Mechanism has been established under the Investment Agreement under the Mainland & Hong Kong Closer Economic Partnership Arrangement (CEPA) for settlement of investment disputes between Hong Kong and the Mainland. A set of CEPA Investment Mediation Rules are in place, and there are 43 Hong Kong mediators designated under this Mediation Mechanism.

 

With a view to building up a team of investment mediators in Asia to handle international investment disputes, the department brought to Hong Kong a capacity building and training programme on investment mediation in 2018. Together with the International Centre for Settlement of Investment Disputes and the Asian Academy of International Law, we have been co-organising the Investment Law & Investor-State Mediator Training in Hong Kong. Government officials and legal and mediation practitioners attended the training and had intellectual and professional exchanges on investment mediation.

 

Despite the COVID-19 pandemic, the department is considering to hold the next Investment Law & Investor-State Mediator Training in the last quarter of 2021.

 

Mediation in the Greater Bay Area

Hong Kong has been serving as a bridge or a springboard for inbound and outbound investment into and from the Mainland. Given Hong Kong’s unique “one country, two systems” and our well-developed and impartial legal system, Hong Kong’s position as an international legal and dispute resolution services hub will be further enhanced with the opportunities presented under the Belt & Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area (GBA).

 

In this respect, the department has been working closely with the Department of Justice of Guangdong Province and the Secretariat for Administration & Justice of the Macao Special Administrative Region in the Guangdong-Hong Kong-Macao Bay Area Legal Departments Joint Conference on the establishment of a GBA Mediation Platform. The GBA Mediation Platform would be an authoritative platform for high-level exchange and co-operation among the legal departments of the three governments of Guangdong, Hong Kong and Macau, established to discharge the role of a standard-setting body with a view to promoting the wider use of mediation within the GBA.

 

The DoJ has already provided a draft of the proposed qualification and accreditation for mediators in the GBA to our counterparts for their consideration. A draft set of code of conduct has also been prepared by the department for comment by the other two sides. We hope that these drafts will be further discussed in the working group meeting soon and for them to be approved before the next meeting of the joint conference later this year.

 

West Kowloon Mediation Centre

Locally, the Department of Justice implemented the Small Claims Mediation Pilot Scheme in November 2018 at the West Kowloon Mediation Centre with the objective of promoting more extensive use of mediation to resolve disputes and enhancing public awareness of mediation as a means of dispute resolution. The Mediation Pilot Scheme provides mediation services to litigants of cases referred by the Small Claims Tribunal, as well as other suitable cases at a nominal fee of $200 per party.

 

With the support of the Judiciary, up to April 30, 966 cases were referred by the Small Claims Tribunal and 56% of those cases submitted an application for mediation. The success rate has been around 50%.

 

The Mediation Pilot Scheme will end in January 2022 and the Department of Justice will review its effectiveness and sustainability and decide the way forward. The department will also continue to devise new initiatives to further promote mediation to the general public of Hong Kong.

 

Returning to today’s programme line-up, besides the keynote speeches from the President of the Law Society of Hong Kong and the Director-General of Invest Hong Kong, you will also hear about the use of mediation in the private wealth sector. As the title suggests, big money comes with big problems, and the most wealthy family surely may prefer settling the disputes confidentially, which is one of the most precious elements of mediation, rather than in a forum that would be attracting public attention.

 

Following on we will look at how mediation can help resolve healthcare disputes. Amidst the COVID-19 pandemic which is straining our healthcare services sector, it elevates the need for disputes relating to healthcare services to be dealt with amicably. The appropriate use of mediation and sometimes an apology may be an apt prescription in easing disputes, particularly in dealing with patients’ relationships.

 

Last but not the least, the benefits of mediation in employees’ compensation claims cannot be understated. Speakers will share with us their insights based on their real life experience in dealing with both the employees and the employers in such claims, and how to better facilitate effective communications among parties to achieve an amicable settlement using mediation skills.

 

Conclusion

Undoubtedly, mediation has much potential for us to explore and capitalise on in the future. The Department of Justice will continue our efforts in promoting mediation locally, regionally and internationally in order to anchor a successful future for Hong Kong.

 

Secretary for Justice Teresa Cheng gave these remarks at the “Mediate First” Pledge Event 2021 on May 28.

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Fintech development crucial

The Hong Kong Government attaches great importance to the development of fintech, and works closely with financial regulators, the industry and stakeholders to promote the development of the industry. Today, I would like to walk you through our latest initiatives in terms of regulatory enhancements and funding support.

 

On regulatory enhancements, we have presented to the Legislative Council a bill in March this year to implement an uncertificated securities market regime under which investors will have the option to hold securities without paper documents. This is expected to modernise our financial market infrastructure, and will also enhance the efficiency and competitiveness of our market. Taking into account the time and efforts needed, a phased approach will be adopted starting with listed shares of Hong Kong companies and initial public offerings. This reform has been widely discussed in the market for a long time, and we are very glad to see that it is finally coming to implementation.

 

Paperless securities aside, I am sure many of you are now very familiar with cryptocurrencies or virtual assets as a new investment, with Bitcoin being a prominent theme. The Government sees both risks and opportunities from this new trend, and we are of the view that a proper regulatory system could facilitate development and at the same time protect investors and adhere to international regulatory standards. That’s why in November last year, we have issued a paper consulting the market on the introduction of a licensing regime for virtual asset services providers in Hong Kong. Imposing mandatory requirements to protect investors, prohibit market manipulation, and guard against money laundering and terrorist financing, we believe the proposed regime will further facilitate development of the virtual assets industry in Hong Kong, leveraging our world-class regulatory framework. We have just issued the consultation conclusion last week, and based on the feedback received, a change is introduced to allow foreign incorporated companies to also obtain a licence as a virtual asset services provider in Hong Kong.

 

Availability of funding and the willingness to experiment are the success factors for the development of the fintech industry in Hong Kong. With that in mind, the Government has launched a Proof-of-Concept (PoC) subsidy scheme, encouraging licensed financial institutions to partner with startups and develop PoC projects applicable in actual business scenarios. To encourage more innovations, projects involving cross-boundary or cross-border applications such as the Guangdong-Hong Kong-Macao Greater Bay Area will be granted an extra 50% subsidy taking into account their complexities. The scheme has indeed proven to be very popular, as so far we have received over 80 applications since the first stage was closed in end of April. The most popular fintech segments submitting applications are regtech, wealthtech, insurtech and paytech. I am very excited about the projects resulting from the subsidy scheme, and I also look forward to them being proven successful and widely adopted by more financial institutions in Hong Kong.

 

Besides offering a subsidy scheme for PoC projects, we also have a three-step strategic plan to develop our private equity (PE) and venture capital (VC) market, such that funding will be more accessible by fintech startups like all of you. Further to the introduction of a limited partnership fund regime in August last year, we have recently passed a legislation offering tax concessions for carried interest of PEs and VCs, enhancing Hong Kong’s attractiveness as a hub for venture investors. With over 200 PEs registered under the new regime, we are also working towards the third step to introduce a re-domiciliation mechanism for overseas funds to relocate to Hong Kong.

 

The forum today will also cover green and sustainable finance. Indeed, it is now a priority issue for global governments and businesses, and Hong Kong is no exception. As demonstrated by the Chief Executive’s commitment to achieve carbon neutrality for Hong Kong by the year 2050, we take green and sustainable development seriously and set concrete targets for ourselves. To finance government green projects as part of the efforts to achieve that target, in the next five years we will issue government green bonds totaling US$23 billion depending on market situations, and we will also for the very first time issue retail green bonds. Also, to encourage private issuers to participate in the green finance market, we have recently announced the details of the Green & Sustainable Finance Grant Scheme, subsidising issuance costs for green bonds, and external review costs for both green bonds and loans. Since green and sustainable finance are expected to bring tangible benefits, data would play a key role for quantification and fintech in this regard would offer the solutions we need. The intersection of the two new and emerging market trends would present tremendous opportunities to our market.

 

Although we are now meeting virtually, as travel returns to normal, Hong Kong will always welcome all of you, and I look forward to greeting each and every one of you in person in the near future. Hong Kong is very much open for business, in fact, now more than ever. And ultimately, I believe together, we can be a force for good by utilising technologies at our disposal.

 

Secretary for Financial Services & the Treasury Christopher Hui gave these remarks at the StartmeupHK Festival – Virtual FinTech Forum on May 27.

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Say no to vaccine hesitancy

The epidemic situation has remained stable in the past month, with no local cases with unknown sources of infection for many days. After more than a year of hard fight against the virus by the whole community, there is hope of achieving zero infection in Hong Kong. While it is encouraging to see the epidemic under control, the Government will not be complacent. The recent rebound of cases in a number of neighbouring places is a timely reminder to us that we must not let down our guard and must continue to keep up our efforts, with vaccination being the most important measure.

 

The latest epidemic situation

In the month from April 25 to May 24, there were only three local cases with unknown sources, and the circumstances of the cases were quite special with the patients having a low viral load or already carrying antibodies. It is possible that the patients had been infected much earlier or viral interference had occurred, and it is believed that transmissibility was not high and the risks posed to the community were low. Nevertheless, decisive and stringent actions were taken to cordon off relevant areas to conduct compulsory testing and put the relevant residents in quarantine according to the new direction in fighting the pandemic announced last month, with a view to cutting off any possible chains of transmission.

 

Anti-epidemic efforts

As the local epidemic situation has stabilised with only sporadic confirmed cases, the need to step up efforts to guard against the importation of cases is all the more necessary. In the past month, the Government has at different times extended or tightened the entry restrictions and quarantine requirements for incoming travellers from places including India, Pakistan, the Philippines, Nepal, Taiwan, Argentina, Italy, Japan, Kenya, Malaysia, the Netherlands and Singapore. On the prevention of the spreading of the virus in the community, in addition to the comprehensive and thorough investigation of each local confirmed case including conducting gene sequencing tests, we have continued to step up virus testing. In this connection, we have conducted over 120,000 virus tests per day on average in the past month, which is record breaking. Among them, since a number of cases involving foreign domestic helpers (FDHs) have been found, we have twice required all the about 370,000 FDHs in Hong Kong to undergo compulsory testing, resulting in the identification of several cases that required follow-up actions. I would like to express my gratitude to FDHs, their employers and the relevant consulates for their support and co-operation and my appreciation to laboratory personnel for their hard work.

 

Regarding the food quality issue and unsatisfactory admission and discharge arrangements of quarantine centres during the above period, I hope that the public will understand the challenges faced by my colleagues in having to arrange for a large number of people to undergo quarantine within an extremely short period of time. The Government has already reflected on the experience and made steps for improvements.

 

The major measures introduced are set out below chronologically:

 

Date

Event

April 29

The Return2hk Travel Scheme for Hong Kong residents was extended from Guangdong Province and Macau to other Mainland provinces and municipalities. The Government relaxed certain social distancing measures with vaccine bubble as the basis. Catering businesses could extend their dine-in service hours and seat more people at one table. Bars and nightclubs etc could resume business with conditions. The Government extended the measure to prohibit all passenger flights from India, Pakistan and the Philippines from landing in Hong Kong. All passenger flights from Nepal would also be prohibited from landing in Hong Kong starting from May 1.

April 30

As two cases involving the N501Y mutant strain were FDHs, the Government required all FDHs in Hong Kong to undergo compulsory testing by May 9.

May 7

The Government updated the quarantine arrangements for local confirmed cases involving mutant strains. Residents living in the same building but not in the same unit with such cases would not be placed under quarantine for 21 days, but would be required to undergo more frequent testing. The Government announced the shortening of quarantine period for fully vaccinated close contacts of confirmed cases and fully vaccinated people arriving at Hong Kong.

May 12

All FDHs in Hong Kong were required to undergo compulsory testing for the second time from May 15 to May 30. Fully vaccinated FDHs were exempted from the requirement.

May 16

In view of the epidemic situation in Taiwan, the Government tightened the testing and quarantine arrangements for arrivals who have stayed in Taiwan. Non-Hong Kong residents who have stayed in Taiwan would be denied entry.

May 17

In view of the epidemic situation in Singapore, the governments of Hong Kong and Singapore decided to defer the target date of the inaugural flights under the bilateral Air Travel Bubble scheduled for May 26.

May 18

The Government launched the outreach vaccination service for eligible enterprises to provide a more convenient way for their employees to get vaccinated. The Government further required people arriving from Taiwan earlier who were still undergoing home quarantine to complete their remaining compulsory quarantine period at the quarantine hotels designated by the Department of Health.

May 21

Argentina, Italy, Japan, Kenya, Malaysia, the Netherlands and Singapore were classified as specified high-risk places. The boarding and quarantine arrangements for people who have stayed in these places were tightened. Non-Hong Kong residents who have stayed in these places would be denied entry.

May 24

All kindergartens, primary and secondary schools in Hong Kong fully resumed face-to-face classes on a half-day basis.

May 25

The Government adjusted the Return2hk Travel Scheme, which would adopt the list of risk level for Mainland places published by the National Health Commission. Hong Kong residents who have visited any area in the Mainland being classified as a medium or high-risk area on the list in the past 14 days prior to and upon the day of arrival in Hong Kong would not be exempted from compulsory quarantine under the Return2hk Travel Scheme upon their entry into Hong Kong.

 

 

Hope is on the horizon with the economy rebounding

With the epidemic situation remaining stable and social distancing measures relaxed, there are more people on the street and many people go to shopping malls, the countryside, the beach and so on at the weekend. In addition, by putting various anti-epidemic measures in place, we have successfully held a number of large-scale events in our city, including the UCI Track Cycling Nations Cup, Art Basel Hong Kong, the French May Art Festival and more. The economic indicators released last month are also encouraging.

 

However, whether our economy will continue to improve in the time to come depends crucially on the resumption of travel between Hong Kong and the Mainland, as well as between Hong Kong and overseas. For this to happen, it is essential for us to strive towards zero infection and achieve widespread vaccination.

 

Say no to vaccine hesitancy

Experts have repeatedly told us that vaccination represents the best hope, or perhaps even the only hope, for Hong Kong and the world to get out of the pandemic. As a matter of fact, in some parts of the world where the vaccination rate is high, the epidemic situation has improved significantly and people’s lives are returning to normal gradually. Hesitating about vaccination, taking a wait-and-see attitude, or thinking that vaccination is not necessary as the epidemic situation is stable, is acting against the aspirations of the whole community.

 

For yourself and others, please do not hesitate anymore and get vaccinated as soon as possible!

 

Chief Executive Carrie Lam issued this article titled Say No to Vaccine Hesitancy on May 26.

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Market expansion on track

I would like to take this opportunity to share with you what I think are the three key lessons that we can draw from this pandemic, which are resilience, digitalisation and sustainable development.

 

Not only has the pandemic changed our ways of life and work as highlighted by Laura (Hong Kong Exchanges & Clearing Chairman Laura Cha) just now, it has also changed how trading is being conducted in the LME (London Metal Exchange). As a response to the guidance issued by the UK Government, LME Ring trading activity now remains suspended. While open outcry in the Ring is a long-standing tradition of the LME, LMEselect as an electronic platform has proven to be reliable, and it has also assumed the role of determining official and closing prices.
 

As commodities also involve the complexities of warehousing and physical delivery, the LME and the metals industry have worked together to ensure orderly and stable operation of the metals supply chains. These efforts should indeed be applauded and in a crisis as disruptive as the one that we are now facing, resilience can truly be demonstrated.

 

Back to Hong Kong where we are now, our financial markets have also weathered the storm and are performing exceptionally well. On the listed equity side, funds raised through IPO were more than US$17 billion in the first quarter of this year, more than nine times compared to the same period of 2020. At a broader scale on the monetary side, we have witnessed the inflow of close to US$50 billion since the second quarter of last year and our foreign reserves now stand at 1.8 times of the HK dollar monetary base.

 

On a more daily basis, the average daily turnover of our equity market in the first quarter reached over US$28 billion, up 86% year-on-year reaching a record high. Judging from these numbers, the Hong Kong financial markets, I must say, have responded to the pandemic in a very resilient manner.

 

Indeed, as many market participants have shared with us, they see more opportunities than challenges in the pandemic, and have taken the chance to innovate and digitalise. For example, online roadshows and online board meetings are increasingly being adopted. On the regulatory and legislative front, we at the Government are also putting in our efforts to pursue innovation and digitalisation. Just in March this year, we presented a bill to the Legislative Council on the uncertificated securities market (USM) regime, with a view to allowing investors in the equity market the option to hold securities without paper documents.

 

I know the same is happening with the LME on digitalisation and modernisation. Earlier this year, the LME published a discussion paper on future market structure with proposals to facilitate modernisation of the LME and to create a metals market that is fit for the future. Similar to our Hong Kong regime moving from paper-based to scripless securities, the LME successfully launched its electronic warranting solution in March this year, replacing paper warrants. I am glad to learn that market support for this new service seems to be strong.

 

Another key theme that has emerged from the pandemic is the drive towards sustainable development. There is now a global consensus that, as the public and private sectors seek to rejuvenate economic growth, investments into green and sustainable projects should be our prime focus. Pursuing green recovery would allow us to walk out of the crisis together in a stronger and fairer manner.

 

The Government has accorded top priority to green and sustainable development, as demonstrated by the Chief Executive’s commitment in her Policy Address to achieve carbon neutrality for Hong Kong by 2050, basically 10 years before our own country. To deliver on this goal, we will issue a total of US$23 billion of green bonds over the next five years, depending on market situations, to finance green projects in pursuit of low-carbon economic development. Our cross-regulatory steering group also launched a strategic plan to strengthen our financial ecosystem to support a greener and more sustainable future.

 

Of course relying on the public sector alone would not suffice, and we will need to leverage on the private sector including each and every one of you as well. That is why in the Budget this year, a Green & Sustainable Finance Grant Scheme was announced, with a view to subsidising eligible issuers of green bonds and also green loans this time on their costs of issuance and external review. We hope this would attract more institutions to come, and leverage on Hong Kong’s market infrastructure to venture into green and sustainable finance.

 

Now let’s turn back to the LME, the focus of today’s metals seminar. I note that sustainability is also identified as a strategic goal to pursue, as illustrated by many of its initiatives – one of which is an online service called LMEpassport, which would register Certificates of Analysis, providing a broad range of metal sustainability certifications and disclosures electronically. I note that launch is planned for Q3 this year, and the LME would actively engage with market stakeholders on its design, ensuring the primary goals will be met for providing the industry with greater transparency and sustainably produced products.

 

Time flies and it has been more than eight years since HKEX completed its acquisition of the LME back in late 2012, and we just passed the seven-year itch. It is a tale of two cities forging a strong connection between east and west. Just now I have shared with you, during the time of the pandemic, how our two trading centres in Hong Kong and London have both maintained resilience, delivered innovation, and pursued sustainability. People say a good marriage would have the couple having in minds the same goals and pursuits. As you can hear from Laura’s speech and mine, judging from what we have said, the marriage between the HKEX and LME is actually doing very well and would come a long way continuing to weather ups and downs in our common destiny together going forward.

 

Looking ahead, under the country’s 14th Five-Year Plan and the Greater Bay Area initiative, the catchment of our commodities market would be further expanded. We have seen early signs of success, as marked by the tripling of year-on-year turnover of Qianhai Mercantile Exchange in the first quarter this year, and the pioneering investment of HKEX into Guangzhou Futures Exchange. I am sure under the capable leadership of Laura and Gucho, we can expect many more achievements to come. I would also send my warmest welcome again to Gucho, as he officially took on the role as the CEO yesterday.

 

And back to what I promised at the outset about vacation. To conclude, as financial market participants, I think what you care about more should be not just vacation but another V – volatility. That said, if you talk to any people in Hong Kong, what they care about most now is about vacation. But before we can talk about volatility and vacation, we need to know another V, which is vaccination as it is essential for restarting our economic engine. On that, I would urge every one of you who have not been vaccinated to go get your jab and also, at the same time, I wish you all an enjoyable and fruitful discussion in the coming seminar today. Thank you.

 

Secretary for Financial Services & the Treasury Christopher Hui gave these remarks at the LME Asia Metals Seminar 2021 on May 25.

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Arts events mark return to normality

It is a great pleasure to be here with you for the opening ceremony of “Mythologies: Surrealism & Beyond – Masterpieces from Centre Pompidou”. I am pleased, as well, that this extraordinary exhibition, designed especially for Hong Kong and featuring more than 100 pieces of distinctive works of art, is being held at our newly renovated Museum of Art.

 

The exhibition opens at the same time when Art Basel Hong Kong takes place. These major arts events remind us of what a wonderful cultural city Hong Kong is, and that our determined efforts to fight COVID-19 have paid off by making it possible for these events to happen. This exhibition, which runs till mid-September, also serves as a welcoming treat to many art lovers in Hong Kong after a prolonged period of social distancing. And, as if this wasn’t enough of a blessing, the world-class exhibition is in fact one of some 80 cultural events – featuring music, theatre, dance, film, food and more – at this year’s 29th French May Arts Festival, which runs through the end of June.

 

Since its first edition in 1993, the festival has been the Hong Kong Government’s close partner in bringing the best of French culture to Hong Kong. This year is a departure, in that the vast majority of artists and performing arts companies are based right here in Hong Kong, a grand collaboration of French citizens who call Hong Kong home and our local performers. Festival highlights include “Larger Than Life”, a contemporary French play performed in Cantonese and directed by our own Tang Shu-wing. Another winning collaboration is the “Jazz in French Films” concert, featuring the Patrick Lui Jazz Orchestra playing with big-band gusto during the screening of some of France’s greatest movies. Through these two splendid months of French arts and culture, some of Hong Kong’s major performing arts groups, including the Hong Kong Ballet, Hong Kong Sinfonietta and the Hong Kong Philharmonic Orchestra, are all taking part.

 

Co-operation, in culture and other areas, has long marked relations between Hong Kong and France. And I am thrilled to see it displayed so creatively at this year’s French May Arts Festival. For that, I am grateful to the organiser, the Association Culturelle France – Hong Kong, as well as the French May team and of course the Consulate General of France in Hong Kong. My thanks, too, to the Hong Kong Jockey Club Charities Trust for its significant support of this welcome exhibition, and its continuing support of French May’s Community Outreach & Arts Education Programme.

 

Last month, I outlined a new direction in our fight against COVID-19, under which we seek to control the epidemic with targeted measures while allowing activities to resume as far as possible. The French May Arts Festival is yet another remarkable event marking Hong Kong’s gradual return to normality. I know you will enjoy it, and I wish it every success. I hope full normality will resume next year when the festival hosts its 30th edition to help celebrate the 25th anniversary of the establishment of the Hong Kong Special Administrative Region.

 

Chief Executive Carrie Lam gave these remarks at the opening ceremony of the Mythologies: Surrealism & Beyond – Masterpieces from Centre Pompidou exhibition on May 20.

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HK’s strengths recognised

I am honoured to have this opportunity to congratulate the six Shaw Laureates of 2020.

 

COVID-19 may have delayed the presentation of the 2020 Shaw Prize. It has not, however, dimmed our delight in honouring the year’s laureates and their profound achievements in Life Science and Medicine, Mathematical Sciences and Astronomy.

 

If anything, the pandemic has highlighted the critical importance of groundbreaking research and innovation in science and its numerous applications. It emphasised just how much we count on scientists’ continuing pursuit of excellence. A case in point is the rapid development of effective COVID-19 vaccines, giving people all around the world hope for finally overcoming the pandemic.

 

In the 14th Five-Year Plan of the nation recently released, we are delighted by the inclusion of the central government’s support for Hong Kong to develop an international innovation and technology hub. I believe this is a strong recognition of Hong Kong’s strengths, particularly in basic research conducted in our universities, and the synergy in innovation and technology that is evident in the Guangdong-Hong Kong-Macao Greater Bay Area. We will spare no effort in seizing these opportunities and one of the key initiatives is the Global STEM Professorship Scheme that will be launched later this year. By offering well-funded professorship and research support, the scheme aims to recruit overseas and Mainland scientists to come to work in Hong Kong. Another initiative with planning under way is the Hong Kong Laureate Forum organised with the full support of the Shaw Prize Foundation which will take place towards the end of this year.

 

Chief Executive Carrie Lam gave these remarks at the Shaw Prize Award Ceremony 2020 on May 20.

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Legal ties highlight HK’s uniqueness

Many people might have a negative impression on corporate insolvency and debt restructuring. Some even avoid talking about them. But from the legal perspective, a modernised and efficient insolvency regime is in fact favourable for business and investment. On May 14, the Department of Justice and the Supreme People’s Court signed the Record of Meeting on Mutual Recognition of & Assistance to Bankruptcy (Insolvency) proceedings between the Courts of the Mainland and the Hong Kong Special Administrative Region, allowing liquidators from Hong Kong to apply to Mainland courts for recognition of insolvency proceedings in Hong Kong. Likewise, bankruptcy administrators from the Mainland may apply to the High Court in Hong Kong for recognition of bankruptcy proceedings in the Mainland.

 

This new co-operation mechanism comes with three advantages, two breakthroughs and one goal. The advantages include:

 

(1) Balance and protect the interests of creditors and debtors: the establishment of a system for mutual recognition of insolvency proceedings and assistance to liquidators between the two places avoids the inability to fully recover the debtors’ assets due to lack of mechanism, thereby enhancing the protection of the interests of debtors and creditors which is conducive to the orderly and fair handling of the relevant stakeholders’ interests.

 

(2) Make use of debt restructuring to reduce unemployment: it encourages enterprises to make use of debt restructuring procedures to facilitate creditors to reach a consensus on the restructuring plan as soon as possible. Companies under financial distress can reduce the risk of liquidation through debt restructuring and therefore prevent layoffs.

 

(3) Further improve business environment and encourage investment: the mechanism collectively built by the two places will give additional assurance to creditors and investors, thus further improving the investment and business environment.

 

The co-operation mechanism, implemented through pilot cities, connecting the procedures and rules between Hong Kong and the Mainland, marks an important move for judicial assistance between the two places and has achieved two breakthroughs:

 

(1) The signing of the record of meeting signifies a major breakthrough by fully reflecting the uniqueness of “one country, two systems” as Hong Kong becomes the only jurisdiction outside the Mainland where mutual recognition of and assistance to insolvency proceedings are allowed. It highlights the trust of our country in Hong Kong’s judicial system and the firm support for Hong Kong to become an international legal hub.

 

(2) In devising the co-operation mechanism, reference has been made to relevant international rules, including certain principles in the UNCITRAL (United Nations Commission on International Trade Law) Model Law on Cross-Border Insolvency issued in 1997. However, the mechanism is much more extensive and in-depth, and is more in line with the needs and development of the two places. The co-operation mechanism expressly covers bankruptcy compromise and reorganisation in the Mainland as well as debt restructuring in Hong Kong, which allow debtors, creditors and other stakeholders to understand the scope of application of it, thereby encouraging the rescue of enterprises through reorganisation or restructuring.

 

Through the implementation of the “one country, two systems” policy and leveraging Hong Kong’s uniqueness as the only common law jurisdiction in China, the most important aim of the co-operation mechanism is to explore the rules governing cross-border insolvency at first, and then further provide high quality cross-boundary legal and dispute resolution services with a view to contributing to the promotion of rule of law involving foreign parties and the building of rule of law in China.

 

On the day of signing the record of meeting, the Shenzhen Intermediate People’s Court held a forum on legal and practical issues concerning cross-boundary insolvency co-operation between the Mainland and Hong Kong and introduced the co-operation mechanism, with over 500 registrations for attendance. About half of them came from Hong Kong. Meanwhile, the department has issued a practical guide to briefly explain the key procedure of applying for recognition and assistance from Hong Kong courts. We are exploring the opportunity of organising another seminar to further explain the relevant information and operational details of the co-operation mechanism between the two places to the legal sector.

 

In the long run, more businesses will be attracted to invest in Hong Kong, which in turn will consolidate the city’s role as a platform for enterprises to tap into the Mainland market. Also, businesses may choose Hong Kong law as the applicable law for their contracts when investing in the Mainland. To give a better understanding of the advantages of using Hong Kong law, the department will hold a webinar titled Why Use Hong Kong Law on May 31. Representatives from the legal sector will present an objective analysis and exchange views with the audience.

 

Secretary for Justice Teresa Cheng wrote this article and posted it on her blog on May 19.

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I&T key to HK’s growth potential

Major breakthroughs in economic development have always been led by technological breakthroughs. To name a few: steam power in the 18th Century, electricity in the 19th and computers in the 20th Century all changed the way people live and work. And now the digital wave is changing the way we live and work. But the process does not happen by itself – we have to seize the opportunity.

 

The Government recognises how important innovation and technology (I&T) is in realising Hong Kong’s economic potential. That is why, in 2015, we set up the Innovation & Technology Bureau. It co-ordinates I&T efforts across our society, expediting the development of I&T industries and initiatives. That is also why, over the past three years, the Government has allocated more than $110 billion to fast-track our I&T progress.

 

The unstoppable wave of innovation and technology may be transforming economies, disrupting industries and digitising communities and their institutions everywhere. But change is not always welcome, and more often, resisted. Sometimes fiercely. The weavers and other textile workers who tried to destroy the knitting machines in 19th Century in Nottingham is just one such example.

 

New partnerships 

Another change defining the global economy in the past few years is the escalating tension in China-US relations, from trade tensions to geopolitical disagreements and disputes with allies of the US. Hong Kong, a small and open economy that depends on trade, is inevitably affected by such developments. Yet, facing this new normal in the bilateral relations between the world’s two biggest economies, we are edging our way forward carefully seeking to turn risks into opportunities.

Such widespread friction and deep-rooted differences, unthinkable a few years ago, underlines just how much the world has changed since China joined the WTO (World Trade Organization) in 2001. In the 20 years since then, China’s inexorable rise has created enormous opportunities for globalisation and international co-operation. Those opportunities, in turn, have spurred mutually rewarding business relations with partners all over the world.

 

Most of those relationships have endured, and new ones continue to emerge. But given today’s evolving political landscape, including the rise of protectionism and the fading of multilateralism, the next steps will not be as easy.

 

The pandemic, of course, is another turn of the screw, exposing many vulnerabilities and reshaping global supply chains.

 

That said, Hong Kong’s strategies will not change. We continue to seek every opportunity to create new partnerships, to diversify our export markets, to reach out to the world. We will continue to pursue free trade and investment agreements with like-minded trading partners, including early accession to the Regional Comprehensive Economic Partnership, the world’s largest trade agreement.

 

Beyond trade and its seemingly intractable problems, there’s another, even larger, challenge: global climate change. In recent years, extreme weather has devastated businesses, communities and economies around the world. The Paris Agreement, which entered into force nearly five years ago, applies to Hong Kong as part of China. And we are doing our part, working to achieve carbon neutrality before 2050. It requires changing some of the ways we do things. But by promoting sustainable living and economic development through structural reform, I am confident we will create new businesses, and innovative opportunities, as well.

 

In short, ladies and gentlemen, Hong Kong is determined to ride the mercurial waves of change. That means re-examining our focus and re-orienting our priorities. Sometimes that calls for reinforcing existing competitive advantages. Sometimes it demands that we create fresh advantages. Our key markets, for example, have long been Europe and the US. The eastward shift of global economic gravity, however, means we must develop new markets closer to home.

 

National development 

Fortunately, we have a road map. Our country’s 14th Five-Year Plan, together with the long-range objectives through 2035, sets out a comprehensive development direction for the whole nation, Hong Kong included of course. Let me share with you some of the details that are particularly relevant to us.

 

In the coming five years, China will pursue sustainable, quality economic development, with reform and innovation being the fundamental driving forces. The plan put forward a “dual circulation” development strategy, whereby domestic demand will take the primary role in driving economic development, while enabling domestic and foreign markets to interact with and boosting each other. Domestic demand, technology and opening up are three critical aspects of the new approach.

 

The Mainland’s middle class is expected to double over the next decade, from 400 million to 800 million. Its increasingly rigorous demand for quality goods and services will create tremendous opportunities for Hong Kong and the businesses that work with us. We will, after all, enjoy access to the Greater Bay Area and its vast and growing consumer market.

 

I&T is at the heart of our country’s social and economic development. Self-reliance is a key part of the strategy. By establishing a comprehensive industrial system, making breakthroughs in core technologies, China will reduce its dependence on Western technology.

 

In this, the Greater Bay Area will lead the way, rising as an international I&T hub. Hong Kong will play a central role in this, collaborating with the other 10 Greater Bay Area cities, particularly Shenzhen. Hong Kong and Shenzhen are establishing a “one zone, two parks” development, combining Hong Kong’s R&D (research and development) strengths and Shenzhen’s capabilities in advanced manufacturing. In developing the region into an international I&T centre, we will contribute to China’s technological self-reliance while creating new growth areas for the Hong Kong’s economy.

 

Over the course of the 14th Five-Year Plan, China will continue to open up, linking domestic circulation with international circulation, and strengthening co-operation with the rest of the world. That will surely boost Hong Kong’s interaction and connections between the Mainland and the international markets.

 

And by helping to align product standards, professional services standards between the Mainland and overseas markets, Hong Kong will become a more attractive place for Mainland companies to set up regional headquarters and research offices in “going out” to the world.

 

Beyond supporting Hong Kong’s development as an I&T hub, the plan recognises Hong Kong’s future as an international aviation hub and counts on our traditional competitive advantages in international finance, shipping and trade.

 

While the Five-Year Plan presents great opportunities for Hong Kong, some of the mega trends I mentioned – from geopolitical tensions, to climate change and of course, the pandemic – pose huge challenges. It is also important to recognise and tackle the key constraints which impede the economic development and competitiveness of Hong Kong, including land supply and talent pool. Only by addressing these constraints, could we fully unleash our growth potential and turn opportunities into real social and economic benefits for Hong Kong.

 

As befits a conference sponsored by HKU (the University of Hong Kong), the agenda promises rewarding discussion in a great many ways, and I know you are looking forward to that. Allow me for now to leave you with two questions, to get the ball rolling.

 

First, with Hong Kong’s comparative advantages and China’s development road map in mind, how should we position ourselves that would enable us to play to our strengths in the country’s development, benefiting both the country and ourselves? Taking financial services as an example, Hong Kong, as an international financial centre, has long been a world-class magnet for IPOs (initial public offerings). However, going forward, with carbon neutrality becoming the cornerstone of future growth global sustainability, how can we further capitalise on our fund-raising platform to lead in green and sustainable finance in support of the country’s drive to green economy?

 

Second, with regard to innovation and technology, we have identified four key areas to concentrate our efforts and investment, namely artificial intelligence and robotics, smart city, fintech and biotech. Which subsector in these areas will Hong Kong have the best potential to develop into a rewarding industry? For example, biopharmaceutical seems to be one. What do you think?

 

Financial Secretary Paul Chan gave these remarks at the conference on The Future of Hong Kong Economy organised by the University of Hong Kong Business School on May 14.

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