2022 Policy Address (1st debate session)
Mr. Chen Chun-ying:
Deputy President, after extensive consultation and taking in the views of various sectors of the community, the public and all Members present, Chief Executive John LEE delivered his first Policy Address in his term of office, with the theme of “Charting a Brighter Tomorrow for Hong Kong”, setting out a number of clear objectives and demonstrating a vision and blueprint for governance with determination to make progress, improve people’s livelihood and promote economic development.
The Policy Address echoes and implements the “four musts” and the “four proposals” mentioned in the speech delivered by President XI Jinping on 1 July. It contains targeted policy measures to create strong impetus for economic growth, promote the development of innovation and technology (“I&T”) industries, expedite the development of the Northern Metropolis and continue to improve people’s livelihood. It is believed that by consolidating our financial strengths, adjusting our industrial structure, capitalizing on the synergy of the Greater Bay Area and integrating into the overall development of the country, Hong Kong can strengthen its international competitiveness and its attractiveness to overseas and local talents, so that it will be better equipped to undertake the historical mission of “capitalizing on Hong Kong’s strengths to serve the country’s needs”.
The Policy Address impresses me firstly by the new bright spot of 110 specific key performance indicators (“KPIs”) set out by the Chief Executive, which is a full manifestation of a governing belief which advocates “a people-oriented and result-oriented approach to serve members of the public in a pragmatic manner”. In the past, when scrutinizing Government policies, funding applications or proposals for creating new directorate posts, Members often asked the Government to provide the corresponding KPIs for the public to follow up on the effectiveness. KPIs are indeed helpful in translating objectives into concrete actions; they are gradually broken down into smaller parts for the relevant units from the top down, so that KPIs can be used to specify the major responsibilities and duties of staff members at all levels.
Deputy President, KPIs have been introduced for decades and have proven to be very effective in bringing together forces and resources to achieve goals, but in practice, some business organizations have obtained outcomes which deviate from their KPIs due to inappropriate application. For example, no one is willing to actively undertake duties beyond those with KPIs, and there is a chance that some KPIs are to be achieved across departments, making it difficult to clarify the responsibilities and outcomes.
Therefore, in recent years, some innovative companies have started to adopt the method of Objectives and Key Results (“OKR”), which motivates, monitors and manages staff members on the bases of “objectives” and “key results”. After setting the objectives and key results, teams and employees need to develop their own specific action plans, which will become their outstanding items or tasks. In the implementation process, a lot of emphasis is placed on increasing the engagement of staff members, giving them space and a sense of pride, and simulating motivation and creativity.
I am not suggesting that the Government should switch its performance management approach to OKR; rather, when civil servants implement the measures in the Policy Address, efforts should be made to prevent deviations from KPIs and incorporate the advantages of OKR so that civil servants can become more proactive, positive and willing to undertake responsibilities.
Another good impression that the Policy Address has given me is the importance attached to creating strong impetus for growth. According to statistics, the key word that appears most frequently in the Policy Address is “development”, which appears 173 times. There are various initiatives to promote Hong Kong’s economic development and develop the “eight centres”, as well as the planned establishment of the Chief Executive’s Policy Unit and the Steering Group on Integration into National Development. It is believed that these initiatives will enable the Government to grasp the sentiments of local community and public opinion at a higher level and in a more comprehensive manner, strengthen the convergence with the national development strategy, effectively expand the room for economic and social development in Hong Kong, and strengthen the coordination and sustainability of integrated development.
As a representative of the financial sector, I am particularly pleased that the Chief Executive has placed the development of our status as an international financial centre at the forefront of the Policy Address and proposed a number of specific measures to comprehensively enhance Hong Kong’s competitiveness in financial services.
The first measure is to revise the listing mechanism for technology and innovation enterprises that have yet to meet the profit and trading record requirements. The Government plans to amend the listing rules to allow advanced technology enterprises that have yet to generate revenue and commercialize their research technologies to list on the main board of the technology and innovation enterprises, so as to attract quality enterprises such as technology “unicorns” from various countries to list in Hong Kong.
The Government also supports the idea of revitalizing GEM (formerly known as the Growth Enterprise Market) to serve small and medium-sized issuers and provide a more effective financing platform for small and medium-sized enterprises (“SMEs”) and start-ups. In fact, the London Stock Exchange launched AIM, the Alternative Investment Market, back in 1995, allowing small companies to list their shares under less stringent financial regulations than the Main Board, making it one of the most popular listing channels for SMEs in the world, sometimes raising better IPOs than NASDAQ in the United States. If we can learn from London’s successful experience and transform GEM into a board similar to London’s AIM, I believe it will be a more flexible and effective way to attract fast-growing and innovative SMEs from all over the world to list in Hong Kong and raise capital so as to develop and expand the Hong Kong securities market.
The second measure is to enhance our strengths as an offshore Renminbi (“RMB”) business centre. At present, Hong Kong has a wide range of RMB products, including RMB deposits and loans, derivative products, financial products and insurance. Among them, RMB deposits account for more than half of the total offshore RMB deposits; the turnover of Hong Kong’s RMB Real Time Gross Settlement system accounts for more than 70% of the global RMB settlement volume; and most of the “dim sum” bonds are issued in Hong Kong. Promoting the launch of more RMB-denominated investment tools and providing stable treasury services such as foreign exchange, exchange rate risk and interest rate risk management tools in the market is an important part of building an offshore RMB business hub.
The Government will introduce a bill to exempt the stamp duty payable for transactions conducted by dual‑counter market makers, with a view to enhancing the RMB stock trading mechanism. Currently, there are more than 800 stocks available for investment in the southbound trading of Stock Connect, with an average daily turnover of more than RMB40 billion. Domestic investors who buy or sell Hong Kong stocks in large lots on a daily basis may incur exchange rate risk when converting to RMB. The introduction of a “dual-tranche, dual-counter” model will increase the liquidity of Hong Kong’s offshore RMB market and help build a global offshore RMB business hub in Hong Kong. However, I suggest that the Government should conduct further studies on more policies to encourage RMB-denominated transactions on the basis of practical implementation, such as subsidizing or providing more extensive transaction tax concessions for RMB stock issuance.
The third measure is to expand mutual access of the financial markets of the Mainland and Hong Kong. The Government will explore to enhance the southbound trading of Bond Connect. Bond Connect is a major institutional innovation that promotes the opening of the bond market to the outside world and enhances the internationalization of RMB. Currently, the trading volume of the northbound trading accounts for more than 56% of RMB bonds traded by foreign trading investors, and is an important channel for foreign trading investors to increase their holdings of RMB assets. The next step should be to explore enhancements to the southbound trading of Bond Connect so as to facilitate the issuance and trading of more diverse “dim sum” bonds, and continue to discuss with the Mainland authorities on proposals for the further expansion of mutual market access. For example, we should actively promote enhancement measures such as mutual recognition of qualifications of business personnel from the Mainland and Hong Kong in the Cross-boundary Wealth Management Connect Scheme, expansion of the product range and relaxation of the quota management.
The fourth measure concerns developing green and sustainable finance and strengthening asset and risk management. The Policy Address mentions that the Government will develop Hong Kong into an international carbon market, continue pursuing cooperation with financial institutions in Guangzhou in carbon market development. The Government will also introduce a bill to offer tax concession for eligible family offices, with a view to attracting no less than 200 family offices to establish or expand their operations in Hong Kong within three years. These two measures can indeed capture the latest hot development trend of the financial market, and sufficient resources must be invested to achieve the goals as soon as possible, such as introducing an official catalogue of green and sustainable industries, increasing financial subsidies, and including the fees for financial institutions to hire external experts to provide green consultancy services in the funding scheme.
The fifth measure is to enhance our competitiveness in financial technology (“Fintech”). The Government is encouraging more Fintech services and products to undergo proof-of-concept trials, taking forward cross-border Fintech projects and nurturing Fintech talents, all of which the industry hopes to expedite. With the launch of the Commercial Data Interchange, enterprises will be able to share their operational data, enabling banks to make accurate assessment and providing SMEs with a better chance of securing loans, which is very important to SMEs in urgent need of support after the epidemic.
Deputy President, at present, the Mainland and Hong Kong have started the relevant tests on cross-boundary payment facilities to explore the mutual accessibility of the e-CNY system and the local Faster Payment System. Meanwhile, the cross-border settlement currency bridge project (mBridge), in which the People’s Bank of China, the Hong Kong Monetary Authority, the Bank of Thailand, the Central Bank of the United Arab Emirates and Hong Kong Centre of the Bank for International Settlements are jointly involved, completed its trial run in the third quarter of this year with more than 160 payment and foreign exchange transactions worth more than HK$171 million. It is the world’s largest cross-border central bank digital currency trial to date and it is believed that if Hong Kong captures the opportunity of digital currency development and continues to promote cooperation in this area, it will enhance Hong Kong’s financial infrastructure and its leading position in the process of digitalization of cross-border payments.
The Policy Address has drawn up a detailed roadmap for enhancing Hong Kong’s financial development momentum, but any ambitious plan needs to be driven and implemented by “people”. The Hong Kong Institute of Bankers released a survey on banking talent and development this year, reflecting that there is a shortage of manpower and a skills gap in the three key development areas of banking, namely, Fintech, green finance and cross-border finance. In the Talent List announced by the SAR Government earlier, there are seven categories of professionals that meet the development needs of the banking industry, including professionals in compliance, professionals in ESG (Environmental, Social and Governance), asset management professionals, actuaries, Fintech professionals, data scientists and cyber security specialists, and I&T experts. However, these seven categories of talents are not only needed by the banking industry, but urgently needed by other industries as well. It is believed that each of the industries will face a huge challenge in order to succeed in “competing for talents”.
Talent is the driving force to enhance Hong Kong’s competitiveness and promote economic development. With the declining birth rate and increasing net migration from Hong Kong, the labour force has shrunk and there is a serious talent gap, which is extremely unfavourable to the future development of Hong Kong.
In terms of nurturing talents, bringing in talents and “competing for talents”, the Policy Address has made a breakthrough by launching the Top Talent Pass Scheme, relaxing the existing application requirements and employment arrangements for the admission of talents, suspending the annual quota under the Quality Migrant Admission Scheme, enhancing the Technology Talent Admission Scheme, extending the limit of stay of employment visas, providing the employees of strategic enterprises with one‑stop facilitation services in areas such as education arrangement for their children, refunding the extra stamp duty paid by eligible incoming talents in purchasing residential property in Hong Kong. These new measures have been unanimously praised and applauded by the industries.
But frankly speaking, although the relevant measures have been debated by the red and blue teams, the key to their effectiveness lies in how talents feel and the choices they make. We must consider whether the measures can capture the hearts of talents so as to choose Hong Kong instead of Beijing, Shanghai, Guangzhou, Shenzhen or even Singapore. We expect the Government to closely examine the effectiveness of these measures. Can we achieve the goal of admitting at least 35 000 talents annually? If not, it will be necessary to review and optimize the talent policy and the measures of “competing for talents” in a timely manner, so that we can really succeed in the competition to bring in talents for Hong Kong.
Turning to the Northern Metropolis, it is an important area for the integrated development of Hong Kong and Shenzhen and the connection with the Guangdong-Hong Kong-Macao Greater Bay Area as well as a new engine for the future development of Hong Kong, the planning of which involves railroad transportation, housing construction, technology and innovation, research and development and many other areas. Once the project is launched, it will require a continuous investment of trillions of dollars. However, in recent years, since government revenue has been affected by economic performance; it is difficult to cut spending on healthcare, education and welfare; and the Kau Yi Chau Artificial Islands project requires injection of resources for its infrastructure works, we may not be able to cope easily with the current fiscal reserves.
Therefore, the Government should draw reference from the existing large-scale infrastructure financing schemes and cooperate with private enterprises to adopt the public-private partnership or BOT (Build-Operate-Transfer) model as the financing framework for the project, so as to leverage the participation of a wider range of social resources. In addition, the Government should fully utilize Hong Kong’s financial advantages, making good use of financial tools such as green finance and bonds and issue land bonds or green bonds to the community, which will not only solve the problem of financing the construction of the Northern Metropolis, but also accelerate the pace of infrastructure development and enrich Hong Kong’s range of financial products to strengthen its status as an international financial centre.
Deputy President, the next five years will be a crucial period for our country to make a start in building itself into a modern socialist country in all aspects, and Hong Kong has entered a new stage of “advancing from stability to prosperity”. The Policy Address has adopted a new mindset of governance to break with the old and establish the new, and has comprehensively planned the development strategies and measures for Hong Kong in the new era; I believe these will bring confidence and hope for Hong Kong and the general public. As long as the public and all sectors are united and support the Government in expeditiously implementing various initiatives, I believe we can continue to write the success story of Hong Kong.
With these remarks, I support the Motion of Thanks. Thank you, Deputy.