Speech at Council meeting-Strengthening HK’s status as int’l finan.ctr & enhancing competitiveness

“Strengthening and consolidating Hong Kong’s status as an international financial centre and enhancing its competitiveness

MR CHAN CHUN-YING (in Cantonese): Deputy President, over the past 25 years since our return to the Motherland, with the support of the Central Authorities, Hong Kong has overcome a number of crises, sustained the development of its financial sector and consolidated and enhanced its status as an international financial centre. The National 14th Five-Year Plan will enable Hong Kong to integrate into the overall national development, support Hong Kong in enhancing its status as an international financial, transportation and trade centre and an international aviation hub, and in strengthening its roles as a global offshore Renminbi (“RMB”) business hub, an international asset management centre and a risk management centre, etc.

The implementation of the 14th Five-Year Plan has provided a clear direction and positioning for the development of Hong Kong’s financial sector. It is believed that the internationalization of RMB, green and low carbon, digitalization and wealth and asset management and so on will be the key words for the development of Hong Kong’s financial industry.

Hong Kong is currently ranked third in the Global Financial Centres Index, the world’s most authoritative index indicating the status of international financial centres, compiled jointly by the think tank Z/Yen Group in the United Kingdom and the China Development Institute in Shenzhen, China. Since 2007, the index has been evaluating 46 financial centres around the world, and is updated regularly in March and September each year to show the changes in the competitiveness of each financial centre.

The index focuses on the market flexibility, adaptability and development potential of each financial centre. The rating system covers five indicators, namely, business environment, reputational and general, human capital, infrastructure and financial sector development.

Hong Kong’s current ranking is not stable. In March 2020, Hong Kong’s ranking dropped from the third to the sixth place, and has since recovered to the third place in half-yearly steps. Hong Kong’s ranking as released in March this year has remained third, but the difference in rating between each rank from the third to the eighth financial centre (i.e. Hong Kong, Shanghai, Los Angeles, Singapore, San Francisco and Beijing) is only one point.

Hong Kong only ranks 4th in terms of human capital, which is behind Singapore, and even ranks 11th in terms of financial sector development. On the contrary, Shenzhen, which ranks 10th, has climbed 6 places in half a year, its amazing strength in catching up is something which Hong Kong should not take lightly.

I am very grateful to Mr Jeffrey LAM for proposing the motion this time. He has put forward three proposals and urged the Government to expeditiously formulate measures to consolidate and enhance Hong Kong’s status as an international financial centre. I also support the amendments proposed by the other Members, such as enhancing the current regulatory regime; striking a proper balance between regulation and development, which we often suggest; and making active efforts to explain and promote to international investors, and tell a good Hong Kong story.

However, Deputy President, when private companies set their business objectives, they should often make “three comparisons”. They must compare their performances with those of the previous years, then compare them with those of their peers of similar scale, and if they have international business, they must also compare them with those of their peers in the international arena.

Therefore, on the basis of the original motion, I suggest that the Government should regularly draw comparisons with our competitors, which are the highest ranked global international financial centres, and conduct analysis and assessment on key indicators such as business environment, human capital, infrastructure and development level, so as to identify performance gaps, and only in this way can it formulate corresponding strategies and measures in a timely manner.

Just now Mr Jeffrey LAM mentioned that the overall competitiveness of Hong Kong as in the report published by the International Institute for Management Development in Lausanne, Switzerland seems to have increased, but still, our ranking has lagged behind that of Singapore for a long time. Since the epidemic started, Hong Kong has been lagging behind Singapore in terms of attracting financial talents and inward investment due to the impact of the “border-closing” measures, and the financial industry is facing the challenges of losing talents and business. If we do not expeditiously introduce response measures for importation of talents to “stop the bleeding”, I am afraid the gap will only get wider and wider.

The Chief Executive-elect John LEE has proposed to adopt a “result-oriented” approach as one of his three major policy directions. Considering the importance of the financial sector to Hong Kong, it is believed that maintaining Hong Kong’s status as an international financial centre will be the focus of the new Government’s administration. In international competition, we are like sailing against the current, we will fall behind if no progress is made and as the Director of the Liaison Office of the Central People’s Government in the Hong Kong Special Administrative Region, Mr LUO Huining, said, “We will fall behind if progress is not made fast enough.” Hong Kong must know itself and its opponents, keep making progress, and always maintain its position as at least the third international financial centre with the hope of becoming the second, in order to make ourselves unbeatable. I urge the new Government to immediately review the quarantine measures to facilitate a business-friendly environment.

Hong Kong is an important economy which is highly market-oriented and internationalized. I believe, if we do our part, Hong Kong’s status as an international financial centre will reach new heights.

I so submit. Thank you, Deputy President.