Speech at Policy briefing-cum-meeting of Panel on Financial Affairs

Briefing by the Financial Secretary on Hong Kong’s latest overall economic situation and 2021-2022 Budget consultation

Measures to support enterprises and relieve people’s burden

Mr CHAN Chung-ying referred to the counter-cyclical measures and three rounds of measures under the Anti-epidemic Fund (“AEF”) introduced in the 2020-2021 Budget amounting to over $340 billion for relieving the severe impact of the COVID-19 epidemic on the local economy, and enquired if any unused funds under individual measures could be used to assist individuals and industries hard hit by the epidemic, such as the tourism industry.

FS advised that the majority of AEF measures were in progress and there was a contingency provision under AEF to meet urgent needs. The Administration would closely monitor the implementation of various AEF measures to meet the needs of the affected sectors and members of the public. FS said that the Chief Executive had announced in the 2020 Policy Address additional relief measures for the tourism industry, involving a total commitment of close to $600 million.

Financial stability

Mr CHAN Chung-ying commented that banks would handle customers’ accounts in accordance with the relevant laws and regulations. In general, banks would take appropriate risk mitigating measures, such as restraining the operation of accounts, only when the accounts were suspected to be involved in irregular or suspicious transactions.

FS advised that the Administration would not comment on individual cases. The relevant regulatory bodies would follow up on the case with the banks concerned in accordance with the established rules and procedures. He stressed that the incident was irrelevant to the development of family office business in Hong Kong.

Budget related issues

Mr CHAN Chung-ying pointed out that the number of unemployed persons living in low-income households increased by 200% (i.e. 50 000 persons) in the third quarter of 2020 on a year-on-year comparison, whereas the overall Comprehensive Social Security Assistance (“CSSA”) caseload only went up by 2.5% (i.e. 5 409 cases) from its trough in January 2020. He sought clarification on the difference between the two figures, in particular if the unemployed persons were not qualified to apply CSSA. He also asked if the Administration would consider setting up an unemployment relief fund in order to provide temporary financial support for the unemployed.

G Econ advised that low-income households referred to households with monthly household income below $9,000. As regards the application for CSSA, applicants’ income and other factors including their assets would be considered. Unemployed persons might choose not to apply CSSA. Thus the number of unemployed persons living in low-income households and the number of CSSA applicants might not match. He added that to provide more assistance to the unemployed and their families, the Administration had announced in April 2020 the “Special Scheme of Assistance to the Unemployed” under the CSSA system, under which the asset limits for CSSA applicants had been temporarily relaxed for six months from 1 June 2020. In September 2020, the Administration further extended the special scheme for another six months to 31 May 2021.

As regards the proposal of setting up an unemployment relief fund, FS said that as provided in the Secretary for Labour and Welfare’s previous reply to the Council, there were no mechanisms/systems in place to disburse unemployment assistance fund promptly in Hong Kong. Given that it would take considerable time to set up the relevant mechanism to provide unemployment relief, the quickest way to provide support for the unemployed was through the existing CSSA framework. Indeed it was noticed that unemployed persons applying CSSA had significantly increased in the past few months, with an average monthly 16 864 cases from January to September 2020 and a 43% increase as compared to the average in the same period in 2019. He stressed that the Administration would strive to contain the epidemic, facilitate the gradual resumption of cross-boundary travel between Hong Kong and the Mainland without the need for compulsory quarantine in an orderly manner when the epidemic in Hong Kong was under control, and introduce measures as necessary to support Hong Kong’s economic recovery. He added that the Administration would step up efforts to combat unemployment, including creating 30 000 time-limited job opportunities for people with different academic qualifications and skill sets under the second round of AEF, and the launch of the third tranche of the Love Upgrading Special Scheme by the Employees Retraining Board offering 20 000 retraining places with allowance.

Briefing by the Secretary for Financial Services and the Treasury on the Chief Executive’s 2020 Policy Address

Development of financial services in the Guangdong-Hong Kong-Macao Greater Bay Area

While welcoming the Administration’s initiative to implement the Wealth Management Connect, Mr CHAN Chun-ying enquired whether the Administration would formulate relevant supporting measures like remote onboarding and product promotion to cope with challenges brought by COVID-19, such as the temporary suspension of cross-boundary travel between Hong Kong and the Mainland.

SFST advised that the implementation framework of the Wealth Management Connect was jointly announced by the relevant regulatory authorities of the Mainland, Macao and Hong Kong in June 2020. The authorities were working out the implementation details and would consult the industry as appropriate. It was anticipated that banks would adjust their business to facilitate the implementation. It was envisaged that the implementation framework and relevant measures might not be applied to the local securities industry directly. SFST stressed that in allowing remote onboarding, the Administration was mindful of the need to strike a proper balance between convenience and customer protection.

Development in financial technologies

Mr CHAN Chun-ying opined that Hong Kong should strive to launch a pilot scheme on the use of Digital Currency/Electronic Payment (“DCEP”) developed by the People’s Bank of China outside the Mainland. Noting that HKMA was conducting tests on cross-border payment systems, he enquired about the progress and whether the Administration had plans to apply DCEP in Hong Kong.

SFST responded that the Mainland had launched pilot schemes on DCEP in a number of cities. It was believed that the utilization of DCEP would initially be confined to retail level. The Administration would review Hong Kong’s role in the cross-border application of DCEP and its utilization at institutional level. HKMA would liaise with its Mainland counterparts as necessary, and the Financial Services Development Council had established a task force to study the subject.

Developing Hong Kong’s fundraising platform and green finance market

Mr CHAN Chun-ying enquired whether the Administration would consider measures including introducing capital deduction and tax relief in order to promote the development of green finance in Hong Kong.

SFST responded that under the Green Bond Grant Scheme and the Pilot Bond Grant Scheme, the Administration and HKMA would subsidize eligible bond issuers in obtaining certification under the Green Finance Certification Scheme and issuing bonds in Hong Kong respectively. The Administration welcomed views from Members and the industry on measures to strengthen Hong Kong’s position as a regional green and sustainable finance hub.