Opinions on the financial budget for the fiscal year 2024 to 2025
Release Date: 2023-11-29
Hong Kong Tamar
Office of the Financial Secretary
Government of the Hong Kong Special Administrative Region
People's Republic of China
November 29, 2023
To: Financial Secretary Mr. Paul Chan Mo-po, Deputy Financial Secretary Mr. Michael Wong Wai-lun
Subject: Insights on the 2024-25 Budget
The economy of Hong Kong has yet to achieve a full recovery following the pandemic. While Chief Executive John Lee Ka-chiu has outlined development strategies and initiatives for the international financial center in his "Policy Address," industry stakeholders believe that further enhancements are necessary to invigorate Hong Kong's financial sector. On November 29, the Financial Secretary sought feedback from various sectors regarding the upcoming "2024-25 Budget," set to be revealed on February 28 of next year. As a representative of the securities industry and the association, as well as a voice for citizens in their daily lives, I would like to present the following recommendations and appeals for consideration in the forthcoming Budget:
1. The association strongly opposes any initiatives to open the market during severe weather events unless the government guarantees personal safety.
2. We urge the government to regularly assess and review the impact of adjustments to the stock stamp duty.
3. It is proposed that the threshold for transactions subject to a 5% cap under the DIPN61 Unified Fund Tax Exemption Ordinance be increased, reflecting the current high-interest rate environment. Furthermore, the Inland Revenue Department should consider classifying interest income from debt securities as eligible transactions, thereby enhancing the attractiveness of the tax exemption ordinance and drawing more fixed-income, credit, and debt-related funds to Hong Kong, reinforcing its status as a leading international asset management hub.
4. In the realm of investment immigration, we suggest integrating more elements, such as ESG and Islamic finance. Additionally, permitting the listing of government infrastructure bonds or other public institution bonds, akin to green bonds, would enable greater citizen participation.
5. It is recommended that the government collaborate with the Securities and Futures Commission (SFC) to facilitate the establishment of Islamic finance in Hong Kong by acknowledging Islamic finance principles and Sharia law. This recognition is crucial for compliance and success, without necessarily implying full adoption.
6. The SFC could engage stakeholders from the Islamic community to form a committee dedicated to creating guidelines for Islamic finance tailored to Hong Kong. Licensed firms should modify their licensing requirements to accommodate Islamic finance, ensuring compliance prior to offering Islamic financial products, rather than merely introducing ETFs or unicorns superficially.
7. The SFC should evaluate various regulations, potentially relaxing restrictions related to the "Guidelines on Securities Margin Financing Activities," corporate finance advisor conduct codes, rules on takeovers, mergers, share repurchases, dual filing requirements, and pre-emptive rights.
8. The government must review existing laws and guidelines concerning anti-money laundering and counter-terrorism financing.
9. The Stock Exchange should assess its listing rules, particularly those that may disadvantage SMEs, such as the contentious GL68-13A guidance letter's "seven sins." Since backdoor listings are legal, the focus should be on individual conduct rather than penalizing shell companies; administrative measures need to be reconsidered to avoid stifling SMEs with excessive regulations.
10. The possibility of launching an Initial Coin Offering (ICO) mechanism should be explored.
11. Large infrastructure projects should be slowed down to alleviate fiscal pressure.
12. As a major shareholder of MTR, the government should eliminate the discounts offered to Shenzhen, which undermine efforts to stimulate the night market.
13. A land departure tax for permanent residents and work visa holders should be considered.
14. The $2 elderly transport subsidy should be reviewed, reverting to a half-price system while maintaining subsidies for the disabled and mentally challenged.
15. The Tenant Purchase Scheme should be reinstated to alleviate governmental financial pressures, accompanied by improved measures for non-purchasing tenants requiring relocation to less populated areas to enhance future management by owners' corporations.
Although the "2024-25 Budget" will be unveiled in February, it is anticipated that the government will engage with stakeholders over the next three months to align its policies with national development goals, thereby accelerating Hong Kong's economic recovery.
Sincerely,
Mofiz Chan
Chairman
Hong Kong Securities and Futures Professionals Association
Office of the Financial Secretary
Government of the Hong Kong Special Administrative Region
People's Republic of China
November 29, 2023
To: Financial Secretary Mr. Paul Chan Mo-po, Deputy Financial Secretary Mr. Michael Wong Wai-lun
Subject: Insights on the 2024-25 Budget
The economy of Hong Kong has yet to achieve a full recovery following the pandemic. While Chief Executive John Lee Ka-chiu has outlined development strategies and initiatives for the international financial center in his "Policy Address," industry stakeholders believe that further enhancements are necessary to invigorate Hong Kong's financial sector. On November 29, the Financial Secretary sought feedback from various sectors regarding the upcoming "2024-25 Budget," set to be revealed on February 28 of next year. As a representative of the securities industry and the association, as well as a voice for citizens in their daily lives, I would like to present the following recommendations and appeals for consideration in the forthcoming Budget:
1. The association strongly opposes any initiatives to open the market during severe weather events unless the government guarantees personal safety.
2. We urge the government to regularly assess and review the impact of adjustments to the stock stamp duty.
3. It is proposed that the threshold for transactions subject to a 5% cap under the DIPN61 Unified Fund Tax Exemption Ordinance be increased, reflecting the current high-interest rate environment. Furthermore, the Inland Revenue Department should consider classifying interest income from debt securities as eligible transactions, thereby enhancing the attractiveness of the tax exemption ordinance and drawing more fixed-income, credit, and debt-related funds to Hong Kong, reinforcing its status as a leading international asset management hub.
4. In the realm of investment immigration, we suggest integrating more elements, such as ESG and Islamic finance. Additionally, permitting the listing of government infrastructure bonds or other public institution bonds, akin to green bonds, would enable greater citizen participation.
5. It is recommended that the government collaborate with the Securities and Futures Commission (SFC) to facilitate the establishment of Islamic finance in Hong Kong by acknowledging Islamic finance principles and Sharia law. This recognition is crucial for compliance and success, without necessarily implying full adoption.
6. The SFC could engage stakeholders from the Islamic community to form a committee dedicated to creating guidelines for Islamic finance tailored to Hong Kong. Licensed firms should modify their licensing requirements to accommodate Islamic finance, ensuring compliance prior to offering Islamic financial products, rather than merely introducing ETFs or unicorns superficially.
7. The SFC should evaluate various regulations, potentially relaxing restrictions related to the "Guidelines on Securities Margin Financing Activities," corporate finance advisor conduct codes, rules on takeovers, mergers, share repurchases, dual filing requirements, and pre-emptive rights.
8. The government must review existing laws and guidelines concerning anti-money laundering and counter-terrorism financing.
9. The Stock Exchange should assess its listing rules, particularly those that may disadvantage SMEs, such as the contentious GL68-13A guidance letter's "seven sins." Since backdoor listings are legal, the focus should be on individual conduct rather than penalizing shell companies; administrative measures need to be reconsidered to avoid stifling SMEs with excessive regulations.
10. The possibility of launching an Initial Coin Offering (ICO) mechanism should be explored.
11. Large infrastructure projects should be slowed down to alleviate fiscal pressure.
12. As a major shareholder of MTR, the government should eliminate the discounts offered to Shenzhen, which undermine efforts to stimulate the night market.
13. A land departure tax for permanent residents and work visa holders should be considered.
14. The $2 elderly transport subsidy should be reviewed, reverting to a half-price system while maintaining subsidies for the disabled and mentally challenged.
15. The Tenant Purchase Scheme should be reinstated to alleviate governmental financial pressures, accompanied by improved measures for non-purchasing tenants requiring relocation to less populated areas to enhance future management by owners' corporations.
Although the "2024-25 Budget" will be unveiled in February, it is anticipated that the government will engage with stakeholders over the next three months to align its policies with national development goals, thereby accelerating Hong Kong's economic recovery.
Sincerely,
Mofiz Chan
Chairman
Hong Kong Securities and Futures Professionals Association