Research by the HKSFPA on the Capital Investment Entrant Scheme
Release Date: 2023-03-05
March 5, 2023
Consultation Support Group for the Budget and the Immigration Department:
Research by the Hong Kong Securities and Futures Professionals Association on the Capital Investment Entrant Scheme
The Hong Kong SAR Government mentioned in the 2023/24 Budget the relaunch of the “Capital Investment Entrant Scheme” (hereinafter referred to as the “Scheme”), which is undoubtedly one of the most prominent among the various financial-related proposals. Investment immigration can not only bring more capital and talent to Hong Kong, but also expand the pie of Hong Kong's financial industry, allowing more people to participate in and drive the industry's development, bringing tremendous benefits to Hong Kong's financial industry. To this end, our association has conducted discussions with industry practitioners and summarized some optimization recommendations for the Scheme based on various opinions, in order to submit them to the relevant government departments and market participants for reference.
According to previous media reports, the investment threshold for the new Scheme is tentatively set at a minimum of HK$10 million, and investment in the local market will be allowed, with the initial investment scope including stocks and funds, but excluding property investment. The details and launch timeline are yet to be further announced. Our association suggests that the relevant authorities, when considering the investable scope, in addition to including secondary market investments, can also increase some primary market investment options that can promote the development of green finance and technology and innovation financing centers. This can not only provide more financing channels for the market's green finance and technology innovation projects, attracting more investors to participate in the investment of green finance and technology innovation projects, but also promote the financial development of ESG (Environmental, Social and Governance) in Hong Kong.
Our association has the following recommendations on how the Hong Kong financial market can utilize the Scheme to promote the development of green finance and technology and innovation financing centers through private equity investment options:
1. Launch Green Finance and Technology Innovation Private Equity Funds
It is recommended to launch green finance and technology innovation private equity funds, which can help attract investors to participate in the investment of related projects, and such funds must meet the ESG reporting requirements. While providing more investment options for investors, it can also provide more financial support for green finance and technology innovation projects, and lay a solid foundation for Hong Kong's ESG equity market.
2. Provide Green Finance and Technology Innovation Private Bonds
In addition to launching private equity funds, Hong Kong issuers can also issue green finance and technology innovation private bonds and green infrastructure bonds, with the premise that the issuers and managers must meet the ESG requirements, to provide more financing channels for related projects. Investment immigration investors can enjoy stable fixed income when investing in private bonds, while also providing long-term financial support for green finance and technology innovation projects, consolidating the position of the local green bond market.
3. Support the Integration of Hong Kong's LPF (Limited Partnership Fund)
It is required that the issuance of private equity funds, private bonds, and private equity investments for Hong Kong investment immigrants must be structured through Hong Kong's LPF. The Hong Kong government can provide corresponding support and policy support, encourage and promote the development of LPF in international private equity funds, private bonds, and private equity investments, providing clear tax incentives, simplifying registration procedures, reducing establishment and operating costs, and strengthening global market promotion, etc.
4. Strengthen Supervision and Regulation of Managers and Issuers
The government needs to strengthen the supervision and regulation of the private fund managers, private bond and private equity investment issuers recognized by the investment immigration scheme, establish a sound risk management and registration mechanism, strengthen the monitoring and evaluation of private funds, private bonds and private equity investments, to ensure the legal rights and interests of investors are protected.
In summary, increasing the investment options in the primary market for Hong Kong's investment immigrants can not only promote the development of green finance and technology and innovation financing centers, but also provide more financing channels for green finance and technology innovation projects, attracting more investors to participate in investments, and effectively driving the local ESG development, further building Hong Kong into a global ESG financial center.
Best regards,
Wong Yin-hing Ian
ESG Spokesperson
Hong Kong Securities and Futures Professionals Association
Consultation Support Group for the Budget and the Immigration Department:
Research by the Hong Kong Securities and Futures Professionals Association on the Capital Investment Entrant Scheme
The Hong Kong SAR Government mentioned in the 2023/24 Budget the relaunch of the “Capital Investment Entrant Scheme” (hereinafter referred to as the “Scheme”), which is undoubtedly one of the most prominent among the various financial-related proposals. Investment immigration can not only bring more capital and talent to Hong Kong, but also expand the pie of Hong Kong's financial industry, allowing more people to participate in and drive the industry's development, bringing tremendous benefits to Hong Kong's financial industry. To this end, our association has conducted discussions with industry practitioners and summarized some optimization recommendations for the Scheme based on various opinions, in order to submit them to the relevant government departments and market participants for reference.
According to previous media reports, the investment threshold for the new Scheme is tentatively set at a minimum of HK$10 million, and investment in the local market will be allowed, with the initial investment scope including stocks and funds, but excluding property investment. The details and launch timeline are yet to be further announced. Our association suggests that the relevant authorities, when considering the investable scope, in addition to including secondary market investments, can also increase some primary market investment options that can promote the development of green finance and technology and innovation financing centers. This can not only provide more financing channels for the market's green finance and technology innovation projects, attracting more investors to participate in the investment of green finance and technology innovation projects, but also promote the financial development of ESG (Environmental, Social and Governance) in Hong Kong.
Our association has the following recommendations on how the Hong Kong financial market can utilize the Scheme to promote the development of green finance and technology and innovation financing centers through private equity investment options:
1. Launch Green Finance and Technology Innovation Private Equity Funds
It is recommended to launch green finance and technology innovation private equity funds, which can help attract investors to participate in the investment of related projects, and such funds must meet the ESG reporting requirements. While providing more investment options for investors, it can also provide more financial support for green finance and technology innovation projects, and lay a solid foundation for Hong Kong's ESG equity market.
2. Provide Green Finance and Technology Innovation Private Bonds
In addition to launching private equity funds, Hong Kong issuers can also issue green finance and technology innovation private bonds and green infrastructure bonds, with the premise that the issuers and managers must meet the ESG requirements, to provide more financing channels for related projects. Investment immigration investors can enjoy stable fixed income when investing in private bonds, while also providing long-term financial support for green finance and technology innovation projects, consolidating the position of the local green bond market.
3. Support the Integration of Hong Kong's LPF (Limited Partnership Fund)
It is required that the issuance of private equity funds, private bonds, and private equity investments for Hong Kong investment immigrants must be structured through Hong Kong's LPF. The Hong Kong government can provide corresponding support and policy support, encourage and promote the development of LPF in international private equity funds, private bonds, and private equity investments, providing clear tax incentives, simplifying registration procedures, reducing establishment and operating costs, and strengthening global market promotion, etc.
4. Strengthen Supervision and Regulation of Managers and Issuers
The government needs to strengthen the supervision and regulation of the private fund managers, private bond and private equity investment issuers recognized by the investment immigration scheme, establish a sound risk management and registration mechanism, strengthen the monitoring and evaluation of private funds, private bonds and private equity investments, to ensure the legal rights and interests of investors are protected.
In summary, increasing the investment options in the primary market for Hong Kong's investment immigrants can not only promote the development of green finance and technology and innovation financing centers, but also provide more financing channels for green finance and technology innovation projects, attracting more investors to participate in investments, and effectively driving the local ESG development, further building Hong Kong into a global ESG financial center.
Best regards,
Wong Yin-hing Ian
ESG Spokesperson
Hong Kong Securities and Futures Professionals Association