SFST's opening remarks on public finance at LegCo Finance Committee special meeting
Following is the English translation of the opening remarks by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, on public finance at the special meeting of the Legislative Council (LegCo) Finance Committee today (April 14):
Chairman and Honourable Members,
In order to better support Hong Kong's integration into and service of the overall national development strategy, as well as to align with the National 15th Five-Year Plan, the Treasury Branch will continue to strengthen public finance management, formulate tax policy conducive to businesses, optimise resource allocation and make good use of public finance management tools to ensure promotion of the high-quality economic development of Hong Kong.
I would brief Members on the major work of the Treasury Branch in this financial year which include:
(I) Together with other bureaux and departments, we will continue implementing the reinforced fiscal consolidation programme put forward in last year's Budget, striving to achieve fiscal balance in the economic cycle through strictly containing the growth of government expenditure, suitably increasing revenue and consolidating the Government's financial resources, as well as expanding the scale of bond issuance.
(II) Adhering to the principles of "increasing revenue as a supplementary measure" and "affordable users pay", we have introduced an amendment bill to suitably increase revenue by raising the stamp duty rate for residential property transactions valued above $100 million from 4.25 per cent to 6.5 per cent. This measure is expected to bring in an additional revenue of about $1 billion per annum.
(III) Further to bringing back $61.5 billion from six seed capital funds to the Government's accounts last year, we have conducted a full review of the remaining 36 funds established outside the Government's accounts. We propose bringing back about $15.8 billion from seven funds to the Government's accounts and consolidating six funds in 2026-27. We reported the review outcome to the Panel on Financial Affairs last Friday. We will also introduce a resolution to the LegCo to enable the transfer of the accumulated surplus of the Bond Fund (about $37 billion) to the Consolidated Account during the year.
(IV) The Government's capital works expenditure is estimated at about $128 billion for this financial year, and is expected to remain at a similar level throughout the five-year Medium Range Forecast period. On the premise that the Exchange Fund's function to maintain the stability and integrity of the local monetary and financial systems will not be compromised, we will transfer $150 billion from the investment income earned by the Exchange Fund last year to the Capital Works Reserve Fund in two tranches in the current and the next financial years to support the development of the Northern Metropolis and other infrastructure projects. The Chief Executive in Council has given approval for the relevant arrangement this morning.
We will issue about $160 billion to $220 billion worth of bonds in each of the next five years for financing purposes, and raise the borrowing ceiling for government bonds to $900 billion. The ratio of government debt to Gross Domestic Product will stay between 14.4 per cent and 19.9 per cent, which is highly prudent and well below the levels of most advanced economies. In future, we will issue more longer-term bonds to align more closely the cash flow duration with project requirements. The LegCo has finished scrutinising the proposed resolution and we hope that Members would support its passage.
The Treasury Branch will also implement the following measures to support citizens and enterprises, and reinforce Hong Kong's position as an international financial and trade centre:
(I) To promote industry development and step up efforts to attract enterprises and investment, we will introduce an amendment bill this year to provide tax concession with a half-rate or 5 per cent tax rate.
(II) We will assist the Financial Secretary in establishing the Advisory Committee on Tax Policy to gather views from the commercial, industrial and professional sectors, with the aim of formulating tax policies that can reinforce Hong Kong's economic development. The committee is expected to hold its first meeting in the middle of the year.
(III) Hong Kong has so far concluded 57 Comprehensive Avoidance of Double Taxation Agreements (CDTAs). We will further expand our CDTA network to attract enterprises to Hong Kong and help Hong Kong enterprises expand their overseas footprints.
(IV) On international taxation, we plan to introduce a bill in the middle of the year, with a view to respectively implementing the Crypto-Asset Reporting Framework and the amended Common Reporting Standard in the coming two years. This will contribute to international efforts in enhancing tax transparency of digital assets and combating cross-border tax evasion.
(V) To alleviate the tax burden on salary earners and support the Government's policy on promoting fertility, we have introduced legislative proposals into the LegCo on increasing tax allowances and raising the deduction ceiling, as well as one-off tax reduction and one-off rates concession as announced in the Budget.
Chairman, my colleagues and I will be happy to answer any questions from Members. Thank you.
Source: AI-found images
SFST's opening remarks on financial services at LegCo Finance Committee special meeting
Following is the English translation of the opening remarks by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, at the special meeting of the Legislative Council Finance Committee today (April 14), on the estimates of expenditure for financial services and the key areas of work:
Chairman and Honourable Members,
To contribute to the national strategic goal of "accelerating China's development as a financial powerhouse" and align with the 15th Five-Year Plan, we will focus on four major directions, namely "promoting reform", "expanding infrastructure", "enhancing capacity" and "building connectivity".
(I) In the area of "promoting reform", we are committed to optimising market rules and regulatory regimes through reform to enhance efficiency and competitiveness.
The HKEX (Hong Kong Exchanges and Clearing Limited) has already commenced market consultations on various proposals, such as the revision of listing requirements for enterprises with weighted voting right structures, facilitation of secondary listings of overseas issuers and the enhancement of the initial public offering process, and will implement the enhanced structured product listing framework as well as consult the market on the specific implementation proposals for the settlement cycle of T+1 in the first half of this year. In addition, we will reform the trading unit regime and launch the uncertificated securities market regime this year in collaboration with the SFC (Securities and Futures Commission), the HKEX and the industry. The next phase will cover proposals including the enhancement of the continuing obligation regulatory framework and the inclusion of more overseas markets as recognised exchanges.
The SFC and the HKMA (Hong Kong Monetary Authority) are implementing the Roadmap for the Development of Fixed Income and Currency Markets earlier released, facilitating issuance and liquidity, expanding offshore RMB (Renminbi) business and next-generation infrastructure.
The MPFA (Mandatory Provident Fund Schemes Authority) will enhance the process of recovering default contributions from employers, and enhance the flexibility of making MPF (Mandatory Provident Fund) investments. The IA (Insurance Authority) will enhance the risk-based capital regime for insurance companies, adjusting risk parameters for the general insurance business and providing capital relief for infrastructure investments.
Besides, we will introduce a bill this year to establish licensing regimes for, among others, digital asset dealing and custodian service providers. We will also set up an accelerator to expedite market innovation, protecting the investors and facilitating the diversification of products and services.
(II) As for "expanding infrastructure", we are actively expanding financial infrastructure to lay a solid foundation for long-term development.
The HKMA's CMU OmniClear Holdings Limited (CMU) and the HKEX are currently studying the establishment of a one-stop multi-asset class post-trade securities infrastructure to cover Mainland and Hong Kong equity and debt securities. This will facilitate cross-product and cross-boundary collateral connectivity. The CMU aims to establish a digital asset platform by the end of this year. It will support the issuance and settlement of digital bonds. The Integrated Fund Platform under the HKEX will also expand its services this year, covering fund sales procedures such as payment and settlement, to enhance market efficiency and lower transaction costs.
We are setting up a central clearing system for gold in Hong Kong at full steam, and have signed a co-operation agreement with the Shanghai Gold Exchange in January this year to establish a high-level and collaborative governance structure for the system. The system is scheduled to commence trial operations within this year. We will also be exploring the offering of tax incentives to build an efficient ecosystem for gold.
(III) We are also "enhancing capacity" by enhancing market capacity and attractiveness through tax measures and product expansion.
On the internationalisation of the RMB, the Government will issue RMB bonds on a regular basis to improve the yield curve, promoting more convenient foreign exchange quotations and transactions between RMB and regional currencies.
We issued the third batch of tokenised bonds with an issuance size of $10 billion in November last year, with an option to settle via tokenised central bank money. The HKMA will also encourage more digital bond issuances in Hong Kong through the Digital Bond Grant Scheme.
On asset and wealth management, we will enhance the preferential tax regimes for funds and single family offices. We will introduce an amendment bill in the first half of this year, with a view to effecting the implementation from the year of assessment 2025/26.
To promote the REIT (real estate investment trust) market, we will introduce a statutory regime to facilitate REITs to conduct privatisation and restructuring, and will provide a stamp duty waiver for the transfer of non-residential properties into REITs before listing.
To boost Hong Kong's appeal as a two-way platform for "bringing in and going global", we will announce additional tax incentives and a pre-approval mechanism for corporate treasury centres in the middle of this year. At the same time, we will step up our promotional efforts to attract more companies for re-domiciliation.
On international co-operation, we are actively "building connectivity", fully supporting the Asian Infrastructure Investment Bank to set up an office in Hong Kong. Hong Kong will hold for the first time the APEC (Asia-Pacific Economic Cooperation) Finance Ministers' Meeting this year and will continue hosting various financial mega events, including the Wealth for Good in Hong Kong Summit and Hong Kong FinTech Week x StartmeupHK Festival 2026. The Asian Financial Forum will celebrate its 20th anniversary next year, and we will enrich the element of finance empowering businesses, i.e. the "Finance+" put forward in the Budget, at the forum.
Chairman, my colleagues and I will be happy to answer Members' questions. Thank you, Chairman.
Source: AI-found images
