06 Jul 2015
Hong Kong seems to have become less appealing as a regional hub than it used to be. The cost of living has increased significantly over recent years and there aren't enough incentives to attract foreign talent.
" The HKMA is ready to take on the challenge to oversee financial institution giants."
Ivy Au Yeung, Chief Executive Officer ANZ Hong Kong
The availability of an appropriately skilled talent pool is a key to attracting high-end services operations that depend on intellectual property (IP) – research, technology, design, analytics.
According to the Global Competitiveness Report 2014-15, the most problematic factors for doing business in Hong Kong is its insufficient capacity to innovate. The quality of its research institutions and the limited availability of scientists and engineers remain the two key issues to be addressed.
In addition, increasing political tensions with Chinese government are causing concerns within the business community. With the recent vote down of the electoral package, Hong Kong's political condition remains uncertain.
The government need to regain its credibility and focus on economic and social development as quickly as possible in order not to deteriorate the city's competitiveness.
Having spent most of my career life in Hong Kong, I believe Hong Kong still has its strengths despite these challenges. The generally observed freedoms, business-friendly policies and approach to regulation are just a few.
Most importantly, Hong Kong is achieving remarkable progress in financial infrastructure development and has reinforced its status as a well-established global financial centre.
Hong Kong is at a unique position having the best of both worlds. We are intrinsically linked with China which provides a natural 'support' to our economic growth; but at the same time we have the trust of international community on our transparent legal infrastructure and culture which makes us different from China.
The signing and implementation of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) and the new cross-border investment channel brought by the Shanghai-Hong Kong Stock Connect and the Mutual Fund Connect closely connects Hong Kong economic booms with mainland China.
The Hong Kong government is offering tax incentives to encourage multinational and mainland Chinese enterprises to set up corporate treasury centres in the region (profits tax for specified treasury activities would also be reduced by 50 per cent) which will benefit the financial and business sectors, and help to deepen our capital markets, including the offshore renminbi market.
Hong Kong is still considered by businesses as the preferred headquarters location for managing the Greater China market.
We have a sound regulatory system. The Hong Kong Monetary Authority (HKMA) commits itself to ensure Hong Kong's monetary and financial stability by frequently consulting with counterparts in Asia on the soundness of the macroeconomic and financial sectors.
Massive achievements have been made on global regulation reforms by taking on relevant recommendations and implementation. It has built on a solid track record in protecting the linked exchange rate and restores the financial market through AFC and GFC.
To maintain our competitive advantage, Hong Kong could further liberalise cross-border trade and investment relations with mainland China, as well as address key issues such as cost of operations, property/rental cost, availability of office space and overall cost of living.
People in Hong Kong are known for the unique ability to adapt and change. We can play to our strengths and make adjustments to stay ahead of the changing world trends. This will be the key to securing Hong Kong's status as the preferred Asian headquarters location.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
06 Jul 2015
07 Jul 2015