MR CHAN KIN-POR (in Cantonese): President, after the successive blows from “black-clad violence” and the pandemic, Hong Kong suffered a drastic economic decline and has to spend over $300 billion for disaster relief. This has put considerable pressure on public finance. This year, under such adverse circumstances, the Budget still manages to “hand out candies”, alleviate poverty, assist the small and medium enterprises and undertake not to reduce livelihood-related spending. Moreover, it even puts forth the proposals for the electronic consumption voucher of $5,000 and the revival of the economy in the aftermath of the pandemic, such that Hong Kong is properly prepared to resume prosperity. In all fairness, this is quite a good Budget indeed.
At present, the fiscal reserves of Hong Kong are only $902.7 billion. While the deficit is expected to stand at $200-odd billion in 2021, it will still be $100 billion in 2021-2022. Moreover, there will also be deficits in the next four years. This is worrisome. In fact, the pandemic has rebounded in many places around the world. If the world economy cannot get back on the right track, Hong Kong will also be affected. Therefore, the Government should by no means take the matter lightly. Instead, it should proactively prepare proposals for reviving the economy. Also, I do not want fiscal deficit to become Hong Kong’s new normal.
Hong Kong has to get rid of the deficit and set out afresh for development. Hence, the Budget proposes to revive the economy in the aftermath of the pandemic and the specific proposals include developing digital economy, issuing consumption vouchers and supporting tourism as well as large-scale publicity and promotional campaign both at home and abroad. All these are sound ideas targeting at Hong Kong’s present situation. I support all the proposals and hope that they, the issuance of consumption vouchers in particular, can be implemented as soon as possible. After all, the consumption vouchers of $5,000 are the most useful to the general public. I hope that the Government can take views from different parties, act swiftly and efficiently so that not only members of the public can benefit earlier, but can also achieve the purpose of stimulating the market.
In the long run, the Budget suggests that Hong Kong can participate more proactively in the country’s “dual circulation” strategy, so as to enhance Hong Kong’s competitiveness as an international financial centre. The Financial Services and the Treasury Bureau (“FSTB”), together with the Hong Kong Monetary Authority, the Securities and Futures Commission and the Insurance Authority (“IA”), has set up a joint working group to explore how Hong Kong can complement the financial development of our country and secure the Central Authorities’ support. I am convinced that through directly participating in the country’s financial activities, Hong Kong can definitely expand its financial market, develop broader market dimensions, and also spur the development of different industries in Hong Kong. This will do all good but no harm to Hong Kong. The insurance industry is happy to see this happen, and will render its support in full strength.
President, I understand that no one wants a tax rise. However, at present, in the face of a serious fiscal deficit and the need to keep looking after people’s livelihood, the option of increasing the rates of certain tax items with smaller livelihood impact is actually the last resort when there is no other choice. I hope the Government can communicate with and explain to the industry, and provide assistance in its development and restructuring. Actually, in the face of present economic hardship, all walks of society should tide over the difficult times together. However, I also hope that when the hardship is over, the Government will consider what can be done for all trades and professions to help them revitalize after the pandemic.
The current pandemic has brought heightened awareness to hygiene, and more people are willing to lead a healthy life. As proven by the facts, healthy living can reduce the morbidity rate. Previously, whenever there was a surge of influenza, hospitals would inevitably be overcrowded. However, the situation has been greatly improved during the current pandemic. Besides, as told by some medical practitioners whom I know well, the number of people seeking medical consultation reduced significantly in the previous year. Therefore, I did advise the Financial Secretary to learn from this experience and encourage members of the public to keep leading a healthy life. In the long run, this can achieve the dual objectives of significantly reducing medical expenses and enhancing the quality of life of people in their senior age.
I am very glad that the Budget has put forward measures such as the plan for sports and recreational facilities, the plan for upgrading football pitches and enhancement of facilities in country parks, so that people can get more involved in sports and hiking. In fact, many people are fond of going hiking now and I hope that their enthusiasm will not last for just a while. I believe everyone is already fully aware of the importance of healthiness, so the Government should keep vigorously promoting healthy living.
President, up next, I would like to focus my speech on issues relating to the insurance industry. Following the outbreak of the pandemic, Mainland customers cannot come to Hong Kong to take out insurance due to the closure of the boundary. This has a huge impact on the insurance industry. In fact, given the deep economic ties between Hong Kong and the Mainland, the present state of de facto closure of the boundary has a bearing on various trades and professions. Resumption of cross-boundary activities is of paramount importance to the economy. Hence, the industry hopes so much that the Government can do a good job of epidemic prevention to turn Hong Kong into a low-risk place and resume its economic exchange with the Mainland as soon as possible.
Moreover, the insurance industry also hopes that it can make its way into the Greater Bay Area (“GBA”) soon and explore the gigantic market in the Mainland. The Chief Executive announced in her Policy Address last year that the proposal on after-sales service centres (“service centres”) for Hong Kong insurance in GBA was supported by the Mainland Government, and the industry has been waiting for the announcement of further details since then. Regrettably, owing to the pandemic, negotiations were inevitably affected. Nevertheless, there is finally good news lately. In response to my written question, the Secretary for Financial Services and the Treasury pointed out that regulatory bodies of the insurance industries in Guangdong, Hong Kong, Macao and Shenzhen met in January for an in-depth discussion on the proposals relating to the service centres and the “unilateral recognition” for Hong Kong vehicles, and hopefully progress would be made within this year. I do not merely hope that progress will be made on the proposals, but it is also hoped that they can be implemented within this year to enable the industry to formally take forward their businesses in GBA when the pandemic has subsided. I hope that the departments concerned can proceed as expeditiously as possible.
In addition to the service centres, the industry has also been striving for the sale of insurance products in the Mainland. This involves even more complex issues concerning the regulatory regimes and capital. In response to my question, FSTB also provided some positive information. It replied that with the upcoming launch of the cross-boundary Wealth Management Connect, the Government would take reference of relevant experience and further explore with Mainland authorities the proposal of facilitating cross-boundary sale of Hong Kong insurance products. Although there may be an extensive negotiation, this is a start after all. Both Hong Kong and the Mainland have included this item to their working schedules, and stated expressly that the governments will put it into practice. The insurance industry hopes the authorities can expeditiously implement it because it is not only of paramount importance to the industry, but can also provide residents of Hong Kong and Mainland with more channels of financial management, thereby creating an all-win situation. I hope that the authorities will strive to create more “win-win” opportunities.
In order to push forward the development of international insurance business, a lot has been done by the Government, which include promoting marine insurance and specialty insurance, etc. The insurance industry welcomes them. This Budget proposes a two-year Pilot Insurance-linked Securities Grant Scheme to attract international insurance organizations to issue insurance-linked securities in Hong Kong, which is very good. This pilot scheme will provide subsidies to cover the relevant upfront costs of insurance organizations, e.g. fees provided to legal advisers and auditors, subject to a cap of $12 million. The eligibility criteria of the pilot scheme are that the issuance size of the insurance-linked securities is not less than $250 million and the issuer is required to engage Hong Kong service providers. I believe the pilot scheme can attract organizations to come and invest in Hong Kong, which will be of very great help to the insurance industry, financial industry and related professions. Furthermore, if more international investors can be attracted to Hong Kong, it can also help us maintain our internationality and this is good in an overall sense.
Lastly, I would like to talk about issues related to the development of insurance technology. The current pandemic has dealt a severe blow to the insurance industry. Not only that Mainland customers are unable to come and take out insurance in Hong Kong; against the background that sales in the insurance industry are traditionally conducted with a face-to-face approach, sales are difficult to come by when people avoid contact with each other amidst the pandemic. In the face of operational difficulties, the industry has worked very hard to turn crises into chances by striving to develop remote sales platforms. Moreover, we received full assistance from IA, such that it approved some deliberate products of which sales are conducted via means that cannot only protect customers but also give business practicability to insurance companies.
Such products include health insurance plans and deferred annuities. They have received an excellent market response. The experience awakened the industry to the fact that sales practices must keep pace with the times and adopt more novel technologies. Given that the proposal involves many legal and compliance issues, support from regulatory bodies is very important for they cannot be dealt with by the industry alone. I hope that the Government, FSTB and IA can keep working hard to take forward the task as it is beneficial to Hong Kong as a whole. Thank you, President.