MR CHAN KIN-POR (in Cantonese): Deputy President, I speak in support of the Second Reading of the Inland Revenue (Amendment) (Profits Tax Concessions for Insurance-related Businesses) Bill 2019 (“the Bill”). The Bill seeks to implement the policy of the Chief Executive and the Financial Secretary to strengthen the status of Hong Kong as an international insurance hub, promote further internationalization of Hong Kong’s insurance industry and enhance its competitiveness. The Bill specifically proposes to reduce profits tax rate by 50% to 8.25% for specified insurance business.
First of all, on behalf of the insurance sector, I would like to thank the Government for its efforts. The proposals will not only increase the international competitiveness of the insurance industry, but also benefit the entire Hong Kong economy in many ways. These include offering new business opportunities for many trades and industries, assisting to promote the development of Hong Kong as a maritime centre, offering great opportunities for professional services sectors such as the accounting sector and the legal sector, enabling Hong Kong to earn a considerable amount of revenue and creating more high-quality job opportunities for young people. It is a multi-win solution which serves multiple purposes.
Hong Kong is a global insurance hub, like London, New York, Switzerland and Singapore, but in recent years, Hong Kong’s insurance organizations have focused on developing local business, while their international business has stalled and faced international competition. Other insurance hubs have successively introduced many different tax incentives. Take Singapore as an example. In addition to providing convenient business environment measures, it also provides tax concessions for underwriting of specialty risks, with a tax rate as low as 8%, while the tax rate for marine insurance and brokerage businesses is as low as 10%. In contrast, the profits tax rate in Hong Kong is 8.25%, which is higher than that of Singapore, even after a 50% concession calculated on the basis of the current the profit tax rate. Thus, if the Government does not reduce the tax rate, it will really be difficult for Hong Kong’s insurance industry to compete with others.
On the other hand, as the local insurance market becomes more mature, it is imperative for the industry to promote insurance business in the international world in addition to the Greater Bay Area for its further development. As Hong Kong has the advantage of relying on our country to develop captive insurance, reinsurance, marine insurance and other businesses, it still has considerable potential for development. As long as there is a sound business environment, insurance organizations can promote the development of these businesses. The Bill and the two bills to be deliberated later are related to the development of the insurance industry and its international business; the insurance sector hopes that these bills can be smoothly passed today, so that members of the industry can promote the development of the relevant businesses as soon as possible.
To develop these insurance businesses in Hong Kong, a large number of professionals who are proficient in international business are required, including those who are familiar with marine insurance, catastrophe insurance and captive insurance. Since the insurance industry used to focus on developing local businesses, there is not much demand for such talents. But, as the industry has to develop professional and international businesses now, it will not be able to expand its international business without these talents. The Government has made changes this time and provides in the Bill that insurance brokerage companies can also obtain tax concessions for operating the businesses concerned. After the implementation of the Bill, it will help attract international insurance brokers to Hong Kong, thereby motivating international insurance professionals to come here too and promote international business for Hong Kong’s insurance industry.
However, these measures are only stopgaps. In the long run, Hong Kong must train local talents. Thus, I have repeatedly asked the Government to set up an insurance college. In addition to training insurance business talents, the college can also train international insurance professionals locally. I understand that the establishment of an insurance college requires a lot of resources, but it is definitely worth the investment. Everyone knows that at present, young people in Hong Kong lack opportunities for upward mobility and many university graduates cannot find satisfactory jobs. International insurance professionals are in great demand in the local industry, and they are also in hot demand in the international labour market. Thus, if the Government invests in nurturing talents in this area, it will definitely benefit young people and offer another career pathway for them. The insurance industry will vigorously develop business internationally and in the Greater Bay Area with a view to providing a lot of quality jobs for young people. Thus, I hope the Government will seriously consider setting up an insurance college.
Furthermore, I heard a Member ask two days ago why the Government has not included life insurance and health insurance in the list of eligible businesses for tax concession this time to promote the development of the industry. Frankly speaking, the insurance industry certainly hopes that the Government will introduce more tax concession measures, but at the same time, we also hope that the Government can assist the industry in alleviating their problems under the current business situation. In particular, there are many self-employed persons in the insurance industry. At present, the economy is adversely affected by the epidemic. In addition, the compulsory quarantine arrangements between Guangdong and Hong Kong have prohibited prospective Mainlander insurance customers from visiting Hong Kong to complete the required procedures. As a result, the business of these self-employed persons has plummeted. However, they receive very little assistance under the second round of Anti-epidemic Fund. We also hope that a mutual recognition system for health codes between Guangdong and Hong Kong can be established as soon as possible so that business activities can resume between the two places, but unfortunately, it has yet to be implemented. Thus, I urge the Government once again to expeditiously introduce a new round of measures to assist self-employed persons in the insurance industry as well as other industries.
The Bill seeks to promote the internationalization of general insurance business. We must first complete this step before continuing to ask for more measures for promoting the development of the industry in the future. I hope that Members will support the Bill. Thank you, President.