MR CHAN KIN-POR (in Cantonese): President, in my capacity as Chairman of the Panel on Financial Affairs, I now submit the report on the work of the Panel for the current Session and highlight several major areas of work.
In the current Session, the Panel continued to provide a forum for Members of this Council to exchange views with the Financial Secretary on matters relating to Hong Kong’s macro-economic issues. Some members expressed concern about the recent slowdown in inbound tourism and retail sales as well as the continuous rise in local property prices. The Panel urged the Government to stay vigilant to the impact of the development in inbound tourism on the economy and labour market and to step up its efforts in increasing land and housing supply so as to maintain stable and healthy development of the property market.
Regarding the work of the Hong Kong Monetary Authority (HKMA), members expressed concern that the investment returns of the Exchange Fund in2014 had continued to decline. Besides, the rise in the Hong Kong interest rates along with normalization of the United States interest rates in the near future might result in major consolidation of local residential property prices and adverse impacts on mortgage loan borrowers. Members urged the HKMA to review the investment strategy of the Exchange Fund, and make timely adjustment to its prudential supervisory measures in tandem with the property market cycles.
On the development of the financial services industry in Hong Kong, the Panel, in addition to receiving a briefing on the work progress of the Financial Services Development Council, also discussed a number of relevant initiatives with the Administration. With regard to the development of the asset management industry, the Panel noted the Government’s legislative proposal of extending the profits tax exemption for offshore funds. Furthermore, the Panel was also consulted on the legislative proposal of offering tax concessions to attract enterprises to establish corporate treasury centres in Hong Kong. The Panel supported the proposal in principle and stressed the need to include anti-avoidance provisions to avoid abuse of the concessions. However, in drafting the relevant bill, the Administration should avoid making the Inland Revenue Ordinance excessively complicated so as not to undermine Hong Kong’s simple taxation regime.
The Government briefed the Panel on a pilot programme to enhance talent training for the insurance sector and the asset and wealth management sector, which would include promotion and education initiatives, internship programme for undergraduate students, and financial incentive schemes for professional training for the two sectors. While members did not raise any objection to the proposal, some were of the view that the two sectors had the responsibility to promote public awareness of the wide range of career opportunities and prospects in their sectors and provide relevant training.
The Panel noted that in light of the international developments on taxation matters, the Government would implement automatic exchange of financial account information in tax matters (AEOI) on a reciprocal basis with appropriate partners. Members stressed that the Inland Revenue Department should strike a balance between tax transparency and protection of data privacy, and prevent fishing expedition by AEOI partners in tax information exchange.
President, a full account on the work of the Panel is already given in the written report. I so submit.