CPA Australia proposes policy ideas to reinforce Hong Kong’s international position

HONG KONG SAR - Media OutReach Newswire - 19 September 2024 - Despite recent data indicating the Hong Kong economy is improving; many businesses remain cautious. To encourage more investment to boost the economy, it remains important the Hong Kong Government announces further reforms in the upcoming Policy Address to sustain the city's international position.

CPA Australia, one of the world's largest professional accounting bodies with a large and long-term presence in the SAR, has today made a submission to the upcoming Policy Address.

In the submission, CPA Australia proposes several policy measures that focus on five major themes, reinforcing Hong Kong's role as an international financial hub, developing the city into an international innovation and technology (I&T) centre, promoting environmental, social and governance (ESG) measures, developing, attracting and retaining talent, and boosting the domestic economy.

Mr Cliff Ip, Divisional President of CPA Australia in Greater China 2024, said, "As an international financial hub, Hong Kong should capitalise on its strengths to continue attracting foreign investment, ensuring its sustained vitality and global competitiveness."

Earlier this year, the government launched the new Capital Investment Entrant Scheme (CIES) to support the local economy. Mr Ip said "To further encourage inbound investment, we recommend the range of permissible assets under the CIES be expanded to include private credit within Hong Kong, and investments in single-family offices and art and collectables. This should boost the city's position as one of the world's top art trading centres."

The Hong Kong Government should continue its efforts to boost economic ties with overseas countries to attract enterprises and investment, CPA Australia says.

To encourage more inbound investment, Mr Ip added "We would like to see the government expedite the implementation of its re-domiciliation regime and offer more financial incentives to further entice non-Hong Kong companies to transfer their domicile to Hong Kong."

The recent temporary modifications to 18C listings and Special Purpose Acquisition Company (SPAC) requirements demonstrate that a proactive approach to market developments is possible, however, it should be formalised. We would like to see the establishment of a listing rules flexibility mechanism on the GEM Board that allows for dynamic adjustments to listing requirements.

We urge the government to implement an IPO Connect scheme to enable Mainland investors to participate in Hong Kong IPOs and Hong Kong investors to subscribe to mainland IPOs.

The trading volume of the Hong Kong exchange traded fund (ETF) market is lagging behind other major exchanges in the Asia-Pacific region.

Mr Ip added: "To enhance ETF trading activities, we recommend expanding the diversity of ETF products. Additionally, the government should also consider providing more information to help the public better understand complex concepts such as digital assets ETFs."

To position Hong Kong as a leading hub for Web 3 and virtual assets, CPA Australia is encouraging the government to consider integrating the development and regulatory oversight of such technologies under the Task Force on Promoting Web 3 Development, rather than the current dispersed regulatory approach.

CPA Australia's recent annual Business Technology Report 2024 reveals a substantial increase in the number of companies utilising artificial intelligence (AI). To further develop Hong Kong into an international I&T centre, the government should consider whether Hong Kong requires its own regulations governing the safe use of AI, and if so, whether they should be risk-based or rules-based.

We recommend that the Policy Address include measures to support small and medium enterprises (SMEs) to adopt AI solutions, scale-up their technology faster, improve their cyber resilience and upskill the digital skills of workers.

In addition, CPA Australia recommends the government:

• consider establishing a Vulnerability Disclosure Programme (VDP) to encourage responsible reporting of suspected vulnerabilities or weaknesses in critical government IT services or systems
• encourage businesses to develop their own VDP to manage and incentivise vulnerability reports
• encourage more businesses to implement two-step verification (2SV) as an extra layer of protection for online transactions.

We acknowledge that many SMEs are struggling due to weak private consumption and low visitor numbers. The government should consider initiatives that attract tourists and encourage locals to spend in Hong Kong. Options include attracting more world-class entertainment, cultural and sporting events to the city, especially when the Kai Tak Sports Park opens. Such events provide a boost to economic activity and enhance the city's overall appeal.
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About CPA Australia

CPA Australia is one of the largest professional accounting bodies in the world, with more than 173,000 members in over 100 countries and regions, including more than 22,500 members in Greater China. CPA Australia has been operating in Hong Kong since 1955 and opened our Hong Kong office in 1989. Our core services include education, training, technical support and advocacy. CPA Australia provides thought leadership on issues affecting the accounting profession and the public interest. We engage with governments, regulators and industries to advocate policies that stimulate sustainable economic growth and have positive business and public outcomes. Find out more at cpaaustralia.com.au