HONG KONG SAR - Media OutReach - 10 October 2023 - Hong Kong has recovered steadily throughout 2023. However, the HKSAR government should increase its efforts to respond to new circumstances globally.

To navigate Hong Kong towards a prosperous future, we believe the government should implement further reforms to strengthen the economy.

CPA Australia has therefore proposed a range of ideas to the Hong Kong Government for the Chief Executive's second policy address today. These ideas are focused under eight themes, including bolstering the city's position as an international financial centre (IFC), attracting enterprises and investments, and turning Hong Kong into an international centre for innovation and technology (I&T).

These ideas were developed following consultation with member experts and the broader CPA Australia membership in Hong Kong. This included a poll of 208 accounting and finance professionals. The poll captured their expectations and opinions for the Policy Address.

In response to our poll question on where the government should prioritise the allocation of resources in this Policy Address, the most popular option was strengthening Hong Kong's position as an IFC (84 per cent). This was followed by the development of Hong Kong as an international I&T centre (47 per cent), and an international trade centre (41 per cent).

Mr Robert Lui, CPA Australia's Greater China Divisional President 2023 said: "Hong Kong's position as an IFC is a key competitive advantage for the city. However, in the face of growing competition, action is needed to sustain and enhance that advantage.

"With the stock market facing significant pressure this year, we suggest the government consider reforms that increase market liquidity and attract investment. These should include reducing stamp duty on stock transactions. One option is to align Hong Kong's stamp duty rate with mainland China's rate of 0.05 per cent imposed on the seller only, a cut from the current rate of 0.26 per cent.

"To bring Hong Kong into line with other international bourses, we suggest that the HKEX's trading hours be extended by 1.5 hours from the current 5.5 trading hours.

"To support the development of non-traditional and emerging asset classes, the government should consider initiatives that advance investor education and financial literacy in these asset classes."

To attract talent, most respondents (67 per cent) said that the Policy Address should include initiatives to improve the working environment such as implementing work-life balance policies. Lui stressed that better working conditions and improvements to Hong Kong's environment and cultural scene will help lure and keep talent.

In light of the current weakness in the property market, Ms Karina Wong, Deputy Chair of the Greater China Taxation Committee at CPA Australia, suggested the government expedite the implementation of the new Capital Investment Entrant Scheme (CIES) and reduce the ad valorem stamp duty (AVD).

"To support the property sector and encourage new investment into Hong Kong, we suggest the government consider providing eligible CIES applicants with the same Buyers Stamp Duty (BSD) rate as local residents for their first property purchase. Permissible assets under the scheme should be expanded to include immovable properties in Hong Kong with a minimum threshold of at least HKD20 million.

"The property market could be further supported by reducing the ad valorem stamp duty of 15 per cent on the acquisition of a second residential property. Should the property market remain weak for an extended period, the government should consider phasing out the AVD."

To enhance closer collaboration with the mainland, Wong suggests the government works with Mainland authorities to enhance the Hong Kong-Mainland of China double tax agreement (DTA) and help distinguish Hong Kong from regional competitors, "This could include discussions on reducing the dividend withholding tax rate to say 2.5 per cent from the existing of 5 per cent."

Many members want the government to prioritise allocating resources to developing Hong Kong into an international I&T centre. Strengthening the city's digital infrastructure, including its cybersecurity and data protection infrastructures should be a key part of that vision.

Dr Paul Sin, Greater China Divisional Councillor of CPA Australia says "Data is the bridge connecting the real and virtual worlds, and drives artificial intelligence (AI) and web3. We suggest that the government release more of its valuable data to enable the extension of the Open Application Programming Interface (API) beyond the banking sector.

"Further developing and supporting such digital infrastructure could speed up information exchange and innovation. It could for example allow connecting a property token with Land Registry record or allow eKYC (electronic Know Your Customer) of SME through Company Registry record."

"We also suggest the government initiate the development of a standardised ESG grading system. This would enable banks and other investors to effectively assess the ESG performance of a green project, benefiting the development of green finance," he further suggested.

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About CPA Australia

CPA Australia is one of the largest professional accounting bodies in the world, with more than 172,000 members in over 100 countries and regions, including more than 22,200 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 local, national and international issues affecting the accounting profession and 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