New Perspectives for Continued Financial Success
The National 14th Five-Year Plan
Our Most Outstanding and Heartening Achievements at the Olympics
Fifteen Years of “Science in the Public Service” Campaign
Accolades for outstanding civil servants
Civil Service Newsletter Editorial Board
Mr Hui worked in the Government as an Administrative Officer from 1999 to 2003, and served in the then Economic Development Branch, the Office of the Government of the Hong Kong Special Administrative Region in Beijing and the Home Affairs Department. He later joined the financial sector with over ten years in the Hong Kong Exchanges and Clearing Limited. He was the Executive Director of the Hong Kong Financial Services Development Council before taking up the appointment as the Secretary for Financial Services and the Treasury in 2020.
When comparing his work in the public and private sectors, Mr Hui pointed out, “For the public sector, more emphasis is placed on process and procedural issues with strong concern over compliance of rules and regulations, while the private organisations focus more on the outcome”. He added, “Despite these differences, one thing common to any organisation is the importance of people. Whether you emphasise processes or focus on outcomes, having the right people at the right place and at the right time is most essential. Otherwise, you cannot deliver what you want to do.”
In terms of changes to the civil service during his tenure, Mr Hui noticed increasing public involvement in policymaking over the last two decades. Currently, many people in the society, even the younger generations, are more interested in public policy. Mr Hui explained, “People nowadays are very keen to take part in public discourse in terms of policy-making. This helps shape the way the Government does its business because, after all, we need to respond to society changes and devise policies which are fit for the purpose.”
As the Principal Official responsible for the financial development in Hong Kong, Mr Hui develops strategies to maintain financial stability that is the key to a growing economy. One of the key tasks is to maximise the existing advantages Hong Kong has as an international financial centre. He noted, “If you look globally at different financial centres, New York has America as its large home country; London, despite Brexit, still has Europe as its key hinterland; and for Hong Kong, we have the Mainland as our natural hinterland. This sets us apart from our competitors, like Singapore. Hong Kong is uniquely blessed in being part of the country, and yet at the same time, deeply embedded into the global financial infrastructures — both hard and soft.”
In addition to hard infrastructures like a robust financial system and well-regulated markets, Hong Kong’s soft infrastructure is equally indispensable, including its people and stable regulatory climate. Mr Hui explained, “The quality of people, and the depth of our talent pool, in particular in financial and professional services, are amongst the top in the world. At the same time, Hong Kong also benefits from the rule of law, the independent judiciary, and the way we transact business in line with international standards.”
A major challenge of the Government is to ensure that all Hong Kong’s financial advantages can be sustained amid changes. In terms of positive change, the rise of China has been instrumental. Mr Hui said, “Our country has undertaken reform and opening up since 1978 — bringing in foreign direct investment, developing key cities and bridging the gap between the income of rural areas and cities. Financial services and capital markets are run differently there compared to how they operate in the rest of the world. This gives us a unique advantage in terms of tapping into the huge pool of wealth being generated with the emergence of the real economy, yet at the same time under served by its domestic financial services.”
Recent initiatives, including the Wealth Management Connect and Southbound Trading under Bond Connect, have better connected the financial markets of the Mainland and Hong Kong. The accumulation of wealth in the Greater Bay Area (GBA) is now creating huge demand for people seeking asset diversification, with Hong Kong being uniquely positioned to offer what they want. Mr Hui explained, “We speak the same language, we share the same culture, and the financial products available in Hong Kong equate to those you can find in the rest of the world. So, it is obviously an advantage for institutions and individuals to invest in Hong Kong’s financial products for better asset management and wealth growth.”
Currently, the GBA powerhouse contains around 5% of China’s population, yet generates almost 12% of the country's Gross Domestic Product (GDP). This highly productive part of the country accommodates around one-fifth of its high-net-worth families. Mr Hui noted, “Stock Connect, Bond Connect and Wealth Management Connect products are a great fit for the GBA and help people with wealth management and asset diversification.”
Environmental, Social and Governance (ESG) and fintech are two recent financial trends that are starting to change people’s perspective in Hong Kong. Mr Hui noted, “To capture new opportunities, sometimes we need to take a new perspective on things and make corresponding changes in policies. To respond to these challenges, we need transformation and the right resources in place.”
Hong Kong has leveraged the Belt and Road Initiative and its proximity to the GBA to further elevate its position as a regional green and sustainable finance hub in recent years. Mr Hui noted, “Hong Kong acts as a financing platform for multiple green projects, such as the issuance in October last year of the offshore Renminbi (RMB) bonds by the Shenzhen Municipal People’s Government, the first ever issuance of bonds in Hong Kong by a Mainland municipal government. This financing totalled RMB 5 billion, allocated in two-year, three-year and five-year tenors, the latter two being green bonds.”
In this way, Hong Kong becomes a key platform in seeking financing for green projects and facilitating green transformations regionally. The Green and Sustainable Finance Grant Scheme, which commenced in May 2021, also provides subsidies for eligible bond issuers and loan borrowers to cover expenses on bond issuance and external review services. About 50 applications have been approved since the launch of the grant scheme.
With the objective set by the Government to achieve carbon neutrality before 2050, Hong Kong can also act as a carbon trading hub for the GBA and globally. Mr Hui said, “To achieve carbon neutrality, we need to be able to continually congregate the right people, especially those in ESG. This is why in the latest Policy Address, the Chief Executive highlighted that Hong Kong would add professionals in ESG to the Talent List to increase the pool here.” He added, “People are the key and, as a service-based economy, we need people to innovate and deliver.”
Another catalyst to perspective changes in Hong Kong has been fintech, in particular the need for rapid shift to contactless financial transactions. Mr Hui said, “The Government's Consumption Voucher Scheme has added new impetus to the use of electronic and mobile payments throughout Hong Kong. We have also rolled out the Fintech Proof-of-Concept Subsidy Scheme (the PoC Scheme) which sponsors joint initiatives between financial institutions and fintech companies. This helps overcome the inertia in some traditional banking systems, and speeds up the adoption of fintech. The name of PoC Scheme in Cantonese “拍住上” literally means ‘coming up together’, and the Scheme has been a great success. We have already approved over 90 applications, many of which involve cross-boundary projects in the GBA, and cross-border projects in the Association of Southeast Asian Nations (ASEAN).”
The Central Government provides support for Hong Kong to further enhance its status as an international centre for asset management and risk management. Two key “pastures” are being leveraged to further cement Hong Kong’s place as the premier fund hub for private equity. Mr Hui explained, “One ‘pasture’ is about attracting capital into Hong Kong from the Mainland and globally. A key indicator of this, Hong Kong’s Assets Under Management (AUM), saw over 20% growth in 2020 — more than 60% of which came from non-local investors.” The second “pasture”, closer to home, relates to maximising Hong Kong’s potential to keep its services in demand and utilised abroad. Mr Hui noted, “Asset and wealth management are particularly relevant because of the credibility of our governance, legal system and the quality of our financial regulation. Philosophically, it's mainly about trust. Hong Kong is uniquely suited, because we know the standards in China and the rest of the world, and at the same time are trusted globally.”
Private Equity (PE) is an important upstream component of the overall value chain, and Hong Kong provides the ideal nurturing ground for investment in new growing companies, taking them to listed status. Mr Hui noted, “Following our listing reform in 2018, right now around a quarter of our market cap of companies listed in Hong Kong are from new-economy companies.”
Hong Kong is again uniquely positioned to develop both PE and Venture Capital (VC) markets as a trusted and credible economy, and the Government has implemented a three-step approach to grow this value chain. Mr Hui detailed, “Step one was to set up a Limited Partnership Fund (LPF), a legal structure for funds to be easily established in Hong Kong. And in a year or so we already have more than 400 LPFs set up. Step two was the offer of tax concession for the carried interest of PE funds — similar to capital appreciation, and step three was the re-domiciliation regime that allows funds already set up outside Hong Kong to return to the city without the need to disentangle all existing contractual relationships.” Mr Hui concluded, “This approach, coupled with this critical mass of PE and VC funds in Hong Kong, helps develop the financial services and grow our innovation industries — as many of these funds have investment themes around innovation.”
With the support of the Central Government, Hong Kong continues to be the world’s largest offshore RMB business hub. Mr Hui recounted some impressive statistics as a measure of Hong Kong’s success as an offshore RMB hub, “Some 60% of the overall offshore RMB deposits in Hong Kong, which is the biggest offshore market other than the Mainland. About 70% of offshore RMB clearing takes place in Hong Kong, and 80% of offshore RMB bonds are being issued out of Hong Kong. So, I think we are faring rather well as an offshore RMB hub.”
Amid this success, the Government is also proactively growing the RMB ecosystem with institutional arrangements to further boost connectivity with the Mainland and channel more offshore RMB for deployment in the Mainland and vice-versa. Initiatives include the Stock Connect and Bond Connect, as well as the Wealth Management Connect programme in the GBA. Mr Hui explained, “These programmes utilise RMB funds from the offshore market to purchase mainland-related equity stocks and products.”
A second measure has been the introduction of more RMB products in Hong Kong, including exploring to include RMB stocks under Southbound Trading of Stock Connect, which allows Mainland investors to use RMB to directly buy Hong Kong stocks, without the need to first convert into Hong Kong dollars. Mr Hui noted, “By facilitating Mainland investors to buy stocks directly in RMB, we are minimising transactional friction. These multiple paths synchronise in a way which makes the whole ecosystem flourish. The ‘Connect’ programmes, increased cross-boundary flow and greater number of RMB products should create more natural demand for RMB and improve the liquidity of the offshore RMB market as a result.”
It is an international trend to pursue independent regulation of the accounting profession to ensure impartiality. Taking a step by step approach, the Government launched an auditor regulatory regime on 1 October 2019 to vest the regulatory powers over auditors of listed entities with an independent regulator, namely Financial Reporting Council (FRC). Meanwhile, the regulation of auditors of non-listed companies and accountants remain with the professional body, namely the Hong Kong Institute of Certified Public Accountants (HKICPA). Recently, the Legislative Council has passed an amendment bill to further develop the FRC into a full-fledged independent regulator of the accounting profession by vesting with it major regulatory powers including inspection, investigation and discipline of accounting professionals and practices. Mr Hui explained, “While existing arrangements have served us well before, we see a growing international trend for independent regulation — both for auditors and accountants. Moreover, having a professional body that performs regulatory functions may create a potential conflict of interest — with the professionals themselves investigating cases of their own profession. With this in mind the Government is removing the HKICPA’s regulatory role so that it can focus solely on professional development.”
Being a responsible member of the international community, Hong Kong adheres to its international tax commitments with other jurisdictions. The Organisation for Economic Co-operation and Development (OECD)'s framework for international tax reform announced in October 2021 is a milestone in reaffirming the collective commitment of the international tax community. The tax reform, among others, requiring the implementation of a global minimum effective tax rate of 15%, targets large multinational enterprise (MNE) groups. If the effective tax rate of an MNE group in a jurisdiction is below 15 per cent, its parent or subsidiary companies will be required to pay top-up tax in respect of the shortfall in the jurisdictions where they are located. Despite calls for a global minimum tax rate, Mr Hui remained determined to ensure that Hong Kong would continue to be a popular destination for companies to locate and domicile, “Our simple tax regime is highly predictable and will be preserved. While potentially there may be an increase in tax burdens for corporates that are currently being charged below the minimum rate, we are cognizant of the need to minimise the cost of compliance for such corporates.”
Setting aside the finance related subjects, Mr Hui was candid in sharing his life during private time, “Once I leave the office building, my priority rests with my family. Basically, my children and my wife are my bosses, and I work around their schedules.” Besides, he enjoys appreciating antiques. He quipped, “I have no money to buy antiques, but enjoy looking at them, because it gives me a sense of history and reminds me how things came about and where they were developed.”
He shared an interesting story, “Once I showed my son an antique bowl and pointed out the seal underneath which indicated the reign of the emperor when it was produced. My son immediately asked me, ‘Is that an ancient QR code?’ This experience reminds me that we all come from different times!”
On parting advice for civil service colleagues, Mr Hui concluded, “I think perspective is the key. Having the right perspective can definitely make a difference. At the Olympics, the reporters asked the athletes, ‘Are you nervous?’ And the athletes who were gold medallists said, ‘Actually, I don't feel nervous, I'm so excited’. If you look at the biological traits of being excited and being nervous, they are actually very similar: you sweat, your heartbeat rises, and so on. What you go through is the same, but different perspectives can lead to very different outcomes.”