Hong Kong is well and truly back to business now that our borders have reopened and normal operations have resumed. However, the city still has some catching up to do in certain aspects after the extended period of Covid restrictions put us on the back foot compared to other jurisdictions.
In particular, we must ensure that the rest of the world knows that Hong Kong is back in business, and that our unique set of attractions as an IFC remains intact. There is no doubt that the Hong Kong brand has been tarnished over the past few years. But this doesn’t mean that our reputation as a global financial hub has been irreparably damaged: with some hard work and polish, the city’s sheen should soon return.
The government is aware of the challenges and has made the financial sector a key focus of its recovery efforts. One of its first “back in business” activities was the high-level banking summit hosted by Financial Secretary Paul Chan in November last year. The government has also rolled out a range of promotions to attract tourists, business travellers and investors back to the city, which will be essential for a full economic recovery.
Hong Kong’s key advantages as an IFC remain solid. Our location at the heart of Asia and excellent connectivity are as important as ever, while our low and simple tax rate remains globally competitive. The city has a superb professional services ecosystem with world-class talent including lawyers, advisors and accountants. All of these are underpinned by the strong foundation of the rule of law, with the benefits of a common law system, independent judiciary, clean transparency index and trust in the core system.
In addition, our connections with the Chinese Mainland cannot be replicated by any other city. As the global trade and business landscape evolves, Hong Kong will continue to provide a crucial service as a bridge between the Mainland and the rest of the world. This will involve helping Chinese companies seeking growth in new markets including Southeast Asia, the Middle East and Central Asia, as well as international corporates keen to explore the emerging onshore opportunities.
Hong Kong also benefits from cross-border ties in terms of product innovation. The Greater Bay Area is at the forefront of innovation in financial products and fintech, and China has some of the most innovative payment methods in the world. To date, these have mostly been applied in a closed payment loop, but Hong Kong could be the channel to test a more regional reach. China is also moving forward in Central Bank Digital Currencies, with development of the E-CNY.
Looking ahead, Hong Kong should also look to develop its own product innovations related to areas where the city is already strong. In ESG, for example, Hong Kong is doing well in green finance. But we should also see where we can contribute to the real economy – in energy, recycling, real estate and transport – and ensure that the financial services sector is helping these industries to become sustainability leaders.
In terms of emerging sectors, the Hong Kong government is making significant efforts to promote the city as a virtual assets hub, including through stronger regulations such as the new Virtual Assets Trading Platform licencing regime. This approach has already attracted the attention of the industry globally, and a strong virtual assets capability will provide another string to the city’s bow as a broad-based financial hub.
Lifestyle and talent
Being a successful IFC is not just about the financial side, such as access to global corporates, innovative entrepreneurs and business leaders. It is also about being a world-class city in terms of lifestyle. Hong Kong offers a diverse and exciting range of leisure options for residents, from fine dining and street food to beaches and mountains. The city’s extensive transport infrastructure means that all of these are easily accessible within a short journey.
The government has also been developing the city’s cultural attractions, including the opening of the M+ gallery and Palace Museum as part of the West Kowloon Cultural District. These enhancements can have an impact beyond the tourism and culture sectors.
To be a successful financial centre, a city needs to be able to attract a wide range of global professionals, from the brightest new graduates to seasoned executives. Hong Kong must be able to compete with other locations in terms of culture, as well as schools, sports and community, to attract the best.
Hong Kong can offer all of these as part of our many attractions a global city. Right now, Hong Kong is enjoying an economic rebound driven by the border reopening and the end of Covid restrictions. This is perhaps a prime opportunity to spread the word and ensure that we can continue to attract the world-class talent needed to further strengthen our foundations as an IFC.