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MAY 9 - 15, 2023

BUSINESS AND FINANCE

Hong Kong’s Legislative Council passed (May 10) a tax concession bill, offering tax exemption for eligible family-owned investment holding vehicles managed by single family offices in the city. The bill takes effect on May 19, with the tax concession applicable to any years of assessment commencing on or after Apr 1, 2022. Secretary for Financial Services & the Treasury Christopher Hui said the tax concession will facilitate family offices to set up and operate in Hong Kong, create new business opportunities for the asset and wealth management sector, and generate demand for other related professional services. “We are committed to creating a conducive and competitive environment for the businesses of global family offices to thrive in Hong Kong. This would foster Hong Kong's position as a premier family office hub and an international asset and wealth management center.”

The Northbound Trading of Swap Connect, which provides a convenient and secure channel for international investors to trade interest rate swap products in the Mainland via a connection between infrastructure institutions in Hong Kong and the Mainland, has been launched. The Chief Executive of the Hong Kong Monetary Authority, Eddie Yue, said that the scheme will not only create favorable conditions for global investors to increase their participation in the onshore bond market, but also provide new opportunities for Hong Kong's financial institutions and strengthen Hong Kong's role as a global risk management center and offshore Renminbi hub.

ECONOMY

Led by the strong recovery of inbound tourism and domestic demand, Hong Kong’s economy improved visibly in the first quarter of 2023, with real GDP resumed growth at 2.7% from a year earlier. During the year, total services exports expanded visibly with exports of travel services leaping more than six fold. Private consumption expenditure surged as consumption sentiment improved sharply while overall investment expenditure reverted to growth amid an improved economic outlook. Looking ahead, inbound tourism and domestic demand will remain the major drivers of economic growth this year. While exports of goods will continue to face significant challenges, the continued improvement of the labor market, the disbursement of consumption vouchers and a series of local events will provide additional support to private consumption. Real GDP growth forecast for 2023 is maintained at 3.5% to 5.5%.

The volume of Hong Kong’s total exports and imports of goods in March fell by 5% and 3.2%, respectively, year-on-year. The prices of total exports of goods and imports of goods grew by 4.5% and 2.8% respectively during the comparison period. The total export volume to the US rose by 9.6%, with a 4.8% increase in total export prices. The volume of imports of goods from the US dropped by 14.1%, with

a 2.6% increase in import prices.

ADMINISTRATION AND CIVIC AFFAIRS

The Secretary for Transport and Logistics, Lam Sai-hung, attends the 11th Asia-Pacific Economic Cooperation (APEC) Transportation Ministerial Meeting in Detroit, US from May 15-17. During the three-day meeting, Lam will meet with transportation ministers and senior officials from 21 APEC member economies and discuss some of the most pressing issues. He will also speak at a session on supply chain resilience, sharing how Hong Kong's well-connected transport network, world-class infrastructure and close communications with other economies have minimized the negative impact of the pandemic on air cargo and logistics.

The Hong Kong Special Administrative Region (HKSAR) Government strongly condemned and firmly rejected (May 12) the so-called “staff research report” recently published by the US Congressional-Executive Commission on China and the so-called “hearing” on the situation of Hong Kong, which again made slandering remarks and despicable threats against Hong Kong judges. The HKSAR Government emphasized that it will fully support and take whatever steps as may be necessary to ensure that all judges and judicial officers will be able to continue to discharge their duties without worry or fear about such threats.

BASIC LAW

The Basic Law (BL) is the constitutional document of the Hong Kong Special Administrative Region (HKSAR). It provides the guarantees to maintain our existing way of life, including socio-economic development, the rights and duties of Hong Kong people, the rule of law and other areas. The Basic Law was put into effect on July 1, 1997.

Q: Does the HKSAR Government have complete control over fiscal and economic policies and safeguard the free movement of goods, assets and capital?

A: The HKSAR Government formulates its own economic policies; manages its finances independently; prepares its own budgets; issues its own freely convertible currency; practices an independent taxation system; keeps its low and simple tax regime; formulates its own monetary and financial policies; safeguards the free flow of capital; maintains the status of a free port; pursues a policy of free trade and protects the free movement of goods, intangible assets and capital. (BL Articles 62; 106-119)