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NOVEMBER 28 - DECEMBER 4, 2023

BUSINESS AND FINANCE

The Hong Kong Legislative Council passed the Inland Revenue (Amendment) (Taxation on Foreign-sourced Disposal Gains) Bill 2023 on Nov 29. The bill refines Hong Kong’s foreign-sourced income exemption regime (FSIE), expanding the scope of assets in relation to foreign-sourced disposal gains to cover assets other than shares or equity interests. With the bill’s passage, the city’s FSIE regime will be brought in line with the latest requirement of the Guidance on Foreign Source Income Exemption Regimes updated by the European Union in Dec 2022. The tax regime is further strengthened to counter cross-border tax avoidance and prevent double non-taxation. While the scope of assets in relation to foreign-sourced disposal gains is expanded, exemption and relief have been put in place to minimise the compliance burden of the affected multinational enterprise entities, thereby maintaining the tax competitiveness of Hong Kong. The refined FSIE regime will be implemented on Jan 1, 2024.

Hong Kong Exchanges and Clearing Limited (HKEX) welcomed the listing of Asia Pacific’s first exchange-traded fund (ETF) to track Saudi Arabian equities. The ETF offers global and regional investors unique Middle East exposure in Hong Kong. It also complements a huge array of thematic and country specific ETFs listed in the city and will be the world’s biggest Saudi-focused ETF. Welcoming the listing, HKEX Co-Operating Officer & Head of Equities, Wilfred Yiu, said this reflects HKEX’s ongoing commitment to connecting capital with opportunities, and to diversifying its range of products and investment opportunities on its markets. The HKEX also looks forward to welcoming further new products in the future, strengthening Hong Kong’s ETF ecosystem, and reinforcing the city’s role as a vital international financial center, he added.

ENVIRONMENT

Secretary for Environment & Ecology Tse Chin-wan attended the 28th Conference of the Parties to the UN Framework Convention on Climate Change (COP28) in Dubai as part of the Chinese delegration and joined discussions at the Local Climate Action Summit (Dec 2). Mr Tse made it clear that Hong Kong is striving to achieve carbon neutrality before 2050 and to contribute to China’s dual carbon targets, and as such four major decarbonisation strategies, namely net-zero electricity generation, energy saving and green buildings, green transport, and waste reduction, have been set up. To reduce carbon emissions from electricity generation which accounts for more than 60% of the total carbon emissions in Hong Kong, much efforts have been put into promoting the use of zero-carbon energy so as to cease using coal for daily electricity generation and increase the share of usage of zero-carbon energy in electricity generation to around 60% to 70% by 2035.

ARTS AND CULTURE

Hong Kong will unveil its comprehensive blueprint on the city’s arts and culture and creative industries development. Addressing the opening ceremony of Business of Design Week 2023 (BODW) (Nov 29), Chief Secretary Chan Kwok-ki said this first-ever blueprint will feature a host of initiatives along four directions, namely to develop diverse arts and culture with an international perspective, promote Chinese culture, drive cultural exchange between China and the rest of the world, and drive industry building. Launched in 2002, the BODW has been an annual signature event in the global design community. This year’s edition, with the Netherlands as the partner country, saw the attendance of a 50-strong Dutch delegation to exchange design mindsets and creative solutions with other participants at the summit.

EDUCATION

Two US-based educators – Michelene (Micki) Chi of Arizona State University and Shai Reshef, President and Founder of University of the People – received the Yidan Prize, the world’s highest education accolade, in Hong Kong on Dec 3. The award recognises their innovative solutions which help learners reach their full potential, by advancing the quality of teaching and learning and breaking down barriers to higher education globally. They will each receive a gold medal and HK$30 million (approximately US$3.8 million), half of which is an unrestricted project fund to support the scaling of their work. Speaking at the awards ceremony, Chief Executive John Lee said Hong Kong is committed to developing as an international hub for post-secondary education and attract more outstanding talents to pursue studies and conduct research in the city.

ECONOMY

The value of total retail sales in Hong Kong in October, provisionally estimated at US$4.33 billion, rose 5.6% year-on-year. Of the total retail sales value in October, online sales accounted for 11%. The value of total retail sales had risen alongside a continued revival of inbound tourism. A further anticipated recovery in visitor arrivals should benefit the retail sector, and that continued improvement in household income and various activities that bolster the economy, including the Night Vibes Hong Kong campaign, will provide support. Nevertheless, factors such as tight financial conditions and economic uncertainty will weigh on consumer sentiment.

ADMINISTRATION AND CIVIC AFFAIRS

The Hong Kong Special Administrative Region (HKSAR) Government strongly condemned (Nov 30) the US House Foreign Affairs Committee for passing its so-called Hong Kong Economic & Trade Office Certification Act and its complete disregard of the status of the HKSAR under “one country, two systems”. The HKSAR Government urged the US not to violate the basic norms governing international relations and to stop political smears and attacks on the HKSAR. Hong Kong maintains economic and trade relations with places around the world in accordance with the “one country, two systems” principle and has set up 14 overseas Economic and Trade Offices (ETOs) as official representatives of the HKSAR, including three in the US. In their respective jurisdictions, the ETOs in Washington DC, New York and San Francisco maintain close links with interlocutors in government, business, think tanks and various sectors to enrich ties between Hong Kong and the US in different areas such as trade, investment, arts and culture. The smooth operation of the three ETOs in the US contributes to strengthening co-operation between Hong Kong and the US in different areas, and is mutually beneficial to both places. The US enjoys significant economic benefit from its ties with Hong Kong, enjoying a trade surplus of US$284.9 billion with Hong Kong over the past 10 years, its largest with any trading partner. More than 1,200 US companies operate in Hong Kong.

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: Are Hong Kong people administering Hong Kong with a high degree of autonomy?

A: Yes. In accordance with the Constitution of the People’s Republic of China, the National People’s Congress enacted the Basic Law, authorizing the HKSAR to exercise a high degree of autonomy and enjoy executive, legislative and independent judicial powers, including that of final adjudication, in accordance with the Basic Law. The Central People’s Government (CPG) shall be responsible for the foreign affairs and defense relating to the HKSAR and other matters authorized by the Basic Law. It also authorizes the HKSAR to conduct relevant external affairs on its own in accordance with the Basic Law. The HKSAR shall have independent finances and shall use its financial revenues exclusively for its own purposes. Hong Kong is not required to pay taxes to the CPG. (BL Preamble and BL Articles 2; 12-17; 19; 22; 106)