SOEs may bypass HK in 'going global'
Updated: 2015-03-13 06:32
By Selena Li(HK Edition)
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Hong Kong needs to further boost its overall competitiveness to attract mainland enterprises to use its facilities and services for overseas expansion, or "going global," said Laura Cha Shih May-lung, a National People's Congress delegate and chairperson of the Hong Kong Financial Services Development Council.
Attending the two sessions in Beijing as a Hong Kong deputy, Cha noted that Hong Kong is not the only option of mainland enterprises looking for a springboard to diversify. What's more, the free trade zones in Shanghai and Shenzhen are gearing up to give Hong Kong a run for its money, she said.
The People's Bank of China, the mainland's central bank, and other government bureaus are known to have submitted a proposal to the State Council to streamline the "going global" procedures and to ease the restrictions on overseas investment by the large and cash-rich State-owned enterprises (SOEs).
These enterprises can either pick Singapore and London, which offer financial and other services that are equal to, if not better than, Hong Kong's.
Guo Jianwei, a deputy director of the central bank's renminbi (RMB) policy department, said the policy changes that apply to overseas investment and funding by mainland enterprises would create fresh competition for Hong Kong as a services center.
Under the new policy, Hong Kong would no longer be the only regional financial center where mainland SOEs are allowed to issue bonds denominated in the RMB, Guo said.
"We cannot prevent Singapore, London and Shanghai from developing," said Cha. "What Hong Kong can do is to focus on things it can do best, and stop making a lot of distracting political noises," Cha said.
As a global financial center, Hong Kong stands to benefit greatly from meeting the financing and corporate advisory needs of mainland enterprises going overseas, Cha said. They all need to raise capital in Hong Kong to fund their overseas expansion and seek investment and mergers and acquisitions advice from Hong Kong banks and professional firms, Cha added.
For example, the listing of CITIC Group, an SOE headquartered in Beijing, was seen as a show of confidence in Hong Kong's established legal framework, high standard of corporate governance and international connectivity.
"The central government encourages SOEs to give priority to Hong Kong in establishing their offshore corporate treasury centers to perform group holding companies' treasury functions," she said.
Consulting firm PricewaterhouseCoopers predicts in its 2015 outlook that mainland companies, particularly SOEs, are increasingly building a presence in Hong Kong as a platform for future outbound activity.
Financial Secretary John Tsang Chun-wah proposed in this year's budget speech to allow interest deductions under profits tax for corporate treasury centers and reducing profits tax for specified treasury activities by 50 percent.
The council Cha chairs is formulating a proposal to give policy advice to the SAR government to further optimize the taxation and relevant financing infrastructure, including, RMB bond issuances.
selena@chinadailyhk.com
(HK Edition 03/13/2015 page8)