Visit to Incheon: Connecting Belt and Road countries and fulfilling global responsibility

I recently visited Incheon of Korea to attend the Asian Development Bank (ADB) Annual Meeting on the theme of “Rebounding Asia: Recover, Reconnect and Reform”.  Apart from discussing with global participants about the post-pandemic economic recovery in Asia, I also seized the chance to promote Hong Kong’s unique advantages in financial services.

Fostering green transformation and green economic development has been a key strategy of the ADB in recent years.  In striving to become the “Climate Bank” of Asia, the ADB has set a target of providing developing member countries with green financing of US$100 billion in total between 2019 and 2030.  In 2022 alone, the ADB provided green financing of US$6.7 billion to support green mitigation and transformation projects in various Asian regions.  An example of such is a project which involves the pioneering use of an innovative and scalable energy transition mechanism to achieve early retirement of a coal-fired power plant.

In view of the great demand for green financing in Asia, the ADB has also been carrying out internal reforms in recent years, including reviewing its organisational structure and capital framework to better meet the financing needs of developing member countries.  A major priority of the reforms is to promote projects with private capital participation, through which the ADB intends to enhance the efficiency of the use of balance sheets and strengthen the overall financing capability.  In particular, the ADB has signed an agreement for up to US$1 billion with five insurers to support private financial capital participation in ADB’s lending projects.

As an international financial centre, Hong Kong has been playing an active role in the investment and financing activities of the ADB.  In 2022, the ADB issued a total of over US$720 million of bonds in Hong Kong.  Meanwhile, our quality and efficient professional services have given much support to a number of ADB-financed projects, with local companies and consultancies securing a cumulative total of over US$1.4 billion worth of contracts offered by the ADB in its procurement exercises over the years.  During my visit to Incheon, I specifically introduced to the ADB and its members the opportunities to issue insurance-linked securities (ILS) in Hong Kong.  The establishment of a dedicated regulatory framework in this regard earlier and the launching of the Pilot Insurance-linked Securities Grant Scheme in 2021 have facilitated four ILS issuances so far, involving a total issuance amount of US$560 million.  These securities, issued in the form of a catastrophe bond, serve to cover losses inflicted by typhoons and earthquakes in the Mainland and overseas places.  Hence, this type of debt instrument is particularly important to island countries which are prone to extreme weather conditions, and we welcome the ADB to make use of our platform to issue ILS, a move also closely in line with its target of empowering private capital.

 
The ADB Annual Meeting has brought together various government representatives in charge of financial and taxation matters from around the world. As this year marks the 10th anniversary of the "Belt and Road Initiative”, I also took the chance to discuss its practical achievements and the future development opportunities with the participants of the Annual Meeting.  I met Mr. Ibrahim Ameer, Finance Minister of the Maldives, to discuss the comprehensive avoidance of double taxation agreement between Hong Kong and Maldives which has entered the final preparation stage, and we hope to sign the agreement in the near future for its formal implementation.

 
The ADB team, representatives of constituents, the Korean government, financial regulators and the financial sector have all shown keen interest in the mutual access schemes for the capital markets between Hong Kong and the Mainland as well as the development of financial technology and green finance in our market.  I have invited them to join a host of upcoming signature events in Hong Kong, including the Hong Kong Fintech Week in November and the Asian Financial Forum in January next year.  I certainly hope they can come and see for themselves the various business opportunities offered in Hong Kong and the Guangdong-Hong Kong-Macao Greater Bay Area.

 
The Government has also recently announced its proposal to improve district governance, and the day after I returned to Hong Kong from Korea, I expressed my support for the proposal at the street booth of "Hong Kong Alliance for Improving District Governance".  The proposal fundamentally improves the district governance structure and is guided by three principles, namely, putting national security as the topmost priority, fully implementing the principle of “patriots administering Hong Kong” and manifesting the executive-led government.  The proposal will strengthen the coordination, and enhance the capacity and effectiveness of district governance, returning the District Councils to their position as district organisations which are not organs of political power under the Basic Law for the benefits of the public.  I call on all members of the public to render support to the proposed package for improving district governance.

8 May 2023