Chief Executive-designate Leung Chun-ying's proposal to set up a "sovereign wealth fund" would help stabilize the SAR financial market and facilitate the government's long-term investment plan, according to a top banker.
Tse Yung-hoi, deputy chief executive of BOC International, said the wealth fund can be funded through budget surpluses rather than from the Exchange Fund.
"[The government] cannot keep coming up with handouts today when it has surpluses, and then raise taxes tomorrow when it doesn't have enough money," he told Sing Tao Daily, a sister publication of The Standard.
Leung has proposed setting up a strategic investment firm similar to Singapore's Temasek Holdings.
It is understood the government explored the feasibility in 2007, but it believed the Exchange Fund already served the purpose.
Tse said in the case of the financial market being "maliciously attacked" such as in 1997, such a fund can intervene and help stabilize it. He added it was a pity there was no such fund to save Peregrine Investments when it failed in 1998.
A fund can also invest in a variety of assets such as private equity, foreign acquisitions and livelihood related items such as tunnels, he said.
Tse also supports Leung's proactive policies, saying they should not be seen as government interference. "There's nothing wrong with the idea of `small government, big market,' but even a small government needs to make plans for the development of the financial industry."
He said Leung's proposal of a finance development bureau would promote Hong Kong's status as a financial centre. He also hoped that the government would help nurture domestic financial institutions. STAFF REPORTER