Paul Chan: Hong Kong has no intention of racing to the bottom with Singapore

Hong Kong has no intention of racing to the bottom with Singapore through extensive tax breaks and will instead focus on enhancing its core strengths, Financial Secretary Paul Chan Mo-po said on Wednesday, as the two international financial hubs compete to attract wealthy investors and global talent.

“We do not want to race to the bottom, but at the same time we need to be competitive,” Chan said in a Bloomberg's interview.

This came as Singapore proposed to introduce tax exemptions on profits earned by fund managers last month, which seems to match Hong Kong's recent move to expand tax-free carried-interest measures.

Chan said that the government is making efforts to implement the tax breaks within this year.

Compared with its rival Singapore, Hong Kong has advantages including easy access to the Chinese mainland market, an abundant talent pool, and a high quality of life, he noted.

Regarding the yuan, Chan explained that the authorities' wider use of the yuan, including in public expenditure, is to benefit from the lower costs of borrowing in the currency.

He defended the Hong Kong dollar's long-term role, adding that the government has no intention of changing its peg to the US dollar.

In terms of financial markets, Chan noted that the key to boosting liquidity is to lure more quality companies amid the city's booming initial public offering market.

He added that any further regulatory moves would hinge on market conditions, while due diligence, credibility, and investor confidence remained priorities.

Besides, Chan highlighted that the Northern Metropolis will be Hong Kong's major engine of growth in the next one or two decades.

𝗗𝗼𝘄𝗻𝗹𝗼𝗮𝗱 𝗧𝗵𝗲 𝗦𝘁𝗮𝗻𝗱𝗮𝗿𝗱 𝗔𝗽𝗽 ↓