Ma Welcomes Changes To Mainland's QDII Regime

by Mary Swire, for LawAndTax-News.com, Hong Kong

03 May 2006

Hong Kong's Secretary for Financial Services and the Treasury, Frederick Ma has suggested that the new measures announced under the Mainland's qualified domestic institutional investor (QDII) scheme will enhance Hong Kong's position as an international financial centre and asset-management centre.

In his latest FSTB & You column, posted on the Financial Services and the Treasury website, Mr Ma stated that the Mainland authorities announced a series of measures to deepen the reform of the foreign-exchange administration regime on April 13.

These measures include allowing Mainland institutions and residents to entrust Mainland commercial banks to invest a certain amount of money in financial products overseas, and allowing insurance institutions to invest part of their assets in overseas fixed-income products and money-market products.

"As far as I see, these measures will, in the long run, further enhance Hong Kong's position as an international financial centre and asset-management centre. Although funds in the Mainland are estimated to be huge, the actual amount involved in the new scheme remains unknown as details of the measures have yet to be announced," he wrote, continuing:

"Regardless of the amount involved at the start, what's most important is that the new measures will broaden the channels for overseas investments of the vast funds in the Mainland. This is expected to have far-reaching and positive effects on our financial markets."

Mr Ma went on to explain that Hong Kong can benefit in two ways, as some of the Mainland funds may be invested in the financial products of its markets, thereby increasing the trading volume and liquidity, and Mainland investors can engage the services of Hong Kong-based financial institutions, which possess rich international experience and professional knowledge to make global investments.

"This will enhance the investment returns and diversify the risks of Mainland investors, while (it will) also strengthen the development of our financial services sector."

Under the new measures, Hong Kong's role as the Mainland's global investment platform will grow even more, Mr Ma predicted, observing that:

"Hong Kong is well prepared in this respect, having put in a lot of efforts on all fronts, including financial infrastructure and tax concessions. The enactment in March of the legislative amendments to exempt offshore funds from profits tax is an example of our efforts."

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