《普华永道:由治及兴:以信心和远见引领香港(2023)(英文版)(34页).pdf》由会员分享,可在线阅读,更多相关《普华永道:由治及兴:以信心和远见引领香港(2023)(英文版)(34页).pdf(34页珍藏版)》请在三个皮匠报告上搜索。
1、From resilience to resurgence:paving the way forward for Hong Kong with confidence and visionIntroductionOne year on since Chief Executive John Lee took office,Hong Kong has demonstrated economic and social resilience at large and continued its steady path to recovery,scoring positive year-on-year r
2、eal GDP growth in the first and second quarter of 2023.Hong Kongs accession to the Regional Comprehensive Economic Partnership(RCEP),Chinas strong backing for Hong Kong to fulfil its super connector role in the development of the Belt and Road Initiative(BRI),the return of tourists marked by the suc
3、cessful launch of landmark events in recent months,and the International Monetary Funds(IMF)reaffirmation of the citys status as a robust and reliable international financial hub,were among some of the headlines worth celebrating.However,the Hong Kong Special Administrative Region(HKSAR)government s
4、till faces strong headwinds in the form of a global economic slowdown,the looming climate emergency,financial market volatility,let alone home-bound issues such as weak retail consumption and the ongoing talent shortage.1From resilience to resurgence:paving the way forward for Hong Kong with confide
5、nce and visionTo navigate the challenging landscape with confidence and vision,Hong Kong must give full play to its strengths as an international financial hub while fostering strong regional cooperations.By tapping into a comprehensive strategy toolbox from recalibrating its capital market strategi
6、es to fostering innovation and developing robust infrastructures the HKSAR government will be able not only to brave those challenges but also to create the environment necessary for upgrading and transforming its economic structures.Figure 1:A summary of PwCs recommendations for the HKSAR governmen
7、tSix key focus areasRecommendations1.Cementing Hong Kongs status as an international financial centre Enhancing stock market liquidity and supercharging the development of the citys capital marketConsolidating Hong Kongs competitive advantages to further advance financial servicesExpediting Hong Kon
8、gs development as a leading hub for family offices2.Fostering a robust sustainability ecosystem in Hong KongImproving disclosures on sustainability and driving corporate actionPromoting innovation and development of new sectorsUsing green and sustainable finance to catalyse investmentsImproving clim
9、ate resilience to tackle worsening urban heat and extreme weather3.Unlocking the next phase of growth with innovation and technology Striving to be the generative artificial intelligence(GAI)hub of choice for the GBAStrengthening Hong Kongs e-hub with tax measuresAddressing the I&T development needs
10、 in the Shenzhen-Hong Kong Innovation and Technology Park(HSITP)and other infrastructure projectsIncreasing support to innovative start-ups to back up and accelerate their growth4.Providing more support and flexibility for attracting and retaining talent in Hong KongAccelerating the expansion of Hon
11、g Kongs tax treaty networkExploring new tax incentives and non-financial measures to attract and retain talent in specific industriesPrioritising investments in capacity building for ESG talent to strengthen Hong Kongs expertise in sustainable finance Creating cross-boundary regulatory measures that
12、 facilitate seamless operationsProviding support for full-time parents to return to the workforceAdopting a multi-pronged strategy to encourage workforce participation of the silver-haired group 5.Establishing Hong Kong as a regional data hub for frictionless flow and exchange of dataCreating,improv
13、ing,and implementing harmonised legal and regulatory frameworks as well as common mechanisms for cross-boundary data sharingDeveloping and implementing initiatives that support the HKSAR governments vision of becoming a digital-first,data-driven organisation6.Optimising infrastructure development to
14、 bolster long-term growth and competitivenessReinventing infrastructure delivery models with the private sectorAccelerating the coordinated development of the Northern Metropolis and Kau Yi Chau artificial islands projectsDiversifying sources of infrastructure fundingOur recommendations,which captur
15、e the insights from our expansive network of subject matter experts,are rooted in six key principles:1)cementing Hong Kongs status as an international financial centre,2)fostering a robust sustainability ecosystem in Hong Kong,3)unlocking the next phase of growth with innovation and technology,4)pro
16、viding more support and flexibility for attracting and retaining talent in Hong Kong,5)establishing Hong Kong as a regional data hub for frictionless flow and exchange of data,as well as 6)optimising infrastructure development to bolster long-term growth and competitiveness.2From resilience to resur
17、gence:paving the way forward for Hong Kong with confidence and visionCementingHong Kongs status as an international financial centre1As the global economy races to resume normalcy and invigorate its economic activities,Hong Kong has found itself in a whole new race for growth,capital and talent,part
18、icularly stemming from fierce competition with Singapore in recent years in its quest to become the go-to financial hub in Asia Pacific.While Hong Kong is still far ahead of Singapore in term of equity funds raised(with approximately USD 32 billion raised for Hong Kong against USD 5.7 billion for Si
19、ngapore)and assets under management(USD 4.6 trillion against USD 4.1 trillion),it is important for Hong Kong to further consolidate its position as the preeminent financial centre in the region,particularly leveraging its unique strengths in financing and professional services in the high-quality de
20、velopment of the BRI.On the plus side,with the linked exchange system acting as an anchor of financial stability,the city also has unparalleled advantages from its close integration with the Chinese Mainland,along with a favourable tax and regulatory system that allows free flow of capital and acces
21、s to a diverse array of financial products and services.To sustain this competitive edge,we recommend implementing measures to facilitate initial public offerings(IPOs)and listings with both foreign and Chinese structures,as well as enhancing regional integration.Figure 2:Comparative statistics betw
22、een Hong Kong and Singapore4.14.6SingaporeHong KongAssets under management(2021,USD trillion)*5.732SingaporeHong KongTotal equity funds raised(2022,USD billion)From resilience to resurgence:paving the way forward for Hong Kong with confidence and vision4.Source:The HKEX,Singapore Exchange Market*The
23、 latest available data from Monetary Authority of Singapore is as of 2021,while the 2022 figure is yet to be published.Enhancing stock market liquidity and supercharging the development of the citys capital marketThe Hong Kong Stock Exchange(HKEX)is one of the largest in the world and for a long tim
24、e has been the fastest growing stock exchange in Asia.However,the number of new listings at the HKEX has seen a steady decline since 2018.In order to revitalise Hong Kongs capital market,we recommend strengthening collaboration with global stock exchanges,especially those in the Middle East and Sout
25、heast Asia,through exploring dual listing opportunities and leveraging the GEM market as a channel to attract small-medium enterprises with high growth potential.Dual listing offers the advantage of expanding the investor and issuer base,making Hong Kong an even more appealing destination for IPOs.F
26、igure 3:Comparative analysis of listings in Hong Kong,Indonesia,and Saudi Arabia8000212022Yearly number of new listings at the HKEX(2015-2022)20022Number of listed companiesIndonesia Stock Exchange668713766825Saudi Exchange(Tadawul)3N
27、umber of IPOsIndonesia Stock Exchange55515357Saudi Exchange(Tadawul)541536Source:The HKEX,Indonesia Stock Exchange and Saudi ExchangeFrom resilience to resurgence:paving the way forward for Hong Kong with confidence and vision5The Primary Equity Connect(PEC)initiative,introduced in the HKEXs 2016-20
28、18 strategic plan,unveils a mechanism to allow Mainland investors to directly subscribe for IPOs in the Hong Kong market and vice versa.We recommend the implementation of the PEC initiative as it holds significant potential to enhance connectivity and promote companies to list in Hong Kong by raisin
29、g funds in RMB.Additionally,it would allow Mainland investors to participate in Hong Kong IPOs using RMB while Hong Kong investors can subscribe to Mainland IPOs using HKD or RMB.Expanding the Stock Connect scheme from secondary markets to IPOs can significantly enhance liquidity of both markets.Whi
30、le foreign and Chinese Mainland companies are still typical candidates for new listings and IPOs in Hong Kong,local SMEs and start-ups are also a source for untapped potential.In 2018,the HKEX discontinued the streamlined process for transfer from the Growth Enterprise Market(GEM)to the Main Board,c
31、oncurrently increasing the minimum market capitalisation and cash flow requirement for GEM applicants.To unlock the listing potential of SMEs and start-ups,we recommend that regulators review and reposition the GEM by relaxing some of its existing listing requirements,such as minimum market capitali
32、sation,public float value of securities,cash flow,and“track record period”.A dedicated team could be established to accelerate the vetting process of GEM applicants,simplify the listing procedures,disclosure and reporting requirements such as by eliminating mandatory quarterly reporting.This approac
33、h can effectively reduce IPO costs and ongoing listings compliance expenses,ultimately enhancing the appeal of GEM as a desirable listing platform.In addition,regulators should consider allowing secondary listing on GEM to diversify investor base and enhance liquidity of GEM.Furthermore,GEM-listed c
34、ompanies should also be able to migrate to the Main Board once they fulfil the listing requirements of the latter,subject to the approval of the Listing Committee.The transfer from GEM to the Main Board could be further expedited by replacing the existing IPO prospectus with a standard transfer appl
35、ication form.From resilience to resurgence:paving the way forward for Hong Kong with confidence and vision6Another way to draw more investment into the citys entrepreneurial and innovative sectors would be through the enrichment of the Capital Investment Entrant Scheme introduced in the 2023-2024 Bu
36、dget by expanding investible areas to include domestic start-ups,listed shares,public and private funds domiciled in and managed by fund managers in Hong Kong.Finally,policy makers should reconsider the possibility of reducing stamp duties by half for stock trading and conduct a thorough review of t
37、he impact of stamp duty on the market intermediaries and the impact on the development of financial products in Hong Kong.The reduction of transaction costs,especially the stamp duty levied on share purchases,would yield substantial benefits.It would invigorate trading volume,amplify liquidity,and f
38、oster long-term investment.Hong Kongs stamp duty rate on share transfers currently surpasses that of the Chinese Mainland(0.05%applied to the seller only)even before the recent increase from 0.20%to 0.26%of transaction value,effective from 1 August 2022.Figure 4:Stamp duty rate comparison in the Chi
39、nese Mainland,the US,and Hong KongSource:Ministry of Finance of the Peoples Republic of China,US Security and Exchange Commission,HKSAR Government From resilience to resurgence:paving the way forward for Hong Kong with confidence and vision7JurisdictionsEffective stamp duty ratesChinese Mainland0.10
40、%to the seller only and recently further reduced to 0.05%in August 2023United StatesNo stamp duty in the US,but has a SEC fee of 0.0008%levied to the sale of securitiesHong Kong0.13%to both seller and buyerConsolidating Hong Kongs competitive advantages to further advance financial servicesHong Kong
41、s medical services are in high demand within the GBA.The incoming implementation of the GBA Insurance Connect is expected to further boost the popularity of health insurance products offered by Hong Kong insurers for people in other GBA cities.In the eye of such growing demand,it is advisable that t
42、he HKSAR government act as the facilitator to advocate for an integrated proposition of medical services and health insurance development in the GBA by encouraging Hong Kong insurers and reinsurers to expand their presence in the GBA market,while proliferating medical service facilities in the North
43、ern Metropolis to cope with growing South bound demand.Launched in September 2021,the Wealth Management Connect(WMC)scheme has provided eligible GBA residents the opportunity to invest in wealth management products distributed by banks across the GBA through a closed-loop funds flow channel.With the
44、 necessary building blocks now in place and a track record of nearly two years,it is now the perfect time to envision the future roles of the WMC initiative to ensure it is fit-for-purpose for years to come.This is essential considering the rapid growth of Hong Kongs wealth management industry,which
45、 is largely driven by evolving investor preferences.To this effect,we suggest expanding beyond the retail investor channel to include other investor groups,such as institutions,high net worth individuals,and family offices.Additionally,introducing a broader range of products,particularly alternative
46、 asset classes like private funds and infrastructure opportunities,will offer investors greater exposure and opportunities for diversification.Historically,retail investors have faced several obstacles that prevented them from investing in alternative assets,most notably,regulatory restrictions on i
47、nvestor protection,the complexity of such investments,illiquid product structures,long investment horizons,and significant capital requirements.With technology advancements,increasing regulatory acceptance and greater interest from product manufacturers to make the asset class more accessible for re
48、tail investors,it is now possible for investors to gain exposure to alternative investment strategies through retail structures in other jurisdictions.Innovation and product structuring have provided alternative assets an avenue to reach a larger base of investors worldwide.This shift towards retail
49、isation has opened up new opportunities for alternative asset managers to reach a larger global investor base.As such,it is recommended that relevant regulations be developed in Hong Kong with an aim to facilitate this transformation and enable retail investors to access a broader range of alternati
50、ve assets.In some jurisdictions,the establishment of new marketplace platforms to distribute private funds has gained traction,broadening the range of distribution channels for investors.One example of this is the emergence of exchange-based fund distribution platforms,where unlisted funds can be tr
51、ansacted and settled through stock exchanges.These platforms bring together asset managers and investors,providing clearing and settlement services.We thus recommend developing private funds exchange platforms through broadening distribution channels via the HKEX,with the goal of increasing accessib
52、ility and liquidity of private funds and other platforms.From resilience to resurgence:paving the way forward for Hong Kong with confidence and vision89From resilience to resurgence:paving the way forward for Hong Kong with confidence and visionExpediting Hong Kongs development as a leading hub for
53、family officesIn recent years,Hong Kong has made significant strides in establishing itself as a leading hub for family offices.The government has prioritised this endeavour,as seen in the implementation of a tax concessionary regime and greater regulatory clarity.Leveraging on the existing Connect
54、schemes such as Stock Connect,Bond Connect,and Wealth Management Connect,it would be beneficial for the HKSAR government to explore the possibility of codeveloping a Family Office Connect scheme with the Mainland authorities to allow the wealth of Chinese Mainlanders to be managed in Hong Kong.Figur
55、e 5:GDP growth in the Greater Bay Area in RMB(2022)Tax concessions provided to family offices should be regularly reassessed to stay competitive.The government should explore new tax incentives and other measures to attract and retain talent of specific industries,for instance family office professi
56、onals,thereby deepening the talent pool and capabilities of the industry.This can be achieved via tax measures such as granting tax deductions for childrens education and removing the current limit on unilateral double taxation relief for employment income,as well as non-fiscal incentives such as ho
57、using subsidies.Zhaoqing270.51 billion 1.1%Dongguan1.12 trillion 0.6%Huizhou540.12 billion4.2%Shenzhen3.24 trillion3.3%Guangzhou2.88 trillion 1.0%Foshan1.27 trillion2.1%Zhongshan363.13 billion0.5%Jiangmen377.34 billion3.3%Zhuhai404.55 billion2.3%Hong Kong SAR2.63 trillionMacao SAR160 billionSource:C
58、onstitutional and Mainland Affairs Bureau of the HKSAR26.7%1.2%Fostering a robust sustainability ecosystem in Hong Kong2The increasing severity of the climate crisis has led to a global push for more sustainable corporate practices.Governments and the public are raising the bar on sustainability sta
59、ndards,prompting the private sector to invest heavily in Environmental,Social,and Governance(ESG)initiatives.This shift towards ESG investment in the finance sector has been driven by both regulatory mandates and investor expectations.In the Asia Pacific region alone,we expect to see ESG assets unde
60、r management(AuM)to triple by 2026.This presents a notable opportunity for Hong Kong,which serves as a regional hub for sustainable innovation,embraces green technology,and a gateway to the Chinese Mainland.Figure 6:Forecasts of global ESG investmentsHong Kong can capitalize on the current surge in
61、ESG investments.20026Low2026Base2026BestMandates0.04.810.412.816.922.4Mutual funds1.63.66.910.114.320.7Private markets0.61.01.11.62.74.5Total2.29.418.424.533.947.60.61.01.11.62.74.51.63.66.910.114.320.74.810.412.816.922.420026 Low2026 Base2026 BestGlobal ESG AuM(USD trillion)20
62、026Low2026Base2026BestAsia-Pacific0.20.71.02.13.35.0Europe1.14.712.814.319.625.7Latin America0.00.00.00.10.20.3Middle East&Africa0.00.10.10.20.30.4North America0.83.84.57.710.516.3Total2.19.318.424.433.947.70.83.84.57.710.516.30.10.10.20.30.40.10.20.31.14.712.814.319.625.70.20.71.02.13.35
63、.020026 Low2026 Base2026 BestGlobal ESG AuM by region(USD trillion)From resilience to resurgence:paving the way forward for Hong Kong with confidence and vision11Source:PwC Global ESG and AWM Market Research Centre Analysis,Lipper,Preqin,ESG Global12From resilience to resurgence:paving th
64、e way forward for Hong Kong with confidence and visionImproving disclosures on sustainability and driving corporate actionThe 2022 Policy Address encouraged the adoption of localised International Sustainability Standards Board(ISSB)standards for public and private entities.This year,the HKEX propos
65、ed mandating all issuers to make climate-related disclosures in their ESG reports and to introduce new disclosures that are aligned with the ISSB Climate-related Disclosure Standard.Our recommendation is for the HKSAR government to continue to enhance the ESG regulatory framework,ensuring it is robu
66、st,while concurrently offering clear guidance to issuers on the effective implementation of the new guidelines.We also propose continuing to monitor and strengthen the disclosure of ESG information,aligning it with international standards,including expanding to nature-related disclosure referencing
67、the recently launched Taskforce on Nature-related Financial Disclosures(TNFD)framework.Promoting innovation and the development of new sectorsIn October 2021,the HKSAR government unveiled its proactive climate action plan towards achieving carbon neutrality by 2050.With electricity generation alone
68、accounting for 62.7%of Hong Kongs annual greenhouse gas emissions in 2021,we recommend that the government adopt a data-driven approach to monitor energy efficiency of its public services and formulate a comprehensive energy consumption strategy in order to monitor and achieve their carbon neutralit
69、y objectives.This approach has been successfully implemented overseas,most notably in Singapores public housing sector or in the city of Daegu in Korea.By implementing efficient energy monitoring practices,the government can serve as a role model for the private sector,encouraging them to follow sui
70、t in their own sustainability efforts.Climate tech is a fast-growing area attracting substantial investments in recent years.Since 2021,over 25%of global venture capital funding has consistently been directed towards climate tech start-ups.To capitalise on this trend,we recommend continuing to promo
71、te and incubate innovative financial products or measures that link with climate mitigation and adaptation.This can include the development of insurance products that cover commercial losses caused by flooding and heatwaves,green and sustainable bonds and loans,and the formation of an ESG data repos
72、itory,among other measures.This would help foster a green finance and technology ecosystem in Hong Kong to encourage enterprises and start-ups to set up their operations in the city and engage in acceleration programmes.Hydrogen fuel cells have gained recognition as a promising technology for reduci
73、ng reliance on fossil fuels,particularly in the transportation sector,and with applications in other industries.This year,Hong Kong is piloting a network of hydrogen buses alongside the citys first hydrogen refuelling station.To support this development further,we recommend the government support th
74、e expansion and capability building for a hydrogen ecosystem within and beyond road transport applications.This includes considering applications such as energy storage,portable power,and green shipping,as further avenues to strengthen Hong Kongs status as an international logistics hub.Ammonia,unli
75、ke methanol which is a non-zero carbon fuel traditionally used by the shipping industry,is a zero-carbon emissions fuel that can be produced by combining hydrogen with nitrogen.The International Energy Agency(IEA)projects that ammonia and hydrogen will satisfy 60%of shipping fuels demand by 2050,wit
76、h ammonia alone accounting for 45%,in its net zero scenario.Continuing to develop safety standards covering the value chain of hydrogen from production,liquefaction,storage,distribution,regasification,to infrastructure design and actual usage is also essential.Finally,it is advisable to encourage th
77、e development of green financing to support hydrogen projects by raising market awareness within the financial services sector.Using green and sustainable finance to catalyse investmentsHong Kong has positioned itself as a crucial intermediary in connecting capital and opportunities in Hong Kong,the
78、 Chinese Mainland,Asia and beyond.We recommend that the HKSAR government take actions to enhance governance and cement its status of global gateway for the China Certified Emission Reduction scheme by developing measures to enhance confidence in carbon trading.This includes establishing oversight ru
79、les and regulations to protect market participants from fraud,excessive speculation,money laundering,and other illicit activities.Coordinating efforts between the authorities of Hong Kong and the Chinese Mainland is also required to harmonise legal and accounting treatments for carbon transactions,w
80、hether they should be classified as intangible assets,commodities,financial instruments or other assets,because different classifications could lead to different potential tax and compliance consequences for cross-boundary carbon trading and financing.Establishing a governance framework would instil
81、 confidence and assurance among market participants,let alone adding creditability to the market.We assess based on current market trends that cross-boundary securitisation has a great potential as a tool to attract international capital for funding infrastructure projects,including renewable energi
82、es in the Chinese Mainland and SME business expansion.On this front,we propose establishing Hong Kong as a PRC cross-boundary green and sustainable securitisation and,in the context of the Green Belt and Road Initiative,a sukuk(sharia-compliant bond)platform to channel international capital towards
83、green and sustainability projects in both Hong Kong and the Chinese Mainland.This will contribute to job creation and long-term economic growth while supporting sustainability initiatives and goals.While leading by example is an important approach,there are other effective strategies to foster a gre
84、ener and more sustainable economy.Tax incentives should be considered to encourage more private investments in ESG and green projects.For example,expanding the scope of tax exemption of existing qualifying debt instrument schemes to cover green and ESG bonds would attract more investors to invest in
85、 such bonds traded in Hong Kong.Funding schemes are another proven effective way of nudging businesses in adopting more sustainable practices.For example,the three-year Pilot Green and Sustainable Finance Capacity Building Support Scheme,launched in late 2022,should be further proliferated to encour
86、age the participation of local eligible and prospective practitioners in training programmes related to green and sustainable finance.Similar funding schemes are also needed to support Hong Kong SMEs in strengthening their ESG management.From resilience to resurgence:paving the way forward for Hong
87、Kong with confidence and vision13Improving climate resilience to tackle worsening urban heat and extreme weatherClimate projections suggest that the risks of extreme weather events from flooding,typhoon to heatwaves are increasing in the city,particularly in urbanised and dense areas.To combat these
88、,we recommend undertaking a comprehensive study to thoroughly understand the impacts of extreme weather events in Hong Kong.While the city has a long history of managing typhoons,extreme rainfalls and landslides,establishing a heat adaptation strategy will also be important to identify sectors at ri
89、sks and analyse the impact on local economies.Figure 7:Extreme weather projections in Hong Kong under a severe climate change scenario Establishing a dedicated taskforce is crucial to addressing urban heat effectively.This taskforce should focus on integrating heat adaptation strategies into urban p
90、lanning,adopting heat-resilient urban design principles,and implementing effective and innovative measures.These may include nature-based solutions such as enhancing urban forests and water bodies or reducing the urban heat island effect through appropriate building design and pedestrian-friendly in
91、frastructure.Other equally important solutions include promoting community awareness and education on relevant issues and leading research efforts in energy-efficient and affordable urban cooling technologies that have applications in China and the wider Asian region.From resilience to resurgence:pa
92、ving the way forward for Hong Kong with confidence and vision14Source:Intensel,World Bank Climate Change Knowledge PortalHeat Index 35(days)Rainfall Flood(meters)Typhoon(km/h)LegendRainfall floods refer to inundation resulting from heavy rainfall,elevation,and climate change.Typhoons bring intense w
93、ind gusts and rainfall,the spatial extent and intensity of which are a function of historic tropical cyclone tracks,temperature,and wind speeds.Heat Index 35 refers to total count of days per year where the daily mean Heat Index rose above 35C A Heat Index is a measure of how hot it feels once humid
94、ity is factored in with air temperature.Definitions2030472050107City-wide-19720300.9118420500.9819920301.0815920501.16172Lantau IslandNorthCentral&Western20301.1818420501.27199Yuen Long20300.6318420500.68199Sha Tin20301.3618420501.46199Sham Shui PoUnlocking the next phase of growth with
95、innovation and technology316From resilience to resurgence:paving the way forward for Hong Kong with confidence and visionThe HKSAR government has long prioritised the promotion of I&T as a key driver of economic growth.This commitment is reflected in the establishment of the Innovation and Technolog
96、y Bureau in 2015,subsequently renamed the Innovation,Technology and Industry Bureau.The bureau has been instrumental in fostering the advancement of I&T and related industries within Hong Kong and enhancing the citys competitiveness in this field.In line with these objectives,we have identified seve
97、ral actionable measures that the HKSAR government can undertake,including bolstering the local start-up ecosystem,increasing cooperation in the GBA,and more.Striving to be the generative artificial intelligence(GAI)hub of choice for the GBAThe increasing adoption of GAI is poised to bring disruptive
98、 changes to existing business processes and has the potential to greatly enhance work efficiency.To position Hong Kong as a regional GAI hub,it is crucial to establish close collaboration with stakeholders in the GBA in building a regional large language model designed to cater to social and busines
99、s applications and developing GAI use cases specific to the region,having due consideration of a variety of languages used in the daily living and business context of the GBA.The HKSAR government has been actively seeking digitalisation of its services for years,and GAI will provide a powerful way t
100、o speed up this transformation,through its capabilities in summarisation,original content creation,semantic search,and coding.We recommend launching a city-wide action plan for AI adoption for both the public and private sectors.The action plan would assess the impact of AI adoption on the local wor
101、kforce,the need for reskilling and retraining,risk management for AI adoption,and priority areas for AI pilots,among other aspects.17From resilience to resurgence:paving the way forward for Hong Kong with confidence and visionStrengthening Hong Kongs e-hub with tax measuresTo support the growth of a
102、 vibrant digital and metaverse ecosystem,we recommend exploring new tax policies,measures,and incentives.These measures could involve clarifying tax provisions for digital activities,introducing tax incentives for specified qualifying expenditures,expediting the implementation of the patent box regi
103、me outlined in the 2023-2024 Budget,aligning intellectual property-related tax deduction rules with the proposed patent box regime,allowing tax deductions for Research and Development(R&D)activities in the GBA to encourage collaboration,and developing a comprehensive policy framework to facilitate t
104、he adoption of Web3 technologies.Addressing the I&T development needs in the HSITP and other infrastructure projectsAccording to the State Councils notice issued on 29 August,2023 on the“Development Plan for Shenzhen Park of Hetao Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zon
105、e”,the HSITP will jointly develop with the Shenzhen side to act as a pioneering zone for innovation and technology cooperation amongst Shenzhen and Hong Kong,as well as a pilot production cluster in the GBA.Considering Hong Kongs I&T development,PwC suggests HSITP to speed up the land allocation pro
106、cess to adapt to the ever-changing market,such as adopting a flexible mixed model that includes the self-user model and the investor model to encourage commercialization of I&T findings at the HSITP.To cultivate a vibrant and diverse I&T ecosystem,we suggest the HSITP to implement exclusive support
107、policies for enterprises and talent as soon as possible.This would effectively attract diverse talent,enterprises,and investors,providing cross-border flow for the convenience of enterprises through the“four flows”talent,capital,data and logistics flow,as well as offering companies the same benefits
108、 as Mainland companies,and providing various subsidies,tax exemptions,and incentive measures to encourage talent and companies to conduct their I&T work in the park.In addition,efforts should be channelled towards attracting leading international and national companies,investors,private equity funds
109、,Contract Research Organizations(CROs),and professional certification bodies.It is also crucial to implement industrial and supporting facilities such as enterprise accelerators,joint incubation programs,one-stop service windows,talent accommodation facilities,and international schools,in order to f
110、ulfil the needs of the enterprises and talent at the HSITP.18From resilience to resurgence:paving the way forward for Hong Kong with confidence and visionIncreasing support to innovative start-ups to back up and accelerate their growthSince its establishment in 2017,the Innovation and Technology Ven
111、ture Fund(ITVF)has played a vital role in incentivising venture capital funds to invest in local I&T start-ups in Hong Kong.We recommend accelerating the use of the ITVF for identifying and directly investing in innovative companies,with a particular focus on Hong Kong-based start-ups intending to s
112、cale up their commercialisation efforts in Hong Kong and beyond.This would serve the purpose of encouraging and supporting local investment in innovation R&D and motivating funded portfolio companies to be listed in Hong Kong when they reach the appropriate stage.Figure 8:Total number of start-up co
113、mpanies in Hong Kong(2018-2022)Source:InvestHKVarious governments in Asia Pacific have introduced subsidies to foster innovation and support start-ups in their founding and early stages.In line with these initiatives,we recommend creating similar direct subsidies in Hong Kong for start-ups in the fo
114、unding and early stages and support their listing in Hong Kong,thereby fostering an innovative and vibrant ecosystem.2,6253,1843,3603,7553,985200212022Providing more support and flexibility for attracting and retaining talent in Hong Kong 420From resilience to resurgence:paving the way fo
115、rward for Hong Kong with confidence and visionIn recent years,Hong Kong has been grappling with a significant labour shortage resulting from the surge in emigration and rising global competition for talent,compounded by low birth rates and demographic shifts.The trend has persisted into the current
116、year,with finance,insurance,and real estate sector experiencing a 1.3%loss in employees during the first quarter of 2023,while overall vacancies in the private sector have risen by 6.3%since December 2022.Recognising the urgency of this issue,the government unveiled a series of measures in late last
117、 year,including the introduction of specialised admission schemes targeted at professionals and high-calibre migrants,as well as the implementation of the Talent List and Testimonial Scheme.These targeted measures,which are designed to attract and retain talent from diverse global pools,have had ear
118、ly success in attracting 100,000 applications in just the first half of 2023.Figure 9:Number of vacancies and vacancy rate by industry(March 2023)VacanciesVacancy rateIndustryNumberYear-on-year%change%change over 3-month period%Manufacturing2,378+69.5+26.33.1Mining and quarrying,electricity and gas
119、supply,waste management271+11.5-13.72.2Construction sites(manual workers only)644+139.4+20.10.6Import/export,wholesale and retail trades10,656+60.8+3.01.5Transportation,storage,postal and courier services,and information and communications10,466+65.1+2.53.7Accommodation and food services8,633+126+12
120、.13.2Financing and insurance,and real estate10,835+15.7+6.62.8Professional and business services8,574+18.8+6.62.2Social and personal services25,294+37.4+5.64.4All industry sections covered77,751+44.8+6.32.8Source:Census and Statistics Department of the HKSARThe boundaryless nature of talent also mea
121、ns that Hong Kong needs to constantly benchmark its talent policies against those of Mainland cities and Southeast Asian countries to identify competitive advantages and areas to enhance.By offering attractive incentives such as tax benefits,industry-specific subsidies,training and upskilling,and ed
122、ucational support,Hong Kong can re-establish itself as an attractive destination for both local and international talent.21From resilience to resurgence:paving the way forward for Hong Kong with confidence and visionWe propose that Hong Kong employ a more proactive and focused approach to address th
123、e current talent shortage,summarised in six key aspects:Accelerating the expansion of Hong Kongs tax treaty network,particularly with key trading partners and jurisdictions along the BRI.Hong Kong can proactively play its part in the wider national strategy and leverage its unique advantages within
124、the BRI,serving as a favourable business platform for the Chinese Mainland and rest of the world.The signing of tax treaties canenhance international cooperation between Hong Kong and other jurisdictions,promote cross-boundary talent mobility,mitigate double taxation,and provide favourable tax arran
125、gements for businesses and individuals.Exploring new tax incentives and non-financial measures to attract and retain talent in specific industries.such as professionals in family offices.This can be done in conjunction with tax exemptions for single-family offices(SFOs)to support Hong Kongs aspirati
126、on in becoming a regional hub for family offices.When considering these incentive measures,the aggregate needs of the talent,their spouses and children should also be taken into account,with an aim of enhancing the level of commitment of highly sought-after professionals and their families to long-t
127、erm employment,education,residence and settlement in Hong Kong.These measures may include providing additional tax exemptions for childrens education and housing subsidies.These family-oriented,long-term incentives are key to deepening Hong Kongs“talent reserve”and ensuring the long-term success of
128、its talent strategy.Prioritising investments in capacity building for ESG talent to strengthen Hong Kongs expertise in sustainable finance and its leading position in green finance.The government can continue to enhance the Pilot Green and Sustainable Finance Capacity Building Support Scheme,launche
129、d in December 2022,by providing additional subsidies for eligible local individuals and aspiring professionals to participate in relevant training.This will assist Hong Kong in effectively addressing the new opportunities of low-carbon and sustainable economic development,sustaining its long-term co
130、mpetitive position amid the new global ESG race.Creating cross-boundary regulatory measures that facilitate seamless operations.Hong Kongs development is becoming increasingly intertwined with that of the Mainland under the engine of national development and its closer integration with other GBA cit
131、ies.In light of this,The HKSAR government can consider further coordinating with government agencies on the Chinese Mainland and exploring new business models that facilitate seamless operations for talent,employers,products,and services.Examples of such measures include mutual recognition agreement
132、s for professional qualifications,product certifications,among other facilitative arrangements.Providing support for full-time parents to return to the workforce.Many professionals in Hong Kong choose to take career breaks for the caring fortheir children,which results in significant economic losses
133、 to individuals and the society.The HKSAR government can consider implementing additional measures to provide comprehensive support for families with childcare needs.For full-time parents,that may translate into subsidies for daycare services and tax deductions for domestic helper expenses.Furthermo
134、re,employers can be encouraged,through means of subsidies or additional tax deductions,to provide upskilling and reskilling training opportunities to their employees.These initiatives will support the return of full-time parents into the workforce and enhance talent quality in the workplace.Adopting
135、 a multi-pronged strategy to encourage workforce participation of the silver-haired group so that they can continue to contribute their knowledge and expertise to the society.On top of the introduction of the Employment Programme for the Elderly and Middle-aged(EPEM)by the Labour Department,the Fina
136、ncial Secretary announced in the fiscal budget earlier this year the proposal to increase the tax deduction rate,from 100%to 200%,for employers voluntary contributions to the Mandatory Provident Fund(MPF)schemes for employees aged 65 or above.To further incentivise senior citizens to remain in and r
137、eturn to the workforce,the HKSAR government can also consider raising the basic tax allowances for salary tax or personal income tax to reduce their tax burden,thereby retaining valuable human resources to the betterment of society.Establishing Hong Kong as a regional data hub for frictionless flow
138、and exchange of data523From resilience to resurgence:paving the way forward for Hong Kong with confidence and visionEffective and efficient data flow is the pre-requisite for a vibrant digital economy,and more importantly,an essential cornerstone for the seamless movement of goods and capital in any
139、 modern economy.Hong Kongs status as both an international financial hub and a gateway to the Chinese Mainland can make data transfer challenging due to the diverse nature of the many stakeholders involved.It is thus imperative for Hong Kong to create the needed framework,systems,and infrastructure
140、to facilitate as much as possible the free flow of information.To establish its position as a regional and international data hub,Hong Kong must both foster a regulatory framework that complies with regional and international requirements,and in doing so develop and harmonise its own digital infrast
141、ructure to meet global standards.Creating,improving,and implementing harmonised legal and regulatory frameworks as well as common mechanisms for cross-boundary data sharing Hong Kong has the potential to become a prominent hub for cross-boundary data exchange,connecting the city,the Chinese Mainland
142、,and the rest of the world.To this end,the HKSAR government must take the lead in executing the memorandum signed between the Cyberspace Administration of China and the Innovation,Technology and Industry Bureau in Hong Kong.This involves introducing measures to enhance trust amongst different partie
143、s,reducing compliance costs and streamlining regulatory approval processes.At a regional level,this would require working closely with the respective governments of key jurisdictions in the GBA as well as regulators,industry associations,and financial institutions with an aim to establish a harmonis
144、ed legal and regulatory frameworks and common mechanisms.To pave the way forward for enterprises to reflect in a tangible way the value of data assets they own,we recommend seeking convergence and alignment with national initiatives governing data assets and providing technical support in implementa
145、tion.This includes activities such as asset valuation,setting up governing standards,and establishing platforms for cross-boundary trading of data assets.Finally,for Hong Kong to become a regional data hub,data standards and protocols must be eased.We propose engaging with business stakeholders,such
146、 as telecom operators and utility companies,in discussions on data standards,protocols,and governance arrangements.Reviewing and amending regulations to facilitate B-2-B,B-2-C,and B-2-G data sharing may be required in light of data security and privacy considerations.Developing and implementing init
147、iatives that support the HKSAR governments vision of becoming a digital-first,data-driven organisationApart from the need for harmonised data regulations and framework,it is imperative for the HKSAR government to develop and implement actionable measures as it seeks to digitalise its various public
148、services leveraging on its wealth of data.For example,the government should build upon the its e-Gov audits to continue piloting and adopting novel I&T solutions aimed at enhancing public services in a more efficient manner.This approach ensures a systematic and managed approach to digitalisation ef
149、forts.Besides,we recommend that the HKSAR government develop a unified,comprehensive catalogue of data that it currently holds to facilitate data exploration and sharing within and beyond the public sector.This would promote the collection and interoperability of big data among different government
150、departments,between the government and different sectors,and between the government and the general public.Taking a broader perspective and implementing mechanisms that support efficient and managed data sharing amongst stakeholders can contribute to the advancement of the ESG agenda of Hong Kong.Da
151、ta can serve as a catalyst for innovation and creativity in the city,thereby allowing it to create better citizen services that span both the public and private sectors and ensuring a seamless and excellent experience for its citizens and visitors alike.From resilience to resurgence:paving the way f
152、orward for Hong Kong with confidence and vision241City ManagementA robust framework underpinning city operations and planning,delivery of public services,and provision of city dashboard and reporting,and common operating picture(COP)2Contact CentreAn omni-channel,single point of contact with governm
153、ent whereby citizens can contact the government and get their needs addressed in their preferred manner3Digital TwinsA platform that allows physical assets to be reflected accordingly in the digital world,supporting city management and“what-if”scenario planning4Digital Identity CybersecurityA critic
154、al“trust”infrastructure that facilitates identity authentication of individuals in a digital economy,and measures to protect privacy and cybersecurity5Digital PaymentA secured and scalable payment infrastructure underpinning electronic transactions that is essential for the development of a vibrant
155、digital economy 7UtilitiesUtilities infrastructure(power,telecom etc.)that is able to support both existing and future use cases and demand,and offer improved city resilience6HPC and Data CentreHigh-performance(or super)computing centres and data centres supporting AI-and data-driven economic and R&
156、D activities and policy formulation Figure 10:Overview of the critical building blocks for a Smart CitySupplying Data:1010101011Enabling City Experience in ESGGSECircular economyClimate resilienceSustainabilityWaste managementAir and water qualityBiodiversityAwarenessEducation Reskilling and upskill
157、ingCapacity buildingBenefits realisationTechnological impactTransparencyAccountabilityInclusivenessStakeholder engagementRegulatory requirementsStandards Technology deploymentHarmonised standards and regulations,allowing city activities to be conducted in an efficient,managed,secured and privacy-pro
158、tected mannerFrom resilience to resurgence:paving the way forward for Hong Kong with confidence and vision25City Intelligent BaseAdaptive,predictive and responsiveSelf-learning and continuous innovation in a citizen-centric mannerPublic,private and citizen collaborationsSource:PwC AnalysisWith respe
159、ct to digital infrastructure,the government should formulate a roadmap for the growth of new Green Data Centres,including a comprehensive review of the current regulatory regime governing data centre development projects.Other proposed measures include promoting the application of Beidou,alongside G
160、PS,to enhance the resilience of the citys location infrastructure and keeping abreast of quantum computing development and assess its implications for governmental and commercial operations in a timely manner.Figure 11:Global and Asia-Pacific rankings of data centre markets(2023)Global RankingAsia-P
161、acific Ranking1Northern Virginia1Singapore1Portland2Hong Kong3Singapore3Sydney4Hong Kong3Seoul5Atlanta5Tokyo5Chicago6Beijing5Silicon Valley7Mumbai8Dallas8Shanghai26From resilience to resurgence:paving the way forward for Hong Kong with confidence and visionSource:Legco of the HKSAR Optimisinginfrast
162、ructure development to bolster long-term growth and competitiveness6Just as data flow facilitates economic growth,infrastructure serves as a fundamental element to bolster competitiveness.Value-creating and comprehensive infrastructure projects not only pave the way for future growth but also instil
163、 investor confidence in Hong Kongs potential.In the face of an increasingly competitive regional and international landscape,Hong Kong must prioritise the development of forward-looking infrastructure projects.By fostering diverse funding avenues and steadfastly supporting local and regional initiat
164、ives such as the Northern Metropolis project,Hong Kong can establish a strong foundation for future growth while enhancing the citys long-term competitiveness.One way to restore investor confidence in the future of Hong Kong is to establish a robust,transparent pipeline of infrastructure projects.Th
165、is long-term pipeline,spanning over 10 years,will provide clarity to investors and demonstrate a commitment to engaging the private sector in infrastructure delivery.Creating this pipeline,potentially through the newly-established Office for Attracting Strategic Enterprises(OASES),is highly recommen
166、ded.It should be periodically updated and publicised to the local and international business community.Some industry associations are willing to engage their members in this pipeline and actively seek interest in specific projects.Secondly,the effective management of such pipeline would require the
167、government to assign responsibility to a central agency for the oversight of infrastructure procurement.This agency would serve as a subject matter expert in drafting tender documents and procuring infrastructure projects in collaboration with the private sector.Reinventing infrastructure delivery m
168、odels with the private sectorThe central agencys role would involve consolidating best practices,ensuring optimal risk allocation between parties,and maximisingvalue in infrastructure projects.Currently,different government bodies procure infrastructure projects in different ways without sufficient
169、exchange of collective expertise and leveraging of good practices.Establishing a central agency would address these challenges and enhance the overall efficiency and success of infrastructure procurement in Hong Kong.To promote social cohesion and foster collaboration with the private sector,integra
170、ting affordable housing with private housing developments is recommended.This approach entails funding and delivering affordable housing in partnership with the private sector.Various international delivery models,such as Public-Private Partnerships(PPPs),can serve as a basis for implementing this s
171、trategy.Under this model,developers allocate a certain proportion of housing units at discounted,affordable prices to qualifying individuals.From resilience to resurgence:paving the way forward for Hong Kong with confidence and vision2800500600Rent price in HKD per mHong Kong IslandKowloo
172、nNew TerritoriesFigure 12:Average private domestic rent for small housing units*in Hong Kong(1999-2022)Accelerating the coordinated development of the Northern Metropolis and Kau Yi Chau artificial islands projectsTo expedite the development and management of significant projects,Hong Kong should ex
173、plore various PPP mechanisms to leverage diverse funding approaches.Additionally,establishing a dedicated infrastructure fund can provide financing and investment opportunities for infrastructure and I&T projects,supporting long-term economic growth and competitiveness.It is clear that coordinated e
174、fforts and ongoing communication with the Chinese Mainland authorities(particularly Shenzhen)are crucial to accelerating the development of the Northern Metropolis.This collaborative approach will harness the synergies between Hong Kong and the GBA for shared growth and prosperity.To facilitate the
175、four flows talent,capital,data,and logistics in the Northern Metropolis,implementing supportive policies is essential.This can include offering subsidies,tax exemptions,and incentives to encourage talent and companies to engage in I&T activities within the Northern Metropolis,fostering a conducive e
176、nvironment for innovation and economic development.*Small housing units are housing units 40m or smaller.From resilience to resurgence:paving the way forward for Hong Kong with confidence and vision29Source:Rating and Valuation Department of the HKSAR30From resilience to resurgence:paving the way fo
177、rward for Hong Kong with confidence and visionDiversifying sources of infrastructure funding With respect to diversifying sources of infrastructure funding,one recommendation is to facilitate infrastructure financing in both HKD and RMB tapping into Hong Kongs unique position as an international bon
178、d hub and a bridgehead for RMB internationalisation.This can be achieved by further developing the long-term HKD and RMB bond markets.At present,the relatively low volume of HKSAR government bonds and long-term low-risk company bonds presents ample space for growth.Increasing,the availability of the
179、se bonds would enhance the stability of the local pension and annuity markets and support cross-boundary RMB clearance and RMB globalisation.Hong Kongs robust public and private fund management regimes also provide an effective platform to channel private sector funding to infrastructure projects in
180、 Hong Kong,the Chinese Mainland,and overseas.The upcoming infrastructure projects in the Northern Metropolis and Lantau Tomorrow development are excellent opportunities for infrastructure companies to issue both HKD and RMB-denominated long-term investment grade bonds,as a way to obtain infrastructu
181、re financing under the framework monitored by the HKSAR government.This also presents a favourable environment to promote the development of green bonds.Lastly,to ensure a steady funding source for infrastructure development and to reinvent the current infrastructure delivery models in Hong Kong,we
182、propose expanding government asset-backed securitisation initiatives.Conventional delivery models,which heavily rely on developer-led funding,need to be re-evaluated.The solution involves engaging private sector investors and lenders as a source of infrastructure funding.By expanding government asse
183、t-backed securitisation initiatives,significant capital can be generated for reinvestment in the citys infrastructure pipeline.This approach also aims to channel institutional investment into infrastructure,such as leveraging MPF funds,the Exchange Fund of Hong Kong and the new Hong Kong Investment
184、Corporation.Additionally,promoting the growth of Infrastructure Real Estate Investment Trusts(REITs)as well as private investment funds can facilitate the recycling of capital from existing infrastructure assets to new ones.These measures will help diversify funding sources and ensure sustainable fi
185、nancing for infrastructure development in the city.It is worth noting that within a short span of three years leading up to August 2023,a total of 29 infrastructure REITs have been launched in the Chinese Mainland in the form of C-REITs.These C-REITs are exclusively accessible to Chinese domestic an
186、d foreign investors holding the Qualified Foreign Investors status.As a new financial product,Hong Kong s Infrastructure-REITs have a strong growth potential that could lead to an“Infra-REITs Connect“.However,it is important to highlight that the definition of“infrastructure”under Hong Kongs tax law
187、 only encompasses traditional infrastructures,and as such we recommend that the Government review and expand the definition making reference to those in the Chinese Mainland,the EU,the US,the UK,and other major economies,ensuring the inclusion of new infrastructure types of the new economy.Conclusio
188、nIn summary,our comprehensive recommendations encompass six pivotal areas that align with and bolster HKSAR governments stated goals.We believe that implementing these measures will elevate Hong Kongs overall competitiveness both regionally and internationally,cementing its place as an international
189、 financial centre,Asias sustainable finance hub for ESG transformation,and a trusted data hub with a competitive tax system,as well as a vibrant metropolis attracting regional and international talent.At PwC,we support the administrations current commitment to attracting and nurturing talent,promoti
190、ng growth in emerging industries,and engaging with diverse stakeholders and communities.In light of these efforts,we would be delighted to engage in further discussion with the HKSAR government to refine and develop the initiatives herein proposed,working together to shape a prosperous vision for Ho
191、ng Kong.31From resilience to resurgence:paving the way forward for Hong Kong with confidence and vision32From resilience to resurgence:paving the way forward for Hong Kong with confidence and visionRaymund ChaoPwC Asia Pacific and China CThomas LeungManaging Partner Markets,PwC China+852 2289 Albert
192、 WongPublic Sector Consulting Partner,PwC Hong Kong+852 852 2289 Brian ChoiCapital Markets and Accounting Advisory Services Leader,PwC China+852 2289 Charles Lee South China(incl.Hong Kong SAR)Tax Leader,PwC China+852 2289 Chris ST Chan Financial Services Markets Leader,GBA Services,PwC Hong Kong+85
193、2 2289 Eddie WongCapital Market Services Partner,PwC Hong Kong+852 2289 Contact usEmily ChakTax Services Partner,PwC Hong Kong+852 2289 Florence YipSenior Advisor,PwC Hong Kong+852 2289 Lit Ping LowAsia Pacific Sustainability,Climate Change Partner,PwC Hong Kong+852 2289 Loretta FongMainland China a
194、nd Hong Kong Sustainability Deputy Leader,PwC Hong Kong+852 2289 Marie-Anne KongHong Kong Asset and Wealth Management Leader,PwC Hong Kong+852 2289 2707marie-Rex HoAsia Pacific Financial ServicesTax Leader,PwC Hong Kong+852 2289 Roy ChanPublic Sector Consulting Partner,PwC Hong Kong+852 2289 Simon B
195、ookerPublic Sector Consulting Partner,PwC Hong Kong+852 2289 Wilson ChowGlobal Technology,Media and Telecommunications Industry Leader,PwC Hong Kong86(755)8261 Wise LamPrivate Client Services Partner,PwC Hong Kong+852 2289 This content is for general information purposes only,and should not be used as a substitute for consultation with professional advisors.2023 PricewaterhouseCoopers Limited.All rights reserved.PwC refers to the Hong Kong member firm,and may sometimes refer to the PwC network.Each member firm is a separate legal entity.Please see for further details.