The journey's on to carve out HK's new chapter

Raising competitiveness

Rex Ho Yun-hang, Asia Pacific financial services tax leader for PwC Hong Kong, notes that implementing these initiatives would reduce and, hopefully, reverse any brain drain by creating more jobs and attracting new talents from various industries to Hong Kong. He agrees that the Greater Bay Area, as a launch pad, can provide Hong Kong with significant opportunities to tap the vast mainland market and help Hong Kong build a solid foundation to fortify its international financial status.

“We recognize the importance of strengthening the interconnection mechanism between the mainland and Hong Kong financial markets,” says Ho. “Apart from those that have been proposed, we should expand the mechanism to other assets, such as carbon trading and real-estate investment trusts.”

At the same time, Hong Kong should stay ahead of the curve in promoting other asset classes such as infrastructure and digital assets, says Ho. “Lee’s objectives will make Hong Kong more vibrant and diverse by transforming the city from a traditional to a modern international financial center. They will foster deeper links with the Chinese mainland and our regional neighbors.”

Another of Lee’s pledges is to raise Hong Kong’s overall competitiveness and pursue sustainable development as the city’s economic vitality and competitiveness have been buffeted by COVID-19 and other internal and external reasons.

Lee’s manifesto lays out six core policies to achieve the goal, including lifting Hong Kong’s international financial position and promoting its core strengths as well as turning the city into a world technology center.

In Eden Wong’s view, the SAR government should introduce more resources and policies to attract and retain tech-savvy talent, or upgrade the capabilities of the local workforce with relevant technology skills.

Therefore, the government should consider commissioning a large-scale review of the skills, training and workforce development needs of Hong Kong, including reassessing the skills and capabilities of the workforce, the key skills and competencies that will be in high demand in the medium to long term, as well as the potential to achieve targeted reforms in the education and training system.

Ho believes that Hong Kong’s simple tax system and low tax rate are two of the pillars for maintaining the city’s competitiveness. The Organization for Economic Cooperation and Development’s BEPS (base erosion and profit shifting) 2.0 project unveiled in October last year, which includes a proposal to introduce a global minimum corporate tax of 15 percent from as early as next year, will have a great impact on international tax rules, he says.

In the context of a post-BEPS era, Hong Kong should review its existing tax concessionary regime and consider introducing new rules to bolster Hong Kong’s competitive edge. The government should actively engage with stakeholders and multinational enterprises to ensure that any changes made to its tax regime and tax administrative system are practical and viable for the future, says Ho.