At its inauguration ceremony on December 5, the Financial Secretary, John C
Tsang, welcomed the establishment of the Hong Kong Private Equity Finance Association
as another milestone in the development of Hong Kong's financial services industry.
He noted that private equity is a key component of Hong Kong's asset management
sector, and that its growth and development in recent years has been encouraging.
At the end of September this year, total capital under management in private
equity funds in Hong Kong accounted for about one-fifth of Asia's total, amounting
to some USD100bn. In the first nine months of 2013, Hong Kong raised some USD10bn
of private equity funds, which is about 30 percent of total funds raised in
"Our region has a growing number of high-net worth individuals who are
keen to explore investment options beyond Asia," Tsang said. "As a
global financial center in the Asian time zone with free flows of information
and capital, a robust regulatory regime and a simple tax system, Hong Kong is
the natural nexus to bridge this two-way flow of capital."
As he noted that Hong Kong is facing strong competition from other financial
centers in the region, he emphasized that the Government is not being complacent,
and has been "proactive in sharpening the city's competitive financial
To attract more private equity funds to domicile in Hong Kong, in his Budget
in February this year, Tsang proposed legislative amendments to introduce open-ended
investment companies, and to extend the profits tax exemption for offshore funds
to include transactions in private companies, which are incorporated or registered
outside Hong Kong and do not hold any Hong Kong properties nor carry out any
business in Hong Kong.
He confirmed that the Government is taking forward these proposals, and noted
that the Financial Services Development Council included the industry's recommendations
on these two initiatives in reports issued in November. The Government would
also welcome ideas and suggestions from the Private Equity Finance Association
on ways to further facilitate the industry's competitiveness.