| Enhancing Core Industries
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37. To stay competitive, Hong Kong must excel in three aspects: quality, creativity and speed. The core industries in Hong Kong, comprising financial services, logistics, tourism, and producer and professional services, possess a considerable competitive edge in these three aspects.
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Financial Services
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38. In order to maintain Hong Kong's status as an international financial centre, we must move up the value chain to attract quality companies to list in Hong Kong and investors to participate in our market. The Financial Services and the Treasury Bureau is working with the organisations concerned to implement the Corporate Governance Action Plan announced in mid-January. This will upgrade the standard of governance for listed companies and the quality of the equity market. Within this month, I expect to receive the Expert Group's report making recommendations on the regulatory structure and operation of the securities market in respect of listing matters to further improve market quality.
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39. With the rapid accumulation of capital in the region, Hong Kong is making strides to become the bond and fund management centre for Asia. The Hong Kong Monetary Authority (HKMA) has already established a Real Time Gross Settlement System for the Hong Kong Dollar and the US Dollar. The HKMA has also
established links with the Mainland's government bond and international bond settlement systems so as to reduce the settlement risk of bond trading. The HKMA co-operates actively with central banks in the region on development of an Asian Bond Fund to promote the growth of Asian bond markets. The Mortgage Corporation, Airport Authority, MTR Corporation and Kowloon-Canton Railway Corporation will step up the issuance of bonds in Hong Kong. I welcome investment banks to enhance their fixed-income operations in Hong Kong, including secondary trading.
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40. Fund management is the core activity of the financial services industry. It is well-developed in Hong Kong, and the Government encourages fund managers to expand their business here. The Securities and Futures Commission has approved the issue of qualified retail hedge funds and will consult the industry on codes relating to real estate investment trusts.
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41. In order to foster the development of retail bonds and other financial products, we will introduce a bill to amend the Companies Ordinance by July to simplify the procedures for the registration and issue of prospectuses. We will make tax proposals to assist the development of the bond market and the fund management industry. I will return to this later.
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42. The insurance industry is an important component of the financial market. To enhance the effectiveness of the Office of the Commissioner of Insurance, we are studying arrangements to turn it into an agency independent of the Government. Such an arrangement is in line with international regulatory trends.
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