We hear a lot about whether Hong Kong is over-reliant on particular economic sectors, and whether we need a more diversified economy.
This may be the case if we have industries that are in decline or do not create much value. But it does not make sense when our industries are cutting-edge and high-value. If anything, we should be bolstering these sorts of activities.
The best example of this is our financial services industry. It is one of Hong Kong’s major strengths, and we should be focused on developing it – and boosting our competitive position as a hub for the industry.
Most officials and industry leaders agree broadly on how we should do this.
We need to maintain our current advantages in terms of a high-quality legal system, a world-class regulatory structure, low taxes, and an open operating environment that welcomes players from around the world.
We also need to keep up with the latest trends in the industry, by facilitating regulatory and technological innovation – for example in fields such as fintech.
What else can we do?
The financial services sector around the world is, if anything, going to become more globalized and more integrated with other disciplines, especially technology. Helping to stimulate ideas – through discussion, debate and research – will play an important role in keeping Hong Kong at the forefront of international financial hubs.
Around two years ago, the Hong Kong Monetary Authority came up with a concept to promote Hong Kong’s development in financial leadership. The plan was for an institution that, the HKMA officials hoped, could bring talent and knowledge together to boost Hong Kong’s competitiveness as a financial center.
The HKMA consulted a group of experts, who agreed that such an institution was a good idea. They also recommended that it should be formed alongside the existing Hong Kong Institute for Monetary Research.
The Academy of Finance, as the institution was named, would attract global talent from various areas of the financial services sector to take part in events such as seminars, and it would contribute to research. However, it would not offer vocational or basic professional training.
HKMA Chief Executive Norman Chan said he saw it as contributing to Hong Kong’s ‘soft power’.
Financial Secretary Paul Chan Mo-po formally announced the plan in his budget speech earlier this year. And in late June, the Academy of Finance – funded by the HKMA – officially opened its doors in Pacific Place.
The Academy’s core aims are to help promote the development of high-level financial leadership and to serve as a center for monetary and financial research.
It will run a Leadership Development Program which will cater to senior-level managers not only in financial institutions but from regulatory authorities and the professional services and academic finance-related sectors.
The institute has already lined up an impressive list of speakers for seminars and other events, including Stephen Schwarzman of the Blackstone Group, former US Treasury Secretary Tim Geithner and HSBC chairman Mark Tucker.
The Academy’s research activities will come under the Hong Kong Institute for Monetary and Financial Research – which forms a subsidiary of the Academy. In addition to its past research areas, it will engage in applied finance research.
What does all this mean for Hong Kong as a financial services center?
The key issue here is the role of what Norman Chan refers to as ‘soft power’ or ‘soft infrastructure’. Maybe it is hard to define exactly what this is – but it is something that differentiates a true international financial center from the much larger number of second-tier hubs.
It is not simply about image – although by attracting leading financial expertise to share ideas here, the Academy will help raise Hong Kong’s reputation. It is about the quality of the ideas and the awareness, vision and new thinking that takes place here.
While much of its work will be focused on top levels of the financial services sector, the Academy will try to reach out to promising younger talent in the industry. Hopefully, some of its activities will also help broaden understanding of the sector’s role and importance among industry bodies, tertiary institutions and the wider community.
The new institution will certainly benefit the whole economy by giving Hong Kong a soft power boost as a financial center.
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