Blog
Visit to Papua New Guinea
A gist of the blog:
Last week, I paid my very first visit to Papua New Guinea (PNG) to attend the Finance Ministers' Meeting (FMM) of the Asia-Pacific Economic Cooperation. Most Hong Kong people may find this Australia's neighbouring island country unfamiliar. Given various historical and geographical factors, the economic development of PNG is lagging behind with relatively weak infrastructure. To attract investment and develop the economy, improvement to the transportation network to facilitate the circulation of people and goods would be necessary.
In fact, even though we have entered into the era of "Industrialisation 4.0" of internet, internet of things and artificial intelligence, the importance of infrastructure never diminishes. Global funding demand for infrastructure development is huge. It is necessary to attract more funding and investment from the private market, instead of relying on resources from governments and multilateral development agencies.
On the other hand, more investors and capitals around the world are looking for long-term projects with stable return. Infrastructure projects are one of the options. How to make infrastructure projects more investible and bankable, and direct funding of the financial market towards projects with practical needs, manageable risks and better return is the key to success. Hong Kong has extensive knowledge and experience in infrastructure financing and has been pursuing different measures in this regard.
Looking ahead, we need to be innovative in infrastructure financing. Securitization of infrastructure loans is one option. The Hong Kong Mortgage Corporation Limited under the Hong Kong Monetary Authority has conducted a study in this area.
Study findings show that the securitisation of infrastructure loans would allow banks to cash in and at the same time, meet the needs of investors looking for long-term projects with manageable risk and stable return (e.g. pension funds and insurance companies). The setting of investment quota by investors for individual projects would be more flexible, achieving a multi-win situation.
Besides infrastructure financing, the FMM also discussed about application of Fintech and financial inclusion, which are also focus areas of our current work. In gist, our work direction aligns with international trend on funding and financial services. We will continue with our effort to break a new ground in our local financial services, and enhance Hong Kong's position as an international financial centre.
October 21, 2018
