Blog

Trip to Luxembourg

In the past few days, I attended the Annual Meeting of the Asian Infrastructure Investment Bank (AIIB) in Luxembourg. The theme of this year’s meeting covers “Cooperation and Connectivity”, “Digital Infrastructure Developments” and “Corporate Strategy of AIIB”. One of my reflections on the two-day meeting and bilateral discussions in Luxembourg is that Hong Kong’s commitment in developing infrastructure financing, green finance and financial technology (Fintech) in the past few years is on the right track. This allows us to meet the demand of the international market, while benefitting the development of Hong Kong’s economy at the same time.

On infrastructure financing, with the efforts of the Hong Kong Monetary Authority (HKMA)’s Infrastructure Financing Facilitation Office (IFFO) over the past three years, some 90 organisations have joined as IFFO’s partners. They include multilateral financial agencies and development banks, public sector investors, reputed private sector investors/asset managers, insurance companies, banks, infrastructure projects developers and operators, international business councils, and professional services companies. The IFFO has hosted over 20 meetings, seminars, and workshops to facilitate co-investment in rewarding infrastructure projects among partners.

In Mach this year, a memorandum of understanding was signed between the Chinese Ministry of Finance, AIIB, the Asian Development Bank, the Development Bank of Latin America, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank, the International Fund For Agricultural Development and the World Bank Group to jointly establish the Multilateral Cooperation Center for Development Finance (MCDF). The MCDF provides a multilateral coordination mechanism to foster information sharing, project preliminary preparation and capacity building in order to promote multilateral collaborations on infrastructure financing.

While the MCDF enables collaborations between multilateral financial institutions, IFFO focuses on catalysing financing in the private sector. With the estimated worldwide funding requirement of some USD1,700 billion per year in the run up to 2030, this large funding demand cannot be solely met by multilateral financial institutions. IFFO therefore plays an effective role in bridging the private sector to fill the funding gap.

In addition, the Hong Kong Mortgage Corporation Limited under HKMA is currently promoting securitisation of infrastructure loans. The Securities and Futures Commission also issued guidelines last year on the listing of qualified infrastructure companies. Such measures will further channel capitals in the private market to enter into mature infrastructure projects with effective operation and stable cash flow, giving full play to the function of financial services in supporting the real economy, and offering more options to investors.

As for green finance, we rolled out several measures in these two years to promote related development, including:

• Green Bond Grant Scheme;
• Government Green Bond Programme;
• Qualifying Debt Instrument Scheme.

The total amount of green bond issued in Hong Kong reached USB 11 billion last year, doubling the amount of that in 2017. Issuers include various international multilateral financial institutions, such as the Asian Development Bank, the World Bank and the European Investment Bank, etc.

I also took the opportunity to visit the Luxembourg House of Financial Technology and exchanged views with dozens of local startups there. They showed interest in Hong Kong’s Fintech development and the supporting policies. A delegation is being planned to join the Fintech Week in Hong Kong in November this year, during which a Luxembourg-themed pavilion will be set up to facilitate the exchange of ideas and collaborations with participants coming from all over the world. The Hong Kong Fintech Week last year attracted more than 8 000 startups and investors from over 50 countries and regions to join. In addition to business matching, a one-day tour to Shenzhan was arranged for delegates to visit leading local I&T companies, which was well received by the participants. This year, we will make unremitting efforts to bring this Fintech flagship event to new heights!

July 14, 2019