The Private Wealth Management Association (PWMA) has welcomed a paper published by Hong Kong’s Financial Services Development Council (FSDC) to bolster Hong Kong’s value proposition as the family office hub in Asia. PWMA hopes the paper can be translated in a smoother coordination among different government agencies and departments when approving family offices that are setting up in the city.
In the FSDC paper titled Family Wisdom: A Family Office Hub in Hong Kong published last week, the council makes policy recommendations in terms of regulatory development, tax considerations, talent development and interdisciplinary coordination that should allow Hong Kong to stay competitive as the preferred location in Asia for establishing family offices.
Peter Stein, managing director at PWMA told Asian Private Banker that the association was one of the parties consulted by the FSDC in the course of drafting the paper. Whilst the details may be different, he said the direction of the policy recommendations are similar to the ones in the white paper published by the PWMA and KPMG in 2018.
“Hong Kong is already a very competitive place from a tax and business perspective, and it also has the benefits of its proximity and relationship with mainland China,” said Stein.
“However, one challenge we identified for aspiring family offices is that they need to reach out to different government agencies and departments to collect all the information and approvals they need to set up their business. What we hope is that this paper will help identify how Hong Kong can raise its game a bit more and make sure it is sufficiently competitive in areas where it can be, including with regard to tax and regulatory issues as well.”
He highlighted that enhancing interdisciplinary coordination is something that can “yield maximum gain with minimum effort”. Other than addressing the need for better government departmental coordination in the paper, Stein commended that progress has been done where InvestHK launched a website Hong Kong: A Leading Hub for Family Offices a few months ago. The site shows the steps needed to be taken for a family office to set up in Hong Kong (see below), with links to different circulars issued by respective government departments or public bodies.
Now is the best time to promote Hong Kong’s capabilities
While the National Security Law has raised concerns about whether it is opportune at this stage to promote Hong Kong as a location for establishing a family office, Stein said the recommended improvements in business infrastructure are not controversial and should be implemented sooner rather than later.
“Remember that we already have quite a lot of family offices operating here. I think it is good that the paper is coming out now, because the sooner it comes out, the sooner you can make progress,” said Stein.
“In terms of political stability, I think every family has to evaluate these things and make their own decisions. Hong Kong has had to deal with uncertainties many times in its past, so this is not entirely new. I think the political uncertainty, particular the US and China relationship, is one of these macro factors, just like the coronavirus, that we have to deal with. If Hong Kong can keep focusing on making sure that its strengths are maintained and improved on, this is the best thing that it can do to ensure its long term viability as a global wealth management hub.”
Government more supportive of Hong Kong as an AM and WM hub
In addition to conducting research and facilitating the establishment of family offices in the city, the Hong Kong government seems to have taken on a more proactive role in securing Hong Kong’s status as an asset and wealth management hub, as illustrated by the recent launch of the Wealth Management Connect scheme and the support in launching apprenticeship programmes to nurture talents in these sectors.
“We have seen some really positive support to wealth and asset management in the past few years,” Stein pointed out. “The government recognises Hong Kong’s status as a private wealth management hub and seeing the industry’s potential, the government has become increasingly supportive. Naturally, we are pleased about that.”