Hong Kong’s financial service industry should act “bolder and faster” to unleash the untapped potential of its various sub-sectors including trade finance, former chief executive of the city Leung Chun-ying said on Friday.

Leung also called for efforts to create a new financial statutory body and boost ties with the Chinese mainland.

Leung, who is also vice-chairman of the National Committee of the Chinese People’s Political Consultative Conference, the nation’s top political advisory body, made the remarks at the Asia-Pacific Structured Finance Association’s (APSA) Inaugural Master Series 2024.

Leung said the sector is not just about initial public offerings, the stock market, or commercial banks, as there are many “sub-sectors” that present immense untapped potential

The event was co-hosted by APSA and the Asian Academy of International Law and addressed growing concerns over the Hong Kong Special Administrative Region’s financial center status.

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The financial services sector is one of SAR’s most important economic pillars, accounting for 23.4 percent of the city’s GDP and providing some 276,200 jobs, or 7.5 percent of total employment in 2022, data from the Hong Kong Trade and Development Council show.

It is also the sector that produces the highest GDP per capita, and employs personnel with  the highest level of education.

Leung said the sector is not just about initial public offerings, the stock market, or commercial banks, as there are many “sub-sectors” that present immense untapped potential.

Among them is trade finance. According to Leung, Hong Kong’s total trade volume is about three times that of GDP as the city has raised its prowess as an entrepot, importing goods into the mainland and exporting goods overseas.

“We don't produce anything, but we sell things for other people, for third parties. We don’t consume a lot in a small society, but we buy a lot from other countries. When goods flow, you need finance to go with them,” Leung told a room packed with financial experts.

Also, there are opportunities within the larger financial services sector to help the country’s space industry as well as growing high-value-added maritime services, Leung added.  

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In Leung’s view, to help realize the untapped potential of Hong Kong’s financial service sector, several things need to happen.

Hong Kong should make efforts to attract mainland enterprises, including state-owned enterprises, and develop in a bolder and faster manner

First, the Hong Kong government should legislate and turn the Financial Services Development Council (FSDC) into a statutory body and grow it as quickly as possible into another Trade and Development Council, Leung said, adding that the FSDC should have full-time officers in the mainland.

The FSDC was established in 2013 by the HKSAR government as an advisory body to promote the financial industry.

As of last December, the FSDC has published 204 recommendations, of which 66 percent have been adopted. These include the then-controversial rule change in 2018 that allowed companies to list with weighted voting rights — a share structure widely adopted by new-economy firms to raise capital without their founders losing control.

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Also, everyone who has a stake and duty in growing Hong Kong’s financial service sector should have a permanent and proactive office in Beijing and other commercial cities on the mainland for the purpose of information generating, lobbying, and promotion, according to Leung.

Third, Hong Kong should make efforts to attract mainland enterprises, including state-owned enterprises, and develop in a bolder and faster manner.

“Time is of the essence,” Leung said. “The time to market for our new products has to be shorter.”