Hong Kong capital investment scheme’s 50 applications in a month shows ‘strong confidence’ from wealthy: government
- InvestHK says it has had 1,600 inquiries since March 1 launch, with 70 per cent of interest from professional services providers
- Authorities expect up to 4,000 people a year to join the scheme, bringing in about HK$120 billion annually
A new Hong Kong scheme to attract capital and the wealthy has had more than 50 applications in a month, with authorities saying it is a signal of “strong confidence” in the city among high-net-worth individuals.
InvestHK, the agency in charge of attracting foreign investment, said on Tuesday the New Capital Investment Entrant Scheme had also received more than 1,600 inquiries since its launch on March 1. About 70 per cent of the inquiries were from professional services providers.
“It shows strong confidence among high-net-worth individuals in [a] stable business environment, and the diverse investment opportunities Hong Kong has to offer,” said Alpha Lau Hai-suen, the director general of investment promotion.
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She added the government would work on the introduction of more incentives to boost the city’s competitiveness as an asset and wealth management centre.
The revised investment migration programme aimed at the wealthy and their families was announced by Chief Executive John Lee Ka-chiu in his policy address last October.
Authorities earlier said they expected up to 4,000 people to join the scheme annually, and that it would bring in about HK$120 billion (US$15.3 billion) each year.
The programme was designed to offer a faster route to residency for people who invested at least HK$30 million in city stocks or other assets, excluding residential property – three times the requirement of a previous version.
Candidates must also meet the standard immigration and security requirements.
Ninety per cent of the HK$30 million must be invested in financial assets such as equities on the Hong Kong stock exchange, debt securities, cash deposits, subordinated debts, eligible collective investment schemes and limited partnership funds.
The remaining HK$3 million must be investments related to the development of the innovation and technology sector and strategic industries.
Investments must remain in the city’s financial markets for at least seven years.
People who have their sole residence in mainland China are excluded from the scheme.
But Chinese nationals with permanent residence status in a foreign country, or people who are residents of Macau or Taiwan, are eligible.
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Several government agencies have responsibility for vetting applicants, including InvestHK, which ensures candidates fulfil the financial requirements for the scheme.
The Immigration Department handles visa and entry permit applications.
Professor Terence Chong Tai-leung, executive director of the Lau Chor Tak Institute of Global Economics and Finance at the Chinese University of Hong Kong, said more than 50 applications in a month was a “good start”, noting that such investment normally started slowly.
But he added that the government’s expectation of up to 4,000 people joining annually, equivalent to about 10 people investing at least HK$30 million daily, was difficult to realise.
“The attraction of people to join the scheme largely depends on Hong Kong’s overall market conditions,” he said.
Chong said measures such as lowering the threshold of the investment sum as well as allowing a certain amount of the investment to be in residential property could help attract more investors.
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Gary Ng Cheuk-yan, a senior economist with Natixis Corporate and Investment Bank, said that while the scheme was relatively simple, had clear rules and allowed for low-risk asset investments, it would depend on how valuable investors deemed the city’s permanent residency status.
“Seven years is longer than many places,” he said. “The challenging economic climate and geopolitical sentiment may also deter some applicants.”
Lawmaker Doreen Kong Yuk-foon also called it a good start but urged the government to closely monitor the scheme and talk to investors to learn about their needs to fine-tune the programme.
She asked the authorities to review the scheme half a year after the launch, and also to compare it with similar programmes in countries such as Singapore to see what adjustments were needed to make it more appealing.
The scheme has often been compared with Singapore’s, which in March last year raised the threshold for its global investment citizenship programme from S$2.5 million (US$1.85 million) in assets based in the city state to at least S$10 million – about double the amount asked for by Hong Kong.
It also required investors to set up businesses and hire dozens of Singaporean staff.
Authorities from the city state said the new guidelines would help with the selection of “individuals with the ability to make more economic impact for Singapore”.
Hong Kong’s Secretary for Financial Services and the Treasury Christopher Hui Ching-yu earlier said he was “confident” the city’s scheme was competitive with Singapore’s and other regional jurisdictions.
Additional reporting by Fiona Sun
