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WEDNESDAY, JULY 30, 1975
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GOVERNMENT BONDS BILL PASSED
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THE LEGISLATIVE COUNCIL TODAY APPROVED THE LOANS (GOVERNMENT BONDS) BILL 1975 WHICH GIVES LEGAL AUTHORITY FOR THE GOVERNMENT TO ISSUE HONG KONG DOLLAR DENOMINATED BONDS AS ONE OF THE MEANS TO MEET THE BUDGETTED DEFICIT.
THE BILL COMPLETES THE LEGISLATIVE PROGRAMME FOR INTERNAL BORROWING AND WAS WELCOMED BY TWO UNOFFICIAL MEMBERS.
THE HON. LEE QUO-WEI SAID: WHILE SERVING ITS INTENDED PURPOSE, THE ENACTMENT OF THE BILL WILL HAVE THE IMPORTANT CONSEQUENCES IN CONSOLIDATING THE POSITION OF HONG KONG AS FINANCIAL CENTRE.
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HE NOTED THAT THE ATTRACTIVE TERMS ON WHICH THE BONDS WOULD BE ISSUED NAMELY TRANSFERABLE FREE IN BEARER FORM, EXEMPT FROM STAMP DUTY, INTEREST AND PROFIT TAXES SHOULD WHET THE APPETITE OF INVESTORS.
+ALL THESE ATTRACTIONS,+ MR. LEE ADDED, SHOULD RESULT IN POPULAR INVOLVEMENT BY THE GENERAL PUBLIC AND REGULAR TRADING, THEREDY, LEADING TO THE FORMATION OF AN ORDERLY AND ACTIVE MONEY MARKET TO INTERNATIONAL STANDARDS.+
ANOTHER UNOFFICIAL SPEAKER, THE HON. LI FOOK-WO, SAID THAT IN VIEW OF THE STATE OF THE MONEY MARKET IN THE PAST FEW MONTHS, AND STEADY INCREASE IN BANK DEPOSITS TOGETHER WITH THE VERY HIGH AVERAGE LIQUIDITY RATIO IN HONG KONG'S BANKING SYSTEM, HE BELIEVED THE TIME WAS NOW RIGHT TO ISSUE THE GOVERNMENT BONDS LOCALLY.
HE FELT THAT THE INITIAL ISSUE OF $250 MILLION IN FIVE-YEAR. GOVERNMENT BONDS SUGGESTED BY THE FINANCIAL SECRETARY IN A SPEECH TO MEMBERS OF THE CHINESE DANKS ASSOCIATION WAS AN APPROPRIATE AMOUNT AS IT REPRESENTED ABOUT THREE QUARTERS PER CENT OF TOTAL BANK DEPOSITS IN MAY 1975.
THE TWO UNOFFICIAL MEMBERS ALSO CALLED ON THE GOVERNMENT TO ACTIVATE THE FINANCIAL SECRETARY'S IDEA OF SETTING UP A LOANS BOARD TO CO-ORDINATE ALL PUBLIC SECTOR BORROWINGS AND TO SUPERVISE THE TRANSACTION OF FOREIGN CURRENCIES INVOLVED THEREIN.
MR. Q.W. LEE SAID IN VIEW OF THE FACT THAT GOVERNMENT AND QUASI-GOVERNMENT ORGANISATIONS WILL HAVE TO GO MORE INTO DOMESTIC AND INTERNATIONAL MARKETS, IT WAS IN THE PUBLIC INTEREST FOR THESE ACTIVITIES TO BE SUPERVISED AND CO-ORDINATED UNDER ONE BODY.
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MR. LEE'S VIEWS ON THE NEED FOR A CENTRAL LOANS BOARD WERE SHARED BY MR LI FOOK-WO WHO SAID THE FUNCTIONS OF SUCH A BOARD WOULD CERTAINLY HELP CLARIFY SOME OF THE POINTS RELATING TO THE ISSUE AND TRANSACTIONS OF GOVERNMENT BONDS.
MR LEE ALSO CALLED ON THE GOVERNMENT TO MAKE A CLEAR UNDERSTANDING AT THE OUTSET ON THE LIQUIDITY ASPECT OF THE BONDS AS IT WAS MOST IMPORTANT FACTOR WHICH DETERMINED THE SUCCESS OF BOND ISSUES.
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