XN000022-1996-03-29 — Page 3

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MPF beneficial to Hong Kong

The Secretary for Financial Services, Mr Rafael Hui, today (Friday) reiterated that the Government was committed to the Mandatory Provident Fund (MPF).

He said the scheme would not only offer retirement protection for Hong Kong's workforce, but would also create an important and positive impact on the further development of the territory's capital markets.

Speaking at the Hong Kong Capital Markets Association luncheon meeting, Mr Hui pointed out that the newly formed MPF Office would endeavour to develop a simple and effective MPF System within the next 12 months and there should not be any more delay.

At present, only one-third of Hong Kong's workforce has retirement schemes and Mr Hui said the MPF System would extend coverage to the remainder of the workforce.

With regard to MPF's impact on the capital market, Mr Huï estimated that there were about HK$120 billion of retirement funds in the market.

"When the MPF System is in operation, about HK$30-HK$40 billion contributions, or equivalent to about four per cent of GDP will be added to the MPF System each year," he said.

"This rapid growth in the accumulation of retirement funds will continue for quite some time, until the MPF System reaches maturity in 30-40 years.

"It is therefore obvious that the MPF funds will be a major impetus for the further development of Hong Kong's capital market."

Mr Hui also said he saw positive factors from MPF contributing to the development of debt instruments, both in the primary and the secondary markets.

He pointed out that the MPF Office would try to shape the regulation, rules and guidelines regarding MPF investments with the objectives to safeguard the scheme members against undue and unnecessary risks and to allow the fund managers sufficient flexibility to invest the funds for reasonable returns.

However, Mr Hui emphasised that the MPF Advisory Board and the MPF Office would consult widely and take fully into account the interests of all parties concerned in order to strike the right balance in making the investment rules and guidelines.

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