ENG-2001 — Page 125

FINANCIAL AND MONETARY AFFAIRS

choose to remain in the existing scheme or join a MPF scheme. At the end of 2001, there were 6065 MPF-exempted ORSO schemes covering more than 500 000 employees.

Mandatory Provident Fund Schemes Authority

The Mandatory Provident Fund Schemes Authority (MPFA), which was set up in September 1998 under the Mandatory Provident Fund Schemes Ordinance. (MPFSO), is tasked with the responsibility of the regulation and supervision of the MPF System and ensuring compliance with the MPFSO. Two statutory committees, the MPF Schemes Advisory Committee and the MPF Industry Schemes Committee, have been established to advise the MPFA on the overall operation of the MPFSO and the Industry Schemes, respectively. A MPF Schemes Appeal Board has also been set up under the MPFSO to hear appeals against the decisions of the MPFA.

To ensure that the interests of MPF scheme members are protected, the MPFA closely monitors the operation of MPF trustees and other service providers, investigates complaints about non-compliance and takes enforcement actions accordingly. Proactive inspections are also carried out at business premises to ensure compliance of employers in enrolling their employees in MPF schemes and making contributions. On public education, the MPFA's emphasis for 2001 was on MPF investment.

Apart from supervising and regulating the MPF System, the MPFA is also the Registrar under the ORSO.

Developments in Recent Years

The MPFA continues to review the MPF legislation in the light of operational experience. In May, the Mandatory Provident Fund Schemes (Amendment) Bill 2001, containing amendments related to certain operational and technical issues of MPF schemes, was introduced into the Legislative Council. In addition, an MPF Schemes Operation Review Committee comprising representatives of employers, employees and service providers was set up in August. It is tasked to undertake a comprehensive review on the administrative and operational aspects of the MPF legislation and to make relevant recommendations to amend the MPF legislation in order to enhance the effectiveness and efficiency of the MPF System. The Review Committee completed the first phase of its work by the end of the year. Taking into account its recommendations (which have been endorsed by MPFA), the Government plans to introduce a bill to amend the MPF legislation in 2002.

During the year, the MPFA has reviewed the ORSO legislation with a view to facilitating the administration of ORSO schemes and improving the effectiveness of scheme regulation. The industry has been consulted on the proposed legislative amendments, which would be submitted to the Government in 2002.

Financial Links between Hong Kong and the Mainland

Hong Kong provides Mainland entities with an efficient access to international capital through its banking, equity and debt markets. Nevertheless, the cross- boundary capital flows have by no means been one-way. Direct investment and inter- bank fund flows have developed in both directions. Hong Kong's banks have maintained a strong presence in the Mainland. The financial links between Hong Kong and the Mainland would be further strengthened with China's accession to the

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