ENG-2005 — Page 122

92 | Financial and Monetary Affairs

understanding of Fujian enterprises about Hong Kong's strengths as an international financial centre.

Enhancing Hong Kong's Competitiveness as an International Financial Centre

The Government is committed to strengthening Hong Kong's competitiveness as an international financial centre and the premier capital formation centre for the Mainland through enhancing its regulatory regime, promoting corporate governance, upgrading financial infrastructure and fostering the development of the bond market.

Enhancement of Hong Kong's regulatory framework will continue in the light of international experience and standards. The objective is an effective regulatory framework that will ensure sound business standards and confidence of the market but without unnecessary impediments. There are also other major initiatives to enhance Hong Kong's competitiveness as an international financial centre.

Upgrading of the Quality of Financial Reporting

Quality financial reporting is of paramount importance for upholding Hong Kong's corporate governance regime. The Hong Kong Financial Reporting Standards (HKFRS), which are issued by the HKICPA, have been fully convergent with the International Financial Reporting Standards (IFRS) in all material aspects since January 1, 2005. This uniform accounting platform, well understood by global investors and financial analysts, enables the comparison of corporations and their results in different jurisdictions and leads to greater confidence in the transparency and quality of Hong Kong's financial markets.

In addition, the Government is acutely aware of the need to maintain an effective, transparent and accountable regulatory regime for the accountancy profession that is on a par with international standards. The proposal to establish the Financial Reporting Council recognises the importance of reassuring the markets and the investing public that Hong Kong's financial reporting and corporate governance frameworks are, and will continue to be, robust.

The Financial Reporting Council, which is to be an independent statutory body, will oversee both an Audit Investigation Board and the Financial Reporting Review Committee. The former will be tasked to investigate suspected irregularities concerning auditors of corporations/collective investment schemes listed in Hong Kong, while the latter will be responsible for enquiring into suspected non- compliance of financial reports of such corporations/schemes with the relevant legal, accounting and regulatory requirements.

Building on the very strong public support received in the two public consultation exercises in September 2003 and February 2005, the Government introduced the Financial Reporting Council Bill into the Legislative Council in June 2005. At year-end, the bill was under the scrutiny of the Legislative Council.

Promoting Asset Management Business

The saving rates in Asia are high compared to other regions and this is expected to be a long-term trend. Located at the heart of Asia, Hong Kong is well positioned