ENG-2009 — Page 120

72 | Financial and Monetary Affairs

Asset Management Centre

China's strong economic rebound spearheaded Asia's overall economic recovery and created investment opportunities in the region in the wake of the financial tsunami. Hong Kong with its strong asset management foundation and world-class financial infrastructure is benefiting greatly from the huge demand for wealth and asset management services in the Mainland. Hong Kong is also well placed to become Asia's premier asset management centre.

The city's combined fund management business amounted to US$750 billion at the end of 2008, over 64 per cent of which was sourced from non-Hong Kong investors, underlining the city's strong appeal to foreign investment capital. At the end of December, there were 86 approved fund management groups managing 1 955 unit trusts and mutual funds authorised by the SFC.

During the year, the Government continued to lead financial services delegations to the Mainland and different countries to promote Hong Kong's financial services and its advantages as a major asset management centre in Asia.

Developing Islamic Finance

The Government is also pressing ahead with creating a conducive platform for developing Islamic finance in Hong Kong. After amending the relevant laws, tax neutrality arrangements will be put in place for the issue and transaction of common types of Islamic bonds vis-à-vis their conventional counterparts.

In November, the SFC signed a

signed a Declaration on Mutual Co-operation on Development of Islamic Capital Market and Islamic Collective Investments Schemes. (the Declaration) with the Securities Commission Malaysia. The Declaration provides a framework for mutual recognition of Islamic collective investment schemes by Malaysia and Hong Kong, which is an impetus for developing further Islamic finance in Hong Kong.

Improvemens to the Mandatory Provident Fund Schemes Ordinance

Since the enactment of the Mandatory Provident Fund Schemes Ordinance in August 1995, the Mandatory Provident Fund Schemes Authority (MPFA) has been reviewing and making proposals to improve the Mandatory Provident Fund (MPF) legislation based on operational experiences. The amendments have simplified the running of MPF scheme, strengthened protection for scheme members and improved regulation of the schemes and their investments. On July 9, the Legislative Council passed the Mandatory Provident Fund Schemes (Amendment) Bill 2009 to allow employees to transfer in a lump-sum accrued benefits derived from their mandatory contributions made during their current employment from a contribution account to another MPF scheme of their choice at least once a year.

The new law lightens the portability restrictions on employees' mandatory contributions and gives them access to a broader spectrum of MPF service providers, MPF schemes for investing mandatory contribution funds. About 60 per cent of MPF benefits are expected to become portable after implementation of the new law,

Page 120Page 121