LCQ6: Setting up “wealth fund”
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Following is a question by the Hon Mrs Regina Ip (Hon Shiu Ka-fai to ask on her behalf) and a reply by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, in the Legislative Council today (July 6):
Question:
Currently, the Future Fund (FF) is placed with the Exchange Fund (EF). In accordance with the Exchange Fund Ordinance, the statutory purposes for which the EF is established are to use the fund for such purposes as the Financial Secretary thinks fit affecting, either directly or indirectly, the exchange value of the currency of Hong Kong, to maintain Hong Kong as an international financial centre, and to maintain the stability and the integrity of the monetary and financial systems of Hong Kong. Unless the Financial Secretary exercises his discretion pursuant to the resolution for the establishment of the Land Fund passed by the Provisional Legislative Council under section 29 of the Public Finance Ordinance on July 23, 1997, the investment of the FF is governed by the Public Finance Ordinance. As it is inappropriate to use the EF for high-risk investments, will the Government inform this Council whether it will, by drawing reference from the experience of the Singapore Government in using government assets to set up “Temasek”, consider “packaging” the three road harbour crossings in Hong Kong after the revocation of the franchise of the Western Harbour Crossing in August next year to set up a “wealth fund”, which is to be used under a public-private partnership approach to invest in sound investment projects with long-term value-added potential in the Guangdong-Hong Kong-Macao Greater Bay Area and the Northern Metropolis; if so, of the specific proposals; if not, the reasons for that?
Reply:
Acting President,
I am very grateful to the proposal to set up a “wealth fund”, with the ultimate aim of promoting investments in sound investment projects with long term value-added potential in Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and the Northern Metropolis. The proposal is actually in line with the Government’s strategy of promoting Hong Kong’s long-term development by making good use of the Future Fund (FF) and setting up the Hong Kong Growth Portfolio (HKGP). In response to the question, I, having consulted the Transport and Logistics Bureau on tunnel-related issues, provide a consolidated reply as follows:
On January 1, 2016, the FF was established by the Government with an initial endowment of $219.7 billion, being the balance of the Land Fund at the time, held as a notional savings account. On July 1, 2016, the Government injected one-third of the 2015-16 fiscal surplus, i.e. $4.8 billion, into the FF as its first periodic top-up. The FF is meant to secure higher returns for the fiscal reserves through long-term investments.
A large proportion of the FF is placed with the Exchange Fund and linked to the returns of its Investment Portfolio and Long-Term Growth Portfolio. Up to 2021, the FF has achieved an average composite rate of investment return of around 9.8 per cent. To make better use of the FF, the Financial Secretary (FS) announced in the 2020-21 Budget that 10 per cent of the FF, i.e. about $22 billion, will be deployed to set up the HKGP for making strategic investments in projects with a Hong Kong nexus, with a view to reinforcing Hong Kong’s status as a financial, trading and innovation and technology centre, as well as raising Hong Kong’s productivity and competitiveness in the long run, while seeking reasonable risk-adjusted returns.
Besides, to support the development of the GBA and facilitate the expansion of Hong Kong’s industries in the GBA so as to enable further integration into our country’s overall development, the FS announced in the 2022-23 Budget that the Government would increase the funding allocated to the HKGP by $10 billion, of which $5 billion would be used to set up a GBA Investment Fund. The Fund will focus on projects in the GBA that can benefit Hong Kong, including those undertaken by Hong Kong-based companies or companies with investment in the GBA.
As regards the Northern Metropolis, the FS also announced in the 2022-23 Budget that the Government would set aside $100 billion from the cumulative return of the FF to set up a dedicated fund in order to ensure that there would be sufficient funding for meeting the development needs under the Northern Metropolis Development Strategy and to expedite the implementation of projects in the area. The Northern Metropolis covers a number of projects, some of which are already underway. The Government will implement these projects in phases according to schedule with due consideration given to financial viability and sustainability. With the development of the Northern Metropolis, the private development projects in the area may also generate income for the Government.
Under the existing arrangement, toll revenue is credited to the General Revenue Account (GRA) and its balance, together with the balances of other funds established under the Public Finance Ordinance (Cap.2) (including Land Fund and Capital Works Reserve Fund), will automatically become part of the fiscal reserves. As far as promoting investments in the GBA is concerned, we can follow the existing arrangement of making injections into the FF from the GRA if the Government finds it necessary to increase the size of the FF. As for developing the Northern Metropolis, the Government will consider and explore various financing options, including the feasibility of enabling private sector organisations’ participation in the financing and provision of public services under public-private partnership. In other words, apart from seeking funding approval from the Finance Committee of the Legislative Council, we will work out appropriate financing arrangements for different infrastructure projects in the Northern Metropolis by carefully taking into account various factors, including their characteristics, economic values, commercial viability, the need for the Government to take part in their operations and construction costs. It is therefore possible that a mixture of different options may be adopted in terms of the financial arrangements for the projects in the Northern Metropolis.
However, we share Members’ goal of making good use of the Government’s assets and investing in sound investment projects with long-term value-added potential, so as to build a better Hong Kong.
Thank you, Acting President.
Jun 1, 2022 | Business
Uniqlo founder Tadashi Yanai reclaims the No.1 spot
SINGAPORE – WEBWIRE – Wednesday, June 1, 2022
Global headwinds blew away nearly a third of the combined wealth of Japans 50 richest, shrinking their collective net worth to US$170 billion. The complete list of Japans 50 richest on the 2022 Forbes list can be found at www.forbes.com/japan and www.forbesjapan.com/feat/japanrich, as well as in the June issue of Forbes Asia.
Soaring energy and commodity prices, as well as supply chain disruptions, dashed Japans hopes of an economic rebound. The yen fell 17% against the dollar since fortunes were last measured in April 2021. The meltdown extended to the stock market, with the benchmark Nikkei 225 stock index declining 12% in the same period. Overall, the wealth of 38 members on the list dropped from a year ago.
Clothing retailer Tadashi Yanai, who was the second richest last year, reclaimed the title of the countrys richest person. However, his fortune slid 44% to $23.6 billion as a sales slowdown in the domestic market and in China affected shares of his Fast Retailing, the parent of the Uniqlo store chain. Takemitsu Takizaki, founder of sensor-maker Keyence, climbs to No. 2 for the first time with $21.6 billion, although his wealth too declined by $4.2 billion from a year ago.
Rounding out the top three is SoftBank Group founder and CEO Masayoshi Son, whose net worth more than halved to $21.1 billion. Son, ranked No. 1 last year, took the biggest hit in both dollar and percentage terms. Amid a global tech rout, SoftBanks two Vision Funds reported a record $27 billion loss for the year ended March 2022. Apart from Son, a dozen others saw their fortunes fall by more than $1 billion.
Despite the turbulence, six newcomers overcame the odds to make their debut this year. They include the Sekiya family (No. 20, $2 billion), whose company Disco makes semiconductor processing equipment; scientist-turned-entrepreneur Keiichi Shibahara (No. 34, $1.35 billion), who founded Amvis Holdings to provide hospice care; Japanese beauty brand DHCs founder Yoshiaki Yoshida (No. 44, $1.03 billion) and Hachiro Honjo (No. 48, $950 million), chairman of Ito En, a maker of canned and bottled teas.
Three returned to the list after dropping off last year. They include online gaming tycoon Yoshikazu Tanaka (No. 43, $1.04 billion), founder and CEO of Gree, which gained traction from the launch of two new titles.
Nine dropped from the ranks, including Shintaro Yamada, founder and CEO of used-goods marketplace app Mercari, who was the biggest percentage gainer in the 2021 list. Shares of the company tumbled as it racked up losses in the nine months ended March 2022, partly due to a decline in listings.
The minimum net worth to make the list was $925 million, down from $1.15 billion last year.
The top 10 richest in Japan are:
- Tadashi Yanai; US$23.6 billion
- Takemitsu Takizaki; $21.6 billion
- Masayoshi Son; $21.1 billion
- Nobutada Saji; $9.3 billion
- Takahisa Takahara; $6.4 billion
- Shigenobu Nagamori; $4.6 billion
- Hiroshi Mikitani; $4.4 billion
- Masatoshi Ito; $4.35 billion
- Hideyuki Busujima; $4.2 billion
- Masahiro Noda; $3.5 billion
This list was compiled using shareholding and financial information obtained from the families and individuals, stock exchanges, annual reports and analysts. The ranking lists both individual and family fortunes, including those shared among relatives. Private companies were valued based on similar companies that are publicly traded. Net worths were based on stock prices and exchange rates as of the close of markets on May 13, 2022. The list can also include foreign citizens with business, residential or other ties to the country, or citizens who dont reside in the country but have significant business or other ties to the country.
For more information, visit www.forbes.com/japan and www.forbesjapan.com/feat/japanrich
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