China Daily Hong Kong Edition: Clarity spells appeal

Lin Chen, chair professor of Finance at the Hong Kong University, says some policies in Qianhai are not clear. (Parker Zheng / China Daily)Qianhai Cooperation Zone in Shenzhen should make greater efforts to reduce policy ambiguity in order to attract more Hong Kong enterprises, said Lin Chen, chair professor and associate dean of the Faculty of Business and Finance at the University of Hong Kong.

“Right now, many Hong Kong enterprises know about Qianhai. Some of them have already set up offices there. However, some policies of the zone are not clear,” Lin told China Daily in an exclusive interview on the sidelines of Qianhai Conference 2014, held in Shenzhen from Dec 6 to 7.

He cited cross-border loans, one of the major financial innovative policies in Qianhai, as an example. “Although enterprises registered in Qianhai are able to borrow money from banks in Hong Kong, there are limits on the use of the cross-border loan,” Lin said.

“Uncertainty exists on whether the loan can only be used in financial businesses in Qianhai, or it can also be used in businesses elsewhere,” he explained.

Lin suggested that Qianhai do more toward promotion, policy interpretation and increasing transparency in order to attract more Hong Kong enterprises to operate businesses in the zone.
In terms of attracting Hong Kong financial institutions specifically, Lin said increasing flexibility in capital flow and reducing taxes are the two solutions. “As yuan deposits in Hong Kong are very large, banks in the city may want to put some of the deposits directly in their Qianhai branches and use them in the real economy, apart from providing cross-border loans,” he said.
However, he acknowledged that this is hard to realize at the present time. “At the same time, tax incentives given by the Qianhai zone also play a role in attracting, for example, fund companies,” he added.

Aside from exploring innovation in financial services, Lin stressed that Qianhai should “make some difference” in the incubation of innovative enterprises. “For instance, it could introduce more venture capital or private equity (to help incubate those innovative enterprises).”

According to the Qianhai Authority, as of Nov 30, the number of enterprises registered in the zone reached 17,778, with a total registered capital of nearly 1.2 trillion yuan ($194 billion). Of these, 939 are Hong Kong enterprises.

sally@chinadailyhk.com
http://www.chinadailyasia.com/2014-12/10/content_15201591.html