Delays in modernising Hong Kong's trust ordinance could be losing the city millions of dollars in professional fees and services, according to the Hong Kong Trustees' Association.
'The delay is very concerning because we are losing a lot of business to Singapore and Malaysia at a time when we should be attracting business,' says association chairman Carolyn Butler.
Proposed changes to the antiquated laws were scheduled to be presented before the last session of Legco but were delayed for a year, apparently because of a lack of time. Hong Kong has not revised its trust laws since 1937 and industry professionals consider the legislation dated and limited in scope compared with many competing offshore jurisdictions
Butler says rising regulation and administration costs in Europe are diverting trust business to Asia. Wealth expansion across Asia is also creating a need for succession planning and asset management in the form of trusts.
'Hong Kong is still a good place for the trust business, but we would be even better if the trust ordinance was amended,' says Butler, who is also CEO of The Hong Kong Trust Company.
'If you have good trust laws, it opens the way for innovative financial instruments structured to protect assets. At the moment, special purpose vehicles managed under trust arrangements are exploding around the region, but Hong Kong is missing out and doesn't seem to be focusing on these issues.'