Guernsey to set up Hong Kong office in effort to tap fund and insurance business
Guernsey, the offshore financial centre for global fund management and insurance business, set up an office in Hong Kong last week, reflecting optimism on regional business opportunities even as an economic slowdown is poised to weigh negativity on activity in Hong Kong and mainland China.
Kevin Stewart, Minister of Commerce and Employment of Guernsey, said in Hong Kong that the regional economic slowdown and stock market uncertainty would not affect his government’s ambition to build relationships in Asia.
“There is never a right timing to expand our services. China still has 6.9 per cent GDP growth which I do not think is slow when compared with Europe and UK where growth is only 1 to 2 per cent,” he said.
Guernsey has a legal status a Crown dependency, which means it is independent from Britain but its defence and most foreign relations are handled by the British Government. Guernsey is made up of a main island plus three smaller islands, in addition to rocky outcrops, in the English Channel off the Southwestern shores of Britain.
The island supports financial products and services for global banks, investment funds, wealth management and insurance companies. These financial services account for 34 per cent of its GDP.
The island has 800 domiciled funds worth at £222.2 billion (HK$2.435 trillion), which are marketed to global investors. It also ranks as the fourth largest capital insurance domicile worldwide.
Companies which domicile on the island are eligible to apply for a stock market listing on exchanges in London, Hong Kong, Australia, and Euronext.
Stewart said Guernsey’s high corporate governance and international regulatory standards are among reasons that companies domiciled on the island have been able to raise funds on international stock exchanges.
Stewart said the liaison office in Hong Kong was to provide information to companies seeking to invest or set up in Guernsey as a entrepôt to Europe.
“We would like to attract more Hong Kong and mainland companies to come to Guernsey, which is an important gateway for investors to invest in Europe and the Britain. The new office in Hong Kong would promote our services to investors and explain our regulatory regime,” he said.
Under its tax code, non financial companies are not required to pay tax. Banks and other financial services companies are assessed 10 per cent corporate tax, while individuals are required to pay a flat 20 per cent tax on income.
He added that Guernsey has a double taxation treaty with many major countries.
Guernsey’s Hong Kong office, its second in Asia, was established nine years after the debut of its Shanghai address.
Dominic Wheatley, chief executive of Guernsey Finance, said the move is a recognition of Hong Kong’s status as a financial hub in the region.
“We believe that establishing a larger presence in Asia reflects current industry trends and is fundamental to our future strategy, particularly as Hong Kong is such an important hub not only for China, but Southeast Asia overall,” Wheatley said.
Hong Kong Investment Funds Association chief executive Sally Wong said Guernsey would likely compliment Hong Kong’s own ambitions to expand as a fund management centre.
“We welcome more parties within the value chain of the asset management industry to establish a presence here. It would only reinforce our position as an asset management hub,” Wong said.
“Of course, at the same time, Hong Kong has to beef up its service offerings, and initiatives...to bolster our position.”