Capital costs seen burying half of providers
About half of the Mandatory Provident Fund (MPF) providers in Hong Kong eventually could withdraw from the market, according to the regional head of an insurance group.
Rex Auyeung Pak-kuen, managing director and chief executive of Principal International Asia, one of the 20 MPF trustees, said some competitors could leave the market because of high costs.
'This is a market in which the capital requirement is very high,' he said yesterday.
'I think about half of the players might find it too costly to operate in this market and withdraw eventually.'
Mr Auyeung said more than 4,000 employers with 40,000 employees had appointed Principal as their MPF provider. More are expected to sign before the December 1 deadline.
Principal had enhanced its facilities to deal with increasing enquiries about MPF schemes.
'We are also one of the first service providers to distribute an employer guide, so that our members will find it easier to administer their MPF schemes,' Mr Auyeung said.
He believed competition among MPF providers would not stop after the implementation deadline.
'This is only the first phase . . . after the implementation [of the MPF scheme], some employers might want to switch to another service provider. We hope to enhance our reputation in the market so that we can attract these companies,' he said.
The MPF ordinance requires all 300,000 employers who do not operate an occupational retirement scheme to enrol their 2.2 million staff in an MPF plan.
On Saturday, Mandatory Provident Fund Authority (MPFA) deputy managing director Alan Wong said he expected 30 per cent of employers to miss the enrolment deadline.
Figures from the MPFA, recorded about two weeks ago, showed only 88,000 employers - or 35 per cent of eligible employers - had enrolled for MPF schemes.
Mr Auyeung said he estimated the figure to be higher.
'I think between 50 and 60 per cent of employers have registered, as activity over the past month has been intense.'