The Government announced the details of the new Capital Investment Entrant Scheme (CIES) on December 19

Announcing the details of the new CIES at a press briefing, the Secretary for Financial Services and the Treasury, Mr Christopher Hui, noted the 2023-24 Budget set out that a new CIES would be introduced with a view to further enriching the talent pool and attracting more new capital to Hong Kong.

Mr Hui said, “The Policy Statement on Developing Family Office Businesses in Hong Kong, issued by the Financial Services and the Treasury Bureau in March, identified the new CIES as one of the eight policy measures to promote the growth of family offices, with the aim of attracting asset owners to set up in Hong Kong and tap into the diverse investment opportunities in Hong Kong by deploying and managing their wealth.

“The new CIES would help strengthen the development of the asset and wealth management, financial and related professional service sectors in Hong Kong, and bring more business opportunities and high-quality job prospects to all segments of the industry’s service chain.”

The new CIES will accept applications from eligible persons aged 18 or above (including foreign nationals, Chinese nationals who have obtained permanent resident status in a foreign country, Macao Special Administrative Region residents and Chinese residents of Taiwan). An applicant must demonstrate that he/she has net assets of not less than HK$30 million to which he/she is absolutely beneficially entitled throughout the two years preceding the application. An applicant must make an investment of a minimum of HK$30 million in the permissible investment assets, including investing a minimum of HK$27 million in the permissible financial assets and non-residential real estate , and placing HK$3 million into a new CIES Investment Portfolio. The Portfolio will be set up and managed by the Hong Kong Investment Corporation Limited to make investments in companies/projects with a Hong Kong nexus, with a view to supporting the development of innovation and technology industries and other strategic industries that are beneficial to the long-term development of Hong Kong’s economy.

A successful applicant may bring his/her dependants (including spouse and unmarried dependent children aged under 18 years) to Hong Kong. Permission to stay will normally be granted to the applicant and his/her dependants for not more than two years. Upon expiry of the two-year period, they may apply for an extension of stay for not more than three years, and may subsequently apply for further extensions of stay for not more than three years upon the expiry of each three-year period.  They may, upon a period of continuous ordinary residence in Hong Kong of not less than seven years, apply to become Hong Kong permanent residents in accordance with the law. If an applicant is unable to fulfil the continuous ordinary residence requirement, while continuously satisfying the financial requirements under the new CIES for not less than seven years, he/she may apply for an unconditional stay in Hong Kong. If the application is approved, the applicant will be free to dispose of the invested assets.

As announced in “The Chief Executive’s 2023 Policy Address”, a mechanism will be introduced for suspension of payment of Buyer’s Stamp Duty and New Residential Stamp Duty for incoming talent’s acquisition of residential property in Hong Kong (Suspension Mechanism). The Government will make legislative amendments for the Suspension Mechanism to cover the successful applicants under the new CIES.

Under the new CIES, Invest Hong Kong will be responsible for assessing whether the applications fulfil the net asset and investment requirements, and the Immigration Department will be responsible for assessing the applications for visa/entry permits, extensions of stay, etc. The Government aims to officially launch the new CIES and invite applications in mid-2024.

Hong Kong revives investment residencies to attract the wealthy

After eight years, the move responds to a duller city with slowing economy

HONG KONG — Hong Kong is bringing back an investment migration program it axed eight years ago in a bid to restore its status as a global financial hub within China’s sluggish economy and steady outflow of talent.

Wealthy individuals who invest more than 30 million Hong Kong dollars ($3.85 million) in non-residential real estate, equities and other financial assets will be eligible for Hong Kong permanent residency after seven years, the government announced on Tuesday.

Under the revised Capital Investment Entrant Scheme, which will begin accepting applications from mid-2024, foreign nationals and mainland Chinese individuals who hold foreign residency status will be granted the right of abode if they meet the requirements.

Those include investing HK$3 million into an investment portfolio managed by the Hong Kong Investment Corporation, a sovereign investment operation that aims to pour money into fintech, artificial intelligence, biotechnology and high-end manufacturing.

The right of abode for eligible family members has been updated to include same-sex partners.

“The objective of the scheme … is to benefit the real economy of Hong Kong,” Christopher Hui, the city’s deputy secretary for financial services and treasury, said at a press briefing. “We are very confident we are competitive.”

Hong Kong has been trying to attract the ultra-rich by offering tax-friendly policies, but so far the response has been muted. The previous capital investment entrant scheme was axed in 2015 after it helped transform Hong Kong into one of the world’s most expensive real estate markets, pricing out many local residents.

The city has since lost much of its luster among foreign investors due to geopolitical tensions and the slowing Chinese economy. Many multinational corporations have moved their headquarters elsewhere, taking with them expatriate employees.

Meanwhile, high net worth Chinese individuals are looking to park their money in places like Singapore due to concerns over Beijing’s tightened hold on Hong Kong.

The old program attracted mostly Chinese investors, said Denny Ko, founder of Primasia Metropolis Immigration Consulting. He added that the revamped scheme could attract a more diverse group of investors from around the region.

“But it is not innovative or aggressive,” he told Nikkei Asia. “If the overall policy is to attract capital and talent to the city, the scheme should also allow the purchase of one residential property within the portfolio.”

Harsh pandemic restrictions and a national security law sparked an exodus of local and expatriates. The population dropped from 7.5 million before the pandemic in 2019 to 7.42 million by the end of 2022.

The city is also struggling with a talent shortage, a problem acknowledged by Chief Executive John Lee, who has vowed to go on a “talent trawl” by introducing various work visa schemes including a Top Talent Pass Scheme.

Three out of four companies are finding it difficult to hire skilled workers for the first quarter of next year, according to an employment outlook survey by ManPowerGroup Greater China.

The new investment scheme could boost capital markets in the property sector, which has seen a downward trend since 2020. The total investment volume of commercial properties sold for HK$50 million or more has dropped by 4.7% in the second half of 2023 compared to the first half.

The financial center’s economic condition has been rather gloomy.

Earlier in December, Moody’s Investors Service downgraded the outlook of Hong Kong’s sovereign credit rating to negative due to its “assessment of tight political, institutional, economic and financial linkages between Hong Kong and [mainland China]”.

The city’s oldest business group, the Hong Kong General Chamber of Commerce, also foresees a more negative business environment in the coming year, citing a frosty geopolitical landscape, high interest rates and weak global demand.

In November, the Hong Kong government slashed the GDP growth forecast for this year from 5% to 3.2 %.

New Capital Investment Entrant Scheme will be launched soon!

According to the financial column of the Hong Kong Economic Daily, citing sources, Hong Kong mentioned in its February budget that it would introduce a new “Capital Investor Entry Scheme” and relevant details will be released soon. Compared with the previous round of the scheme that ended in 2015, the investment threshold is expected to be doubled to HK$20 million (equivalent to approximately US$2.6 million). Property investment is not included, and investment projects are expected to include start-ups or innovation and technology enterprise.