Policies give impetus to Hengqin-Macao modern finance

Two special financial policies, released by the end of 2021, will come into effect later this year to beef up local modern financial development and bring new opportunities for the diversified development of Macao's economy, according to a Jan 13 press conference by the Executive Committee of the Guangdong-Macao In-Depth Cooperation Zone in Hengqin.

The Trial of Qualified Foreign Limited Partner (QFLP) Pilot Plan, the first financial policy since establishment of the cooperation zone in September, was issued on Dec 29, 2021. It will take effect Jan 29, aiming to encourage overseas investors, especially those from Hong Kong, Macao, and Taiwan, to set up multi-currency venture capital and private equity investment funds.

Limitations to overseas shareholders or partners' scale of assets under management, self-owned assets, and financial licenses are not mandatory in the trial phase, yet factors including investors' strength, expertise of senior managers, and financial conditions will be valued when factoring in QFLP pilot qualifications.

More support will also be given to applicants that are beneficial to Hengqin's hi-tech industry and innovation and entrepreneurship development. Green channels have been opened for Macao investors to join the industrial development in Hengqin and other mainland areas. 

Press conference [Photo courtesy Zhuhai Daily]

Chi Tenghui of Hengqin's Economic Development Bureau said that QFLP pilots are an excellent bridge for Macao and foreign investors to participate in private equity and venture capital investment in the Chinese mainland.

Twenty-one companies have registered and been qualified as QFLP pilot enterprises on the island by the end of 2021 and eight of them are funded by Macao. Chi noted that Hengqin has now received applications from several Macao and Hong Kong companies and the number is expected to keep climbing in the future.

Joining Shanghai, Beijing, Tianjin, Jiangsu's Suzhou, Shenzhen, and the Hainan Free Trade Port, the pilot in Hengqin will offer more experience for China's cross-border financial management. Overseas investors are able to share gains from the Chinese mainland economic development by investing in outstanding companies and Hengqin is expected to welcome more high-quality industrial projects.

In addition, the trial methods to support Hengqin companies issuing bonds in Macao, released Dec 30, 2021, will be valid for one year starting from March 1. The document encourages local companies to utilize the Macao bond market for direct financing and reduce costs for issuing bonds in Macao. 

Subsidies of up to 5 million yuan ($786,356) will be offered to Hengqin companies issuing bonds in Macao and meeting certain requirements. An additional award of 500,000 yuan ($78,636) is available as long as their bonds are accredited as green bonds (a type of fixed-income instrument specifically earmarked to raise money for climate and environmental projects).

Local law and accounting firms, credit rating agencies, and third-party evaluation agencies for green bonds can get a subsidy of 100,000 yuan ($15,728) for successfully assisting a domestic company with bond issuance in Macao. 

Bao Weichun of Hengqin's Economic Development Bureau considers developing the bond market as a breakthrough for Macao's modern financial growth. Supporting companies to issue bonds in Macao is also beneficial for Hengqin companies to make full use of both domestic and overseas markets and will promote integrated Hengqin-Macao industrial development.

The zone will draw references from mature markets and timely adjustments will be made in accordance with changes of policies in the Macao bond market after one year of validity, Chi noted.