LCQ8: Measures to boost Hong Kong's international trade of precious metals
Following is a question by the Hon Christopher Cheung and a written reply by the Secretary for Commerce and Economic Development, Mr Edward Yau, in the Legislative Council today (February 7):
In order to boost Hong Kong's international trade of precious metals, the authorities established the Precious Metals Depository at the Hong Kong International Airport (HKIA) in 2009. Some persons-in-charge of companies which engage in the refining and international trade of precious metals have relayed to me that due to the high value of precious metals, the import and export declaration charges on precious metals have put a huge burden on their operating costs and weakened Hong Kong's competitive edge in the international trade of precious metals. In this connection, will the Government inform this Council:
(1) of the respective revenues from declaration charges on imports and on exports of precious metals as well as the year-on-year percentage changes of such revenues in each of the past five years;
(2) given that the declaration charges on imports and exports of gold bars of 995.0 fineness or above have been exempted since 2007, whether the Government has assessed the positive effect of such an exemption measure on boosting the import and export trades of such goods;
(3) whether it knows the current average storage quantity and utilisation rate of the Precious Metals Depository at HKIA; and
(4) given that Singapore, a major competitor of Hong Kong, abolished the declaration charges on imports and exports of precious metals in 2012, whether the Government will consider, apart from exempting the declaration charge of gold bars of 995.0 fineness or above, also reducing or waiving the declaration charges on imports and exports of other precious metals (e.g. gold and silver bullions), so as to reduce the operating costs of the relevant trades and enhance the competitiveness of Hong Kong in the international trade of precious metals; if so, of the details; if not, the reasons for that?
The Government announced in 2006 that, in view of the proposal of the Airport Authority Hong Kong (AAHK) at that time to establish a gold depository at the Hong Kong International Airport, the Administration would consider providing a concession in trade declaration charges for gold with a view to supporting the development of Hong Kong as a logistics hub and gold trading centre. The Government amended the law in 2007 to exempt the trade declaration charge for the imports and exports of gold bars of 995.0 fineness or above.
In consultation with the relevant policy bureaux, I provide a consolidated reply to the various parts of the question as follows:
(1) The quantity and value of gold (covering gold bars), silver and platinum imported into and exported out of Hong Kong in the past five years are provided at Annex. Breakdown of revenue from trade declaration charge by types of commodities (such as precious metal) is not available;
(2) The trade declaration charge for importing and exporting gold bars of 995.0 fineness or above has been exempted since February 9, 2007. The quantity of gold bars of 995.0 fineness or above imported into and exported out of Hong Kong increased from around 200 000 kilograms (valued at $37.0 billion) in 2007 to nearly two million kilograms (valued at $615.5 billion) in 2017. While recognising that the trade volume of gold bars is subject to many economic factors, we consider that the aforementioned exemption was conducive to Hong Kong's trade of importing and exporting gold;
(3) According to the Transport and Housing Bureau (THB), the Hong Kong International Airport Precious Metals Depository Limited (the Depository) is wholly owned by AAHK and commenced its operation in 2009. Its major clients include both local and international financial institutions and institutional investors. According to the information provided by AAHK to THB, similar to other precious metals facilities in the world with high-security arrangements, the Depository is not able to disclose the inventory balance and the actual utilisation rate due to security reasons; and
(4) Payment of trade declaration charges is required when making trade declaration for imports and exports, with the exception of a few individual items. The rate of trade declaration charges in Hong Kong has been maintained at a very low level. Nevertheless, we will review the arrangements when the situation warrants.
According to the Financial Services and Treasury Bureau, trade declaration charges are not applicable to precious metal-related financial products currently traded on a recognised stock or futures exchange in Hong Kong.
Ends/Wednesday, February 7, 2018