Mr Henry Tang, GBS, JP
Financial Secretary
Financial Secretary's Private Office
12/F West Wing Central Government Offices
Lower Albert Road Central
Hong Kong

Dear Henry

Over the past year, numerous members of the Hong Kong General Chamber of Commerce, including those active in our Financial Services Committee and our Competition Policy Expert Group, have been made aware of concerns over the role of the Hong Kong Mortgage Corporation (HKMC), and what appear to be practices that sit uncomfortably with the Government’s commitment that “market leads and Government facilitates”.

I do not intend here to go into the detail of the concerns. Rather, I attach two documents which outline them with some thoroughness: first, a copy of a letter written last year by Leland Sun, CEO of PanAsian Mortgage Company, which I believe you received last July; and second, an article written by Tony Latter, and published recently in the South China Morning Post.

If it is correct that private sector enterprises are willing and able to provide products being developed by the HKMC, and if it is also correct that the HKMC is able to exploit its privileged access to capital markets and local financial institutions, then the HKMC’s actions would seem to raise concerns on at least two counts: first it is abusing a privileged market position to stifle or preempt market competition; and second, it is directly contradicting the Government’s (and your own) stated intent that the market should lead, and the government facilitate.

Mr Latter also raises the perfectly reasonable possibility that such unfair market competition might be resolved by means of privatizing the HKMC – an option which might be attractive to the Government as it seeks to cut costs and to raise revenues by means of privatizations.

While we do not have the necessary expertise or precise information to argue with confidence that privatization (or even winding up the HKMC) might be the best way forward, it appears to Chamber members that this is an issue that at least deserves further detailed examination. Might this not be an issue that could be considered by the Efficiency Unit or Finance Branch?

I hope the above is helpful, and look forward to your reply,

Yours sincerely,

Nick Brooke
Chairman