Regular reviews

"Hong Kong should not be complacent as London, New York, Singapore and Shanghai have all reviewed their policies for promoting a treasury center in order to stay ahead of the curve. Hong Kong should do regular reviews to stay ahead to maintain its status as a premier hub for treasury management," she added.

The Hong Kong Monetary Authority (HKMA) and the Financial Services and Treasury Bureau (FSTB) will make concrete proposals next year to review the requirements under the Inland Revenue Ordinance for interest deduction in corporate treasury activities taxation, and clarify the criteria for such deductions.

The bid is envisaged to attract more global or regional treasury functions being relocated to Hong Kong through optimizing the interest deductibility requirements for inter-company loans.

According to PricewaterhouseCoopers' (PwC) Asia Corporate Treasury Survey 2014, treasury activities face many challenges that are unique to Asia.

"Asia does not have a single currency, there is no single regulator and the banking landscape is very diverse. Besides, there are too many restrictions and regulations governing the (capital flow of) multiple emerging currencies," explained PwC China and Hong Kong's corporate treasury solutions leader Ian Farrar.

The survey had interviewed 117 treasury professionals from various industries, including commodities, trading, manufacturing, electronics and technology, on the mainland and in Hong Kong, Singapore, Japan, Malaysia, Indonesia and Thailand. It identified cash and liquidity management as the two major treasury activities for larger organizations because these enterprises are likely to be more geographically dispersed, and managing financial and liquidity risk would be the key focus areas.

Working capital management, as well as cash and liquidity management, were ranked the two most important activities for medium-sized organizations. Smaller organizations placed more emphasis on the importance of supporting their management and business units and their business relationship with banks.

On future development, the respondents reckoned that there's a need to hire treasury market-skilled professionals and to improve companies' cash forecast skills to enhance cash visibility and centralization.

Contact the writer at oswald@chinadailyhk.com