What opportunities and challenges are on the horizon in Hong Kong following the reintroduction of CIES?

The Hong Kong Government’s budget for the 2023/24 fiscal year, released earlier this year, has announced the reintroduction of the Capital Investment Entrant Scheme (CIES) as a measure to attract new capital in the city. It is not yet clear whether the scheme will be introduced with the same criteria of the previous one, suspended in January 2015 due to concerns about the impact on Hong Kong’s property market, or if there are going to be major changes. This article provides a refresh on the CIES guidelines and explores what opportunities or challenges are on the horizon with its reintroduction.  

The Capital Investment Entrant Scheme (CIES) was a program implemented by the Hong Kong Government to attract wealthy individuals to invest in Hong Kong. It was introduced in 2003 and allowed foreign nationals, who were at least 18 years old, to obtain residency in Hong Kong through investment. Under the CIES, foreign nationals could apply for Hong Kong residency if they invested at least HKD 10 million (approximately USD 1.3 million) in permissible assets in Hong Kong, within six months of their application being approved. Permissible assets included:  

1. Real estate - situated in Hong Kong, whether commercial, industrial, or residential, or mixed-use, including land and pre-completion properties (but not including car parking spaces, any portion of a property used for non-residential purposes, or property purchased under the Home Ownership Scheme or Private Sector Participation Scheme)

2. Specified financial assets:  

• Equities - Stocks listed on the Hong Kong Stock Exchange and traded in Hong Kong Dollars
• Debt securities - denominated in Hong Kong Dollars and issued or guaranteed by the Hong Kong government or companies incorporated in Hong Kong 
• Certificates of deposit - denominated in Hong Kong Dollars and issued by authorised banks in Hong Kong with a remaining term of maturity of not less than 12 months at the time of acquisition by the applicant

Applicants were allowed to make the investment in any combination of the above permissible assets, as long as the total value of the investment was at least HK$10 million. It is important to note that one of the advantages of the CIES is that applicants are not required to top-up the value of their investment in either class of permissible investment assets, even if their market value falls below the minimum level of HK$10 million. This means that even in the event of a total loss, applicants do not have to make up the difference.  

Successful applicants and their family members are granted a three-year visa, which can be renewed as long as the eligibility requirements are met and the investment in permissible assets is maintained. After a continuous ordinary residency of 7 years, the applicant/entrant can apply to become a permanent resident of Hong Kong. Additionally, applicants can include their spouse and unmarried dependent children under the age of 18 in their CIES application.  

Overall, the Capital Investment Entrant Scheme was an effective program to attract new capital and talent to Hong Kong. We hope the reintroduction of the scheme comes with revised conditions and the investment requirements to align more with the government’s intention to attract single family offices - i.e., no real estate and higher investment amount in bankable assets.  This could provide an opportunity for foreign ultra high net worth families to have their wealth managed in Hong Kong, access investment opportunities available in Greater China and the Greater Bay Area in specific and obtain residency in the city.   

Whether you have questions about the types of investments allowed by the scheme, ensuring the protection of your assets in Hong Kong, or discovering how you and your family office can maximise the benefits of this investment opportunity, Gerard Chinniah and the team in Hong Kong can support you.  

If you would like to learn more, or discuss your specific circumstances, please contact our team in Hong Kong who can provide tailored solutions that align with your financial goals and aspirations.

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees, and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.