The development of a renminbi bond market in Hong Kong is significant for the city, for the Chinese mainland and for the region, Hong Kong Financial Secretary John Tsang said in Coolum, Australia, on Thursday.

According to news from the Information Services Department, when attending the 14th APEC Finance Ministers' Meeting in Coolum of Australia, Tsang spoke at a plenary session on global capital flow and strengthening investment in the Asia Pacific Region.

He said Hong Kong is the first place outside the Chinese mainland to have a renminbi bonds market and that the first issue of bonds last month was met with a very enthusiastic investor response.

The new renminbi bonds market has opened a new channel for financial intermediation between Hong Kong and the Chinese mainland, providing a new choice of renminbi-denominated investment instrument for Hong Kong investors.

He said development of such a market in Hong Kong provides a new funding avenue for mainland users, and serves as a useful experiment for the use of renminbi in financial transactions across the rest of Asia.

Tsang also spoke on the need to help small and medium enterprises (SMEs) raise funds at lower costs. Citing the Hong Kong example, he said what could be done includes the establishment of credit reference bureaux for SMEs to improve their transparency and the formation of government-sponsored credit guarantee programs.

"We can also develop securitization and credit risk transfer to provide an alternative funding channel for SMEs at lower costs," he added.

Earlier on Thursday, Tsang attended the Ministers' Retreat. He will attend another session on transparency and sustainability of the public balance sheet on Friday before attending the Hong Kong Films Reception at the Brisbane International Film Festival which will feature Hong Kong movie The Banquet.

(Xinhua News Agency August 3, 2007)