HONG KONG -- WOCCU launched the 18th annual World Credit UnionConference in Hong Kong on July 13 amid the pageantry that has cometo customize the opening of these meetings.

But even as leaders on site offered welcomes and an agendadominated with credit union and development issues, problems inworld financial markets and China's looming opportunity andchallenge remained on leaders' minds.

John Tsang, financial secretary for the government of the HongKong Special Administrative Region and the highest financialservice regulator in the region, welcomed the conference attendees.Tsang keyed his remarks off the 2008 Olympic Games, which beginAug. 8 in Beijing. Reminding the attendees that Hong Kong willwelcome the Olympics' equestrian events as part of the games, Tsangoutlined the strengths that make Hong Kong a strong competitor forfinancial services in China.

Among these, Tsang said, were good governance, a largely openand transparent financial system, a willingness to innovate inproducts and services and an overall lower regulatory burden. Tsangremarked that the conservative Heritage Foundation in Washingtonhas consistently named Hong Kong as the world's freest economy,explaining that the region has no value-added tax, no tax on incomenot generated in Hong Kong and a top income tax rate of 15%.

Further, the lack of a capital gains tax has been instrumentalin helping Hong Kong attract foreign capital to the point where ithas become the third largest stock market in the world, behind onlyLondon and New York, he explained.

"Hong Kong's geographic position and its history give us aunique position to offer the world a strong financial servicesalternative," Tsang said.

Tsang praised Hong Kong's financial innovation in particular asoffering hope for China overall as the sector struggled to bringretail and business banking services to the broader country.

If there is a down side for credit unions in all this, it may bethat the financial sector's strong success in banking, combinedwith Hong Kong's traditionally customer-service oriented businessculture, has made it difficult for credit unions to find a niche inthe market.

In his comments, Charles Yip Wai-kwong, president of the boardof the Credit Union League of Hong Kong, added to these remarks,reminding attendees that although Hong Kong's 41 credit unions haveonly 1% of the region's population, the league has been workinghard to promote the credit union philosophy in what Yip calledmainland China.

"Mainland China is undoubtedly the base of what is potentiallythe largest credit union movement not only in Asia, but also theworld," Yip said. He explained that several Hong Kong credit unionshave entered into different development projects with communitiesin China to help introduce residents to financial cooperatives.

Hong Kong credit unions' problems with penetration are echoed inthe region, Yip said. While having one of the highest overallnumber of credit union members in the world, Asia still ranks ashaving one of the smallest percentages of credit union members inthe world.

Meanwhile, other world credit union leaders have also beenconsidering the potential impact of the current instability inworld credit markets, particularly in the U.S.

The World Council of Credit Unions Chairman Melvin Edwardsexplained that he fears the current period of instability in manyof the world's financial markets less than a regulatory backlashthat might follow.

After welcoming attendees to the conference, Edwards noted howleading U.S. regulators have already begun laying groundwork forincreased regulation, citing the extraordinary circumstances facingthe U.S. financial services industry.

"The problem with the kinds of regulation that arise insituations like these is that they sweep up the innocent with theguilty," Edwards said. "Credit unions have not been involved inthese problems, yet a blanket regulation will cover them aswell."

Edwards acknowledged that the variety of nations and languagesrepresented at the conference demonstrated the global appeal ofcredit unions. He characterized that appeal as resting upon theidea of a source of financial services and development that doesnot rest in government or the private sector but in cooperationamong people.

In his comments to the attendees, Edwards said the single mostunifying thread that ties credit unions together around the worldtogether is their shared commitment to providing the best possibleservice to their members.

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