Letters | Lai See Bonds anyone? Here’s how Hong Kong could raise billions

Readers propose a possible new source of funding for the government, and suggest how cities in the Greater Bay Area could cooperate to boost the nighttime economy

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A shopper selects lai see - the red packets traditionally given out over the Lunar New Year holiday - amid a sea of festive ornaments at Tai Kiu Market in Yuen Long on January 28. Photo: Dickson Lee

Published: 11:30am, 21 Mar 2024

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Hongkongers are familiar with bonds, a form of debt that pays interest and offers full payment upon maturity. The government has issued inflation-linked iBonds and “Silver Bonds”, a range of green bonds and even infrastructure bonds to raise funds.

Perhaps it could consider a new type of bond, which could be called “Lai See Bonds”. The idea comes from UK Premium Bonds, treasury-backed paper with a twist: rather than offering a fixed coupon rate, returns are subject to a monthly lottery where every £1 bond stands a chance to win anything from a £25 prize to a £1 million jackpot.

When Hongkongers buy Lai See Bonds, they would be investing, not gambling, as their investment would be protected and can be returned in full at any time, similar to UK Premium Bonds. Unlike traditional bonds, Lai See Bonds would offer greater flexibility; with no maturity date, investors would able to subscribe and redeem at any time, say, by giving 30 days’ notice of withdrawal.

The government could offer these Lai See Bonds with a monthly or even weekly lottery, offering smaller prizes of, say, HK$10,000-HK$100,000 and major prizes of up to HK$1 million – making them just as exciting as the Mark Six lottery, if not more. The difference being that you would pay just once to enter the Lai See “lottery” and qualify for endless draws – and can still get your stake back.

Such a bond issue, assuming a good take-up rate, could be a significant and alternative source of funds for the government. Given the improbability of a collective redemption, the government should safely be able to invest most of the money raised, leaving a minority for short-term working capital purposes.

Assuming the government can secure an annual investment return of 5 per cent, 1 per cent can be set aside for Lai See Bond winnings, leaving 4 per cent for the government, less running expenses. So, there would be a very low cost of funds plus a feel-good factor for investors.