Dear Friends of Hong Kong,

 

Today (February 26), the Financial Secretary of the Hong Kong Special Administrative Region Government, Mr Paul Chan, unveiled the 2025-26 Budget, themed “Accelerating Development through Reform and Innovation”, putting forward a series of practical and effective measures on Hong Kong’s economic development and public fiscal consolidation.

 

The Budget will reinforce the Government’s financial strength, and create new momentum and new advantages for Hong Kong’s economic development. At the same time, the Budget continues to support citizens and businesses through rates concessions, reduction in salaries and profits taxes, and extra allowance payable to eligible social security recipients.

Economic Review and Outlook

 

Hong Kong’s economy progressed steadily in 2024, amid a complicated and changing environment, recording a moderate real GDP growth of 2.5%. The economy is forecast to continue to grow moderately by 2% to 3% in real terms this year.

 

In the medium term, monetary policy normalisation will help sustain solid growth in the global economy. The Mainland will continue to be an important driver of global economic growth. Hong Kong is making every effort to promote market diversification and opening up new growth areas, and the economy is expected to grow steadily by an average of 2.9% a year in real terms, from 2026 to 2029.

 

I would like to share some of the key initiatives outlined in the Budget.

Innovation and Technology

 

  • Set aside US$128 million (HK$1 billion) to establish the Hong Kong Artificial Intelligence Research and Development Institute
  • Host inaugural International Conference on Embodied AI Robot and International Young Scientist Forum on Artificial Intelligence
  • Host World Intellectual Property Organization’s publication event of the top 100 science and technology clusters this year
  • US$128 million (HK$100 million) earmarked to launch Pilot Manufacturing and Production Line Upgrade Support Scheme
  • Study streamlining vetting of licence applications for operating Low Earth Orbit satellites
  • Hong Kong Exchanges and Clearing to launch dedicated “TECH” channel to help prepare for listing applications
 
 

Finance

 

  • Improve vetting process and optimise thresholds for listing
  • Enhance the “board lot” system and issuance mechanism for structured products; increase position limits for key index derivatives
  • Explore enhancing preferential tax regimes for funds and single family offices
  • Host the Hong Kong Global Financial and Industry Summit and a flagship forum on fixed income and currencies
  • Extend pilot grant scheme on insurance-linked securities for 3 years
  • Implement linkage of faster payment systems with Mainland China

Shipping and Aviation

 

  • Propose provision of half-rate tax concessions to eligible commodity traders
  • Establish the Hong Kong Maritime and Port Development Board
  • Allocate US$26.9 million (HK$210 million) to install the port community system for smart port development
  • Aviation Academy to expand training programmes to cover C919 aircraft-related subjects
  • Promote Hong Kong’s development into Asia’s first aircraft dismantling, parts recycling, processing and trading centre
 
 

Tourism

 

  • Allocate US$157.7 million (HK$1.23 billion) to Hong Kong Tourism Board to pursue “tourism is everywhere” concept and implement Development Blueprint for Hong Kong’s Tourism Industry 2.0
  • Host Fragrant Hills Tourism Summit in April 2025
  • Strategically attract sports events that can bring significant economic benefits in Hong Kong
  • Study to re-plan some waterfront and former pier sites in Kowloon into a new harbourfront landmark, including commercial and residential developments and a yacht club 

Education and Talent

 

  • Launch a new round of Research Matching Grant Scheme, totalling US$192.3 million (HK$1.5 billion)
  • Increase annual quota of Hong Kong PhD Fellowship Scheme to 400 places
  • Offer 4,000 short-term internship placements in policy bureaux and departments and public organisations in the coming year
  • Relax requirements for joining and increase allowance limit of the Greater Bay Area Youth Employment Scheme
  • Organise the second “Global Talent Summit · Hong Kong” in 2026
  • Enhance the New Capital Investment Entrant Scheme
 
 

Green Development

 

  • InnoCentre in Kowloon Tong to become hub for GreenTech companies
  • US$38.5 million (HK$300) million subsidy scheme to support installing EV fast chargers
  • Provide tax exemptions for green methanol used for bunkering
  • Set a Sustainable Aviation Fuel consumption target
  • US$60.3 million (HK$470 million) for subsidising bus and taxi trades to switch to EVs
  • Extend the Pilot Green and Sustainable Finance Capacity Building Support Scheme to 2028

Northern Metropolis

 

  • US$474.4 million (HK$3.7 billion) to expedite Phase 1 facilities of Hong Kong Park of Hetao Co-operation Zone
  • Start tendering work for large-scale land disposal
  • Complete re-zoning procedures for data facility cluster at Sandy Ridge
  • Take forward planning and design of various railway development projects
 
 

Land and Housing

 

  • About 13,700 units from 8 residential sites under the 2025/26 Land Sale Programme and various property developments
  • No commercial sites will be put on sale in the coming year
  • Make available land for around 80,000 private housing units in the coming 5 years
  • Total public housing supply to reach 190,000 units in the coming 5 years
  • Completion of over 17,000 private residential units annually in the coming 5 years
  • Expected first-hand private residential unit supply around 107,000 for the next 3 to 4 years

Caring and Inclusive Community

 

  • Increase the number of Residential Care Service Vouchers for the Elderly to 6,000
  • Increase the number of Community Care Service Vouchers for the Elderly to 12,000
  • Additional annual provision of over US$23.1 million (HK$180 million) to expand residential child care facilities, strengthen support for child abuse victims and their families
  • Additional 1,280 day community rehabilitation and home care service places for persons with disabilities
  • Regularise the Pilot Project on Enhancing Vocational Rehabilitation Services
 

Combat Illegal Betting

 

  • Explore with Hong Kong Jockey Club on regulating basketball betting to combat illegal gambling

The full text of the Budget is available at https://www.budget.gov.hk/2025/eng/index.html.

 

If you have any questions or would like to learn more about the initiatives announced in the 2025-26 Budget, please feel free to contact my colleagues or myself at hketony@hketony.gov.hk.

 

 

Yours sincerely,

 

Maisie Ho

Director

Hong Kong Economic and Trade Office, New York

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