Budget earmarks billions to support technology, business and more
|Financial Secretary John C. Tsang (second from left) holds a press conference at Central Government Offices in Tamar after delivering the 2016-17 Budget in the Legislative Council on February 24.
Hong Kong Financial Secretary John C. Tsang unveiled the city’s 2016-17 Budget on February 24, with US$2.2 billion earmarked for programs to nurture innovation and technology, apply research and development (R&D), promote financial technology (fintech), help startups and boost the fashion, film and creative sectors. The major initiatives are to inject funding into cultivating innovation and technology, businesses and nurturing talent.
Amid the global economic setback and highly volatile financial markets, Hong Kong’s overall economy grew 2.4% in 2015. The economy is forecast to grow at a slower rate of 1-2% in 2016.
Underlying inflation was 2.5 percent for 2015 and is expected to taper further to 2 percent in 2016. Unemployment averaged 3.3 percent in 2015.
Hong Kong’s financial position remains healthy and sound, with a surplus forecast of US$3.8 billion in 2015-16 and anticipated fiscal reserves of US$110 billion by March 31, equivalent to 24 months of government expenditure.
For 2016-17, the Financial Secretary estimated total government expenditure of US$63 billion including US$10 billion for capital works. Public expenditure will be equivalent to 21.2 percent of GDP.
On the whole, the Financial Secretary said the financial position of the government over the medium term remains sound.
The Financial Secretary said Hong Kong should act swiftly to identify new development opportunities being driven by breakthroughs in information technology and the increasingly influential role of emerging markets in the global economy. Robotics, healthy aging and “smart city” are areas in which Hong Kong could apply and commercialize research and development results.
Funding programs will be introduced or enhanced to encourage more private enterprises to invest in R&D and applied technology, and to translate outstanding local R&D achievements into products and services with commercial value.
|Hong Kong's economy grew 2.4% in 2015.
With Hong Kong emerging as one of the world’s most popular startup hubs, Mr. Tsang said the government shall continue to offer comprehensive support to startups in various areas, including business incubation, financing, business expansion and office space. These include a new Innovation and Technology Venture Fund to the tune of US$256 million.
The government would also explore long-term opportunities arising from fintech, creating a conducive environment and to encourage financial institutions and professionals to drive fintech development and applications in Hong Kong.
The government will continue to support and nurture the growth of Hong Kong’s creative industries. The measures include an injection of US$50 million into the CreateSmart Initiative and promoting local fashion designers and fashion brands overseas.
Mr. Tsang said that emerging markets along China’s Belt and Road routes are likely to become a new impetus for Hong Kong’s development. The government would continue to deepen understanding of these new markets among Hong Kong business. The first Belt and Road Summit will be held in May.
The government will continue to pursue trade and investment agreements to expand commercial and trading networks. Negotiations for a free trade agreement between Hong Kong and the Association of Southeast Asian Nations would likely be concluded this year. The government would also seek to participate in the FTAs that have been or will be concluded between mainland China and other countries.
The government was also looking to attract more multinational and Mainland enterprises to establish corporate treasury centers in Hong Kong. The government has introduced a bill into the Legislative Council that would, among other things, reduce the profits tax of qualifying corporate treasury centers by 50%.
Taking note of the risks to the economy in the year ahead, the government needed to take timely and appropriate measures to stimulate the economy, support local enterprises and safeguard employment.
Mr. Tsang announced he would reduce profits tax for 2015-16 by 75%, subject to a ceiling of US$2,564.
Business registration fees will be waived for 2016-17.
To enhance the long-term competitiveness of small and medium enterprises, which employ half of the private sector workforce, a Pilot Technology Voucher Programme would be launched to subsidize the use of technological services and solutions to improve productivity and upgrade or transform business processes.