1 March 2016
The Hong Kong Government in February unveiled a raft of measures to support businesses amid uncertain economic times. In his latest budget speech, Financial Secretary John Tsang announced that HK$4.9 billion would be earmarked for helping small- and medium-sized enterprises (SMEs), as well as HK$23 billion to promote technology and innovation.
"The local economy is laden with risks in the year ahead; the outlook is far from promising,” said Mr Tsang. “We need to take timely and appropriate measures to stimulate the economy, support local enterprises and safeguard employment."
Relief Measures for SMEs
Among the SME support measures is a 75 per cent profits tax cut (capped at HK$20,000) and a waiver of business registration fees for 2016-2017.
“There are 320,000 SMEs in Hong Kong, employing 50 per cent of the private-sector workforce,” said the Financial Secretary. “This underscores the role of SMEs as the mainstay of our economy.”
In addition, the government will launch a Pilot Technology Voucher Programme, under the Innovation and Technology Fund, to subsidise SMEs that use technological services and solutions to improve productivity and upgrade their business. The three-year pilot programme will provide, on a matching basis, a maximum subsidy of HK$200,000 for each eligible company.
The initiative is part of the government’s drive to further develop technology and innovation in the city. In total, the Financial Secretary announced a HK$17 billion package aimed at the innovation and technology sector, including HK$8.2 billion for the Hong Kong Science and Technology Parks Corporation to promote smart production and research.
“Hong Kong has world-class IT facilities, research and development (R&D) institutes and personnel, financing platforms, and above all, a well-developed system to safeguard intellectual property (IP) rights,” said Mr Tsang.
The Financial Secretary said the city’s strengths in services complement the advantages offered by the neighbouring Pearl River Delta Region, which is a tech manufacturing hub. “The immense synergy effects generated will provide powerful support for Hong Kong's internationalised corporations in material application, prototyping and production.”
Financial technology, or fintech, will also get a leg up with government arm InvestHK to set up a dedicated team to help fintech start-ups establish a presence in Hong Kong. Mr Tsang noted that several overseas companies, including Accenture, the Commonwealth Bank of Australia, KPMG, Nest and Tuspark, have already chosen to establish laboratories and incubation programmes in Hong Kong.
Among creative industries, the film industry will receive a HK$20 million injection through the Film Development Fund to subsidise expenses incurred by locally produced Cantonese films for distribution and publicity conducted on the Chinese mainland.
Fashion and design, meanwhile, will be allocated extra funding through the CreateSmart Initiative, with priority for start-ups. For its part, the Hong Kong Trade Development Council (HKTDC) will continue organising international fashion shows for local designers, including at New York Fashion Week, to help raise their profile abroad and help designers find new markets. This year, apart from shows staged at Fashion Weeks in Tokyo, New York and Copenhagen, the HKTDC will also debut CENTRESTAGE, in September, another high-profile showcase for local fashion brands.
Belt and Road Initiative
Finding new markets was another cornerstone in the latest budget, including identifying opportunities from China’s Belt and Road Initiative. While results from the long-term development plan “will not emerge overnight,” Mr Tsang said the government, along with the HKTDC, will start laying the groundwork through a series of measures, including staging the first Belt and Road Summit on 18 May. Key officials from markets along the Belt and Road route, representatives of international organisations and business sectors, and experts in related fields will gather to discuss cooperation opportunities and how Hong Kong can serve as a business connector.
Mr Tsang, who led the first Belt and Road Initiative Hong Kong business delegation to Hungary, Poland and Germany last September, will lead another mission to Central Asia this year. “The visit will enable participants from the business sectors to gain first-hand knowledge about the development potential and business opportunities in the region,” he said.
Financial services will be a key sector to benefit from growing demand in emerging markets. Hong Kong, Mr Tsang said, is well-equipped to serve as a platform for financing and fund management for these markets. The Hong Kong Monetary Authority will set up an office to facilitate the financing of infrastructure projects and provide a platform for pooling the efforts of investors, banks and the financial sector to offer comprehensive financial services for various infrastructure projects.
Meanwhile, Hong Kong will continue discussions with the Central Government on its participation in the Asian Infrastructure Investment Bank (AIIB), which was officially launched in January.
Expanding Trade Links
Mr Tsang said that Hong Kong will continue pursuing trade and investment agreements to expand commercial and trade links, including concluding negotiations on a Free Trade Agreement with ASEAN and a Closer Economic Partnership Arrangement with Macau this year.
To maintain Hong Kong’s competitiveness, Mr Tsang said the government will remain focused on developing opportunities in emerging markets. “With the global economic gravity shifting towards the East, emerging markets are playing a much more important and influential role. Breakthroughs in IT development have also brought about paradigm shifts in different economic and social spheres, changing our daily lives and business modalities,” he said.
And despite an “unsteady economic climate ahead,” Hong Kong, Mr Tsang said, should rise to the challenge. “Over the years, Hong Kong has sustained its competitive edge because our trade network is highly internationalised, our market is transparent and open, and our society is clean and law-abiding. Under the new economic order, we must act swiftly, get prepared, identify development opportunities and position Hong Kong as a key player in the competition.”