Hong Kong still has plenty of skin in the game despite external factors like geopolitical conflicts and rising interest rates, said Financial Secretary Paul Chan at the HKGCC Business Community Luncheon on 15 March.
Outlining his 2024-25 Budget to Consuls General, chambers of commerce and business leaders in Hong Kong, the Financial Secretary emphasized that the need of the hour was to restore confidence, especially amid concerns about public finance.
In 2023, the Hong Kong economy returned to normalcy in the aftermath of the pandemic. Private consumption expenditure grew 7.3% in real terms last year, thanks to the distribution of consumption vouchers, the “Happy Hong Kong” and “Night Vibes Hong Kong” campaigns, and the continuing increase in household income. Overall investment expenditure also rebounded, by 10.8%, alongside the economic recovery. Importantly, visitor arrivals also bounced back sharply, to about 34 million last year. However, the challenging external environment has affected Hong Kong’s export performance.
To revitalize the economy, Chan said the new Budget followed three main lines of thought: to bolster confidence in the immediate term, pursue high-quality development in the medium to long term, and strive for fiscal consolidation and a return to a balanced budget in two to three years’ time.
Explaining Hong Kong’s current position in attracting enterprises and talent, Chan said this included over 40 strategic enterprises, with InvestHK attracting more than 380 companies to our shores in 2023. The Government’s talent admission schemes saw over 158,000 applications approved, with 106,000 people arriving in the city. Meanwhile, in the Top Talent Pass Scheme, around 50% of the professionals came with family members, while 54% of those who arrived more than half a year ago are already employed.
To boost confidence and revive the beleaguered property market, all demand-side management measures for residential property have been removed, while associated mortgage arrangements have been relaxed, The Government is also working to implement the recommendations of the Task Force on Enhancing Stock Market Liquidity.
SMEs can enjoy continued support with the extension of the 80% and 90% guarantee products application period until March 2026. The injection of $500 million into the BUD Fund will increase the total commitment from $6.5 billion to $7 billion, thus sustaining its operation and tying in with the launch of E-commerce Easy. Meanwhile, those SMEs in the F&B and retail sectors will be invited to select suitable options among ready to use basic digital solutions, and apply for subsidies on a matching basis under the Digital Transformation Support Pilot Programme.
The authorities are also keenly following mega trends in economic development: “green future,” which includes the fields of green tech, green finance, green shipping and aviation, photovoltaic pilot scheme etc.; and “digital economy,” comprising cross-boundary data flow, digital finance, Web 3.0, digital trading, among others.
Explaining the need to accelerate high-quality development, Chan pointed out that the 14th Five-Year Plan supports the development of Hong Kong in eight key centres, including an international financial centre, IT hub, international, legal and dispute resolution service centre, and a global aviation hub, among others.
To promote the city as an IT hub, for example, Chan said the Government is working to boost research and development of AI as well as life and health technology. New industrialization development is also a key focus area, with the $10 billion New Industrialization Acceleration Scheme, supplemented by a tech talent admission scheme.
After the address, Chamber Chairman Betty Yuen moderated a Q&A session where the Financial Secretary fielded questions from the floor. To a query about the potential for including SMEs and start-ups in the Northern Metropolis development, Chan said that the project was primarily meant to attract bigger enterprises. However, depending on sector, SMEs could avail themselves of the space currently available in existing facilities such as Science Park. He added that there also were many incubation and funding scheme options for SMEs looking for further support.
On diversifying Hong Kong’s approach to investment beyond traditional markets such as Europe and the United States, Chan said that the authorities have long been focusing on other regions, such as the Middle East and the ASEAN region, as the axis of economic power tilts eastwards. He also pointed out that such outreach initiatives go hand in hand with telling the world that Hong Kong is prospering under the “one country, two systems,” principle.
Reiterating his confidence in Hong Kong’s future, Chan thanked the business community for their hard work to revitalize the economy, and urged them to continue with their efforts as well as to share good stories about Hong Kong to their connections overseas.