The Chamber welcomes the measures unveiled by the Financial Secretary Paul MP Chan in his Budget Speech, which presented a balance between the need to support the economy and citizens, while addressing Hong Kong's record budget deficit.
"This budget addresses our three most pressing needs: supporting the people and businesses who have been worst affected by Covid; safeguarding our standing as a premier financial, business and tourism centre; and laying the foundations for new innovation-led growth," said HKGCC Chairman Peter Wong. "The benefits of deploying the government's resources to aid the recovery justify the increase in spending."
As companies are facing severe liquidity constraints, the Chamber is pleased that the Financial Secretary has announced further financial relief measures for businesses. Reducing profits tax, together with waiving business registration fees, rates and utilities charges will bring some relief for businesses. We also welcome the extension for applications for the SME Financing Guarantee Scheme and raising the loan ceiling to help small businesses. Similarly, the Financial Secretary's decision to raise the ceiling to HK$6 million per enterprise applying for the BUD Fund will help companies develop new markets.
The pandemic has necessitated a temporary increase in government spending. However, the Chamber firmly believes that issuing government debt is a practical way to indirectly help preserve our fiscal strength. We are pleased that the Government has accepted a number of proposals in our submission regarding debt issuance, such as issuing more green bonds, Silver Bonds and iBonds, etc. The issuance of government bonds and expansion of Bond Connect, together with increasing retail bonds, would have the added benefit of strengthening Hong Kong's capital markets and standing as an international financial centre.
Moreover, the long-term benefits of developing new financial products, such as the Insurance-linked Securities Grant Scheme, tax concessions for some insurance business and private equity funds, providing subsidies for open-ended fund companies to set up in or re-domicile in Hong Kong, as well as other timely initiatives, will go a long way towards laying the path for future growth.
As the tourism industry, which is one of Hong Kong's pillar industries, has been frozen for the past year, we are glad to see the Government will inject significant support to promote the city's attractions and revive the sector. This should align with the opening up of the border and also the relaxation of quarantine requirements when safe to do so, which we believe should be the key focus of the Government. The move to issue consumption vouchers to stimulate local spending will also help support the struggling tourism and retail sectors.
We support the Financial Secretary's decision to continue and enhance the Distance Business Programme to offer funding support for enterprises to adopt information technology solutions and cover the expenses for providing relevant training to their employees. The extension of the STEM education subsidy to primary schools should also help nurture our future talent pool for Hong Kong to become the innovation and technology hub for the GBA.
To meet Hong Kong's carbon reduction commitments and improve the overall air quality, we welcome the Government's plan to introduce Hong Kong's first roadmap on the popularisation of electric vehicles, and updating our Clean Air Plan by mid-2021. Other green initiatives, including installing renewable energy systems, concessions for energy audits and injecting $1 billion into the Recycling Fund will all contribute to making Hong Kong a greener and more liveable city.
"Despite a very challenging year for Hong Kong, we are pleased to see that the Financial Secretary has responded to the immediate needs of businesses and citizens, while also keeping an eye on longer-term planning for Hong Kong," said Wong. "We hope these Budget measures, combined with the gradual roll-out of the vaccination programme, will help position the territory for accelerated growth as the global recovery gains momentum."
Budget: Key Points for Businesses
Support Enterprises and Employment
- Extend the application period of 100% guarantee low-interest loan for enterprises to the end of this year, raise loan ceiling to $6 million, extend repayment period and duration of principal moratorium
- Reduce profits tax for 2020-21 assessment year by 100%, subject to a $10,000 ceiling
- Provide rates concession for non-domestic properties in 2021-22, subject to a ceiling of $5,000 per quarter in first two quarters and $2,000 per quarter in remaining two quarters
- Waive business registration fees for 2021-22
- Continue to waive 75% of water and sewage charges of non-domestic households for eight months, subject to a monthly ceiling of $20,000 and $12,500 respectively
- Continue to grant 75% rental/fee concession for eligible Government properties/short-term tenancies and waivers for six months (100% concession for those closed at the Government’s request)
- Allocate $6.6 billion to create around 30,000 time-limited jobs
Revive the Economy
- Issue $5,000 electronic consumption vouchers in instalments to each eligible Hong Kong permanent resident and new arrival aged 18 or above
- Inject $1.5 billion into the Dedicated Fund on Branding, Upgrading and Domestic Sales, increase funding ceiling per enterprise to $6 million and extend its geographical coverage in phases
- Allocate $375 million to Hong Kong Trade Development Council (HKTDC) to enhance its capability to organise online activities and to proceed with digitalisation
- Develop the business version of the “iAM Smart” digital authentication platform
- Earmark $169 million to continue to take forward local cultural, heritage and creative tourism projects
- Earmark $765 million to support Hong Kong Tourism Board (HKTB) in reviving the tourism industry
- Discuss and work out Air Travel Bubble arrangement with suitable places
- Issue no less than $24 billion of Silver Bond and no less than $15 billion of iBond this year. Lower the eligible age for Silver Bond subscription from 65 to 60
- Issue green bonds totalling $175.5 billion within the next five years, and plan to issue retail green bonds
- Roll out Green and Sustainable Finance Grant Scheme to subsidise expenses on bond issuance and external review services
- Strive for the launch of Southbound Trading of Bond Connect within this year, and enhance the domestic Central Moneymarkets Unit
- Provide subsidy for Real Estate Investment Trusts to list in Hong Kong
Innovation and Technology
- Inject $9.5 billion into the Innovation and Technology Fund by two yearly instalments
- Hong Kong Monetary Authority to consider enhancing its Fintech Supervisory Sandbox to reduce time for launching innovative financial products in the market
- Press ahead with the development of the Hong Kong-Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop