Charting Hong Kong’s future - The Chief Executive's 2017 Policy Address

We Connect for Hope and Happiness
Good governance, a diversified economy, nurturing talents, improving people’s livelihood, building a liveable city and connecting with the young people – these are the top priorities that Hong Kong’s Chief Executive, Mrs Carrie Lam, highlighted in her first Policy Address delivered on 11 October. The Policy Address, with the theme of "We Connect for Hope and Happiness", will be the policy blueprint for the Hong Kong Special Administrative Region Government (HKSARG) for the coming five years.

“One Country, Two Systems” is our cornerstone
“This year marks the 20th anniversary of Hong Kong’s return to the Motherland, a milestone for us to build on our achievements and begin a new chapter of development. In the last two decades, thanks to the support of the Motherland and with an international vision, Hong Kong has kept its distinct features and strengths”, Mrs Lam said. When setting the new starting points for Hong Kong, she added that the principle “One Country, Two Systems” is the best institutional arrangement to ensure Hong Kong’s long-term prosperity and stability after the city’s return to Mainland China.

Reducing Profits Tax for SMEs
Elaborating on the key policy topics, the Chief Executive explained the need for developing and diversifying Hong Kong's economy and competitiveness by a raft of measures including a two-tiered profits tax system that would lower the profits tax rate to 8.25 percent – half the current standard rate – on the first HK$ 2 million (about EUR 220 000) of profit. On economic development, Mrs Lam emphasised the need to consolidate and enhance Hong Kong’s traditional advantages while developing new areas of economic growth as a matter of urgency. “I propose that the Government should be more proactive and play the role of a ‘facilitator’ and a ‘promoter’. We should seize the opportunities brought by the national Belt and Road Initiative and the Guangdong-Hong Kong-Macao Bay Area (Bay Area) development, make good use of the autonomy enjoyed by the HKSAR in developing our external affairs as provided under the Basic Law, and make timely investments in order to create new impetus for our economy, particularly in the areas of innovation and technology, creative industries and key infrastructure projects for Smart City development.” In terms of numbers, it means that the CreateSmart initiative will receive HK$ 1 billion (about EUR 109 million) to boost support for design and creative industries, and R&D investment will benefit from a 300 percent tax deduction for the first HK$ 2 million (about EUR 220 000) R&D expenditure, and 200 percent deduction for the remainder, for instance.

Promoting Innovation and Technology
Hong Kong has huge potential to become an international innovation and technology hub. To that end, Mrs Lam said she would personally lead a high-level, inter-departmental Steering Committee on Innovation and Technology. The Government has set a goal to double the Gross Domestic Expenditure on R&D as a percentage of the Gross Domestic Product to about HK$ 45 billion a year (about EUR 5.44 billion) from 0.73 percent to 1.5 percent by the end of the current Government’s five-year term of office. The Government will further set aside at least HK$ 10 billion (about EUR 1.2 billion) in university research funding to further encourage private companies to increase R&D spending. There will also be a HK$ 500 million (about EUR 60.4 million) "Technology Talent Scheme" to be launched to train and pool technology talents. To nurture young talents and entrepreneurs, the Government pledged to use HK$ 2 billion (about 220 million) of the Innovation and Technology Venture Fund Scheme to co-invest on matching basis with venture capital funds investing in local tech start-ups.

Emphasizing Good Governance
The Chief Executive has identified good governance as another top priority for her political team. "Good governance is vital, whether in discharging the responsibilities of the Government as a 'service provider' or a 'regulator', or in taking up the new roles of the Government as a 'facilitator' and a 'promoter' that I advocate," she said, adding that the Government will take concrete actions to resolve problems for the people, following the principles of being "Innovative, Interactive and Collaborative".

From the comprehensive measures of tax reliefs and economic initiatives to the overarching good governance principles, the 2017 Policy Address is designed to demonstrate Hong Kong’s unparalleled strengths under “One Country Two Systems” and further establish Hong Kong as Asia’s World City. For more information on the Chief Executive’s 2017 Policy Address, please click here.