Hong Kong Budget: HK$120B to stimulate the economy, support the community

A well thought-out plan was unveiled in the Hong Kong Budget 2020-21 to boast the economy and ease the burden on people as the city battles economic headwinds amid the COVID-19 epidemic. The HK$120 billion (EUR 14.16bn) in one-off relief measures includes tax waivers for businesses and employees. With forecasts of the first budget deficit in 15 years, there are also substantive measures to stimulate and diversify the economy.

The Financial Secretary, Mr Paul Chan, outlined a wide range of measures to help Hong Kong tackle the current economic difficulties and to support the community during challenging times by making optimal use of the fiscal reserves. The implementation of counter-cyclical measures aims at relieving people’s hardship and stimulate the economy.

In the medium term, the economic outlook of Hong Kong remains positive. The economic development of Hong Kong and Asia will continue to be the key driving force of global growth. Given the considerable market potential of the China as well as the opportunities brought by the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area development, Hong Kong can leverage its strengths, grasp the opportunities and explore greater room for development.

The recurrent expenditure for the three key livelihood areas, that is, education, health care and social welfare is expected to exceed HK$280 billion (EUR 33bn) accounting for nearly 60 per cent of the Government's total recurrent expenditure or an increase of more than 50 per cent over the past five years. This demonstrates the Government's commitment to address people's needs, nurture talents and strengthen the economy.

Financial services, tourism, trading and logistics, business and professional services are the pillars of Hong Kong’s economy. Apart from strengthening the industries with competitive edges, the Government will actively support the development of emerging industries that will not only broaden the foundation of Hong Kong’s economy but also provide diversified and quality employment opportunities for young people to unleash their potential. Such initiatives include issuing green bonds totaling HK$66 billion (EUR 7.79bn) over the next five years, earmarking HK$3 billion (EUR 350.6m) for Phase 2 of the Hong Kong Science Park Expansion Programme, and injecting HK$2 billion (EUR 233.8m) into the Innovation and Technology Fund for reindustrialization projects.

For enterprises, a concessionary low-interest loan under the SME Financing Guarantee Scheme will be introduced, under which the Government will provide a guarantee of up to HK$20 billion (EUR 2.3bn). Companies will also benefit from the announced reduction in profit tax for 2019/20 by 100 per cent, subject to a ceiling of HK$20,000 (EUR 2,340). In addition, it has been proposed to waive the business registration fees for 2020-21, benefitting 1.5 million business operators.

The Budget Speech by Financial Secretary Paul Chan can be downloaded here:
https://www.budget.gov.hk/2020/eng/pdf/e_budget_speech_2020-21.pdf