Hong Kong Budget: A plan for people and businesses to combat the COVID-19 pandemic

The Financial Secretary Paul Chan delivered the Government’s 2022-23 Budget on 23 February 2022, with extensive measures to relieve the hardship of Hong Kong people, render support to the struggling economy and foster a post epidemic economic revival.

In his Budget Speech, the Financial Secretary pointed out that the rapid spread of the virus and its profound impact had disrupted the life and work of many people, and seriously affected the operations of small and medium-sized enterprises. To counteract all these and to boost the struggling economy, the Financial Secretary announced a budget of over HK$170 billion (EUR 20.5 billion) in total. This amount of commitment is about 40% higher than that in the previous two Budgets.

Following the previous year’s Budget, the 2022-23 Budget continued to adapt an expansionary fiscal policy with initiatives mainly focusing on the following four areas: concerted effort to fight the epidemic on all fronts and at full speed, development of industries, building capacity and building a liveable city.

The Financial Secretary stressed that fighting the epidemic remained the overriding mission of the Government. Around HK$67.5 billion (EUR 8.1 billion) has been allocated to anti-epidemic efforts.

Among the measures, there would be tax cuts to support people affected by the epidemic and relieve their hardship. The Government would reduce salaries tax and tax under personal assessment for the year of assessment 2021/22, as well as provide rates concession for domestic properties for four quarters of 2022-23, benefitting some 3 million domestic properties.

Also, in light of the success of the Consumption Voucher Scheme rolled out last year, the Financial Secretary announced that a second round of the scheme would be launched, involving some HK$66.4 billion (EUR 8 billion) which would benefit 6.6 million people in Hong Kong. “With the help and concerted efforts of various parties, the scheme was effective in boosting the market sentiment, stimulating local consumption, and speeding up economic recovery,” the Secretary said.

Meanwhile, to ease the unemployment situation, the Government has earmarked HK$13.2 billion (EUR 1.6 billion) under the Anti Epidemic Fund to create timelimited jobs. So far, some 60 000 jobs had been created. The Financial Secretary decided to allocate an additional HK$6.6 billion (EUR 0.8 billion) to yield another 30 000 temporary jobs.

Addressing the needs of businesses affected by the pandemic, the Financial Secretary announced a package of relief measures, which included reducing profits tax for the year of assessment 2021/22, benefitting some 151 000 businesses. Furthermore, rates concession for non‑domestic properties would be provided for 2022-23, whereas the business registration fees would be waived for 2022-23 to benefit 1.5 million business operators. Other waivers and concessions of various government fees and charges already in place would also be extended again. All these would benefit a wide range of sectors, including aviation, maritime, logistics, retail, catering, agriculture and fisheries, construction, tourism and entertainment.

The Financial Secretary, Mr Paul Chan (second left), holds a press conference on February 23, 2022, at the Central Government Offices in Tamar after delivering the 2022-23 Budget to the Legislative Council. Also in attendance are the Secretary for Financial Services and the Treasury, Mr Christopher Hui (second right); the Permanent Secretary for Financial Services and the Treasury (Treasury), Miss Cathy Chu (first left); and the Government Economist, Mr Andrew Au (first right).

On industry development, the Financial Secretary has set aside significant resources to spur the progress of industries such as innovation and technology (I&T), financial services, arts and culture, and tourism. Notably, the Budget allocated additional resources “to keep reinforcing the entire value chain and the I&T ecosystem”. Tax concessions would also be introduced to attract eligible family investment management entities managed by single-family offices with a view to enhancing our attractiveness as a hub for family offices, deepening Hong Kong’s liquidity pool and creating more business opportunities for the financial sector and other professional sectors.

In addition, to promote investment in sectors that have good potential for contributing to the economy, the Financial Secretary injected an additional HK$10 billion (EUR 1.2 billion) to the Hong Kong Growth Portfolio under the Future Fund, among which half would be used to set up a new Strategic Tech Fund, while the remaining half was for establishing a GBA Investment Fund which focused on investment opportunities in the Guangdong-Hong Kong-Macao Greater Bay Area.

Looking ahead, the Financial Secretary considered that land and manpower were the two major constraints on Hong Kong’s economic growth. “In order to ease these constraints, we must make vigorous efforts to create land and nurture talent,” the Financial Secretary said. Such efforts included setting aside HK$100 billion (EUR 12 billion) from the cumulative return of the Future Fund to set up a dedicated fund to expedite the implementation of infrastructure works relating to land, housing and transportation within the Northern Metropolis, an area of 30 000 hectares which could accommodate some 2.5 million people and provide over 650 000 jobs upon full development. Various initiatives would also be implemented to upgrade the manpower skills of the workforce, covering such sectors as the medical and healthcare, Fintech, construction, etc.

For the fiscal year 2022-23, a deficit of about HK$56.3 billion (EUR 6.8 billion) (about 1.9% of GDP) was expected due to the extensive anti-epidemic and relief measures. Nevertheless, the Budget created favourable conditions for economic recovery and emphasised investment in the future, thereby continuing to consolidate Hong Kong’s unique advantages under “one country, two systems” and raising our productivity and competitiveness in the long run. With a 6.4% growth in Hong Kong’s overall economy in 2021, reversing the declining trend in the past two consecutive years, the economic outlook for Hong Kong remained positive in the medium term. “From 2023 to 2026,” as forecasted by the Financial Secretary, “Hong Kong’s economy will grow by an average of 3% per annum in real terms, slightly higher than the trend growth of 2.8% during the decade before the pandemic.”

The Budget Speech by Financial Secretary Paul Chan can be downloaded here. For more details on the 2022-23 Budget, click here.