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| No.1 February, 2014 |
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Hong Kong's Financial Secretary targets competitiveness and livelihood issues in Budget |
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 The 2014-15 Budget was released on 26 February with wide-ranging measures to boost Hong Kong’s economy and sharpen the city’s competitive edge.
Hong Kong Financial Secretary Mr John Tsang forecast an A$1.74 billion surplus from 2013-14, with fiscal reserves reaching A$107 billion by 31 March. He also forecast a 3-4% GDP growth in 2014 with an underlying inflation of 3.7%. Despite the uncertainty of the external economic environment in the coming few years, the trend growth of the Hong Kong economy is forecast to be 3.5% per annum from 2015 to 2018.
Against this backdrop, this year’s Budget sets out a comprehensive strategy to improve flows of people, goods, capital and information, and also to enhance Hong Kong’s quality of life and position as an international hub.
Consolidate Hong Kong’s Status as an International Hub
One of the keys to staying competitive is to maintain the high efficiency of Hong Kong. This Budget promises continuous investment in mega infrastructure projects, like the third runway at the Hong Kong International Airport (A$14.5 billion) and a number of regional and domestic highway and railway projects.
Hong Kong is set to be developed as a smart and more liveable city. We will promote city-wide Wi-Fi for all, launch an “e-cheque service”, adopt an open data policy across the Government and explore the wider use of sensors, data analytics and digital identity. We are providing incentives to phase out old diesel commercial vehicles while promoting electric vehicles, and investing A$7.3 billion in recycling and waste treatment facilities.
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Facilitate Development of Industries
Measures will be taken to enhance competitiveness of our various industries, including:
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- Financial services – As the world’s largest offshore Renminbi business centre, Hong Kong will see more diversified Renminbi fund products upon implementation of mutual recognition of funds with Mainland China. Stamp duty will also be waived for trading all exchange traded funds to lower transaction costs. To draw more corporate treasury activities to Hong Kong, we will review the legal requirements for interest deduction in the taxation of such activities.
- Tourism – We will enable the development of a major hotel cluster adjacent to the new Kai Tai Cruise Terminal. Over A$13 million will be reserved for strengthening popular tourist events and conventions and exhibitions industry in the next few years.
- Innovation and technology industry – To encourage commercialisation of R&D results, the Innovation and Technology Fund will start supporting R&D activities in private companies, subject to a ceiling of A$1.43 million for each project.
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Manpower, Land Supply and Ageing Population
Echoing the Policy Address, this Budget allocates more funding to career navigation and vocational training, as well as reserving more land for residential development.
Hong Kong faces the key issue of an ageing population, and we forecast over 2.5 million, or 30% of the population, will be aged over 65 by 2041. In light of this, the Government will reserve over A$8 billion for elderly services, upgrade hospital facilities and invest more in the healthcare system in the long run. The Government will also contain expenditure growth, preserve the revenue base and save for future generations. To alleviate taxpayers’ burden, the allowance for maintaining a dependent parent or grandparent aged 55 and above will be increased.
Estimates for 2014-15 and Medium Range Forecast
The Government forecasts an operating surplus of A$7.4 billion in 2014-15. Almost 60% of our recurrent expenditure will go to education, health and social welfare. Earnings and profits tax and land revenue will remain the major sources of Government revenue. The Financial Secretary also forecast an annual surplus in the Operating Account in the four years from 2015-16.
For the full budget text, please click here. |
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