Hong Kong Financial Secretary, Mr. John Tsang announced on February 25, 2009, in the annual Budget a multi-pronged strategy to combat the fallout of the global financial crisis.

The measures will tackle both immediate and longer term challenges by creating jobs, improving the environment, fostering economic development and building a caring community.

Mr. Tsang said he had been guided by three principles in preparing this year’s Budget: create jobs and support employment; increase overall competitiveness; and, facilitate a return to economic growth.

“Being a small, open economy, Hong Kong will inevitably be hit by the turmoil and our economy will slide into recession,” Mr. Tsang told legislators while delivering his Budget. “In this Budget, we have announced initiatives that will create about 62,000 jobs and internship opportunities. We will invest heavily to foster a caring society. We will introduce measures to sustain economic development and maintain our economic vibrancy.”

The Financial Secretary said Hong Kong’s economy contracted by 2.5% in the fourth quarter of 2008, with GDP growing by 2.5% for the year as a whole.

“I forecast a decrease in GDP by two to three per cent for 2009, the first negative growth for a whole year since the Asian financial crisis in 1998,” he said.

Mr. Tsang said the Government would increase public government spending next year to more than HK$300 billion (US$38.46 billion). This would help ease the pressure of economic contraction, boost domestic demand and increase employment opportunities.

Despite the impact of the global financial crisis, Hong Kong still enjoys a number of advantages, including a sound institutional framework, a large pool of talent, solid commercial fundamentals, and a favorable geographical location. The Financial Secretary, Mr John Tsang said in his Budget on February 25, 2009, that Hong Kong will continue to capitalize on her strengths and to enhance the four pillar industries – financial services, logistics, tourism, and business support and professional services.

“To consolidate Hong Kong’s position as an international financial center, we will further develop and increase financial co-operation with emerging markets. Particular measures are needed to improve Hong Kong’s regime as a platform for the growing area of Islamic finance,” the Financial Secretary said.

To provide more diversified investment products and avenues for financing for institutional and individual investors, the Hong Kong Special Administrative Region (HKSAR) Government intends to implement a program to issue government bonds.

On tourism economy, the HKSAR Government has decided to finance the construction of the Kai Tak cruise terminal. The project is expected to create over 3,000 jobs in the next few years.

Since the exemption of wine duties last year, wine trading, distribution and other related businesses have all shown notable growth. In the 10 months ending last December, the total value of imported wine reached HK$2.6 billion
(US$ 333.33 million), an increase of 82 per cent over the same period in 2007. Mr Tsang said in the Budget that
Hong Kong will step up the promotion of Hong Kong as an Asian wine and gourmet centre through festivals
and trade fairs.