Hong Kong Economic and Trade Office, San Francisco
Hong Kong
Financial Secretary uses budget to promote economic diversification, boost pillar industries and foster talent

The Financial Secretary, Mr. Paul Chan, in his 2020-21 Budget, announced a wide range of measures to help Hong Kong tackle the current economic difficulties and to strengthen Hong Kong’s pillar industries while identifying new growth engines among emerging sectors.

Hong Kong's economy contracted by 1.2 per cent in 2019, and the forecast for the full-year growth in 2020 is between -1.5 per cent and 0.5 per cent.

In broadening the foundation of the economy and providing diversified and quality employment opportunities for young people, Mr. Chan proposed various measures covering different sectors of the economy.

On financial services, Mr. Chan set out a series of proposals to fortify the city's competitiveness as an international financial center. Initiatives include:

• issuing green bonds totaling HK$66 billion (US$8.46 billion) over the next five years to develop Hong Kong's position as a premier hub for green finance;
• waiving the stamp duty on stock transfers paid by Exchange Traded Fund (ETF) market makers when creating and redeeming ETF units listed in Hong Kong to spur development of the ETF market;
• issuing inflation-linked retail bonds (iBond) and Silver Bonds totalling not less than HK$13 billion (US$1.66 billion) ; and
• providing tax concessions for carried interest issued by private equity funds and preparing to establish a limited partnership regime to encourage them to domicile and operate in Hong Kong.

On innovation and technology which is a driving force for future economic development, Mr. Chan announced a series of proposals. These include:

• earmarking HK$3 billion (US$384.6 million) for Phase 2 of the Hong Kong Science Park Expansion Programme;
• exploring the development of a third InnoHK research cluster, in addition to the two research clusters currently being set up at the Science Park, one focusing on healthcare technologies and the other on artificial intelligence and robotics technologies;
• increasing the Government's funding ratio under the Technology Voucher Programme to three-fourths from two-thirds, and raising the funding ceiling from HK$400,000 to HK$600,000 (US$51,000 to US$77,000), to promote the wider use of technological services and solutions among local companies; and
• providing HK$345 million (US$44.2 million) for a pilot subsidy scheme to encourage the logistics industry to enhance its productivity through technology application.

In addition, Mr. Chan has also announced a series 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. These measures include a one-time cash payout of HKS10,000 (US$1,282) to Hong Kong permanent residents, concessionary low-interest loan for small and medium enterprises and reductions in salaries and profits tax.

Mr. Chan said that these and other measures in the Budget would help create "new areas of economic growth, with a view to increasing our revenue, promoting social development, coping with the challenges arising from an ageing population, and providing more quality employment opportunities."

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