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Financial Secretary unveils economic stimulus measures

27.02.2013
The Financial Secretary, Mr John C Tsang, in his Budget today (February 27) predicted a modest economic recovery for Hong Kong in 2013 and announced a range of measures to stimulate economic growth and support the development of established and emerging industries.

"The ultimate objective of economic policies is not about chasing after statistics. It is about expanding the scale of Hong Kong's economy, promoting the holistic development of our society and creating more business and job opportunities so that our people can realise their aspirations and improve their living standards," Mr Tsang said.

The Financial Secretary said Hong Kong's economy expanded by 1.4 per cent in 2012. He forecast growth of between 1.5 and 3.5 per cent in 2013.

The average rate of headline inflation is estimated at 4.5 per cent for 2013 with underlying inflation of 4.2 per cent.

"The whole world will have to face wars on three fronts, namely, 'currency', 'trade' and 'geopolitics'," Mr Tsang said.

"As a highly open and small economy, Hong Kong will be impacted by the development of these wars to a certain extent."

The Financial Secretary said the Government would pursue a dual strategy of fostering economic integration with Mainland China to take advantage of its market development while also preserving Hong Kong's characteristics as an international city.

Mr Tsang announced a variety of measures to develop Hong Kong's pillar industries of financial services, tourism, trade and logistics and business and professional services. On financial services, he proposed:

* Expanding the size of the Government Bond Programme from the current $100 billion to $200 billion;

* Launching a further issue of inflation-linked iBonds of up to $10 billion under the Government Bond Programme;

* Reducing profits tax on the offshore insurance business to attract more enterprises to form captive insurance companies in Hong Kong;

* Allowing private equity funds to enjoy the same tax exemption as offshore funds; and

* Legislative amendments to introduce the Open-ended Investment Company to attract more traditional retail funds and hedge funds to domicile in Hong Kong.

To promote the tourism industry, Mr Tsang said the Government would offer a $2.3 billion loan to Ocean Park to spur the development of an all-weather Water World.

He also said the Government would seek to bring more large-scale international events to Hong Kong with support from the Mega Events Fund.

On developing the city's high value-added logistics services, the Financial Secretary said the Government had reserved a logistics site of about 2 hectares at Tsing Yi which will be put on the market in the first half of this year.

He also said the Government plans to designate about 10 hectares of land at Tuen Mun West for the development of logistics facilities. Facilities at the two sites combined will provide more than 300,000 square metres of floor space, generate 7,500 new jobs and yield over $3 billion in economic benefits annually, Mr Tsang said.

Hong Kong's emerging industries will also receive a boost.

On innovation and technology, the Financial Secretary set aside additional funding for universities to facilitate technology transfer and the realisation of research and development results. He proposed providing six local universities with a subvention of up to $12 million for three years to support the work of their technology transfer offices.

For creative industries, Mr Tsang said the site of the former Royal Hong Kong Yacht Club in Oil Street, North Point, would be converted into a visual arts exhibition and activity centre. He also proposed additional funding of $50 million to acquire local visual artists' outstanding artworks, and to commission works for exhibition.

The Financial Secretary also announced a range of measures to support small and medium enterprises (SMEs).

These include:

* Extending the application period for special concessionary measures under the SME Financing Guarantee Scheme for one year;

* Increasing the cumulative amount of the grant for SMEs under the SME Export Marketing Fund from $150,000 to $200,000;

* Waiving business registration fees for 2013-14, benefiting 1.2 million business operators; and

* Reducing profits tax for 2012-13 by 75 per cent, subject to a ceiling of $10,000, to benefit around 119,000 taxpayers.

"The package of measures in this Budget will have a stimulus effect of 1.3 percentage points," Mr Tsang said.

"I hope that with these measures, we shall not only promote economic growth and invest in the future, but also improve employment opportunities and people's livelihood in a bid to address the aspirations of different sectors of the community.

"As the world's economic balance shifts to Asia, Hong Kong should ride the wave of the new order by capitalising on our unique advantages and exploring new business opportunities to take Hong Kong's economy to new heights."

To view the Budget: www.budget.gov.hk

Ends

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