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FS uses Budget Speech to promote diversified economy and boost innovation and technology

Posted in: Press Releases

February 28, 2018

The Financial Secretary, Mr Paul Chan, in his 2018-19 Budget today (February 28) announced a broad range of measures to diversify Hong Kong's economy, grasp regional and global opportunities and promote innovation and technology (I&T).

He revealed that Hong Kong's economy expanded 3.8 per cent in 2017 due to better-than-expected outturn in the external environment. Mr Chan said he was cautiously optimistic about Hong Kong's economic prospects in the near term, predicting Gross Domestic Product growth of between 3 and 4 per cent for 2018.

He said Hong Kong needs to keep abreast of and ride on three major trends of the global economic landscape: the development of I&T that has revolutionised the traditional and capital intensive business model based on tangible assets, the shift in global economic gravity from West to East, and the rise of protectionism in some advanced economies. In response to the three major trends, Hong Kong needs to consolidate and build on its existing strengths, rise with the tide and seize the opportunities before it.

Mr Chan said, "In the Dedicated Chapter on Hong Kong and Macao in the 13th Five-Year Plan, our country indicates support for Hong Kong to leverage its unique advantages, reinforce and enhance its status as an international financial, transportation and trade centre, and strengthen Hong Kong's status as a global hub for off-shore Renminbi business and our role as an international asset management centre."

The transformation of the Chinese economy from a phase of rapid growth to high-quality development and the continued consumption upgrading and the supply-side structural reform have created enormous opportunities for Hong Kong, he said. The Belt and Road Initiative and the Guangdong-Hong Kong-Macao Bay Area development will also serve to enlarge the hinterland for business development of Hong Kong enterprises and expand their market coverage.

With the surge of I&T and fierce competition between economies, the current-term Government will examine Hong Kong's competitiveness, its economy and the current state and direction for development of its industries from a forward-looking and strategic perspective. Playing the role of a "facilitator" and a "promoter", the Government will introduce timely and appropriate measures to support industries where Hong Kong has strengths and development potential, and tap new markets. The Government will also review regulatory and tax requirements to remove red tape and create a business-friendly environment.

"To stay ahead of the game, we must enhance our I&T environment, attract companies from new economy sectors and research institutions to set up their presence in Hong Kong and nurture talent for a knowledge-based economy," Mr Chan said.

The Financial Secretary has set aside an additional $50 billion to support Hong Kong's I&T development in key areas such as biotechnology, artificial intelligence, smart city and financial technologies (Fintech). Key measures include:

* Allocating $20 billion for the first phase of the Hong Kong-Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop;

* Injecting $10 billion into the Innovation and Technology Fund to continue to support applied research and development;

* Earmarking $10 billion to support the establishment of two research clusters, on healthcare technologies and on artificial intelligence and robotics technologies, to attract the world's top scientific research institutions and technology enterprises to Hong Kong;

* Setting aside $10 billion to upgrade the facilities of the Science Park and enhance support for enterprises in the Park; and

* Allocating $200 million to Cyberport to enhance the support for start-ups and a further $100 million for Cyberport to promote the development of e-sports.

The Government will inject a further $1 billion into the CreateSmart Initiative to strengthen support for the development of the creative industries, especially in nurturing talent, helping start-ups and enhancing public understanding of the value of creativity and design.

While fostering the development of new industries, the Government should also strengthen the traditional industries in which the city enjoys clear advantages. Mr Chan said, "I have set aside a dedicated provision of $500 million for the development of the financial services industry in the coming five years, providing necessary support for bond market development, Fintech, green finance, manpower training and other aspects of financial services."

Mr Chan said that he has asked the Hong Kong Monetary Authority to make plans to set up an academy of finance in collaboration with the Financial Services Development Council and the stakeholders of the financial sector. He also proposed to launch a three-year Pilot Bond Grant Scheme to attract local, Mainland and overseas enterprises to issue bonds in Hong Kong, and to continue the issuance of Silver Bonds in 2018 and 2019.

To promote green finance, he proposed to launch a green bond issuance programme with a borrowing ceiling of $100 billion. The sums borrowed will be credited to the Capital Works Reserve Fund to provide funding for green public works projects of the Government.

Situated at the heart of Asia, the Hong Kong International Airport (HKIA) boasts a vast global network. This, together with its proximity to the Pearl River Delta and the Bay Area as well as the imminent commissioning of the Hong Kong-Zhuhai-Macao Bridge, promises ample opportunities for Hong Kong's air cargo industry. The Government is actively considering the redevelopment of the Air Mail Centre at the HKIA to enhance its efficiency and capacity, and has set aside $5 billion for the project.

To encourage the trading and logistics industry to move up the value chain, the Government will cap the charge for each declaration at $200, so as to further lower the cost of importing and exporting high-value goods to and from Hong Kong, and enhance Hong Kong's advantage as a trading hub. The measure is expected to save the trade $458 million per year and benefit about 900 000 cases.

On tourism, the Government will allocate an additional $396 million to the industry, of which $226 million will be provided for the Hong Kong Tourism Board to implement the Development Blueprint for Hong Kong's Tourism Industry. The Development Blueprint, released by the Tourism Commission last year, sets out four strategies: to develop a diversified portfolio of visitor source markets for Hong Kong, with a focus on attracting high value-added overnight visitors; to nurture and develop tourism products and initiatives with local and international characteristics; to develop smart tourism; and to upgrade the service quality of the tourism industry.

A further $310 million is earmarked to support Ocean Park in developing education and tourism projects over the next few years. 

In addition, the Government is committed to expanding its network of Economic and Trade Offices to help open up emerging opportunities. To support small and medium enterprises including start-ups to grasp economic opportunities and boost their competitiveness, the Government will inject $1.5 billion into the Dedicated Fund on Branding, Upgrading and Domestic Sales, and improve the relevant support programmes.

The Government will also provide $250 million in additional funding to the Hong Kong Trade Development Council for work related to the Belt and Road Initiative and the Bay Area development, promoting the development of e-commerce and enhancing Hong Kong's role as a premier international convention, exhibition and sourcing centre.

Mr Chan also proposed setting up a $1 billion Construction Innovation and Technology Fund to encourage enterprises and practitioners in the construction industry to adopt new technology, and support the industry to harness innovative technology.

See full version of the Budget Speech:


Chinese version on next page.

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