Hong Kong’s 2024-2025 Budget

On 28 February 2024, Mr. Paul CHAN, the Financial Secretary of the Hong Kong Special Administrative Region, presented the annual Budget Speech for the fiscal year 2024-25. During this speech, the government's strategies for the coming financial year were unveiled, with emphases on enhancing confidence, attracting investments, and fostering sustainable development. The following highlights encapsulate the key elements outlined in the address:

Bolstering Confidence:
Hong Kong's new budget aims to boost confidence and attract enterprises, capital, and talent. Over 40 strategic enterprises are set to invest HK$40 billion, creating 13,000 jobs. Initiatives include implementing projects in life and green technology and hosting international events. Proposals involve re-domiciliation mechanisms, listing an ETF in the Middle East, and reviewing the Top Talent Pass Scheme. Notable property and stock market measures include cancelling stamp duties and introducing a treasury share buy-back regime. Small and Medium Enterprises will benefit from extended schemes and a HK$500 million injection into the BUD Fund. Over HK$1.09 billion is allocated for tourism development, including monthly shows at Victoria Harbour, immersive experiences, and a new tourism brand. The budget also supports people and enterprises through tax reductions, rates concessions, and additional allowances.

Green Future:
A priority is being put on green initiatives. In Green Finance, there's a focus on aiding companies with sustainability reporting. The Green and Sustainable Finance Grant Scheme is extended, and a Fintech Subsidy Scheme will launch. Hong Kong plans to co-host a Joint Climate Finance Conference with Dubai. For Green Shipping, HK$65 million is allocated for concessions benefiting highly rated Hong Kong-registered ships, with a study on green-methanol bunkering. Green Aviation initiatives include promoting Sustainable Aviation Fuel. A pilot scheme for photovoltaic technology on government buildings is planned. Electric Vehicle efforts involve extending first registration tax concessions until March 2026, with a 40% reduction.

Digital Economy:
HK$300 million are being allocated for a business version of the all-in-one government app "iAM Smart" and a study on developing a data trading ecosystem is being initiated. Project mBridge's first phase is set to streamline cross-boundary transactions for corporates, while the second phase of the e-HKD Pilot Programme begins. The e-CNY pilot testing in Hong Kong expands, allowing e-CNY wallet top-ups through the digital “FasterPaymentSystem”. Furthermore, HK$100 million is designated for digital training and technical support for the elderly, promoting digital inclusivity and skills development.

Industry Development:
Hong Kong's budget prioritizes Innovation and Technology with plans for an AI Supercomputing Centre and a Microelectronics Research and Development Institute. HK$6 billion is allocated for life and health technology research at universities. Finance initiatives include issuing HK$70 billion in retail bonds, promoting block trading, and expanding mutual access to REITs. The trade sector focuses on a multinational supply chain management centre and exploring new markets. Intellectual Property Trading involves a "patent box" tax incentive, and the maritime sector considers enhancements to tax concessions. In aviation, there's an emphasis on strengthening services along the Belt and Road. The budget injects funds into cultural exchange, including the Film Development Fund and CreateSmart Initiative. Nurturing local talent involves additional funding for patent agent services, establishing the Hong Kong International Legal Talents Training Academy, and supporting IT education in primary schools. The Maritime and Aviation Training Fund will be reviewed for effectiveness.

Land, Housing and Transport:
The new budget addresses land development with plans for 15,000 residential units across various projects, including commercial and industrial sites. The government commits to considering market conditions in determining land sale quantity, type, and pace, aiming to provide land for at least 80,000 private housing units over the next 5 years. In housing, sufficient land for 308,000 public housing units is identified, and the Cash Allowance Trial Scheme is extended until June 2025. For private housing, the plan aims to complete an average of 19,000 units annually over the next 5 years, with an expected supply of around 109,000 units in the next 3 to 4 years. Transport infrastructure initiatives involve seeking expressions of interest for smart and green mass transit systems, examining the feasibility of investing in the Modular Integrated Construction (MiC) supply chain, and establishing the Building Testing and Research Institute by 2024 to promote industry innovation.

Caring and Inclusion:
HK$680 million are being allocated for vocational and professional education, extending incentives and subsidies for 5 years. An additional HK$100 million supports post-secondary institutions forming an Alliance of Universities in Applied Sciences. The budget addresses community care and residential services, increasing service vouchers to HK$11,000 and HK$5,000 for Community Care and Residential Care, respectively. A 3-year pilot scheme provides an extra HK$500 monthly subsidy for employed disabled recipients of CSSA. The plan includes establishing 10 aided childcare centres, adding 900 places within 3 years, and expanding the After School Care Programme for Pre-primary Children to about 1,200 places within the same timeframe. In healthcare, the budget advances the construction of the Chinese Medicine Hospital and the Government Chinese Medicines Testing Institute, expected to begin service from the end of 2025. Additionally, there's an immediate 80 cents per stick increase in the duty on cigarettes as part of tobacco control measures.

Public Finance:
Hong Kong presents a financial overview, forecasting a consolidated deficit of HK$101.6 billion for 2023/24 and HK$48.1 billion for 2024/25, with fiscal reserves expected to be HK$733.2 billion and HK$685.1 billion, respectively. The plan extends to 2028/29, forecasting consolidated surpluses and fiscal reserves of HK$832.2 billion by end March 2029. The Fiscal Consolidation Programme aims for gradual fiscal balance, emphasizing expenditure cuts and pragmatic revenue increases while prioritizing public service provision. Measures include maintaining zero growth in the civil service establishment, reducing recurrent government expenditure by 1% in 2026/27, and reviewing and reprioritizing capital works projects. Revenue adjustments involve increasing business registration fees, implementing a two-tier standard rates regime for certain taxpayers, resuming Hotel Accommodation Tax collection, and introducing a progressive rating system for domestic properties.

In conclusion, the 2024-25 budget sets a robust foundation for sustainable growth, innovation, and heightened competitiveness. With a strategic focus on diverse sectors, ranging from green initiatives to digital transformation and industry development, the budget opens avenues for exciting opportunities within our community and beyond. The outlined measures reflect a proactive approach to economic resilience and social inclusivity, showcasing the government's commitment to steering Hong Kong towards a dynamic and prosperous future.
 
Source: https://www.budget.gov.hk/2024/eng/index.html