The 2020/2021 Budget

Yesterday 26 February Financial Secretary of the HKSAR Government, Mr. Paul Chan, published his 2020/2021 Budget. You will find the entire work on this website (click). Alternatively you can download the informative flyer right here (click).
Your BLCC has gone through the budget, there is a lot in there, here are the highlights we think are relevant for our business communities:

  • Develop & Diversify the Economy
    • Financial Services
      • Issue green bonds totaling HK$66 billion in next 5 years;
      • Issue inflation-linked retail bonds and Silver Bonds totalling at least HK$13 billion
    • Innovation & Technology
      • Inject HK$345 million for a pilot subsidy scheme to encourage the logistics industry to enhance productivity through the application of technology
      • Inject HK$2 billion into the Innovation &Technology Fund to launch the Re-industrialisation Funding Scheme, providing matching-basis support for manufacturers setting up smart production lines in HK
    • Trade
      • Additional funding of HK$150 million for the Hong Kong Trade Development Council to assist Hong Kong enterprises in exploring business opportunities
    • Tourism
      • Additional funding of over HK$700 million for the Hong Kong Tourism Board to step up external promotion after the epidemic
    • Cultural & Creative Industries
      • Additional HK$900 million to the Art Development Matching Grants Scheme to further promote sponsorship of culture and arts from all sectors
  • Relieving the Burden, Supporting Businesses & Salary Earners
    • Stimulate the Economy
      • Cash Pay-out: HK$10,000 cash pay-out to Hong Kong permanent residents aged 18 or above
      • Reduce salaries tax & tax under personal assessment for 2019-20 assessment year by 100%, subject to ceiling of HK$20,000
    • Support Enterprises
      • Concessionary low-interest loan: Introduce a concessionary low-interest loan with 100% Government guarantee for enterprises, which will be open for application for 6 months
      • Reduce profits tax for 2019-20 assessment year by 100%, subject to a HK$20,000 ceiling
  • Developing a Livable City
    • Environmental Protection
      • Earmark no less than $300 million per year to implement waste paper collection & recycling services in the second half of 2020, to help stabilise the quantity and price of local waste paper
      • Formulate Hong Kong’s first roadmap on the use of electric vehicles and launch a HK$2 billion pilot scheme to subsidise the installation of charging-enabling infrastructure in car parks of private residential buildings
      • Earmark $80 million to launch a pilot scheme for electric public light buses
      • Earmark $350 million to launch a pilot scheme for electric ferries
      • Launch a scheme in the second half of this year to phase out about 40 000 Euro IV diesel commercial vehicles. HK$7.1 billion earmarked for ex-gratia payment to vehicle owners concerned
      • Set up a HK$200 million Green Tech Fund to support the R&D and application of decarbonisation and green technologies
    • Healthcare
      • Establish a $10 billion public healthcare stabilisation fund

The entire work with all details is accessable on the dedicated budget website (click). To conclude this post a few numbers on the economy of Hong Kong:

  • Economic Performance in 2019
    • GDP growth: -1.2%
    • Headline inflation: 2.9%
    • Underlying inflation: 3.0%
    • Unemployment (latest): 3.4% – the highest in more than 3 years.
  • Economic Forecast for 2020
    • GDP growth: -1.5 to 0.5%
    • Headline inflation: 1.7%
    • Underlying inflation: 2.5%
    • Total fiscal reserves of HK$1,133.1 billion forecast by 31 March 2020 (about €133B) – equivalent to 22 months of government expenditure