The Hong Kong budget has been unveiled along with measures to consolidate Hong Kong economic recovery, build a more caring environment for society and to support Hong Kong business.

This year’s Hong Kong Government Budget proposes a series of measures to consolidate its economic recovery from the global financial crisis, develop the Hong Kong economy and build a caring society.

In his Budget announced recently, Hong Kong’s Financial Secretary, Mr John C Tsang, highlighted a strong rebound by the Hong Kong economy from the financial tsunami.

After four straight quarters of negative growth, Mr Tsang said Hong Kong’s gross domestic product expanded by 2.6 percent in the fourth quarter of 2009. He forecast GDP growth of 4 percent to 5 percent for 2010, which indicates a considerable improvement for the Hong Kong economy and Hong Kong business in general.

“While we have come through the most difficult period of the financial tsunami, the external environment is still fraught with uncertainties and the foundations of the economic recovery are not yet firm,” Mr Tsang said.

“I am also concerned that some people have yet to benefit from the economic recovery. Therefore, through this Budget, I will strive to achieve the three objectives of consolidating the recovery, developing our economy and building a caring society.”

Mr Tsang announced a nearly HK$20 billion (A$2.8 billion) relief package that includes Hong Kong tax rebates, rates concessions and public housing rental waivers, to provide financial assistance to the community during the economic recovery.

With the implementation of these Hong Kong financial relief proposals, Mr Tsang said the total spending of the Hong Kong Government to counter the financial tsunami since 2008 would increase from HK$87.6 billion (A$12.3 billion) to HK$110 billion (A$15.5 billion). However, Mr Tsang cautioned that these exceptional means, employed at exceptional times, could not continue for long. In the long run, the Hong Kong Government must maintain fiscal discipline.

The Hong Kong Budget also includes a series of measures to prevent volatility in the property market, such as raising stamp duty on property sales of above HK$20 million (A$2.8 million), and steps to curb excessive expansion of mortgage lending.

The Financial Secretary has estimated that capital works expenditure would increase to HK$49.6 billion (A$7 billion) in 2010-2011. Major projects expected to start this financial year include the Kai Tak Cruise Terminal Building and ancillary facilities and the Hong Kong-Zhuhai-Macao Bridge Hong Kong boundary crossing facilities. With projects by many a Hong Kong company entering their construction peaks, the capital works expenditure for each of the next few years is estimated to reach an all-time high of over HK$50 billion (A$7 billion).

Six industries identified as priority areas to broaden the Hong Kong economic base in the wake of the financial crisis will get more support to help them develop further. These include medical services, education services, environmental industries, testing and certification, innovation and technology and cultural and creative industries.

“The role of the Hong Kong Government is to provide a conducive environment for the development of these industries under the principle of ‘Market Leads, Government Facilitates’,” Mr Tsang said.

The HK$4.9 billion (A$0.7 billion) Hong Kong Science Park Phase 3 development will be completed by 2016, creating 5,000 jobs during construction and 4,000 Research & Development jobs on completion.

To encourage the transport sector to test out green and low-carbon transport technology, Mr Tsang announced the establishment of a HK$300 million (A$42.3 million) Pilot Green Transport Fund.

“I hope that this Fund will encourage the industry to introduce more innovative green technologies, such as the use of buses, public light buses, taxis, and ferries that employ green technologies and help nurture the budding of green technology in Hong Kong,” he said.

Mr Tsang has also set aside HK$540 million (A$76 million) for subsidies to replace Euro II diesel commercial vehicles.

The Hong Kong Financial Secretary added that the Government would take full advantage of the platform being provided under the National 12th Five-Year Plan to capitalise on the “China advantage”.

“I will promote sustainable development of our economy by furthering regional co-operation, investing in infrastructure and promoting the development of various industries.”

To foster regional co-operation, Mr Tsang said the Government would set up a Hong Kong- Taiwan Economic and Cultural Co-operation and Promotion Council to enhance cross-strait ties.

The Hong Kong Financial Secretary has forecast a larger than expected surplus of HK$13.8 billion (A$1.9 billion) for 2009-2010. He has forecast a deficit of HK$25.2 billion (A$3.5 billion) for 2010-2011, and expects a return to fiscal balance by 2013-2014. He has forecast mild inflation of 2.3 percent in 2010.

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