In his fifth annual budget announced yesterday (February 1), the Financial Secretary of Hong Kong, Mr John C Tsang, put a priority on increasing competitiveness, supporting businesses and protecting jobs, so as to maintain Hong Kong's steady economic growth amid uncertainty in the global economy.
Mr Tsang said that Hong Kong's economy grew by 5 per cent in 2011, but forecast GDP growth to slow to between 1 and 3 per cent for 2012, mainly due to sluggish European and US economies. For the medium term, he projected that the annual average growth rate will be 4 per cent in real terms for the period 2013-16, while the underlying inflation rate will average 3.5 per cent.
He announced measures worth nearly HKD 80 billion in this year's budget to stabilise Hong Kong's economy, protect people's livelihood and invest for the future.
To help support small and medium sized enterprises (SMEs), Mr Tsang announced a series of initiatives, including to enhance the existing SME Financing Guarantee Scheme by introducing concessions, such as increasing the maximum loan guarantee ratio, thus boosting the confidence of lending institutions in offering loans to SMEs to meet their financing needs. He also said that the Hong Kong Export Credit Insurance Corporation will offer new policy terms to to further assist SMEs.
"I believe that these new initiatives will further help SMEs maintain their competitiveness, tap into emerging markets and ease their financial pressure," said Mr Tsang.
He also proposed to help reduce operating costs, enhance competitiveness and preserve jobs by:
* Waiving the business registration fees for 2012-13 to benefit all business operators;
* Reducing profits tax for 2011-12 by 75 per cent with a cap of HKD 12,000;
* Halving the charges for import and export declarations; and
* Abolishing capital duty levied on local companies to encourage investors to set up companies in Hong Kong to raise capital and expand their business.
To promote Hong Kong's four traditional pillar industries - namely trading and logistics, financial services, business and professional services, and tourism, Mr Tsang unveiled measures such as furthering the development of retail bond market, setting up a dedicated fund of HKD 1 billion to help Hong Kong enterprises tap the Mainland market, and allocating HKD 150 million to the Mega Events Fund etc.
He also described measures to support the six industries where Hong Kong enjoys clear advantages: Cultural and creative industries, medical services, education services, innovation and technology, environmental industries, and testing and certification services. Measures in support of these industries include: HKD 100 million to support the operation of the Hong Kong Design Centre for the coming three years, and to finance two anchor events, namely Business of Design Week and Hong Kong Design Centre Awards; 5,000 additional international school places in the next few years with four international schools on greenfield sites; increasing the level of cash rebate under the R&D Cash Rebate Scheme; increasing the funding ceiling for each project under the Small Entrepreneur Research Assistance Programme; and measures to encourage the use of industrial buildings or sites for data centre development.
Education receives the largest share of expenditure as Mr Tsang announced that recurrent expenditure on education would go up by seven percent in 2012-13 over last year, to HKD 60 billion.
The full budget speech and details of the budget proposals can be found at www.budget.gov.hk.
Hong Kong Economic and Trade Office
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