In yesterday’s Budget, Hong Kong Financial Secretary John Tsang emphasized exploring new ideas and diversity to help Hong Kong citizens achieve their goals.
He stated his commitment to utilizing resources generated by the community, supporting those in need, and promoting sustainable development to ensure that people from all sectors of society and future generations can benefit from economic growth.
The Budget outlines measures for the cultural and creative sector:
An extra HK$400 million will be allocated to the CreateSmart Initiative. This funding will offer support to various sectors and provide talented individuals with training programs, overseas exchanges, and internships, fostering their potential.
A three-year pilot program for Hong Kong’s fashion industry will be launched with HK$500 million, utilizing existing and new resources. It will promote designers and brands, create an incubation program for design startups, and offer overseas internships and study opportunities to fashion design graduates.
The HK$300 million Art Development Matching Grants Pilot Scheme will match private donations and sponsorships secured by eligible local arts groups with government grants.
The Film Development Fund will receive an additional HK$200 million. A subsidy scheme will be introduced for film productions with budgets not exceeding HK$10 million to increase local film production and nurture talent. The production budget ceiling for the Scheme for Financing Film Production will also be raised from HK$15 million to HK$25 million. The First Feature Film Initiative will be relaunched with increased subsidies for production costs.
Tsang highlighted that startups developed by the Hong Kong Science and Technology Parks Corporation (HKSTPC) and Cyberport have attracted significant investments.
To further encourage the financing of new enterprises, HKSTPC will allocate HK$50 million to establish a corporate venture fund. This fund, created in partnership with private funds, will invest in startups located in the Science Park or those that have participated in its incubation programs.
Tsang also allocated HK$150 million to a new phase of the Enhancing Self-Reliance Through District Partnership Programme, covering 2016-17 to 2019-20.
This funding will encourage private sector participation in social enterprises and promote their growth and diversity. Tsang recognized the growing recognition of social enterprises in Hong Kong, highlighting their role in the maturing of society by balancing economic and social values. He noted that research indicates a significant return on investment in social enterprises, with each dollar of public funding generating four to seven dollars of workfare for disadvantaged employees. Since its 2006 launch, the Enhancing Self-Reliance Through District Partnership Programme has allocated HK$180 million to establish 161 social enterprises, creating 2,600 job opportunities. Eighty percent of these social enterprises have become self-sustaining.
Human resources development is a key focus of the Budget. Tsang emphasized the growing issue of manpower mismatch in Hong Kong, compounded by the challenge of an aging population. He warned that these factors hinder sustainable economic development and must be addressed to avoid burdening future generations.
Human resources initiatives in the Budget include:
A three-year pilot scheme will receive HK$100 million, focusing on insurance and asset and wealth management services. In collaboration with the industry, the program will offer internships, particularly for students, to provide insight into career prospects. The government and industry will also enhance continuing professional development programs and offer financial support for practitioners to participate. Tsang explained that this initiative stems from industry consultations revealing acute manpower shortages in insurance and asset and wealth management.
HK$960 million will fund a pilot program allowing 1,000 students per cohort to pursue specific self-financing undergraduate programs aligned with Hong Kong’s manpower needs. In 2015/16, this initiative covers 13 programs in healthcare, architecture, engineering, testing and certification, creative industries, logistics, tourism, and hospitality.
Short-term internship places provided by government departments will be expanded to 3,000 for 2015-16, a 30% increase from the previous year.
An additional HK$205 million over the next three years will enable more Hong Kong youth to participate in Mainland exchange and internship programs.
Internship opportunities for university students seeking to understand Association of Southeast Asian Nations (ASEAN) countries will increase to 250, up from 90 last year.
HK$23 million over the next three years will promote Hong Kong as a regional intellectual property (IP) trading hub. This funding will provide manpower training, IP consultation, and other services to small and medium enterprises.
Childcare services will receive HK$130 million to strengthen their operations and support women joining the workforce.
The on-the-job training allowance under the Employment Programme for the Middle-aged will be expanded to encourage employing older persons in part-time jobs. The Employees Retraining Board will focus on providing training for older persons and other target groups.
Environmental improvement was also prioritized. Environmental measures include:
Phasing out 82,000 Euro III or earlier diesel commercial vehicles by the end of 2019, with 22,000 vehicles already phased out.
Extending the incentive scheme to waive half the port facilities and light dues charged on ocean-going vessels using low-sulphur fuel while at berth in Hong Kong until the end of March 2018.
An additional HK$150 million will extend the Cleaner Production Partnership Programme for five years. This program assists Hong Kong-owned factories in Hong Kong and Guangdong in reducing emissions and conserving energy.
Tsang emphasized the vital role of small and medium enterprises (SMEs) in Hong Kong’s economy.
He highlighted the significance of SMEs, representing 98% of local enterprises and employing 50% of the private sector workforce, in driving economic growth and preserving employment, particularly in the face of external trade uncertainties.
The government will invest HK$1.5 billion into the SME Export Marketing and Development Funds and increase the maximum funding support for each project under the SME Development Fund from HK$2 million to HK$5 million.
The SME Export Marketing Fund’s scope will also be expanded, and HK$180 million will be allocated for targeted, short-term measures to support sectors negatively impacted by the occupy movement. These measures include:
Waiving license fees for 1,800 travel agents for six months.
Waiving license fees for 2,000 hotels and guesthouses for six months.
Waiving license fees and restricted food permit fees for 26,000 restaurants and hawkers for six months.
Waiving vehicle examination fees for the renewal of licenses for taxis, light buses, franchised and non-franchised buses, goods vehicles, trailers, and special-purpose vehicles once within a year.
Progress continues on the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA). Tsang noted the issuance of 3,000 Certificates of Hong Kong Service Supplier and the establishment of thousands of individually-owned stores in the Mainland by Hong Kong residents under CEPA’s preferential treatment. He highlighted the recent agreement with the Ministry of Commerce to liberalize trade in services between Hong Kong and Guangdong, resulting in Guangdong opening 153 services trade sub-sectors to Hong Kong service suppliers. He expressed hope for further liberalization measures and their nationwide extension, achieving basic liberalization of trade in services between the Mainland and Hong Kong by the year’s end.
Hong Kong is dedicated to intellectual property trading, allocating HK$23 million over the next three years to provide IP consultation, manpower training, and other services to SMEs.
Proposed tax measures included a 75% reduction in profits tax and salaries tax for the 2014-15 assessment year, capped at HK$20,000 per case.
Tsang emphasized the importance of boosting business sentiment and addressing international perceptions of Hong Kong’s economy, given its externally oriented nature.
Hong Kong Chief Executive CY Leung cautioned against underestimating the significance of economic growth, urging vigilance amidst economic slowdown in the Mainland and global uncertainties.
Leung also encouraged employers to prioritize improving employee pay conditions to share prosperity.