IN her maiden policy speech, Hong Kong’s Chief Executive Carrie Lam yesterday warned the city faced “grave” challenges and must develop a diversified and high-value economy, unveiling a mix of housing and tax relief policies to raise competitiveness.
Lam said she would bolster support for small and medium enterprises in the Asian financial hub by cutting company profits tax to 8.25 percent from 16.5 percent for the first HK$2 million (US$256,000) of earnings. After that earnings would be taxed at the current 16.5 percent.
She also said Hong Kong would aim to double expenditure on research and development over the next five years to 1.5 percent of annual GDP from 0.73 percent, in a bid to bolster its sputtering high-tech prospects.
Capitalizing on the advantages of “One Country, Two Systems,” Hong Kong’s geographical location, business environment, legal system, intellectual property, research and development capability, financial services, and given the opportunities brought by the national 13th Five-Year (2016-2020) Plan and the Guangdong-Hong Kong-Macau Greater Bay Area development, Lam said Hong Kong has huge potential to become an international innovation and technology hub.
“In the face of competition from other economies as well as the rise of protectionism in recent years, Hong Kong is facing increasingly grave challenges. We must develop a high value-added and diversified economy.”
The city government will step up efforts in eight key areas — resources for R&D, nurturing a talent pool, venture capital, scientific research infrastructure, legislation review, opening up data, government procurement and popular science education — to propel innovation and technology development, she added.
Hong Kong will also strive to train and pool together more technology talent and to encourage them to pursue a career in innovation and scientific research.
A HK$500 million technology talent scheme will be launched in the coming year as one of the initiatives to provide funding support for enterprises to recruit postdoctoral talent for scientific research and product development.
In terms of smart city development, Lam said the city government will invest HK$700 million to push ahead with the various key infrastructure projects.
As for youth development, Lam said the government will do its best to address young people’s concerns about education, career pursuit and home ownership, and encourage their participation in politics as well as public policy discussion and debate.
“As regards encouraging young people to participate in public policy discussion and debate, we will appoint more young people to various government committees with the aim of increasing the overall ratio of youth members to 15 percent within the current-term government,” she said.
Lam vowed to reinforce and enhance Hong Kong’s status as a global financial center, an offshore yuan business hub and an international asset-management center. “We will capitalize on the opportunities arising from the Belt and Road initiative and the Bay Area, and make the best use of Hong Kong’s advantages to promote diversified development of our financial market,” she said.
On combating Hong Kong’s soaring housing prices, Lam said that despite a raft of property cooling measures, the government had “no magic wands.”
She pledged to increase land supply where possible and launch a new subsidized “starter homes” scheme to help families not eligible for cheap-rental public housing.
The first phase would provide around 1,000 residential units.
“Even if our housing policy has broad community support, it takes time to find land for increasing the housing supply,” conceded Lam, who is Hong Kong’s first female leader.
Lam said the government will strive to shorten the waiting time for public rental housing, which is a long-established safety net for the grassroots and low-income families.