Dr Jonathan CHOI Koon-shum (Chairman of the 51st terms of office) February 2020
We hope the soon-to-be-announced Budget will provide continued short-term support measures to help companies to overcome the hurdles, and propose mid- to long-term policies aimed at promoting the diversification of industries.
The Year of the Gold Rat marks a new beginning! On Behalf of the CGCC, I would like to wish everyone prosperity and business success in the year ahead.
The Year of the Pig was not an easy year for Hong Kong. The Year of the Rat is expected to be challenging still, as the continual spread of the new pneumonia and other uncertainties hover over the local economy and business outlook. We hope the soon-to-be-announced Budget will provide continued short-term support measures to help companies to overcome the hurdles, and propose mid- to long-term policies aimed at promoting the diversification of industries.
Economic challenges remain in the Year of the Rat
Tension between China and the US over the trade deal finally eased last month when the two countries signed the phase 1 trade agreement, which also helped to stabilize Hong Kong’s weakened external trade. That said, only time can tell if the two economic powers will not get into another round of wrestling and change the face of global trade and investment once again.
As for the Hong Kong economy, the advance estimates on GDP for 2019 contracted by 1.2%, whereas retail sales also registered a significant decline. The number of visitors to the city has been dropping since July last year; the unemployment rate had climbed up to a three-year high between October and December 2019. The uncertainties in the external environment will likely continue to cripple Hong Kong’s economic development for a while. Before the social unrest triggered by the Fugitive Offenders Ordinance amendment bill has died down, a new threat, namely the spread of the novel coronavirus, is confronting the city. It is important that the business sector stay vigilant and make necessary preparations.
Stepping up support and contingency measures
In the face of the numerous external and internal, political and economic challenges, we welcome the series of support and relief measures the HKSAR government has implemented to aid businesses, and are eager to see these measures enhanced in the new Budget. The authorities may also consider distributing consumption vouchers to boost consumption among the local residents, and offering tax exemption to a quota of individuals and businesses to mitigate imminent waves of layoffs and business closures.
In addition, we believe that the HKSAR government is capable of leading all sectors of society to fight against the novel coronavirus infection and adopt all the appropriate support measures. The business sector will collaborate proactively, including purchasing needed supplies from the global market to stabilize Hong Kong’s stock of protective items.
Fostering a diversified economy
In the mid- and long-run, Hong Kong’s industries are facing the problem of homogeneity. We hope the HKSAR government will allocate more resources to support the developments of different industries.
For example, the authorities can develop more long-term plans to support the development of the tourism sector. Leveraging the convenience offered by the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the Hong Kong-Zhuhai-Macao Bridge, the government can also liaise with the Mainland authorities on improving port facilities so as to enhance their efficiency and capacity, thus allowing multi-destination travel in the Guangdong-Hong Kong-Macao Greater Bay Area (the Greater Bay Area) to grow further.
We also suggest that the authorities proactively invest in research and development (R&D) as well as innovation and technology (I&T), such as by providing businesses with subsidies to recruit overseas talents, increasing the tax relief threshold for SMEs engaged in R&D, and attracting renowned science and technology institutions and tech companies to set up offices in Hong Kong through favourable tax, land and other policies.
Deepening cooperation with neighboring regions
China’s active promotion of the Greater Bay Area and “Belt and Road Initiative” (B&R) has created new opportunities for Hong Kong. The HKSAR government should explore the possibility of providing matching support facilities and policies. For instance, it can increase the quota on private cars travelling from Hong Kong to Guangdong via the Hong Kong-Zhuhai-Macao Bridge by enhancing the cross-boundary clearance service with Guangdong, and look into the plausibility of expanding the channels for two-way renminbi fund flows and creating an e-payment platform compatible with Guangdong, Hong Kong and Macao. All these help to facilitate the free flow of people, commodities and capital within the Greater Bay Area.
Meanwhile, we hope the HKSAR government will assist the business sector in building a platform to facilitate B&R project interfacing and promoting B&R study tours for Hong Kong and Mainland businesses. In particular, it is important to strengthen trade connections with the Association of Southeast Asian Nations (ASEAN) and fight for favourable open-market policies for Hong Kong’s products, financial sector and professional services, among others, which enjoy a competitive edge.
To summarize, notwithstanding the challenges facing the Hong Kong economy in the Year of the Rat, we firmly believe that Hong Kong enjoys unique strengths, and that opportunities abound for the city’s long-term development so long as all sectors of society work together to overcome the challenges and promote the development of the society.
