Mr YUEN Mo (Chairman of the 52nd terms of office) February 2021
We hope the upcoming Budget will present targeted financial support for heavily hit businesses and local residents.
On behalf of CGCC, I would like to wish everyone good health, business success and smooth sailing in the Year of the Ox.
The Year of the Rat just past was a volatile year for Hong Kong’s economy, which had been scarred by the COVID-19 pandemic. We hope the upcoming Budget will present targeted financial support for heavily hit businesses and local residents. It is also imperative for the HKSAR government to help local businesses to find new opportunities by enhancing the competitiveness of local industries, while accelerating the city’s integration into the Guangdong-Hong Kong-Macao Greater Bay Area (Greater Bay Area) and deepening cooperation with neighboring regions.
Supporting industries hit by the pandemic
In 2020, the Hong Kong economy experienced unprecedented challenges, with significant contraction recorded in the first half of the year. Just when the economy began to recover slightly in the latter half of the year, the fourth wave of COVID-19 infections dealt it a heavy blow once again, putting many businesses back in a dire situation.
Since the COVID-19 trend remains unpredictable, the new Budget should focus resources on helping F&B businesses and venue operators who have lost significant business due to the pandemic by providing them with further subsidies. The authorities should also consider rolling out the third tranche of the “Employment Support Scheme”, raising the maximum loan amount and providing an interest subsidy for loan guarantee to relieve the cash flow burden on businesses, and lowering profits tax levied on corporations to help business sector ride out the storm.
Once the COVID-19 situation stabilizes, the authorities can consider distributing consumption coupons, and subsidizing the retail and dining sectors in organizing large-scale promotions to stimulate domestic consumption, which will also likely to facilitate the growth of related sectors and employment.
Enhancing the competitiveness of local industries
Meanwhile, we hope the Budget will pave way for the development of a new economy by earmarking more resources to promote research and development (R&D) and innovation. To this end, subsidies can be provided for local companies to hire overseas and Mainland industry experts, the tax exemption threshold for SMEs regarding R&D expenditure can be raised, and the tax deduction arrangements can be applied on Hong Kong businesses conducting R&D in the Mainland. In addition, the HKSAR government can increase its investment in the Innovation and Technology Venture Fund, and provide incentives in such areas as tax and land leasing to attract reputable international R&D institutions and tech companies to set up offices in Hong Kong.
Another area the Budget should highlight is the development of Hong Kong’s high-end maritime industry and related services, which can be promoted through encouraging the Hong Kong International Arbitration Centre to increase its participation in maritime arbitration services and help to raise the industry standards, and by stepping up support in areas like shipping registration and management to address the growing demand for maritime services in the Greater Bay Area.
Deepening cooperation with neighboring regions
In response to the signing of the Regional Comprehensive Economic Partnership (RCEP) and the China-EU Comprehensive Agreement on Investment, the Budget should allocate resources to bolstering Hong Kong’s role as an intermediary in trade between the Mainland and international markets. To enable local businesses to follow the latest trade development more easily, the HKSAR government may want to consolidate the trade information disseminated by different departments on a one-stop platform. In the long run, it is essential that the HKSAR government helps Hong Kong businesses to secure new opportunities in the ASEAN countries and markets along the “Belt & Road Initiative”, and actively bid for the inclusion of Hong Kong in the RCEP to open up more markets in the region for Hong Kong.
At the same time, the HKSAR government must speed up exchange with the Mainland, particularly the Greater Bay Area. To enhance people flow and logistical efficiency, it can, for instance, implement joint boundary clearance at the ports of call step by step, test run a salaries tax relief scheme for Hong Kong personnel engaging in scientific research in the Lok Ma Chau Loop, and offer import tax subsidies for scientific research equipment transported between Hong Kong and the Mainland.
The Hong Kong authorities can go one step further by helping to create a good sales network for Hong Kong businesses and unifying product standards to facilitate simpler and more effective product certification in the Greater Bay Area. It should also strengthen cooperation with Guangdong Province on better intellectual property protection for goods and services in the region.
To conclude, while the Hong Kong economy will not be free of challenges in the Year of the Ox, we believe that by proactively and positively handling the COVID-19 situation, it is possible for local economic activities and people’s lives to go back to normal soon, so that the economy-boosting measures can function properly. It is also time for Hong Kong to diversify its economy by leveraging on the rapid economic growth in the Mainland.