The 2024-25 Hong Kong Budget

In light of Hong Kong’s aging population, low birth rates, and talent shortages, this year’s budget aims to boost the confidence of Hong Kongers. For long-term fiscal health, economic security, improved living standards, and environmental preservation, this is an essential plan of action. But how? You may ask.

From bolstering the economic sector to revitalizing Hong Kong’s soft power to the acceleration of development and the facilitation of trade, these are but a few ways the city is looking to pave the way towards a sustainable and prosperous future under the 2024–2025 budget.

Are you a citizen of Hong Kong? Do you want to know the key areas of development? Keep reading this article to learn in detail what you can expect from this year’s budget, listed in pinpoint details.

In this Pacific Prime Hong Kong article, we will highlight the most notable ways the budget will affect Hong Kong’s future, taking into consideration the most notable changes and their significance.

Bolstering Economic Confidence

In terms of economic development, significant efforts have been made to attract enterprises, capital, and talents to the region. The government has implemented various strategies and initiatives to foster economic growth and create a favorable business environment.

Here are some key areas of development:

• Strategic Enterprises: Over 40 strategic enterprises have either established their presence, expanded their businesses in Hong Kong, or have plans to do so. These enterprises have made a total investment of over HKD $40 billion, leading to the creation of approximately 13,000 job opportunities.

• Hong Kong Investment Corporation Limited: The Hong Kong Investment Corporation Limited is set to implement the first batch of direct and co-investment projects. These projects, scheduled to commence in the first half of the year, will focus on areas such as life technology, green technology, semiconductors, and chips. This initiative aims to boost innovation and technological advancement in these sectors.

• International Engagement: To attract global investment, Hong Kong has organized the “Roundtable for International Sovereign Wealth Funds” and the “Summit on Start-up Investment and Development in Hong Kong”. These events provide platforms for engaging with international investors and promoting Hong Kong as an attractive investment destination.

• Re-domiciliation Mechanisms: The government plans to submit a legislative proposal to implement re-domiciliation mechanisms in the first half of 2024. These mechanisms aim to facilitate the relocation of companies to Hong Kong, providing them with a conducive business environment and access to the region’s market.

• Market Development: In an effort to expand its reach, Hong Kong is preparing to list an Exchange Traded Fund (ETF) in the Middle East that tracks Hong Kong stock indices. This move will enhance the accessibility of Hong Kong’s stock market to investors in the Middle East.

• Talent Attraction: The government is reviewing the arrangements for the Top Talent Pass Scheme in mid-2024. Additionally, a Global Talent Summit will be hosted to promote Hong Kong as a hub for attracting global talent. These initiatives aim to attract highly-skilled individuals from around the world to contribute to the growth and development of Hong Kong.

• Stock Market Enhancements: Hong Kong is actively implementing recommendations from the Task Force on Enhancing Stock Market Liquidity. Measures such as introducing a Treasury share buy-back regime and maintaining trading operations under severe weather conditions are targeted for implementation in mid-2024.

Furthermore, the government is exploring measures to enhance the listing regime, improve transaction mechanisms, boost investor services, and intensify market promotion efforts.

Support for Small and Medium Enterprises (SMEs)

• SME Financing Guarantee Scheme: The application period for 80% and 90% Guarantee Products has been extended until the end of March 2026. This scheme aims to facilitate access to financing for SMEs, enabling them to expand their operations and invest in growth.

• Branding, Upgrading, and Domestic Sales (BUD) Fund: An injection of $500 million has been made into the BUD Fund, along with the launch of the “E-commerce Easy” program. This program provides support of up to $1 million per enterprise for implementing e-commerce projects in the Mainland, helping SMEs tap into the vast market opportunities.

• Digital Transformation Support Pilot Programme: SMEs in the food and beverage (F&B) and retail industries will be invited to select ready-to-use solutions for digital transformation starting early this year. This initiative aims to enhance the competitiveness of SMEs by leveraging digital technologies.

Brand and Soft Power Development

In terms of soft power development, the Hong Kong government has allocated significant funds and implemented various initiatives to enhance tourism, promote mega-events, and support the financial sector.

Here are the key highlights in this category:

Strengthening Tourism Development and Organizing Events

Over $1.09 billion has been allocated to strengthen tourism development and organize events in Hong Kong. Some of the highlights include:

• Splendid Victoria Harbour: Monthly pyrotechnic and drone shows will be organized, along with revamping the iconic “A Symphony of Lights” show. Additionally, a pilot scheme will be implemented to enhance F&B, retail, and entertainment facilities at the harbourfront, creating an immersive experience for visitors.

• Immersive and In-Depth Tourism: Hong Kong will focus on developing immersive and in-depth tourism experiences based on themes such as “Citywalk.” These initiatives aim to showcase the unique cultural and historical aspects of the city, providing visitors with a deeper understanding of Hong Kong.

• Young-Adult Focused Activities: Activities such as hiking, cycling, stand-up paddleboarding, trail running, and stargazing will be promoted to attract young adults and adventure enthusiasts. These activities leverage Hong Kong’s natural beauty and outdoor recreational offerings.

• Local Characteristics: The government will continue organizing events such as the “Sai Kung Hoi Arts Festival” and “Design District Hong Kong.” These events celebrate local art, design, and cultural expressions, highlighting the unique characteristics of Hong Kong.

• New Hong Kong Tourism Brand: A new tourism brand will be launched to showcase the diverse offerings and attractions of Hong Kong, aiming to attract a wider range of international visitors.

• Multi-Destination Tourism: Hong Kong will collaborate with cities in the Greater Bay Area (GBA) to promote multi-destination tourism. This initiative aims to encourage visitors to explore multiple cities within the region, enhancing their travel experiences.

• Promoting Mega-Events: The government has earmarked $100 million to boost mega-event promotions over the next three years. These mega-events serve as platforms to showcase Hong Kong’s strengths and attract global attention.

Thematic financial forums, such as the Global Financial Leaders’ Investment Summit and the Wealth for Good in Hong Kong Summit, will continue to be organized to promote Hong Kong as a leading financial hub.

• Sponsored Overseas Speaking Engagement Programme: A new Sponsored Overseas Speaking Engagement Programme will be launched to sponsor renowned scholars and industry leaders in promoting Hong Kong overseas. This initiative aims to enhance Hong Kong’s international reputation and foster collaboration with global partners.

The Acceleration of Multi-Sector Development

In terms of industry development, there is a strong focus on accelerating high-quality development in multiple sectors. The government has implemented initiatives and allocated funds to promote sustainability, green finance, the digital economy, and green aviation.

Here are the key areas of development:

The Development of Green Finance

• Green Future, Green Finance: Sustainability Reporting and Data Analysis: Companies and financial institutions will receive assistance in sustainability reporting and data analysis. This initiative aims to promote transparency and accountability in environmental practices.

• Green and Sustainable Finance Grant Scheme: The Green and Sustainable Finance Grant Scheme has been extended to 2027. This scheme provides financial support to projects that contribute to green and sustainable development.

• Green and Sustainable Fintech Proof of Concept Subsidy Scheme: The government plans to launch the Green and Sustainable Fintech Proof of Concept Subsidy Scheme in the first half of the year. This scheme aims to support the development of innovative fintech solutions that promote green and sustainable finance.

• Joint Climate Finance Conference: Hong Kong will co-host a Joint Climate Finance Conference with Dubai. This conference aims to facilitate discussions and collaborations on climate finance, promoting sustainable investments in the region.

• Concessionary Measures for Green Shipping: The government will allocate $65 million to provide concessionary measures for Hong Kong-registered ships that have achieved a high rating in terms of decarbonization. This initiative aims to incentivize the shipping industry to adopt greener practices.

The Development of Green Aviation

• Sustainable Aviation Fuel Promotion: Hong Kong will promote the use of Sustainable Aviation Fuel (SAF) in the aviation sector. This initiative aims to reduce carbon emissions from air travel and contribute to a greener aviation industry.

• Photovoltaic Technology: A pilot scheme will be launched to explore the application of photovoltaic technology on the facades of government buildings. This initiative aims to harness solar energy and promote renewable energy sources.

• Electric Vehicles: The first registration tax (FRT) concessions for electric vehicles will be extended to March 2026, with concessions reduced by 40%. This extension aims to encourage the adoption of electric vehicles and reduce carbon emissions from conventional vehicles.

The Development of Digital Economy

• Business Version of “iAM Smart”: The government will allocate $300 million to launch a business version of the “iAM Smart” digital identity platform. This initiative aims to facilitate digital transactions and enhance the efficiency of business operations.

• Data Trading Ecosystem: An in-depth study will be conducted on developing a data trading ecosystem. This initiative aims to explore the potential of data as an economic asset and promote data-driven innovation.

• Cross-Boundary Transactions: Phase 1 of Project mBridge will be launched to settle cross-boundary transactions for corporations. This project aims to facilitate seamless cross-border transactions and enhance business connectivity.

• Digital Payment Pilot Programs: Phase 2 of the e-HKD Pilot Programme will commence, expanding the scope of digital payment solutions in Hong Kong. Additionally, the scope of e-CNY pilot testing will be expanded to include topping up e-CNY wallets through the Faster Payment System (FPS).

• Digital Training for Elderly: $100 million will be set aside to provide digital training courses and technical support to the elderly. This initiative aims to bridge the digital divide and empower senior citizens with digital skills.

Innovation and Technological Development

With a strong emphasis on innovation and technology, the 2024-2025 budget aims to foster research and development, promote collaboration, and support the growth of emerging industries. The government has allocated substantial funds and introduced various initiatives in this sector.

Here are the key highlights under the umbrella of innovation and technology:

• AI Supercomputing Centre: The first phase of the AI Supercomputing Centre is set to operate by 2024. The government will allocate $3 billion to support local universities, research and development institutes, and enterprises in leveraging the computing power of the center. This initiative aims to advance artificial intelligence research and applications within Hong Kong.

• Hong Kong Microelectronics Research and Development Institute: In 2024, the Hong Kong Microelectronics Research and Development Institute will be established to facilitate research collaboration on third-generation semiconductors. This institute aims to enhance Hong Kong’s capabilities in the microelectronics industry and drive technological advancements.

• Life and Health Technology Research Institutes: An allocation of $6 billion will be provided to universities to establish life and health technology research institutes. These institutes will focus on developing innovative solutions and technologies in the areas of life sciences, healthcare, and biotechnology.

• Greater Bay Area International Clinical Trial Institute: The Greater Bay Area International Clinical Trial Institute will be established in the Hetao Shenzhen Hong Kong Science and Technology Innovation Cooperation Zone (HTCZ). This institute aims to facilitate collaboration and conduct clinical trials, contributing to the advancement of medical research and healthcare in the Greater Bay Area.

• New Industrialization Acceleration Scheme: The New Industrialization Acceleration Scheme will be launched, providing enterprises with up to $200 million on a matching basis. This scheme aims to support the development and adoption of advanced technologies, automation, and digital transformation across various industries.

• Frontier Technology Research Infrastructure Support Scheme: A budget of $3 billion will be earmarked to launch the Frontier Technology Research Infrastructure Support Scheme. This initiative aims to provide support for the development and utilization of frontier technologies, such as artificial intelligence, robotics, and advanced manufacturing.

Financial Initiatives to Support Sustainable Tech Development

• Bond Issuance: The government plans to issue $70 billion worth of retail bonds, including $50 billion for Silver bonds and $20 billion for Green bonds and infrastructure bonds. These bonds aim to facilitate public participation in investments and fund sustainable development projects.

• Introduction of Block Trading: Measures will be introduced to promote the introduction of block trading, RMB counters under Southbound Stock Connect, and the expansion of the mutual access regime to Real Estate Investment Trusts (REITs). These initiatives aim to enhance the efficiency and accessibility of financial markets.

• Grant Schemes: The Grant Scheme for Open-ended Fund Companies and REITs will be extended for three years, providing continued support for the development of these investment vehicles.

• Tax Regimes: Preferential tax regimes for family office funds will be enhanced to further encourage the establishment and growth of family offices in Hong Kong.

• Cross-boundary Credit Referencing: Efforts will continue to build a collaborative framework on cross-boundary credit referencing. This initiative aims to facilitate cross-border credit assessments and enhance financial cooperation between Hong Kong and other jurisdictions.

Trade Development

The 2024-2025 Hong Kong budget includes several measures and initiatives to promote trade, attract investment, and enhance international cooperation. The government aims to support the development of multinational supply chain management, explore new markets, strengthen intellectual property trading, maritime and aviation services, legal and dispute resolution services, as well as international cultural exchange.

Here are the key highlights:

• Multinational Supply Chain Management Centre: The government will establish a multinational supply chain management center to provide consulting services, trade financing, and corporate training.

Additionally, a study will be conducted to explore the establishment of a trade single window, which aims to provide one-stop services for enterprises. The government also aims to attract Mainland manufacturing enterprises to set up offshore trading management headquarters in Hong Kong.

• Explore New Markets: Hong Kong will consider establishing Economic and Trade Offices in Riyadh, Saudi Arabia, and Kuala Lumpur, Malaysia. This initiative aims to explore new markets, facilitate trade, and strengthen economic ties with these regions.

• Belt and Road Initiative: The government will organize the “Belt and Road Festival” and the “Belt and Road Initiative Tax Administration Cooperation Forum” in 2024. These events aim to promote cooperation and exchange among countries involved in the Belt and Road Initiative.

• Intellectual Property Trading: A legislative proposal will be introduced to implement a “patent box” tax incentive, reducing the profit tax rate to 5%. This initiative aims to attract intellectual property-related businesses and encourage innovation and technology development.

• Maritime Services: The government will allocate $45 million to support the Hong Kong Productivity Council in establishing and operating the WIPO Technology and Innovation Support Centre.

This center aims to provide support and promote technological innovation in the maritime industry. Additionally, enhancements to tax concession measures for the maritime industry will be studied.

• Aviation Services: In support of the “Air Silk Road” initiative, the government will strengthen aviation services along the current major routes and routes along the Belt and Road. Furthermore, a block registration incentive will be offered to shipowners to encourage extensive registration of ships in Hong Kong.

• Legal and Dispute Resolution Services: Hong Kong will host the headquarters of the “International Organization for Mediation.” This initiative aims to enhance Hong Kong’s position as an international dispute resolution center.

The government will continue to promote Hong Kong’s legal and dispute resolution services in the Mainland, the Middle East, and ASEAN member states.

• International Cultural Exchange: The budget includes an injection of $1.4 billion into the Film Development Fund and $2.9 billion into the CreateSmart Initiative to support the development of the film and creative industries.

Hong Kong Fashion Design Week will be organized annually from 2024 onwards, promoting the fashion industry. The government will also devise key arrangements for the Signature Performing Arts Programme Scheme to support the long-running of large-scale programs. Additionally, the first Hong Kong Performing Arts Expo will be organized.

Infrastructure and Community Development

The budget includes various measures and initiatives to support infrastructure development and community welfare. The government aims to address housing needs, improve transport infrastructure, enhance healthcare services, promote a caring and inclusive community, nurture local talent, and support vocational and professional education.

Listed below are the key highlights:

Land Development

Under the 2024/25 Land Sale Programme, railway property developments, private development and redevelopment projects, and URA’s projects, 15,000 residential units will be developed across eight sites. In addition, two commercial sites will provide approximately 120,000 square meters of commercial floor area, and one industrial site will provide 540,000 square meters of industrial floor area.

The government will consider market conditions when determining the quantity, type, and pace of land sales, with a commitment to making available land for no less than 80,000 private housing units over the next five years.

Housing

For public housing, sufficient land has been identified to accommodate 308,000 public housing units. The Cash Allowance Trial Scheme will be extended for one year until June 2025. In the private housing sector, an average of 19,000 private residential units will be completed annually over the next five years, with an expected supply of around 109,000 first-hand private residential units over the next three to four years.

Transport Infrastructure

The government will invite expressions of interest on the supply and operation of smart and green mass transit systems in East Kowloon, Kai Tak, and Hung Shui Kiu/Ha Tsuen in 2024. The feasibility of investing in the Modular Integrated Construction (MiC) supply chain will be examined. Additionally, a Building Testing and Research Institute will be established within 2024 to promote innovative applications by the industry.

Healthcare

The construction of the Chinese Medicine Hospital and the Government Chinese Medicines Testing Institute will proceed, with services expected to begin in phases at the end of 2025. The government will allocate $680 million to support vocational and professional education, extending the Pilot Incentive Scheme to Employers and the Pilot Subsidy Scheme for Students of Professional Part-Time Programmes for five years.

Caring and Inclusive Community

Various measures will be implemented to support a caring and inclusive community. These include increasing the number of Community Care Service Vouchers to 11,000, increasing the number of Residential Care Service Vouchers for the Elderly to 5,000, and providing an additional subsidy of $500 per month for employed disabled recipients of Comprehensive Social Security Assistance (CSSA) through a three-year pilot scheme.

Furthermore, the budget aims to set up 10 aided, standalone childcare centers to add 900 places for child day-care services within three years, extend the After School Care Programme for Pre-primary Children to cover all districts and increase the number of service places to about 1,200 within three years.

Nurturing Local Talent

The budget includes additional funding of $12 million to prepare for regulatory arrangements for local patent agent services. Efforts will also be made to establish the Hong Kong International Legal Talent Training Academy to nurture legal talent.

An additional funding of $130 million will support the “Knowing More About IT” program, providing subsidies of up to $300,000 for each publicly funded primary school over the next two academic years. The Maritime and Aviation Training Fund will be reviewed to enhance its effectiveness.

These initiatives aim to address the housing needs of the population, improve infrastructure, enhance healthcare services, promote inclusivity, support education and talent development, and ensure the well-being of the community.

Conclusion

In conclusion, the 2024-2025 Hong Kong budget covers a range of economic concerns. The notable measures include the removal of all cooling measures in the property market, the issuance of large quantities of bonds for infrastructure development, and the reduction or removal of certain sweeteners.

The budget also introduces higher taxes on top earners and tobacco products. Other highlights include the revival of a hotel tax, continued studies on the artificial islands project, a review of the transport subsidy, and investments in cutting-edge industries. Despite a significant budget deficit, the government expects the economy to grow in the coming years.

About Pacific Prime 

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Wish Sutthatothon

Content Writer at Pacific Prime Hong Kong

Wish Sutthatothon (Nickname: Guy) is currently a content writer at Pacific Prime Thailand, an insurance broker that connects individuals and businesses with insurance providers worldwide. He creates and edits blog articles, guides, reports, webpages, and other types of digital content.

He graduated with a Bachelor’s Degree in Communication Arts, Media & Communication major (concentration: Creative Content) from Mahidol University International College (MUIC). During the compulsory major elective period in the summer of 2021 and voluntarily during the summer of 2022, he also interned as a video and photo editor at Mbrella Films.

He has experience working as an English Content Writer at a real estate buying/renting/selling platform in Thonglor. There, he crafted company blog posts on a multitude of topics. Topics include market trends, legal issues and disputes in property businesses, financial guides, expat guides, home insurance, home decoration and maintenance, and weekly real estate news quick-recaps. Occasionally, as part of the blog-writing process, he would also translate existing Thai blogs to English.

In his free time, Guy enjoys doing scriptwriting and storytelling for comic strips, watching movies, and listening to music (particularly film scores).

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