Hong Kong Chief Executive’s 2017 Policy Address

Chief Executive’s 2017 Policy Address

Hong Kong Chief Executive Carrie Lam revealed the details of her maiden Policy Address on 11 October, which comprehensively covers such areas as good governance, diversified economy, nurturing talent, improving people’s livelihood, liveable city and connecting with young people. A number of initiatives which will be of interest to the business and international communities are summarised as follows:

Economy
• Capitalise on the opportunities arising from the national Belt and Road Initiative and the Guangdong-Hong Kong-Macao Bay Area development proactively and holistically. Enter into a full agreement on Hong Kong’s participation in the Belt and Road Initiative with the National Development and Reform Commission as soon as possible.
• Support SMEs by reducing profits tax to 8.25% for first $2 million (AUD $343,120) profits. Remaining profits to be taxed at current rate of 16.5%
• Encourage research and development (R&D) investment with 300% tax deduction for first $2 million R&D expenditure, and 200% deduction for remainder
• Continue to negotiate bilateral free trade agreement (FTA) with Australia. Further enhance bilateral ties through signing a FTA and an investment promotion and protection agreement (IPPA) with the ASEAN in November this year, and the Hong Kong and Macao Closer Economic Partnership Arrangement (CEPA) this year.
• Increase the total number of comprehensive avoidance of double taxation agreements to 50 within the next few years
• Demolish and redevelop the three government towers in Wan Chai to create a new, integrated wing for the Hong Kong Convention and Exhibition Centre (HKCEC) with 23,000 sq m of convention and exhibition facilities
• Boost diversified development of tourism sector, including cultural, heritage, green and creative tourism
• Issue "green bonds" to encourage investment in green projects via HK capital markets
• Hong Kong Monetary Authority to launch a Faster Payment System in 2018 to promote more diversified and flexible payment products

Innovation and Technology
• Promote the development of innovation and technology (IT) on all fronts to bring new economic drive and to improve people’s daily lives
• Set aside at least $10 billion (AUD $1.72 billion) in university research funding to further encourage private companies to increase R&D spend
• Kick-start a $500 million (AUD $85.78 million) "Technology Talent Scheme" to train and pool technology talent
• Inject $3 billion (AUD $514.68 million) into the Research Endowment Fund
• Jointly develop with Shenzhen the “Hong Kong-Shenzhen Innovation and Technology Park” at the Lok Ma Chau Loop, and through the Guangdong-Hong Kong-Macao Bay Area development and collaboration between Hong Kong and Shenzhen, develop an international IT hub in the Bay Area
• Use $2 billion (AUD $343.12 million) of the Innovation and Technology Venture Fund Scheme to co-invest on matching basis with VC funds investing in local tech startups

Smart City
• Invest $700 million (AUD $120.09 million) to take forward Smart City initiatives, including "smart lampposts"; and develop an intelligent transport system (parking meters, payments, real-time parking information)

Creative Industries

• Inject $1 billion (AUD $171.56 million) into the CreateSmart initiative to boost support for design and creative industries

For more details on Policy Address, please read here.

For highlights, please read here.

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