October 17, 2024
HONG KONG – Hong Kong Chief Executive John Lee Ka-chiu delivered his third policy address of his five-year term at the Legislative Council on Wednesday with a clear emphasis on tourism, housing and targeted reform.
He pledged to continue to follow through the “four proposals” put forward by President Xi Jinping in his July 1, 2022 speech delivered in the special administrative region.
Referencing the Third Plenary Session of the 20th Central Committee of the Communist Party of China resolution, he expected Hong Kong to fully harness the institutional strengths of “one country, two systems” while enhancing its status as an international financial, shipping and trade center and deepening collaboration within the Guangdong-Hong Kong-Macao Greater Bay Area (GBA).
National security
“Security and development work together like the two wings of a bird,” Lee said, pledging to safeguard national security, foster patriotic education and promote Chinese culture. Pointing out reform was a “continuous process”, he promised to fully leverage the strengths of “one country, two systems” for sustaining the prosperity and stability of Hong Kong while reminding civil servants to honor their national security duties.
Liquor duty slashed
In a widely anticipated move and seen as a major boost to tourism, effective Wednesday, the duty on liquor with an import price of over HK$200 was reduced to 10 percent from 100 percent for the portion valued above HK$200.
Currently, Hong Kong imposes a duty of 100 percent on the import price of liquor with an alcohol content of more than 30 percent. The duty for liquor with an import price of HK$200 or below will remain unchanged, Lee announced.
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In another boost to tourism, visitors will no longer need to fill entry and departure forms starting Wednesday, Lee announced as he listed measures to attract international tourists, especially those from the Middle East. Disseminating public information in Arabic and cultural sensitivity training, among other initiatives were proposed in the policy address. Also starting Wednesday, nationals of Cambodia, Laos and Myanmar seeking multiple-entry visas for travel and business will see relaxed criteria.
Lee said mainland authorities had been requested to consider resuming multiple-entry travel permits for Shenzhen residents and add more cities to “one trip per week” individual visit endorsements.
He said the Culture, Sports and Tourism Bureau will launch the city’s tourism blueprint later this year.
Housing
In another widely anticipated move, the CE announced to allocate an extra ballot number to young family applicants and one-person applicants aged below 40 with White Form status for the purchase of Home Ownership Scheme (HOS) flats from the next sale onwards.
The White Form Secondary Market Scheme quota will increase by 1,500, allocated entirely to young family applicants and one-person applicants aged below 40.
This apart, in an effort to bolster the sagging property market, the CE announced that the maximum loan to value ratio for residential properties will be adjusted to 70 percent. This will be applicable regardless of the value of the properties, whether for self use or held by companies, and whether or not involves first-time home buyers. The maximum debt servicing ratio will also be adjusted to 50 percent.
This was eased from the existing arrangement for homes valued at less than HK$30 million.
Lee also said a new law to regulate subdivided flats will lay down requirements for windows, toilets and a minimum size of 86 sq ft.
The ratio of public rental flats to subsidized homes will be modified from 7:3 to 6:4 in the coming years, Lee said. Also, an extra ballot will be given to applicants who failed to purchase a subsidized flat in the last two sales.
Enhancing financial, shipping hub status
The CE said his administration aimed to turn Hong Kong into an international gold trading center. This apart, the government will facilitate an international commodity exchange to set up accredited warehouses in the city and introduce measures such as a preferential tax regime. To leverage green shipping opportunities, a fuel bunkering center will be established. A central clearing system for RMB-denominated bond repurchase (repo) transactions was planned.
Effective Wednesday, the New Capital Investment Entrant Scheme will be enhanced to allow investment in residential properties provided the transaction price is no less than HK$50 million, with the amount of real estate investment to be counted towards the total capital investment capped at HK$10 million.
In addition, investments made through a private company wholly owned by an applicant will be counted towards the applicant’s eligible investment with effect from March 1, 2025. The government will consult the industry with a view to expand the scope of tax concessions.
The existing Hong Kong Maritime and Port Board will be reconstituted into the “Hong Kong Maritime and Port Development Board” to help the government in formulating policies.
The statutory maximum indemnity percentage of the Hong Kong Export Credit Insurance Corporation (ECIC) will be increased from 90 percent to 95 percent, Lee said. The ECIC will also provide more free buyer credit checks with extended geographical coverage.
With a view to encourage strategic enterprises to set up headquarters or corporate divisions in Hong Kong, a bill will be tabled this year to introduce a company re-domiciliation mechanism so that interested companies no longer need to wind up operations in original overseas domicile.
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Lee also said the validity period of multiple-entry mainland visas for foreign staff of Hong Kong-registered companies, including non-permanent residents, will be extended to five years.
Lee announced the launch of the Exchange Traded Funds (ETF) that will track Hong Kong stock indices in Gulf countries, seeking to forge closer ties with markets in the Middle East and the Association of Southeast Asian Nations (ASEAN).
Health and quality of life
Lee pledged to deepen reform of the healthcare system while announcing to conduct a comprehensive review with a view to augment the city’s development as an international health and medical-innovation hub.
He said a task group will be set up to establish a third medical school in Hong Kong, inviting interested universities to submit proposals. He also said a bill to admit qualified non-locally trained supplementary medical professionals will be tabled next year.
He said a stepped care model for mental health will be formulated with enhanced support for children and adolescents.
Lee said the government will explore setting up an inter-disciplinary and inter-organization database for the detection of high-risk cases and early intervention and support.
While stressing targeted poverty alleviation, the CE said the total number of vouchers under the Residential Care Service Voucher Scheme for the Elderly will be increased by 20 percent to 6,000.
To promote women’s workplace development, the government will establish a network run by leading women from all walks of life and launch a mentorship program “She Inspires”.
Education and talent development
Beginning in the 2025/26 academic year, the Hong Kong Future Talents Scholarship Scheme for Advanced Studies will annually help 1,200 local students enrolled in designated postgraduate programs.
“We plan to publish the Northern Metropolis University Town Development Conceptual Framework in the first half of 2026,” Lee said. He announced that a start-up fund of HK$100 million has been set up for the first university of applied sciences (UAS) alliance to be established this year. A campus for the newly established Hong Kong Institute of Information Technology will be built.
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About HK$2 billion will be allocated for the Teacher Professional Development Fund to support the long-term development of the teaching profession and about HK$470 million will be allocated to enhance the learning and teaching of English, Putonghua and other languages.
Also, a research center under the InnoHK research cluster to participate in the Chang’E-8 mission will be set up.
Key green, I&T and innovation initiatives
Around HK$750m has been set aside under the New Energy Transport Fund to subsidize electric vehicles purchase, the CE said, adding a subsidy scheme for trialing hydrogen fuel cell electric heavy vehicles will be launched.
Also, a new round of Research Matching Grant Scheme totaling HK$1.5 billion to promoting research was pledged.
The CE said an HK$10 billion I&T Industry-Oriented Fund will be set up to channel more market capital to invest in specified emerging and future industries of strategic importance to build an I&T ecosystem.
An I&T Accelerator Pilot Scheme with a funding allocation of $180 million at a one-to-two matching ratio between the Government and the institution, with up to a subsidy ceiling of HK$30 million was also pledged.
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Hong Kong will join hands with Shenzhen to establish the GBA Clinical Trial Collaboration Platform.
Formulating a low-altitude airspace management system can unlock new opportunities for the economy, Lee pointed out, who cited areas such as telecommunication, artificial intelligence and the digital sector.
He also said a policy stance regarding the application of AI in the financial market will be unveiled soon.
A Working Group on Promoting Silver Economy will be set up to focus on “silver consumption”, “silver industry”, “quality assurance of silver products”, “silver financial and security arrangements” and unleashing “silver productivity”.
The authorities expect to publish later this year the Development Outline for the Hong Kong Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zone.
In summing up his two and a hour-long speech that started at 11 am Wednesday, the CE listed Hong Kong’s advances and achievements to say, “I do believe that our overall policy directions are on the right course.”
Acknowledging the adverse winds of geopolitics and the challenges they posed to the city, Lee struck an optimistic note as he declared they are “outweighed by the opportunities available to us”.