This year's Budget is Hong Kong's first one since its emergence from the COVID-19 pandemic overhang and resumption of normal cross-border travel with mainland China and the world. This Budget is critical to reigniting the post-pandemic economy.

Consolidate strengths to promote economic recovery

Allocating over 80% of resources to benefit the general public and small and medium-sized enterprises (SMEs), the Budget introduced one-off relief measures such as consumption vouchers, tax breaks and rates concession. It is only right to continue supporting SMEs as uncertainties and ups-and-downs will inevitably arise in the process of economic recovery. More importantly, to support the digital transformation of SMEs according to the development trend of the new era, it launched “BUD Easy” under the BUD Fund and allocated HKD100 million to strengthen the services of SME ReachOut to assist SMEs in embarking on the path of economic recovery.

Promote high-quality economic development

High-quality economic development requires a better integration of a “capable government” and an “efficient market” to act in a timely and forward-looking manner. The Budget allocated additional funding of HKD550 million in total to the HKTDC over five financial years, which will help assist Hong Kong businesses in seizing opportunities arising from the “Belt and Road” Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area development. In addition, the Budget introduced several measures to promote the development of Hong Kong's digital economy and green economy. While this is the right direction, the key is to ensure policy implementation and effectiveness. The development of the digital economy must rely on the power of the market and businesses so that the Government can avoid acting without regard to the real situation. During the visit of the HKSAR Government and the Legislative Council to the Greater Bay Area, some leading companies wanted to discuss cooperation with Hong Kong to develop digital industries and data centers.

Furthermore, Hong Kong's high-quality economic development needs to be better integrated into the overall national development. In this regard, the Budget has formulated specific measures for each of Hong Kong's eight centers and hubs. Taking the key International Innovation and Technology Centre as an example, it set aside HKD6 billion to set up thematic research centers related to life and health technology and earmarked HKD3 billion to strengthen the development of frontier technology fields such as artificial intelligence and quantum technology. All of these involve huge fiscal expenditures and need the Government to do more explaining and monitoring to ensure rational use of public funds going forward. Regarding the plan to set up the Microelectronics Research and Development Institute indicated in the Budget, the HKSAR Government can explore teaming up with relevant enterprises and universities in the Greater Bay Area and adopt the model of Belgium's IMEC to jointly establish research directions, nurture talents, and bear R&D costs and risks.

Overcoming the land and housing conundrum

The Budget put forward specific measures to implement the Northern Metropolis and the Kau Yi Chau Artificial Islands reclamation projects mentioned in the Policy Address, which are set to overcome Hong Kong's development predicament.

The public has been concerned that the Government's concurrent implementation of the two projects would trigger a fiscal crisis. The public's concerns are not unfounded. However, although the cost of the artificial islands is very high, the Government can avoid excessive fiscal burden on itself by adopting different methods of financing for the construction. Of course, the Government still needs to explain more to the public.

On the housing issue, the Budget stated that sufficient land has been identified to meet the demand for about 300,000 public housing units in the coming decade. However, as land creation takes time, transitional measures are of utmost importance to those who are waiting for public housing. Although Light Public Housing has been criticized for its high construction costs, the social benefits brought by the project are greater. The Government should speed up the implementation on the basis of good site selection and effective cost control. In addition, it can consider appropriately extending the lease period of transitional housing units and expedite the study on the feasibility of converting quarantine facilities into transitional housing in order to increase housing availability so that people do not have to keep relocating.

This is a free translation. For the exact meaning of the article, please refer to the Chinese version.