THE 2020-21 BUDGET OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION GOVERNMENT

The 2020-21 Budget was released today (February 26) by the Financial Secretary, Mr Paul Chan. FS unveiled a $120 billion spending plan to support enterprises, safeguard jobs, stimulate the economy and relieve people's burden.

Here are the major highlights that may be of interest to you.

Economy + Fiscal Overview

Economic Performance in 2019
GDP growth: -1.2%
Headline inflation: 2.9%
Underlying inflation: 3.0%
Unemployment (latest): 3.4%

Economic Forecast for 2020
GDP growth: -1.5 to 0.5%
Headline inflation: 1.7%
Underlying inflation: 2.5%

Fiscal Deficit of HK$37.8 billion (about US$4.85 billion) estimated for 2019-20
Deficit of HK$139.1 billion (about US$17.8 billion) forecast for 2020-21
Total fiscal reserves of $1,133.1 billion forecast by 31 March 2020 (about US$145B) – equivalent to 22 months of government expenditure

Almost HK$120 billion (about US$15.4 billion) of deficit for 2020-21 related to cash payout scheme (HK$71 billion) and other one-off relief measures

Total Government Revenue of HK$572.5 billion estimated in 2020-21
Total Government Expenditure of HK$731.1 billion for 2020-21
Spending: Education (HK$112.3b), Social Welfare (HK$115b), Health (HK$97.7b), Infrastructure (HK$78.3b)
Revenue: Profits tax (HK$130.9b), Land premium (HK$118b) and Stamp duties (HK$75b)

Economic development and diversification

Financial Services
· Issue green bonds totalling HK$66 billion (about US$8.5 billion) over the next five years
· Issue inflation-linked retail bonds and Silver Bonds totalling at least HK$13 billion (about US$1.7 billion)
· Waive stamp duty on stock transfers paid by Exchange Traded Fund (ETF) market makers when creating and redeeming EFT units in HK
· Establish a limited partnership regime and provide tax concessions for carried interest issued by private equity funds

Innovation and Technology
· Earmark $3 billion for Phase 2 of the Hong Kong Science Park Expansion Programme
· Inject $2 billion into the Innovation and Technology Fund to launch the Re-industrialisation Funding Scheme, providing matching-basis support for manufacturers setting up smart production lines in HK
· Explore the development of a third InnoHK research cluster
· Increase the grant ceiling under the Technology Voucher Programme to $600,000, raising the Government’s funding ratio to 75 per cent
· Set aside $345 million for a pilot subsidy scheme to encourage the logistics industry to boost productivity through technology

In Addition
· $900 million to the Art Development Matching Grants Scheme
· $700 million to the HKTB for tourism promotion once the epidemic is over
· $150 million to the HKTDC for promotional activities
· $216 million to the Arts Development Council and LCSD for internship, scholarship and on-the-job training, offering about 700 placements
· Nearly 5,000 Government and public organisation short-term internship places to be made available in 2020-21

Housing, healthcare, and developing a liveable city

Land and Housing
· Public housing supply of 100,400 units estimated from 2019-20 to 2023-24
· Private housing supply of 19,600 units estimated annually from 2020 to 2024
· Land supply for 2020-21 expected to provide a total about 15,700 residential units
· 2020-21 Land Sale Programme includes 6 commercial sites capable of producing 830,000 sqm floor space

Healthcare
· Establish a $10 billion public healthcare stabilisation fund
· HK$75 billion recurrent funding for Hospital Authority, 35% increase from 2017-18
· HK$3.6 billion to Hospital Authority to retain talents in next 5 years
· HK$600 million to subsidise interim District Health Centres
· HK$180 million to enhance facilities and strengthen professional training

Liveable City
· Phase out 40,000 Euro IV diesel commercial vehicles, HK$7.1 billion ex-gratia payments to affected owners
· HK$300 million for Cleaner Production Partnership Programme to encourage cleaner production technologies
· HK$200 million Green Tech Fund to support R&D and application of decarbonisation and green technologies
· HK$2 billion to subsidise installation of electric car charging infrastructure at private residential buildings
· HK$80 million to launch pilot scheme for electric light buses
· HK$350 million to launch pilot scheme for electric ferries
· HK$60 million to establish first Geospatial Lab
· HK$300 million for geospatial data sharing platform

Tax relief and other concessions

Cash Payout
· Cash Payout to Hong Kong permanent residents aged 18 or above of HK$10,000

Support for businesses and salary earners
· Concessionary low-interest loan with 100% Government guarantee for enterprises, up to a maximum of HK$2 million
· Reduce profits tax for 2019-20 assessment year by 100%, up to maximum of HK$20,000
· Reduce salaries tax for 2019-20 assessment year by 100%, up to maximum of HK$20,000
· Waive rates for non-domestic properties for 2020-21, up to $5,000 per quarter in first two quarters and $1,500 for remaining two quarters per property
· Waive business registration fees for 2020-21
· Waive registration fees for company annual returns for 2 years
· Electricity subsidies for non-residential accounts and Water and Sewage Charges reduced for non-domestic households

For more comprehensive information, please refer to the website: www.budget.gov.hk/2020/eng/index.html