THE 2021-22 BUDGET OF THE HONG KONG SAR GOVERNMENT

Greetings from the Hong Kong Economic and Trade Office (HKETO) in Singapore.

The Financial Secretary of the Hong Kong Special Administrative Region Government, Mr Paul Chan, unveiled the 2021-22 Budget on 24 February. Please see below some of the major highlights. Kindly note that all currencies shown are denominated in Hong Kong dollars.

Economic Performance in 2020

- GDP: 6.1%
- Unemployment rate: 5.9%
- Headline inflation: 0.3%; underlying inflation: 1.3%

Economic Prospects for 2021

- GDP growth of 3.5% to 5.5%
- Headline inflation: 1.6%; underlying inflation: 1%

Revenue and Expenditure

Total Government Revenue 2021-22
- $591.1 billion
(Profits tax: $126.7b; Land premium: $97.6b; Stamp duty: $92b; Investment income: $84.6b; Salaries tax: $64.4b; Other revenue: $125.8b)

Total Government Expenditure 2021-22
- $727.8 billion
(Social welfare: $120.6b; Health: $115.8b; Education: $110.9b; Infrastructure: $84.1b; Economic: $81.6b; Security: $62.4b; Environment and Food: $35.3b; Others incl. community and external affairs: $117.1b)

Estimated Deficit 2020-21
- $257.6 billion

Estimated Deficit 2021-22
- $101.6 billion

Initiatives
- Issue green bonds to finance green projects and increase government's fiscal space
- Review rating system to look for areas of improvement
- Reduce expenditure: Zero growth in civil service establishment in 2021-22
- Increase revenue: Raise stamp duty on stock transfers from 0.1% to 0.13%

Measures to support enterprises, revive and stimulate the economy

(A) Support for enterprises

- Extend application for low-interest loan guarantee scheme and raise loan limit to $6 million
- Reduce profits tax for 2020-21 up to maximum of $10,000
- Rates concession for non-domestic premises ($5,000 for first two quarters; $2,000 for second two quarters)
- Waive business registration fees
- Waive 75% of water and sewerage charges for non-domestic premises for 8 months (monthly ceiling of $20,000 and $12,500 respectively)
- $6.6 billion to create 30,000 time-limited jobs

(B) Revive Economy

- $5,000 e-vouchers for each eligible permanent resident aged 18 or above to boost local consumption
- $1.5 billion for dedicated fund on branding, upgrading and domestic sales
- $375 million for HKTDC to assist young business starters promote original products
- $934 million to support tourism

(C) Stimulate Economy

Financial services
- Issue at least $24 billion in silver bonds and lower age limit from 65 to 60
- Issue at least $15 billion in iBonds
- Issue green bonds totalling $175.5 billion over next five years; plan to issue retail green bonds
- Subsidise Open-ended Fund Companies to set up or re-domicile in Hong Kong
- Review tax arrangements relevant to family office business

Innovation and Technology
- $200 million for school IT programmes
- $9.5 billion for Innovation and Technology Fund in two instalments
- Continue to press ahead with Science Park expansion and Cyberport 5 development
- Support development of 5G networks and apps
- Commence first batch of 20 R&D labs under the "InnoHK Research Clusters"

Building a Liveable City

- Roadmap on popularisation of electric vehicles, including ceasing new registrations of fuel-propelled private cars by 2035 or before
- Update Clean Air Plan for Hong Kong by mid-2021
- Increase first registration tax bands for private cars by 15%; Increase vehicle licensing fees by 30%
- $555 million to enhance facilities in Country Parks and improve hiking trails
- $300 million to upgrade soccer pitches

Housing and Land

- Supply of about 16,500 units from land sale programme as well as railway and private developments/redevelopments in 2021-22
- 3 commercial sites to provide about 480,000 sq m of floor space
- 860 hectares of brownfield sites in the New Territories expected to become available for housing and other land use
- Estimated production of 101,400 public housing/subsidised units in 2020-21
- Estimated production of 18,000 private units a year on average for the five years from 2021

For more comprehensive information including the full budget speech, leaflet and video links, please refer to the Website: https://www.budget.gov.hk/2021/eng/index.html