Hong Kong has unveiled new plans to invest in innovative technology industries as part of plans to sustain growth in an expansionary budget.
Some $6.4 billion has been earmarked by the city for “investing in the future” to help innovative and creative industries, a start-up fund and investment in emerging sectors like fintech.
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Biotechnology and artificial intelligence will also get a cash injection and $2.5 billion will be set aside for the Hong Kong-Shenzhen tech hub just north of the city.
Meanwhile, the emerging esports industry will get $12.7 million to develop a so-called Cyberport Arcade competition venue and entertainment hub.
Enterprises will get a 300% tax deduction on the first $200,000 of qualifying research and development spending, and a 200% deduction on the remainder.
The city also plans to return 40% of its $17.6 billion cash surplus to the community, though no specifics were given.
Hong Kong has plenty of cash on hand thanks to its booming property and financial services markets.
What was said:
Hong Kong’s financial secretary Paul Chan, addressing the city’s lawmakers in his annual budget speech, said:
Information and Technology is undoubtedly an economic driver in the new era. To shine in the fierce I&T race amidst keen competition, Hong Kong must optimize its resources by focusing on developing its areas of strength, namely biotechnology, artificial intelligence, smart city and financial technologies.
Housing supply has been a long standing problem in Hong Kong. The government has been making every effort to identify land and boost housing supply.
Why it matters:
This year’s budget was expected to be a difficult balancing act between for Chan between sharing the city’s wealth while keeping up with long-term investments.
Hong Kong recorded its fastest economic growth in six years in 2017, spurring calls to share more of the wealth with those in need.
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Hong Kong is widely seen to be lagging far behind the new industry push of rivals like the southern China tech hub of Shenzhen, and Singapore and this budget would appear to be an attempt to catch up.
Hong Kong’s economy grew 3.4% in the fourth quarter from a year earlier, according to Chan while full-year 2017 GDP came in at 3.8% — the fastest since 2011 – and up from 1.9 percent growth in 2016.
GDP this year is expected to grow between 3% and 4%.
Hong Kong’s chief executive Carrie Lam kicked off her five-year term last July amid calls for political reform of the Chinese territory.