Chairman's Message - CGCC Keen to See New Budget Boost Confidence in Hong Kong inject New Impetus to Economy
Dr Jonathan CHOI Koon-shum (Chairman of the 53rd terms of office) February 2024
Efforts to find new sources of revenue and reduce expenses should be a top priority. It is particularly important to allocate public resources effectively, with a focus on stabilizing and enhancing Hong Kong’s business and investment environment and creating new growth impetus.
On behalf of CGCC, I would like to wish you a healthy and prosperous Year of the Dragon.
This month, the Financial Secretary will be announcing the 2024/25 Budget. In light of the complex and volatile external circumstances, efforts to find new sources of revenue and reduce expenses should be a top priority. It is particularly important to allocate public resources effectively, with a focus on stabilizing and enhancing Hong Kong’s business and investment environment and creating new growth impetus.
Multi-prong approach to cut expenses and find new revenue sources
In view of economic uncertainties such as fluctuations in global interest rates, and the drastic increase in government expenditure over the past few years, the Financial Secretary said that the budget deficit in 2023/24 is expected to exceed HKD100 billion, and the city could incur another deficit in 2024/25. In our view, as the government maintains fiscal prudence, it should also review and streamline the existing establishment and work processes to reduce the recurrent expenses of various policy bureaus and departments. Concurrently, it should advance the development of a digital government, and promote strategies like targeted poverty alleviation to ensure the efficient use of resources.
Based on actual social and economic development needs, the HKSAR Government can consider adopting the public-private partnership approach for large-scale projects to lessen the burden on public finance. Another possibility is to expand the scope of the green bond program, and issue infrastructure bonds to leverage public assets and generate additional income for the government.
Boosting confidence of businesses and investors
To rebuild market confidence, the Budget should endeavor to support and fine-tune policies and measures that will boost the local business and investment environment. For instance, serious consideration should be given over the complete removal of the “harsh measures” for the property market. The authorities should also explore targeted strategies for promoting the liquidity of the stock market, such as further lowering the stamp duty on stock transfers and attracting more overseas companies to list in Hong Kong, so as to inject new impetus into Hong Kong’s stock market.
Meanwhile, the HKSAR Government should actively work with the Hong Kong business sector to promote Hong Kong. For one, it can strengthen financial support for the business community to participate in Mainland and overseas delegations and related activities, and subsidize Hong Kong business organizations to invite Mainland and overseas guests to attend exchange activities in Hong Kong, with a view to attracting more multinational enterprises and international investors to operate and invest in Hong Kong.
Serving as a bridge between the Mainland and the rest of the world
Active promotion of the development of the Guangdong-Hong Kong-Macao Greater Bay Area and deepening regional cooperation through the Regional Comprehensive Economic Partnership (RCEP) and the “Belt & Road” initiative (B&R) are not only vital strategies to expand the country’s opening-up, but also sources of tremendous new development opportunities for Hong Kong. The city’s role in deepening regional economic and trade cooperation and development is especially crucial.
Leveraging Hong Kong’s experience in fundraising, the HKSAR Government can explore promoting the creation of a B&R segment in the stock market, and put in place mid- and long-term green fundraising channels, as well as develop RMB-denominated hedging and investment tools, to allow Hong Kong to further expand its role as an investment and fundraising platform for the B&R initiative. The authorities can also look into enriching the role of the Finance Services Development Council by strengthening its policy research capability, so that it can make greater contributions to Hong Kong’s development as a financial center in the long run.
The advantages enjoyed by Hong Kong’s legal and arbitration systems should also be consolidated and bolstered. In fact, the government can coordinate the establishment of a new B&R arbitration institution to be jointly run by Hong Kong and the Mainland, which will provide much needed legal, arbitration and mediation services relating to regional trade and business dealings.
In addition, we hope to see the new Budget provide further financial assistance for enhancing human resource support and attracting professional talent. Through accelerating the development of the Northern Metropolis, the authorities can also promote synergy between Hong Kong and Shenzhen to enhance their innovation and technology industry pattern and facilitate the efficient and smooth flow of scientific research elements between the two cities.
In summary, despite the challenges in the external environment, the Mainland economy is resilient, stable and full of potential. As long as Hong Kong speeds up its integration into the national development, there is no doubt it will continue to grow steadily.
