Hong Kong's new fiscal budget is announced! Multiple measures are taken in areas such as the stock market, property market, artificial intelligence, etc. (Attached is the full text of the budget)

6. 7. 8. 9. 10.Character.6. I proposed an "enhanced version" of the budget, including a plan to reduce government recurrent expenditure by seven percent by the fiscal year 2027/28. It is necessary to control public expenditure, but we must also carefully balance the impacts during the process, progressing cautiously, making every effort to minimize the impact on public services and people's livelihoods, and providing a sustainable fiscal foundation for future development. This "enhanced version" plan provides clear goals so that we can gradually restore balanced books within this government's term of office. 7. In order to seize the opportunities brought about by rapid developments in technological innovation, we need to accelerate the construction of the "Northern Metropolis Area" and invest in the future. Hong Kong has the conditions and capabilities to moderately increase the issuance of debt while maintaining sound public finances, flexibly and properly utilizing funds for future investments to create value for society. 8. In the midst of global changes, we must make technological innovation a core focus and accelerate economic development, particularly by strengthening new economic drivers and increasing the competitiveness of traditional industries. Technological changes and artificial intelligence are reshaping the global landscape, giving rise to more Shenzhen New Industries in Biomedical Engineering, new formats, products, and services. We must seize the opportunities, take advantage of this key window of accelerated development, lead the future through reform and innovation, and accelerate the high-quality development of the Hong Kong economy. I will elaborate further on this in the following sections. 2024 Economic Review 9. Despite the complex and changing external environment, the Hong Kong economy steadily developed last year. Geopolitical instability, trade tensions, and high global interest rates all had negative impacts on local economic activities and confidence. However, the country's economy made progress, supportive policies were implemented to benefit Hong Kong, and the government's stimulus measures, combined with the US interest rate cuts starting in September, provided support across different economic sectors. The Hong Kong economy grew moderately at 2.5% last year. 10. The International Monetary Fund (IMF) estimates that global economic growth reached 3.2% last year. Continued expansion of external demand supported a substantial growth of 4.7% in overall goods exports in Hong Kong. 11. Due to the benefits of policies favoring Hong Kong by the country, various major events held, and the further recovery of aviation capacity, last year saw a 30% increase in visitor arrivals to approximately 45 million people, driving significant growth in tourism and transportation services exports. Other cross-border economic activities also continued to improve, with overall service exports growing by 4.8% for the year. 12. With overall economic growth and the government's active promotion of infrastructure projects, overall investment expenditure increased by 2.4%. However, a slight decrease of 0.6% was observed in private consumption spending as local residents' consumption patterns shifted. 13. The labor market remained tight, with the latest unemployment rate at a low of 3.1%. Median monthly employment income for full-time employees grew steadily by 4.8% in the last quarter of the year. 14. Overall inflation remained modest. Excluding the effects of one-off government measures, the basic consumer price inflation rate was 1.1% last year. 15. The atmosphere in the asset markets improved during the year, mainly due to a series of measures supporting the local capital market introduced by the central government, as well as the US initiating an interest rate cut cycle. Stock market trading volumes and prices rose together, with the Hang Seng Index increasing by 18% for the year, and average daily turnover increasing by 26%. Funds raised from new listings reached HK$88 billion. 16. The residential property market continued its adjustment in the first three quarters of last year but stabilized after interest rate cuts. Transaction volume increased by 23% for the year to around 53,000 transactions, while property prices decreased by 7%. The non-residential property market remained quiet. 2025 Economic Outlook and Mid-term Prospects 17. The Hong Kong economy continues to face a highly challenging external environment, but there are also several positive factors. 18. Protectionist measures impact global trade and capital flows, affecting investment and consumer confidence, and slowing down global economic growth. Encouragingly, the mainland economy continues stable growth, with the mutually reinforcing effects of internal and external cycles, further expansion of high-level opening up, and mainland enterprises in global industrial and supply chains all favorable for steady development of external trade activities. Additionally, the mainland economy has strong resilience and solid fundamentals. The central government's more proactive fiscal policies and moderately accommodative monetary policies, comprehensive expansion of domestic demand, will provide additional momentum for economic growth. 19. Major central banks are gradually loosening monetary policies to support their economic growth. However, uncertainty in the US economic and trade policies affects the pace of interest rate cuts this year. The European Central Bank also stated its intention to further cut interest rates given the inflation trend towards its target level. According to the latest forecast by the IMF, global economic growth is expected to reach 3.3% this year, slightly higher than last year. 20. Against this backdrop, Hong Kong's exports are expected to perform steadily this year. In addition, building on the policies from the previous year and positive momentum, the number of visitor arrivals in Hong Kong is expected to increase further. Combined with the further recovery of other cross-border economic activities, this should drive continued growth in service exports. 21. In terms of domestic demand, investors may adopt a cautious stance this year due to external uncertainties, but a more favorable global financial situation should benefit fixed asset investments. After adjustment last year, private consumption was showing signs of stabilization by the end of the year. Increasing citizens' income and stable development of asset markets will further boost consumption. 22. Taking into account these factors, we predict that the Hong Kong economy will continue to grow moderately this year, with real growth expected to be between 2% and 3% for the year. 23. In terms of prices, local cost pressures may increase somewhat due to sustained economic growth, while external price pressures should be generally manageable, although geopolitical risks could pose challenges. We predict that the basic inflation rate and overall inflation rate for this year will be 1.5% and 1.8%, respectively. 24. In the mid-term, normalizing monetary policies will help maintain robust global economic growth. The "Global South," especially the mainland, will continue to be a vital driver of global economic growth. 25. Geopolitical factors will continue to present challenges for the Hong Kong economy. However, the mainland is actively promoting high-quality development through technological innovation, comprehensive deepening reforms, and expanding high-level opening up. Hong Kong is also making efforts to promote market diversity.To transform and explore new growth potentials, it is expected that the economy will continue to develop steadily.connector"Hong Kong is the only place in the world that combines international advantages with Chinese advantages under the "one country, two systems" policy. The current government has been vigorously expanding economic capacity and enhancing competitiveness, achieving certain results. By actively integrating into the overall national development and proactively connecting with national development strategies, we can continue to seize new opportunities brought by national and global economic development, creating a bright future. We predict that the Hong Kong economy will grow by an average of 2.9% in real terms per year from 2026 to 2029. The basic inflation rate is expected to average 2.5% per year. Consolidating the foundation and accelerating development The Hong Kong economy has seen moderate growth for two consecutive years. The government is actively promoting innovation and technology development and striving to attract more companies, funds, and investment through diversified investment promotion activities. Recently, various economic sectors have continued to improve, and the government's efforts to boost the economy, attract companies, and talent have achieved certain results. 1. Booming stock market: The atmosphere and trading volume of Hong Kong stocks improved last year. Trading has been more active this year, with daily turnover exceeding 200 billion yuan in recent days, up more than 50% from the previous year's total. The overall market value reached 40 trillion yuan; 2. Flourishing IPO market: Confidence among companies seeking to raise funds in Hong Kong has strengthened. Last year, the total funds raised through new listings in Hong Kong reached 88 billion yuan, an increase of nearly 90% year-on-year, ranking fourth globally. HKEX is currently processing more than 100 listing applications; 3. Outstanding wealth management: Hong Kong is the largest hedge fund center in Asia and the second-largest private equity fund management center after the Mainland. The number of open-end fund companies in Hong Kong has doubled to over 470 annually, and the number of limited partnership funds registered in Hong Kong has increased by nearly 40% annually to over 1,050. It is expected that by 2028, Hong Kong will become the world's largest cross-border wealth management center; and 4. Comprehensive attraction of companies, funds, and talent Attracting companies: Since the establishment of the Key Economic Office (KEO), 66 key enterprises have been attracted to Hong Kong, of which 80% have established or are planning to establish global or regional headquarters. Many of these enterprises are valued at over 10 billion yuan. In addition, the Invest Hong Kong successfully attracted over 500 mainland and overseas companies to open or expand businesses in Hong Kong last year, with a growth of over 40%, expected to bring in over 67.7 billion yuan in direct investment. Attracting funds: By the end of last year, the total amount of deposits in Hong Kong exceeded 17 trillion yuan, up 7% annually. In terms of introducing funds from emerging markets, two exchange-traded funds tracking Hong Kong stocks were listed on the Saudi Arabian Stock Exchange, with assets exceeding 13 billion yuan. Attracting talent: By the end of last year, the various talent admission schemes had received over 430,000 applications, approved over 270,000 cases, with approximately 180,000 talents coming to Hong Kong. We are actively launching more measures to attract more companies or institutions to settle in Hong Kong, host more events, and welcome more visitors: 1. The KEO will announce a new list of key enterprises next month, involving more than ten enterprises. Together with key enterprises introduced earlier, they will collectively invest nearly 50 billion yuan in Hong Kong in the coming years, creating over 20,000 job opportunities; 2. We are committed to attracting companies from home and abroad to set up headquarters or branches in Hong Kong, and have submitted a bill to the Legislative Council for the introduction of a company relocation mechanism to facilitate the transfer of registration of companies registered elsewhere to Hong Kong; 3. The headquarters of the International Mediation Institute (IMI) is expected to open by the end of the year, the first international governmental organization to set up its headquarters in Hong Kong, and it is also the world's first organization dedicated to mediating international disputes, helping to make Hong Kong the world's mediation capital; 4. The Kai Tak Sports Park will officially open in three days, providing world-class venues for various events, driving the development of Hong Kong's cultural and tourism industries. Some events of the National Games will also be held here; and 5. The "2025 World Tourism City Federation Shazhan Tourism Summit" will be held in Hong Kong for the first time in April, attracting representatives from over 40 countries and regions around the world. This year, there will be a series of events and activities to promote economic development acceleration and attract more visitors to Hong Kong in various fields. I will explain in relevant sections. Upholding the original and creating new productive forces The rapid evolution of the international environment presents a complex situation for Hong Kong. Protectionism and unilateralism have fragmented the world economic landscape, and the future will tend towards cooperation between economically interested entities, forming different regional blocks. The rapid development of Artificial Intelligence (AI) technology is reshaping the global economy in the medium to long term, especially as its development is no longer limited to a single technological field but applied in various industries through AI+. The global value chain is undergoing profound restructuring, and product design and manufacturing are transitioning towards more intelligent and digitized directions. This technological revolution is not only disrupting traditional production methods, business models, and consumption patterns but also redefining the core competitiveness of different economies, industries, or companies. Against the backdrop of global changes and technological revolution, Hong Kong is at a critical juncture in its development. The third plenum of the twentieth session clearly stated the central position of technological innovation, emphasizing the need to accelerate the realization of high-level technological self-reliance in order to leverage Hong Kong's international platform advantage and accelerate the development of the Artificial Intelligence industry. The third plenum pointed out that the country must further comprehensively deepen reforms, promote high-level opening-up, and accelerate the construction of a new development landscape. We must also expedite the cultivation of new productive forces tailored to local conditions to promote high-quality development. To achieve this goal, we must be daring in reform, bold in breaking conventions, and continuously innovate, using institutional reform to unleash innovation and economic potential. Through technological innovation, new models and driving forces are generated, accelerating the cultivation of new industries and the transformation and upgrading of traditional industries; at the same time, we improve talent training and introduction, promote the integrated development of education, technology, and talent, providing solid support for reform and innovation. We must leverage the advantages of "one country, two systems", better integrate into the overall national development, actively participate in the construction of the Guangdong-Hong Kong-Macao Greater Bay Area, make good use of the characteristics of internal connection and external communication, strengthen linkage with overseas emerging markets, especially the "Southern Global", and serve as a "super connector" and "super The role of "value-added person".Innovative technology Artificial Intelligence 36. Artificial intelligence is the core of accelerating the cultivation of new quality productivity. We will make good use of the institutional advantages of "one country, two systems" and the international characteristics to make Hong Kong a hub for international exchanges and cooperation in the artificial intelligence industry. Through cutting-edge research and practical applications, we will fully develop artificial intelligence as a key industry, and empower traditional industries to upgrade and transform. Artificial intelligence as a key industry Artificial Intelligence Supercomputing Center 37. We have been actively optimizing the development strategy and planning of artificial intelligence. The first phase facilities of the Artificial Intelligence Supercomputing Center at Cyberport have just been put into service, and the computing speed will gradually increase to three trillion floating point operations per second within this year, equivalent to processing nearly 10 billion images in an hour. Hong Kong Institute of Microelectronics 38. The Hong Kong Institute of Microelectronics was established in September last year to lead collaborative research and development of third-generation semiconductor core technologies among universities, R&D centers, and the industry. By leveraging the complete manufacturing industry chain and huge market in the Greater Bay Area, it aims to promote the transformation of research results from "one to N" and industrial development. Two pilot lines will be assembled at the Yuen Long Microelectronics Center within the year and will be operational next year. Hong Kong Artificial Intelligence Research Institute 39. To guide and support the innovation research and industrial application of artificial intelligence in Hong Kong, I have set aside ten billion dollars to establish the Hong Kong Artificial Intelligence Research Institute. The Office of the Government Chief Information Officer (OGCIO) will formulate arrangements for the establishment of the research institute and specific goals, focusing on promoting upstream research and development in artificial intelligence, midstream and downstream results transformation, and expanding application scenarios. "Artificial Intelligence Funding Program" 40. Since the launch of the "Artificial Intelligence Funding Program" in October last year, five projects led by local universities, research institutions, and others have been approved, accelerating the development of local research and development work related to large language models, new materials, and synthetic biology models. Promotion of international exchanges and cooperation 41. In order to gather top talents in the industry to explore the development and application of artificial intelligence, Hong Kong Investment Company Limited (HKICL) will organize the first "International Artificial Intelligence Young Scientists Forum" to promote research and industrial development of artificial intelligence technology, including open-source technologies, especially the design and application of RISC-V open-source chips. Financial and tax support 42. To further assist technology and biotechnology enterprises in financing and developing businesses, especially companies already listed in the Mainland, the Hong Kong Stock Exchange is actively preparing to launch the "Science and Technology Enterprise Line" to facilitate the preparation work for listing applications of relevant enterprises. The Securities and Futures Commission (SFC) will also cooperate to make the application process smoother. 43. Intellectual property rights are an important foundation for the development of emerging industries. In addition to obtaining intellectual property rights through research and development in Hong Kong, enterprises may also acquire related usage rights. In this regard, we will review the tax deduction arrangements, including the entire lump sum royalty fees paid for acquiring usage rights, and related expenses incurred in acquiring intellectual property or its usage rights, to accelerate the development of knowledge-intensive industries and promote the development of intellectual property trading in Hong Kong. Artificial intelligence applications "International Siasun Robot & Automation Conference" 44. HKICL will host the first "International Siasun Robot & Automation Conference", bringing together top scientific enterprises, academic institutions, and investors to showcase the latest research results and application scenarios, further enhancing Hong Kong's international influence in the field of technology. Intelligent manufacturing 45. We optimized the "New Industrialization Subsidy Program" last year, increasing support for local manufacturers to transition to intelligent manufacturing. The number of new intelligent production lines established in Hong Kong under the subsidy program has exceeded one hundred, covering various industries including biotechnology, nanofiber materials, and new energy, with a total investment of approximately 1.3 billion dollars, of which 930 million dollars are private investments. 46. We also launched the "New Industrial Acceleration Program" in September last year to provide matching grants to companies to establish intelligent production facilities in Hong Kong. The first application has been approved, with a total investment of approximately 600 million dollars, of which the government grant amounts to around 200 million dollars. This project will establish intelligent production facilities in the life and health technology sector. 47. We will launch the "Manufacturing and Production Line Upgrade Assistance Pilot Program" this year for a period of two years. The government will provide a maximum grant of 250,000 dollars to each company operating production lines in Hong Kong, in a one-to-two matching ratio, to assist them in developing intelligent production strategies and introducing advanced technologies to existing production lines. I have allocated one billion dollars for the program, benefiting approximately four hundred companies. Low Earth Orbit Satellite Licensing System 48. Low Earth Orbit satellites are a new trend in global satellite development, with related technologies widely applicable in transportation logistics, smart cities, and other fields. The Commerce and Economic Development Bureau (CEDB) and the Office of the Communications Authority (OFCA) are studying the streamlining of the approval process for low Earth orbit satellite licenses. We will complete the relevant work within this year. Generative Artificial Intelligence Sandbox 49. The Hong Kong Monetary Authority (HKMA) and Cyberport collaborated last year to launch a new Generative Artificial Intelligence Sandbox to promote innovation in the banking industry and unleash the potential of artificial intelligence. The HKMA will refer to global development trends and sandbox experiences to issue practical guidelines. Industry-oriented applications 50. The government will formulate a medium to long-term development plan for Hong Kong's new industry and strengthen market-guided investment in strategic emerging and future industries through the HK$100 billion "Innovation and Technology Industry Guidance Fund". The government is inviting relevant organizations to submit expressions of interest and plans to apply for funding to the Legislative Council in the middle of the year. 51. We are preparing to launch the HK$180 million "Innovation and Technology Accelerator Pilot Program". The government will provide a maximum grant of 30 million dollars to each professional start-up service institution in a one-to-two matching ratio, enriching the start-up ecosystem in Hong Kong through their business networks and experience. 52. Under the "InnoHK Innovation Hong Kong R&D Platform", the Hong Kong Space Robotics and Energy Center has been established to develop a multifunctional lunar surface operations robot to contribute to the Chang'e-8 mission. In addition, the government has initiated the establishment of the third InnoHK R&D platform, focusing on advanced manufacturing, materials, energy, and sustainable development, and will soon invite schools to submit proposals.Industrial development53. The Greater Bay Area has an important strategic position in the national science and technology innovation system. In the "2024 Global Innovation Index" of the World Intellectual Property Organization (WIPO), the "Shenzhen-Hong Kong-Guangzhou" cluster has consecutively ranked second globally for five years. With strong support from the government, the WIPO "2025 Global Innovation Index" top 100 technology clusters release event will be held in Hong Kong later this year, recognizing Hong Kong's important position as a center city in the Greater Bay Area in the global innovation and technology field. Health Technology 54. The government will support local universities in setting up health research and development institutes through the "Establishment of Health R&D Institute Funding Scheme" to promote cooperation across schools, organizations, and disciplines. The Innovation and Technology Bureau is inviting universities to submit proposals. 55. Hong Kong Science and Technology Parks Corporation (HKSTP) is discussing the market's need for "Production Quality Management Standards" manufacturing facilities in the health technology industry and exploring feasible development and operation models to assist the industry in conducting clinical trials for new drugs or Innovative Medical Management technologies in Hong Kong. Low-altitude Economy 56. The "Low-altitude Economy Development Working Group," established at the end of last year, is reviewing applications for the first batch of regulatory sandbox pilot projects and will soon announce the results. Through pilot projects, we hope to gradually expand and enrich the applications of low-altitude flights, paving the way for new growth opportunities in Hong Kong's economy. 57. The government is reviewing the Civil Aviation Ordinance to improve regulatory systems that support the long-term development of the low-altitude economy. We will submit proposals to the Legislative Council in the second quarter of this year to amend the "Small Unmanned Aircraft Order." We will also explore the establishment of new dedicated regulations for various "Advanced Air Transportation Systems" and actively strengthen communication with mainland authorities on issues related to the low-altitude economy. Technology Product Showcase 58. We will provide more physical display and sales opportunities for local tech companies. During key trade shows, the Trade Development Council (TDC) will set up "Special Pop-up Showcases" at flagship retail platform "Hong Kong Design Gallery" and exhibition venues to showcase quality innovative products from local tech companies to buyers and consumers from around the world. Patient Capital Hong Kong Investment Corporation 59. As a patient capital, the Hong Kong Investment Corporation aims to attract more cutting-edge tech companies and patient capital to Hong Kong, accelerate the development of the city's innovation and technology ecosystem and industry chain. 60. The Hong Kong Investment Corporation has already invested in over ninety tech companies, mainly in areas such as hard technology, life sciences, new energy, and green technology. For every dollar invested by the corporation, it has attracted four times the long-term funding following. The Hong Kong Investment Corporation will continue to promote these tech companies and investment partners to expand their businesses using Hong Kong as a platform, encouraging them to establish venture capital departments in the city to attract more startup investments and promote mergers and acquisitions. Northern Metropolis Area Industrial and Spatial Layout 61. The Northern Metropolis Area is crucial for Hong Kong's social and economic development and can accelerate the growth of the innovation and technology industry, allowing us to participate more deeply in the construction of the Greater Bay Area and create quality career development opportunities and living environments for citizens. The government will continue to prioritize resources for this project. Key industries include: (1) Innovation and Technology: The HeTian-Shenzhen-Hong Kong Science and Innovation Cooperation Zone (HeTian Cooperation Zone) Hong Kong Park, together with the XinTian Science and Technology City, will provide a large amount of land for innovation and technology, complementing the advantages of the Shenzhen Park in the HeTian Cooperation Zone. We will also introduce new policies to facilitate the cross-border flow of innovative elements; (2) High-end Professional Services and Modern Logistics: The Hangfauqiao/Xiacun New Development Area, connected to Shenzhen Qianhai by the Shenzhen Bay Highway Bridge and the planned Guangdong-Hong Kong West Rail Link, will become a hub for high-end professional services serving companies both domestically and internationally. In the cross-border freight layout of the Guangdong-Hong Kong regions, we are strategically positioning logistics land around the ports; (3) Upper Tertiary Education: In line with the development of the innovation and technology industry and to promote Hong Kong as an international tertiary education hub, we have reserved about ninety hectares of land in the Northern Metropolis Area to develop the "Northern Metropolis University Education City," including the third medical school; and (4) Culture, Sports, and Tourism: The Northern Metropolis Area will not only allocate land for cultural and sports facilities but also preserve traditional towns and historical and cultural resources. We will develop cultural, sports, and tourism industries based on the unique features of the area, including promoting ecological tourism. Innovative and Diverse Land Development Models 62. To accelerate the development and industrial introduction of the Northern Metropolis Area and benefit the economy and livelihood as soon as possible, the government will adopt more diverse development models, including "District Development" trials with innovative thinking. We are inviting market submissions for three "District Development" pilot projects, with the aim of inviting tenders for the pilots starting in the second half of this year. We will continue to identify suitable locations, allowing private landowners to apply for on-site land exchanges for housing and industrial development. Innovation Land Use HeTian Cooperation Zone 63. The HeTian Cooperation Zone is an important cooperation platform for the construction of the Greater Bay Area, with unique advantages in policy innovation, flow of elements, and landing of scientific research projects. We attach great importance to the development of the HeTian Cooperation Zone. 64. The Hong Kong Park will enter the operational phase this year, with the first phase of the first three buildings gradually completing. The first batch of tenants covering industries such as health technology, artificial intelligence, and data science will move in within the year. 65. I have earmarked 3.7 billion yuan to accelerate the completion of infrastructure and public facilities in the first phase of Hong Kong Park. At the same time, we will select suitable land plots and seek private development plans this year to accelerate development with the help of market forces. Upon the full development of Hong Kong Park, it is expected to contribute 52 billion yuan to the Hong Kong economy annually and create around 52,000 jobs. XinTian Science and Technology City 66. XinTian Science and Technology City is an important project to drive innovation and technology, with twenty hectares of land to be developed and operated by the Science and Technology Parks Corporation from 2026/2027 onwards. The Science and Technology Parks Corporation is currently conducting comprehensive planning studies and is expected to complete them in the third quarter of this year. ShaLing Data Park 67. Last year, we initiated the process of rezoning ten hectares of land in ShaLing, North District for the development of ShaLing Data Park. The rezoning process is expected to be completed in the middle of the year, and we are actively preparing to launch the land on the market. Full Efforts to Advance Land Development 68. To further accelerate the development of the Northern Metropolis Area and the introduction of industries for the benefit of the economy and livelihood, the government will adopt more diverse development models, including conducting "District Development" trials with innovative thinking. We are inviting market submissions for three "District Development" pilot projects, with the goal of inviting tenders for the pilots starting in the second half of this year. We will also continue to identify suitable locations for private landowners to apply for on-site land exchanges for housing and industrial development.After the completion of the second phase of development in the North of Kodo/Kam Ling and the first phase of infrastructure projects in Xintian Science and Technology City, we will start the project in the second phase of Yuen Long South New Development Area this year. We will also complete the rezoning process for the land in Sha Ling Data Park, and finalize the land use proposals for Niu Tanwei, as well as the new towns and Ma Caolong in the North New Territories. Following this, we will conduct environmental impact assessments and other statutory procedures. There will be significant outputs of housing units and industrial land in the northern metropolitan area in the coming years.69. In order to support the development of commerce and innovative technology in the northern metropolitan area, we will also search for suitable locations in the area to build facilities that cater to different types of conference and exhibition needs. Railway Development 70. The construction of the Kam Tin station project for Phase 1 of the Northern Link has already commenced, with a target completion date in 2027. The preliminary work for Phase 2 has also started, with the goal of completing the mainline of the Northern Link by 2034. 71. Additionally, we are collaborating with the Shenzhen authorities to promote two cross-border railway projects. We are expecting to conduct surveys and design research for the Hong Kong-Shenzhen Western Express Railway project (Hung Shui Kiu to Qianhai) within the year, as well as detailed planning and design for the Northern Link branch line. Consolidating and Enhancing Key Industries 72. Hong Kong must seize the strategic positioning of "three centers, one high ground," leverage the advantages of "one country, two systems," with solid support from the country, to consolidate and enhance key industries, while actively nurturing and developing Shenzhen New Industries Biomedical Engineering to inject greater momentum into the Hong Kong economy and achieve faster and better development in contributing to China's modernization. International Financial Center 73. Hong Kong ranked among the top three international financial centers last year, and is one of the top four new stock markets globally. The stock market has been vibrant this year, with asset management exceeding HK$31 trillion, with over half coming from foreign sources. The offshore RMB fund pool has expanded to around RMB 1.1 trillion. 74. The consolidation and enhancement of Hong Kong's international financial center advantage hinges on institutional innovation, product innovation, enterprise aggregation, and capital flow. In recent years, capital market institutional reforms, including the establishment of a new listing channel for "weighted voting rights" new economy enterprises and technology companies, and facilitating foreign issuers to raise funds in Hong Kong, combined with the government's active efforts to attract new capital overseas and explore new markets, inject vitality into the local market and enhance liquidity. We are pushing forward with the high-quality development of Hong Kong's international financial market, creating more points of growth. Securities and Derivatives Market Facilitating Financing for Overseas Enterprises and Specific Products 75. ASEAN is an important economic region with sustained growth. Several companies from ASEAN are applying to list in Hong Kong, covering biotechnology, integrated logistics, metal mining, and other businesses. 76. The Hong Kong Stock Exchange will further enhance promotion in ASEAN and the Middle East, actively exploring cooperation opportunities with exchanges in the region, including listing exchange-traded funds, to enrich investment product options in both markets and promote two-way capital flow. The Hong Kong Stock Exchange is also committed to increasing the number of recognized overseas exchanges, making it easier for more foreign companies to have secondary listings in Hong Kong. 77. To facilitate more private equity funds to list in Hong Kong, the Securities and Futures Commission has clarified relevant regulatory provisions to encourage the fundraising of alternative asset funds with scale and stable income. In addition, the Hong Kong Stock Exchange will propose optimization suggestions for the issuance mechanism of structured products to provide greater flexibility for product listings and trading. Improving Trading and Risk Management Efficiency 78. We will continue to reform trading mechanisms. The Hong Kong Stock Exchange will gradually introduce new features to its post-trade system starting in the middle of the year and conduct system upgrades to ensure compatibility with a T+1 settlement cycle by the end of the year. 79. Building upon the implementation of lowering the minimum tick size in the first half of the year, the Hong Kong Stock Exchange and the Securities and Futures Commission will propose suggestions for improving the trading unit system (commonly known as the "lot size") within the year, making trading arrangements more suitable for the liquidity characteristics and investment needs of different share sizes, facilitating trading and enhancing efficiency. 80. We have submitted subsidiary legislation to the Legislative Council for the implementation of the paperless securities market system. The Securities and Futures Commission and the Hong Kong Stock Exchange are working closely with the industry to conduct system upgrades and technical preparations, with the aim of implementing these changes early next year. 81. In response to the risk management needs of investors, the Securities and Futures Commission will seek market feedback on a proposal to increase the position limits for major index derivative instruments, providing investors with greater flexibility in using these tools while safeguarding financial stability. Advancing Listing System Reforms 82. To align with the latest economic trends and corporate needs, we will review listing requirements and post-listing obligations; review listing rules and arrangements, improve approval processes; optimize the criteria for primary and secondary listings, as well as review market structures, including studying the establishment of OTC trading mechanisms for delisted companies. Fixed Income and Currency Markets 83. The Securities and Futures Commission and the Hong Kong Monetary Authority have established a task force to develop a roadmap covering the development of primary and secondary bond and currency markets, as well as enhancing infrastructure. We will also hold a flagship forum in the second half of the year to promote Hong Kong's advantages in this area globally. 84. The government will study the legal and regulatory framework for the issuance and trading of digital bonds, explore optimization measures, and promote the adoption of tokenization technology in the Hong Kong bond market. 85. The government will normalize the issuance of tokenized bonds. The Hong Kong Monetary Authority is preparing to issue the third batch of tokenized bonds and will continue to encourage the issuance of digital securities through the "Digital Bond Grant Scheme," while actively exploring tokenizing traditional bonds already issued. Asset and Wealth Management Hub 86. We have been actively promoting the development of the asset and wealth management industry, with measures in place to optimize the Greater Bay Area Cross-Border Wealth Management Connect, Mutual Recognition of Funds between exchanges, and Mainland-Hong Kong fund mutual recognition arrangements. 87. Within this year, we will formulate schemes for tax concessions related to funds, single family offices, and carried interest, including broadening the definition of "funds" under the tax exemption regime, increasing eligible transaction types for tax concessions for funds and single family offices, optimizing tax concession arrangements for carried interest distributed by private equity funds, and so forth. 88. We will continue to attract global capital to Hong Kong and enrich the ecosystem of family offices. The InvestHK has assisted over 160 family offices in establishing or expanding their businesses in Hong Kong. We will soon host the third "Wealth in Hong Kong" Summit Forum with the theme "Hong Kong - for the world, towards the world," highlighting Hong Kong's advantages as a hub for global family offices. Offshore RMB Business Hub 89. As the internationalization of the RMB continues steadily, Hong Kong, as an offshore RMB business hub, will continue to enhance offshore RMB liquidity, improve related infrastructure, and offer more investment products and risk management tools. 90. The government will issue RMB bonds of varying maturities on a regular basis.Promote the formation of the offshore RMB yield curve. The Hong Kong RMB clearing bank has been providing 24-hour cross-border clearing services since last year, facilitating banks and clients in different time zones.Exchange of foreign reserves with the People's Bank of China currently amounts to 800 billion RMB. The Hong Kong Monetary Authority will introduce a trade financing fund for the Renminbi, with a total amount of 100 billion RMB, to provide banks with stable and low-cost funding to meet the Renminbi trade financing needs of enterprises. To promote more stock trading in Renminbi, enhance market liquidity, and incorporate Renminbi trading counters into the Hang Seng Stock Connect, technical preparations are underway. In addition, the Hong Kong Stock Exchange is advancing a multi-counter arrangement for individual stocks, including the use of the same international securities identification code for dual-counter stocks, to improve trading and settlement efficiency. The government is also preparing for Renminbi counter trading to pay stock stamp duty in Renminbi and hopes to propose legislation next year. Connectivity for Development We will optimize the connectivity mechanism with the mainland, including introducing offshore sovereign bond futures in Hong Kong, implementing large-scale stock trading as soon as possible, and including real estate investment trust funds in the connectivity targets. We will also actively study and introduce further expansion plans, expand the cross-border wealth management scheme for the Greater Bay Area, enhance market liquidity, and enrich the risk management toolbox. The Financial Services and Treasury Bureau will work with the Innovation and Technology Bureau and the Trade Development Council to hold the first "Hong Kong Global Financial and Industrial Cooperation Summit" within the year, using financial empowerment to attract global companies, funds, and technology to enhance international industrial cooperation levels and attract more advanced industries and overseas enterprises and investors to settle in Hong Kong. To promote connectivity in electronic payments between the mainland and Hong Kong, the People's Bank of China and the Hong Kong Monetary Authority are actively implementing the interconnection of the rapid payment systems in the two places, providing round-the-clock instant small cross-border remittance services for residents of both places, expected to be launched as early as mid-year. In accordance with the Second Amendment to the Mainland and Hong Kong Closer Economic Partnership Arrangement on Trade in Services Agreement, limitations on Hong Kong banks engaging in bank card business in the mainland branches will be lifted next month, helping them expand their business in the mainland. Financial Technology and Innovation Virtual Assets In recent years, we have actively developed Hong Kong's virtual asset ecosystem, leading in the world with a framework that balances regulation and market development. The recent annual industry event Consensus in Hong Kong brought together thousands of global virtual asset, blockchain, Web3, and fintech industry elites and corporate representatives, confirming global confidence in Hong Kong's vibrant development in this field. The Securities and Futures Commission also released a roadmap for the virtual asset market during the event. We are about to release the second virtual asset policy manifesto, exploring how to combine the advantages of traditional financial services with technological innovations in the virtual asset field, improve the security and flexibility of real economic activities, and encourage local and international companies to explore the innovation and applications of virtual asset technology. The government will consult on the licensing regime for virtual asset over-the-counter trading and custody services within the year. We have submitted a draft ordinance to the Legislative Council on the regulatory regime for issuers of fiat stablecoins. Upon the passage of the ordinance, the Hong Kong Monetary Authority will approve licensing applications as soon as possible. Gold and Commodities The "Promotion of Gold Market Development Working Group" will formulate a plan within the year covering enhancements to storage facilities, optimization of trading and regulatory mechanisms, expansion of exchange products, market promotion, etc., to be gradually implemented. The London Metal Exchange, under the Hong Kong Stock Exchange, added Hong Kong as a delivery point in January this year. Local warehouse operators have expressed interest in becoming recognized warehouses, and relevant discussions are actively ongoing. Non-Traditional Risk Transfer As an international risk management center, Hong Kong has always provided diverse risk management tools. Through the establishment of a dedicated regulatory regime and funding pilot schemes, we actively promote the development of insurance-linked securities. To date, six catastrophe bonds have been issued in Hong Kong, with a total issuance amount of over 5.8 billion RMB. The industry's response to the pilot scheme has been very positive, and we will extend the scheme for three more years. Trillions of MPF "Full Mobility" The Mandatory Provident Fund Schemes Authority will consult the public on the specific arrangements for Trillions of MPF "Full Mobility" within the year, and then submit proposals to the government, aiming for the full implementation of the Trillions of MPF "Full Mobility" after the comprehensive operation on the Funds Platform. International Trade Center As an international trade center, Hong Kong leverages its unique advantages of internal connection and external reach to connect the mainland and global markets, providing high-level professional services for international trade and supporting the country's advancement in the development pattern of dual circulation. Cross-Border Supply Chain Management Center The Trade Development Council and Invest Hong Kong are working together to encourage mainland companies to set up in Hong Kong, establishing international or regional headquarters for managing offshore trade and supply chains, helping these companies expand overseas and position their supply chains and industrial chains. The Trade Development Council will provide one-stop professional consultation services to assist them in establishing market contacts and understanding overseas market regulations. As a major trade financing center in the region, Hong Kong provides trade financing totaling 3.8 trillion RMB through banks, of which about 40% is for financing overseas trade in goods. The recent trade financing flow arrangements reached between the Hong Kong Monetary Authority and the People's Bank of China also provide greater flexibility for Renminbi trade financing. In addition, the Hong Kong Export Credit Insurance Corporation will provide credit insurance for export services related to cross-border supply chains, providing more comprehensive support for companies to expand overseas. The government will study revisions to facilitate the electronicization of trade documents based on the Model Law on Electronic Transferable Records proposed by the United Nations Commission on International Trade Law and will submit legislative proposals for amendments to the legislation next year. Expanding Networks To expand our trade networks and attract more "global southern" companies and investments, the government is actively discussing the establishment of economic and trade offices with the governments of Malaysia and Saudi Arabia. In addition, Invest Hong Kong has established advisory offices in Cairo, Egypt, and Izmir, Turkey, and the Trade Development Council has also set up advisory offices in Cambodia. We are discussing investment agreements with Saudi Arabia, Bangladesh, Egypt, and Peru, and are negotiating comprehensive agreements with seventeen countries.Avoid double taxation agreement. Enhance cooperation with countries along the "Belt and Road" initiative 111. Hong Kong will continue to play its role as a functional platform for the "Belt and Road" initiative. We will work closely with the business and professional services sectors to deepen our presence in ASEAN, Middle East markets, and explore market potential in Central Asia, South Asia, and North Africa. The Trade Development Council will also strengthen the connection with "Belt and Road" projects, focusing on green development and innovative technology. 112. The "Belt and Road Summit" is the flagship platform for Hong Kong's participation and support of the "Belt and Road" initiative. The tenth summit will be held in September, and we will encourage various sectors to organize activities before and after the summit to enhance synergy. Supporting local businesses 113. To support the development of local businesses and their international expansion, we will allocate a total of HK$1.5 billion to the "Branding, Upgrading and Domestic Sales Development Fund" (BUD Fund) and the "Marketing Support and Business Organisations Support Fund," and optimize the application arrangements. The Commerce and Economic Development Bureau will announce details shortly. 114. The government has been providing credit guarantees to businesses through the "SME Financing Guarantee Scheme." As of the end of last year, the scheme has granted over HK$288 billion in loans, benefiting nearly 65,000 SMEs. To meet the funding needs of SMEs during their transformation, we reintroduced the "Principal Payment Holiday" arrangement in November last year, lasting for one year, allowing businesses to apply for up to 12 months of not repaying the principal. 115. In addition, several banks have joined the "SME Financing Specialist Group" established by the HKMA and the Hong Kong Bankers Association, committing to providing flexible arrangements to alleviate the cash flow pressure on SMEs. The financing portion reserved for SMEs in their loan portfolio has been increased to over HK$390 billion. 116. To assist local SMEs in expanding into the mainland market and increasing e-commerce sales, the Trade Development Council will launch the "E-commerce Express" program, working with major e-commerce platforms to provide one-on-one advisory services and special seminars for Hong Kong businesses. We will also optimize the Business Mentorship Program with the Trade and Industry Department to help Hong Kong businesses better utilize mainland e-commerce and online shopping platforms for promotion. Additionally, the Trade Development Council will host the second "Hong Kong Brands and Products Expo" this year. International shipping center 117. Hong Kong is a leading international shipping center in the world. The government will inject greater development momentum into the industry with an innovative spirit. Hong Kong Maritime Port Development Authority 118. The government will establish the Hong Kong Maritime Port Development Authority this year to enhance related research, promotion, and manpower training, promoting the sustainable development of the international shipping center. High-value-added maritime services 119. In recent years, the government has introduced a series of tax measures to benefit the development of the shipping industry. In response to changes in international tax rules, we are optimizing these measures, including providing tax deductions for ship lessors under operating leases on ship acquisition costs. To drive the development of maritime services, we also propose a half-tax concession for eligible commodity trading companies. We will submit a draft legislation to the Legislative Council by the first half of next year. Modern logistics development 120. The government has been actively identifying and releasing suitable logistics sites. The first logistics site near the Kwai Tsing Container Terminal has just been awarded through tender. At the same time, the government has initiated a study on the development model for logistics sites in the northern metropolis area, constructing a modern logistics circle, with the results expected to be announced this year. Smart ports 121. To develop smart ports, the government has reserved HK$215 million to build a port community system that enhances information sharing among stakeholders in shipping, ports, and logistics sectors. We will apply for funding from the Legislative Council within the year. International aviation hub 122. Hong Kong International Airport connects nearly 200 destinations worldwide, with daily passenger and flight movements returning to pre-pandemic levels. The airport has ranked first in global air cargo volume for many years. The three-runway system was put into operation at the end of last year, and passenger facilities will be progressively operational by the end of this year. "Aerotropolis" 123. The Civil Aviation Department has just released an expanded outline for the development of the "aerotropolis," planning to utilize the airport island and adjacent land and waters to develop a new focal point combining high-end business, art, tourism, and leisure activities centered around the aviation industry. Supporting C919's entry into the international aviation market 124. In January this year, the domestically developed C919 aircraft was officially put into service on regular flights between Hong Kong and Shanghai, marking the first time outside the mainland, a significant breakthrough for domestically produced aircraft entering the world market. Hong Kong will support the entry of C919 into the international market. The Hong Kong International Aviation Academy will expand its training courses to cover areas related to the C919 aircraft. Aircraft parts processing and trading center 125. Under the coordination of InvestHK, the Civil Aviation Department has signed a memorandum of cooperation with a leading overseas aviation service company to explore providing professional services such as aircraft dismantling, parts recycling, and talent training in Hong Kong, promoting the development of Hong Kong as the first aircraft parts processing and trading center in Asia. Medical industry Training and gathering medical professionals 126. In recent years, the government has increased the training quota for medical students multiple times, with the quota set to increase to 650 by the academic year 2025/26. The public healthcare system will utilize the revised legal framework to introduce non-locally trained healthcare professionals. Optimizing drug and medical device regulation 127. In the first half of the year, the government will propose a timetable for the establishment of the "Hong Kong Drug and Medical Device Regulatory Center" and a roadmap towards the "first-tier review," as well as formulate strategies and measures to support drug and medical device research and development. Third medical school 128. The "Preparation Workgroup for the New Medical School" has invited local universities interested in establishing the third medical school to submit proposals and will complete the assessment and submit recommendations to the government within the year. We will allocate resources in a matching form for universities to build the new medical school. Cultural and creative industries 129. The government is committed to promoting the industrialization of the cultural and creative industries. The "CreateSmart Initiative" has approved over 780 cultural and creative projects, many of which have industrial potential, with a total funding of around HK$3.4 billion benefiting over 30,000 SMEs. We strategically introduce more creative enterprises combining technology and creativity to accelerate the vibrant development of the local creative industry chain. Large-scale art events 130. The first "Hong Kong Performing Arts Expo" was held in October last year, attracting over 1,600 arts leaders and practitioners from over 60 countries and regions.Staff participation. We will hold the second expo next year, aiming to create the flagship cultural and artistic industry event in Hong Kong.The government will continue to make good use of the "Cultural Arts Festival Fund" to attract and support international or large-scale cultural and arts activities in Hong Kong, promoting Hong Kong's development as a center for cultural and arts exchange between China and foreign countries. We have updated the approval guidelines to include requirements for activities to drive tourism and the economy. Film Industry Development The government has been strongly supporting the development of the film industry. The "Film Development Fund" has approved over 1.3 billion dollars, supporting over 120 films, employing over 110 new directors and producers, and these films have received over 180 awards. The fund also launched the "Exploring the Mainland Film Market Funding Scheme" to encourage Hong Kong film companies and mainland cultural enterprises to invest in and support Hong Kong directors' productions. Cultural Intellectual Property Over the next five years, the government will support creators and producers of cultural intellectual property by promoting over 30 cultural intellectual property projects. We are actively promoting cross-category collaboration within the cultural and creative industry to increase the dissemination and commercial value of cultural intellectual property products. Tourism Industry The tourism industry drives the economic development and creates job opportunities in Hong Kong. In order to realize the concept of "Tourism Everywhere" and the "Hong Kong Tourism Development Blueprint 2.0," I will allocate 1.235 billion to the Hong Kong Tourism Board (HKTB) next year. The HKTB will collaborate with more international brands to organize events and tell good stories about tourism in Hong Kong. For example, the HKTB signed a three-year global strategic cooperation agreement with Art Basel, setting up a Hong Kong cultural immersive experience area at all four global Art Basel events each year to strengthen the connection between Hong Kong and the global art community. We will further promote a series of distinctive tourism projects such as ecotourism, panda tourism, horse racing tourism, and more to enrich Hong Kong's tourism experiences. The HKTB will continue to support more conferences, exhibitions, and incentive tourism activities in Hong Kong, expected to attract an additional 183,000 visitors and generate around 1.4 billion in additional spending. I have set aside resources to strengthen support for the cruise industry, encouraging cruise companies to increase port calls, overnight stays, and using Hong Kong as a homeport. We will provide more incentives to attract cruise ships to call at the Kai Tak Cruise Terminal during the off-peak season. Event Economy We will continue to promote Hong Kong as the events capital worldwide to attract more visitors to Hong Kong and enhance their tourism experiences. The Kai Tak Sports Park is Hong Kong's largest sports infrastructure project to date, with a main stadium that can accommodate 50,000 spectators. We will host major sports and entertainment events here to boost footfall and consumption. The government has been supporting large international sports events in Hong Kong through the "M" Branding Scheme. We will strategically attract sports events that bring significant economic benefits to Hong Kong and are in discussions with LIV Golf, which has been held in Hong Kong for the past two years, for long-term partnership, and will announce the results soon. Seizing the Opportunity of Restoring the "One Visit, Multiple Entries" Scheme The SAR government is grateful to the Central Government for restoring the "One Visit, Multiple Entries" individual permit scheme for Shenzhen residents to visit Hong Kong at the end of last year and expanding the arrangement to non-Hukou residents holding Shenzhen residence permits. After the new measures were implemented, over 700,000 visitors have entered Hong Kong through this channel. Benefiting from the new measures and an increase in overseas visitors, overall market sentiment in Hong Kong is buoyant. During the recent Christmas and New Year period, the retail, catering, and other industries have reported an increase in business turnover. The government will make good use of various measures to promote the development of Hong Kong's tourism industry actively. Expanding the Middle East and ASEAN Visitor Source The government will work together with the HKTB to expand efforts in the Middle East and ASEAN markets to attract more high-end visitors to Hong Kong. The government is promoting all sectors of society to enhance tourism facilities, such as providing prayer facilities in hotels and enhancing staff training to deepen the industry's understanding of tourists from different cultural backgrounds. Smart Tourism The HKTB will optimize the Discover Hong Kong one-stop tourism information platform, providing "real-time tourism maps" and "artificial intelligence itinerary planning" to give travelers more comprehensive and personalized itinerary suggestions, tourism information, and promotions. Maximizing Coastal Resources We are optimizing both sides of Victoria Harbour's waterfront. The recently opened western section of the North Point Eastern Promenade has been well-received by the public. The eastern section of the Promenade, Phase 2 of Hung Hom Urban Park, and the North Rest Garden in Sai Ying Pun will also be completed this year. We will set up more light food and beverage stalls at the waterfronts in Central, Wan Chai, North Point, and Tsim Sha Tsui this year to provide a better experience for visitors. The government has invited MTR Corporation to study the development of the waterfront and former pier areas south of Hung Hom Station into a new waterfront landmark, including the construction of distinctive commercial and residential projects, providing retail, dining, and entertainment facilities, and establishing a yacht club to promote yacht tourism. We will make proposals on land use by mid-year. Education Industry Hong Kong's tertiary education is highly internationalized and diversified, with five world's top 100 universities and outstanding research talent. We will launch a new round of 1.5 billion "Research Matching Grant Scheme" to encourage more organizations to fund university research. The government will hold international education conferences and exhibitions to highlight Hong Kong as an international hub for higher education. We will enhance the global promotion of the "Study in Hong Kong" brand to attract more outstanding overseas students. The quota for the "Hong Kong Ph.D. Fellowship Scheme" will increase to 400 places per year. Self-financing tertiary institutions complement government-funded institutions, providing diverse pathways for young people to pursue higher education. The government has launched a new round of land allocation and course loan schemes, symbolically allocating land at lower prices and providing interest-free loans to support the expansion and enhancement of self-financing institutions. Gathering Talent Powerhouse Aggressively Attracting Talent Attracting Top Talent and Professional Talent The government is aggressively attracting talent and will actively invite top and leading talents to Hong Kong under the "Quality Migrant Admission Scheme." We will also optimize the "Mainland Talent Admission Scheme" and "General Employment Policy" to allow young non-degree professional talents with specialized technical qualifications and experience to come to Hong Kong and engage in technica"Bonjour, comment a va?" "Hello, how are you?"152. The Hong Kong Talent Office (Talent Office) provides comprehensive one-stop support for talent coming to Hong Kong, promotes Hong Kong's advantages and attracts talent from abroad. The Talent Office plans to hold the second "Hong Kong. Global Talent Summit" early next year to strengthen Hong Kong's status as an international hub for high-end talent. "Belt and Road Scholarship" 153. The government will continue to attract students from countries along the Belt and Road, especially ASEAN countries, to study in Hong Kong through measures such as the "Belt and Road Scholarship". "New Capital Investment Entrant Scheme" 154. The "New Capital Investment Entrant Scheme" has received over 880 applications to date, expected to bring in over 26 billion dollars in investments. We are about to introduce a series of optimization measures to provide greater flexibility for the scheme. Fostering Talent 155. To inspire primary and secondary school students' interest in innovation and technology, I have invited over a hundred technology companies under the Cyberport, Science Park, and other organizations to engage with students through product demonstrations and site visits over the next year. These companies cover different fields such as artificial intelligence, Siasun Robot & Automation, and green technology. 156. We are also promoting local technology companies to provide resources, technical guidance, and practical scenarios for programming and artificial intelligence learning in schools, combining theoretical learning with practical applications to further enhance young people's interest and capabilities in innovation and technology. Enhancing Linkages with Greater Bay Area Cities Medical Cooperation 157. The "Greater Bay Area Clinical Trial Collaboration Platform" jointly built by Hong Kong and Shenzhen is one of the flagship projects in Greater Bay Area cooperation. We aim to establish the "Real World Research and Application Center" by the end of the year, using data from the "Hong Kong-Macao Drug Regulatory System" to expedite the approval and market entry of new drugs in Hong Kong, mainland China, and overseas to promote advanced biomedicine technology research and clinical trials in Hong Kong. 158. The Hospital Authority (HA) has introduced several talent exchange programs to facilitate the exchange of medical personnel, particularly from the mainland, especially the Greater Bay Area, with local medical professionals for professional development, establishing a regional talent pool for medical professionals in the long run. Data Connectivity 159. The "Guangdong-Hong Kong-Macao Greater Bay Area (Mainland, Hong Kong) Personal Information Cross-border Data Flow Standard Agreement" facilitates authorized individuals' secure cross-border data flow compliance. Since its launch, the telecommunications industry has responded positively. The measure has been opened for participation by other industries. Financial Cooperation 160. The Hong Kong Monetary Authority (HKMA) and the People's Bank of China signed a "Memorandum of Understanding on Pilot Cross-border Credit Information Exchange" to trial in Shenzhen and Hong Kong first. The industry has responded positively. We will gradually expand the trial to further facilitate cross-border financing for enterprises. Youth Exchange 161. The Labour Department has extended the eligibility for the "Greater Bay Area Youth Employment Scheme" to youths aged twenty-nine or below with sub-degree or higher qualifications. The subsidy limit provided to enterprises will be increased to HKD 12,000 per person per month, with a maximum duration of eighteen months. Transport and Logistics Cooperation 162. The Civil Aviation Department (CAD) and Zhuahai Transport Holdings Group signed a cooperation agreement to invest in Zhuahai Airport at the end of last year, to provide a more solid foundation for interconnected passenger and cargo transportation between the two regions. Additionally, the "Sea-Air Intermodal Transportation Model" cooperation between Hong Kong and Dongguan has attracted participation from twenty-one airlines and one hundred twenty-five logistics companies. The permanent facilities for the first phase of Dongguan Logistics Park are expected to be completed this year, with preliminary studies for the second phase set to begin. Construction Industry Cooperation 163. The Hong Kong Construction Industry Research Institute established last year is adapting to different regional testing and certification standards to promote the application of high-quality and cost-effective building materials locally. Moreover, the institute will collaborate with relevant authorities in Guangdong Province to conduct strategic research on standards in the Greater Bay Area in the short term. 164. We are working with Guangdong Province to actively promote the complementary advantages and industrial development of the Greater Bay Area's "prefabricated assembled" construction industry, focusing on the research and development, quality certification, and international market promotion of such buildings. 165. We have successfully established a professional title evaluation mechanism for the first batch of engineering professionals in Hong Kong with Guangdong Province, and will gradually expand it to other construction-related disciplines that meet the conditions. We will also collaborate with Guangdong Province and the Macau SAR to develop regional technical standards for construction industry technicians and professionals and promote a "single test, multiple certifications" system. We will soon announce the first trial occupation under the regional standards. Legal Cooperation 166. The Department of Justice is actively promoting the establishment of a specific platform organization for lawyers in the Greater Bay Area to better support the development of legal practitioners and brand building. The Department of Justice will also actively promote the establishment of a legal information platform for the Greater Bay Area to enhance the exchange of legal information. Qianhai Development 167. The Qianhai-Hong Kong Modern Service Industry Cooperation Zone is one of the major cooperation platforms within the Greater Bay Area. Since the introduction of the "Overall Development Plan for Qianhai-Hong Kong Modern Service Industry Cooperation Zone," Hong Kong and Shenzhen have made practical progress in various policy areas of cooperation. For example, the Qianhai-Hong Kong Stock Exchange, jointly operated by the Hong Kong Stock Exchange, has achieved an annual trading volume exceeding 100 billion RMB and operates the only offshore soybean spot trading platform in the country. 168. Building on the success of implementing the "Hong Kong law and system" in Qianhai, the Department of Justice is cooperating with relevant mainland ministries to expand the practice of "Hong Kong law and arbitration" to other pilot cities in the Greater Bay Area, creating a more favorable business environment for Hong Kong investors. 169. Cyberport is actively collaborating with the Qianhai Management Authority to attract startups to establish themselves in both regions. Over a dozen Cyberport companies are currently exploring opportunities to set up in Qianhai, and two Qianhai companies focused on artificial intelligence and digital entertainment have already set up in Cyberport. 170. Hong Kong will continue to support Qianhai as a pilot zone, promoting more policy innovations and breakthroughs to spread successful experiences throughout the Greater Bay Area and even the whole country. Accelerating Green Development Green Industries 171. Developing green industries is an international trend and a key response to global climate change. The combination of green finance and green technology will accelerate the construction of a diverse industrial cluster, bringing significant business opportunities and financing needs to contribute to green transformation and development. Green Finance 172. We introduced the "Sustainable Finance Action Plan" last year, setting targets for the banking sector to achieve net-zero emissions. Additionally, we have promoted a number of green finance initiatives to encourage sustainable investment and carbon reduction practices, supporting Hong Kong's transition to a low-carbon economy.Publishing the "Hong Kong Sustainable Disclosure Roadmap" provides a clear path for large public entities to fully adopt the International Sustainability Standards Board (ISSB) standards no later than 2028, making Hong Kong one of the first jurisdictions to align local standards with the ISSB standards.173. The "Green and Sustainable Finance Training Pioneer Program" will be extended until 2028 to continue supporting the training of local green finance talents. The program has approved more than 5,700 applications to date. Green Technology 174. The Science Park Corporation will develop the Innovation Center in Kowloon Tong into a leading green technology hub "GreenTech Hub," bringing together over 200 green technology enterprises. The Science Park Corporation will invite financial and commercial institutions, universities, industrial and commercial support institutions, and others to become partners of the resident companies, providing support such as talent training, testing and application scenarios, and business pairing. Green Shipping 175. The government will provide tax exemptions for green methanol used for bunkering, and implement the "Green Ship Fuel Bunkering Action Plan" to help Hong Kong become a green ship fuel bunkering center. Green Aviation 176. To support international and local aviation sectors in reducing carbon emissions, we are promoting the use of Sustainable Aviation Fuel (SAF) at Hong Kong International Airport. The Civil Aviation Department completed related studies last year, and we will announce the target quantities of SAF this year. Green City Waste Reduction and Recycling 177. To strengthen waste reduction at the source, the government will allocate an additional HK$180 million to increase the number of intelligent food waste recycling bins or food waste collection facilities in residential areas across Hong Kong, expanding the recycling network and enhancing recycling rates. Turning Waste into Energy 178. The first urban solid waste-to-energy facility, "IPARK1," is expected to start operation this year. In addition, we have publicly tendered the second large-scale facility, "IPARK2," which is expected to process 6,000 tonnes of urban solid waste per day, a significant step towards achieving "zero landfilling." Electric Vehicle Charging Network 179. With over 100,000 electric vehicles in Hong Kong, eight times the number five years ago, the government will launch a HK$300 million subsidy program mid-year to encourage the industry to install 3,000 fast charging stations across Hong Kong by 2030 to accommodate an additional 160,000 electric vehicles. Green Transformation of Public Buses and Taxis 180. The government has released the "Green Transformation Roadmap for Public Buses and Taxis" and has allocated HK$470 million from the New Energy Transport Fund to subsidize bus operators in purchasing around 600 electric buses. An additional HK$135 million has been set aside to assist the taxi industry in purchasing 3,000 electric taxis. Furthermore, the "Hydrogen Fuel Cell Heavy Vehicle Subsidy Pilot Scheme" is now accepting applications. Smart and Green Public Transport System 181. The government has invited expressions of interest for the smart and green public transport systems in Kai Tak, East Kowloon, Hung Hom Bay/Sham Shui Po, and Yuen Long South New Development Area last year. We will continue to promote relevant systems with innovative thinking and aim to tender the Kai Tak project this year and the East Kowloon and Hung Hom Bay/Sham Shui Po and Yuen Long South New Development Area projects next year. Sustainable Development of Fisheries and Agriculture 182. We will continue to promote the "Blueprint for Sustainable Development of Fisheries and Agriculture" to assist in upgrading and transforming the industries. In terms of agriculture, the government has reserved land in Sheung Shui for the construction of the first multi-story modern and environmentally friendly poultry and livestock farm. In terms of fisheries, the first batch of fish farming licenses can be issued as early as mid-year for sites in Waters off Wong Chuk Hang and Tai O. We are also actively promoting leisure fisheries and the establishment of local fishery brands and certification systems. Land and Housing Supply Land Supply 183. We need sufficient land supply to support the development of new industries, inject new momentum into the economy, and provide better living and recreational environments for residents. 184. The government will closely monitor market conditions and developments to release land in a prudent and orderly manner. Drawing from past experiences where land shortage constrained Hong Kong's development, our planning and land formation work cannot be halted. Of course, the pace of land supply can be adjusted according to actual circumstances. 185. Commercial property has faced challenges in the past few years. Considering that office vacancy rates have been high in recent years and the supply will remain relatively adequate in the next few years, the government will not sell commercial land next year to allow the market to digest existing supply. We will also consider rezoning some commercial land for residential use and provide more flexibility in land use. To accommodate this work, we will also extend the deadline for the completion of the site swap of the commercial site in the City Center of the Hung Hom Bay/Sham Shui Po New Development Area. 186. The upcoming land sales program includes eight residential sites, along with railway property development, Urban Renewal Authority projects, and private development and redevelopment projects, providing potential land supply for the construction of approximately 13,700 units throughout the year, similar to the annual private housing demand projected in the "Long-Term Housing Strategy." Specific land sale arrangements will be announced quarterly based on market conditions and other factors. 187. Over the next five years, we will prepare land for the construction of approximately 80,000 private residential units. Around sixty-five percent of the land will come from the Northern Metropolis Area and Tung Chung New Town Extension Area. The supply from the Urban Renewal Authority and other private development projects is not included in this calculation. Housing Supply 188. In terms of public housing supply, the government has secured enough land to meet the target of providing 380,000 public housing units in the next ten years. Together with "Starter Homes," the total supply of public housing units in the next five years will reach 190,000, an increase of about 80% compared to the first five years of this government. 189. For private housing supply, the estimated average annual completion of private residential units in the next five years will exceed 17,000, a decrease of around eight percent compared to the past five years. As for the potential supply of first-hand private residential units, it is estimated to be around 107,000 units over the next three to four years. Infrastructure Development Transport Infrastructure 190. The government will strive to begin detailed planning and design for the South Island Line (West) project within the year. The remaining sections of Route 6, including the Central Kowloon Route, the T2 Main Trunk Road, and the Cha Kwo Ling Tunnel construction projects are nearing completion, with the Central Kowloon Route expected to be completed by the end of the year and Route 6 to be fully operational next year. Professional Development in the Construction Industry 191. I have reserved HK$15 million to support the work of the "Construction Industry Elite Academy" over the next two years to enhance the professional standards and promote the development of the construction industry.New capability and cost-effective management. The college will hold summits and various activities to promote cross-regional and cross-sector collaboration and exchange. 192. In order to attract more young people to join the construction industry, we will allocate a total of approximately HK$95 million with the Construction Industry Council to continue providing on-the-job training allowances for students studying construction-related part-time degree courses in the next two academic years, benefiting approximately 1,000 students. 193. The Construction Industry Council will allocate approximately HK$150 million to subsidize around 2,500 graduates of engineering, architecture, surveying, planning, and landscape degree courses in the construction industry to undergo on-the-job training, helping more young people obtain professional qualifications. Caring for Inclusivity Supporting Youth 194. The government has raised the age limit for participants in the "Youth Employment Plan" to twenty-nine and introduced internship opportunities in the Greater Bay Area to help young people enhance their employability. The budget for the plan next year is estimated to be approximately HK$100 million. 195. Next year, we plan to provide around 4,000 short-term internship opportunities for college students in government departments and public organizations, allowing students interested in public service to broaden their horizons and better plan their career development. 196. The Housing Authority's "Build Together. Start-up Homes" pilot scheme offers young people free shop spaces in its shopping malls to try out starting a business. The scheme has received widespread support, and we will expand it, encouraging more private landlords to participate. Caring for the Elderly 197. The government will increase the number of elderly care vouchers for residential care services by 1,000 in the coming year, bringing the total to 6,000. The number of community care vouchers for the elderly will also increase by 1,000 to a total of 12,000. The total annual expenditure for the year is approximately HK$1.71 billion and HK$900 million, respectively. 198. The "Silver Hair Economy Task Force" will introduce measures in five areas, including promoting "silver consumption," developing "silver industries," promoting "silver quality assurance" and "silver financial and security arrangements", and unleashing "silver production power." The relevant policy bureau is advancing this work. 199. The Hong Kong Monetary Authority will collaborate with the Hong Kong Association of Banks to develop industry guidelines this year, encouraging banks to provide elderly-friendly electronic banking services. Support for Working Families 200. As of the end of last year, around 50,000 households have applied for the "Working Family Allowance," involving approximately 170,000 individuals, including about 70,000 children. The budget for the 2025/26 fiscal year for the related allowances is approximately HK$2.1 billion. Since last April, the government has increased the amount of household and child allowances under the scheme by fifteen percent. Child Protection 201. The "Mandatory Reporting of Child Abuse Ordinance" will come into effect in January next year, creating a more comprehensive protection network for children. The government will allocate an additional HK$1.86 billion annually to increase emergency accommodation places for children and strengthen professional support for abused children and their families. Support for Persons with Disabilities 202. The government will establish fourteen "Integrated Community Rehabilitation Centers" throughout Hong Kong in phases to provide flexible comprehensive community support services to persons with moderate to severe care needs through a case management model. We will increase the quota for daytime community rehabilitation and home care services for persons with disabilities by 1,280, involving additional annual spending of approximately HK$160 million. 203. Starting from the third quarter of this year, the government will institutionalize the "Optimized Vocational Rehabilitation Services Pilot Program," providing training based on the interests and abilities of individuals with disabilities to improve their employment opportunities. The annual expenditure for this initiative is approximately HK$100 million, benefiting an estimated 10,000 people. Women's Development 204. The government values women's development and established the "Women's Empowerment Fund" in June 2023, providing an annual funding of HK$20 million. The fund has supported over 240 projects by women's groups and non-governmental organizations to empower women to leverage their strengths. This year, we will launch a two-year pilot project called "Mentoring Program" to pair female university students with female leaders to promote women's career development. District Service and Care Teams 205. The Chief Executive announced last year that the government would institutionalize the establishment of District Service and Care Teams (Care Teams) and increase funding for the Care Teams by fifty percent in the next service term. The Care Teams have visited approximately 390,000 households and provided around 43,000 support services since their establishment. The government will further optimize and promote care services. Optimizing Public Healthcare System 206. To develop primary healthcare, the government will upgrade the Central and Western, Eastern, and Yau Tsim Mong District Health Centers to District Health Centers this year, strengthening the community healthcare system. 207. The government is actively promoting and completing sixteen projects under the "First Hospital Development Plan," involving approximately HK$190 billion. We will review the distribution, scale, and priority of projects under the "Second Hospital Development Plan" based on the latest population structure, planning, and development, and will announce them in due course. 208. Additionally, the government and the Hospital Authority are reviewing the public healthcare financing structure and levels to enhance the fiscal sustainability of public healthcare services and better support critically ill patients and those in economic difficulties. The review results will be announced within the year. Combatting Illegal Gambling 209. In recent years, many sectors of society have been concerned about the issue of illegal basketball gambling in Hong Kong. According to the latest assessment by the Hong Kong Jockey Club, the amount of illegal basketball betting reached as high as HK$70 billion to HK$90 billion last year. To effectively combat illegal gambling activities, the government will actively explore regulating basketball betting activities and invite the Hong Kong Jockey Club to submit proposals. Public Finance 210. The government has always adhered to the principle of "keeping expenditure within the limits of revenue" as stipulated in Article 107 of the Basic Law, striving to restore fiscal balance over a period of time to ensure the resilience and sustainability of public finances. 211. Let me provide some explanation on the current financial situation facing the government. 212. The government's finances are broadly divided into two categories, operational accounts and non-operational accounts. The revenue in the operational accounts mainly consists of various taxes, investment income, government fees, etc., while the expenses mainly involve the government's daily expenditures. On the other hand, the revenue in the non-operational accounts is mainly related to land, and the expenses mainly involve infrastructure projects and land acquisition. 213. Given the different composition and nature of the government's operational and non-operational accounts, we must manage them with different financial goals and methods. For operational accounts, we aim to keep expenditure within revenue and achieve a surplus. 214. Regarding the non-operational accounts, basic infrastructure expenditure is an investment for the future, such as the Northern Metropolis Area, which will bring economic and social benefits upon completion, requiring expenditure to be determined based on social and economic development needs.Needs drive action. However, income may be affected by economic cycles, causing a gap between income and expenses. At this time, we can use the surplus from business accounts or financial reserves for support, as well as flexibly utilize market resources, including various forms of public-private partnerships, bond issuances, etc. to manage the situation.215. We predict that the government's operating account will roughly balance in the financial year 2025/26, and recover a surplus starting from 2026/27. As for non-operating accounts, due to the acceleration of development projects in the northern urban areas and other infrastructure projects related to the economy and livelihood, deficits are expected in the mid-term forecast period, but the deficit level is expected to decrease annually from the financial year 2026/27. Revised Budget for the Financial Year 2024/25 216. For the financial year 2024/25, the government's revised total revenue budget is approximately $559.6 billion, 11.6% lower than the original budget. 217. Among them, profits tax and salaries tax revenue remain stable at $177.7 billion and $88 billion respectively, similar to the original budget, reflecting the strong resilience of the Hong Kong economy. 218. However, the asset market is under pressure, and the government's revenue from land and stamp duties has decreased. Land revenue is $13.5 billion, a significant decrease of approximately $19.5 billion from the original budget. Stamp duty revenue is $58 billion, $13 billion lower than the original budget. 219. The government's expenditure for the financial year 2024/25 is similar to the budget, with a revised total expenditure budget of $754.8 billion, $22.1 billion lower than the original budget. Of this, recurrent expenditure is $562.5 billion, $17.7 billion lower than the original budget. 220. Taking into account the issuance of $130 billion in government bonds and the repayment of $22.1 billion in matured funds, we expect a comprehensive deficit of $87.2 billion for the financial year 2024/25. Fiscal reserves are expected to be $647.3 billion as of March 31, 2025. Financial Budget for the Financial Year 2025/26 221. Looking ahead to the financial year 2025/26, the government will continue to allocate resources to consolidate economic growth momentum, promote the accelerated development of the innovation and technology industry, enhance public services, and increase infrastructure spending to support the continuous development of the Hong Kong economy, especially in the northern urban areas and other infrastructure projects related to the economy and livelihood. 222. The main policy measures announced in the 2024 Policy Address involve approximately $8.1 billion in operating expenditure and $14.1 billion in non-operating expenditure. The financial impact of these measures is reflected in the financial budget for the financial year 2025/26. 223. The government's total expenditure for the financial year 2025/26 is expected to increase by approximately 8.9% to $822.3 billion, equivalent to 24.4% of nominal GDP. 224. Recurrent expenditure for the financial year 2025/26 will increase by 4.5% to $588.1 billion. Expenditure on policies related to livelihood categories such as healthcare, social welfare, and education remains substantial, totaling $348.6 billion, accounting for nearly 60% of recurrent expenditure. Non-recurrent expenditure will decrease by 3.4% to $36.1 billion. 225. Total revenue for the financial year 2025/26 is projected to be $654.9 billion. Income and profits tax revenue is expected to be $301.2 billion, an increase of 8.4% from the revised budget for the financial year 2024/25. Based on the land sale plan and land supply target for the financial year 2025/26, land revenue is budgeted at $21 billion, an increase of 55.3% from the revised budget for the financial year 2024/25. Considering the recent trading situation in the stock market, stamp duty revenue is budgeted at $67.6 billion, an increase of 16.5% from the revised budget for the financial year 2024/25. In addition, we will reallocate approximately $62 billion from six seed funds set up outside the government accounts. 226. Taking into account the issuance of $150 billion in government bonds and the repayment of $54.1 billion in matured funds for the financial year 2025/26, the deficit is expected to be $67 billion, and fiscal reserves will decrease to $580.3 billion. Support Measures 227. Taking into account the pressure faced by certain industries and residents, as well as the government's financial situation, we will introduce the following measures: (1) A reduction of the first quarter property rates for residential properties in the financial year 2025/26, with a cap of $500 per household. This will affect approximately 3.12 million residential properties, resulting in a reduction of government revenue by approximately $1.5 billion; (2) A reduction of the first quarter property rates for non-residential properties in the financial year 2025/26, with a cap of $500 per household. This will affect approximately 430,000 non-residential properties. The reduction will lead to a decrease of approximately $200 million in government revenue; (3) A reduction of 100% of salaries tax and individual income tax for the tax year 2024/25, with a cap of $1,500, benefiting approximately 214,000 taxpayers across Hong Kong. The reduction will be reflected in the final tax payable for the tax year 2024/25. This will result in a reduction of government revenue by approximately $2.9 billion; (4) A reduction of 100% of profits tax for the tax year 2024/25, with a cap of $1,500, benefiting approximately 165,400 companies across Hong Kong. The reduction will be reflected in the final tax payable for the tax year 2024/25. This will lead to a reduction of government revenue by approximately $200 million; and (5) Providing an amount equivalent to half a month's standard comprehensive social security assistance to eligible recipients of old age allowance, elderly living allowance, disability allowance, and making similar arrangements for the Working Family Allowance Scheme, involving additional expenditure of approximately $3.1 billion. 228. To ease the burden on individuals purchasing residential and non-residential properties with lower prices, I announce that the property value cap for which $100 stamp duty is levied will be raised from $3 million to $4 million, effective immediately, benefiting approximately 15% of property transaction cases, with government revenue reduced by approximately $400 million annually. Strengthening the Fiscal Integration Plan 229. Adhering to the principle of prudent financial management, I propose to strengthen the fiscal integration plan proposed in last year's Budget, focusing on cost savings, efficient use of government finances, and revenue generation. Our principles are: (1) Emphasizing strict control of government spending as the main focus, with revenue generation as a supplement, to minimize the impact on the general public whether through revenue generation or cost savings. The government will lead by example, demonstrating its determination to save costs while ensuring the maintenance of high levels of public services, and continuing to accelerate the development of infrastructure projects in the northern urban areas and those related to the economy and livelihood; (2) Maintaining Hong Kong's competitive advantage of a simple and low tax system.Try to avoid significant increases in tax rates or the introduction of new taxes; andFinancial Management and Cost Control (3) When increasing income, try to embody the principles of "user pays" and "those who can afford more pay". Strict control of government expenditure Operating expenses 230. We will intensify efforts to control government operating expenses. I have instructed all policy bureaus and departments to further review resource allocation and work priorities, and to provide services to the public in a more cost-effective manner by integrating internal resources, streamlining procedures, and leveraging technology. 231. While maintaining the efficiency of public services, we will implement the following measures: (1) Increase the intensity of the "Resource Efficiency Optimization Plan". Without affecting the Comprehensive Social Security Assistance and public welfare payments, and statutory expenditure, the savings in government recurrent spending for the financial year 2025/26 will be increased from the original one percent to two percent, and will continue for two more years until the financial year 2027/28. Together with the one percent reduction in the financial year 2024/25, the cumulative reduction will be seven percent, based on the recurrent spending for the financial year 2023/24, resulting in annual savings of approximately HK$3.9 billion, HK$11.7 billion, HK$19.5 billion, and HK$27.3 billion in government recurrent spending; (2) To cope with reduced expenditure and optimize the use of human resources, the establishment of civil servants will be reduced by two percent in each of the financial years 2026/27 and 2027/28. It is estimated that by April 1, 2027, about ten thousand positions will be reduced within the term of this government; and (3) The government will provide HK$68.1 billion in funding to the University Grants Committee over the next three years. The funding reflects an annual savings target of two percent, consistent with the government's reduction in recurrent spending. I must emphasize that the funding is higher than the HK$63.2 billion in the previous three-year period. 232. In last year's Budget, I asked the relevant policy bureaus to review two major and rapidly growing transport subsidy schemes, namely the "Public Transport Fare Concession Scheme for the Elderly and Eligible Persons with Disabilities" (referred to as the "Two-dollar Concession Scheme") and the "Public Transport Fare Subsidy Scheme". To ensure the continued operation of the schemes in a financially sustainable manner, after review, we proposed the following adjustments: (1) "Two-dollar Concession Scheme": Maintaining the same beneficiaries, the scheme will be changed to a "Two dollars for Two-thirds" concession, where fares below or equal to ten dollars will require a payment of two dollars, while fares above ten dollars will require a payment of two-thirds of the full fare. There will also be a limit on the number of trips eligible for the concession, with a cap of two hundred and forty trips per month. This adjustment retains the original intention of the policy, striking a balance between enhancing the sustainability of the scheme and minimizing its impact on beneficiaries; and (2) "Public Transport Fare Subsidy Scheme": Starting from June 2025, the subsidy threshold for the scheme will be raised from the actual monthly public transport expenditure level of four hundred dollars to five hundred dollars. For expenditures exceeding five hundred dollars per month, the government will continue to provide one-third of the subsidy, with the cap of four hundred dollars per month remaining unchanged. 233. The details will be announced by the relevant policy bureaus later. After implementing the adjustment, the government can save a total of around HK$6.2 billion in expenditure over the next five years. 234. To assist policy bureaus and departments in reducing expenditure and ensuring prudent use of public funds, I have requested: (1) The Audit Commission to conduct workshops for senior executives of government departments and public organizations, using their experience in performance audit and sharing of case studies to reinforce the concept and practice of prudent financial management and responsible use of public funds among the senior management of government departments and public organizations; (2) The Financial Services and the Treasury Bureau to review and optimize the government procurement system, with new arrangements expected to be introduced by mid-year, to ensure that departments procure goods and services of quality and reasonable price within a fair and open framework; and (3) The relevant policy bureaus to review expenditure in the areas of social welfare, healthcare, and education. The recurrent expenditure in these three areas each exceeded HK$100 billion in the current financial year. We must use resources wisely and adapt to changes in Hong Kong's population structure, examining the sustainability of resource utilization. 235. In addition, the government proposes to freeze the salaries of all personnel in the administrative, legislative, judicial branches, and district councils in the financial year 2025/26, including the Chief Executive and politically appointed officials; non-official members of the Executive Council; all civil servants; the President and all members of the Legislative Council, as well as the staff of the Legislative Council Secretariat; the Chief Justice of the Final Court of Appeal, judges of all levels of courts, and staff of the judiciary; and district councilors. Basic infrastructure expenditure 236. In recent years, construction costs have been on the rise, and the government aims to control costs effectively when promoting infrastructure projects. I have instructed the Project Strategy and Control Division under the Development Bureau (the Control Division) to assist various departments in controlling civil engineering projects comprehensively. The Control Division participates in the review of engineering budgets from the project initiation stage and follows the principle of "purpose-oriented, real and practical" to optimize project design and, together with relevant policy bureaus and engineering departments, develop cost-effective solutions to reduce construction costs. Since its establishment, the Control Division has reviewed over five hundred and forty civil engineering projects, assisting in reducing construction costs by approximately fifteen percent. 237. At the same time, the Control Division is coordinating related work to reduce construction costs, including formulating policies for government-related engineering departments to purchase building materials and products directly and centrally from a single department, such as "prefabricated" components and rebars; and exploring the use of new materials and innovative construction techniques, drawing lessons from mainland China and overseas experiences and practices to assist departments in reducing project costs and making civil engineering projects more cost-effective and timely. 238. Furthermore, the government is examining the scale and implementation mode of district cooling systems in new development areas such as Hung Shui Kiu/Xia N Village and the Science Park City, to support the development of these areas more cost-effectively, with preliminary estimates indicating a potential savings of no less than HK$40 billion in construction costs. The Environment Bureau plans to present the review results in the second quarter of this year. Integrating and Making Efficient Use of Government Financial Resources 239. Policy bureaus and departments have set up funds for specific purposes outside the government accounts from time to time to meet their policy needs. There are currently forty-two such funds with a total balance of nearly HK$180 billion. Some funds only use their investment income to meet expenditure (seed funds). These seed funds have different governance structures and investment strategies, locking up substantial public financial resources. 240. To make government funds more flexible and to ensurethat the funding is directed for the benefit of the public, the government is reviewing these funds and assessing their use in line with the public's needs and priorities. This will allow for better allocation of resources and improve the overall performance of the funds.In order to actively and effectively utilize these resources, we have reviewed the financial arrangements of these seed funds and recommended that in the 2025/26 fiscal year, the six larger seed funds should first set aside the necessary expenditures for the next five years without affecting the continuous operation of these funds. The unused approximately 62 billion dollars should be returned to the government accounts, in order to more comprehensively reflect and utilize the government's financial resources. We will also request the relevant policy bureaus to review the financial arrangements of other seed funds.The funds raised from government bonds are used for infrastructure investment and will not be used to pay for government recurrent expenditure, which is a fiscal discipline we have always adhered to. Besides leveraging market funding to support infrastructure projects, government bond issuance also helps promote the development of the bond market. On the other hand, the economic activities and industrial development driven by infrastructure investment will bring Hong Kong more new development opportunities and income. By issuing longer-term bonds to support long-term engineering projects, cash flow can be matched with the funding needs of the projects.Mid-term fiscal forecast 256. The mid-term fiscal forecast mainly estimates the government's revenue and expenditure from a macro perspective, and fully reflects the measures in the strengthened fiscal integration plan. The adopted real economic growth rate for the 2025/26 fiscal year is between two to three percent, and for the 2026/27 to 2029/30 fiscal years, it is approximately 2.9 percent annually. 257. During this period, government capital expenditure averages around 120 billion yuan annually, while recurrent expenditure increases by an average of 3.5 percent per year. The overall government expenditure as a percentage of GDP will decrease from around 24.4 percent in the 2025/26 fiscal year to approximately 20.9 percent in the 2029/30 fiscal year. 258. In terms of land revenue, land revenue is projected to gradually increase to two percent of GDP in the 2026/27 and subsequent fiscal years, which is 3.3 percent lower than the average ratio over the past twenty years. The land revenue forecast is conservative. I also assume that the growth rate of profits tax and other tax revenues will be similar to the future economic growth rate in the coming years. Overall, government revenue is projected to stay at around 20 percent of GDP starting from the 2025/26 fiscal year. 259. The mid-term fiscal forecast also reflects the issuance of approximately 150 to 195 billion yuan in sustainable government bonds and infrastructure bonds each year. 260. Based on these assumptions and arrangements, the deficits of operating and non-operating accounts will narrow annually over the next five years, with the operating account returning to surplus starting in the 2026/27 fiscal year. As for the non-operating account, the deficit will gradually decrease from 159.8 billion yuan in the 2025/26 fiscal year to 87.6 billion yuan in the 2029/30 fiscal year. Taking into account the net proceeds from bond issuance, the government's overall accounts are projected to return to surplus starting in the 2028/29 fiscal year. The above calculations do not account for any tax reductions or other relief measures that may be introduced after the 2025/26 fiscal year. 261. It is expected that by the end of March 2030, the fiscal reserves will amount to 579.1 billion yuan, equivalent to 13.9 percent of GDP, or approximately eight months of government expenditure. Conclusion 262. Chairman, over the past year, Hong Kong's economy has been steadily advancing, with continuous growth momentum, providing favorable conditions for our future development. 263. Faced with pressure on public finances, we have taken a series of measures to actively respond and strengthen fiscal management. We are confident and determined to overcome challenges. 264. Riding the wave of technological change, we are brave in reform and embrace innovation, allowing the breakthroughs brought by technological innovation to accelerate Hong Kong's high-quality development and contribute to the country. 265. We must also take systemic approaches to break through constraints and bottlenecks in development, overcoming challenges of uneven development and unequal sharing of achievements. This makes us even more convinced that we must respond to challenges with reforms, drive development with innovation, and lead the future with technology. 266. I am full of confidence and anticipation for the future of Hong Kong. This confidence stems not only from the wit and diligence of the people of Hong Kong in striving for the economy but also from the strong support of the country for us, as well as our profound insight into the future development trends and Hong Kong's rare advantageous position. 267. The cover color of this year's budget is lake blue, symbolizing the infinite potential in the blue ocean of future development. It also implies the profound background and broad prospects of high-quality economic development. Just like lakes and oceans are deep, harboring infinite vitality and possibilities. 268. Let us define the future with action, break through boundaries with innovation, work together to build a more prosperous, caring, diverse, and international Hong Kong, create a new chapter for our city, and contribute to the construction of a strong modern country with Chinese characteristics!