Major Good News! The latest budget of Hong Kong involving the stock market, real estate market, and mutual connectivity has been released (full text attached)

2024/25 20242024 2024-2025The impact of one-off measures by the Hong Kong government led to a basic inflation rate of 1.7 percent for the whole year last year.The Hong Kong stock market was in a state of adjustment for most of last year with reduced trading volumes. The Hang Seng Index initially received support at the beginning of the year due to normal economic activities, but later softened as market confidence in the Chinese mainland economy weakened and expectations of high interest rates for an extended period persisted. The Hang Seng Index fell by 13.8% for the full year. In the residential property market, the atmosphere has been cautious since mid-last year due to rising interest rates and uncertainties in the external environment. Property prices fell by 7% for the whole year, with transaction volumes declining by 5% to a low level of about 43,000 transactions. The non-residential property market remained relatively quiet. 2024 Economic Outlook and Mid-term Prospects The external environment for this year remains complex. Geopolitical tensions will continue to affect international trade and capital flows, and may disrupt global supply chains. Financial conditions have tightened significantly over the past two years, which will continue to constrain the growth rates of advanced economies. On the other hand, the market generally believes that the Federal Reserve of the United States (the Fed) will begin to cut interest rates this year, although the timing and magnitude of the rate cuts remain uncertain. Last month, the National Bureau of Economic Research predicted that global economic growth would remain at 3.1%, lower than the average growth rate of 3.8% from 2000 to 2019. China's export performance will continue to be affected by the external environment this year. However, the Chinese economy is resilient and robust, with various policies to boost the economy gradually taking effect, and there is enough policy space to further regulate the economy, which is expected to further improve domestic demand. It is expected that China's economy will achieve stable growth this year. For advanced economies, as the lagged impact of rising interest rates over the past two years becomes more evident on demand, economic growth expectations for the United States this year will be lower than last year's. However, if the Fed begins to cut interest rates as expected by the market during the year, it will provide some support to the economy. Over the past two years, US consumption growth has been concentrated in services, and this year there may be faster growth in demand for goods, which will support global trade. In Europe, with geopolitical tensions and weak global demand, economic growth expectations for this year will remain weak. Although the external environment will continue to exert pressure on Hong Kong's merchandise exports, there is an opportunity for global financial conditions to gradually relax during the year, which may be beneficial to export performance. On the other hand, as passenger reception capacity, especially air passenger capacity, continues to recover, and the Hong Kong government vigorously promotes the event economy, the number of visitors to Hong Kong is expected to increase, driving growth in tourism and related services exports. In addition, with continued income growth among citizens, private consumption will continue to be supported. Measures introduced by the Hong Kong government will help stimulate consumer sentiment. As for fixed asset investment, it should continue to rise as the economy grows. Taking into account the above factors, we predict that the Hong Kong economy will further expand this year, with real growth ranging from 2.5% to 3.5% for the whole year. In terms of prices, local cost pressures are expected to increase as the economy recovers, while external price pressures should moderate further, although geopolitical tensions could bring upward risks. We forecast that the basic inflation rate and overall inflation rate for this year will be 1.7% and 2.4% respectively. In the medium term, the Hong Kong economy will continue to develop sustainably and robustly. Although geopolitical tensions will continue to affect international capital flows and trade patterns, most economies have implemented expansionary fiscal and monetary policies during the pandemic, which has increased the vulnerability of the global economy and financial system. However, it is expected that interest rates in the United States and the Eurozone will gradually decline in the coming years, and global demand is expected to gradually recover. More importantly, the country is committed to promoting high-quality development, which will bring broad development opportunities to Hong Kong. The country's "14th Five-Year Plan" has set a clear positioning for Hong Kong as the "eight centers". As long as Hong Kong makes good use of its unique advantages under the "one country, two systems", actively integrates into the national development strategy, and continues to play an important role in both the domestic and international economies, the future prospects will be very bright. The efforts of the Hong Kong government in recent years to expand economic capacity, enhance competitiveness, and cultivate new growth points will enable Hong Kong to seize opportunities and enhance long-term growth momentum when the global economic situation improves. Based on the above considerations, we predict that the Hong Kong economy will achieve an average annual real growth rate of 3.2% between 2025 and 2028. The basic inflation rate is expected to average 2.5% per year. Confidence In recent years, geopolitical tensions have escalated, unilateralism and protectionism have risen, and the economic environment has become more challenging, affecting both the mainland China and Hong Kong economies. Combined with fierce competition from other economies, some residents feel uneasy about future development. However, the outlook for the Hong Kong economy is bright. Despite facing many challenges, as long as we understand the overall situation and explore boldly, we will find endless opportunities. The center of gravity of the global economy will continue to shift eastward. Asia will continue to be an important engine of global economic growth. The national economy is innovating, deepening reforms, and continuing high-level two-way opening up, promoting high-quality development, and the long-term trend remains positive. The country cherishes and solidly supports Hong Kong, recently extending the "individual visit" scheme to Xi'an and Qingdao. Under the "one country, two systems" framework, Hong Kong has institutional advantages and connects international and mainland China, so we can seize opportunities. In the short term, the Hong Kong government will implement a series of measures to demonstrate Hong Kong's attractiveness to domestic and foreign individuals and businesses and support them in seizing opportunities. At the same time, we will comprehensively introduce policy measures to attract funds, businesses, and talent, expand economic capacity, and enhance development momentum. Comprehensive Attraction of Enterprises, Funds, and Talent Attracting more enterprises, funds, and talent will help the economy develop better. In terms of attracting enterprises, the Inward Investment Department (Inward Office), the Innovation Technology Bureau (Hong Kong Innovation Bureau), the Invest Hong Kong and the Hong Kong Investment Management Limited (Hong Kong Investment Company) actively engage with domestic and foreign enterprises to attract and assist high-value-added technology and other enterprises to settle in Hong Kong. Attracting Key Enterprises Next month, more than ten key enterprises will sign memoranda of understanding with the Inward Office, confirming their intention to establish or expand business in Hong Kong. Together with the first batch of thirty companies, it is estimated that they will bring in over HK$40 billion in investment and create about.Thirteen thousand jobs. These enterprises setting up in Hong Kong will attract upstream, midstream, and downstream companies to come to Hong Kong, driving the vigorous development of the innovation and technology ecosystem in Hong Kong.Hong Kong Investment Management Limited The company will play a role in guiding capital and leveraging market resources to attract more innovative technology companies to settle in Hong Kong, accelerating the development of key industries. In the first half of this year, the company will implement the first batch of direct investment and co-investment projects, covering fields such as life sciences, green technology, finance, semiconductors, chips, and manufacturing upgrades and transformations. The company will also promote the companies in its investment portfolio to actively participate in local, mainland China, and overseas innovation and technology networks, explore more application scenarios, development opportunities, and find more potential investors and customer groups. To enhance Hong Kong's attractiveness in attracting companies and funds, the company will organize the "International Sovereign Fund Roundtable Conference", inviting sovereign funds and financial industry leaders to explore investment opportunities and establish partnership relations. In addition, the company will host the "Hong Kong Start-up Investment and Development Summit" to invite key members of the start-up ecosystem to further activate the collaborative cooperation of "investment", "production", "learning", and "research" and support the development of start-up companies at different stages. Migration Mechanism Furthermore, we have taken the lead in establishing a simplified fund migration mechanism for open-ended fund companies and limited partnership funds to attract existing foreign funds to register and operate in Hong Kong. In the first half of this year, we will submit legislative proposals for the introduction of a company migration mechanism to facilitate companies registered abroad, especially those with the Asia-Pacific region as their core business, to relocate their headquarters to Hong Kong. Exploring New Sources of Funding In addition to continuing to strengthen Hong Kong's attractiveness to traditional European and American funds, we are also committed to exploring new sources of funding, including the Middle East market. The first ETF tracking Saudi Arabian stocks in the Asia-Pacific region was listed in Hong Kong at the end of last year, marking an important milestone in the connection between the two markets. We are also actively promoting the listing of an ETF tracking Hong Kong stock indices in the Middle East, and the Hong Kong Monetary Authority is in discussions with multiple financial institutions on this matter. Attracting Talent Attracting more talent benefits economic development and enhances competitiveness. In recent years, we have launched various talent attraction measures including the "Technology Talent Admission Scheme" (TechTAS). In the past year, more than 140,000 talent admission applications have been approved, with approximately 100,000 talents already in Hong Kong. The Labour and Welfare Bureau will review the relevant arrangements in the middle of this year to ensure that the measures remain competitive and effectively address labour needs. The median age of individuals approved under the TechTAS plan is thirty-five years, with sixty percent being married individuals who generally bring their families to Hong Kong. More than half of the talents who have been in Hong Kong for six months or more have been hired, with a median monthly income of around fifty thousand Hong Kong dollars. The "Hong Kong Talent Hub" is committed to attracting talents from home and abroad to Hong Kong and providing one-stop services to help them settle and integrate into the city. The Talent Hub will host the "Global Talent Summit and Greater Bay Area Talent High-Quality Development Conference" in May this year, promoting Hong Kong's unique advantages as an international talent hub and driving talent flow and cooperation within the Greater Bay Area. Creating Favorable Conditions for Recovery Property Market The Hong Kong government announced adjustments to the residential property demand management measures last October, including shortening the applicable period for the Additional Buyer's Stamp Duty from three years to two years, halving the tax rates for Buyer's Stamp Duty and Residential First-Time Buyer Stamp Duty, and implementing a "first-time buyer relief" arrangement for foreign buyers. The "first-time buyer relief" arrangement has been well-received, with over five hundred applications approved, demonstrating Hong Kong's attractiveness to foreign talents. We have been closely monitoring the residential property market situation. After careful consideration of the current overall situation, we have decided to revoke all residential property demand management measures with immediate effect, meaning that all residential property transactions from today onwards will no longer be subject to Additional Buyer's Stamp Duty, Buyer's Stamp Duty, and Residential First-Time Buyer Stamp Duty. We believe that the measures are no longer necessary given the current economic and market conditions. In July last year, the Hong Kong Monetary Authority revised the countercyclical macroprudential supervisory measures for property mortgages. Considering the external and local economic conditions, we believe that there is room to further revise the relevant measures while maintaining the stability of the banking system and appropriately adjusting other regulatory policies related to property mortgages. The Hong Kong Monetary Authority will make an announcement on this later today. Stock Market In the past year, we have made good progress in developing the stock market. We have collaborated with various regulatory bodies and the HKEX (Hong Kong Stock Exchange) to introduce several measures, including the establishment of a special listing regime for technology companies and the Hong Kong dollar - Renminbi dual-counter stock trading mechanism. In terms of attracting overseas companies to list in Hong Kong, the HKEX has included the Saudi Arabian and Indonesian stock exchanges as recognized exchanges last year, facilitating companies listed on their main boards to conduct secondary listings in Hong Kong. We are fully implementing the recommendations put forward by the Stock Market Liquidity Steering Group last October, including reforming the GEM. The HKEX has sought market views on the establishment of a stock repurchase mechanism and maintaining market operation in inclement weather, with the goal of implementing these by the middle of this year. To further enhance market efficiency and liquidity, the Securities and Futures Commission of Hong Kong and the HKEX are exploring a series of measures, including: (1) Improving the listing mechanism: Studying the optimization of the price discovery process for initial public offerings and reviewing the public shareholding requirements of listed companies to enhance market efficiency. The listing requirements and arrangements for structured products will also be optimized, reducing their listing costs; (2) Optimizing trading mechanisms: Exploring the narrowing of minimum price limits to reduce bid-ask spreads, proposing these by the second quarter of this year; conducting further research on optimizing stock spot trading units; and exploring further optimization of position limits and margin arrangements for derivative products to better meet risk management needs; (3) Improving investor services: Studying the optimization of real-time market information services to provide services that meet the needs of different investors at reasonable prices; and (4) Strengthening market promotion: The HKEX will strengthen the promotion of the Hong Kong securities market through overseas offices and proactively deepen its connections with the Middle East and ASEAN regions, aiming to attract more issuers and funds. To further enhance market competitiveness, Real Estate Investment Trust (REIT) unit transfers and market makers engaging in securities dealing business will be exempted from stamp duty, resulting in an estimated annual revenue reduction of approximately one billion Hong Kong dollars for the government. Supporting Small and Medium Enterprises Considering that the strength of economic recovery still needs to be consolidated and marketChanges that the Hong Kong government will assist small and medium enterprises in managing their cash flow, expanding their market, and accelerating their transformation through various measures.The Small and Medium Enterprises Financing Guarantee Scheme To assist small and medium-sized enterprises in dealing with cash flow issues, I will extend the application period for the 80% and 90% guarantee products under the "Small and Medium Enterprises Financing Guarantee Scheme" for two years until the end of March 2026. The total credit guarantee commitment under the scheme will be increased by an additional HK$10 billion. In addition, I have instructed the Hong Kong Monetary Authority to maintain communication with banks and the business sector to assist enterprises with cash flow turnover in a accommodating manner, to avoid situations where loans are called in due to a drop in collateral value. Digital Transformation The "Pilot Scheme on Support for Digital Transformation" will gradually invite small and medium-sized enterprises in the catering and retail industries to select suitable digital solutions from existing basic schemes and apply for matching funding. These schemes will focus on three areas: electronic payments and in-store sales, online promotion, and customer management systems, benefiting a minimum of 8,000 eligible SMEs. BUD Special Fund The "Special Fund for Brand Development, Transformation and Expansion of Domestic Market" ("BUD Special Fund") will continue to be optimized, including increasing the cumulative funding limit for each enterprise and simplifying the application process. I propose to further inject HK$500 million into the fund to assist small and medium-sized enterprises in enhancing competitiveness and expanding into mainland China and overseas markets, including establishing "eCommerce Easy" under the fund, allowing each enterprise to receive funding of up to HK$1 million for implementing eCommerce projects in mainland China. Deductions and Exemptions under Profits Tax We propose to introduce two measures to optimize deductions under profits tax. Profit tax payers will be allowed to claim tax deductions for expenses incurred in restoring leased properties to their original conditions. As for the exemptions for industrial, commercial buildings, and structures, the time limit for making claims will be cancelled. When the property changes hands, depending on factors such as the construction cost of the property and the remaining tax of the previous owner, the new owner can still claim the exemption for the property. These two optimization measures will take effect from the 2024/25 tax year. Building the Hong Kong Brand comprehensively Hong Kong is not only an international financial center but also an international metropolis that blends eastern and western cultures. By better utilizing various social and natural resources, promoting events and thematic annual conferences in various fields, and seizing the opportunities for industrial development, we aim to build Hong Kong as the preferred destination for business and tourism. Major Events Major events help attract more tourists and provide citizens with more entertainment and leisure options. In the future, we will host more major events, enhance overall coordination, expand the economic and promotional benefits of the events, and improve Hong Kong's international image. In the first half of this year, there will be more than eighty different themed events. In "Art March" alone, there will be a series of art and cultural events, such as Art Basel, "Art at Victoria Harbour," and the inaugural international trend event "ComplexCon" in Asia. In sports events, there will be the first international golf tournament LIVGolf held in Hong Kong, as well as a series of music, entertainment, and activities. Hong Kong will co-host the 15th National Games with Guangdong Province and Macau in 2025. At that time, citizens can cheer for athletes at the main venue and also travel to nearby cities in the Greater Bay Area to watch the games. The Hong Kong government has established a coordination group for major events and will be more proactive in the future, striving to host more major events in Hong Kong and further enhance inter-departmental cooperation to ensure the success of these events. We have set aside HK$100 million to strengthen the promotion of major events in the next three years. Financial Forums Themed conferences help shape the Hong Kong brand. The "International Financial Leaders Investment Summit" and "ASIA FINANCIAL Forum" are successful examples. Next month, Hong Kong will host "Financial Highlights Week," which will feature a series of important financial events, including the "Swiss-Hong Kong Family Office Summit" and the MilkenInstitute Global Investor Symposium. There will also be a series of activities enriching the Hong Kong brand, including roundtable discussions organized by the Hong Kong Investment Corporation. In addition to inviting guests to Hong Kong, we will continue to "go out," sharing Hong Kong's stories in different markets to expand Hong Kong's circle of friends. We will launch a new sponsorship program for overseas speaking engagements, sponsoring prominent scholars and industry leaders to attend overseas events, deliver speeches, and enhance the promotion of Hong Kong internationally. Utilizing Waterfront Resources The beautiful Victoria Harbour and waterfront are natural treasures of Hong Kong and popular leisure destinations for tourists and citizens, leaving them with fond memories and a deep impression of Hong Kong. We will make good use of these precious resources to provide more attractive and diverse experiences for residents and tourists. The dazzling fireworks in the Victoria Harbour night sky and the special water fireworks display last year in Wan Chai and the West Kowloon Cultural District were well-received. The Hong Kong Tourism Board will hold fireworks and drone performances against the backdrop of the beautiful Victoria Harbour skyline every month, and will revamp the "A Symphony of Lights" light and music show. The Hong Kong Development Bureau will introduce commercial facilities such as dining, retail, and entertainment at suitable locations along the Victoria Harbour waterfront on a trial basis to provide convenience and enhance the visitor experience. Boosting Tourism In response to different seasons, festivals, and major events, the Hong Kong Tourism Board will create new experiences under different themes, including Chinese and Western arts, pop culture, wine and dine, outdoor exploration, dynamic sports, etc., to cater to the interests of different groups of tourists and encourage the industry to introduce more diverse tourism products. We will continue to strengthen local cultural tourism activities. The Tourism Commission will continue to implement popular creative art brand projects in the coming years, including the "Sai Kung Seaside Art Festival," which connects islands through art to allow tourists to appreciate and experience the natural beauty, history, culture, and heritage of Sai Kung. "Design Hong Kong" will lead tourists to understand the authentic culture and characteristics of Hong Kong through design elements. The Hong Kong Tourism Board will promote immersive deep-travel experiences themed on "Urban Walking" and cater to the preferences of young groups by promoting hiking, biking, paddleboarding, trail running, and stargazing in the wilderness, etc., to "soft sell" Hong Kong in innovative ways. The promotion of the Temple Street Night Market in December last year successfully attracted a large number of tourists and residents to this uniquely characteristic street. The Hong Kong Tourism Board will attract more people to the region by offering more diverse activities and promotions, creating more business opportunities for merchants in the area. Enhancing Promotion and Publicity The Hong Kong Tourism Board will launch a new Hong Kong tourism brand, continue to promote to different market segments, and establish new experiences tailored to different interests of tourists, such as Chinese and Western arts, pop culture, wine and dine, outdoor exploration, dynamic sports, etc. to expand their circles. We will urge the industry to introduce more diverse tourism products. We will continue to enhance the appeal of Hong Kong as a destination for leisure travel and stimulate local consumption, contributing to economic growth and job creation.Transmit, and cooperate with cities in the Greater Bay Area to jointly promote "multi-stop" tourism.The use of sincerity in dealing with people and courtesy in serving guests will make Hong Kong more welcoming. The Hong Kong Tourism Board will enhance the "Quality Tourism Services" program and launch a new round of promotions, including "live show" programs and awards for outstanding frontline service industry employees, to work with all sectors to promote Hong Kong as a hospitable city. We will fully promote major events and design themed deep travel experiences to cater to the preferences of different types of tourists from different regions, enriching tourism resources and providing more new products and experiences. This will help stimulate demand for retail, consumption, dining, and transportation. To support the Tourism Commission and the Hong Kong Tourism Board in organizing the above and other activities, we will collectively allocate a total of 9.5 billion Hong Kong dollars to them. Supporting Citizens and Businesses Considering that some industries and citizens are still facing economic pressure, and the fiscal situation of the Hong Kong government this year, we will implement the following measures: (1) Waive the first quarter of the 2024/25 residential property rates, with a cap of 1,000 Hong Kong dollars per household. An estimated 308,000 residential properties will be affected, resulting in a reduction of government revenue by 2.6 billion Hong Kong dollars; (2) Waive the first quarter of the 2024/25 non-residential property rates, with a cap of 1,000 Hong Kong dollars per household. An estimated 430,000 non-residential properties will be affected, resulting in a reduction of government revenue by 370 million Hong Kong dollars; (3) Waive 100% of salaries tax and personal income tax for the 2023/24 tax assessment year, capped at 3,000 Hong Kong dollars, benefiting 2.06 million taxpayers across Hong Kong. The corresponding deductions will reflect in the final tax payable for the 2023/24 tax assessment year. This will result in a reduction of government revenue by 5.1 billion Hong Kong dollars; (4) Waive 100% of profits tax for the 2023/24 tax assessment year, capped at 3,000 Hong Kong dollars, benefiting 160,000 enterprises across Hong Kong. The corresponding deductions will reflect in the final tax payable for the 2023/24 tax assessment year. This will result in a reduction of government revenue by 430 million Hong Kong dollars; and (5) Provide an amount equivalent to half a month of Comprehensive Social Security Assistance (CSSA) standard payments to eligible recipients of social security, elderly allowances, disability allowances, as well as enact similar arrangements for the Working Family Allowance Scheme, with a total additional spending of approximately 3 billion Hong Kong dollars. Accelerating High-Quality Development Promoting high-quality development will help stimulate continuous economic innovation and growth, protect natural ecosystems, and provide a better life for citizens. Green and digital futures are two main themes. We aim to leverage Hong Kong's unique advantages of being backed by the country and connected to the world under the principle of "one country, two systems," to explore new opportunities and bring incremental growth in the process of high-quality development. Towards a Green Future "Green development is the cornerstone of high-quality development." Economies around the world are moving towards carbon neutrality, and the entire process of green transformation is bringing considerable business opportunities and financing needs, forming a diverse range of industries. Sustainable fuels, energy efficiency, emissions reduction, and carbon capture and storage technologies are continually evolving. Green Finance Hong Kong, as an international financial center, is also moving towards becoming an international green finance center. The Hong Kong government is currently hosting "Hong Kong Green Week," covering activities in technology, finance, and other sectors, bringing together industry leaders from the Asia-Pacific region to delve into topics related to green development and climate finance. The Hong Kong Monetary Authority will also co-host a climate finance conference with the Dubai Financial Services Authority in Hong Kong this autumn, exploring opportunities and challenges in promoting transitional finance in the Middle East and Asia. Continuing the "Green and Sustainable Finance Grant Scheme" So far, the Hong Kong government has successfully funded over 340 green and sustainable debt instruments issued in Hong Kong, totaling over USD 100 billion, through the "Green and Sustainable Finance Grant Scheme," enriching the ecology of green and sustainable finance in Hong Kong. The grant scheme is set to expire this year, and we propose to extend it for three more years until 2027, and expand the scope of funding to include transition bonds and loans to further encourage industries in the region to use Hong Kong's platform for transitional finance to gradually reduce emissions. Developing Sustainable Disclosure Standards To promote sustainable financing, accurate disclosure of information is crucial, and this is a key focus for international organizations and Hong Kong government entities in the years ahead. To deepen the development of green and sustainable finance in Hong Kong, companies must align their sustainable disclosure practices with international standards. The Financial Services and the Treasury Bureau and the Securities and Futures Commission of Hong Kong will draft a roadmap and vision statement to assist companies and financial institutions in sustainable reporting and analyzing relevant data to demonstrate our vision for promoting green and sustainable finance. Green Technology Hong Kong also has advantages in green technology. Currently, there are over 200 green technology companies in Hong Kong, with some having internationally competitive technologies and successfully tapping into domestic and overseas markets. Coupled with the strong research, advanced manufacturing, and commercialization abilities of sister cities in the Greater Bay Area, as well as their market size, the Greater Bay Area will become a leading hub for green technology in Asia. The Hong Kong government's "Low Carbon Green Research Fund" provides funding for research projects in Hong Kong aimed at reducing carbon emissions and enhancing environmental protection, encouraging practical applications. To date, the fund has allocated HKD 400 million and approved 30 projects from local universities, public research institutions, and companies, involving a total amount of approximately HKD 130 million. We will launch the "Green and Sustainable Finance Technology Proof-of-Concept Funding Scheme" in the first half of this year to provide early-stage funding for promising green financial technology, promoting their commercial development and advancing the development of new green financial technologies. Green Shipping The green transformation of the shipping industry holds enormous market potential, and the Hong Kong Maritime Department plans to provide incentives to Hong Kong-registered vessels that receive high ratings in international carbon reduction standards set by the International Maritime Organization, involving an allocation of approximately HKD 65 million. In addition, the Hong Kong Transport and Logistics Department is collaborating with the Hong Kong Environment and Ecology Department and other relevant departments to conduct feasibility studies on the provision of green methanol refueling for local ships and ocean-going vessels, with an action plan expected to be announced within the year to establish Hong Kong as a hub for green maritime energy refueling. Green Aviation We are committed to making Hong Kong International Airport a "green airport." The Hong Kong Airport Authority is studying, together with relevant Hong Kong government departments, the simplification of transporting and storing Sustainable Aviation Fuel, with an allocation of around HKD 65 million. Additionally, the Transport and Logistics Bureau of Hong Kong is working with the Hong Kong Environment and Ecology Department and other relevant departments to conduct feasibility studies on the provision of green methanol refueling for local ships and ocean-going ships, with an action plan expected to be announced within the year to establish Hong Kong as a center for green aviation fuel refueling.Approval procedures for the use of SAF in Hong Kong have been streamlined to allow more airlines to use it. In addition, the Hong Kong Civil Aviation Department has recently launched a consultant study to understand global SAF development trends and provide recommendations from policy and infrastructure perspectives. It is expected that the consultant study will be completed in the third quarter of this year.Green City Launch of the "CECEP Solar Energy Generation (Photovoltaic) Building Pilot Program" The Hong Kong government has been at the forefront of applying renewable energy in various buildings and facilities. We will launch a pilot program at the headquarters of the Electrical and Mechanical Services Department to explore the application of CECEP Solar Energy generation technology on the facades of Hong Kong government buildings. We will also continue to support public and private organizations in further utilizing renewable energy to help Hong Kong move towards carbon neutrality. New Energy Vehicles The Hong Kong government is actively promoting trials of various new energy public transport vehicles, including new energy buses, and using the New Energy Transport Fund to promote trials of different types of new energy commercial transport vehicles, including electric trucks and electric tour buses. The Hong Kong government encourages wider use of electric vehicles, and the first registration tax concession for electric vehicles expiring at the end of March this year will be extended by two years. However, considering factors such as the decrease in electric vehicle prices and increased model choices, the concession amount will be reduced by forty percent. Under the "One-for-One" program for electric private vehicles, the maximum exemption amount for the first registration tax will be adjusted to HK$172,500, and the maximum exemption amount for general electric private vehicles will be adjusted to HK$58,500. Additionally, based on the principle of "those who are more capable pay more," electric vehicles with a pre-tax price exceeding HK$500,000 will not be exempted. As for other types of electric vehicles, including electric commercial vehicles, electric bicycles, and electric motor tricycles, their first registration tax will continue to be fully exempt in the next two years. The Hong Kong Environment and Ecology Department will announce further details later. Sustainable Development of Fisheries and Agriculture In December last year, the Hong Kong Environment and Ecology Department issued the "Blueprint for Sustainable Development of Fisheries and Agriculture." In terms of agriculture, we expect to establish a modern technology agricultural park on part of the land in Agriculture Park Phase Two (covering approximately eleven hectares) by the end of this year, in collaboration with the public and private sectors to accelerate the modernization of agriculture. We will also launch a modern urban agriculture experimental project in Ma On Shan this year. In terms of fisheries, four new fish farming zones will be put into operation in phases starting this year, with a total area of 590 hectares, expected to significantly increase the local marine fish farming output. Digital Economy The digital economy has become a new driving force for economic development. Data, as a new key production factor, can empower enterprises to enhance efficiency and competitiveness and create new business opportunities by combining different industry sectors. The "Committee on the Digital Economy Development" chaired by me has conducted in-depth research on promoting the development of the digital economy over the past two years. The committee's report covers recommendations in various areas, including promoting digital policies, strengthening digital infrastructure, promoting safe and orderly flow and use of data, accelerating the pace of digital transformation of enterprises, and cultivating talent. Some of the recommendations have been implemented, including the preparation for the establishment of the "Digital Policy Office." Building a Data Trading Ecosystem With the acceleration of global digitization, having an efficient data ecosystem has become one of the factors for many companies to consider establishing their presence in Hong Kong. Establishing mechanisms to facilitate data trading is particularly important. Leveraging Hong Kong's unique advantages under the "one country, two systems" framework and international characteristics, from data supply and demand to application scenarios, Hong Kong has a solid foundation and rich conditions to develop international data trading. We have commissioned an expert group to conduct in-depth research on how to create a good data trading ecosystem for Hong Kong, including the role of Hong Kong as a super connector in data trading and promoting the formulation of international rules for data trade, so that we can harness the potential of data elements and develop them into a strong growth driver for Hong Kong's digital economy, as well as empowering traditional industries to upgrade and transform. Digital Finance Digital technology has enabled new financial business models. By combining scenarios, data, and technological innovation, digital finance addresses the shortcomings of traditional financial services, lowers service thresholds, and enhances the inclusiveness of overall finance. The Hong Kong Monetary Authority completed the first phase trial of the "Digital Hong Kong Dollar" pilot program in October last year, studying various local retail use cases, such as programmable payments, offline payments, tokenized deposits, and more. The second phase trial is about to begin to further study new use cases. Another key project, the "Multicentral Bank Digital Currency Cross-Border Network (mBridge)," has made progress, with the first phase of services expected to be launched this year, becoming one of the first projects in the world to settle cross-border transactions for enterprises using multiple central bank digital currencies. In addition, the "Digital Renminbi" will be expanded in its trial scope in Hong Kong, allowing residents to easily open and use digital Renminbi wallets, and use "Fast Remittance" for value-added services, further enhancing cross-border payment efficiency and user experience. Promoting Cross-border Data Flows In December last year, the Innovation and Technology Bureau of Hong Kong and the National Internet Information Office jointly launched the pilot scheme of the "Guangdong-Hong Kong-Macau Greater Bay Area (Mainland China, Hong Kong) Personal Information Cross-border Data Flow Standard Contract." The first phase invited participation from the banking, credit reporting, and medical industries, and the industry's response was very positive. We will refer to the implementation effects of the first phase trial and gradually expand facilitation measures to allow various industries in the two regions to use more fluid cross-border data to provide more convenient cross-border services for citizens and enterprises. "Global Top E-Commerce Office" To further facilitate residents and companies in Hong Kong and the Greater Bay Area to use government services in Guangdong and Hong Kong, we launched the "Global Top E-Commerce Office" website in collaboration with Guangdong province in November last year, and connected "Smart Convenience" with the "Guangdong Province Unified Identity Authentication Platform." We have set up "Smart Convenience" registration service counters in Guangzhou, Shenzhen Qianhai, and Futian, and launched the first Hong Kong "Global Top E-Commerce Office" self-service machine in Guangzhou, making it convenient for residents and enterprises in the Greater Bay Area to use "Global Top E-Commerce Office" services and carry out "Smart Convenience" registration. Third Generation Internet (Web3.0) In last year's "Budget Speech," I proposed to accelerate the development of the Web3.0 ecosystem, and there has been good progress in the past year. Cyberport currently has over two hundredTwenty companies engaged in related technologies, including three unicorns. Cyberport held multiple promotion and educational activities last year, attracting over 29,000 participants. It also launched a sponsorship program to encourage companies to conduct concept verification and accelerate the market application of related technologies.After successfully issuing the first batch of tokenized green bonds in February last year, we issued the second batch totaling 6 billion yuan in Hong Kong dollars, RMB, US dollars, and euros in early February this year. This is the first global issuance of multi-currency tokenized bonds, with enthusiastic subscription from global institutional investors, including asset management companies, insurance companies, private banks, and non-financial corporate entities. In addition to various technological innovations, this issuance also made breakthroughs in expanding investor participation and streamlining issuance procedures. Following the latest international trends and market developments, we proposed legislation at the end of last year to establish a regulatory framework for stablecoin issuers, soliciting public opinion with the goal of establishing a regulatory system that safeguards financial stability without hindering innovation. The Hong Kong Monetary Authority will also launch a "sandbox" in the short term to allow institutions interested in issuing stablecoins to test the issuance process, business models, investor protection and risk management systems in a controlled environment, and communicate about future regulatory requirements. Network security and investor and consumer protection are crucial for the development of Web3.0. Adhering to the principle of same business, same risk, same rules, the Securities and Futures Commission of Hong Kong began implementing a licensing regime for virtual asset trading platforms in June last year, allowing investors to trade on licensed platforms that comply with relevant international standards and provide protection to investors, positioning Hong Kong ahead of many major jurisdictions. In order to enhance protection for investors and consumers, we are currently consulting on regulating over-the-counter trading services for virtual assets. We will continue to promote the stable and responsible development of the virtual market in Hong Kong through timely dissemination of information, comprehensive public education, and enhanced enforcement efforts. Launch of Corporate Version of "SmartConvenience" The Hong Kong government will establish the "Digital Business Identity" platform, known as the corporate version of "SmartConvenience," to allow businesses to securely and conveniently verify their identity and validate their signatures when using electronic government services or conducting online transactions, eliminating cumbersome processes, saving time and reducing human errors. With a budget of approximately 300 million, the aim is to gradually roll out the platform starting from the end of 2026. Promoting Digital Inclusion We are committed to reducing digital divides and promoting the broader application of information technology among different communities, including the elderly. The Hong Kong government has allocated one billion dollars from the Social Innovation and Entrepreneurship Development Fund to provide digital training courses and technical support programs for residents aged 60 or above in Hong Kong over the next three years, making it easier for them to integrate into the digital age and benefit from digital technology. The first projects are expected to be launched as early as the fourth quarter of this year, benefiting at least fifty thousand elderly individuals. International Innovation and Technology Center Innovation and technology are vital drivers of the economy and high-quality social development. The "Hong Kong Innovation and Technology Development Blueprint 2022," published in 2022, has formulated a systematic strategic plan and clear development path for innovation and technology development in the next five to ten years, leading Hong Kong steadily to realize its vision as an international innovation and technology center. We have invested heavily in enhancing innovation and technology infrastructure, research capabilities, and talent, establishing a vibrant innovation and technology ecosystem. Science Park and Cyberport are the two flagship innovation and technology incubation bases in Hong Kong. By the end of last year, the tenants of these two incubators, along with existing and completed incubated companies, totaled approximately 4,500, representing an increase of over sixty percent in five years; there have been a total of sixteen companies listed and nine unicorns, with a total financing amount of about 130 billion dollars, and over 1,700 domestic and international awards received. Artificial Intelligence Artificial intelligence is a significant driver of the new industrial revolution and a key enabler of digital economy development in Hong Kong. Cyberport is rapidly establishing an artificial intelligence supercomputing center to assist research institutions and industries in meeting their computing needs, with the first phase of facilities expected to be operational as early as this year. The center is expected to provide computing power of up to three trillion floating-point operations per second by early 2026, equivalent to processing nearly one hundred billion images in an hour. We will allocate 3 billion dollars to implement a three-year Artificial Intelligence Funding Program, funding local universities, research institutions, and companies to use computing power for scientific breakthroughs; strengthen the cybersecurity and data protection of the computing center; and conduct promotion and education activities to attract international artificial intelligence experts, companies, and research projects to settle in Hong Kong. Microelectronics Research and Development As global demand for semiconductors increases, related industries will continue to grow, with the industry expected to exceed one trillion US dollars by 2030. To seize the vast market potential and align with the national science and technology development strategy, the Hong Kong government is actively promoting microelectronics research and development, establishing the Hong Kong Microelectronics Research Institute this year, leading and promoting cooperation in the research and development of third-generation semiconductors among universities, research centers, and the industry, and leveraging the complete manufacturing industry chain in the Greater Bay Area to realize research and development outcomes. Life and Health Technology Hong Kong possesses deep foundational research capabilities in life and health technology, with world-class experts, excellent medical schools, research centers, and laboratories, creating the conditions to become an international center for life and health technology. Establishment of the Life and Health Research Institute The 2022 Budget reserved 10 billion dollars to promote the development of life and health technology. We will utilize 6 billion dollars to fund local universities to collaborate with institutions both domestically and internationally to establish the Life and Health Research Institute, promoting related technological research and development, technology transfer, and attracting global innovation leaders and research teams to come to Hong Kong. Enhancement of Clinical Trial Platform The Hong Kong government will establish the "Greater Bay Area International Clinical Trial Institute" within the "HeTa Deep Technology Innovation Cooperation Zone" this year, providing a one-stop support platform to facilitate more local and international pharmaceutical and medical device companies to conduct clinical trials in Hong Kong. We are actively seeking approval from the National Medical Products Administration to allow companies to use this data when applying for market approvals in mainland China. Establishment of "First-Tier Approval" The new drug approval mechanism, which took effect on November 1 last year, known as the "1+" mechanism, allows new drugs for treating severe or rare diseases, after meeting specific requirements, to be approved in Hong Kong with just one reference to the competent drug regulatory authority. Two new drugs have been approved under this mechanism, bringing New Hope to patients. The "1+" mechanism is a significant step towards establishing a "first-tier approval" system. This system allows us to approve drugs in Hong Kong based on clinical data without relying on other drug regulatory authorities. The Hong Kong government is determined to establish the "Hong Kong PharmaceuticalThe Medical Devices and Supplies Supervision and Administration Center. In the first half of this year, a preparatory office will be set up to study the restructuring and strengthening of the supervision and approval system for pharmaceuticals and technologies. The goal is to develop the supervision and management center into an independent and internationally authoritative institution, in order to accelerate the clinical application of new pharmaceuticals and to promote the development of emerging industries in pharmaceutical research and testing.New industrial development The new industrialization emphasizes the driving force of informatization, using advanced technologies such as artificial intelligence, data analysis, and new materials to promote enterprises towards intelligent production and develop emerging industries with value-added potential and high economic benefits. We will launch a "New Industrial Acceleration Plan" with a budget of 10 billion yuan within this year, providing a maximum of 200 million yuan in funding to each enterprise engaged in life health technology, artificial intelligence and data science, advanced manufacturing and new energy technology in a 1 (government) : 2 (company) matching form. Applying enterprises must also invest a minimum of 200 million yuan in Hong Kong. In addition to the matching funding mentioned above, enterprises participating in the acceleration plan can receive funding to hire research talents under the "Research Talent Pool" and, in a pioneering manner under the "Science and Technology Talent Immigration Plan", employ a small number of non-local technical personnel to speed up the establishment and operation of advanced manufacturing facilities in Hong Kong. We expect the acceleration plan to attract fifty to one hundred enterprises engaged in related industries to invest not less than 20 billion yuan in Hong Kong. Hong Kong-Shenzhen Innovation and Technology Park The HeTao Hong Kong-Shenzhen Innovation and Technology Park allows Hong Kong to actively participate in the development of the Greater Bay Area, better integrate into the national development plan, and connect more closely with the world. The first batch of buildings in the park will gradually start operation by the end of the year, and work on investment and talent attraction has also begun. The Hong Kong government will continue to support the development of the Hong Kong-Shenzhen Innovation and Technology Park and is currently drafting a "HeTao Hong Kong Park Development White Paper" to be released within the year. InnoLifeHealthtechHub, Life Health Innovation Research Center We will establish the "InnoLifeHealthtechHub, Life Health Innovation Research Center" in the Hong Kong-Shenzhen Innovation and Technology Park to attract top international research teams and talents to focus on research in the field of life health, supporting the construction of the HeTao and Guangdong-Hong Kong-Macao Greater Bay Area as an international science and technology innovation center. We will allocate 2 billion yuan from the previously reserved budget to support the "InnoHK Innovation Hong Kong R&D Platform" to settle in HeTao, and also allocate 200 million yuan to provide support such as incubation and acceleration programs for life health technology startups in the park. Nurturing startups According to the "2023 Global Startup Ecosystem Report", Hong Kong ranks second globally and first in Asia in the startup ecosystem. The number of startups has increased to nearly 4,300 from about four times in 2014. During the same period, the number of employees in related enterprises has increased to over 16,000, nearly seven times higher. The Science Park Corporation's "Technology Enterprise Investment Fund" has invested nearly 400 million yuan since its establishment, involving 31 startups and attracting about 12.6 billion yuan in private funds. The company will soon launch the "Joint Enterprise Acceleration Plan" to provide value-added support services for high-potential innovative enterprises in collaboration with industry partners, nurturing them to become regional or global enterprises. Innovation in research and development and transformation Cutting-edge technology research support program We will implement the Cutting-edge Technology Research Support Program to support eight funded universities in purchasing related equipment and conducting research projects led by top scientists from home and abroad in areas such as artificial intelligence, quantum information, integrated circuits, clinical medicine and health, genetics, and biotechnology. For this, I will allocate 3 billion yuan from the previously reserved amount. Enhancing support for technology transfer To enable universities to strengthen support for technology transfer and market expansion services, starting from the 2024/25 fiscal year, we will provide up to 16 million yuan in funding to the technology transfer offices of the eight funded universities each year. Enhancing innovation and technology infrastructure The first phase of the expansion plan for the Hong Kong Science Park is expected to be completed in the first quarter of next year, providing around 13,000 square meters of floor space primarily for wet laboratories. The completion of the fifth phase expansion plan for Cyberport is expected by the end of next year, providing around 66,000 square meters of floor space for shared workspaces and offices. Together with the continuous development of the HeTao innovation and technology land, the local innovation and technology ecosystem will have more room for growth. International financial center Efficient financial markets can effectively match funds with the needs of industrial development and accelerate the development of the real economy. The financial industry is one of Hong Kong's pillar industries. As an international financial center and also the international financial center of the country, Hong Kong has advantages in both "quantity" and "quality", with vibrant development across various financial sectors. Offshore Renminbi business hub China is the world's second-largest economy, and with the increasing economic and trade exchanges between mainland China and other regions, the proportion of Renminbi in international trade, investment, cross-border payments, and as a reserve currency has been steadily rising, with a growing demand for Renminbi in the market. Hong Kong is the world's largest offshore Renminbi business hub, processing about 75% of global offshore Renminbi payment and settlements, as well as holding the largest offshore Renminbi deposit fund of over 1 trillion yuan. We are fully committed to building the ecosystem for offshore Renminbi to seize enormous opportunities and support the steady promotion of Renminbi internationalization. We are advancing related work from multiple aspects, including deepening connectivity mechanisms, facilitating Renminbi cross-border investment and two-way circulation, enhancing offshore Renminbi liquidity; encouraging institutions to provide more offshore Renminbi products and risk management tools, as well as conducting Renminbi financing in Hong Kong. In addition, we will develop the Central Moneymarkets Unit (CMU system) into a major international central securities depository platform in Asia to better support Renminbi cross-border clearing, trade settlement, custody, among other businesses. Connectivity The connectivity between the mainland China and Hong Kong financial markets continues to expand, with Bond Connect, Cross-boundary Wealth Management Connect, ETF inclusion in the connectivity targets, and Interest Rate Swap Connect, all implemented in recent years, further enriching the asset allocation and risk management choices of mainland China and international investors. This year, the Hong Kong Stock Exchange will host the "10th Anniversary Forum on Connectivity" to share experiences with the industry and explore injecting new vitality. We will conduct joint roadshows in mainland China to further promote the development of connectivity. We are actively discussing with mainland China the introduction of stock block trading, incorporating Renminbi counters into the Hong Kong Stock Connect, and including Real Estate Investment Trusts in the connectivity mechanism to attract more enterprises and funds to utilize the Hong Kong market. Asset and Wealth Management Center Hong Kong is an international asset and wealth management center, with a thriving industry in asset management and wealth planning.With assets under management exceeding $30 trillion Hong Kong dollars, it is also the largest hedge fund center in Asia and the second largest private equity fund management center after mainland China. Currently, Hong Kong has more than 250 open-ended fund companies and 780 limited partnership funds. 2700300 "" """""" 2024/251200700500200 """2.0"300 The government has always worked to expand Hong Kong's economic and trade networks, helping the local business community access emerging markets.To strengthen economic and trade relations with the Middle East, the Hong Kong government is currently in negotiations with Saudi Arabia for an investment agreement and is considering establishing an economic and trade office in Riyadh. We will also set up advisory offices in Turkey and Egypt within the year to attract foreign funds and companies. In addition, Hong Kong has completed investment agreement negotiations with Bahrain and will soon sign a comprehensive double taxation avoidance agreement. ASEAN is also one of our key partners. The Hong Kong government is considering setting up an economic and trade office in Kuala Lumpur, Malaysia. In other markets, we are negotiating a free trade agreement with Peru and an investment agreement with Bangladesh. The Hong Kong Trade Development Council will also set up two advisory offices along the Belt and Road route to enhance trade promotion in emerging countries. Belt and Road Initiative As we embark on another golden decade of the Belt and Road Initiative, Hong Kong will continue to play its role as a functional platform for the initiative, actively participating and helping to drive high-quality development, especially in green development and technological innovation. In September this year, we will host the annual Belt and Road Summit and hold the first Belt and Road Festival to promote cooperation between Hong Kong and countries along the Belt and Road in various areas such as trade, investment, technology, culture, arts, and talent exchange. We will also host the Belt and Road Taxation Management Cooperation Forum, bringing together Hong Kong government representatives, international organizations, academic institutions, and key enterprises from the Belt and Road regions to establish a platform for networking and exchange to promote tax management cooperation and capacity building. Additionally, we will organize more outbound missions, including visits to mainland China by Belt and Road country enterprises in Hong Kong to explore business opportunities. Regional Intellectual Property Trade Center Effective protection and efficient trading of intellectual property is crucial for the development of industries such as scientific research, cultural and creative industries, design services, and brand licensing in Hong Kong. In fact, the Hong Kong Intellectual Property Department has averaged over 10,000 standard patent registrations annually over the past three years, demonstrating the huge potential of Hong Kong's intellectual property trade market. This year, the Hong Kong government will submit proposals to the Legislative Council in the first half of the year to amend the Inland Revenue Ordinance to introduce a "Patent Box" tax incentive, which significantly reduces the profit tax rate for eligible intellectual property to five percent, to encourage companies to invest more resources in research and utilize patents and other intellectual property for commercial transactions. Participation in WIPO Special Programs We will actively establish a World Intellectual Property Organization (WIPO) Technology and Innovation Support Center in Hong Kong to better integrate Hong Kong into the national development landscape. The center will focus on providing specialized services such as patent search and analysis to protect research results and support the innovation and technology industry, as well as promote intellectual property trade. The construction of the center will also help Hong Kong cultivate talent with expertise in both patents and innovation. To support this initiative, I have set aside HK$45 million to support the Hong Kong Productivity Council in establishing and operating this center, with the aim of commencing services as early as next year. International Shipping Center Approximately ninety percent of global trade in goods is conducted by sea. Leveraging its strategic location, unique institutional advantages, and extensive international trade experience and networks, Hong Kong holds a significant position in the shipping market. With the support of the national "14th Five-Year Plan" and the "Guangdong-Hong Kong-Macao Greater Bay Area Development Plan Outline," the Hong Kong government announced the "Maritime and Port Development Strategy Action Plan" in December last year, outlining ten major strategies and thirty-two specific action measures to support the sustainable development of the maritime and port industry in Hong Kong, enhance the industry's long-term competitiveness, and consolidate and elevate Hong Kong's status as an international shipping center. Developing High-Value-added Shipping Services One of the directions in the Action Plan is to develop high-value-added shipping services. The Hong Kong government has introduced a series of tax incentives for the shipping industry in recent years, including for ship leasing, maritime insurance, ship agency, ship management, and ship brokerage services, with initial success seen in these measures. We will conduct further optimization studies this year. In addition, Hong Kong's ship registration enjoys international recognition, ranking fourth globally in terms of total tonnage and excelling in quality fleets. Hong Kong-registered ships have a much lower detention rate by port authorities globally. We plan to offer bulk registration incentives to ship owners to attract large-scale vessel registration in Hong Kong. The government will revise relevant regulations to introduce bulk registration incentives this year, outlining rules and eligibility requirements. Developing Modern Logistics The Hong Kong government aims to assist the industry in seizing the latest developments and business opportunities in smart logistics and e-commerce. To achieve this, the government allocated HK$300 million in 2020 for the launch of the "Third-party Logistics Service Provider Subsidy Scheme," providing funding to eligible logistics service providers to encourage the application of technology to enhance productivity. To date, over 190 enterprises have benefited from this scheme, involving funding of approximately HK$1.37 billion. In February this year, the government optimized this scheme by increasing the funding cap from HK$1 million to HK$2 million per enterprise and expanding the scope to cover services related to ESG technology applications. International Aviation Hub Currently, Hong Kong International Airport is served by approximately 120 airlines operating flights to around 180 destinations worldwide. As an international aviation hub, our vision is to leverage the convenience and opportunities brought by the Hong Kong-Zhuhai-Macao Bridge to transform Hong Kong International Airport into an "airport city" that integrates elements of commerce, exhibitions, tourism, living, and logistics, becoming a world-class landmark. Exploring New Aviation Frontiers The Hong Kong Civil Aviation Department is progressing full steam ahead with the Hong Kong International Airport Three-runway System project, with the aim of commencing operations by the end of this year. To leverage the opportunities presented by the Three-runway System and support the construction of the national "Silk Road in the Sky," we will strengthen aviation service links with countries on current major routes and potential Belt and Road routes to expand the aviation network. Intermodal Transport The Hong Kong Civil Aviation Department will fully utilize the advantages of Hong Kong International Airport in handling high-value and temperature-controlled air cargo. In this regard, we are actively promoting the "Ocean-Air Freight Intermodal Model" with Dongguan, and plan to complete the first phase of permanent facilities at the "Hong Kong International Airport Logistics Park" by the end of next year, gradually reaching an annual handling capacity of one million tons to better meet the needs of the Greater Bay Area.International freight demand.Asian Air Cargo Logistics Base The Hong Kong Civil Aviation Department is actively expanding air cargo services, including refrigerated cargo services at the Dongguan Logistics Park, joint international freight operations with Zhuhai City, and attracting international freight companies and major global retailers to use Hong Kong as their aviation logistics base. Asia-Pacific International Legal and Dispute Resolution Services Center Hong Kong is the only region in China where common law is practiced, with a sound legal system and high-quality legal talent. These are the cornerstones of Hong Kong's excellent business environment and bring us new opportunities for development. With strong support from the central government, the "International Mediation Institute" will establish its headquarters in Hong Kong, becoming the first international organization established by the Hong Kong government with headquarters in Hong Kong, specializing in mediating international disputes. This will help attract parties to disputes, mediators, lawyers, and other professionals to choose Hong Kong for mediation, as well as drive related economic activities. In addition, the Hong Kong Department of Justice will continue to host international conferences and exchanges, leading the industry to visit mainland China, the Middle East, and ASEAN member countries to promote Hong Kong's legal and dispute resolution services. Sino-foreign Cultural and Art Exchange Center Hong Kong is a diverse and open city where Eastern and Western cultures converge and blend. The government of Hong Kong will continue to develop a vibrant and diverse cultural and artistic scene, promote Chinese culture, encourage cultural exchanges between China and foreign countries, and develop high-quality cultural and artistic industries. The Hong Kong government will soon announce the "Blueprint for the Development of the Cultural and Creative Industries", outlining the vision and specific measures for related work. Cultural and Creative Brands In the 2024/25 financial year, the Hong Kong government will allocate approximately 1.4 billion and 2.9 billion Hong Kong dollars to the "Film Development Fund" and the "Creative Smart Plan" respectively, to support projects in different fields such as film, arts, and design. Starting this year, the Hong Kong government will host the "Hong Kong Fashion Design Week" annually, aiming to establish the event as a major fashion design event in Asia, making Hong Kong fashion design brands renowned across Asia and internationally. Major Performing Arts Projects The Hong Kong government proposes the "Key Performing Arts Project Plan" to support the long-term performances of representative large-scale local performing arts works, making these creations another cultural hallmark of Hong Kong. The Department of Cultural, Sports, and Tourism will finalize the specifics of the plan in the first half of the year. Large-scale Art Events We will host the inaugural "Hong Kong Performing Arts Expo" in October this year, providing a comprehensive platform to showcase top performing arts works from around the world and facilitate exchanges and business opportunities for these works and creative elites. We will also organize the "4th Greater Bay Area Cultural and Arts Festival", featuring over a hundred cultural and arts activities in Hong Kong and other cities in the Greater Bay Area, expected to attract around 5,000 arts and culture professionals and 140,000 attendees. Cultivating Local Talent "Talent is our most important asset" is a fundamental driving force for the development of the economy and various industries. While actively attracting talent from around the world, we must also continue to vigorously cultivate local talent. In addition to supporting tertiary institutions to enhance quality and expand capacity, we will continue to promote talent training programs in various industries to enrich the local talent pool. Innovation and Technology Talents In addition to supporting talent training programs in the development of "new industrialization", through the "InnoTech Internship Program", we encourage university students to participate in work related to innovation and technology. Furthermore, to prepare for integration into the knowledge-based economy and the development of a digital society, the Hong Kong government has launched the "Spark IT Interest More Plan" to enhance primary school students' interest and application of information technology. As such, I propose an increase of 134 million Hong Kong dollars to provide a maximum subsidy of up to 300,000 Hong Kong dollars to each public-funded primary school in the next two school years. Medical and Health Professions The Hong Kong government attaches importance to training local medical and health professionals. The Hong Kong Department of Health will continue to enhance medical teaching facilities and moderately increase the training quotas for local medical and health professionals. Since last April, we have also subsidized selected schools for the clinical internship expenses related to designated medical courses. Additionally, following the additional allocation of 500 million Hong Kong dollars to the Chinese Medicine Development Fund in last year's Budget, the Fund has launched several industry capacity enhancement projects, such as the "Hong Kong Chinese Medicine Talent Short-term Training Program" jointly organized with the National Administration of Traditional Chinese Medicine, to cultivate an outstanding team of Chinese medicine professionals. Maritime and Aviation Talents Under the "Maritime and Aviation Talent Training Fund", the Hong Kong government launched the "Smart and Green Logistics Professional Training Program" and the "Logistics Promotion Assistance Program" in January this year to strengthen the promotion and talent development work in the logistics industry, in line with the new developments in smart and green logistics. We also introduced the "Aviation Industry Promotion Activity Assistance Program" to support local aviation-related organizations and academic institutions in organizing activities to promote the development and opportunities in the aviation industry to different sectors of society. The Transport and Logistics Bureau will conduct a comprehensive review of the effectiveness of the fund in attracting talent and promoting human resources development in the industry this year. Patent Talents Over the next three years, the Hong Kong government will allocate a total of approximately 120 million Hong Kong dollars to the Hong Kong Intellectual Property Department to plan the establishment of regulatory arrangements for local patent agency services, enhance their professional quality, and support the development of the "original patent" system. The government will continue to strengthen the patent examination team to enhance substantive examination capabilities, aiming to conduct independent substantive patent examinations by 2030. International Legal Talents The Department of Justice of Hong Kong will establish a dedicated office and expert committee within this year to promote the establishment of the "Hong Kong International Legal Talent Training Institute" to cultivate legal professionals with an international perspective and familiarity with different legal systems. Land and Housing Supply Land Supply In the 2024/25 financial year, the land sale plan includes eight residential sites, as well as railway property development, private development, urban renewal projects, which are expected to provide potential land supply for the construction of around 15,000 units throughout the year, exceeding the annual estimated demand of 13,200 units from the "Long-term Housing Strategy" by nearly fourteen percent. Additionally, the land sale plan includes two commercial sites and one industrial site, providing approximately 120,000 square meters of commercial floor area and 540,000 square meters of industrial floor area. We will consider the market situation to determine the quantity, types, and speed of land sales. Over the next five years, we will prepare land for the construction of no fewer than 80,000 private housing units to be released to the market in a timely manner. Nearly sixty percent of the land supply will come from new development areas and new town expansion areas, while the remaining forty percent will come from other areas in Hong Kong.Hong Kong government land sale projects and railway property development projects.Housing Supply In terms of public rental housing supply, the Hong Kong government has secured enough land to meet the supply target of 380,000 public rental housing units in the next ten years (i.e. from the fiscal year 2024/25 to 2033/34). As of the end of last year, around 105,000 units under the Hong Kong Housing Authority have commenced construction, with progress on track. Considering that the cash allowance trial scheme is set to expire mid this year, the Hong Kong government has decided to extend the trial scheme for another year until June next year to assist grassroots families on the waiting list, and will conduct a review at an appropriate time. In terms of private housing supply, we estimate that in the next five years starting from this year, the average annual completion of private residential units will exceed 19,000, representing an increase of about 15% compared to the average of the past five years. The potential supply of first-hand private residential units in the next three to four years is estimated to be approximately 109,000 units. Transport Infrastructure The Hong Kong government's vision is to build a livable, competitive, and sustainable Hong Kong through the planning principles of "Infrastructure-led" and "Creating Capacity". We are systematically advancing railway and major road projects outlined in the "Hong Kong Major Transport Infrastructure Development Blueprint" to enhance connectivity between different regions and unleash development potential. At the same time, the Hong Kong government plans to promote smart and green collective transport systems in East Kowloon, Kai Tak, and Hung Hom Bridge/Chek Lap Kok, and will invite relevant suppliers and operators to submit expressions of interest this year. To further promote infrastructure connectivity in the Greater Bay Area, the Hong Kong government will continue to collaborate with the Shenzhen authorities through the "Hong Kong-Shenzhen Cross-border Rail Infrastructure Construction Task Force" to advance two cross-border projects, the Hong Kong-Shenzhen Western Railway (Hung Hom Bridge to Qianhai) and the North Ring Line Branch Line, collectively building a "GBA on Rails". Furthermore, to enhance construction industry productivity, a cross-departmental supervisory committee under the Hong Kong Development Bureau will formulate multiple measures in the short term to strengthen the application of "Modular Integrated Construction". In order to promote "Modular Integrated Construction" as one of the advantageous industries in the Greater Bay Area, we will strengthen cooperation with the Guangdong Provincial Hong Kong Government to promote the production, import and export facilitation, and export capabilities of modular components; the Hong Kong government will also explore the possibility of investing in the modular supply chain. In addition, the Hong Kong Development Bureau will establish an R&D and testing center for construction within this year to promote innovation applications across the industry. Healthcare The Hong Kong government places great importance on the health and well-being of its citizens, striving to maintain a high level of medical professionalism and an efficient healthcare system. We continue to allocate substantial resources to the healthcare sector, with a regular expenditure budget of HK$109.5 billion for the fiscal year 2024/25, accounting for approximately 19% of the Hong Kong government's regular expenditure. The Hong Kong government will continue to innovate, protect public health, improve primary healthcare services, enhance the quality of healthcare services, and promote the development of the healthcare industry. The Hong Kong government has been improving public healthcare services and enhancing patient experience from various angles, setting specific indicators such as shortening waiting times for specialist outpatient services and promoting wider use of telemedicine consultations. Targets for certain services, such as medicine delivery services and electronic sick leave certificates, were achieved early last year. Development of Traditional Chinese Medicine To promote the development of traditional Chinese medicine, the Hong Kong government has been allocating resources and implementing various measures, including increasing the number of government-subsidized Chinese medicine outpatient services, further expanding integrated Chinese-Western medicine collaboration services, promoting Chinese medicine research and development, and standard-setting work, among others. We are actively promoting the construction of Chinese medicine hospitals and the Hong Kong government Chinese Medicine Testing Centre, and expect both projects to be gradually put into service starting from the end of next year. Tobacco Control Policy Increasing tobacco tax is internationally recognized as the most effective measure to reduce tobacco use. The Hong Kong government proposes to immediately increase the tax on each cigarette by 80 cents and raise the tax rates on other tobacco products in proportion, with a similar increase to last year. We expect the percentage of tobacco tax in the retail price of cigarettes to increase to around 70%, gradually moving towards the World Health Organization's recommended 75% level to enhance smoking cessation incentives and protect public health. We will continue to crack down on illicit cigarettes, strengthen smoking cessation services, and promote education and awareness. Inclusive Care Youth Development Youth are the future of Hong Kong, "when youth thrives, Hong Kong thrives". The Hong Kong government is actively and progressively implementing various actions and measures outlined in the "Youth Development Blueprint" and will continue to provide more opportunities for youth exchanges and internships in mainland China and overseas. The goal for this year is to benefit no fewer than 30,000 people, allowing young people to understand the overall development trends of the country and broaden their global perspectives. The Hong Kong government will also hold a "Youth Development Summit" in the middle of this year, inviting youth organizations from home and abroad to participate, engage in discussions on youth-related topics, and learn from each other. It is expected that more than 1,000 people will participate in the event. Vocational and Professional Education The Hong Kong government will continue to strengthen and promote vocational and professional education through the strategy of "Integration of Vocation and Academic Development" and has reserved approximately HK$680 million to support the work of the Vocational Training Council in this area. This includes extending the "Vocational Employer Recognition Pilot Scheme" and the "Means-tested Financial Assistance Scheme for Students Pursuing Self-financing Programmes" for five years, further supporting student exchange activities, enhancing support for students with special educational needs, and encouraging employers to provide workplace learning opportunities. In addition, the Hong Kong government has reserved HK$100 million in initial funding to assist self-financing tertiary institutions in establishing the "Alliance for Applied Science Universities" to jointly promote and enhance the position of vocational and professional education in the minds of society and students. Elderly Care Since last September, the Hong Kong government has been implementing the "Elderly Community Care Voucher Scheme" (Community Voucher) on a regular basis, with the scope extended to renting assistive technology products. The number of Community Vouchers in the fiscal year 2024/25 will increase to 11,000, involving an annual expenditure of approximately HK$900 million. The Hong Kong government has also been implementing the "Elderly Care Home Voucher Scheme" (Home Voucher) on a regular basis since last April. The number of Home Vouchers in the second quarter of this year will increase to 5,000, allowing more eligible elderly people to benefit early, with a planned annual expenditure of approximately HK$1.44 billion. Support for Persons with Disabilities The Hong Kong government is committed to increasing the quotas for daytime rehabilitation, residential care, and respite care services for persons with disabilities. As of the end of last year, the total number of service quotas has increased to 36,400. Additionally, the Hong Kong government will allocate approximately HK$130 million through the caring fund to implement a three-year trial scheme starting from the third quarter of this year, providing an additional HK$500 monthly subsidy to persons with disabilities who receive comprehensive social assistance and are employed, to encourage employment. It is estimated that around 6,800 people will benefit from this initiative. Women's DevelopmentThe Hong Kong government attaches great importance to women's development and allocated one billion dollars last year to enhance support for related work. The Women's Empowerment Fund, established in June last year, has funded over one hundred and forty programs by women's groups and non-governmental organizations, including assisting women in transitioning in the job market, providing training for childcare or elderly care. Support for working parents The Hong Kong government will progressively increase the number of subsidized standalone childcare centers by ten starting this year, with the goal of providing nearly 900 additional childcare spots within three years. Additionally, the government will expand after-school care services for preschool children to all districts in phases starting this year, with the number of spots increasing to nearly 1,200 within three years. Revised Budget for 2023/24 Due to global interest rate hikes, economic slowdown, and ongoing geopolitical tensions, last year's economic growth in Hong Kong was slower than expected. Despite overall spending decreasing after the pandemic, soft asset markets led to lower land prices and stamp duty revenue, resulting in a larger fiscal deficit than expected. The revised budget for the overall revenue of the Hong Kong government for 2023/24 is 554.6 billion dollars, 13.7% lower than the original budget, which was 878 billion dollars. Land revenue is 19.4 billion dollars, significantly down by 65.6 billion dollars from the original budget and much lower than in previous years. Stamp duty revenue is 50 billion dollars, 35 billion dollars lower than the original budget. Profits tax and salaries tax revenues are 171.2 billion dollars and 79.2 billion dollars respectively, similar to the original budget. The revised budget for the overall expenditure of the Hong Kong government for 2023/24 is 727.9 billion dollars, a 10.2% decrease from the previous year, 4.3% lower than the original budget, which is 331 billion dollars less. Overall, I estimate a comprehensive deficit of 101.6 billion dollars for 2023/24. The fiscal reserves are expected to be 733.2 billion dollars by March 31, 2024. Fiscal Budget for 2024/25 Looking ahead to the next year, due to the complex external environment, Hong Kong, as a small and export-oriented economy, will inevitably be affected, and it will take time for income related to asset markets to fully recover. In terms of expenditure, the Hong Kong government will continue to invest resources to consolidate economic growth momentum and improve public services. The main policy measures announced in the 2023 Policy Address involve approximately 142 billion dollars in revenue, 134 billion dollars in operating expenditures, and 252 billion dollars in non-operating expenditures. The financial impact of these measures is reflected in the 2024/25 fiscal budget. The overall expenditure of the Hong Kong government for 2024/25 is expected to increase by 6.7% to 776.9 billion dollars, with a slight increase to 24.6% of nominal GDP. Operating expenses for 2024/25 are expected to increase by 7% to 580.2 billion dollars. Social welfare policies in areas such as healthcare, social welfare, and education will remain significant, totaling 343.7 billion dollars, accounting for 59.3% of operating expenses. Non-operating expenses are expected to decrease significantly by 47.7% to 336 billion dollars due to the end of the pandemic. Total revenue for 2024/25 is projected to be 633 billion dollars. Income and profits tax revenues are expected to be 279.6 billion dollars, a 6.8% increase from the revised budget for 2023/24. Based on the land sales plan for 2024/25 and land supply goals, land revenue is budgeted at 3.3 billion dollars, a 70.1% increase from the revised budget for 2023/24. Stamp duty revenue is budgeted at 71 billion dollars, a 42% increase from the revised budget for 2023/24. Taking into account the issuance of government bonds in 2024/25 amounting to 120 billion dollars, the deficit for the year is expected to be 48.1 billion dollars, and the fiscal reserves will decrease to 685.1 billion dollars. In 2024/25, the target for maintaining the civil service establishment is zero growth. Each department will implement new policies and measures through revising work priorities, internal reallocations, streamlining procedures, and improving efficiency. It is estimated that by the end of March 2025, the civil service establishment will be approximately 194,000 positions. Medium-term Financial Forecast We are determined and confident in overcoming the current challenges facing public finances. The basic principle is to maintain the sustainability of public finances. We have formulated a financial consolidation plan outlining how to gradually restore budget balance and maintain fiscal reserves at a steady level to ensure that the Hong Kong government can continue to provide various public services and promote economic development, as well as have sufficient capacity to introduce measures to assist citizens and businesses in times of adversity or emergencies. The medium-term financial forecast mainly estimates the revenue, expenditure, and financial situation of the Hong Kong government from a macro perspective and fully reflects the measures in the financial consolidation strategy. The adopted real economic growth rate for 2024/25 is projected to be 2.5% to 3.5%, and approximately 3.2% per year for the subsequent years from 2025/26 to 2028/29. During this period, the average annual capital expenditure of the Hong Kong government will be approximately 90 billion dollars, and operating expenses will increase by an average of 4.2% per year. The ratio of the overall expenditure of the Hong Kong government to GDP will gradually decrease from approximately 24.6% in 2024/25 to around 20.6% in 2028/29. In terms of land revenue, the calculation for the 2025/26 and subsequent years is based on a conservative average of land revenue relative to GDP from the past twenty years (around 3.4%). I also assume a growth rate for profits tax and other tax revenues similar to the future economic growth rate over the next few years. Overall, the Hong Kong government's revenue is expected to gradually increase from approximately 20% of GDP in 2024/25 to around 22.6% in 2028/29. Additionally, the medium-term financial forecast also reflects the issuance of approximately 950 to 1,350 billion dollars in green and sustainable bonds and infrastructure bonds each year. Based on these assumptions and arrangements, the deficits for both operating and non-operating accounts will narrow annually over the next five years, with a return to surplus in operating accounts in 2026/27 and in non-operating accounts in 2028/29.Surplus. If the proceeds from the issuance of bonds are taken into account, the comprehensive accounts of the Hong Kong government recorded a deficit only in the fiscal year 2024/25, and surpluses were recorded in subsequent years. The above calculation does not take into account tax refunds and relief measures that may be introduced in the next four years.By the end of March 2029, it is estimated that the fiscal reserve will be HK$832.2 billion, equivalent to 21.2% of the Gross Domestic Product (GDP) or about 12 months of Hong Kong government expenditure. Public Finance During the pandemic, the Hong Kong government implemented multiple rounds of large-scale counter-cyclical and anti-epidemic measures, leading to a surge in expenditure to a peak of HK$810.5 billion in the 2022/23 fiscal year. Despite efforts to reduce spending post-pandemic, total expenditure for the current fiscal year is still HK$727.9 billion, an increase of 36.9% compared to 2018/19, with operational spending increasing by 40.2% during the same period, while operational revenue only increased by 13.1%. Basic infrastructure spending has increased from an average of around HK$76 billion per year in the past five years to approximately HK$85 billion in the 2023/24 fiscal year, mainly due to the government's efforts in land and housing projects, as well as other infrastructure projects to improve the environment and livelihoods. Over the past few years, due to the challenges posed by the pandemic and external environment, fiscal reserves have decreased to around HK$733.2 billion. Rather than focusing solely on short-term revenue and expenditure of the Hong Kong government, we should consider the overall fiscal situation over the economic cycle. The Hong Kong government will adhere to the principle of balancing income and expenditure as prescribed in Article 107 of the Basic Law, striving for fiscal balance to avoid deficits and ensure the resilience and sustainability of public finances. Fiscal Integration Plan We are implementing a comprehensive fiscal integration plan. Considering the need to strengthen economic recovery and alleviate the burden on businesses and residents, this plan focuses on cost-saving measures while pragmatically increasing some income sources, with the goal of achieving fiscal balance for the Hong Kong government within the next few years. We will start from the root, by reorganizing work processes or adjusting priorities, to strengthen control over the rate of expenditure growth. Despite this, the Hong Kong government will continue to address the needs of the public by consistently allocating resources to improve and provide public services. Controlling operational expenditure growth We will strictly control operational expenditure and implement the following measures: 1. Continuing the policy of zero growth in civil service establishments, keeping establishments at levels not exceeding those at the end of March 2021; and 2. The previously announced "Resource Efficiency Optimization Plan", which will save 1% of recurrent expenditure annually over the next two fiscal years, reallocating the resources internally for optimizing and introducing new public services. To further control the growth of Hong Kong government spending, departments will need to reduce recurrent expenditure by a further 1% in the 2026/27 fiscal year, without impacting schemes such as Comprehensive Social Security Assistance and public welfare benefits. After the implementation of expenditure growth control measures, it is expected that over the next five fiscal years, operational expenditure will slow down from an average annual increase of 7% in the past five years to approximately 2.2% annually, lower than the nominal GDP growth of 5.5% during the same period. Additionally, we have instructed relevant departments to review the operating models of two significant transport subsidy programs with large expenditures and rapid growth. It is crucial to note that the Hong Kong government does not intend to cancel these programs; rather, the review aims to ensure that these programs continue to be financially sustainable. We anticipate completing the review of the following two programs within the year: 1. Elderly and eligible persons with disabilities public transport fare concession scheme (i.e., "Two-dollar concession scheme"): Expenditure for this program in the 2023/24 fiscal year is approximately HK$4 billion, more than double the HK$13 billion in 2019/20; and 2. Public transport fare subsidy scheme: Expenditure for this program in the 2023/24 fiscal year is approximately HK$3.5 billion, more than double the HK$17 billion in 2019/20. While we are controlling the overall growth rate of expenditure, resources allocated to public services have significantly increased. For example, the total recurrent expenditure for healthcare, social welfare, and education-related expenses is expected to reach HK$343.7 billion in the 2024/25 fiscal year, an increase of approximately 7.3% from 2023/24 and 34.2% from five years ago. Reviewing the priority of Hong Kong government basic infrastructure projects Infrastructure development not only invests in the future but also benefits the economy and livelihoods. In recent years, the Hong Kong government has actively promoted land and housing supply projects, including the development of new towns and new development areas, as well as projects to improve the environment and livelihoods, such as the Kai Tak Sports Park and hospital development plans. It is anticipated that infrastructure spending will peak in the next three years. The Hong Kong government must control infrastructure spending at a financially sustainable level. In this regard, relevant decision-making bodies and departments have reviewed the benefits of engineering expenditure and adjusted the development schedule based on project priorities. Some projects that are relatively mature in planning will continue as planned, including land leveling and infrastructure projects in the northern metropolis areas. Projects in the early planning or conceptual stages will adjust their development schedules based on the importance of the project and other factors. The Hong Kong government aims to control basic infrastructure spending in the mid-term fiscal forecast to an average of approximately HK$90 billion per year, representing an increase of around 17% compared to the average of HK$76 billion per year over the past five years, demonstrating continued investment in basic infrastructure spending by the government. Increasing income The key to growth in public finance revenue lies in sustained high-quality economic development. Only by expanding the "cake" and facilitating a faster, more resilient, and diversified economic growth can income increase to support societal development and livelihood needs. Considering the need to balance open revenue sources with the actual situation without rushing, to avoid impacting economic recovery and citizens' lives, while maintaining a competitive advantage of a simple low tax system. Taking these factors into account and following the principle of "those who can, pay more," we will adjust the following taxes. We propose to implement a two-tier standard tax rate system for salaries tax and personal income tax starting from the 2024/25 tax year. This means that for taxpayers whose net chargeable income exceeds HK$5 million, the tax amount calculated using the standard tax rate will be 15% for the first HK$5 million of net chargeable income and 16% for the portion exceeding HK$5 million. It is estimated that around 12,000 taxpayers will be affected, representing 0.6% of the total number of relevant taxpayers, with an annual increase in government revenue of approximately HK$910 million. Even with the implementation of the two-tier standard tax rate, the effective tax rate in Hong Kong will still be lower than that of other advanced economies. The Hong Kong government will continue.In the first half of this year, a proposal to revise the progressive rates of residential property stamp duty was put forward, with the aim of taking effect in the fourth quarter of the 2024/25 financial year. The new system will only affect residential properties with rental values exceeding HKD 550,000, accounting for 1.9% of relevant properties. It is estimated that the Hong Kong government's annual revenue will increase by approximately HKD 840 million.The Hong Kong government will review different fees in a timely manner. In addition to the principle of "user pays," consideration will also be given to the burden of citizens and businesses. The business registration fee will increase by $200 to $2,200 per year starting from April 1st. The last adjustment was in 1994. It is estimated that the Hong Kong government's annual revenue will increase by approximately $290.5 million. To alleviate the related impact, the $150 business registration levy collected by the bankruptcy and wage protection fund will be exempted for two years. We propose to reinstate the hotel room tax at a rate of three percent, with an estimated annual increase in revenue for the Hong Kong government of about $1.1 billion. In order to allow hotels and the tourism industry more time to prepare, the implementation date will be January 1, 2025. It is estimated that the hotel room tax collected will only account for less than one percent of the spending by overnight tourists in Hong Kong. The Hong Kong government has already allocated over $1 billion to enhance tourism infrastructure and services next year, striving to attract more overnight and high-spending tourists from different markets to Hong Kong. International Tax Developments We will continue to implement the Organisation for Economic Co-operation and Development's global minimum tax rate scheme to address base erosion and profit shifting, aiming to implement a fifteen percent global minimum tax rate starting from 2025 for large multinational corporate groups with annual total revenues of 750 million or more, as well as levy the minimum top-up tax in Hong Kong. We are currently consulting on the implementation plan, with legislative proposals expected to be submitted in the second half of this year. The scheme is expected to bring in around $15 billion in tax revenue for the Hong Kong government from the fiscal year 2027/28 onwards. After the implementation of the scheme, Hong Kong's tax competitiveness will still be superior to most tax jurisdictions. "Investment Returns of the Future Fund" The 2021/22 Budget proposes to gradually reflect the accumulated investment returns of the Future Fund in the operating accounts of the Hong Kong government. The Hong Kong government will submit a resolution to the Legislative Council next month to complete the implementation arrangements. Bond Issuance In addition to promoting the development of the bond market, the issuance of bonds by the Hong Kong government can also be used to fund green and sustainable development and infrastructure projects. I emphasize that the proceeds from bond issuance will not be used to cover the Hong Kong government's current expenditure. The "Committee on Financing Major Development Projects" led by me has reviewed how to promote the development of the Northern Metropolis area in an orderly and phased manner. We plan to issue bonds of around $95 billion to $135 billion annually over the next five years to drive the development of the Northern Metropolis area and other infrastructure projects. As for the artificial islands project in Kau Yi Chau, we will continue to advance various related studies, with the specific implementation timeline taking into account factors such as the public financial situation. The Hong Kong government will continue to adhere to fiscal discipline and maintain its borrowing at a prudent level. It is expected that the ratio of Hong Kong government debt to gross domestic product will be around 9 to 13 percent between the fiscal years 2024/25 and 2028/29, significantly lower than most other advanced economies. Conclusion Chairman, 2024 is still full of uncertainties. The external environment is complex and constantly changing, affecting investment sentiment and capital flows. In the short term, we need to consolidate economic recovery momentum. In the long run, we must adjust the way of economic growth, improve "quality" and "quantity." High-quality development will drive more innovation, bring new services and products, stimulate new demand, and create new markets, which is the only way for Hong Kong's future development. The evolution of nature has a cycle of endless create, and economic development has highs and lows cycle as well. The new challenges and uncertain future may make people feel confused. However, looking back at the development of Hong Kong over the past few decades, the path, despite its ups and downs, always leads to a better future. The cover color of this year's budget represents the dawn, welcoming hope and embracing confidence, harboring the expectation of a more harmonious and united future. With strong central leadership, solid national support, and the resourcefulness and resilience of Hong Kong people, challenges at each stage have been successfully transformed into greater opportunities. In the high-quality development and the construction of a modern strong country, Hong Kong's unique position and function are irreplaceable and have always made a positive contribution to the country's development. The rapid development and stable progress of the country, together with the rapid development of Asia, bring us unlimited opportunities. Hong Kong's fusion of Eastern and Western influences, connecting the world, is the only place that combines the advantages of international and Chinese characteristics. As long as we find the right position, the right direction, leverage our unique strengths, constantly strive for innovation, and move forward with determination, Hong Kong will surely prosper and flourish. Thank you, Chairman!