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Wednesday, February 25, 2015, 16:28

SAR sets aside HK$34 billion for subsidies

By Agencies
SAR sets aside HK$34 billion for subsidies
Hong Kong's Financial Secretary John Tsang Chun-wah presents the budget on Feb 25, 2015. (Roy Liu / China Daily)

HONG KONG - Hong Kong's Financial Secretary John Tsang said Wednesday in his budget speech that Hong Kong's economy grew by 2.3 percent in 2014.

The government of Hong Kong Special Administrative Region will introduce six one-off relief measures amounting to HK$34 billion (about US$4.4 billion) in 2015 to help alleviate the financial burden on the public and stabilize the economy.

Tsang said that despite the steady performance of the mainland's economy and signs of recovery in the United States, Hong Kong's trade performance was beset by eurozone's weakening economy and Japan's relapse into recession. Merchandise exports grew by one per cent and service exports by 0.5 per cent in real terms.

As a result, Hong Kong's economy grew by only 2.3 percent last year, the third consecutive year with a growth rate lower than the annual average of 3.9 percent over the past decade.

Tsang said that with steady increases in labor costs and mild imported inflation, the headline inflation rate for 2014 was 4.4 percent. Netting out the effects of the government's one-off relief measures, the underlying inflation rate was 3.5 percent, lower than the four percent in 2013.

Short-term relief

The relief measures include reducing salaries tax and tax under personal assessment for 2014-15 by 75 percent, benefiting 1.82 million taxpayers, reducing profits tax for 2014-15 by 75 percent benefiting 130,000 taxpayers and waiving rates for the first two quarters of 2015-16 benefiting 3.15 million properties.

Also, the government would provide additional allowance to the elderly and the disabled worth HK$5.5 billion and pay one month's rent for qualified lower income tenants, involving an expenditure of HK$1.1 billion as well as increase basic and additional child allowances.

Tsang announced an increase in child allowances to HK$100,000 (US$13,000) from HK$70,000 in line with expectations.

Housing

Tsang said the 2015-16 Land Sale Program will include 29 residential sites, capable of providing 16,000 units in total.

He said a total of 20 residential sites were put up for sale by government in 2014-15, capable of providing 6,300 private residential units.

Taking into account the railway property development projects, the Urban Renewal Authority's projects and private redevelopment or development projects, the land supply has a capacity of producing 20,000 units, he said.

Tsang also mentioned that the government promulgated the new Long Term Housing Strategy last year, setting the target for public housing supply at 290,000 units for the coming decade.

"The government will continue to monitor the market conditions closely, and I will not hesitate to introduce measures when necessary," he said.

Supporting SMEs

In addition, the government will introduce measures to support small and medium-sized enterprises to maintain economic vibrancy and preserve employment, Tsang said, adding the SMEs are the mainstay of Hong Kong's economy.

Relative measures include injecting HK$1.5 billion into the SME Export Marketing and Development Funds, increasing the maximum amount of funding support for each project under the SME Development Fund and expanding the scope of the SME Export Marketing Fund.

Tsang announced measures worth HK$290 million to help businesses hurt by the illegal "Occupy Central" demonstrations, including waiving licence fees for 26,000 restaurants and other food outlet operators, and running events to promote Hong Kong to investors and tourists.

He said the protests had affected several industries, including tourism, retail and transport, and it was important to rebuild international investor and tourist confidence in Hong Kong.

Inflation

In the face of internal and external challenges, Tsang forecasts Hong Kong's GDP growth at 1 to 3 percent in 2015.

Regarding inflation, Tsang said with the softening of global commodity prices in the past year, imported inflation will remain mild. He expects the underlying inflation rate for 2015 as a whole will be 3 percent.

Surplus

Tsang said he expected a budget surplus of HK$63.8 billion for the financial year ending March 31, handily beating the government's earlier forecast for a HK$9.1 billion surplus.

 

 
 
 
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