Hong Kong's Financial Secretary, Paul Chan delivered his 2022 budget speech on Wednesday (23 February 2022) amidst a surge in COVID-19 Omicron cases - here's how the SAR plans to spend in the coming year.
Hong Kong’s overall economy saw a visible recovery in 2021 with a growth of 6.4%, according to HKSAR's Financial Secretary, Paul Chan, while the seasonally adjusted unemployment rate dropped substantially from a high of 7.2% early last year to 3.9% in the latest period.
Speaking to the Hong Kong Legislative Council on Wednesday (23 February 2022) via a video feed, Chan delivered the final budget speech of his tenure, where he laid out the budget would focus on four main areas that include:
- Supporting an all-out effort to win the fight against the epidemic;
- Relieving the hardship of people and SMEs;
- Rendering support to the struggling economy and fostering post-epidemic economic revival; and
- Investing for the future by planning ahead for the medium- and long-term development of the economy.
Chan said that a total of over HK$170bn will be spent on counter-cyclical measures, infrastructure projects and other items which he predicts will boost the economy by 3%.
Here are some highlights from his speech.
Funds for fighting the pandemic
The government will add an additional HK$27bn into the Anti-epidemic Fund (AEF) to provide support to businesses and individuals affected by the pandemic. The sixth round of measures includes providing support for the first time for the temporarily unemployed, with HK$3bn earmarked for granting a subsidy of HK$10,000 to each eligible person.
Counter-cyclical measures were also launched in Chan's previous two Budgets. These measures, together with the relief measures under the AEF, involved over HK$460bn.
Meanwhile, over HK$24bn has been spent on resources for the pandemic response including isolation facilities, setting up a temporary hospital at the AsiaWorld-Expo, launching the vaccination programme, providing testing services, and increasing the supply of medications and medical equipment.
"The successful control of the epidemic is the key to safeguarding our economy and people’s livelihood," said Chan.
The budget committed more money to achieving the COVID-19 "dynamic-zero" strategy.
- HK$22bn for the Food and Health Bureau (FHB) to strengthen testing work, procure rapid antigen test kits and relevant services, and provide additional support for the Hospital Authority (HA);
- HK$6bn for the Department of Health to procure more vaccines as booster doses for the general public;
- HK$7bn in total for relevant departments to procure anti‑epidemic items and services, implement anti-epidemic measures, etc.;
- HK$500mn to be allocated within two years for the Food and Environmental Hygiene Department (FEHD) to enhance environmental hygiene services;
- A further injection of HK$12bn into the AEF for the construction of various anti-epidemic related facilities; and
- HK$20bn for other potential anti-epidemic needs.
Relieving people’s hardship
To cope with some of the issues around the loss of livelihood, Chan proposed the following one-off measures in the following year to stimulate the economy and help individuals with a loss of income.
- Reducing salaries tax and tax under personal assessment for the year of assessment 2021/22 by 100%, subject to a ceiling of $10,000. This measure will benefit 2.01mn taxpayers and reduce government revenue by HK$13.1bn;
- Providing a rates concession for domestic properties for four quarters of 2022-23, subject to a ceiling of HK$1,500 per quarter in the first two quarters and a ceiling of HK$1,000 per quarter in the remaining two quarters for each rateable property;
- Granting each eligible residential electricity account a subsidy of HK$1,000. This measure will involve an expenditure of about HK$2.8bn and benefit around 2.8mn residential households.
The government's consumption voucher scheme from 2021 will have an encore in 2022, this time upping the amount from HK$5000 to HK$10,000 which will be disbursed by instalment to each eligible Hong Kong permanent resident and new arrivals aged 18 or above through suitable stored value facilities. The scheme is expected to benefit about 6.6mn people, and has been credited previously with stimulating local consumption and promoting the use of electronic payment.
Consumption vouchers valued at HK$5,000 will be disbursed in April to over 6.3mn successful registrants first by making use of the registration data collected through last year’s consumption voucher scheme. They will get the remaining vouchers in instalments together with the new eligible persons in the middle of the year.
The entire scheme will incur about HK$66.4bn of financial commitment.
"During this critical juncture of fighting the epidemic, we must take all necessary measures to preserve the vitality of the economy, in particular the survival of SMEs, and strive to safeguard jobs," said Chan.
Measures to help SMEs include:
- Reducing profits tax for the year of assessment 2021/22 by 100%, subject to a ceiling of HK$10,000;
- Providing a rates concession for non-domestic properties for four quarters of 2022‑23, subject to a ceiling of HK$5,000 per quarter in the first two quarters and a ceiling of HK$2,000 per quarter in the remaining two quarters for each rateable property;
- Waiving the business registration fees for 2022-23. This measure will benefit 1.5mn business operators;
- Continuing to waive 75% of water and sewage charges payable by non-domestic households for eight months until 30 November 2022, subject to a monthly ceiling of HK$20,000 and HK$12,500 respectively per household;
- Extending the waivers/concessions of the existing 34 groups of government fees and charges for 12 months starting from October this year. This measure will benefit a wide range of sectors (such as aviation, maritime, logistics, retail, catering, agriculture and fisheries, construction, tourism and entertainment), and;
- Continuing to grant the 75% rental or fee concession currently applicable to eligible tenants of government premises and eligible short-term tenancies and waivers under the Lands Department for six months until 30 September 2022.
Chan introduced some other measures to help SMEs with cashflow and operations, including extending the SME Financing Guarantee Scheme (SFGS) for one year to the end of June next year.
The Special 100% Loan Guarantee under the SFGS will be further enhanced by increasing the maximum loan amount per enterprise from the total amount of employee wages and rents for 18 months to that for 27 months with the loan ceiling raised from HK$6mn to HK$9mn, and by extending the maximum repayment period from eight years to 10 years.
The Government has earmarked total funding of HK$13.2bn under the AEF to create time-limited jobs in the public and private sectors. As of end-2021, some 60,000 jobs were created under two rounds of the Job Creation Scheme, of which about 45,000 jobs were filled. The SAR has earmarked additional funding of HK$6.6bn in the latest round of AEF injection for the creation of another 30,000 time‑limited jobs.
“A stabilised epidemic situation will also create favourable conditions for the gradual and orderly resumption of quarantine free travel between the Mainland and Hong Kong, thereby injecting greater impetus into the economy,” added Chan.
Quality migrant admission scheme
After reviewing the Talent List of Hong Kong under the Quality Migrant Admission Scheme, the Government has added the following professions to the list:
- Professionals in compliance in asset management, and
- Financial professionals in environmental, social, and governance (ESG).
In addition, it has expanded the scope of some existing professions to include experts of:
- Medical and healthcare sciences,
- Integrated circuit design, and
- Arts technology.
Further, the requirements on legal and dispute resolution professionals have been refined.
These changes have been made with a view to complement Hong Kong’s policy direction to accord priority to the development of finance, I&T, arts and culture as well as dispute resolution services in future, and attract more targeted talent to Hong Kong.