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FS' "Letter to Hong Kong" on Budget (English only)

                   Following is the "Letter to Hong Kong" on the 2016-17 Budget by the Financial Secretary, Mr John C Tsang, broadcast on Radio Television Hong Kong this morning (March 6):

Good morning, Hong Kong.

                  Thank you so much for the opportunity of speaking with you this morning about this year's Budget.

                  Sir Thomas More, in his classic work, Utopia, offered us an “ideal” society set loose on a fantasy island.  By the way, the book, and the concept that he so famously coined, is enjoying the global spotlight this year – the 500th anniversary of its publication.

                  I remember fantasising a great deal about that perfect world in the planning school, but when I got to the school of public administration, we were focusing more on the art of the possible, the art of responsible governing and the art of prudential public finance.  The professors taught us that politicians can mesmerise the populace with visions of a utopian society, but governments, generally, are not engaged in the business of building utopia.  And after some three decades of practicing public administration, I have come to the realisation that even though we need to be practical and keep our feet on the ground, we should always maintain a touch of idealism in the formulation of public policies and delivery of services to the people.

                  In putting together the 2016-17 Budget, I reminded myself constantly that the contents should be so packaged to lighten the burden of the community, so shaped to fulfill a future of wide-ranging opportunities, and so crafted to realise the promises of an inclusive society.

                  Two dominant forces are now transforming the global economic landscape: the overwhelming application of technology and the influential role of the developing economies in Asia.  Together, they are responsible for the emergence of a new economic order.

                  The Budget for 2016-17 was prepared to help the Hong Kong community embrace some of these fast-evolving realities.  To help businesses identify the opportunities that are available, and to help our people capture the rewards that these opportunities can offer.

                  We certainly have well in place the necessary foundation to reap the benefits that these opportunities can offer – the very same foundation that has enabled Hong Kong to rise as a global trading and commercial economy and one of the world’s major financial capitals.

                  We are a magnet for companies from all over the world.  They are here in Hong Kong to explore the markets in the Mainland and throughout Asia.  They are here because they have confidence in Hong Kong’s rule of law, our independent judiciary, and our robust regime for intellectual property protection.  They have faith in our consistent and persistent advocacy of economic freedom.  They count on the investment opportunities that our financial services sector can render.  They take advantage of the expertise that our professional services can provide.

                  But the new economic order demands much more than that.  It demands that we turn the creative and the innovative into practical products and services that are commercially attractive.  It demands that we transform these technological concepts into practical realities that would improve the way that we live in the future.

                  The Budget this year expands on that very innovation and technology focus.  And it does so within the actual economic and social context of Hong Kong.  It targets robotics, healthy aging and smart city as areas that our community, with its rapidly aging population and shrinking workforce, must embrace – and sooner rather than later.

                  To that end, the Science Park is planning a HK$8.2 billion smart production centre at the Tseung Kwan O Industrial Estate with completion expected in five years.

                  We are earmarking HK$500 million for an Innovation and Technology Fund for Better Living.

                  We are allocating HK$2 billion for a Midstream Research Programme for our universities.

                  We are setting aside HK$2 billion for an Innovation and Technology Venture Fund to invest in local technology start-ups on a matching basis with private venture capital.

                  We are investing HK$200 million in our start-ups in Cyberport as we emerge as a global hub for these new ventures.

                  We are expanding Science Park to provide by the year 2020 an additional 70,000 square meters of floor space for more technology companies.

                  We are also offering measures to help promote Hong Kong as a hub for Fintech.

                  Developing economies in Asia are also transforming business, powering, as they do, the new economic order.  To take advantage of their rise, Hong Kong must expand our ties, explore new markets and seize the opportunities that they offer.

                  The Belt and Road initiatives spearheaded by President Xi surely offer a wealth of opportunities for us.  Last September, I led a business mission to Hungary, Poland and Germany.  This year, I shall be leading another delegation of business leaders to Central Asia to explore further market opportunities for Hong Kong.  

                  I have asked the Monetary Authority to establish an office to facilitate the financing of infrastructure projects in these developing economies.

                  I have asked them to continue expanding our successful program of sukuk issuances to cater for the needs of shariah-compliant investors.

                  I have asked my colleagues to complete before the end of this year the negotiations for the free trade agreement with the ASEAN bloc, our second-largest trading partner.

                  Beyond ASEAN, we shall continue to expand our commercial and trading networks, to pursue trade and investment agreements where we can help create more opportunities for Hong Kong.

                  Actually, nothing creates opportunity, offers hope and promises, more than education.  That is why I have allocated HK$75 billion this year to education – our single largest recurrent outlay.  Our education expenditure this year, by the way, is some 70 per cent higher than it was a decade ago, while the student population in primary and secondary schools for the corresponding period dropped by 20 to 30 per cent.

                  Total government expenditure for 2016-17 comes in at a hefty HK$487 billion, some 14 per cent over that of last year and 112 per cent higher than it was 10 years ago.

                  It is the Budget’s standing measures – for education, to be sure, but also for social welfare and healthcare – that benefit the broadest reaches of the Hong Kong community.  Social welfare, at HK$66 billion this fiscal year, and healthcare, at HK$57 billion, are up 106 per cent and 90 per cent, respectively, over expenditures 10 years ago.

                  Welfare offerings include the establishment of a HK$2.9 billion annual outlay for the Low-income Working Family Allowance Scheme.

                  Healthcare measures include the setting aside of HK$200 billion to help finance the 10-year hospital development programme. That, of course, is in response to our aging population, and the necessity of planning for that reality.

                  The Budget provides also substantive short-term assistance – some HK$39 billion in tax and relief measures – to help Hong Kong businesses, in particular our small and medium-size companies to bridge the difficult year ahead and to lend a helping hand to our tourism, catering, as well as retail sectors.

                  There are more initiatives in the Budget, but in the past two weeks, I have received a great deal more responses about the increasing tension and sharpening polarisation in our society.  Perhaps, that is to be expected.  After all, Hong Kong is a community of varied interests, concerns and ambitions.  And the people of Hong Kong have never been shy about speaking their minds on the harmonious and caring society that we so cherish and the well-being and civility that we so aspire.

                  We have encountered violent confrontations in the recent past, and I hope that everyone can pause for a moment and think about the Hong Kong that we are building for our future generations.  We need to enhance communication and we need to reaffirm our determination to resolve the conflicts, so that we can revert to the values that we share, return to our usual decency and rationality, and reignite our love for this home of ours.  I do not believe that there is anything that we cannot resolve.  Anything that we cannot accomplish.  All we have to do is to put our minds to it.  Love will see us through.

                  Thank you.


  Your Financial Secretary,  
  John Tsang,  
  March 6, 2016  









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