The city’s first female Chief Executive Carrie Lam has revealed her maiden Policy Address (October 11). A number of initiatives are of interest to the business and international communities. Some of the highlights are as follows:

Economy

  • Support SMEs by reducing profits tax to 8.25% for first HK$2 million (US$255,000) profits. Remaining profits to be taxed at current rate of 16.5%
  • Encourage R&D investment with 300% tax deduction for first HK$2 million (US$255,000) R&D expenditure, and 200% deduction for remainder
  • Increase CDTAs to 50 within the next few years
  • Issue “green bonds” to encourage investment in green projects via HK capital markets
  • Launch a Faster Payment System in 2018 to promote more diversified and flexible payment products

Innovation and Technology

  • Set aside at least HK$10 billion (US$1.28 billion) in university research funding to encourage private companies to increase R&D expenditure
  • Kick-start a HK$500 million (US$64 million) “Technology Talent Scheme” to train and pool talent
  • Inject HK$3 billion (US$384.62 million) into the Research Endowment Fund
  • Use HK$2 billion (US$256.41 million) of the Innovation and Technology Venture Fund Scheme to co-invest on matching basis with VC funds investing in local tech startups
  • Invest HK$700 million (US$89.74 million) to take forward Smart City initiatives, including “smart lampposts”; and develop an intelligent transport system (parking meters, payments, real-time parking information)

Creative Industries

  • Inject HK$1 billion (US$128.21 million) into the CreateSmart initiative to boost support for design and creative industries
  • The Policy Address also includes a number of initiatives on education; arts, sports and culture; green space; land and housing supply; healthcare; care for the elderly and underprivileged; improving livelihood; and youth development.