Hong Kong Budget 2012-2013: Summary and Opportunities
Against an uncertain global outlook, the Hong Kong Finance Secretary, John Tsang, earlier this month presented the Budget for the coming year. With the objective of stimulating the economy and supporting enterprise he introduced measures worth nearly HK$ 80 billion (approx. €8 billion) with the intention of growing the economy 1.5 percentage points in 2012. We summarise the key points of the budget speech below:
To reduce the burden on business four measures will be introduced:
1. Waiving the Business Registration fees for 2012-13.
2. Abolition of capital duty on local companies. To encourage investors to establish companies in Hong Kong, to raise capital and expand business, so enhancing Hong Kong’s competitiveness as a corporate domicile.
3. Import and export declarations a 50% reduction in charges: an anticipated saving of $9,000 pa on average for import and export businesses.
4. 75 % reduction to tax on profits, salaries and tax under personal assessment for the year for 2011-2012, subject to a ceiling of HK$12,000.
In addition, the Hong Kong Government will take the following steps to bolster local businesses with support and investment in five areas:
• Corporate Financing
o Increasing the maximum loan guarantee ratio to 80% under the SME Financing Guarantee Scheme and committing to a guarantee of HK$100 billion, while reducing the guarantee fee.
o The HK Export Credit Insurance Corp. will offer new policy terms which will include special concessions and premium discounts to SME policyholders.
• Developing Industry
o Creating a HK$1 billion fund to help local businesses develop into the Chinese market.
o New measures to encourage the use of industrial buildings as data centres.
o Increasing the rebate under the R&D Cash Rebate scheme.
o Boosting various development funds including the Small Entrepreneur Research Assistance Programme, the Internship Programme under the Innovation and Technology Fund and the Mega Events Fund
o Investing in a wide range of training projects including HK$220 million to the Construction Industry Council and HK$175 million in the Youth Pre-employment Training and related schemes.
• Increasing Land Supply
o Increasing the supply of sites for residential and commercial development through the Urban Renewal Authority and the project “Energizing Kowloon East”.
• Developing Infrastructure
o Infrastructure projects of HK$400 billion are proposed to develop rail and road connections with the Hong Kong-Zhuhai-Macao Bridge, the possible construction of a third runway and the construction of medical facilities as community halls, sports centres, libraries and parks.
Developing business with mainland China
To consolidate Hong Kong’s position as an international financial, trade, commercial and shipping centre, a key objective is Hong Kong’s integration into the mainland economy.
A fund of HK$ 1 billion will be set up to help Hong Kong enterprises tap into the Mainland market to assist Hong Kong business seize opportunities arising from the Chinese 12th Five-Year Plan.
Measures introduced by the Ministry of Commerce and the People’s Bank of China assist businesses investing in Mainland China to lower their risk of currency fluctuation and increase demand for renminbi (RMB) financing. Through the use of the RMB fund-raising platform in Hong Kong, business can finance direct investment in China through banks, debt and equity. The measure also provides more investment channels for the growing pool of RMB funds in Hong Kong as well as promoting the development of the RMB bond and securities markets and expedites the development of the offshore RMB business in Hong Kong.
The Hong Kong RMB bond market last year issued RMB bonds with a total value approaching RMB 180 billion. RMB deposits in Hong Kong amounted to nearly RMB 590 billion at the end of 2011, an increase of nearly 90 per cent over the previous year.
Hong Kong’s economy is facing challenges in 2012 from the Euro-zone debt crisis, economic slowdown in China, softening domestic property prices and slack consumer demand. Against this background it even more important for Hong Kong to implement reforms to enhance its competitive edge.
The comprehensive Budget offers wide-ranging and solid measures that should stabilize the economy, alleviate the financial burden on taxpayers and assist SMEs that are the backbone of Hong Kong’s economy.
Hong Kong confirms its consolidation of its position as an international financial, trade, commercial and shipping centre, a key objective of China’s 12th Five-Year Plan, and put in place tax incentives for SMEs and overseas group willing to establish their centre of Asian operation.
If you want to know how your business can benefit or require more details about the 2012-2013 Budget speech please contact us at ROSEMONT (Hong Kong) Ltd and we will be pleased to assist you.