Budget Gives Businesses a Boost

The Hong Kong General Chamber of Commerce welcomes Financial Secretary John Tsang Chun-wah’s 2015-16 Budget proposals as an appropriate and timely response to the challenges arising in these uncertain times. Amid a sluggish and risky international economy, Hong Kong needs to rebuild confidence, both at home and abroad, that it remains the premier place to live and work in the Asia-Pacific region. If fully enacted in a timely manner, the measures proposed in the 2015-16 Budget will enhance our ability to achieve our highest aspirations.

“We are pleased to see a broad collection of focused measures aimed at reducing the operating costs of companies seriously affected by the Occupy Movement,” Chamber Chairman Y K Pang said. Among these measures are the suspension of fee collection from travel agents, hotels and guesthouses, restaurants and commercial vehicle examinations.

Mr Pang added, “All along, we have been urging the Government to pay close attention to SMEs’ short-term cash-flow problems, and we are pleased to see that the FS has proposed several one-off measures that will directly address this need.” Measures designed to help SMEs find new businessincludeextending the SME Financing Guarantee Schemeandexpanding the SME Export Marketing Fund. To promote Hong Kong as a leading global hub for start-ups, various initiatives such as setting up the corporate venture fund will provide greater financial support from private investors to nurture new start-ups in Hong Kong. Studying the development of Hong Kong into a financial technology hub will help groom both start-ups and established businesses as well.

Measures such as rationalising taxation of corporate treasury service centres and broadening the domestic bond market are substantive steps that will attract high value-added services and talent to Hong Kong. Similarly, support for the high value-added fashion industry will ensure that Hong Kong designers are able to take full advantage of this important industry. We also agree with the Government’s emphasis on capitalising on opportunities emerging from the Mainland’s ‘One Belt, One Road’ initiative through building on our already competitive pillar industries.

While the one-off reductions in salaries and profits taxes are welcome, such an approach does not provide sufficient certainty to enable companies to plan for future expansion. The Chamber hadsuggested reducing the profits tax rate from 15% to 10% on the first $2 million of taxable income. Such a measure would encourage companies to expand, boosting employment opportunities, economic activity and even the Government’s profits tax revenues. As was the case with the elimination of the wine import duty, reducing taxes can lead to greater benefits than the value of the foregone income. “We appreciate the attention paid to our ideas, but we do not think that such a concession would overly complicate Hong Kong’s low and simpletax regime,” added Mr Pang.

HKGCC shares the Financial Secretary’s concern for Hong Kong’s long-term fiscal sustainability and competitiveness. Ensuring that the tax base is sufficiently broad to support the needs of an aging society, while matching or beating our competitors’ attractive fiscal policies and ability to attract and retain talent are at the very core of Hong Kong’s future. The establishment of a Future Fund, designed to ensure that our society can afford to provide a high level of support for future generations, is a further example of the prudent foresight that characterises this Budget.