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6 key takeaways for the HK marketing community from Budget 2023 

6 key takeaways for the HK marketing community from Budget 2023 

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Hong Kong’s finance chief Paul Chan delivered the 2023 budget today at the LegCo and highlighted heavily on the city's recovery post-COVID, the city's financial position internationally and how Hong Kong can lure in more talents and businesses to set foot in the city.  

Chan opened by stating that Hong Kong's economy contracted by 3.5% in 2022.  Nevertheless, the labour market showed improvement, with the seasonally adjusted unemployment rate declining gradually to the latest 3.4% after rising to 5.4% early last year.   

Moving forward, as overall economic sentiment improves in tandem with the revival of economic activities and the rapid return of Hong Kong's exchanges with the Mainland and the world to normalcy, Chan assumed the private consumption will increase. Overall, he said the government will take a "moderately liberal" fiscal stance this year.  Hence, this is still a deficit budget. More than 80% of the resources involved for the budget initiatives will benefit the general public and small and medium sized enterprises.   

He then went on to lay out Hong Kong’s financial plan for the public and for businesses. Below, MARKETING-INTERACTIVE lays out some of the key takeaways from the Budget 2023 that businesses and marketers in Hong Kong should focus on. 

1. HK economy sees growth in coming year

Domestically, as overall economic sentiment improves in tandem with the revival of economic activities and the rapid return of Hong Kong's exchanges with the Mainland and the world to normalcy, private consumption will increase.  The better economic prospects will also be conducive to fixed asset investment, though tightened financial conditions will remain a constraint. 

Having regard to the above factors, the Hong Kong government forecast that the Hong Kong economy will see a visible rebound this year with growth of 3.5% to 5.5% for the year as a whole. In respect of prices, domestic cost pressures will increase alongside the economic recovery.  Despite some moderation, external price pressures will remain notable this year. Therefore, Chan forecasted that the underlying inflation rate and the headline inflation rate will rise to 2.5% and 2.9% respectively this year.

Considering all the above factors and taking into account the catch-up growth in the initial period arising from the continued return of economic activities from the epidemic to normalcy, the Hong Kong economy will see growth by an average of 3.7% per annum in real terms from 2024 to 2027, higher than the trend growth of 2.8% during the decade before the epidemic.  The underlying inflation rate is forecast to average 2.5% per annum.

2. Boosting local economy by introducing "Happy Hong Kong" campaign 

Chan will soon be introducing the "Happy Hong Kong" campaign, including launching a "Gourmet Marketplace", under which large‑scale food fairs will be organised in various locations across the territory in the coming months, bringing together Mainland, Hong Kong and overseas gourmet food, with a view to enabling the public and visitors enjoy the good food in the city.

The initiative aims to provide the public opportunities to share happy moments together and stimulate local consumption and boost our economy. Another highlight is the organisation of a large‑scale sea‑land carnival by the HKTB in summer, with Victoria Harbour as the stage. Apart from a wide range of dancing, music and street performances presented by performing groups from around the world, a brand new lighting show will also be staged to offer a new experience to the public and visitors while they are enjoying the spectacular view of the harbour.

Additionally, organisations such as the West Kowloon Cultural District Authority, Hong Kong Disneyland, Ocean Park Hong Kong, Cyberport and Hong Kong Science and Technology Parks Corporation (HKSTPC) will each hold themed fairs, carnivals or other activities this year.  

This comes following the recent launch of global promotional campaign "Hello Hong Kong", which aimed to showcase and promote the city's new bright economic prospects, new cultural vision and new travel experience. Hong Kong will give away 500,000 free air tickets and city-wide offers to overseas visitors and 80,000 to HongKongers. The giveaway will start from March to SEA tourists, mainland China and other regions will come next. 

3. Introducing an artificial intelligence (AI) supercomputing centre

The availability of adequate computing infrastructure is a prerequisite for promoting the development of scientific research and artificial intelligence (AI) industries in Hong Kong. To further support the initiative, the government will conduct a feasibility study on the development of an artificial intelligence (AI) supercomputing centre. The study will be completed in 2023‑24.

Furthermore, the government will earmark about HK$200 million to enhance the operation of the "iAM Smart" platform, providing members of the public with more convenient one‑stop digital services, as well as promoting "Smart Government" and digital transformation of the whole society.

Learning that local SMEs are seeking digital transformation for value creation of their business, the government will set aside $500 million for Cyberport to launch a digital transformation support pilot programme, under which subsidies will be provided on a one-to-one matching basis to assist SMEs in applying ready-to-use basic digital solutions, thus facilitating their digitalisation.

In terms of Web3, the government will allocate $50 million to expedite the Web3 ecosystem by organising major international seminars and arranging an array of workshops for young people. Cyberport established the Web3 Hub@Cyberport early this year. The government will also establish and lead a task force on virtual asset development, with members from relevant policy bureaux, financial regulators and market participants, to provide recommendations on the sustainable and responsible development of the sector.

4. Establishing GreenTech and GreenFi centre

Aligning to China's goal towards the "3060 Dual Carbon Targets", Hong Kong has an edge when it comes to establishing an international green technology and financial centre. The innovation and technology development over the years has pooled together quite a number of green technology enterprises and talents. The government also takes the lead in promoting the application of green technology, including setting up the Green Tech Fund.

Given that sustainability is huge within the local marketing industry, the government has also approved grants for over 200 related debt instruments issued in Hong Kong since the launch of the Green and Sustainable Finance Grant Scheme in 2021, involving a total underlying debt issuance of nearly US$70 billion, on promoting the adoption of green financing by enterprises.

The government will set up a green technology and finance development committee, inviting industry representatives from green technology, green finance and green standard certification to assist in the formulation of an action agenda for promoting the development of Hong Kong into an international green technology and finance centre.  The government will also organise an International GreenTech Week at the end of this year to pool together representatives, enterprises and investors from the green technology industries around the world.

In order to build a green technology ecosystem to attract top-notch enterprises or start-ups to set up their operations, green finance application and innovation: facilitating green projects , green certification and alignment with international standards, Training for talents and enhancing the exchange and co-operation with the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and international markets.

5. Re-introducing a new Capital Investment Entrant Scheme for pooling talents

To enrich the talent pool and attract more new capital to Hong Kong, the government will re-introduce a new Capital Investment Entrant Scheme, which was first launched in 2003 and suspended in 2015. Secretary for financial services and the treasury Christopher Hui said at a press conference that the investment involved in the new scheme will be multiplied. Applicants have to make investment at a certain amount in the local asset market, excluding property. Upon approval, they may reside and pursue development in Hong Kong. More details will be announced later. 

Furthermore, The Labour and Welfare Bureau (LWB) is updating the talent list, which is estimated to complete by next month, to better reflect the manpower demands of different professions. The LWB will also commence a new round of manpower projections in the middle of this year to help the government formulate appropriate strategies to address the overall manpower demand.

To further nurture local fintech talents, the government will launch a fintech internship scheme for post secondary students, under which subsidies will be provided to participating students in Hong Kong and the GBA.  Moreover, the government will inject $200 million into the maritime, aviation and logistics industries to support manpower training of the logistics industry, promote the development of high‑end, high value‑added and smart logistics, and encourage the industry to collaborate with tertiary institutions and professional organisations in attracting more young people to join the industry.

6. Supporting enterprises by adjusting tax systems

The government will reduce salaries tax and tax under personal assessment for the year of assessment 2022/23 by 100%, subject to a ceiling of HK$6,000. This measure will benefit 1.9 million taxpayers and reduce government revenue by HK$8.5 billion.

The government will also be providing rates concession for non‑domestic properties for the first two quarters of 2023‑24, subject to a ceiling of $1,000 per quarter for each rateable property. This measure is estimated to involve 430,000 non‑domestic properties and reduce government revenue by $740 million; and starting from July 2023, granting 50% rental or fee concession to eligible tenants of government premises and eligible short‑term tenancies and waivers under the Lands Department for six months until end‑2023. This measure will reduce government revenue by approximately HK$1billion.

In terms of supporting the financing needs of small and medium enterprises (SMEs) during economic downturns, the government has decided to extend the application period of all guarantee products under the SME Financing Guarantee Scheme (SFGS) from end of June 2023 to end of March 2024, thus giving SMEs more room to adjust and secure a firm footing.

Consumer front conversations

On the consumer front, the latest Budget has also included plans to issue electronic consumption vouchers again this year with a total value of $5,000 to each eligible Hong Kong permanent resident and new arrival aged 18 or above in two installments. The first disburse consumption vouchers valued at $3,000 will be distributed in April this year, using the registration data of last year's scheme. The remaining vouchers will be disbursed together with the vouchers for the new eligible persons in the middle of the year.

In line with the arrangement for last year's scheme, eligible persons who have come to live in Hong Kong through different admission schemes or to study in Hong Kong will receive vouchers in half value (HK$2,500) in total. 

This has drawn heated discussions across social platforms as social listening firm Meltwater saw a total of 3,290 mentions regarding the news over the past week, which increased 129% when comparing to previous seven days. Meanwhile, the total engagement such as amount of likes and retweets are 4260, which has decreased 80% when comparing to previous seven days.

On the other hand, media intelligence company CARMA saw 9.3% of positive sentiment and 3.7% of negative sentiments over the past two days. 

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Related articles:

5 key takeaways for the marketing community from Budget 2023
SGTech lays out recommendations on tech talent ahead of Budget
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