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Proposals of the Business and Professionals Alliance for Hong Kong (BPA) to support small and medium-sized enterprises (SMEs), help the middle class and care for people’s livelihood have found their way to the Hong Kong’s Budget 2013 unveiled by the Financial Secretary, Mr John Tsang, today (February 27). Among the measures are profits tax rebates to SMEs and extension of the application period for special concessionary measures under the SME Financing Guarantee Scheme.
“As the first budget for the administration of this term, Hong Kong’s Budget 2013 delivered by Mr Tsang is considered prudent and pragmatic. Overall, it is a passable one. However, it fails to put forward effective measures to tackle deep-rooted conflicts, high land prices and the wealth gap of the society. We would like to see stronger efforts by the government to address these issues with concrete measures,” said Mr Andrew Leung, Chairman of the Alliance.
Several proposals of the Alliance are adopted by the Budget, including the reduction of SME profits tax which we have strived for. We believe that the measure can help ease the burden on SMEs in a year full of economic challenges.
The Budget has also taken our suggestions to extend the application period for special concessionary measures under the SME Financing Guarantee Scheme and increase the cumulative amount of the grant for SMEs under the SME Export Marketing Fund to $200,000. These will help SMEs explore new markets and meet the challenges arising from the uncertain global economic environment.
We welcome the idea to diversify our industries and steer financial development, including the consolidation of Hong Kong’s status as an offshore Renminbi centre, and attracting more private equity funds to come to Hong Kong. Yet we also hope that the Government can put forward more concrete measures to improve Hong Kong’s business environment so that the whole sector can benefit. Our proposals to develop captive insurance business and reduce profits tax on the offshore insurance business have been adopted by the government.
Other relief measures
We welcome the government’s measures to care for people’s livelihood, including tax reduction, raising the child allowance, waiving rates, paying two months’ rent for public housing tenants, granting electricity subsidy, providing an extra allowance to Comprehensive Social Security Assistance and Old Age Allowance recipients, expanding the coverage of the Hospital Authority Drug Formulary, and redevelopment of the KwaiChungHospital. “Although the proposals are in line with prudent budgeting principle, we find their effectiveness to care for people’s livelihood weaker than those introduced in the years before. For example, the amounts of tax rebates and rates to be waived are both less than those of the previous years,” said Mr Jeffrey Lam, Vice Chairman of the Alliance.
Education and training
We welcome the injection of $480 million into the government scholarship fund to help outstanding students get enrolled in renowned overseas universities and strengthen teacher training. The BPA believes that the measures will encourage highly achieved local students to further their studies and build a pool of talents for Hong Kong. We also welcome the Government’s injection of $15 billion into the Employees Retraining Board and the increase in retraining programme enrollments. Yet the content of the retraining programmes should be adjusted in accordance with the prevailing social and economic changes.
Despite the Budget’s measures on employees’ training programmes, we believe the government should take on broad the actual situation and consider importing workers for sectors where there are manpower shortages. “In view of the launch of major infrastructural projects in the next few years and the shortfall of workers in areas such as reinforcement bar fixing and formwork erection, the chronic manpower shortage cannot be resolved simply through on-the-job training or pay increases. The predicament calls for a review of the labour importation programme,” said Mr Jeffrey Lam.
Other proposals in the Budget to strengthen Hong Kong’s four pillar industries, develop other emerging industries, and strengthen tourism support facilities will help promote our economic development. The BPA will closely monitor the progress of the infrastructural projects that cost a total of HK$ 70 billion, including the Hong Kong-Zhuhai-Macao Bridge, the five new railways and the Central-Wanchai Bypass.
Based on prudent budgeting principle, we agree with the government’s one-off relief measures to help people in need. While the Budget proposals are passable as a whole, their effectiveness to care for people’s livelihood falls short of our expectation. We also call on the government to watch out for the changing environment of neighbouring regions and introduce appropriate measures to ensure sustainable development of the Hong Kong economy.