HONG KONG: Hong Kong’s Chief Executive Carrie Lam warned in her maiden policy speech on Wednesday that the city faced “grave” challenges and must develop a more diversified economy, unveiling a mix of housing and tax relief policies to raise competitiveness.
Hong Kong, one of the world’s costliest cities, has battled rising income inequality, the slow implementation of marquee public projects, political tensions with its mainland China and a slide in its competitiveness.
“In the face of competition from other economies as well as the rise of protectionism in recent years, Hong Kong is facing increasingly grave challenges. We must develop a high value-added and diversified economy,” Lam said.
Hong Kong has seen its lucrative position as the world’s gateway to China eroded as the mainland rapidly builds up its own ports, airlines and financial powerhouses, and opens its markets to foreign investors.
Lam said she would bolster support for small and medium enterprises in the Asian financial hub by cutting company profits tax to 8.25 per cent from 16.5 per cent for the first HK$ 2 million ($256,000) of earnings. Earnings after that would be taxed at the current 16.5 per
cent.
On Hong Kong’s soaring housing prices, Lam said that despite a raft of property cooling measures, the government had “no magic wands”.
Lam pledged to increase land supply where possible and launch a new subsidised “starter homes” scheme to help families not eligible for cheap-rental public housing. The first phase would provide around 1,000 residential units.
“Even if our housing policy has broad community support, it takes time to find land for increasing the housing supply,” conceded Lam, Hong Kong’s first female leader.
Hong Kong residents are squeezed into an average living space of just 150 square feet per person, and apartments are the most expensive in the world, according to a recent UBS report ranking 20 global cities including New York, London, Tokyo and Paris.
Even residents with good jobs and wages have struggled to get on the property ladder.
Chinese President Xi Jinping also voiced concern over the city’s property market when he visited on July 1 for the 20th anniversary of the former British colony’s handover to China.
Some observers felt Lam’s housing initiatives were not bold enough, with local property shares giving up initial gains and closing the day down 1.8 per cent.
— Reuters
Oman Observer is now on the WhatsApp channel. Click here
