EY comments on the 2022 Policy Address

The Chief Executive of the Hong Kong Special Administrative Region (HKSAR), John Lee delivered the 2022 Policy Address on 19 October 2022, the first of his current five-year term. The Policy Address has reinforced the confidence of all sectors of society in Hong Kong's future development by reassuring that, under the institutional advantages of "one country, two systems", Hong Kong will embrace unlimited opportunities by giving full play to its own unique strengths and leveraging key national strategies such as the 14th Five-Year Plan, the development of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and the Belt and Road Initiative. 

Jasmine Lee, EY Hong Kong and Macau Managing Partner, said that the Chief Executive’s first Policy Address profoundly echoed President Xi Jinping’s monumental speech delivered at the Celebrations of the 25th Anniversary of Hong Kong's Return to the Motherland and the Inaugural Ceremony of the Sixth-term Government of the HKSAR. It systematically elaborated the governing philosophy, vision and measures of the current government in terms of improving governance, creating impetus for growth, and addressing people’s livelihood issues while safeguarding harmony and stability. The focus measures proposed in this year's report, including investment promotion, talent, science and innovation, will inject new impetus for Hong Kong to further consolidate and enhance its position as an international financial center and the largest offshore RMB business center, and build itself into an international center of innovation and technology (I&T), trade, shipping and other industries.

The series of measures aimed at improving people’s livelihood, especially in the areas of land and housing, health care, education, care for the disadvantaged and youth development, are straightforward in addressing the persistent problems of the society, and are welcomed by all sectors of the community that care about the future of Hong Kong. Under the guidance of the Policy Address, EY teams will support the government’s policies with the various professional services it provides – to nurture young professionals, help corporates grasp the momentum of China’s national development and the specific opportunities arising from Hong Kong, tell the good stories of Hong Kong, achieve new leaps and contribute to Hong Kong’s future development. 

Better developing Hong Kong: attract enterprises, investment and talent to enhance competitiveness 

Lee pointed out that the seven measures to attract investment and talent laid out in the Policy Address are a good start and in the right direction. Such measures include the establishment of the Office for Attracting Strategic Enterprises (OASES), the Talents Service Unit, the Dedicated Teams for Attracting Businesses and Talents, the HK$30 billion Co Investment Fund for attracting enterprises to set up operations in Hong Kong, and the launch of the Top Talent Pass Scheme – an enhancement of the existing talent admission schemes, and allowing eligible incoming talent to, upon becoming permanent residents, apply for a refund of the extra stamp duty paid for purchasing residential property in Hong Kong. 

Wilson Cheng, EY¹ Hong Kong and Macau Tax Leader, suggested that when implementing these measures to attract enterprises, investment and talent, the government can simultaneously offer various supporting measures such as individual and enterprise tax incentives and one stop auxiliary services, in order to build a business-friendly image, tell the good stories of Hong Kong and attract targeted enterprises and talent to pursue development in the city. 

Six measures to reinforce Hong Kong’s position as an international finance center

The Policy Address proposed to enhance Hong Kong’s position as a global fundraising platform. The Hong Kong Exchanges and Clearing Limited (HKEX) will revise the Main Board Listing Rules to attract fundraising of advanced technology enterprises that have yet to meet the profit and trading record requirements. It is also planning to revitalize GEM (formally known as the Growth Enterprise Market) to provide small and medium enterprises (SMEs) and startups with a more effective fundraising platform. Jacky Lai, EY² Assurance Partner, said that some technology enterprises with primary listing status in the US have returned to seek secondary listings in Hong Kong or to change their secondary listing status in Hong Kong to a primary one. Provided the current regulatory environment, such trend is expected to prevail. Launching a listing platform tailored for advanced technology enterprises which are still in their early stages will effectively enhance Hong Kong’s attractiveness to potential advanced technology issuers and gradually establish Hong Kong’s status as an I&T fundraising hub. 

In addition, Hong Kong should continue to enhance its competitiveness for financial technology. The Policy Address pointed out that it should strengthen its advantages as the largest offshore RMB business center, enhance the various Connect schemes, develop green and sustainable finance, including the construction of an international carbon market, and reinforce asset and risk management represented by family offices and the risk-based capital system of the insurance industry. These measures will be closely linked with the promotion of I&T development in a complementary manner, creating a sound ecosystem that can attract relevant talent and capital to Hong Kong.

Lee also noted that the establishment of the Hong Kong Investment Corporation Limited (HKIC) is a good start, which demonstrates the government’s commitment and increased efforts to further leverage Hong Kong’s status as an international financial center, optimize the use of fiscal reserves for promoting industrial and economic development, and attract enterprises to invest in Hong Kong at a quicker pace.

International I&T center

I&T is an important engine to stimulate the high-quality development of Hong Kong's economy. Vincent Chan, EY³ Greater Bay Area Consulting Leader, suggested that while the Policy Address puts forward a number of proposals for I&T development, including the “re-industrialization” of Hong Kong, the development of San Tin Technopole in the Northern Metropolis, and the policy for cross-border I&T cooperation between Hong Kong and Shenzhen, time and the challenge of resource allocation must also be considered. In promoting the cross-border data flow, Hong Kong should make good use of the advantages from its internationalization in order to become an international data hub. 

Jeff Tang, EY⁴ Greater China & ASEAN Financial Services People Advisory Services Partner, added that accelerating I&T development requires not only hardware and software support but also cross-disciplinary talent. Building a community of top talent is crucial as people are drawn by strong community of innovators and top talent. We look forward to seeing a concrete plan that attracts and cultivates top technological talent to Hong Kong.

Better serving the people: a healthy and vibrant Hong Kong

Lee said she was pleased to see the proposal to promote the professional development of Chinese medicine (CM) practitioners and professionals, and to deepen the collaboration in CM between Hong Kong and the mainland, and the GBA. Promoting the Electronic Health Record Sharing System (eHealth) and Hong Kong-registered drugs and medical devices to be used in the GBA will provide the public with more flexibility and choices in medical services, drugs and equipment, prompting the industry to offer more diversified services and products, and optimize the entire medical system.

Youth development and education

Lee added that in addition to attracting talent, the Policy Address also covered the cultivation of local talent in Hong Kong, such as the launch of the Business-School Partnership Program 2.0 and regularizing the GBA Youth Employment Scheme. EY is pleased to see the government continues to strengthen youth education and development, as young people are the future, only by supporting the better development of youth can we truly pave the way for the long-term development of Hong Kong's economy.

Striving toward carbon neutrality and sustainable green development 

Ee Sin Tan, EY² Hong Kong and Macau Climate Change and Sustainability Services (CCaSS) Partner, welcomed the green measures put forward by the Policy Address, such as energy conservation, green transportation, waste reduction in the community, and expressed his support for the government’s “smart mobility” initiative, which can lead many industries and companies to drive carbon neutrality and smart city development. 
 

¹ Ernst & Young Tax Services Limited
² Ernst & Young
³ Ernst & Young Advisory Services Limited
⁴ Ernst & Young Tax Services Limited

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This news release has been issued by EY China practice, a part of the EY global network.