e Budget Speech 2024-25

THE 2024-25 BUDGET
Speech by the Financial Secretary, the Hon Paul MP Chan

moving the Second Reading of the Appropriation Bill 2024
Wednesday, 28 February 2024
Introduction
Mr President, Honourable Members and fellow

citizens,
I move that the Appropriation Bill 2024 be read a second time.
Introduction
2. During the past year, Hong Kong has returned to normalcy after
the epidemic. The society and the daily lives of our people are back
to normal as they have longed for. Visitors are returning, and our
economy is regaining positive growth. A series of mega events have
helped to restore a buoyant mood in the community.
3. Meanwhile, geopolitical uncertainties and high interest rates

have impacted capital flows. Resumption of outbound travel, changes
in consumption patterns and a shift in inbound visitors’ preferences,
along with competition from other economies and so forth have all
weighed down economic confidence.
4. Amid a complicated and ever-changing international

environment, and with our economy and society constantly evolving,
more strenuous efforts are required to strengthen momentum of our
economic recovery. While the uneven pace of recovery across
industries merits our attention, there are also certain constraints that
need to be unravelled in a gradual manner.
5. Innovation and technology as well as data empowerment will

catalyse the emergence of new business models, however they will also
heighten competition and pose challenges to many enterprises.
Through vigorous promotion of innovative research and transformation
of its outcomes as well as acceleration of digital transformation in
recent years, we are well-equipped to navigate the changes.
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Introduction
6. Underpinned by our country’s firm and steady development,

our institutional advantages under “One Country, Two Systems” and
our highly international characteristics, Hong Kong will attract yet a
bigger pool of talent, capital and enterprises. I have absolute
confidence in Hong Kong’s future.
7. Our public finances, nevertheless, need consolidation as the

epidemic subsides. Upon a full and thorough evaluation, we will
adopt a fiscal consolidation strategy to narrow our fiscal deficit
progressively towards achieving the goal of restoring fiscal balance.
8. The theme of this Budget is: “Advance with Confidence.

Seize Opportunities. Strive for High-quality Development.” I will
elaborate on this a little later.
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Economic Situation in 2023
9. In 2023, the Hong Kong economy returned to normalcy in the

aftermath of the pandemic. Economic activities showed improvement
immediately following the removal of anti-epidemic measures and the
resumption of normal travel early in the year, though the difficult
external environment continued to constrain the pace of growth. For
the year as a whole, the economy grew 3.2 per cent. Incomes of the
general public recorded growth in real terms.
10. Private consumption expenditure increased 7.3 per cent in real

terms last year, supported by the Government’s Consumption Voucher
Scheme, activities and initiatives such as “Happy Hong Kong” and
“Night Vibes Hong Kong” and the continuing increase in household
income. Overall investment expenditure also rebounded, by
10.8 per cent, alongside the economic recovery.
11. Visitor arrivals bounced back sharply, to about 34 million last

year, with fourth-quarter arrivals recovering to 58 per cent of the same
period in 2018. Exports of travel services soared for the year, while
exports of transport services increased in tandem, bringing about
notable growth of 21.2 per cent in total exports of services for the year
as a whole.
12. Nonetheless, the challenging external environment continued to

affect Hong Kong’s export performance. Heightened geopolitical
tensions severely undermined economic confidence around the world.
Central banks of the advanced economies raised interest rates sharply
to tame inflation, tightening global financial conditions and dampening
import demand for goods. The International Monetary Fund (IMF)
estimated that global economic growth slowed to 3.1 per cent last year.
Against this backdrop, Hong Kong’s total goods exports fell notably by
10.3 per cent last year.
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13. The labour market continued to improve. The seasonally

adjusted unemployment rate declined from 3.5 per cent in the fourth
quarter of 2022 to the latest 2.9 per cent. The median monthly
employment earnings of full-time employees increased 8.6 per cent,
year-on-year, in the fourth quarter of last year.
14. Inflation remained moderate in overall terms. While prices of

individual items such as energy, clothing and footwear, as well as meals
out and takeaway food, rose visibly, price pressures faced by other
major components were largely contained. Netting out the effects of
the Government’s one-off measures, the underlying inflation rate was
1.7 per cent last year.
15. The local stock market consolidated through most of 2023, and
trading activities shrank. The Hang Seng Index, once again supported
by economic activities, returned to normal at the beginning of the year.
The market softened subsequently, however, with the Hang Seng Index
falling 13.8 per cent in 2023, alongside weakened market confidence in
the Mainland economy and expectations of interest rates remaining
high.
16. As for residential property, market sentiment has become very

cautious since the middle of last year amid rising interest rates and an
external environment fraught with uncertainties. Flat prices fell
seven per cent during the year. The number of transactions declined
by five per cent, to a low level of about 43 000. The non-residential
property market was largely quiet.
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Economic Outlook for 2024 and the Medium Term
17. The external environment remains complicated. Geopolitical

tensions will continue to impact international trade and capital flows,
and may cause disruption to global supply chains. Sharply tightened
financial conditions over the past two years will continue to constrain
the growth rate of advanced economies. That said, the market widely
believes that the US Federal Reserve will start cutting rates this year,
though the timing and magnitude of rate cuts are still uncertain. Last
month, the IMF forecast that global economic growth would remain at
3.1 per cent this year, below the average annual growth rate of
3.8 per cent between 2000 and 2019.
18. The Mainland’s export performance this year will continue to

be affected by the external environment. The Mainland economy,
however, is resilient, with solid fundamentals. Our country’s
measures for boosting the economy are progressively taking effect, and
there is still sufficient policy room to further support the economy.
Domestic demand should improve, and the Mainland economy is
expected to register steady growth this year.
19. Among advanced economies, the US this year is expected to

realise lower economic growth than last year, as the lagged effects of
rate hikes over the past two years continue to surface. Nevertheless,
if the Federal Reserve, as expected, starts cutting interest rates, there
would be some support for the economy. As consumption growth in
the US was more concentrated in services over the past two years,
demand for goods may grow faster this year and render support to
global trade. For Europe, economic growth is expected to remain
weak this year amid geopolitical tensions and the lack of significant
improvement in external demand.
20. The external environment will continue to put pressure on

Hong Kong’s exports of goods. But global monetary conditions may
ease progressively over the course of the year, which would bode well
for export performance.
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21. On the other hand, with the continued revival of handling

capacity, particularly air passenger capacity, and the Government
vigorously promoting mega event economy, visitor arrivals are
expected to increase further, driving growth in exports of travel and
other related services.
22. Moreover, rising incomes among the general public will

continue to support private consumption. Successive Government
measures will help lift consumption sentiment as well. Fixed asset
investment should also increase alongside continuing economic growth.
23. Having regard to the above factors, we forecast that the

Hong Kong economy will expand further this year, with growth of 2.5
to 3.5 per cent in real terms for the year as a whole.
24. Domestic cost pressures are expected to increase alongside the

economic recovery. External price pressures, however, should ease
further, though persisting geopolitical tensions may pose upside risks.
We forecast an underlying inflation rate and headline inflation rate of
1.7 per cent and 2.4 per cent, respectively, this year.
25. In the medium term, the Hong Kong economy will see sustained
and solid development. While geopolitical tensions will continue to
impact international capital flows and trade patterns, and the
expansionary fiscal and monetary policies vigorously pursued by most
economies during the pandemic have also added vulnerabilities to the
global economy and financial system, global demand should be able to
revive gradually in tandem with the anticipated progressive declines in
interest rates in the US and the euro area in the coming few years.
More importantly, our country’s focus on promoting high-quality
development will provide Hong Kong with ample room to grow.
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26. The National 14th Five-Year Plan has set a clear positioning for
Hong Kong’s development of the “Eight Centres”. Future prospects
will be bright, as long as Hong Kong steadily forges ahead by
leveraging its unique advantages under “One Country, Two Systems”,
proactively integrates into the overall national development, aligns with
national development strategies, and continues to perform the role of an
important node in the domestic and international dual circulation of our
country. The Government’s efforts in expanding economic capacity,
enhancing competitiveness and cultivating new growth areas will also
enable Hong Kong to seize opportunities when the global economic
situation improves, enhancing its medium- to long-term growth
momentum.
27. Based on the above considerations, we forecast that the

Hong Kong economy will grow by an average of 3.2 per cent a year in
real terms from 2025 to 2028. The underlying inflation rate is forecast
to average 2.5 per cent a year.
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Bolstering Confidence
28. The economic environment has been rather difficult in recent

years amid intensifying geopolitical tensions and the rise of
unilateralism and protectionism. Its impact on the Mainland economy
and even the Hong Kong economy, coupled with fierce competition
from other economies, have caused unease among some about the
future development of Hong Kong.
29. That said, Hong Kong’s economic outlook is bright. Despite

a host of prevailing challenges, we will find infinite opportunities
ahead, as long as we stay on top of global trends and dare to explore.
Global economic gravity will continue to shift eastward. Asia will
remain an important engine of global economic growth. Our
country’s economy is now pursuing high-quality development through
innovation, deepening reform and sustaining a high-level, two-way
opening-up. The overall trend of long-term growth remains
unchanged. Our country has shown great care and staunch support for
Hong Kong, and recently extended the Individual Visit Scheme to Xi’an
and Qingdao. By leveraging Hong Kong’s institutional advantages
and our connectivity with the Mainland and the rest of the world under
“One Country, Two Systems,” we will certainly be able to seize the
opportunities coming our way.
30. In the short run, the Government has put in place a series of
measures to showcase Hong Kong’s appeal to people from around the
world, empowering individuals and enterprises to seize every
opportunity. And we will continue to roll out policies and initiatives
on all fronts, drawing in capital, enterprises and talent, expanding our
economic capacity and strengthening our impetus for development.
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Attracting Enterprises, Capital and Talent on All Fronts
31. Our economy will develop better by drawing together a larger

pool of companies, capital and talent. The Office for Attracting
Strategic Enterprises (OASES), the Innovation, Technology and
Industry Bureau (ITIB), Invest Hong Kong (InvestHK) and the
Hong Kong Investment Corporation Limited (HKIC) actively reach out
to enterprises from the Mainland and overseas, and proactively attract
and assist high value-added technology industries and enterprises to
establish a foothold in Hong Kong.
Attract Strategic Enterprises
32. Next month, 10-plus strategic enterprises will sign a partnership

agreement with OASES. The companies have either confirmed
setting up or expanding their businesses in Hong Kong, or they are
planning to do so. Together with the 30 companies from the first
batch, they are expected to bring about over $40 billion in investment
to Hong Kong, creating about 13 000 jobs over the next few years.
Their presence in Hong Kong will attract upstream, midstream and
downstream partners from their industry chains, promoting our
Innovation and Technology (I&T) sector’s vibrant development.
Hong Kong Investment Corporation Limited
33. Performing its role of channelling capital and leveraging market

resources, the HKIC will attract more I&T companies to establish their
presence in Hong Kong, accelerating the development of strategic
industries. The first batch of direct investment and co-investment
projects will be implemented in the first half of this year, covering areas
such as life technology, green technology and finance, semi-conductors
and chips, as well as the upgrading and transformation of manufacturing
industries.
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34. The HKIC will also encourage enterprises in its investment

portfolio to engage more actively in local, Mainland and overseas I&T
networks, where they can explore more application and development
opportunities, while identifying potential investors and their target
clientele.
35. To enhance Hong Kong’s attractiveness to enterprises and

capital, the HKIC will host a Roundtable for International Sovereign
Wealth Funds. Sovereign wealth funds and financial leaders will be
invited to explore investment opportunities and develop collaborative
partnerships. A Summit on Start-up Investment and Development in
Hong Kong will also be organised. It will bring together prominent
figures in the start-up ecosystem, with a view to boosting collaboration
among the investment, industry, academic and research sectors. That
will help support I&T enterprise development at varying stages.
Re-domiciliation Mechanisms
36. We have already taken the first step by putting in place

user-friendly fund re-domiciliation mechanisms for Open-ended Fund
Companies and Limited Partnership Funds. These mechanisms attract
existing foreign funds to establish and operate in Hong Kong. In the
first half of 2024, we will submit a legislative proposal enabling
companies domiciled overseas, especially enterprises with a business
focus in the Asia-Pacific region, to re-domicile in Hong Kong.
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Opening Up New Capital Sources
37. Alongside our longstanding efforts to reinforce Hong Kong’s

appeal to traditional European and American capital, we are striving to
open up new capital sources, including those from the Middle East. At
the end of last year, the Asia-Pacific region’s first Exchange Traded
Fund (ETF), which tracks stocks in Saudi Arabia, was listed in
Hong Kong, a milestone in enhanced mutual access between our two
markets. The Hong Kong Monetary Authority (HKMA) is also
working with a number of financial institutions on the listing of an ETF
in the Middle East that tracks Hong Kong stock indices.
Pooling Talent
38. A larger pool of talent can boost economic development and

competitiveness.
39. In recent years, we have rolled out a number of measures,

including the Top Talent Pass Scheme (TTPS), to trawl for talent. In
the past year or so, more than 140 000 applications were approved
under various talent admission schemes. About 100 000 of them have
already arrived in Hong Kong. The Labour and Welfare Bureau will
review the relevant arrangements in the middle of this year to ensure
the competitiveness of these measures and their effectiveness in
addressing our manpower demand.
40. The median average age of successful applicants of the TTPS is

35. Over 60 per cent of them are married, and most of them have
brought their families to Hong Kong. More than half of those who
have been in Hong Kong for at least half a year are employed, and their
median monthly income is about $50,000.
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41. The Hong Kong Talent Engage (HKTE) is committed to

attracting talent from the Mainland and overseas, providing one-stop
support services to help them settle here. The HKTE will organise a
Global Talent Summit and the Guangdong-Hong Kong-Macao Greater
Bay Area High-quality Talent Development Conference in May. Their
aim is to promote Hong Kong’s advantages as an international talent
hub, enabling the flow of talent among the cities of the GBA.
Creating Favourable Conditions for Recovery
Property Market
42. The Government announced on 25 October 2023 the adjustment

of demand-side management measures for residential properties. The
relevant adjustments included shortening the applicable period of the
Special Stamp Duty (SSD) from three years to two years, reducing the
rates of the Buyer’s Stamp Duty (BSD) and the New Residential Stamp
Duty (NRSD) by half, and introducing a stamp duty suspension
arrangement for incoming talents’ acquisition of residential properties.
Among them, the stamp duty suspension arrangement has been
well-received, with over 500 applications approved. This is a
testament to the appeal of Hong Kong for overseas talents.
43. We have been keeping a close watch on the residential property

market. After prudent consideration of the overall current situation,
we decide to cancel all demand-side management measures for
residential properties with immediate effect, that is, no SSD, BSD or
NRSD needs to be paid for any residential property transactions starting
from today. We consider that the relevant measures are no longer
necessary amidst the current economic and market conditions.
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44. The HKMA adjusted the countercyclical macroprudential

measures for property mortgage loans in July last year. Taking into
account the external and local economic situation, we consider that
there is now room to make further adjustments to the relevant measures
and other supervisory policies pertinent to property lending where
appropriate, under the premise of maintaining the stability of the
banking system. The HKMA will make announcements later today.
Stock Market
45. During the past year, we have made good progress in

developing the stock market. We joined hands with regulators and
HKEX in implementing a number of measures, including establishing
the listing regime for specialist technology companies and the
Hong Kong Dollar – Renminbi Dual Counter securities model.
Regarding attracting overseas enterprises to be listed in Hong Kong,
HKEX has included the Saudi Arabia and Indonesia stock exchanges in
its list of Recognised Stock Exchanges last year, which facilitates
enterprises primary listed on the main market of these exchanges to seek
secondary listing in Hong Kong.
46. We are actively implementing measures proposed, last October,

by the Task Force on Enhancing Stock Market Liquidity. They include
reforming the Growth Enterprise Market (GEM). The HKEX has
consulted the market on such initiatives as introducing a treasury share
buy-back regime and maintaining trading operations under severe
weather. Both are targeted for implementation in the middle of the
year.
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47. The Securities and Futures Commission of Hong Kong (SFC)

and the HKEX are considering an array of measures to boost market
efficiency and liquidity, including:
(a) enhancing the listing regime: explore enhancing the process

of price discovery in the initial public offering of shares and
reviewing requirements for the public float of shares of
listed companies to boost market efficiency. Listing
requirements and arrangements for structured products will
also be enhanced, while the listing costs of the products will
be lowered;
(b) improving the transaction mechanism: explore reducing the

minimum trading spread to narrow bid-ask spreads, with
the proposal to be submitted in the second quarter;
enhancing stock-trading units adopted in the cash market as
the next step; and making further adjustments to the
position limits and margin requirements of derivative
products to better meet risk-management needs;
(c) boosting investor services: explore refining real-time,

market-data services, to provide investors with targeted
services at a reasonable price; and
(d) stepping up market promotion: the HKEX will strengthen

the promotion of Hong Kong’s securities market through its
overseas offices and deepen connectivity with the Middle
East and ASEAN countries, to attract more issuers and
capital.
48. To further enhance market competitiveness, stamp duties

payable on the transfer of real estate investment trust (REIT) units and
the jobbing business of option market-makers will be waived. It is
estimated that this will reduce government revenue by about $1 billion
annually.
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Assisting Small and Medium Enterprises
49. Taking into consideration that the strength of our economic

recovery still requires consolidation and changes in market conditions,
the Government will assist small and medium enterprises (SMEs)
through different measures to tackle their capital-flow problems, tap
into new markets and accelerate upgrading and transformation.
SME Financing Guarantee Scheme
50. To assist SMEs in tackling their capital-flow problems, I will

extend the application period for the 80% and 90% Guarantee Products
under the SME Financing Guarantee Scheme for two years to the end
of March 2026. The total guaranteed commitment under the Scheme
will increase further by $10 billion.
51. In addition, I have instructed the HKMA to maintain close

communication with banks and the commercial sectors, adopt an
accommodating manner to help enterprises tide over their liquidity
needs, and refrain from demanding repayment of loans due to a fall in
collateral value.
Digital Transformation
52. SMEs in the food and beverage industry and the retail industry
will be invited to select suitable options among ready-to-use basic
digital solutions and apply for subsidies on a matching basis early this
year under the Digital Transformation Support Pilot Programme. The
solutions will focus on three areas: digital payment and shopfront sales,
online promotion and customer-management solutions. It is expected
that at least 8 000 eligible SMEs will benefit from the pilot programme.
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BUD Fund
53. We have been making continuous enhancements to the

Dedicated Fund on Branding, Upgrading and Domestic Sales
(BUD Fund). They include raising the cumulative funding ceiling per
enterprise and streamlining application procedures. I propose to inject
$500 million more into the fund to help SMEs boost their
competitiveness and tap into Mainland and overseas markets. This
includes the launch of “E-commerce Easy” under the fund. It will
provide support of up to $1 million per enterprise for implementing
e-commerce projects in the Mainland.
Deduction of Expenses and Allowances under Profits Tax
54. We propose to introduce two enhancement measures for

deduction of expenses under profits tax. Profits-tax payers will be
granted tax deduction for expenses incurred in reinstating the condition
of the leased premises to their original condition. As regards the
allowances for industrial buildings and structures as well as commercial
buildings and structures, the time limit for claiming the allowances will
be removed. This will allow the new owner to claim allowances for the
property after a change of ownership, subject to factors such as the
construction cost of the property and the balancing charge of its
previous owner. Both enhancement measures will take effect from the
year of assessment 2024/25.
Building the Hong Kong Brand on All Fronts
55. Hong Kong is an international financial centre and a world city

with a distinctive blend of Chinese and Western cultures. We will
build Hong Kong as a premier destination for business and tourism
through better use of our social and natural resources, the consolidation
of mega events and thematic annual conferences and the integration of
opportunities created by industry development.
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Mega-Events
56. Mega-events create opportunities for attracting tourists, while

bringing wider entertainment and leisure choices for the people of
Hong Kong. We will stage more mega-events, boost their promotion
and co-ordination and maximise their economic and publicity benefits
to enhance our international image.
57. More than 80 mega-events in a variety of themes and genres

will be staged in Hong Kong in the first half of this year. For “Art
March” alone, a series of arts and cultural events will be presented, such
as Art Basel, Art@Harbour and the Asian debut of the international
pop-culture festival ComplexCon. For sports events, LIV Golf, an
international golf tournament also featuring musical entertainment and
other activities, will be staged for the first time in Hong Kong.
58. Hong Kong, Guangdong Province and Macao will co-host the
15th National Games in 2025. Members of the public can cheer the
athletes on home ground or visit nearby GBA cities to watch the games.
59. The Government has set up a Mega Events Coordination Group

to reach out proactively for more mega events to be staged in
Hong Kong, while strengthening inter-departmental collaboration for
such events to be successfully held. We have earmarked $100 million
to boost mega-event promotions over the next three years.
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Financial Forums
60. Organising thematic conferences can help reinforce

Hong Kong’s branding. The Global Financial Leaders’ Investment
Summit and the Asian Financial Forum are two very successful
illustrations of this. The Financial Mega Event Week will be launched
in Hong Kong in March, featuring an array of major financial events,
including the Wealth for Good in Hong Kong Summit, which brings
together owners and managers of family offices, the Global Investors’
Symposium by Milken Institute etc. There will also be a wealth of
activities for enriching Hong Kong’s branding, including a round-table
conference to be organised by the HKIC.
61. Apart from inviting visitors to our city, we will continue to go

global, visiting regions and markets to tell the good stories of
Hong Kong and expand our circle of friends. We will also launch a
new Sponsored Overseas Speaking Engagement Programme.
Renowned scholars and industry leaders will be sponsored to attend
overseas events and give speeches to promote Hong Kong and its many
advantages.
Better Use of the Harbourfront Resources
62. Our magnificent Victoria Harbour, with its stunning

harbourfront, is a natural beauty and popular leisure destination for
tourists and the general public that creates memorable moments and
positive impressions of Hong Kong. We will make good use of such
valuable resources to offer many more enchanting moments and
experiences for our people and visitors alike.
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63. The dazzling fireworks display above the night sky of Victoria
Harbour, and last year’s special waterfront pyrotechnic shows along the
waterfronts of Wan Chai and the West Kowloon Cultural District, were
well-received by the public. The Hong Kong Tourism Board (HKTB)
will hold pyrotechnic and drone shows against the backdrop of the
splendid night views of Victoria Harbour every month. The HKTB will
also revamp its light-and-sound show, “A Symphony of Lights”. The
Development Bureau (DEVB) will also introduce commercial facilities
such as food and beverages, retail and entertainment on a pilot basis at
selected suitable harbourfront locations to bring convenience and better
experience to visitors.
Energise Tourism
64. The HKTB will develop brand new seasonal, festival and event
experiences of varying themes featuring Chinese and Western arts,
popular cultures, wine-and-dine, outskirt explorations, active sports and
more to cater to the interests of wide-ranging visitor segments. The
HKTB will also encourage the industry to launch a more diversified
portfolio of tourism products.
65. We will continue to enhance local group-tour activities. The

Tourism Commission will, over the next few years, continue to organise
well-received signature creative arts and cultural tourism projects.
That includes the Sai Kung Hoi Arts Festival, which features an
integration of arts with the island, allowing visitors to experience its
natural landscape, history, culture and heritage. Another example is
the Design District Hong Kong (#ddHK), which takes visitors on a
journey to discover the local culture and characteristics of Hong Kong.
66. In addition, the HKTB will promote immersive, in-depth

tourism with themes like “Citywalk”, and promote young-adult focused
activities such as hiking, cycling, stand-up paddle-boarding, trail
running and stargazing in the wilderness. It’s all part of an energising
effort to soft-sell Hong Kong.
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67. Our Temple Street Night Market promotion, last December,

successfully drew tourists and locals alike to this street of distinctive
character. The HKTB will offer more diversified activities and
promotion to boost the flow of people in the district and create more
business opportunities for its merchants.
Enhance Publicity and Promotional Efforts
68. The HKTB will launch a new Hong Kong tourism brand, and
continue to target source markets and collaborate with GBA cities to
jointly promote multi-destination tourism.
69. Sincerity and hospitality will make Hong Kong even more
popular. The HKTB will enhance the Quality Tourism Services
Scheme and launch a new round of publicity activities, including reality
shows and the commendation of outstanding frontline staff in the
service industry. We want to promote Hong Kong as a hospitable,
people-focused city in collaboration with various sectors.
70. We will make every effort to promote mega-events and design

in-depth thematic tours, enrich tourism resources and provide more
novel products and experiences to cater to visitors of all types and
sources. This will help stimulate retail, consumption, catering and
transportation demand throughout Hong Kong.
71. We will allocate additional funding, totalling $1,095 million, to

support the Tourism Commission and the HKTB in organising these
and other Hong Kong events and activities.
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Supporting People and Enterprises
72. Having regard to the economic pressure faced by some

industries and the people, and the Government’s financial position this
year, we will introduce the following measures:
(a) provide rates concession for domestic properties for the first
quarter of 2024/25, subject to a ceiling of $1,000 for each
rateable property. This measure is estimated to involve
3.08 million domestic properties and reduce government
revenue by $2.6 billion;
(b) provide rates concession for non-domestic properties for

the first quarter of 2024/25, subject to a ceiling of $1,000
for each rateable property. This measure is estimated to
involve 430 000 non-domestic properties and reduce
government revenue by $370 million;
(c) reduce salaries tax and tax under personal assessment for
the year of assessment 2023/24 by 100 per cent, subject to
a ceiling of $3,000. The reduction will be reflected in the
final tax payable for the year of assessment 2023/24. This
measure will benefit 2.06 million taxpayers and reduce
government revenue by $5.1 billion;
(d) reduce profits tax for the year of assessment 2023/24 by

100 per cent, subject to a ceiling of $3,000. The reduction
will be reflected in the final tax payable for the year of
assessment 2023/24. This measure will benefit
160 000 businesses and reduce government revenue by
$430 million; and
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(e) provide an allowance to eligible social security recipients,

equal to one half of a month of the standard rate
Comprehensive Social Security Assistance (CSSA)
payments, Old Age Allowance, Old Age Living Allowance
or Disability Allowance, while similar arrangements will
apply to recipients of the Working Family Allowance,
altogether involving an additional expenditure of about
$3 billion.
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Accelerating the Promotion of High-quality Development
Accelerating the Promotion of High-quality

Development
73. The promotion of high-quality development inspires continuing

economic innovation and growth while conserving the natural
environment, making life better for people. Green future and
digitalisation are two of its overarching themes.
74. We have to make better use of Hong Kong’s distinctive

advantages of enjoying our nation’s strong support and being closely
connected to the world under “One Country, Two Systems”. In
pursuing high-quality development, we will open up new opportunities
and bring more room for growth.
Moving towards a Green Future
75. “Green development is a defining feature of high-quality

development”. As global economies pursue carbon neutrality, green
transformation creates huge business opportunities and financing needs,
leading to industry clusters of great diversity. Sustainable fuels,
energy saving, emission reduction and carbon-capture technologies
continue to emerge.
Green Finance
76. Being an international financial centre, Hong Kong is also

rising as an international green finance centre.
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77. The Government is hosting “Hong Kong Green Week” this

week, comprising events covering technology, finance and other fields.
It has brought together industry leaders from the Asia-Pacific region to
examine issues such as green development and climate finance. This
autumn, the HKMA will co-host a Joint Climate Finance Conference in
Hong Kong with the Dubai Financial Services Authority. The
Conference will explore transition financing opportunities and
challenges for the Middle East and Asia.
Extend the Green and Sustainable Finance Grant Scheme
78. The Government has so far provided subsidies to eligible bond

issuers and loan borrowers for the issuance of more than 340 green and
sustainable debt instruments in Hong Kong through the Green and
Sustainable Finance Grant Scheme which totalled US$100 billion,
enriching our green and sustainable finance ecosystem. We propose
to extend the scheme, which is due to expire in mid-2024, to 2027, and
expand the scope of subsidies to cover transition bonds and loans.
This will encourage related industries in the region to make use of Hong
Kong’s transition financing platform as they move towards
decarbonisation.
Formulate Sustainability Disclosure Standards
79. Accurate information is essential to the promotion of

sustainable financing. It is also the priority of international
organisations and government agencies in the next few years. To
deepen Hong Kong’s green and sustainable finance development,
enterprises must align their practices in sustainability disclosure with
international standards. Financial Services and the Treasury Bureau
and the SFC will formulate a roadmap and vision statement to assist
companies and financial institutions in sustainability reporting and the
analysis of relevant data, elucidating our vision of promoting green and
sustainable finance.
24
Green Technology
80. Hong Kong also possesses advantages in green technology.

More than 200 green-technology companies work out of Hong Kong,
with some equipped with globally competitive technologies and have
successfully tapped into Mainland and overseas markets. And the
Greater Bay Area cities, apart from their market scale, enjoy strong
capabilities in research, advanced manufacturing and
commercialisation. Together, we have what it takes to become Asia’s
leading green technology hub.
81. The Government’s Green Tech Fund funds research and

development (R&D) projects which help Hong Kong decarbonise and
enhance environmental protection, and encourages their subsequent
practical applications. With $400 million injected into the Fund,
thirty projects from local universities, public research institutes and
enterprises have been approved, involving a total grant of about
$130 million for subsidising local research projects
82. We will launch the Green and Sustainable Fintech

Proof-of-Concept Subsidy Scheme in the first half of this year. It will
provide early-stage funding support for green fintech, facilitating
commercialisation and fostering the development of new green fintech
initiatives.
25
Green Shipping
83. Given maritime industry’s vast market potential for green

transformation, the Marine Department is planning to provide
incentives for Hong Kong-registered ships that have attained high
ratings under the international standards on decarbonisation formulated
by the International Maritime Organization. This will involve about
$65 million in funding. And the Transport and Logistics Bureau (TLB),
in collaboration with the Environment and Ecology Bureau (EEB) and
other relevant departments, is conducting a feasibility study to provide
green-methanol bunkering for local and ocean-going vessels. We
expect to publish an action plan for Hong Kong’s development into a
green maritime fuel-bunkering centre this year.
Green Aviation
84. We are committed to developing Hong Kong International

Airport (HKIA) into a green airport. The Airport Authority Hong
Kong (AA) is working in collaboration with relevant government
departments to simplify approval procedures for the transportation and
storage of Sustainable Aviation Fuel (SAF), so as to encourage more
airlines to use SAF in Hong Kong. In addition, the AA has begun a
consultancy study on SAF development trends worldwide, which will
also put forward recommendations on policy measures and
infrastructure etc. The consultancy study is expected to be completed
in the third quarter this year.
26
Green City
Launch a Pilot Scheme on Building-Integrated Photovoltaics
85. The Government has taken the lead in applying renewable

energy (RE) in government buildings and facilities. We will launch a
pilot scheme at the Electrical and Mechanical Services Department
Headquarters to explore photovoltaic technology applications on the
facades of government buildings. We will also support public and
private organisations to use RE to help Hong Kong realise carbon
neutrality.
New Energy Vehicles
86. Through its New Energy Transport Fund, the Government has
been promoting trials of various new-energy public transport, including
new-energy buses, while encouraging the industry to conduct trials on
a variety of new-energy commercial transport, including electric-goods
vehicles and electric coaches.
87. The Government has been encouraging a wider use of electric

vehicles. The first registration tax (FRT) concessions for electric
vehicles, due to terminate at the end of March, will be extended for two
years. Nevertheless, given the price reduction of electric vehicles and
increasing availability of vehicle options, we will reduce the
concessions by 40 per cent. Specifically, the maximum FRT
concession for electric private cars (e-PCs), granted under the
“One-for-One Replacement” Scheme, will be adjusted to $172,500,
whereas the concession ceiling for general e-PCs will be lowered to
$58,500. At the same time, e-PCs valued at over $500,000 before tax
will not be entitled to concessions under the “affordable users pay”
principle. As for other types of electric vehicles, including electric
commercial vehicles, electric motorcycles and electric motor tricycles,
the FRT will continue to be waived in full over the next two years.
The EEB will announce details in due course.
27
Sustainable Development of Agriculture and Fisheries Industries
88. The EEB promulgated its Blueprint for the Sustainable

Development of Agriculture and Fisheries in December last year.
For agriculture, we expect to enable the establishment of a modernised
Techno-Agricultural Park of approximately 11 hectares as part of the
Agricultural Park’s Phase 2 this year. It will help accelerate the
modernisation of agriculture through public-private partnership. We
will launch a pilot project on modern urban farming in Ma On Shan this
year. As for fisheries, four new fish culture zones, with a total area of
up to 590 hectares, will begin operation in phases starting this
year. Local mariculture production is expected to increase
considerably
Digital Economy
89. Digital economy has become a new driving force for economic
development. As a new key production factor, data links different
industries and sectors, empowering enterprises to enhance efficiency,
boost their competitiveness and create fresh business opportunities.
90. The Digital Economy Development Committee (DEDC),

chaired by me, has undertaken in-depth studies on promoting the
development of digital economy over the past two years. The
DEDC’s report covers recommendations on many areas, including
promotion of digital policies, initiatives for enhancing digital
infrastructure, facilitation of the safe and orderly flow and usage of data,
acceleration of enterprise digital transformation and talent
development. Some of these recommendations have been
implemented, including making preparations for the establishment of
the Digital Policy Office.
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Build a Data Trading Ecosystem
91. As transformation of global digitalisation accelerates, the

presence of a highly efficient data ecosystem has become one of the
considerations for many enterprises to establish a foothold in Hong
Kong. Building a mechanism that facilitates data trading is
particularly important in the data ecosystem. Hong Kong is
underpinned by its distinctive advantages under “One Country,
Two Systems” and endowed with the characteristics of an international
city. From supply and demand of data to application scenarios, we are
equipped with a robust foundation and possess an abundance of
favourable conditions for developing international data trading.
92. We have commissioned an expert group to undertake an

in-depth study on how to develop a robust data trading ecosystem in
Hong Kong, the scope of which includes Hong Kong’s role as a “super
connector” in data trading as well as promoting the formulation of
international data trading rules. The aim is to enable us to unleash the
potential of data elements and facilitate its development into a new
industry with an enormous growth momentum, hence empowering the
upgrading and transformation of traditional industries.
Digital Finance
93. Digital technology has turned new financial business models

into reality. Digital finance, through integrating data and
technological innovations in different use case scenarios, can
complement traditional financial services in enabling wider service
access and enhancing the inclusiveness of financial services.
29
94. The HKMA completed Phase 1 of the e-HKD Pilot Programme

last October, and has studied domestic retail use cases in various areas
such as programmable payments, offline payments and tokenised
deposits. Phase 2 of the pilot programme will soon commence to
further explore new use cases. Project mBridge, another important
initiative, has also achieved good progress. Phase 1 of its service,
which is expected to be launched this year, will become one of the first
projects around the world to settle cross-boundary transactions for
corporates using central bank digital currencies.
95. In addition, we will expand the scope of e-CNY pilot testing in

Hong Kong. Members of the public may set up e-CNY wallets easily
for use and for topping up funds by the Faster Payment System, thereby
further enhancing the efficiency and user experience of cross-boundary
payment services.
Promote Cross-Boundary Data Flow
96. The ITIB and the Cyberspace Administration of China launched

an early and pilot implementation arrangement for the “Standard
Contract for the Cross-boundary Flow of Personal Information Within
the Guangdong-Hong Kong-Macao Greater Bay Area (Mainland,
Hong Kong)” last December. During the first phase of
implementation, we have invited the banking, credit referencing and
healthcare sectors to participate, and their responses have been very
positive. Having regard to outcomes of the pilot implementation in
the first phase, we will gradually extend the coverage of the facilitation
measures so that various business sectors of both places may leverage
cross-boundary data with a smoother flow, thereby providing more
cross-boundary services for the convenience of the public and
enterprises.
30
Cross-boundary Public Services
97. To further facilitate access to the public services of Guangdong

and Hong Kong by residents and enterprises in Hong Kong and the
GBA, we collaborated with Guangdong Province to launch the
Cross-boundary Public Services thematic website. We also connected
iAM Smart with the Unified Identity Authentication Platform of
Guangdong Province in November last year. Having set up
iAM Smart registration service counters in Guangzhou as well as in
Qianhai and Futian in Shenzhen, we have also introduced the first
self-service kiosk for Hong Kong’s Cross-boundary Public Services in
Guangzhou. This will facilitate Hong Kong residents and enterprises
in the GBA cities to access the Cross-boundary Public Services and
register for iAM Smart.
Web3.0
98. In last year’s Budget, I proposed to expedite development of the

Web3.0 ecosystem. We have made good progress over the past year.
99. At present, there are over 220 enterprises specialising in related

technologies in Cyberport, including three unicorns. Last year,
Cyberport organised a number of promotional and educational
activities, attracting more than 29 000 participants. It also rolled out
a subsidy scheme to encourage enterprises to conduct proof-of-concept
testing, with a view to accelerating market application of the relevant
technologies.
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100. Having successfully issued the first batch of inaugural

tokenised green bonds in February 2023, we issued the second batch of
tokenised green bonds in early February this year, worth a total of
$6 billion and denominated in Hong Kong dollar, Renminbi (RMB),
US dollar and Euro. This is the world’s first-ever multi-currency
tokenised bond issuance, and has attracted overwhelming subscription
by global institutional investors, including asset managers, insurance
companies, private banks and non-financial corporates. Apart from
the many technological innovations, we have also achieved
breakthroughs in this issuance in areas such as broadening investor
participation and streamlining the issuance process.
101. In keeping abreast of the latest international trends and market

development, we consulted the public on a legislative proposal to
develop a regulatory regime for stablecoin issuers in end-2023, with the
aim of putting in place a regulatory regime that safeguards financial
stability without compromising innovation. The HKMA will soon roll
out a “sandbox” for entities interested in issuing stablecoins to conduct
trials, under manageable conditions, on the issuance process, business
models, investor protection and risk management system. The
“sandbox” will also facilitate communication on future regulatory
requirements.
102. Cybersecurity alongside investor and customer protection are

matters of utmost importance in Web3.0 development. Embracing the
principle of “same activity, same risks, same regulation”, the SFC has
implemented a licensing regime for virtual asset (VA) trading platforms
since last June. This regime enables investors to conduct trading on
licensed trading platforms in compliance with the relevant international
standards and in a protected environment, thereby enabling Hong Kong
to surpass many major jurisdictions in the regulation of VA trading.
To strengthen investor and customer protection, we have launched a
consultation on the regulation of over-the-counter trading of VA. We
will continue to promote the development of Hong Kong’s VA market
in a stable and responsible manner through a multi-pronged approach,
which includes timely dissemination of information, holistic public
education and enhanced enforcement.
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Launch the Business Version of “iAM Smart”
103. The Government will set up a “digital identity of enterprises”

platform, i.e. the business version of “iAM Smart”, to enable
authentication of identity and verification of signature of enterprises
using electronic government services or conducting online business
transactions in a secure, convenient and efficient manner without
having to go through complicated procedures, thus saving time and
reducing the risk of human error. The expenditure involved is
estimated to be about $300 million and our goal is to roll out the
platform progressively from end-2026 onwards.
Promote Digital Inclusion
104. Moreover, we strive to reduce digital exclusion and promote the

wider use of information technology by various community groups,
including elderly persons. The Government will allocate $100 million
under the Social Innovation and Entrepreneurship Development Fund
to provide, in the next three years, elderly people aged 60 or above with
digital training courses and technical support, so that they can integrate
into the digital era more easily and enjoy the benefits that digital
technology brings. The first group of projects is expected to
commence in the fourth quarter of 2024 at the earliest and benefit at
least 50 000 elderly persons.
International Innovation and Technology Centre
105. I&T is a key engine driving our economy and society towards
high-quality development. The Hong Kong Innovation and
Technology Development Blueprint, promulgated in 2022, formulates
strategic plans and clear roadmaps for Hong Kong’s I&T development
over the next five to ten years, leading Hong Kong steadily towards its
vision of becoming an international I&T centre.
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106. The Government has committed substantial resources to

building a vibrant I&T ecosystem by focusing on enhancing I&T
infrastructure, research capacity, talent, etc. The Hong Kong Science
Park and Cyberport are I&T flagships and incubators for the city. As
at end-2023, the number of tenants of these two flagships, together with
past and current incubatees, amounted to some 4 500, an increase of
more than 60 per cent over the past five years. Among them, 16 have
been listed, nine have become unicorns, and a total of some $130 billion
has been raised while more than 1 700 local and non-local awards have
been won.
Artificial Intelligence
107. Artificial Intelligence (AI), as an important driver of a new

round of technological and industrial transformation, is also the key to
propelling the development of digital economy in Hong Kong.
108. Cyberport is expediting the establishment of an AI

Supercomputing Centre to meet the demand of research institutes and
the industry for computing power. The first phase facility is expected
to start operating within this year at the earliest. By early 2026 at the
soonest, the computing power of the supercomputing facility is
expected to reach 3 000 petaFLOPS. The scale of such power is
equivalent to the capacity of processing nearly 10 billion images in one
hour.
109. We will allocate $3 billion to Cyberport for the launch of a

three-year AI Subsidy Scheme to support local universities, research
institutes and enterprises to leverage the Centre’s computing power and
achieve scientific breakthroughs. The subsidy will also be used to
strengthen the cyber security and data protection of the Centre, and
launch promotional and educational activities, etc. to encourage
Mainland and overseas AI experts, enterprises and R&D projects to
come to Hong Kong.
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R&D of Microelectronics
110. With an increasing demand for semiconductors worldwide, the

scale of related industries is expected to grow continuously and exceed
US$1 trillion by 2030.
111. To capture a market with such huge potential, and dovetail with
the national strategy for technological development, the Government is
fostering R&D of microelectronics. We will establish the Hong Kong
Microelectronics Research and Development Institute (HKMSRDI)
this year. It will spearhead and facilitate research collaboration on the
third-generation semiconductors among universities, R&D centres and
the industry, and to realise R&D outcomes by making use of the
comprehensive manufacturing industry chain in the Greater Bay Area
(GBA).
Life and Health Technology
112. With solid basic research capabilities in life and health

technology, Hong Kong is home to world-class experts, top-notch
medical schools, R&D centres and laboratories. We are well-
equipped to develop into an international life and health technology
centre.
Set up Life and Health Technology Research Institutes
113. In the previous Budget, I earmarked $10 billion to promote the

development of life and health technology. Of this, $6 billion will be
used to provide subsidies for local universities to collaborate with
Mainland and overseas organisations to set up life and health
technology research institutes. The purpose is to facilitate relevant
R&D activities and transformation of R&D outcomes, and to attract
leading I&T talent and research teams around the world to Hong Kong.
35
Strengthen Clinical Trial Platform
114. The Government will set up the Greater Bay Area International
Clinical Trial Institute in the Hetao Shenzhen-Hong Kong Science and
Technology Innovation Co-operation Zone this year. It will provide
one-stop support to attract more local, Mainland and overseas
pharmaceutical and medical device enterprises to conduct clinical trials
in Hong Kong. We will also actively seek support from the National
Medical Products Administration for record filing, so that such data can
be used by these enterprises when applying for marketing authorisation
of their products in the Mainland.
Establish “Primary Evaluation”
115. The new mechanism for registering New Drugs

(“1+” mechanism) came into effect on 1 November 2023. This allows
for new drugs for life threatening or severely debilitating diseases to be
registered in Hong Kong with the submission of only one certificate of
pharmaceutical product issued by reference drug regulatory authorities,
subject to the fulfilment of specific requirements. The Department of
Health has approved two new drugs for registration under this
mechanism, bringing new hope of treatment to patients.
116. The “1+” mechanism is an important step in progressing

towards a “primary evaluation” approach. This approach enables us
to directly approve applications for registration of drugs and medical
devices locally based on clinical data, without relying on other drug
regulatory authorities.
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117. The Government is committed to establishing the Hong Kong

Centre for Medical Products Regulation (CMPR). The preparatory
office will be set up in the first half of this year to study the restructuring
and strengthening of the current regulatory and approval regimes for
drugs, medical devices and medical technologies. The objective is to
establish a standalone statutory body that is internationally recognised,
so as to accelerate clinical application of new drugs and medical
devices. It will also drive the development of emerging industries
engaging in the R&D and testing of drugs and medical devices.
New Industrialisation Development
118. Driven by information, new industrialisation leverages

advanced technologies such as AI, data analytics and new materials to
support enterprises in moving towards smart production and develop
emerging industries with high value-adding potential and economic
efficiency.
119. We will launch a $10 billion New Industrialisation Acceleration

Scheme (NIAS) this year. Enterprises engaging in life and health
technology, AI and data science, advanced manufacturing and new
energy technology will each be provided with funding support of up to
$200 million on a matching basis of one (Government):
two (enterprise). Applicant enterprises shall invest no less than
$200 million in Hong Kong.
120. Apart from the above funding support on a matching basis,

enterprises participating in the NIAS may receive subsidies to engage
research talent under the Research Talent Hub. They may also, on a
pilot basis, engage a small number of non-local technical personnel
under the Technology Talent Admission Scheme to expedite the set-up
and operation of advanced manufacturing facilities in Hong Kong.
121. It is anticipated that the NIAS will attract 50 to 100 enterprises

engaging in relevant industries to invest no less than $20 billion in
Hong Kong.
37
Hong Kong Shenzhen Innovation and Technology Park
122. Hong Kong-Shenzhen Innovation and Technology Park

(HSITP) in the Lok Ma Chau Loop (the Loop) enables Hong Kong to
play an active part in GBA development, better integrate into overall
national development and forge closer connections overseas. While
the first batch of buildings in the HSITP will commence operation
progressively by the end of this year, various tasks such as attracting
enterprises, investment and talent are underway. We will continue to
support the development of the HSITP, and are drafting the White Paper
on the Development of the HSITP in the Loop targeting to be
announced this year.
InnoLife Healthtech Hub
123. We will set up the InnoLife Healthtech Hub in the HSITP to

attract top-notch research teams and talent from around the world, with
a focus on life and health disciplines, to conduct research. This will be
conducive to the development of international I&T centre in the Loop
and the GBA. We will allocate $2 billion from the $10 billion
earmarked to support the InnoHK research clusters to establish presence
in the Loop. We will also allocate $200 million to provide assistance
to start-ups engaging in life and health technology in the form of
incubation and acceleration programmes, etc.
Nurturing Start-ups
124. In the Global Startup Ecosystem Report 2023, Hong Kong

ranked second in the world and first in Asia in the Emerging Startup
Ecosystems category. The number of start-ups rose to nearly 4 300
last year, about a fourfold increase compared to 2014. Over the same
period, the number of people employed by related start-ups increased
by about seven times to over 16 000.
38
125. Since its inception, the Corporate Venture Fund under the Hong
Kong Science and Technology Parks Corporation (HKSTPC) has
invested a total of nearly $400 million in 31 start-ups and attracted
private investment of about $12.6 billion. The HKSTPC will soon
launch the Co-acceleration Programme to pool the efforts of the I&T
industry and provide value-added support services to I&T start-ups with
high potential and to nurture them as regional or global enterprises.
R&D and Transformation in I&T
Frontier Technology Research Infrastructure Support Scheme
126. We will launch a Frontier Technology Research Infrastructure

Support Scheme to assist the eight University Grants Committee
(UGC)-funded universities, on a matching basis, in procuring facilities
and conducting research projects which cover various fields such as AI,
quantum information, integrated circuit, clinical medicine and health,
and gene and biotechnology. To this end, we will allocate $3 billion
from the sum earmarked in the past.
Strengthen Support for Technology Transfer
127. To enable universities to strengthen technology transfer and

marketing services, we will provide subsidies of no more than
$16 million to the Technology Transfer Office of each of the eight
UGC-funded universities from 2024-25 onwards.
39
Enhancing I&T Infrastructure
128. Batch 1 of Stage 2 of the Science Park Expansion Programme,

which will provide a gross floor area (GFA) of about 13 000 square
metres mainly for wet laboratories, is expected to be completed in the
first quarter of next year. The Cyberport 5 expansion project, which
will provide a GFA of about 66 000 square metres for co-working
spaces and offices, etc., is expected to be completed by the end of next
year at the earliest. Together with the I&T sites in the Loop to be put
into use progressively, there will be more room for the local I&T
ecosystem to prosper.
International Financial Centre
129. A highly efficient financial market accelerates the development

of the real economy by effectively matching capital with the needs of
industry. The financial industry is one of the pillars of Hong Kong’s
economy. Hong Kong as an international financial centre is also our
country’s international financial centre, having an edge in “quantity”
and “quality” that enables various financial areas to thrive.
Offshore Renminbi Business Hub
130. Our country is the world’s second-largest economy. The

proportion of RMB as a global currency for international trade,
investment and financing, cross-border payment and reserves is
increasing continuously, as the Mainland develops closer economic ties
with other regions. Market demand for RMB is becoming keener than
ever.
131. As the world’s largest offshore RMB business hub, Hong Kong
processes about 75 per cent of global offshore RMB settlement. We
also have the world’s largest offshore RMB liquidity pool, at over RMB
1 trillion. To capitalise on this enormous opportunity, we will press
ahead with the development of an offshore RMB ecosystem to promote
the internationalisation of the RMB in a steady and prudent manner.
40
132. We are taking forward relevant work on various fronts. It

includes making continuous efforts to deepen mutual-market access
schemes that facilitate RMB cross-boundary investment and two-way
fund flows to enhance offshore RMB liquidity. It also includes
encouraging financial institutions to provide more offshore RMB
products and risk-management tools, and carrying out RMB financing
in Hong Kong. We will also develop the Central Moneymarkets Unit
(CMU) into Asia’s major international central securities depository
platform. It will provide better support for RMB businesses such as
cross-border clearing, settlement and custodian services etc.
Mutual Market Access
133. Mutual-market access between financial markets in the

Mainland and Hong Kong has been expanding in scope and capacity.
Bond Connect, the Cross-boundary Wealth Management Connect
Scheme, ETFs in Stock Connect and Swap Connect are among the
many opportunities that have been implemented, one after another, in
recent years. The initiatives provide more asset allocation and
risk-management options for Mainland and international investors.
134. This year, HKEX will host the 10th Anniversary of Mutual
Access Forum to share our experience with the industry and explore
how best to inject new impetus into the regime. We will stage a series
of roadshows in the Mainland to promote mutual market access further.
135. We are now in discussion with Mainland authorities over the

introduction of block trading, the inclusion of RMB counters under the
Southbound Trading of Stock Connect, and the expansion of the
mutual-market access regime to cover REITs, bringing in more
enterprises and capital to the Hong Kong market.
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Asset and Wealth Management Centre
136. Hong Kong is an international asset and wealth management

centre, with assets under management amounting to more than
HK$30 trillion. It is also Asia’s largest hedge-fund centre and the
second-largest centre for private equity management after the
Mainland. Currently, there are more than 250 open-ended fund
companies and 780 limited partnership funds registered in Hong Kong.
137. To drive market development, the Government will extend the

Grant Scheme for Open-ended Fund Companies and Real Estate
Investment Trusts for three years, and set up a task force to discuss with
the industry measures for further developing the asset and wealth
management industry.
138. Attracting global family offices and asset owners to Hong Kong
will help bring in more capital and drive ancillary economic activities.
We have implemented a number of measures, including providing tax
concessions for qualifying transactions of family-owned investment
holding vehicles managed by single family offices in Hong Kong, and
streamlining the suitability assessment when dealing with sophisticated
professional investors.
139. The new Capital Investment Entrant Scheme (new CIES) will
soon invite applications. Eligible investors who invest HK$27 million
or more in qualifying assets and place HK$3 million into a new CIES
Investment Portfolio may apply to reside in and pursue development in
Hong Kong. The new CIES will help strengthen our advantages in
developing the asset and wealth management industry and related
professional service sectors in Hong Kong, while supporting the I&T
sector’s development.
42
140. We are setting the stage for the second Wealth for Good in
Hong Kong Summit in end-March in a bid to showcase Hong Kong’s
unique advantages to global family offices and asset owners. In
addition, we will further enhance the preferential tax regimes for related
funds, single family offices and carried interest, including reviewing the
scope of the tax concession regimes, increasing the types of qualifying
transactions and enhancing flexibility in handling incidental
transactions, all to attract more funds and family offices with potential
to establish a presence in Hong Kong.
Securities Market
141. We are keen to foster the development of the securities market

into one with greater depth, breadth and vibrancy, thereby consolidating
and enhancing market competitiveness. I have explained this in detail
in paragraphs 45 to 48.
Bond Market
142. As a long-standing leader in bond issuance in Asia, Hong Kong

has ranked first in the region for seven consecutive years in terms of the
volume of international bond issuance. In the last Budget, I proposed
to expand the scope of the Government Green Bond Programme to
cover sustainable finance projects and take forward the Infrastructure
Bond Scheme to raise capital for infrastructure projects, thereby
facilitating the early completion of projects for the good of the economy
and people’s livelihood. We will set a borrowing ceiling of a total of
$500 billion for these two programmes to allow more flexibility in
quota re-allocation. The sums borrowed will be credited to the Capital
Works Reserve Fund for investment in projects which are conducive to
long-term development. These two programmes will gradually
replace the existing Government Bond Programme.
43
143. In 2024-25, we will issue $120 billion worth of bond, of which

$70 billion will be retail tranche that includes $50 billion worth of
Silver Bond, and $20 billion worth of green bonds and infrastructure
bonds to achieve financial inclusiveness and enhance a “sense of
participation” in infrastructure and sustainable development among the
public.
Deepen Financial Co-operation in the GBA
144. The Cross-boundary Wealth Management Connect (WMC)

Scheme in the GBA has seen continuous and steady development.
“WMC 2.0” was officially launched earlier this week, introducing such
enhancement measures as increasing the individual investor quota to
RMB 3 million and lowering the threshold for participating in the
Southbound Scheme.
145. To help enterprises secure financing in the GBA more easily,

the HKMA and Mainland regulatory authorities will continue to build
a collaborative framework on cross-boundary credit referencing.
Through such collaboration, the banks of both places, upon consent
from corporate customers, will be allowed to access the credit data of
relevant corporations, so that credit assessment can be conducted in a
more secure and efficient manner.
44
Specialty Insurance Market
146. As an international risk-management centre, Hong Kong

provides diversified risk-management channels, including professional
insurance services. We have been making dedicated efforts to invite
Mainland and overseas enterprises to establish captive insurers in
Hong Kong, enhancing their corporate risk-management capabilities.
We are also promoting the development of insurance-linked securities
(ILS) by establishing a dedicated regulatory regime and launching a
pilot grant scheme. To date, we have facilitated the issuance of four
catastrophe bonds in Hong Kong, one of which marked the inaugural
listing of its type of ILS. We will continue to attract more issuing
institutes to Hong Kong, while nurturing talent and propelling the
industry’s development.
Create Strong Impetus for Growth in the Financial Services

Industry
147. To bolster the competitiveness and advantages of the financial

services industry in Hong Kong, the Government will earmark
$100 million to promote the sustainable development of financial
services. This includes green and sustainable finance, fintech, asset
and wealth management, headquarters business, and risk management
etc.
International Trade Centre
148. The international trade landscape is in a constant state of flux.

In recent times, Hong Kong’s total exports have seen their share of the
Europe and US markets decline, while our exports to developing
countries such as those in ASEAN and the Middle East is on the rise.
At the same time, Mainland manufacturing enterprises are increasingly
using production capabilities both at home and abroad as multinational
supply chains for manufacturing products to be exported to overseas
markets. Hong Kong is equipped to seize the opportunities arising
from these changes.
45
Multinational Supply Chain Management
149. In line with the trend of Mainland manufacturing enterprises

extending their production supply chains abroad, our goal is to develop
Hong Kong into a multinational supply chain management centre. As
a premier financial and commercial centre in the region, Hong Kong
has the capacity to offer full-fledged and comprehensive professional
support services to enterprises to meet their overseas business needs.
These services are of utmost importance to enterprises seeking to go
global, particularly those with less overseas experience.
150. Consulting services: The Hong Kong Trade Development

Council (HKTDC) has been providing various services through
different schemes covering business operations, production and supply
chain solutions, market information and other consulting services. All
this helps to support Mainland enterprises based in Hong Kong to
establish a foothold in the Belt and Road (B&R) Initiative countries.
151. Trade financing: Mainland enterprises with operations in Hong

Kong can also utilise various services provided by the Hong Kong
Export Credit Insurance Corporation, including export credit insurance,
surveys on buyers, and sharing of market updates to meet their business
operation needs. The Commercial Data Interchange launched earlier
by the HKMA and its Project mBridge allow enterprises to apply trade
financing and cross-border settlement services at a lower cost and with
higher efficiency.
152. Corporate training: Hong Kong’s business sector possesses rich

knowledge and profound experience in managing multinational supply
chains as well as handling compliance, labour protection,
environmental protection and other requirements of overseas markets.
We will facilitate collaboration between different organisations and
industry stakeholders to provide environmental, social and corporate
governance (ESG) training etc. to Mainland enterprises seeking to
expand their reach to overseas markets. This will help them build
goodwill with business partners and expand their markets.
46
153. In order to enhance our work on this front, Commerce and

Economic Development Bureau, in coordination with “Team
Hong Kong” organisations, will work together to study relevant details,
including the establishment of a trade single window to provide
one-stop services for enterprises. Invest Hong Kong will also step up
efforts to attract Mainland manufacturing enterprises to set up offices
in Hong Kong, to serve as headquarters for managing their offshore
trading.
Explore Markets
154. The Government has been expanding Hong Kong’s economic

and trade network overseas, to help the business sector explore
emerging markets.
155. To strengthen our economic and trade relations with the Middle
East, the Government is conducting negotiations with Saudi Arabia on
an Investment Promotion and Protection Agreement (IPPA) and
considering establishing an Economic and Trade Office (ETO) in
Riyadh, Saudi Arabia. Two consultant offices will also be set up in
Turkey and Egypt this year to bring in foreign capital and enterprises.
Meanwhile, Hong Kong has concluded the IPPA negotiations with
Bahrain and will soon sign a Comprehensive Double Taxation
Agreement with it.
156. ASEAN is another priority strategic partner with whom we seek

to enhance our engagement. The Government is considering
establishing an ETO in Kuala Lumpur, Malaysia. As for other
markets, we are negotiating a Free Trade Agreement with Peru and an
IPPA with Bangladesh. Furthermore, the HKTDC will set up two
consultant offices along the B&R to enhance trade promotion in
emerging countries.
47
Belt and Road
157. The B&R Initiative promulgated by our country has entered its
second golden decade. Hong Kong will continue to give full play to
its role as a functional platform for the B&R. To this end, we will
actively participate in and contribute to fostering high-quality
development, especially in green development as well as innovation
and technology.
158. Apart from continuing to host the annual Belt and Road Summit
in September, a new Belt and Road Festival will be launched. The
festival will promote collaboration with B&R countries in a wide range
of areas including trade and investment, technology, arts and culture
and talent exchange. Hong Kong will also host the Conference of Belt
and Road Initiative Tax Administration Cooperation Forum, which will
be attended by representatives of the governments, international
organisations, academic institutions and strategic enterprises of B&R
regions. It will provide a platform for attendees to establish
connections and exchange ideas, thereby promoting tax administration
co-operation and capacity building. Besides, more outbound missions
will be organised, including visits to the Mainland for enterprises of
B&R countries which are operating in Hong Kong to explore business
opportunities.
Regional Intellectual Property Trading Centre
159. The effective protection and efficient transaction of IP is

important to promote industries such as R&D, cultural and creative
industries, design services, and brand licensing industries in
Hong Kong. In fact, for the past three years, the Intellectual Property
Department (IPD) granted an average of more than 10 000 standard
patent registrations each year, which is a clear indication of the
enormous potential of the IP trading market in Hong Kong.
48
160. The Government will introduce into the Legislative Council

(LegCo) in the first half of 2024 a proposal to amend the Inland
Revenue Ordinance with a view to implementing the “patent box” tax
incentive, which will reduce substantially the tax rate for profits derived
from qualifying IP to five per cent. This incentive aims to encourage
enterprises to devote more resources to R&D and conduct
commercialisation transactions making use of patents and other IP
protections.
Participate in Dedicated Programme of World Intellectual

Property Organisation (WIPO)
161. We are planning for the establishment of a WIPO Technology

and Innovation Support Centre (TISC) in Hong Kong to enable our
integration into the country’s TISC network. The TISC will focus on
providing specialised services such as patent search and analysis for the
protection of scientific research results and enhanced support to the I&T
sector, while promoting IP trading at the same time. The TISC also
helps nurture local I&T talent well versed in patent knowledge. In this
regard, I have set aside $45 million to support the Hong Kong
Productivity Council in establishing and operating the TISC. It is
anticipated that the TISC will commence operation by 2025 the earliest.
49
International Maritime Centre
162. Currently, around 90 per cent of the world’s merchandise goods

are transported by sea. With its advantageous geographical location,
unique institutional strengths and extensive experience and network in
international trade and commerce, Hong Kong enjoys a prime position
in the shipping market. Supported by the National 14th Five-Year
Plan and the Outline Development Plan for the Guangdong-Hong
Kong-Macao Greater Bay Area, the Government promulgated the
Action Plan on Maritime and Port Development Strategy (Action Plan)
in December last year. The Action Plan formulates 10 strategies and
32 action measures to support the sustainable development of
Hong Kong’s maritime and port industry, with a view to enhancing the
long-term competitiveness of the industry. It also consolidates and
strengthens Hong Kong’s position as an international maritime centre.
Develop High Value-Added Maritime Services
163. One of the directions set out in the Action Plan is to develop
high value-added maritime services. Over the past few years, the
Government has introduced a series of tax concession measures for the
maritime industry in the areas of ship leasing, marine insurance, ship
agency, ship management, shipbroking and so forth, which have begun
to yield results. We will commence studies on further enhancements
within this year.
164. In addition, Hong Kong’s ship registration regime is widely

recognised internationally. Hong Kong ranks fourth in the world in
terms of gross tonnage, and excels in its high quality fleet. The port
state control detention rate of Hong Kong registered ships is much
lower than the global average. We plan to offer block registration
incentive to attract shipowners to register ships in Hong Kong
extensively. The Government will amend the relevant regulations
regarding this incentive starting this year, and provide an outline of the
incentive rules, eligibility criteria and so forth.
50
Modern Logistics Development
165. The Government seeks to assist the logistics industry in better

capitalising on the latest developments and business opportunities in
smart logistics and e-commerce. To encourage the logistics industry
to enhance productivity through technology application, the
Government launched a $300 million Pilot Subsidy Scheme for
Third-party Logistics Service Providers in 2020 to provide subsidies to
eligible logistics service providers. So far, the scheme has benefited
over 190 enterprises, involving a total of about $137 million. The
scheme was enhanced in February this year, with the funding ceiling
for each applicant enterprise increased from $1 million to $2 million
and the scope of funding extended to cover services related to the
application of ESG technology solutions.
International Aviation Hub
166. Hong Kong International Airport (HKIA) has about 120 airlines
operating flights to some 180 destinations worldwide. With
Hong Kong’s role as an international aviation hub and tapping into the
convenience and opportunities brought about by the Hong Kong Zhuhai
Macao Bridge, our vision is to transform HKIA into an Airport City
integrating commerce, conventions and exhibitions, tourism, lifestyle,
logistics and more, shaping it into a world-class landmark.
Open up a New Aviation Hinterland
167. The AA is working full steam ahead with the HKIA

three-runway system (3RS) project as scheduled, with the target of
commissioning at the end of this year. Leveraging the opportunities
brought by the 3RS and our country’s support of the “Air Silk Road,”
we will focus on current major routes and routes along the B&R with
potential, thus strengthening aviation services between Hong Kong and
related countries and, in doing so, expand our aviation network.
51
Intermodal Transport
168. The AA will make comprehensive use of HKIA’s advantages

in handling high-value, temperature-controlled air cargo. We are
taking forward the development of a sea-air intermodal
cargo-transhipment mode in collaboration with Dongguan. Its
handling capacity will gradually reach one million tonnes per annum,
better fulfilling the GBA’s international cargo demand, with first-phase
construction of the permanent facility of the HKIA Logistics Park,
which is scheduled for completion by the end of next year.
Asia’s Aviation Logistics Base
169. The AA will actively expand air cargo services, including

handling cold-chain cargo at its logistics park in Dongguan and
collaborating with Zhuhai to develop its international cargo business.
It will also attract international cargo forwarders and major global
retailers to set up their Asian aviation logistics base in Hong Kong.
Centre for International Legal and Dispute Resolution Services in

the Asia-Pacific Region
170. As the only common law jurisdiction in China, Hong Kong

enjoys a robust legal system and a pool of elite legal talent, which are
cornerstones of Hong Kong’s premier business environment and
provide us with new opportunities for development.
171. With the staunch support from the Central Government, the
International Organization for Mediation (IOMed), upon establishment,
will have its headquarters hosted in Hong Kong. IOMed, specialising
in resolving international disputes by means of mediation, will be the
first international inter-governmental organisation to set up
headquarters in Hong Kong. This will attract dispute parties,
mediators and legal professionals to conduct mediation in Hong Kong,
which will in turn boost other related economic activities.
52
172. Furthermore, the Department of Justice (DoJ) will continue to

promote Hong Kong’s legal and dispute resolution services by
organising international conferences and exchange activities, as well as
leading delegations of legal professionals to visit the Mainland, the
Middle East, ASEAN member states, etc.
East-meets-West Centre for International Cultural Exchange
173. Hong Kong is a diverse and open community. It is a melting

pot of Chinese and Western cultures, where modernity blends with
tradition. The Government is committed to developing high-quality
arts, cultural and creative industries through continuously developing
relevant sectors, promoting Chinese culture and fostering arts and
cultural exchanges between China and the rest of the world. The
Government will soon promulgate the Blueprint for Arts and Culture
and Creative Industries Development, to outline the vision and specific
initiatives for the work.
Creative Arts Branding
174. The Government will inject about $1.4 billion and $2.9 billion
into the Film Development Fund and the CreateSmart Initiative
respectively in 2024/25, to support projects in various areas such as
film, arts and design. Among them, the Government will organise the
Hong Kong Fashion Design Week annually from 2024 onwards. It is
our vision to turn the Hong Kong Fashion Design Week into an Asian
fashion design mega event, thereby introducing Hong Kong’s fashion
design brands internationally.
53
Signature Performing Arts Programmes
175. The Government has announced the launch of the Signature

Performing Arts Programme Scheme. The scheme will support
production of representative and large-scale local signature performing
arts programmes to be staged as long-running performances and
become another cultural icon of Hong Kong. Culture, Sports and
Tourism Bureau will devise the key arrangements of the Signature
Performing Arts Programme Scheme in the first half of 2024.
Large-scale Arts Events
176. We will organise the first Hong Kong Performing Arts Expo
(HKPAX) in October this year to provide a comprehensive platform for
showcasing top-notch performing arts productions and enhancing
exchanges to create business opportunities for these programmes and
creative talents. We will also organise the 4th
Guangdong-Hong Kong-Macao Greater Bay Area Culture and Arts
Festival. With more than 100 arts and cultural activities taking place in
Hong Kong and different cities of the GBA, the festival is expected to
feature about 5 000 artists and draw a total of 140 000 visitors.
54
Nurturing Local Talent
177. “Talent as the prime resource” is the fundamental driving force

that underpins the development of our economy and various sectors.
While proactively attracting talent from around the world, we must
continue our efforts in nurturing local talent. Apart from supporting
post-secondary institutions to enhance their quality and expand their
capacity, we will continue to take forward a number of sector-specific
talent training programmes to enrich the local talent pool.
I&T Talent
178. Apart from supporting various talent training programmes

under new industrialisation development, we have also implemented
the STEM Internship Scheme to encourage university students to
participate in I&T-related work. Besides, to better prepare for
integration into the knowledge-based economy and development of a
digital society, the Government has launched a “Knowing More About
IT” Programme to enhance primary school students’ interests in
information technology and its applications. In this connection, I
propose to allocate an additional funding of $134 million for the
provision of subsidies of up to $300,000 for each publicly-funded
primary school in the next two academic years.
55
Healthcare Professionals
179. The Government attaches importance to training local

healthcare professionals. The Health Bureau will continue to enhance
healthcare-related teaching facilities, while increasing the number of
local training places as appropriate. Since last April, we have also
started to subsidise the relevant institutions in respect of the clinical
practicum training fees for their specified healthcare-related
programmes. On another front, since the announcement of an
additional injection of $500 million into the Chinese Medicine
Development Fund in last year’s Budget, a number of capacity building
initiatives for the industry have been taken forward under the fund, such
as the Hong Kong Chinese Medicine Talent Short-term Training
Programme co-organised with the National Administration of
Traditional Chinese Medicine in support of building an excellent pool
of Chinese medicine (CM) talent.
Maritime and Aviation Talent
180. The Government introduced the Professional Training on Smart

and Green Logistics Scheme and the Logistics Promotion Funding
Scheme under the Maritime and Aviation Training Fund (MATF) in
January this year. These schemes aim to enhance promotion and
talent development in the logistics sector in line with new developments
in smart and green logistics. We also launched the Aviation
Promotion Project Funding Scheme to fund activities organised by local
aviation-related organisations and academic institutions, while
promoting to different sectors of the community the development of our
aviation industry and the opportunities available. The TLB will
conduct a comprehensive review of the MATF this year, to gauge its
effectiveness in attracting talent and promoting manpower development
in the maritime and aviation sectors.
56
Patent Talent
181. The Government will allocate an additional funding of about

$12 million in total to the IPD over the next three years, to prepare for
the introduction of regulatory arrangements for local patent agent
services. Our aim is to enhance the professionalism and support the
development of the original grant patent system. The Government
will also continue to strengthen and enlarge its patent examiner team
and enhance its substantive examination capability, with a view to
acquiring institutional autonomy in conducting substantive patent
examination in 2030.
International Legal Talent
182. In order to nurture legal talent with an international perspective

and good knowledge of different legal systems, the DoJ will set up a
dedicated office and an expert group this year to take forward the
establishment of the Hong Kong International Legal Talents Training
Academy.
57
Land and Housing Supply
Land Supply
183. The 2024-25 Land Sale Programme will cover a total of eight
residential sites. There will also be railway property developments,
private development and redevelopment projects as well as projects
undertaken by the Urban Renewal Authority. Taken together, the
potential land supply for the whole year is expected to have a capacity
for providing about 15 000 units, exceeding the annual demand of
13 200 units projected in the Long Term Housing Strategy by about
14 per cent. The Land Sale Programme will also include
two commercial sites and one industrial site, capable of providing about
120 000 square metres of commercial floor area and 540 000 square
metres of industrial floor area respectively. We will take into account
the market situation when deciding on the quantity and types of land to
be put up for sale as well as the pace of sale.
184. We will make available land for the production of no less

than 80 000 private housing units in the coming five years. Such land
will be put to the market in a timely manner. Among them, about
60 per cent comes from New Development Areas/New Town
Extensions, with another 40 per cent from government land sale and
railway property development projects in other districts.
58
Housing Supply
185. On public housing supply, the Government has identified

sufficient land for meeting the supply target of 308 000 public housing
units over the next ten years (from 2024-25 to 2033-34). Among
which, as at the end of last year, construction of about 105 000 units
under the Hong Kong Housing Authority has commenced with
satisfactory progress. In view of the fact that the Cash Allowance
Trial Scheme is due to expire by mid-2024, the Government has
decided to extend the scheme for one year until June 2025, to help
grassroots families on the waiting list for public rental housing. The
scheme will be subject to further review in due course.
186. On private housing supply, we estimate that the completion of

private residential units will average over 19 000 units annually in the
five years from 2024, representing an increase of about 15 per cent over
the annual average of the past five years. The potential supply of first
hand private residential units for the next three to four years will be
around 109 000 units.
59
Transport Infrastructure
Transport Infrastructure
187. It is the Government’s vision to build a liveable, competitive

and sustainable Hong Kong by adopting the planning principles of
“infrastructure led” and “capacity creating”. We are taking forward in
an orderly manner the railway and major road projects set out in the
Hong Kong Major Transport Infrastructure Development Blueprint, to
bolster connectivity between districts and unleash their development
potential. At the same time, the Government plans to put in place
smart and green mass transit systems in East Kowloon, Kai Tak and
Hung Shui Kiu/Ha Tsuen. We will invite within the year the relevant
suppliers and operators to submit expressions of interest.
188. To further promote the connectivity of infrastructure within the

GBA, the Government will continue to work with the Shenzhen
authorities through the Task Force for Hong Kong-Shenzhen
Co-operation on Cross-Boundary Railway Infrastructure. We will
take forward two cross-boundary projects, namely the Hong
Kong-Shenzhen Western Rail Link (Hung Shui Kiu – Qianhai) and the
Northern Link Spur Line, to jointly develop the concept of “GBA on
the Rail”.
189. Meanwhile, to raise productivity of the construction industry, a

cross-departmental steering committee under the DEVB will soon
formulate various measures to enhance the application of Modular
Integrated Construction (MiC). We will strengthen collaboration with
the Guangdong Provincial Government to enhance the manufacturing,
import/export facilitation, and exportability of MiC modules, with a
view to developing MiC as one of the industries in the GBA that enjoy
clear advantages. The Government of the HKSAR will also examine
the feasibility of investing in the MiC supply chain. Moreover, the
DEVB will set up the Building Testing and Research Institute within
this year to promote innovative application in the industry.
60
Healthcare
Healthcare
190. The Government attaches great importance to the well-being of

members of the public, and is committed to maintaining Hong Kong’s
high-quality healthcare profession and its efficient healthcare system.
We devote significant resources to the healthcare portfolio. The
2024-25 estimated recurrent expenditure for healthcare is
$109.5 billion, accounting for about 19 per cent of government
recurrent expenditure. The Government will continue to pursue
transformation with innovation, with a view to protecting the health of
all citizens, further developing primary healthcare, enhancing the
quality of medical services and promoting the development of the
healthcare industry.
191. The Government has been improving public healthcare services

and enhancing the patient experience on various fronts with specific
performance indicators. These include shortening the waiting time for
specialist out-patient services and making wider use of telehealth
services. The performance indicators of certain services, including
medication delivery and electronic medical certificates, were met early
last year.
Development of Chinese Medicine
192. The Government provides resources and implements a variety

of measures to promote CM. These include increasing the quota of
government-subsidised CM out-patient services, extending integrated
Chinese-Western medicine services, promoting scientific research on
CM and setting relevant standards. We are pressing ahead with the
construction of the Chinese Medicine Hospital and the Government
Chinese Medicines Testing Institute. The two institutions are
expected to begin service, in phases, starting from end of 2025.
61
Healthcare
Tobacco Control Policies
193. Increasing the tobacco duty is recognised internationally as the

most effective means of reducing tobacco use. The Government now
proposes to increase the duty on cigarettes by 80 cents per stick, with
immediate effect. Duties on other tobacco products will be increased by
the same proportion. The rate of increase is similar to that of last year.
We expect that the proportion of tobacco duty in the retail price of
cigarettes will rise to about 70 per cent, gradually approaching the
75 per cent level recommended by the World Health Organization.
This will provide a greater incentive for the public to quit smoking,
safeguarding public health. We will continue to step up enforcement
against illicit cigarette trading and strengthen smoking cessation
services, publicity and education.
62
A Caring and Inclusive Community
Youth Development
194. Young people are Hong Kong’s future. “Hong Kong will
prosper only when its young people thrive.” The Government is
actively implementing the various actions and measures set out in the
Youth Development Blueprint in phases. We will also open up more
Mainland and overseas exchange and internship opportunities for
young people. Our target is to benefit no less than 30 000 youths this
year, enabling young people to learn about our country’s major
development trends and broaden their global exposure. The
Government will also organise the Youth Development Summit in mid
this year. Mainland and overseas youth organisations will be invited to
exchange views on issues of concern to young people and to engage in
mutual learning. It is anticipated that more than 1 000 people will
participate in the Summit.
Vocational and Professional Education and Training
195. The Government will continue to foster industry-institution

collaboration and diversified development to enhance vocational and
professional education and training (VPET). The Government has set
aside some $680 million to support the Vocational Training Council’s
efforts. Initiatives include extending the Pilot Incentive Scheme to
Employers and the Pilot Subsidy Scheme for Students of Professional
Part-time Programmes for five years, as well as stepping up support for
student-exchange activities, strengthening assistance to students with
special educational needs and encouraging employers to provide
workplace learning opportunities etc.
196. Furthermore, the Government has also set aside a start-up fund
of $100 million to support self-financing, post-secondary institutions in
forming an Alliance of Universities in Applied Sciences for joint
publicity and promotion of VPET, and raise the status of VPET among
parents, students and society in general.
63
Caring for the Elderly
197. The Government has regularised the Community Care Service

Voucher (CCSV) Scheme for the Elderly since September 2023, and
extended its scope to cover the rental of assistive technology products.
The number of CCSVs will increase to 11 000 in 2024-25, involving an
annual expenditure of about $900 million. The Government also
regularised the Residential Care Service Voucher (RCSV) Scheme for
the Elderly since last April. From the second quarter of this year, the
number of RCSVs will increase to 5 000 for the early benefit of more
eligible elderly persons. The scheme will involve an annual
expenditure of about $1,440 million.
Support to Persons with Disabilities
198. The Government is committed to increasing the number of day

rehabilitation, residential care and respite service places for persons
with disabilities. As at end-2023, the total number of service places
had been increased to 36 400. The Government will also allocate
funding of about $130 million from the Community Care Fund to
implement a three-year pilot scheme starting from the third quarter of
2024 to provide an additional subsidy of $500 per month for employed
disabled recipients of CSSA as an incentive for employment. The
scheme is expected to benefit some 6 800 persons.
Women’s Development
199. The Government attaches great importance to women’s

development, setting aside $100 million last year to strengthen support
for the relevant work. The Women Empowerment Fund, established
in June 2023, has so far provided funding support to women’s
organisations and non-governmental organisations for launching over
140 projects for purposes such as helping women assume different roles
in the job market and providing them with training on child and elderly
care.
64
Assist Working Families in Childbearing
200. Starting this year, the Government will set up 10 more aided,
standalone child-care centres, in phases. The target is to provide nearly
900 additional places for child day-care services within three years.
The Government will also extend the After School Care Programme for
Pre-primary Children in phases, starting this year, to cover all districts
in Hong Kong. The number of service places will increase to nearly
1 200 within three years.
65
Revised Estimates for 2023-24
Revised Estimates for 2023-24
201. Hong Kong’s economic growth last year was slower than
expected owing to global interest rate hikes, economic slowdown and
continued geopolitical tensions. Notwithstanding a reduction in total
government expenditure after the pandemic, revenue from land
premium and stamp duty has decreased under a softened asset market,
resulting in a larger deficit than expected.
202. The 2023-24 revised estimate on government revenue is

$554.6 billion, lower than the original estimate by 13.7 per cent or
$87.8 billion.
203. Revenue from land premium is $19.4 billion, substantially

lower than the original estimate by $65.6 billion and also far lower than
the previous year. Revenue from stamp duty of $50 billion is lower
than the original estimate by $35 billion. Revenue from profits tax
and salaries tax is $171.2 billion and $79.2 billion respectively,
comparable to the original estimates.
204. The revised estimate of total government expenditure for

2023-24 is $727.9 billion, decreased by 10.2 per cent compared to the
previous year, and is 4.3 per cent or $33.1 billion lower than the
original estimate.
205. All in all, it is expected that there will be a consolidated deficit

of $101.6 billion for 2023-24. Fiscal reserves are expected to be
$733.2 billion by 31 March 2024.
66
Estimates for 2024-25
206. Looking ahead, the external environment will remain

complicated in the coming year. As a small and externally-oriented
economy, Hong Kong’s economic growth will inevitably be affected.
Revenues related to asset market will still require some time to fully
recover. On the expenditure side, the Government will continue to
provide resources for strengthening momentum on economic growth
and enhancing public services.
207. The major policy initiatives announced in the 2023 Policy

Address involve revenue of about $14.2 billion, operating expenditure
of $13.4 billion and capital expenditure of $25.2 billion. The financial
implications of such initiatives have been reflected in the estimates for
2024-25.
208. Total government expenditure for 2024-25 will increase by

about 6.7 per cent to $776.9 billion, with its ratio to nominal GDP
projected to increase slightly to 24.6 per cent.
209. Recurrent expenditure will increase by seven per cent to

$580.2 billion. Of this, substantial resources will still be allocated to
livelihood-related policy areas including health, social welfare and
education, involving a total of $343.7 billion, representing 59.3 per cent
of recurrent expenditure. After the pandemic, non-recurrent
expenditure will substantially decrease by 47.7 per cent to
$33.6 billion.
210. Total government revenue for 2024-25 is estimated to be

$633 billion, while earnings and profits tax are estimated to be
$279.6 billion, increasing by 6.8 per cent over the revised estimate for
2023-24. Having regard to the Land Sale Programme and the land
supply target of 2024-25, revenue from land premium is estimated to be
$33 billion, increasing by 70.1 per cent over the revised estimate for
2023-24. Revenue from stamp duty is estimated to be $71 billion,
increasing by 42 per cent over the revised estimate for 2023-24.
67
211. Taking into account the bond issuance of $120 billion in

2024-25, it is expected that there will be a deficit of $48.1 billion for
the year, and fiscal reserves will decrease to $685.1 billion.
212. In 2024-25, the Government will maintain its target of zero

growth in the civil service establishment. Departments will enhance
their effectiveness and efficiency through reprioritisation, internal
redeployment and streamlining of work processes in taking forward
different new policies and initiatives of the Government. It is
expected that there will be about 194 000 posts in the civil service
establishment as at end-March 2025.
68
Medium Range Forecast
213. We are determined and confident in overcoming the challenges

currently facing our public finances. The fundamental principle that
we follow is to maintain the sustainability of public finances. We have
formulated a fiscal consolidation programme to achieve fiscal balance
gradually and maintain fiscal reserves at a prudent level for ensuring
the provision of various services to the society and promotion of
economic development while also having sufficient buffer to roll out
measures for rendering assistance to the public and enterprises at times
of adversity or in other emergency situations.
214. The Medium Range Forecast (MRF) projects, mainly from a

macro perspective, the revenue and expenditure as well as financial
position of the Government. It has fully reflected the impact of the
measures under the fiscal consolidation programme. For 2024-25, a
real economic growth rate of 2.5 to 3.5 per cent per annum is adopted.
From 2025-26 to 2028-29, a real economic growth rate of about
3.2 per cent per annum is adopted.
215. During the above period, the average annual capital works
expenditure will be about $90 billion, while recurrent government
expenditure will grow at a rate of 4.2 per cent per annum. The ratio
of total government expenditure to GDP will gradually fall from about
24.6 per cent for 2024-25 to about 20.6 per cent for 2028-29.
216. Regarding revenue from land premium, the forecast for

2025-26 and onwards is mainly based on the more conservative 20-year
average ratio of revenue from land premium to GDP, which is
3.4 per cent of GDP. I also assume that the growth rates of revenue
from profits tax and other taxes will correspond to the economic growth
rates in the next few years. Overall, the ratio of government revenue
to GDP will gradually increase from about 20 per cent for 2024-25 to
about 22.6 per cent for 2028-29.
69
217. In addition, the MRF reflects the proceeds from the annual
issuance of government green/sustainable bonds and infrastructure
bonds worth approximately $95 billion to $135 billion in total.
218. Based on the above assumptions and arrangements, the deficit

in the Operating Account and Capital Account in the next five years
will gradually reduce every year. The Operating Account is estimated
to record a surplus two years later from 2026-27 onwards, while the
Capital Account will record surplus in 2028-29. After taking account
of proceeds from the issuance of bonds, the Consolidated Account will
only record a deficit in 2024-25 and will turn to a surplus in subsequent
years. The above forecast has not taken into account any tax rebates
or relief measures that the Government may implement over the coming
four years.
219. Fiscal reserves are estimated at $832.2 billion by the end of

March 2029, representing 21.2 per cent of GDP, or equivalent to
approximately 12 months of government expenditure.
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Public Finance
Public Finance
220. As one may recall, the Government launched several rounds of

large-scale counter-cyclical and anti-epidemic measures during the
pandemic, resulting in a sharp increase of expenditure to a high level of
$810.5 billion in 2022-23. Although we have strived to reduce
expenditure as the pandemic subsided, total expenditure for 2023-24
still reached $727.9 billion, representing an increase of 36.9 per cent
compared with 2018-19, of which operating expenditure rose
substantially by 40.2 per cent whereas operating revenue during the
same period increased only by 13.1 per cent.
221. On capital works, the average annual expenditure has increased

from about $76 billion over the past five years to about $85 billion in
2023-24. This is mainly due to the Government’s all-out effort to
press ahead with the land and housing supply projects, along with other
infrastructure works for improving the environment and people’s
livelihood in recent years.
222. In face of challenges posed by the epidemic and external

environment, our fiscal reserves have dropped to the current level of
$733.2 billion. On Government’s fiscal situation, we should not just
focus on the short-term situation, but should look at the fiscal position
over the entire economic cycle. The Government will uphold the
principle of keeping the expenditure within the limits of revenues as
enshrined under Article 107 of the Basic Law, and strive to achieve
fiscal balance and avoid deficits, thereby ensuring the resilience and
sustainability of our public finances.
71
Public Finance
Fiscal Consolidation Programme
223. We are taking steps to implement a comprehensive fiscal

consolidation programme. After taking account of the need to
strengthen momentum on economic growth and the burden of
businesses and the public, the programme focuses mainly on
expenditure cut with a view to restoring fiscal balance in a few years’
time, although some revenue measures have been included in a
pragmatic manner.
224. We will address the issue at its root by exercising stronger

control over the pace of expenditure growth through re-engineering of
business process or re-prioritisation. This notwithstanding, the
Government will remain committed to taking care of people’s needs by
continued allocation of resources for the provision and improvement of
public services.
72
Public Finance
Contain Growth of Operating Expenditure
225. We will strictly contain growth of operating expenditure by

introducing the following measures:
(a) continuing to maintain zero growth in the civil service

establishment, with the aim of containing the establishment
at a level not exceeding that as at end-March 2021; and
(b) implementing the Productivity Enhancement Programme as

announced earlier under which recurrent government
expenditure will be cut by one per cent for two consecutive
years. The resources thus saved will be re-allocated
internally for enhancing existing or introducing new public
services. To further contain the pace of expenditure
growth, on the premise that such schemes as the
Comprehensive Social Security Assistance Scheme and the
Social Security Allowance Scheme will not be affected, all
government departments need to cut recurrent government
expenditure by another one per cent in 2026-27.
226. Upon implementation of the measures to contain expenditure

growth, we forecast that the growth of operating expenditure will be
reduced from the annual average of seven per cent in the past five years
to an annual average of 2.2 per cent in the coming five years, which is
lower than the 5.5 per cent increase in GDP over the same period.
73
Public Finance
227. Moreover, I have requested the relevant bureaux to review the

mode of operation of the following two transport subsidy schemes that
incur higher expenditure with a rapid expenditure growth rate. We
have to emphasise that the Government has no intention to cancel these
schemes. The review aims to enable the continued provision of
subsidies of the schemes in a financially sustainable manner. We
anticipate that the above review will be completed within this year:
(a) Government Public Transport Fare Concession Scheme for

the Elderly and Eligible Persons with Disabilities (i.e. “the
$2 Scheme”): the annual expenditure of the scheme has
increased by over 200% from $1.3 billion in 2019-20 to
about $4 billion in 2023-24; and
(b) Public Transport Fare Subsidy Scheme: the annual

expenditure of the scheme has doubled from $1.7 billion in
2019-20 to the revised estimate of about $3.5 billion in
2023-24.
228. While we are controlling the growth rate of total expenditure,

the amount of resources we allocated to public services has still
recorded a significant increase. For example, recurrent expenditures
related to health, social welfare and education in 2024-25 amount to
$343.7 billion, up by 7.3 per cent over 2023-24 and by about
34.2 per cent over five years ago.
74
Public Finance
Review and Re-prioritisation of Capital Works
229. Implementation of infrastructure projects is not only an

investment for the future, it can also promote Hong Kong’s economic
development and enhance people’s livelihood. In recent years, the
Government has made all-out effort to press ahead with the land and
housing supply projects, including new development areas and new
towns, and also proposed a number of other works projects for
improving the environment and people’s livelihood, such as Kai Tak
Sports Park and Hospital Development Plan etc. It is estimated that
expenditure on capital works will start reaching its peak in the next
three years.
230. The Government needs to contain its expenditure on

infrastructure works at a sustainable level. To this end, relevant
bureaux and departments have reviewed the cost-effectiveness of works
projects and give due regard to priority and urgency to adjust the
implementation schedule. For some works projects which are at a
comparatively mature stage of planning, they will continue to be taken
forward by the relevant bureaux and departments as planned. They
include the site formation and infrastructure works for the Northern
Metropolis. As for some works projects that are currently at the
preliminary planning or conceptual stage, the implementation schedule
will be adjusted in light of their importance, etc.
231. In the MRF, capital works expenditure could be contained at

about $90 billion per annum on average. This figure still represents
an increase of about 17 per cent over the average annual expenditure of
$76 billion in the last five years, which demonstrates the Government’s
continued allocation of resources for capital works expenditure.
75
Public Finance
Increase Revenue
232. The key to boosting public revenue lies in sustained

high-quality economic development. Only through growing the
“economic pie” and enabling the economy to grow in a more robust and
diversified manner can we increase our revenue to support the building
of social infrastructure and people’s livelihood.
233. When considering measures for increasing revenue, we have to

take Hong Kong’s actual situation into account and avoid taking any
hasty actions that may affect local economic recovery and people’s
livelihood while at the same time maintaining the competitive edge of
the simple and low tax regime. Having considered the above factors
and based on the “affordable users pay” principle, we will implement
adjustments to the following individual tax items.
234. We propose to implement a two-tiered standard rates regime for

salaries tax and tax under personal assessment starting from the year of
assessment 2024/25. In calculating the amount of tax for taxpayers
whose net income exceeds $5 million and whose salaries tax or tax
under personal assessment is to be charged at a standard rate, the first
$5 million of their net income will continue to be subject to the standard
rate of 15 per cent, while the portion of their net income exceeding
$5 million will be subject to the standard rate of 16 per cent. It is
expected that about 12 000 taxpayers will be affected, accounting for
0.6 per cent of the total number of taxpayers chargeable to salaries tax
and tax under personal assessment. The government revenue will
increase by about $910 million each year. Even with the two-tiered
standard rates regime above in place, the new tax rates will still be lower
than those of other advanced economies.
76
Public Finance
235. The Government will introduce legislative amendments in the

first half of this year to implement the progressive rating system for
domestic properties, with the aim to bring the system into effect from
the fourth quarter of 2024-25 onwards. The new system will only
affect domestic properties with rateable value over $550,000, which
account for about 1.9 per cent of the relevant properties. It is
estimated that the system will contribute to an increase of about
$840 million in government revenue annually.
236. The Government will review various fees and charges in a

timely manner. Besides adhering to the “user pays” principle, the
affordability of the general public and businesses will also be taken into
account. Business registration fees will increase by $200 to
$2,200 per annum with effect from 1 April 2024. The last adjustment
to business registration fees was in 1994. We estimate that
government revenue will increase by about $295 million per annum.
To relieve the relevant impact, the business registration levy of $150
payable to the Protection of Wages on Insolvency Fund will be waived
for two years.
237. We propose to resume the collection of the Hotel

Accommodation Tax (HAT) at a rate of three per cent. It is
anticipated that government revenue will increase by about $1.1 billion
per annum. This will take effect from 1 January 2025 in order to allow
the hotel and tourism industries more time for preparation. The HAT
to be collected is estimated to only account for less than one per cent of
the total spending of overnight visitors in Hong Kong. In the coming
year, the Government plans to allocate over $1 billion for upgrading
tourism infrastructure and services to attract more high-spending
overnight visitors from different visitor source markets to Hong Kong.
77
Public Finance
Developments in International Taxation
238. We will continue to take forward the implementation of the

global minimum tax proposal drawn up by the Organisation for
Economic Co-operation and Development to address base erosion and
profit shifting. We aim to apply the global minimum tax rate of
15 per cent on large multinational enterprise groups with an annual
consolidated group revenue of at least EUR 750 million and impose the
Hong Kong minimum top-up tax starting from 2025. We are now
conducting consultation on the implementation of the above proposals
and expect to submit a legislative proposal to LegCo in the second half
of this year. It is estimated that these proposals will bring in tax
revenue of about $15 billion for the Government annually starting from
2027-28. Hong Kong maintains an edge over other tax jurisdictions
in terms of tax competitiveness after the implementation of the
proposals.
Investment Return of the Future Fund
239. As announced in the 2021-22 Budget, the accumulated

investment return of the Future Fund would be progressively reflected
in the Operating Account. The Government will submit a resolution
for passage by LegCo next month to complete the transfer
arrangements.
Bond Issuance
240. The issuance of Government bonds is conducive to the

development of the bond market and allows the use of the capital raised
from the market to drive green/sustainable and infrastructure projects.
I emphasise that proceeds from bond issuance will not be used for
funding government recurrent expenditure.
78
Public Finance
241. The Committee on the Financing of Major Development

Projects led by me has reviewed how to adopt an orderly and phased
approach in developing the Northern Metropolis. We plan to issue
bonds of about $95 billion to $135 billion per annum in the next
five years to drive the development of the Northern Metropolis and
other infrastructure projects. For the Kau Yi Chau Artificial Islands
project, we will continue to conduct relevant studies, and in considering
its concrete implementation timetable, we will take into account various
factors including the public finance position.
242. The Government will continue to adhere strictly to fiscal

discipline and keep the government debt at a prudent level. It is
expected that the ratio of Government debt to GDP will be in the range
of about 9 to 13 per cent from 2024-25 to 2028-29, which is much lower
than most of the other advanced economies.
79
Concluding Remarks
Concluding Remarks
243. Mr President, this year will still be fraught with uncertainties.

Investment sentiment and capital flows are under the sway of the
complicated and volatile external environment.
244. In the short term, we need to reinforce the momentum of our

economic recovery, while in the long run, we have to adjust our
economic growth model with enhancements to both “quality” and
“quantity”. By charting the course of high-quality development, we
will drive further innovations, bring in new services and products,
stimulate new demand and open up new markets. This is the
necessary path to take for the future development of Hong Kong.
245. Just as nature goes through endless evolutions, so economic

development has its cycles of ups and downs. New challenges and
future uncertainties may be disconcerting. But when we reflect on
decades of development in Hong Kong, it is obvious that the path we
have trodden, however winding or bumpy, has always led to a better
tomorrow.
246. The colour of the cover of this year’s Budget symbolises the
first glimmer of dawn, for this inspires hope, faith and our longing for
greater unity and harmony.
247. We have succeeded in turning challenges into greater

opportunities every step of the way. We owe every success to the
strong leadership of the Central People’s Government, the staunch
support from our country, as well as the agility and tenacity of
Hong Kong people.
80
Concluding Remarks
248. Our unique positioning and distinctive functions make us

irreplaceable as our country strides towards high-quality development
and the building of a great modern nation. And we have been playing
an active role in contributing to our country’s development. Our
country’s swift and steady progress, alongside a fast developing Asia,
has provided us with infinite opportunities along the way.
249. Hong Kong thrives on its cultural blend of East and West and
its connectivity to the world. It is also the only place in the world
where the global advantage and the China advantage come together in
a single economy. So long as we know where we stand and chart the
right direction, we will be able to give full play to our unique strengths.
By blazing new trails and firmly pressing ahead, Hong Kong will
certainly thrive and prosper, like a dragon soaring far and high in the
boundless sky. Thank you, Mr President.
81
THE 2024-25 BUDGET
Speech by the Financial Secretary, the Hon Paul MP Chan

moving the Second Reading of the Appropriation Bill 2024
Supplement and Appendices
Wednesday, 28 February 2024

SUPPLEMENT
Please visit our website at http://www.budget.gov.hk/2024/eng/speech.html for all

documents, appendices and statistics relating to the 2024-25 Budget. The Chinese
version can be found at http://www.budget.gov.hk/2024/chi/speech.html.
Contents
Pages
Rates (1)
Salaries Tax (2)
One-off Reduction of Tax (3)
Economic Performance in 2023 (4) – (7)
Economic Prospects for 2024 (8)

Supplement
EFFECT OF THE PROPOSED RATES CONCESSION(1)

ON MAIN PROPERTY CLASSES
2024-25 (2&8)
Property Type No Concession With Rates Concession
Average Rates Average Rates Average Rates Average Rates
Payable Payable Payable Payable
($ for the year) ($ per month) ($ for the year) ($ per month)
Private Domestic
Premises(3)
Small 6,648 554 5,688 474
Medium 13,332 1,111 12,348 1,029
Large 29,688 2,474 28,704 2,392
Public Domestic 3,168 264 2,436 203
Premises(4)
All Domestic 6,504 542 5,652 471
Premises(5)
Shops and 37,716 3,143 36,804 3,067
Commercial Premises
Offices 45,996 3,833 45,012 3,751
Industrial Premises(6) 18,684 1,557 17,736 1,478
All Non-domestic 36,144 3,012 35,292 2,941
Premises(7)
All Properties 10,152 846 9,300 775
(1) The proposed rates concession measure is capped at $1,000 per tenement for the first quarter of
2024-25. No rates will be charged on 37% of domestic ratepayers, and 28% of non-domestic
ratepayers for the first quarter of 2024-25. Overall speaking, about 36% of ratepayers will not
need to pay any rates for the first quarter of 2024-25.
(2) The rates payable have reflected the changes in rateable values for 2024-25 after the General
Revaluation.
(3) Domestic units are classified by saleable areas, as follows –
Small up to 69.9m² (up to 752 ft²)
Medium 70m² to 99.9m² (753 ft² to 1 075 ft²)
Large 100m² and over (1 076 ft² and over)
(4) Including Housing Authority and Housing Society rental units.
(5) Including car parking spaces in domestic premises.
(6) Including factories and storage premises.
(7) Including miscellaneous premises such as hotels, cinemas, petrol filling stations, schools and car
parking spaces in non-domestic premises.
(8) The effects of implementation of the proposed progressive rating system for domestic tenements in
the 4th quarter of 2024-25 have been taken into account.
(1)
Supplement
SALARIES TAX
Proposed Changes to Standard Rate
Present Proposed
Net income Standard Rate Net income Standard Rate

(%) (%)
Any amount 15 First $5,000,000 15
Remainder 16
Note: Salaries tax payable is calculated at progressive rates on a taxpayer’s net chargeable
income or at standard rate on his/her net income (before deduction of the allowances),
whichever is lower.
(2)
Supplement
EFFECT OF THE PROPOSED

ONE-OFF REDUCTION OF SALARIES TAX,
TAX UNDER PERSONAL ASSESSMENT AND PROFITS TAX
Year of Assessment 2023/24
Salaries tax and tax under personal assessment –

100% tax reduction subject to a cap at $3,000 per case
Average amount Average %

Assessable Income No. of taxpayers of tax reduction of tax reduced
$200,000 and below 187 000 $770 100%
$200,001 to $300,000 391 000 $2,230 57%
$300,001 to $400,000 373 000 $2,560 27%
$400,001 to $600,000 474 000 $2,720 13%
$600,001 to $900,000 335 000 $2,850 6%
Above $900,000 303 000 $2,910 1%
Total 2 063 000 — —
Note: In the fourth quarter of 2023, the number of employed persons in Hong Kong was
3.71 million.
Profits tax –
100% tax reduction subject to a cap at $3,000 per case
Average amount Average %

Assessable Profits No. of businesses# of tax reduction of tax reduced
$100,000 and below 49 700 $2,000 46%
$100,001 to $200,000 20 500 $3,000 18%
$200,001 to $300,000 11 800 $3,000 11%
$300,001 to $400,000 8 200 $3,000 8%
$400,001 to $600,000 11 400 $3,000 6%
$600,001 to $900,000 10 900 $3,000 4%
Above $900,000 47 700 $3,000 0.1%
Total 160 200 — —
Note: As at 31 December 2023, there were about 1.3 million corporations and 287 000
unincorporated businesses in Hong Kong.
#
Including 121 800 corporations and 38 400 unincorporated businesses.
(3)
Supplement
ECONOMIC PERFORMANCE IN 2023
1. Rates of change in the Gross Domestic Product and its expenditure

components and in the main price indicators in 2023:
(%)
(a) Growth rates in real terms of:
Private consumption expenditure 7.3
Government consumption expenditure -4.3
Gross domestic fixed capital formation 10.8

of which :
Building and construction 7.1
Machinery, equipment and intellectual 20.7
property products
Total exports of goods -10.3
Imports of goods -8.6
Exports of services 21.2
Imports of services 26.2
Gross Domestic Product (GDP) 3.2
Growth rate of per capita GDP in real terms 0.6
Per capita GDP at current market prices HK$396,900
(US$50,700)
(b) Rates of change in:

Underlying Composite Consumer Price Index 1.7
GDP Deflator 3.2
Government Consumption Expenditure Deflator 2.6
(c) Growth rate of nominal GDP 6.5
(4)
Supplement
2. Annual rates of change in total exports based on external merchandise trade

index numbers:
Total exports
In value terms In real terms

(%) (%)
2021 26 20
2022 -9 -15
2023 -8 -12
3. Annual rates of change in real terms of total exports by major market based
on external merchandise trade quantum index numbers:
Total exports
The
Total Mainland EU US India Taiwan
(%) (%) (%) (%) (%) (%)
2021 20 18 20 20 33 35
2022 -15 -21 -11 -11 26 0
2023 -12 -14 -15 -10 -9 -12
4. Annual rates of change in real terms of imports and retained imports based
on external merchandise trade quantum index numbers:
Imports Retained imports

(%) (%)
2021 18 13
2022 -14 -10
2023 -9 1
(5)
Supplement
5. Annual rates of change in real terms of exports of services by type:
Exports of services
Transport Travel Financial Other

Total services services services services
(%) (%) (%) (%) (%)
2021 3 6 -38 2 9
2022 0 -3 62 -2 -1
2023 21 5 523 -4 2
6. Hong Kong’s goods and services trade balance in 2023 reckoned on GDP
basis:
(HK$ billion)
Total exports of goods 4,497.1
Imports of goods 4,625.3
Goods trade balance -128.3
Exports of services 774.1
Imports of services 620.7
Services trade balance 153.4
Combined goods and services trade balance 25.1
(6)
Supplement
7. Annual averages of the unemployment and underemployment rates and

growth in labour force and total employment:
Growth in
Unemployment Underemployment Growth in total
rate rate labour force employment
(%) (%) (%) (%)
2021 5.2 2.6 -1.2 -0.6

2022 4.3 2.3 -2.4 -1.6
2023 2.9 1.1 0.8 2.2
8. Annual rates of change in the Consumer Price Indices:
Composite CPI
Underlying Headline CPI(A) CPI(B) CPI(C)
(%) (%) (%) (%) (%)
2021 0.6 1.6 2.9 1.0 0.9

2022 1.7 1.9 2.2 1.7 1.8
2023 1.7 2.1 2.3 2.0 2.0
(7)
Supplement
ECONOMIC PROSPECTS FOR 2024
Forecast rates of change in the Gross Domestic Product and main price indicators
in 2024:
(%)
Gross Domestic Product (GDP)
Real GDP 2.5 to 3.5
Nominal GDP 5.2 to 6.2
Growth rate of per capita GDP in real terms 2.1 to 3.1
Per capita GDP at current market prices HK$416,000-419,900

(US$53,300-53,800)
Composite Consumer Price Index

Underlying Composite Consumer Price Index 1.7
Headline Composite Consumer Price Index 2.4
GDP Deflator 2.7
(8)
APPENDICES
APPENDICES
Page
A. MEDIUM RANGE FORECAST 3
Forecast of government expenditure and revenue for the period up to 2028-29
B. ANALYSIS OF EXPENDITURE AND REVENUE 15
Allocation of resources among policy area groups and analysis of revenue
C. GLOSSARY OF TERMS 35
Note: Expenditure figures for 2023-24 and before have been adjusted to align with the definitions and policy
area group classifications adopted in the 2024-25 estimate.
—2—
APPENDIX A
MEDIUM RANGE FORECAST
—3—
—4—
Appendix A
CONTENTS Page
SECTION I FORECASTING ASSUMPTIONS AND BUDGETARY CRITERIA 6
SECTION II MEDIUM RANGE FORECAST 7
SECTION III RELATIONSHIP BETWEEN GOVERNMENT EXPENDITURE/ 11

PUBLIC EXPENDITURE AND GDP IN THE MEDIUM RANGE
FORECAST
SECTION IV CONTINGENT AND MAJOR UNFUNDED LIABILITIES 13
—5—
Appendix A – Contd.
SECTION I FORECASTING ASSUMPTIONS AND BUDGETARY CRITERIA

1 The Medium Range Forecast (MRF) is a fiscal planning tool. It sets out the high-level forecast of government
expenditure and revenue as well as the financial position covering the five-year period including the budget year, i.e. from
2024-25 to 2028-29.
2 A wide range of assumptions underlying the factors affecting Government’s revenue and expenditure are used to
derive the MRF. Some assumptions are economic in nature (the general economic assumptions) while others deal with
specific areas of Government’s activities (other assumptions).
General Economic Assumptions

Real Gross Domestic Product (real GDP)
3 GDP growth is forecast to range from 2.5% to 3.5% in real terms in 2024. We have used the mid-point of this
range forecast in deriving the MRF. For planning purposes, in the four-year period 2025 to 2028, the trend growth rate
of the economy in real terms is assumed to be 3.2% per annum.
Price change
4 The GDP deflator, measuring overall price change in the economy, is forecast to increase by 2.7% in 2024. For
the four-year period 2025 to 2028, the GDP deflator is assumed to increase at a trend rate of 2.3% per annum.
5 The Composite Consumer Price Index (CCPI), measuring inflation in the consumer domain, is forecast to increase
by 2.4% in 2024. Netting out the effects of various one-off relief measures, the underlying CCPI is forecast to increase
by 1.7% in 2024. For the ensuing period 2025 to 2028, the trend rate of increase for the underlying CCPI is assumed to
be 2.5% per annum.
Nominal Gross Domestic Product (nominal GDP)
6 Given the assumptions on the rates of change in the real GDP and the GDP deflator, the GDP in nominal terms is
forecast to increase by 5.2% to 6.2% in 2024, and the trend growth rate in nominal terms for the period 2025 to 2028 is
assumed to be 5.5% per annum.
Other Assumptions
7 Other assumptions on expenditure and revenue patterns over the forecast period are as follows –
 The operating expenditure for 2025-26 and beyond represents the forecast expenditure requirements for
Government.
 The capital expenditure for 2024-25 and beyond reflects the estimated cash flow requirements for capital projects
including approved capital works projects and those at an advanced stage of planning.
 The revenue projections for 2025-26 and beyond basically reflect the relevant trend yields.
Budgetary Criteria
8 Article 107 of the Basic Law stipulates that “The Hong Kong Special Administrative Region shall follow the
principle of keeping expenditure within the limits of revenues in drawing up its budget, and strive to achieve a fiscal
balance, avoid deficits and keep the budget commensurate with the growth rate of its gross domestic product.”
9 Article 108 of the Basic Law stipulates that “… The Hong Kong Special Administrative Region shall, taking the low
tax policy previously pursued in Hong Kong as reference, enact laws on its own concerning types of taxes, tax rates, tax
reductions, allowances and exemptions, and other matters of taxation.”
10 For the purpose of preparing the MRF, the following criteria are also relevant –
 Budget surplus/deficit
The Government aims to achieve, over time, a balance in the consolidated account.
 Expenditure policy
The general principle is that, over time, the growth rate of expenditure should be commensurate with the growth
rate of the economy.
 Revenue policy
The Government aims to maintain, over time, the real yield from revenue.
 Fiscal reserves
The Government aims to maintain adequate reserves in the long run.
—6—
SECTION II MEDIUM RANGE FORECAST

11 The financial position of the Government for the current MRF period (Note (a)) is summarised below –
Table 1
2023-24
Revised 2024-25 2025-26 2026-27 2027-28 2028-29
($ million) Estimate Estimate Forecast Forecast Forecast Forecast
Operating Account
Operating revenue (Note (b)) 513,920 580,729 620,551 666,626 695,468 732,345
Less: Operating expenditure (Note (c)) 606,272 613,785 622,585 639,234 654,194 676,695
Operating surplus / (deficit) (92,352) (33,056) (2,034) 27,392 41,274 55,650
Capital Account
Capital revenue (Note (d)) 40,651 52,298 82,906 103,570 127,613 153,823
Less: Capital expenditure (Note (e)) 121,610 163,083 164,719 178,205 154,801 131,382
Capital surplus / (deficit) (80,959) (110,785) (81,813) (74,635) (27,188) 22,441
Consolidated Account
Government revenue 554,571 633,027 703,457 770,196 823,081 886,168
Less: Government expenditure 727,882 776,868 787,304 817,439 808,995 808,077
Consolidated surplus / (deficit) before (173,311) (143,841) (83,847) (47,243) 14,086 78,091
issuance and repayment of bonds
Add: Proceeds from issuance of government 72,490 120,000 135,000 135,000 135,000 95,000
bonds (Note (f))
Less: Repayment of government bonds 800 24,217 44,819 54,933 106,345 107,899
(Note (f))
Consolidated surplus / (deficit) after (101,621) (48,058) 6,334 32,824 42,741 65,192
issuance and repayment of bonds
Fiscal reserves at 31 March 733,169 685,111 691,445 724,269 767,010 832,202

In terms of number of months of
government expenditure 12 11 11 11 11 12
In terms of percentage of GDP 24.5% 21.7% 20.7% 20.6% 20.7% 21.2%
—7—
Fiscal Reserves
12 Part of the fiscal reserves has, since 1 January 2016, been held in a notional savings account called the Future Fund,
which is placed with the Exchange Fund with a view to securing higher investment returns over a ten-year investment
period. The initial endowment of the Future Fund was $219,730 million, being the balance of the Land Fund on
1 January 2016. $4.8 billion of the consolidated surplus from the Operating and Capital Reserves was transferred to the
Future Fund as top-up in 2016-17. The arrangement thereafter is subject to an annual review by the Financial Secretary.
Table 2
Distribution of fiscal reserves at 31 March
2023-24
Revised 2024-25
Estimate Estimate
Future Operating and
($ million) Fund Capital Reserves Total
General Revenue Account 140,451 129,647 4,800* 124,847 129,647

Funds with designated use 225,778 213,298 213,298 213,298
Capital Works Reserve Fund 96,477 99,410 99,410 99,410
Capital Investment Fund 16,363 12,368 12,368 12,368
Civil Service Pension Reserve Fund 55,857 57,924 57,924 57,924
Disaster Relief Fund 9 200 200 200
Innovation and Technology Fund 28,149 17,987 17,987 17,987
Loan Fund 5,828 4,480 4,480 4,480
Lotteries Fund 23,095 20,929 20,929 20,929
Land Fund 366,940 342,166 342,166 - 342,166
733,169 685,111 346,966 338,145 685,111
In terms of number of months of 12 11 6 5 11

government expenditure
* Being one-third of 2015-16 consolidated surplus.
13 The fiscal reserves would be drawn on to fund contingent and other liabilities. As detailed in Section IV, these
include over $632 billion for capital works projects underway and about $559 billion as statutory pension obligations in
the coming ten years.
—8—
Notes –
(a) Accounting policies
(i) The MRF is prepared on a cash basis and reflects forecast receipts and payments, whether they relate to
operating or capital transactions.
(ii) The MRF includes the General Revenue Account and eight Funds (Capital Investment Fund, Capital Works
Reserve Fund, Civil Service Pension Reserve Fund, Disaster Relief Fund, Innovation and Technology Fund,
Land Fund, Loan Fund and Lotteries Fund). It does not include the Bond Fund which is managed separately
and the balance of which does not form part of the fiscal reserves.
(b) Operating revenue
(i) The operating revenue takes into account the revenue measures proposed in the 2024-25 Budget, and is made
up of –
2023-24
Revised 2024-25 2025-26 2026-27 2027-28 2028-29
Operating revenue before 448,563 499,798 571,308 633,391 662,545 703,847

investment income
Investment income 65,357 80,931 49,243 33,235 32,923 28,498
––––––– ––––––– ––––––– ––––––– ––––––– –––––––
Total 513,920 580,729 620,551 666,626 695,468 732,345
––––––– ––––––– ––––––– ––––––– ––––––– –––––––
(ii) Investment income under the Operating Account includes investment income of the General Revenue Account
(which is credited to revenue head Properties and Investments) and investment income of the Land Fund.
The rate of investment return is 3.7% for 2024 (vs 3.7% for 2023) and is assumed to be in the range of 2.9%
to 4.1% a year for 2025 to 2028.
(iii) Investment income of the Future Fund includes investment income of the relevant portion of the General
Revenue Account and investment income of the Land Fund, compounded on an annual basis. As directed
by the Financial Secretary, the investment income is reflected in the Government’s accounts on a progressive
basis starting from 2021-22.
(c) Operating expenditure
This represents expenditure charged to the Operating Account of the General Revenue Account and Land Fund.
The figures for 2025-26 and beyond set out the forecast operating expenditure requirements for Government.
—9—
(d) Capital revenue
(i) The breakdown of capital revenue is –
2023-24
Revised 2024-25 2025-26 2026-27 2027-28 2028-29
General Revenue Account 7,182 7,249 1,520 5,979 5,030 5,030

Capital Investment Fund 480 898 1,973 1,414 1,416 1,417
Capital Works Reserve Fund 19,539 33,008 66,700 85,000 110,000 135,000
Innovation and Technology Fund 70 - - - - -
Loan Fund 659 1,127 3,095 3,568 4,178 4,234
Lotteries Fund 1,153 1,149 1,138 1,145 1,148 1,150
––––––– ––––––– ––––––– ––––––– ––––––– –––––––
Capital revenue before investment 29,083 43,431 74,426 97,106 121,772 146,831
income
Investment income 11,568 8,867 8,480 6,464 5,841 6,992
––––––– ––––––– ––––––– ––––––– ––––––– –––––––
Total 40,651 52,298 82,906 103,570 127,613 153,823
––––––– ––––––– ––––––– ––––––– ––––––– –––––––
(ii) Land premium included under the Capital Works Reserve Fund for 2024-25 is estimated to be $33 billion.
For 2025-26 onwards, it is assumed to be 3.4% of GDP, being the 20-year historical average, with possible
adjustment with reference to the land sale programme.
(iii) Investment income under the Capital Account includes investment income of the Capital Investment Fund,
Capital Works Reserve Fund, Civil Service Pension Reserve Fund, Disaster Relief Fund, Innovation and
Technology Fund, Loan Fund and Lotteries Fund. The rate of investment return is 3.7 % for 2024 (vs 3.7%
for 2023) and is assumed to be in the range of 2.9% to 4.1% a year for 2025 to 2028.
(e) Capital expenditure

The breakdown of capital expenditure is –
2023-24
Revised 2024-25 2025-26 2026-27 2027-28 2028-29
General Revenue Account 7,595 9,586 9,296 9,901 10,371 9,420

Capital Investment Fund 2,826 5,451 6,631 6,510 5,364 3,386
Capital Works Reserve Fund 100,976 130,154 126,388 141,934 119,869 99,996
Disaster Relief Fund 164 - - - - -
Innovation and Technology Fund 5,645 11,081 13,423 11,721 11,464 11,537
Loan Fund 2,348 2,675 2,773 2,736 2,769 2,803
Lotteries Fund 2,056 4,136 6,208 5,403 4,964 4,240
––––––– ––––––– ––––––– ––––––– ––––––– –––––––
Total 121,610 163,083 164,719 178,205 154,801 131,382
––––––– ––––––– ––––––– ––––––– ––––––– –––––––
(f) Government bonds
The Government issued green bonds under the Government Green Bond Programme (GGBP) from 2019-20 to
2023-24, and plans to expand its scope to cover sustainable finance projects and continue to issue relevant bonds
from 2024-25 to 2028-29. In addition, the Government plans to issue infrastructure bonds under the Infrastructure
Bond Programme (IBP) to be established from 2024-25 to 2028-29. The actual size and timing of issuance will
be determined having regard to market conditions. The proceeds of the aforementioned Programmes are credited
to the Capital Works Reserve Fund to finance eligible projects.
— 10 —
SECTION III RELATIONSHIP BETWEEN GOVERNMENT EXPENDITURE/PUBLIC

EXPENDITURE AND GDP IN THE MEDIUM RANGE FORECAST
14 For monitoring purposes, expenditure of the Trading Funds and the Housing Authority (collectively referred to as
“other public bodies” in this Appendix) is added to government expenditure in order to compare public expenditure with
GDP.
Government Expenditure and Public Expenditure

in the Context of the Economy
Table 3
2023-24
Revised 2024-25 2025-26 2026-27 2027-28 2028-29
Operating expenditure 606,272 613,785 622,585 639,234 654,194 676,695

Capital expenditure 121,610 163,083 164,719 178,205 154,801 131,382
Government expenditure 727,882 776,868 787,304 817,439 808,995 808,077

Expenditure by other public bodies 42,544 53,126 60,322 64,238 66,264 68,698
Public expenditure (Note (a)) 770,426 829,994 847,626 881,677 875,259 876,775
Gross Domestic Product 2,991,328 3,161,800 3,335,700 3,519,200 3,712,800 3,917,000

(calendar year)
Nominal growth in GDP (Note (b)) 6.5% 5.7% 5.5% 5.5% 5.5% 5.5%
Growth in recurrent government 0.4% 7.0% 3.0% 4.3% 3.1% 3.8%
expenditure (Note (c))
Growth in government expenditure -10.2% 6.7% 1.3% 3.8% -1.0% -0.1%
(Note (c))
Growth in public expenditure -9.1% 7.7% 2.1% 4.0% -0.7% 0.2%
(Note (c))
Public expenditure in terms of 25.8% 26.3% 25.4% 25.1% 23.6% 22.4%
percentage of GDP
Notes –
(a) Public expenditure comprises government expenditure and expenditure by other public bodies. It does not include
expenditure by those organisations, including statutory organisations in which the Government has only an equity
position, such as the Airport Authority and the MTR Corporation Limited.
(b) For 2024-25, the nominal GDP growth of 5.7% represents the mid-point of the range forecast of 5.2% to 6.2% for
the calendar year 2024.
(c) The growth rates for 2023-24 to 2028-29 refer to year-on-year change. For example, the rates for 2023-24 refer
to the change between the revised estimate for 2023-24 and the actual expenditure in 2022-23. The rates for
2024-25 refer to the change between the 2024-25 estimate and the 2023-24 revised estimate, and so forth.
— 11 —
15 Table 4 shows the relationship amongst the sum to be appropriated in the 2024-25 Budget, government expenditure
and public expenditure.
Relationship between Government Expenditure

and Public Expenditure in 2024-25
Table 4
Government
expenditure and revenue Public
Appropriation expenditure
($ million) Operating Capital Total
Expenditure
General Revenue Account
Operating
Recurrent 580,213 580,213 - 580,213 580,213
Non-recurrent 33,571 33,571 - 33,571 33,571
Capital
Plant, equipment and works 5,912 - 5,912 5,912 5,912
Subventions 3,674 - 3,674 3,674 3,674
623,370 613,784 9,586 623,370 623,370
Transfer to Funds 185 - - - -
Capital Investment Fund - - 5,451 5,451 5,451
Capital Works Reserve Fund - - 130,154 130,154 130,154
Innovation and Technology Fund - - 11,081 11,081 11,081
Land Fund - 1 - 1 1
Loan Fund - - 2,675 2,675 2,675
Lotteries Fund - - 4,136 4,136 4,136
Trading Funds - - - - 5,012
Housing Authority - - - - 48,114
623,555 613,785 163,083 776,868 829,994
Revenue
Taxation 449,211 8 449,219
Other revenue 56,291 7,241 63,532
505,502 7,249 512,751

Capital Investment Fund - 1,456 1,456
Capital Works Reserve Fund - 37,304 37,304
Civil Service Pension Reserve Fund - 2,067 2,067
Disaster Relief Fund - 6 6
Innovation and Technology Fund - 919 919
Land Fund 75,227 - 75,227
Loan Fund - 1,327 1,327
Lotteries Fund - 1,970 1,970
580,729 52,298 633,027
Deficit (33,056) (110,785) (143,841)
— 12 —
SECTION IV CONTINGENT AND MAJOR UNFUNDED LIABILITIES
16 The Government’s contingent liabilities as at 31 March 2023, 31 March 2024 and 31 March 2025, are provided
below as supplementary information to the MRF –
Table 5
At 31 March
($ million) 2023 2024 2025
Guarantee to the Hong Kong Export Credit Insurance 44,078 48,966 52,174
Corporation for liabilities under contracts of insurance
Guarantees provided under the SME Financing Guarantee 141,411 146,070 114,787
Scheme
Legal claims, disputes and proceedings 16,007 18,235 15,349
Subscription to callable shares in the Asian Development 5,801 5,753 5,753

Bank
Subscription to callable shares in the Asian Infrastructure 4,800 4,779 4,779

Investment Bank
Guarantees provided under the SME Loan Guarantee 1,602 1,010 622
Scheme
Guarantees provided under a commercial loan of the 893 866 -

Hong Kong Science and Technology Parks Corporation
Guarantees provided under the Special Loan Guarantee 185 72 69

Scheme
–––––––– –––––––– ––––––––
Total 214,777 225,751 193,533
–––––––– –––––––– ––––––––
17 The Government’s major unfunded liabilities as at 31 March 2023 were as follows –
($ million)
Present value of statutory pension obligations (Note (a)) 1,015,397
Untaken leave (Note (b)) 28,171
Green bonds 122,498
Notes –
(a) The statutory pension obligations for the coming ten years are estimated to be about $559 billion in money of
the day.
(b) The estimate for “untaken leave” gives an indication of the overall value of leave earned but not yet taken by
serving public officers.
18 The estimated outstanding commitments of capital works projects as at 31 March 2023 and 31 March 2024 are
$613,946 million and $632,368 million respectively. Some of these are contractual commitments.
— 13 —
— 14 —
APPENDIX B
ANALYSIS OF EXPENDITURE AND REVENUE
— 15 —
— 16 —
Appendix B
CONTENTS Page
SECTION I THE ESTIMATES IN THE CONTEXT OF THE ECONOMY
Relationship between Government Expenditure, Public Expenditure and GDP 18
SECTION II RECURRENT PUBLIC/GOVERNMENT EXPENDITURE BY POLICY

AREA GROUP
Recurrent Public Expenditure : Year-on-Year Change 22
Recurrent Government Expenditure : Year-on-Year Change 23
Percentage Share of Expenditure by Policy Area Group 24

Recurrent Public Expenditure
Recurrent Government Expenditure
SECTION III TOTAL PUBLIC/GOVERNMENT EXPENDITURE BY POLICY

AREA GROUP
Total Public Expenditure : Year-on-Year Change 25
Total Government Expenditure : Year-on-Year Change 26
Percentage Share of Expenditure by Policy Area Group 27

Total Public Expenditure
Total Government Expenditure
SECTION IV MAJOR CAPITAL PROJECTS PLANNED FOR COMMENCEMENT 28

IN 2024-25
SECTION V TRENDS IN PUBLIC EXPENDITURE : 2019-20 TO 2024-25 30
SECTION VI ANALYSIS OF GOVERNMENT REVENUE 32
SECTION VII CLASSIFICATION OF POLICY AREA GROUP 33
— 17 —
Appendix B – Contd.
SECTION I THE ESTIMATES IN THE CONTEXT OF THE ECONOMY
Relationship between Government Expenditure, Public Expenditure and GDP
2024-25
Estimate
$m
Operating 613,784
Capital 9,586
—————
623,370
Capital Investment Fund 5,451
Capital Works Reserve Fund 130,154
Innovation and Technology Fund 11,081
Land Fund 1
Loan Fund 2,675
Lotteries Fund 4,136

—————
Government Expenditure 776,868
Trading Funds 5,012
Housing Authority 48,114

—————
Public Expenditure 829,994
—————
GDP 3,161,800
Public Expenditure in terms of percentage of GDP 26.3%
— 18 —
— 19 —
— 20 —
— 21 —
SECTION II RECURRENT PUBLIC/GOVERNMENT EXPENDITURE

BY POLICY AREA GROUP
Recurrent Public Expenditure : Year-on-Year Change
Increase/Decrease
over 2023-24
2023-24 Revised Estimate
2022-23 Revised 2024-25 in Nominal
B in Real
Actual Estimate Estimate Terms Terms
$m $m $m % %
Education 97,920 103,152 106,776 3.5 2.8
Social Welfare 104,797 112,368 127,362 13.3 10.9
Health 127,002 104,711 109,522 4.6 3.6
Security 55,105 57,071 60,885 6.7 5.9
Infrastructure 32,203 33,933 34,919 2.9 1.4
Environment and Food 22,987 24,598 26,485 7.7 5.8
Economic 20,660 20,788 23,115 11.2 9.6
Housing 18,392 19,469 21,004 7.9 5.5
Community and External Affairs 15,890 16,727 18,245 9.1 7.3
Support 67,687 72,415 76,666 5.9 4.3

———— ———— ————
562,643 565,232 604,979 7.0 5.6
———— ———— ————
GDP growth in 2024 5.2% to 6.2% 2.5% to 3.5%
— 22 —
SECTION II RECURRENT PUBLIC/GOVERNMENT EXPENDITURE

Recurrent Government Expenditure : Year-on-Year Change
Increase/Decrease
over 2023-24
2022-23 Revised 2024-25 in Nominal in Real
Actual Estimate Estimate
3 Terms Terms
$m $m $m % %
Education 97,920 103,152 106,776 3.5 2.8
Social Welfare 104,797 112,368 127,362 13.3 10.9
Health 127,002 104,711 109,522 4.6 3.6
Security 55,105 57,071 60,885 6.7 5.9
Infrastructure 31,988 33,710 34,659 2.8 1.3
Economic 15,814 16,607 18,784 13.1 11.6
Housing 672 745 830 11.4 11.3
Support 67,687 72,415 76,666 5.9 4.3

———— ———— ————
539,862 542,104 580,214 7.0 5.6
———— ———— ————
— 23 —
— 24 —
SECTION III TOTAL PUBLIC/GOVERNMENT EXPENDITURE
Total Public Expenditure : Year-on-Year Change
Increase/Decrease
over 2023-24
$m $m $m % %
Education 106,833 113,443 115,741 2.0 1.1
Social Welfare 110,194 117,771 136,211 15.7 13.0
Health 153,659 120,177 127,939 6.5 4.9
Security 65,954 62,757 68,352 8.9 7.8
Infrastructure 89,604 88,619 106,141 19.8 15.9
Economic 103,103 74,555 56,405 -24.3 -26.0
Housing 35,997 44,874 54,063 20.5 16.4
Support 116,963 77,637 83,583 7.7 5.8

———— ———— ————
847,538 770,426 829,994 7.7 5.6
———— ———— ————
— 25 —
SECTION III TOTAL PUBLIC/GOVERNMENT EXPENDITURE

Total Government Expenditure : Year-on-Year Change
Increase/Decrease
over 2023-24
$m $m $m % %
Education 106,833 113,443 115,741 2.0 1.1
Social Welfare 110,194 117,771 136,211 15.7 13.0
Health 153,659 120,177 127,939 6.5 4.9
Security 65,954 62,757 68,352 8.9 7.8
Infrastructure 89,357 88,349 105,821 19.8 15.9
Economic 97,942 69,963 51,713 -26.1 -27.7
Housing 4,344 7,192 5,949 -17.3 -19.6
Support 116,963 77,637 83,583 7.7 5.8

———— ———— ————
810,477 727,882 776,868 6.7 4.7
———— ———— ————
5.2% to 6.2% 2.5% to 3.5%

GDP growth in 2024
— 26 —
— 27 —
SECTION IV MAJOR CAPITAL PROJECTS PLANNED FOR COMMENCEMENT IN 2024-25
Major capital projects estimated to begin in 2024-25 include 
Project
Estimates
$ billion
Infrastructure 134.6
 Town Park with Public Vehicle Park in Area 66, Tseung Kwan O
 Drainage improvement works in Wong Tai Sin
 Drainage improvement works in Mong Kok—phase 1
 Drainage improvement works in Kwun Tong—phase 2
 Drainage improvement works in Sha Tin and Sai Kung—phase 1
 Drainage improvement works in Tai Po—phase 1
 The District Cooling System (DCS) for Hung Shui Kiu/Ha Tsuen New Development
Area, Phase 1 (stage 1 works)
 Dualling of Hiram’s Highway from Marina Cove to Sai Kung Town
 Northern Metropolis Highway—investigation
 Improvement works at Tsuen Tsing Interchange
 Hung Shui Kiu/Ha Tsuen New Development Area advance works phase 3—site
formation and engineering infrastructure
 Remaining phase of site formation and engineering infrastructure works at Kwu Tung
North New Development Area and Fanling North New Development Area—
construction
 Hung Shui Kiu/Ha Tsuen New Development Area stage 2 works—site formation and
engineering infrastructure
 Tung Chung New Town Extension—site formation and infrastructure works (Phase 2)
 Development of San Tin Technopole phase 1 stage 1 works—site formation and
engineering infrastructure
 Trunk Road T4 in Sha Tin
 Risk-based improvement of large diameter water mains, stage 1A
 Site formation and infrastructure works for public housing development at Tin Wah
Road, Lau Fau Shan
 Site formation and infrastructure works for public housing development at To Yuen
Tung, Tai Po
 Site formation and infrastructure works for public housing development at Tsing Yi
Road West, Tsing Yi
 Site formation and infrastructure works for public housing development at A Kung
Ngam Village, Eastern
 Site formation and infrastructure works for public housing development near Chai Wan
Swimming Pool, Chai Wan
Environment and Food 18.6

 Reprovisioning of cremators and related works at Kwai Chung Crematorium
 Construction of a new public market in Kwu Tung North New Development Area
 Relocation of Sha Tin Sewage Treatment Works to caverns—remaining works
 Construction and rehabilitation of sewage rising mains in Southern District
 Implementation of a Large scale Solar Farm at South East New Territories Landfill for
Supplying Renewable Energy to the Tseung Kwan O Desalination Plant
Health 11.5
 Reprovisioning of Victoria Public Mortuary
 Redevelopment of Shek Kip Mei Health Centre
 Funding provision to the Hospital Authority for Minor Works Projects
— 28 —
Project
Estimates
$ billion
Housing 9.8
 Implementation of Light Public Housing—the Second Batch of Projects
Support 6.2
 Hoi Ting Road Joint-user Complex
 Joint-user Complex with Market in Area 67, Tseung Kwan O
 Development of a Joint User Complex at Sheung Shui Areas 4 and 30
Education 5.5
 A 30-classroom Primary School at Area 89 (Northern side), Tung Chung
 A 30-classroom primary school at Area 17, Fanling North New Development Area
 A 30-classroom primary school at Area 29, Kwu Tung North New Development Area
 The Chinese University of Hong Kong—Engineering Building at Central Campus
 Construction of a new academic building on an extension site east of No. 3 Sassoon
Road (Main Works)
Community and External Affairs 4.7

 Amenity Complex in Area 103, Ma On Shan—main works
 Public Open Space at East Coast Park Precinct, North Point
 Cycle Track between Tsuen Wan and Tuen Mun—detailed design, site investigation and
construction (Stage 2)
— 29 —
SECTION V TRENDS IN PUBLIC EXPENDITURE : 2019-20 TO 2024-25
— 30 —
SECTION V TRENDS IN PUBLIC EXPENDITURE : 2019-20 TO 2024-25
— 31 —
SECTION VI ANALYSIS OF GOVERNMENT REVENUE
— 32 —
SECTION VII CLASSIFICATION OF POLICY AREA GROUP
Policy Area Group Policy Area (Note)
Community and External 19 District and Community Relations

Affairs 18 Recreation, Culture, Amenities and Entertainment Licensing
Economic 3 Air and Sea Communications and Logistics Development

6 Commerce and Industry
8 Employment and Labour
1 Financial Services
17 Information Technology and Broadcasting
34 Manpower Development
4 Posts, Competition Policy and Consumer Protection
7 Public Safety
5 Travel and Tourism
Education 16 Education
Environment and Food 2 Agriculture, Fisheries and Food Safety

32 Environmental Hygiene
23 Environmental Protection, Conservation, Power and Sustainable
Development
Health 15 Health
Housing 31 Housing
Infrastructure 22 Buildings, Lands, Planning, Heritage Conservation, Greening and

Landscape
21 Land and Waterborne Transport
24 Water Supply, Drainage and Slope Safety
Security 12 Administration of Justice

13 Anti-corruption
10 Immigration Control
9 Internal Security
11 Legal Administration
20 Legal Aid
Social Welfare 14 Social Welfare
Support 26 Central Management of the Civil Service

30 Complaints Against Maladministration
28 Constitutional and Mainland Affairs
27 Intra-Governmental Services
25 Revenue Collection and Financial Control
29 Support for Members of the Legislative Council
Note: Details of individual heads of expenditure contributing to a particular policy area are provided in an index in
Volume I of the 2024-25 Estimates. The index further provides details, by head of expenditure, of individual
programmes which contribute to a policy area.
— 33 —
— 34 —
APPENDIX C
GLOSSARY OF TERMS
— 35 —
— 36 —
Appendix C
GLOSSARY OF TERMS
Note: Terms shown in bold italic are defined elsewhere in the glossary.
Capital expenditure. This comprises all expenditure charged to the Capital Account of the General Revenue Account,
Capital Investment Fund, Capital Works Reserve Fund (including interest on government bonds but excluding
repayment of the bonds), Disaster Relief Fund, Innovation and Technology Fund, Loan Fund and Lotteries Fund.
Major items are highlighted below –

equipment, works and capital subventions of a minor nature
Capital Investment Fund

advances and equity investments
Capital Works Reserve Fund

acquisition of land
capital subventions
computerisation
interest and other expenses on government bonds
major systems and equipment
Public Works Programme expenditure
Disaster Relief Fund

relief to disasters that occur outside Hong Kong
Innovation and Technology Fund

projects promoting innovation and technology upgrading in manufacturing and service industries
Loan Fund
loans made under various development schemes supported by the Government
loans to schools, teachers, students, and housing loans to civil servants, etc.
Lotteries Fund
grants, loans and advances for social welfare services
Capital surplus. The difference between capital revenue and capital expenditure.
Capital revenue. This comprises certain revenue items in the General Revenue Account and all receipts credited to
seven Funds, as highlighted below –

disposal proceeds of government quarters and other assets
estate duty
loan repayments received
recovery from Housing Authority
Capital Investment Fund

dividends from investments
interest on loans
investment income
proceeds from sale of investments
— 37 —
Appendix C – Contd.
Capital Works Reserve Fund

investment income
land premium
recovery from MTR Corporation Limited
Civil Service Pension Reserve Fund

investment income
Disaster Relief Fund

investment income
Innovation and Technology Fund

investment income
proceeds from sale of investments
Loan Fund
interest on loans
investment income
proceeds from sale of loans
Lotteries Fund
auctions of vehicle registration numbers
investment income
share of proceeds from the Mark Six Lottery
Consolidated surplus / (deficit) before issuance and repayment of bonds. The difference between government
revenue and government expenditure.
Fiscal reserves. The accumulated balances of the General Revenue Account, Capital Investment Fund, Capital Works
Reserve Fund, Civil Service Pension Reserve Fund, Disaster Relief Fund, Innovation and Technology Fund, Land
Fund, Loan Fund and Lotteries Fund.
Future Fund. It is the part of the fiscal reserves which is set aside for longer-term investment with a view to securing
higher investment returns for the fiscal reserves. It is a notional savings account established on 1 January 2016. It
comprises the balance of the Land Fund as its initial endowment and top-ups from consolidated surpluses to be
transferred from Operating and Capital Reserves which is the part of the fiscal reserves outside the Future Fund.
Government expenditure. The aggregate of operating expenditure and capital expenditure. Unlike public
expenditure, it excludes expenditure by the Trading Funds and the Housing Authority.
Government revenue. The aggregate of operating revenue and capital revenue.
Operating and Capital Reserves. With the establishment of the Future Fund, the part of the fiscal reserves outside
the Future Fund is collectively known as the Operating and Capital Reserves.
Operating expenditure. All expenditure charged to the Operating Account of the General Revenue Account and the
Land Fund.
— 38 —
Appendix C – Contd.
Operating revenue. This comprises all revenue credited to the General Revenue Account (except those items which
are treated as capital revenue) and the Land Fund, as highlighted below –

duties
fines, forfeitures and penalties
investment income
rents and rates
royalties and concessions
taxes
utilities, fees and charges
Land Fund
investment income
Operating surplus / (deficit). The difference between operating revenue and operating expenditure.
Public expenditure. Government expenditure plus expenditure (operating and capital) by the Trading Funds and the
Housing Authority.
Transfer to Funds. Transfers between the General Revenue Account and the eight Funds (Capital Investment Fund,
Capital Works Reserve Fund, Civil Service Pension Reserve Fund, Disaster Relief Fund, Innovation and
Technology Fund, Land Fund, Loan Fund and Lotteries Fund) are not counted as government revenue and
expenditure as these are merely internal transfers within Government’s accounts.
— 39 —

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THE 2024-25 BUDGET

Speech by the Financial Secretary, the Hon Paul MP Chan

Mr President, Honourable Members and fellow

I move that the Appropriation Bill 2024 be read a second time.

3. Meanwhile, geopolitical uncertainties and high interest rates

4. Amid a complicated and ever-changing international

5. Innovation and technology as well as data empowerment will

6. Underpinned by our country’s firm and steady development,

7. Our public finances, nevertheless, need consolidation as the

8. The theme of this Budget is: “Advance with Confidence.

Economic Situation in 2023

9. In 2023, the Hong Kong economy returned to normalcy in the

10. Private consumption expenditure increased 7.3 per cent in real

11. Visitor arrivals bounced back sharply, to about 34 million last

12. Nonetheless, the challenging external environment continued to

13. The labour market continued to improve. The seasonally

14. Inflation remained moderate in overall terms. While prices of

16. As for residential property, market sentiment has become very

Economic Outlook for 2024 and the Medium Term

17. The external environment remains complicated. Geopolitical

18. The Mainland’s export performance this year will continue to

19. Among advanced economies, the US this year is expected to

20. The external environment will continue to put pressure on

21. On the other hand, with the continued revival of handling

22. Moreover, rising incomes among the general public will

23. Having regard to the above factors, we forecast that the

24. Domestic cost pressures are expected to increase alongside the

27. Based on the above considerations, we forecast that the

28. The economic environment has been rather difficult in recent

29. That said, Hong Kong’s economic outlook is bright. Despite

Attracting Enterprises, Capital and Talent on All Fronts

31. Our economy will develop better by drawing together a larger

Attract Strategic Enterprises

32. Next month, 10-plus strategic enterprises will sign a partnership

Hong Kong Investment Corporation Limited

33. Performing its role of channelling capital and leveraging market

34. The HKIC will also encourage enterprises in its investment

35. To enhance Hong Kong’s attractiveness to enterprises and

36. We have already taken the first step by putting in place

Opening Up New Capital Sources

37. Alongside our longstanding efforts to reinforce Hong Kong’s

38. A larger pool of talent can boost economic development and

39. In recent years, we have rolled out a number of measures,

40. The median average age of successful applicants of the TTPS is

41. The Hong Kong Talent Engage (HKTE) is committed to

Creating Favourable Conditions for Recovery

42. The Government announced on 25 October 2023 the adjustment

43. We have been keeping a close watch on the residential property

44. The HKMA adjusted the countercyclical macroprudential

45. During the past year, we have made good progress in

46. We are actively implementing measures proposed, last October,

47. The Securities and Futures Commission of Hong Kong (SFC)

(a) enhancing the listing regime: explore enhancing the process

(b) improving the transaction mechanism: explore reducing the

(c) boosting investor services: explore refining real-time,

(d) stepping up market promotion: the HKEX will strengthen

48. To further enhance market competitiveness, stamp duties

Assisting Small and Medium Enterprises

49. Taking into consideration that the strength of our economic

SME Financing Guarantee Scheme