Hong Kong financial chief Paul Chan has made a difference with his budget but can he match ambition with action?
Chan’s budget reflects a more harmonious working relationship with his boss Carrie Lam compared with that of their predecessors John Tsang and Leung Chun-ying, Denise Tsang writes
In setting out the fiscal blueprint for 2018-19, Financial Secretary Paul Chan Mo-po broke considerable new ground on both the financial and political fronts.
With the wild card of a record HK$138 billion surplus amassed in the 2017-18 financial year, Chan sought to map out the path ahead by earmarking nearly 40 per cent of the windfall to easing the public’s immediate burdens and tens of billions on investing in the economic future.
In the short-run, whether one is from the middle-class or grass roots, single or married, a student or an elderly person, one can take home sweeteners ranging from free Ocean Park tickets to tax reliefs and allowances.
At a time when the city has been branded a regional laggard in innovation and technology, and Shenzhen and Guangzhou have trumpeted their economic achievements in overtaking Hong Kong, Chan placed top priority on sowing for the economic future through greater IT investments.
After committing HK$10 billion to the emerging industries of biotechnology, artificial intelligence (AI), smart city and financial technologies (fintech) last year, he promised to spend HK$50 billion in these areas for future growth. While Hong Kong is heading in the right direction with a firmer embrace of IT development, new economies take years to bear fruit.
A case in point is Shenzhen. The special economic zone has been investing about 4 per cent of GDP in the past few years into IT development, which saw the industry replace the growth engine of labour-intensive and low-value manufacturing.
As Shenzhen and Guangzhou power ahead, can Hong Kong leapfrog the competition?
Still, for now, Hong Kong remains a service-based economy, and Chan’s unexpected plan to reinvent Hong Kong’s tourism sector is to be welcomed.