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.
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.
The industry, one of the four pillars of the city’s economy together with trading and logistics, financial services as well as professional and producer services, will get a makeover with Chan’s pledge of a cash infusion of HK$706 million.
Of that sum, HK$310 million will be spent rejuvenating the loss-making Ocean Park and repositioning it as an “education and tourism project”.
While large-scale theme parks and tourism infrastructure mushroom across the border and in the region, the upgrade in tourism and cultural facilities is long overdue, but better late than never.
One spending surprise was the HK$20 billion earmarked for developing and renovating cultural facilities. The windowless Cultural Centre in Tsim Sha Tsui will be renovated and City Hall in Central, which is nearly 60 years old, will be expanded.
Despite widespread reports that Chan was not Chief Executive Carrie Lam Cheng Yuet-ngor’s No 1 choice as financial secretary, the budget reflected a more unified team compared to the last administration.
Lam complimented Chan for what she said were forward-looking fiscal principles and strategic fiscal management that made good use of the surplus to invest in Hong Kong’s future and ease people’s burdens. Chan pointed out that this fiscal philosophy was Lam’s visions and he “agreed entirely” with her.
She also felt “grateful” for Chan’s decision to budget HK$2 billion for education, a key area in her election manifesto.
In the Leung Chun-ying regime, it was an open secret Chan’s predecessor John Tsang Chun-wah and Leung had divergent views on public finance – with Leung more inclined to spend the government coffers while Tsang preferred salting it away for the proverbial rainy day. Leung and Tsang’s political face-off spilled into the public in September 2016 during the controversy surrounding a housing project in Wan Chau, Yuen Long.
If Chan has overcome the challenge in making a difference from his predecessor and forming a team with his boss, a greater challenge ahead is making it all happen. Ambition is one thing, action is another.
Examples of dashed dreams abound but one is salutary. The planned Lok Ma Chau Loop near the border, an 87-hectare site and a centrepiece of Chan’s budget to be turned into a hi-tech powerhouse in 2023. Dust off old plans and you find this area identified in 2007 as an infrastructure development. Today it remains a tranquil green belt dotted with fish ponds.
Denise Tsang is Hong Kong news editor with the Post.