‘More resources needed to develop Hong Kong’s technology industry’
Latest in series of debates organised by the Post also argues city needs to widen its tax base
Hong Kong should input more resources to shore up the IT development and widen its tax base for a sustainable growth engine, panellists said yesterday at a forum on the financial secretary’s latest budget.
The debate, on whether Hong Kong faces a healthy or bleak economic future, was the latest in the “Redefining Hong Kong” debate series organised by the South China Morning Post.
On Wednesday, Financial Secretary John Tsang Chun-wah dished out a HK$38.8 billion package to jump-start the ailing economy, and announced a series of economic incentives such as the setting up of a HK$500 million voucher scheme to allowing small and medium-sized enterprises to apply for a technological services subsidy.
However, information technology lawmaker Charles Mok said he understood the scheme will be limited to government-subsidised service providers, such as universities and research centres.
“It would be a mistake, as the solutions offered by other local IT companies... will be [excluded],” Mok said. “The government needs to innovate itself.”
He said the city should also spend more resources on nurturing talents and beefing up technology development for future growth.
Denis Ma, head of research at JLL, also suggested that without spending more on research and development, the initiatives in the budget would be piecemeal.
“If you look at the amount of investment on R&D in Hong Kong, it’s less than 1 per cent of the GDP, but you look at ... Singapore, Korea, China, they are spending [more].”
In 2014, Shenzhen’s overall investment in R&D reached 64.3 billion yuan (HK$76.5 billion), accounting for 4 per cent of the city’s GDP.
Ronny Tong Ka-wah, who resigned as a lawmaker, quit the Civic Party and formed the Path of Democracy think tank last year, said he would rather look at “the bigger picture”.
“Tsang always talks about the tax base in Hong Kong being too restrictive and we really need to widen the tax base, but he has done nothing about it,” Tong said.
He said while former financial chief Henry Tang Ying-yen’s bid to introduce a goods and services tax was abandoned amid public outrage in 2006, it was mainly because the minister failed to come up with exemptions for the lower class.
“You look at our taxation system, you can’t help to think that there is a lot of room for improvement,” Tong added.
Ernst & Young Hong Kong and Macau managing partner, Agnes Chan endorsed Tong’s idea.
“[Some] 169 countries ... have a GST, and at the same time they have room to reduce direct tax and keep themselves a lot more competitive in the market,” Chan said, adding that the tax would also stabilise public revenue.
The financial secretary expected profits tax to contribute 28 per cent of the HK$498 billion in government’s revenue in the coming year, while land premium and salaries tax will contribute 13 and 12 per cent respectively.