Hong Kong Business News

A number of initiatives and measures aimed at accelerating high-quality development were announced in today’s 2024-25 Budget, with the Government emphasising a move towards a green future and digitalisation.

Explaining that high-quality development spurs ongoing economic innovation and growth whilst conserving the natural environment, Financial Secretary Paul Chan said Hong Kong must pursue opportunities through leveraging its advantages under “one country, two systems”, namely those of enjoying strong support at a national level and being closely connected to other parts of the world.

He stressed that green development involves huge business opportunities and financing needs, as governments and businesses around the world pursue carbon neutrality and green transformation. In addition, he said digitalisation has become a new driving force for economic development, empowering enterprises to enhance efficiency, boost their competitiveness and achieve new growth.

Introducing a host of green development measures, Mr Chan stressed that Hong Kong is a rising international green finance centre. He pointed out that the Government is this week hosting “Hong Kong Green Week”, which comprises events covering technology, finance and other fields, and that the Monetary Authority (HKMA), in collaboration with the Dubai Financial Services Authority, will co-host a Joint Climate Finance Conference in Hong Kong in the autumn.

The finance chief said the Government proposes to extend the Green and Sustainable Finance Grant Scheme, due to expire in mid-2024, to 2027, and to expand the scope of the subsidies it provides to include transition bonds and loans, helping enterprises to access transition financing as they move towards decarbonisation. He outlined that under the scheme the Government has so far provided subsidies totalling US$100 billion for the issuance of more than 340 green and sustainable debt instruments.

In addition, Mr Chan said the Financial Service & the Treasury Bureau and the Securities & Futures Commission will formulate a roadmap and vision statement to assist companies and financial institutions in sustainability reporting and the analysis of relevant data, in line with international standards.

Highlighting that more than 200 green technology companies work out of Hong Kong, and that Greater Bay Area cities on the Mainland have strong capabilities in research, advanced manufacturing and commercialisation, Mr Chan said that the region as a whole has what it takes to become Asia’s leading green technology hub. He outlined that the Government’s Green Tech Fund has so far approved grants of about $130 million to fund 30 projects aimed at helping Hong Kong to decarbonise and enhance environmental protection.

He announced that the Government will launch a Green & Sustainable Fintech Proof‑of‑Concept Subsidy Scheme in the first half of this year and explained that it will provide early-stage funding support, facilitate commercialisation and foster the development of new green fintech initiatives.

With regard to shipping, Mr Chan said 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, and that this will involve about $65 million in funding.

Moreover, the Transport & Logistics Bureau, in collaboration with the Environment & Ecology Bureau (EEB) and other relevant departments, is conducting a feasibility study to provide green-methanol bunkering for local and ocean‑going vessels. The Government expects to publish an action plan for Hong Kong’s development into a green maritime fuel-bunkering centre this year.

On aviation, Mr Chan iterated that the Government is committed to developing Hong Kong International Airport into a green airport. The Airport Authority is working in collaboration with relevant government departments to simplify approval procedures for the transportation and storage of Sustainable Aviation Fuel, so as to encourage more airlines to use it in Hong Kong. 

The Financial Secretary also highlighted that the Government is taking the lead in adopting renewable energy in its buildings and facilities and revealed that a pilot scheme will be launched at the headquarters of the Electrical & Mechanical Services Department to explore photovoltaic technology applications on the facades of government buildings. 

In terms of new energy vehicles, Mr Chan said that first registration tax (FRT) concessions for electric vehicles, which had been due to terminate at the end of March, will be extended for two years, although the concessions will be reduced by 40% in light of price reductions for electrical vehicles.

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, while 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.

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.

In the agricultural sector, Mr Chan said the Government this year expects to enable the establishment of a modernised Techno‑Agricultural Park, spanning approximately 11 hectares, as part of the Agricultural Park’s Phase 2. A modern urban farming pilot project will also be launched in Ma On Shan. Moreover, four new fish culture zones, comprising a total area of up to 590 hectares, will begin operation in phases starting this year.

Turning to digitalisation, Mr Chan said the Digital Economy Development Committee, which he chairs, has conducted research and made recommendations in several areas, adding that some of these have been implemented, including preparations having been made for the establishment of a Digital Policy Office.

He also explained that an expert group has been commissioned to undertake an in-depth study on how to develop a robust data trading ecosystem in Hong Kong that enhances the city’s role as a “super connector” in data trading while also promoting the formulation of international data trading rules. 

On digital finance, Mr Chan said the HKMA had competed Phase 1 of its e-HKD Pilot Programme, in which it studied domestic retail uses cases in various areas including programmable payments, offline payments and tokenised deposits. Phase 2 of the pilot programme, exploring further use cases, will soon commence. Meanwhile, Phase 1 of Project mBridge is expected to launch this year and will become one of the first projects around the world to facilitate the settlement of cross‑boundary transactions for corporates using central bank digital currencies.

Meanwhile, the scope of e‑CNY pilot testing in Hong Kong will be expanded. Members of the public can now easily set up e‑CNY wallets and top up their funds using the Faster Payment System.

On promoting cross-boundary data flow, Mr Chan said the Innovation, Technology & Industry Bureau and the Cyberspace Administration of China had launched a pilot implementation arrangement on the flow of personal information within the bay area in December and that responses to it from the banking, credit referencing and healthcare sectors had been very positive. He added that the facilitation measures under the arrangement would be gradually extended to other business sectors, thereby providing more cross-boundary services for the convenience of the public and enterprises.

In terms of cross-boundary access to public services, Mr Chan mentioned that the Government has connected iAM Smart with Guangdong’s Unified Identity Authentication Platform, set up iAM Smart registration service counters in Guangzhou and Shenzhen, and introduced the first self‑service kiosk for accessing Hong Kong cross-boundary public services in Guangzhou.

With regard to the development of the Web 3.0 ecosystem, the finance chief said good progress had been made since last year. He highlighted that at present Cyberport has over 220 enterprises specialising in related technologies, including three unicorns.

Meanwhile, the Government issued a second batch of tokenised green bonds, worth a total of $6 billion and denominated in Hong Kong dollars, renminbi, US dollars and Euros, this month. Mr Chan said this was 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. 

Moreover, he highlighted that 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 protections and risk management systems. He also explained that a consultation on the regulation of over-the-counter trading in virtual assets (VA) has been launched.

Mr Chan announced that the Government will set up a “digital identity of enterprises” platform that will act as the business version of iAM Smart. The platform will enable authentication of identity and verification of signature for enterprises using electronic government services or conducting online business transactions in a secure, convenient and efficient manner. The cost involved is estimated to be about $300 million and the aim is to roll the platform out in stages from the end of 2026 onwards.  

In addition, the finance chief revealed that the Government will allocate $100 million over the next three years under the Social Innovation & Entrepreneurship Development Fund to provide people aged 60 or above with digital training courses and technical support, helping them to integrate into the digital era more easily. The first batch of projects is expected to commence in the fourth quarter of 2024 at the earliest and will benefit at least 50,000 elderly people.

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