Economists and policymakers are keen to see pragmatic, feasible and coherent answers in the Policy Address to pressing and long-term issues stunting Hong Kong’s business growth and economic revival.
Chong Tai-leung, associate professor at the Chinese University of Hong Kong’s economics department, calls for a concrete and thought-out timeline for quarantine-free travel between the special administrative region and the Chinese mainland, saying normalization of cross-border travel, economic and social exchanges is the most urgent and pressing matter for the city’s economic resurrection.
The protracted travel restrictions have taken a toll on Hong Kong’s economy, affecting almost all industries. This has led to the labor force contracting by more than 100,000 workers so far this year, compared with the same period of 2021, and having shrunk by nearly 300,000 since early 2020 because of the exodus of residents, says Chong. “It’s high time we ponder how to attract new blood to our city to replenish the hollowed-out labor market.”
He says it’s even more worrying that Hong Kong’s GDP declined in the first two quarters of this year. He sees a consecutive decline in the GDP as an “unnerving and menacing” sign that “deserves hard thought”.
The economist also says the SAR’s imports, exports and re-exports performance has been well below par, lagging far behind the mainland. These conundrums must be prioritized and confronted head-on.
Lawmaker and solicitor Kennedy Wong Ying-ho says efforts to promote digital commerce, such as providing substantial aid to e-commerce companies, should be given high priority in the Policy Address.
At a press conference held by the Democratic Alliance for the Betterment and Progress of Hong Kong last month, he hailed the setting up of the Digital Economy Development Committee by the government in June as “commendable”. However, more has to be done to help the e-commerce and digital economy take off. “Explicit directions and an appraisal system for key performance indicators should be introduced, with the value of e-commerce sales in relation to GDP being evaluated (to keep track of e-commerce’s popularity and expansion). Guangdong province has set a textbook example in this regard,” says Wong.
He hopes the SAR government will also consider creating a framework for tax exemption on e-commerce and trade for small and medium-sized enterprises, starting from HK$50,000 ($6,410). The government should further coordinate and integrate available resources to unlock more business opportunities in digital commerce, focusing on exports to and imports from the Guangdong-Hong Kong-Macao Greater Bay Area, the Association of Southeast Asian Nations, and the Belt and Road countries and regions.
Wong also refers to the Dedicated Fund on Branding, Upgrading and Domestic Sales — a government initiative rolled out in 2012 which has since been expanded to better support local enterprises in exploring more diversified markets and capturing the opportunities.
Since last year, the SAR government has launched a multitude of enhancement measures, including extending the geographical coverage of the BUDS Fund to include all economies with which Hong Kong has signed Free Trade Agreements or Investment Promotion and Protection Agreements; and raising the cumulative funding ceiling per enterprise to HK$6 million ($769,000). Wong said the funding should be further increased.
Pang Chor-fu, a member of the Election Committee, says incorporating the key performance indicator into the e-commerce industry development strategy is a brilliant proposal to expedite the expansion of digital commerce and the digital economy as a whole.
Since Hong Kong plays a pivotal role in the global dual economy climate, digital commerce and trade between Hong Kong and cities in regional economic clusters, such as ASEAN and the Greater Bay Area, inject tremendous momentum into the dual circulation dynamics, says Pang.
If the government could attend to the complex and demanding groundwork involved in digital commerce activities, it would offer great relief and ease to Hong Kong’s e-commerce enterprises, particularly small and medium-sized firms.
Li Chen, a professor at the Chinese University of Hong Kong and research fellow at the university’s Lau Chor Tak Institute of Global Economics and Finance, expects the upcoming Policy Address to be driven by and filled with “pragmatism, problem-solving and consensus building, and, above all, a commitment to turning vision into action and solutions”.
jenny@chinadailyhk.com