Hong Kong Budget 2012-13 Highlights

Econimic Forecast

• Forecast GDP growth is 1?%.
  
• Headline inflation rate is estimated at 3.5%.

Government Expenditures

• Government expenditure is estimated to reach $393.7 billion for 2012?3, an increase of 7% compared with the revised estimate for 2011?2; total government revenue will be $390.3 billion.

Stabilise the Economy

Supporting Enterprises

To help enterprises lower their operating costs in a difficult external economic environment and to minimise unemployment, the following measures will be introduced:

• Enhance the existing SME Financing Guarantee Scheme by increasing the maximum loan guarantee ratio to 80% for which the Government will provide a guarantee commitment of $100 billion while the guarantee fee will be lowered.
  
• The Hong Kong Export Credit Insurance Corporation will offer new policy terms which will include special concessions for SME policyholders who will be allowed to insure their exports only for places and buyers of their choice, and will be entitled to various premium discounts.
  
• Waive business registration fees for 2012?3. This proposal will cost the Government $1.9 billion.
  
• Reduce profits tax for 2011?2 by 75%, subject to a ceiling of $12,000. This proposal will cost the Government $1.12 billion.
  
• Halve the charges for import and export declarations and abolish capital duty levied on local companies. These measures will cost the Government $840 million a year.
  
  

Preserving Employment

• Earmark $220 million to support the Construction Industry Council in enhancing manpower training to bring fresh blood into the industry to meet the demand created by future infrastructure developments.
  
• The Employees Retraining Board will offer 130,000 training places for the unemployed and people seeking employment. Adequate resources have been reserved for providing an additional 30,000 training places to meet contingencies.
  
• The Vocational Training Council will set up an International Cuisine College which is expected to admit its first cohort of students in the 2014?5 academic year. It will provide more than 2,000 places a year.
  
• Inject $100 million into the Enhancing Employment of People with Disabilities through Small Enterprises Project, under which funding is granted to non-government organisations to set up small enterprises employing people with disabilities.
  
• Continue to pursue the Youth Pre-employment Training Programme and Youth Work Experience and Training Scheme, Employment Programme for the Middle-aged, and Work Orientation and Placement Scheme.
  These projects benefit 20,000 job seekers each year and involve an annual expenditure of $175 million.
  
  

Increasing Land Supply

Residential and Business Sites:

• It is estimated that the housing land supply in aggregate for 2012?3 will provide some 30,000 private residential flats.
  
• The Application List in the Land Sale Programme will include 47 residential sites, of which half are new sites. They will provide some 13,500 units.
  
• A public consultation will be launched on two property projects above the West Rail Kam Sheung Road Station and Pat Heung Depot of the Mass Transit Railway Corporation. It is estimated that these projects will provide about 8,700 flats.
  
• Increase the supply of business sites by introducing measures including “Energizing Kowloon East? revitalising industrial buildings and relocating government departments from core business districts.

Subsidised Housing:

• Total production of public rental housing flats will be 75,000 in the five-year period starting from 2011?2 with an aim to maintain the average waiting time
  at around 3 years. The production volume will be adjusted when necessary.
  
• 6 sites in Shatin, Tsuen Wan, Kwai Tsing and Yuen Long have been initially identified for the first batch of developments under the new Home Ownership Scheme.
  
• The Government has earmarked a number of sites for about 5,000 flats under My Home Purchase Plan. The first development project at Tsing Yi will provide 1,000 flats which will be completed in 2014. Application for pre-letting will begin in the fourth quarter of this year. The second development project at Shatin will provide about 700 units.

Urban Renewal:

• Accelerate the renewal of old industrial areas to release more sites for residential or commercial development.
  
• Urban Renewal Authority (URA) is invited to launch redevelopment projects of industrial buildings in the form of a pilot scheme. Subject to the results of
  the pilot scheme, injection will be made to the URA when necessary.

Safeguard People’s Livelihood

Education

• Recurrent government expenditure for 2012?3: $60 billion (+7%)
  
• The increase in the recurrent expenditure will be used in implementing the four-year undergraduate programmes under the new academic structure by the University Grants Committee-funded institutions, increasing university places, introducing small-class teaching in public primary schools, continuing to launch the Pre-primary Education Voucher Scheme and increasing the value of the voucher etc.
  
• Earmark $1 billion to implement a new programme modelled on Project Yi Jin under the new senior secondary academic structure.
  
• Allocate $2.5 billion to launch the sixth Matching Grant Scheme which will cover all statutory and approved post-secondary institutions.
  
• Make two separate injections of $1 billion each, into the HKSAR Government Scholarship Fund and Self-financing Post-secondary Education Fund, to establish more scholarships or award schemes.
  
• Allocate $5 billion to Research Endowment Fund to enhance the academic and research development of tertiary institutions.
  
  

Medical and Health Services

• Recurrent government expenditure for 2012?3: $45 billion (+8%)
  
• Allocate $2.54 billion to the Hospital Authority to meet community demand for medical services, including efforts to attract and retain talents so as to provide quality healthcare services to patients, expansion of the coverage of the Hospital Authority Drug Formulary, enhancing primary medical services, improving mental health services, increasing in-patient service capacity and strengthening neonatal intensive care service.
  
• Provide $2.2 billion for clinic and hospital projects, including the expansion of the United Christian Hospital, redevelopment of Yan Chai Hospital, Kwong Wah Hospital and Queen Mary Hospital. Allocate $500 million to procure and revamp medical facilities.
  
• Inject $10 billion into the Samaritan Fund so that more people will benefit from the subsidy and patients already receiving the assistance will have the burden of drug expenses further eased.
  
  

Social Welfare

• Recurrent government expenditure for 2012?3: $44 billion (+9%)
  
• The increase in the recurrent expenditure will be used in implementing the provision of public transport concessions for the elderly and eligible people with disabilities, strengthening the support for infirm and demented elders, increasing the amount of supplements for residential care homes for demented elderly, providing additional 1,000 subsidised residential care places and community care services, improving the quality of more than 600 subsidised places in residential care homes for the elderly under the Enhanced Bought Place Scheme.
  
• Allocate $900 million to improve the physical settings and facilities of as many as 250 district elderly community centres, neighbourhood elderly centres and social centres for the elderly across the territory.
  
  

Relief Measures

To help ease the pressure on the community brought about by an economic downturn, the following measures will be introduced:

• Provide an extra allowance, equal to one month’s payment, to CSSA recipients, Old Age Allowance and Disability Allowance recipients.
  
• Pay two months?rent for public housing tenants.
• If necessary, allocate $100 million to extend short-term food assistance services.
  
• Grant each residential electricity account a subsidy of $1,800, benefitting 2.5 million households.
• Waive rates for 2012?3, subject to a ceiling of $2,500 per quarter for each rateable property. It is estimated that almost 90% of properties will be subject to no rates in the year. This proposal will cost the Government $11.7 billion.
• Reduce salaries tax and tax under personal assessment for 2011?2 by 75%, subject to a ceiling of $12,000. This proposal, benefitting 1.5 million taxpayers, will cost the Government $8.9 billion.
  
• Propose various tax measures: raising the basic allowance to $120,000 and married person’s allowance to $240,000; increasing the allowance for maintaining a dependent parent or grandparent aged 60 or above to $38,000; raising the child allowance to $63,000; raising the dependent brother/sister allowance to $33,000; raising the disabled dependent allowance to $66,000; extending the entitlement period for the tax reduction for home loan interest to 15 years of assessment and increasing the maximum tax deduction for mandatory contributions to Mandatory Provident Fund schemes to $15,000. These measures will cost the Government $3.5 billion a year.
  
• Give all student loan borrowers who complete their studies in 2012 the option to start repaying their student loans one year after completion of studies. This will alleviate the financial burden of fresh graduates.
  
  

Strengthening Our Social Capital

• Hong Kong Mortgage Corporation will introduce a three-year pilot scheme of microfinance. The maximum loan amount will be capped at $100 million and the repayment period will be as long as 5 years.
  
• Inject $200 million into the Community Investment and Inclusion Fund to promote social capital development.
  
• Subject to the views of the Steering Committee on the Commmunity Care Fund (CCF), the Government shall decide to incorporate the appropriate programmes launched by the CCF into the regular assistance programmes. Corresponding financial arrangements will be made when necessary.

Invest in the Future

Promoting Development of Industries

• Promote the development of the retail bond market. A further issuance of iBond worth not more than $10 billion will be launched.
  
• Allocate $150 million to the Mega Events Fund and extend its operation for 5 years.
  
• Increase the cash rebate under the R&D Cash Rebate Scheme, raise the funding ceiling of the Small Entrepreneur Research Assistance Programme and increase the monthly allowance of the Internship Programme under the Innovation and Technology Fund.
  
• Introduce measures to encourage the use of industrial buildings and industrial lots for data centres.
• Set up a fund of $1 billion to help Hong Kong enterprises tap the Mainland market.

Infrastructural Development

• The total value of infrastructural projects approved and to be submitted to the Legislative Council is worth $400 billion, $62.3 billion of which is the annual actual expenditure on capital works for 2012?3.
  
• Large-scale projects include the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link, the Hong Kong-Zhuhai-Macao Bridge, the Central-
  Wan Chai Bypass, railway construction works of the South Island Line (East) and
  the West Island Line, and Shatin to Central Link project.
  
• Take forward projects of various scales at the district level, including the expansion of Tseung Kwan O Hospital, redevelopment of Caritas Medical Centre, construction of North Lantau Hospital, building the first indoor velodrome in Tseung Kwan O, redeveloping the Victoria Park, Lai Chi Kok Park and Kwun Tong Swimming Pools, expansion of Ko Shan Theatre, and building community facilities such as community halls, sports centres, libraries and parks in various districts.
  
• Consider the proposal of building the third airport runway.

Click here to download the complete set of The 2012-13 Budget.