Funds proposed to aid pillar industries
February 26, 2014
Innovation and technology, financial services, and small and medium enterprises will receive targeted support through proposals in his Budget, Financial Secretary John Tsang says.
These are among Hong Kong’s pillar industries, which have capitalised on their own strengths and can benefit more from a favourable business environment.
Measures to boost innovation and technology include up to $10 million in new funding for research and development activities through the Innovation & Technology Fund, and granting $24 million in seed money annually to six universities for R&D projects and new business ventures.
For financial services, stamp duty on exchange traded funds will be waived to lower transaction costs, to promote such funds’ trading in Hong Kong. As the city has become a popular platform for multinational companies to manage their treasury functions, tax requirements will be reviewed for interest deductions in corporate treasury activities’ taxation.
Mr Tsang also spoke of the need to strengthen renminbi services, and noted the Securities & Futures Commission had come to an agreement with Mainland authorities on the mutual recognition of funds, which will promote fund products' diversification in both places.
A consultation on proposed regulatory frameworks for an open-ended fund company structure to attract more funds to the city will start next month, he added.
He also proposed another iBond issue of up to $10 billion with a three-year maturity, targeting Hong Kong residents, with interest to be paid every six months at inflation-linked rates.
On small and medium enterprises, which Mr Tsang noted make up 90% of local businesses and employ half of private-sector workers, he proposed reducing profits tax for 2013-14 by 75%, subject to a ceiling of $10,000.
Other proposed measures include extending the SME Financing Guarantee Scheme for a year, earmarking $50 million to support retailers on a matching-fund basis for technology upgrades to increase productivity, and promoting cloud computing to bring them affordable IT solutions.
