A television screen shows Hong Kong chief executive John Lee delivering his annual policy address in the Legislative Council chamber in Hong Kong on Oct 16, 2024. - AFP
HONG KONG: Hong Kong's leader pledged on Wednesday to reform and revive the economy and financial markets including slashing liquor duties, while seeking to improve dire living conditions for the city's poorest.
John Lee, in his third annual policy address, highlighted the need to "deepen our reforms and explore new growth areas," in line with China's national priorities and recent calls from Beijing for all sectors to unite to promote development and economic growth.
Hong Kong's small and open economy has felt the ripple effects of a slowdown in the Chinese economy and political tensions including a years-long national security crackdown.
It grew by 3.3% in the second quarter from a year earlier, and is forecast to grow 2.5%-3.5% for the year.
Although tourism has rebounded since COVID, with 46 million visitors expected this year, consumption and retail spending remain sluggish, while stock listings have dried up and capital flight remains a challenge.
Lee told Hong Kong's legislature that duties on liquor would be slashed to 10% from 100% for drinks with more than 30% alcohol content, in a bid to stimulate the trade in spirits. The lower duties apply only to spirits priced over HK$200 ($26), and for the portion above that amount.
The move would "promote liquor trade and boost development of high value added industries including logistics and storage, tourism as well as high end food and beverage consumption," Lee said.
He hoped the move would benefit Hong Kong in the way that it became an Asian wine trading hub after wine duties were abolished in 2008.
China's recent decision to provisionally impose sharp tariffs on French brandy in a tit-for-tat move to European Union tariffs on Chinese electric vehicles, might also benefit the city.
Lee said procedures for companies seeking to list in Hong Kong would be streamlined, in a bid to lure more international company listings on its stock exchange.
The value of Hong Kong IPOs in 2024 is the lowest in 21 years, according to Dealogic data, not taking into account China Resources Beverage and Horizon Robotics which this week launched deals to raise up to $1.34 billion. China's Midea raised $4 billion in a secondary listing in the city in September.
The government said it would try to develop Hong Kong into a gold trading hub with "world-class" gold storage facilities, create a commodity trading ecosystem and fuel bunkering centre, and try to tap opportunities in green shipping, aviation and tourism.
"Amidst the increasingly complicated geopolitics, our city’s security and stability gives us a clear edge as an attractive place for physical gold storage ... and potentially propelling Hong Kong into a gold trading centre," he said.
PIVOT TO ECONOMY FROM SECURITY
Lee's speech was less focused on national security than the year before, though he also stressed a need to "stay vigilant" towards potential national security threats.
There were also signs of further integration between Hong Kong and China with the launch of a new civil servant "exchange programme" with a number of Chinese cities.
A "Northern Metropolis" project on the border with China would also see 60,000 housing units in a cluster of public housing estates be completed in the next five years.
In a bid to revive the city's ailing property sector, Lee said the ratio of mortgages would be eased to 70% of the value of a property for all buyers.
Hong Kong's benchmark stock index was up 0.3%, while the property sub-index rose more than 2%.
On the livelihood front, the government proposed new laws to regulate the leasing of so-called "sub-divided flats", tiny cubicles sometimes called "cage homes" which have been criticised as below acceptable living standards.
The new system would ensure basic safety standards for the 110,000 households currently living in such units. - Reuters
