The Financial Secretary (FS), Mr John C Tsang highlighted Hong Kong's strong rebound from the financial tsunami. Hong Kong's gross domestic product (GDP) expanded by 2.6 per cent in the fourth quarter of 2009 after four straight quarters of negative growth. In 2009, the GDP shrank by less than expected (2.7%) and the GDP per capita reached HK$233,200 (US$30,100). The inflation was 0.5% and unemployment rate 5.2%. Total trade in goods and services reached HK$5,198 billion and HK$1,014 billion respectively.
While the most difficult period of the financial tsunami may be over, the external environment is still fraught with uncertainties and the foundations of the recovery are not yet firm. Some people in Hong Kong have yet to benefit from the economic recovery. Hence Mr Tsang when preparing the budget had three objectives: consolidating the recovery, developing our economy and building a caring society.
Measures to consolidate the recovery and enhance economic development include:
* An increase in capital works expenditure to HK$49.6 billion in 2010-2011. Major projects expected to start this financial year include the Kai Tak Cruise Terminal Building and the boundary crossing facilities for the Hong Kong - Zhuhai - Macao Bridge.
* Implementation of the HK$4.9 billion Hong Kong Science Park Phase 3 development. This would promote the development of innovation and technology and create some 9,000 R&D and construction jobs.
* Support for the six priority industries - medical services, education services, environmental industries, testing and certification, innovation and technology and cultural and creative industries. The government will optimise land resources, strengthen manpower training and provide incentives to promote these industries. Some HK$41 million will also be set aside over the next two years to support the work of the Hong Kong Council for Testing and Certification and the Hong Kong Accreditation Service.
* Establishment of a HK$300 million Pilot Green Transport Fund to encourage the transport sector to test out green and low-carbon transport technology, and provision of $540 million in subsidies to replace Euro II diesel commercial vehicles.
* To further develop Hong Kong as Asia's premier asset management centre by extending the stamp duty concession for the trading of exchange traded funds and expanding the 50% profits tax concession in the bond market to debt instruments with a maturity period of less than three years. We will clarify the residency requirement for offshore fund directors, thereby attracting more fund managers to manage overseas funds in Hong Kong.
* To continue developing the Renminbi (RMB) business providing a RMB clearing platform thereby facilitating Hong Kong's development as a regional RMB settlement centre.
In order to avoid the much-reported risk of a so-called 'property bubble,' the FS proposed initiatives to stabilise the market, notably by increasing land supply - especially for small and medium sized flats - but also raising stamp duty on luxury homes for the first time since 1999.
To ensure that all people benefited from economic recovery, a relief package of just under HK$20 billion was announced, including tax rebates, rates concessions and public housing rental waivers. An injection of HK$3 billion into the Arts and Sport Development Fund will help provide additional resources for the long-term development of sports, culture and arts.
FS remains cautiously optimistic about Hong Kong's economic prospects for 2010. Hong Kong may have a surplus of HK$13.8 billion for 2009 -10 as a result of better-than-expected revenue from stamp duties and land sales. Looking ahead, FS forecasts GDP to grow by 4-5% with an underlying inflation forecast at 1.5% in 2010.
Commenting on the budget, Chief Executive, Mr Donald Tsang, said that it 'responded positively to the immediate concerns about people's livelihood and will consolidate our economic recovery and contribute to Hong Kong's long-term economic growth.'
Life in China 
While the most difficult period of the financial tsunami may be over, the external environment is still fraught with uncertainties and the foundations of the recovery are not yet firm. Some people in Hong Kong have yet to benefit from the economic recovery. Hence Mr Tsang when preparing the budget had three objectives: consolidating the recovery, developing our economy and building a caring society.
