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Hong Kong, 18 January 2017 – Today’s 2017 Policy Address delivered by C.Y. Leung looked back on the Chief Executive’s five-year term and addressed the challenges currently facing the city.

 

Download our highlights here.

 

Introduction

Government upholds the vision of “Developing the Economy and Improving People’s Livelihood”.

Over the past four years, Hong Kong’s economy has seen moderate growth and receding inflation. Apart from reinforcing the competitive edges of traditional industries, the Government also strives to promote the development of emerging industries.

Land and housing supply for the short and medium terms has increased significantly while medium and long-term planning is actively pursued. Many infrastructure projects are underway.

 

Economy

Closer economic partnership arrangements are to be made between Hong Kong and Macao under National 13th Five-Year Plan to enhance status as an international financial, transportation and trade centre.

The Shenzhen-Hong Kong Stock Connect launched last month has further reinforced Hong Kong’s status as an international financial centre and a global offshore Renminbi (RMB) business hub.

Hong Kong has been officially invited to join the Asian Infrastructure Investment Bank (AIIB). Expect the relevant procedures to be completed by the middle of this year.

Important to promote development of FinTech as well as projects on cyber security, “Blockchain” and talent building.

The Chief Executive highlighted the mega events of Formula-E and Wine & Dine as examples of Hong Kong’s diversifying tourism offer.

The city will look to celebrate the 20th anniversary of Hong Kong’s return to the motherland with increased mega events including summits, heritage exhibitions, large-scale sports events and light shows, to attract more high-yield overnight visitors.

The Government plans to introduce a bill into the LegCo this year to amend the Inland Revenue Ordinance to offer tax concession so as to attract companies to develop aircraft leasing business in Hong Kong.

The Hong Kong-Zhuhai-Macao Bridge (HZMB) will cut transport of goods from Zhuhai to Kwai Tsing Container Terminals from 3.5 hours to 65 mins. Similarly, the journey time between the Hong Kong International Airport (HKIA) and Zhuhai will be reduced from 4 hours to 45 minutes.

The Government is closely monitoring the impact of Brexit. Invest Hong Kong and the Economic and Trade Offices (ETOs) in Europe will actively promote the strengths of Hong Kong to attract European businesses.

 

Belt and Road

Leverage “one country, two systems” to fulfil Hong Kong’s role as a “super-connector”.

Beefing up of resources for Belt and Road Office to ensure its effective work on a long term basis.

HKSAR to take part in Belt and Road forum for International Co-operation in Beijing in May.

Hong Kong to leverage its professional services expertise. The MTR Academy has embarked on initial discussions with the rail operators of several Belt and Road Countries.

The Hong Kong International Aviation Academy signed an agreement last month with Ecole Nationale de l’Aviation Civile (National School of Civil Aviation) of France to jointly nurture aviation professionals for Hong Kong and the region.

Government will consider relaxing visa requirements of Belt and Road country nationals for greater co-operation and exchange.

Fine-tuning primary and secondary school curricula to create better people-to-people links with Belt and Road countries through initiatives like providing greater opportunities to learn a foreign language.

 

Innovation and Technology

More top-tier global research and development institutes establishing their presence in Hong Kong.

Supply of hardware, such as land (the new Hong Kong/Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop for example) and premises are not enough. Must look for other policy measures to encourage enterprises to set up in Hong Kong.

Growth of startups in Hong Kong: up 25% since 2015.

Announcement of InnoCell facility adjacent to the Science Park with shared working spaces, for leasing to staff of the incubatees and start-ups in the Science Park.

Data Technology Hub and an Advanced Manufacturing Centre to be built in the Tseung Kwan O Industrial Estate.

Technology Voucher Programme introduced two months ago to subsidise the use of technology by SMEs to improve productivity or facilitate upgrading and transformation.

Setting aside of 50 hectares near the Liantang/Heung Yuen Wai Boundary Control Point, for use by the innovation and technology sector.

The Government is using Kowloon East as a smart city pilot area to enhance city management and improve people’s livelihood.

It is estimated that by 2019, the number of WiFi hotspots will increase to 34,000 from 18,400 today.

The Government will launch a $500 million Innovation and Technology Fund for Better Living by the middle of this year to subsidise innovation and technology projects.

 

Housing and Land Use

On private housing, the projected supply of first-hand residential properties for the coming three to four years was 94 000 units at end-December last year. This is 45% higher than the figure at the beginning of the current-term Government, and a record high since the regular release of supply statistics 12 years ago.

The Chief Executive admits that public housing is a “tough nut to crack”.

The housing supply target for the next decade from 2017-18 is 460,000 units, including 200,000 PRH units and 80,000 subsidised sale flats. However, land supply for public housing still lags and the waiting time for PRH units has increased notably.

Various short, medium and long-term land supply initiatives can provide over 600,000 housing units in total.

The government has rezoned almost half of the 190 potential housing sites. Government has identified some 25 additional housing sites, capable of producing over 60,000 units.

The Government continues to take forward two planning and engineering studies related to the Kai Tak Fantasy project, and will consult the public this year on the design plan of the runway tip and the preliminary proposals for development of the Kwun Tong Action Area.

The Urban Renewal Authority plans to conduct a district planning study for Yau Ma Tei and Mong Kok on a pilot basis.

Land supply in Kowloon East continues to increase.

At the end of last year, the Government commenced a planning and engineering study for the development of Tseung Kwan O Area 137, which has potential for large-scale residential, commercial and other development.

Studies on reclamation outside Victoria Harbour at Siu Ho Wan on Lantau, Lung Kwu Tan in Tuen Mun and Ma Liu Shui in Sha Tin to be completed this year.

Blueprint for development of Lantau will be: “development for the north, conservation for the south”.

The boundary crossing facilities island of the HZMB can provide a floor area of 500 000 square metres for economic uses. The community will be consulted on this in the first half of this year.

The Planning Department estimates that at least 4,800 hectares of land is required up to 2046. Government will need to identify at least another 1,200 hectares of land.

The housing problem in Hong Kong boils down to land use, which is not a technical issue, but a conceptual one. Need to “think outside the box” and re-examine land use planning.

The Government will commence work on designating Robin’s Nest, about 500 hectares, a new country park.

Government should consider allocating a small proportion of land on the periphery of country parks for public housing and non-profit-making elderly homes.

It is premature to establish a statutory Harbourfront Authority. The Government has decided to partner with the Harbourfront Commission and implement harbourfront enhancement initiatives with $500 million for the first stage developments.

The Government is closely scrutinising the estimates of works projects at the planning and design stage, so far examining about 60 works projects and achieving savings of about $13 billion.

The Construction Industry Council will set up an innovation and technology application centre to provide a platform for introducing innovative technologies into the industry to enhance productivity.

 

Environmental Protection and Nature Conservation

$500 million earmarked for the provision of renewable energy installations in government buildings and venues, as well as community facilities.

Air pollutants (including nitrogen dioxide and PM 2.5 which are more difficult to tackle) have been reduced by up to about 30%.

With the completion of the Harbour Area Treatment Scheme Stage 2A a year ago, the water quality of Victoria Harbour has significantly improved.

 

Transport

Central Kowloon Route, which will link Yau Ma Tei with Kowloon Bay and the Kai Tak Development Area: the journey time between West Kowloon and Kowloon Bay will be reduced from 30 minutes to 5 minutes during rush hours.

Guangzhou-Shenzhen-Hong Kong Express Rail Link will consolidate Hong Kong’s position as a regional transport hub.

Promotion of ‘Walk in HK’: Smart, connected, enjoyable and safe pedestrian projects.

 

Poverty Alleviation, Elderly Care and Support for the Disadvantaged

To address elderly poverty and working poverty, the Government has introduced two new support programmes — the Old Age Living Allowance (OALA) and the Low-income Working Family Allowance, over the short span of four years.

Government is encouraging employers to employ more persons with disabilities and has procured services from an NGO to strengthen counselling support.

This year, estimated recurrent government expenditure on social welfare is $66.2 billion, a 55% increase over the level four years ago.

Poverty alleviation is a long-term commitment in which the community must persevere.

The Government will continue to increase the number of subsidised residential care places for the elderly.

 

Retirement Protection and Population Policy

After consulting the public, the government will consider the existing multi-pillar retirement protection system should continue.

The Government proposes to progressively abolish the “offsetting” of severance payments (SP) or long service payments (LSP) with MPF contributions.

The Government will share part of the expenses on SP or LSP of employers in the 10 years after the implementation date of the abolition to help employers, especially SMEs.

eMPF, a centralised electronic platform, to be put in place to facilitate the standardisation, streamlining and automation of the MPF scheme administration

Subject to approval by the LegCo, the Statutory Minimum Wage (SMW) rate will be increased with effect from 1 May this year.

 

Education and Youth Development

The Education Bureau (EDB) will strengthen Basic Law education and further promote the Basic Law.

 

Sports and Culture

$20 billion to be spent in the coming five years to launch 26 projects to develop new or improve existing sports and recreation facilities.

Pre-construction works for the Kai Tak Sports Park, the largest sports project to be built in Hong Kong, are close to completion.

West Kowloon Cultural District Authority: enhanced financial arrangement by granting it the government-owned development rights of the hotel/office/residential portion of the WKCD.

 

Healthcare

A new private hospital will be commissioned early this year and the construction of the Chinese University of Hong Kong Medical Centre has started. The Government will continue to facilitate the further development of private hospitals.

In 2017-18, the Government will provide an additional $2 billion to the Hospital Authority in total recurrent expenditure.

The Government has decided to finance the construction of a Chinese medicine hospital on a reserved site in Tseung Kwan O.

Government aims to develop Hong Kong into an international hub for scientific research on Chinese medicines testing and quality control.

 

Municipal Services, District Administration and Governance

To celebrate 20th anniversary of Hong Kong’s return to the motherland, the Government is organising a series of large-scale celebration activities under the theme of “Together, Progress, Opportunity”.

The Basic Law ensures Hong Kong’s prosperity and stability, and allows us to ride on the dual advantages of “one country” and “two systems”

Hong Kong continues to play the role of a “super-connector”, helping the country go global and attract foreign investment.

 

Conclusion

Mr CY Leung concludes his policy address by reiterating how Hong Kong has benefited from the “one country, two systems” arrangement and how the city will continue to leverage its economic development for improving people’s livelihood. The Chief Executive finishes by reflecting on his inaugural policy address five years ago and thanking the Executive Council, the LegCo, the statutory bodies as well as members of the public for their support and co-operation.