Budget Speech by the Financial Secretary (7)

Investing in Infrastructure

70. In the beginning of its term, the Government initiated the strategy of promoting growth through infrastructural development. Our capital works expenditure rose substantially from $20.5 billion in 2007-08 to the revised estimate of $49.6 billion in 2010-11.

71. The estimated capital works expenditure for 2011-12 will reach a record high of over $58 billion.  The ten major infrastructure projects are being rolled out in phases as scheduled.  Among them, the Hong Kong-Zhuhai-Macao Bridge, the Hong Kong Section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the Kai Tak Development Plan Stage 1 have commenced construction.  The Shatin to Central Link project was gazetted in November 2010.  We are pressing ahead with its planning, design and consultation, and construction is expected to start in 2012.  The construction works of the South Island Line (East) are scheduled to commence in 2011.

72. Other major projects expected to start in 2011-12 include essential public infrastructure works for the Kwun Tong Line Extension; detailed design and ground investigation works for the Liantang/Heung Yuen Wai Boundary Control Point; the replacement and rehabilitation of water mains in various districts across the territory; sewerage improvement works in Central and East Kowloon and the rural areas of the New Territories; redevelopment of Yan Chai Hospital; and construction of district open space, sports centre and library in Area 74, Tseung Kwan O.  With the ten major infrastructure projects and other projects entering their construction peaks, I estimate that the capital works expenditure for each of the next few years will exceed $60 billion.

73. The employment situation in the construction industry has improved significantly, with the unemployment rate dropping successively from a tsunami peak of 12.8 per cent to 4.5 per cent.  In my last Budget, I earmarked $100 million to support the Construction Industry Council (CIC) to train more skilled staff and attract more people, especially young people, to join the construction industry.  With the support of the industry, the CIC launched the Enhanced Construction Manpower Training Scheme.  To boost enrolment, the Hong Kong Construction Association Limited announced last month that it would raise the monthly salary of trainees graduating from courses on selected trades to $10,000 and further to $15,000 after six months' employment.  The Development Bureau, in collaboration with the CIC and the stakeholders of the construction industry, will reach out to young people through various measures, including establishing a designated website on the industry and setting up a construction industry resource centre.

Enhancing Business Environment

74. Hong Kong enjoys the advantages of open markets, free flows of information and capital, an independent judiciary, the rule of law, a low and simple tax regime, quality professional support services and advanced infrastructure.  We are committed to maintaining our competitive edge through continuous investment in new infrastructure.  We will also strive to create a more favourable business environment through improving working procedures and reducing compliance costs.

Headquarters Economy

75. The business environment of Hong Kong attracts enterprises from all around the world to set up regional headquarters and offices here, bringing in capital and creating abundant high-value-added job opportunities.  They introduce new management culture, promote transfer of technology and enhance local creativity.

76. At present, more than 6 500 enterprises from overseas, the Mainland and Taiwan have established their presence in Hong Kong.  Together, they employ some 350 000 people.  We will step up promotion efforts and take the initiative in approaching overseas enterprises, particularly those in the industries where Hong Kong enjoys clear advantages, to encourage them to set up business here.  We will also provide aftercare services and support to foreign companies already established in Hong Kong.

Support for Small and Medium Enterprises

77. Small and Medium Enterprises (SMEs) are an important pillar of our economy and employment market.  In 2008, a credit crunch and market dislocation swept the world.  To mitigate the impact of the financial tsunami on Hong Kong, the Government launched the $100 billion Special Loan Guarantee Scheme in December 2008.  The Scheme has helped more than 20 000 enterprises and indirectly preserved more than 340 000 jobs.

78. With improved financing for SMEs, the Special Loan Guarantee Scheme ceased to accept applications at the end of last year.  In January, the Hong Kong Mortgage Corporation Limited (HKMC) launched a market-oriented SME Financing Guarantee Scheme to help SMEs obtain sustainable bank financing for their daily operations or acquisition of equipment.  This Scheme will meet the financing needs of SMEs while helping banks manage their lending risks more effectively.  As at end-January, 16 banks have already joined this Scheme.

79. The SME Loan Guarantee Scheme of the Trade and Industry Department (TID) has been well received by enterprises.  With the introduction of enhancement measures under the Scheme in November 2008, SMEs now have greater flexibility in using the loan guarantees.  As at end-January 2011, the TID approved loan guarantees of over $15 billion, involving loans of around $33 billion and benefiting over 12 000 SMEs.  To demonstrate the Government's continued support for SMEs, I propose to increase the total guarantee commitment under the SME Loan Guarantee Scheme substantially from $20 billion to $30 billion.

Promoting Brands of Hong Kong

80. We should make good use of the opportunities brought by the Mainland's rapidly growing economy and help Hong Kong brands and products tap the vast Mainland market.  Much has been done by relevant government departments and the Hong Kong Trade Development Council in recent years.  The initiatives in place include staging large-scale branding conferences and seminars, holding exhibitions and trade fairs on Hong Kong brands in various Mainland provinces and municipalities, as well as organising delegations for business matching and promotion.  We will continue to take forward such work and strengthen co-operation with the trade sector.  For example, the SME Development Fund of the TID will focus on supporting projects related to brand development and the opening up of the Mainland market and other emerging markets this year.

(To be continued)

Ends/Wednesday, February 23, 2011
Issued at HKT 11:54