Hong Kong Economy
It’s ideal location in the fast-paced Asia and due to the various opportunities brought to the country via its Mainland economy, the special administrative region of Hong Kong has developed into an international trade and financial hub. It is one of the most renowned tourist destinations and is providing knowledge-intensive services to the world. Hong Kong by offering high value-added services is potentially serving as an important gateway for the Mainland and welcomes overseas investors while also providing a major platform to the Mainland businesses to compete at global scale.
It considered as a small open economy and exhibits many areas of strength. This includes, providing wide opportunities for businesses, low tax regime, free flow of information and capital, world-class infrastructure, efficient markets are considered important elements of Hong Kong’s economic success. The “one country, two systems” situation of Hong Kong further facilitates the country to generate enormous development towards Hong Kong economy.
- Hong Kong is known to be the world’s freest economy. It is also being described as the world’s most service-oriented economy, in which the service sector contributes towards more than 90 percent in the total GDP.
- The World Trade Organization declared Hong Kong as the world’s 8th largest exporter of merchandise trade exported and15th largest for commercial services for 2018.
- UNCTAD World Investment Report 2019 reported that the total global FDI inflows in Hong Kong was equivalent to USD115.7 billion for the year 2018 and was therefore ranked third globally after Mainland China (USD139 billion) in Asia.
- Hong Kong was ranked third in Asia, when compared with respect to the FDI outflows amounted to USD85.2 billion, with Japan (ranked first with USD143.2 billion) and Mainland China (ranked second with USD129.8 billion).
- Hong Kong was ranked second largest host when analyzed in term of the FDI stock with an amount equivalent to USD1,997.2 billion. The comparison was done with respect to world’s fourth largest investor, that is United States with USD1,870.1 billion for the year 2018.
- According to Bank for International Settlements, Hong Kong has been ranked second largest foreign exchange market across Asia and also the fourth largest in the world for the year 2019, with average daily turnover for forex transactions increasing by 44.8 percent with USD436.6 billion (April 2016) to USD632.1 billion (April 2019).
- Hong Kong is also one of the most important global offshore Renminbi or RNB business hub. SWIFT has declared Honk Kong to be the largest offshore Renminbi (RNB) clearing center for the year 2018, which shared approximately 79 percent of the world’s total RMB payments.
- Towards the end of December 2018, Hong Kong’s stock market was ranked third largest across Asia and fifth largest across the globe, when compared with respect to market capitalization.
- Hong Kong is considered as an important finance and banking center across Asia Pacific. Moreover, the Global Financial Centre Index, Hong Kong has been ranked as the third largest global financial center, after global giants like New York and London.
- Hong Kong has been reported as world’s busiest container ports and Hong Kong International Airport as the busiest airport in the work in terms of international air cargo as long as 1996. In 2018, Hong Kong was ranked seventh across the world when compared with respect to container throughput. For the year 2018, Hong Kong was ranked seventh across the world with respect to container throughput.
Recent Initiatives from Hong Kong Government
2019 Policy Address
- Some of the highlights from the 2019 Policy Address as announced by the Chief Executive of the Government, Mrs Carrie Lam are given below:
- Organize delegations and conferences and invite Hong Kong and Mainland businesses to conduct integrated promotional activities for the B&R economies.
- Seek the policy support from the concerned Central Authorities in order to extend the incentives that are presently enjoyed by Mainland Businesses towards Hong Kong enterprises and wish to set up their won business in the international Economic and Trade Co-operation Zones across the Mainland.
- Seek the policy support from the concerned Central Authorities for tax concessions on businesses thriving across Hong Kong and are planning to shift from export industry and do domestic sales while also working towards streamlining the approval process, with an objective of increasing their competitiveness within the Mainland domestic market.
- Make Technology Talent Admission Scheme available for the companies that do not come within the Hong Kong Science and Technology Parks Corporation in order to include new technology areas.
- Make the Researcher Programme, Public Sector Trial Scheme and Postdoctoral Hub available for those technology companies that are conducting research and development initiatives.
- Invest $500 million for Social Innovation and Entrepreneurship Development Fund in order to promote social innovation.
Some important highlights from the 2019-20 budget given by the Financial Secretary, Mr Paul Chan on 27 February 2019 are given below:
- Provide tax concessions on marine insurance and assist them to issue insurance-linked securities.
- Promote the financial leadership development for mid-2019 by establishing Academy of Finance
- Work towards establishing AI and robotics technologies as well as healthcare technologies through creating innovation clusters in the Science Park.
- Invest $300 million towards the development of geospatial data sharing platform along with 3D digital maps for the entire territory.
- Auction spectrums and assign them further in order to work towards the development of 5G networks.
- Promote the development of green finance by issuing the first batch
Hong Kong’s business freedom is known to be well protected via an efficient regulatory framework. The transparency displayed by the economy and government, encourages investments by entrepreneurs. Along with it, the overall environment is compatible for start-ups across various industry types. The labor code though enforced stringently but is never perceived as burdensome. Similarly, there exists very few price control measures by the government, but it effectively regulates residential rents and also checked the transportation subsidies imposed in 2018.
The integrated value of imports and exports is equivalent to 375.1 percent of the total GDP. The average tariff rate applied is equivalent to 0.0 percent. As declared by the WTO, Hong Kong possessed 149 nontariff measures in operation, as of June 30, 2018.
At present, Hong Kong is open for global trade and investment. The financial regulatory environment focuses mainly upon ensuring transparency and applying judicious minimum standards. There are no restrictions imposed on foreign banks.
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