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.
Strategic Position
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.
> 2019-20 Budget
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
Regulatory Efficiency
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.
Open Markets
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.
