Hong Kong Economic and Trade Office, Brussels
The Government of the Hong Kong Special Administration Region
Chief Executive's Annual Policy Address - 11 October 2017

The Chief Executive of the Hong Kong Special Administrative Region (Hong Kong SAR) Mrs Carrie Lam, delivered her first Policy Address to the Legislative Council on Wednesday 11 October. 

She shared her governance philosophy and elaborated on the vision and initiatives of the Government for different policy areas. 

"I hope that this Policy Address will set new starting points for Hong Kong in areas such as governance, economic development, housing, education, healthcare, and chart the gradual delivery of the pledge that I made in my inaugural speech about connecting with you to build an even better Hong Kong," Mrs Lam said.

Noting that this year marks the 20th anniversary of Hong Kong's return to the Motherland, Mrs Lam said that in the last two decades, thanks to the support of the Motherland and with an international vision, Hong Kong has kept its distinct features and strengths.  This fully demonstrates that "One Country, Two Systems" is the best institutional arrangement to ensure Hong Kong's long-term prosperity and stability, she said. 

On the economy, Mr Lam said that in the face of competition from other economies as well as the rise of protectionism in recent years, the Government should take up new roles.  Other than as a "service provider" and a "regulator", it should be more proactive and also play the role of a "facilitator" and a "promoter".

To help the city become more competitive and to help small and medium enterprises, the Government would cut profits tax on the first HK$ 2 million (EUR 216,000) of profits to half of the standard rate.  To encourage research and development (R&D) investment by enterprises, a 300% tax deduction for the first $2 million eligible R&D expenditure, with the remainder at 200%, would be introduced. 

To press ahead with innovation and technology (I&T) development at full steam, the Chief Executive will personally lead a high-level, inter-departmental Steering Committee on Innovation and Technology to examine and steer measures under I&T development as well as Smart City projects.  Investment in key infrastructures and measures to attract and nurture relevant talents would be put in place for Hong Kong's future development into a smarter, more livable and connected city. 

The Government is also committed to provide more land for various uses, including an additional 23 000m² of convention and exhibition facilities to be integrated with the existing Hong Kong Convention and Exhibition Centre (HKCEC) in Wan Chai.

Mrs Lam said Hong Kong should seize the opportunities brought by the national Belt and Road Initiative and the Guangdong-Hong Kong-Macao Bay Area (Bay Area) development, make good use of the autonomy enjoyed by the Hong Kong SAR in developing its external affairs as provided under the Basic Law, and make timely investments in order to create new impetus for our economy.

On peoples' livelihood, Mrs Lam said that meeting the public's housing needs is the Government's top priority.   It would increase land supply, build more subsidised flats and launch a new subsidised "starter homes" scheme to help families not eligible for cheap-rental public housing.  The first phase would provide around 1 000 residential units, she said.  "The Government has no magic wands, but in the past few months the Directors of Bureaux concerned have demonstrated their readiness to think out of the box in a bid to address the community's pressing needs," she added.

Mrs Lam said the Government will strive to do its best to address the concerns of young people about education, career pursuit and home ownership, and will encourage their participation in politics as well as public policy discussion and debate.  She would also allocate resources to provide more internship opportunities outside Hong Kong for the young people.

More details of the measures are set out below. 


  • The tax rate for the first HK$2 million (EUR 216,000) of profits of enterprises will be halved to 8.25%.  Profits of over HK$2 million will continue to be subject to the standard tax rate of 16.5%. 
  • Research and development (R&D) investment will be encouraged with a 300% tax deduction for the first HK$2 million (EUR 216,000) of R&D expenditure, and a 200% deduction for the remainder.
  • Hong  Kong will sign a Free Trade Agreement and an Investment Promotion and Protection Agreement with the Association of South East Asian Nations (ASEAN) in November and continue to expand its bilateral agreement networks in trade, investment and taxation.  The Government will open a Hong Kong Economic and Trade Office in Thailand, the Hong Kong SAR's third office in an ASEAN country.
  • The Hong Kong Convention and Exhibition Centre in Wanchai will get a new, integrated wing of 23,000 square metres of convention and exhibition facilities with space freed by the demolition of three government towers.
  • The diversified development of tourism sector, including cultural, heritage, green and creative tourism will be boosted.
  • "Green bonds" will be issued to encourage investment in green projects via Hong Kong capital markets.
  • The Hong Kong Monetary Authority will launch a Faster Payment System in 2018 to promote more diversified and flexible payment products.

Land and Housing Supply

  • The housing policy will focus on home ownership and strive to build a housing ladder as well as to shorten the waiting time for public rental housing.
  • Affordable "Starter Homes" would be introduced for Hong Kong's middle-class families not eligible for other schemes.   

Innovation and Technology, and Creative Industries

  • The Government will set aside at least HK$10 billion (EUR1.08 billion) in university research funding to further encourage private companies to increase R&D spending.
  • It will kick-start a HK$500 million (EUR 54 million) "Technology Talent Scheme" to train and pool technology talent.
  • It will  inject HK$3 billion (EUR 324 million) into the Research Endowment Fund.
  • It will use HK$2 billion (EUR 216 million) of the Innovation and Technology Venture Fund Scheme to co-invest on a matching basis with Venture Capital funds investing in local tech startups.
  • It will invest HK$700 million (EUR 75 million) to take forward Smart City initiatives, including "smart lampposts"; and develop an intelligent transport system (parking meters, payments, real-time parking information).
  • HK$1 billion (EUR 108 million) will be injected into the CreateSmart initiative to boost support for design and creative industries.

Education and Young People

  • HK$12 billion (EUR 1.3 billion) Hostel Development Fund will be established so that more young people can live on campus.
  • Young people will be invited to become members of specified boards and committees. The Government will recruit young people who aspire to be engaged in policy research as well as policy and project co-ordination to join the Policy Innovation and Co-ordination Unit proposed to be established as non-civil service contract staff so that they could make a contribution in shaping the future Hong Kong.
  • A youth ambassador scheme will be launched by the Home Affairs Bureau to strengthen the youth network across Hong Kong's 18 districts, and a Youth Development Commission will be set up in the first half of 2018.  Mrs Lam added that she would chair youth summits to listen to the views of young people.

Full details of the Policy Address can be found here.