Hong Kong’s stock market continues to surge and shows no sign of slowing down.
Apart from positive external factors such as the sudden and dramatic easing of the North Korea nuclear crisis and US President Donald Trump’s signing of a tax reform bill into law, some analysts have also cited internal factors for the current stock market boom.
These include the high credibility of Chief Executive Carrie Lam Cheng Yuet-ngor, when compared to that of her predecessor, as well as the bullish outlook for the local property market.
Given all that, the government’s budget surplus is very likely to hit a record high this year. Some have said the surplus may reach HK$160 billion this time.
As to how the government will use these huge savings, Financial Secretary Paul Chan Mo-po noted that for the 2016/17 fiscal year, the administration spent 30 percent of its HK$110 billion surplus on “one-off sweeteners” such as one-year tax reliefs and extra payments for recipients of the Comprehensive Social Security Assistance Scheme (CSSA).
The government spent the remaining 70 percent on long-term policy initiatives such as elderly care, education, sports facilities and scientific development.
I am personally in favor of the government sticking to the same 3:7 ratio this year, i.e., spending 30 percent of its surplus, or around HK$50 billion, on short-term “sweeteners”.
With regard to the remaining 70 percent, or roughly HK$100 billion, I strongly believe the money should be focused on some strategic policy areas rather than scattered around.
First and foremost, the government should invest more heavily in innovative technologies. In this digital age, Hong Kong must ride the global tech wave to further propel the economy.
I suggest the government invest HK$50 billion in innovative technologies. It should build a territory-wide free WiFi network as soon as possible so as to enable our citizens to adopt information technologies in their everyday lives.
If in the past we couldn’t leave home without our wallets, today we simply can’t go anywhere or do anything without our smartphones.
And since data is the soul of the smartphone, it is the government’s responsibility to divert its huge surplus into providing free, basic public data transmission services for our citizens, whereas private telecommunication service providers can focus on the high-end market.
The government should also use its budget surplus to build an electronic network through which it can disseminate real-time information such as where commuters can find vacant taxis using online maps or where taxi drivers can find passengers.
Meanwhile, many of the city’s major infrastructure projects such as the Express Rail Link and the Hong Kong-Zhuhai-Macau Bridge are nearing completion. This means a large number of construction workers may soon lose their jobs and drive up the city’s unemployment rate. They, too, will require the government’s attention.
This article appeared in the Hong Kong Economic Journal on Jan 20
Translation by Alan Lee
[Chinese version 中文版]
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