Kudos to govt for EV initiatives in latest budget

February 28, 2020 08:36
The government has earmarked HK$350 million in the budget to launch a pilot scheme for electric ferries. Photo: Reuters

Although the headline items in the budget announced on Wednesday are the cash handout and other relief measures to help Hongkongers cope with the current economic challenges, the most commendable part is probably the money set aside to promote the use of electric vehicles.

The government will spend HK$2 billion to subsidize the installation of charging facilities for electric cars in 3,000 private residential buildings. This should encourage more people to switch to EVs.

At the moment, most private estates are not willing to introduce such facilities because only a few car owners drive electric vehicles.

The government also earmarks HK$350 million to launch a pilot scheme for electric ferries. In the first stage, four ferry operators in the city will each be granted an electric ferry for 24 months.

Currently, it's very expensive to operate gasoline-driven ferries, and it’s hard to make a profit without a sizable number of passengers.

The difficult operating environment discourages them from investing in electric ferries, even though that would help reduce fuel and maintenance costs.

So it’s good news that the government is taking a leading role this time. Geographically, Hong Kong has great potential to develop water public transportation to ease road congestion. The pilot scheme is definitely a good starting point.

Separately, the government will set aside HK$22 billion to set up a private equity fund to support local firms and projects.

The Hong Kong government has been holding an enormous amount of fiscal reserves. Yet most of the funds are invested in conservative assets like government bonds or foreign exchanges.

That's why the government has been widely criticized for neglecting many investment opportunities in the city.

This new private equity fund will invest directly in companies based in Hong Kong or projects operating in the city, covering new economy, biotech, innovative and technology sectors.

Big market and small government and a "positive non-interventionism" policy have always been upheld as a core value of Hong Kong. So setting up such a private equity fund using taxpayers’ money marks a big shift.

The fund will take a long-term investment strategy, with an investment horizon of five to seven years.

Given that investments of this kind are often quite risky and with a long payback period, the benefit of this initiative appears to be far less certain than that of the EV schemes.

This article appeared in the Hong Kong Economic Journal on Feb 27

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist