The competitiveness of Hong Kong’s business environment is the top concern of the majority (63%) of senior business executives, according to a PriceWaterhouseCoopers survey on social policies.
Sixty-three percent of respondents also believe embracing the opportunities as well as taking on the challenges arising from the setting up of free trade zones in Mainland China is the most important for Hong Kong.
The survey starts off by asking the respondents what their top three concerns on Hong Kong’s social policies are. Sixty-three percent ranked the business environment/competitiveness as their top concern, followed by the property market and land policy (25%) and demographic challenges/population policy (8%). According to the same survey conducted in 2013, business environment/ competitiveness also ranked as the top concern (52%) and property market and land policy (20%) came in second.
Among the top three most important items under Hong Kong’s business environment/ competitiveness category, a majority (63%) believe the positioning of Hong Kong to embrace the opportunities and take on the challenges resulting from the free trade zones in Mainland China is the most important.
Meanwhile, further support for the pillar/priority industries (18%) and tax rate adjustments/tax reform (9%) rank second and third respectively. Compared to the same survey last year, responses were equally split between enhancing economic cooperation with Mainland China (35%) and further support for the pillar/priority industries (35%). Tax rate adjustments/tax reform was third (10%).
“PwC is cautiously optimistic about the global economy this year," says KK So, PwC Hong Kong Tax Partner. "The continuing internationalisation of the Renminbi and the closer economic collaboration between Hong Kong and Mainland China are creating more business opportunities for Hong Kong. At the same time, Hong Kong is also facing challenges arising from the emerging free trade zones in Mainland China. Under these circumstances, the SAR Government should continue to step up its cooperation with the Mainland China to better position Hong Kong to prepare for the opportunities and challenges presented.”
Respondents’ priorities on property market/land policy remain the same over the last two years. Increasing land supply/speeding up of land sales and urban renewal are considered the most important, (49% in 2014 and 50% in 2013). Regulating property prices through administrative measures is ranked second (27% in 2014 and 26% in 2013); increasing public housing and improving its allocation came in third (19% in 2014 and 17% in 2013).
When it comes to demographic challenges/population policy, further investment on education/training has become the most important (36%) this year whereas it was ranked second (30%) in 2013.
Strengthening medical healthcare services is second (24%), a notch below last year at 33%. Retirement protection/MPF remains in third place (19% in 2014 and 22% in 2013).
“This year, the findings show that the local business community is more concerned about education and talent development," says Jeremy Choi, PwC Hong Kong Tax Partner.
Choi notes that the government should proactively address the needs of the business community and plan for a sustainable talent development policy. In addition, the Government should also attract talents from abroad which would further enhance the competitiveness of our business environment.
"To cope with the ageing population, we are expecting a long-term population policy and its related financial support,” adds Choi.
Referring to the 2014/2015 Hong Kong Budget, PwC is revising its budget forecast for FY2013/14 to a surplus of HK$19.3 billion. The revision is due to the lower than expected revenue from land sales.
The new surplus forecast is also based on the latest government financial results as at 31 December 2013 and historical information and model.
The original estimation made in January 2014 was for a budget surplus of HK$22.3 billion. By end of March 2014, Hong Kong’s fiscal reserves would reach HK$753.2 billion, equivalent to 21 months of total government expenditure.