Will Carrie Lam’s new policies boost Hong Kong’s global tech hub aspirations?

Racepoint Global

Written by Mark Jackson, Deputy Managing Director, Hong Kong office 

This morning, Carrie Lam gave her maiden policy address as Chief Executive of the Hong Kong Special Administrative Region. Unsurprisingly, the address has stirred up controversy, particularly among those seeking reassurance of the territory’s continued separation from its Chinese parent.

That aside, the address did give some insight into the likely shape of Lam’s tenure with a surprising number of innovative moves that should please many. Among them, are three items that may go some way to addressing the country’s desire to become a global tech hub:

  1. Housing: the shortage of places to live has driven the price of accommodation beyond many, and is a significant reason why Hong Kong often fails to compete effectively in the war for IT talent. The initiatives proposed today – a starter home scheme, lower priced government housing and utilizing empty spaces better – should all help ease the demand for housing and will have a ‘trickle up’ effect on availability and pricing. That in turn will help make Hong Kong a more attractive place for the world’s best IT talent.
  2. Tax: always a hot topic in Hong Kong, Lam’s proposal to cut the tax rate on companies’ first HK$2million profit (approx $256,000) by half to 8.25 per cent will go some way to attracting start-ups to the territory. A further proposal of significant tax deductions on R&D spending should have entrepreneurs and venture capital firms the world over licking their lips.
  3. Smart City: despite its outward appearance, Hong Kong has a long way to go to rival its global competitors as a Smart City. The launch of a HK$700m (approx US$90m) investment fund for projects that include universal broadband is much needed although a mere drop in the ocean by comparison to cities in the Middle East and across the territory’s immediate border to the north. Perhaps of more relevance to the tech sector is the promise to double government spending on R&D to HK$10bn through university research funding. Much of this will target the design sector but with luck, some of that money will make its way into tech R&D.

As with all policy addresses, the proof will be in the, erm, spending and it will be months if not years before we know whether the promises turn into real action. For the sake of the country’s future and its goal of becoming a global tech hub, let’s hope that action rather than words is the hallmark of the new regime.