Hong Kong is Cashed Up

Hong Kong is Cashed Up

Hong Kong Wednesday reported a record surplus of almost US$18 billion thanks to a red-hot property market and announced wide-ranging tax cuts in its annual budget, but critics said the measures did too little to help the city’s poor.

Financial Secretary Paul Chan said the business hub had amassed a HK$138 billion ($17.7 billion) budget surplus and he wanted to “share the fruits of our economic success with the community”.

He unveiled plans to slash salaries tax by up to 75 percent, with a ceiling of HK$30,000, a move which he said would benefit almost two million people.

There were also payments of HK$2,000 to students in need, along with extra welfare allowances for the poor, the disabled and the elderly.

But there was no one-off cash handout to all permanent residents, as some had called for.

The government of Chief Executive Carrie Lam also plans to build 100,000 public housing flats in the next five years, including subsidised properties for sale.

The budget will be welcomed by the middle class in the semi-autonomous Chinese city, but critics said it failed to address long-term poverty problems. An official study last year showed nearly 20 percent of Hong Kong’s 7.35 million people live below the poverty line.

The wealth gap last year was at its widest for nearly 50 years, fuelling discontent as the former British colony marked two decades under Chinese rule.

Property prices are among the world’s most expensive, forcing some small businesses to close due to sky-high costs while many residents cannot afford to buy or rent decent homes.

While Hong Kong enjoys high per capita GDP of US$46,000, Chan warned about its “slower growth momentum” with a mere 2.7 percent average annual economic growth over the past decade.

Demonstrators gathered outside the legislature before the budget speech, accusing the government of not doing enough to help ordinary people.

Some social media users were also unhappy.

“Carrie Lam and (Paul Chan) are still returning wealth to the wealthy while ignoring the general public who are living in misery. Shameful!” said a Facebook page organised by pro-democracy activist Lau Siu-Lai.

Another Facebook user wrote: “I’m not qualified for public housing as a taxpayer while (prices for) private flats are sky-rocketing. This government has given up on us again.”

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S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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