The 2025 Policy Address: A Blueprint for Hong Kong’s Competitiveness
The 2025 Policy Address outlines an ambitious plan to reinforce Hong Kong’s role as a global business hub, centred on digital transformation, tax innovation, SME support, capital market reforms, incentives for new industries, and deeper integration with the Greater Bay Area (GBA).
Digital Transformation & Regulation
- Launch of a one-stop AI-enabled portal for incorporations, licensing, and compliance by mid-2026, integrated with GBA systems to cut approval times by 50%.
- Deployment of AI across 200 government processes by 2027, opening significant opportunities for technology providers.
Tax Incentives & Financial Sector Growth
- New 8.25% profits tax rate for qualifying IP income, and enhanced R&D deductions of up to 300%.
- Half-rate concessions for commodity traders and logistics firms, higher thresholds under the Capital Investment Scheme, and strengthened preferential regimes for family offices, funds, and asset managers.
Capital Markets & Financial Hub Enhancements
- Measures to attract additional mainland banks, expand RMB use in public expenditure, and shorten HKEX settlement cycles to T+1.
- Incentives for gold and yuan trading hubs, development of captive and reinsurance markets, and an invitation to the AIIB to establish a Hong Kong presence.
Support for SMEs & Emerging Industries
- Financing guarantees have been extended to 360,000 SMEs, along with license fee waivers and trade charge reductions.
- Incentives, including land grants, tax breaks, and capital subsidies, to accelerate new industries and attract global talent.
- A more proactive push to promote Hong Kong firms’ global expansion via its financial and professional services networks.
Regional Integration & Long-Term Growth
- Simplified VAT exemptions and a new Economic and Trade Express platform to boost intra-GBA trade.
- Northern Metropolis development prioritising life sciences, microelectronics, new energy, and AI as future growth drivers.
Governance & Performance
- Stronger accountability for senior officials through performance-based assessments.
- Establishment of an AI Efficacy Enhancement Team to ensure reform delivery and monitor outcomes.
Our View
The package is seen as strategically aligned and forward-looking, particularly in digitalisation, cross-border integration, and targeted tax reforms aimed at strengthening competitiveness.
The emphasis on SMEs and emerging industries signals a deliberate effort to diversify beyond financial services. At the same time, the Northern Metropolis vision highlights a longer-term bet on technology- and infrastructure-led growth.
See further here: https://lnkd.in/gTZQsueQ
Get In Touch
For more information please contact Michael Velten.
michael@veltenadvisors.com
+6590687547
37 Ann Siang Rd, Singapore 069715
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