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Update: Hong Kong pledges US$4.4 billion sweeteners in post-protest budget

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Hong Kong unveiled HK$34 billion (S$6 billion) worth of sweeteners in its budget on Wednesday, including measures to help businesses hit by pro-democracy protests, as it strives to rebuild confidence amid fears the city is losing its competitive edge.

[HONG KONG] Hong Kong unveiled HK$34 billion (S$6 billion) worth of sweeteners in its budget on Wednesday, including measures to help businesses hit by pro-democracy protests, as it strives to rebuild confidence amid fears the city is losing its competitive edge.

The government has warned that the Asian financial hub must make economic stability a top priority after more than two months of pro-democracy protests late last year paralysed parts of the Chinese-controlled city and unnerved authorities in Beijing.

The budget was presented as Hong Kong's embattled leader, Leung Chun-ying, seeks to bolster support following months of political upheaval in which demonstrators demanded free elections and triggered widespread calls for him to quit.

Financial Secretary John Tsang announced a cut in taxes on salaries and profits as well as an increase in child allowances to HK$100,000 from HK$70,000 in line with expectations.

Mr Tsang added that a 2015-16 land sale programme would include 29 residential sites capable of providing 16,000 new homes.

Tsang said the economy grew 2.2 per cent in the fourth quarter of last year. That was slightly better than a median expectation for growth of 2.1 per cent among six analysts polled by Reuters, but marked a slowdown from annual growth of 2.7 per cent in the third quarter.

The economy grew 2.3 per cent last year compared with a 2.9 per cent expansion in 2013 and the government forecast growth of 1 per cent to 3 per cent this year. A Reuters poll of analysts had estimated the economy would grow 2.7 per cent this year.

The government is under pressure to ensure the financial hub, which returned to Chinese rule in 1997, remains on a steady keel while at the same time maintaining strong ties with Communist Party rulers in Beijing.

Mr Tsang announced measures worth HK$290 million to help businesses hurt by the Occupy Central demonstrations, including waiving licence fees for 26,000 restaurants and other food outlet operators, and running events to promote Hong Kong to investors and tourists.

He said the protests had affected several industries, including tourism, retail and transport, and it was important to rebuild international investor and tourist confidence in Hong Kong.

Mr Tsang said he expected a budget surplus of HK$63.8 billion for the financial year ending March 31, handily beating the government's earlier forecast for a HK$9.1 billion surplus.

REUTERS