Hong Kong Budget 2025-26: Growth, Innovation, and Business Advancements

Key Takeaways:   

• Hong Kong's economic blueprint, aka Hong Kong Budget 2025-26, was delivered on the 26th of February, effective from April. The fiscal plan aims to foster the city's position on the global front. 

• Sectors like tourism, technology, talent acquisition, and business expansion were taken special care of in the Hong Kong budget. 

• The city is expected to improve its economic projection with an average rate of 2.9% with an underlying inflation rate of 2.5% per year between 2026 to 2029. 

• OASES (Office for Attracting Strategic Enterprises) has attracted strategic enterprises, with 80% planning to establish headquarters in the city. It is anticipated to generate approximately 20,000+ jobs in the coming years. 
   

On February 26th, Hong Kong's financial secretary of the Special Administrative Region (SAR) delivered the city's economic blueprint. The budget has come across as a pivotal moment for the present government, as they mark their half-way tenure. 

Hong Kong, in its previous economic years, has witnessed economic growth of 2.5% along with other factors like a decent employment market, controlled inflation, and a substantial growth in tourism, marking a notable 30%. This significant growth has also favored an economic atmosphere in the city. Although with the positive developments that were seen in the past years, Hong Kong continues to navigate through challenges triggered by global geopolitical tensions, shifts in consumption patterns, and a prolonged period of steep financial costs. These lingering factors have influenced asset prices, retail performance, and market sentiment, generating a need for strategic economic amendments. 

The government has therefore acknowledged the need for long-term sustainability in the coming budget, ensuring that it maintains a balance between financial prudence and public service stability. To address these needs and create a blissful balance, Hong Kong's budget introduces a fiscal consolidation programme. The budget 2025-26 discusses prioritization of aspects such as innovation, technology, and economic transformation in order to provide an edge to Hong Kong's position in the global market landscape. 

This blog discusses the key insights, fiscal strategies and reformative amendments outlined in the budget offering a comprehensive overview of the city's economic roadmap in coming times.  

Hong Kong's Economy 2024: Statistics and Challenges  

Hong Kong's economy looms large with factors like increased export of goods by 4.7%, surged number of visitors by 30%, increase of export services by 4.8%, and investment expenditure rising by 2.4%. While factors like unemployment rate inflation hit low. The employment rate was 3.1%.   

Asset market sentiment was given a boost of confidence fueled by central government support and US rate cuts leading to an 18% rise in the Hang Seng Index and an increase of 26% in average daily turnover.  

2025 Economic Outlook: What the Budget Speaks!   

While giving a brief overview of the past challenges that Hong Kong has faced, Paul Chan, Financial Secretary of Hong Kong, discussed the positive and unfavorable aspects of the economy. The steady economic growth in Mainland China and its aiding factors like the global expansion of supply chains and proactive fiscal and monetary policies are serving as a resilient groundwork of stability. Additionally, major central banks are gradually easing the monetary policies to support Hong Kong's economic growth, yet uncertainties linger around interest rate decisions in the U.S. and Europe. He has mentioned that visitor arrivals will continue to boost the service sectors, although external uncertainties may influence investor behavior. A major anticipation of the relaxation of global financial conditions to support fixed asset investment was made.  

Adding to his speech further, Chan claimed that private consumption, which signaled stabilization towards the end of last year, is more likely to improve in coming times. It is driven by rising incomes and a steady asset market. As a result, Hong Kong's economy is projected to grow by 2% to 3% in real terms in 2025. Addressing the inflation in depth, Chan mentioned underlying inflation and headline inflation to be expected at 1.5% and 1.8%  

Looking ahead to the transitional period, the normalization of monetary policy is anticipated to extend global economic stability along with the Global South, particularly Mainland China, which continues to be the key driver of growth. While geopolitical challenges in the region persist, high-quality development through technological innovation, deepening economic reforms, and expanding market reach remains the priority.  

Notably, Chan covered the "One Country, Two Systems" framework wherein the city remains uniquely positioned to leverage both global and mainland advantages. The government also focuses on enhancing competitiveness and integration with national development strategies to unlock better and new opportunities.  

The city expects economic projection to grow at an average rate of 2.9% with underlying inflation at 2.5% per year between 2026 to 2029. 

Economic Growth and Investment Drive   

As Hong Kong's economy has highlighted steady growth over the past two years, underpinned by the government initiatives to advance innovation and technology. Purposeful undertakings to attract enterprises, capital, and investment institutions through broad-based business promotion initiatives have delivered tangible results. Various mainstream economic sectors have delivered notable progress, which include: 

• Buoyant Stock Market: Since the commence of 2025, the average daily turnover has exceeded HKD 200 billion which indicates a surge of more than 50% as compared to the previous year. Moreover, the total market has reached a capitalization of HKD 40 trillion reflecting strong market trust. 

• Thriving Initial Public Offering (IPO) Market: HKD 88 billion were raised from IPOs in 2024, resulting in a positive outlook of enterprises for the coming year. Hong Kong's IPO market is positioned as the world's fourth largest IPO market while HKEX processes 100+ new applications. 

• Excellence in Wealth Management: Hong Kong continues to remain Asia's largest hedge fund hub and the second-largest private equity center after Mainland China. The number of open-ended fund companies has doubled in the past year, exceeding 470, while registered limited partnership funds have grown by 40% year-on-year to over 1,050. With this rapid expansion, Hong Kong is projected to become the world's largest cross-boundary wealth management center by 2028.  

Expanding Hong Kong's Global Presence in 2025:  

Attracting Enterprises:  

• OASES (Office for Attracting Strategic Enterprises) has strategically attracted 66 enterprises, with 80% planning to establish their global or regional headquarters in Hong Kong. Most of these enterprises master technologies generating a market with a valuation exceeding HKD 10 billion. 

• Invest in Hong Kong (InvestHK) has expedited the entry of 500+ Mainland and overseas enterprises in 2024 and is anticipated to a 40% increase year-on-year.  

• These companies are expected to bring direct investment exceeding HKD 67.7 billion. 

Attracting Capital:

• Hong Kong's total deposits surpassed HKD 17 trillion by the end of 2024, this digit is expected to rise by 7% annually.  

• Notably, to attract capital from emerging markets two exchange traded funds (ETFs) tracking the city's stocks were listed on Saudi's Exchange with assets exceeding HKD 13 billion. 

Trawling for Skilled Talent:  

• Hong Kong offered several talent admission schemes which successfully received over 430,000 applications by 2024, more than 270,000 applications were approved leading to relocation of 180,000 professionals to Hong Kong. 

Future Initiatives for Economic Expansion  

The governing body of Hong Kong is proactively bringing onto reforms that solidifies the economic foundation and attract enterprises, investments, and global events.  

• Expansion of Strategic Enterprise Initiatives: OASES will be announcing a new set of strategic enterprises in the coming month. These enterprises are expected to invest a total of HKD 50 billion in the city and create approximately 20,000+ jobs in the coming years.  
  
  
• Encouraging Business Relocation: The government is progressing towards attracting mainland and international enterprises to establish their headquarters or divisions in Hong Kong. The bill has been submitted to the Legislative Council (LegCo) proposing a company re-domiciliation mechanism. This will allow businesses to relocate to Hong Kong.  
  
  
• Strengthening Hong Kong as an International Mediation Hub:  IOMed (Internation Organization for Mediation) is set to open its headquarters in Hong Kong by the end of 2025. Notably, IOMed is the first global intergovernmental organization dedicated to resolving international disputes through mediation, bolstering the city's reputation as an international legal and dispute resolution hub.
  
  
• Bolstering Tourism and Mega Events: Kai Tak Sports Park is a venue designed for hosting mega events, it will play a key role in the National Games further uplifting Hong Kong's position in sports, culture, and tourism sector. The World Tourism Cities Federation (WTCF) Fragrant Hills Tourism Summit 2025 will be hosted in April. The event is expected to attract 40 countries and provide the necessary boost to the city's tourism sector.  

Key Developments for Businesses    

Hong Kong’s fiscal blueprint discussed various necessary reforms that will strengthen its competitive advantages including fiscal consolidation efforts, tax incentives, talent attraction policies, AI advancements, and Greater Bay Area (GBA) integration. 

Supplementary Measures   

• A rates concession capped at HKD 500 per rateable property will be provided for both domestic and non-domestic properties in the first quarter of the 2025-2026 fiscal year.  

• Salary tax and tax under personal assessment for the 2024-2025 will be reduced by 100%, provided the maximum limit will be HKD 1,500.  

• Profit tax for the 2024-2025 assessment year will also be slashed by 100%, with a cap of HKD 1,500.  

• The maximum property value eligible for a fixed stamp duty of HKD 100 will be increased from HKD 3 million to HKD 4 million, effective at the soonest.   

Taxation and Business Incentives   

• Intellectual Property (IP) Development: The government will audit tax deduction framework for IP-related expenditures, which will include licensing fees and acquisition costs.  

• Maritime Services: Tax deductions will be seen for ship acquisition costs under operating leases and a half-rate or 50% tax concession for eligible commodity traders.  

• BEPS (Base Erosion and Profit Shifting) 2.0 Implementation: Multinational companies with annual revenues exceeding the threshold of €750 million annually will be subjected to a global tax rate of 15% (minimum) with Hong Kong implementing a minimum top up tax starting in 2025.  

Supporting Local Enterprise  

• SME Financing Guarantee Scheme: The government has prolonged the principal moratorium application period until November 2025.   

• Funding for Smart Production Strategies: A sum of HKD100 million will be allocated to HKD 250,000 per enterprise who are engaged in operating production lines in Hong Kong. This initiative is taken for smart production upgrades.   

• Injection of HKD1.5 billion: The government has allocated HKD 1.5 billion for funds dedicated to branding, upgrading, and domestic sales support along with export marketing, trade, and Industrial Organization Support Fund while streamlining the application process.  

• Increased SME Financing: Over HKD390 billion in financing support is available via participating banks.  

• E-Commerce Express by HKTDC: Consultation services for businesses expanding into e-commerce will be conducted by Hong Kong Trade Development Council.  

Business Expansion and GBA Integration   

• Office for Attracting Strategic Enterprises (OASES): OASES will cohort new strategic enterprises announced by next month, bringing total investments of HKD50 billion and 20,000 new jobs.   

• GBA Financial Collaboration: The Cross-Boundary Wealth Management Connect Scheme in the GBA will be expanded. Besides, the scope of the Memorandum of Understanding on Cross-Boundary Credit Referencing Pilots which was established last year between Shenzhen and Hong Kong, will be extended to enhance cross-boundary financing for enterprises. Concurrently, support will continue for the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone in piloting innovative policies.  

• Northern Metropolis (NM) Development: The government steps ahead to prioritize the NM initiative to house 2.5 million people and stimulate new business districts. Large-scale land disposals, I&T hubs, and dedicated zones are also planned for finance, logistics, and innovation to drive growth   

• International Trade Expansion: The government is initiating expansion of its tax treaty network, pursuing investment agreements with key markets, and exploring Economic and Trade Offices in Malaysia and Saudi Arabia. This will help attract investment from Global South. It will also strengthen Hong Kong's role in the Belt and Road Initiative by deepening ties with ASEAN, the Middle East, and emerging regions in Central and South Asia and North Africa.   

Talent Attraction and Business Relocation   

• Talent Admission Schemes: The Hong Kong budget addressed the need of attracting top notch talent to the city which is why Quality Migrant Admission Scheme will enhance the Admission Scheme for Mainland Talents and Professionals and General Employment Policy. These enhancements will cater to young and non-degree professionals with technical qualifications and experience to fill skilled trade shortages. Additionally, 4000 short-term internships are introduced for tertiary students.  

• Education and Workforce Development: Hong Kong government has allocated HKD 1.5 billion on Research Matching Grant Scheme to encourage institutional research support. Moreover, the maximum age limit for the Youth Employment and Training Programme has been increased to 29 with new workplace attachment opportunities in the GBA to enhance youth employability. 

Wealth Management and Investment Migration   

• New Capital Investment Entrant Scheme (CIES):   

Relaunched in 2024, the New CIES open doors of opportunity for eligible individuals to relocate to Hong Kong by investing a heavy sum of HKD30 million in approved financial assets. Applicants who maintain their investment portfolio promptly and are residing in Hong Kong for a consecutive seven years may apply for permanent residency along with their dependents. The government has received over 880 applications, projecting HKD 26 billion in investments, and plans to introduce enhancements to increase flexibility and attract more high-net-worth individuals (HNWIs).   

• Asset and Wealth Management:
  InvestHK has extended support to 160 family offices in setting up or expanding in Hong Kong. To further attract investment to the city, the government plans to introduce preferential tax measures by broadening the definition of "fund" under the tax exemption regime, redefining eligible transactions for tax concessions, and enhancing tax benefits on carried interest distribution.  

• Offshore RMB Business Hub:
  Hong Kong is a global hub for RMB trade settlement, financing, and asset management. Thus, it continues to improve offshore RMB liquidity, infrastructure, and investment options. As the government initiates to implement reform that fosters RMB trading, HKMA will launch a RMB 100 billion Trade Financing Liquidity Facility to support banks in RMB trade finance.  

• Mutual Market Access Enhancements:
  Inclusion of real estate investment trusts and offshore Mainland government bond derivatives in established trading mechanisms.  

• MPF' Full Portability:
  MPF Scheme authorities to consult on MPF Full Portability allowing account holders to transfer funds post eMPF implementation.   

Infrastructure and Sustainability  

• Bond Issuance: The Hong Kong government will be granting HKD150-195 billion in bonds under the Government Sustainable Bond Programme and Infrastructure Bond Programme annually from 2025-26 to 2029-30.  

• Green Economy and ESG Initiatives: City's government is set to issue HKD 300 million subsidy scheme mid-year to hasten the installation of 3000 fast chargers spanning in Hong Kong by 2030 aiding an additional 160,000 electrical vehicles.  

• Artificial Intelligence and Innovation: The government reserves HKD 1 billion for the Hong Kong AI R&D Institute, launches TECH for tech IPOs and discusses on virtual asset trading and custody licensing. 
  
  
• Public Transport and Fare Adjustments:
  The Public Transport Subsidy Scheme has reached a benchmark from HK$400 to HK$500. The HK$2 Fare Concession Scheme will adopt a "HK$2 flat rate + 80% discount" model, capping discounts at 240 trips monthly.
  
  
• Government Expenditure:
  Civil servant salaries, including those of government officials, judiciary members, and District Council members, will remain unchanged. However, the civil service workforce is expected to reduce by 2% annually in 2026-27 and 2027-28, resulting in a heavy decrease of 10,000 government positions.  

Why is Hong Kong Ideal for Your Business?  

• Low and Competitive Tax Regime: With substantial reductions in tax and incentives, Hong Kong offers a business-friendly tax environment compared to other global business hubs. 
  
  
• Gateway to Mainland China & Global Markets – Under the "One Country, Two Systems" concept, businesses can take advantage of Hong Kong's access to both global and Chinese markets. 
  
  
• Robust Financial Services – As Asia’s leading financial hub, Hong Kong continues to be a remain the leading destination for IPO market and wealth management. 
  
  
• Strong Talent Pool – More than 270,000 skilled professionals have relocated to Hong Kong through talent admission schemes. 
  
  
• Investment & Innovation Hub – Initiatives like OASES are appealing in strategic enterprises, with billions in investment and thousands of jobs in the pipeline.
  
  
• Stable Economic Growth – GDP is expected to grow by 2% to 3% in 2025 and an average of 2.9% from 2026 to 2029. 

Final Thoughts  

Hong Kong cleverly discusses a balance of economic prudence and progress-oriented policies. The city's budget for 2025-26 focuses on factors like tourism, talent acquisition, business expansion, and technology investment, strongly aiming to portray itself as a forward-thinking global hub in forthcoming years.  

The economic blueprint and provided provisions clearly indicate the growth and employment opportunities that can aid businesses to success. Thus, global expansion in Hong Kong can be a strategic move in coming years. Moreover, if you are planning or exploring global business opportunities in Hong Kong then we might help you!  

How Can We Help You?  

Looking at the opportunities in Hong Kong that the current government is striving for, the city gears up to promote a business-friendly environment. As a business, if you are planning your global expansion in thriving economies like Hong Kong, then TopSource Worldwide can be the right choice. 

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