Hong Kong Leader Prioritises Talent, Security In First Policy Address

Making his first policy address on Wednesday, Hong Kong Chief Executive John Lee prioritised improving competitiveness and attracting more overseas talent, while also stressing the need to bolster national security in the Chinese ruled city.

While some Western governments including the United States have said the erosion of rights and freedoms has hurt Hong Kong's business climate and exacerbated a brain drain, Lee pledged to tighten control, referencing Chinese President Xi Jinping's directives for the city in a speech at the start of a major party congress in Beijing.

"We will further strengthen the legal system and enforcement mechanisms for safeguarding national security," said Lee. The proposed new laws would regulate areas including cybersecurity, crowdfunding activities and false information, he added.

Lee, who took up his job in July and was sanctioned by the United States in 2020 for his role in the crackdown on Hong Kong's freedoms, did not give a timeframe for this.

With limited financial experience, Lee faces multiple challenges restoring Hong Kong's fortunes as a financial hub after several years of upheaval that resulted in it losing ground to rivals such as Singapore.

Hong Kong's economy contracted 1.3% in the second quarter from the same period a year earlier.

Over 200,000 foreigners and Hong Kongers, including young people who had been at the forefront of pro-democracy protests, left the city in the past two years, unsettled by China exerting more control over political freedoms and a heavy-handed approach to fighting COVID-19.

"TRAWL" FOR TALENT

Lee said two-year visas would be made available to individuals earning salaries of HK$2.5 million ($318,475) or more during the past year, and graduates from the world's top 100 universities with at least three years of work experience

"Apart from actively nurturing and retaining local talents, the government will proactively trawl the world for talents," Lee said in his speech.

Overseas talent choosing to become permanent residents in Hong Kong would also be given stamp duty refunds for a first residential property purchase.

Lee said HK$30 billion ($3.8 billion) would go into a "Co-Investment Fund" to attract enterprises to set up operations. He added the Hong Kong stock exchange would revise its rules next year to make it easier for high technology firms to list.

During Lee's nearly three-hour speech, he mentioned the word "talent" more than 60 times.

Hong Kong scrapped a hotel quarantine requirement for all incoming visitors in September, having kept closely to China's "zero-COVID" policies over the past two years. The tourism and catering sectors were bruised by prolonged lockdowns, and the closure of the city's once porous and economically vital border with mainland China.

Lee said talks were continuing with mainland authorities on resuming cross-border travel.

PROPERTY

On housing, long a thorny issue for Hong Kong leaders in one of the world's most expensive property markets, Lee pledged to provide enough land for the provision of not less than 72,000 residential units in the next five years.

"We will enhance quantity, speed, efficiency, and quality in land production, staying on top of things and putting in place a long-term plan to steadily increase supply," he said.

Public housing supply will be increased by 50% in the next five years, and over half of the city's under-utilised, semi-industrial "brownfield" sites converted for housing and other uses.

Despite an estimated 10% fall in prices this year, Lee stopped short of announcing any bold moves, such as easing property cooling measures implemented over the past decade.

The Hang Seng Property Index rose as much as 2.8% before the speech, but had fallen by more than 1% shortly after it ended. The Hang Seng index fell more than two percent in afternoon trading.

"It was a bit disappointing with no new relaxation of the cooling measures, and that dragged down the property and the Hang Seng Index," said Steven Leung, sales director at UOB Kay Hian brokerage.

"The overall policy address is rather unexciting, providing many targets. But the ability to execute these will be key."

($1 = 7.8499 Hong Kong dollars)