FHKI Welcomes the 2026-27 Budget Investing in Innovation to Enhance Industrial Synergy
FHKI Welcomes the 2026-27 Budget Investing in Innovation to Enhance Industrial Synergy
25-02-2026
FHKI Welcomes the 2026-27 Budget
Investing in Innovation to Enhance Industrial Synergy
Federation of Hong Kong Industries (FHKI) welcomes the 2026-27 Budget. Amid the volatile global environment, the Operating Account returned to a surplus ahead of schedule, demonstrating the effectiveness of the Government’s counter‑cyclical measures. The new Budget prioritises investment in technology, leveraging Hong Kong’s strengths in scientific research, finance, professional services, medical and healthcare, and international connectivity. These initiatives foster the synergistic development of new industries and traditional industries with competitive edge in accordance with local conditions, comprehensively enhancing the competitiveness of the city in the global innovation and technology race. The Federation applauds the Government for broadly adopting industry opinions on various areas, including AI and industry development strategy, development of new industrialisation, intellectual property trade, and support for SMEs.
FHKI Chairman Anthony Lam expressed strong support for the establishment of the "Committee on AI+ and Industry Development Strategy", the launch of the "New Industrialisation Elite Enterprises Nurturing Scheme", and the optimisation of tax policies. He noted that these measures will strengthen the connections between innovation, industry, and capital, supporting the long-term development of diversified industries. "The National 15th Five-Year Plan emphasises self-reliance and self-strengthening in technological innovation," said Chairman Lam. "This Budget drives industrial upgrading through technology, ensuring policies and funding are deployed in tandem while a dedicated mechanism coordinates cross-departmental resources. Hong Kong possesses strong advantages in scientific research capabilities, a robust financial system, and excellent internal and external connectivity. With a clear roadmap, supporting policies, and proactive investment, we can seize this critical window for global innovation and digital transformation. By turning research results into industrial momentum, we can drive the dual engines of emerging and traditional industries, injecting lasting energy into Hong Kong's economy and promoting high-quality development."
Chairman Lam added that with the Operating Account expected to record a surplus in the coming years, the industry hopes the Government will continue to review and optimise SME support measures. He also urged the rapid establishment of a cross-sectoral professional services platform to help the business community assist brands and products in "going global," achieving "global connect" and exploring new opportunities.
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Supporting SMEs to Tackle Challenges
An increasingly complex market environment continues to pose challenges for business, and FHKI welcomes the Government’s ongoing SME-support measures and responsiveness to industry concerns, including the allocation of HK$200 million to the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund) and the raising of the funding cap for “Easy BUD” to HK$150,000 per project. At the same time, there will be more targeted funding to assist enterprises in deploying AI to support upgrading and transformation to maintain competitiveness. The Hong Kong Export Credit Insurance Corporation will launch a pilot scheme later this year to provide protection for SMEs exporting to higher-risk buyers, encouraging the exploration of new Belt and Road markets.
FHKI welcomes the Government’s continued measures to alleviate funding pressures on SMEs, including extending the application period for the 80% Guarantee Product under the SME Financing Guarantee Scheme to March 2028, and extending the window for the principal moratorium arrangement to mid‑November this year, which will help enterprises weather difficult times.
The Budget proposes a rates concession for non-domestic properties for the first two quarters of the 2026/27 fiscal year, capped at HK$500, and a 100% reduction in profits tax for the 2025/26 assessment year, capped at HK$3,000. FHKI believes these measures will help relieve the burden on SMEs and reflect the Government’s ongoing support.
Establishing High-level Committee to Drive Comprehensive AI Development
As global AI competition intensifies and industrial transformation accelerates, FHKI welcomes the Budget’s acceptance of our recommendation to establish the Committee on AI+ and Industry Development Strategy. FHKI believes that AI has a wide range of application, and setting clear strategies could foster new business models and also accelerate enterprise transformation, thereby strengthening competitiveness across all sectors.
In response to the urgent need for talent training, FHKI is pleased to see the Government allocating HK$50 million to promote AI training for all, thereby enhancing citizen’s AI literacy. Meanwhile, we support the Government in upgrading the Employees Retraining Board as Upskill Hong Kong to provide skill-based AI training, helping employees to master key technologies and improve productivity.
Looking ahead to the operation of the Hong Kong Artificial Intelligence Research and Development Institute Company Limited in the second half of this year, FHKI hopes it will unite the strengths of the Government, industry, academia, research, and investment sectors. This collaboration should refine governance frameworks, accelerate the commercialisation of AI technologies, and help Hong Kong actively align with the National AI+ initiative.
Nurturing Elite Enterprises to Fast-track I&T and New Industrialisation
FHKI fully supports the Budget’s strengthened commitment to new industrialisation and its drive to accelerate the development of new quality productive forces in Hong Kong. FHKI is encouraged that the Government is conducting a study on the medium- and long-term development of new industrialisation, and looks forward to industry consultation during the process. Specifically, the New Industrialisation Elite Enterprises Nurturing Scheme will help foster leading enterprises and build a more complete industrial ecosystem. Meanwhile, the planned establishment of the first National Manufacturing Innovation Centre outside the Mainland will enhance cross-boundary collaboration, support Hong Kong enterprises in integrating into the national industrial system, and broaden the development space for high-end manufacturing.
In frontier technologies, FHKI welcomes the Government’s strategic push in areas including life and health technology, microelectronics, and the low-altitude economy. The establishment of the International Clinical Trials Academy and the capital injection into the Chinese Medicine Development Fund will strengthen Hong Kong’s position as an international health and medical innovation hub. FHKI also welcomes the Government’s adoption of recommendations to enhance the regulatory framework for the low-altitude economy. We recommend strengthening mutual recognition of standards with the Mainland to better align with the national landscape. In addition, establishment of the Hong Kong RISC‑V Alliance and attracting aerospace enterprises to set up operations in Hong Kong will inject strong momentum into emerging industries.
Regarding infrastructure and funding, FHKI welcomes the Government’s injections of HK$10 billion each into the Hetao Hong Kong Park and the San Tin Technopole, as well as the introduction of the HK$10 billion Innovation and Technology Industry Oriented Fund this year to accelerate the development of the Northern Metropolis by mobilising market resources. Coupled with the enhancement of tax arrangements for R&D expenditures, these measures will effectively encourage cross‑boundary R&D activities and strengthen the resilience of the I&T ecosystem. FHKI will continue to unite the strengths of Government, industry, academia, research, and investment sectors to promote deeper integration of technology and industry, advancing Hong Kong’s development into an International I&T Centre.
Strengthening Commodity and Gold Markets via Enhanced Tax Incentives
FHKI welcomes the targeted measures in the Budget to cultivate a robust commodities ecosystem. The Government’s move to refine maritime tax arrangements by offering a half-tax incentive for eligible commodity traders, alongside the inclusion of precious metals in the qualified investment domain for family offices and funds, will act as a powerful catalyst for capital and corporate relocation. This strategy is expected to foster a virtuous cycle between trade and capital while providing a solid institutional foundation for commodity trading in Hong Kong.
Regarding the construction of an international gold trading market, FHKI is pleased to see the Government advancing this comprehensively, including exploring tax concessions and supporting the establishment of industry associations and training frameworks. This aligns with FHKI’s advocacy for strengthening the commodities ecosystem and will enhance Hong Kong’s global influence in precious metals pricing, settlement, and storage, driving high-value professional services and consolidating our status as an international shipping and trade hub.
Consolidating Unique Advantages to Empower Industrial Development
FHKI appreciates the Budget’s active alignment with the National 15th Five-Year Plan and its focus on "Finance +" to empower industrial development. Measures to advance RMB internationalisation and optimise the securities market will help solidify Hong Kong's position as an International Financial Centre and promote financial market connectivity.
As an international trade centre, the Government is rightly expanding its agreement network and strengthening Hong Kong’s role as a key node in the Belt and Road Initiative. The Budget notes that the Government is exploring new Investment Agreements with Saudi Arabia and Egypt, and organising outbound missions. This will significantly aid the industry in exploring emerging markets.
The proposal to expand market access and simplify customs arrangements for local food products entering the Mainland, alongside waiving food certification fees for two years, is expected to boost exports of Hong Kong-manufactured food, which is highly trusted by Mainland consumers.
In logistics, FHKI welcomes the "Future Innovative Logistics Acceleration Scheme" and the "rail-sea-land-river" intermodal transport system. Together with optimised tax, ship registration, and licensing arrangements, these will enhance efficiency and strengthen Hong Kong's position as an International Maritime Centre.
Intellectual property (IP) trading is crucial for high-value industries. The allocation of HK$52 million to establish the "Intellectual Property Academy," the "Pilot Patent Valuation Support Scheme," and the study on tax deductions for IP trading costs will help perfect the ecosystem, positioning Hong Kong as a Regional IP Trading Centre, while aligning with the development of the International I&T Centre.
Enhancing the Talent Development System and Achieving Carbon Neutrality
To build competitive industries, we must first gather talent. FHKI welcomes the further refinement of manpower strategies and talent admission mechanisms to attract top global professionals while nurturing local talent. Through the “STEM Internship Scheme” and the “Research Talent Hub Scheme,” the government encourages university students to engage in and experience innovation and technology, helping cultivate I&T talent. In addition, HKD 10 billion in loan funding, land, and other resources have been reserved to support the construction of the Northern Metropolis University Town, the campus of the new medical school, and the development of an integrated teaching and research hospital. These efforts aim to strengthen the training system for talents with both clinical and R&D capacity and attracting more medical talents to take up teaching and research positions, further enriching Hong Kong’s professional talent hub, thereby providing a robust workforce foundation for economic transformation.
On sustainable development, FHKI supports the push for green technology and finance, the five-year waste reduction plan, and waste-to-energy facilities. These measures aim to enhance resource recycling and energy efficiency. The issuance of sustainable bonds will improve green financing efficiency, driving the circular economy. These initiatives highlight the Government’s determination to promote sustainable development and represent a significant step toward carbon neutrality.
Win-Win Cooperation on Exploring Global Opportunities: Connecting Domestic and International Businesses
The Budget’s proposal to establish a cross-sectoral professional services platform to support enterprises in "going global" aligns perfectly with FHKI’s "Global Connect" initiative. By proactively seeking project-matching opportunities in Belt and Road regions, the Government can help resolve the difficulties companies face regarding unfamiliar markets and regulations. FHKI suggests that the Government include local and Mainland enterprises in outbound missions to facilitate direct business engagement. We also recommend strengthening policy consultation, market analysis, and business matching support to accelerate the overseas landing of brands and products.
Regarding investment attraction, FHKI welcomes the detailed preferential policy packages. Land grant arrangements, financial subsidies, and tax incentives effectively address concerns over high initial costs. The Budget's measures provide sufficient incentives to attract key enterprises and new capital to Hong Kong. We recommend tailoring these packages for specific strategic enterprises to ensure effectiveness. FHKI will actively support the "Advisory Committee on Tax Policy" to explore how tax adjustments can further enhance Hong Kong's appeal to investors.
Finally, the HK$100 million allocated to attract large-scale international exhibitions with new elements will not only showcase the strengths of Hong Kong's exhibition industry but also create a new promotional platform for local and Mainland brands. The Federation will continue to communicate closely with the Government, reflect the industry's reactions and opinions, and perform the role as a "super connector" and "super value-added agent" to encourage more domestic and foreign companies to set up operations in Hong Kong and then expand overseas or to the Mainland.
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