HONG KONG – Hong Kong Chief Executive John Lee on Wednesday will lay out his vision for the city’s revival as an international financial hub during his maiden policy address, which is likely to include measures to ease property taxes and visa restrictions.

Mr Lee’s speech before the Legislative Council will seek to answer Beijing’s calls for Hong Kong to better serve as a bridge between mainland China and the rest of the world.

But his task – Mr Lee’s first annual policy presentation since taking office July 1 – is a tough one. He’ll need to tackle thorny issues, including the city’s waning competitiveness with rivals like Singapore, a housing market on track to be its least affordable in two decades, and a brain drain fueled by years of pandemic isolation.

While the city’s most punishing Covid-19 controls have been lifted, the economy is still projected to contract this year for the third time since 2019 as rising interest rates, global inflation and Russia’s war in Ukraine hamper growth. The government’s fiscal deficit, meanwhile, could triple from earlier estimates as revenue weakens and spending on Covid-related policies and economic support rises.

Here’s a look at what we’re expecting Mr Lee to cover:

Attracting talent

Mr Lee has emphasised the importance of attracting and retaining talent in remarks leading up to his address. Last week, he pointed out that while strategic plans for the city’s tech development were one thing, “having the talent to execute and build on these plans is something else entirely.”

What that could entail: New regulations making it easier for Hong Kong-based companies to hire non-local workers, people familiar with the matter told Bloomberg News last week. The measures under consideration would target 13 priority professions, including asset management and fintech.

Such a change would allow firms to skip a process that now requires them to show they’ve made efforts to recruit locals for roles before hiring from the mainland or abroad. 

Other measures under consideration include cash subsidies for some highly skilled professionals, and the creation of a specific government branch to attract and manage new talent, the people told Bloomberg. The South China Morning Post reported – citing unidentified individuals – that Mr Lee could announce a programme that provides an 18-month visa allowing graduates from world-renowned universities to seek work in the city.

Also likely to feature in Mr Lee’s push to attract talent is the Greater Bay Area plan, a longstanding project that has been pitched as a way to further integrate Hong Kong with mainland hubs like Shenzhen and Guangzhou while facilitating innovation and tech development. He recently spoke about the initiative at a conference focused on its development, according to Radio Television Hong Kong.

Property market

The government may relax rules on an extra 15 per cent stamp duty that non-resident property buyers need to pay, with part or all of the impost likely to be refunded after workers have stayed in the Asian hub for a certain number of years, Bloomberg News has reported.

Hong Kong is the world’s most expensive housing market, and Mr Lee’s address will be watched for any policies that could make property less costly. The Business and Professional Alliance for Hong Kong, a political party in the city, has urged the government to develop more public housing in areas close to country parks, according to local media outlet HK01, though it isn’t clear how seriously Mr Lee may consider that proposal.

Covid-19 curbs

After more than two years of border controls, Hong Kong has relaxed some of its harshest travel restrictions, including ending mandatory hotel quarantine for inbound travellers in September. But with the continuation of short-term testing and movement restrictions for those flying into the city, there’s still no roadmap for a full reopening.

Mr Lee’s policy address won’t likely lay out a precise time frame for the full removal of restrictions, either for Hong Kong’s international borders or for its shared land border with mainland China, according to a South China Morning Post report citing anonymous sources. The paper did say, however, that Mr Lee would pledge to relax more measures as the city begins to host international events in November. A global banking summit and the iconic Hong Kong Sevens rugby tournament are two highlights.

While the business community has welcomed measures like the end of hotel quarantine and the easing of social distancing restrictions, they are still pushing for a full reopening as the Covid-19 curbs drain talent. An August survey by the Hong Kong Investment Funds Association showed more than a third of fund-management companies moved some or all regional and global roles from the city to other places, while the labour force recently dropped to near-decade lows.

Other proposals

Mr Lee is expected to announce major infrastructure projects to boost the economy in his address, the South China Morning Post reported, citing unidentified people. The paper said he will highlight three rail links and three highways, including the acceleration of plans for a cross-border railway between Hong Kong and mainland China that will connect parts of northern Hong Kong with a development area in Shenzhen.

Other political parties have encouraged Mr Lee to address other issues, such as the city’s ageing population, though it’s unclear whether Mr Lee is considering their measures. 

The New People’s Party, for example, has proposed that the government provide HK$20,000 (S$3,617.) subsidies to new parents, according to local newspaper Ming Pao – an attempt to prop up a birth rate that last year sunk to the lowest on record going back to at least 1971. The party also proposed standardising the retirement age for civil servants at 65, compared to the current policy that allows options allowing for retirement as early as 55. BLOOMBERG