State of Hong Kong Economy

Hong Kong Financial Secretary John Tsang Chun-wah pointed out that the main reason why Hong could maintain its present economic status and maintain relatively low corruption rate was because Hong Kong has adopted a small-sized government and low tax policy in ruling this special economic district of China.

He said Hong Kong has a population of 7 million, but the civil servants, including teachers, street cleaners, etc., only accounted for 0.16 million or about 3 percent of the population.

GNP on Public Spending
"Hong Kong thinks that by managing a small-sized government in the public domain, expenditure can be maintained at a level that is below 20 percent of GNP (Gross National Product) while the remaining 80 percent can be handed over to the private sector. This is because the private sector has more manpower and talents and can come out with smart decision that can help to promote economic growth."

Hong Kong Financial Secretary said this in response to a question posed by a participant asking his suggestion of how Hong Kong could help Malaysia achieving the anti-corruption goal and in the elimination of business-government connection culture.

The talk by Tsang Chun-wah was held in conjunction with his official visit to Malaysia. It was jointly organized by the Malaysian International Chamber of Commerce, Malaysian Chinese Chamber of Commerce and the Hong Kong Economic and Trade Office based in Singapore.

Country's Personal Income Tax
Tsang Chun-wah said that Hong Kong's tax system was simple and its taxation was relatively low. For personal income tax, it was not more than 15 percent and for business profit tax it was only levied at 16.5 percent.

However, the low tax system of Hong Kong has also led people to think that Hong Kong is a heaven to escape tax. However, this is an unfair assessment of Hong Kong. Fortunately, Hong Kong did not face deficit problems in the past few years. As such it can maintain its healthy economic situation.