From reformative vision to emboldened action — Charting a brighter future for Hong Kong; EY comments on the 2025 Policy Address

The Chief Executive of the Hong Kong Special Administrative Region, John Lee, delivered the 2025 Policy Address under the theme “Deepening Reforms for Our People, Leveraging Our Strengths for a Brighter Future”. The Policy Address outlines comprehensive strategies for key priorities, including the development of the Northern Metropolis, finance, trade, technology, talent, education, people’s well-being, green transition and integration within the Guangdong-Hong Kong-Macao Greater Bay Area (GBA). It underscores the Hong Kong Government’s (the Government’s) resolve and capability to proactively align with national strategies during the planning year of China’s “15th Five-Year Plan”, precisely respond to local societal needs and strategically position future industries.

Jasmine Lee, EY Hong Kong and Macau Managing Partner, says: “This year’s Policy Address is well-structured, pragmatic in its measures and clear in its objectives. It not only reinforces a results-oriented culture in governance but also reflects the wisdom of combining an efficient market with an enabling government – injecting strong momentum into Hong Kong’s critical economic transformation phase.”

Accelerating Northern Metropolis development, reshaping economic landscape

The Policy Address makes groundbreaking institutional arrangements for the Northern Metropolis, explicitly proposing the enactment of dedicated legislation to expedite its development. This will grant the Government greater flexibility and statutory authority to streamline approval processes, relax land-use restrictions, accelerate infrastructure delivery, and establish seamless cross-border flows of people, goods, capital, data and biological samples – fostering an internationally competitive ecosystem for scientific research, innovation and advanced manufacturing.

Lee remarks: “The introduction of dedicated legislation represents an institutional breakthrough that will significantly shorten project implementation timelines and boost investor confidence. Coupled with the ‘Development Zone’ model and the statutory industry park company mechanism, these measures will help attract leading global technology enterprises and research institutions, creating a strong industrial clustering effect.”

The Policy Address also accelerates the development of the Hong Kong Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone, adopting a flexible “moving in while construction is underway” approach. It further unveiled the Conceptual Outline of the Development Plan for the Innovation and Technology Industry in the San Tin Technopole, which clearly positions four strategic pillar industries: life and health technology, microelectronics, new energy and artificial intelligence (AI).

“The concurrent advancement of the Northern Link Spur Line in combination with the Main Line and the accelerated planning of the Hong Kong-Shenzhen Western Rail Link signify the full implementation of the ‘infrastructure-first’ strategy,” Lee adds. “As both ‘hard connectivity’ and ‘soft connectivity’¹ deepen in tandem, the Northern Metropolis will not only address land supply challenges but also emerge as a core engine driving GBA innovation synergy, institutional alignment and talent convergence – reshaping Hong Kong’s economic landscape for the next three decades.”

Driving AI implementation, strengthening governance foundations

The Policy Address sets out an ambitious strategy for the development of AI. Vincent Chan, EY² Greater Bay Area Technology and Data Connect Leader, says: “Its success hinges on a robust governance and data security framework. The establishment of the ‘AI Efficacy Enhancement Team’ is a welcome move to drive AI adoption across government departments, especially in citizen-facing services.”

The Government’s commitment to support the private sector – particularly small and medium-sized enterprises (SMEs) – through digital education, workforce re-engineering and targeted funding schemes is crucial to accelerating AI integration.

A funding allocation of HK$1 billion has been earmarked for the establishment of the Hong Kong Artificial Intelligence Research and Development Institute in 2026, to promote upstream AI research, midstream and downstream commercialization, and the development of application scenarios. The Department of Justice will also set up an interdepartmental task force to review the legal framework required for broader AI adoption. Chan adds: “We welcome the Government’s efforts to provide clearer guidance on AI governance, as such clarity is critical to driving adoption. We are also encouraged by the Government’s comprehensive, end-to-end approach to supporting AI R&D.”

Equally pressing is the need to develop the Northern Metropolis as a strategic innovation corridor. With the Chief Executive-led Committee on Development of the Northern Metropolis steering its progress, the area is poised to become a key hub for technology and cross-boundary collaboration. The proposed legislation to facilitate data flow for scientific research and AI testing, particularly in Hetao and the GBA, is vital, but must be supported by robust data governance to ensure privacy, compliance and interoperability – foundations essential to unlocking AI’s full potential and securing Hong Kong’s position as a global innovation leader.

Integrating industry-academia-research, building a talent hub

Following last year’s establishment of a dedicated committee chaired by the Chief Secretary for Administration, this year’s Policy Address continues to institutionally drive the integrated development of education, technology and talent, by coordinating resources, breaking down silos and deepening industry-academia-research collaboration, signaling a strategic shift in Hong Kong’s talent policy from “attracting talent” to a systematic approach of “nurturing, retaining and utilizing talent.”

Lee says: “This is a precise response to global competition for talent. Only when education produces R&D talent, technology provides application scenarios and industry creates high-value jobs – forming a closed-loop ecosystem – can Hong Kong truly become a sustainable international talent magnet.”

The Policy Address also explicitly supports Hong Kong Metropolitan University and other universities of applied sciences in building exchange platforms with Mainland vocational institutions within the GBA, commits to explore mutual recognition of qualifications, and encourages collaboration between applied science universities and leading enterprises to advance industry-education integration.

Lee adds: “When Hong Kong’s higher education moves beyond traditional academic pathways to align with industrial needs, technological frontiers, and national strategies, we can truly realize ‘excellence in every field’, opening diverse pathways for youth and fueling the economy with enduring momentum.”

Optimizing family office ecosystem, activating arts trading

Earlier this week, the Government announced that Invest Hong Kong has assisted more than 200 family offices in establishing or expanding their businesses in Hong Kong, surpassing its key performance indicator. Since its launch, the New Capital Investment Entrant Scheme (CIES) has also been well received by the market. The Policy Address proposes to refine the CIES by adjusting the property transaction thresholds and the amount eligible for real estate investments. Lee notes: “I particularly welcome the Government’s positive response to some of EY’s earlier policy recommendations, such as lowering the residential property investment threshold under the CIES from HK$50 million to HK$30 million. EY fully endorses the direction set out in the Policy Address and will actively collaborate with the Government to help businesses and talent seize new opportunities and build a prosperous Hong Kong together.”

Ming Lam, EY³ Hong Kong Financial Services Tax Partner, welcomes these enhancements, noting: “These measures will effectively attract more high-net-worth individuals to settle in Hong Kong, bringing additional capital and reinforcing the city’s position as an international asset and wealth management hub. The Government should seize this opportunity to further optimize tax incentives for family offices and expand the scope of qualifying investments to include asset classes such as arts, fine wine and collectibles. This would strengthen the synergy between CIES and family offices, accelerate Hong Kong’s long-term cultural and arts development, and help position the city as a premium arts trading hub.”

Streamlining capital channels enhancing listing appeal

The Policy Address introduces a series of measures to enhance the efficiency of Hong Kong’s capital markets. Jacky Lai, EY² Hong Kong Capital Market Services Spokesperson, says: “The capital market remains one of the key pillars supporting Hong Kong’s transition to a more diversified economy, and we must maintain its vibrancy over the long term. Measures such as refining primary listing requirements and facilitating overseas companies – including Mainland enterprises currently listed abroad – to pursue dual-primary or secondary listings in Hong Kong are critical to sustaining the competitiveness of HKEX. We also recommend piloting ‘IPO Connect’ and expanding the inclusion of more secondary-listed companies – particularly those in innovative sectors such as biotechnology and AI – into Stock Connect. This would broaden investment options for Mainland investors, improve liquidity for these companies, and further attract high-quality overseas enterprises to list in Hong Kong. Shortening the stock settlement cycle to T+1 will reduce transaction costs and settlement risks while improving market efficiency, further strengthening the competitiveness of Hong Kong’s capital markets.”

Preferential policy packages to attract strategic foreign investment

The Policy Address introduces preferential policy packages to attract strategically targeted foreign businesses to invest and establish a presence in Hong Kong. Wilson Cheng, EY Hong Kong and Macau Tax Leader, says: “Such a coordinated approach will streamline onboarding processes and reaffirm Hong Kong’s reputation as an international business-friendly platform. We recommend that Corporate Treasury Centres (CTCs) – with planned tax concession reviews by mid-2026 – as well as IP trading and financing transactions aiming at solidifying Hong Kong’s role as a regional IP hub, should be included in the design of the preferential policy packages. The BEPS Pillar Two-compliant Qualified Refundable Tax Credit should also be taken into consideration.”

The Policy Address emphasizes Hong Kong’s strategic repositioning as a global hub by leveraging national Belt and Road Initiative (BRI) opportunities. It highlights talent development and professional service matching for BRI countries, reinforcing Hong Kong’s role as a super-connector. Cheng comments: “The establishment of a Belt and Road Green Development Cooperation Platform will showcase Hong Kong’s expertise in sustainable finance and green technology. Additionally, efforts to develop tourism markets in the Middle East and ASEAN regions, including Halal industry support, will enhance cultural and economic collaboration with BRI countries. These measures align with Hong Kong’s goal to deepen international cooperation and strengthen its status as a super value-adder.”

Attracting Mainland banks to establish regional HQs, strengthening financial ecosystem

The Policy Address proposes that the Hong Kong Monetary Authority (HKMA) will actively encourage Mainland banks to set up regional headquarters in Hong Kong. Paul Ho, EY³ Hong Kong Financial Services Hong Kong Tax Leader, comments, “Attracting more Mainland banks to establish regional headquarters in Hong Kong will enhance the concentration of financial institutions and strengthen the city’s role as a global financial hub with depth and liquidity. Regional headquarters require senior decision-makers, experienced bankers, accounting and legal professionals, and compliance specialists – creating high-value positions that attract global financial talent and foster a more mature talent pool, benefiting the entire financial industry.”

Ho adds: “As Hong Kong accelerates its expansion into markets such as Southeast Asia and the Middle East, banks must develop more sophisticated cross-border financial solutions to meet the complex product needs of these regions. This includes project financing, M&A advisory, structured products and risk management tools, which will further enrich Hong Kong’s financial product ecosystem.”

Building a green hub, connecting the Belt and Road

The Policy Address reaffirms Hong Kong’s role as a diversified international hub, proposing a suite of innovative initiatives – including aircraft recycling, EV battery circular economy solutions and the establishment of a green maritime fuel bunkering center – while strengthening green cooperation with BRI partner countries to solidify Hong Kong’s position as a global green hub.

Ee Sin Tan, EY² Hong Kong and Macau Climate Change and Sustainability Services (CCaSS) Partner, says: “In line with the country's ‘dual carbon’ targets, the proposed development of a sustainable aviation fuel industry chain and hydrogen projects in Hong Kong – in collaboration with the GBA – will enhance Hong Kong’s status as an international green logistics hub. Cooperation with the GBA carbon market and the future formulation of voluntary carbon credit standards will also unlock new opportunities for Hong Kong companies in their decarbonisation journey.”

Lai adds: “Developing hubs for aviation fuel and hydrogen projects will attract more leading companies from both the Chinese mainland and overseas to Hong Kong, enabling them to raise funds locally and further strengthen the city’s IPO pipeline.”

1. Refers to physical infrastructure and institutional connectivity respectively
2. Ernst & Young, Hong Kong
3. Ernst & Young Tax Services Limited

-Ends-

Notes to Editors

EY | Building a better working world

EY is building a better working world by creating new value for clients, people, society and the planet, while building trust in capital markets.

Enabled by data, AI and advanced technology, EY teams help clients shape the future with confidence and develop answers for the most pressing issues of today and tomorrow.

EY teams work across a full spectrum of services in assurance, consulting, tax, strategy and transactions. Fueled by sector insights, a globally connected, multi-disciplinary network and diverse ecosystem partners, EY teams can provide services in more than 150 countries and territories.

All in to shape the future with confidence.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients, nor does it own or control any member firm or act as the headquarters of any member firm. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com.