EY comments on Hong Kong’s First Five-Year Plan and 2026 Policy Address

The Chief Executive of the Hong Kong Special Administrative Region, John Lee, announced the First Five-Year Plan for Economic and Social Development of the Hong Kong Special Administrative Region (2026-2030) (“Hong Kong’s First Five-Year Plan” or “Five-Year Plan”) and the Chief Executive's 2026 Policy Address (“Policy Address”). The Five-Year Plan outlines a blueprint for Hong Kong’s future development across six key areas. The sections “Strengthen the Four Centers, Develop the Hub for High-caliber Talent, Consolidate and Enhance Our Edge in Global Competition”; “Expedite the Development of the Northern Metropolis” and “Deepen the Development of the Guangdong-Hong Kong-Macao Greater Bay Area (‘GBA’)” closely reflect EY recommendations.¹ Under the theme “A Strategic Vision for a Bright New Era; Driving Reform and Boosting Development; Unleashing Opportunities and Enhancing Livelihood”, the Policy Address outlines a range of measures and cross-departmental initiatives to implement the strategic direction set out in the Five-Year Plan.

Benny Cheung, EY Hong Kong and Macau Managing Partner, says: “I am encouraged to see the Government adopting a more forward-looking, coordinated and strategic approach to charting Hong Kong’s future development. The EY team will continue to work closely with stakeholders across sectors to help Hong Kong seize the opportunities arising from national development initiatives and the transformation of the global economy. Together, we can further strengthen Hong Kong’s international competitiveness while advancing higher-quality, more resilient and sustainable growth.”

Driving new industrialization through innovation and technology

To accelerate the development of Hong Kong’s new industrialization ecosystem, the Five-Year Plan proposes advancing three major innovation and technology parks and five key research and development institutions, establishing a world-class industry-academia-research collaborative innovation system, expected to foster the commercialization and industrial application of research outcomes. The Five-Year Plan also identifies AI as a strategic industry underpinning Hong Kong’s future development and calls for the continued advancement of the “AI+” initiative.

Ben Kwan, EY² Greater China Strategy and Transactions Managing Partner, says: “We welcome the Government’s efforts to adopt a more coordinated approach to resource allocation while providing more targeted support for emerging and future industries with strategic value and high growth potential. In particular, the enhancement of the Digital Transformation Support Pilot Program under the ‘AI+’ initiative is closely aligned with the EY recommendations. We believe these measures will help address the challenges that SMEs face in adopting AI and enhance their competitiveness.”

Commenting on the “New Industrialization Elite Enterprises Nurturing Scheme” from the Policy Address, Kwan added: “We are encouraged to see the Government establishing a mechanism for the continuous identification and nurturing of high potential enterprises. This will provide end-to-end support and a clear growth pathway to help promising companies scale. EY stands ready to support the Government in advancing this initiative in every possible way.”

Strengthening Hong Kong’s policy and tax competitiveness

The Policy Address introduces a range of concrete measures to support the development of the Northern Metropolis, including the proposed Northern Metropolis Development Bill, which aims to streamline land, planning and industrial development through dedicated legislation and subsidiary regulations. The Policy Address also proposes tailored preferential policy packages for strategic enterprises, as well as providing a 5% concessionary tax rate or 50% tax reduction for businesses operating in priority sectors, including financial services, advanced manufacturing, innovation and technology research and development, headquarters activities, logistics and supply chain management.

Wilson Cheng, EY³ Hong Kong and Macau Tax Leader, says: “These measures demonstrate the Government’s commitment to driving economic transformation through a coordinated commercial and tax policy framework. The direction is also aligned with EY recommendations to position the Northern Metropolis as a pilot zone for commercial and tax policy innovation, with targeted tax incentives to attract high value-added and innovative industries.”

He added: “The tax incentives proposed in the Policy Address could be further strengthened through the introduction of a Qualified Refundable Tax Credit (QRTC) regime, an EY-advocated initiative. Such a framework could more effectively attract strategic emerging industries, including AI, life and health science, green technology and advanced manufacturing, to establish operations in Hong Kong. Compared with traditional concessionary tax rate arrangements, a QRTC regime would not only align with the evolving global minimum tax environment but also provide meaningful support to innovative businesses that remain in the investment and R&D stage, and have yet to achieve profitability.”

Building a multi-layered capital market ecosystem that supports innovation-driven development

The Five-Year Plan proposes advancing “Finance + Technology Innovation”, promoting patient capital and attracting a broad range of financial resources to support technological innovation through market-oriented mechanisms. Key initiatives include the launch of a HK$10 billion Innovation and Technology Industry-Oriented Fund covering five technology innovation themes. The capital market reforms outlined in the Policy Address, including the consultation on the proposed amendments to Chapter 18C, also align with the Five-Year Plan’s objective of strengthening Hong Kong’s status as an international financial center and advancing “Finance + Technology Innovation”.

Thomas Lo, EY⁴ Greater China Capital Market Services Leader, says: “We are encouraged to see measures that are aligned with EY recommendation to strengthen support from both government funding and patient capital, enabling more innovative enterprises to leverage Hong Kong’s capital market to achieve sustainable growth. At the same time, initiatives aimed at enhancing the competitiveness of Hong Kong’s listing regime, including simplifying listing procedures, reducing compliance and administrative costs, and streamlining prospectus disclosure requirements, will further strengthen Hong Kong’s appeal to international investors and reinforce its role as a leading hub for cross-border fundraising.”

Deepening regional collaboration and high-standard opening-up

GBA serves as a strategic fulcrum of the country’s new development paradigm, a demonstration zone for high-quality development and a pioneer of Chinese modernization. The Five-Year Plan proposes advancing the GBA’s innovation and technology ecosystem and industrial chain, fostering the transformation of research and development outcomes and strengthening collaboration with Mainland cities in areas including technological innovation, industrial cooperation and infrastructure development. It also seeks to deepen integration through both “hard connectivity” and “soft connectivity”, including the active expansion and promotion of GBA Standards and GBA Certification, under which technical specifications for a wider range of products and services will be established to enhance quality.

Cheung says: “These initiatives are closely aligned with EY recommendations. They will further leverage Hong Kong’s strengths as an international platform by providing high value-added support in areas such as rules and standards, compliance and risk management, while enhancing the influence of Hong Kong’s institutional framework and professional services. Together with the Policy Address’s proposals to strengthen dedicated support for enterprises expanding overseas and broaden international trade and economic networks, Hong Kong will be well positioned to reinforce its role as both a ‘super connector’ and a ‘super value-adder’, helping businesses capture opportunities across the GBA and international markets.”

1. EY recommendations on First Five-Year Plan for Economic and Social Development of the Hong Kong Special Administrative Region (2026-2030) and 2026 Policy Address（中文）
2. Ernst & Young (China) Advisory Limited
3. Ernst & Young Tax Services Limited
4. Ernst & Young (EY member firm in Hong Kong)

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