As Hong Kong approaches the 2025-26 fiscal year, the city faces mounting global competition and internal pressures for transformation. The development of innovation and technology (I&T), artificial intelligence (AI), and family offices has become critical to revitalizing the economy. Based on FOFA’s analysis, this article proposes pragmatic and breakthrough recommendations that leverage existing resources and technological capabilities. By focusing on I&T and wealth management, Hong Kong can achieve a significant economic leap within five years, further securing its status as an international financial hub.
I&T and AI: A New Engine for Transformation
Hong Kong’s economy requires fresh momentum, with I&T and AI poised to play a decisive role. Currently, the contribution of technology to GDP is merely 1.5%, significantly lagging behind leading global cities. This structural imbalance must be addressed. A practical starting point is to introduce tax incentives, such as a 50% profits tax reduction for AI and green technology companies during their first three years (estimated annual cost: HK$2 billion). Additionally, allowing a 150% tax deduction for R&D expenditures could attract 50 technology companies to establish their presence in Hong Kong within five years. These measures would not only stimulate corporate investment but also create jobs and drive technological upgrades. Given Hong Kong’s mature policy framework, these initiatives are cost-effective and highly appealing.
Simultaneously, the San Tin Technopole (part of the Northern Metropolis) could become a “cross-border pilot” highlight. By cooperating with Shenzhen, a HK$5 billion fund could be launched in 2025 to support 100 cross-border R&D projects, aiming to incubate 10 high-growth companies within three years. With shared financial contributions from governments and enterprises, risks remain manageable, and existing infrastructure allows for quick implementation. These initiatives serve as a transformative engine, injecting technological vitality into Hong Kong and paving the way for its economic transformation.
Family Offices: A New Pillar of Wealth Management
Beyond innovation, family offices represent another significant growth driver. As Asia’s financial hub, Hong Kong has immense potential to attract global high-net-worth individuals. In 2025, the government could introduce a “one-stop approval” fast-track process, enabling family offices to complete registration within three months, with a target of adding 100 new family offices within three years and managing an additional HK$500 billion in assets. This initiative does not require legislative changes but only administrative adjustments, and the recent surge in family offices demonstrates its market appeal.
Taking a step further, Hong Kong could draw inspiration from Singapore by offering additional tax incentives to family offices managing over HK$1 billion in assets, attracting more ultra-high-net-worth families. Combined with Hong Kong’s low tax rates and robust legal system, these measures would solidify its position as a wealth management hub, providing stable fiscal revenue and creating a dual growth engine alongside I&T development.
Deepening Synergies: AI and Wealth Management
The potential of I&T and family offices can be maximized through deeper integration, generating greater economic benefits. In the AI sector, a “Technology Commercialization Fund” could be established, with the government allocating HK$3 billion in matched funding with enterprises. Over three years, this could support 50 industry-academic research projects, creating an estimated HK$10 billion in economic benefits. Priority funding could be given to AI applications in areas like smart finance and healthcare technology, attracting investments from family offices and achieving a win-win for technology and capital.
Additionally, a “drone logistics sandbox” could be piloted in the Northern New Territories in 2025, allowing 10 companies to test operations and establish regulations within three years. This would accelerate logistics automation while attracting participation from technology-focused family conglomerates. As the technology matures and risks remain low, the initiative could scale further. Moreover, halving the tax rate for virtual asset trading platforms during their first three years could attract HK$5 billion in annual investments, catering to the growing interest of family offices in emerging assets. These initiatives are simple to implement and highly appealing to the market.
Talent development is equally critical. In 2025, the government could provide AI skill subsidies of HK$2,000 per person to 100,000 citizens (annual cost: HK$2 billion) to ensure the workforce keeps pace with technological advancements. Additionally, offering PhD retention bonuses of HK$50,000 per year could retain 500 AI professionals over three years, achieving significant results at a low cost. These innovative measures would tightly link technology and wealth management, amplifying economic impact.
Fiscal Support and Vision Realization
To foster the growth of I&T and family offices, fiscal support and long-term vision are essential. On the revenue side, Hong Kong could issue HK$50 billion in green bonds (with a 3% annual yield) to attract ESG-focused funds from family offices, supporting AI and green technology infrastructure. Market demand is strong, and issuance risks are low. Tax adjustments could include a 2% surcharge on luxury properties valued over HK$30 million, generating HK$5 billion annually to provide stable funding for the I&T fund. This measure would target high-income groups, with limited public backlash.
On cost reduction, full digitization of tax processing by 2026 could save HK$1 billion annually, while introducing AI-powered document processing across three government departments in 2025 could save another HK$500 million annually. These technologies are mature and widely accepted by the public.
Regional collaboration could focus on a 20-hectare pilot zone in the Northern Metropolis' Sha Ling area, reducing corporate tax rates to 12% and generating HK$5 billion in revenue within three years. This would attract AI and data center enterprises, leveraging competitive tax adjustments. If decisively implemented, these measures could increase the share of technology in Hong Kong’s GDP to 3% within five years, while family offices could manage over HK$1 trillion in assets. This would achieve the goals of “stabilizing public finances, driving transformation, and benefiting livelihoods,” reshaping Hong Kong into a global hub for technology and wealth management, and delivering better quality of life and opportunities for its citizens.
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