Hong Kong’s 2026/2027 Budget presents a city in confident forward motion. Financial Secretary Paul Chan outlined a fiscal plan centred on stability, technology-driven growth and long-term economic competitiveness – backed by stronger-than-expected results: the Operating Account has returned to surplus ahead of schedule.

The economic data from 2025 supports this positive outlook. Real GDP grew between 2.5 and 3.5 percent, total exports rose by 12 percent, unemployment stood at 3.8 percent, and the Hang Seng Index gained 28 percent over the year. Against this backdrop, the government has set total public expenditure at HKD 904.7 billion, with clearly defined priorities.

The Northern Metropolis remains a flagship investment zone, serving as a cross-boundary platform for innovation, high-end manufacturing and Greater Bay Area integration. HKD 10 billion is being injected into the Hetao Hong Kong Park, covering infrastructure development, startup support and a new venture fund. Alongside this, approximately HKD 220 million is earmarked for Hong Kong’s first national manufacturing innovation centre outside the Mainland, with a focus on advanced manufacturing and semiconductor R&D. The Innovation and Technology Fund receives an additional HKD 4 billion.

Tourism and culture also benefit significantly: HKD 1.66 billion goes to the Hong Kong Tourism Board to attract high-value visitors and scale up major events, while an additional HKD 1 billion supports heritage conservation. For businesses and individuals, the budget delivers tangible relief – including a one-off 100 percent reduction in salaries and profits tax (capped at HKD 3,000) and increased allowances for dependants and residential care.

On the revenue side, the government is taking targeted action: stamp duty on residential property transactions above HKD 100 million rises to 6.5 percent, and from 2027/2028, the OECD global minimum tax will apply to multinational groups with revenues above EUR 750 million, projected to generate around HKD 15 billion annually.

The 2026/2027 Budget sends a clear message: Hong Kong is investing in its future as a centre of innovation, finance and culture – and doing so with fiscal discipline.

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Your point of contact in Hong Kong: Stefan Schmierer

Ravenscroft & Schmierer

22nd Floor, Bupa Centre
141 Connaught Road West
Hong Kong, SAR

CELL:    +852 9229 6603
TEL:      +852 2388 3899
FAX:      +852 2385 2696

www.rs-lawyers.com.hk
sschmierer@rs-lawyers.com.hk

The Philippines are making a serious and well-structured move into one of the world’s most strategically significant industries: aerospace and aviation manufacturing.

The Philippine Economic Zone Authority (PEZA), in partnership with the Civil Aviation Authority of the Philippines (CAAP), is developing dedicated aerotropolis-style economic zones designed to cluster aviation and aerospace firms near major airports. The goal is to improve infrastructure connectivity, streamline supply chains, and deepen the country’s integration into global aerospace production networks. A memorandum of understanding between both agencies is already in place, with operational guidelines currently being developed for near-term implementation.

The immediate catalyst for this initiative is the registration of Global Aerospace Technology Philippines Inc. as a Peza Ecozone Export Enterprise, based at the Cavite Technopark Special Economic Zone. The company will manufacture and assemble unmanned aerial vehicles and UAV systems, special-purpose machinery, and aerospace components – activities that PEZA explicitly describes as anchoring the Philippines more firmly in technology-intensive, high-value global manufacturing.

What makes this development particularly noteworthy is the strategic ambition embedded in it. PEZA Director General Tereso Panga stated that the project positions the Philippines as an integrated production partner of Japan – one of the world’s largest aircraft manufacturing nations – with a clear pathway toward high-value systems engineering, defense platforms, next-generation aircraft technologies, and sustainable aviation solutions. This is not incremental industrial policy; it is a deliberate bid for a seat at the table in the future of aerospace.

Equally significant is the inclusive design of the initiative. Beyond attracting large international manufacturers, the aerotropolis ecozones are explicitly structured to create supply-chain entry points for local micro, small, and medium enterprises through subcontracting arrangements, precision parts production, logistics, and technical services. This layered approach – combining anchor investors with SME integration – is precisely what distinguishes durable industrial ecosystems from isolated foreign direct investment projects.

For the global aerospace industry, the message is clear: Southeast Asia is no longer simply a high-growth passenger market. It is actively building the manufacturing infrastructure, regulatory frameworks, and international partnerships needed to become a credible production and MRO hub. Against the backdrop of persistent supply chain pressures, the imperative to diversify sourcing geographies, and IATA’s forecast that Asia-Pacific will drive the largest share of global passenger growth through 2040, the timing of this Philippine push could not be more strategic.

Companies reassessing their global footprint, supply chain resilience, or OEM partnerships should look at the Philippines not merely as a market, but as an emerging aerospace production partner of genuine consequence.

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Your point of contact in the Philippines: Lutz Kaiser

Villanueva Gabionza & Dy Law Offices

20th/F Corporate Center
139 Valero St., Salcedo Village
Makati City 1227, Philippines

CELL: +63 995 985 4957
TEL: +63 2 8813 3351
FAX: +63 2 8816 6741

www.vgdlaw.ph
kaiser@adwa-law.com

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Wie As you may have read in our article “New Catalogue of Encouraged Industries Effective from 1 February 2026: What Are the Benefits for Foreign Investors?”, the new Catalogue of Industries for Encouraging Foreign Investment (“Positive List”) entered into force in the People’s Republic of China on 1 February 2026. Among other things, it includes a special list of encouraged foreign investments in Hainan Province.

According to the central government’s plan, the tropical island and province of Hainan is to be developed into a high-quality free trade port with international influence, capable of competing with Hong Kong, Singapore and Dubai in the future.

In 2020, the State Council published the Master Plan for the Hainan Free Trade Port, a comprehensive economic and social development plan intended to develop Hainan into a “strategic location for trade, investment and innovation” and transform it into a strategic hub for China’s “dual circulation” strategy.

In 2025, the next phase of the development plan began with the enactment of a series of investment, customs and trade regulations intended to further liberalise Hainan’s trade and investment system and attract foreign investors.

These measures include, among other things, reductions in corporate income tax and individual income tax, as well as the introduction of the “two customs boundaries” system. Under this system, most goods—approximately 74%—may be imported from abroad into Hainan across the first customs boundary and subsequently transported to the Chinese mainland across the second customs boundary free of customs duties, provided that certain requirements are met.

Further information about the Hainan Free Trade Port and the advantages and disadvantages that Hainan Province offers foreign investors can be found in our new article.

To the article:

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Your point of contact in China: Rainer Burkardt

Burkardt & Partner

Suite 1706, Five Corporate Avenue
No. 150 Hubin Road
Shanghai 200021, P.R. China

CELL:    +86 186 1687 7153
TEL:      +86 21 6321 0088
FAX:    +86 21 6321 1100

www.bktlegal.com
info@bktlegal.com