Hong Kong 2025 Policy Address – Key Takeaways and Practical Implications

Each year, the Hong Kong SAR Government sets its policy direction through the Chief Executive’s Policy Address – a key document that outlines the administration’s priorities and reform agenda.  For international businesses operating in or through Hong Kong, this Address offers valuable insight into the city’s evolving regulatory landscape, economic strategy, and alignment with national development goals.  The Chief Executive’s 2025 Policy Address is anchored on two interlinked pillars: the economy and people’s livelihood.  This is pursued through an ambitious and wide-ranging reform agenda. Below, we summarise the key proposals most likely to be relevant to our clients.

1. Intellectual Property: from Asset to Collateral

Hong Kong continues to strengthen its position as a regional intellectual property (IP) trading centre, with a suite of new measures designed to support innovation and commercialisation:

• IP Financing Sandbox: A new IP financing sandbox will be launched, particularly targeting the technology sector. This initiative will enable businesses, especially SMEs and start-ups, to leverage their IP assets – such as patents and copyrights – as banking collateral for financing. The Government will also subsidise patent valuation services for small and medium I&T enterprises, making it easier to use IP as collateral for credit.
• Patent and Trademark Support: The Hong Kong Technology and Innovation Support Centre will provide patent evaluation services based on national standards, and a pilot programme will subsidise patent valuation for credit financing.
• Copyright and Design Law: Efforts are underway to modernise the Copyright Ordinance, particularly to address the protection of AI technology development. The Government will formulate a code of practice reflecting relevant legal principles and prepare legislative proposals. Additionally, a consultation on updating the registered designs regime is planned. Businesses with significant intangible portfolios should consider early positioning for asset-backed lending, tax planning, and cross-licensing opportunities.
• External Promotion: Hong Kong will continue to promote IP trading and financing through international forums and by supporting local enterprises in competing for prestigious awards.

These developments present new opportunities for businesses to monetise their IP portfolios and access alternative financing channels, while also strengthening the legal framework for IP protection.

2. Technology, AI, and Digital Infrastructure – “Industries for AI” and “AI for Industries”

Artificial intelligence (AI) and technology are at the heart of Hong Kong’s economic transformation. The Policy Address introduces several key initiatives:

• AI as a Core Industry and Core Growth Engine: The Government is positioning AI as a core industry and a central driver of growth, supporting both “industries for AI” and “AI for industries.”  Key milestones include the tendering of a 10-hectare data-facility cluster at Sandy Ridge, the commissioning of Cyberport’s AI Supercomputing Centre, and the earmarking of HK$1 billion for the establishment of the Hong Kong AI Research and Development Institute in 2026 to support upstream AI R&D, midstream and downstream R&D outcome, and the expansion of use cases.  The Government has also bolstered its efforts to nurture local and attract overseas and Mainland AI professionals, such as setting up the AIR@InnoHK research cluster that pooled over a thousand experts. The Government also announced the launch of the HK$3 billion Frontier Technology Research Support Scheme earlier, which will help funded universities to attract researchers in AI and will invite applications soon.
• Investment, Public Sector Adoption and New Industrialisation: The Hong Kong Investment Corporation will continue to deploy “patient capital” into AI enterprises, while the Digital Policy Office embarks on comprehensive adoption of AI in public services. Financial institutions should monitor the Hong Kong Monetary Authority’s evolving approach to AI model evaluation and the second cohort of its AI Sandbox, which may set compliance benchmarks for algorithmic decision-making and model risk management. To further accelerate new industrialisation, the Government is providing industry-ready use cases, adopting a scenario-based approach to investment promotion, and supporting leading innovation and technology companies. Key measures accelerating the third InnoHK research cluster, lowering the funding threshold for the New Industrialisation Acceleration Scheme, and launching an I&T Industry-Oriented Fund to invest in strategic emerging industries.
• Autonomous Vehicles: Regulatory and Operational Developments: The statutory framework for autonomous vehicles (AV), established in 2024, will develop rapidly: three areas will be approved for AV trials this year, with the explicit aim of enabling cross-district operations and swift progression towards commercial services. Developers, fleet operators, and insurers should prepare for new permitting, data-sharing, and liability allocation requirements.
• Ride-Hailing Services: The regulations of ride-hailing services, such as Uber, is set for significant change. The Government is determined to resolve the long-standing issue of ride-hailing regulation, with a bill to be introduced before the end of the current Legislative Council term. The proposed legislation is expected to address licensing, safety standards, and the integration of ride-hailing with existing transport systems with the aim to safeguard public safety while providing a clear legal framework for ride-hailing operators. Operators and users of ride-hailing services should monitor developments closely and prepare for new compliance requirements.

These initiatives are expected to accelerate digital transformation, improve efficiency, and create new business opportunities, while also raising important questions around technology, AI governance, and risk management.

3. Data Protection: Cross-Boundary Data and Digital Security

Data protection remains a key concern as Hong Kong deepens its integration with the Greater Bay Area and expands its digital economy:

• Cross-Boundary Data Flow: The Government is working to establish a compliant and secure mechanism for the cross-boundary data flow of Mainland data to Hong Kong, particularly for scientific research and AI application testing.
• AI and Data Security: All Government and public sector AI systems are subject to rigorous testing, audits, and continuous monitoring to ensure data security and privacy.
• Digital Identity: The rollout of AI-powered assistants for the “iAM Smart” and “Digital Corporate Identity” platforms will enhance user experience while raising new considerations for data protection and privacy.

Businesses operating in Hong Kong should remain vigilant regarding data protection obligations, especially when handling cross-border data or deploying new digital solutions.

4. Digital Economy: Fintech, Tokenisation and Digital Trade

Hong Kong is consolidating its status as a leading international financial and digital hub, with a range of initiatives to support the digital economy:

• Fintech and Tokenisation: The Hong Kong Monetary Authority is advancing Project Ensemble, supporting the development of tokenised deposits and assets, and encouraging live transactions of tokenised money market funds. The Government is also regularising the issuance of tokenised bonds.
• Digital Asset Regulation: A new regime for stablecoin issuers is being implemented, and legislative proposals are being developed for licensing digital asset dealing and custodian service providers. The Securities and Futures Commission is exploring a wider range of digital asset products for professional investors. The Financial Services and the Treasury Bureau is working with Shenzhen and Qianhai to foster the development of digital finance and to deepen the integration of technology and financial services between Shenzhen and Hong Kong. Further measures to support this cross-border collaboration are expected to be announced within the year.
• e-HKD and Digital Trade: The Government is promoting the use of the e-HKD (Hong Kong’s digital currency) and expanding digital trade infrastructure, including the Trade Single Window and electronic bills of lading. The Hong Kong Monetary Authority will set out a roadmap for Project Cargo^x, which aims to lower credit costs and shorten processing times for banks and SMEs.  Corporates are encouraged to assess whether their current treasury, custody, and KYC systems are future-proofed for tokenised workflows, and to consider early stakeholder engagement ahead of upcoming licensing regimes.
• Cybersecurity: Enhanced support is available for SMEs to adopt AI and cybersecurity solutions, with subsidies provided through Cyberport’s Digital Transformation Support Pilot Programme.

These developments offer significant opportunities for innovation and efficiency, but also require careful attention to regulatory compliance and risk management.

5. Green Finance: Sustainable Growth and Green Coin Initiatives

Sustainability and green finance are central to Hong Kong’s economic strategy:

• Green Finance Ecosystem: The Government is deepening cooperation with the Greater Bay Area on carbon trading and green finance, including the development of a regional carbon market ecosystem and the launch of green coin initiatives.
• Green Technology Commercialisation: Commercialisation of green technology will be incentivised, from battery-swapping infrastructure to district cooling systems, while a HK$300 million Fast Charger Incentive Scheme targets 3,000 additional fast chargers by 2028. Market participants issuing sustainability-linked instruments should monitor the harmonisation of Mainland and Hong Kong carbon standards, particularly if seeking access to the Mainland’s emerging compliance markets.
• Sustainable Finance Products: The Hong Kong Monetary Authority and Securities and Futures Commission are promoting the issuance of green bonds and the development of new green investment vehicles, including tokenised green assets.

Businesses are encouraged to explore green finance opportunities and to consider how sustainability initiatives can support their growth and compliance objectives.

6. Pharmaceuticals and Healthcare Sectors: Innovation, Regulation and Growth

The life sciences and healthcare sectors are a major focus of the Policy Address, with a range of measures to promote research, attract investment, and enhance regulatory standards:

• Attracting Pharmaceutical Companies: Hong Kong aims to become a hub for clinical trials and advanced therapies, with streamlined processes for patient recruitment and trial initiation. The Greater Bay Area Clinical Trial Collaboration Platform will enable simultaneous trials in Hong Kong and Shenzhen.
• Regulatory Developments: The Government will establish the Hong Kong Centre for Medical Products Regulation, with the goal of becoming an internationally recognised authority. Legislative proposals for regulating medical devices are expected in 2026.
• Accelerated Drug Approval: A new “1+” mechanism will prioritise the evaluation and approval of innovative drugs, particularly for severe or rare diseases, helping to bring new treatments to market more quickly. Life science investors and pharmaceutical companies may anticipate shorter clinical timelines and, in the medium term, a more internationally recognised regulatory pathway for drugs and devices.
• Healthcare Infrastructure: The Policy Address also highlights the development of a third medical school, expansion of primary healthcare services, and the integration of Chinese and Western medicine.
• Digital Health and AI: AI is being applied to improve diagnostics, patient care, and hospital management, with a focus on digital pathology and generative AI in clinical workflows.
• Primary Healthcare and Prevention: Expansion of community healthcare, disease prevention, and mental health support, including new screening programmes and digital health initiatives.
• Chinese Medicine: The opening of the Chinese Medicine Hospital and the promotion of integrated Chinese-Western medicine services.
• Elderly and Carer Support: Enhanced support for elderly care, carers, and persons with disabilities, including new funding, data platforms, and technology-driven solutions.

These reforms are designed to position Hong Kong as a leading centre for life sciences and healthcare innovation creating new opportunities for service providers and investors, while ensuring robust regulatory oversight to improve public health outcomes and patient safety.

7. Employment, Skills and Labour Compliance

The Policy Address introduces several important changes in employment and labour law, reflecting the evolving needs of Hong Kong’s workforce:

• Minimum Wage: A new annual review mechanism for the Statutory Minimum Wage (SMW) will be implemented, with the first rate under the new system expected to take effect on 1 May 2026.
• Skills and Training: The Employees Retraining Board is being reformed to provide more targeted, skills-based training, including micro-credential courses recognised by industry.  The Government is also enhancing support for re-employment and silver employment.
• Labour Importation and Local Priority: Measures are being introduced to ensure the employment priority of local workers, including stricter requirements for employers seeking to import labour and enhanced enforcement against illegal employment.  The Enhanced Supplementary Labour Scheme will now require an extended six-week local recruitment process and stricter manning ratios, particularly in F&B roles.
• Digital Platform Workers: The Government will legislate to improve work injury compensation for digital platform workers (such as those in food and goods delivery), and a tripartite committee will continue to address issues affecting this sector.
• Occupational Safety and Health: There is a continued focus on reducing workplace accidents, with increased use of technology such as drones and AI for inspections and evidence collection.

Employers should review their policies and practices (including occupational safety protocols and contractual structures) to ensure compliance with these new requirements to mitigate compliance risks and to take advantage of available support for workforce development.

8. Culture and Creative Industries: Growth and Internationalisation

Hong Kong is investing in its position as a global centre for culture and creativity:

• Creative Economy: The Government has plans for the development of the West Kowloon Cultural District, new international arts trading hubs, and enhanced support for local creative industries with initiatives to promote digital fashion, sustainable design, and the incubation of local cultural IP. The West Kowloon Cultural District will discuss leasing strategies with the developer of Artist Square Towers to attract galleries, family offices, and other art trading enterprises. Designers and film producers will benefit from enhanced CCIDA support.
• Arts and Culture: The Government will consolidate Hong Kong’s status as a premium arts trading hub by hosting major international conferences, exhibitions, and festivals to raise Hong Kong’s profile as an East-meets-West centre for cultural exchange – including developing a dedicated ecosystem at Airport City, expanding collaboration with Art Basel, and studying tax and financing measures.

Businesses in the creative sector can expect increased support, new funding opportunities, and a more vibrant ecosystem for growth and collaboration.

Contact Us

The 2025 Policy Address marks a period of significant change and opportunity for businesses and individuals in Hong Kong. Whether you are seeking to protect your intellectual property, navigate new regulatory requirements, adopt innovative technologies, or explore opportunities in the digital and green economies, our team is here to help. Please contact us to discuss how these developments may affect your business and how we can support your legal and strategic objectives.