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Hong Kong Announces Tax Cuts Amid Huge Government Surplus


Hong Kong has offered tax cuts because of a huge surplus in government finances and U.S. retail giant Wal-Mart has bought stakes in a discount chain in China. Claudia Blume at VOA's Asia News Center in Hong Kong has more on these and other stories in our weekly look at business news from the region.

Hong Kong's government announced a $2.5 billion handout that includes tax cuts and one-off rebates. This financial year's salary tax demands will be cut in half, and alcohol duty is cut by 50 percent. The government also raised child allowances but critics said little effort was made to bridge the growing gap between rich and poor.

The populist measures were unveiled just weeks before Hong Kong's chief executive Donald Tsang will be returned for a second term in office.

Financial secretary Henry Tang said the handouts are a prudent way to share out a surplus of more than $5 billion in government finances.

"They are meant to share the wealth with the community, but at the same time maintain fiscal discipline," he said. "So the fact that out of the package only about one quarter represents a long-term recurrent basis and the other three quarters is on a one-off basis strikes a very good balance of maintaining fiscal discipline but at the same time share the wealth with our community."

U.S. retailer Wal-Mart bought a 35-percent stake in a Taiwan-owned discount chain, which operates more than 100 stores in China. Wal-Mart said it aims for eventual ownership control of the Trust-Mart hypermarket chain. The acquisition could help the U.S. firm topple French retailer Carrefour from its position as the dominant foreign retailer in China. Wal-Mart currently operates 68 hypermarkets in China while its rival Carrefour owns 90.

Japanese carmaker Nissan teamed up with France's Renault auto company to build a factory in India. The car plant near the southern city of Chennai will be built in collaboration with local automaker Mahindra and Mahindra. The three companies will together invest about $900 million, with the Indian partner owning 50 percent of the joint venture.

When it starts production in 2009, the auto plant will be one of India's largest, producing about 400,000 cars per year. It will manufacture both Nissan and Renault models.

Burma signed a contract with South Korea's Daewoo conglomerate, allowing the company to explore for natural gas off Burma's northwestern coast. The agreement is Daewoo's second exploration deal with Burma, whose natural gas wealth has become an increasingly important source of foreign revenue. Burma's military regime has signed energy contracts with foreign companies from China, India, Malaysia and Thailand in recent years.

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