Hong Kong's infrastructure spending to eat up 18.1% of annual budget

But delays are still predicted amidst manpower crunch.

The Hong Kong government will also continue to invest in the infrastructure sector, and these investments will bode well for the territory's long-term development prospects, according to BMI Research.

According to the budget documents, infrastructure spending will continue to be the biggest share of expenditures for the government, coming in at 18.1% for FY2017/18 (versus 19.8% in FY2016/17), despite policymakers budgeting a small decline of 3.6% y-o-y to HKD89.1b.

Here's more from BMI Research:

Projects such as the Shatin to Central Link will help to ease congestion in the city's MTRs while the Guangzhou-Shenzhen-Hong Kong Express Rail Link will help to improve connectivity between mainland China and the Special Administrative Region (SAR), as part of the Chinese government's plans to integrate the region.

Indeed, Chinese Premier Li Keqiang announced during his speech to the National People's Congress on March 5 that the Chinese central government is looking to draw up a plan for the development of a cluster of cities in the Guangdong/Hong Kong/Macau region, which is aimed at opening up the country further.

However, as it has been the case over the past couple of years, these infrastructure investments will continue to be met with delays due to issues such as the shortage of manpower and cost overruns, and are unlikely to boost near-term growth significantly.

Indeed, the Guangzhou-Shenzhen-Hong Kong Express Rail Link, which was first expected to be completed in 2015, will only be commissioned in Q318 due to these issues.