Hong Kong authorities are seeking to inject HK$4.6 billion (US$587 million) into the government-owned postal service provider to sustain its operations for the next three years, following eight years of losses and declining mail volume.
A document submitted to the Legislative Council on Wednesday by the Commerce and Economic Development Bureau showed a bruising fiscal trajectory for the Post Office Trading Fund (POTF) of Hongkong Post since 2017-18.
Self-financing since 1995, Hongkong Post has recorded eight consecutive annual deficits, accumulating nearly HK$2.9 billion in losses. That stands in stark contrast to its 1997-98 peak profit of HK$1.23 billion.
The bureau said Hongkong Post faced major operational shifts, as geopolitical developments had reshaped global postal services and electronic communication had permanently reduced demand for traditional mail.
“The rapid development of the e-commerce industry has resulted in the influx of commercial logistics operators into the market, who possess substantial resources to build their own logistics networks and delivery teams, and are capable of offering point-to-point delivery services at more competitive prices,” the bureau said.
“In comparison, Hongkong Post is operating at higher costs, which is compounded by costs driven by external factors, including the higher transport fees charged by carriers and terminal dues charged by other postal administrations, making it difficult to significantly reduce costs within a short time frame.”
It added that the mail volume handled by Hongkong Post had decreased by an average rate of about 7 per cent per year from 2019-20 to 2024-25, culminating in a 44 per cent drop that was “expected to continue or even worsen in the years to come”.
“Based on current mail volume trends and revenue and expenditure forecasts, POTF’s cash reserves can only cover Hongkong Post’s operating expenses for less than a year,” the bureau said.
It stressed that the injection was a necessary short-term lifeline to protect public services while the department used its trading fund status to aggressively step up cost-saving and revenue-generating measures.
Of the proposed HK$4.6 billion capital infusion, about HK$4.09 billion would be provided as an operational lifeline over three financial years from 2027-28 to keep postal services running smoothly.
The remaining HK$510 million would be injected upfront in the 2026-27 financial year to fund a scaled-down, cost-effective structural refurbishment of the existing Air Mail Centre at the airport.
The refurbishment scheme will update existing building structures and introduce an automated storage and retrieval network integrated with digital customs clearance technology.
Looking ahead, authorities said they planned to pivot towards high-potential e-commerce postal markets to hedge against the continued decline in traditional mail.
The bureau said Hongkong Post was “actively exploring emerging markets”, focusing on developing postal logistics business in regions with development potential including belt and road, Asean and Middle Eastern countries.
Belt and road countries are key partners of the Belt and Road Initiative, Beijing’s plan to grow global trade.
The bureau added that the postal service provider would deepen regional cooperation with China Post to handle cross-boundary demand within the Greater Bay Area.
The bay area refers to a central government scheme to link the cities of Hong Kong, Macau, Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing into an economic and business powerhouse.
Lawmakers are scheduled to discuss the matter next Tuesday at a meeting of the panel on economic development. -- SOUTH CHINA MORNING POST
