While the demonstrations in recent months have hit Hong Kong’s tourism and retail sectors badly, the impact of the trade war between the United States and Mainland China on local SMEs has also started to surface.
Both these issues have caused concern in the business sector over the city’s economic prospects, with international brands shifting to a defensive strategy by postponing their expansion plans, and quite a lot of SMEs are experiencing operational and financing difficulties.
At a time fraught with internal and external troubles, we believe the new measures introduced by the Government to support SMEs will help tide them over the difficulties.
According to the Hong Kong Tourism Board, the number of visitor arrivals to Hong Kong fell around 30% in August year-on-year, and the decline is expected to continue. And the latest statistics from the Census and Statistics Department show that retail sales value dropped 11.4% in July from a year earlier. Many shops have been forced to consider laying off staff or even shutting down altogether.
If the situation persists, it will add pressure to SMEs and employees, and even break their “rice bowls.” If waves of business closures arise in the retail industry – which employs 270,000 people – the long-term economic development of Hong Kong will be undermined. There is a pressing need for the Government to implement feasible and effective policy measures to cope with SME closures and an increasing unemployment rate that may emerge.
I have had a number of meetings with officials including Financial Secretary Paul Chan and Secretary for Commerce and Economic Development Edward Yau to reflect the challenges facing SMEs today. The lack of liquidity means that SMEs will not be able to take new orders, because of their inability to pay the basic operating costs. Therefore, I proposed allowing SMEs to repay loans on an interest-only basis for the time being, and the introduction of a new loan guarantee product under which the Government will provide a 90% guarantee on loans to SMEs, to a maximum of HK$6 million. I believe such measures can ease the burden on SMEs so that they will have greater flexibility to respond to market changes.
Economic prosperity can help address social and livelihood problems. In addition to withstanding the trade war, Hong Kong needs to tackle challenges posed by internal troubles, which requires all of us, who are sitting in the same boat, to provide input and shared insights.
As a responsible government, the Administration should continue to help the business community through the current challenges. It should also help businesses expand into emerging markets, so that everyone in Hong Kong can enjoy the fruits of economic growth.