The Hong Kong General Chamber of Commerce (HKGCC) believes that, at this current time of extreme financial hardship, the latest relief measures unveiled by the Financial Secretary Paul MP Chan in his Budget Speech on 26 February should give a much needed lifeline to many businesses during these very challenging times.
“Businesses are facing the most severe challenge since SARS, so we are pleased that the Government has accepted our calls to roll out measures to ease their cash flow malady and stimulate the economy. This should provide businesses with some much needed short-term relief and help stave off redundancies for the near term,” said HKGCC Chairman Aron Harilela.
Providing an $18.3 billion package of concessions to specifically ease the pain of businesses is to be lauded. SMEs have long lamented the difficulties in securing loans, so the latest initiative for low interest loans of up to $2 million under the SME Financing Guarantee Scheme, under which a 100% guarantee will be provided by the Government, will be greatly welcomed. Lowering profits tax for companies, waiving business registration fees, reducing rental and utility fees, and other measures should help businesses and safeguard jobs.
Providing Hong Kong permanent residents with a cash handout of $10,000 should hopefully boost people’s confidence, stimulate domestic consumption and give some relief to businesses.
In the Chamber’s survey of members conducted last month on how the coronavirus is impacting businesses, 91% of the 320 respondents said that their business activities had been either significantly or moderately affected by the Covid-19 outbreak, so these measures to support the economy and people’s livelihoods will be most welcome.
“Hong Kong’s immediate needs must temporarily take precedence over the longer-term goal of balancing public finances. We have been saving for this proverbial rainy day, so we agree that now is the time for the Government to dig into its war chest to safeguard jobs and people’s livelihoods, and stimulate the economy,” said Harilela. “We realize that this has been a very difficult Budget to help deal with extraordinary challenges, so we are pleased that the Government is taking great pains to prevent unemployment increasing.”
The Government has adopted a pragmatic and visionary approach for the longer term by investing in the creation of a smart and liveable Hong Kong. New and expanded initiatives such as the establishment of a Green Tech Fund, a pilot scheme for electric ferries, and promoting the use of electric vehicles will help Hong Kong achieve these objectives. Policy and funding measures to safeguard and advance our standing as a premier financial centre, as well as to create a diversified economy through the development of innovation and technology, promotion of R&D and supporting start-ups are also welcome initiatives. The Government also doesn’t lose sight of opportunities offered by both the Greater Bay Area and Belt and Road initiatives, leveraging on our strengths in financial, professional and legal services.
One area which the Chamber feels needs to be addressed is the Government’s failure to introduce regulatory impact assessments (RIA) into the policymaking process to improve Hong Kong’s efficiency and competitiveness.
“Many of the policy decisions in Government have created unintended consequences,” said Chamber CEO Shirley Yuen. “We understand that the Government has been talking about the need to review regulations, remove red tape to create a business friendly environment, and consult with various stakeholders more, but we need to see more urgent action on this.”
She added an RIA would also help minimize the risk of conflict, while at the same time enable the Government to have a greater understanding of people’s concerns, and be able to address these early in the decision-making process.
“At this crucial juncture, we must put our heads together to revitalize our economy and restore international confidence. We are glad to see that the Financial Secretary, while addressing the immediate needs, has also kept an eye on longer-term planning for Hong Kong, as well as opportunities unfolding in the GBA and BRI, all of which will go a long way towards rebuilding confidence and our economy when we are through this crisis,” Harilela concluded.
Some of the key support measures for businesses and salary earners
• Concessionary low-interest loan with 100% Government guarantee for enterprises, up to a maximum of HK$2 million
• Reduce profits tax for 2019-20 assessment year by 100%, up to maximum of HK$20,000
• Reduce salaries tax for 2019-20 assessment year by 100%, up to maximum of HK$20,000
• Waive rates for non-domestic properties for 2020-21, up to HK$5,000 per quarter in first two quarters and HK$1,500 for remaining two quarters per property
• Waive business registration fees for 2020-21
• Waive registration fees for company annual returns for 2 years
• Electricity subsidies for non-residential accounts and Water and Sewage Charges reduced for non-domestic households