COVER STORY
May 2003 Issue

HKGCC's Submission to the
Hong Kong Government Initiatives to Boost Economy and Confidence in HK
Based on suggestions collected from members, the Chamber
submitted on April 16 a recommendation paper to the Hong Kong Government containing
short-, mid- and long-term measures to boost the economy and confidence in view of the
impact of SARS on Hong Kong
I. Recommended
immediate economic measures
1. Provisional tax payments: In
the Chamber ’s most recent
Budget Submission, we suggested "...SMEs may be given a longer lead time to pay the
Final Tax and not be required to pay Provisional Tax." This would provide immediate
cash flow benefit. Money in pockets, welcomed by the vulnerable companies, with very minor
loss of income to government. The Chamber recommends that the Government temporarily waive
provisional payments, or take the step to eliminate it altogether.
2. Airport: The Chamber recommends that the government
fund the Airport Authority to reduce or temporarily waive airport landing and parking
fees, and office or retail rentals under the Airport Authorities' responsibility, for
three months. Also consider free parking of idle coaches that belong to travel agencies.
This will provide immediate cash flow benefit for the hard hit travel sector and
encourages airline companies, with very low load factors now, to continue to fly in and
out of Hong Kong.
3. The SME Loan Guarantee Scheme: It currently requires
bank approval and then government approval. The Chamber recommends modifying the process
to allow applicants to receive pre-approval from the government-conducted by certified
accountants at a set fee-before seeking bank approval. Thus SMEs will be able to shop
around different banks for the best terms, and avoid delays. This means less government
responsibility for screening and approval; new business for approved accountants; faster
bank approval; and more rapid access to funds for SMEs at this challenging time.
4. Reducing water and sewage charges: This extends the
2002-03 Budget concession; the continual waiving would mean the additional $1 billion
revenue earmarked from water rate charges would be forgone. This concession would provide
immediate cash flow benefit for companies and households. Useful for SMEs and for
restaurants and shops. The Chamber recommends a return to 2002-03 concessions for six
months.
5. Freezing government fees and charges: Again, this
would provide immediate cash flow benefit. It has direct impact on company cash flow,
particularly SMEs, regardless of companies' profitability. The Chamber recommends a return
to 2002-03 freeze for six months.
6. General Rates: The 2003-04 Budget proposes an end to
last year's $5,000 deduction on rates, leading to an additional $4.2 billion in revenue.
The Chamber recommends that this concession be extended for one quarter, with no ceiling
on deduction. This concession should be only for specific industries most affected --
restaurants, retail, tourism, and entertainment, and would bring immediate cash relief.
7. Waive Business Registration Fee: The budget
anticipates a $1.2 billion increase in fees this year. The Chamber recommends a waiving
for one year.
8. Reduce or waive rent for Housing Authority commercial complexes
for three months: The Chamber recommends that the government look at tenants
case-by-case and reduce or waive as their hardships dictate. This directly affects
companies' bottom line, and can be implemented without negotiation among private
landlords. It shows strong moral leadership of the government.
9. SME Export Marketing Fund: The Chamber recommends an
increase of the fund ceiling from $40,000 to $80,000. This money assists companies
participating in overseas trade shows and exhibitions. Be flexible in allowing use of this
fund. This would create opportunities for businesses affected by cancelled or postponed
exhibitions and trade shows.
10. Trade shows: The Chamber recommends that the
government fund TDC in helping SME exhibitors reduce their losses. This would involve
reducing participation fees and negotiating with exhibition contractors and venues.
11. Web-site promotion: The Chamber recommends that TDC
help companies promote their web sites through the TDC portal, with special pages for
events and industries affected.
12. Using various government funding to assist business: These
include the four funds to assist SMEs (totaling $1.9 billion), the Professional Services
Development Assistance Scheme ($100 million), and the Innovation Technology Fund ($5
billion), which could be disbursed much faster than originally planned. The Chamber
recommends that the coverage of these funds can be made more flexible to encompass more
innovative uses consistent with the spirit of the funds. For example, extending the use of
specific-purpose funds (such as the Pneumoconiosis Compensation Fund) to related uses.
This provides an immediate cash flow benefit and puts already committed money to work when
it is most needed. Another morale booster that costs no additional amount.
13. Encouraging banks to assist in restructuring loans to
customers: The Chamber recommends that the government take a leadership position
in lobbying the banks to treat with sympathy their long-time customers who are clearly
damaged by SARS. This could include extension of loan payback period or payment of
interests only, or other means that can be worked out between the customer and the bank.
This would be especially useful for SMEs with cash flow problems. The Chamber will be
working with the banks also on this idea.
II. Recommended immediate crisis management measures
1. Need an authoritative
spokesman to send out a clear and confident message: The Chamber recommends a
greater coordination and transparency in government reporting on SARS. Use an
authoritative spokesman to put out information per day who has an international
projection. Right now, the messages are from too many people and too confusing-with some
good news not even being emphasized, and the official spokesmen too low level and
technical and have no international impact. He/she should speak with authority, pre-empt
all stations at a fixed time per day, giving out progress and facts and dispelling rumors
and speculation. This spokesperson can also answer questions which increases our
understanding and takes away some "unknowns", like: What kind of people have
recovered? How many people have been infected in MTR, taxis, shopping centers or
restaurants? How many have actually been infected by a sick passenger on an airplane? What
steps are being taken next and how do we measure previous steps?
The assumption now in the community is that the virus is rife everywhere
in Hong Kong and you can be victimized anywhere. This discourages consumption locally, and
is also the international perception, which makes Hong Kong business people unwelcome in
other countries in addition to no one coming here. If only a minority of cases is due to
community sporadic infection and not due to close contact with patients, visitors,
relatives, medical personnel, then say so. The Chamber believes that this kind of
authoritative, transparent, non-speculative, and forward-looking information dissemination
would show that we are "in control", and create greater confidence in Hong Kong
by residents and overseas cities.
2. More pro-active and
higher-profile cooperation with internationally recognized public health experts from WHO,
USCDC etc: There is a need to show the people of Hong Kong and the world that
Hong Kong officials are working hand in hand with renowned world public health agencies on
disease containment planning. Cooperation with Mainland health officials should also be
highlighted. This would boost the morale of our medical personnel also. The Chamber
recommends this highly pro-active approach, reflecting the international character of Hong
Kong, as opposed to managing with mainly local experts. The whole world is working on this
problem, and we are leveraging off advances and suggestions globally. It also gives
"ownership" of problem solution here to international organizations that judges
our ability to handle crisis.
3. Using our international connection: The Chamber
recommends that the government, working with local chambers, should aggressively lobby
American, British, French, Norwegian, Swiss, Dutch, etc. Chambers of Commerce and
consulates in Hong Kong to lobby their own governments and domestic trade organizations to
keep the door open to Hong Kong business and travelers. This would include organizing
expatriate businesspeople to meet international and local journalists. This is crucial to
allow Hong Kong businessmen to continue to have their international links. The Chamber
will be using our foreign invested members and working with the international chambers on
this effort. We will also be writing to foreign chambers overseas on the SARS story.
4. International negotiations: The Chamber recommends
that in conjunction with other Asian governments, the government should try to establish
with others a fair set of travel rules defining when restrictions will be imposed and
ground-rules on how to treat arrivals. We should explain to them what we are doing to
ensure that passengers leaving Hong Kong will be healthy, and prevent discriminating
treatment of Hong Kong people either at the border or in business before it happens. This
could be done by our government or via the Central Government.
5. Medical supply/personnel support: The Chamber
recommends that the government work with Beijing and other governments on equipment supply
replenishment, and urge Hong Kong based-airlines to offer free transport for foreign
medical experts and supplies to come to Hong Kong. Certain shortages in intensive care
units here can be supplemented by overseas equipment, and personnel can also come from
overseas or from the Mainland in intensive care.
6. Clean the City: The Chamber supports a serious
long-term campaign to clean the city, coupled with a vigorous "greening Hong Kong
campaign". Putting together a highly publicized effort to scrub streets and buildings
would win a lot of attention, and might actually do some good. Hygienic standards must be
raised in Hong Kong, with a seal of approval of hygiene to be devised for restaurants.
This is vital to keep SARS under control and also might create some jobs. This could start
now and must continue to give us a healthier place with better quality-of-life.
III. Recommended mid- to long-term measures
1. Promotion I (Re-launch Hong
Kong as a business centre): This would be for when conditions improve, at least
in Hong Kong, and when "knowns" outnumber the "unknowns" about the
disease. The Chamber recommends a large-scale campaign to send private business executives
abroad, to "sell" Hong Kong in skeptical markets and bring business travelers
back. The flip side would be a program to invite business leaders to Hong Kong, to see for
themselves the state of the (post-crisis) economy, and to hold international conferences
here. Once the worst has passed, we need a pro-active plan with government and the
business community joining hands to target the right audiences.
2. Promotion II (Re-launch Hong Kong as a tourism centre):
As conditions improve, as the number of new cases declines significantly and the World
Health Organization lifts its travel advisory, the Chamber recommends implementing a
large-scale publicity campaign to attract tourists back to Hong Kong. Consider full-page
ads on the day of the lifting of travel advisory, adding benefits such as suspension of
the hotel accommodation tax and air passenger departure tax for 1-3 months. Coordinate
with full restoration of airline services and perhaps a vacation package for Hong Kong's
"health care heroes". Spending vouchers to encourage consumption. The right
campaign at the right time would encourage a more rapid return to normal and would reduce
the lingering effect and mis-perception time.
3. Promotion III (Re-launch Hong Kong spirit): The
Chamber recommends a post-crisis celebration theme. Promote charitable events with
international celebrities to improve community sense of well being and raise money for
those who have suffered personally or financially. In essence, this will be a
"celebration" of the end of the crisis, drawing this experience we have all live
through to a close.
4. Medical insurance reform: This crisis highlights the
fundamental health care funding problem in Hong Kong. This crisis can be the catalyst to
review how health insurance and health care should be reformed. This is long overdue, and
system is so stressed now that reform is necessary to look at sources and manner of
contribution. The Chamber recommends a feasibility study.
5. Urban renewal: As a "come back" measure with
some "promotion" element, initiate a very large scale ($100 billion?) urban
renewal program targeting old flats and commercial premises. The Chamber recommends a
feasibility study.
6. "Sustainable Development": Invest in massive
government projects under the "sustainable development" umbrella: local-level
public works projects, waste management and disposal efforts, conservation (buying
wetlands for recreational use).
The Chamber recommends a feasibility study. Both this and the previous
initiative make Hong Kong a healthier and more livable place.
7. Biotech and healthcare
industries: The government should use this opportunity to invest in universities
and other infrastructure to support the development of a biotech and healthcare industry,
perhaps with emphasis on infectious diseases. The Chamber recommends a feasibility study.
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