Hong Kong businesses have been thrown an HK$18.3 billion (US$2.3 billion) lifeline in relief measures as the government vows to support enterprises and safeguard jobs through the economic doldrums.
A full government guarantee on loans of up to HK$2 million for each small and medium-sized enterprise (SME) and extended subsidies on utility bills were among the key measures Financial Secretary Paul Chan Mo-po announced during his budget speech on Wednesday to help more than 3 million workers keep their jobs and ease the financial burden on companies.
Profits tax and business registration fees would also be waived.
Reacting to the measures, business were generally favourable but were adamant the city's soaring rents remained insurmountable and called on landlords to offer reductions.
"The tourism and consumption sectors, already hit hard by months of social unrest, are now suffering from an even more serious setback and entering a harsh winter," Chan said of the economic woes aggravated by the coronavirus epidemic.
A key highlight of the relief measures was a full guarantee by the government of loans under an SME financing guarantee scheme, involving HK$20 billion in total.
To apply, businesses would need to have been in operation for three months or more by last December and able to prove their revenue was down by at least 30 per cent in any month since February compared with the monthly average of any quarter last year.
Each firm could borrow an amount equal to the sum of its wage bill and rent for six months, capped at HK$2 million, with an interest rate of the prime rate minus 2.5 per cent per year.
The longest repayment period would be three years and businesses could pay off their interest rate but not the principal amount during the first six months.
Businesses are facing their (biggest) challenge since (severe acute respiratory syndrome)Aron Harilela, Hong Kong General Chamber of Commerce
Authorities are striving to launch the scheme within a month of the Legco finance committee giving it the green light and the application period will last six months.
Hong Kong banks such as HSBC, its subsidiary Hang Seng, and Standard Chartered welcomed the improved lending scheme and said they would support it.
Local officials announced four rounds of relief measures in the last four months of 2019, totalling more than HK$30 billion, to help enterprises and individuals as the anti-government protests grew increasingly violent.
One round promised to give businesses a subsidy covering 75 per cent of their electricity, capped at HK$5,000 (US$641) a month per unit, while also reducing water and sewage fees - up to HK$20,000 and HK$12,500 a month respectively - for four months.
Chan said the utilities relief measures would be extended for a further four months.
Tenants in government properties or land who were receiving a 50 per cent rent reduction for six months would have that extended to a year, he added.
Profits tax would also be waived, up to a ceiling of HK$20,000.
These proposals were expected to give more support to businesses which were also set to receive more cash allowances under a HK$30 billion (US$3.9 billion) government coronavirus relief package approved by lawmakers last week.
"Businesses are facing their (biggest) challenge since (severe acute respiratory syndrome)," Hong Kong General Chamber of Commerce chairman Aron Harilela said, adding that the package would throw "a much-needed lifeline" to many businesses.
"This should provide businesses with some much needed short-term relief and help stave off redundancies in the near term."
Hong Kong Small and Medium Enterprises Association president Pam Mak said banks had hesitated to lend money to new clients under existing loan schemes as they were risk averse.
"The new plan can help ease (the banks') doubts," Mak said, adding she believed it could help many businesses.
All of these relief measures (to travel agencies), and tour guides cannot get a centWong Ka-ngai, chairman of the Hong Kong Tour Guides General Union
She said a HK$2 million loan could help tide small firms over the next few months, but joined the calls to developers to follow the government's lead in cutting rents.
Hong Kong Retail Management Association chairwoman Annie Tse Yau On-yee echoed this sentiment.
"The government measures can help SMEs a lot. But for chains, help from landlords is very important," she said.
David Leung Chi-wai, chairman of Seafood Delight Group, said it was crucial for private landlords to lower the rent. Leung said HK$2 million could only keep his 12 restaurants running for about two months, adding that only three of his outlets had been given a rent reduction.
While businesses were set to benefit from the initiatives, Wong Ka-ngai, chairman of the Hong Kong Tour Guides General Union, lamented that the money to employers would never go back to unemployed residents in his sector.
He said tour guides could only receive a salary when they serve a tour.
"All of these relief measures (to travel agencies), and tour guides cannot get a cent," he said.
"In the government's eyes, there are only business owners. It can never see the workers."
Meanwhile, more than HK$700 million has been allocated to the Hong Kong Tourism Board for reviving the industry when the epidemic is over.
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