Firms can't wait for help, says chamber
Albert Wong and Eva Wu
Business leader wants budget relief now
The government has been urged to bring forward its budget and introduce tax relief measures for small and medium-sized enterprises, without waiting until February.
Andrew Brandler, chairman of the Hong Kong General Chamber of Commerce, which was critical of Chief Executive Donald Tsang Yam-kuen's policy address for its scant attention to SMEs, also called on the government to allow smaller companies to delay tax payments.
'SMEs are starving for cash and banks are not lending regardless of government guarantees,' he said. 'We expect the government will announce some relief measures in the annual budget, but from what SMEs have been telling us that will be too late to save them.
'The government needs to bring forward its budget to help companies now. Unless companies can get relief we will all be in for a very long, bitter winter.'
He suggested that the government urgently eliminate the need for smaller companies to pay provisional tax for 2009, that SMEs be given a longer time to pay taxes they owe without penalty, and that charges and fees which affect businesses' bottom lines be frozen or reduced.
Mr Brandler also urged the government to introduce group loss relief and loss carry-back in its tax regime. Group loss relief allows losses of companies to offset the profits of other firms in the same group, while loss carry-back allows losses to offset profits made in previous years so companies can get a refund on tax paid.
A spokesman from the chief executive's office said the proposals were being studied.
Mr Brandler added that bankruptcies often lag behind by about three months to a year, meaning any budgetary relief measures could come too late.
Chamber chief executive Alex Fong Chi-wai added that their proposal would 'keep cash in the pockets' rather than making them rely on loans, which could be crucial.
The anticipated minimum wage and fair competition law were also concerns for the chamber. Mr Fong said any increase in regulation and administrative work for small businesses, which already had their hands full, would not be welcome.
Mr Brandler said 'a rapid increase in unemployment is inevitable' and that a minimum wage could drive up redundancies.
Executive councillor Cheng Yiu-tong said a minimum wage could not be implemented until 2010 due to the legislative process, adding that the business sector should not delay preparatory work for the legislation.
'We don't even have a drafted ordinance at this stage. It will take at least a year and a half before the law is passed by the Legislative Council,' he said, adding that the economy might have improved by the time the law was introduced.
A chamber survey of around 300 members revealed 88.6 per cent thought next year's economy would be weaker or much weaker, and 70.8 per cent did not think GDP growth would exceed 2 per cent next year. The survey also showed 48.3 per cent did not think GDP growth would exceed 2 per cent in 2010.
Around 60 per cent did not think Hong Kong's competitiveness would improve in the next three to five years, which was 'a reflection of increasing legislation burdening businesses', Mr Fong said.