Insolvency fund may see 9,500 claims

PUBLISHED : Saturday, 17 January, 2009, 12:00am
UPDATED : Saturday, 17 January, 2009, 12:00am

More than 9,000 claims for help from the Protection of Wages on Insolvency Fund are expected this year, the chairman of its board said yesterday.

Clement Chen Cheng-jen said the board had predicted that about 9,500 claims would be filed this year as the global financial crisis continued to take its toll on the city's economy.

'This is going to be a very difficult year and it will affect business in every sector. Most applicants affected by bad economic conditions are usually from the catering, retail, construction, export and import, and transport sectors,' he said.

Mr Chen believed, however, that the situation would not be as bad as in 2003, when Hong Kong was hit by severe acute respiratory syndrome.

'The fund's reserve now stands at HK$1.49 billion. We predict that the 9,000-odd claims will result in about HK$200 million worth of payouts from the fund this year, and we believe the reserve should be enough to meet the demand,' he said.

There were 6,448 applications last year - an increase of 33 per cent when compared with 4,836 in 2007, Mr Chen said. About HK$96 million was paid out last year.

More than 2,000 claims were filed in November and last month - about a third of the total number of applications received last year.

'I believe the closure of chain retail stores such as U-Right [a clothing retailer] and Tai Lin [an appliance chain] contributed to the number of cases recorded near the end of last year,' Mr Chen said.

He also said that though the number of applicants increased last year, the number of companies involved dropped.

'The cases received in 2008 involved 818 companies, while 961 companies were involved in 2007. This means more big companies or chain stores were involved in the cases recorded last year.'