Hong Kong’s small and medium-sized enterprises (SMEs) on Wednesday said the government’s plan allowing them to defer rent payments for up to six months might provide short-term relief, but resolution of the difficulties they face depended very much on the fifth Covid-19 wave being brought under control. SMEs in certain sectors will be allowed to defer their rent payments by up to six months, Financial Secretary Paul Chan Mo-po said in his budget briefing earlier on Wednesday. The government will introduce legislation to effect the new measures, which will be valid for three months and, if necessary, be extended once more for the same duration, he said. The legislation will lapse automatically after six months. “Of course, we hope the measure are introduced as they will help relieve the immediate pressure,” said Gordon Lam, convenor of the Hong Kong Small and Middle Restaurant Federation. But he urged the government to clarify whether rents could be paid in instalments after the deferral period, if business continued to be bad. He also asked how the city would handle any subsequent waves of Covid-19. Hong Kong imposed its toughest social-distancing rules to date in February. Many food and drink (F&B) outlets have been hit badly by a blanket ban on dining after 6pm, and a cap of two people on public gatherings. The city has 343,699 SMEs, including 18,050 property companies. SMEs employed 1.21 million people as of March 2021, according to the latest Census and Statistics Department data. “Taking into consideration that rental payment constitutes a major part of the operating expenses of enterprises, we will expeditiously introduce new legislation to prohibit landlords from terminating the tenancy of, or not providing services to, tenants of specified sectors for failing to settle rents on schedule, or taking relevant legal actions against them,” Chan said. HSBC, the city’s largest lender, also said on Wednesday that it “will continue to stand by our customers and communities to help them get through this challenging time. Since February 2020, we have provided more than HK$315 billion in liquidity relief to commercial customers in Hong Kong.” Hang Seng Bank, which is majority owned by HSBC, said it had granted more than HK$8.6 billion in loans to help SMEs since late last year. “We have contacted our SME clients to offer help to those affected by the Covid-19 pandemic,” the bank said on Wednesday. “Having tenants defer rent payments for three to six months will definitely affect income,” said Edwin Lee, founder of Bridgeway Prime Shop Fund Management, which owns a portfolio of 30 shops worth HK$700 million (US$89.7 million). Most of the company’s shops were, however, paid for and Bridgeway did not have the pressure of mortgage repayments, he said. “As a landlord, we will not kill our tenants by terminating their leases or taking legal action for unpaid rents,” Lee said. Many of Bridgeway’s tenants were SMEs such as hair salons and F&B outlets, and their sales had plunged by 90 per cent this month, he added. The company has slashed rents by 40 per cent for tenants in core areas such as Central, Causeway Bay and Mong Kok, Lee said. The government’s rents deferment plan, as well as its plan of distributing HK$10,000 in digital consumption vouchers to boost spending, might even encourage more individual retailers to rent shops, Lee said. “Retailers selling frozen meat or fresh vegetables remain unaffected by the Covid-19 pandemic,” he said, adding that business would return to normal only when the pandemic had been brought under control. More details were needed as far as the execution of the plan was concerned, said Helen Mak, senior director and head of retail services in Hong Kong at Knight Frank Greater China. “Landlords themselves also need cash flow to pay mortgages after the grace period of three to six months,” she said. In the event that owners of premises face mortgage repayment difficulties caused by the relief measures, the Hong Kong Monetary Authority will discuss with banks ways to handle the situation flexibly, the financial secretary said on Wednesday. The rent relief measures adopted by the Hong Kong government are similar to those enacted in Singapore and the United Kingdom aimed at easing the financial burden on hundreds of thousands of SMEs. The Singaporean government, however, requires that businesses demonstrate a drop in sales to qualify. The UK government last summer extended a moratorium on commercial rents until March this year, providing relief for thousands of businesses that were facing huge rent bills.