Hong Kong’s small and medium-enterprises (SMEs) are confident about their outlook in the second quarter, as they expect a boost from the upcoming easing of social distancing rules, consumption vouchers and employment support programme. Six in 10 SMEs said they could cope with the fifth wave of the coronavirus outbreak while many expect their business to grow or at least return to previous levels in the April to June period, according to a CPA Australia survey of 300 finance executives from March 18 and 23. The government is expected to announce an easing of social distancing restrictions from April 21, which were implemented after the highly contagious coronavirus Omicron variant took hold in January. While the fifth wave of the outbreak has so far infected nearly 1.18 million people and claimed 8,614 lives, daily cases have dropped to around 1,400 from a peak of over 50,000 in early March. The restrictions, the government’s most stringent since the start of the pandemic more than two years ago, hurt retail and restaurant businesses hard in the first quarter. The latest data for February showed that retail sales fell 14.6 per cent year on year to HK$25.2 billion (US$3.2 billion). It was also the worst since sales slumped 23.1 per cent in June 2020. There were 340,000 SMEs in Hong Kong at the end of last year, which employed 45 per cent of the private workforce. “The experience of 2021 has shown that retail and restaurant businesses post strong growth once the social distancing rules are relaxed,” said Janssen Chan, chairman of CPA Australia’s SME committee for Greater China region. “The government’s other government relief measures will also support struggling SMEs.” Four in 10 SMEs said the relaxation of social distancing restrictions will have the most positive impact on their business in the second quarter. Some 20 per cent are banking on the Employment Support Scheme – in which the government will offer employers up to HK$8,000 a month per eligible worker from May to July – to ease their burden. Another 12 per cent of SMEs said the government’s consumption voucher scheme will help to boost sales. Some 4.2 million residents were eligible for the first batch of HK$5,000 payouts from April 7. “We have already seen many retail shops crowded with shoppers in recent days, while many restaurant operators believe customers would return when the government allows [evening] dine-ins from next Thursday,” Chan said. Still, SMEs that depend on tourism would continue to suffer because of the closed borders, he added. In a November-December survey by CPA Australia of more than 4,000 SMEs across 11 markets in Asia including Hong Kong, 40 per cent of small business operators in the city – defined as those with 20 or fewer staff – expected their business to grow in 2022. This was a marked improvement from 21 per cent in 2020 in the midst of the pandemic and 26 per cent in 2019 during the social unrest, but still lower than the 47 per cent registered in 2018. Chan said that since the pandemic started many small businesses have invested a lot in technology to sell products online and were accepting digital payment to counter the loss of physical sales. “The pandemic has been a major catalyst for transforming business models for many SMEs in Hong Kong who are better prepared for the sixth outbreak or any other future eventualities.”