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Financial Secretary John Tsang Chun-wah speaks to the media after delivering his budget speech. Photo: Sam Tsang

Opportunities will decide the fate of Hong Kong SMEs

Jeffrey Lam suggests ways to provide a real boost, budget pledges aside

JEFFREY LAM

At the end of his budget speech, John Tsang Chun-wah recited the lyrics of a Canto-pop song, : "Believe in opportunity, not fate." It reminds me of former financial secretary Antony Leung Kam-chung's use of lyrics from another Canto-pop classic, , to conclude his maiden budget in 2002. Both recall Hong Kong's tough times in the late 1970s and 1980s.

However, the two songs rouse the spirit in different ways. reminded Hong Kong people of how everyone had struggled to make an honest living with no welfare benefits provided, "encouraging each other and helping each other". By contrast, focuses on personal growth, and appeals for a revival of the can-do and self-reliant spirit.

Some say the era is long gone when Hong Kong people could succeed through hard work. That's also why Tsang's decision to cut down on "sweeteners" in his budget has stirred debate.

The "sweeteners" offered in the past years seemed to be aimed at easing people's financial pressures following the global financial crisis in 2008. The giveaways became something everyone thought they deserved, and a guessing game ensued each year about how much the government would offer.

Welfare should be allocated in a more targeted way. Thus, it was responsible of the government to roll back some of the giveaways while committing resources to help those most in need - the working poor, elderly and minority groups - over the long term.

The Hong Kong economy is at a crossroads. The economic situation has improved and the city has near full employment. However, as Tsang warned, a structural deficit could surface in seven years if government expenditure keeps growing and outpacing economic and revenue growth. This growing expenditure includes the permanent welfare measures proposed by Chief Executive Leung Chun-ying in his policy address and the increase in health care costs amid a rapidly ageing population.

To avoid a deficit, Tsang is taking a bold step towards public finance reforms by giving out "opportunities" rather than "fish". He vowed to support the development of new industries with more research and development funding for universities and businesses, and assist small and medium-sized enterprises in upgrading their IT capabilities.

However, the major concerns among SMEs are high rents and a shortage of labour. Can the government come up with any measures to solve the labour shortage and help make the business and working environment more attractive to the workforce?

To provide more career choices for our younger generation, thus enhancing Hong Kong's upward social mobility, the government needs to broaden the industry spectrum.

SMEs are the backbone of the local economy, representing about 98 per cent of the city's local companies and employing more than 1.2 million people. This suggests there is room to help them build a more diversified economic base. Cash flow is the lifeblood of small businesses and the business sector wished to see the overall profits tax rate reduced to 15 per cent, and even further for smaller ones.

There has been some resistance from the public to the reducing of "sweeteners". But we should recall the heart-warming lyrics of the song: as Tsang said, we should stay positive and tenacious, no matter what difficulties we face. Now we must hope for more opportunities to further lift our spirits.

This article appeared in the South China Morning Post print edition as: Opportunities will decide the fate of Hong Kong's SMEs
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