Hong Kong’s top officials promise raft of economic measures in new year and coming budget address to help city tide over recession, warning of ‘tough tests’ ahead
- Comments were made separately by Financial Secretary Paul Chan, Chief Secretary Matthew Cheung and commerce chief Edward Yau
- Spotlight thrown on SMEs, who will get funding schemes and a government unit to service their needs
More measures would be rolled out next month and in the coming budget address to help Hong Kong businesses survive the economic downturn, top ministers said on Sunday as they warned of challenges in the new year.
In a blog post, Financial Secretary Paul Chan Mo-po said he expected negative growth in the fourth quarter this year, noting gloomy figures in retail sales, visitor arrivals and unemployment rates in certain industries.
“Although the statistics for the fourth quarter will be out only early next year, judging from the situation in the past months, continued negative growth is unavoidable,” Chan wrote.
Two other top officials, Chief Secretary Matthew Cheung Kin-chung and Secretary for Commerce and Economic Development Edward Yau Tang-wah separately shared similar sentiments on Sunday while reviewing the impact of the ongoing political crisis.
Hong Kong has been rocked by anti-government protests since June, which, coupled with the US-China trade war, have pushed the city into a recession. The economy shrank 3.2 per cent in the third quarter from the previous one, while GDP was down 2.9 per cent year on year, the biggest contraction in a decade.
Hong Kong slips into recession as economy shrinks 3.2 per cent in the third quarter
Chan cited the record drop of 26 per cent in retail sales in October, the more than 50 per cent plunge in the number of visitors to Hong Kong during the Christmas holidays, and the unemployment rate of more than 6 per cent in the catering industry, a six-year high.
“This will leave the government with its first budget deficit in the past 15 years. It means the government’s flexibility in deploying financial resources during the economic downturn will be less,” he said.
The government’s flexibility in deploying financial resources during the economic downturn will be less
To ease the pressure on the public and small and medium-sized enterprises, the finance chief said the theme of the coming budget address in February would be on “supporting enterprises, safeguarding jobs, revitalising the economy and easing poverty”.
Cheung, Hong Kong’s No 2 official, also said in a blog post that the economy was expected to shrink by 1.3 per cent this year, the first time in a decade, while warning of “tough tests and challenges in 2020”.
The chief secretary said the government would try its best to handle the political storm, uphold the rule of law and mend fractures in society in the coming year.
“Hong Kong has a deep foundation and competitive system. If it can grasp opportunities, stop the violence and restore social order as soon as possible, it can surely be back on the right track for rebirth,” he wrote.
‘Violence, hatred pushing city to brink of worst recession since 1997 handover’
Cheung added that the government was preparing to set up an independent review committee to look into the cause and influence of the social unrest from a macro aspect, and solve deep-rooted conflicts for better policymaking.
He also noted that the Independent Police Complaints Council would submit its first-stage report to the city’s leader in the coming weeks.
Meanwhile, the Commerce and Economic Development Bureau, under Yau, announced on Sunday that a dedicated service team called “SME ReachOut” will start work on January 1 to support small businesses through face-to-face meetings to help identify suitable funding schemes.
Other schemes for SMEs would also be enhanced through measures such as raising funding ceilings and the ratio of initial payments
“Enterprises are facing the challenges of the external economic environment and pressure from the downward trend of the current economy,” Yau said.
“The measures to be launched will more effectively and flexibly support enterprises in expanding markets, while enhancing their competitiveness to help them capture new business opportunities.”
Danny Lau Tat-pong, honorary chairman of the Hong Kong Small and Medium Enterprises Association, welcomed the government’s new support measures, especially the service team for SMEs.
“The government has some 40 funding projects for SMEs. Some are quite similar and the application procedures are very complicated,” he said.
Lau also said he hoped the government could shorten the time in handling applications and funding distribution.
He said his company with about 200 people had been waiting for five months for an approval for government funding of HK$500,000, while other SMEs had waited for more than a year.
Sparked by the now-withdrawn extradition bill, the protest movement has since morphed into a citywide anti-government campaign calling for more democracy and an independent inquiry into police action.
