A shot in the arm for small businesses

Editorial | Mary Ma 5 Dec 2019

For the fourth time in as many months since anti-government protests erupted on an unprecedented scale, Financial Secretary Paul Chan Mo-po is rolling out more relief measures to bail businesses out of the economic cold snap engendered by the unrest.

Taking the point of criticisms directed at past initiatives, some measures in the latest package are now direct and timely.

That's essential because in this time of a sociopolitical crisis that has hemorrhaged into the lifeline economic sphere, making assistance available to those in dire need without any delay whatsover is absolutely crucial. Any unnecessary red tape is the last thing anyone will wish for.

For Hong Kong's economy is in a de facto state of emergency after months of violence.

Although the situation has largely improved since district council elections over a week ago, the economy has yet to stabilize and is most unlikely to recover soon enough to keep the labor market unaffected.

Small businesses are particularly vulnerable to economic devastation, and the top priority has to be to see them survive this darkest period in Hong Kong's history so that they are able to see the light again when this crisis is resolved at long last.

Cash flow is the single most important factor in determining who survives. A HK$1 billion donation by the Li Ka Shing Foundation is meant to keep small businesses afloat, but that cash infusion cannot save all.

Chan more than doubled that ante yesterday by announcing HK$4 billion worth of assistance mainly for businesses.

Over half of the aid is direct and timely. For example, 75 percent of water and sewage bills for non-residential premises will be waived for four months subject to a monthly cap of HK$20,000 and HK$125,000 per month.

Also covered will be 75 percent of the electricity charges for these premises over that period, capped at HK$25,000 a month.

These measures alone will cost taxpayers HK$2.7 billion.

While all businesses will benefit from the assistance, small restaurants will welcome that help the most.

However, some measures in the package do appear to be redundant. One wonders, for example, if it is really necessary to waive the licensing fees of brokerage firms when the stock market has been as lively as it can be despite the unrest and the ongoing trade war between China and the United States.

Heavy subscription for Alibaba's public offering as part of its secondary listing here serves as an ironic counterpoint to that small saving of HK$110 million for brokers. Should the money be set aside for better uses in the future? Chan may have a duty to help, but that doesn't mean he can't be discerning and shrewd as well. This HK$110 million is wasted.

Some of the measures published yesterday will have to be approved by the Legislative Council. Will opposition lawmakers put up a filibuster to delay their passage? I hope not. Instead, the bulk of the package should be passed without delay.

One cannot overstate the gloomy economic outlook faced by Hong Kong. With the SAR in a recession, a deficit is predicted for this year - and probably for the next one or two years.

The 24.3-percent drop in retail business in October has reverberations that the sector has yet to fully feel, and that will likely take the form of unemployment sooner rather than later. Will the chilling effect spill over into other sectors and result in job losses next year?

Keeping the job market stable is the next battle looming for our policymakers.

 

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