Mixed reception for new loan scheme

There were about 7,000 applications on the first three days since a special loan scheme for the unemployed started on Wednesday. Under the 100-percent personal loan guarantee scheme revealed in the budget, residents aged 18 or above who have been unemployed for at least two months can...

Wallis Wang

Monday, May 03, 2021

There were about 7,000 applications on the first three days since a special loan scheme for the unemployed started on Wednesday.

Under the 100-percent personal loan guarantee scheme revealed in the budget, residents aged 18 or above who have been unemployed for at least two months can apply for a loan.

They can borrow up to six times their average monthly income or HK$80,000, whichever is lower.

With the interest rate fixed at 1 percent per annum, the loan must be repaid within six years. And borrowers can receive a refund of the interest if they repay the loan in full.

Financial Secretary Paul Chan Mo-po blogged yesterday that most applicants who passed a preliminary review are from the transportation, retail and catering sectors.

But unionists were critical of the scheme and preferred an unemployment subsidy.

The results of a survey by the Society for Community Organization that were released yesterday also suggested more than 80 percent of eligible people would not apply. Most were concerned about their ability to repay a loan.

The organization had interviewed 365 grassroots residents last month, and more than half had at least one unemployed family member.

And more than 40 percent of respondents were unable to work as their companies could not operate as normal under social distancing measures, and nearly half were not paid at all while around 39 percent received reduced pay.

Nearly 90 percent of respondents were also asked to take unpaid holidays, and more than 40 percent had been underemployed for more than three months.

Soco community organizer Sze Lai-shan said many families are struggling although the pandemic situation in the SAR had improved and the economy was recovering.

"They cannot even afford three meals a day and cannot pay their rent," Sze said. "Some have even become homeless."

Sze urged officials to provide allowances for people in financial difficulties due to the pandemic from the anti-epidemic fund.

She also suggested authorities should provide retraining courses for the unemployed or those who want to change jobs.

Chan, meanwhile, sees "significant growth" in the first quarter's gross domestic product being announced today.

"However, some industries are still facing huge pressure due to the social distancing measures amid the pandemic, resulting in an uneven pace of economic recovery," he said.

Other budget proposals are in the pipeline. The government aims to launch a HK$5,000 electronic coupons scheme this summer, while the inflation-linked retail bond, the iBond, is to be launched this month.