Hong Kong fights back against the Corona Virus. Economic Stimuli in the horizon

Amidst the panic caused by the Corona Virus, Hong Kong remains one of the most affected places in the world. Not in a direct manner, given that the number of patients remains relatively low, but in an indirect one, considering its close connection with mainland china, as well as the reduction of inbound flights, affecting retail, restauration, tourism and the economy as a whole.

Following the public outbursts of panic and confusion, the road to recovery is now on the public agenda, in a city that has known many challenges in the past year.

In a piece of news recently announced by the South China morning post and many other news outlets, it was made public that the Financial Secretary Paul Chan Mo-po proposed a one off cash handout of HKD$10,000 for an estimated 7 million over 18 permanent residents in Hong Kong, which was later extended to some non-permanent residents of a more modest income.

This measure was announced together with a bundle of others concerning the new Hong Kong budget, all aimed at boosting the economy and counter attacking the recent economic downturn and making sure that businesses continue to thrive in the region.

Regarding the measures that will benefit businesses in Hong Kong, here is what the government announced:

• Profits tax will be reduced by 100 per cent for the 2019-20 year to benefit 141,000 taxpayers at a cost of HK$2 billion.
• Business registration fees will be waived for 2020-21, benefitting 1.5 million business owners at a cost of HK$3 billion. Company registry fees for annual tax returns will be waived for two years to benefit 1.4 million firms at a cost of HK$212 million.
• A concessionary low-interest loan of up to HK$2 million will be provided to enterprises under the SME Financing Guarantee Scheme.
• Rates for non-domestic properties for 2020-21 will be waived up to a ceiling of HK$5,000 per quarter in the first two quarters and a ceiling of $1,500 per quarter in the remaining two quarters for each non-domestic property. 420,000 properties will benefit, at a cost of HK$3.2 billion.
• Non-domestic electricity accounts will enjoy a 75 per cent discount up to a ceiling of HK$5,000 for four months, at a cost of HK$2.9 billion. Likewise, water and sewage costs will be discounted by 75 per cent up to a cap of HK$20,000 and HK$12,500 respectively, costing HK$340 billion.
• Local recycling firms will see a rental subsidy for six months, costing HK$100 million.
• Tenants of government properties, government land and EcoPark will see rent discounts of 50 per cent, costing HK$573 million. Rent and fees for eligible operators of properties will be slashed by 50 per cent, costing HK$265 million.
• Hirers of civic centres under the Leisure and Cultural Services Department will enjoy discounts of 50 per cent for six months, costing HK$23 million.

In addition to these measures as of March 11th, it was also announced that small and medium businesses can tap into loans fully guaranteed by the Hong Kong government, as early as the end of April , considering that the administration plans to expedite relief measures to help the economy, which has been much disrupted by the corona virus.

Hong Kong´s finance minister went all the way to even stating that: “At the time of difficulties for the SMEs, liquidity is the lifeblood. This is very important.” And so, to help cope with the economic downturn, Hong Kong businesses were given an HKD$18.3 billion (US$2.3 billion) lifeline of relief measures in the budget announced on February 26 as the government vowed to support enterprises and safeguard jobs.

One of the major highlights of the measures, was a full government guarantee on loans of up to HKD$2 million for every small and medium-sized enterprise, under a financing guarantee scheme and involving HKD$20 billion in total.
These measures were simultaneously met with enthusiasm and some scepticism, as well as questions regarding its implementation and why some people were left out (for example only people over 18 will benefit from the HKD 10,000 handout).

However, the important thing to retain is that the government is already planning a post-corona virus future and making sure that Hong Kong adapts and recovers quickly.

In other news and on a final note, as Hong Kong is on the road to recovery, mainland China, Asia in general and the recent stricken Europe and United States are following suit and making sure that the negative disruption that occurred in daily life is overcome in the shortest time possible.

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