Hong Kong lawmakers and industry officials on Wednesday joined the chorus of support for a hefty government package of relief measures worth more than HK$120 billion (US$15.4 billion) unveiled that day in the 2020-21 Budget.
The approval gives a thumb-up to the SAR government’s dogged determination to ease the burdens on individuals and companies under the faltering local economy.
The boost to household disposable incomes in the form of the cash handouts should spur consumption
Qian Wan, Bloomberg Intelligence economist
Perhaps the most eye-catching measure is that every Hong Kong permanent resident and older will receive HK$10,000 in cash — a plan the government said may cost HK$71 billion, with nearly 7 million people expected to benefit.
In addition to the cash handout, Financial Secretary Paul Chan Mo-po, during his budget speech on Wednesday, disclosed other sweeteners that included 100 percent guarantees to companies taking out low interest loans; the doubling of the monthly allowance to low-income families; and new tax incentives.
The budget comes at a tough time for Hong Kong’s economy, burdened by the protracted Sino-US trade skirmish, months of citywide violent protests, and the novel coronavirus outbreak. The economy has already slid into its first recession in a decade.
Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor praised the cash payout plan as “a justifiable and effective measure”.
“For some people, the cash payout will help to make ends meet in their hour of need. It will also encourage local consumption and inject some much-needed impetus into the economy,” Lam said on Wednesday.
Bloomberg Intelligence economist Qian Wan said she believes the boost to household disposable incomes in the form of the cash handouts should spur consumption. According to Bloomberg estimates, the plan will add about 1 percentage point to GDP growth.
The Democratic Alliance for the Betterment and Progress of Hong Kong (DAB), the largest political party in the Legislative Council, said the budget is “an active response to public interest appeals”. Before the budget was released, the DAB joined a growing chorus of voices among Hong Kong political parties calling for the cash handout.
“I’ll at least give a score of 98 out of 100 to the budget,” said pro-business Liberal Party Chairman Tommy Cheung Yu-yan.
Liberal Party leader Felix Chung Kwok-pan also lauded the budget, saying, “In the past, you stocked up on grain to prevent hunger; today, you open the barn to give out rice.” Chung stressed that Hong Kong could get out of the woods in no time as long as the SAR government maintains the open and responsive attitude as demonstrated in this year’s budget.
Johnson Kong, president of the Hong Kong Institute of Certified Public Accountants, said, “Overall, the budget underscores the government’s intention to put money back into people’s pockets amid these challenging times.”
Chan said the government is making good efforts to distribute the cash handout in a simple and quick way, with less red tape and fewer obstacles. Hopefully, in this summer, residents will receive the cash in a gradual manner, he added.
At the media briefing after the budget speech, the government source said it will take some time for the SAR government to establish a system with the Hong Kong Monetary Authority and local banks for the cash payout program, as application materials collected for the previous program back in 2011 have been removed.
Compared with what it was like in 2011, more and more people today tend to use e-banking services. This is believed to speed up the process and improve the efficiency of giving out the cash, the source said.
The application is expected to begin in July and it will lead to administration expenses of HK$1 billion, equivalent to 1.5 percent of the total cash disbursed to all eligible permanent residents.
