Hong Kong fourth wave: government reverses course and unveils another round of aid worth HK$6.4 billion for hard-hit businesses

Tony Cheung
·7-min read

Businesses struggling to remain afloat during the fourth wave of the coronavirus hammering Hong Kong will receive HK$6.4 billion in a new round of relief after the government reversed its position that the city’s strained finances could not afford any further handouts.

The subsidy programme, equal to US$826 million, will mainly help companies operating in the entertainment, catering, education and beauty and massage sectors, after tighter social-distancing rules kept customers away and sharply eroded their bottom lines.

Some operators expressed satisfaction with the latest scheme, but others warned the amount was still not enough to ensure their survival if the spread of the pandemic continued unchecked.

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The government gave HK$310 billion (US$40 billion) in aid during three previous rounds and warned no more financial help was coming. But in revealing the package on Thursday, Chief Secretary Matthew Cheung Kin-chung said the policy U-turn was needed given the worsening health crisis.

“Some businesses have been hard hit,” he said. “We need to offer them assistance.”

Under the latest package, HK$5.5 billion will be distributed through 19 subsidy schemes with the remaining HK$900 million set aside for emergency use. The spending would push financial reserves down to HK$800 billion, equivalent to 12 to 13 months of government spending, and the deficit would balloon to a record HK$300 billion, Cheung said.

The economy was already in a recession with unemployment figures nearing an all-time high before the fourth Covid-19 wave began in November. Hong Kong has ordered mandatory testing for high-risk groups and residents tied to clusters as the daily caseload has risen. The city confirmed 96 new cases on Thursday, taking the overall total to 7,899.

At present there are over 1,000 restaurants on the brink of closure

Simon Wong, president of the Hong Kong Federation of Restaurants and Related Trades

Cheung noted that only HK$2.8 billion of the HK$24 billion in aid offered in the previous round was spent on struggling industries, and the amount had now been doubled. “It is a substantial enhancement,” he said.

The catering industry will receive HK$3.4 billion for 17,000 outlets. Depending on their size, restaurants will receive between HK$100,000 (US$12,900) and HK$500,000 each. Karaoke, nightclubs and bars will be eligible for HK$50,000, while about 50 commercial bathhouses will receive HK$100,000.

Hong Kong’s No 2 official Matthew Cheung. Photo: Nora Tam
Hong Kong’s No 2 official Matthew Cheung. Photo: Nora Tam

The city’s 11,000 beauty and massage parlours will be offered between HK$30,000 and HK$100,000, while 500 party rooms will receive HK$40,000. The government has allocated HK$$21 million for 60 cinemas, with HK$100,000 offered per screen.

About 1,860 fitness centres will be eligible for HK$100,000, and the government will pay the salary of roughly 4,450 part-time instructors until the end of next month.

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Financial assistance will be offered to sport coaches, individual arts practitioners and freelancers, as well as clubhouses, public entertainment venues, amusement game centres and mahjong parlours.

In the social welfare sector, 550 child care centres will receive HK$4,000 monthly for each full-day enrolment and HK$2,000 for half-day ones. The assistance will last for four months. About 6,000 interest class instructors hired by NGOs will receive a one-off grant of HK$7,500.

About 910 catering providers for schools and post-secondary education institutions will each receive HK$80,000 in one-off grants. School bus drivers, kindergartens and private primary and secondary day schools will also receive aid.

Under tighter measures that came into effect earlier this month, eateries were barred from offering dine-in services after 6pm for 14 days, earlier than the previous cut-off time of 10pm.

The number of diners per table was capped at two, and restaurants were limited to operating at half their capacity. Gyms, beauty and massage parlours were closed again, and banquets restricted to 20 people.

Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants and Related Trades, said the latest round of subsidies for his sector, despite being double the previous one, was enough to cover current rent payments but not employee wages.

“Despite that restaurants will get more subsidies, this is still not enough for them to retain staff, as last time we had the second round of the wage subsidy scheme to help retain jobs,” he said, referring to the government programme that paid up to 50 per cent of workers’ salaries for half a year, capped at HK$9,000 a month.

“The subsidies this time can only help eateries pay rent for December. As to what will happen in January, we are all worried.”

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Wong called on the government to allocate part of the emergency cash to restaurants so they could to pay wages, warning of a wave of business collapses and lay-offs in January if the government did not contain the pandemic.

“At present there are over 1,000 restaurants on the brink of closure,” he said. “If the government fails to relax the social-distancing rules in January allowing the catering sector to regain some business, I am afraid that these eateries may shut down while others may lay off staff.”

Wing Chin Chun-wing, vice-president of the Hong Kong Bar & Club Association, said the group was satisfied with the handouts.

“We think it is fair that the amount this time is double that of the third round because we usually do a lot of business in December,” he said. “The government has to compensate for our business loss in December.”

Bars and pubs would be able to pay their rent as well as the salaries for the month, Chin predicted.

“Despite that the bars and pubs are all disappointed that they cannot make any profits this year, at least they can retain jobs and escape closure for now,” he said.

Chin hoped establishments could reopen in January after being closed again this month, warning the industry would otherwise fall into a crisis.

But Chow Chun-yu, president of Hong Kong Licensed Massage Association, was unhappy about the latest round.

“I have 10,000 reasons to be unsatisfied with the government,” he said. “I need food to survive, but it gives me water.”

Chow warned the industry, which he estimated had 100,000 part-time staff working at 3,000 licensed and unlicensed operators, was dying and the situation was made worse by the recent closure order, which is traditionally a peak season.

Masked pedestrians in Hong Kong’s Central. The city is reeling from a fourth wave of Covid-19 infections. Photo: Xiaomei Chen
Masked pedestrians in Hong Kong’s Central. The city is reeling from a fourth wave of Covid-19 infections. Photo: Xiaomei Chen

The Legislative Council’s Finance Committee is scheduled to scrutinise the funding proposal on Monday, and Cheung was confident it would pass soon.

“I think Legco understands the importance,” he said. “We have set aside the whole day to answer their questions, and I believe that after our interactions, they will approve it. I believe that we will win this battle eventually.”

Lawmaker Felix Chung Kwok-pan, leader of the pro-business Liberal Party, said the organisation would support the package, even though small and medium-sized businesses were frustrated with the government’s failure to control the pandemic.

“People were talking about designating hotels for incoming travellers for so long, and the government only implemented it recently … But why did the government close down beauty parlours when people can do their fingernails one on one?” he criticised.

Federation of Trade Unions lawmaker Alice Mak Mei-kuen said she could not commit to supporting the package until officials explained in detail how workers in hard-hit sectors would be eligible for financial aid.

Additional reporting by Denise Tsang

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