How Hong Kong is supporting its economy during the COVID-19 pandemic
Published on: May 7, 2020
Hong Kong has rightly been praised for its handling for the COVID-19 pandemic.
With just over a thousand cases despite being a densely populated metropolis, the government learnt from its experience during the SARS epidemic and took preventative measures early and is now beginning to relax social distancing measures and open up its businesses.
However, like much of the rest of the world its economy has suffered, and its businesses have been hit hard. As such, the government has rolled out a number of financial relief packages and support measures aimed at supporting local businesses and workers.
Below are a number of measures that the government has introduced over the past two months:
- Employment support – Under the Employment Support Scheme, the Hong Kong Government has offered a HKD137.5 billion lifeline to save businesses with the aim of ensuring around 1.5 million employees can continue to receive their salary over the coming months.
- Wage subsidies – All employers who have been making Mandatory Provident Fund (MPF) contributions or have set up Occupation Retirement Schemes for employees are eligible to wage subsidies, provided that they undertake not to lay off workers during the subsidy period, and spend 100% of subsidy on paying wages. Wage subsidies are calculated at 50% of the salary, capped at HKD18,000, for 6 months.
- Training support – Apart from direct subsidies, the Government is matching grants for skills upgrading. HKD100 Million will be spent on matching grants for training programmes for staff in the public and private sectors.
- Retraining – Around HKD2.5 billion is provided to the Employees Retraining Board to enhance the Love Upgrading Special Scheme to provide 10,000 additional places and increase the maximum monthly allowance of eligible trainees to HKD5,800.
- Technology adoption – The Distance Business Programme will support enterprises with technology adoption and related training. 3,000 enterprises and 40,000 individuals are expected to benefit.
- 5G technology – There will be about 100 projects for public and private organisations who are deploying 5G technologies that will be subsidised, subject to a HKD500,000 cap for each project.
- Technology and the law – The LAWTECH Fund will help the legal sector and related persons to procure or upgrade IT systems and arrange training for staff to support remote hearings with an estimated 700 stakeholders expected to benefit. The Government will also provide an Online Dispute Resolution service for resolving disputes related to or arising from the COVID-19 pandemic.
- Tax reductions – The profit tax in the year of assessment 2019-20 will be reduced by 100%, with a ceiling of HKD 20,000.
- Rate waivers – The government will waive rates for non-domestic properties in 2020-21, subject to a ceiling of HKD5,000 per quarter in the first two quarters, and a ceiling of HKD1,500 per quarter in the remaining two quarters.
- Administrative fees – There will be waiver of business registration fees in 2020-21 and registration fees for annual returns charged by the Companies Registry for two years.
- Rent concessions – A 75% rental concession to eligible tenants of government premises and eligible holders in respect of tenancies on government land will be provided from April to September 2020.
- Electricity subsidies – Furthermore, 75% of electricity charges will be subsidised to non-residential accounts for 8 months, with a monthly cap of HKD5,000. 75% water and sewage charges for non-domestic accounts will be waived for 12 months until November 2020.
It will no doubt take many years to fully recover from this pandemic, but these measures that have been put in place by the government will make it easier for businesses to survive and continue into the future. As a fiduciary services firm we are able to advise our clients which of these support measures they can apply for and we are able to see the benefits.
For more information on the Hong Kong’s coronavirus financial relief measures and guidance on doing business in Hong Kong, please contact Alpadis Group.