Following a series of policies and initiatives implemented and executed by the Hong Kong Special Administrative Region government to assist individuals and businesses affected by the COVID-19 pandemic, the government has recently unveiled its HK$170 billion ($21.7 billion) budget for fiscal year 2022-23.
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Hong Kong residents, hard hit by the Omicron outbreak, had a high expectation that the new budget would include strong measures to help them tide over this trying time. So far, various sectors have given mixed feedback on the budget. As expected, measures aimed at helping individuals and businesses affected by the pandemic are a key feature in the budget. Digital consumption vouchers and a six-month rental enforcement moratorium were two of the most significant measures. Starting in April, redeemable in installments, each of Hong Kong’s 6.6 million eligible residents will receive digital consumption vouchers totaling HK$10,000; and the rent enforcement moratorium for small and medium-sized enterprises across 19 industries will commence in March, providing a much-needed respite to struggling businesses. These initiatives, however, will only generate temporary relief and, in my opinion, will not be sufficient to lift Hong Kong out of the current predicament.
In the short term, digital consumption vouchers may promote spending, but they will not help individuals who are struggling with debt or liquidity problems in the long run. Expenses such as rents and bill payments will continue to be the biggest burden and source of frustration for low-income residents. For those who are struggling to make ends meet, a cash handout is a wiser alternative and a more preferable option during this time.
Additionally, the digital vouchers have an expiration date and can be used only at approved payment gateway retailers. This means that those who have no intention or desire to purchase anything from the participating stores may not be able to benefit directly from the program. The decision to offer digital vouchers does not appear to have been made in the best interests of the Hong Kong residents, but rather in the interests of major corporations. The beneficiaries of this arrangement will be the stores, restaurants and payment-gateway companies, but not the average Hong Kong resident. These vouchers will certainly give struggling stores and restaurants a fighting chance, but they will also add to the already deep pockets of the affluent big corporations who own many of the restaurants, retailers, and supermarkets.
During the COVID-19 crisis, even the United States, which prides itself on being a free-market economy, has been distributing cash handouts to its citizens. Three rounds of stimulus payments totaling $3,200 per adult and $2,500 per dependent child have been granted by both the current and previous administrations. Hong Kong is a society that values common prosperity over individualism; if our government genuinely cares about its people, I believe it should act in their best interests.
Furthermore, the rental enforcement moratorium policy for SMEs, is a Band-Aid solution and a transitory measure that falls short; a six-month rent exemption period would have provided a much-needed respite to many small businesses that are battling to stay afloat. Such a policy is only postponing the problem rather than addressing the root cause. Stranded tenants would still be unable to pay rent after six months, and some might even take advantage by declaring bankruptcy at the conclusion of the period.
Rents in Hong Kong are among the highest in the world; and rent exemptions, in my opinion, should be backstopped by our government through large enterprises such as Link REIT and MTR Corp, rather than to include small property owners who rely on rental revenue to cover their mortgages and other bills. This will help keep Hong Kong residents and businesses from bankruptcy. In fact, Link REIT, MTRC, and Swire Properties recently offered a rental reduction or waiver to assist renters of “scheduled premises”, which included those that were ordered to close by the government under the most current anti-pandemic regulations.
At the very least, our Hong Kong SAR government should consider the UK’s lead and impose an eviction moratorium. The UK government has recently extended this prohibition, which has been in place since 2020, until March 2022. This will provide a much-needed breathing period for struggling individuals and businesses. Additionally, landlords in the UK are now obliged to “share the financial impact with their tenants” under the new law. According to the UK government, this legislation will allow tenants and landlords to reach an agreement on how to handle any outstanding funds, such as waiving a portion of the total amount or establishing a longer-term repayment plan. The courts will be forced to interfere if they are unable to achieve an accord.
A similar initiative to the eviction moratorium was mentioned by Financial Secretary Paul Chan Mo-po, as a “new legislation to prohibit landlords from terminating the tenancy of or not providing services to tenants of specific sectors for failing to settle rents on schedule, or taking legal actions against them”. This raises the question of what those “specified sectors” are. If such a regulation were to be implemented, it appears that only certain specified tenants would be eligible for the program rather than a broad moratorium in the UK and California. Mr Chan seems to have advocated controversial populist initiatives without offering a solution to the aforementioned issue.
When alleviative measures such as cash distributions, eviction prohibitions, and rent-free periods are implemented, societal behavior will inevitably shift. Some individuals may opt to pursue other opportunities rather than returning to their previous jobs. Some businesses may refuse to reopen after the rent-free period expires. When it comes to policymaking in times of crisis, our government must determine whether they are absolutely essential, who will benefit, and who will bear the repercussions. What are the possible ramifications and consequences; and how might a broader range of people be aided rather than just a select few?
The time has come for our SAR government to transcend beyond populist talk to do what is necessary. It must prioritize the needs of the people above all else. Hong Kong appears to be drifting from its founding principles and values, becoming a city governed by individuals who prefer to take the easy way out rather than addressing the underlying problems. Big corporations, in my opinion, should be encouraged to participate in a “third distribution”, which comprises giving back to the community, and our government should take urgent action to assist those who are the most vulnerable. Then and only then will we have a realistic chance of recovering from this pandemic.
The author is founder of Save HK and a Central Committee member of the New People’s Party.