25 Feb 2020
Lifeline for SMEs, start-ups
Fallout from the COVID-19 outbreak has affected almost all businesses in Hong Kong but the many trade-focused small and medium-sized enterprises (SMEs) face a stiffer challenge than most as prolonged factory shutdowns in Mainland China have weighed on the global supply chain network.
Meanwhile, Hong Kong, one of the world’s leading science and technology hubs and featuring a flourishing start-up ecosystem, has its access to the mainland talent pool restrained by the virus outbreak and resultant travel restrictions
To help soften the impact on SMEs, start-ups and other sectors, the offices of The Chief Secretary for Administration and Financial Secretary in the Hong Kong Special Administrative Region (HKSAR) asked the Legislative Council (LegCo) for a HK$30 billion (US$3.86 billion) one-off injection into an “Anti-epidemic Fund”. LegCo approved the funding on 21 February.
The fund would “enhance our capability in combating the [COVID-19] epidemic, and provide assistance or relief to enterprises and members of the public hard hit by the present epidemic or affected by anti-epidemic measures”, the secretaries said in a proposal document presented to the committee.
HKSAR Chief Executive Carrie Lam (main picture, in purple jacket) welcomed the funding.
"The government will continue to assess the impact of the epidemic on society and listen to comments from all sectors, while introducing more support measures as necessary,” she said in a statement.
The Financial Secretary, Paul Chan, will announce the 2020-21 Budget on 26 February and will introduce measures as in the past to support the economy and relieve people's burden, Ms Lam said.
In addition to funding direct interventions by bodies such as the Hospital Authority, the fund would support industries affected by the outbreak.
The funding would include more than HK$1 billion for the Convention and Exhibition (C&E) Industry Subsidy Scheme to help C&E industry bodies such as the Hong Kong Trade Development Council (HKTDC) reinvigorate Hong Kong’s reputation as an international premier C&E hub.
“The C&E industry has almost come to a complete halt with the outbreak of [COVID-19], as visitors have cut down significantly on their travelling, including trips to Hong Kong,” the secretaries noted. “In addition to the business of the C&E industry itself (including event organisers and venue managers), other related sectors such as accommodation, catering, retail, entertainment, transportation, etc. are also seriously affected.”
Network opportunities lost
Event cancellations also meant SMEs had lost opportunities to connect with international buyers and obtain orders. “In order to reinvigorate Hong Kong’s reputation as an international premier C&E and sourcing hub, it is necessary for us to give an early commitment to the industry that we would much welcome the resumption of C&E events in Hong Kong as soon as the outbreak of the epidemic has come to an end,” the secretaries said.
“We therefore suggest providing subsidy to participants, local and overseas, of exhibitions and conventions organised by the HKTDC and all other organisers of exhibitions and international conventions at the Hong Kong Convention and Exhibition Centre (HKCEC) and Asia World-Expo (AWE) in order to retain and attract C&E events in/to Hong Kong,” they said.
“We introduced in January 2020 a scheme to subsidise local SMEs to participate in HKTDC’s exhibitions held between 1 February and 31 July 2020, i.e. local participants will be subsidised 50% of their participation fee per participation in HKTDC’s exhibitions during the period, subject to a cap of HK$10,000. However, following the outbreak of the novel coronavirus, HKTDC has already decided to postpone its exhibitions between February and April 2020.
“In order to reinvigorate Hong Kong’s reputation as an international premier C&E hub and sourcing, we propose that the scheme should be expanded to all participants of HKTDC’s exhibition and major conventions (i.e. over 400 participants), and that the scheme should be extended to 12 months, counting from the time when HKTDC is holding events again. We estimate that this would cost $400 million.
For exhibitions and major conventions hosted by private organisers, in order to streamline administrative procedures, the secretaries proposed the government subsidises all organisers of exhibitions and international conventions/conferences (i.e. conventions/conferences with over 400 participants and at least 50% of which are non-local participants) at HKCEC and AWE 100% of the venue rental for one year. This one-year period would synchronise with that of HKTDC’s scheme.
“We estimate that this would cost about $620 million. The two venue operators must pass on the rental subsidy to all organisers involved, and we would urge the organisers to share the subsidy with their event participants,” the secretaries said.
“In view of the lead time required for organising C&E events, particularly for exhibitions, events once cancelled or moved elsewhere may not return to Hong Kong. It is of paramount importance that we make a commitment now so as to send a clear message to the industry that we welcome the resumption of C&E events in Hong Kong once the epidemic has come to an end,” they said. “This will help secure confidence of event organisers in Hong Kong as well as allow preparation time for event organisers, exhibitors, buyers and other participants to return to Hong Kong on our C&E events.
Noting the importance of scientific and technological research to Hong Kong, the secretaries also proposed spending HK$380 million on a six-month rental waiver for tenants and start-ups at the Hong Kong Science Park, industrial estates and Cyberport.
The relief would cover all start-ups, incubating firms, co-working space users, office tenants, partner companies, professional services companies and merchant outlets at the Hong Kong Science Park, InnoCentre, industrial estates and Cyberport. The relief will be capped at 10 000 square feet and is expected to benefit about 1,800 tenants.
“The epidemic has worsened [the technology companies’] situation as it has substantially reduced Hong Kong’s interaction with overseas economies and Mainland China. We consider it necessary to be able to offer further rental support after the current rental concessions end in March 2020 in order to retain these companies in Hong Kong’s technology ecosystem.”
The scheme would take effect from 1 April.
Other sectors benefitting from the government’s proposed assistance include retail, catering and transport.
Readers can find out more about changes to HKTDC exhibition schedules here.
Hong Kong Legislative Council