COVID-19 Economic Relief Packages in Hong Kong
Businesses are facing a range of complex challenges in these unprecedented times. On 8 April, the HKSAR government announced a further HK$137.5 billion (US$17.6 billion) package of relief measures to help businesses stay afloat, keep workers in employment and relieve financial burdens on individuals and businesses during the Covid-19 outbreak.
This takes the total amount of relief pledged by the HKSAR government to help offset the economic fallout to HK$287.5 billion (US$36.85 billion) – equivalent to 9.5% of Hong Kong’s GDP – including the HK$120 billion package previously announced in the 2020-21 Budget and the HK$30 billion anti-epidemic fund.
Understanding these various government stimulus packages can be confusing. Sovereign is here to help you navigate through some of these funding schemes and can further introduce you to the relevant government departments for particular schemes.
The major components of the new relief package involve:
Job retention, creation and advancement
Retention – HK$80 billion is being allocated to provide wage subsidies to employers for the purpose of retaining employees. For a period of six months, the government will fund 50% of wages that eligible employers are contractually required to pay, capped at HK$9,000 per employee per month, in return for employers undertaking not to implement redundancy, no-pay leave arrangements or reductions of wages.
Employers who have been making Mandatory Provident Fund (MPF) contributions for employees are eligible, excluding government employees. The first round of applications can be made in early June and payment to employers will be made in two tranches, with the first payout no later than June 2020.
Further support will also be provided to employers in the catering, construction and transport sectors who are not completely covered by the MPF scheme and a one-off grant will be given to self-employed persons who make MPF contributions.
Creation – The government and private sectors will create 30,000 time-limited jobs at a cost of HK$6 billion; the civil service will recruit 10,000 people in 2020-21.
Advancement – Six measures have been introduced to encourage staff to learn new skills and help enterprises to apply technology:
- LAWTECH fund: technical support and training for SME law firm and barristers’ chambers;
- COVID-19 Online Dispute Resolution (ODR) scheme: HK$70 million to provide ODR services for dispute;
- Encourage Deployment of 5G: HK$60 million scheme for public and private sectors to subsidise 50% of their 5G deployment projects
- Distance Business Programme: HK$500 million programme to support enterprises to continue business with technology adoption and related training
- Training Subsidies for the Construction Sector: HK$30 million training subsidies for consulting firms under the Construction Industry Council (around HK$50,000 for each company)
- Matching Grants for Skills Upgrading: HK$100 million matching grants for training programmes for staff in the public and private sectors
A total of HK$21 billion is pledged for 16 support measures, including:
- One-off relief grant of at least HKD$7,500 for service providers and suppliers for schools and post-secondary education institutions
- One-off subsidy for sectors that are completely or partly closed due to government health safeguarding measures
- HK$100,000 for amusement game centres, commercial bathhouses, fitness centres and amusement facilities
- HK$30,000 to $100,000 for beauty parlour and massage operators, depending on the size of the premises
- Cinema Subsidy Scheme – HK$100,000 subsidy per screen up to a maximum of HK$3 million
- Tourist industry – subsidy ranging from HK$20,000 to 200,000 for licensed travel agencies, and HK$300,000 to 400,000 for licensed hotels
- Aviation sector – one-off subsidy of HKD$1 million per large aircraft and HK$200,000 per small aircraft registered in Hong Kong, one-off subsidy for aviation support services and cargo facilities (HK$3 million for operators with 100 employees or above, HK$1 million for companies with less than 100 employees)
Government rental concessions, fee waivers, provisions of loans and loan repayment deferrals in limited circumstances to reduce financial burdens
- Enhancement of the SME Financing Guarantee Scheme: special enhancement up to 100% guarantee, additional guarantee commitment of HK$30 billion
- Four-month extension of the 75% waiver of water and sewage charges for non-domestic accounts from August to November 2020
- Three-month extension of the deadline for payment of tax for year of assessment 2018/19
Other relief through government facilitation
- Airport Authority Hong Kong (HK$2,000 million)
- The Hong Kong Monetary Authority
- The Insurance Authority and industry stakeholders
Introducing ‘SME One’
The HK government has set up a new department – called SME One – that is dedicated specifically to assisting small and medium-sized enterprises (SMEs) and Start Ups with funding in these five main areas:
Branding, Upgrading & Domestic Sales (BUD Fund) – To provide funding support to individual Hong Kong enterprises in undertaking projects to develop brands, upgrade and restructure their business operations and promote sales in Free Trade Agreement (FTA) markets and Mainland China market, so as to enhance their competitiveness and facilitate their business development; here
SME Export Marketing Fund (EMF) – To encourage SMEs to expand their markets outside Hong Kong by providing financial assistance with participation in export promotion activities; here
Retail Tech Adoption Assistance Scheme (ReTAAS) – To provide funding support for retail enterprises to adopt technologies for manpower demand management purposes and help to enhance productivity. Funding will be provided on a matching basis, with up to two projects from a single applicant subject to the cumulative ceiling of funding support of HK$50,000; here
Enterprise Support Scheme (ESS) – A major funding initiative under the Innovation and Technology Fund (ITF), which is designed to encourage the private sector to invest in research and development (R&D). Funding support of each approved project is up to HK$10 million on a matching basis; here
SME Loan Guarantee Scheme (SGS) – To provides loan guarantees to SMEs to help them secure loans from the participating lending institutions (PLIs) for acquiring business installations and equipment or meeting working capital needs of general business uses; here.
An SME is a manufacturing business that employs fewer than 100 persons in Hong Kong; or a non-manufacturing business that employs fewer than 50 persons in Hong Kong.
Please click here to download the official PDF of Government’s package of measures to support individuals and businesses affected by COVID-19.
If you would like to find out more about how you can benefit from any or all of these schemes, please contact Sovereign.
Please keep coming back to this page for more information. We will continue to update it as and when more details are released. If you have any questions please do not hesitate to contact your relationship manager or email hk@SovereignGroup.com.
Official government corona virus updates are published here.