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LEAD: H.K. unveils HK$11.8 bil. package to help economy.

HONG KONG, April 23 Kyodo


Hong Kong unveiled an economic relief package worth HK$11.8 billion (about US$1.5 billion) Wednesday to help local businesses and the general public hit by the outbreak of severe acute respiratory syndrome (SARS).

Chief Executive Tung Chee-hwa said, ''The measures seek to relieve the short-term impact of atypical pneumonia on our economy.''

The relief measures include a HK$3.5 billion loan-guarantee scheme for sectors badly hit by the disease, a HK$1.77 billion concession in waiving of housing rates and water and sewage treatment charges, and a HK$2.3 billion rebate on personal income taxes that will benefit 1.3 million taxpayers.

The government said it will also create 21,500 training places and temporary jobs for various affected sectors to provide home-cleaning services to the needy families and to clean up the territory.

Funds will be allocated for medical research and enhancing public health, as well as to provide assistance and training for health-care workers.

Government fees and charges will as well be frozen for the next six months.

''(The measures) have also taken into account the medium-term need to make sure our budget is in balance and the possible impact of the package on the financial market,'' Tung told reporters.

Financial Secretary Antony Leung told lawmakers separately at a meeting that those relief measures are one-off and will not affect the government's plan to resolve its chronic fiscal deficit problem in the medium term.

The government last month anticipated the deficit for the fiscal year ending March 31 to top HK$70 billion, 5.5% of the territory's gross domestic product.

Leung has projected a budget deficit of HK$67.9 billion for the new fiscal year, but targeted restoring balance by fiscal 2006-2007.

''Our priority remains to prevent and control the disease and this must be, above all, the most important task we all have. However, it is necessary for us to plan for arrangements to revive our hard-hit economy in the medium and longer term,'' Tung said.

SARS, which has killed 105 people and infected more than 1,450 in Hong Kong, has hampered local businesses and consumption as residents tend to avoid public places while travelers have shunned the territory following alerts from the World Health Organization and some countries.

Hong Kong's pillar industry tourism and other sectors of air travel, retail trade, restaurants, entertainment and various services are being hit worst by the spread of the disease.

The number of tourists visiting Hong Kong fell 33.4% between March 16 and April 15 from the same period a year earlier, while sales in restaurants, retail outlets, cinemas and karaoke parlors have slumped sharply, the government said in a paper to lawmakers.

''Quite a number of operations in these sectors have closed down or are facing liquidation,'' the government said.

Some restaurants have temporarily closed and others have asked their employees to take leave without pay until further notice.

Private economists estimated tourism bookings in Hong Kong have dropped 80%, while restaurant patronage and retail sales have declined by more than 50%.

The Hong Kong government expects the territory's high unemployment rate to worsen over the next few months as the SARS economic impact becomes more apparent.

Leung earlier admitted the government's forecast of 3% economic growth for 2003 could not be achieved due to the adverse impact from SARS.

And several international securities houses have slashed their projections of Hong Kong's economic growth rate in the wake of the outbreak.

International credit-rating agency Standard & Poor's said the territory's economy could even contract in the second quarter of this year.
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Publication:Asian Economic News
Geographic Code:9HONG
Date:Apr 28, 2003
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