Over the past few months, the Hong Kong Government has reiterated their commitment to helping the Hong Kong economy, especially to SME’s. On 8 April 2020, the Hong Kong Government announced a HKD 137.5 billion relief package (“the relief package”) to help individuals and businesses tide over the financial difficulties incurred as a result of COVID-19. While details pertaining to the specifics of this relief package have yet to be released, we have identified several points which would be of interest to Hong Kong SME’s.
What you will learn from this article:
1. What Does The Relief Package Cover?
The HKD 137.5 billion relief package will be utilized for the following:
2.1. Salary Subsidies
To encourage job retention, job creation and job advancement, the relief package will include a HKD 80 billion Employment Support Scheme. Although the scope of the Employment Support Scheme extends past salaries, people can expect the following salary subsidies in respect of job retention:
- Salary subsidies to eligible employers to retain their employees on the condition that the employer will not implement redundancy
- The wage subsidy to be provided is calculated based on 50% of the monthly salary, capped at HKD 18,000 (i.e. the median monthly wage in Q2 2019), for a period of six months
- Subsidies will be disbursed to employers in two payments, with the first payment not being later than June 2020
- One-off subsidies to self-employed persons who made MPF contributions will also be provided
For the details of this scheme, please refer to Hong Kong Employment Support Scheme Explained.
2.2. Employment Support Scheme
The Employment Support Scheme will promote job creation and job advancement in the following ways:
- LAWTECH Fund
- To assist some SME law firms / barristers’ chambers to procure / upgrade their information technology system and arrange relevant LAWTECH training for their staff to support the development of remote hearings
- An estimated 700 SME law firms / barristers’ chambers and related persons are expected to benefit from this
- Distance Business Programme
- To implement a programme under the Innovation and Technology Bureau to support enterprises to continue business with technology adoption and related training
- Over 3,000 enterprises and 40,000 individuals are expected to benefit from this
- Matching Grants for Skills Upgrading
2.3. Relief to Hard-Hit Sectors
The Hong Kong Government has identified various sectors of Hong Kong’s economy as those that are expected to be hard-hit financially. Among the sectors of the economy which are expected to be hardest hit, FastLane has identified three sectors which are of particular prominence among the SME community:
- Provision of a one-off relief grant of HKD 40,000 to private schools offering non-formal curriculum registered under the Education Ordinance
- Creative Arts
- Provision of a HKD 25 million subsidy for upkeeping PMQ’s operation and waiver of its tenants rental
- Provision of a one-off subsidy ranging from HKD 250,000 to HKD 2.2 million (based on the size of their premises)
- Subsidy will be disbursed in two tranches, and not less than 80% of the subsidy has to be used to pay employees’ salaries
- A licensee is required to undertake that there would be no redundancy of staff for 3 months after obtaining the subsidy, and it will not apply for subsidy under the Employment Support Scheme
- Each eligible catering outlet directed by the Hong Kong Government to close whole of its licensed premises is eligible for a further one-off subsidy of HKD 50,000
- Provision of a one-off subsidy of HKD 50,000 to tenants of cooked food / light refreshment stalls at public markets managed by the Food and Environmental Hygiene Department
2.4. Easing Cash Flow Burden On Businesses and Individuals
It is commonly recognised that “cash is king.” Without assistance, the cash flows of Hong Kong SME’s will undoubtedly be put under strain. The relief package aims to ease this cash flow burden by introducing revisions to the Hong Kong Government’s SME Financing Guarantee Scheme (“SFGS”).
To summarize, the revisions to the SFGS are as follows:
- Introduced enhancements to the 80%, 90% and Special 100% Guarantee Products
- Additional guarantee commitment of HKD 30 billion
- HKMC Insurance Limited will immediately liaise with banks on the implementation details, with a view to roll out new measures as soon as possible
2.5. Other Relief Measures Through Government Facilitation
The relief package includes additional initiatives for Hong Kong’s economy. SMEs in particular can expect the Hong Kong Monetary Authority to continue working with the banking industry. The purpose of this collaboration is to implement a number of measures in addressing cash-flow pressure of their clients with a special focus being made on Hong Kong’s SMEs.
There remains a lot of uncertainty regarding how the relief package will be implemented and logistical arrangements surrounding how eligible applicants can obtain assistance. We can expect the Hong Kong Government to release further clarity regarding these uncertainties in the upcoming weeks.
Please stay tuned to the FastLane Group and check out the government website as we will continue to monitor all developments and will provide updates accordingly.