Desperate times call for desperate measures, and the government of Hong Kong is bumping up its spending to help its residents as coronavirus fears intensify.
Every permanent resident above the age of 18 will receive around 10,000 HKD, worth around $1,300. In the foreseeable future, at least until the end of 2020, residents will not have to pay taxes on salaries with a 20,000 HKD cap.
The robust economy of Hong Kong, which has remained strong over the past decade, has started to dwindle in the past 12 months.
Regular protests and the coronavirus outbreak caused the tourism industry of Hong Kong to take a big hit.
Hotels and restaurants have started to see a plunge in sales, causing instability in one of the largest industries in the region that supports the livelihood of hundreds of thousands of local residents.
The travel industry of Hong Kong was already in decline before the coronavirus outbreak geared towards it peak.
As the World Health Organization (WHO) began to consider the possibility of the outbreak turning into a global pandemic, the tourism market of Hong Kong plummeted.
According to a report from Forbes, visitors to Hong Kong dropped by a staggering 99 percent in February, leaving its economy at risk of turmoil.
In response, the government has included various benefit packages for all permanent residents in its official 2020-2021 budget.
The government primarily targeted small businesses and low-income employees, formalizing a 100 percent tax cut on profits for businesses until the end of 2020, and possibly entering into 2021.
Hong Kong’s financial secretary Paul Chan said:
“In preparing this budget, I put the focus on ‘supporting enterprises, safeguarding jobs, stimulating the economy and relieving people’s burden.”
With Hong Kong University’s dean of medicine Gabriel Leung expecting the worst of coronavirus to come in May, it remains unclear whether these benefits will be sufficient to assist local residents.
Many businesses have started to leave Hong Kong amidst geopolitical uncertainties since the fourth quarter of 2019.
With virtually no tourists coming into the region in the past two months and no improvements anticipated in the local tourism sector until 2021, the economy of Hong Kong could struggle to recover for the next five years.
The real estate market of Hong Kong is the last remaining sector that is holding firm, but local banks have started to express a negative sentiment towards home mortgages since January 2020.
Throughout the past decade, Hong Kong’s housing market has primarily been driven by buyers from mainland China. As the single largest source of demand disappears over the next two years, Hong Kong is at risk of facing a severe market crash.