The Chartered Institute of Management Accountants has a few words of advice for the proposed $137.5 billion relief package, approved last week in the Legislative Council.
Photo: Legislative Council Complex courtesy of Tksteven.
The Chartered Institute of Management Accountants (CIMA) recently outlined six additional steps needed to improve the economic stimulus package for Hong Kong.
The stimulus package revealed on 8 April is worth $137.5 billion, with $80 billion designated to subsidise the salaries of all private-sector workers. $21 billion will go towards sectors such as aviation and tourism, two of the hardest hit by the pandemic.
The package was approved in the Legislative Council last week, with 41 legislators voting in favour, 22 against, and two who abstained.
While the CIMA “welcomes the stimulus packages,” they do not believe that the financial relief goes far enough.
Paulus Chau, Associate Director, Hong Kong and Emerging markets, said, “There is, however, an opportunity to do more to help get the economy back on its feet more quickly.”
The CIMA’s first recommendation is that the government, Hong Kong’s largest employer, hires recently unemployed workers in “part-time positions and other available avenues.”
The CIMA also agrees that the stimulus money needs to be directed to the sectors that need it the most. The CIMA recommends that the government extend SME support. Currently, the loans offered by the government are six month loans, but the CIMA suggests that the government extend them to one year.
Additionally, instead of renting, some SMEs own their premises. The CIMA recommends help to SMEs who own their premises, by giving their mortgage payments the same relief that rents are being provided.
Another area of focus for the CIMA is cash flow. The CIMA recommends “delaying payment of provident funds by employers and employees and offering tax incentives to SMEs who continue to pay rental and salaries in full.”
The CIMA is also heavily focused on making sure some of the stimulus money hits the education sector. The CIMA recommends that the government “engages” technology companies to provide low-income students with laptops, as social distancing procedures have moved all classrooms online.
Furthermore, the HK$1000 that parents received from the Anti-epidemic Fund should be extended to university students as well.
Perhaps, most importantly, the CIMA recommends “speed and simplicity in administration”:
“The relief measures provided by the government need to be more accessible to businesses. There are currently too many regulations and requirements that make it difficult for businesses to adapt and change.”
While the latest stimulus package for Hong Kong was desperately needed, not everyone is cheering yet.
“History shows that these funding schemes often benefit the few rent-seekers who know how to game the system,” said Simon Lee, a political advisor and columnist.
This development is currently being seen across the world, not just in Hong Kong. The American fast-food giant Shake Shack recently returned a $10 million loan that was meant for small businesses.
Lee concluded, “There is no accountability on whether the money is well spent.”
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