Asian govt offer relief to SARS-hit businesses

Asian govt offer relief to SARS-hit businesses

David Brooks, Agence France-Presse, Hong Kong

Asian governments are starting to respond to the cries of anguish from businesses decimated by the deadly SARS outbreak with emergency packages to help the worst affected sectors.

Singapore announced relief measures worth $S230 million (US$130 million) on Thursday. The other most badly affected economy in the region, Hong Kong, is expected to follow suit as soon as this coming week and Taiwan has stepped in to offer support to local airlines and tourism firms.

The travel and tourism industries have borne the brunt of the Severe Acute Respiratory Syndrome (SARS) outbreak since it started in southern China's Guangdong province late last year and spread to Hong Kong in February before being carried around the globe by air travelers.

Governments, already under severe budget pressure after regional economies were hammered by the regional financial crisis five years ago and 2001's global slowdown, are finding themselves again searching for band-aids for their bleeding economies.

Regional airlines, still recovering from the 2001 slump, have been among the first to send out an SOS, saying up to 50 percent of their flights have been suspended.

"Airports and air traffic management services can and must reduce their charges, rents and other burdens which they impose on the airlines regardless of the fluctuations of the markets," said Richard Stirland, director-general of the Association of Asia-Pacific Airlines (AAPA).

Such steps were vital to the survival of regional airlines, he added.

Singapore, which like Hong Kong relies heavily on tourism and its role as a regional transport hub, has cut its economic growth target to 0.5-2.5 percent this year from 2.0-5.0 percent due to the impact of SARS.

Its assistance measures focus on the devastated tourism industry, which suffered a 61 percent plunge in visitor arrivals in the first 13 days of April from a year earlier. Hotel occupancy rates fell to 20-30 percent from normal levels of at least 70 percent.

The package includes rebates for airport landing fees, a reduction of the levy paid by employers for their foreign workers and property tax relief for shops, hotels and restaurants. It will take effect in May and last until the end of the year.

"This is an immediate response and now we will have to watch very carefully how the situation develops and if there is a need to do more later and there is justification to do more later, we are able to do so," Deputy Prime Minister and Minister of Finance Lee Hsien Loong said.

In Hong Kong, the two local airlines Cathay Pacific and Dragonair have cut flights by more than 40 percent, hotels, restaurants and bars have emptied and retailers claim sales have been cut in half since the last half of March.

Analysts have cut their economic growth forecasts for Hong Kong by around one percentage point because of the SARS.

Hong Kong Chief Executive Tung Chee-hwa said this week the government will announce relief measures "very soon" and there is speculation they will be released during the coming week.

Industry groups have proposed a raft of measures to the government, including the temporary lowering of pension fund contributions and a delay to previously announced rises in corporate and personal tax rates.

Attempts by the government in last month's budget to rein in the spiraling budget deficit are being frustrated by SARS.

The Hong Kong government has forecast a HK$68 billion dollar ($8.7 billion) budget deficit for the current year to March but Daniel Chan, senior economist at DBS Bank, said the virus outbreak is likely to swell the deficit to between HK$80 billion and HK$90 billion.

The Taiwanese government announced last week it will cut charges for the aviation and travel industries to help them weather what they describe as their worst ever crisis.

Some airport fees will be halved while the payment of others can be delayed and travel firms' training costs will be subsidized.

The measures offered by governments so far will help provided the outbreak is quickly contained. However, as Singapore's Lee said, the continued spread of the disease means "all bets are off".