HK pledges $1.5b SARS economic package

HK pledges $1.5b SARS economic package

Agence France-Presse, Hong Kong

Hong Kong chief executive Tung Chee-hwa on Wednesday announced a US$1.5 billion economic package to soften the impact of the deadly SARS outbreak, which has devastated the travel and retail industries.

The package worth HK$11.8 billion ($1.5 billion) includes reductions in fees and rates for the worst affected industries and for residents.

Severe Acute Respiratory Syndrome (SARS) has killed 99 people in Hong Kong and the local economy has taken a heavy hit. Cathay Pacific Airways has cut the number of its flights almost in half, hotels and restaurants are nearly empty and retailers claim their sales have fallen by more than 50 percent.

"Much careful consideration has been given to the measures which we believe will help to relieve the short term impact of the effect of SARS," Tung said at a press conference.

"We also took into account the medium term need to maintain fiscal balance and took into account the possible effect of the package on the financial markets," he added.

Under the new measures, public housing estate residents will receive a 25 percent rent reduction while businesses in government-owned buildings will get 30 to 50 percent rent cuts.

Property rates will be waived and there will be concessions for water, tariffs and sewage charges.

License fees for businesses most affected by SARS including tourism, bus and coach operators, will be waived for a year, costing the government HK$280 million.

Water and sewage charges for residents will be suspended at a cost of HK$1.7 billion and taxpayers will receive tax rebates totaling HK$2.8 billion.

The three hardest hit sectors -- catering, retail and entertainment -- will be eligible for a HK$3.5 billion loan scheme in which the government will act as guarantor.

The government will aim to create 21,500 training and short- term jobs in the service sectors hardest hit by SARS.

"The government will set aside one billion dollars so it can launch large scale publicity and promotion campaigns both locally and internationally to promote Hong Kong to help revive the economy," Tung said.

Some HK$1.3 billion will also be provided for disease control and public hygiene.

"However, the first priority is to control spread of the disease and to bring the number of cases down to a minimum as soon as possible," Tung added.

Despite stepped up government efforts to contain the spread of SARS, which has no cure, more than 1,400 people have been infected since it first erupted in the former British colony about seven weeks ago.

Dao Heng economist Daniel Chan said the measures were likely to help ease the impact of SARS on the tourism and leisure sectors, but were unlikely to have any stimulative effect on the local economy.

"This is just a relief package for the severely affected industries and I think it will help them to some extent. Of course, for them it is much better than nothing. But this package will not stimulate the economy," Chan told financial newswire AFX-Asia.

Financial Secretary Antony Leung is due to release further details of the measures later in the day.

Earlier this month, Leung said the government's target for 3.0 percent economic growth this year cannot be achieved due to SARS.

The territory has been devastated by the SARS epidemic since the World Health Organization issued an unprecedented travel advisory on April 2 warning against travel to Hong Kong and the neighboring Chinese province of Guangdong, where the virus first emerged in November last year.

The key aviation industry has been hit hardest with at least 40 percent of all flights canceled.