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Hong Kong business seeks relief
HONG KONG, China (CNN) -- Hong Kong's key business lobby group is pushing for relief from up to HK$5 billion ($640 million) in government fees and charges as the city of 7 million struggles with the impact of the deadly SARS virus. Hong Kong General Chamber of Commerce director Eden Woon told CNN Friday that some sectors of the economy had seen their business decline by up to 80 percent because of the flu-like illness known as Severe Acute Respiratory Syndrome (SARS). The illness, which has already claimed 65 lives from about 1300 cases in Hong Kong, has plunged the economy towards recession, with two more major banks cutting their 2003 growth forecasts on Thursday. The consensus outlook for 2003 is now for growth of 1.7 percent, down from 3.0 percent before the SARS outbreak. HKGCC's Woon said Friday that many small businesses in Hong Kong would go under if the crisis lasted much longer. He identified four sectors -- tourism, entertainment, retail and restaurants -- where the downturn in business has ranged from 40 to 80 percent. Woon said that what these businesses really wanted from any government rescue package was relief from fees, charges and provisional taxation. He said the HKGCC had proposed a package of relief measures along these lines to the Hong Kong government valued at between HK$4 billion and HK$5 billion. The government has already conceded that its own 3 percent growth forecast for 2003 is now unachievable. It will update the figure when it releases first-quarter GDP results on May 30. Two of Hong Kong's biggest lenders, Hong Kong & Shanghai Banking Corp and Standard Chartered Bank, both cut their forecasts to 0.5 percent on Thursday. Economists from a variety of other financial institutions and investment banks, including Citigroup, Morgan Stanley, Merrill Lynch, ING, Deutsche have also been cutting their forecasts in recent weeks. Ratings agency Standard & Poor's said on Tuesday that Hong Kong would suffer the gravest damage from SARS in the Asia Pacific region. It estimated the disease would slice between 0.6 percent and 1.5 percent from growth this year. The tourism sector alone is expected to suffer a loss of about HK$6 billion Hong Kong ($770 million), even if SARS is contained within one or two months. Hong Kong Chief Executive Tung Chee-hwa and his senior cabinet members have been working on a series of relief measures, with an announcement expected soon. Thousands of jobs, particularly those in the tourism and entertainment industries, are at risk as travellers shun Hong Kong and residents stay away from hotels, cinemas, shopping centers and restaurants. The government has already warned that the jobless rate will rise in the weeks ahead. On Tuesday, official figures showed the rate was 7.5 percent in the first quarter, up slightly from 7.4 percent in the December-February period. Along with the HKGCC, other business and labor leaders have urged Tung to defer planned rises in income and profit taxes and to suspend mandatory contributions by workers and employers towards retirement funds. They also want relief for rent and utility charges. The SARS illness is thought to have originated in China's Guangdong province, adjoining Hong Kong. China has come in for criticism over its slow response and alleged under-reporting of the disease, prompting President Hu Jintao to promise full support and cooperation with international health agencies. (Full story)
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