Au Kam
More data and further studies are needed if a financial support scheme for small and medium sized enterprises on the Hong Kong model were to be adopted in Macau, commentators told the Times.
Ian Johnson and Au Kam San agreed that more data is required in order to judge whether or not the city should consider adopting the financial measures in place in Hong Kong that aim at supporting small and medium sized enterprises in the area of salary.
In Hong Kong, the new scheme will provide financial support to eligible enterprises on their salary costs during the period between May and July this year. During the subsidized period, these enterprises are not permitted to “hire fewer workers than the number reported to the government,” meaning that they cannot shrink the size of their teams during this period.
There is no ceiling to the salary level of eligible employees, but there is a ceiling to the number of staff members eligible for the financial support. Each enterprise will only be allowed to register at most 1,000 employees.
In order to be eligible, employees must have active Mandatory Provident Fund (MPF) accounts. The same applies to workers who are at or above 65 years of age. With that said, senior residents who are still contributing their efforts will be eligible. Self-employed people with active MPF accounts will also be eligible.
The Hong Kong government will issue HKD8,000 each month for each eligible worker. The maximum amount each month an enterprise could obtain will be HKD8 million, according to the scheme. The funds will be advanced to the employers’ accounts but it must be used on salary spending.
Johnson recalled that in 2020, a similar scheme operated in Macau. However, the lack of updates and data on the scheme has caused uncertainty about its success. “We need data to conclude the effectiveness of the scheme,” he said.
Despite this comment, he agreed that Macau’s adoption of the scheme is worth considering.
He pointed out that last week, Chief Executive (CE) Ho Iat Seng agreed at a parliamentary plenary on the possibility of subsidized employment, by which he meant subsidizing employees if they get employed.
Johnson Ian Heng Ut
Johnson found this similar to the salary subsidy scheme in Hong Kong. “This is actually feasible,” he remarked, adding that the government should clarify eligibilities.
“A similar scheme in Hong Kong last year prompted public debate because many massive enterprises benefited from the subsidies,” he added.
Meanwhile, Au found direct financial subsidies unsustainable due to the limit to the public reserve. He implied that the government cannot resolve financial challenges with subsidies and cash distributions every time the economy takes a dive.
Echoing Johnson’s comments, Au emphasized that cash distribution can be inequitable. The same amount of money has varied realistic or psychological values to people of different wealth statuses.
“The pandemic has already lasted two years, the government should have distilled certain characteristics of the current economy. This knowledge should be utilized to facilitate targeted support schemes,” the former lawmaker said.
In addition, Au called on the government to think more about the conditions for eligibility if the city should adopt the Hong Kong style scheme, although he was quite certain that “the government does have some clues by now.”
Furthermore, he agreed with the CE’s encouragement to the tourism industry to diversify both its target source markets and offerings of products and services, which the head of the government proposed at a recent parliamentary plenary.
Au estimated that even if the pandemic were to disappear, in the best case scenario, the number of visitor arrivals would not rise instantly to the 40-million mark, which was the level before the pandemic.
“The mainland economy has been affected to certain levels, and I doubt if there will be an influx of tourists immediately after the relaxation of all disease control measures,” Au explained.
On the other hand, at yesterday’s parliamentary plenary, lawmaker Si Ka Lon also called for the adoption of certain financial support schemes currently operating in mainland China and Hong Kong.
effectiveness of last year’s consumption card
The amendment to the Annual Budget was passed at the parliament yesterday. A set of Executive Regulations is the only element missing to facilitate the coming round of consumption subsidies.
With the community expecting the subsidy this year to remain nearly identical to that of last year – with MOP8,000 to be spent by each eligible resident – the two commentators doubt if the scheme will be as effective as its first round.
“It can actually be seen from the past two rounds that the stimulation effect became weaker,” Johnson said. “There were [fewer] promotions in the market during the second round of the consumption stimulus.”
He mentioned particularly that he is not very confident of the positive impact of this coming consumption stimulus if the nature of the scheme were to be retained.
“People feel uncertain about the future,” Johnson said. “They will use the subsidies on necessary spending, such as supermarkets and dining. The benefits to non-crucial merchandise, such as gadgets and sport shoes, may not be obvious.”
Meanwhile, besides asking the government to release data to prove the effectiveness of the scheme, Au asked the government to consider long-term planning on economic support. “It seems to me that the consumption subsidy scheme was not powerful in terms of supporting employment,” Au said. This appears to contradict the CE’s comment that the scheme has safeguarded employment in many small and medium sized enterprises.
Seeing the scheme returning in another round with a similar appearance, Au wondered if it implies that the government is satisfied with the effect of the scheme in its previous rounds. “Data should be made available to the public,” he said.
Moreover, the former lawmaker suggests the government envision how the economy can be revived in the long run. “What has the government considered in the past two years?” Au questioned.
Au also warned that financial support is easier to initiate than to withdraw. If the economy returns to normal level, the public will not spend at the same rate if these subsidies are withdrawn, since more public revenue means more ability for expenditure.
