May 27 – Yesterday the Hong Kong Special Administrative Region (HKSAR) announced its package of tax cuts, fee waivers and spending amounting to HK$16.8 billion to ease the effects of the global economic crisis.
The plan includes the waiver of business registration fees, salary tax cuts and two quarter suspension of property rates. This brings HKSAR stimulus and relief spending to a total of HK$87.6 billion since last year.
The local government also plans to increase the waiver on salary tax payments HK$8,000 for the years 2008-09 from the previous HK$6,000. The package aims to help burdened businesses and will allow that fees for business registrations and entertainment and restaurant licenses be taken out for a year.
The government could “do something further” if conditions worsen, said Financial Secretary John Tsang during the press conference. The financial secretary said the economy will be better during the second half of the year and the territory might posty economic growth by next year.
Industry insiders feel the money for the stimulus is too little to have an immediate effect. “The public had expected giveaways that would deliver a more immediate stimulus to the economy,” Denise Yam, an economist with Morgan Stanley in Hong Kong told Bloomberg.
Despite the Hong Kong’s shrinking economy and worsening unemployment, investment money continues to pour into the territory from the mainland China and other international sources buoying property and stock prices. Recently, Beijing has loosened regulations to allow local companies to buy overseas assets easier.
Home prices increased by 13 percent while the benchmark Hang Seng Index has gained 18 percent during the same period.