Hong Kong to give cash handouts to back economy

A man wearing a protective face mask, amid concerns over the spread of the COVID-19 novel coronavirus, walks past a mural in Hong Kong. (AFP)
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Updated 27 February 2020

Hong Kong to give cash handouts to back economy

  • 7 million adult permanent residents to benefit from the move

HONG KONG: Hong Kong’s government said on Wednesday it will give a HK$10,000 ($1,280) handout to every permanent resident in a bid to jump-start an economy in recession after months of protests and hit further by the coronavirus outbreak.

Financial Secretary Paul Chan unveiled the cash gift in the annual budget, committing a colossal HK$120 billion to help alleviate the worst economic downturn the international financial hub has faced in a decade.

Hong Kong boasts significant fiscal reserves of more than HK$1 trillion built up over the boom years, a stockpile that the government is now tapping into.

The cash handout to around 7 million permanent residents will cost HK$71 billion, but officials hope consumers will plough much of the money back into local businesses.

“Making good use of fiscal reserves to support enterprises and relieve people’s hardship is certainly in line with our people’s expectations,” he said, adding the cash handout was for permanent residents aged 18 or above, including those residing overseas.

Chan said the stimulus and lower revenues would push government coffers into the red by a record HK$139.1 billion in the coming fiscal year, the first deficit in 15 years.

Hong Kong’s economy is reeling from the US-China trade war, months of pro-democracy protests last year and now the coronavirus: A triple whammy Chan described as “exceptionally austere.”

Other measures announced in the budget included profits and salary tax breaks, as well as low-interest loans for businesses struggling to pay staff wages.

The tourist, restaurant and retail sectors have been hit especially hard with bankruptcies soaring and traditionally low unemployment rising.

“Hong Kong’s economy is facing enormous challenges this year,” Chan said, predicting a range of 0.5 percent growth to a 1.5 percent contraction this year.

The recession is a major headache for the city’s pro-Beijing leader Carrie Lam, who currently boasts record-low approval ratings after facing down huge democracy protests.

The massive rallies and regular clashes with police that became a weekly fixture last year were dying down before the virus outbreak began. But the virus has comprehensively ended mass gatherings.

Yet public anger still simmers in a city where neither its leadership nor Beijing have addressed the issues fueling years of rising resentment. In Wednesday’s budget, the police received a 25 percent bump to HK$25.8 billion.

Neighboring Macau often announces universal cash handouts to residents in its annual budget, while Hong Kong has historically been more reticent.

The last one for all residents was in 2011, three years after the global crash sparked the city’s last recession.

Last week, Hong Kong’s government announced a HK$30 billion relief fund for those hit hardest by the virus outbreak, including cash handouts for businesses such as restaurants and travel companies.

Mexican brewer of Corona beer producer halts production over virus

Updated 03 April 2020

Mexican brewer of Corona beer producer halts production over virus

  • Measure in line with the Mexican government’s order to suspend all non-essential activities until April 30
  • Corona beer has been the punchline of jokes and memes and online rumor

MEXICO CITY: The Mexican brewer of Corona beer said Thursday it was suspending production because of the health emergency in the country over the COVID-19 pandemic.
Grupo Modelo — whose brands also include Pacifico and Modelo — said the measure was in line with the Mexican government’s order to suspend all non-essential activities until April 30 to slow the spread of coronavirus.
“We are in the process of lowering production at our plants to the bare minimum,” the company said in a statement, adding it would complete the suspension in the following days.
Mexico’s government has said that only key sectors such as agribusiness will be able to continue to function.
Grupo Modelo said it was ready to operate with 75 percent of its staff working remotely to guarantee the supply of beer, if the government agreed.
Mexico’s other major beer producer Heineken — which makes the Tecate and Dos Equis brands — could also stop activities on Friday, the Reforma newspaper said, although the company did not confirm the report.
On Wednesday, the northern state of Nuevo Leon, where Heineken’s Mexican operations are based, said it would stop the production and distribution of beer, which led to panic buying.
Since the start of the virus crisis, Corona beer has been the punchline of jokes and memes, and an online rumor said sales in the US dropped by around 40 percent after the outbreak.
However, in late February, Constellation Brands, which owns the Corona label, denied the rumor and said sales had stayed strong in the US even as the virus has spread internationally.
Mexico has so far registered over 1,500 confirmed cases of coronavirus and 50 deaths.