With the huge spending of financial support to the Hong Kong society and economy in the past year, the Financial Secretary, Paul Chan forecasted a $300 billion budget deficit in 2020-21. As a result, reserves drop to $872 billion from $1.16 trillion up to March 2021, equivalent to about 22 months of recurrent expenditure. Facing the historically poor economic situation, he has delivered the Budget 2021 on 24 Feb 2021. Since he has indicated a limited option in Budget 2021, whether entrepreneurs can be benefited, it remains a question. WYND team will highlight some key points in his speech for SMEs.
Fees Reduction & Waiving
Same as last financial year, the business registration fees shall be waived for 2021-22. Further, profits tax will be fully reduced, with maximum of $10,000 ceiling. Meanwhile, there will be rates concession for non‑domestic properties in 2021‑22, subject to a ceiling of $5,000 per quarter in the first two quarters and a ceiling of $2,000 per quarter in the remaining two quarters.
Extension of Financial Scheme
The SME Financing Guarantee Scheme introduced last year, will be extended until year-end. In addition, there will be an increase of the maximum loan amount per enterprise from the total amount of employee wages and rents to 18 months, rising loan ceiling to $6 million; extending the maximum repayment period to eight years; and extend the maximum duration of principal moratorium to 18 months.
Stimulation of specific industry (Financial services)
The government will continue to strive for the launch of “BondConnect” from mainland China within this year. By doing so, there will be a further enhancement of the domestic Central Moneymarkets Unit. Moreover, there will be a subsidy for Open-ended Fund Companies to set up the business in Hong Kong.
STIMULATION OF SPECIFIC INDUSTRY (Innovation and Technology)
The will be an injection of 9.5 billion into Innovation and Technology Fund in the upcoming 2 years. Additionally, Hong Kong Monetary Authority will strive to reduce time for launching innovative financial products in the market by the enhancement of Fintech Supervisory Sandbox. The ongoing development of 5G networks and applications will continue to be supported.
A recent survey indicates almost a half of the SMEs are facing difficulties on stable or efficient operation due to the lack of cash flow. The insufficient short-term implementation such as Employment Support Scheme seems unable to help to overcome this hardship. Every entrepreneur should adopt the new model of business operation to maintain the business. For instant, they can consider moving to the private office or hotdesk in a coworking space. We also hope the vaccine can assist in overcoming the COVID-19 and economic recovery.
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