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HK’s ‘zero case’ target may delay border opening
MORE LAYOFFS, CLOSURES IN 2021
The Lunar New Year might not prove as lucrative for businesses this year as the economic situation brought by the pandemic is still severe, according to Hong Kong Financial Secretary Paul Chan Mo-po.
Chan also feared that more businesses will close and layoffs will continue after the Lunar New Year.
He wrote in a blog post that despite the government introducing 300 billion yuan of support and relief under the government’s budget and the Epidemic Prevention and Antiepidemic Fund, the financial support is merely a drop in the bucket amidst the crisis.
“Workers are struggling to survive and are willing to take the initiative to introduce enhanced epidemic prevention measures. Under the premise of more effective prevention of virus infection, in exchange for the resumption of business and some activities as much as possible, it also gives the public a little more breathing space,” Chan wrote.
According to Chan, in terms of figures, Hong Kong has started to recover and has a likely possibility to have a positive growth in 2021 but the current situation can still be considered severe.
“Take the recent figures released by the Official Receiver’s Office as an example. Last year, the number of bankruptcy applications was close to 8,700, an increase of 6.6% year-on-year; about 450 petitions for compulsory winding-up were filed, an increase of 7.2% yearon-year. In December, the Hong Kong Purchasing Managers Index returned to the contraction range, and the business atmosphere of SMEs also tended to be pessimistic,” Chan added.
HK’s ‘zero case’ target may delay border opening
Government responses to the pandemic have split countries into two categories, according to a research by Jefferies.
The research said countries that fall under the “suppression” category are those that aim to minimise COVID-19 cases, whilst countries under the “elimination” category are those that aim for “zero cases”.
The United States, United Kingdom, and Brazil are among the countries with a suppression strategy.
Hong Kong, with its almost total ban on inbound travel as only residents are allowed to travel, falls under the elimination category. Other countries that fall under this category are Singapore, China, New Zealand, and Australia.
Jefferies said countries with strict restrictions will have slower reopening than those implementing the suppression approach. Countries implementing a suppression strategy are more likely to open borders to each other unlike countries with elimination approach as they will find it hard to open even to those with significantly lower COVID-19 cases versus their original peak.
“Imagine a scenario where due to vaccines and social distancing, the very high case numbers in the USA and UK start to reduce. By the middle of 2021, cases in some European countries have fallen to less than 1,000 per day. That’s a marked improvement, but even at those levels, governments that take zero case approaches will not want to be seen as exposing their populations to the risk of inbound infection. As a result, they will very likely keep their travel restrictions and significant quarantines in place for some time,” Jefferies added.
Pressure from the tourism industry
Further border closure may also spell disaster for Hong Kong as travel and tourism contributed 17.6% to the country’s gross domestic product in 2019. In 2020, inbound tourist arrivals drop nearly 98% compared to 2019. Jefferies said countries whose GDP relies on inbound tourists are pressured to open the borders early. Spain and Italy are some of the countries that have already expressed willingness to open borders for tourists.
Vaccine offers hope
Last year, the air travel bubble between Hong Kong and Singapore was scheduled but was then repeatedly delayed due to a surge in COVID-19 cases.
In an interview with the South China Morning Post last December, Secretary for Commerce and Economic Development Edward Yau said he was not optimistic about resuming talks about the air travel buble between Singapore and Hong Kong. He pointed out that the presence of vaccines may be the solution for the revival of the quarantine-free travel agreements.
Jefferies said that the end of the pandemic may not be the elimination of the coronavirus, but when mortalities from COVID-19 start to resemble influenza in a typical year.
Hong Kong, allowing only residents to travel, falls under the elimination category of government response ti the pandemic
