Customers buy goods from a shop with a sign that reads "We accept consumption vouchers" at a market in Tsuen Wan on April 4, 2022. (ANDY CHONG / CHINA DAILY)
People from the business and financial sectors embraced consumption vouchers in Hong Kong on Sunday as an impetus for a retail market that has been in the doldrums since the COVID-19 pandemic outbreak. But they said that more needs to be done to sustain the economy’s recovery.
The first installment of consumption vouchers under Phase II was disbursed to about 6.36 million people on Sunday, following the distribution of HK$5,000 ($637) consumption vouchers in April to eligible residents who had successfully registered under the Consumption Voucher Scheme initiated by the government. Depending on which categories eligible citizens are in and whether they received the HK$5,000 voucher under Phase I, vouchers worth either HK$2,000 or HK$3,000 were disbursed by installment to different stored value facilities of their choice, including AlipayHK, Octopus, Tap & Go and WeChat Pay HK.
Without a shadow of a doubt, the voucher project will help fuel consumer sentiment in the city, which has been battered and remains lukewarm due to the relentless pandemic, said Terence Chong Tai-leung, associate professor of economics and executive director of Lau Chor Tak Institute of global economics and finance at the Chinese University of Hong Kong
The generous handout by the government is intended to inject dynamism into the still-bleak market compared to the vigor of the pre-pandemic era, and to “extend the stimulating effect on local consumption, thereby accelerating economic recovery”, stated Hong Kong Financial Secretary Paul Chan Mo-po when detailing the scheme in June.
Without a shadow of a doubt, the voucher project will help fuel consumer sentiment in the city, which has been battered and remains lukewarm due to the relentless pandemic, said Terence Chong Tai-leung, associate professor of economics and executive director of Lau Chor Tak Institute of global economics and finance at the Chinese University of Hong Kong.
“Every individual entitled for the voucher scheme should be ecstatic upon receiving such a handsome amount of money. For those under the poverty line, the penniless elderly and students above 18 in particular, the e-voucher means a lot. The project improves people’s life satisfaction, prompting their purchasing desire,” said Chong.
The project will help in alleviating Hong Kong’s dismal economy as residents are expected to spend more on merchandise, restaurants and hotels, and entertainment facilities, said Linus Yip, chief strategist of First Shanghai Securities Limited in Hong Kong. Stores, diners and hotels have delivered various promotions in the form of discounts and coupons in tandem with or before the installment of the vouchers, which will likely lead to a spending spree.
The effects of the vouchers were felt almost immediately by the catering sector. Some practitioners reported a 10 percent growth in revenue the day they were issued, mainly from brisk business at lunch and dinner.
Along with rewards from online payment platforms, stores and shopping malls, the extra spending by consumers will have a “multiplier effect” on stimulating Hong Kong’s economy, which needs urgent support, Financial Secretary Paul Chan Mo-po said
Along with rewards from online payment platforms, stores and shopping malls, the extra spending by consumers will have a “multiplier effect” on stimulating the city’s economy, which needs urgent support, Chan said in his blog on Sunday.
The first batch of consumption vouchers issued on April 7 led to a retail sales surge of almost 12 percent year-on-year in April, after consecutive declines in prior months, the finance chief said.
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Nevertheless, Yip argued, “How the economy will go much depends more on how well the COVID-19 situation in the city will be contained and other economic factors like interest rates, market confidence and government’s (economic stimulus) policies.”
“The contribution of the consumption voucher to the economy will manifest itself more on instant and basic consumption, like food and entertainment, while durable goods consumption may still be not so good because deferred consumption will still matter due to the current economic situation,” contended Yip.
“If compared with the Chinese mainland, Hong Kong is relatively slow in popularizing and adopting digital payment tools, yet far more advanced in comparison to Western countries,” said Yip. Making digital payments a mainstream trend can’t be realized overnight. “The government’s encouraging policies and gradual familiarity of the public will do the trick,” said Yip.
“The e-vouchers have accelerated the application and popularity of online payments. The digital model provides more opportunities for exploring potential new markets and business models for retail stores and enterprises,” he said.
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On a different note, Chong applauded how the government determined the criteria for eligibility. The government decided that non-permanent residents who are eligible to become permanent residents, such as those under the Quality Migrant Admission Scheme, can enjoy the voucher scheme, while excluding those who have left or intend to leave the city permanently. “The voucher is a social welfare measure that should be given to people who make contributions to Hong Kong’s economy. Any Hong Kong identity card holder who is working in the city, should be entitled, and non-permanent residents working here included because they’ve already paid their fair share of tax,” said Chong.
While the voucher may well serve as an instant but short-term measure to counteract the rigors of the slow economy, Hong Kong is probably on the right track to bounce back.
Zhang Tianyuan contributed to the story.