1/3 of Hong Kong eateries, bars, to close as curbs linger

[HONG KONG] Thousands of bars and restaurants in Hong Kong will shut as some of the world's toughest Covid restrictions, aimed at taming a record outbreak, deal a heavy blow to the once-vibrant city's economy.

About 5,000 restaurants, or almost one third of Hong Kong's eateries, are considering shutting down for months in order to cut costs, said Simon Wong, president of the Hong Kong Federation of Restaurants and Related Trades.

More than 1,200 restaurants have already suspended business and 300 have permanently closed, he said. And there are concerns that government stimulus measures won't be enough to stem losses.

Hong Kong ordered bars to shut in early January and bans in-restaurant dining after 6 pm as part of a swath of restrictions to stem a surge in infections.

While the city's 4-digit daily case numbers still pale in comparison to other parts of the world, authorities have imposed increasingly strict measures in pursuit of a Covid Zero strategy that keeps it in-line with mainland China but makes it a global outlier.

Social-distancing rules, which have also shut hair salons and beauty parlours and limits restaurants to 2 patrons per table, will last until at least Apr 20.

A prolonged loss of business may see half of Hong Kong's 2,000 bars and 4,200 hair salons fold, according to Allan Zeman, chairman of Lan Kwai Fong Group, a major landlord and catering services operator, and Kong Shu-lam, president of the Hong Kong Hair and Beauty Merchants Association.

A relief package announced on Wednesday (Feb 23) may be too little, too late, they said.

The government's HK$66.4 billion (S$11.5 billion) plan to give eligible residents a HK$10,000 spending voucher will only start in April, near the end of the restriction period, and it's uncertain if the city will have brought the outbreak under control by then.

A fund to provide one-time subsidies to affected businesses - which equates to as much as HK$500,000 for a restaurant and HK$50,000 for a hair salon - may barely cover costs, including rent in the world's most expensive property market, they said.

Planned legislation that would allow tenants to delay rent payments for up to 6 months won't be effective as businesses are earning almost no income and the measure won't change the amount of rent they eventually need to pay, Zeman and Kong said.

Finance Secretary Paul Chan said on Wednesday economic growth will slow to 2 per cent-3.5 per cent this year from 6.4 per cent in 2021.

Hong Kong's small and medium enterprises, which account for 98 per cent of business establishments and 45 per cent of private sector employment, are bearing the brunt of tighter measures.

The restaurant sector's business is about 75 per cent below normal and it may face an unemployment rate of 15 per cent by March, according to the industry association's Wong.

The Hong Kong Retail Management Association said outlets are seeing the biggest hit since the pandemic began.

It's been a sudden change for the food and retail sectors after the financial hub managed to exist largely virus-free for most of last year.

The worsening outlook also comes as other international cities facing outbreaks on a similar scale move toward living with the coronavirus.

Michael Tien, a lawmaker and founder of clothing retail chain G2000 Apparel, called for a 9-day citywide lockdown rather than prolonged social-distancing restrictions.

Hong Kong Chief Executive Carrie Lam said this week she isn't considering a total lockdown.

"Opening the stores or not opening the stores does not mean that much anymore," Tien said in an interview with Bloomberg TV on Wednesday, reporting a 70 per cent drop in sales. "If this continues for a few more months, we will see a lot of bankruptcies and local economies will be hurt so much it's beyond imagination." BLOOMBERG