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Pressing ahead towards economic recovery

Today is Mother's Day, may I wish you all a happy celebration and good health. As our battle against the virus has been lasting for nearly one year and a half, moments spending with family and friends are more precious than ever. With the slight relaxation in social distancing measures, some restaurants have received more bookings than before. Yesterday I also took a walk in a wet market to shop and chat with storekeepers. From our chat, it seems that their business was doing quite well these days.

Yesterday I also took a walk in a wet market to shop and chat with storekeepers, so as to learn more about the current market sentiment and the usage of e-payment among merchants.

Overall speaking, Hong Kong's economy has indeed shown signs of recovery and recorded a 7.8% of year-on-year growth in Q1 this year, ending the contraction after six consecutive quarters and marking three consecutive quarters of positive growth. In Q1, the private consumption expenditure grew by 1.6%, a rebound after six consecutive quarters of contraction. Nonetheless, the growth in Q1 is mainly export-driven. Other sectors, such as retail and catering, are still showing a weak performance.

Taking the restaurants sector for instance. The value of total receipts of the sector in Q1 this year was HK$ 19.7 billion, decreased by about 9% annually or 37% when comparing to Q1 2019. As a sector engaging over 230 000 employees, its unemployment rate still remains high at 13.3%, which is much higher than the overall unemployment rate of 6.8%.

Apart from the restaurants sector, the pandemic has also dealt a severe blow to other sectors such as tourism, retail, transport and logistics. These sectors altogether employ about 1 million people, i.e. around one-third of Hong Kong's labour force. For enterprises and employees of these sectors, their "sensory temperature" in real life will be much lower.

Local enterprises of different scale from different sectors, as well as foreign enterprises in Hong Kong, are all looking forward to Hong Kong's success in winning the battle against the epidemic. Storekeepers in the wet market told me that, although their business has slightly improved, it is not yet fully recovered back to the level before the COVID-19 outbreak. In addition, some representatives of foreign enterprises reflected that due to the stringent anti-epidemic measures, some of their employees in Hong Kong could not return to their home country to visit their families for more than a year, at the same time it is also not easy for their families to visit Hong Kong. They are concerned that, if the situation persists, some of their non-local senior management staff will return to their home country or relocate to other places to work. Similar difficulties are also faced by those stationed employees from the Mainland, as reflected by many Chinese enterprises. This situation is detrimental to Hong Kong's attractiveness in drawing talents and the business operations of these enterprises in Hong Kong.

The SAR Government has been making our best effort to bring the epidemic under control. It is equally important to have our citizens' support to the vaccination programme. Only by getting vaccinated, our body could build up the immune system against the COVID-19 virus and reduce the risk of serious illness if getting infected. This is the most effective and pragmatic way to protect our own and our families' health, and also the most crucial part to facilitate the society to return to normal. After all, even if we can reduce gatherings in order to curb the spread of the virus, it is unlikely to totally prevent people from all sorts of social contacts in daily lives. In order to resume normal lives and economic activities as soon as possible, many places around the world, particularly those advanced economies, are pressing hard for mass vaccination as a key strategy in their game plan to win the battle against the epidemic.

We also need a road map for economic recovery. Through bringing the epidemic under control and resuming cross boundary travel between the Mainland and other foreign places, it could help stabilizing the economy and improving people's income, which in turn continually boosting private consumption. As seen from past figures, continuous improvement in private consumption can support the job market, thereby lowering the unemployment rate and increasing the overall wage level.

The objective of the electronic consumption voucher scheme being pursued is to give a boost to the economic recovery, particularly to those sectors such as retail, catering and personal services, which could provide large amount of jobs for the grassroots.

Yesterday I also took a walk in a wet market to shop and chat with storekeepers, so as to learn more about the current market sentiment and the usage of e-payment among merchants.

Another objective of the electronic consumption voucher scheme is to promote the usage of e-payment among merchants, particularly small to medium size merchants. Of the total retail sales value in Q1 this year, HK$ 6.29 billion came from online sales, reflecting a 63% increase compared with the same period in 2020, much higher than the 7.5% increase in the overall retail sales value. This demonstrates the strong growing impetus in the online sales sector. However, online sales still only accounted for 7.7% of the total retail sales values in Hong Kong, while that ratio in Mainland stood at over 20%. This tells that there is a huge room of growth for online retail sales in Hong Kong.

Moreover, figures in Hong Kong show that merchants with physical stores gained a much higher growth in online sales than those without, reflecting the business opportunities that traditional merchants could explore through online sales channels.

There have been calls for the Government to help local merchants enhance competitiveness and create a greater space for their development. This is exactly one of the functions that the electronic consumption voucher scheme aims to serve. By providing market incentives, we hope to encourage more small merchants to adopt e-payment, which could facilitate them to connect with other online sales platform in the long run, so as to grasp the benefits from this fast growing sector and the opportunities for upgrading their business. When I toured around the wet market yesterday, I saw that many merchants had been using different types of e-payment devices. I have tried them too, which was a pretty good experience. I believe the launch of the electronic consumption voucher scheme could further deepen the application and development of e-payment in Hong Kong.

The preparation of the electronic consumption voucher scheme is at its full swing. We expect that the scheme will be open for registration and vouchers will be started to hand out gradually in this summer. It is envisaged that the scheme would create more sales and promotion opportunities for the retail market from the latter half of this year till early next year.

Hong Kong's economy has shown signs of recovery in Q1. To sustain the trend of recovery, the whole community has to stay united in fighting against the epidemic. Our current low and slow vaccination rate will hamper Hong Kong's economic recovery, with the wage earners from different sectors bearing the direct and indirect costs. To protect your own and your families' health and to help a speedy economic recovery for Hong Kong, please support and join in our vaccination programme.

May 9, 2021