In Hong Kong, there is such a thing as a free lunch
- E-voucher handouts by the government have won near-universal praise for boosting a fragile, pandemic-hit economy, but how long they will last is anyone’s guess
Economists may be divided over the efficacy of giving handouts to boost consumption, but everyone loves free money. The feel-good factor may be hard to quantify. The Hong Kong government, though, must have taken that into consideration when it first launched the consumption voucher scheme back in 2021, when the economy was hit hardest by the Covid-19 pandemic.
Today, the economy is recovering, but slowly. Such handouts may not be a sustainable solution. Even so, businesses need all the help they can get. To manage expectations, Financial Secretary Paul Chan Mo-po has declined to make them a regular exercise. He has not, however, ruled them out further down the road.
The latest instalment of e-vouchers is worth HK$2,000 each for permanent residents. They come after the last HK$3,000 paid in April and will be available by mid-July.
When the scheme was first launched two years ago, the payout was HK$10,000. The cutback to HK$5,000 is understandable as the economy is picking up. The recovery, however, has not been evenly spread.
Hong Kong e-vouchers coming from July 16 but a long-term scheme ‘difficult’
Consumer sectors such as hospitality, restaurants and shops have been hit hardest. Many are expected to roll out matching promotions to encourage spending. A boost to consumption is crucial to keep the momentum of recovery going.
Voucher-holders have until the end of October before the coupons expire, so they can have a whole summer to spend the money. The exercise is expected to give the economy a HK$13 billion spending boost.
On an interesting note, about 170,000 out of 240,000 people who were disqualified last year from claiming the vouchers have become eligible again. They were originally thought to have left Hong Kong after they were found to have emptied their Mandatory Provident Fund accounts.
That may mean a number of them moved overseas such as relocating to Britain using their BN(O) passports – which are no longer recognised by the Hong Kong and central governments – have returned.
After seeking a better life elsewhere, some may have found that there is no place like home with a government that happily gives away free money.
