HONG KONG (BLOOMBERG) - Thousands of bars and restaurants in Hong Kong will shut as some of the world's toughest Covid-19 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 to cut costs, said Mr 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 will not be enough to stem losses.
Hong Kong ordered bars to shut in early January and banned in-restaurant dining after 6pm as part of a swathe of restrictions to stem a surge in infections.
While the city's four-digit daily case numbers still pale in comparison to other parts of the world, the authorities have imposed increasingly strict measures in pursuit of a Covid-19-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 limit restaurants to two patrons per table, will last until at least April 20.
A prolonged loss of business may see half of Hong Kong's 2,000 bars and 4,200 hair salons fold, according to Mr Allan Zeman, chairman of Lan Kwai Fong Group, a major landlord and catering services operator, and Hong Kong Hair and Beauty Merchants Association president Kong Shu Iam.
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 start only in April, near the end of the restriction period, and it is 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 six months will not be effective as businesses are earning almost no income and the measure will not change the amount of rent they eventually need to pay, Mr Zeman and Mr Kong said.
Finance Secretary Paul Chan said on Wednesday that economic growth will slow to 2 per cent to 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 Mr Wong.
The Hong Kong Retail Management Association said outlets are seeing the biggest hit since the pandemic began.
It has 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 towards living with the coronavirus.
Mr Michael Tien, a lawmaker and founder of clothing retail chain G2000 Apparel, called for a nine-day citywide lockdown rather than prolonged social distancing restrictions.
Hong Kong Chief Executive Carrie Lam said this week that she is not considering a total lockdown.
Mr Tien said in an interview with Bloomberg TV on Wednesday: "Opening the stores or not opening the stores does not mean that much any more."
He has reported 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," he added.
