Thousands of bars and restaurants in Hong Kong will close 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, nearly a third of Hong Kong’s restaurants, plan to close for months to cut costs, said Simon Wong, chairman of the Hong Kong Federation of Restaurants and Allied Trades. More than 1,200 restaurants have already suspended operations and 300 have closed permanently, he said. And there are fears government stimulus will not be enough to stem the losses.
Hong Kong ordered bars closed in early January and banned restaurant dining after 6 p.m. as part of a series of restrictions aimed at stemming a spike in infections. As the city’s four-digit daily case count remains pale in comparison to other parts of the world, authorities have imposed increasingly stringent measures in pursuit of a Covid Zero strategy that keeps it in line with mainland China but makes it a global outlier.
The social distancing rules, which have also closed hair salons and beauty salons and limited restaurants to two customers per table, will last at least until April 20.
A prolonged loss of business could see half of Hong Kong’s 2,000 bars and 4,200 hair salons shut down, according to Allan Zeman, chairman of Lan Kwai Fong Group, a major restaurant service owner and operator, and Kong Shu-lam, president of the Hong Kong Association of Hair and Beauty Merchants.
A relief package announced Wednesday could be too little, too late, they said.
The government’s HK$66.4 billion ($8.5 billion) plan to offer eligible residents a HK$10,000 spending voucher will not start until April, towards the end of the restriction period , and it is uncertain whether the city has brought the outbreak under control by then. A fund to provide one-time grants to affected businesses – equivalent to HK$500,000 for a restaurant and HK$50,000 for a hair salon – could barely cover costs, including rent on the real estate market on most expensive in the world, they said. .
Planned legislation that would allow tenants to delay paying rent for up to six months will not be effective as businesses earn almost no income and the measure will not change the amount of rent they will eventually have to pay, said Zeman and Kong.
Finance Secretary Paul Chan said on Wednesday economic growth would slow to 2%-3.5% this year from 6.4% in 2021. Hong Kong’s small and medium-sized businesses, which make up 98% of establishments commercial and 45% of jobs in the private sector, bear the brunt of tougher measures.
Restaurant sector activity is around 75% below normal and could face a 15% unemployment rate by March, according to the industry association’s Wong. The Hong Kong Retail Management Association said retail outlets have been hit the hardest since the pandemic began.
It was 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 of a similar scale head into life with the coronavirus.
Michael Tien, a lawmaker and founder of clothing retail chain G2000 Apparel Ltd., called for a nine-day citywide lockdown rather than extended social distancing restrictions. Hong Kong Chief Executive Carrie Lam said this week she was not considering a full lockdown.
“To open or not to open stores doesn’t mean much anymore,” Tien said in an interview with Bloomberg TV on Wednesday, reporting a 70% drop in sales. “If this continues for another few months, we will see a lot of bankruptcies and local economies will be hit so hard it is beyond imagination.”