How Hong Kong Is Catching Up To Singapore In Virus Stimulus
An employee uses a machine to count Chinese 100 yuan banknotes in Hong Kong, China. (Photographer: Paul Yeung/Bloomberg)

How Hong Kong Is Catching Up To Singapore In Virus Stimulus

(Bloomberg) --

Hong Kong is catching up with global peers in its fiscal response to the coronavirus outbreak with this week’s announcement of an “unprecedented” HK$137.5 billion ($17.7 billion) stimulus package focused on avoiding mass job losses.

The fresh stimulus raises inevitable comparisons with spending measures unveiled by its geographic neighbor and financial-hub rival Singapore, with the two governments among the first to confront the coronavirus threat before its wider spread beyond Asia.

When it comes to total spending, Singapore remains ahead but Hong Kong is closing the gap, economists say. Singapore’s relief spending is equivalent to about 12% of gross domestic product, while the latest additions bring Hong Kong’s outlay to about 10% of GDP.

How Hong Kong Is Catching Up To Singapore In Virus Stimulus

“All in all, it seems Singapore is being more proactive,” said Alicia Garcia Herrero, chief Asia Pacific economist with Natixis SA. One factor: Hong Kong appears to be moving more slowly in getting stimulus out the door and into the economy, particularly with its HK$10,000 cash handout not expected to materialize until the summer, she said.

Singaporeans will start receiving cash from the handout programs as soon as this month, the government said.

Both are in good position to support their economies via ample reserves, while both are also particularly vulnerable due to reliance on exports, Tuuli McCully, the Singapore-based head of Asia Pacific economics at Scotiabank, said in an email.

In spending on job retention, the Hong Kong government’s job-security program is offering wage subsidies for employees for six months at 50% of salary. Singapore is offering employers between 25% and 75% subsidies on wages for nine months, capped at the first S$4,600 of a citizen or permanent resident’s monthly salary. The subsidy provided will depend on the sector, and payouts will be made three times this year.

While fiscal measures in the two territories are “broadly similar,” Singapore faces a “larger risk of widespread retrenchments and bankruptcies” as it has instituted a one-month shutdown of non-essential services that covers about 30% of GDP, said Chua Hak Bin, a senior economist at Maybank Kim Eng Research Pte. in Singapore.

By comparison, “Hong Kong has not resorted to such stricter measures, with restaurants and retail still open, as the Covid spread has been better contained,” Chua said. Social gatherings of as many as four individuals are still allowed, and a narrower group of pubs, cinemas, gyms and other businesses have been shut.

Here’s a closer look at what the two governments have announced so far and how they compare:

Total Spending Announced This Year

Hong Kong

  • Hong Kong has unveiled about HK$287.5 billion of direct virus-related aid following the announcement of Wednesday’s measures.
  • The HK$30 billion anti-epidemic fund announced in February included cash for hospitals and virus containment efforts, as well as subsidies for industries.
  • This year’s budget, announced Feb. 26, included a HK$120 billion relief package centered on a HK$10,000 handout to Hong Kong permanent residents age 18 and older, but the money isn’t expected to arrive until the third quarter or later. That package came after the city slid into recession last year following months of anti-government protests.
  • Hong Kong businesses and vulnerable social groups also received about HITS6 K$35 billion in stimulus and livelihood spending during the months of protests that rocked the city. Economists criticized those efforts as “peanuts” given the city’s ample cash reserves.


  • The city-state’s total virus-related spending from three tranches of aid is close to S$60 billion ($41.8 billion).
  • Singapore was among the first governments in Asia-Pacific to unveil special stimulus to counter losses from the outbreak. It announced S$6.4 billion in direct medical-response efforts and support for households and businesses as part of its annual budget Feb. 18.
  • Amid pleas from businesses, the government rolled out the bulk of its stimulus in a S$48 billion package March 26, including more wage subsidies and a freeze of government fees.
  • The third package, for S$5.1 billion, raised household cash handouts to S$600 for each Singaporean adult and provided additional relief to businesses, especially tourism-related businesses and restaurants.

Other Fiscal Measures

Hong Kong

  • Hong Kong’s government, often criticized for conservative spending given ample reserves, is being forced to shift to a more aggressive approach.
  • This spending will result in a record HK$276.6 billion budget deficit for the 2020-2021 fiscal year, Chief Executive Carrie Lam said Wednesday.
  • The latest relief package includes a 20% discount on transit fares with the government and MTR Corp. sharing the cost, additional rent reduction on government properties, and plans to create 30,000 jobs including civil-service positions and internships over the next two years.
  • Other relief measures in the February budget package include low-interest business loans fully guaranteed by the government, a waiver of business registration fees, subsidies on utility bills and tax breaks for individuals and businesses.
  • To aid home buyers and reduce interest-rate volatility, the Hong Kong Mortgage Corp. will launch a pilot program offering fixed-rate mortgage loans through banks.


  • Singapore has temporarily waived the business levy for employing foreign workers, extending the relief through April as part of the third package.
  • Officials have pledged legislation to ensure that a property-tax rebate announced earlier this year would filter through to tenants -- responding to a plea from the restaurant community.
  • Singapore has enhanced loan-financing programs, particularly for small and medium-sized enterprises. That has boosted the government’s risk share of loans initiated from April 2020 to 90%, from 80%.
  • Government fees and charges have been reduced or waived, and firms’ income tax payments have been deferred. Self-employed individuals will receive special income relief.

Non-fiscal Measures

Hong Kong

  • Financial Secretary Paul Chan has repeatedly called on landlords and big developers to take some “social responsibility” and give tenants a break on rent. He repeated his demand in a recent blog post while warning it could take six months to reverse the economic impact from the outbreak.
  • Railway operator MTR Corp. and the Airport Authority Hong Kong, the former majority owned and the latter wholly owned by the government, agreed to reduce rents in October.


  • As Singapore has tightened social-isolation measures, the government has pledged more resources for households, offering public pickup of government-issued hand sanitizer and masks.

Monetary Measures

Hong Kong

  • The Hong Kong Monetary Authority is somewhat hamstrung given the local currency’s longstanding peg to the U.S. dollar.
  • The de facto central bank followed the Fed in twice reducing base lending rates last month, while cutting bank capital buffers to free up cash and stoke lending.
  • The HKMA has more recently cut regulatory reserves and moved to assist banks in managing liquidity. Recent moves have helped to soften the Hong Kong dollar.


  • The Monetary Authority of Singapore, which typically meets twice a year and uses the currency exchange band as its main policy tool rather than interest rates, has weighed in with its virus measures while stating that fiscal policy will take the primary role in this crisis.
  • In an unprecedented easing move at the end of March, the MAS lowered the midpoint of the currency band and reduced the slope to zero. This implies the central bank will allow for a weaker exchange rate to help support export-driven growth and ward off deflationary risks.
  • The MAS has eased banks’ capital rules to boost lending.

©2020 Bloomberg L.P.

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