HK businesses are suffering but will rebound, head of commerce body says

The Hong Kong economy has been badly hurt by the violent protests since demonstrations broke out in early June, with small and medium-sized enterprises being the hardest hit, and the retail, catering and tourism sectors the biggest victims.

While offering hope that the impasse will end soon, Aron Harilela, chairman of Hong Kong General Chamber of Commerce, is confident that Hong Kong will bounce back quickly after the protests are over because the city has very good fundamentals.

Talking about the negative impacts brought about by the violent protests, Harilela said the disruptions at the airport last week were really terrible. For the second quarter, GDP grew modestly by 0.5 percent. "The situation could get worse as we don't know how long the protests would last," he told China Daily.

"The SMEs have the biggest fears because they rely heavily on cash flows. If their cash flows dry up, their businesses could close down and their livelihoods are at stake. If businesses shut down, that would result in unemployment. This is the worst situation Hong Kong could face as we are lucky that we have virtually zero unemployment for a long time."

On Monday, the Census and Statistics Department announced that the seasonal jobless rate from May to July was 2.9 percent, slightly up from 2.8 percent for the April to June period. The upward trend was attributed to diminishing trade and continuous sluggish domestic consumption.

"I am in the hotel industry. It is rather sad that hotel occupancy is less than half (lately), while room rates are 30 percent down. With over 20 countries and regions having issued travel advisory, foreign tourists don't want to travel to Hong Kong. They have cancelled their flights, they have changed their holiday plans. Many industries such as tourism, retail and catering are hurting badly," he said.

Many foreign businessmen have also cancelled their trips to Hong Kong. "On Wednesday, I have a meeting with local investors who are thinking about moving their money out of Hong Kong," he added.

Aware that US President Donald Trump has recently said a lot about Hong Kong, Harilela said "We know that President Trump wants to destabilize the business sector in China and some of the events in Hong Kong worked in favor of destabilization.."

Harilela is optimistic that Hong Kong's economic future will turn around.

"I believe the business environment will improve six to 18 months after the protests are over. Hong Kong will bounce back quickly because it has very strong fundamentals, namely: rule of law, an independent judiciary, and free flow of information, people and capital. It will not happen this year but Hong Kong will certainly bounce back next year," he said.

Time for dialogue, law and order

Harilela said protests have continued despite Chief Executive Carrie Lam Cheng Yuet-ngor saying on July 9 that the extradition bill was dead. Right now the most important thing is to maintain law and order, and then to start a dialogue. As a chamber the HKGCC will be happy to be a platform in any way to be able to help that dialogue and that communication, he said.

Referring to the growing use of violence, Harilela stressed that disruptions at the airport on Aug 12 and 13 must be condemned, at which tourists were fearing for their lives, police officers were assaulted and the lives of innocent bystanders were put into danger.

Radical protesters paralyzed the Hong Kong International Airport for two days in a row, causing cancelation of 979 flights, according to the Airport Authority. A violent clash took place on the evening of Aug 13, where a mainland tourist and a reporter from Global Times were roughed up and assaulted by radicals.

"That must be condemned," he said. "But this is a turning point because a lot from the majority do not want to associate with the violent minority, therefore we must make a division between the violent minority and the peaceful majority."

It is not only about the bill only as there are a lot of other issues such as housing, quality of life and the wealth gap. "They all played a part in the frustrations of people in the streets and that suddenly flared up," he said.

He also expressed sympathy for the city's police force. "We have a very small police force, with a little over 30,000 personnel. They have been on the street for 11 weeks but they are not riot police, and I am sure they must be very tired," he said, adding it is entirely unacceptable in a decent society with rule of law that police officers and their families are subjected to cyber bullying.