Hong Kong’s Association of Banks recommends that customers avoid visiting bank branches in person over the next few weeks due to increased crowds during the post-holiday season. The public is encouraged to make use of online banking services for all applicable transactions in order to reduce the risk of contracting an infection.
Hong Kong’s major banks are requiring administrative staff to work remotely, while employees working in customer service positions are required to wear protective face masks at all times. Government civil servants have been instructed to work from home until at least February 16, while local schools have closed until March.
Hong Kong currently has 42 confirmed cases of infection (As of February 11, 2020) from the viral outbreak that originated in Wuhan, and government authorities continue to monitor the situation, preparing to take action as necessary. All travelers arriving in Hong Kong from Mainland China will required to quarantine at home for 14 days. Some border crossing checkpoints have been temporarily suspended and quarantine facilities have been set up by the Food and Health Bureau.
In Mainland China, where there are over 42,000 cases, more extensive public health measures are underway. The People’s Bank of China (PBOC) has announced plans to supply liquidity to the banking system through open market operations (the purchase and sale of financial instruments by the central bank in order to raise or lower funds in the system) and all other available policy instruments.
The China Securities Regulatory Commission (CSRC) strongly encourages remote trading across the system, with stringent hygiene standards to be maintained at all trading locations when on-site transactions cannot be avoided. The CSRC also expressed its view that investors should exercise restraint when assessing the economic impact and assume a long term investment-value perspective.
The State Administration of Foreign Exchange (SAFE) has temporarily set up an expedited stream for currency exchange for cases where the capital serves the purpose of managing the public emergency. All foreign exchange outlets will ease restrictions on foreign exchange for medical supply materials and donations made in overseas currencies. SAFE also raised the possibility of removing limits on overseas debts in order to invigorate cross border financing for businesses.
The China Banking and Insurance Regulatory Commission (CBIRC) advises banks to assist companies and individuals facing financial adversity by extending further credit and rescheduling loan repayments. The CBIRC also encourages insurance agencies to prioritize claims related to the health crisis. Furthermore, the commission urges the opening of expedited finance channels to raise relief funds for severely affected areas and charge reduced processing fees, streamline regulations and expedite government office operations.
The situation in China is expected to cause disruptions to business operations until the end of spring. Companies and enterprises operating in China should evaluate their networking infrastructure in order to enable staff to work efficiently from home. This involves consolidating a communications and cloud-based file management platform, while ensuring that staff are able to access networks from their personal computers. The psychological impact of the crisis is likely to be more severe than the medical emergency, and companies operating in China, particularly Foreign Invested Enterprises, should take all necessary measures to support the well-being of their staff, as the country faces its most severe domestic adversity in decades. Support and commitment during this crucial period will pay dividends in terms of long-term goodwill and market access, as well as being positioned to benefit from the economic recovery during the latter half of the year. The situation poses immense challenges for all parties involved nonetheless, and all business operations have to be evaluated for cost efficiency in order to counter reduced cash flow in the short term.
Companies should also take note that China’s State Tax Administration has extended the deadline for filing taxes for the month of January from February 17th, 2020, to February 24th, 2020, in order to accommodate the challenges that businesses face returning to work after the holidays and the unforeseen necessity of temporarily suspending office work.
The current situation is particularly trying, coming on the heels of 2019’s trade related adversity and political disturbances in the Hong Kong Special Administrative Region. The recovery will come nonetheless, and commitment will only pay off more as a result. Should you require any advice or assistance adjusting your business operations or streamlining your tax burden over the next few months, we can draw on our longstanding experience in Hong Kong and China, having navigated through the 1997 Asian Financial Criss and 2003 SARS crisis. We feel that businesses should take both precaution and action rather than make decisions out of panic, and we are committed to assisting in every possible way.