Governments in Asia are starting to assist businesses decimated by the deadly SARS outbreak with emergency packages to help the worst affected sectors.
Singapore announced relief measures worth S$230 million (US$130 million) on Thursday. The other most badly affected economy in the region, Hong Kong, is expected to follow suit as soon as this coming week and Taiwan has stepped in to offer support to local airlines and tourism firms.
The travel and tourism industries have borne the brunt of the severe acute respiratory syndrome (SARS) outbreak since it started in southern China's Guangdong province late last year and spread to Hong Kong in February before being carried around the globe by air travellers.
Governments, already under severe budget pressure after regional economies were hammered by the regional financial crisis five years ago and 2001's global slowdown, are finding themselves again searching for band-aids for their bleeding economies.
Regional airlines, still recovering from the 2001 slump, have been among the first to send out an SOS, saying up to 50 percent of their flights have been suspended.
"Airports and air traffic management services can and must reduce their charges, rents and other burdens which they impose on the airlines regardless of the fluctuations of the markets," said Richard Stirland, director-general of the Association of Asia-Pacific Airlines.
Such steps were vital to the survival of regional airlines, he said.
Singapore, which like Hong Kong relies heavily on tourism and its role as a regional transport hub, has cut its economic growth target to 0.5 percent to 2.5 percent this year from 2 percent to 5 percent because of the impact of SARS.
Its assistance measures focus on the devastated tourism industry, which suffered a 61 percent plunge in visitor arrivals in the first 13 days of April from a year earlier. Hotel occupancy rates fell to 20 percent to 30 percent from normal levels of at least 70 percent.
The package includes rebates for airport landing fees, a reduction of the levy paid by employers for their foreign workers and property tax relief for shops, hotels and restaurants. It will take effect in May and last until the end of the year.
"This is an immediate response and now we will have to watch very carefully how the situation develops and if there is a need to do more later and there is justification to do more later, we are able to do so," Deputy Prime Minister and Minister of Finance Lee Hsien Loong said.
Hong Kong carriers
In Hong Kong, the two local airlines Cathay Pacific and Dragonair have cut flights by more than 40 percent, hotels, restaurants and bars have emptied and retailers claim sales have been cut in half since the last half of March.
Analysts have cut their economic growth forecasts for Hong Kong by around one percentage point because of the SARS.
Hong Kong Chief Executive Tung Chee-hwa said last week the government will announce relief measures "very soon" and there is speculation they will be released during the coming week.
Industry groups have proposed a raft of measures to the government, including the temporary lowering of pension fund contributions and a delay to previously announced rises in corporate and personal tax rates.
Attempts by the government in last month's budget to rein in the spiralling budget deficit are being frustrated by SARS.
The Hong Kong government has forecast a US$68 billion (US$8.7 billion) budget deficit for the current year to March but Daniel Chan, senior economist at DBS Bank, said the virus outbreak is likely to swell the deficit to between US$80 billion and US$90 billion.
Singapore's government said a respiratory illness that has forced it to quarantine more than 1,500 people and slash its economic growth forecast in half may cost the country about S$1.5 billion (US$848 million).
Singapore cut its economic outlook two days ago after severe acute respiratory syndrome emptied hotel rooms and forced Singapore Airlines Ltd. and other carriers to reduce flights.
While the fear of contracting SARS is keeping visitors and foreign investors away, quarantine orders have forced some workers to stay home, further damping economic growth, said Prime Minister Goh Chok-tong.
"SARS can kill the economy and our job now is to make sure the economy doesn't go into a tail spin," Goh told reporters at a press conference. "If we fail to contain SARS in Singapore, it would become the worst crisis the country has faced."
The disease has killed 16 people in Singapore, the third-highest total worldwide, and infected as many as 172. It has also hurt the nation's tourism industry, which makes up a tenth of the island's US$88 billion economy. The number of visitors fell 61 percent in the first 13 days of April, pushing hotel occupancy rates as low as 20 percent from last year's 74 percent average.
Quarantine
In the past month, Singapore had shut schools and said it would quarantine some foreign workers who traveled to SARS-affected places, such as China and Hong Kong, to contain the illness.
"It's a very difficult fight but, with proper procedures, we can contain it and prevent it from getting out of control," Goh said.
Those measures include changing laws to allow the government to fine people who break quarantine orders without having to take them to court, Goh said.
Those who can't pay the S$5,000 fine will be sent to isolation wards in prison, he said.
Singapore's government set up electronic cameras in the homes of those under quarantine after 12 people broke isolation orders.
Repeat offenders are fitted with electronic wristbands that alert authorities if the person leaves their home.
"Like it or not, people understand fines," said Goh.
Singapore imposes fines for offences ranging from littering to not flushing public toilets.
"The measures may be a little irksome, but if you don't, you lose control -- and the hospital system may collapse."
Singapore cut its economic growth forecast two days ago to between 0.5 percent and 2.5 percent, from an earlier estimate of between 2 percent and 5 percent.
SARS has become a "crisis of fear" for Singaporeans and visitors, with the disease largely contained in hospitals, Goh said. The nation's hospitals are the source of 90 percent of SARS infections. The government hopes to reduce the incidence of transmission between patients and hospital workers, Goh said.
Leaders from countries in the Association of Southeast Asian Nations will meet in Thailand on April 29 to discuss ways to combat the disease, including measures to ensure travelers leaving any of the 10 member countries are free from SARS, Goh said.
Leaders of member countries, which include Indonesia, Malaysia and the Philippines, will meet officials from China, Hong Kong, Japan and South Korea once an agreement on travel measures has been reached, Goh said.
"It has to go beyond the Singapore context," he said. "We have to approach this on a regional basis and work out cross-border rules."
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