Hong Kong hands out consumption vouchers to retain foreigners. Will it stem brain drain?

Under an unprecedented scheme introduced last month, Hong Kong has expanded its consumer voucher program to include expatriates and foreign students in an effort to encourage spending and retain talent. The benefits, however, remain out of reach for domestic helpers, who are essential to the economy but severely undervalued.

When announced in February, the program was only available to permanent residents. They would receive a total of HK$10,000 ($1,274) in two installments, said the city’s Financial Secretary Paul Chan Mo-po (陳茂波 Chén Màobō). But in June — two month after the first batch of coupons were issued — the government decided to revamp the eligibility requirements for the second installment to include people who are not yet permanent residents but eligible to pursue.

The new policy meant that more than 300,000 people, most of whom are foreign professionals, entrepreneurs, and students, could receive HK$5,000 ($637). Among the newly eligible, at least one-third are mainlanders who moved to Hong Kong through designated channels, such as the Admission Scheme for Mainland Talents and Professionals (ASMTP), according to statistics from the Immigration Department.

This is the first time the Hong Kong government has dispensed financial subsidies to studying and working visa holders. Since 2011, the city has offered five monetary handouts under the voucher program, three of which were conducted during the COVID-19 pandemic. In 2020, HK$10,000 was disbursed to the eligible residents’ bank accounts.

Last year, in a bid to shore up its flagging economy battered by the pandemic, the government issued electronic vouchers (e-voucher) worth HK$5,000, whose usage was restricted to local businesses. The voucher scheme ended up boosting Hong Kong’s gross domestic product (GDP) by 0.7 percent at the end of the year. This year, the government hopes that the program will not only produce a similar result amid its economic downturn and sluggish consumption, but also halt a mass exodus of professionals caused by stringent COVID curbs.

“(Including non-permanent residents in the scheme) is beneficial to retain talents and increase their sense of belonging,” said Jessie Wong Hok-ling (王學玲 Wáng Xuélíng), the Head of Budget and Tax Policy Unit, during an interview with Now TV, a local news website.

“I am overjoyed to receive the money,” said Evan Hong, a mainland junior student majoring in Quantitative Finance and Risk Management at the Chinese University of Hong Kong (CUHK). He thought it demonstrated better social welfare in Hong Kong, and “it definitely makes me consider staying for permanent residency more positively.”

However, the city’s appeal to mainlanders as a place of long-term residence seems to be on a decline in the past two decades. From 2003 to 2012, around 57,000 mainlanders were admitted through ASMTP, but only 12% of them decided to stay for seven or more years.

The shrinking space for civil society and coronavirus restrictions in Hong Kong have worsened the long-simmering brain drain, with around 178,000 people leaving the city in 2020 and 2021, according to the Census and Statistics Department.

Many of them were locals with British National Overseas (BNO) passports, a document issued to Hong Kong residents born before the handover of the territory from the UK to Chinese sovereignty in 1997. In 2021, in response to Beijing’s sweeping National Security Law, the UK launched a special immigration program that delivers a pathway to full citizenship for millions of Hong Kong citizens with B.N.O. passports. Since then, over 123,400 people have applied for BNO visas and 92% have been approved.

The political climate is likely to drive more people to leave, and Jessica (alias), a year-three mainland student at CUHK, is one of them. Although she appreciated the voucher, she said she couldn’t see herself staying in Hong Kong after graduation for the sake of her future kids. “I don’t want to see my children heading to West Kowloon Station with little red flags saying ‘Welcome! Welcome!’” Jessica said.

She was referring to President Xí Jìnpíng’s 习近平 visit to Hong Kong on June 30, when he arrived at the West Kowloon Station for the city’s 25th anniversary of its handover to China sovereignty. Local officials arranged a group of schoolkids to greet Xi, an activity that was described as a “rare honorable mission.” Jessica also mentioned that the Ph.D. programs in Hong Kong are not competitive enough. Therefore, she was considering applying to universities in England or Switzerland.

But for people outside the Greater China region, the political environment in Hong Kong seems to be less of a concern. “HK$5,000 is not enough as a monetary motivation. It’s less than what I received in the U.S. for COVID relief checks,” said Joseph, a 29-year-old American project manager who has lived in Hong Kong for three years. However, because he has a steady career and a bevy of friends in Hong Kong, Joseph considers it “inconvenient” to move away and plans to stay in the city for four more years to obtain permanent residency.

Chelsea, a 30-year-old actuary, held a similar view to Joseph concerning the voucher. Born and raised in Hebei province, Chelsea moved to the U.S. for college and stayed there for nine years before moving to Hong Kong in 2020. Drawn by Hong Kong’s low tax rate and investment freedom, she plans to stay in the city for the long-term.

“At first, the move was caused by my husband’s relocation for work. But gradually I found life in the city very convenient, with advanced subway and pervasive stores,” she said. “Back in the U.S., I need to drive wherever I go, and I have to prepare a week’s groceries in advance.”

While free coupons brought joy to many, additional vetting left some bitter and disappointed. According to information provided by the authorities overseeing the Mandatory Provident Fund, Hong Kong’s official pension scheme, 240,000 people are disqualified from the voucher program because they withdrew their retirement benefits early, which is seen as an indicator of them having left or intending to leave Hong Kong permanently.

In addition, 400,000 foreign domestic helpers, mostly Filipinos and Indonesians, are left out of the scheme because they are not permanent residents — a status unattainable for them no matter how many years, even decades, they live in the city. In an interview with the Hong Kong Free Press, Eman Villanueva, spokesperson of Asian Migrants’ Coordinating Body, the first and biggest coalition of migrant worker associations and unions in Hong Kong, called out the Hong Kong government for its “hypocrisy” and slammed it for not recognizing domestic workers’ contributions, especially during the pandemic. According to a report in 2018, domestic workers contributed an estimated $12.6 billion to Hong Kong’s economy, representing 3.6% of the city’s GDP.