Answer:
1. Stabilizing the property market:
Since the beginning of the economic turmoil, the market values of property and financial assets had dropped rapidly. Both the Singapore and Hong Kong plans proposed to suspend government land sales until the end of the ®scal year. To further reduce property supply, the Singapore plan proposed measures to permit and encourage developers to defer the completion of construction projects. On stimulating
demand, stamp duty was deferred for purchases of uncompleted properties. In addition, the Hong Kong government used demand-side strategy by raising the number of people eligible for the starter loan scheme and the home purchase scheme.
2. Stabilizing the financial sector:
The Singapore plan aimed at encouraging banks to make adequate provisions for loan exposure to the region. The plan lifted a 3% limit on tax deduction for general provisions made by banks and merchant banks. Stamp duty on contract notes was also suspended. The Hong Kong plan proposed tax exemption for local interest earnings in order to encourage repatriation of offshore deposits, estimated at HK$200 billion. This strategy would provide liquidity for the banking sector and increase the supply of Hong Kong dollars.
3. Stimulating business activities:
Both plans proposed tax rebates to reduce business costs. The Singapore plan proposed to add a 40% tax rebate on top of the 15% provided in the budget for commercial and industrial properties. Rental rebates were provided for tenants and leeses of government-operated industrial estates. Other incentives included reduction and rebates of tariff and suspension of car park surcharge. The Hong Kong plan also proposed cost reduction measures, including rate rebate and lowering diesel duty. Charges paid by importers were also reduced. The plan also aimed at helping small and medium-size businesses to obtain loans. This strategy might have reduced the rate of bankruptcy and assist the middle-class unemployed to start their own businesses, which was encouraged by the Hong Kong government since the unemployment rate started to climb.
