Economy of Hong Kong Falls Victim to Disease

Jaime Sezto hasn’t had SARS, nor has either of her two business partners or the five employees in her small graphic design firm. But that hasn’t stopped the deadly virus from devastating her life.

Since the full weight of severe acute respiratory syndrome hit Hong Kong in mid-March, the firm’s once-brisk turnover of Asian designer T-shirts, trinkets and other tourist keepsakes has plummeted to near zero.

“There’s nothing to do,” Sezto said. “Nothing. I don’t know what the future holds for us.”

She is hardly alone.

As the numbers of new SARS cases and deaths in Hong Kong begin to level off and more residents dare to resume the semblance of a normal routine, many here find it hard to comprehend the economic wreckage the virus has wrought in a matter of weeks.

The strength of the territory’s currency has been downgraded and its projected growth slashed. Its budget deficit is up and its international image sullied. One of the world’s most efficient financial centers is today better known as a global health hazard.

Mainland China’s delayed response to its own, potentially far larger SARS outbreak has merely exacerbated Hong Kong’s plight.

“We’ve become a pariah,” said Christine Loh, a political activist and founder of the public advocacy group Civic Exchange.

Although the territory’s financial secretary, Antony Leung, insisted last week that it was still too soon to tally the economic costs of the outbreak, the World Bank was less inhibited. In a report Thursday, it suggested that SARS could lop a full 2 percentage points off the territory’s projected growth for this year -- an amount roughly equal to $3.2 billion.

Certainly epidemics have wreaked havoc in the past. The so-called Spanish flu outbreak in 1918 is believed to have killed 25 million to 30 million people worldwide -- including up to 80% of those in some U.S. Army units in World War I. Asian flu epidemics in the late 1950s and 1960s claimed tens of thousands of lives.

But with about 1,500 confirmed cases and about 120 deaths so far among Hong Kong’s 7 million people, it isn’t the sickness itself that has crippled the territory. The fear and panic are what have caused the real damage.

Containing this emotional response has become as much a priority here as combating the disease itself, as one of the world’s great cities struggles to regain its balance.

“It’s as much a confidence crisis as a medical crisis,” said David Dodwell, executive director of Golin Harris Forrest, a Hong Kong-based consulting firm.

Either way, the toll is considerable.

Hong Kong’s premier airline, Cathay Pacific, has cut 218 flights a day and is carrying about a third of its normal passenger volume. Some of the city’s most prestigious hotels are operating at less than 10% occupancy. Restaurants and large retail stores limped along through March and much of April.

“It’s really scary,” admitted Cathay Pacific spokeswoman Lisa Wong.

Hong Kong’s tourism industry -- which enjoyed a 19% growth in arrivals during the first 15 days of March compared with the same period last year -- fell by 10% for the second half of the month. With tour operators currently reporting drops of 80% to 90% in bookings, the only certainty is that April will be far worse, tourism officials say.

Only over Easter weekend was there a hint of revival, as good weather and a public holiday began to draw residents out of notoriously cramped living quarters.

For smaller businesses like Sezto’s, which are reliant on tourism but have few reserves to fall back on, the SARS crisis is existential.

“We have enough to pay the staff this month, but I don’t know how much longer we can last after that,” Sezto said. She added that her company, Sze Creations, might be able to survive for a few months with money from a $1.51-billion government emergency support fund.

“But what then?” she asked.

In a worrisome sign for the future, buyers for international brands have stopped coming -- at least temporarily. These individuals purchase billions of dollars’ worth of shoes, toys, apparel and electronic components from factories in mainland China’s neighboring Guangdong province and then ship them through Hong Kong to destinations around the globe.

“There’s been no real impact yet because there are a lot of orders still in the pipeline, but it raises questions about the future,” said Frank Martin, president of the American Chamber of Commerce in Hong Kong.

Public life has also wound down.

Earlier this month, schools were closed, and only some have reopened. Sporting events were scrapped. Trade fairs and exhibitions were postponed. Concerts were canceled (although the Rolling Stones donated $50,000 worth of surgical masks as a gesture of goodwill). Films played to near-empty houses.

At Hong Kong University, classes resumed in mid-April, but the language department canceled oral exams because they were judged to be impossible to conduct with both students and instructors wearing face masks.

While civic leaders here have high praise for medical personnel and the emergency measures taken to contain the SARS virus, many have said they’ve felt let down by the government’s failure to ease the public sense of panic.

“They haven’t managed the perceptions well,” noted Martin.

Many believe Hong Kong’s uninspiring chief executive, Tung Chee-hwa, simply failed to rise to the occasion.

Far from symbolizing strength and steady nerves the way former New York Mayor Rudolph W. Giuliani did in the days after the Sept. 11 terrorist attacks on his city, Tung and those around him have often seemed uncertain how to react.

A series of gaffes didn’t help. For example, a decision to send Tung’s wife, Betty, to distribute masks and disinfectants to residents of a working-class housing block was meant to boost public confidence. However, it had just the opposite effect when she showed up swathed in so much protective gear that she seemed more ready for space travel than an errand of mercy.

In addition, over a period of several days, various government officials came out with differing, yet equally unflattering, possible explanations for the territory’s most alarming SARS outbreak, in the Amoy Gardens apartment complex. Those theories suggested variously that the virus was spread by rodents, cats or cockroaches -- or by open toilets at a neighboring construction site.

A government report released April 18 pointed to a faulty sewage system in the building as the primary cause.

“Before it was over, they had given the international media enough stories to make Hong Kong seem like a ramshackle suburb of Mexico City,” said Dodwell.

The lack of an authoritative government voice has also allowed rumors to go unchecked, including one report that smoking could help prevent SARS (it can’t) and another that 100-story buildings in the city had been vacated because of SARS (there are no 100-story buildings in the territory and no smaller office towers have been closed).

“There were jokes going around that the government should try to hire Iraq’s former information minister,” said Loh, in a reference to the notoriously prevaricative Mohammed Said Sahaf.

Yet despite the crushing impact of the virus, Hong Kong residents -- as individuals and in groups -- have begun to regroup for a fight back.

Loh, for example, has launched a civic campaign called Fearbusters, drawing on residents from all walks of life in the territory to join in projects to clean up the city, rebuild public trust in daily life and prepare to welcome visitors again once they decide to come.

“There are things we can do today on our own,” she said. “Don’t ask the government. Just go out and do it.”

The price of entry to a Fearbusters half-day workshop Saturday: three new ideas.

Loh and others see opportunity in the present crisis -- one in which the entire community has a chance to bury differences and unite against a common enemy.

“It can be a nonpartisan experience to work together to clean the place up,” she said.

Looking beyond her own business troubles, even Sezto said she could see that possibility.

“If our hearts can link together,” she said, “then we can make Hong Kong a better place.”

*

Special correspondent Tammy Wong in Hong Kong contributed to this report.