Cash handoutAdvantages1. Contrary to what government officials speculate, economists do not think handing over cash to people will have minimal impact on inflation. Inflation is influenced mainly on external factors like currency fluctuations and prices of commodity, items we rely heavily from imports.2. Even if people would prefer receiving cash bounty over MPF savings, not all of them would be spending the cash they'll receive. Irina Fan Yuen-yee, a senior economist with Hang Seng Bank, agreed that only half the handouts would flow into the economy. If estimates were to come true, the impact on inflation would indeed be minimal.3. Qualified recipients ...view middle of the document...
There are no middle men involved like in the present PDS system where everything has to pass through a long chain and with every additional link the quality and quantity deteriorates.7. There are very less chance of corruption as the money is transferred directly.8. A new section of people are introduced into the banking system and banks may be encouraged to come with new micro-finance instruments and encourage poor people to save money9. Everybody gets the same amount of money - fair.Disadvantages1. With cash i hand, the appetite for locals to travel would increase the demand and push holiday packages higher. This phenomenon also applies to many other commodities from dining to personal consumption, and could make locals spend more than they really need to, thereby forgoing a prudent and efficient lifestyle.2. Since not everyone in Hong Kong will receive the amount, not everyone will enjoy the benefits but may carry the burden of adverse effects this government cash handout is going to bring. I think it's a bit unfair to expats who have stayed for less than six years but paid taxes or helped raise funds for charity, domestic helpers who have no chance of acquiring permanent residence by virtue of their jobs but contributed to the economy, albeit indirectly, and new migrants from China who may have difficulty in adjusting to the higher cost of living in Hong Kong.3. Certainly the cash handout by the government is a short-term solution to money problems.4. Inflation - the increment in the cash entitlement will have to keep pace with the rate of inflation in the country.
