Executive Councillor Jeffrey Lam has praised a series of initiatives in Chief Executive John Lee’s latest policy address, describing them as "practical and down to earth" measures designed to support Hong Kong’s 360,000 small and medium-sized enterprises (SMEs) through a period of economic restructuring.

Lam said SMEs are currently grappling with significant challenges, including rising operating costs, persistent cash flow issues and the difficult transition to digitalisation – a move often hampered by a lack of necessary skills and capital.

He expressed strong support for key government actions, including the two-year extension of a scheme providing an 80 percent guarantee on credit facilities and the extension of the principal moratorium period.

"With the bank guarantee, it gives more, well, you may say guarantee, just in case the SME is unable to pay back the bank and means the government will guarantee that, so that would also give a bit of relief to the SMEs to get lending from the bank," he said.

"The principal moratorium... under the scheme, with the approval of the authorities, enterprises... they only have to pay the interest payment and not to pay the principals, so it helps with their cash flow."

While acknowledging the current difficulties, Lam, who is also a Business and Professionals Alliance lawmaker, struck an optimistic note for Hong Kong’s medium-term economic outlook.

He anticipates a recovery driven by increased investment and a resurgence in tourism, which would spur job creation, improve wages and boost overall consumer spending.

"I see light at the end of the tunnel. Things will turn around next year with more investment coming to Hong Kong, and that will create jobs and help business," he said.

"More tourists and also business people are coming back here, so that will also help the local economy. I really hope that things will turn around after Christmas or after Chinese New Year.

"But from now until the end of the year, it's still going to be very difficult."

Addressing the lack of sweeteners for individuals this year, Lam noted the city's current budget deficit.

"If everybody just rely on the sweets, we get too fat and then that's not healthy," he added.