Additional HK$500m to Boost Local SMEs

Source: China Daily

The Trade and Industry Department (TID) yesterday announced that an additional HK$500 million will be injected into the Small and Medium Enterprise (SME) Funding Scheme to boost the service industry.

The SME Funding Scheme was set up in December 2001 to help the SMEs cope with the difficulties in the aftermath of the Asian Financial Crisis.

The plan includes the SME Loan Guarantee Scheme (SGS), the SME Export Marketing Fund (EMF) and the SME Development Fund (SDF).

About 90 percent of the funds have been used and approximately 49,000 SMEs have benefited from the plan as at last month. The TID expected to accept 20,000 more successful applications.

Of the HK$500 million funding, HK$150 million will go to the SGS for bad debt provision, and HK$350 million to the EMF and the SDF.

Thus the maximum amount of bank guarantee for an SME under the SGS will be raised to HK$6 million from HK$4 million, including the guarantee ceiling of HK$5 million (increased from HK$2 million) for Business Installations and Equipment Loans and HK$1 million guarantee ceiling for the new Working Capital Loan (WCL).

The government initially considered mainly applications from the manufacturing industry and the service industry was left in the cold.

"To target and help the service sector which found it difficult to apply for the SGS, the WCL is now available for different sectors," said Director-General Joseph Lai.

Under the EMF which aims at helping SMEs' participation in export promotion activities, accumulate grant ceiling for each SME is increased to HK$100,000 from HK$80,000.

"SMEs can also apply to cover part of their expenditure for advertisements on trade promotion publications," Deputy Director-General Ngai Wing-chit said.

SMEs welcomed the enhanced measures, but said the assistance was still insufficient.

"SMEs make up 98 percent of Hong Kong firms and the HK$500 million was relatively inadequate ," Hong Kong Small and Medium Enterprises General Association chairman Chan Shan-ho said.

He said the participating lending institutions under the SGS processed the applications slowly. "The documents required in the applications for other funds are also complicated," he added.

"We appreciate the government's concern, but it is also important to look into our difficulties," he said.

Hailing the enhanced funding measures for the service sector, Hong Kong SME Development Association chairman David Kam said: "The capital injection will be in vain if the criteria for applying are still as strict as before."

The government should explain and promote the enhanced measures to the SME associations, he added. (By Peggy Chan)

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Editor: Chen Wenli