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Following is a speech by the acting Secretary for Trade and Industry, Mr Tam Wing-pong, at the Launching Ceremony of Credit Guarantee Scheme held this (Wednesday) afternoon:

Chairman Fang, ladies and gentlemen,

I am very delighted to see so many distinguished guests from the business and banking sectors coming to join us in this Ceremony to support the launching of the Credit Guarantee Scheme.

Credit Guarantee Scheme is one of the new initiatives to help our industries and businesses stated in the Chief Executive's first Policy Address. The idea of the scheme was first put forward by the Small and Medium Enterprises Committee of the Government.

Financing has all along been a big problem faced by Small and Medium Enterprises (SMEs). Compared with larger enterprises, it is more difficult for SMEs to secure loans from a lending institution due to their lack of long-term credit record and insufficient collateral. If we can assist SMEs in solving their problem on financing, they will be better equipped to open up new markets and able to invest more on technology application and staff training, thus increasing their competitiveness in the market.

In February, the Finance Committee of the Provisional Legislative Council approved a provision of $500 million for the establishment of the 'Credit Guarantee Fund.' After months of active preparation, I am pleased to announce here that the Credit Guarantee Scheme is now officially launched. The scheme will be administered by the Hong Kong Export Credit Insurance Corporation. Its target participants are those SMEs engaged in the export business. The risk of the loan guaranteed will be shared between lending institutions and the HKECIC through the Credit Guarantee Fund to facilitate SMEs to secure loans more easily. The scheme is the first of its kind in Hong Kong, and will be reviewed comprehensively after one year of operation to ensure that it meets the financial needs of SMEs.

As a matter of fact, the success of the scheme depends not only on the government's all-out promotion efforts but also on the active participation of the banking sector. As such, I am more than delighted to learn that many local lending institutions have agreed to join the scheme.

With more than 280,000 in number, the majority of the firms in Hong Kong (98%) are SMEs. With the prevailing uncertain outlook of our economy, we have to strengthen our effort to support the further development of SMEs, which would in turn increase the competitiveness of our manufacturing and service industries, and lead to a faster recovery of our economy. The Credit Guarantee Scheme is just one of our supportive measures for SMEs. We provide many services and facilities through various channels in order to create a business-friendly environment for different sectors, especially the SMEs.

For example, the Industry Department set up the Business Licence Information Centre (BLIC) last year to provide free one-stop information service for government licenses, permits, certificates and approvals that businesses are required to have in order to operate. This has significantly reduced the time and resources necessary for SMEs to start a new business or expand their operation.

Besides, useful information is also provided to SMEs via the Internet. In fact, most of the government departments have already set up their homepages on the Internet to introduce their services to the public. A total of 480 types of forms from 35 government departments most commonly used by the public are now available on the Internet, and another 180 types of forms from 14 departments will be available soon.

The SME Committee has also published a directory free of charge to provide information to SMEs on various supporting services and facilities, which are necessary for their operation and further development.

In addition to efforts by the government, many local trade and industrial supporting organizations have strengthened their services specifically cater for the needs of SMEs. For instance, the SME Centre under Hong Kong Productivity Council is charged with the duty to provide cost-effective, one-stop consultancy services on information access and productivity matters. Since its official opening in December 1997, the SME Centre has recruited 300 company members and organized 14 seminars for SMEs. The Centre is also planning to launch its business consultancy service and information technology demonstration service in the near future. Recently, Hong Kong Trade Development Council has set up its SME service stations in four districts where there is a wide distribution of SMEs. These stations are tasked to provide comprehensive services on commercial and trading information to companies of various kinds. The Council has also established an SME Training Centre running different tailor-made training programmes for SMEs.

Looking forward, we are now actively considering how to improve and strengthen our support to SMEs. One idea under consideration is to expand the Business Licence Information Centre and its scope of work so as to offer more supporting services, e.g. business consultancy services and supporting services for those who want to start a business or companies at their start-up stage. We are also considering conducting more researches on problems faced by SMEs, with a view to formulating supporting schemes that can better suit the developmental needs of SMEs.

Before I finish, I would like to take this opportunity to express my gratitude to all the organizations and individuals who have offered their valuable advice to the establishment of the Credit Guarantee Scheme. In particular, I wish to thank the SME Committee, the Hong Kong Association of Banks and the Deposit-Taking-Companies Association for their contribution and Industry Department and the Hong Kong Export Credit Insurance Corporation for their excellent preparatory work. I wish the scheme every success in the future.

Thank you.

End/Wednesday, June 3, 1998

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