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The Chief Executive, Mr Tung Chee Hwa, met with representatives of the Chinese Manufacturers' Association of Hong Kong (CMA) today (Tuesday) and exchanged views with them on ways to provide facilitation for the small and medium-sized enterprises (SMEs) in developing high value-added activities which would create a substantial employment base for the local work force in the future.

The Chief Executive told the CMA representatives that he had devoted most of his time recently to the formulation of measures to create a conducive environment for the SMEs. He had a lot of discussions with members of the industry and trade, the banking sector, and colleagues in the Government on both short term and long term measures to assist the SMEs.

He said that the $2.5 billion loan facility for the SMEs was an emergency measure to ease the credit squeeze brought about by the Asian financial turmoil.

In this regard, Mr Tung was delighted to learn that an authorised institution in the banking sector had just signed up to participate in the scheme.

He said that the Government would review the scheme upon implementation with a view to making it more user-friendly to both the authorised institutions and the SMEs. "However we must not let this consideration stall the scheme from getting an early start which is in the interest of the SMEs," he said.

The Chief Executive, however, pointed out that this short term measure could not help the SMEs in the long run if Hong Kong was to continue to rely on them as the locomotive for our future economic development.

On the long run development of SMEs, the Chief Executive said: "Our SMEs are facing several major challenges: first, the need to enhance productivity through new technology; second, the need for greater access to more timely market information, and improved use of such information through new technology and better trained employees; and third, the need to improve cost effectiveness, in particular in the areas of rents, wages, interest rates and other fees and charges.

"I am fully aware of these challenges and looking closely into relevant issues with the trade and industry and my colleagues in the Government.

"The Government has to be mindful of the need to make effective use of our limited resources, especially under the going economic climate. We have to take a careful look at ways in which we may facilitate the SMEs in enhancing their competitiveness. We also have to review our existing SMEs facilitation schemes to see if the resources are best utilised," he said.

"We are open as to the ways in which we may help the SMEs, but the first thing we must make sure is that we know where we are heading for and whether it is in our long term interest," Mr Tung said.

"In facilitating the SMEs, one of our primary concern is the creation of employment opportunities for our work force in the long run," he added.

The Chief Executive said that he welcomed another opportunity to exchange views with the CMA on the future development of SMEs in the near future.

End/Tuesday, August 11, 1998

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