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LCQ2: Assistance to small and medium enterprises in relieving capital flow problems

     Following is a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, to a question by the Hon Jeffrey Lam in the Legislative Council today (October 26):


     With regard to relieving the capital flow problems of small and medium enterprises (SMEs), will the Government inform this Council:

(a) whether it will consider relaunching the Special Loan Guarantee Scheme for SMEs at present to assist SMEs in securing loans from lending institutions with the Government acting as the guarantor of the approved loans; if it will, of the timetable; if not, the reasons for that;

(b) whether it will encourage the Hong Kong Export Credit Insurance Corporation to step up its credit information enquiry service to facilitate SMEs to grasp more market information; if it will, of the timetable; if not, the reasons for that;

(c) whether the authorities will set up funds or loan schemes to assist SMEs in Hong Kong in tapping the domestic market on the Mainland; if they will, of the timetable; if not, the reasons for that; and

(d) whether the authorities will consider waiving the business registration fee of SMEs as soon as possible to reduce their operating expenditure; if they will, of the timetable; if not, the reasons for that?



(a) The "Special Loan Guarantee Scheme" (SpGS) was a time-limited initiative introduced in December 2008 with the aim of helping enterprises tide over the credit crunch problem arising from the global financial crisis. It was an exceptional measure that was introduced during exceptional times. Although the SpGS ended in end 2010, the Hong Kong Mortgage Corporation has subsequently launched the market-based "SME Financing Guarantee Scheme" on January 1, 2011 with the aim of providing 50% to 70% loan guarantee to eligible Hong Kong enterprises.

     In his Policy Address made earlier this month, the Chief Executive has already pointed out that with the recent sharp downturn in the external economy, our economy will face greater downside risks next year. As the Chief Executive said, we would brace ourselves for this and would keep a close watch on changes in the external environment. We would pay particular attention to the difficulties faced by the small and medium enterprises (SMEs), and would introduce timely and effective measures to tide the trade over when necessary.

(b) To support our export trade, the Hong Kong Export Credit Insurance Corporation (ECIC) provides Hong Kong exporters with insurance protection against non-payment risks arising from commercial and political events. Assisting SMEs has always been ECIC's service focus. Exporters may submit credit limit applications on two buyers via the ECIC's online platform "EC-link". The ECIC will conduct credit checks on the buyers and offer free quotations to the exporters. Policyholders of the ECIC are given a free credit checking facility, determined according to the volume of insurable business invoiced in the past policy period, and can receive free credit checks up to 150 buyers.

     In order to provide exporters, especially SMEs, with information about the latest developments in overseas markets, thereby assisting them in understanding market developments and improving their risk management, ECIC has launched a "Market News Bulletin" on its website since May 27, 2009.  The "Market News Bulletin" includes the latest political and economic news, emerging markets conditions, bankruptcy statistics, and the ECIC's data regarding claims trends for major exports and for emerging markets.

     The ECIC will continue to keep a close watch over developments in the overseas markets and strive to meet the needs of exporters.

(c) The Government is committed to assisting enterprises in brand building so as to tap the Mainland market. The Government has adopted multi-pronged measures, including the provision of funding and financing support through various funding schemes administered by different departments (e.g. the Trade and Industry Department's "SME Funding Schemes"; Innovation and Technology Commission's "Innovation and Technology Fund" and "Research and Development Cash Rebate Scheme" and CreateHK's "Design-Business Collaboration Scheme").

     To further assist Hong Kong enterprises tap the Mainland market, the Chief Executive has announced in the Policy Address the proposal to set up a dedicated fund of $1 billion to encourage them to move up the value chain and build brands by leveraging Hong Kong's strengths in design. Our initial thinking is that the dedicated fund can provide direct funding to individual enterprises to develop their brands, promote their products in the Mainland domestic market, as well as restructure and upgrade their operations in the Mainland. The dedicated fund can also finance non-profit-distributing support organisations to launch large-scale projects to assist Hong Kong enterprises in general or in specific sectors in developing their brands, tapping the Mainland domestic market, and enhancing their overall productivity in the Mainland.  

     We will draw up the implementation details as soon as possible and liaise with the trade and relevant organisations in the next few months. We plan to submit a funding application to the Finance Committee of the Legislative Council in the first half of 2012.

(d) In formulating the 2012-13 Budget, we will consider carefully the case for introducing one-off measures such as waiver of business registration fee, having regard to the economic situation and the Government's fiscal position, so as to relieve the inflationary pressure faced by various sectors of the community.  

Ends/Wednesday, October 26, 2011
Issued at HKT 14:57


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