Government introduces measures to support enterprises and data centre development (with photo/video)

     The Government announced in the 2012-13 Budget a series of measures to support enterprises to preserve employment and stabilise the economy. It will also put in place measures to facilitate the timely development of data centres to further promote the industries where Hong Kong enjoys competitive advantages and sustain Hong Kong's competitiveness as a regional hub and international financial centre.

     Speaking at a press conference today (February 3), the Secretary for Commerce and Economic Development, Mr Gregory So, said, "Small and medium enterprises (SMEs) are our economic pillar. We attach great importance to their sustainable development and strive to create a friendly business environment for them. We consider it necessary to introduce timely and effective measures to support enterprises amid the global economic slowdown."     

     Mr So said that to further assist enterprises in tackling the economic uncertainties and possible liquidity problems, the Government has proposed special time-limited concessionary measures under the existing SME Financing Guarantee Scheme (SFGS) administered by the Hong Kong Mortgage Corporation Limited (HKMC).

     Under the measures, the loan guarantee ratio will be increased from the existing ceiling of 70 per cent to 80 per cent while the guarantee fee will be reduced significantly.  Lending institutions may obtain an 80 per cent loan guarantee by paying about 30 per cent of the existing guarantee fee for a 70 per cent guarantee for approved loans. The application period of the concessionary measures will last for nine months. The Government will make a total guarantee commitment of $100 billion and the maximum loan guarantee period is five years. The estimated government expenditure will be about $11 billion taking into account the anticipated default rate.

     All guarantee fees collected by the HKMC under the special concessionary measures will be used to cover default compensations and related expenses, such as administrative costs for recovery of compensated default payments.  The HKMC will return the balance to the Government and the latter will meet the difference in the event of a shortfall.

     "The concessionary measures will effectively encourage lending institutions to satisfy the financing needs of local enterprises, including SMEs, by making use of the SFGS.  The charging of a limited guarantee fee, meanwhile, will reduce credit risks and ensure prudent use of public money.  

     "We will work closely with HKMC and complete the preparation work as soon as possible.  We hope to seek funding approval from the Finance Committee of the Legislative Council in April, with a view to introducing the concessionary measures within the first half of this year," Mr So said.

     In addition, with the Government's full support, the Hong Kong Export Credit Insurance Corporation (ECIC) will introduce new terms in their insurance policy on February 6 to provide special concessions for SMEs.  For example, SME policyholders will be allowed to insure their exports for places and buyers of their choice under specified circumstances, and will be offered various premium discounts.  

     "I believe these new initiatives will further help Hong Kong enterprises, particularly SMEs, tap into emerging markets and ease their financial pressure.

     "SMEs currently account for more than 90 per cent of all ECIC clients.  We expect the availability of more flexible choices will attract existing clients to consider the flexible insurance policies. Coupled with the various premium discounts offered by ECIC, it is estimated that more than 2,000 exporters will benefit from this new measure," Mr So said.

     The Government also proposes halving the charges for import and export declarations to alleviate the economic pressure faced by the industry.  It is estimated that each enterprise in import and export businesses will save $9,000 a year on average. This will cost the Government $750 million a year.

     "As the fee reduction requires legislative amendments, we have activated the relevant procedures with an aim to have the amendments vetted and passed within the current legislative session," Mr So said.

     On the progress of the dedicated fund, the Government has met with trade bodies and relevant organisations to collect their views.  The Government is finalising the details as expediently as possible.  It intends to seek funding approval from the Finance Committee of the Legislative Council in the first half of this year, and aims to launch the dedicated fund by mid-2012 in order to provide enhanced support for Hong Kong enterprises to tap the Mainland domestic market.

     On facilitating data centre development, Mr So said, "Data centres - the essential infrastructure in a knowledge-based economy - are crucial to the long-term growth of Hong Kong's economy. Major economic sectors, particularly the pillar industries such as financial services, trade and logistics, and the emerging cloud computing and media businesses, rely on them very much.

     "A consultancy study has concluded that there is potential for strong growth in the demand for data centres in Hong Kong in the coming years. Data centres are also much sought after by our regional competitors as they are usually co-located with regional headquarters. To cope with such growth and trends, we need to meet the demand for data centre development quickly, especially the unique and demanding requirements for suitable sites, lest these high value-added facilities will resort to other locations," he said.

     He added that the Government would introduce two new measures to encourage optimisation of existing industrial buildings or industrial lots for data centre development. The first will exempt the waiver fee for changing parts of industrial building aged 15 years or above into data centre use. The exemption will be applicable to data centres of all tiers. The other measure concerns the development of high-tier data centres involving lease modification on industrial lots, regarding which the Government will assess the premium for lease modification on the basis of actual development intensity and high-tier data centre use instead of optimal use.

     "We believe the new measures can encourage more conversion of industrial buildings for data centre use," Mr So said.

     The two measures will be introduced within 2012-13 for application until March 31, 2016.

Ends/Friday, February 3, 2012
Issued at HKT 18:35