LCQ2: Support for micro, small and medium-sized enterprises
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Question:
Quite a number of micro, small and medium-sized enterprises (MSMEs) have pointed out that government funding schemes are crucial to their cash flow, and these funding schemes have an even greater impact on their operations, particularly during the current period of economic transformation. Some members of the industry have pointed out that there have been delays in the vetting and approval process of the SME Export Marketing Fund (EMF), with the waiting time of certain cases exceeding the authorities' service performance indicators. The Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund) implemented enhancement measures in March last year, including making adjustments to the matching ratio and initial payment, etc, all of which have affected the cash flow of MSMEs. In this connection, will the Government inform this Council:
(1) of the lead time between the Trade and Industry Department's receipt of all necessary documentation from the applicants of the EMF and the disbursement of funding support in each of the past three years, with a tabulated breakdown of the number of applications by lead time (i.e. (i) within 30 clear working days, (ii) after 30 clear working days but within nine months, and (iii) more than nine months);
(2) whether it has ascertained if the applications mentioned in (1) have experienced delays in the vetting and approval process; if so, of the details; and
(3) given that the enhancement measures for the BUD Fund have been implemented for more than a year, how the authorities assess their impact on the operation of MSMEs, and when a review will be conducted?
Reply:
President,
The Government has been adopting a multi-pronged approach in promoting diversified development of small and medium enterprises (SMEs). Among which, the SME Export Marketing Fund (EMF) and the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund) provide funding support with a view to encouraging enterprises to expand their markets outside Hong Kong by participating in export promotion activities and upgrading and transformation respectively. As one of the measures addressing the COVID-19 pandemic, the EMF has been implementing the special measures from end-April 2021 to end-June 2026 to cover exhibitions targeting the local market and online exhibitions, as well as relaxing the eligibility criteria to cover non-SMEs. Since 2018, the Government has also launched several rounds of enhancements to the BUD Fund, including the injection of a total of $7.75 billion, expansion of the geographical scope, phased increase of the cumulative funding ceiling per enterprise from $500,000 to $7 million, and the launch of "Easy BUD" and "E-commerce Easy", etc.
The consolidated reply to the three parts of the question is as follows:
Under normal circumstances, the Trade and Industry Department (TID) will complete the processing of a valid EMF application within 30 clear working days from the date of receipt of the duly completed application accompanied by all necessary documentation, and the processing time may take longer for complicated cases. Complicated cases usually involve applications which are suspected to be non-compliant with the funding requirements or conditions. The processing time of individual complicated case varies according to factors including whether the applicant can provide all necessary documentation in a timely manner, the overall number of applications, case details and the complexity of the case, etc.
For general applications, the EMF has been able to meet its performance pledge of completing the processing within 30 clear working days from the date of receipt of the duly completed application accompanied by all necessary documentation in the past three years. Complicated cases which take longer processing time accounted for about 30 per cent of total number of applications in the past three years. Overall speaking, the processing of over 99 per cent of applications was completed within nine months after the receipt of all necessary documentation. Detailed breakdown of the numbers is at Annex.
In recent years, the number of complicated cases has increased. Relevant cases mainly involve applicant enterprises which have included refunded payments by organisers or their related parties in the declared amount of actual expenditure, in order to obtain higher grant amount than they are entitled to. We have also found that the organisers and exhibitors of some promotion activities may have omitted or misrepresented information, or even made false declarations. Therefore, all applications for relevant activities are subject to further review, hence requiring a longer processing time to ensure proper use of public funds.
The TID has been maintaining close liaison with the industry and applicant enterprises and continuing to allocate manpower in a timely manner to process applications, enhance the workflow of handling applications and computer functions, streamline processing procedures, revamp the EMF webpage layout design, etc, with a view to enhancing the processing of EMF applications. For complicated cases suspected to be non-compliant with funding requirements and conditions that require longer processing time, the TID has provided further guidance via the EMF Guide to Application and application form, assisting applicant enterprises in declaring truthfully all the relevant costs of the activities and the related information. Meanwhile, the TID has reminded the organisers via the Guide to list out the details of refunds in documents of the activities to facilitate declaration by applicant enterprises. We have also stepped up publicity through various channels, including the EMF webpage, notices of the EMF, e-newsletters of the Support and Consultation Centre for Small and Medium Enterprises, etc, to strengthen deterrence against the relevant non-compliant or illegal acts.
On the other hand, the Government implemented rationalisation measures under the BUD Fund since March 2025 with a view to utilising the fund in the most productive manner while ensuring its financial sustainability. In 2025, the BUD Fund received around 5 350 applications, an increase of over 210 per cent as compared with the number of applications in 2019; the total approved funding amount increased by over 320 per cent during the same period, indicating that the trade's demand for the BUD Fund has remained strong. Besides, the participating enterprises agreed that the BUD Fund had helped them in various areas, including enhancing corporate image, brands/products/services awareness, and their overall competitiveness, etc. As at end-March 2026, around 98 per cent of the enterprises that responded to the project completion surveys considered that the BUD Fund was useful in supporting their business development. Around 98 per cent of the enterprises that responded to the annual tracking surveys considered that the BUD Fund was useful to their long-term development.
In March 2025, the Government has also rolled out enhancement measures under the BUD Fund, including relaxation of the frequency for "Easy BUD" submissions and provision of more targeted funding support for projects involving green transformation and restructuring of production lines, etc. In addition, the Government plans to implement a series of measures announced in the 2025 Policy Address and the 2026-27 Budget in the second quarter of 2026, including expansion of the geographical scope of the BUD Fund, increase of the funding ceiling per "Easy BUD" application from $100,000 to $150,000, as well as the provision of more targeted funding support for enterprises to implement projects which involve artificial intelligence elements, etc. Therefore, we need time to assess the financial implications in respect of various measures. We will continue to manage the fund prudently with a view to enabling more enterprises to receive funding support and maintaining a wide coverage of beneficiaries while ensuring the financial sustainability of the BUD Fund. The Government will continue to keep in close touch with the trade, constantly review the operation of the funding scheme, and make adjustments and enhancements when necessary.
Ends/Wednesday, May 6, 2026
Issued at HKT 15:10
Issued at HKT 15:10
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