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Trade and Industry Department The Government of the Hong Kong Special Administrative Region
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Press Release

Additional funding approved for the SME funding schemes
Friday, May 6, 2005 

A spokesman for the Trade and Industry Department (TID) announced today (May 6) that the SME Loan Guarantee Scheme (SGS), the SME Export Marketing Fund (EMF) and the SME Development Fund (SDF) will continue to operate to provide support to SMEs.

The Finance Committee today approved an injection of $300 million to the EMF and SDF. It also approved the lowering of the assumed default rate under the SGS from 15 % to 7.5 % and the redeployment of $200 million from the original expenditure earmarked under the SGS to the EMF and SDF. 

"This will mean that Government funding provision for the EMF and SDF will be increased by $500 million and that the total Government loan guarantee commitment under the SGS will be raised from $6.6 billion to $10.6 billion. This will enable the three schemes to run until mid 2007," the spokesman said.

The spokesman explained that in view of significant overlap between the SME Training Fund (STF) and other Government initiatives to promote continuing education and skills upgrading, the TID will cease receiving new applications for the STF as from July 1, 2005. The discontinuation of the STF will allow optimal use of limited public resources.

"Projects that aim to enhance the manpower of SMEs in general or SMEs in specific sectors may still be considered under the SDF," the spokesman added.

The spokesman said that the application procedures for the EMF would be streamlined. The current requirement for SMEs to obtain in-principle funding approval prior to participating in export promotion activities will be removed. Starting from July 2005, SMEs will be allowed to apply for EMF grants within 60 calendar days after their participation in the relevant export promotion activities.

The four SME funding schemes (the SGS, the EMF, the STF and the SDF) were established in December 2001/January 2002, with a total commitment of $7.5 billion and an expected maximum expenditure of $1.9 billion, to assist SMEs secure financing, expand markets, upgrade human resources, and enhance overall competitiveness.

As at end of April, over 99,700 applications, involving $6.6 billion grants and guarantees, have been approved. More than 42,000 SMEs have directly benefited from the schemes.

The original provision for the schemes will be used up by the middle of this year. The Small and Medium Enterprises Committee (SMEC) has recently reviewed the operations of the schemes and recommended the Government to inject additional funding to the EMF and SDF and to lower the assumed default rate under the SGS to 7.5%. The Financial Secretary accepted the recommendation and announced the proposal in his Budget Speech on 16 March 2005.

Ends