Speech by Director-General
of Trade and Industry
Wednesday, December 12, 2001
Following is the full text of the speech delivered by Mr Joshua Law, the Director-General of Trade and Industry at the SME Funding Scheme Press Conference today (December 12):
Ladies and gentlemen, representatives of the media,
The Small and Medium Enterprises Committee (SMEC) submitted to the Chief Executive at the end of June this year a report which contained various recommendations on helping small and medium enterprises (SMEs) enhance their overall competitiveness. Those recommendations include setting up four SME funding schemes. The Chief Executive announced his acceptance of the SMEC's recommendations in full in October this year. The Finance Committee of the Legislative Council approved the necessary funding in November this year. Today, I am glad to announce that three of the funding schemes will start receiving applications the day after tomorrow, i.e. December 14. They are the SME Business Installations and Equipment Loan Guarantee Scheme, the SME Export Marketing Fund, and the SME Development Fund. The fourth funding scheme, namely the SME Training Fund, will start receiving applications in mid-January 2002. I would now introduce to you the details of the first three funding schemes.
First, the SME Business Installations and Equipment Loan Guarantee Scheme. The scheme aims to help SMEs secure loans from banks and financial institutions to acquire new or second-hand business installations and equipment, through Government acting as the guarantor. The maximum Government's guarantee for each SME under the scheme is $1 million or 50% of the approved loan, whichever is less. The maximum guarantee period is three years. Under the Scheme, the Government will provide guarantees up to a total of $6.6 billion, therefore helping SMEs secure loans amounting to a total of $13.2 billion from lending institutions. The Loan Guarantee Scheme accepts applications all year round.
Second, the SME Export Marketing Fund. This fund helps SMEs expand overseas market through providing financial assistance to them to participate in export promotion activities held locally or outside Hong Kong, include setting up booths in trade fairs or study missions. The maximum grant offered to a successful applicant is $10,000, or 50% of the expenditures incurred from participating in the export promotion activities, whichever is less. Each SME can only receive subsidy once under the Export Marketing Fund. The scheme accepts applications all year round.
Third, the SME Development Fund. The Fund finances projects proposed and implemented by trade and industrial organizations, support organizations and research institutes with a view to enhancing the competitiveness of SMEs in general or SMEs in specific sectors. Eligible projects include organizing seminars and workshops, establishing databases, drawing up guidelines on corporate governance, as well as setting up various support facilities and services.
Apart from inviting projects initiated by trade and industrial organizations and support organizations, the Trade and Industry Department will also solicit specific projects on a need basis. For the first tranche of application, we are now soliciting the following projects:
* setting up information technology promotion teams to enhance SMEs' awareness on the importance of IT;
* organizing an SME IT-expo;
* establishing a comprehensive database on services and products offered by lending institutions to SMEs, with a view to helping SMEs identifying appropriate lending institutions and financial packages; and
* drawing up a set of guidelines on corporate governance for SMEs.
These initiatives are recommendations of the SMEC in its report to the Chief Executive, and have been accepted by the Government.
The maximum amount of grant for each project is 90% of the total project expenditure, or $2 million, whichever is the less. Applications will be invited two times a year. The first tranche of applications will be received from 14 December 2001 to 18 February 2002. The second tranche of applications will be invited around June/July 2002. The actual date for the second tranche will be announced later. Each eligible applicant can submit a maximum of four applications in each tranche.
All funding applications received under the SME Development Fund will be assessed by a vetting committee. The vetting committee will be chaired by the Director-General of Trade and Industry, and will comprise SMEC members, representatives from the manufacturing and service sectors, academics and professionals. It is estimated that the vetting committee will be set up next month (January 2002). Also, if necessary, we will invite experts to assist in the assessment work.
All SME funding schemes are administered by the Trade and Industry Department. Applications for the Export Marketing Fund and the Development Fund can be submitted to the Trade and Industry Department in person, by mail or through electronic means. SMEs which wish to apply for the SME Business Installations and Equipment Loan Guarantee Scheme may submit their applications through lending institutions that have participated in the scheme. As at today, 41 banks and financial institutions have participated in the scheme. The list of participating banks and financial institutions has been distributed to you just now. More banks and financial institutions are expected to join the scheme, and we will update the list from time to time.
Information leaflets, application forms and guidelines on the three funding schemes are available at the Trade and Industry Department, District Offices and major SME support organizations. They can also be downloaded from the homepage of the SME Funding Schemes at www.smefund.tid.gov.hk (you can find the website on the pamphlet just distributed to you). We have also set up a telephone hotline at 2398 5125 for enquiries on the funding schemes.
Application procedures for the funding schemes are simple and easy. We have made every endeavour to expedite the time for processing applications. For example, upon receipt of an application for Government's guarantee under the Loan Guarantee Scheme, the Trade and Industry Department will complete processing the application within three working days, and inform the lending institution of the outcome of the application. Applications for the Export Marketing Fund will be processed within seven working days, after which we will notify successful applicants of an approval-in-principle. We will also inform applicants of the outcome of the application within two months from the deadline for applications at the latest.
Apart from a series of promotional activities to publicise the funding schemes, we have solicited the support of 14 SME support organizations and trade and industry associations to help promote the funding schemes. Also, we are grateful to the support from banks and financial institutions for the SME Business Installations and Equipment Loan Guarantee Scheme. I would also like to take the opportunity to express my gratitude to the Chairman and members of the SMEC for their invaluable advice on the implementation details of the funding schemes in the past few months.
As for the SME Training Fund to be introduced in January, we will announce the details in due course.