LCQ16: Business environment for small and medium enterprises and promotion of starting businesses
Following is a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, to a question by Dr Hon Elizabeth Quat in the Legislative Council today (March 26):
Some operators of small and medium enterprises (SMEs) have relayed to me that the business environment in Hong Kong is deteriorating but Government's support for SMEs is insufficient, resulting in quite a number of start-up SMEs being unable to carry on their businesses for more than five years. These people have also pointed out that Government's policies and measures for encouraging the starting of businesses have no merit worth mentioning. In this connection, will the Government inform this Council:
(1) whether it has compiled statistics on the respective numbers of start-up companies, those established for five to 10 years and those established for over 10 years, in each of the past 10 years (with a breakdown by industry), as well as the respective percentages of SMEs and other enterprises in such numbers; if it has, of the detailed figures; if not, the reasons for that;
(2) whether it has compiled statistics on the reasons for closure of local companies in the past 10 years; if it has, of the major reasons for closure (with a breakdown by industry) and for each reason, the percentage of companies the closure of which was related to it; if not, the reasons for that;
(3) whether it has any policy and measure to improve the business environment for SMEs and help such companies sustain their businesses; if it does, set out in detail in a table the policies formulated and measures implemented for SMEs of different industries; if not, of the reasons for that; and
(4) whether it has examined the implementation of measures for encouraging the starting of businesses, targeting at people of different age groups (in particular those who have reached retirement age but are rich in experience and still able to work) and at different industries, so as to promote economic development; if it has, of a breakdown of the relevant measures by age group and industry; if not, the reasons for that?
My reply to the various parts of the question is as follows:
(1) According to the information provided by the Companies Registry, the numbers of local companies incorporated each year in the past 10 years are set out at Table 1. The relevant departments do not keep track of the number of years of incorporation of individual companies, and hence there are no breakdown figures on the industry and scale of companies by their years of incorporation.
(2) According to the information provided by the Companies Registry, the numbers of companies dissolved (dissolution by de-registration (Note 1), striking-off (Note 2) or liquidation) each year in the past 10 years are set out at Table 2.
As there is no clear and uniform definition on "closure" of companies, it may not be appropriate to equate the afore-mentioned figures with the numbers of companies "closed". As such, the Companies Registry does not have the relevant statistics regarding the reasons for "closure" of companies, etc.
(3) The Government attaches great importance to the development of small and medium enterprises (SMEs). We review the various support measures from time to time in order to provide timely and adequate support to SMEs. In the light of the prevailing uncertain external economic environment, the Financial Secretary announced in the 2014-15 Budget various measures to strengthen our support to SMEs in areas of financing, market expansion, brand building and productivity enhancement.
On financing, we have further extended the application of the special concessionary measures under the SME Financing Guarantee Scheme for one more year up to the end of February 2015. With the Government's continued provision of a total loan guarantee commitment of $100 billion, the Hong Kong Mortgage Corporation Limited (HKMC) will continue to provide 80 per cent loan guarantees at concessionary fee rates so as to assist enterprises, including SMEs, in obtaining financing in the commercial lending market.
On market expansion, we will continue to implement the $1 billion Dedicated Fund on Branding, Upgrading and Domestic Sales to assist enterprises including SMEs in enhancing their competitiveness and facilitating their business development in the Mainland. In addition, the Hong Kong Trade Development Council will further expand its Design Gallery network in the Mainland to provide platforms for Hong Kong enterprises, particularly SMEs, to showcase their products and build up greater awareness of Hong Kong brands in the Mainland. The Hong Kong Export Credit Insurance Corporation will continue to implement the "Small Business Policy" scheme for Hong Kong enterprises with an annual business turnover of less than $50 million, so as to provide exporters with more flexibility in taking out insurance cover.
The Government has also earmarked $50 million to support retailers on a matching fund basis for the use of IT and other technology solutions to increase productivity. The target of funding support is SMEs of the retail industry. On the other hand, the Office of the Government Chief Information Officer has earmarked $3 million to launch a Cloud Promotion Campaign in 2014-15, which would comprise training and promotional activities, to encourage SMEs to adopt cloud computing services in enhancing their productivity.
For the creative industries, Create Hong Kong will continue to provide the trade and relevant bodies with funding support for organising activities to support the development and promotion of creative clusters such as the Comix Home Base, PMQ, etc through the CreateSmart Initiative.
In addition, the Trade and Industry Department (TID) will continue to assist SMEs in obtaining financing, exploring markets and enhancing the overall competitiveness through its three existing SME funding schemes, namely the SME Loan Guarantee Scheme, the SME Export Marketing Fund and the SME Development Fund.
We will continue to closely monitor the changes in the economic situation and the needs of the trade and review our support measures for SMEs from time to time in order to provide them with timely and adequate support.
(4) On support for starting business, the HKMC will continue to implement the Microfinance Scheme launched in late June 2012 on a pilot basis for three years to assist persons who may wish to start their own business but cannot do so due to a lack of financial means or difficulties in obtaining loans from traditional finance sources. The maximum loan amounts of each "Micro Business Start-up Loan" and "Self-employment Loan" are $300,000 and $200,000 respectively. As at the end of February 2014, the HKMC has received over 220 applications and approved 116 applications, involving a total loan amount of about $30 million and benefitting people of different age groups.
The Support and Consultation Centre for SMEs (SUCCESS) of TID provides free, reliable and practical information and consultation services for SMEs (including business start-ups). The Business Start-up Information Service of SUCCESS provides comprehensive information on starting a business in Hong Kong, such as information on required government licences and permits, guidelines on drafting business plan and budget analysis. SUCCESS also organises seminars, workshops and other events to help SMEs (including business start-ups) broaden their business knowledge and enhance their entrepreneurial skills. In addition, SUCCESS also arranges SMEs (including business start-ups) to meet with experts from various sectors for professional consultation through its "Meet-the-Advisors" Business Advisory Service, providing SMEs with practical advice on resolving business problems. SUCCESS also implements a SME Mentorship Programme to provide an opportunity for SME owners who are at their early stage of business to learn from and be guided by accomplished entrepreneurs through one-on-one counselling on business skills.
In addition, the Incubation Programmes implemented by the Hong Kong Science and Technology Parks Corporation assist technology start-ups in their vulnerable inception stages through provision of subsidised office space, financial aid package and a wide range of support services. In addition, the Design Incubation Programme of the Hong Kong Design Centre offers funding support and support services to design start-ups, with a view to helping them meet the challenges during the early and critical stage of development.
Note 1: The applicant is not required to indicate the reason for de-registration in the application form.
Note 2: The Registrar of Companies may strike the name of a company off the Companies Register according to the Companies Ordinance where the Registrar has reasonable cause to believe that the company is not in operation or carrying on business.
Wednesday, March 26, 2014