Small and medium enterprises (SMEs) in Hong Kong perennially face a host of financial challenges. For one, the high costs of operations, notably rental costs, are often an impediment to profitability. It could be so forbidding that some SMEs avoid having business addresses altogether or turn increasingly to co-working spaces to save costs. Also due to the small scale of their operations, SMEs lack the collaterals to obtain much needed loans to expand or win business. Those doing business overseas might be exposed to global economic forces causing volatile foreign exchange rates and unpredictable revenue and costs.
Given the significance of the SME sector and the myriad challenges they faced, supporting SMEs is a mainstay of government policy. In February, against a backdrop of slowing global economic growth, the Hong Kong government announced its 2019-2020 budget. An objective of the Budget is to provide support for local enterprises to tide over the uncertain economic and trade environment in the year going forward.
One of the fiscal measures includes the waiver of business registration fees for 2019-2020 which is expected to benefit as many as 1.4 million business operators. The waiver would go some way in relieving operating costs especially for small and medium enterprises, and lowering entry costs for entrepreneurs considering to startup in Hong Kong.
The government is also helping enterprises to stay on the competitive edge with enhancements to its existing funding program in important areas of business, namely technology, international expansion and cashflow management.
A notable enhancement is the doubling of funding ceiling to $400,000 under the Technology Voucher Program for each enterprise. First launched in 2016, the program seeks to help small and medium enterprises make use of technology to enhance their operational efficiency and productivity.
Further, the government also made a series of enhancements to the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund). Notable measures include an additional $1 billion injection into the fund, extension of coverage to all markets with whom Hong Kong has a free trade agreement (FTA), and higher funding ceiling for enterprises.
Now, Hong Kong companies looking to undertake branding, product or sales development in Mainland China, ASEAN and beyond could seek larger matching funds from the government. Most recently, the government concluded FTA negotiations with Australia and Maldives.
Another measure announced is the extension of application period to June 30, 2020 for special concessionary measures under the SME Financing Guarantee Scheme. The scheme was launched in 2011 to help SMEs and non-listed enterprises obtain financing by providing financial guarantees. In November last year, special concessions such as lower guarantee fees and longer maximum guarantee period were implemented. SMEs facing liquidity challenges now have a longer window period to apply for the measures.