Assistance for SMEs gets boost

Updated: 2008-10-24 07:39

By Teddy Ng(HK Edition)

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 Assistance for SMEs gets boost

Secretary for Commerce and Economic Development Rita Lau gives a briefing yesterday on proposals to help SMEs weather the financial turmoil. GIS

The government will set up an inter-departmental committee when necessary to assist small and medium enterprises (SMEs) as financial institutions are tightening their credits, Secretary for Commerce and Economic Development Rita Lau said yesterday.

Lau proposed helping SMEs get through the financial crisis by boosting assistance provided by the Hong Kong Export Credit Insurance Corporation (ECIC).

Responding to demands from representatives of SMEs for more support amid a string of business closures in a meeting yesterday, Lau said the ECIC will provide cover for payment risks arising from the buyers' failure to take delivery of goods which are usually not covered by other insurance companies in the market.

The ECIC will not increase its insurance premiums and will offer free buyer credit assessment to all local exporters.

The processing time in handling exporters' credit limit applications will be shortened to four days from five "upon receipt of adequate information".

Meanwhile, the ECIC and the Trade and Industry Department will offer seminars to update SMEs on the latest developments in overseas markets.

ECIC chairman Jeffrey Lam, also a commercial sector legislator, said the corporation credit limit has not been reduced.

Federation of Hong Kong Industries chairman Clement Chen said SMEs are going through a critical time, and said he expected many of them to be on the brink of collapse by lunar new year, when companies need to settle payments with suppliers and pay their staff end-of-year payments.

Chen estimated that up to 25 percent of the 70,000 Hong Kong-owned manufacturing plants on the mainland will cease operation, which is significantly higher than the 10 percent estimated before the financial crisis.

Manufacturers are feeling the pinch from the stronger renminbi and higher production cost, he added.

"Some clients of the manufacturers have already canceled their orders made for the Christmas season."

Industrial sector legislator Andrew Leung said he hopes the government will press banks to relax credit restrictions.

(HK Edition 10/24/2008 page1)