Stimulus Plan to Support SMEs and Prevent Job Losses
On December 8, Hong Kong Chief Executive Donald Tsang announced that the government would provide up to US$12.82 billion in loan guarantees for enterprises and spur employment opportunities next year as part of its efforts to lead Hong Kong out of the global economic downturn.
Speaking after the second meeting of the Task Force on Economic Challenges, Mr. Tsang acknowledged that it seemed inevitable the local economy would face negative growth in 2009.
In response to the downturn, Mr. Tsang said that the government's priorities were to support small and medium enterprises (SMEs) to prevent job loss and to provide more than 60,000 employment opportunities next year.
Expand SME Credit Guarantee Scheme
To help enterprises secure loans, the government intends to implement the following measures:
* Substantially expand the recently introduced Special Loan Guarantee Scheme. The government will increase the maximum commitment to US$12.82 billion while continuing to provide 70 percent loan guarantees;
* Raise the loan ceiling for each company from US$128,205 to US$769,230, with US$384,615 being revolving credit;
* Allow the loan to be used not only as operating funds, but also for other purposes such as commercial overdraft and letter of credit;
* Allow all firms except listed companies to apply for the scheme, to enable more companies to benefit.
The Chief Executive announced that over 60,000 jobs were to be provided through expediting infrastructure projects, advancing recruitment of civil servants and creating temporary positions.
Mr. Tsang said the government would make the best use of funds approved to create jobs while promoting innovation and technology, promoting environmental awareness and encouraging citizens to enhance their competence and skills.
In addition, the government would complement the efforts of a number of non-governmental organizations (NGOs) in their expansion or removal projects. This would promote the development of NGOs while increasing employment opportunities in the medium term.
To facilitate job creation, Policy Secretaries would personally oversee licensing and approval procedures, expediting the process and better meeting the needs of the market.
Mainland of China Support
The Mainland government will introduce a number of measures which would help Hong Kong weather the global financial crisis.
Among the measures introduced is the gradual expansion of the scope of Renminbi (RMB) business by allowing eligible firms to perform RMB trade payment in Hong Kong thus enhancing Hong Kong's function as a global financial center.
In addition, it was agreed that the People's Bank of China should sign a currency exchange pact with the Hong Kong Monetary Authority and provide capital support to Hong Kong, if necessary.
Mainland organizations would also be encouraged to launch global financial business by using Hong Kong as a platform.
The number of Mainland residents visiting Hong Kong under the individual visit scheme would also be increased. Mainland tourist arrivals have had a positive impact on the economy. According to the latest figures, of the total Mainland arrivals in November, 55 percent arrived under the individual visit scheme, up 11.8 percent. This brought the cumulative arrivals under the scheme to 8.67 million in the first 11 months, a rise of 12.4 percent.
Besides accelerating the Hong Kong-Zhuhai-Macau Bridge project, promotion would step-up for a rail project linking Hong Kong and Shenzhen airports, the Guangdong-Shenzhen-Hong Kong rail system and the revampment of the Huanggang and Man Kam To control points.
Mr. Tsang said Mainland authorities and Hong Kong would soon discuss further liberalization measures with a view to signing the Closer Economic Partnership Arrangement Six next year.
Mainland authorities would also implement measures to help Hong Kong-owned enterprises operating in the Mainland by further adjusting and refining the exports tax rebate rate and the labor system, facilitating domestic sale of goods and establishing a capital-raising guarantee system.
Remaining confident, Mr. Tsang said that given the economic growth of the past few years, Hong Kong was well placed to weather a short-term recession, while the five-year blueprint laid out in the 2007 Policy Address, including the 10 major infrastructure projects, would increase the competitiveness of Hong Kong in the long term.
Task Force on Economic Challenges
In response to the global financial crisis, the Chief Executive announced the establishment of a task force to continually monitor and assess the impact of the financial crisis and provide timely evaluation of its impact on the local economy and Hong Kong's major industries. The task force, chaired by the Chief Executive, is charged with proposing specific options for the Hong Kong government and business community to address the economic challenges.
Task Force on Economic Challenges: http://www.fso.gov.hk/tfec/eng/index.html
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