SUPPORT MEASURES FOR SMES MOOTED

To help small and medium enterprises (SMEs) which face huge challenges amidst the adverse business environment, the Government will expeditiously introduce new legislation to prohibit landlords from terminating the tenancy of or not providing services to tenants of specified sectors for failing to settle rents on schedule, or taking relevant legal action against them.

Financial Secretary Paul Chan in his Budget speech today announced that the relief would be valid for three months and, if necessary, be extended one more time for the same duration, with the legislation automatically lapsing after six months.

“The arrangement will provide enterprises in deep water with breathing space and help secure employment. The Monetary Authority will be in close communication with the banking sector and banks will exercise flexibility if the repayment ability of any landlord is affected owing to reduction in his rental income.”

He noted that the Government must take all necessary measures to preserve the vitality of the economy, in particular the survival of SMEs, and strive to safeguard jobs.

Tax cuts, fee waivers

Mr Chan outlined measures to ease the operating pressure of businesses and enhance the cash flow support for them including:

(a) reducing profits tax for the year of assessment 2021-22 by 100%, subject to a ceiling of $10,000. The reduction will be reflected in the final tax payable for the year of assessment 2021-22. This measure will benefit 151,000 businesses and reduce government revenue by $1.2 billion;

(b) providing rates concessions for non-domestic properties for four quarters of 2022-23, subject to a ceiling of $5,000 per quarter in the first two quarters and a ceiling of $2,000 per quarter in the remaining two quarters for each rateable property. This measure is estimated to involve 430,000 non-domestic properties and reduce government revenue by $3.4 billion;

(c) waiving the business registration fees for 2022-23, which will benefit 1.5 million business operators and reduce government revenue by $3 billion;

(d) continuing to waive 75% of water and sewage charges payable by non-domestic households for eight months until November 30, subject to a monthly ceiling of $20,000 and $12,500 respectively per household. Some 250,000 non-domestic households stand to benefit and government revenue would be reduced by $680 million;

(e) extending the waivers/concessions of the existing 34 groups of government fees and charges for 12 months starting from October. A wide range of sectors including aviation, maritime, logistics, retail, catering, agriculture & fisheries, construction, tourism and entertainment will benefit from the move, which will see government revenue reduced by about $1.7 billion; and

(f) continuing to grant the 75% rental or fee concession currently applicable to eligible tenants of government premises and eligible short-term tenancies and waivers under the Lands Department for six months until September 30. During the period, tenants who must close their properties at the request of the Government will continue to receive a full rental waiver for the duration of the closure. The move will reduce government revenue by $1.4 billion.

Enhancing cash flow

To enhance the cash flow support for businesses, the application period of all guarantee products under the SME Financing Guarantee Scheme (SFGS) will be extended for one year to the end of June 2023. The Special 100% Loan Guarantee under the SFGS will also be further enhanced by increasing the maximum loan amount per enterprise from the total amount of employee wages and rents for 18 months to that for 27 months with the loan ceiling raised from $6 million to $9 million, and by extending the maximum repayment period from eight years to 10 years.
 

The Monetary Authority has been requested to extend the Pre-approved Principal Payment Holiday Scheme through the Banking Sector SME Lending Coordination Mechanism for six months to the end of October this year. The authority and the banking sector will offer enterprises the option of making partial repayment of principal over a longer period of time. This arrangement will also apply to the loans granted under the SFGS.
 

To help small and medium sized exporters secure export financing from banks more easily, the Hong Kong Export Credit Insurance Corporation plans to launch the Export Credit Guarantee Programme on a pilot basis next month, under which the corporation will guarantee up to 70% of their policyholders’ export financing, subject to a maximum limit of $50 million.

In addition, to encourage exporters to take larger orders from overseas buyers, it will introduce the Flexible Indemnity Ratio arrangement in the second half of this year to enhance insurance coverage for exporters. The measure is expected to benefit about 2,400 policyholders.

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