To support small and medium enterprises during the global economic slowdown, Secretary for Commerce & Economic Development Gregory So has proposed launching concessionary measures within the first half of this year.

Speaking at a press conference today, Mr So said the Government has proposed special time-limited concessionary measures under the existing SME Financing Guarantee Scheme administered by the Mortgage Corporation to further assist enterprises in tackling the economic uncertainties and possible liquidity problems.

Under the measures, the loan guarantee ratio will rise from the existing ceiling of 70% to 80% while the guarantee fee will be reduced.

Lending institutions can get an 80% loan guarantee by paying 30% of the existing guarantee fee for a 70% guarantee for approved loans.

The application period will last nine months and the Government will make a total guarantee commitment of $100 billion. The maximum loan guarantee period is five years.

Estimated government expenditure will be $11 billion, taking into account the anticipated default rate.

All guarantee fees collected by the corporation will be used to cover default compensations and related expenses, such as administrative costs for recovery of compensated default payments.

"We hope to seek funding approval from the Legislative Council in April, with a view to introducing the measures within the first half of this year," Mr So said.

Special insurance policy

The Export Credit Insurance Corporation will introduce new terms in their insurance policy on February 6 to provide special concessions for SMEs, which will benefit more than 2,000 exporters.

The Government also proposes halving the charges for import and export declarations and each enterprise in import and export businesses will save $9,000 a year on average. This will cost the Government $750 million a year.

The Government will seek funding approval from the Legislative Council in the first half of this year, and will launch the dedicated fund by mid-2012 to provide enhanced support for Hong Kong enterprises to tap the Mainland domestic market.

Data centre development

Mr So said the Government will exempt the waiver fee for changing parts of industrial buildings aged 15 years or above into data-centre use and it will be applicable to data centres of all tiers.

On the development of high-tier data centres involving lease modification on industrial lots, the Government will assess the premium for lease modification on the basis of actual development intensity and high-tier data-centre use instead of optimal use.

"We believe the new measures can encourage more conversion of industrial buildings for data-centre use," Mr So said.

The two measures will be introduced within 2012-13 for application until March 31, 2016.

The value of total receipts for the restaurants sector was $23.6 billion in the fourth quarter, up 7.4% over the same period a year earlier, the Census & Statistics Department said today.

The value of restaurant total purchases rose 10.4% to $8.7 billion.

Total receipts of miscellaneous eating and drinking places rose 9.5% in value and 1.7% in volume, while Chinese restaurant total receipts rose 7% in value and 0.4% in volume.

Non-Chinese restaurant receipts rose 6.5% in value and 0.3% in volume, while bar total receipts rose 4.2% in value and 0.1% in volume.

On a seasonally adjusted quarter-to-quarter comparison, the volume of total restaurant receipts rose 1.8% in Q4 compared to Q3.

For 2011 as a whole, the value of total receipts for the restaurants sector was $89.3 billion, up 6.4% in value and 1% in volume compared with 2010, while the value of total purchases of restaurants increased by 10.9% to $32.7 billion.

The value of total retail sales in December was provisionally estimated at $43 billion, a 23.4% increase over a year earlier, the Census & Statistics Department said today.

After netting out the effect of price changes over the same period, the volume of total retail sales rose 17.1% when compared with the same month a year earlier.

The revised estimate of the value of total retail sales in November, at $33.4 billion, was up 23.4% on the same month last year, while the volume of total retail sales increased 16.9%.

The volume of sales of miscellaneous consumer durable goods increased the most, by 163.3%.

This was followed by sales of electrical goods and photographic equipment (+45.4% in volume); commodities in department stores (+18.7%); wearing apparel (+17%); jewellery, watches and clocks, and valuable gifts (+15.9%); footwear, allied products and other clothing accessories (+13.2%); miscellaneous consumer goods (+11.8%); commodities in supermarkets (+5.8%); fuels (+4.6%); and furniture and fixtures (+4.6%).

The volume of sales of food, alcohol and tobacco decreased 2.3% in December compared with a year earlier.

For 2011 as a whole, total retail sales grew 24.8% in value and 18.4% in volume over 2010.

The Mortgage Corporation plans to launch a microfinance pilot scheme with a trial period of three years in mid-2012.

At the request of Financial Secretary John Tsang, the corporation formed a study group last year comprising experts from the banking industry, voluntary agencies, academia and the Government. The group examined the feasibility of establishing a sustainable microfinance scheme in Hong Kong and submitted a report to Mr Tsang.

It said a sustainable microfinance scheme will provide comprehensive support to help boost borrowers' credit standing so they can obtain bank loans at a relatively lower interest rate. A comprehensive support system will help borrowers develop their business plans, provide entrepreneurial training, and offer mentorship after a business launch.

The study group recommended the scheme be self-sustaining in the long-run. It should not operate as a social welfare hand-out and borrowers must have the willingness to repay loans. For micro-business start-up and self-employment, borrowers must present viable business plans, and should have the ability to implement them.

According to the preliminary framework suggested in the report, the pilot scheme should cater to those aspiring to start their own businesses, those wishing to become self-employed and those wanting to achieve self-enhancement through training, skills upgrading or securing professional certification. The maximum loan amount for each loan in these categories will be $300,000, $200,000 and $100,000, with a five-year maximum loan tenor.

Mr Tsang announced in yesterday's 2012-13 Budget address a request for the corporation to co-ordinate with banks, voluntary agencies and other stakeholders to conduct a sustainable microfinance pilot scheme based on commercial principles, with a tentative aggregate loan amount of $100 million. The corporation welcomed the announcement and has started preparatory work.

The Land Registry recorded 4,490 sale and purchase agreements for all building units in January, down 19.8% on December and down 54.7% year on year.

The total consideration for sale and purchase agreements in January was $27.8 billion, down 14.7% on December and 52.9% down year on year.

Of the agreements, 3,507 were for residential units, down 18.5% on December and down 56.2% year on year.

Total consideration for sale and purchase agreements in respect of residential units was $22.2 billion, down 13.5% on December and down 33.4% year on year.

There were 280,782 land-register searches in January, down 16.9% on December and down 44.1% year on year.

Financial Secretary John Tsang says his 2012-13 Budget was well thought-out following a series of public consultations, and he is confident the comprehensive measures will win support from the community.

Speaking on joint radio phone-in programme this morning, Mr Tsang said his latest budget covers both one-off measures and long-term strategies, aiming to balance the needs of people from all walks of life to improve their quality of living.

When asked about his performance over the past five years, Mr Tsang said he will leave it to Hong Kong people to rate him. He added the city’s economic development is a representative benchmark, noting the jobless rate dropped from 5.5% in 2009 to 3.3% currently, and the economy remained stable during global economic turmoil.

The economic situation for the current quarter does not look favourable, Mr Tsang said, adding the 1%-3% estimated growth in this year’s gross domestic product has already taken into account the effects of the measures proposed in the latest budget.

He said the Government has been actively exploring the new markets including South America, Russia and India to prepare for the tough times ahead.

About 70% of the budget is allocated to regular expenses covering the needs of the grass roots, such as education, healthcare, social welfare and transportation, he said, adding the Labour & Welfare Bureau aims to request funding for the $2 public transport concessions for seniors and eligible people with disabilities before the end of the second quarter.

The Broadcasting Authority has approved the updated investment plans of ATV (Asia Television) and TVB (Television Broadcasts) for the 2013-15 period.

In its existing six-year plan for 2010-15, ATV was committed to investing a total amount of $2.332 billion on programming and capital expenditure. Taking into account the updated commitments for 2013-15, ATV now submits the total amount of proposed investment for 2010-15 will be $2.351 billion, or $19 million more than its original commitment.

The increase in proposed investment commitment is attributable to higher expenditure on local productions and co-productions and related expenses for backup support and administration.

In its existing six-year investment plan for 2010-15, TVB was committed to investing a total of $6.336 billion on programming and capital expenditure. It now proposes to maintain its existing investment plan for the period from 2013 to 2015 and it has been approved.

The authority also considered three complaint cases about licensees’ non-compliance with codes of practice on programme and advertising standards in January.

TVB was seriously warned about the television programme MaBelle Leo Diamond Special: Happy Moment with Diamond 2011 broadcast on the HD Jade channel in August.

TVB was also warned about its Dolce Vita broadcast on the Pearl channel on August 4.

The now News Channel was strongly advised to observe the TV Programme Code regarding a complaint about its now Late News broadcast on on May 16.

In December, the Commissioner for Television & Entertainment Licensing dealt with 181 cases or 306 complaints, of which five cases, or five complaints, were classified as minor breaches and 113 cases, or 227 complaints, were unsubstantiated. The remaining 63 cases, or 74 complaints, were found to be outside the ambit of the Broadcasting Authority Ordinance.

Financial Secretary John Tsang is confident the $80 billion worth of measures proposed in his 2012-13 Budget will stabilise the economy, adding it was formulated with Hong Kong’s long-term development in mind.

Speaking to the media after delivering the budget today, Mr Tsang said many citizens and Legislative Council members offered their views during the budget consultation period. Having given careful thought to their views and taking into account the current economic conditions and forecasts, he said he has proposed a basket of measures that will benefit the community.

“As you can see from the backdrop, the theme of the budget is Stabilising the Economy, Safeguarding People’s Livelihood & Investing in the Future. I am certain these measures will help support this overall theme,” he said.

“In the past five years, government expenditure increased by 70% while our nominal Gross Domestic Product growth was 21%. Our recurrent expenditure has increased by almost 33%. In this budget, expenditure in livelihood related items has increased by a respectable rate. Expenditure in education will grow by 7%, medical and health services by 8%, and social welfare by 9%.”

He said the SME Financing Guarantee Scheme and other measures will help reduce the pain faced by small and medium enterprises.

Besides providing support to enterprises and preserving jobs, Mr Tsang said he has kept in focus the needs of the working class.

“Although the current unemployment rate is at a full employment level, we should be prepared to readily take measures to counter any upward pressure on the unemployment rate,” he said.

“There is also a chronic manpower shortage in some sectors, such as the construction industry. In this budget, I have proposed additional funding to support the industry in enhancing manpower training. This can bring new entrants into the industry to ease the problem of an ageing workforce and provide necessary manpower for future infrastructure projects.”

He said the Government will not withhold resources even in the face of an economic downturn.

“We shall continue to allocate resources to enhance essential community services while stimulating the economy to help those in need. Having said that, every dollar of public money should be well spent and used, where appropriate.”

Education, medical and health services, and social welfare are closely related to people’s livelihood, he said, adding the Government devotes the largest share of resources to these policy areas, irrespective of economic circumstances.

Expenditure in these three areas, amounting to 60% of overall expenditure, has increased by 30%-40% compared with the 2007-08 fiscal year.

Although inflation is expected to slow in the coming year, he said he fully understands the pressure on the community brought by price hikes last year.

“With this in mind, I have proposed various relief measures and tax concessions in this year’s budget to ease the burden of people in need. These targeted measures are set to benefit people from every sector of our community,” he said.

The budget also identifies ways to nurture the six industries where Hong Kong enjoys competitive advantages.

“In 2010 the output of these six industries accounted for 8.4% of Gross Domestic Product and employed nearly 410,000 people. The budget has proposed various measures to support the development of the six industries, which we hope will become the new economic pillars of Hong Kong and further diversify our economy in future.

“The many large-scale infrastructure projects, already under way or soon to be implemented, will not only benefit our labour market, they will, upon completion, enhance our city’s competitiveness as well as our quality of life.”

He said the Government has maintained the share of public expenditure at around 20% of Gross Domestic Product and the target was set to prevent overspending by the Government and stifling the development of the private sector.

“This percentage provides useful guidance but we are not bound by this rule. We can go beyond this target level, if need be. In four of the past 10 years, public expenditure exceeded 20% of GDP. This is also the case for the estimated public expenditure for the budget.

“I firmly believe that, when preparing the budget, we should adhere strictly to the guiding principle of fiscal prudence. The needs of all trades, industries and sectors of society should take priority. This way we can maintain Hong Kong’s social stability and equip the city for the challenges ahead.”

Speaking in a joint television panel discussion tonight, he said most of the recurrent expenditure will involve long-term issues, such as education, welfare and medical services.

In response to calls for a reduction in the rate of profits tax, he said Hong Kong already enjoys a low tax rate.

Gross Domestic Product grew by 5% in real terms in 2011 and the underlying inflation rate averaged 5.3%, a marked rise from the 1.7% rate in 2010.

Delivering his 2012-13 Budget today, Financial Secretary John Tsang said exports steadied in the fourth quarter to bring growth for 2011 to 3.6% in real terms.

He said Hong Kong lost 62,000 jobs during the economic recession in the wake of the financial tsunami but the unemployment rate rebounded slightly to 3.3% towards the end of 2011, which still represented full employment.

Mr Tsang said the Government's measures to stabilise the economy and the tenacity of Hong Kong people have helped the city come through crisis after crisis.

Financial Secretary John Tsang has forecast the Government's operating expenditure for 2012-13 will be $315 billion, up 6% on the revised estimate for 2011-12.

Delivering his 2012-13 Budget today, Mr Tsang said recurrent expenditure will be $264.3 billion and capital expenditure will be $78.7 billion, including an all-time high of $62.3 billion on capital works.

The revised estimate for government revenue for 2011-12 is $433.1 billion, $63.4 billion higher than the original estimate. The revenues from profits tax and salaries tax have increased by nearly $30 billion compared to the original estimate. The sale of land brought in $83.1 billion, nearly $21.1 billion higher than the original estimate.

Taking into account operating and capital expenditure, he forecast government expenditure will reach $393.7 billion, up 7% on the revised estimate for 2011-12.

Public expenditure will be equivalent to 21.4% of GDP. By March 31, the fiscal reserves are expected to be $662.1 billion, equivalent to 35% of GDP or 22 months of government expenditure.

Total government revenue for 2012-2013 is estimated to be $390.3 billion. Earnings and profits tax, estimated at $161.6 billion, will still be the major source of revenue. Land revenue is estimated at $60 billion. Recurrent expenditure is estimated to grow by 33% during this period.

Mr Tsang said there will be a small deficit in the accounts in the coming years, but fiscal balance will largely be achieved. Fiscal reserves are estimated to be $658.7 billion by end-March 2013, representing 34% of GDP or 20 months of government expenditure.

"In this highly uncertain global economic climate, we will hand over a healthy set of accounts to the next Government," he said.

Financial Secretary John Tsang forecasts the average underlying inflation rate will drop from last year's 5.3% to 4% this year, while the headline inflation rate is estimated to be 3.5%.

In his 2012-13 Budget speech at the Legislative Council today, Mr Tsang said he is not optimistic about Hong Kong’s export performance in the first half of the year, and if exports plunge in the first quarter, the overall economy may take a downturn in that quarter. 

He said the measures proposed are worth nearly $80 billion and make a strong package which will help stimulate the economy 1.5 percentage points this year.

He forecasts Gross Domestic Products growth will be 1% to 3% in real terms for this year.

With global food and commodity prices retreating from peaks and local costs easing off as a result of the economic slowdown, he believes the inflation rate will ease quite visibly in the second half of this year.

The average underlying inflation rate for the year is expected to drop from last year's 5.3% to 4% this year. The headline inflation rate is estimated at 3.5% after taking account of the effects of the one-off measures he proposes.

Financial Secretary John Tsang has proposed enhancing the SME Financing Guarantee Scheme by increasing the maximum loan guarantee ratio to 80% for which the Government will provide a guarantee commitment of $100 billion while the guarantee fee will be lowered.

Delivering his 2012-13 Budget at the Legislative Council today, Mr Tsang said under the current scheme launched by the Mortgage Corporation, the maximum loan guarantee ratio is 70%.

The concessionary measures will include a new loan guarantee product with a higher ratio of 80% for which the Government will provide a total guarantee commitment of $100 billion.

While the annual guarantee fee for a loan with a guarantee ratio of 70% currently stands at 32%-35% of the loan facility’s interest rate, that for a loan with a guarantee ratio of 80% under the new concessionary measures will be lowered to 10%-12%.

The concessionary scheme will be open for application for nine months. Taking into account the anticipated default rate, the estimated government expenditure will be about $11 billion.

To further assist small and medium enterprises, the Export Credit Insurance Corporation will introduce new terms in their insurance policy, which will include special concessions on February 6.

It will also extend the sales-by policy launched in March last year to contracts between Hong Kong exporters’ overseas or Mainland subsidiaries of which the Hong Kong policyholders have control, and their buyers.

He also proposes waiving business registration fees for 2012-13, which will cost the Government $1.9 billion, and reduce profits tax for 2011-12 by 75%, subject to a ceiling of $12,000. The reduction will be reflected in the taxpayers’ final tax payable for 2011-12. The proposal will benefit all taxpayers who are liable to profits tax and will cost the Government $1.12 billion.

He proposes halving the charges for import and export declarations and estimates each enterprise engaging in import-export business will save $9,000 a year on average. This will cost the Government $750 million a year.

Abolishing capital duty levied on local companies is also proposed. It will cost the Government $90 million a year.

The total assets of the Exchange Fund amounted to $2.4927 trillion at the end of December, up $2.3 billion on November.

The Monetary Authority said today foreign-currency assets increased by $10.4 billion and Hong Kong dollar assets decreased by $8.1 billion.

The Currency Board Account showed the Monetary Base at the end of December was $1.076 trillion, up $15.8 billion, or 1.49%, on November. The rise was mainly due to an increase in Certificates of Indebtedness.

Backing Assets increased by $16.8 billion, or 1.46%, to $1.172 trillion.

At the end of December, the backing ratio stood at 108.92%, compared with 108.95% in November.

Hong Kong-dollar deposits increased by 0.8% in December while overall foreign-currency deposits grew by 0.9%, the Monetary Authority said today.

Renminbi deposits in Hong Kong declined by 6.2% to RMB588.5 billion.

Total renminbi remittance for cross-border trade settlement amounted to RMB239.04 billion, compared to RMB184.99 billion in November.

Total loans and advances decreased by 0.7%. Loans for use in Hong Kong contracted by 1.5% but loans for use outside Hong Kong expanded by 1.5%.

As Hong Kong-dollar loans declined while deposits rose, the Hong Kong-dollar loan-to-deposit ratio decreased to 84.5% from 85.5% in November.

Government expenditure in December was $31.2 billion, with revenue of $69.5 billion, resulting in a $38.3 billion surplus.

The Financial Services & the Treasury Bureau announced today the Government’s expenditure for the nine months ending December amounted to $264.8 billion, with $324.3 billion in revenue, resulting in a net surplus of $59.5 billion.

Fiscal reserves stood at $654.9 billion at year's-end.

Financial Secretary John Tsang will deliver the 2012-13 Budget at the Legislative Council at 11am tomorrow. It will be broadcast live by the electronic media and on the budget website.

His speech and a leaflet highlighting his key proposals will be available for collection after his address. They will be available at the Home Affairs Department's 20 Public Enquiry Service Centres, the Information Services Department counter at the Murray Building, Labour Department offices, 20 Mass Transit Railway stations, and 65 shopping centres in public housing estates. Click here for details.

Mr Tsang will hold a press conference at 3pm and participate in a one-hour joint television panel discussion programme Budget Forum at 7pm. Both will be broadcast on television and radio.

He will then attend a joint radio phone-in programme at 8am on February 2.

The Buildings Department approved 50 building plans in September - 20 on Hong Kong Island, nine in Kowloon and 21 in the New Territories.

Of the approved plans, 29 were for apartment and apartment-commercial developments, seven were for commercial developments, three were for factory and industrial developments, and 11 were for community services.

Consent was given for work to start on 11 building projects which will provide 33,057 square metres of gross floor area for domestic use, involving 415 units, and 68,657 square metres of gross floor area for non-domestic use. Work on four projects has started.

Twelve occupation permits were issued, with five on Hong Kong Island, five in Kowloon and two in the New Territories.

Of the buildings certified for occupation, the gross floor area for domestic use was 220,028 square metres, involving 2,455 units, and 117,227 square metres for non-domestic use.

The declared cost of new buildings completed in December totalled $6.6 billion.

Twelve demolition consents were issued, 3,325 complaints about unauthorised building works were received, and 1,336 removal orders were issued.

The Commerce & Economic Development Bureau today launched a public consultation on the second draft of the Code of Practice for Online Service Providers.

It proposes amendments to the first draft, making it more practical and user-friendly. In it, providers must take action to limit and stop a particular infringement as soon as practicable, and a subscriber can ask providers not to disclose personal data when sending a copy of their counter notice to the complainant.

Providers will be required to keep records of the notices of alleged infringement and counter notices received for 18 months, and the complainants and subscribers will be required to provide more information.

Views can be sent to the bureau by email by March 2.

Secretary for Commerce & Economic Development Gregory So said today the Executive Council is handling free-TV licence applications and the results will be announced as soon as possible.

Speaking to the media after attending the RTHK Lunar New Year Celebration, he noted these applications and the results will have a profound impact on the industry. The Government must therefore look at it comprehensively.

The applications are being processed in accordance with procedures, he stressed.

A Policyholders' Protection Fund is proposed to be set up in 2013-14 to provide a safety net for policyholders when an insurer becomes insolvent, the Financial Services & the Treasury Bureau has announced, after reviewing conclusions of a public consultation exercise.

Secretary for Financial Services & the Treasury Prof KC Chan said such a fund would enhance the insurance industry's stability and competitiveness.

The Government aims to introduce the bill into LegCo in the 2012-13 legislative session for setting up the fund in 2013-14 at the earliest, he added.

It would comprise life and non-life schemes, and focus on individual policyholders while also covering building owners' corporations.

It would cover small and medium enterprises, recognising that they have less resources to assess insurers' financial ability.

All authorised direct life and non-life insurers will be required to participate in the fund. The compensation limit would likely be $1 million.

Any compensation would be 100% for the first $100,000 of any claim, plus 80% of the balance, up to the compensation limit. The proposed compensation limit would be able to meet 90% to 100% of the claims arising from about 90% of life policies, and fully meet the claims of about 96% of non-life policies.

When an insurer becomes insolvent, the fund would help facilitate the transfer of life policies and accident and health policies with guaranteed renewability to a replacement insurer. For non-life policies, it would provide for continuity of coverage until their expiry.

Click here to see the final proposals.