'SMEs (small and medium-sized enterprises) are the pillar of Hong Kong's economy. They are facing great challenges amidst the uncertainties of the global economic environment and keen competition.'
Rita Lau Ng Wai-lan
Gov't press release, Feb 2
I don't know about pillar but if this were poker and she were explaining her hand to a beginner, you might expect her to follow up with the caution: '... and so we really ought to think twice about our bet here. If we're raised again we may have to fold.'
But for Rita it was just a preamble to re-appointing a set of nobodies to a government SME committee that 'will continue to provide valuable advice to the Government in formulating policies that are conducive to the development of SMEs in Hong Kong'.
In other words, she's the sort of player who would think a pair of twos enough to push every chip she has to the centre of the table.
This is not hyperbole. As of the end of January the government had HK$96.87 billion on the table in loan guarantees to SMEs under one special scheme alone. Put this together with the basic SME guarantee scheme, the SME Development Fund and the SME Export Marketing Fund, and the total figure must be well over HK$100 billion by now.
Let's make sure we have this in perspective. We are talking not of a hundred million but of a hundred billion - HK$100,000,000,000. This is more than twice the government's annual revenue from salaries tax and also more than twice its annual expenditure on social welfare. It is almost three times the annual public expenditure on health. It's a lot.
So I think you will agree that I can't be too far out in saying Rita has pushed every chip she has to the centre of the table here.
Now, as to that pair of twos she's holding: The people who qualified for the special SME loan guarantee had only to show that they employed fewer than 50 people each (that's fewer than 50, not more than 50), that they had been in business for at least a year and they needed the money to 'tide over the liquidity problem during the global financial crisis'.
That's right. The government wanted only bad loan risks, not good ones. Oh yes, and these people also had to promise that they wouldn't use the money to repay other loans, hah-hah.
I say hah-hah because it was not the government that processed the applications. This was done by the banks that actually made the loans that the government guaranteed, and bankers would never stoop to replacing their bad loans with government-guaranteed good ones, would they? Hah-hah.
So maybe I'll have to think twice about Rita holding a pair of twos here. It can't even be that much really. It would also explain why 1,892,354 people explored their chances of playing poker with Rita before I did. This is the number of visitors that the SME loan guarantee website attracted before I showed up there.
But I shall concede that our Donald nonetheless claimed great benefits for the scheme in his policy address last October. 'The measures have benefited some 20,000 enterprises and helped preserve more than 330,000 jobs,' he told the legislative council.
Those jobs first. You will notice that he had the decency to say 'helped' preserve. Even Donald could hardly claim that, without this scheme, our unemployment rate would have been 13.1 per cent at the time rather than the 4.1 per cent actually registered.
Some jobs may indeed have been preserved but inevitably at the cost of greater economic efficiency and other jobs undermined. It is how the economy works. Jobs are created whenever money is spent. Spend it well and you get jobs with prospects. Spend it badly and you get dead end jobs. Money spent only to create jobs is usually money spent badly. That's just the way things are. Don't shoot the messenger.
The same thing holds for those 20,000 enterprises benefited. They account for just 2.3 per cent of the 863,762 companies registered in Hong Kong at the latest count. We thus have 843,762 companies all carrying a slightly greater burden so that 20,000, chosen more or less randomly, can carry a lesser burden. Win the Rita poker pot and you're in. It's arbitrary, wasteful and, in the end, will make social strife worse.
Why do we need to favour SMEs anyway? Could an SME ever run an airline, a shipping line, a bank or a big housing construction project? For some things big companies work better and for some things small companies work better.
And here is how to find out which works best where: Just leave them alone and let them find out themselves.