The government-owned Hong Kong Export Credit Insurance Corporation is offering new measures to help small and-medium-sized exporters (SMEs) weather an uncertain economic climate.
The measures include a 5 to 10 per cent discount on insurance premiums and extension of policy cover to sales contracts between Hong Kong exporters' majority-owned subsidiaries on the mainland and domestic or overseas buyers.
These are among a cocktail of initiatives the government has unveiled in the past week to boost small firms' financing, lower their costs and strengthen their risk cover.
'Downside risks on global trade [now] are worse than during the global financial crisis,' the corporation's chairman Willy Lin Sun-mo said yesterday. 'Buyers are afraid of placing orders and do not have sufficient capital to source products, while manufacturers lack working capital as banks turn off the tap. It can't go on like this.'
In his budget speech last week, Financial Secretary John Tsang Chun-wah offered some 280,000 smaller firms a new financing guarantee scheme to help them tide over the uncertainty arising from the euro-zone debt crisis. With a commitment of HK$100 billion in loans, the scheme increases the government's loan guarantee ratio to 80 per cent.
In addition, Hong Kong Mortgage Corporation plans to roll out a microfinancing scheme, providing loans of up to HK$100 million with interest rates below market levels for poor start-up firms and the self-employed.
Lin said the Hong Kong Export Credit Insurance Corporation would offer 5 to 10 per cent discounts on premiums to companies earning HK$10 million in revenue annually. Such companies account for 90 per cent of the corporation's 4,000-odd policyholders.
The annual fee for policyholders is also being waived for a year.
Lin said the repercussions of the euro-zone debt crisis and the sluggish US economy prompted 17 per cent more buyers to delay payment on finished goods to Hong Kong exporters in the nine months to December 31.