Broader exemption sought for SMEs

PUBLISHED : Saturday, 11 February, 2012, 12:00am
UPDATED : Saturday, 11 February, 2012, 12:00am


The government is considering further changes to the long-awaited competition bill to exclude more small and medium-sized businesses from its provisions.

Under the latest draft of the bill, firms with a turnover of less than HK$11 million will be exempt. But business groups say this figure is too low, and some want a turnover threshold of HK$500 million.

'We surely understand the concerns of small businesses, and we are listening to different views,' a person familiar with the issue said. 'But we need to base it on something. You cannot just pick a number out of the air.'

If the threshold is raised, it will be the second amendment to the original draft bill put to the Legislative Council in July 2010. The government made six concessions to the business lobby in October last year that drew criticism from supporters of the bill.

The HK$11 million threshold, introduced as part of the October concessions, was based on the average annual turnover of SMEs recorded by the Census and Statistics Department between 2005 and 2009. Under the latest draft, businesses with a turnover of between HK$11 million and HK$100 million would be covered by provisions against abusing substantial market power, but provisions to stop price-fixing and bid-rigging would apply only to companies with a turnover of more than HK$100 million.

Pro-business members of the Legco committee considering the bill have proposed a threshold of HK$500 million, the minimum turnover for companies wishing to list on the stock exchange. But the source dismissed that argument, saying such a high threshold would offer too many loopholes.

Jimmy Ng Wing-ka, vice-president of the Chinese Manufacturers' Association, said the threshold as it stands was futile, as many companies could breach the HK$11 million barrier in a single transaction.

'In garment and other manufacturing businesses with small profit margins, [a turnover of] HK$11 million is more like the definition of a micro-enterprise' rather than a small or medium-sized business, Ng said.

He said the four major business chambers - the others are the General Chamber of Commerce, the Federation of Hong Kong Industries, and the Chinese General Chamber of Commerce - sat down last Monday to discuss the issue. 'We understand the government would not accept the HK$500 million threshold, but we have not reached a consensus on where to draw the line,' Ng said.

The source said the government had to balance the views of pro-business politicians demanding further concessions with the views of pan-democrats, who have threatened to withdraw their support if there are any further changes.

'After all, it is a vote-counting game,' the source said.

If it is not passed by the end of this Legco session in July, the bill will lapse and the legislative process would have to start from scratch.

Jeffrey Lam Kin-fung, a member of the General Chamber of Commerce and a Legco member for the commercial sector, said the chances of the threshold being raised were 50-50.

'The government has to be careful of the impact on small businesses,' Lam said.