Funds to aid SMEs amounting to billions of dollars underused and badly managed, Hong Kong public spending watchdog finds
- Audit Commission report also notes that the funds are plagued by governance issues
Funds amounting to tens of billions dollars administered by the Trade and Industry Department were underutilised and poorly managed, the Hong Kong government’s auditor revealed on Wednesday.
Two funds in aid of small and medium-sized enterprises (SMEs) – the HK$30 billion (US$3.8 billion) SME loan guarantee scheme and the SME export marketing fund – recorded waning interest in the past decade, whereas the other two funds – a special loan guarantee scheme and the SME development fund – were poorly managed, according to the Audit Commission report.
The SME export marketing fund and SME development fund have a combined funding of HK$5.25 billion.
For example, the number of applications for the SME loan guarantee scheme dropped 46 per cent to 744 in 2017 from 1,381 in 2008.
The watchdog noted that the funds overall were plagued by governance issues. For example, the SME development fund, set up to subsidise projects by firms to boost their competitiveness, suffered from poor attendance by non-official committee members, who made up most of the panel.
The committee, which comprises two official members and 14 non-official members, plays an important role in the management of the fund it is responsible for – advising and making recommendations to the director general of trade and industry on funding approval.
However, the audit report showed that in each year between 2013 and 2018, there were one to three members who attended none or only one of the meetings. In each year, there were three to eight members who were present for only half or less than half of the 42 sessions.
A high-profile group advising Chief Executive Carrie Lam Cheng Yuet-ngor on supportive measures for SMEs was also found to be lacking in commitment.
The small and medium enterprises committee, set up in 1996, comprises 28 members, of which 22 are non-officials including businessmen, professionals, bankers and academics appointed by the secretary for commerce and economic development for two-year terms.
Of the 21 meetings held between 2009 and August this year, between two and 10 non-official members in each two-year term attended less than half of the meetings. No quorum was required. The latest term ends in December.
The committee drew up two work plans, for 2014 to 2016 and 2017 to 2019, and proposed more regular meetings but some were not held.
The report urged the department to take measures to ensure the funds were effectively used to help SMEs and to improve the attendance of non-official members on the SME vetting committee and small and medium enterprises committee.
It also urged the department to specify a quorum requirement for committee meetings.
The department accepted the auditor’s recommendations.