The concerns of Hong Kong's small and medium-sized enterprises with regard to the new competition bill was one of the topics under discussion at a recent meeting of business groups and government representatives.

Attending the meeting on December 16th with Commerce and Economic Development Secretary, Rita Lau Ng Wai-lan were representatives from both the Hong Kong and Chinese General Chambers of Commerce, the Hong Kong Small and Medium Enterprises Association, and the Federation of Hong Kong Industries, among other bodies.

The legislation, gazetted in July 2010, and currently before the Legislative Council, aims to prevent anti-competitive behaviour via unlawful collaborations and agreements between businesses, or via the abuse of significant market powers, as well as preventing mergers within the telecommunications sector likely to significantly decrease competition in the SAR; similar rules for other industries are thought likely to follow in the next few years.

According to the HKGCC, the discussions held earlier this month, covered "a broad range of issues, including the need for more clarity and certainty in the competition rules of the Bill, the potential cost implications for businesses and in particular SMEs, as well as penalties and private actions".

Meanwhile, there was good news for the jurisdiction's SMEs, with the signing ceremony for the SME Financing Guarantee Scheme set to be launched on January 1, 2011, having taken place on December 13.

Twenty-one banks have signed a letter signalling their intent to join the scheme, according to the Hong Kong Monetary Authority, the chief executive of which, Norman T L Chan, announced at the time that:

"The HKMC's SME Financing Guarantee Scheme offers extensive and flexible guarantee coverage to help SMEs in Hong Kong obtain more sustainable bank financing for their daily operations or to purchase of equipment."

"Also, this Scheme will help banks manage their lending risks more effectively - the banks can meet the financing needs of SMEs without having to warehouse excessive credit risks.Undoubtedly, the Scheme will bring benefits for SMEs, banks, the economy and employment in Hong Kong."

The SME Financing Guarantee Scheme is designed to provide assistance to non-listed enterprises with business operations in Hong Kong to obtain loans from banks, providing general working capital for their business operations or helping them to acquire equipment and assets in relation to their business.

In order to qualify for the Scheme, firms must have been in operation for at least one year, and have a good loan repayment record.

Under the Scheme, the Hong Kong Mortgage Corporation will provide guarantee coverage on 50%, 60% or 70% of the bank financing for eligible enterprises. The maximum loan amount for each enterprise or each group of enterprises under the cover is HKD12m (USD1.5m), with both term loan and revolving credit facilities being eligible. The maximum guarantee period for each loan facility is five years, and the minimum annual guarantee fee will range from 0.5% to 2.5% of the loan facility.

The launch of the new Finance Guarantee Scheme will follow the expiry of the Special Loan Guarantee Scheme which concludes at the end of 2010.