• 11/10/2024

Hong Kong finance chief urges banks to boost help for small businesses as 74% expect cashflow to be key challenge

Hong Kong Free Press

Hong Kong's financial chief Paul Chan and the Monetary Authority meets with key banks in the city on August 14, 2024. Photo: Paul Chan via Facebook.

Hong Kong’s finance chief Paul Chan has urged big banks to do more to help small businesses, as a survey found that 74 per cent of small and medium-sized enterprises (SMEs) see cashflow as the biggest challenge in the year ahead.

Hong Kong's financial chief Paul Chan and the Monetary Authority meets with key banks in the city on August 14, 2024. Photo: Paul Chan via Facebook.
Hong Kong’s financial chief Paul Chan and the Monetary Authority meets with key banks in the city on August 14, 2024. Photo: Paul Chan via Facebook.

Chan said he and Hong Kong Monetary Authority chiefs met representatives of major banks and discussed the liquidity challenges which SMEs faced.

“Participants agreed that small and medium-sized enterprises are an important component of the Hong Kong economy,” Chan wrote in a Facebook post in Chinese after Wednesday’s meeting.

“Given the current economic environment, it is very important to stay in the same boat and keep an pragmatic attitude, as well as effective mutual communication, to ensure immediate and available liquidity,” he said.

“I hope banks will guarantee that their policies to support small and medium-sized enterprises are in place in front-line services. For individual cases that are more complex and difficult, banks will be assisted by the Monetary Authority.”

Chan added that in March the Monetary Authority unveiled nine measures to support SMEs in financing, with banks told not to require early settlement of loans or to adjust credit limits because of price fluctuations in mortgaged properties.

Serval shops are closed in Mong Kok area on 22 April, 2024. Photo: Kyle Lam/HKFP.
Closed down stores on a corner in Mong Kok, Hong Kong, on April 22, 2024. Photo: Kyle Lam/HKFP.

Last week, lawmaker Jeffrey Lam, who represents the commercial sector, met Monetary Authority officials alongside representatives of the real estate sector to express concern about the liquidity problems facing SMEs.

He urged banks to offer more help to small businesses on funding and to be more flexible with customers struggling to meet repayments.

Separately, the Hong Kong General Chamber of Commerce on Wednesday released the results of a survey conducted last month. It found that 77 per cent of SMEs had not yet seen business recover to pre-pandemic levels and 39 per cent expected business to further decline this year.

Some 74 per cent cited cashflow difficulties as a key challenge in the next 12 months, while high labour costs and rents were also pressing problems.

Hong Kong Tsim Sha Tsui City Harbour view
Hong Kong. File photo: Kyle Lam/HKFP.

Some 46 per cent said they found it very difficult or difficult to secure financing, but only 54 per cent of all respondents had applied for any of the government’s funding schemes.

“This suggests that increasing awareness of the various schemes and providing help in navigating the application process – as around three quarters said the processing time was too long and bureaucratic – would help more SMEs to apply for the schemes,” the chamber said.

“In terms of what more support the Government could provide to help SMEs, access to funding was ranked as the most critical, followed by reducing red tape, while stimulating networking and collaboration was ranked third,” it added.

Hong Kong has more than 360,000 SMEs – which employ fewer than 100 persons – and they accounted for 98 per cent of all enterprises and employed around 45 per cent of the private sector workforce, according to the Commerce and Economic Development Bureau.

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https://hongkongfp.com/2024/08/15/hong-kong-finance-chief-urges-banks-to-boost-help-for-small-businesses-as-74-expect-cashflow-to-be-key-challenge/