Mrs Pamela TanCommissioner for Labour16/F Harbour Building38 Pier Road, Hong KongDear PamelaThe Chamber applauds the government's prompt response in setting up the HK$3.5 billion Loan Guarantee Scheme for SARS Impacted Industries. In support of the scheme, we organised a roundtable luncheon with Mr Raymond Ng of your Department and I am glad to say that the roundtable has indeed proved useful in facilitating better understanding of the scheme, as well as generating some ideas on improving it.Since the scheme was launched on 5 May, we understand that the response has not been very enthusiastic and the success rate of applications was not high. The feedback we gathered was that the requirements were too stringent for users and the grey areas and uncertainties added to the obstacles.We believe that in order for the loan scheme to be of help to businesses to weather through this very difficult period, especially small and medium size enterprises, the loan scheme has to be simple, easy to understand, with a fast-track application and approval process. To enhance the effectiveness of the scheme, we urge the government to conduct a review of the scheme immediately, to focus on the following specific areas:1) Relaxation of the requirement on personal guarantee from shareholders holding 90% or more of equity interest.2) Relaxation of the requirement to prove a 30% drop in sales in April compared with the monthly average of the previous six months.3) Clearer definition of eligible businesses, including - extension of eligible business for the entertainment category to businesses beyond cinemas and karaoke (e.g. game centres);- broader definition of retail business, to enable more sympathetic consideration to be given to retailers who may not have 50% turnover from sale of goods (e.g. photo processing).We recommend that the government undertake this review urgently, with a view to implementing immediate changes to make the scheme more effective in the remaining weeks.Yours sincerely,Dr Eden WoonCEO
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