Policy Statement & Submission

Letter to members of the Government SME Development Fund Vetting Committee
17 October 2002

　

Award schemes to promote SMEs

We write to share with you a few thoughts about promotion of SMEs through various award schemes and how this relates to public funding, of which the SME Development Fund is a part.

Background

We would first like to set out two points of background.

First, the Chamber is the most experienced organisation in running business awards. (Some of that experience is highlighted in the paper attached.) We were the first to advocate the use of business awards to champion SME promotion. It was upon the Chamber's suggestion that the guideline for the Hong Kong Awards for Services included a recommendation to have an SME in the list of finalists, and that a new SME category was added to the Eco-Business Award. More importantly, the Chamber is the originator of the HKSME Award, which consists of two categories, namely, the new SME Award and Best Managed SME Award.

The second background is that the Chamber has submitted an application for the HKSME Award in the first tranche of the SME Development Fund. In our submission we have expanded the scheme to four awards by adding two new categories so as to bring to fruition the recommendations of the Government SME Committee in its Report. These two new categories were on IT application and training respectively. In planning for the new award categories, we have, as always, adopted an inclusive, partnership approach by engaging a number of related organisations, including our long-time partner the Hong Kong Productivity Council, the Hong Kong Information Technology Federation, and the Management Development Centre of the Vocational Training Council.

That second background would have made the Chamber an interested party with regard to using the SME Development Fund for SME awards. In order to remove that interest, we have decided to withdraw the application; coincidentally, we just received from Trade and Industry Department a letter informing us that the application has not been successful. We are, therefore, contributing our thoughts as a non-interested party, as follows.

Recent development

We would now like to draw your attention to a few observations and recent developments.

First, we have decided with the Hong Kong Productivity Council to continue to pursue our existing HKSME Award, consisting of the New SME and Best Managed SME categories. We are making the best endeavours to seek commercial sponsorship; we have not yet succeeded in raising the money as fund-raising has been very difficult in the current economic climate. It is somewhat unfortunate that a sponsor which would have committed had withdrawn due to the delay occasioned by the previous uncertainty over the award scheme.

Secondly, we submitted a paper to the Director General of Trade and Industry proposing a rationalisation of the various award schemes on SME promotion. We believe this is an important structural and policy issue which has to be addressed if the various schemes are to be effective. A copy of our paper is attached for your consideration. We have not yet received any reply from the government.

Thirdly, we were approached by Hong Kong Computer Society for support of its own IT Excellence Award, which had been supported by the Vetting Committee. While we maintain that there should be a rationalisation of the various award schemes, before that materialises, the Chamber would support worthwhile efforts to promote SME through awards. We have thus agreed to be a supporting organisation of that award.

Fourthly, we were approached by government's SME office and the Hong Kong Branch of the UK-based ACCA for support in a new financial management award for SMEs. That proposal reinforced our concern over a possible proliferation of SME awards. We have expressed the view that such an award would best be organised as part of an overall SME award scheme under a rationalised structure, with an appropriate professional body as a partner. However, if that does not materialise, we are prepared to maintain our supporting role should an organiser come forward. Our understanding is that ACCA is preparing an application for that award.

Fifthly, we understand the government is now inviting applications proactively for another new award on training. Again, we are concerned that instead of rationalisation, the “landscape” of the SME award seems to be heading towards more confusion and duplication.

Recommendations

We would like to make a few recommendations.

Firstly, we reinforce the need for rationalisation of the various awards. This is an important systemic issue which must be addressed, and we invite you to endorse the concept as proposed in our paper.

Secondly, following from the above, we recommend that until a rationalised structure of the award schemes exists, the Vetting Committee consider halting all funding for awards after the current tranche. The private sector would always be free to organise their own awards, with or without public funding. But when public funding is involved, it should not be used to perpetuate the confused landscape.

Thirdly, we recommend that once that rationalised structure is in place, the government should provide a sustainable source of funding for the award schemes. This would mean making the SME Development Fund recurrent, if that funding were to come from the Fund. Alternatively, it could be provided as a recurrent grant under the Trade and Industry Department. This suggestion may open up the wider issue of recurrent funding – a “subvention” by the government. Ordinarily, the Chamber does not favour the widespread use of government subventions, but we submit that SME award schemes are different. By nature, support resources for these schemes must be recurrent – the experience of the Hong Kong Awards for Industry is the best testimony. To limit funding to only “start-up” awards on an ad hoc basis would be self-defeating: if the new award fails the money is wasted; if it succeeds then more demand for future resources will be needed which the Fund cannot provide.

Conclusion

We conclude by once again focusing on the need for rationalisation of the SME award schemes and a recurrent provision of funding to ensure its sustainability and effectiveness. We would emphasise that the unified scheme we propose would be an open system which encourages more innovation, not a closed shop by a few parties with vested interests. Moreover, the public funding we seek will be small, probably of the magnitude of a few millions, and will always be a supplementary rather than the major source of funding for what should essentially be private-sector driven efforts.

While not all of the above points relate specifically to the SME Development Fund, they were made with the aim to exact the best use of the SME promotional effort. I hope these ideas receive your endorsement and we shall be more than happy to discuss them with you.

Yours sincerely

　

Dr W K Chan
Senior Director, Business Policy