The Trade and Industry Department (TID)’s main responsibilities are to:
- consolidate and enhance good relations with trading partners and promote bilateral and regional economic and trade cooperation;
- maintain a fair and stable trade regime and ensure that Hong Kong fulfils its international obligations;
- actively participate in international trade organisations and promote trade and investment liberalisation and facilitation
- assist Hong Kong’s enterprises in exploring foreign markets
- support Hong Kong’s enterprises especially small and medium enterprises (SMEs) and encourage them to enhance their competitiveness by adding value to their products and services.
HK’s biggest trading partner is the Mainland China.
The first Mainland and Hong Kong Closer Economic Partnership Arrangement was signed in the year 2003. Subsequent agreements had also been entered into. These Agreements covered 4 main areas i.e trade in goods and services, investment, economic and technical cooperation. Qualified goods can enjoy zero tariff. Professionals can make use of measures such as opening up of the Mainland qualification examinations, mutual recognition etc to enter into the Mainland Market. Investors have investment protection. There is also expansion in the areas of cooperation to open up the Mainland market. Details could be found in the website of the TID.
The 2nd largest trade partner is the ASEAN, the member states include Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam. In 2019, HK signed the Free Trade Agreement with the ASEAN. Slowly, the member states are now granting preferential tariff treatments to HK. Freer market access and trade facilitation are in place. With the strong ties with China and the ASEAN, HK is well positioned to be the trading hub in Asia.
With the Sino-US trade war starting from 2018 and the COVID-19 pandemic affecting all the trade and economic activities at the moment, TID has been relaxing the application criteria on all the funding schemes and increasing the maximum amounts available for SMEs (small to medium size enterprises) to help them tide over the storm. Details of the schemes available as well as government support can be found at the website of SME One. One standout support is the 100% Loan Guarantee under the SME Financing Guarantee Scheme. This aims to help SMEs to pay employee salaries and rent. Any enterprise which has been operating for at least three months as at the end of December 2019 and has suffered at least 30% decline in sales turnover in any month since February 2020 compared with the monthly average of any quarter in 2019 is eligible to apply. The maximum loan amount is the lower of the total amount of employee wages and rents for six months, or HK$2 million. An interest rate of the Prime Rate minus 2.5% per annum (i.e. current interest rate at 2.75%) will be charged. No guarantee fee. Maximum repayment period is 36 months with a principal moratorium for the first 6 months.
With the recent introduction of another round of support, notably HK$80 billion to help enterprises to pay half of their employees’ salaries capped at HK$9,000 per employee for 6 months. Employers can pick a month between January to April as the basis to calculate their employees’ salaries. Application can be made in June. Hopefully, this could reduce the rate of companies going into bankruptcies, thus preventing unemployment to spike up and to help HK recover after pandemic is under control.