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Lawmakers pass bill allowing government to provide more bank loan guarantees for SMEs

The Legislative Assembly on Tuesday passed unanimously a government-initiated bill which allows the government to take on debt of up to MOP 2.2 billion (US$275.6 million) for its two loan guarantee schemes for local small- and medium-sized enterprises (SMEs).

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The Legislative Assembly (AL) on Tuesday passed unanimously a government-initiated bill which allows the government to take on debt of up to MOP 2.2 billion (US$275.6 million) for its two loan guarantee schemes for local small- and medium-sized enterprises (SMEs).

Currently, the government is allowed to take on debt of up to MOP 1 billion for the two SME loan guarantee schemes. The bill passed on Tuesday allows the government to take on debt of up to MOP 2.2 billion for its two SME loan guarantee schemes in the wake of the large increase in the number of applications by local companies for the two schemes in recent months due to the adverse impact of the COVID-19 pandemic on the local economy.

As the government had requested an urgent procedure for the debate and vote of the bill, it was not, as is the normal practice, arranged for review by any of the legislature’s standing committees before its final article-by-article debate and vote. Therefore, after the outline of the bill was passed in Tuesday’s plenary session, its final article-by-article debate and vote were immediately carried out. The lawmakers passed the bill article-by-article.

Secretary for Economy and Finance Lei Wai Nong introduced the outline of the bill during Tuesday’s plenary session in the legislature’s hemicycle.

The government has been running two loan guarantee schemes for local SMEs to help them obtain bank loans for their business development.

The first scheme, officially known as “SME Credit Guarantee Scheme”, helps local SMEs obtain bank loans for their business operations and development, by providing each beneficiary with credit guarantee of up to 70 per cent of the loan approved by the participating banks, with the maximum amount of the guarantee at MOP 4.9 million.

The second scheme, officially known as “SME Credit Guarantee Scheme Designated for Special Projects”, helps local SMEs obtain bank loans for launching certain projects, such as 1) projects to reform and innovate their business models, 2) projects to promote their own brands, and 3) projects to improve the quality of their products. This scheme also helps local SMEs affected by abnormal or unpredictable incidents, such as natural disasters and epidemics, to obtain bank loans to resolve their short-term financial difficulties arising from payment of their employees’ salaries and rental expenses. This scheme provides each beneficiary with credit guarantee of up to 100 per cent, with the maximum amount of the guarantee at MOP 1 million.

According to the current version of the law which allows the government to take on debt for the two SME loan guarantee schemes, the government can provide a maximum of MOP 900 million of credit guarantee for the “SME Credit Guarantee Scheme”, and a maximum of MOP 100 million of credit guarantee for the “SME Credit Guarantee Scheme Designated for Special Projects”. Therefore, the current version of the law allows the government to take on debt of up to MOP 1 billion for the two SME loan guarantee schemes, which were launched in 2003 applicable to local companies with less than 100 employees each.

Steep rise in applications by SMEs

During Tuesday’s plenary session, Lei noted that the number of applications by SMEs for the two schemes has sharply increased in recent months due to the adverse impact of the COVID-19 pandemic on local businesses. Lei said that the government is assessing 635 applications for the two schemes that have been submitted in recent months, involving credit guarantee amounts of MOP 564 million and MOP 4.5 million for the two schemes respectively. Lei said that the government expected the number of applications for the two schemes to continue to increase, adding that the government will possibly spend all of the MOP 1 billion of credit guarantees for the two schemes over the next few months.

Lei said that therefore the government decided to propose an amendment bill, according to which the maximum amount of the government’s credit guarantee for the “SME Credit Guarantee Scheme” will be raised from MOP 900 million to MOP 2 billion, while the maximum amount of the credit guarantee for the “SME Credit Guarantee Scheme Designated for Special Projects” will be raised from MOP 100 million to MOP 200 million. Therefore, the amendment bill will allow the government to take on debt of up to MOP 2.2 billion for the two SME loan guarantee schemes, the policy secretary said.

“The amendment bill will help local SMEs go through their financial difficulties, stabilise the job market, and speed up Macao’s economic recovery,” Lei said.

(The Macau Post Daily/Macau News)
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