Introduction to Government Funds
Navigating the HKSAR Government Funding Schemes for Businesses
In a conversation with Jewell Hui, Senior Consultant at J&K Consulting, Rob Agnew finds out more about the supports that the Government in Hong Kong are providing for technology and other firms in the Special Administrative Region. J&K is a specialist consulting company that helps companies navigate the rules and regulations associated with these supports.
1. What are the key supports being provided by the HKSAR government to help them through the present COVID crisis?
The HKSAR government has launched two major programmes, Employment Support Scheme and D-biz Fund (together, the “COVID Funds”), to provide financial support to various institutions in need. The applications for the COVID Funds have now closed. However, there are over 50 other regular government funding programmes (the “Regular Funds”) which are open for applications.
2. Beyond COVID what schemes does the government have to support start up and businesses wishing to expand in HK?
As mentioned, there are over 50 Regular Funds. Out of these, the following are some of the more common funds which any SMEs with a business registration certificate in Hong Kong may apply for.
- Technology Voucher Programme (funding amount up to HKD 600k)
- Export Marketing Fund (funding amount up to HKD 800k)
- Dedicated Fund on Branding, Upgrading and Domestic Sales (“BUD”) (funding amount up to HKD 4M)
It is possible for a corporation with a business registration certificate to apply for all three funds above concurrently. In other words, upon successful applications for the above three funds, a business will be able to obtain up to HKD 5.4M. Depending on the industry in which such corporation operates, it may also apply for other Regular Funds.
Any NGOs/ social enterprises may apply for the following.
- Enhancing Self-Reliance Fund (funding amount up to HKD 3M)
- Innovation & Technology Fund for Better Living (funding amount up to HKD 5M)
- Social Innovation and Entrepreneurship Development Fund (“SIE”) (no stated maximum but the normal range is from HKD400,000 to HKD5M)
Any technology/innovative projects, with or without a legal entity, may apply for:
- Pre-incubation programs in Science Park or Cyberport (standard funding amount of HKD100k)
- Science Park Incubation programs (depending on the stage of application, standard amount from HKD 500k up to around HKD 6M)
- Cyberport Incubation program (standard funding amount of HKD500k)
3. How is the process to apply for that support? And how long might it take?
The COVID Funds were relatively easy to apply for compared to the regular funding schemes, and generally it only took 3-4 months to obtain government approval. However, as explained above, the applications for the COVID Funds have closed.
For the Regular Funds, due to the mass application amounts, it generally takes 6-9 months to obtain government approval depending on the specifics of the scheme. You may still commence the projects before obtaining the government approval and get reimbursed after the approval is given for some of the Regular Funds. Also, be prepared that a substantial amount of time will be required to deal with the administrative work during the application process.
4. What are the three things that applicants need to consider before applying for support?
- As all government funds are to support the Hong Kong ecosystem, it is necessary to have a Hong Kong Business Registration and invoices to prove the operation of the entity. Funding over HKD 1M or more, generally requires the applicant to be a Hong Kong company and proof of sales revenue.
- If you have multiple related companies (having the same/overlapping shareholders), it is worth noting that some funds allow related companies to apply as separate entities. So, each company could have its own funding quota.
- As government funds usually take a long time to process and you may perhaps only receive the funds by way of reimbursement, you will need to manage the Company’s cashflow carefully.
5. Are there specific sectors that the government is supporting?
Yes, there are different funds with specific industries targets, for example, new precision materials, Chinese medicine, logistics, robotics, fintech, university research-based projects.
6. What are the resources that you would recommend companies should use?
Please check out the various government links in relation to the details of each funding programme. Some are set out below:
- Technology Voucher Programme: https://www.itf.gov.hk/en/funding-programmes/facilitating-technology/tvp/
- Export Marketing Fund: https://www.smefund.tid.gov.hk/english/emf/emf_objective.html
- BUD Fund: https://apply.bud.hkpc.org/index.php?lang=en
- Enhancing Self-Reliance Fund: https://www.sehk.gov.hk/en/gov_fund.html
- Innovation & Technology Fund for Better Living: https://fbl.itb.gov.hk/
- SIE Fund: https://www.sie.gov.hk/en/who-we-are/sie-fund.page
- Preincubation and incubation funds under Science Park: https://www.hkstp.org/innovate-with-us/incubation/
- Preincubation and incubation funds under Cyberport:
Also, we would recommend companies to investigate different government funds and align the business plan to the funding plan. This clearly identifies the fund you will be getting and at what stage and timeframe. Below is a case study which we have dealt with for your reference.
Case study: Existing business, an offline therapy centre. The client’s strategy under COVID restriction is to provide online therapy. Our advice on the funds to apply for to match to its business strategy was.
- Applied D-biz Fund (around HKD100k) for zoom and other IT supports for online therapy. At the same time, leave some budget under d-biz to test the idea of creating an online therapy matching platform.
- Applied for a small amount of loan from bank with an interest rate of 2.75% APR.
- Applied for Technology Voucher Programme (up to HKD600k to support the technology development for the matching platform.
- Applied Cyberport Incubation fund (HKD500k for marketing and development and, most importantly, to tap into the start-up ecosystem for investors)
- Applied for Research Talent Hub (around HKD4M) to support 2-3 years IT development costs.
- Applied for SIE fund (around HKD400k per project) for university research and data analytics and initial partnerships with NGOs.
- Applied for BUD (around HKD4M) for expansion strategy outside Hong Kong.