Hong Kong tycoon and International Chamber of Commerce adviser calls on G20 to cooperate to save SMEs amid pandemic

Denise Tsang
·4-min read

The International Chamber of Commerce, to which prominent Hong Kong businessman Victor Fung Kwok-king is a top adviser, has urged the Group of 20 to take urgent action to avert the risk of small and medium-sized enterprises (SMEs) worldwide going under amid the economic fallout of the Covid-19 pandemic.

The chairman of the family-owned Fung Group, who also co-chairs a high-level advisory group to the world’s biggest business chamber, said in an interview that coordinated efforts among governments were needed to boost trade-related finance, a proven low-risk means of providing fresh stimulus to cash-strapped SMEs.

The International Chamber of Commerce, a global network of more than 6 million companies and business groups in more than 130 countries, is pressing the Group of 20 nations to act ahead of a meeting of state leaders for an online summit on November 21 and 22.

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“During the 2008 global financial crisis, we made a call to G20 leaders to make trade finance available before they met in London in 2009 … [and] the world averted a major crisis,” Fung said on Thursday. “Fast forward to today, it is hard to get liquidity for SMEs. The situation is slightly different in that banks have liquidity … however, they are reluctant to lend, primarily because of credit issues. It is an effort to galvanise the world to recognise the crisis before the world can restart the global economy.”

He added that governments should come together in a coordinated effort by providing export credit through banks.

State leaders of the G20, such as outgoing US President Donald Trump and Chinese President Xi Jinping, are expected to meet virtually at the G20 meeting hosted by Saudi Arabia as the world battles the pandemic.

US President Donald Trump (left) and Chinese President Xi Jinping are expected to be among those attending a virtual G20 summit later this month. Photo: AP
US President Donald Trump (left) and Chinese President Xi Jinping are expected to be among those attending a virtual G20 summit later this month. Photo: AP

At present, the world has recorded at least 52 million Covid-19 infections and around 1.2 million related deaths, with the US and Europe among the worst hit. Hong Kong has logged more than 5,400 infections, and 108 related fatalities.

Covid-19’s toll on the world’s economy has been so severe that it prompted the International Monetary Fund to forecast a deep recession, with a 4.4 per cent contraction projected for the world’s gross domestic product in 2020 following the 2.8 per cent growth posted in 2019.

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The fund said in its blog that there had been nearly US$12 trillion in global fiscal support, plus interest rate cuts, liquidity injections and asset purchases by central banks in an effort to save lives and livelihoods, but more should be done for a sustained recovery.

Fung said Hong Kong fared relatively well under the government’s measures to release liquidity into the market through banks and a statutory body helping export finance, the Hong Kong Export Credit Insurance Corporation.

According to the city’s de facto central bank, the Hong Kong Monetary Authority, the total loans from banks jumped by 6.2 per cent, or HK$650 billion, from the end of December last year to HK$11 trillion at the end of September. These loans were partly used for financing imports, exports and re-exports from Hong Kong.

Loans extended by banks have jumped in the first nine months of the year, according to the Hong Kong Monetary Authority. Photo: Shutterstock
Loans extended by banks have jumped in the first nine months of the year, according to the Hong Kong Monetary Authority. Photo: Shutterstock

It also showed the overall credit line granted by banks to SMEs jumped by HK$8 billion during the same nine-month period.

“We are doing a lot better than other countries,” Fung said.

To ride out the recession, he added, Hong Kong needed to tap the emerging economies of its Greater Bay Area cohort – including Macau, Shenzhen and eight other cities in Guangdong – as well as the 10-member Association of Southeast Asian Nations (Asean).

The Asian focus reflected the uncertainty in pandemic-hit Europe and the ongoing tensions between Washington and Beijing, he said.

“What we need to do is think of the Greater Bay Area and Asean; when we put the two together, Hong Kong is at the centre of that region and has the ability to thrive,” he said.

This article Hong Kong tycoon and International Chamber of Commerce adviser calls on G20 to cooperate to save SMEs amid pandemic first appeared on South China Morning Post

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