Plagued by problems: auditor calls for review of HK$1 billion government fund to help small Hong Kong firms

A HK$1 billion government fund aimed at supporting smaller firms and non-profit organisations in their bids to tap the mainland market has been hit with waning interest, a slow vetting process, a low success rate and high management costs, according to a probe by the Audit Commission.

Only 349 enterprise and 45 non-profit organisation projects were approved under the dedicated fund on Branding, Upgrading and Domestic Sales (BUD) three years after it was launched in 2012. This is way below the projected 1,000 enterprise and 90 non-profit organisation projects.

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As of last October, only one-third, or HK$147 million, out of HK$440 million in funding was granted to non-profit organisations, and less than one-third, or HK$157 million, given to enterprises out of HK$500 million.

“[The Audit Commission] considers it an opportune time for the government to conduct a comprehensive review of the BUD fund to assess the performance of the fund in meeting its objectives, analyse benefits brought by the fund, identify improvement areas and decide the way forward,” it said in a report released on Wednesday.

The BUD fund is composed of two parts – HK$440 million for non-profit organisations and HK$500 million for enterprises. The remaining HK$60 million is earmarked for the Productivity Council. The fund was designed to help organisations break into the mainland retail market.

However, the overall success rate of applications was low. Only one in three enterprise applicants and nearly two in five non-profit body bids made the grade.

The government said it reviewed the BUD fund and its operation on an ongoing basis.