Changes to SME Aid Scheme enter force by administrative regulation

The government published a new administrative regulation in the Official Gazette yesterday, regarding a scheme that provides financial aid to small and medium-sized enterprises (SMEs), first launched in 2003.

The amendments aim to adjust administrative regulation number 9/2003 to suit the current circumstances. Some of its articles have been updated so it can be used as part of the planned support measures for SMEs announced by Secretary Lei Wai Nong in mid-February.

The method of introducing the changes via administrative regulation means the government is not required to bring the proposal to the Legislative Assembly. This method reduces the scope of possible relief measures to mere alterations of those already in force. 

Among the small adjustments made, the government now notes in Article 20-A that if a company has previously received support from the program and their interest-free loan has not yet been repaid, they still can apply for the new scheme. The maximum amount to be granted (usually 600,000 patacas) will be reduced according to the circumstances of the previous scheme in which the company has enrolled.

The scheme provides interest- free loans worth up to 600,000 patacas to be returned within eight years. The maximum amount will only be provided if the company has never been a beneficiary of the program in the past, or if the previous loan has been completely settled.

Changes regarding the requirements for companies applying for the scheme are also being enforced, with the new administrative regulation amending the minimum operating time of companies from two years to just one.

The timing for payment of the first installment is also slightly different. In the previous regulation, payment was required 18 months after the date the loan was granted. However, this date has not been defined in the new administrative regulation. Instead, it will be established through an Order from the Chief Executive from now on, allowing more flexibility for future changes.

The new administrative regulation, coded as number 4/2020, was approved by Chief Executive Ho Iat Seng on March 4 with a note that it would enter into force the day after its publication.

In a statement, the Executive Council clarified that the new rules also apply to applications that were lodged under the previous rules, fixing an implementation deadline of six months.

As the Times previously reported, the measures the government has presented to mitigate the difficulties related to the region’s Covid-19 outbreak include several financial support programs for SMEs. These programs are not new and have been running for many years, making it easier for them to be enforced without the need to draft a new law.
However, measures that involve changes to the annual budget or the taxation regime, “need to be approved by the Legislative Assembly,” according to lawyer and legal expert Sérgio de Almeida Correia, who added “there is no way to go around this.”

Even if the government’s method of issuing new administrative regulations for old programs significantly cuts down on the time required to enforce the programs, economics experts and lawmakers have previously said that this method is inefficient. It does not specifically address the current problems faced by local companies, or consider the very unique, special and never-before-seen circumstances that did not exist when the schemes were originally created almost 17 years ago.

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