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received 200 applications for loans since it launched a similar scheme three weeks ago. An interesting article appeared in the Herald-Tribune on 23 February which said HK was accepting the inevitability of its future as part of China (a copy is attached). Below are details of the stories covered in the English-language press:
Loans to industry by Bank of China: The SCMP on Sunday reported that the Bank of China would with immediate effect offer low interest loans to local manufacturers at a fraction of the going rates for similar credit facilities, according to an announcement by the CMA and the HK Factory Owners' Association. No guarantee would be needed by a small business applying for a one-year loan of up to $200 000. Large manufacturers could apply for unlimited mortgage loans of 30 - 50 years to spend on their own premises. The offer was open to all manufacturers, not only members of the two Associations. The Post reported that China Bank's move came three weeks after the HK Bank and Heller Factoring (HK) Ltd had brought in special credit facilities for small business. On Monday, the SCMP reported that the Bank of China had clarified that the interest rate and repayment period of its loan scheme for small industries would have to depend on individual cases. The scheme was an extension of existing services. The interest rate would be lower with the exact rate decided individually. The normal repayment period was seven or eight years, but this may be extended. It said the repayment period was not 30 50 years as stated in some press reports. The Bank stressed that it had not authorised any individual or organisation to announce the scheme on its behalf and regretted any errors in previous public statements. The Asian Wall Street Journal of 28 February, however, carried a front-page report of the Bank of China move it referred to "cut-rate" loans and said repayment of the secured loans would be up to 50 years. It said such long repayment periods were unheard of anywhere, which indicated China's eagerness to keep HK prosperous after 1997, and marked a major step towards intervention in the local economy. The article repeated the Financial Secretary's words in the Budget that the HK Government would not offer direct assistance to industry, although local manufacturers had for years been asking for low-interest loans and cheap land.
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The SCMP also reported on Monday that over 200 applications had been received since the HK Bank began its special loan scheme for small industry and 80 per cent had been successful. A spokesman for the Bank said at a seminar the Bank expected to lend more than $21.5 million within the next two weeks. The spokesman said there was no dialogue between the Bank of China and the HK Bank on whether a manufacturer could apply for loans from both banks. UC candidate Dr. Victor Sit told the seminar the two bank loan schemes reflected the Government's "reserved" attitude in helping small industry: most small manufacturers needed money to help cash flow rather than for new machines. Miss Y.Y. Tang of the CMA felt the financial help itself was more important than who offered it; the Government might be accused of favouritism if it tried to boost a particular industry. She also suggested a factory ownership scheme similar to the Home Ownership Scheme.
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