XN000022-1986-11-18 — Page 6

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TUESDAY, NOVEMBER 18, 1986

+GIVEN OUR OPEN AND COMPETITIVE BANKING SYSTEM AND THE RESOURCES AVAILABLE WITHIN IT. I PERSONALLY DO NOT SEE THE NEED FOR AN INDUSTRIAL LOAN FUND OR AN INDUSTRIAL DEVELOPMENT BANK,+ HE SAID.

+ IN ANY EVENT, IT IS LIKELY THAT THE LIGHT LABOUR INTENSIVE INDUSTRIES WHICH PREDOMINATE IN HONG KONG REQUIRE LESS IN THE WAY OF LONG-TERM FINANCING THAN THE HEAVY CAPITAL INTENSIVE INDUSTRIES WHICH EXIST IN MANY OTHER PLACES.+

MR JACOBS ALSO EXPLAINED THAT HE SAW LITTLE EVIDENCE TO SUGGEST THAT AN ENTREPRENEUR WITH A VIABLE BORROWING PROPOSITION WAS UNABLE TO OBTAIN THE LOAN CAPITAL HE REQUIRED ON TERMS AND AT A COST WHICH ENABLE HIM TO COMPETE EFFECTIVELY WITH HIS RIVALS OVERSEAS.

+ I DO NOT SEE THAT AN INDUSTRIAL DEVELOPMENT BANK, WITHOUT PUBLIC SUBSIDY, WOULD BE ABLE TO ACHIEVE MUCH MORE, HE SAID.

ON WHETHER BANKS HAD A SPECIAL ROLE IN SUPPORTING HONG KONG'S FURTHER INDUSTRIAL DEVELOPMENT, MR JACOBS SAID THAT WITH BANK LOANS TO THE MANUFACTURING SECTOR AVERAGING ONLY ABOUT 10 PER CENT OF ALL BANK LOANS FOR USE IN HONG KONG, OTHER THAN THOSE FOR FINANCING VISIBLE TRADE, THERE WAS PROBABLY SCOPE FOR DEVELOPMENT.

APART FROM PROVIDING FUNDS, A LENDER COULD ALSO CONTRIBUTE BY MAKING BUSINESS KNOWLEDGE AVAILABLE, PARTICULARLY TO SMALLER CONCERNS, FOR EXAMPLE, FINANCIAL AND ACCOUNTING GUIDANCE.

NOTING THAT MANY LARGER COMPANIES NOW TURNED TO THE CAPITAL MARKETS FOR MUCH OF THEIR NEEDS WHILE BANKS REMAINED BASICALLY THE ONLY AVAILABLE SOURCE OF FUNDS FOR SMALLER BUSINESS CONCERNS, MR JACOBS SAID THE PARTICULAR EMPHASIS NOW BEING GIVEN TO LENDING TO SMALL INDUSTRIAL CONCERNS WAS TIMELY.

HE MENTIONED A +WELCOME INITIATIVE+ TAKEN RECENTLY BY ONE OF THE MEDIUM-SIZED LOCAL BANKS WHICH LAUNCHED AN INDUSTRIAL LOAN SCHEME FOR SMALL INDUSTRIES A FEW MONTHS AGO, THE MAXIMUM AMOUNT OF EACH LOAN BEING $300 000.

+ IT HAS HAD A MARKED AND THOROUGHLY DESERVED SUCCESS. WITHIN THREE MONTHS ALMOST 200 APPLICATIONS HAD BEEN APPROVED, FOR FACILITIES TOTALLING OVER $25 MILLION. I AM AWARE THAT SEVERAL BANKS ARE UNDERTAKING SIMILAR INITIATIVES AND THIS MAY SERVE TO ENCOURAGE OTHERS TO FOLLOW SUIT, HE SAID.

ON WHETHER THERE WAS A ROLE FOR THE GOVERNMENT AND BANKS IN PROMOTING THE CONCEPT OF VENTURE CAPITAL, WHICH WAS A WAY OF CHANNELLING INWARD INVESTMENT INTO HONG KONG'S MANUFACTURING INDUSTRIES, MR JACOBS SAID:

WHAT THE