In order to assist Hong Kong enterprises to seize the opportunities arising from the national "Twelfth Five-Year Plan", the Government of the Hong Kong Special Administrative Region launched a "Special Fund for Brand Development, Upgrading and Transformation and Expansion of Marketing Markets" (referred to as the "Special Fund for Brand Development, Upgrading and Transformation and Expansion of Marketing") in June 2012. "BUD Special Fund"). In order to assist SMEs, including start-ups, to seize economic opportunities and enhance their competitiveness, the 2018-19 Budget proposes to expand the geographical scope of BUD Fund funding to the ASEAN market, and to launch the "ASEAN Plan" to increase funding for individual The cumulative funding ceiling for enterprises to implement Mainland projects (Mainland Schemes).
Purpose of the Hong Kong BUD Special Fund Program
The BUD special fund includes two parts: "Mainland Plan" and "Free Trade Agreement Plan":
Mainland Scheme: To subsidize individual unlisted Hong Kong enterprises to implement projects related to brand development, upgrading and transformation and domestic sales expansion, so as to enhance their competitiveness in the Mainland and promote their business development in the Mainland.
Free Trade Agreement Plan: In order to further support local enterprises in coping with the challenges facing Hong Kong’s economy, the 2019-20 Budget proposes to inject HK$1 billion into the BUD Special Fund and expand the scope of the BUD Special Fund’s funding to all countries signed with Hong Kong Free Trade Agreement (FTA) economies.
As of January 2022, Hong Kong has signed 22 investment agreements covering 31 overseas economies, including ten ASEAN countries, Australia, Austria, Belgium, Luxembourg Economic Union, Canada, Chile, Denmark, Finland, France, Germany, Italy , Japan, South Korea, Kuwait, Mexico, Netherlands, New Zealand, Sweden, Switzerland, Thailand (ASEAN), United Arab Emirates and United Kingdom. The geographical coverage of the "BUD Special Fund" will be extended from 20 FTA economies to 37 economies that have signed FTAs and/or investment agreements with Hong Kong.
Conditions for applying for the Hong Kong BUD Special Fund
1. All unlisted enterprises registered in Hong Kong in accordance with the Business Registration Ordinance (Cap. 310) and having substantial business operations in Hong Kong, regardless of whether they are engaged in manufacturing or service industries, or whether they already have business in the Mainland, are eligible to apply for subsidies . A business or shell company that mainly operates its business outside Hong Kong will not be deemed to have substantial business in Hong Kong;
2. The applicant enterprise must provide relevant documents to prove that the enterprise has substantial business in Hong Kong during the period of application for funding. Relevant supporting documents include employee records, tax returns, or commercial transaction documents such as commercial contracts, invoices, etc.;
3. If the project measures will be implemented by the Mainland business unit of the applicant company, the applicant company must provide relevant documents to prove that the company has a direct investment relationship with the Mainland business unit. If the applicant enterprise meets any of the following conditions, it will be deemed to have a direct investment relationship with a mainland business unit and be eligible to apply for funding:
① The applicant enterprise holds more than 50% of the ownership of the mainland unit;
② Shareholders (natural persons) who hold 30% or more of the ownership of the applicant company, also hold more than 50% of the ownership of mainland units;
③ The applicant company and the mainland unit are 100% held by the same group of shareholders (natural persons).
Optimization measures for the Hong Kong BUD special fund
1. Since 2018, the government has injected a total of 5 billion yuan into the "BUD Special Fund" and launched several rounds of optimization measures to further support local enterprises, including:
① Expand the geographical scope of funding, from the Mainland "Mainland Plan" to cover the "ASEAN Plan" of the "ASEAN" member countries of the Association of Southeast Asian Nations, and then to cover all economies that have signed free trade agreements (FTAs) with Hong Kong "Free Trade Agreement Scheme";
② Gradually increase the cumulative funding ceiling for each enterprise, from 500,000 yuan to 2 million yuan, and then to 4 million yuan;
③ Increase the first-phase funding ratio from 25% of the approved government funding to a maximum of 75%.
2. In order to further support Hong Kong enterprises in developing a more diversified market and seize the opportunities arising from the national "14th Five-Year Plan", the government has launched fund optimization measures under the "BUD Special Fund", including:
① Expand the geographical scope of the Fund’s funding in stages to cover all economies that have signed Free Trade Agreements and/or Investment Promotion and Protection Agreements (Investment Agreements) with Hong Kong (Free Trade Agreement and Investment Agreement Scheme);
② Increase the cumulative funding ceiling for each enterprise from 4 million yuan to 6 million yuan.
Attention should be paid to applying for the Hong Kong BUD special fund
1. If the application project is implemented in the local/mainland business unit of the ASEAN country of the applicant enterprise (especially the measures involving recruitment of manpower and purchase of equipment), the applicant company must submit the statutory certificate of the direct investment relationship with the local/mainland business unit of the ASEAN country .
2. If the application project involves regulated products or industries (such as medical equipment, cosmetics, food, medicine, cross-border e-commerce, publishing and education, etc.), enterprises generally need to obtain relevant product/service licenses/qualification certificates/ Approval to carry out the project.
3. Enterprises must comply with the regulatory requirements and laws of relevant countries.
4. If the application project involves the promotion/sales of other brand products, the company must first obtain the agency rights of the product in the local/mainland of ASEAN countries, and the time limit for obtaining the agency rights must also ensure that there is enough time for the company to develop its business.
5. If the application project involves the creation of its own brand, the company generally needs to complete a search of the own brand trademark that it plans to register to determine the feasibility of registration and to apply for local/mainland brand trademark registration in ASEAN countries.
