Bottlenecks in digital upgrade funding plan

money-glitz | Staff reporter 11 Jan 2021

Fewer than 20 percent of companies that applied have got funding from the Distance Business Programme (D-Biz) launched by the government.

The program has been criticized due to the long time required for application approval and low amount of funds approved.

The Innovation and Technology Commission launched the D-Biz program in May to support the digital transformation of companies. Although the total subsidy has been raised from the initial HK$500 million to HK$1.5 billion, so far only 4,800 companies have received the first grant.

In August last year, the commission introduced improvements, including accepting enterprises for a second application and extending the funding period for subscription-based IT solutions from six to 12 months. However, companies say the approval situation has not been improved.

Teddy Ko, director of Fortinet, a cybersecurity company, says more than 40 companies were purchasing their network security products for remote offices through the project fund, but so far only a few have been notified that their applications have been approved. "They applied for HK$80,000, and only got HK$20,000," Ko says.

An online marketing provider surnamed Chan, says most applicants have only been approved for 10 percent of the applied amount. For example, Chan says his partner has been given HK$90,000, regarded as rare.

Besides assisting his clients in applying for the program, Chan has also sent his own application for his company. But Chan has not yet been arranged to sign a contract after his application was approved a few months ago. "If you don't sign the contract, you can't get the funds and start your project," Chan says.

Lam, another online marketing provider who is not willing to disclose his identity, says the Productivity Council is only processing applications submitted in July, and some applicants who received approval have not yet been able to sign the contracts.

As of December 11, the program secretariat has completed preparations of about 7,500 funding agreements, of which nearly 5,900 have been signed. But only 4,800 companies have received the initial funding. None has got final grants.

Although applying for the same project with uniform pricing from suppliers, the IT industry has found that different companies have different amounts approved.

The president of Hong Kong Innovative Technology Development Association, Leonard Chan Tik-yuen, says traditional computer systems are mainly subscribed for according to the number of users, and the subscription expenses can be calculated according to the number of people in a company. However, the practice has changed.

Chan says, "take the accounting system as an example. The system is designed for accounting personnel, the subscription fee should be calculated based on the accounting users, not the total number of people in the company."

The intention of D-Biz was to subsidize companies to adopt information technology solutions to continue operations and provide services during the pandemic. However, many companies in urgent need of transformation are worried about waiting indefinitely and decided to abandon their applications.

Chan, the online marketing provider, says many companies prefer to invest their own funds.

Charles Peter Mok, the former legislator from the IT sector, says the purchasing power of a company for IT products is limited. "After D-Biz is launched, all companies want to wait for funding to buy IT products. But the funds have taken a long time to be approved, it freezes all the purchasing power in the market," Mok says.

To process the large number of applications received and to assist enterprises in a short time, the program secretariat replied that the D-Biz program does not have an appeal mechanism. It also explains that the subsidy is within the reasonable market price range. As far as the similar plan is concerned, the approved amount may vary depending on the content of the project submitted by the company and the number of employees, which vary.

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