OPINION> Commentary
Wen urges support for small firms
(China Daily)
Updated: 2008-11-17 07:34

 

World leaders pose for a photo at the G20 financial and economic summit meeting in Washington DC on Saturday. Li Xueren

Premier Wen Jiabao on Saturday outlined a series of proposals for local governments to support small- and medium-sized enterprises (SMEs).

Visiting SMEs in the southern province of Guangdong, Wen said SMEs would play a crucial role in promoting economic growth, increasing fiscal revenue, providing jobs and maintaining social stability.

Wen visited Shenzhen, Dongguan and Foshan cities and told local governments to formulate policies to support the healthy and rapid growth of SMEs.

Measures should include easier access to credit extension as well as preferential tax policies, and more loans to ensure SMEs grow faster in the fourth quarter, Wen said.

Financing priority should be given to SMEs that meet industrial and environmental protection standards and have access to technologies and markets, he said.

Wen said SMEs in Shenzhen performed better than those in other parts of the Pearl River delta because they upgraded earlier and were more innovative.

On Friday afternoon, while inspecting export-oriented and labor-intensive SMEs in Dongguan, the premier said the key to survival and growth was to develop new products, expand the range of products, improve quality and diversify markets.

Beijing shows the way

Beijing has been vigorously pushing ahead with measures to solve SMEs' financing problems. Yesterday, the country's first regional re-guarantee company, Bejing SMEs Credit Re-guarantee Corporation (BCRG), was set up to enable more local SMEs secure bank credit.

According to Li Aiqing, BCRG's chairman, the company - with a capital of 1.5 billion yuan ($220 million) - will mainly support the culture industry, hi-tech companies and agriculture-related enterprises. To that end BCRG has signed agreements with six banks and three leading guarantee institutions in Beijing.

Currently, 99 percent of companies in Beijing are SMEs, with the number totaling 300,000 and employing more than 80 percent of the local workforce. Although about 60 credit guarantee organizations in Beijing mainly serve SMEs, their average guarantee leverage ratio is only 2.6.

According to the Beijing Credit Guarantee Association, about 80,000 SMEs in Beijing need guarantees for loans every year, but less than 10 percent of the requirements can be met.

"With the support of BCRG, the average guarantee leverage ratio of local credit guarantee originations (for SMEs) is expected to reach 5-8 percent in three years and the city's guarantee balance is expected to reach 100 billion yuan ($14.6 billion) from the current 40 billion yuan," said Li, who is also the chairman of the Beijing State-owned Assets Management Corp Ltd.

China Daily-Xinhua

(China Daily 11/17/2008 page6)