China to establish 3-billion-yuan fund for troubled SMEs
24/11/2008 17:12
The China Association of Small and Medium Enterprises (CASME) has
initiated a 3-billion-yuan (US$439.2 million) venture investment fund as a step
to help the country's SMEs raise capital, the body announced in its website
today.
The fund will be established by the end of this year.
Other efforts
include the joint issue of an SME corporate bond with the northeastern Liaoning
provincial government and the founding of a bank with a planned registered
capital of 10 billion yuan, according to CASME.
"Upon its establishment, the
bank will provide loans only for the small and medium sized enterprises.
Companies may get as much as 5 million yuan each for their investment and
development," said CASME head Li Zibin without specifying when the bank would
open.
Any industrial company with sales revenue up to 300 million yuan would
be eligible for assistance from the fund and the bank, said Li.
Li said
difficulty in capital raising as a major threat to the SMEs' survival.
Statistics from the National Development and Reform Committee showed 67,000
small and medium sized companies with sales income exceeding 5 million yuan
closed down in the first half of 2008 due to the economic slowdown and a tight
monetary policy.
Companies were being denied enough money two main reasons: a
shrinking loan supply from the banks and rising costs.
China's SMEs
contribute 60 percent of the national GDP, while getting less than 25 percent of
total bank loans.
"It is obviously out of proportion," said Li.
With
demand weakening both at home and abroad amid global financial crisis, however,
the country has sought to help its troubled SMEs.
The central bank raised the
loan quota of both national and regional commercial banks by 5 and 10 percent
respectively in the second half to ease the financial pressures on the private
companies.
Premier Wen Jiabao also pledged to attach great importance to the
difficulties and challenges the companies faced during an inspection of
enterprises in eastern Shanghai and Zhejiang Province from Friday to
yesterday.
"More supporting policies should be available to create a sound
environment for their development," he said.
Li gave three recommendations
for SMEs to help them through the difficult times: ensure capital supply by all
means; avoid impulsive expansions and investment regardless of the market
situation.
"The fundamental way to survive the severe winter is to enhance
capability of innovation and improve company management," he said.
Xinhua
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