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Govt contemplates more support for SMEs

06
Nov '08

The downturn in the global economy resulting in a recession is compelling governments to come out with policy and measures to save their sinking industries, in particular the small and medium sector (SME) companies who have been hit the hardest.

China is planning to implement a slew of measures to help SMEs face head on the challenges arising from the meltdown. According to a senior ministry official, the government is contemplating and thinking over measures to help these SMEs tide over the current crisis.

According to the official the government would help these enterprises in upgrading technology and product mix and help them garb a bigger slice of the global market. Another official said that the industry in China was facing a grim situation and the turmoil would create a deep impact on the industrial and information technology sector.

The official mulled on the fact that the weakening demand and already planned expansions in capacity was creating an imbalance which would become more serious as the crisis deepens. He added by saying that labour intensive and export oriented industries would be hurt more as prices of raw materials and demand for finished goods continue to fluctuate.

Statistics reveal that while raw material prices have increased by 10-15 percent in the current year, the ex-factory prices of products manufactured from these very raw materials has increased by only 5 percent.

He revealed that there is a possibility of once more increasing the export tax rebates in the near future, for the labour intensive industries in particular. The government had recently raised the tax rebate by 1 percent for 3,486 products ranging from textiles, garments and toys.

The official ended by saying that SMEs would be provided better access to soft loans as experts have averred that not being able to access loans easily was the root cause for slow growth in SMEs.

Fibre2fashion News Desk - China

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