The specialized fiscal fund is not working for the development of SMEs
On the executive meeting of the State Council held on Sep. 1, it is decided to set up ¥60 billion development fund for small and medium-sized enterprises (SMEs), focusing on supporting the development of growing small and medium-sized enterprises in start-up period in order to relieve their difficulties in financing.
Different from helping enterprises with direct fiscal subsidies, the establishment of national development fund for SMEs emphasizes cooperation between the government and the market, while striving for SMEs ‘more motives for innovation.
Nie Riming, a researcher from SIFL Institute, said to the Legal Weekly that the establishment of this development fund is contradictory naturally since it is a question that whom shall been given this money to so as to liberate SMEs from difficult surviving. If money has been given to enterprises with better profit, the fund would not loss but gain a relative high profit by marketization operation. However, this kind of enterprises could successfully finance through market even without this fund. Then what’s the meaning of establishing it? And yet if this fund is used to support enterprises with bad performance, ¥15 billion fiscal appropriation may be lost without gaining any profit.
It is said by Mr. Nie that since the fund establishment is still in a start-up period and there is no public information on the specific establishment time, it may need to be fully funded firstly.
Feng Xingyuan, a researcher from Rural Development Institute Chinese Academy of Social Science said that it is always hard to keep the efficiency and fairness of the fund by supporting SMEs with fiscal fund.
It is pointed out by Mr. Feng that it is not rare for the government to subsidize and support SMEs with equity investment, fund allowance, interest subsidy, etc., but the effect is not as good as expected. On one hand, “who could be subsidized by fiscal fund cannot be decided by the market. Whoever gets the fund will be regarded as a winner, while the one could not get the fund will be regarded as being discriminated. It is so hard to keep the efficiency and fairness of the fund.”said Mr. Feng. On the other hand, the fiscal fund will be allocated level by level, which consumes too much human resource cost as well as causing corruption and rent-seeking, so it could not be used completely and effectively.
“From the point of the effect, the fund pool is too little to help SMEs put an end of financing difficulty”, Nie said, “It may be a more fair way to support their development by reducing SMEs’ tax for ¥60 billion”.
(the Legal Weekly | Reporter：JU Dongye)
