Cities launch support measures, but business anxiety rises

The GBA’s two biggest cities have launched a series of measures designed to help get business communities back on their feet, including tax relief, finance and lower interest rates. Between them they have several million companies to take care of, according to local media, which have reported rising anxiety levels among small business leaders.

In Guangzhou, the government passed 15 measures focused on helping businesses that had been hit hardest by the COVID-19 outbreak, particularly catering, trading, and transportation. It is expected the measures will affect around 1.05 million individual-owned businesses. 

Financing costs are a key target. Banks have been told they are not allowed to withdraw, cut off or defer loans, while the city government is also encouraging them to reduce interest rates on loans by more than 10% for catering, accommodation, tourism, trading, and transportation industries. Guangzhou Bank and Guangzhou Rural Commercial Bank have already announced they will advance another 57 billion yuan in loans to SMEs this year, and lower the interest rates on new loans by more than 10%. 

Adjusting the floating rate of unemployment insurance is another key measure that will improve cashflow for SMEs, while two-month rent waivers for companies at premises owned by the city government will be implemented in February and March, worth around 6 billion yuan in total.

In terms of tax reduction and exemption, enterprises suffered significant losses may be eligible to apply for exemptions on real estate tax and urban land use tax. Moreover, the government has set aside as much as 5 billion yuan for subsidies, rewards and other direct financial support.

Shenzhen has released a similar tranche of 16 policies to help enterprises. These will result in savings of more than 60 billion yuan, of which direct government financial support will be more than 10 billion yuan.

To encourage enterprises not to lay off staff or cut wages, enterprises who keep all their staff will be entitled to a refund of 50% of actual unemployment insurance they paid last year, while the current payment of employee insurance premiums can also be deferred. 

However, many interviewed companies still have concerns, according to local media.

First, the shortage of materials for epidemic prevention and control has troubled many enterprises intending to start work. More than 90 listed companies in Shenzhen are in urgent need of protective equipment such as masks and disinfectants. Even companies that have collected these materials, they still need to control the number of employees and encourage employees to work online instead of offline.

In addition, compared with the tertiary industry, the resumption process of the secondary industry, led by manufacturing companies, has lagged behind. A government official in Chang ‘an, a manufacturing town in Dongguan, said that currently less than one-third of enterprises are planning to start work. A person in charge of a local leading enterprise also said, “Rent reduction has a greater effect on the tertiary industry, but for enterprises represented by the manufacturing industry, it is not so useful. Deferring payment of social security insurance and taxes is not a non-payment. All kinds of favorable enterprise policies mean a little to manufacturing companies.”

Many manufacturing companies in Zhongshan said that about 40% employees are currently unable to return to work, and it is difficult for the company to resume daily operations. On the other hand, even if these people return to Zhongshan, they must monitor the daily physical condition of employees, report their situation, and finish the site’s ventilation, disinfection and sanitary management and isolation area control. These will be a large amount of work and cost more money.
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