Help at hand for SOEs burdened with donations

PUBLISHED : Friday, 09 July, 2010, 12:00am
UPDATED : Friday, 09 July, 2010, 12:00am

The State-owned Assets Supervision and Administration Commission is reviewing tax expenses and sponsorship contributions from state-owned enterprises to local governments as Beijing seeks to reduce the financial burden of the corporate sector.

This follows complaints from small and medium-sized enterprises that local governments had unreasonably increased taxes and asked for sponsorships of local events such as exhibitions.

The State Council set up a task force last month to alleviate unnecessary burdens on state-owned enterprises. It is led by Minister of Industry and Information Technology Li Yizhong (above).

The committee composes members from the National Development and Reform Commission, the Ministry of Industry and Information Technology, Ministry of Finance, Ministry of Public Security and several other ministries.

'The financial load of state-owned enterprises in the east is not that serious,' said Chen Naixing, a director of the small and medium enterprise research centre at the Chinese Academy of Social Sciences.

'But the issue is getting worse in the western part of the country,' he said.

There are many kinds of fund-raising activities through which local governments seek sponsorship from state-owned enterprises when some important events are held.

A professor at the Party School of the Central Committee, Zhou Tianbao, had estimated earlier that 'unreasonable' funds collected from state-owned enterprises amounted to 800 billion yuan (HK$919.76 billion) up to 2007.

Chen suggests the government should carry out some reforms of the fund collection system as a way to solve the problem.

According to a report in the 21st Century Business Herald, local governments should start modifying their fund-raising policies in September and October after all the statistics from state-owned enterprises have been presented to the task force.

The task force will write reports and hand them to the State Council and the Central Commission for Discipline Inspection by November and December.