Guangzhou's municipal government is to establish a fund to help large and medium-sized industrial enterprises increase their asset value and reduce their gearing ratios. The fund will be used to inject fresh capital into the enterprises and settle debts and redundancy payments brought about by closures or bankruptcies. The measures have been approved by the Guangdong government, a report in the Guangzhou Daily said. Only enterprises whose development is in line with the state's industrial policies will benefit from the measures, which include the government turning enterprises' outstanding state loans into state investments. Enterprises which are unable to pay wages, social insurance and benefits, settlement fees, retirement payments and medical fees will be put on a list temporarily before the government issues a standard set of regulations to resolve the problems. To encourage mergers between efficient and loss-making businesses, the government has also made a number of provisions to minimise the negative impact of poor performers on efficient enterprises. The enterprises will be exempted from interest payments and allowed to convert the loans of those acquired into state investment. The report said profitable state-owned industrial enterprises would also enjoy an appropriate increase in loans depending on the level of deposits in the year. Those which are not operating efficiently, but have promising prospects and have improved themselves significantly, will not have to pay extra interest surcharges for late repayment of loans. Under the policy, enterprises which have obtained approval to go bust can first hive off their efficient operations, which will bear a portion of the enterprise's outstanding debts agreed by the government, banks and the enterprise itself. Large corporations which enjoyed support from the government in the preceding five years would receive a refund of 80 per cent of additional income tax over the next five years.