LettersHelp Chinese SMEs make green transition to hit carbon neutrality goal
- Readers discuss ways to help China’s small firms close the financing gap, the chances of a general election in Malaysia, and fixing interest rates
Take for example corporate loans, which are commonly used financing instruments for firms. Corporate finance is structured in such a way that makes lending to SMEs for green projects risky and unprofitable as many of them lack a sound financial basis to underpin solvency.
Further, the SMEs themselves might not see the significance of going green. Economically, there are no incentives for them to do so as most national policies in China monitor big companies’ carbon emissions in specific industries.
It is time the government and financial institutions took the initiative to engage SMEs in green development with policy support and loan product optimisation.
Firstly, the government needs to roll out the emission trading scheme to those highly polluting industries that consist of more SMEs, such as the manufacturing industries, forcing them to cut emissions progressively.
In addition, it is vital to help SMEs secure capital for green transitions. Government agencies could research the possibility of providing assurance or certification services on green transition efforts by SMEs, whatever their size. Firms that are recognised as being compliant could gain goodwill and a potential price premium from customers, which would contribute to a better financial position on paper. This would also boost financial institutions’ confidence and thus foster loan underwriting for them.
Meanwhile, financial institutions could adjust the loan pricing for SMEs based on their green profiles.
Eventually, the ones that decide to go green would be rewarded with increasing value and lower funding costs, narrowing the financial imbalance.
Jacky T.K. Tam, Ma On Shan
Malaysia’s king holds key to general election
Malaysia’s Prime Minister Ismail Sabri Yaakob is said to be facing more than one storm. The upper echelons of his party Umno, of which he is not the head, are demanding a general election, even as the country braces itself for flash floods during the monsoon season set to begin in November.
But dissolving Parliament is not as simple a process as pressing a button. It is done upon request of the prime minister to the king. The Federal Constitution allows the king to act in his discretion on three matters: the appointment of the prime minister, the dissolution of Parliament and requests for a meeting of the Conference of Rulers, comprising the sultans and the governors of four non-royal states.
Thus, while the king acts on advice of the cabinet, he can withhold his consent to a request to dissolve Parliament as he deems fit.
But among the country’s own constitutional experts, the decision by the king to refuse the advice to proclaim an emergency has a sound constitutional basis.
If such residual discretion has a sound constitutional basis, what more where the king may act in his discretion to withhold consent for the dissolution of Parliament? On this matter, the Malaysian king holds the key.
Mohamad Hafiz Bin Hassan, lecturer, Faculty of Law, Multimedia University, Malacca, Malaysia
Fix interest rates to bring economic stability
Money supply and a country’s economic welfare are dependent on confidence, security and resources. If we wish to maintain confidence and social stability while quickly reducing inflation, the only solution is for most developed countries to fix their official interest rates for the next three years. This will also help stabilise and reduce fluctuating employment numbers, exchange rates and current and trade accounts.
Fixed rates for OECD and G20 countries should be 6.25 per cent for borrowers and 3.75 per cent for savings, leaving a 2.5 per cent margin for lenders. We might not be able to defeat greed, but we can certainly marginalise the greedy and give the world some economic stability in the short term.
Mike Musgrave, New South Wales, Australia