Government lending plan could finance 25,000 firms

President Chen Shui-bian (陳水扁), following advice from the four-member economic advisory panel headed by Vincent Siew (蕭萬長), said yesterday that he will offer government-guaranteed loans to small and medium-sized busin-esses while deregulating the banking sector's credit policies in order to help traditional industries raise loans.

"The government plans to allocate NT$50 billion for the next five years to back loans for small and medium-sized businesses," Chen said at the committee meeting yesterday morning.

According to Siew, the five-year government-backed lending plan is expected to help finance 25,000 emerging small-size and medium-size businesses.

The plan is expected to use innovative business models, and analyst expect it could create a total of approximately 125,000 job opportunities.

"The current credit crunch has increased difficulty in obtaining loans for small and medium-size businesses, which account for 20 percent of the nation's total lending -- down from 40 percent previously," Siew told a press conference after yesterday's meeting.

A special rating agency will also be founded to come up with new rating standards that examine small and medium-sized business credit issues, said Chen Tain-jy (陳添枝), acting president of Chung-hua Institute for Economic Research (中經院) and an economic advisor.

The president's economic advisory panel yesterday also proposed pushing forward urban renovation projects in order to reinvigorate construction of the nation's infrastructure and boost private investment by inviting the private sector to take part.

Siew said that a NT$50 billion joint-venture fund between the government and the private sector will be set up to induce at least 20 public projects each year

Such public-private projects are expected to generate NT$86.6 billion in tax revenue annually, create 20,000 job opportunities and add NT$580 billion to the nation's GDP.

Siew, who had previously advocated cross-strait direct links, nevertheless, yesterday failed to touch on the thorny issue.

"Taiwan-China trade relations should be both competitive and cooperative while Taiwan should maintain its competitive edge," he said, without elaborating.