The Ministry of Economic Affairs would continue to offer the nation’s small and medium-sized enterprises (SMEs) financial assistance, and encourage the use of hedging tools against foreign exchange volatility, as the sharp appreciation of the New Taiwan dollar since early May has seriously affected their operations, Deputy Minister of Economic Affairs Ho Chin-tsang (何晉滄) said yesterday.
There are 46,000 export-oriented SMEs in Taiwan, most of which are in the manufacturing industry, and 80 percent of them quote prices in US dollars, Ho said at a news conference in Taipei.
As SMEs are highly vulnerable to exchange rate fluctuations, the ministry would step up promotion of three hedging tools, including foreign exchange forward contracts, foreign exchange options and natural hedging, while helping them connect with banks to explore alternative hedging instruments, he said.
Photo courtesy of the Ministry of Economic Affairs
Firms most affected by the sharp appreciation of the NT dollar are those in the metal, machine tools, machinery, textiles, plastics and rubber, auto parts, food, electronic components, and information and communications industries, he said.
The ministry has set up a foreign exchange response team, which is expected to run for at least three months to offer SMEs clear countermeasures, accessible consultation and practical tools they can use when needed, Small and Medium Enterprise Startup Administration Director-General Lee Guann-jyh (李冠志) said.
The team is mainly composed of personnel from the administration, the Industrial Development and International Trade administrations, Lee said.
The ministry earlier yesterday held a meeting with eight state-run banks — Bank of Taiwan Co (臺灣銀行), Land Bank of Taiwan Co (土地銀行), Taiwan Cooperative Bank Ltd (合作金庫), First Commercial Bank Co (第一銀行), Hua Nan Commercial Bank Ltd (華南銀行), Chang Hwa Commercial Bank Ltd (彰化銀行), Mega International Commercial Bank Co (兆豐銀行) and Taiwan Business Bank Co (台灣企銀) — to discuss how to assist SMEs.
The ministry would continue talks with the banks on further lowering fees for SMEs applying for financial aid, it said.
In April, the ministry announced it would offer up to NT$6 billion (US$206.8 million) in loan guarantees for SMEs directly affected by US tariffs, and an additional NT$5 billion for those indirectly affected.
Each SME could receive up to NT$60 million in guarantees and large firms could qualify for up to NT$100 million, while firms with fewer than 30 employees could receive loan guarantees of up to NT$35 million, it said.
The Small and Medium Enterprise Credit Guarantee Fund of Taiwan (信保基金) provided about NT$159 billion in loan guarantees to small, medium and micro-sized enterprises last month, up 7.8 percent from NT$147.5 billion in May, a fund official told the Taipei Times by telephone.
That represented a 5 percent increase to NT$829.4 billion in the first half of this year, up from NT$790.2 billion a year earlier, the official said on condition of anonymity.
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