Shanghai plans to allow financially troubled companies to delay the payment of social insurance fees as part of government efforts to help them counter the impact of the economic downturn, an official with the Shanghai Municipal Commission of Commerce said on Tuesday.

"Such a measure can ease pressure on the cash flow of companies amid the current harsh business climate," said the commission's Jin Ying at a conference to solicit advice and feedback on the government's measures.

Companies in Shanghai can apply for a delay of up to six months to pay social insurance fees once the city government approves the plan.

Lin also said the government was considering providing subsidies and temporarily reducing the social insurance fees to help troubled companies.

Social insurance fees in Shanghai include insurance for pensions, medical care, unemployment, work injury and child bearing. An employer has to allocate about 30 percent of its wage payments to the social insurance fees of its employees.

Lin Zhenyi, president of the Shanghai Duolun Chemical Co Ltd, said companies welcomed such a policy but it would only help those on the brink of collapse.

"For companies that target long-term, sustainable development, they need simpler forms of government support to raise funds and more reduction of taxes," Lin told Shanghai Daily.

To help small and medium enterprises get funds, Shanghai's financial authorities have ordered banks to set up special departments to serve SMEs and establish small loan companies to cater to their demands.

However, the higher risks involved with lending to SMEs and the lack of guarantees to such loans mean banks and loan companies are still reluctant to support SMEs, Lin said.

(Shanghai Daily May 27, 2009)