On Thursday Hunan national legislature deputies who are also entrepreneurs welcomed the State Council's new policy supporting the private sector, but stressed the importance of detailed measures and thorough implementation.

Entrepreneur deputies to the 10th National People's Congress (NPC) on Thursday afternoon said the success of the State Council's latest policy supporting the private sector would ultimately depend on its detail and how well it is implemented.

The State Council, China's cabinet, issued the 36-article Guidelines on Encouraging and Supporting the Development of the Non-Public Sector Including Individual and Private Enterprises in late February, a week before the NPC session was convened.

The document said that private enterprises would be allowed to invest in infrastructure construction, public undertakings, financial services and national defense, which have now been monopolized by state-owned enterprises (SOEs).

Ten private business people, also NPC deputies from Hunan Province, held a special discussion on the sidelines of the ongoing legislative session to affirm the policy's significance. But they cautioned that they await publication of detailed measures and their full implementation.

"Local governments should abolish systematic hindrances to the private sector and administrative regulations that contradict the 36 articles, and formulate detailed measures and supplementary regulations as soon as possible," said Ren Yuqi, board chairman of Jinqiao Group.

Similarly, Wang Rixin, president of Hunan Dongfu Group, stressed the policy's implementation. "I'm concerned about whether local governments set thresholds for market entry, and what kinds of thresholds they are." 
 
The new policy reflects the continued existence of problems for the development of the private economy, according to Zhong Faping, board chairman of Hunan Keli Group.

Private enterprises can still face local inequalities in tax rates, market entry requirements and available channels of finance, despite a trend toward national harmonization.

Liu Pingjian, board chairman of Hunan Zhongxin Digital Technology Co. Ltd., took the enterprise income tax rate as an example.

"The rate for domestic enterprises is much higher than that for foreign-funded enterprises, and to enjoy the preferential policy, many domestic companies register overseas and then return to China for investment," he said.

A unified tax rate, strongly opposed by multinationals, has been delayed and, though the head of State Administration of Taxation confirmed on March 9 that it would go ahead, there is as yet no timetable.

The discriminatory approaches of local authorities toward private enterprises run deep. 

"Changing the attitude of local governments is vital for the implementation of the new policy," said Wang Tian, board chairman of Bubugao Trade Chain Co. Ltd. He said local authorities usually set forth preferential policies, but ignored their implementation.

If administrative departments don't actually make changes, it benefits no one to hold conferences or write policies, he added.

"Private enterprises need the government to help solve these problems and fully implement these policies," said Liu Pingjian, warning that local governments were seldom in step with them.

Xiao Zijiang, board chairman of Hunan Wujiang Light and Chemical Industry Group, suggested that a special body like the Supervision Committee be set up to demonstrate the special attention of central government.

(China.org.cn by staff reporter Tang Fuchun March 12, 2005)