(Yicai Global) July 25 -- The amount of overseas debt held by Shanghai enterprises through the country’s foreign debt facilitation scheme swelled nearly 50 percent at the end of June from April 2020 when the city was first included in the pilot, according to the latest data. Earlier this year Shanghai broadened the remit of the program to make it easier for high-tech and specialized firms to find the financing they need through overseas channels.

To facilitate cross-border financing, especially for small and medium-sized start-ups with limited assets, the Shanghai government recently widened the Foreign Debt Facilitation Pilot to include both high-tech and ‘specialized and advanced companies that make new and unique products,’ expanded it city-wide, as opposed to just those companies registered in the free trade zone, and hiked the leverage ceiling to USD10 million each from the previous USD5 million.

As a result, the amount of borrowing through this scheme has surged 50 percent since it was first introduced, the State Administration of Foreign Exchange’s Shanghai branch told Yicai Global. The exact amount, though, was not specified.

The hike in the quota and broadening of the remit will help more companies expand their financing channels, lower their fundraising costs and increase investment in research and development so as to ensure their healthy growth, market insiders said.

The city aims to have 50,000 such specialized firms by 2025, up from 3,005 at the end of last year. And it expects to have more than 26,000 hi-tech companies, up from 20,000, over the period.

Bank of China’s Shanghai branch has been explaining the external debt facilitation policy to around 30 high-tech firms in different sectors each week, so as to raise customer awareness, explore companies’ demands from multiple angles as well as offer a service plan to help them take advantage of this opportunity, Yicai Global has learned.

Editors: Liao Shumin, Kim Taylor