Stimulus Packages Take Hold

As analytical instrument makers and laboratory product companies face downturns in key market segments, such as chemicals, energy and metals, due to the global economic crisis, national stimulus plans may provide some relief. The variety of plans announced over the last three months provide state funding designed to increase spending through business loans, tax reform and infrastructure spending. In some cases, stimulus plans also allocate a share of funding to R&D.

On November 9, China announced a CNY4 trillion ($587.7 billion) stimulus plan to combat the country’s slowing growth. The wide-ranging plan includes CNY1.8 trillion ($264.5 billion) for major infrastructure projects, such as airports and railways, and CNY120 billion ($17.6 billion) in tax breaks. Funding of interest to instrument companies include CNY$350 billion ($51.4 billion) for environmental projects, CNY160 billion ($23.5 billion) for R&D and CNY4.8 billion ($70.5 million) for rural healthcare. NRDC Minister Zhang Ping stated that environmental funding would go primarily to rural projects, including CNY280 billion ($41.1 billion) for sewage treatment.

The investments will be made over two years, beginning in the fourth quarter. Approximately CNY100 billion ($14.7 billion) of the stimulus is expected to be spent by March 2009. According to China Daily, the $14.7 billion will be divided among the following projects: $1.46 billion for affordable housing; $4.99 billion for rural infrastructure; $3.66 billion for highways, railways and airports; $1.9 billion for public health and education; $1.76 billion for emission reduction and the environment; and $880 million for technical innovation.

In late November, the EU proposed a €200 billion ($258.2 billion) stimulus plan. The plan encompasses €170 billion ($219.5 billion) in spending by EU nations and €30 billion ($38.7 billion) in spending by the EU and European Investment Bank. The plan emphasizes immediate investments by EU countries to create jobs, increase loans to businesses and stimulate spending. Specific proposals that could benefit instrument and laboratory product spending include three public-private initiatives. The European Green Car Initiative would provide €5 billion ($6.5 billion) in loans as well as incentives to support development of cleaner automobile technology. The €1 billion ($1.3 billion) European Energy-Efficient Buildings Initiative includes support for the development of energy-saving materials through standardization, and regulatory actions. The €1.2 billion ($1.5 billion) Factories of the Future Initiative would spur improvements in manufacturing through the use of new technologies and advanced materials. EU nations that have announced their own stimulus plans include Germany, Hungary, Italy, Poland, Spain and the UK. Spain’s €11 billion ($14.2 billion) package includes €500 million ($645.6 million) in funding for R&D and €800 million ($1.0 billion) for the auto industry.

In Asia, Japan, South Korea and Taiwan have each launched stimulus plans. However, none of the countries’ plans specify funds for R&D. Japan’s ¥5 trillion ($51.4 billion) package, announced on October 30, includes tax cuts and loan guarantees for business and consumer assistance. It is the government’s second such package this year, following a ¥11.7 trillion ($120.2 billion) package announced in August. South Korea’s KRW14 trillion ($10 billion) plan includes a KRW4.6 trillion ($3.3 billion) investment in infrastructure, as well as KRW1 trillion ($714 million) for state-run companies. The plan also includes measures to stabilize financial markets, provide income assistance and assist local governments. Announced in November, Taiwan’s TWD$500 billion ($14.9 billion), four-year stimulus plan will fund new infrastructure, increase public spending and aid private investment. For public construction, the plan allocates TWD$75 billion ($2.2 billion) in funding.

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