The Beijing Customs District is introducing customs surety insurance, beginning September 01, which it says will lower the business costs of small and medium enterprises (SMEs) and improve efficiency.

Under the General Administration of Customs of China (GACC), the Beijing customs bureau will explore the insurance scheme, which will reduce the overall operating costs of enterprises, such as the cost of capital and institutional transaction costs, China Daily reported.

“The new insurance scheme has been developed by the customs agency and an insurance company,” Zhou Gonghua, chairman of Bank of China Group Insurance Co. Ltd. “It is the first time that the customs agency is introducing an insurance product as a new type of customs bond.”

Under the scheme, importers are the policyholders while the customs agency is the insured.

According to Gao Haifeng, deputy director of Beijing Customs District, customs bonds, which are guarantees for payment of import duties and taxes, are mostly accessible only for large companies with correspondingly large credit lines, and thus are mostly out of reach of SMEs.

SMEs are an important pillar of the Chinese economy, with the China Association of SMEs estimating that they generate around 60% of GDP and 80% of employment in the country. As such, the government is taking steps to reduce costs for these businesses in order to promote their development.