EMPLOYEES who earn 1,500 yuan (US$238) a month, the minimum wage in Shenzhen, will be exempted from paying monthly contributions to the city's housing provident fund starting Feb. 1.

The housing provident fund is a long-term savings program to help buy, build or decorate apartments, with employees and employers contributing each month.

However, employers of the exempted will still need to pay the obligatory monthly contribution to the fund, according to the fund management center.

Local residents can make withdrawals from the fund to pay rental or housing mortgage loans.

Around 400,000 residents had made withdrawals from the fund by the end of last year, totaling almost 2.6 billion yuan, the paper said.

Using the fund to apply for a mortgage loan is expected to become possible before the end of September.

The fund management center has invited suggestions and opinions from legislators, experts of financial and housing policies, and ordinary residents, on a drafted related policy concerning the loan application.

Experts said control should be tightened because of capital risks.

According to a national regulation, monthly contributions paid by employees and employers can be used by employees to buy, build, renovate or repair homes and cannot be used for other purposes by any unit or individual.

Shenzhen first instituted a housing provident fund in 1992, but the regulations covered employees in only a few State-owned companies. Government agencies and public institutions were not covered.

Source:Shenzhen Daily