The new regulation on ensuring timely payments to small and medium-sized enterprises, which will go into effect on Sept 1, will safeguard the legitimate rights and interests of SMEs, reduce their operational costs and optimize the business environment, the nation's top industry regulator said on Friday.

Noting SMEs play a crucial role in expanding employment and improving people's livelihood, Vice-Minister of the Ministry of Industry and Information Technology Wang Jiangping said the regulation will ensure government departments, public institutions and large enterprises pay SMEs on time and will invigorate the liquidity of SMEs.

A mechanism will be established for the disclosure of information regarding overdue payments to SMEs within the prescribed time limit, Wang added. Moreover, the system of complaint handling, punishment for acts of bad faith, as well as supervision and evaluation will be set up to protect the legitimate rights of SMEs.

The State Council on Tuesday released a regulation on ensuring timely payments to SMEs, according to a decree of the State Council signed by Premier Li Keqiang.

The regulation standardizes contract signing between the aforementioned departments and SMEs, requiring them to pay for goods, projects and services from SMEs on time. It also prohibits them from extending the payment period.