On 1 June 2020, the Master Plan for the Construction of Hainan’s Free Trade Port was unveiled by the Chinese central government (hereinafter “Master Plan”). The policy document proposes in total 39 new policies with regards to the liberalization and facilitation of trade, investments and cross-border capital flows to develop Hainan into a global state-of-the-art free trade port.
According to the Master Plan, such a free trade port shall be established in Hainan by 2025, to enable the province to become a globally-influential free trade port by the middle of the century.
Under the Master Plan, investors would be given greater freedoms such as:
1. Freedom of trade
“Zero tariffs” on the trade in goods;
For services the policy measures aim to liberalize “market access and operations”;
Reduction of restrictions on cross-border trade in services.
2. Freedom of investment
- Investment shall be allowed if not generally forbidden, for industries implementing mandatory standards, investment and operations are permitted without permission and approval as long as companies commit to meeting the relevant requirements and submitting relevant documents for filing;
- Investment and “ease-of-doing-business” measures will be implemented from setting-up businesses to their deregistration and insolvency procedures;
- Increased penalties for intellectual property infringement, a strengthening of the application of blockchain technology in intellectual property transactions as part of a “Property Rights Protection System”.
3. Freedom of capital flows
- Building a multi-functional free trade account system;
- The promotion of settlement facilitation;
- Leading the way in implementing a policy of opening up the financial industry in Hainan to support the construction of an international energy and shipping industry;
- To support property and equity rights, and other trading facilities, in addition to accelerating the development of settlement centers.
4. Freedom of entry and exit
- To provide immigration facilities to attract foreign talents for the purpose of making investments or to engage in academic exchanges and business activities;
- To implement a wider visa-free entry policy and gradually extend the length of stay free of any visa requirements.
5. Freedom of transport
- A less constraint and open shipping system;
- Further relaxation of airspace controls and relaxation of restrictions with regards to the right of navigation;
- Removal of restrictions on offshore financing for ships and aircrafts.
6. Tax policy
The free trade port will adopt an arrangement characterized by “zero tariffs” on cargo trade. In addition, the enterprise income tax for companies in certain industries shall only be 15%. The individual income tax for highly-skilled talent and talent in short supply shall be 15% at the most.
7. Industry development
The “Master Plan” also proposes that the tourism industry, modern services industry and high-tech industries shall be vigorously supported, as they are key industries in Hainan.
Another point which deserves attention is the fact that the “Master Plan” grants Hainan’s Free Trade Port full legal authority to enable Hainan’s Free Trade Port and to enact Hainan’s Free Trade Port Law.
For more information, please visit the Chinese government’s website under: www.gov.cn
