The Hainan free trade port (FTP) in China's southern island province of Hainan is ramping up efforts to advance institutional innovation through the implementation of a series of zero tariff preferential policies, attracting more enterprises, including foreign capital, choosing to establish their presence within the FTP. The Hainan FTP is home to tens of thousands of businesses, including numerous foreign enterprises attracted by the FTP's preferential policies. "Transshipment through the terminal port is more convenient than air transportation in terms of customs clearance, which is a unique advantage of Hainan. Hainan is now upgrading the port terminals under customs management and strengthening the construction of supporting hardware. After the goods arrive, they can be cleared and transferred at the terminal quickly," said Meng Weiwei, general manager of Jia Green Chocolate Works, a Canadian chocolate company in Jiangdong New Area of Haikou, one of the key parks of the FTP. Since its initiation in 2018, the FTP has saw a remarkable surge in the number of registered enterprises from merely over 10,000 in the initial stage to over 100,000 this year. This significant increase is a testament to the FTP's commitment to enhancing service quality and providing robust guarantees for enterprises that choose to establish their presence within the FTP. "After our enterprise was established in Hainan, the service office of Jiangdong New Area assigned commissioners to interface with the newly established enterprises and assisted us in handling matters. The commissioners list the required documents. After all the documents are collected, they arrange for dedicated personnel to review those. After a few working days, the processing is completed," Meng said. In 2021, the FTP introduced a policy of tariff exemption for domestic sales of value-added processing. By the end of May this year, a total of 26 enterprises had carried out value-added processing business, with a domestic sales value amounting to 5.1 billion yuan (around 701.7 million U.S. dollars) and a tariff reduction and exemption reaching 420 million yuan (around 57.8 million U.S. dollars). "Enterprises that import raw materials for local processing add at least 30 percent in value, and then sell the products domestically, benefiting from tariff exemptions. Additionally, there's a policy that caps both the corporate income tax and the personal income tax of executives for encouraged enterprises. These two policies are crucial factors in our decision to come to Hainan as it significantly reduces operating costs for businesses," Meng said. This year holds special significance for the FTP. Hainan is set to initiate island-wide customs closure and establish a special zone to implement a "zero tariff" policy with other countries and regions outside the Chinese mainland. "Generally speaking, after the customs closure operation, the objects of customs supervision are goods and articles. At that point, engaging in economic and trade activities and cross-border capital flows in Hainan will be easier and facilitated better. The import business will realize 'zero tariffs', and the personal income tax will likewise be the lowest in the entire country," said Ye Zhaobo, director of press office of the Hainan Development and Reform Commission. Since the establishment of the first pilot free trade zone (FTZ) in Shanghai in 2013, China has so far boasted 22 FTZs, including the Hainan FTP, which have seen successful practices in 349 cases of innovation in institutional reform promoted at the national level.
China's Hainan FTP advances institutional innovation, attracts foreign capital with zero tariffs
