Hainan will build a modern industrial system, vigorously develop tourism, modern service industries, and high-tech industries, further strengthen the foundation of the real economy, and enhance the economy’s innovation capacity and competitiveness.
The blueprint for the Hainan Free Trade Port has been drawn up, but the outside world is even more interested in how it will be implemented and what activities will be prohibited.
On June 8, one week after the full text of the “Overall Plan for the Construction of the Hainan Free Trade Port” was released, officials from the Ministry of Finance, the National Development and Reform Commission, the People’s Bank of China, and other relevant ministries, along with leaders from Hainan Province, appeared together at a press conference held by the State Council Information Office to brief the public on the plan for the construction of the free trade port.
Since the 1990s, the ups and downs of Hainan’s real estate market have drawn significant attention from the outside world. With the transition from a free trade zone to a free trade port, will real estate investment in Hainan gain momentum as a result?
Liu Cigui, Secretary of the Hainan Provincial Party Committee and Chairman of the Standing Committee of the Hainan Provincial People’s Congress, made it clear that real estate development will be strictly controlled. He stated that Hainan will not build as much real estate as outside parties might want; the province cannot become a real estate “factory.” Our land resources are limited, and we have learned lessons from past experiences.
Liu Cigui stated that in June 2018, we implemented citywide purchase restrictions with the resolve of a warrior cutting off his own wrist. Looking back now, while we went through some growing pains, the risks associated with the real estate sector—including the historical volatility and several major market crashes—will not recur following the announcement of the free trade port policy.
Now that real estate has been strictly regulated, what should Hainan encourage to develop?
Lin Nianxiu, Deputy Director of the National Development and Reform Commission, stated that Hainan will build a modern industrial system, vigorously develop tourism, modern service industries, and high-tech industries, further strengthen the foundation of the real economy, and enhance the economy’s innovation capacity and competitiveness.
Hainan has unique advantages in the tourism sector. The overall plan proposes measures to attract tourists, such as significantly relaxing the duty-free shopping policy for departing passengers and increasing the duty-free shopping allowance.
Shen Xiaoming, Deputy Secretary of the Hainan Provincial Party Committee and Governor of Hainan Province, stated at the press conference that Hainan should not only become a vacation paradise for people across the country, but also a shopping paradise for them.
“If you’re planning a trip to Hainan, I recommend bringing plenty of money and spending generously on shopping. ” said Zou Jiayi, Vice Minister of Finance. She noted that the duty-free shopping policy for departing island visitors has been significantly relaxed, with the duty-free shopping limit raised from the current 30,000 yuan per person per year to 100,000 yuan per person per year. In addition to the current 38 categories of goods, the range of duty-free products will be further expanded, while management will be optimized to enhance the convenience of shopping for travelers.
The development of the Hainan Free Trade Port to high-quality and high-standard levels cannot be achieved without the active participation of a large number of high-quality market entities. Hainan has made vigorous efforts to attract foreign investment and market entities, resulting in the addition of 444,000 new market entities over the past two years. A total of 572 new projects with an investment of 100 million yuan or more have been launched, with a total investment of 582.8 billion yuan.
Shen Xiaoming stated that the Hainan Free Trade Port operates under the principle of “anything not prohibited is permitted.” Unless there are mandatory standards or legal prohibitions, the government will, in principle, eliminate licensing and approval requirements and implement a filing system and a commitment-based system for enterprises, allowing them to commence business operations upon committing to meet the relevant conditions. For businesses operating in encouraged sectors such as tourism, modern services, and high-tech industries, income from direct overseas investment may be exempt from corporate income tax.
Hainan will also further open up its service sector to foreign investment. Shen Xiaoming explained that Hainan will significantly reduce market access barriers and expand the opening-up of the service sector in three major industries—tourism, modern services, and high-tech—with a particular focus on key areas such as the seed industry, shipping, telecommunications, business services, finance, healthcare, education, culture, and sports. For example, the province will support overseas securities, futures, and fund management institutions in establishing wholly-owned or joint-venture financial institutions.
The development of the Free Trade Port requires talent. “Whether you’re part of the older generation or the younger one, the Hainan Free Trade Port welcomes everyone to come and make their mark,” said Shen Xiaoming.
Liu Cigui explained that more than 40,000 positions have recently been opened for global recruitment, with more to be announced before the end of the year, and hundreds of thousands of talented individuals from both home and abroad have enthusiastically applied. Over the past two years, we have brought in more than 80 of the best schools and more than 50 medical institutions of various types from around the world and across the country.
In addition to addressing issues related to children’s education and health care, there are also personal income tax incentives. Shen Xiaoming said that for high-end and in-demand talent working in the Hainan Free Trade Port, if they stay on Hainan Island for at least 183 days, the portion of their personal income tax liability exceeding 15% will be exempted. Therefore, the personal income tax incentives are also highly attractive to high-end and in-demand talent.
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