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On June 1, 2020, China officially released the Overall Plan for the Construction of Hainan Free Trade Port [1], a master-plan to transform the entire island province into a free trade port (FTP) – establishing a leading business environment in China by 2025.
Chronology development of Hainan province
In 1988 - Approved as one of the Special Economic Zones in China
In 2009 - International Tour Island Strategy
In 2011 - Offshore Duty-Free Policy
In 2018 - Approved as one of the Pilot Free Trade Zones in China (Whole Island)
In 2020 - The Construction of Hainan Free Trade Port
For foreign firms, Hainan FTP provides broader market access:
The island will implement zero tariffs for most of its imports, including manufacturing equipment, vehicles, raw materials, and consumer goods.
It also has lowered the income tax rate to 15 percent for eligible companies registered in Hainan.
It caps the personal income tax rate at 15 percent for individual talents.
Hainan will also focus on developing its tourism, service, and high-tech industries, particularly tourism, as relevant companies' income tax will be exempted. Chinese consumers now can spend up to 100,000 yuan in duty-free shops on the island, compared to the 30,000-yuan limit set at the end of 2018, which will surely attract more tourists to the island amid the global pandemic.
According to the official data [2], from July 1 to August 31, the sales volume of the four offshore duty-free stores in Hainan exceeded 5.582 billion yuan, with a year-on-year growth of 221.9% and an average daily sales volume of 90 million yuan. The number of shoppers reached 832,000, up 54.77% year on year. The number of shopping items reached 6.123 million, up 147.3 percent year on year.
Sanya Duty-Free Store
With support from the central government and the incentive of a range of beneficial policies, Hainan's future looks promising. Recently Hainan officials have hosted several online investment promotional conferences with global commercial associations like Chambers of Commerce from Singapore, Malaysia, Thailand, Norway, and the United Kingdom, which has attracted hundreds of multinational enterprises to participate.
Promotion Seminar & Business Matching of Hainan FTP for Singapore, Malaysia, Thailand Companies
The Investment Guide of Hainan Free Trade Port 2020 jointly published by the Hainan Department of Commerce, Hainan International Economic Development Bureau, and PWC can be downloaded here.
Disclaimer: All images used in this article are from the internet.
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