Tariff and tax benefits give more foreign firms motivation to increase investment
Rising companies from Regional Comprehensive Economic Partnership (RCEP) member states are benefiting from the trade facilitation policies of the Hainan Free Trade Port (FTP), and will continue to beef up their presence in the Chinese market.
"In recent years, the country's successful implementation of policies supporting the Hainan FTP has created new opportunities for the development of companies like us," said Saravoot Yoovidhya, CEO of Thai beverage company TCP Group.
Yoovidhya recalled that his father actively responded to China's call for reform and opening-up by establishing the first overseas factory in Hainan in 1993. Since then, the Thai company has entered other locations in the China market.
"The company has had the opportunity to witness first-hand Hainan's phenomenal development over the past several decades. Thus, we are hugely confident about the new opportunities that will be created as the RCEP and the Hainan FTP continue to take shape in the coming years," he said.
Since the beginning of this year, trade in goods between Hainan and RCEP economies has grown rapidly. From January to May, the import and export volume of goods between Hainan and RCEP countries was 25.79 billion yuan ($3.77 billion), a year-on-year increase of 44.1 percent, which was higher than the average national level.
"The Hainan FTP will connect deeply with high-level international trade and economic rules. It will become a new bridge linking China more closely with Thailand and other regions under the RCEP, and even the global market," Yoovidhya added.
Seeing such great opportunities, he said that the company will beef up investment in the Chinese market, and will invest a total of 2 billion yuan into its new production base in China.
According to the local government, the Hainan FTP has implemented more than 180 policy documents to widen market access and promote trade facilitation and liberalization as of the beginning of July.
The documents include a positive "zero tariff" list for free trade port vehicles and yachts, a negative "zero tariff" list for cross-border trade in services and a catalog of encouraged industries.
"With the accelerated implementation of related policies of the Hainan FTP, local infrastructure has been greatly improved, more talent have begun to arrive here, and the business environment has continued to be optimized," said Yan Qingle, managing partner of the China free trade service center of market consultancy Deloitte.
"More companies will benefit from policies including corporate income taxes, personal income taxes and tariffs, QFLP, or qualified foreign limited partner, and QDLP, or qualified domestic limited partner," Yan said. "These will create favorable conditions for enterprises to conduct cross-border investment and businesses through the Hainan FTP."
Jin Guang, an official with the Japan External Trade Organization Guangzhou Office, said that after the RCEP agreement took effect, the product tax rate of many Japanese products, including the popular drink sake, will decrease a lot, which will create huge opportunities for Japanese companies.
"In order to enjoy more preferential tariff dividends, many Japanese enterprises are studying the RCEP rules and plan to dynamically adjust their industrial chains and supply chains in the region," he said.