Make good use of "policy+reform", Hainan Free Trade Port sets sail

On December 18th, Hainan Free Trade Port officially launched the island wide lockdown and entered a new stage of construction.

Looking back at the past, a set of impressive data outlines the "acceleration" of Hainan's opening up to the outside world: in the past five years, Hainan has actually used foreign investment of 102.5 billion yuan, achieving an average annual growth rate of 14.6% and setting a record for attracting more foreign investment in five years than the total of the previous 32 years.

Against the backdrop of weak global economic recovery and rising trade protectionism, why can Hainan achieve a leap in utilizing foreign investment and write a new answer to China's open economy?

The answer lies in the methodology presented at the Central Economic Work Conference, which concluded on December 11th - 'We must adhere to both policy support and reform and innovation.'. Under the dual drive of policy support and reform and innovation, Hainan has activated the "multiplier effect" of industrial agglomeration, attracting global advantageous resource elements to flock in.

What are the advantages of attracting foreign investment in Hainan? Firstly, it cannot be separated from the free trade port policy system tailored by the Party Central Committee and the State Council. In June 2020, the "Overall Plan for the Construction of Hainan Free Trade Port" was released, and the policies of "zero tariffs, low tax rates, and simple tax system" and "five freedoms and conveniences, one safe and orderly flow" quickly fell from paper to the ground. Three "zero tariff" policies for imports of raw materials, transportation vehicles and yachts, and self use production equipment were successively introduced, and a trial of 30% tariff free domestic sales for processing value-added products was implemented. The "double 15%" preferential policies for enterprise and personal income tax rates covered industries such as tourism, modern services, and high-tech. Pilot projects for cross-border investment and financing, as well as cross-border data flow, broke the ice one after another.

The policy and institutional system is the "four beams and eight pillars" of the construction of Hainan Free Trade Port. Over the past five years, based on the Hainan Free Trade Port Law, Hainan has issued more than 40 supporting regulations, clarifying various institutional arrangements for free trade ports through legal means. The policy intensity and synergy are unprecedented in the history of Hainan. After the closure operation, with the expansion and improvement of policies such as "zero tariffs", cross-border flow of factors such as people, logistics, capital, and data in Hainan has become more convenient.

From "reducing certificates for the convenience of the people" to "freedom and convenience", reform continues to make efforts. If policy support is the 'hard support' to attract foreign investment, then reform and innovation are the 'soft power' to optimize the business environment. Hainan has launched a series of breakthrough reform measures with institutional opening as its core, making foreign-funded enterprises "willing to come, able to stay, and develop well".

For example, taking the "Five in One" reform of registering foreign-funded enterprises as a starting point, Hainan continues to improve the convenience of market access for foreign-funded enterprises. Optimize the registration process for foreign-funded enterprises and waive multiple registration application materials; Take the lead in implementing the direct registration system for foreign enterprises; Building a "three one thing" service chain for enterprise establishment, change, and cancellation, as well as a "no application, enjoy" service chain... Nowadays, in Hainan, the number of procedures for foreign-funded enterprise establishment has been reduced from 5 to 1, and the material reduction has exceeded 77%. In May of this year, Liu Xiaoming, the president of the Denmark China Tourism and Cultural Exchange Association, completed the registration of a travel agency in Hainan through remote "zero running" with the proactive services of Hainan's tourism and market supervision departments.

The resonance between policy support and reform and innovation has activated a pool of spring water for industrial development. This year, Singapore's Pengrui Group signed a contract with Hainan to develop an international high-end medical and elderly care project that integrates medical treatment, rehabilitation, health preservation, and health management. This is the first foreign-owned hospital introduced by Hainan Free Trade Port. In the past five years, Hainan has been based on the strategic positioning of "three zones and one center", and through the development model of "policy guidance, innovation platform building, and industrial aggregation power", foreign enterprises have relied on Hainan to connect with domestic and foreign markets, realizing the development vision of "doing global business with Hainan as the fulcrum".

'We must adhere to the combination of policy support and reform and innovation' is not only the password for Hainan Free Trade Port to attract investment, but also the universal formula for China's high-level opening up. If we continue to make good use of the golden key of "policy+reform", Hainan will continue to "accelerate" after the closure of the customs, and contribute more replicable and promotable "Hainan experience" to Chinese path to modernization.