By SHI JING ( China Daily)
Move aimed at 'seamless transition' ahead of official launch on Sunday
The municipal legislature of Shanghai on Thursday endorsed the legal framework for the China(Shanghai) Pilot Free Trade Zone, paving the way for the official launch on Sunday, when thefirst batch of new laws and regulations are expected to be announced.
 |
|
The name plate of the China (Shanghai) Pilot Free Trade Zone on a gate of the Waigaoqiao free tradezone in Shanghai. The pilot FTZ is expected to be officially launched on Sunday.ZHAO YUN / FORCHINA DAILY
|
The Standing Committee of the Shanghai Municipal People's Congress said in a statement thatit decided to adjust some of its local regulations and suspend the 1996 Regulations onExamination and Approval of Foreign Investment Enterprises of Shanghai Municipality, whichare expected to be superseded by the new zone's regulations.
The statement said that the suspension wouldn't create a legal vacuum, because every effortwould be made to ensure a seamless transition.
Foreign business executives said they welcomed the proposed changesand looked forward to an even more efficient regulatory environment.
Calling the general business environment the top factor in attractingforeign investment, Anders Paulsson, a partner at the Shanghai-basedconsulting firm SmithStreet, said the FTZ is expected to provide morebusiness opportunities.
"Foreign enterprises will be given pre-establishment national treatment— treated the same as Chinese companies. Foreign investment will alsobe evaluated with a 'negative' list approach as opposed to a 'positive' listapproach," said Jian Chang, an economist at Barclays China.
In a "negative" list approach, any industry that is not on the list is open to foreign investment.
"This new approach would greatly simplify the process because few industries are expected tobe on the negative list," said Chang.
Although the ban on foreign capital in such industries as telecommunications is unlikely to belifted, Yang Yuyi, an attorney at the Jingtian & Gongcheng Law Firm's Shanghai branch, saidthat the review and approval procedures for other sectors, including healthcare, have becomemore open and easier for foreign capital. It can be assumed that the FTZ will offer even easierprocedures, she said.
Taxes
:
A
major concern for all
Taxes are another major area of concern for foreign enterprises. Once a company qualifies fortax breaks in the FTZ, it will have a top income tax rate of 15 percent, compared with thepresent rate, which can be up to 33 percent, said Chen Li, chief securities analyst with UBS AG.That's a big saving for the foreign enterprises that qualify, he added.
Any other local regulations that aren't in line with the general plan of the FTZ will beadjusted accordingly for a three-year trial period, the Shanghai municipallegislature's statement said.
Legal and regulatory changes will take effect from Oct 1.
Central government departments that have responsibilities connectedwith the FTZ and the Shanghai municipal government will issue laws andregulations regarding the admission of foreign investment andregistration of foreign-invested companies to ensure a smooth transition,according to Ding Wei, director of the legislative affairs commission ofthe Standing Committee of the Shanghai Municipal People's Congress.
Wang Xinkui, counselor of the Shanghai municipal government and a key architect of the FTZplan, reportedly told a forum in Shanghai on Thursday that there will be no offshore duty-freepolicy in the zone.
Also, local authorities in Shanghai denied media reports that China will lift its ban on Facebookand Twitter in the FTZ, according to the State-owned media outlet people.com.cn.
Internet administration will remain unchanged in the FTZ. There will be no ideologicalarrangement in this area.
