REGULATIONS OF ZHUHAI MUNICIPALITY FOR THE PROVISION
OF FURTHER PREFERENTIAL TERMS FOR FOREIGN INVESTORS

(Promulgated 29 October 1986 by the
Zhuhai Municipal People's Government)

 

 

 

SUBJECT: ENTERPRISES WITH FOREIGN INVESTMENT

ISSUING-DEPT: ZHUHAI SPECIAL ECONOMIC ZONE

ISSUE-DATE: 10/29/1986

IMPLEMENT-DATE: 10/29/1986

LENGTH: 1908 words

TEXT:

The recently issued State council Regulations concerning Encouragement of Foreign Investment provide various incentives to foreign investment enterprises and are of great importance to Zhuhai Municipality in such areas as attracting foreign investment, introducing advanced technology and management methods from abroad and accelerating the four modernisations construction programme.  The content of the State Council Regulations to a large extent has already been implemented by foreign investment enterprises in the Special Economic Zone.  In order to suit contemporary conditions, the Zhuhai Municipal People's Government has decided, in accordance with the spirit of the Regulations and the autonomous rights and special economic policies accorded Zhuhai Special Economic Zone by the State, to provide further preferential terms to foreign investors, After more than six years of construction, a favourable investment climate has been achieved in the Zhuhai Special Economic Zone and hence foreign investors may now be provided with further and more advantageous conditions.

(1) Zhuahi Special Economic Zone is located at a major open port in China which is adjacent to Hong Kong and Macau and has efficient transport and information services.  At present five port facilities with direct waterway services to Hong Kong and Macau ports have been built and opened, and a deep water wharf has also been built and will be opened soon to international shipping.  There are direct dialling telephone and telex communication services between Zhuhai and Hong Kong, Macau and various domestic cities.  Direct dialling telephone services to some of the world's major countries and regions will be available as early as the beginning of next year.  Zhuhai Special Economic Zone has representative and trade offices in both Hong Kong and Macau and is able to provide efficient services to foreign investors.

(2) Any bank or non-banking financial institution in Zhuhai Special Economic Zone which provides foreign exchange services may carry out financial operations on international financial markets, and any foreign investment enterprise may carry out foreign exchange adjustment transactions through the Zhuhai Municipal Foreign Exchange Adjustment Centre.  A foreign investment enterprise may, following approval, raise funds through such means as the issue of shares and debentures.  Banks in the Zhuhai Special Economic Zone shall give priority to the issue of loans for short-term working capital and any other loans required by a foreign investment enterprise, subject to examination and verification of the loan application by a bank with which the applicant has an account or another financial institution.

(3) Capital construction of the "seven connecting and one levelling" service infrastructure facilities in the Zhuhai Special Economic Zone has largely been completed.  The five industrial districts and the two new urban districts of Gongbei and Jida provide investors with ideal general-purpose factory buildings, residential buildings, office buildings and large land sites.  The Special Zone power station which is to go into operation early next year will provide foreign investment enterprises with an even more ample electricity supply.

(4) Zhuhai Special Economic Zone shall implement a special economic system which is in accord with international markets and effectively protects the autonomous rights of foreign investment enterprises.  An enterprise may, within the business scope set out in its contract, articles of association and regulations, arrange its own production plans, determine its own wage scales and forms of payment of wages and incentive system and, in accordance with production requirements, may also determine its own organisational structure, staffing arrangements and may determine the recruitment and dismissal of employees.

(5) Zhuhai Special Economic Zone was one of the first areas in which the State's open door policy was implemented and is ranked at the highest level among all State proclaimed open areas.  Since the trial establishment of Special Economic Zones, the State has accorded a series of special economic policies and autonomous rights to Zhuhai Special Economic Zone.  Compared with inland areas, Zhuhai Special Economic Zone enjoys more autonomous rights and incentives in respect of customs control, examination and approval of imports, exports and projects introudced from abroad, exit and entry permits for both Chinese and foreigners, taxation, loans, land development and land use and other aspects.

In order to encourage foreign investment, the Zhuhai Municipal People's Government, in accordance with the spirit of the State Council Regulations concerning Encouragement of Foreign Investment, shall provide the following preferential terms to foreign parties which invest within the area of the Special Zone:

(i) The income tax rate to be levied on the profit of any enterprise in the Special Zone shall be 15%.  A foreign investment enterprise with investment of $ US2,000,000 or more, or which is a technologically advanced enterprise with a relatively long capital recovery period and a business operation period of ten years or more, may enjoy preferential treatment in the form of exemption from income tax for the first two profit-making years and payment of one-half of the prevailing tax rate for the next three years.  Exporting enterprises shall pay income tax at the reduced rate of 10%.  A technologically advanced enterprise shall pay enterprise income tax at one-half of the prevailing rate during the three year period after the expiry of the period of reduction of or exemption from enterprise income tax as stipulated by the State.  A foreign investment enterprise shall be exempt from local income tax for five years from the first profit-making year.

(ii) Any enterprise in the Special Zone shall be exempt from export duty on export products.  A foreign investment enterprise shall be exempt from import duty on all imports of equipment and materials necessary for production, and daily necessities for personal use.  Raw materials imported for the manufacture of export products shall be exempt from Customs import duty.

Approval procedures relating to the import, by enterprises in the Special Zone, of equipment and raw materials for the production of export products and those relating to the export of the enterprise's own products shall, as far as possible, be simplified.  An official response shall be issued as soon as possible and no later than three days after submission of an application.

The Special Zone Administration Commission shall actively assist a foreign investment enterprise in applying for and seeking approval to sell domestically a Special Zone product the import of which is restricted by the State.  If the Special Zone product is not a State restricted import, the Special Zone administration Commission shall, in accordance with the power conferred upon it by the State, give priority to the examination and approval of the application.  Import duty on raw materials imported for the manufacture of products to be sold within the Special Zone shall be levied at one-half of the prevailing rate.

(iii) An overall reduction of land use fees shall be implemented.  The fees charged for land for industrial use shall be reduced from levels of between 5 and 15 yuan per square metre per year to between 0.5 an 1 yuan.  In order to encourage foreign investment, the Municipal Government has decided that any industrial enterprise with foreign investment shall be exempt from the payment of land use fees for three years from the date of approval to use the land and, after the expiry of the period, land use fees shall be paid at one-half of the prevailing rate for a further period of three years.  A technologically advanced enterprise or an enterprise with an export value for the year of 70% or more of the value of the enterprise's product output for that year shall be exempt from land use fees for five years from the date of approval to use the land and, after the expiry of the period, land use fees shall be paid at one-half of the prevailing rate for a further period of five years.  An advanced high-technology enterprise shall be granted a special concession of exemption from land use fees.  An enterprise which enjoys a reduction of or exemption from land use fees.  An enterprise which enjoys a reduction of or exemption from land use fees shall be issued with a certificate by the Municipal State Land Bureau.

(iv) Service is of prime importance in land development.  Land use fees and land development fees only shall be charged for the use of land and these fees shall be uniformly administered and collected by the Municipal State Land Bureau.  Land development fees shall be calculated on the basis of the actual development cost.  The levels of charges shall be examined and determined by the Municipal Bureau of Commodity Prices.

(v) Priority supply of water and electricity shall be given to foreign investment enterprises and charges shall be the same as those for State-run enterprises.

(vi) Indiscriminate levies on foreign investment enterprises shall be strictly prohibited.  Administrative charges and charges for public undertakings may only be levied on presentation of a certificate of approval issued by the Provincial or Municipal People's Government and charges on foreign investment enterprises shall be the same as those on State-run enterprises.  An enterprise shall have the right to refuse payment to any party which imposes charges without the approval of the Provincial or Municipal People's Government and an appeal may be lodged with the Municipal People's government or its authorised department.

(vii) Procedures shall be simplified and work efficiency shall be improved.  Prompt examination and approval of agreements, contracts and articles of association of foreign investment enterprises shall be carried out and an official response on any case which is within the jurisdiction of Zhuhai Municipality shall be given within one month of receipt of the documents.  Where a foreign investment enterprise requires an official response to or settlement of any other issue, in normal circumstances response shall be given within ten days.

In order to properly co-ordinate the administration of and provide consultancy services for foreign investment enterprises, the Municipal People's Government shall establish a leading group on the use of foreign investment and a foreign investment enterprise consultancy service company.

(viii) The Municipal People's government shall, in accordance with the autonomous rights and special economic policies accorded the Special Economic Zones by the State, gradually formulate new regulations on measures for the development of foreign investment enterprises and the settlement of existing problems.  At the same time, regulations on preferential terms for foreign parties investing in Zhuhai Municipality's old urban districts, suburbs and counties shall be formulated gradually.

At present, the Special Zone is deeply involved in the reform of its economic and political system.  The various administrative systems and economic laws and regulations are becoming more comprehensive, and conditions for foreign parties investing in the Zhuhai Special Economic Zone are ever improving and the future is bright.