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GLOBAL OUTLOOK NEWS


ADB agrees $30m loan for Mongolia


The Asian Development Bank has approved a $30m loan to develop the Zamyn-Uud free zone, located at Mongolia’s busiest border crossing with China. Upon completion in 2025, it is


hoped the zone will help facilitate cross-border economic activity and encourage involvement in interna- tional supply chains. The Zamyn-Uud free zone is one


of three free zones in Mongolia set up in 2004. The zone had a management teamand basic infrastructure before the ADB became involved, but has struggled to attract business activity. The ADB cites anumber of


constraints to the zone’s develop- ment, including an unfeasible masterplan and incomplete infra- structure. The $30m loan – which was approved on June 18 – is intended to remedy some of these issues.■ JACKCONWAY


Philippines greenlights 12newzones


The Philippines has approved the creation of 12 new economic zones from January to June 2020, adding to the country’s existing 400-plus zones. The zones will be managed by


the Philippine Economic Zones Authority (Peza), and aim to attract 6.4bn pesos ($130m) in investment in 2020. They comprise nine IT centres,


two manufacturing zones, and one IT park, according to a Peza state- ment published in July. The latter will be the


Philippines’ first knowledge-based economic zone, to be established at Batangas State University. Called the Knowledge, Innovation, and Science Technology Park, it will promote collaboration between academia and the private sector, foster innovation and incubate tech start-ups. ■ JACKCONWAY


August/September 2020 www.fDiIntelligence.com FREE ZONE FOCUS


Hainanfreetradeport willbeagamechanger


I


nvestingin Chinahas longbeenagoal of foreign


investors,butopportunities areoftensubject tothe manylegalcomplications.


Insharpcontrast, specialeconomic zones(SEZ)haveprovided light legal requirementsandfinancial incentives intheformof preferential taxand tradepolicies. In fact,eachChinese freetradearea(suchasShanghai, Guangdong, TianjinandFujian)hasits ownmissionandunique characteristics.Hainanisthelatest freetradeareatobedeveloped. Launched in 2018, China’s


massive Hainan free trade port (Hainan FTP) project hasmany advantages. According to the master plan released in June 2020, the FTP will have three distinctive features. First, it will follow a zero-tariff policy for most of its imports, including “manufacturing equipment, vehicles, rawmaterials and consumer goods”. Second, there will be a special focus on tourism, services and the high-tech sectors – to this end, the plan has listed favourable corporate tax policies in these areas. Third, the project also aims to attract skilled foreign talent towork in Hainan. HainanFTPis agamechanger.


Designed tobethe largest free trade area in China, it will covermorethan 35,000 squarekilometres,dwarfing ShanghaiSEZin comparison. Notably, HainanFTPwill alsobemuchbigger thanHongKong, a special administrativeregion that hasitsown rightsandobligationsunder theWTO andmany other international treaties.However, HainanFTPwill not beimmediately subject toany


international rules, whichmayraise somelegal issues for China. Hainan is not only bigger than


other Chinese SEZs, the level of market liberalisation it introduces goes further than usual as it will open up the trade of services by implementing a ‘minimumapproval’ investment system. This system will comprise a special market access list relaxing market access for Hainan FTP. Additionally, a negative list approach, which defines the economic areas restricted to foreign investment, will be adopted in the free zone. The overall goal is the


establishment of a fully functional free trade port by 2035, which will be able to compete withHongKong and Singapore, while retaining “Chinese characteristics”.Many policies have been announced so far.However, they must be complemented by implementationdocuments, which are likely to be released in the coming months and will gradually give clearer indications as for the direction taken by the Hainan FTP. Withmore SEZs under


construction, China continues to be one of the best places in theworld to invest because of its SEZs. Hainan promises to be at the vanguard for years to come, and confirms that China’s future FDI policy will heavily rely on SEZs. Faster options for starting businesses, preferential tax treatment and better access to previously prohibited investment sectors are the factors likely to bring investors to Hainan.■


JulienChaisseisprofessoroflawatthe CityUniversityofHongKong


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