Huge potential for Chinese firms to use Hainan Free Trade Port as a base for investing in SE Asia
(LI MIN / CHINA DAILY)
The first working meeting of the Hainan Free Trade Port-ASEAN Think Tank Network held on May 13 focused on how to help strengthen China-ASEAN economic and trade cooperation and enable the Hainan Free Trade Port to play the role of a strategic hub promoting trade, investment and cooperation.
At the second working meeting held recently, we discussed how the network can better carry out its work in the future.
A core objective of building the Hainan FTP is to transform Hainan into an important hub and market for comprehensive cooperation between China and the Association of Southeast Asian Nations.
Many Chinese firms want to use the FTP as a base to invest and deepen cooperation with counterparts in ASEAN member states.
According to a survey on Chinese companies, 56 percent of the respondents said they are planning to enter the ASEAN market, and 60 percent said they want to increase investment and expand cooperation with ASEAN companies in the next 12 months.
In fact, the percentage of Chinese firms planning to enter the ASEAN market is likely to increase to 66 percent in the next three years or so, and their investment in ASEAN could rise by 25-50 percent.
In view of this demand, the China Institute for Reform and Development said in March that building “two headquarters bases” in the Hainan FTP should be considered a major task — one for helping Chinese companies enter the ASEAN market, the other for ASEAN firms to enter the China market.
The feasibility of Chinese enterprises using the Hainan FTP as a base for investing in ASEAN states and boosting cooperation with their ASEAN counterparts is immense, as the free trade port’s policies such as the “15 percent corporate profits tax rate policy”, the “foreign investment income tax exemption policy” and the “zero tariff policy for importing important commodities and parts” are attracting an increasing number of Chinese companies to set up base in Hainan.
How to provide intellectual support for Chinese companies to enter the ASEAN market?
Hainan has been exploring specific measures, and policy and institutional arrangements for building “headquarters bases”, but it is yet to resolve some knotty issues.
For instance, which Chinese companies can meet the specific needs of which ASEAN member’s industries and therefore should invest in the ASEAN market or establish cooperation with ASEAN companies? How large is the ASEAN market space? How can the advantages of the Hainan FTP in promoting China-ASEAN cooperation be better utilized? What kind of policies will help ASEAN companies to increase their share in the Chinese market through the free trade port?
The lagging construction of the financial services system remains a weak point of the Hainan FTP.
Hong Kong is the top financial center in the region, and its stock market owes about 80 percent of its value to Chinese mainland companies. And more than 80 multinational companies headquartered in ASEAN are listed on the Hong Kong Stock Exchange.
So to enable Chinese enterprises to enter the ASEAN market using the Hainan FTP as a base, the network should help integrate the Hong Kong Special Administrative Region’s financial services with China-ASEAN industrial chains.
As a bridge between governments and enterprises, the network’s fellow think tanks are urged to conduct policy research especially aimed at helping enterprises achieve better cooperation results.
How to build institutionalized platforms to help Chinese enterprises enter the ASEAN market?
This can be done by the Hainan FTP and ASEAN co-organizing regular forums on cooperation.
The China Institute for Reform and Development, or CIRD, with the support of the China Ocean Development Foundation, is preparing to hold an international forum on “Exchange and Cooperation between Hainan Free Trade Port and ASEAN” at the end of October.
The institute is also preparing to hold an offline forum on “Global Free Trade Port Development” at the end of this year or early next year.
Small and medium-sized enterprises in China and ASEAN states account for more than 90 percent of all enterprises.
To mobilize the talent resources of the network and ensure the SMEs fulfill their full potential, and contribute more to regional development and China-ASEAN cooperation, the network aims to co-organize capacity-building training seminars.
As for the CIRD, it is preparing to hold a training seminar on capacity building for the development of the blue economy under the Regional Comprehensive Economic Partnership framework.
We hope the experts attending these forums and seminars will offer useful suggestions for governments and enterprises of ASEAN states.
The Hainan Free Trade Port-ASEAN Think Tank Network and the CIRD also suggest that mutual academic visits and exchanges between visiting scholars be organized, and camps for young talents from member think tanks be set up.
This is an edited excerpt from the opening speech of Chi Fulin, president of the China Institute for Reform and Development, at the Second Working Meeting of Hainan Free Trade Port-ASEAN Think Tank Network.
The views do not necessarily reflect those of China Daily.