Download Overview of China’s SEZs

A Presentation of Special
Economic Zones (SEZs)
By Yonghua Ding
China Railway Construction Corp. LTD.
(CRCC)
March, 2014
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CONTENTS
◆
◆
◆
Overview of China’s SEZs
China’s Overseas Trade and Economic
Overview of China’s SEZs
Cooperation Zones
Advice to create a SEZs
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Overview of China’s SEZs
What is Special Economic Zone?
Special Economic Zones (SEZs) are ◆ Located in a geographically delimited area of a country,
◆ Administered by a single autonomous body ,
◆ Offering certain incentives and preferential policies for
businesses that are located and operating within the zone,
◆ Characterized typically by more liberal laws and
economic policies than a country’s general economic laws,
◆ Encouraging industry, manufacturing, and services for
export,
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Overview of China’s SEZs
Brief history and types of China’s SEZs
Economic & Technological
Development Zones (ETDZ):
High-tech Industrial
Development Zones
(HIDZ):
Located in broadly defined zones
with wide spectrum of investors
Special
Economic
Zones (SEZs)
Export Processing Zones
(EPZ):
Eliminate or streamline
most customs procedures
for business
Encourage investment in hightech businesses by offering
incentives to enterprises/investors
Free Trade Zones (FTZ):
Encourage investment by
bringing down tariff barriers
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Overview of China’s SEZs
Contribution to GDP
Major
Contributions
The total GDP of the major state-level SEZs,
ETDZs, HIDZs, EPZs & FTZs accounted for
roughly 21.8% of China’s national GDP in
2007.
Contribution to Employment
The total employment of the SEZs, ETDZs &
HIDZs account for 4% of China’s national em
-ployment.
Contribution to FDI
In Billion USD
78
45
Contribution to High Technology
Until 2011, the HIDZs had accounted for half
of China’s high-tech gross industrial output
and export with another 1/3 made by the
ETDZs.
3
0.5
1978
1988
1998
2008
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Overview of China’s SEZs
Successful Experience of China’s SEZs
A. Strong commitment to
reform from the top
leadership
◆ Strong commitment to reform and pragmatism from
top leadership,
◆ SEZ policy backed by different levels of national,
provincial and local governments & authorities, and
Taking pragmatic approach towards economic reforms.
◆ Preferential policies and incentives legally
enacted and implemented for zones,
B. Preferential policies
and institutional
autonomy
◆ legislative authority to establish and issue
municipal laws and regulations under the basic lines
of the national laws,
◆ Highly efficient administrative services, including
rapid customs clearance to create a businessfriendly environment,
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Overview of China’s SEZs
Successful Experience of China’s SEZs
C. Strong support & pro-active participation of the Government
◆ Government
to build a sound legal and safe business
environment for the investors in the zones,
◆ Hardware:
good infrastructure - roads, water, electricity,
gas, sewerage, telecommunication, etc.
◆ Software:
“ one-stop service “ centre for administrative &
business services , such as accounting, legal, business
planning, marketing, import-export assistance, personnel
training, management consulting, etc.
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Overview of China’s SEZs
Successful Experience of China’s SEZs
D. Introduction of FDI
and investment from
overseas Chinese
SEZs are the attraction of FDI and investments
from Overseas Chinese leading to significant
technology transfer and learning spillovers.
◆ Concentration of professionals and skilled
E. Technology learning,
innovation , upgrading
and strong links with
Domestic Economy
people, including many R&D personnel,
◆ Being centers of knowledge and technology
generation, adaptation, diffusion and innovation,
◆ closely linked to the domestic enterprises
through supply chains or value chains, helping
achieve economies of scale and business
efficiency,
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Overview of China’s SEZs
Successful Experience of China’s SEZs
F. Innovative cultures
G. Clear objective,
benchmarks, and
intense competition
Large number of professionals in the SEZs as
immigrants from across China and overseas
to form a strongly motivated migrant
community helping generate an innovative
and entrepreneurial culture.
China’s SEZs are set up with clear
objectives and targets for economic growth,
exports, employment and investment, etc.
The large number of SEZs would compete
with each other for investments based on
quality of services and infrastructure
offered to investors.
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Overview of China’s SEZs
Successful Experience of China’s SEZs
H. Location advantages
The SEZs usually located in the coastal region
or in the region with good access to major
infrastructure such as, roads, ports, airports
and railways and links to international markets
and historical trading relationships.
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Case of Shenzhen Special Economic Zone
 Area: 396 KM2
 Established in 1980, the first SEZ in China
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Case of Shenzhen Special Economic Zone
Main Changes from 1980—2007
Annual rate
of increase
1980
2007
Population
320,000
12,000,000
GDP
$ 32,131,147
$110,908,360,655
31.20%
GDP
per capita
$99.3
$12,987
17.64%
Import and
Export
$ 17,000,000
$ 287,500,000,000
38.34%
Accumulative Contribution to
Central Government
$ 60,049,180,327
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Case of Shenzheng Special Economic Zone
Development in Stages
Initial stage (1980—1985）
Main Task
1. Development of infrastructure and service facilities.
2. System Innovation
Salary System, Construction System, Labour System,
Price System, Enterprise Structure, Insurance System
Government Structure, etc.
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Case of Shenzhen Special Economic Zone
3. Establishment of “open” area like Shoukou Industrial Zone and
some ports.
4. Some foreign banks attracted to settle down in the Zone.
5. “Shenzhen Speed”
Building up the conception “ Time is money, efficiency is life”
It was a great challenge to the traditional planned economy system.
Overall Development Stage(1986—1992）
Main Achievements
1. Export- oriented and Open-door policy
 Utilization of foreign fund and technique for infrastructure
 Attraction of foreign investment for industry
 Active development of international trade and transit trade
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Case of Shenzhen Special Economic Zone
 Ending the deficit situation of Export & Import trade In 1987.
 The total trade value ranks first among the cities in China since
1992.
2. Market Economy Policy
A. Creation of state-own enterprises system, joint-stock system, the
contract system, the transfer of property rights and bankruptcy.
B. The establishment of nonferrous metal futures market and
Shenzheng Stock Exchange.
C. The establishment of new administrative system of the state-owned
land. Bidding system for the land.
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Case of Shenzhen Special Economic Zone
D. The establishment of contract system and social security systems
for labours.
New Development Stage (1993—now）
A. Good investment & innovation environment established,
Good infrastructure, good service.
B. Upgrade the economic development model
High-tech enterprise and research institution are encouraged.
C. Gradual reduction of incentives and foreign investors enjoys the
same national treatment.
D. High level of international economic cooperations.
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Case of Shenzhen Special Economic Zone
Enlightenment from Shenzhen SEZ
 Wise resolution of the Central Government to set up Shenzhen
SEZ.
 The success of Shenzhen SEZ broke the myth that modernization
could be realized only in capitalistic system.
 To open the mind and insisting on reform is the soul of economic
development.
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Case of Shenzhen Special Economic Zone
Incentives of Shenzhen Special Economic Zone
Logistics
Software
industry
Finance
Integrated
circuits
industry
General
industries
Venture
investment
Industry
Policies
Processing
with
imported
material
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Case of Shenzhen Special Economic Zone
Incentive for General industries
A. For foreign-invested enterprises, corporate income tax rate is
decreased from the original 30% down to the present 15%.
B. Foreign-invested manufacturing enterprises can enjoy 2 years of
corporate income tax exemption and half reduction for the ensuing
3 years according to the regulations of the tax law. Certified exportoriented enterprises at the expiration of tax exemption and
reduction period enjoy a reduced rate of 10% for corporate income
tax provided the export volume accounts for 70% or above of the
total industrial output. Certified manufacturing enterprises using
state-of-the-art technologies at the expiration of tax exemption and
reduction period are entitled to a reduced tax rate of 10% for a 3year extension.
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Case of Shenzhen Special Economic Zone
C. Half of the land use fee for the land for industrial use utilized by
certified export-oriented enterprises will be exempted. Half of the
land use fee for the certified enterprises using state-of-the-art
technologies will be exempted for 5 years.
D. The foreign-invested enterprises engaged in the service sector with
an investment of over US$ 5 million and operation duration of over
10 years can enjoy 1 year of corporate income tax exemption from
the profit-making year and half reduction for the ensuing 2 years.
E. Sino-foreign equity joint ventures engaged in port and dock
construction projects with operation period of over 15 years may
enjoy the exemption of corporate income tax for the first 5 years
from profit-making year and half reduction thereof for ensuing 5
years after their applications are approved.
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Case of Suzhou Industrial Park
◆ To develop into a hi-tech industrial park with international competitiveness
◆ To develop into an innovation eco-township of internationalized, modernized,
information-based happy district of Suzhou
◆ SIP covers a total jurisdiction area of 288 sq km, among which 80 sq km area belongs to
China-Singapore Cooperative Zone.
◆ Starting with west-most parcel and moving eastwards.
◆ Projected population of 600,000, including a workforce of about 360,000.
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Case of Suzhou Industrial Park
The 8 sq km-Phase I area, adjacent to the Old City, will be built
into a central district of industry and commerce integrating
finance and tourism.
Double cities and double flanking zones
The Phase II area is about 23 sq k
m and will be turned into a hightech industrial district
with waterfront features.
The vast land of Phase III, totaling
32 sq km, is close to Shanghai
and expected to become
a base of technologyintensive manufacturing and
processing industries.
Phase III
Phase I
Phase II
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Case of Suzhou Industrial Park
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Case of Suzhou Industrial Park
Achievements
 RMB 133 billion of GDP, USD 18.9 billion of accumulated
utilized foreign capital and RMB 197.2 billion of accumulated
registered domestic capital.
 With only 3.4% of the total land and 5% of the total
population of Suzhou, SIP contributes around 16% of
Suzhou's GDP.
 79 Fortune 500 companies have made investment in SIP with
a total of 125 projects.
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China’s Overseas Economic & Trade Cooperation Zones (OETCZ)
Introduction of
the zones
In the mid-1990s, the Chinese
Government adopted the
policy of “ Going Global”,
encouraging Chinese
companies to target new
markets, build global
relationships, and invest
abroad. It is also the
commitment from Chinese
Government to help African
countries develop their
economies by creating SEZs
Three types of OETCZ
Manufacturing, processin
g and assembling
Resource exploitation
Integration of manufacturi
ng, trade,logistics, real
estate,
tourism, etc.
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China’s Overseas Trade and Economic Cooperation Zones
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China’s Overseas Trade and Economic Cooperation Zones
Facts about the zones
24 zones
approved
Total
by the
单击添加 investment
Chinese
of $2.9b
Ministry of
Commerce
Total
Total tax
单击添加
单击添加
output of
单击添加 paid of
$8.4b
$265m
17865 jobs
been
created
237
enterprises
entered the
zones
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Lekki Free Zone Pictures
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Lekki Free Zone Pictures
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Master Plan of Lekki Free Zone
SEZ as a part of national economic growth
strategy, SEZ’s master plan as a sub-plan
of regional general plan
Residential Estate
Lekki Free Zone
CBD
Lekki
Airport
LAGOS
Airport
Manufactur
ing Proces
sing
Seashore
Expressway
Commerce
Tank
Farm
& Logistics
APAPA Port
Lekki-Epe
Expressway
Lekki Free Zone
New port
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Preferential and Incentive Policies in Lekki Free Trade Zone
 Complete tax holiday from all Federal, State and Local
Governments rates, taxes, Custom Duties and Levies;
 One-stop approval for all permits, Operating License and
Incorporation Papers;
 Duty-Free and Tax-Free importation of raw materials and
components for goods destined for re-export;
 Permission to sell 100% of manufactured assembled of imported
goods into the domestic Nigeria market. When selling into the
domestic market, the amount of import duty on goods manufactured
in the Free Trade Zone is calculated only on the basis of the value
of the raw materials or components used in assembly, not on the
finished products;
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Preferential and Incentive Policies in Lekki Free Trade Zone
 100% foreign ownership of investments;
 100% repatriation of capital, profits and dividends to the country of
origin;
 Waiver of all import and export License;
 Waiver on all expatriate quotas for companies operating in the
zones;
 Prohibition of strikes and lockouts for the first 10 years of operation
of a free zone.
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Advice to create a SEZs
Main points to create a SEZs
Why should I use the word “create”
Type of SEZs to Decide
EPZ
ETDZ
HIDZ
SEZs
ADA
FTZ
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Advice to create a SEZs
Type of Administration and Investment
A. Invested, operated and administrated by the Government
B. Invested, operated and administrated by PPP
Under the control of the high committee
C. Invested and administrated by the Government
and operated by an expert team
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Advice to create a SEZs
Selection of the Location
 Near Ports, Airport or Railway;
 Good Infrastructure & Services
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Advice to create a SEZs
Preferential policies and incentives legally
enacted and implemented for Zone
.
 Incentives is the key to attract the domestic and foreign investment
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Advice to create a SEZs
Master Plan for the Zones
 The overall arrangement and layout in space and time for the
development of land use, industrial structure ,traffic organization,
infrastructure, environment protection of the Zone
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Advice to create a SEZs
Construction
 To follow the Regulatory Plan and Site Plan
 To follow the Municipal Project Plan
 To follow the Engineering Design
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Advice to create a SEZs
Administrative Service & Marketing
 To built a centre for administrative & business services
 To make a marketing promotion worldwide
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Advice to create a SEZs
To establish attractive & friendly investment environment
Why do investors invest in the Zone?
“Open-door” Policy & Opening your mind
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Advice to create a SEZs
Key Points to Operation
Incentives legally enacted
Implementation & Continuity
High efficient administration services, especially a rapid
customs clearance (one-stop service)
Land compensations & friendly community relationships
Good Security
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Thank You !
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