► reading news

Focus Asia

Shanghai FTZ Revised Its Negative List: From 190 Entries down to 139!

(Hong Kong, 2014-07-27) This month, the first revision of Shanghai Free Trade Zone’s (FTZ) Negative List took place.

Shanghai FTZ AirviewShanghai Free Trade Zone (FTZ) was launched in September 2013 with a very successful start and a unique instrument called “Negative List” which has been adopted as innovative approach for foreign investments (FI) in the FTZ. The first Negative List (the “2013 Negative List”), is a ground-breaking document that lists the industry sectors in which FI is restricted or prohibited. Any industry sector not included on the list is fully open to foreign investment, and more importantly, investment in sectors outside the list is no longer subject to government approval – only a simplified “one-stop” filing procedure is required.

On July 1st, 2014, the Shanghai Municipal People's Government issued a revised version of this Negative List (the “Revised Negative List”), aiming to offer more leeway for foreign investment in the zone. The Revised Negative List, which came into force with immediate effect, adopts the same mechanism but with a shortened list of industry sectors.

 

Highlights of the Revised Negative List

Compared to the 2013 Negative List, the number of sectors included on the Negative List is reduced by 51 (from 190 to 139). However, almost 50% of the removals are a result of combining and regrouping existing sectors, or of mirroring current FI policies included in other regulations (e.g., the FI catalogue and CEPA arrangements). Certain sectors, such as gambling and pornography, are removed from the Revised Negative List because they are generally prohibited by law, and therefore are not open to investment – either from foreign or domestic investors. While these changes bring consistency and clarification to the restrictions on FI in the Shanghai FTZ, they are more concerned with form rather than substance.

Nevertheless, the Revised Negative List – to a certain extent and in a limited number of industry sectors – removes or relaxes restrictions on foreign investment, mostly in the industries of manufacturing, transportation, real estate, wholesale and retail.

Restrictions on foreign investment have been removed in 14 sectors, including:

  • Development of Tracts of Land
  • Operation of Premises to provide Internet Access (e.g., Cyber Cafes)
  • Railway Cargo Transport Companies
  • Cotton (Seed Cotton) Processing
  • Paper Pulp and Paper Manufacturing
  • Production of Benzedrine, Dyes and Coatings
  • Production of Chemical Medicines including Chloramphenicol, Penicillin G, Gentamicin and Multiple Vitamins Preparations
  • Smelting of non-ferrous Metals (e.g., Electrolytic Aluminum, Copper, Lead, Zinc) and
  • Wholesale, Retail and Distribution of Vegetable Oil and Sugar


Certain restrictions on FI have been relaxed in 19 sectors, for example:

  • Foreign investors are no longer required to form equity joint ventures with Chinese firms to pursue research, development and manufacturing of automobile electronics, automobile electronic bus-networking technology and electronic controllers for power steering systems
  • The maximum 30-year cap on the business term for any foreign-invested company providing air transportation auxiliary services is now lifted
  • The fact that foreign investors are allowed to set up project companies to trade in the real estate secondary market is clarified
  • Requirements on the minimum amount of total investment and the maximum number of years of business term for a foreign-invested medical institution are removed

 

Comments

Map Shanghai FTZCompared to the 2013 version, the Revised Negative List further opens up the Shanghai FTZ to foreign investment, if to a limited extent. The simplification of the list is not as substantive as had been expected by foreign investors.

Restrictions in certain “sensitive” industry sectors, such as telecommunication and finance, remain unchanged. It appears that the government is taking a very prudent approach to gradually relaxing restrictions and offering more flexibility to foreign investors in the FTZ.

 

Further Information

DELOITTE published an unofficial translation of the Shanghai FTZ Framework Plan with Revised Negative List, downloadable here.

You need further information?
Just drop us an
E-Mail or use our Contact Form.

Discussion

Keine Kommentare

Post a comment

 

HOLDINGS | TRUSTEES | LAW | TAX | FACILITATION | CORPORATE

Welcome to the Web of MCI Counselors Law & Tax - have a good day!

Language

New articles

\r\n (Dubai, 20/10/2014) In August 2014 already, the “so much to UAE committed” foreign bank Standard Chartered announced to exit parts of its SME business in the federat...
\r\n (Dubai & Berlin, 30/09/2014) The increasing “European-ization” of all areas will now also make no longer halt before inheritance. At least, once international ba...
\r\n (Dubai, 04/09/2014) This week the World Economic Forum (WEF) published the results of its annual Global Competitiveness Report (GCR) 2014-2015 with impressive rankings for the U...
\r\n (Dubai, 30/08/2014) Since June/July this year, licensees of Dubai’s DMCC start to rub their eyes when it comes to their annual license renewal. Out of the blue, the Free Z...
\r\n (Dubai, 08/08/2014) MCI offers actually several Shelf Companies, aged between 2yrs, 10mths and 6yrs, 1mth - as per August 2014.\r\n\r\n\r\n\r\n \r\n \r\n \r\n DESCRIPTION\r\n \r\n \r\n ...
\r\n (Hong Kong, 2014-07-27) This month, the first revision of Shanghai Free Trade Zone’s (FTZ) Negative List took place.\r\n\r\n\r\n\r\n Shanghai Free Trade Zone (FTZ) was launched in...
\r\n (Dubai, 14/07/2014) The UAE Ministry of Labour (MOL) has announced that it will stop the usage of the old plastic labour cards & paper contracts starting from July 13, 2014....
\r\n (Hong Kong, 25-06-2014) We found a very interesting BBC documentary about China's debt policy and situation from February 2014, critical as well (of course). But watch yours...
\r\n (Dubai, 13/04/2014) With effect 01/05/2014, Emirates NBD massively increases the required Minimum Balances for its Business Banking Clients.\r\n\r\n\r\n\r\n Emirates NBD, one of UAE'...
\r\n (Dubai, 26/03/2014) Finally, Virtual Currency (VC) Tax Rules - including the most popular, Bitcoin - came to the US on March 25! Several insiders predicted that the government w...

Facebook

Tags