The world’s three major free trade ports


General Secretary Xi Jinping announced in April that the Party Central Committee decided to support the construction of a free trade pilot zone in Hainan Island, support Hainan to gradually explore and steadily promote the construction of a free trade port with Chinese characteristics, and establish a free trade port policy and institutional system in a step-by-step and phased manner. Hong Kong, Singapore and Dubai are internationally recognized as relatively successful free trade ports. Through in-depth research on the successful experience of the construction of free trade ports in the three places, it can provide reference for the construction of China’s free trade port.

Hong Kong: Creating a “all-factor” free trade port

Hong Kong is a world-famous free port. In the 176 years from 1842 to the present, Hong Kong gradually developed from a single entrepot to an international trade center, an international financial center and even one of the world’s most open free ports. The current international status of Hong Kong Freeport is widely recognized not only because of its superior geographical position, but also because of the government’s many efforts, including the implementation of a free trade policy and a simple low tax system, to create a convenient business environment and promote the globalization of trade services. and many more.

The policy focuses on “convenience and trade”

A free trade port usually refers to a port area located outside the country and the region, outside the customs management checkpoint, allowing foreign goods to enter and leave freely, and foreign ships, planes and other means of transportation are also free to travel. The entire Hong Kong SAR is a free port.

In addition to its superior location, as an export-oriented open economy, Hong Kong has long pursued a free trade policy, does not set any trade barriers, and has simple import and export procedures. In general, all goods except the four tax numbers (alcohol, tobacco and cigarettes, hydrocarbon oils, methanol) can enjoy zero tariffs. The American Heritage Foundation has selected Hong Kong as the freest economy in the world for 23 consecutive years.

The taxation advantage of Hong Kong is simple and low. There are only three types of direct taxes, including profits tax, salaries tax, property tax, and a tax allowance system. The 2016 Tax Environment Report published by the World Bank and IFC International Financial Enterprise determined that Hong Kong’s tax environment is one of the best in the world.

Hong Kong is committed to creating a business-friendly environment. It has set up a “Business Facilitation Advisory Committee” to optimize the local regulatory system and provide an effective cross-sectoral and cross-sectoral communication platform for the Government to regulate matters to the Government. Express opinions. In the past ten years, Hong Kong has been ranked among the top five in the world in the World Bank’s Doing Business Report.

The Hong Kong Government has spared no effort in strengthening customs clearance facilities. As a free port, Hong Kong only imposes minimum licensing controls on import and export of goods. It has adopted a number of measures to reduce the burden of trade control on the industry and speed up customs clearance. For example, Hong Kong has worked closely with the Mainland to promote the “Free Trade Agreement Transit Convenience Scheme” to facilitate traders to use tariff concessions to attract goods for transshipment through Hong Kong. It also uses electronic equipment for trans-shipment through the “cross-border lock-up plan”. The goods provide seamless customs clearance services. In addition, the government is advancing the development of the “single window of trade” program, allowing the industry to submit import and export trade documents to the government through a one-stop electronic platform. According to the latest global competitiveness report released by the World Economic Forum, Hong Kong continues to rank first in the world in terms of customs clearance.

Reducing “transaction costs” is the most important

Huang Xingyu, chief economist of the Hong Kong Trade Development Council Greater China, believes that “transaction costs” are the most important considerations in order to become a successful trade center. Transaction costs are mainly affected by two aspects: one is “convenience” and the other is “risk”. “Convenience” stands for efficiency. The trade center is mainly a trading platform, and the transaction involves risks. The protection of the legal system is an important basis for all modern transactions.

Hong Kong Trade Development Council research director Guan Jiaming said that Hong Kong is a free port with complete elements. The goods, services, funds, information and personnel are relatively free to move. After the goods come in, they will be given “national treatment” and will be treated equally. These experiences are worth learning from the mainland.

Dubai: Freeport Strategy Drives Economic Transformation

The United Arab Emirates (UAE) is one of the most dynamic countries in the Middle East and the global economy. Dubai, as a trading, shipping, finance, logistics and technology center in the UAE and even the Gulf region, has attracted more and more attention in recent years. In Dubai’s economic diversification strategy, there is a groundbreaking and important initiative to provide a strong impetus for economic transformation. This is the establishment of a free trade zone.

Drive from Dubai International Airport to Sheikh Zayed Avenue, all the way south, through the Dubai Airport Free Trade Zone, Dubai Multi-Commodity Trading Center, Dubai International Financial Center, Media City, Internet City and other free trade zones, and finally arrive. The Jebel Ali Free Trade Zone, home to the world’s largest man-made port. As of the end of 2017, there are 45 different types of free trade zones in the UAE (including 10 under construction), of which more than 30 are in Dubai.

The emergence of the Dubai Free Trade Zone originated from the “guarantee” system generally implemented in the Arab countries of the Gulf. In order for foreign investors to do business in these countries, they must establish a company in partnership with the locals. This partner is also known as the “guarantee.” The cost of setting up a company is entirely borne by foreign investors, but the local “guarantee” accounts for at least 51% of the company’s shares. With the development of the times, foreign investors are increasingly dissatisfied with the “guarantee” system, and this system has become an obstacle to attracting foreign investment. In this context, the concept of the free trade zone came into being, that is, the emirates demarcated a region in the territory as a free trade zone, foreign investors can enjoy 100% control, but their goods and services can only be transferred in the region, not Enter the local market of the Emirates. In 1985, the Dubai government established the Jebel Ali Free Trade Zone, the first free trade port in the UAE. The core advantage of the Dubai Free Trade Zone over the traditional “guarantee” system is that foreign-funded enterprises can be 100% controlled.

Other incentives in the Dubai Free Trade Zone include: capital and profits can be freely remitted without any restrictions, which fully guarantees the security and freedom of foreign investors in the capital; enterprises in the free trade zone can enjoy the exemption of corporate tax ( There are time limits), personal income tax, import and export tariffs; factory equipment for long-term rental, some free trade zones can sign up with the investors for up to 25 years of plant equipment rental contract, effectively protecting the investor’s operational stability; no minimum Salary standards and the requirement to hire local employees, which enables companies in the Free Trade Zone to further reduce labor costs and gain greater competitive advantage in foreign trade; a one-stop integrated service from establishment to operation, which allows investors to All procedures are completed at a faster rate in the Free Trade Zone.

The Dubai Multi-Commodity Trading Center has been named “Best Free Trade Zone of the Year” by the “Foreign Direct Investment Magazine” of the Financial Times for three consecutive years. The center’s executive director, Christa Fox, said in an interview that Dubai’s free trade zone is diverse, with some focusing on specific areas such as education, media, technology, and multiple commodity trading centers are comprehensive. In the free trade zone, the three keywords “platform, standard and communication” are worthy of reference in other free trade zones.

Fox said that the free trade zone should set up a business, data and trade platform to provide efficient services to merchants stationed in the free trade zone. When formulating rules and standards for the free trade zone, we should ensure a good and stable trend and framework to guide the merchants to establish the future. In the final direction, the Free Trade Zone should also create opportunities to strengthen the links between enterprises in the region and help merchants gather to share experiences and inspiration.

Singapore: Quality software and hardware environment brings vitality

In 1969, Singapore set the first free trade zone in Jurong Terminal in Jurong Industrial Zone, and now Singapore has gradually developed into a highly open trade free port. The Free Trade Zone has played an important role in promoting trade in the country.

There are currently seven free trade zones in Singapore, one of which is mainly air cargo; the other six are mainly sea freight.

Alex Kapri, a senior visiting researcher in the Department of Business Analysis and Operations Management at the National University of Singapore Business School, suggests that China can learn from Singapore, starting with software and hardware construction and law enforcement, and trying to form a dynamic inside the free trade zone. Business ecosystem cluster.

Information flow to create a dynamic platform

Capri believes that Singapore is only a small island in the region. In this case, the Singapore government wisely designated the free trade zone to gather production facilities and infrastructure to connect the business ecosystem and attract a large number of world-class transnationals. Enterprises and local businesses are stationed.

For example, he said that the free trade zone near Changi Airport has high-tech “soft infrastructure” including wireless and broadband access, smart grid, digital applications, financial networks, and roads, runways and warehouses. “Hard Infrastructure” links all key stakeholders in Singapore, Southeast Asia and the world.

In order to meet the increasingly large information processing needs of the Free Trade Zone, the Singapore government has promoted trade facilitation by electronic means, and opened a series of electronic windows and platforms such as a neutral and secure trading platform to serve the development of the free trade zone. At present, Singapore is building a “national trade platform” and will use the alternative trade network as a single window for national declarations.

Efficient business is responsible for management

Singapore’s approach to the operation and management of the Free Trade Zone is to delegate port management to companies that are more efficient and dynamic and more responsive to the globalization trend.

Capri said that for the free trade zone, the Singapore government does not need inefficient, top-down micro-management, but can monitor the operation of the free trade zone operators through good technical capabilities and data acquisition capabilities. Operators are randomly audited and will be fined in the event of a violation. This system follows the principle of “informed obedience” and all parties must abide by the law “due diligence”. At the same time, Singapore’s highly transparent data and excellent data analysis capabilities have virtually eliminated government-related corruption and power rent-seeking behavior.

Financial legal services are perfect

Singapore’s well-established business ecosystem also covers financial services, foreign exchange transactions, insurance, legal arbitration, and talent. Due to the low financial costs in Singapore, many trading companies have located financial and asset custodians in Singapore. Singapore is also unique in legal arbitration for foreign trade disputes. According to the World Competitiveness Yearbook published by the International Institute for Management Development in Lausanne, Switzerland in 2011, Singapore ranks first in terms of judicial protection of corporate competition. Capri said that Singapore’s laws are clear and the law enforcement level is also unified and fair, enabling it to attract more world-class companies.

Capri also hinted that Singapore’s success on its national trading platform is largely due to its adherence to data privacy and security rules, which makes its free trade zone very attractive….

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