Hainan to more than triple duty free allowance as part of FTP project

By Andrew Pentol |

Hainan-FTZ-2020The duty free allowance on China’s Hainan Island will more than triple to RMB100,000 ($14,063), in line with plans for a Free Trade Port (FTP), which were officially released earlier this week.

Announcing the overall FTP plan on 2 June, the Chinese Central Government revealed the quota for offshore duty free shopping will be raised from RMB30,000 ($4,219) to RMB100,000 per person/per year.

In recent years, the Chinese Ministry of Finance has increased the duty free special allowance on several occasions. In 2016, it was doubled to RMB16,000 from RMB8,000 and two years later it was raised to RMB30,000. This was the fifth adjustment to the quota since the successful offshore duty free scheme was introduced in 2011.

Under the new FTP plans, the Hainan Provincial Bureau of International Economic Development will also increase the existing list of duty free product categories.

Recent offshore duty free developments on the island include the opening of two new duty free shops (Haikou Riyue Plaza Duty Free Shop and Qionghai Boao Duty Free Shop) last year. These new stores added to existing outlets at Haikou Airport and in Sanya.

FREE TRADE PORT PLAN

As reported, Hainan first revealed plans in 2018 to develop the free trade zone and port pilot to stimulate its global status.

Hainan Free Trade Port chart

The overall plan for the Hainan Free Trade Port was officially revealed on 1 June 2020. Source: Hainan Provincial Bureau of International Economic Development.

News of the plans actually emerged on 13 April 2018, when Chinese President Xi Jinping announced China would support Hainan in building the pilot free trade zone across the island. Jinping added that this would eventually lead to the establishment of a FTP with Chinese characteristics.

The aim is to have a ‘high level Free Trade Port’ with a strong global influence by 2050. Building up to this, there are plans to implement a zero tariff policy on certain imported goods and items. These include ships, aircrafts and other transport means, along with yachts imported to the island for transportation and tourism.

Qualifying goods and items will be exempt from import duties, import value-added tax and consumption tax. The aim is for policy to be in place by 2025.

In addition, the government is looking to apply a more convenient visa-free entry policy. This involves introducing more visa-free application channels to foreigners including self-declaration and invitation and reception by local entities.

Restrictions on foreigner’s applications for visa-free entry could also be relaxed. Visa-free entry for various purposes including business, medical treatment and exhibitions and conventions might be permitted. A 15-day visa-free policy for foreign tourist groups travelling by cruise ships is also on the table.

Hainan offshore duty free policy chart

The current duty free quota of RMB30,000 on Hainan Island, could be more than triple to RMB100,000 under the new FTP plans. Source: Hainan Provincial Bureau of International Economic Development.

A more open policy on air transportation is set to be incorporated, allowing airlines from relevant countries and regions to transport passengers or freight via Hainan to a third country or region.

This publication also reported last month that Hainan province has created thousands of jobs to foster development of the FTP project.

The government, alongside public sector, state-owned and private enterprises will offer more than 30,000 positions associated with the tourism, technology and service industries.

These include 470 roles for ‘international talents’, mainly in aviation, hotel management and foreign language teaching.

Hainan offshore duty free chart final

Further duty free product categories could also be added. Source: Hainan Provincial Bureau of International Economic Development.

A total of 1,717 jobs with an annual salary of RMB300,000 are being offered, in addition to 59 senior placements with an annual salary exceeded RMB1,000,000 ($141,739) in the tourism, education and medical treatment fields.

UPTURN IN TOURISM

Meanwhile, China Duty Free Group, which runs the impressive Haitang Bay store in the island’s tropical city of Sanya, noted an ‘obvious uptrend’ for the Hainan tourism market, as the recovery from the coronavirus (Covid-19) pandemic in the country continues.

Speaking recently to TRBusiness, Charles Chen, President, China Duty Free Group indicated that he hoped cross-provincial tourism in China would restart as soon as possible. He also suggested the company was ‘well prepared’ for the subsequent sales peak.

CDFG-Haitang-Bay-Hainan-exterior-2019

Chen revealed that the company conducted several marketing activities in Hainan, which were very successful, taking into account he trading environment.

“Our sales grew year-on-year in Hainan during the Labour Day holiday and on 1 May reached RMB200m/$28m; much higher than our expectations. It is a very encouraging result and signal to us. Offshore duty free has become a popular choice for Hainan tourists, whose purchasing power remains strong,” he commented.

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