Foreign Trade Enterprises Doubt That The Free Trade Zone Is Too Small

Foreign trade enterprises: it would be better if the free trade zone were larger

Mr. Zhang is an international spin The head of the trading company, the enterprise headquarters, is registered in Pudong New Area, where the Free Trade Zone is located. He is currently holding a wait-and-see attitude towards the Shanghai Free Trade Zone.

He said: "The Shanghai Free Trade Zone is just a conceptual free trade zone for us."

He said frankly that the area of the free trade zone is too small, only 28 square kilometers, and the company can not operate in it.

"According to the concept of the free trade zone, enterprises are required to put the operation center in the area of 100~500 square kilometers, which is not established." Mr. Zhang said that this is like swimming, at least there must be a swimming pool.

"How can customers go to such a small place? How can business be done?" Mr. Zhang said that since the free trade zone encourages offshore trade, for processing trade enterprises, it needs a sufficiently large exhibition center, commercial center and residential, as well as warehousing and other logistics supporting systems. "How to complete these basic elements in 28 square kilometers is a test."

The current scope of Shanghai Free Trade Zone includes Shanghai Waigaoqiao Free Trade Zone, Waigaoqiao Bonded Logistics Park, Yangshan Bonded Port Zone and Shanghai Pudong Airport Comprehensive Bonded Zone. "The four districts are geographically separated, and only focus on logistics." Mr. Zhang believes that the free trade zone can be divided into one area like the Shenzhen Special Economic Zone in the early years, including at least half of Pudong New Area. The area should be large enough to be connected, and there should be perfect supporting conditions for people to live in. "This is the complete free trade zone".

Mr. Zhang said that at present, within the limited 28 square kilometers, companies can only register 20 square meters of offices. "The free trade zone must solve the problem of personnel and capital flow".

In his view, the free flow of personnel means that businessmen can do business directly in the Free Trade Zone after getting off the plane, and leave directly after finishing business in the Free Trade Zone, without having to go to the visa and customs clearance.

The free flow of funds refers to the free convertibility of RMB under capital account. "This definitely takes time." Mr. Zhang also heard that this is the most controversial part of the opening of the free trade zone at present.

However, Mr. Zhang also said that after the implementation of the detailed rules of the Free Trade Zone for a period of time, if it is conducive to processing trade, he will definitely consider registration.

Shipping intermediary: most concerned about the prospect of "replacing business tax with value-added tax" in the Free Trade Zone

Mr. Qin is a shipping company headquartered in Hongkou District, Shanghai information The person in charge of the enterprise is also engaged in domestic and foreign freight forwarding and ship leasing agency, buying and selling business.

For the Shanghai Free Trade Zone to attract foreign shipping related enterprises, and the Baltic Exchange previously announced that "entities have settled in" Shanghai, Mr. Qin said that the Baltic Exchange, headquartered in London, has only set up a representative office, and there are no registered companies in the Free Trade Zone, including Pudong New Area.

"The head of the Baltic Exchange is usually in Singapore. After the establishment ceremony of its Shanghai representative office, he went back to Singapore. There is no fixed office in Shanghai, and he is not resident in Shanghai. The establishment of an office is just an early form. They are also looking at the trial implementation of the Shanghai Free Trade Zone," Mr. Qin said.

In his opinion, in order to attract and benefit Chinese and foreign shipping enterprises, the free trade zone must be properly solved Tax reform Reform of ship registration system and foreign exchange control. {page_break}

Mr. Qin said that shipping and logistics enterprises are most concerned about whether the pilot project of "replacing business tax with value-added tax" will be stopped in the Free Trade Zone. For shipping companies and international freight forwarding enterprises, this is to solve the problem of "replacing business tax with value-added tax", so that the former's tax burden will not be reduced but increased. The cost of shipping enterprises mainly comes from production equipment, but the investment in fixed assets purchased by enterprises before January 1, 2012 is not deductible; The cost of means of labor accounts for about 20% of the total cost of shipping enterprises, and the salary paid to its own employees cannot be deducted; In addition, capital costs, road and bridge fees, house rent, insurance premiums, etc. cannot be deducted.

It is revealed that many Chinese ships choose to register overseas because of tax revenue and better financial support services.

As a new ship registration port, Yangshan Port has carried out the registration business of export tax refund or bonded ships owned by enterprises engaged in international shipping and in the bonded area or leased exclusively from abroad.

"If Yangshan Port can make greater efforts to facilitate the reform of the ship registration system and link it with financial liberalization, China's ship registration is expected to return to the free trade zone." Mr. Qin said that mainland shipbuilding enterprises generally register a company in Hong Kong and other places to let the company sign orders with overseas customers. In this way, shipping to companies registered overseas by shipyards is equivalent to export, and they can enjoy the export tax rebate policy.

"If the free trade zone can be truly equivalent to outside the customs, the shipyard will register shipping companies in the free trade zone, and after the shipyard ships to the companies in the free trade zone, the export tax rebate will be completed in the free trade zone, which can prevent the tax rebate funds from flowing overseas," Mr. Qin said.

In addition, the opening up under RMB capital also has a significant impact on shipping enterprises and freight forwarders. As shipping companies generally have international businesses and need to settle in dollars, pounds and euros, and as domestic RMB capital cannot be freely exchanged, mainland companies generally cannot make large-scale foreign exchange payments.

"If the RMB free exchange business can be liberalized, the business of Shanghai International Shipping Center will really start." Mr. Qin said, but this is difficult to do, so the Baltic Exchange just set up a representative office to observe.

Mr. Qin said that if these three problems were solved well, Chinese and foreign shipping companies and freight forwarders would be able to register and operate in the Free Trade Zone.