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  • PRD in Perspective

    Shenzhen Speeds Up Reforming of Business Environment

    PRD Council Dr Daniel Yip

       Recently, FHKI’s representatives have attended an exchange session named “Hong Kong Chamber’s Chairmen Exchange Session” held by the Hong Kong Economic and Trade Office in Guangdong of the SAR Government in Shenzhen. Topics covered include “Certain Measures of Guangdong Province for Further Expanding the Scope of Liberalisation and Utilisation of Foreign Investment”, social insurance of Shenzhen, Shenzhen Housing Provident Fund and “Certain Measures of Shenzhen on Strengthening Reform of Business Environment” (the Measure). The Measure is of particular interest to Hong Kong manufacturers. It was promulgated by the Shenzhen Municipal People’s Government in February 2018, with the aims of creating a stable, fair and predictable business environment and accelerating the building of a modern, international and innovative city. 

       Under the Measure, certain initiatives will be introduced to create a cost-effective environment for business development and lower the operating cost and tax burden of enterprises. These include lower the electricity cost for industrial and business users by 10 per cent, gradually abolish the charges regarding highway connecting different districts of the city and officials who overcharge the public would be reprimanded. Land that meets the requirements for industrial planning but have not yet completed the land premium assessment procedures can be put up for sale. Plot ratio will also be increased.

        The authority will step up efforts to support innovation activities by exploring the feasibility of setting up a mid-stage trial innovation fund of RMB10 billion on market principle to provide support for the establishment of mid-stage trial facilities and mid-stage trial production line so as to accelerate the process for commercialising research and development results. In addition, a pilot scheme for innovation will be introduced to encourage higher education institutions and research institutions to set up innovation test centre. These facilities would become a platform for commercialising research and development results that operate on principles of free market and professionalism and provide enterprise incubating and fund-raising services. To generate environment to support innovation, efforts would be spared to protect intellectual property right and increase the amount of compensation for infringing intellectual property right.

        The authority will also build a more open trading and investment environment. Unless the existing regulations state otherwise, negative list of entry of foreign investment into the pilot free trade zones will be applicable to the whole city of Shenzhen. Projects other than those stated under the negative list will be provided with national treatment. Those meeting the requirement will be eligible for subsidy of the same amount for every dollar invested.  Multinational foreign enterprises that establish their headquarters or regional head offices in Shenzhen and pay tax in an amount exceeding RMB100 million, would receive a one-time grant that amounts to 30 per cent of tax payment or RMB100 million, whichever is lower.  Professionals from Hong Kong and Macau in areas such as finance, accounting, planning, design, architecture and medical services are permitted to practice in Shenzhen upon approval.

        On attracting talents, preferential housing policy will be provided. For instance, persons who attain master’s degree or above can rent the flats for talents and purchase a flat of 90 square metres or below upon fulfilling certain conditions. The authority will explore the feasibility of introducing schemes with features such as rent-and-buy mode, rental paid during the tenancy period to cover part of the payment and resold only to applicants under the schemes. For those working lawfully or starting a business, if they obtain degrees from renowned universities, being returned talents after studying abroad and being foreign, Hong Kong and Macau talents and their spouses and children, they would be provided with citizen treatment in areas such as housing, medical service, social insurance, innovation activities and starting a business. Working visa application process for expatriates would be streamlined and long term multiple entry working permits would be issued for those expatriates fulfilling the requirements.

       In recent years, Shenzhen has grown into the Silicon Valley of China and it also houses some of the Mainland’s biggest skyscrapers and shopping malls. Nevertheless, the city is still deemed behind that of some advanced cities in other parts of the world. We believe the Measure would create an equal and international business environment to attract foreign capital into Shenzhen and enhance its competitiveness. With Shenzhen’s introduction of a series of development strategies, Hong Kong manufacturers need to make corresponding adjustments to their investment structure and direction in the Mainland, including consider changing their strategies by shifting from low-end industry to a more high-end industry, so as to seize the emerging opportunities during the period ahead. Hong Kong manufacturers are also recommended to pay close attention to Shenzhen as well as the Bay Area and actively initiate dialogue with local authorities to probe for business opportunities.

     

    Dr Daniel Yip

    PRD Council Chairman

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