Nantong Export processing zones sees transformation and promotion:

Nantong comprehensive free trade zone receives State Council approval

Planning area: 5.29 square kilometers

Nine functions after transformation and promotion

Preferential policies in five aspects

Efforts to transform and promote Nantong Export Processing Zone (NTEPZ) into a comprehensive free trade area achieved a key breakthrough recently. On January 3, the State Council sent an official correspondence to the Jiangsu government and the General Administration of Customs that expressed its official approval to establish Nantong comprehensive free trade zone. It is reported that Nantong comprehensive free trade zone is the eighth and 31st of its kind in Jiangsu and China, respectively. Its establishment marks the first comprehensive free trade area in central Jiangsu province.

A comprehensive free trade area is a kind of special area under customs supervision with the most complete policies and functions in China. After an export processing zone is promoted to a comprehensive free trade area – in addition to the previous six major functions of free trade processing, free trade storage, international procurement and distribution, international entrepot trade, R&D, and inspection and maintenance – three functions will be added, namely, port operation, exhibition and display, and foreign trade. The enterprises in a comprehensive free trade area will enjoy preferential policies in terms of revenue, customs, foreign exchange, foreign trade and economies.

Nantong comprehensive free trade zone consists of two blocks. Block 1 is located within the previous NTEPZ with a planning area of 1.5 square kilometers. It borders Xinkai North Road in the east, Fuxing Road in the south, Zhongtian Road in the west and Tongqi Road in the north. Block 2, located in the east side of Sutong Yangtze River Bridge, has a planning area of 3.79 square kilometers. It borders NETDA and Haimen city in the east; Nongchang Road in the west; the Yangtze River in the south; and Weishiqi Road, Weishiwu Road and Weishiliu Road in the north.

Since beginning operations in 2002, NTEPZ has developed rapidly and played an important role in the development of an export-oriented economy in the city. It also faced challenges such as an insufficient planning area and relatively simple functionality. After NETDA is promoted to Nantong comprehensive free trade zone, the area will be given full play in regards to function and policy advantages, creating a more efficient, convenient logistics environment and becoming an important carrier of transformation and promotion for processing trade in Nantong. It will cultivate newly emerging high-end industries, drive regional economic developments and create an ideal environment for various industries. It will have complete functionality, preferential policies and innovative systems that will enhance international competitiveness.

According to the approval, NTEPZ will not be maintained after Nantong comprehensive free trade zone is closed for examination acceptance. The functions, relevant revenue and foreign exchange policies of Nantong comprehensive free trade zone will be implemented according to the relevant regulations of the Reply of the State Council on the Establishment of Yangshan Free trade Port Area.

Newsletter:

New carriers for transformation and new industry areas

There is an area enclosed with green meshes in Nengda Business District. The area is home to various high-rises in NETDA. There are numerous enterprises inside the area. The Chinese characters “China Customs” on the gate are quite bright and striking. It is the only special customs supervision area, Nantong Export Processing Zone.

On January 3, the State Council sent an official correspondence to the Jiangsu government and the General Administration of Customs to express its approval to establish Nantong comprehensive free trade zone. After serving the open economy of Nantong for 10 years, NTEPZ will undergo a significant transformation to enlarge its area and completely upgrade policies and functions.

NTEPZ starts transformation and development

The establishment of Nantong Export Processing Zone (NTEPZ) was approved by the State Council on June 21, 2002, with a planning area of 2.98 square kilometers. In 2009, NTEPZ began free trade logistics services, providing free trade processing, free trade storage, international procurement and distribution, international transit shipment, R&D, inspection and maintenance. It also enjoyed preferential tax policies such as import and export tax exemption, imported materials under bond, and tax rebates after entering the area. As a sole special area under the supervision of customs, NTEPZ played an important role in the export-oriented economy. There were 26 registered enterprises in NTEPZ, which realized total import and export amounts of $2.4 billion. Nearly 700 enterprises carried out free trade logistics activities in NTEPZ, including nearly 200 enterprises from Nantong. The area realized an accumulative total free trade logistics supervision amount of up to $1.5 billion.

In recent years, various new energy, equipment manufacturing and biological medicine foreign trade enterprises and free trade logistics enterprises have applied to settle in the area. They have also fulfilled requirements to add functions such as exhibition and foreign trade. Various shipbuilding and maritime work enterprises hope to establish a comprehensive area under the supervision of customs that functions as a port and enjoys the policies of a free trade port area.

According to Zhang Xiaoji, the former director-general of the research department of Foreign Economic Relations at the Development Research Center (DRC) of the State Council, has been devoted to the research of the development of China’s open economy for a long time. He said, “Comprehensive free trade areas are special economic areas with the most preferential policies and most complete functions in China. They not only provide complete operational environments for various industries in the area, but also play a role in driving the economic development of surrounding areas.” In his opinion, Nantong’s application for establishing a comprehensive free trade area is not only an important measure for implementing two major national strategies, namely the development of the coastal areas of Jiangsu and the integration of the Yangtze River Delta, but also the urgent need for transforming the economic development model and improving the adjustment and promotion of industrial structures.

The municipal Party committee and municipal government of Nantong have attached great importance to the area. They regard the transformation and promotion of NTEPZ as an important measure to establish a good industry platform, complete relevant functions and create new advantages for the open economy of Nantong. In light of this, they launched the application to the State Council in August 2011 and organized and implemented it as a priority. In accordance with the procedures for examination and approval of a comprehensive free trade area, after the State Council receives an official application from a provincial government, the file will be transferred to the General Administration of Customs for approval. After the General Administration of Customs approves, it will send correspondences to nine ministry committees under the State Council, including the National Development and Reform Committee, Ministry of Finance, Ministry of Land and Resources, Ministry of Housing and Urban-Rural Development, Ministry of Commerce, State Administration of Taxation, State Administration for Industry & Commerce, General Administration of Quality Supervision, Inspection and Quarantine, and State Administration of Foreign Exchange to receive their opinions. After the General Administration of Customs receives approval from the nine ministries and committees, they will summarize the opinions and submit the countersigned result to the State Council for final approval. In order to accelerate the formalities process, the major leaders and concerned leaders from the municipal Party committee and municipal government of Nantong will report relevant issues actively and coordinate major issues in person. NETDA has also established a special group to promote the process. Relevant departments such as customs also provide communication services. As of January 3 this year, the approval procedures for Nantong comprehensive free trade zone have been completed successfully and the State Council has agreed to the establishment of Nantong comprehensive free trade zone.

Promoting a supervised special area with complete functionality

There are six types of special customs supervision areas in China, including a free trade area, export processing zone, free trade logistics park area, cross-border industrial park, comprehensive free trade area and free trade port area.

On October 27, 2012, the State Council issued guidance opinions that expressly defined the direction of the construction and development for special areas under customs supervision. According to the opinions, the special areas will be integrated under customs supervision. For existing areas under customs supervision, their export processing zone, free trade port area, comprehensive free trade area, free trade logistics park area and cross-border industrial area shall be integrated into one comprehensive free trade area.

A comprehensive free trade area refers to an area that integrates free trade area, export processing zone, free trade logistics area and port, which can conduct businesses such as international transit shipping, distribution, procurement, entrepot trade and export processing. It is a special area under customs supervision with the most complete functions in China.

According to Zhang Jin, the director of the office of Nantong Customs in NETDA, a comprehensive free trade area has more apparent advantages than an export processing zone.

From the viewpoint of space, the area of an export processing zone is usually 3 square kilometers, while that of a comprehensive free trade area is 5 square kilometers. After the transformation and promotion of Nantong Export Processing Zone, it will adopt a pattern of “two blocks in one area” to substantially expand the area.

After an export processing zone is transformed and promoted to a comprehensive free trade area, three functions will be added in addition to the previous six major functions. The previous six major functions are free trade processing, free trade storage, international procurement and distribution, international entrepot trade, R&D, inspection and maintenance. The three new functions are port operation, exhibitions and demonstrations, and foreign trade.

A comprehensive free trade area will enjoy policies in various aspects such as finance, revenue and foreign exchange.

According to the introduction, Section A of Nantong comprehensive free trade zone will mainly deal with port logistics, comprehensive services and innovation-oriented businesses. Section B is adjacent to the Yangtze River and will mainly deal with port logistics, free trade logistics, free trade processing and comprehensive services.

Nantong Hongbo Machinery is an enterprise that specializes in manufacturing accessories for ships such as hatch covers and ship propellers. According to Zhang Junfeng, the purchase department director of the company, the company was restricted by the hardware conditions of the export processing zone in the past. Some extra wide or extra large parts could not be transported to the area for free trade purposes and had to be shipped to Zhangjiagang Free trade Port Area. In the future, Nantong comprehensive free trade zone will be able to function as a port, with the ability to perform all kinds of operations in Nantong, saving a large amount of money for enterprises.

According to Gu Xinxiang, the purchase department director of Nantong Cosco KHI Ship Engineering, “If the matched enterprises for ships are introduced into the comprehensive free trade area in the future, it will no doubt substantially lower the costs of ship manufacturers and maritime work enterprises.”

The establishment of the comprehensive free trade area will bring benefits for the cotton spinning enterprises of the city. Cotton is a restricted commodity limited by import quotas. At present, the price of imported cotton and that of domestic cotton are inversely related. Any processing enterprise can be established in the comprehensive free trade area. Cotton can be directly processed into yarn or cotton cloth and then sold domestically or exported. The quota restrictions will be avoided, which lowers material costs.

Scientific planning to accelerate construction and business invitation

Section B of Nantong comprehensive free trade zone is located along 2 kilometers at the lower reaches of Sutong Bridge. It is adjacent to the Yangtze River in the south and Zhenhua Heavy Industry Co., Ltd. (ZPMC) (Nantong) Transmission Machinery company in the west. Various engineering vehicles，dump trucks and excavator s come and go inside the green customs meshes.

It is expected that the investment for the infrastructure of Nantong comprehensive free trade zone will reach up to 700 million yuan ($112.4 million). At present, one-third of supervision facility construction, including meshes for Section B and patrol passageways, has been completed. The construction of five roads, including three north-south and two east-west ones, has been accelerated. The bid and tender procedure for the construction of the customs supervision building has also begun.

During its preparation stage, Nantong comprehensive free trade zone shall organize the construction of quarantine and supervision facilities according to the relevant regulations of special areas under customs supervision. When the area is ready, it will be closed for inspections by the joint inspection team from the State Council. At present, investment attraction has been initiated and various projects are already under negotiation.

The researcher Zhang Xiaoji hopes that Nantong comprehensive free trade zone will make positive innovations and give full play to the spirit of “initial innovation at basic levels” to better realize the platform value of the comprehensive free trade area. Nantong will spare no efforts to expand the degree of investment attraction and create an advanced manufacturing industry base in the Yangtze River Delta area. It will also seek to develop a logistics center in the northern part of the Yangtze River Delta and a base for ship and maritime work, R&D, design, accessories supply, exhibition and transactions. The area will serve as a new platform for innovations driving developments for Jiangsu province as well as an experimental plot area for new service trade outsourcing and financial trade background services.

Mr. Pan Li, the general manager of Beijing Sunclock Consultation, was once in charge of feasibility research of Nantong comprehensive free trade zone and layout planning research for the special areas under customs supervision for Nantong. In his opinion, priority should be placed on completing the detailed regulations of control within the site selection range and the compilation of detailed construction regulations. It is also important to speed up construction and realize operation as soon as possible. In the meantime, comprehensive management systems for Nantong comprehensive free trade zone should be set up as quickly as possible, enhancing overall coordination to provide powerful and reliable guarantees for scientific planning, construction and developments in Nantong comprehensive free trade zone.

According to Fang Bojian, the chief of Nantong Customs, Nantong Customs will cooperate with NETDA closely and research preferential policies to ensure that Nantong comprehensive free trade zone gets off to a good start.