Yachting and the Hainan Free Trade Port
News source:hihainan.info / By Godfrey Zwygart / 01 13,2021 18:06:07 / others

In the last several years there had been so much speculation about the possibility of Hainan Island becoming a free trade zone and free trade port, and a lot of expectations from the yacht industry players, big and small. There were also many rumors and assumptions about the likelihood of a tax-free yacht haven.

But this is China, so even the implausible can occur at a finger’s snap. So here you are, on June first, 2020 the central government, after the congress “two sessions” released the stunning news: a great plan for the development of the whole island into a free trade zone and free trade port. Not a light decision as this new strategy represents a milestone in the expansion of Hainan and China. The newborn FTZ is to serve as a pilot region for further opening of China to the world, and as another crucial element of the belt and road.

The Chinese government is very conscious of the arduous tasks ahead, and has set a timeline with four deadlines: 

  • 2020: Become an operational FTZ, improve international openness and facilitate investment and trade
  • 2025:Have the free trade port system basically in place and establish a leading business environment in China
  • 2035: Have a mature operation of the Hainan Free Trade Port, and promote the free and convenient exchange of people, transportation, and data
  • 2050: Become a mature, high-level free trade port with major international influence

At present, the local government bureaus are working hard to cope with the new workload brought on by these major changes, particularly in the financing, law, taxes, and customs procedures. New infrastructure projects are either completed or underway, namely:

- The relocation of the Haikou commercial harbor farther from the city center

- The construction of a large commercial harbor in Yangpu, on the northwest coast

- The establishment of the free trade zone and investment bureau in Haikou

- The building of the SCBD and NBH in Sanya

What changes will that bring to the yachting industry in the short term?

The first major transformation will impact yacht sales. The import taxes have been scrapped, so foreign-made boats will be much more competitive, as insofar taxes were the main constraint on yacht acquisition.

Other crucial measures are the possibility for foreign enterprises to establish WOFE (wholly-owned foreign enterprises) within the FTZ, as well as a cap of 15% taxes on these companies as well as on individuals working for such corporations.

There won’t be any import taxes on all spares and equipment used locally on yachts, as well as for products that will be reprocessed locally and sold on the mainland, providing they can generate 30% of added value.

It is important to notice that yachting is a major component of tourism, one of the three main industries in Hainan at the moment. It might not be impressive in terms of revenue, but Yachting's influence on the island will be dramatic, as it brings foremost international events, improves the range and quality of services, and contributes to the island’s upscale leisure image and the overall reputation of excellence.

As for Sanya, the Chinese yachting hub, it will become the favored berthing option for most Chinese buyers. Yacht companies, both brokers and services, are flocking to Sanya and inquiring about the news laws, signing MOUs, and registering companies on the Island.

The Sanya government is pushing forward the SCBD (Sanya central business district) and NBH (Nanbianhai) projects. The master plan includes 5 zones:

- Cruise terminal on Phoenix Island

- MICE area on Gangwu (former harbor)

- Two business service zones (Hailuo and Dongan areas)

- Marine commerce zone and international yacht harbor (Nanbianhai area)

The new service offices of the CBD in Haikou and Sanya were inaugurated simultaneously on June 3. Sanya's office is located within the cruise terminal. They both offer all kinds of services for marine business and general investment: financial, customs, law, marine affairs, etc.

Most of the new provisions are going to be a shot in the arm for the local yacht industry. This will be a serious boost to the industry nationwide and may well lay the base for a development like the one we witnessed in the West in the 80s, popularizing water sports, yachting, and sailing. Of course, there are still many obscure points, and a lot of new laws are still being drafted, especially in terms of foreign yachts and visitor visas, so we surely can expect further improvements and opening up in the coming months and years. 

Since June, the various service bureaus have spared no effort in clarifying and implementing the new rules, establishing new enterprises, and trying to attract new talents to the island. Besides, the Yazhou Bay Science & Technology Administration Bureau held a talents forum on November 25 to introduce new regulations and incentives available to both Chinese and foreign talents.

Long ago we predicted that Sanya would become the Cannes of China. We today rejoice that this finally seems to be coming true. 

For any information regarding investment and talents in Hainan, contact:

IEDB (International economic development bureau) at: iedb@investhainan.cn

SYCBD (Sanya Central Business District Administration) at sycbd123@163.com

YZBSTC (International talents workstation) at pennypeng@yzbstc.sanya.gov.cn

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