The China (Shanghai) Pilot Free Trade Zone Financial · PDF fileChina (Shanghai) Pilot Free...

The Introduction of China (Shanghai) Pilot Free Trade Zone

May. 2014

Content

1 FTZ Background

3 FTZ Financial Solution

2 FTZ General Policy Framework

1 FTZ Background

Content

I、FTZ Background

FTZ Overview

In order to achieve a more open Chinese economy, change the mode of economic development and adapt to the global trade competition, Chinese government established China (Shanghai) Pilot Free Trade Zone (FTZ). Shanghai FTZ is a test field of reform. A replicable economic development mode is expected to be formed.

Background

FTZ is composed by 4 customs special supervision areas. Totally 28.78 km2.

I、FTZ Background

FTZ Event Review

2013.7.3

The State

Council approved

the “Framework

Plan for China

(Shanghai) Pilot

Free Trade Zone

”in principle

2013.8.19

The State Council

officially approved

the Framework ★ 2013.9.29

China (Shanghai )

Pilot Free

Trade Zone

established

2013.9.27

The “Framework

Plan for China

(Shanghai) Pilot

Free Trade

Zone ”was

published 2013.9.29

The Shanghai

municipal governm

ent

published the

management

measure of FTZ.

★ 2013.12.2

The PBOC

published the 30

opinions of

financial support

for FTZ

★ 2013.12.5

Bank of China

conducted the first

business in FTZ,

the cross-border

RMB bilateral cash

pool

2014.2.18 PBOC published “The Opinion of Payment Institutions Conducting Cross-Border RMB Payment Business in FTZ ”

★ 2014.2.20 PBOC published “The announcement of supporting the FTZ to enlarge the usage of cross-border RMB”

★ 2014.2.21 BOC conducted the first cross-border RMB loan in FTZ to support the FTZ construction.

2014.2.26 PBOC published “The Announcement of Loosening the Interest Rate Limitation of Petty Deposit Foreign Currency in FTZ ”

2014.2.28 PBOC published “The Announcement of Anti-Money Laundry and Anti-Financing of Terrorism in FTZ

★ 2014.2.28 SAFE Published “Implementation Regulations concerning Foreign Exchange Administration to Support the Construction of the China (Shanghai) Pilot Free Trade Zone ”

★ 2014.2.28 BOC conducted the first commodity derivatives transaction in FTZ

★ 2014.2.28 BOC conducted the first petty deposit of foreign currency in FTZ. BOC also conducted the first cross-border RMB settlement of current account in FTZ

Content

2 FTZ General Policy Framework

FTZ Policy

Framework

Deepening innovation and opening up of

financial services

II. FTZ General Policy Framework

../Local Settings/Temp/政策框架.xlsx

FTZ Policy

Framework



financial services


Expediting the Functional Transformation of Government

Expediting the

functional

transformation

of government

An administrative management system which meets and fits with international trade and investment standards will be established. The focus of administrative management procedures will shift from prior approval to mid-event control and subsequent supervision. A joint supervision and enforcement system will be implemented. Transparency in administrative management will be enhanced


▲

▲

▲

▲

Industrial and Commercial Registration

• The shareholders don’t need to register the paid-up capitals. There is no limitation on the mode and time of capital contribution.

Registration System for Registered Capital

Pledged

• Enterprises with business license in FTZ may carry out the general production and operation activities, with the exception of pre-license business.

Business license first, operating permit later

• Enterprises in FTZ shall submit their annual report to the administrative department of industry and commerce. The annual report shall be open to the public

Annual report publication

• The approval system for foreign-funded enterprise establishing projects or subsidiaries will be altered to the filing system

File system for Foreign-funded Enterprises

• Enterprise could submit the materials by means of online data exchange or onsite submitting

One-window Handling Mechanism


STEP 1 Name approval

STEP 2 Submitting the materials by “one window service”

STEP 3 Being evaluated and approved by relative departments

STEP 4 Getting the license from one unified window


Steps of Industrial and Commercial Registration for Foreign- Domestic Enterprise

Domestic

Enterprise

For more details please visit: http://zwdt.sh.gov.cn/shen3hall/enterpriseColumn/index.jsp

Administrative

department

informs the

applicant of the

examining and

approval items,

factors and

materials at one

time

Applicant

submits the

materials to

administrative

department

Pre-license

Department

Approval

Enterprise

Registration

Organization

Code

Certification

Registration

Post-license

Department

Approval

Tax Registration

Pre-license

Non pre-license


Steps of Industrial and Commercial Registration for Foreign- Domestic Enterprise

Domestic

Enterprise Diagram

STEP 1 Name approval

STEP 2 “Negative list” comparing

STEP 3 Submitting "one application form" online

STEP 4 Submitting the materials by “one window service”

STEP 5 Approval (filing) by relative departments

STEP 6 Getting the license from one unified window

Steps of Industrial and Commercial Registration for Foreign- Funded Enterprise


Foreign funded

Enterprise

For more details please visit: http://zwdt.sh.gov.cn/shen3hall/zmq/index/index.jsp

Admittance

Navigate

Online

Application

Submitting

Materials by

“one-window

service”

Objects Filing (approval)

Enterprises Filing

(evaluatiion and approval)

Enterprise Registration

Organization Code

Certification Registration

Tax Registration

Get the

license

from one

unified

window

Foreign -funded Corp (non-Corp)

Other Type

Negative List

Comparing


Steps of Industrial and Commercial Registration for Foreign- Funded Enterprise

Foreign Funded

Enterprise Diagram

FTZ Policy

Framework



financial services


Opening up of Investment Sectors

Opening up of investment sectors

▲ Enlarging and opening the financial services, transportation services, commerce and

trade services, professional services, cultural services, and public services sectors

▲ Suspending or cancelling market access restrictions such as requirements concerning the

qualification of investors, limitations on foreign participation, and restrictions of

business scope

▲ Exploring the "Negative List”

▲ Based on international norms, implementing pilot national treatment on investment

permission and a "Negative List" mechanism will be within the zone.

▲ Altering the approval system for foreign investment projects, foreign investment contracts

and Articles of Association to the filing system

▲ Implementing the filing system on the setup of outbound companies and projects

▲ Encouraging various types of investors in the FTZ to conduct outbound investment in

different forms


Benefit

Markets

Trade

Finance

Cultural

Public

Profess-

ional

Transp-

ortation

New opening up service sectors

01. Banking

02. Medical Insurance

03. Finance Lease

04. Maritime Transportation

05. International Ship Management

06. Value-added Telecom Service

07. Game Machine Selling and Service 08. Lawyer

09. Credit Investigation

10. Travel Agency

11. Head-hunting Service 12. Investment Management

13. Engineering Design

14. Architectural Service

15. Performance Brokerage

16. Entertainment

17. Training Service

18. Medical Service



Foreign Investment Projects

“Procedures on the Filing Administration of Foreign Investment Projects Within FTZ”

Foreign-funded Enterprises

“Procedures on the Administration of Filing Foreign-funded Enterprises Within FTZ”

Outbound Investment Projects

“Procedures FTZ on the Filing Administration of Overseas Investment Projects”

Investment in Businesses Overseas “Procedures of FTZ on Filing

Administration of Investment in Businesses Overseas”

ODI

FDI



1

• Scope: All the foreign investment projects out of the “negative list”. With the exception of domestic investment projects of which is approved by the State Council

2 • Filing：Filing Form + relative materials ；“One form application, one window service”

3 • The decision on filing: Within 10 working days

4 • Conducting the approval procedure by the decision on filing；Applying for preferential policy

5 • Alteration（if any）：For essential events，applying for alteration to filing agency.

6

• i. The project shall be made to the relative organs, if it’s not under the scope of FTZ policy any

more.

• ii The project shall be made to the project filing agency ,if it still under the scope of FTZ policy after

alteration.

Foreign

Investment

Projects

Filing System



Admittance

Navigate

Negative list

comparing

Comparing to

the

investment

menu

admitted

by the

government

Online

applica-

tion

Submitting the

material to

the

investment

management

window

Objects

filing

(approval)

Obtaining the

decision or

approval

documents from

the window

Uploading

attachment

Objects

filing

(approval)

online

Obtaining the

decision or

approval

documents from

the window with

original copies

In list

Out of list



Foreign

Investment

Projects

Diagram

Foreign-

Funded

Enterprises

1 • Scope：The establishment or alteration of all the foreign funded enterprise out of the “negative

list”

2

• The enterprise’s name shall be pre-approved

3

• Filing：The applicant shall logging onto acceptance platform to make application online, and make commitment on the notification items for filing

4

• Filing Certificate：After an investor completes the application online, the filing agency shall put it on file within one working day, and shall issue the Filing Certificate online

5

• Alteration（ if any）：For essential event, filing alterations shall be accepted via the acceptance platform. For existing enterprises, filing alterations shall be accepted via the acceptance platform and the approval certificate shall be cancelled

6 • Filing change to approval ：According to the relative regulations


Opening up of Investment Sectors Notification-commitment management

Filing System

Overseas

Investment

Projects 1

• Scope：General projects conducted by local enterprises registered in FTZ are under the scope

2

• Filing： Applicant shall report to the filing agency bringing with Filing Form and relative materials.

3

• Filing decision： The agency shall issue the decision within 5 working days. If dismissed, the reasons shall be given to the applicant

4

• Tender for or acquisition of an overseas project：The applicant shall submit a written information report to the NDRC

• Local important overseas investment project that shall be registered ：The applicant shall report to NDRC for registration

5

• Applicant may go through relevant formalities with the administrative departments of commerce, foreign exchange management, customs, and taxation against the Filing Opinions


Opening up of Investment Sectors Responsible for the truthfulness

of application

Filing System

Filing

Navigate

Online

Application

Submitting materials to

“One window service”

Filing

Getting the license from one unified

window


Overseas

Investment

Projects


Diagram

Investment in

Businesses

Overseas

1 • Scope：Investment business overseas registered in FTZ are under the scope

2

• Filing：The applicant shall finish the Filing Form（online version and paper version）and get other relative materials ready.

3

• Certificate of Enterprises Overseas Investment ：The filing agency shall Issue the certificate within 5 working days. If be dismissed, the filing agency shall notify the enterprise in 1 working day.

4

• Going through relevant formalities of FX, customs, and foreign affairs by presentation of the Certificate, and may apply for support by related policies of the State according to the provisions

5

• Alteration （if any）：The alteration of investment entity, amount of investment, equity ratio, funding sources and structure, business scope, or operating term shall be filed to the Filing Agency.

6

• Termination：The Filing Agency shall file the termination of an existing outbound

investment enterprise.


Opening up of Investment Sectors Integrity Administration

Filing System

Implement Tax Policies to Boost Investment

For enterprises or individual shareholders registered in FTZ that carry out non-monetary investment, the income tax payable due to the increase in asset valuation can be paid by installments within a five-year period. For the rewards given by Enterprises within the FTZ to highly-skilled or short-supply employees by means of shares or capital contributions, the relevant individual income tax may be paid by installments.


Opening up of Investment Sectors-Tax

FTZ Policy

Framework



financial services


Promoting the

transformation

of trade

development

approach

▲Cultivating new trading types and functions

▲ Encouraging multinational companies to set up Asia-Pacific regional HQ

▲Promoting Shanghai as the international trade settlement center, and expanding the

function of the special account on cross-border receipt or payment and financing under

trade service

▲Encouraging enterprises to employ an overall plan to integrate the development of

domestic and foreign trading business.

▲ Exploring international commodity trading and resource configuration platform

▲ Expanding and improving the ongoing pilot bonded futures delivery, the warehouse receipt

financing and other functions.

▲ Allowing and encouraging financial leasing companies to set up project companies in FTZ

and to carry out domestic and international leasing business.

▲ Cultivating cross border e-biz service function

▲ Elevating the capacity of the shipping service

Promoting the Transformation of Trade Development Approach


Outbound

FTZ

Inbound

Frontier Opening

Second-tier Control


Promoting the Transformation of Trade Development Approach—Trade

•The ongoing pilot bonded futures delivery will be expanded

and improved and the warehouse receipt financing will be

extended

•The oversea companies will gradually be allowed to engage in

commodity futures trading

Futures

Deal

•International commodity trading and resource

configuration platform will be explored to promote

international commodity trade.

•Enterprise in FTZ will be supported to develop offshore

business

•Cross border e-commerce service function will be

cultivated

Cross-border

Trade


Promoting the Transformation of Trade Development Approach—Trade

Goods that produced and processed in FTZ and sold to outer-zone will be levied tax in

accordance with relevant laws and regulations

VAT tax will be refund for qualified financial leasing business

Manufacturing enterprises as well as manufacturing service companies in FTZ will be free of tax

for the imported machines, equipment and other goods required for own usage.

Tax refund policies on the port-of-departure will be improved

Tax policies will be studied to support the development of overseas equity investment and

offshore business 。

Implement Tax Policies to Promote Trade

II. FTZ Genral Policy Framework

Promoting the Transformation of Trade Development Approach—Tax

Transportation

Coastal shipping between domestic coastal ports and Shanghai port are encouraged to pilot.

Foreign-owned ship management companies are allowed to be established, which implements international ship registration in FTZ


Shipping financing, ship management, and international shipping management, will be encouraged. Limitations on equity ratio in Sino-foreign equity joint venture and sino-foreign cooperative shipping enterprises will be relaxed. Chinese-invested companies are allowed to own or indirectly own non-Five Star Flag ship.

Promoting the Transformation of Trade Development Approach—Transportation

·

· ·

·

FTZ Policy

Framework



financial services



Improving Regulatory Supporting Systems

▲ A regulatory system of high standard investment and trade rules will be

developed rapidly to serve the needs of the development of FTZ.

▲ Some administrative regulations and provisions in the State Council’s

documents will be terminated according to the prescribed procedures.

▲ Problems in regulatory protection during the pilot period should be solved

promptly .

▲ An administrative system will be established by the Shanghai Municipal

People's Government through local legislation in correspondence to the

demands of FTZ.

Improving

regulatory

supporting

systems

FTZ Policy

Framework



financial services


▲ Under proper risk control, the FTZ will pilot RMB capital account convertibility,

interest rate liberalization, and the cross-border use of RMB. ▲ In FTZ, the assets by the financial institutes will be priced at market rate.

▲ The FTZ will explore the trial of a FX administrative system that is in line with

international practice to better facilitate trade and investment. ▲ Enterprises are encouraged to leverage on both domestic and international

market resources to liberalize cross-border financing.

▲ Administration on foreign debt will be further reformed to facilitate cross- border financing.

▲ FX centralized operation by multinational Corp. HQ will be enhanced to

encourage the setup of regional or global treasury centers in Shanghai. ▲ Foreign-invested and sino-foreign equity joint venture banks will be allowed to

incorporate in FTZ.

▲ Equity escrow institutes will be supported to setup comprehensive financial service platform in FTZ.

▲ The cross-border RMB reinsurance business is encouraged.

Deepening Innovation and Opening up of Financial Services

Deepening

innovation

and opening

up of

financial

services


Deepening Innovation and Opening up of Financial Services

General Requisition

Creating Account System in Favor of Risk Management

Enlarging Cross-Border Use of RMB

Promoting Interest rate liberalization

steadily

Deepening the Reform of FX

Administrative System

Monitoring and Management

Expediting Investment, Financing, and

Exchange Convenience

《 O p i n i o n o f T h e P e o p l e ’ s B a n k o f C h i n a o n F i n a n c i a l S u p p o r t f o r C h i n a ( S h a n g h a i ) P i l o t F r e e T r a d e Z o n e 》


Resident free trade

account： Expediting investment,

financing and exchange

convenience

Non-resident free

trade account： principle of national treatment

before admittance Same management as cross-border

business

Frontier Opening Second-tier Controlled

Outbound Account

NRA Outside of FTZ

Other settlement

account

Current account Credit repayment Industry investment Other admitted cross-border transaction

Cross-border financing , guarantee could be conducted via resident free trade account. When conditions are mature, capital in the account can be exchanged without limitation.


Resident Free Trade Account

Other Resident Free Trade

Account

Non-resident Free Trade

Account

Other Settlement

Account for the Same Entity

Deepening Innovation and Opening up of Financial Services ——Creating Account System in Favor of Risk Management

Deepening Innovation and Opening up of Financial Services ——Expediting Investment, Financing and Exchange Convenience

Objects Details

Investment outside of the zone by Inter-zone

entity

Eligible foreigner working in FTZ can open individual investment account at inter-zone financial institutes and conduct inbound investment including securities investment by rule.

Financing institutes and enterprise can join in securities trading and futures trading in Shanghai to conduct investment and trade.

Investment abroad by Inter-zone entity

Eligible individual working in FTZ can conduct outbound investment including securities investment by rule.

Eligible inter-zone enterprise can conduct outbound securities and derivative investment by rule.

Loan or lending abroad by inter-zone entity

Inter-zone individuals can rent to its outbound entity according to its demand of operation.

Resident and non-resident free trade account can conduct cross-border financing.

Loan or lending abroad by entity outside areas

Inter-zone institute can finance RMB and foreign currency from outbound according their demand of operation, but details of foreign debt monitoring have not been prescribed.

Inter-zone enterprise can conduct bilateral RMB cash pool according their demand of operation.

Others

Inter-zone enterprise’s outbound parent enterprise can issue RMB bonds at inbound market by rule.

According to the market，develop inter-zone international financial capital trade.



Deepening Innovation and Opening up of Financial Services ——Deepening the Reform of FX Administrative System

Foreign Exchange

Administration Innovation

Current Account

Transactions

Capital Account

Transactions

Foreign Exchange Market

Business

Improve the monitoring system of

interest rate liberalization

Prior to publishing trial Negotiable

Certificate of Deposit

When conditions are mature, cancel the

upper limit of interest rate of small-

amount foreign deposits

Macro prudential management framework


Deepening Innovation and Opening up of Financial Services ——Promoting Interest Rate Liberalization Steadily

Conducting cross-border RMB settlement under current account and direct investment at bank.

Facilitation measures, promoting RMB internationalization .

Intergroup bilateral RMB cash pool and Centralized receiving and paying for current account

Cash flow across the border and increasing the utilization of capital.

Providing RMB settlement for cross-border e-commerce.

Cooperating with third-party e-payment company to promote cross-border electronic commerce.

Outbound RMB borrowing

Broadening financing channel, forming RMB reflux system.


Deepening Innovation and Opening up of Financial Services ——Enlarging Cross-border Use of RMB

3 FTZ Financial Solution

Content

III. FTZ Financial Solution

Consulting

Opening

Account

Settlement

Exchange

Online

Service Investment

Financing

Cash

management

Others

Financial Products And Services Focused On FTZ New Policy

Trade And Investment Trade

Facilitation

RMB/FX Bilateral Cash Pool

Centralized Payment Under Current Account

Cross-border RMB Outbound

Borrowing

Cross-border RMB Trade

Finance

• Optimize Settlement Process

• E-bank Payment

• Cross-border Multi Currency Global Cash Management

• Outbound Multi Currency Account Opening

• Outbound RMB Transaction

• Group Centralized Settlement Under Current Account

• Trade Of Goods Netting Payment

• Information Declaration Proxy

• E-bank Payment

• Offshore RMB Finance

• Offshore Mini -Bond Consignment

• Offshore IPO

• Cross-border RMB Guarantee

• Global Credit Separation Management

• Import Agreement Payment

• Export Agreement Finance

• RMB LC Trans Notification

• ……

III. FTZ Financial Solution

YOUR FTZ EXPERT

BANK OF CHINA

Declaration

This PPT’s copyright is owned by Bank of China Shanghai branch, part or all of this PPT cannot be used without our permission.

Thanks！

The China (Shanghai) Pilot Free Trade Zone Financial · PDF fileChina (Shanghai) Pilot Free...

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