ON SPECIFIC INVESTMENT DIRECTIONS

In line with the “Temporary Provisions on Guiding the Foreign Investment Directions” jointly issued by the State Planning Commission, State Economic and Trade Commission and Ministry of Foreign Trade and Economic Cooperation, and other documents concerned, Anhui province promulgated the “Index on Guidelines for Foreign Investment Industries Encouraged by Anhui Province”.

The index determines the project sphere in encouraging the foreign investment for transportation and energy infrastructures.

1.Communications and Transportation 

(1)Highway construction and operation (trunk lines, isolated bridges and tunnels, reconstruction and construction of highway network within the Economic Zones)

(2)Navigation channels construction 

(3)Harbors construction (river ports facilities, reconstruction and extension of over 1000-ton berths, reconstruction of inland small ports) 

(4) Bus stations construction and management (transformation, reconstruction and extension of local passenger transport stations, bus repairing & inspection centre)

(5) Traffic safeguard system construction

(6)Railway and relevant facilities of bridges, tunnels, ferries construction and operation (joint-venture or cooperation) 

(7)Machinery equipment and technology of designs and manufacturing for highways and harbors

(8) Civil airport’s construction and operation (shares controlled by the State or state shares being of major position) 

(9)Technological equipment for railway transportation (designing and manufacturing of locomotives and main parts, line equipment ; manufacturing of super railway equipment, communication signal and monitoring equipment of safety transport, electric railway installation, etc)

2.Energy Industry

(1) Equipment designing and manufacturing for coal excavation, ore dressing & processing and transport

(2) Complete sets of equipment for popularization of coal gas

(3) High-consistency liquid coal equipment and additives manufacturing

(4) Coal safety equipment, instrument & meter 

(5) Comprehensive development and utilization of low-calorie fuels and associated resources

(6) Development and utilization of coal-seam gas

(7) Comprehensive development and utilization of coal resources (geologic prospecting, mine well construction, coal separation plant construction, coal processing and operation) 

(8) Construction and operation of thermal power station (pit power station, heat and power station, coal-mud power station, normal thermal power station and power station with the technology of coal clean burning 

(9) Construction and operation of hydroelectric station (over 250, 000-KW installed capacity controlled by the state or state shares being the leading position)

(10) Construction and management of nuclear power station

(11) Construction and management of new energy resources power stations (solar energy, wind energy, magnetic energy, heat energy and tide energy, etc.)

3.Post and Telecommunications 

(1) MHz900 numerical honeycomb mobile communication equipment (DTM,CDMA)

(2) Synchronous optical fiber microwave communication system, measuring equipment

(3) Asynchronous transferring model (ATM) exchange equipment

(4)Television broadcasting equipment i.e. SV series satellite TV sets receivers and program-controlled exchange

(5)Communication radar, radio frequency coaxial linker

(6) 150MHz wireless communication equipment manufacture

(7) Key parts of visual telephones, faxes (heat-sensible printing machines, image sensor)

(8)SDH light communication system, cross- linking equipment, network management of net equipment 

(9)Optical fiber, light cable and complete sets of equipment

(10)Wireless telephone of over 450MHz

MODE OF INVESTMENT AND MANAGEMENT 

1.Transportation

In accordance with the state policies and relevant regulations, we encourage that foreign investors participate in the construction of transportation infrastructure by way of sole proprietorship, joint venture, cooperative, BOT or other forms. Foreign investors can also purchase the operating rights of the built projects. And in compliance with relevant stipulations, they may invest and manage various comprehensive service trades concerning the construction of transportation basic facilities, including comprehensive development of real estate, passenger and freight transport, oil supply, water supply, food & beverages, tourism facilities, hotel, advertisement and other business of the Tertiary industry along the highways, harbours, or within the designated area.

When investing in the road construction projects in line with the conditions of collection fees stipulated by the State, foreign investors can be compensated progressively and timely if they abide by the measures of “completing one section, having it checked and approved, then putting it into operation and making compensation by the section”. If the built highways can’t reach the lowest transportation volume specified in the contract from the second year after it has been operated, transportation-administrative departments will make up the balance from the yearly highway transportation fees. What’s more, with the approval of the administrative departments concerned, the investors can survey and explore the natural resources of ore, stone, soil, surface water etc. which are served as raw material for the transportation infrastructure constructions, with the resources compensation fees being reduced or exempt from. 

2.Electric Power

Investors from China and foreign countries can set up Chinese-foreign joint-venture power companies or Chinese - foreign cooperative power companies to participate in the construction and management of new generating units or extension of them. Foreign investors can also do the above by way of purchasing the shares less than 30% of the existing power plants. They may apply for the set- up of new power company with sole proprietorship approved by the State. The time limit excluding the construction period of the power projects by way of joint venture or co-operation is less than 20 years for the thermal power plants, and less than 30 years for the hydropower plants.

ON TAXES 

It is permitted by the province that the foreign-invested enterprises of transportation and energy infrastructure will pay business income tax at a tax rate of 15%. The enterprises with more than 15 years of operation may enjoy the favorable conditions of being exempted from the business income tax for the first five years after profit-making year, and reduced the tax by half for the second five years. At the same time, they are given comprehensive compensation. Those foreign-funded enterprises engaged in transportation projects, with their profits re-invested in the same industry constructions and the running period exceeding 5 years, will be paid back 40% of the business income tax they have paid for the portion of re-investment. In addition, the enterprises can recoup their capital outlay by way of calculating depreciation rates of upper-limit classified fixed assets.

ON LAND USE

If foreign businessmen invest in the State encouraged projects, they will be collected the land-use fees under the principle of low-limit, and be given some preferential terms in collecting local income tax. As far as the water capacity expansion fees concerned, the local governments can decide for themselves whether they will exempt these enterprises from the charges or reduce the charges. The land using for the transportation infrastructure constructions can be provided by way of administrative transfer with the permission of at least county-level People’s Government. Thus, the foreign investment enterprises should pay land-using charges, the standard is low -limit charge of similar category using-land confirmed by the People’s Government above the county-level. Besides, the investors engaged in the transportation projects can submit the applications to the Government for comprehensive development land within the ten years from the day they begin to invest. Then, with the approval of the Government, and through the agreed renting method, they can be provided with certain amount of land to develop and operate.

ON PROTECTION OF RIGHTS AND INTERESTS 

The lawful rights and interests of the foreign investors such as property, management, earnings are protected by China laws. Their normal operating activities will not be disturbed by any unit or individual and their economic returns and profits in Renminbi from the investment enterprises can be re-invested or remitted to their own countries or regions according to the relevant stipulations of foreign exchange administrative departments.

ON FINANCING CHANNELS 

Anhui province encourages the foreign investment enterprises to adopt diversified financing channels to speed up the projects implementation; The province also encourages some enterprises with favorable conditions to be listed in the Stock Exchange at home or abroad so as to raise necessary construction capitals for the key projects.

While we are absorbing the foreign direct investments for the transportation and energy resource projects in Anhui province, we are using actively and effectively the overseas loans, esp. the preferential loans from foreign governments and international financial organizations.

Appendix: List of Major Documents of Policy Concerned 

1. “Temporary Provisions on Guiding the Foreign Investment Directions” (issued jointly by the State Planning Commission, the State Economic & Trade Commission, the Ministry of Foreign Trade & Economic Cooperation)

2. “Index on Guiding Foreign Investment Industries” (by the State Planning Commission, the State Economic & Trade Commission, the Ministry of Foreign Trade & Economic Cooperation) 

3. “Provisional Measures on Administration of Foreign Loans Projects in the Road and Water Transport Constructions” ( by the Ministry of Communications)

4. “Temporary Provisions on Electric Power Projects Using Foreign Capital” (by the Ministry of Power Industry)

5. “Chinese-foreign Joint-venture Enterprise Law of PRC”

6. “Chinese-foreign Cooperative Enterprise Law of PRC” 

7. “Foreign-owned Enterprise Law of PRC” 

8.“Provisional Measures on Projects Overseas Financing” ( by the State Planning Commission, State Administrative Bureau of Foreign Exchange)

9.“Decisions on Expediting the Use of Foreign Capital by Anhui Provincial Government” 

10.“Index of Foreign Investment Industries Encouraged by Anhui Province”

11. “Measures on Encouraging the Foreign Investment in Transportation Infrastructures by Anhui Province”

12. “Administrative Measures on Anhui Province Using Loans of Foreign Governments” (for trial implementation)