(Yicai Global) June 8 -- Development of China’s southern island province of Hainan into a free trade port, a policy announced last week, will be done in two phases, according to the vice director of the country’s top economic planning agency.

Hainan will introduce a series of trade liberalization and facilitation measures by 2025, while the government is committed to fully advancing free trade port policies by 2035, the National Development and Reform Commission’s Lin Nianxiu said at a press conference today.

In the first phase, firms will no longer need government licenses and approvals to conduct business in principle except those required by mandatory standards and laws. Local governments will instead adopt a registration-based commitment system, enabling applicants to do what they want as long as they meet the conditions to do business.

Hainan will also open up a series of areas, including shipping, telecoms, finance, medicine, education, culture and sports.

Between now and 2025, the province will cut or collect zero income tax from eligible companies and individuals. For firms involved in sectors encouraged by local governments and registered in the FTP, tax shall be levied at 15 percent. For those in tourism, modern services, innovative and high-tech industries, income from overseas direct investment will be tax free.

As for policies that individuals can enjoy, Vice Finance Minister Zou Jiayi said that zero tariffs are key to the FTP. By 2025, China will have zero tariffs on some imported goods, exempting them from import duties, value-added tax on imports and consumption tax, Zou added. The country will ease the policy on off-island duty-free shopping, raising the annual quota per head to CNY10,000 (USD14,137) from CNY30,000, while further expanding the types of duty-free goods.

The overall scheme for the Hainan Free Trade Port will allow local residents to buy some imported duty-free goods on the island at much lower prices than outside the free trade port, Governor Shen Xiaoming said.

Pan Gongsheng, head of the State Administration of Foreign Exchange, told the press conference that as the construction of the FTP progresses, it will explore ways to expand the autonomy of Hainan residents in the use of foreign exchange.

Editor: Peter Thomas