Haitong: The closure of the Hainan Free Trade Port is approaching, pay attention to the related policy dividends and market opportunities.

Haitong released a research report stating that, according to the government of Hainan Province, the construction of the Hainan Free Trade Port has entered a critical stage, with customs clearance work accelerating to ensure that the entire island of Hainan will operate as a closed loop by the end of 2025. The core policy framework of the Hainan Free Trade Port, including policies such as "zero tariffs, low tax rates, simple tax system, five freedoms, and secure and orderly flow," will gradually be implemented. After customs clearance operations are in place, import businesses will enjoy zero tariffs, reduced income taxes, and increased freedom and convenience in trade, investment, and personnel mobility. These policies will inject powerful momentum into Hainan's regional economic development, and Hainan-related companies stand to benefit fully from the policy dividends and market opportunities of the Free Trade Port. Key points from Haitong are as follows: Policy Context Since President Xi Jinping proposed the construction of the Hainan Free Trade Port in 2018, various policies have been accelerated. Departments have successively introduced guidance opinions and overall plans for supporting comprehensive deepening of reform and opening up in Hainan, as well as laws related to the Hainan Free Trade Port, laying the institutional foundation. These measures have clearly defined the tax system and a series of liberalizing measures to streamline regulations and propose key construction tasks to be completed by 2025 and 2035. Haitong believes that the policy strength of the Hainan Free Trade Port strategy is unprecedented, with a comprehensive and highly consistent scope of influence. Gradual implementation of core policies such as tax incentives and freedom and convenience According to the government of Hainan Province, the core policy system of the Hainan Free Trade Port is based on the framework of "zero tariffs, low tax rates, and simple tax system," along with the "five freedoms and secure and orderly flow." Specifically, according to the official website of the Hainan Free Trade Port, the "zero tariffs" policy covers various areas such as raw materials, vehicles and yachts, and personal production equipment, effectively reducing the import costs for enterprises. The "low tax rates" policy includes a 15% tax incentive for both enterprises and individuals, attracting market entities and talents. The "simple tax system" reform merges the current five taxes into a sales tax, creating a more internationally competitive tax environment. At the same time, specific arrangements for liberalizing and facilitating trade, investment, cross-border capital flow, personnel movement, and secure and orderly data flow are gradually being perfected. Haitong believes that with proactive and comprehensive policy support, Hainan is actively adjusting its industrial structure, establishing 13 key industrial parks where industry upgrades and the development of key zones are advancing together, leading to strong momentum in the regional economic development of Hainan. Investment recommendations As the customs operations of the Hainan Free Trade Port are about to begin, Hainan's transportation and logistics companies will benefit from the demand growth brought about by the liberalization and facilitation of trade, investment, and personnel mobility, as well as from the various tax policies and liberal trade and investment measures of the Free Trade Port. Risk warning Risks include delays in the progress of the construction of the Free Trade Port, policy changes, significant decreases in passenger flow, substantial fluctuations in ticket prices and rents, and weakness in the macroeconomic environment.