Fat deals await global investors as the central government ploughs
money and preferential incentives into the western development
programme, hoping to turn the poverty-ridden interior into a
driving economic engine.
They will be eligible for a piece of the huge pie in projects worth
billions of dollars, ranging from roads and railways to property
and environmental protection.
Leading the way are 12 major infrastructure projects worth a total
investment of up to 300 billion yuan (US$36 billion), many of which
involve environmental protection. The figure is a huge jump from
the more than 10 billion yuan (US$1.2 billion) on offer last year,
when the go-west campaign was launched. That money was invested in
10 massive projects including the Qinghai-Tibet Railway, the
natural gas pipeline, major superhighways, education and
agricultural projects.
Li
Zibin, vice-director of the Western Region Development Office under
the State Council, told reporters that foreign investors can get
more scope for their investment and operation in the region.
Analysts said the central government will be expected to roll out
bolder incentives to get foreign business interested in the west
rather than concentrate on the booming eastern region centred
around Shanghai's Pudong. Only 20 per cent of overseas investment
now rests in the western regions.
But the untapped region does have its own edge. Compared with the
developed coastal region, it has an ample pool of cheap labour,
huge natural resources and a potential market that few can really
turn away - a population of more than 300 million.
The campaign will also foment market forces as more investment
means more consumption. With purchasing power increasing, the
region will serve a dynamic market for products ranging from
Nokia's mobile phones, Sony's electronic products and even to
General Motors' Buick sedans.
The western regions, grouping 11 provinces and autonomous regions
and one municipality, covers 71 per cent of China's territory.
But the per capita Gross Domestic Product (GDP) only stands at
US$500, far lower that of the national average of US$840, and
minuscule compared with Shanghai at more than US$4,000 and
Beijing's figure of US$3,000, official statistics said.
A
comprehensive investment package has been devised which stipulates
measures and policies with regards to the programme. These
regulations are expected to be effective later this year after
being given the stamp of approval by the State Council.
Though few details have been made public, State officials have said
the package is committed to upgrading the "software" of the western
regions, meaning an overhaul of education, law and administrative
reform to ensure overseas firms meet the minimum of problems.
It
came on the heels of a steep income tax cut for foreign business in
the region, from 33 per cent to 15 per cent later this year. The
income tax in special economic zones is 15 per cent, 24 per cent in
the coastal region and 33 per cent in other regions.
However, it is not an easy nut to crack.
Poor infrastructure access, a worsening environment, debt-burdened
State-owned businesses, as well as rudimentary education and
technology still loom large. Meanwhile, red-tape and closed-mind
attitudes of the local administration offices still make foreigners
reticent about investing in the west, analysts said.
And to solve these problems will take more than just a couple of
years.
(Chinadaily.com.cn
09/04/2001)