General Rules on Invest in Tibet

CHAPTER 1: GENERAL RULES

I. In accordance with law of the People's Republic of China on Autonomy in Minority

Ethnic Areas, the Preferential Policies of the Central Government on Tibet and relevant policies and regulations, with a consideration of the reality of Tibet, encourage foreign investment, protect interests and rights of investors and promote the opening-up and economic development in Tibet.

II. The policies are applicable to the enterprises and other projects funfed by businessmen outside Tibet (enterprises of various kinds registered in tibet included).

CHAPTER 2: MODES OF INVESTMENT

III. Investors can select the following investment modes according to law:

A. sole investment, joint venture and cooperation;

B. transforming state firms by means of lease, purchase, trusteeship, merge, shareholding, share-controlling or establishing enterprises group;

C. conducting compensation trade and processing trade;

D. transfer of technologies, technical cooperation and technological contract;

E. establishing Tibet-foreign joint venture or cooperative enterprises in inland areas of China or abroad;

F. BOT for infrastructural construction;

G. Other investment modes approved by laws and regulations.

CHAPTER 3: ORIENTATION OF INDUSTRIES

IV. Except those prohibited in laws and regulations, investors can make investment in every industry and conducting independent business, with no limit in industries, ratio of share controlling, investment modes and varieties of management.

V. Foreign investors are encouraged to make investment in the following industries:

A. comprehensive development of agriculture, animal husbandry and forestry and deep process of the relevant products; industrialization of agriculture and animal husbandry; development of barren hills, barren mountain slopes and wild beach;

B. construction and management of infrastructure such as water conservancy projects, municipal engineering projects and public welfare projects;

C. transformation of state firms in Tibet, introduction of advanced technologies, development of new products, promotion of management level, technological level and quality of products;

D. prospecting and mining minerals and processing minerals;

E. development of tourist attractions;

F. development and deep process of pharmaceutical resources;

G. development of high-tech industries and high-tech products;

H. process of special products needed by minority ethnic people;

I. real estate development and property management, investment and cooperative management in information (advertisement), consulting, medical treatment and environmental protection sectors;

J. infrastructural construction in frontier ports, establishment of export-oriented commodity production bases or processing enterprises;

K. establishment of various welfare to aid the disabled, poverty-alleviation economic entities and relevant projects;

L. comprehensive employment of natural resources and environmental protection, waste disposal and relevantly comprehensive employment, rectification of ecological environment and construction of energy-consuming projects;

M. other industries and projects confirmed by the government or departments concerned.

CHAPTER 4:  PREFERENTIAL POLICIES

VI. Policies on Taxation

A. Enterprises in Tibet funded by foreign business and businessmen from Hong Kong, Macao and Taiwan pay 10 per cent of the enterprise's income taxes;

B. Enterprises in Tibet engaging in industries and projects which are encouraged for investment funded by businessmen from other parts of China pay 15 per cent of the enterprise's income taxes;

C. The following enterprise's and projects are exempted from enterprise's income taxes in a certain period.

a. No enterprise's income taxes will be levied on the enterprises engaging in infrastructure construction (water conservancy, energy, transport, municipal engineering works and public welfare works),comprehensive development of agriculture, forestry and animal husbandry and development of relevant products, development of plantation, animal husbandry and forestry on barren hills, barren mountain slopes and wild beach for 6 years since it is put into operation.

b. No enterprise's income taxes levied on catering enterprises in townships and rural area, which provide services to farmers and herdsmen, for 7 years since it is put operation;

c. High-tech enterprises and high-tech product manufacturers confirmed by the state or the regional government departments concerned enjoy exemption from enterprise's income taxes for 5 years since the day of confirmation.

d. If the enterprises tackling consulting (science, law, accounting, audit and taxation consulting included), technical service and materials retrieving sectors conduct independent accounting, they enjoy exemptions from enterprise's income taxes for 1 year since they are put into operation;

e. The independently accounting enterprises tackling commerce, tourism and storage sectors enjoy exemption from enterprise's income taxes for 1 year since it is put into operation.

f. Foreign-invested fairly large educational or health institutions enjoy exemption from enterprise's income taxes;

D. No business taxes are levied on the foreign-invested enterprises in agriculture or pastoral areas and the enterprises offering technological services to farmers and herdsmen.

E. When the enterprise's paid taxes attain a certain amount, the enterprise can enjoy the preferential treatment formulated in Temporary Provisions to Support Development of Enterprises and Foster Backbone Tax Payers in addition to the policies.

F. Preferential policies of the central government and the regional government on border trade are offered to the approved joint ventures which import products from neighboring countries at the border trade ports in Tibet and sell the products in Tibet and the enterprises which import materials, official articles and daily necessities from neighboring countries for self use. If the enterprises engaging in processing with imported materials and exports of the processed products, their products are bonded products. If the enterprises export the processed products to neighboring countries, they enjoy the preferential policies on border trade.

G. The taxes levied in other parts of China except in Tibet will not be levied on foreign-invested enterprises in Tibet.

VII. Policies on Foreign Trade

A. Foreign-invested enterprises can conduct a little sum of border trade within their business scope after approval. Or they can trust the enterprises which have the right to conduct foreign trade in the region.

B. Enterprises in Tibet funded by businessmen from other parts of China can appeal to foreign economic relation and trade departments concerned in Tibet for the right to import and export their own products if their products have earned a certain sum of foreign exchange for the region.

C. The enterprises funded by enterprises in other parts of China and foreign trade companies in Tibet can appeal for the right to import and export their own products on the conditon that the former investors hold 25 per cent of the investment.

D. Foreign-invested enterprises can appeal to the foreign economic relation and trade departments concerned in Tibet for foreign trade subsidies when they import their own products and import key technical equipment.

E. Foreign-invested enterprises enjoy exemptions from import customs taxes and import taxes when they import domestically unavailable equipment, technologies and parts needed by them on the condition that the value of the imported goods does not exceed the total investment.

VIII. Policies on Land

A. Foreign-invested enterprises enjoy priority in obtaining land according to relevant laws and regulations. The investors should conduct business according to relevant laws and regulations.

B. Foreign-invested enterprises obtain the land use right by means of administrative transfer if they engage in development of agriculture, forestry and animal husbandry and infrastructure, construction (water conservancy, energy and transportation).

C. The land use periods vary for other foreign-invested projects according to relevant laws and regulations; Foreign-invested enterprises enjoy exemptions from land transfer fees paid to the local financial bureau; Those having difficulty in paying land transfer fees can adopt installment; The land in the region can be counted as shares in foreign-invested enterprises. Within the land use period, foreign-invested enterprises can mortgage or transfer their land use right after they have injected 20 per cent of the total investment. When the land use period expires, they enjoy priority in lease the land under the same condition.

D. Foreign-invested enterprises lease state lands from the units which have the land use right. They also can lease state-owned land from the government department concerned at preferential rent after the government departments concerned recover the land use right.

E. Foreign-invested enterprises engaging in development of common apartment buildings obtain the land use right by administrative transfer. 40 per cent of the buildings can be for sale at the price of commercial apartment buildings.

F. Approved by land administration and the people's governments, which have the right of approval, the land use by the enterprises funded by collectively owned and cannot be transferred if the rural enterprises use their land to be shares of the joint management companies.

IX. Other Policies

A. In according with relevant laws and regulations of Tibet Autonomous Region government, foreign-invested enterprises have the right right to independently decide the employment, salaries, management and prices of their products except specifically limited by the central government.

B. Foreign-invested enterprises enjoy low insurance rate when applying for commercial insurance.

C. Approved by government department concerned, foreign-invested enterprises can gain amortization charge by means of accelerating depreciation.

D. Except those limited by the central government, foreign-invested enterprises engaging in processing with supplies materials have the right to decide the ratio between domestic sale and exports.

E. Tibetan-foreign cooperative enterprises engaging in construction and management of power stations, airports, highways, bridges, wharfs, railways and water conservancy projects are permitted to share the pre-tax profit during the cooperative period.

F. Approved foreign-invested enterprises transforming state firms in Tibet can adopt the means of asset trustship management. They enjoy the preferential policies to support reform of state firms.

G. Tibetan-foreign cooperative projects, in line with the state policies on industries and policies on Development of Middle West China, can be approved to be listed among the key middle west China advantageous projects. They enjoy the preferential policies of the central government on development of middle west China

CHAPTER 5: POLICIES ON REWARD

X. Rewards are given to those who introduce investment, facilities, technologies and talent into Tibet

A. Reward is given to those who introduce joint venture or cooperative projects into Tibet (the aiding -Tibet capital and the funds planned to be introduced by government departments excluded) on the condition that the projects involve a management period of over 3 years. 10 per cent of the sum is rewarded to those introducing interest-free funds involving a loan period of 1-3 years. If the borrow period es over 5 years, the reward percentage can be 7. Those introducing low-interest funds (lower than the loan interest in Tibet) involving a loan period of 3 years can be rewarded the difference between the 1-year bank loan interest and the 1-year introduced loan interest. The economic coordination departments granting reward according to the Certificates of the beneficiaries and banks. The rewarded can be anyone except those working in economic coordinating departments.

B. Besides 5000 yuan of reward, those introducing new technologies to develop fast- Selling products can be rewarded 10 per cent of the increasing profit of the products for 5 years since the enterprises are put into operation. The salaries and bonds of managerial from other parts of the country or from abroad, who are now working in various kinds of enterprises in Tibet, are open for negotiation by Tibetan and foreign parts.

C. Those introducing competitive projects gain reward from the beneficiaries. Those introducing public welfare projects gain rewarded from Tibet Investment Reward Fund.

D. To encourage technical personnel and managerial personnel to work in Tibet, foreign-invested enterprises have the right to employ technical personnel, appraise technical titles according to relevant policies, transfer technical personnel from other parts of the country (technical workers excluded). The technical personnel and their and their family dependents can be permanent residents of Tibet. The employed technical personnel enjoy priority in gaining houses. Those resigning from their former posts in state institutions to hunt jobs in Tibet can be re-employed here.

CHAPTER 6:  INVESTMENT SERVICES

XI. Government Departments, coordinating with each other, must finish the approval procedures (project approval, feasibility study report, land use and enterprise registration) for foreign-invested enterprises which suit the orientation of industries in Tibet within the periods stipulated by the implementing rules.

XII. Foreign-invested enterprises engaging in encouraged invested projects enjoy preferential treatment in paying administrative fees:

A. The business and legal interests of foreign-invested enterprises are protected according to law. Foreign-invested enterprises enjoy preferential treatment in paying administrative charges. The administrative charging card system is implemented. Besides legal taxes, the enterprises have the right to refuse to be checked by or pay fine and fees to any departments except those designated by the government and the legally entrusted organs.

B. For enterprises in other parts of China moving into Tibet and being registered in the region, their registered funds (or registered capital ) need not to be re-assessed. However, they must be transfer their bank accounts to banks in Tibet. Their savings deposits also must be transferred to Tibetan banks. Industrial and commercial administrations and special industrial administrations only charge registration cost. If the courses the registered assets increase, the added sum must be assessed. Enterprises having clear property need not to produce asset appraisal certificate.

C. Enterprises having a registered capital of less than 10 million yuan pay 0.5 per thousand of the registered capital for registration; Those having a registered capital of over 10 million yuan pay 0.3 per thousand; Those having a registered capital of over 100 million yuan, only pay 0.3 per thousand of 100 million yuan for registration.

D. In terms of industrial and commercial administrative fees, foreign-invested enterprises having less than 10 million yuan of annual business volume pay 1 per cent of their annual business volume; Those achieving an annual business volume of over 10 million yuan are levied industrial and commercial administrative fees only for 10 million yuan.

E. Foreign-invested enterprises are regarded as local firs when they pay for services concerning supply of water, electricity, gas, fuel, telecommunication, transportation, banking services, insurance services, lawful services, labor, consulting, design and advertisement.

XIII. Foreign investors, their family dependents and the employees in foreign-invested enterprises are regarded as locals in receiving the services concerning transportation, culture, entertainment, medical treatment, attending schools and sightseeing, etc.

XIV. A complain center is established to handle foreign investors' complaints about infringement of their legal interests or inferior services.

XV. According to relevant regulation, employees of foreign-invested enterprises enjoy the priority in going through entry and exit formalities and Tibet residence formalities.

CHAPTER 7: SUPPLEMENTARY RULES

VXI. Tibet Autonomous Regional Government takes the responsibility to explain the policies.

VXII. The functional departments concerned of Tibet Autonomous Regional Government stipulate the implementing rules according to the policies. They come into effect after being approved by the regional government.

VXIII. The policies come into effect since the day of release. If the policies are inconsistent with the former relevant policies and regulations, the policies are regarded as valid. After the policies come into effect, If the relevant policies and regulations of the central government are superior to them, the policies of Tibet are considered invalid.

Development Plan for 2000-2005

The reform and opening up, especially current western development have brought Tibet opportunities for development. The autonomous region's government has formulated its development plan, which includes:

Highway Between 2000 and 2005, Tibet will transform the China-Nepal Highway (No.318 National Highway) in an all-round way, paving the surface of the entire line with asphalt. Continuous construction will be done on two main roads leading to Tibet--the South Sichuan Road (No.318 National Highway) and the Qinghai-Tibet Highway (No.109 National Highway) and paved roads will extend to 10,000 km. The Yangbajain-Lhasa section on the Qinghai-Tibet Highway will be reconstructed and upgraded to a second-class paved road. The Xinjiang-Tibet Highway, the north section of the Sichuan-Tibet Highway and some sections of the Yunnan-Tibet Highway will be reconstructed or renovated. By the end of 2005, highways in the region will total 27,000 km, of which, roads at or above third class level will account for 17 percent. The proportion of towns and townships and administrative villages that have access to simply constructed roads will be up to 90 percent and more than 70 percent respectively. Thus, a road transportation network covering the whole region will have assumed an initial shape.

Civil Aviation Reconstruction and expansion of the Gonggar Airport in Lhasa and the Banda Airport in Qamdo are planned to start in 2001 and be completed in 2003. Heping Airport and Danxung Airport will be restored and renovated and efforts made to develop branch-line air transportation. At the same time, first-phase preparations will be made for the construction of the Lhasa, Nyingchi, Nagari and North Tibet airports. New inter-regional, domestic and international air routes will be opened and a fast and convenient air transportation network will be formed.

Railway A railway from Tibet to Qinghai will be constructed.

Oil Pipeline Planning and design work will be carried out between 2001-06 for the construction of the Lhasa-Konggar-Zetang, Lhasa-Xigaze, and Lhasa-Nyingchi-Qamdo oil pipelines. Construction will start between 2005-20 and these oil pipelines will be built and put into use respectively between 2006-30.

Energy As the focus is continuously put on hydropower construction, active efforts will be made to develop and use solar energy, geothermal energy and wind energy, to form an electric power industrial structure with coordinated development of various energy sources. Between 2000-05, priority will be given to the expansion of existing power grids and construction and renovation of urban and rural power grids. Around 2010, the Central Tibet and Nyingchi power grids will be connected to support the region's animal husbandry comprehensive development and the construction of the north Tibet oil field and the Qinghai-Tibet Railway. Around 2015, Nagqu Power Grid will be connected with the Central Tibet Power Grid, thus initially forming a major power network in central Tibet. By then, total installed capacity of Tibet will approach 1 million kW and the electricity problems in the urban and rural areas will be solved.

Telecommunications By 2005, a telecommunications network centered on Lhasa and covering all cities and rural areas will be built, with counties linked with optical fiber cables and townships having access to the telephone. Telecommunications business volume and turnover will double from the levels in 2000. By 2015, all administrative villages in Tibet will have access to the telephone; the telecommunications level will approach or reach the national average level, and mobile communications will be available at county seats, transportation hubs, airports and exit/entry ports. By 2050, optical fiber communications networks centered on cities and radiating to all directions and a satellite communications network covering the whole region will take shape. Communications means will be digitalized, program-controlled and personalized to meet the communications demand in an information-oriented society.

Ecological Environment Five major ecological environment zones will be built.

Major soil erosion treatment zone: It covers the "three-river" (Nujiang, Lancangjiang and Jinshajiang rivers) valleys in east Tibet, Nyang River valley and the valley on the middle reaches of the Yarlung Zangbo River. Soil erosion is most serious in the three-river valleys, which will thus be taken as major areas for treatment.

Major counties for ecological environment conservation: The four counties are Chagyab, Qamdo, Mangkam and Zogang. Nineteen projects will be built with a total investment of 1.1 billion Yuan.

Ecological environment comprehensive treatment zone: The middle reaches of the Yarlung Zangbo River have been designated as an ecological environment comprehensive treatment zone, covering all counties in the river valley under the jurisdiction of Lhasa City, Shannan Prefecture and Xigaze Prefecture. Lhasa plans to build 11 projects with a total investment of 2.54 billion Yuan.

Natural forest conservation zone: It encompasses five counties of Nyingchi, Bome, Mainling, Zayu and Medog. Twenty-two projects are planned to construct with a total investment of 2.26 billion Yuan.

Deteriorated, desertified and alkali-affected grassland comprehensive treatment zone: Nagqu, Amdo, Nyima, Shuanghu and Baqen are major counties for treatment of deterioration, desertification and alkalization of grassland. Twenty projects are planned with total investment of 330 million yuan.

Tibetan Medicine The Tibet Autonomous Region has included Tibetan medicine into the region's overall plan for economic and social development. Tibetan medicine will be a mainstay industry to be energetically developed during Tibet's implementation of western development. Priority will be given to the application of modern scientific means to promote the transformation, upgrading and innovation of traditional Tibetan medicine, with an aim of increasing the use of Tibetan medicine in domestic and overseas medical circles. Meanwhile, multiple measures, such as association with strong domestic and overseas enterprises, will be adopted to combine traditional preparations with modern techniques. Efforts will be made to increase varieties of domesticated Tibetan medicinal plants, intensify research and use of Tibet's unique medicine resources and ensure the sustainable use of Tibetan medicine resources. Measures will be taken to cultivate Tibetan medical talents to build up a stable and highly qualified scientific and technological contingent that engages in various sectors from pharmaceutical research to development and production. Corporation construction of Tibetan medical enterprises will be promoted in order to improve the comprehensive strength and overall level of Tibet in Tibetan medicine research and development.

Tourism Tourism is an advantageous industry of Tibet. The region has made it one of its objectives in the western development to build Tibet into an international tourist destination. This goal is surely able to realize.