New Forex rules debut
( 2002-08-22 09:57 ) (1 )

The State Administration of Foreign Exchange (SAFE) said on Wednesday enterprises within China's bonded areas needed to observe a new set of foreign exchange management regulations, a move made to improve the business environment in the trade areas.

SAFE, the nation's foreign exchange (forex) watchdog, said the new regulations were issued to further standardize forex activity in the bonded areas, because the old regulations no longer allowed the development of the trade zones.

Bonded areas, first approved by the State Council in 1990, enjoy many preferential policies. They are the country's most flexible areas to conduct business and are characterized by manufacturing and processing, storing and logistics, entrepot trade and international trade.

According to a SAFE statement released on Wednesday, the new regulations will cover 38 forex items in the areas of registration, annual checks, accounts, income and expenditure and the management of sales.

"The adjustment of the rules, based on regulations issued in 1995, will better keep in line with the development of bonded areas," said a SAFE spokesman on Wednesday in a press conference.

"They will officially kick off on October 1," he said.

The new regulations aim to harmonize with the management of other government sectors such as the General Administration of Customs, the Ministry of Foreign Trade and Economic Co-operation, the Ministry of Finance and the State Administration of Taxation, he added.

According to the new rules, both foreign and domestic enterprises in trade zones have to register with SAFE to get forex registration certificates, an identification which allows those enterprises to conduct foreign exchange-related activities.

As a result, SAFE will abandon foreign-investment enterprise registration certificates, formerly issued only to foreign enterprises.

Three categories of enterprises are allowed to make foreign-exchange purchases thanks to the new regulations, the spokesman said.

Purchasing within the bonded areas was suspended during the Asian financial crisis in 1998 for fear of an outflow of foreign exchange.

The new regulations have also loosened controls on forex accounts. According to the spokesman, the new regulations allow enterprises to open their forex accounts, which comprises current accounts and capital accounts, anywhere. They were previously confined to the bonded areas.

But companies need to get approval from SAFE before opening accounts, he said.

Figures from SAFE show that China has so far established 16 bonded areas across the country, including the Shanghai Waigaoqiao Bonded Area, the Tianjin Port Bonded Area and the Zhuhai Bonded Area.