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Strategies & Market Trends : HONG KONG -- Ignore unavailable to you. Want to Upgrade?

To: Dayuhan who wrote (2637)	1/8/1999 8:58:00 AM
From: Ron Bower	Respond to of 2951

Steven, My conclusions are based on news articles and I have no personal knowledge of the situation. I don't know the numbers, but I believe the number of companies in SEZs that compete with non-SEZ is low. Most of these companies are primarily exporters. The State companies have had major losses and have to come up with reasons for those losses. It's a time of excuses and finger pointing. The failure of the State operations is causing real problems for banking and a loss of anticipated tax revenue. At the same time, the SEZs have been adding tax monies that they spend on local improvements. Beijing wants the money. Some of the 'improvements' being made by the SEZ are debatable - fancy new office complexes for SEZ officials and staff? Most of the incentives for companies are tax incentives from Beijing with a major portion of the taxes staying within the SEZ for infrastructure improvements. I don't believe the SEZ companies receive lower rates on rents, utilities, etc, but they are guaranteed that they will not be charged any more for these things. Anyone gouging an SEZ company can be penalized. This is a necessary protection for foreign companies and I expect it to continue. JMHO, Ron