00:00With its new free trade port status, Hainan is redefining trade dynamics in the region
00:06and setting a new benchmark in economic openness in China.
00:10What does this signal for neighbouring countries, especially Malaysia?
00:14How can Malaysia leverage this evolving landscape
00:17and strengthen its position as a bridge promoting ASEAN-China trade?
00:30Many people ask, since China-ASEAN FTA is ready in place, why go to Hainan?
00:37Why not to other cities in China?
00:39And I think the answer is quite simple because over 98% of ASEAN businesses are SMEs
00:45and when come to cross-border investment, they usually face three main challenges
00:51which is market information, market access and funding.
00:56And here's how Hainan can come in.
00:58First on cost, there's no investment threshold.
01:01As long as your project fits the promoted sectors of Hainan Free Trade Port,
01:06you can enjoy the low tax policy, which is the 15% corporate tax policy.
01:13And apart from that, operating costs in Hainan is also relatively low.
01:17And second on market access, many services sectors like the biotechnology,
01:22including the cell and gene therapy sector.
01:27And tourism, international education and vessel registration are much more liberal compared to the rest of China,
01:35with most of them allowing 100% of foreign ownership.
01:40And third on funding.
01:43So when you set up a company or a project in Hainan, you get closer to Chinese capital, to the
01:50investment fund and financing channels.
01:52And this will help ASEAN businesses to grow and expand into this China's mega consumer market.
01:58With simplified customs and lower tariffs, trade between China and ASEAN can move faster and more efficiently.
02:07The Hainan Free Trade Port is designed to reduce friction, lower costs and integrate supply chains.
02:14I think the emergence of the Hainan Free Trade Port represents more than the development of another economic zone within
02:25China.
02:25It actually reflects a much larger transformation that is now taking place within the economic architecture of the entire Asia
02:35itself.
02:36Recent discussions promoting closer collaboration between ASEAN and Hainan Free Trade Port
02:42and coincides strongly with the realities that we are now facing today that is unfolding before us because of the
02:50Italy's conflict.
02:52On top of that, something is changing.
02:56The rise of Asia as a major global economic center, the growing importance of regional supply chain
03:03and the increasing integration of ASEAN economies through trade, investment, technology and logistics.
03:11ASEAN possesses many important strengths.
03:15The region is rich in natural resources, tropical agriculture, energy resources.
03:21We have minerals and we have manufacturing capabilities.
03:26We have strategic shipping routes and more important, a young and growing workforce.
03:33And China, in the meantime, brings huge market scale.
03:39Everything they do is big.
03:41Advanced manufacturing ecosystems, AI, artificial intelligence, logistic capabilities, financial resources,
03:51IB and R, infrastructure strength and one of the world's largest consumer markets of 1.4 billion people.
03:59So I think a lot of Malaysian S&E is worried that if I go to China, I'm going to
04:05spend a lot of money to start a business there
04:08and the tax is so high.
04:09Before even I do anything, I don't pay tax.
04:12But Hainan is different, okay?
04:14For instance, you have white coffee, you want to try.
04:18And then you can go to Hainan, set a company there, import the product there and sell it first.
04:22It's a popularity, it's a pilot place, a cheaper place for Malaysia to test our product.
04:27So for S&E, I think I foresee there is definitely a great opportunity for us to explore.
04:34As regional trade patterns evolve, Malaysia is emerging as a natural link between ASEAN and China.
04:41Its geographic location right along key maritime routes places it at the heart of regional supply chains.
04:48I think Hainan plays two roles. One is playing a role for China to go to the global, to ASEAN
04:54and to the global.
04:55Another is for ASEAN and the rest of the world to go through Hainan into the China market.
05:01As I say, we are producing the raw materials and then we have the commodities advantage in that.
05:06And because we have very quite similar weather in that, especially in the tropical agriculture products,
05:11I think that's where Malaysia may be able to tap into the advantage of the rise of this Hainan free
05:18trade port.
05:19Hainan free trade port, I think one very important aspect is on the institutional side.
05:23Maybe they can consider to have more financial intermediaries and also to have more representative regional companies there.
05:29So I think that's where it's going to build the best for Hainan to connect with more of the rest
05:35of the world.
05:35So inside these so called the 11 countries of the Southeast Asia, which one is central and the hub?
05:45I think Malaysia, Kuala Lumpur over here.
05:48You see more frequency now, the flight from Malaysia to China.
05:53Next time you see frequency will be higher between the Malaysia and the Hainan.
05:57So I think they will make use of Malaysia as a hub to the whole Southeast Asia and then to
06:04the Asia Pacific as well, like Australia, New Zealand.
06:08Beyond trade, Malaysia shares deep cultural and historical ties with Hainan, built over decades of connection and exchange.
06:17Culture is one thing, they are friendlier to Malaysia. They like Malaysia in a way.
06:22And our product, like it or not, it's premium product, especially in FMV.
06:26Of course, Hainanese, we have many Hainanese diaspora in Malaysia as well.
06:30And then we have very strong connection in that sense.
06:32So that's where the business associations in Malaysia and also the Hainanese clan association, all this,
06:39they play a very important role in building out the trust and also our cultural proximity.
06:44And that actually will reduce the transition costs and all this for doing business with China, etc.
06:50through Hainan as a gateway.
06:52The Hainan Free Trade Port is more than just a Chinese development project.
06:56It is a bold experiment in economic openness and regional cooperation.
07:02As time progresses, it is set to reshape the trade flow between China and ASEAN.
07:08Malaysia can become the preferred gateway in China-ASEAN trade, boosting regional connectivity, investment and economic growth.
07:16Now, with a zero tariff advantage, efficient custom system, logistic infrastructure and investment friendly environment,
07:27Hainan can evolve into a major regional processing, innovation, financing and redistribution center.
07:36Malaysia is globally recognized for its halal certification standards, agro-food capabilities, palm oil industry,
07:45manufacturing experience and strategic connectivity within ASEAN itself.
07:53Raw materials and intermediate products from ASEAN countries can potentially be processed in Hainan.
08:00And refined, packaged, manufactured, manufactured, even halal certified and re-exported through that ecosystem into mainland China
08:09and to the wider international Muslim market.
08:14In the next episode, we'll examine how Malaysia's strategic infrastructure is positioning the country within the Hainan Free Trade Port
08:22network.
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