China solicits US$100 mln investment from Singapore to develop Guangzhou

07-Nov-06

As part of its efforts to transform Guangzhou into a major regional petrochemical and logistics hub, a high-level delegation from China is on a visit to Singapore to encourage local companies to invest upto US$100 million in Guangdong province. This delegation visit follows a visit to Guangzhou by the Prime Minister of Singapore for discussions on free trade. Investors from Singapore pumped in US$100 million into Guangdong in 2005. Investments in 2006 have already exceeded US$100 million. Perks given to companies investing in the Nansha Development Zone include tax incentives, such as two-year tax relief and three-year half-reduction of business income tax in the first five years. These will be followed by a 15% tax rate, against the normal tax rate of around 25%. The Guangzhou government is keen to attract investments in Guangdong province's petrochemical sector due to the growing demand for petrochemicals in China. By 2010 Guangdong province is projected to have an annual oil refining capacity of 30 million tons and 2 million tons of ethylene. To play an important role in the sectors development, Guangzhou province needs more upstream products such as olefins to serve as feedstock for existing downstream production. In a move to strengthen its commitment to the sector's development, the Chinese government has pledged CNY10 billion (around US$1.3 billion) to develop the Nansha Development Zone in southeast Guangzhou to attract investment from petrochemical producers and refineries. Germany's BASF AG, U.S.-based Dow Chemical Co. and Singapore-owned but Hong Kong-listed Titan Petrochemicals Group Ltd. have already established their presence in the zone. One of the projects scheduled for the zone is a refinery/petrochemical complex led jointly by China's Sinopec and Kuwait Petroleum Corp.