New program to boost overseas investment plans
China's top economic planner said Thursday that it will launch a trial program to simplify approval procedures for outbound investment activities by private companies, a move to encourage them to expand abroad amid the global downturn.
For resource investment projects involving less than $300 million or non-resource ones of below $100 million, private companies in certain cities will not be required to submit application reports. Instead they will only need to fill in certain forms, the National Development and Reform Commission (NDRC) said in a statement, without offering specific details.
The trial program is a follow-up to a guideline released by the State Council in July encouraging private companies to invest overseas in key areas such as resources and advanced manufacturing. The guideline also called for domestic banks to provide private companies with credit support, as well as issue yuan-denominated bonds overseas.
The guideline was the first of its kind, and came amid a gradual increase of overseas investment activities by private companies.
Of a total of $65.1 billion in outbound direct investment from China in 2011, about 44 percent came from private companies, according to the NDRC.
"Many private companies choose mergers and acquisitions to expand overseas, as the eurozone debt crisis has offered them opportunities to acquire cash-strapped foreign companies at lower prices," Feng Pengcheng, a professor at the University of International Business and Economics, told the Global Times.
Some experts said the guideline lacks details, and that more should be done to simplify approval procedures and facilitate private companies' investment activities.
"Currently, private companies need to get approval separately from several departments such as the NDRC, the Ministry of Commerce and the State Administration of Foreign Exchange," Tao Jingzhou, managing partner of Dechert LLP Asia Practice in Beijing, told the Global Times.
"The approval process always takes a long time and lacks efficiency," Tao said. "If the relevant departments could be more cooperative, private companies could save much time."
It usually takes more than four months for a private company to get approval from domestic authorities for an outbound investment project worth more than $100 million. Sometimes the project fails because of the long and complicated process, Li Lixin, chairman of Zhejiang-based Lisi Group, complained during the annual "two sessions" in March.
"For private companies that use their own funds to invest overseas, the government should simplify the approval process as much as possible," Fei Guoping, executive chairman at China Mergers & Acquisitions Association, told the Global Times.
"If they borrow from domestic banks or get preferential tax polices, the approval procedure should be more targeted," he noted.
Fei also noted that getting domestic approval is just the first step, and private companies still need to gain approval from foreign authorities.
China's fast growing overseas investment has led to increasing restrictions and obstruction from foreign authorities, and private companies need to be prepared for potential risks, the NDRC said.
The trial program is a follow-up to a guideline released by the State Council in July encouraging private companies to invest overseas in key areas such as resources and advanced manufacturing. The guideline also called for domestic banks to provide private companies with credit support, as well as issue yuan-denominated bonds overseas.
The guideline was the first of its kind, and came amid a gradual increase of overseas investment activities by private companies.
Of a total of $65.1 billion in outbound direct investment from China in 2011, about 44 percent came from private companies, according to the NDRC.
"Many private companies choose mergers and acquisitions to expand overseas, as the eurozone debt crisis has offered them opportunities to acquire cash-strapped foreign companies at lower prices," Feng Pengcheng, a professor at the University of International Business and Economics, told the Global Times.
Some experts said the guideline lacks details, and that more should be done to simplify approval procedures and facilitate private companies' investment activities.
"Currently, private companies need to get approval separately from several departments such as the NDRC, the Ministry of Commerce and the State Administration of Foreign Exchange," Tao Jingzhou, managing partner of Dechert LLP Asia Practice in Beijing, told the Global Times.
"The approval process always takes a long time and lacks efficiency," Tao said. "If the relevant departments could be more cooperative, private companies could save much time."
It usually takes more than four months for a private company to get approval from domestic authorities for an outbound investment project worth more than $100 million. Sometimes the project fails because of the long and complicated process, Li Lixin, chairman of Zhejiang-based Lisi Group, complained during the annual "two sessions" in March.
"For private companies that use their own funds to invest overseas, the government should simplify the approval process as much as possible," Fei Guoping, executive chairman at China Mergers & Acquisitions Association, told the Global Times.
"If they borrow from domestic banks or get preferential tax polices, the approval procedure should be more targeted," he noted.
Fei also noted that getting domestic approval is just the first step, and private companies still need to gain approval from foreign authorities.
China's fast growing overseas investment has led to increasing restrictions and obstruction from foreign authorities, and private companies need to be prepared for potential risks, the NDRC said.
