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In order to promote the establishment of closer economic partnership between Hong Kong, Macao and the Chinese Mainland and to encourage Hong Kong and Macao service suppliers to provide airport management services and airport ground services to the Mainland, the following supplementary provisions to the Provisions on Foreign Investment in the Civil Aviation Industry (Order No. 110 of the Civil Aviation Administration of China, the Ministry of Foreign Trade and Economic Cooperation and the State Development Planning Commission) are hereby formulated pursuant to the Supplementary Agreement to the Mainland and Hong Kong Closer Economic Partnership Arrangement and the Supplementary Agreement to the Mainland and Macao Closer Economic Partnership Arrangement: I. A Hong Kong or Macao service supplier is allowed to provide the entrusted management services of medium and small airports in the form of contractual or equity joint venture or solely-funded venture, and the valid term of such contracts shall be no more than 20 years. II. A Hong Kong or Macao service supplier is allowed to provide airport management training and consultation services in the form of contractual or equity joint venture or solely-funded venture. III. A Hong Kong or Macao service supplier is allowed to provide, in the form of equity joint venture or solely-funded venture, seven air transport ground services: agency services, assembling and disassembling control services, communication and departure control system services, management services of containerization facilities, passenger and luggage services, commodity and airmail services, apron services and airplane services. IV. A Hong Kong or Macao service supplier mentioned in these Provisions shall comply with the definition of ¡°service supplier¡± and the relevant prescriptions provided for in the Mainland and Hong Kong Closer Economic Partnership Arrangement or the Mainland and Macao Closer Economic Partnership Arrangement, respectively. A Hong Kong or Macao service supplier of air transport ground services shall have obtained a professional license of Hong Kong or Macao on the engagement of air transport ground services and have engaged in substantial businesses for five or more years. A Macao service supplier of airport management services shall be governed by the relevant regulations and rules of the Mainland if it is an associated enterprise of an airline company. V. Other matters on the investment in civil aviation industry by Hong Kong and Macao service suppliers in the Mainland shall be implemented pursuant to the Provisions on Foreign Investment in the Civil Aviation Industry. VI. The power to interpret these Supplementary Provisions shall remain with the Civil Aviation Administration of China, the Ministry of Commerce of the People¡¯s Republic of China and the National Development and Reform Commission upon the strength of their respective functions. VII. These Supplementary Provisions shall come into force as of February 24, 2005. Attachment: Explanations for the Supplementary Provisions to the Provisions on Foreign Investment in the Civil Aviation Industry ATTACHMENT: EXPLANATIONS FOR THE SUPPLEMENTARY PROVISIONS TO THE PROVISIONS ON FOREIGN INVESTMENT IN THE CIVIL AVIATION INDUSTRY The Provisions on Foreign Investment in the Civil Aviation Industry (Order No. 110 of the Civil Aviation Administration of China, the Ministry of Foreign Trade and Economic Cooperation and the State Development Planning Commission) have been jointly promulgated by the Civil Aviation Administration of China, the Ministry of Commerce (the former Ministry of Foreign Trade and Economic Cooperation) and the National Development and Reform Commission (the former State Development Planning Commission), and have come into force as of August 1, 2002. The Provisions on Foreign Investment in the Civil Aviation Industry clearly prescribe the scope, forms, proportion and the management power limit for foreign companies, enterprises and other economic organizations or individuals to invest in the civil aviation industry, and simultaneously stipulate that the investment in the Mainland civil aviation industry by Hong Kong and Macao companies, enterprises and other economic organizations or individuals shall be implemented by referring to the present Provisions. In order to carry out the important instructions of the Center and the State Council on further supporting the economic development of Hong Kong and Macao and promoting the common prosperity and development of the Mainland and the Hong Kong and Macao Special Administrative Regions, the Mainland has, under the mechanism of WTO, separately signed the CEPA with the Hong Kong and Macao Special Administrative Regions in 2003, which has come into effect on January 1st, 2004, and most industries in the Mainland have been opened wider to Hong Kong. From this May, the negotiation on expanding the Mainland and Hong Kong and Macao special economic partnership arrangement has been started up, and upon the approval of the State Council, the Mainland has separately signed the Supplementary Agreement to the Mainland and Hong Kong Closer Economic Partnership Arrangement and the Supplementary Agreement to the Mainland and Macao Closer Economic Partnership Arrangement (hereinafter referred to the Supplementary Agreement to CEPA) with the government of Hong Kong or Macao Special Administrative Region on October 27 and 29, 2004. In the said two supplementary agreements, our Administration promises to open up items such as the entrusted management of medium and small airports, airport management consultation and airport ground services. Thus, the Provisions on Foreign Investment in the Civil Aviation Industry shall be amended. I. Expanding scope of investment in the Mainland civil aviation industry by Hong Kong and Macao service suppliers The Order No. 110 prescribes that the scope of foreign investment in the civil aviation industry includes the civil airports, pubic air transport enterprises, all-purpose aviation enterprises and items concerning the air transport. While, pursuant to the supplementary agreement to CEPA, the investment in the airport entrusted management and airport management consultation and training has been added for Hong Kong and Macao service suppliers. II. Expanding investment proportion for Hong Kong and Macao service suppliers The Order No. 110 restricts foreign investment proportion to equity and contractual joint ventures. While, pursuant to the supplementary agreement to CEPA, three service sectors, i.e., the entrusted management of medium and small airports, airport management consultation and airport ground services, have been added for Hong Kong and Macao service suppliers to invest in the form of solely-funded ventures. III. Restricting scope of investment in ground services by Hong Kong and Macao service suppliers in the form of solely-funded ventures Pursuant to the supplementary agreement to CEPA, the scope of investment in ground services by Hong Kong and Macao service suppliers in the form of solely-funded ventures is restricted to seven items such as agency services, services of assembling and disassembling control, communication and departure control system, management services of containerization facilities, passenger and luggage services, commodities and airmail services, apron services and airplane services. These seven items are set down pursuant to the classification of ground services by IATA and with the exclusion of fuel filling, aircraft maintenance, operation of scheduled flights and aircrew management, assorted food, security check, etc. IV. Requirements for Hong Kong and Macao service supplier In order to prevent any multinational company from entering into the Mainland under the guise of a Hong Kong or Macao company and enjoying preferential treatment set down in the CEPA, the CEPA has defined the Hong Kong and Macao service suppliers, namely, a Hong Kong or Macao natural-person service supplier shall be a permanent resident of the Hong Kong or Macao Special Administrative Region, and a Hong Kong or Macao legal-person service supplier shall be one that is registered pursuant to the relevant regulations of Hong Kong or Macao, and engages in substantial businesses in Hong Kong or Macao. The CEPA has still prescribed specific standards for the determination of a Hong Kong or Macao service supplier. In order to prevent foreign aviation companies from entering into ground service sections by making use of our promises, apart form general requirements for Hong Kong or Macao service suppliers to invest in the civil aviation industry, we set down special prescriptions for Hong Kong and Macao service suppliers to invest in ground services, namely, a Hong Kong or Macao service supplier of air transport ground services shall have obtained a professional license of Hong Kong or Macao on engaging in air transport ground services and have engaged in substantial businesses for five or more years. In order to prevent an airline company from controlling an airport, the principle of separating airline companies from airports shall be abided by, and a Macao service supplier that provides airport management services, if it is an associated enterprise of an airline company, shall still be governed by the relevant regulations and rules of the Mainland. V. Amending Methods After the conclusion of CEPA in 2003, all ministries and commissions take the CEPA as the upper level law and amend any relevant regulation in the form of supplementary ones. After the conclusion of the current supplementary agreement to CEPA, the Ministry of Commerce still requires to amend relevant regulations in such a form. VI. Other matters The supplementary agreement to CEPA still allows a Hong Kong or Macao service supplier to provide the entrusted management of medium and small airports and airport management consultation in the form of cross-border supply and consumption abroad. Due to their non-relevancy to the investment, these two methods can-not be incorporated into the supplementary provisions to the Provisions on Foreign Investment in the Civil Aviation Industry and can only be embodied in other later provisions. |
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