Investment still strong in Guangzhou property

PUBLISHED : Friday, 15 April, 1994, 12:00am
UPDATED : Friday, 15 April, 1994, 12:00am

INVESTMENT in Guangzhou's real estate sector remained strong in the first quarter of this year despite concerns about the impact of the property capital gains tax.

Latest figures from the Guangzhou municipal government show 1.26 billion yuan (about HK$1.11 billion) was committed to development, 1.42 times the investment in the same period last year.

The authorities attributed the surge in investment to efforts by senior officials to alleviate concern of foreign investors over the new tax.

The property gains tax, with a rate up to 60 per cent on profits, triggered strong opposition from mainland and overseas developers.

Authorities have shelved temporarily implementation of the tax, awaiting publication of a set of detailed guidelines to supplement the regulations.

''After the property gains tax was announced, authorities immediately took actions to alleviate the concern of foreign investors, enabling foreign investment to maintain momentum,'' said an official.

Some cities, eager to attract foreign capital, announced they would exempt developers from the tax.

In the first quarter of this year, Guangzhou saw 699 foreign investment projects signed and US$489 in foreign capital committed, an increase of 80 per cent over the same period last year.

Officials said the tax reform, including the new personal income tax, value-added tax, consumption tax, business tax, corporate income tax, and resources tax would bring additional revenue for the Government.

Before the tax reform was introduced, local governments had expressed concern about the impact of the plans.

Senior leaders in Beijing had to solicit support for the new system from municipal leaders.

According to Guangzhou's projection, government revenue is expected to top 1.44 billion yuan, up 80 per cent from the same period last year.

''The new tax system is operating normally, and government revenue will continue to grow,'' said an official.

The new foreign exchange mechanism, which became effective on January 1, also had favourable impact on exports.

Figures from the Guangzhou Municipal Statistics Bureau show that total imports and exports in the first three months of this year amounted to $986 million, up 31 per cent from the same period last year.

Exports totalled $820 million, representing an increase of 23 per cent.

''The unification of dual exchange rates and related reforms are conducive to mobilising the enthusiasm of enterprises in increasing their exports,'' an official said.

On living standards, the statistics bureau, based on a survey of 300 families, reported that average monthly per capita income in the first three months was 608.94 yuan, up 47 per cent from same period last year.

Average cost of living per month was 481.17 yuan, which grew 31 per cent compared with last year's figure.