Hainan's governor said domestic tourists to the island province were expected to be allowed to shop at duty-free stores from May 1, as part of the central government's efforts to transform it into the 'Hawaii of the East' by 2020.
Governor Luo Baoming said yesterday at the annual session of National People's Congress that the move would attract mainland tourists who wanted to buy imported goods.
A cap would be placed, however - 5,000 yuan (HK$5,925) of duty-free goods per shopping trip - and each person would be limited to two such trips per year. If Hainan implements such a policy, it will be the first province to do so.
'It's going to be a new strategy that will boost tourism in Hainan,' Luo said. He added, though, that it would be difficult to predict the effects.
Luo said the strategy wouldn't threaten Hong Kong's status as a shopping mecca.
'As it's only a trial, it should take a certain amount of time to see the effects: how much the sales will be and how much tax the country will have to waive,' he said.
Luo said the government was still designing software to make sure the limits were not exceeded and would reveal details of the scheme in the middle of next month.
Other details still to be worked out included the types of products eligible for duty-free purchase, what the tax rate would be for purchases above 5,000 yuan and what transportation tourists would have to use to be eligible for duty-free shopping, domestic media reported yesterday.
Hainan received more than 23 million tourists who stayed at least one night in the first 11 months of last year, up 11.6 per cent year-on-year, according to the local statistics bureau. Mainlanders made up 96 per cent of the island's tourists.
Tourism revenue surged 20.7 per cent year-on-year to 22.9 billion yuan.There were no plans to raise the cap on the amount tourists could spend duty-free, provincial Communist Party secretary Wei Liucheng said, until the trial was complete. He said he hoped the cap would eventually be increased.
The central government had introduced an 11 per cent tax rebate for overseas tourists to the island from January 1, but Wei said the policy had only a lukewarm response. Under the policy, overseas tourists and visitors from Taiwan, Hong Kong and Macau who stay no longer than 90 days are entitled to the rebate if they spend at least 800 yuan in designated malls in one day. But the number of overseas tourists was too small and publicity was weak, Wei said.
More than 500,000 foreigners visited Hainan last year, Wei said, but 'only a little more than 100,000 yuan was rebated in the first two months of this year, mostly to Russians.'