How Lin-gang facilitate firms' cross-border RMB settlement

en.lgxc.gov.cn| Updated: Aug 12, 2020 L M S

The China (Shanghai) Pilot Free Trade Zone Lin-gang Special Area Administration and the Shanghai Bank Foreign Exchange and Cross-Border Renminbi Business Self-Discipline Mechanism issued the Facilitation Plan for Cross-border RMB Settlement of High-quality Enterprises in Lingang Special Area (Demo) on March 5.

A number of banks in Lin-gang Special Area responded positively and immediately issued corresponding service guidelines to fully support the production and operation of enterprises in the area during the epidemic prevention and control period.

I. Main functions of the plan

According to the plan, banks can directly handle RMB settlements for the cross-border trade of goods and services, RMB capital, and cross-border financing for enterprises, as well as repatriate funds raised from overseas listings, according to the enterprises' receiving or payment instructions. In other words, on the premise that risks are minimized, the cross-border RMB settlement of high-quality enterprises can be further simplified to facilitate cross-border financial services.

Enterprises recognized as high-quality tend to be those engaged in key industries in Lin-gang, such as integrated circuits, artificial intelligence, and biomedicine.

Case 1

Shanghai Semiconductor Equipment and Material Investment Co Ltd is the main semiconductor company in Lin-gang Special Area set up by Shanghai Pudong Science And Technology Investment Co Ltd.

In the early stages of the merger and acquisition of the semiconductor enterprises in Lin-gang, the enterprise hired an overseas consulting company and generated consulting fees. SPD Bank simplified the procedures for customers and handled the cross-border payment of consulting fees based only on the receiving and payment instructions of the enterprise.

Case 2

After Tesla's resumption of work and production in Lin-gang, in order to catch up with the production schedule, it needed to make a large amount of daily operating payments in RMB. After the bank began providing cross-border RMB settlement facilitation services for enterprises, Tesla completed the payment of RMB capital account based on the payment instructions.

II. Results of implementing the plan

In terms of the types of services provided, after the implementation of cross-border RMB settlement facilitation in Lin-gang, enterprises no longer need to provide background materials such as contracts and invoices for the settlement of the trade of goods, which greatly improves settlement efficiency.

As for the domestic capital transfer procedure, it has been greatly simplified. Enterprises reckon that capital transfers now take one or two working days less than they used to.

From the perspective of banking and financial institutions, with the support of the plan, through internal filing, online banking platforms and other mechanisms, enterprises can handle business digitally from home, which will promote the international use of RMB.

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