Uninhabited island development: becoming an island owner is not romantic
"China News Weekly" reporter / Su Jide
Published in the 960th issue of China News Weekly on August 17, 2020
On July 22, the Department of Natural Resources of Liaoning Province announced the collection standard for the use of non-resident islands in Liaoning Province (except Dalian). If you want to be an island owner, Liaoning clearly marked the price and announced the "newest price for uninhabited islands" at one time. For example, with "tourism and entertainment" as the island type, developers only need to pay a minimum of 3700 yuan per year to own a 1 hectare The right to use the island.
"Want to be an island owner" once again sparked heated discussions on the Internet. In the writing of martial arts master Jin Yong, Taohua Island is a paradise for "East evil" Huang Yaoshi, and has inspired many people's dreams of island owners. But for real developers, developing an uninhabited island is more like survival on the deserted island in Robinson Crusoe. Some coastal provinces had two uninhabited island development booms in 2003 and 2005, but they were once suspended due to disorderly development.
It is easy to buy an island, but difficult to build an island. There are few winners and many losers. The policy swings between protection and development. This is the long-term embarrassing situation faced by the development of uninhabited islands in China.
The invisible threshold of becoming an island owner
Liaoning is the province with the most islands in northern China, with a total of 633 islands, of which 44 are inhabited islands, 589 are uninhabited islands, and 198 have been developed and utilized.
To get the right to use the islands, you have to go through more complicated procedures. According to the regulations of the Department of Natural Resources of Liaoning Province, before the transfer of non-resident islands, the classification, type of island use and method of use of islands should be determined. On this basis, the value of resources such as rare and endangered species, fresh water, and beaches on uninhabited islands is evaluated, and a transfer price is formed.
Liaoning has identified six types of island use methods: primary utilization, light utilization, moderate utilization, heavy utilization, extreme utilization, and reclamation of islands and the disappearance of islands. The more severe the damage to the island, the higher the cost of the transfer. In addition, Liaoning also divides the non-inhabited islands into six grades, and the price difference between the first and sixth grades is more than double. Taking tourism and entertainment islands as an example, it is also the original use method with minimal ecological damage. The minimum transfer standard for the sixth-class non-resident islands is 3,700 yuan per hectare per year, and the first-class is 9500 yuan. The most serious damage to the ecology is the reclamation of the islands and the disappearance of the islands. The sixth-class islands need a one-time payment of 9.27 million yuan per hectare, and the first-class islands need 24.55 million yuan.
Compared with the past, the adjusted non-resident island prices have increased significantly. Information released by the Liaoning Department of Natural Resources shows that raising the standard for collecting fees for non-resident islands is to play the role of economic leverage and control, thereby raising the ecological threshold for sea use.
"The purpose of the adjustment of the use of funds is very clear and focuses on protection." Zhejiang Ocean University professor Cui Wanglai told China News Weekly that the policies for the use of funds for non-resident islands successively introduced by coastal provinces are similar, mainly based on "Circular 15."
The so-called "Circular No. 15" refers to the "Notice on Adjusting the Collection Standards for Non-resident Island Use Fees" (Cai Zong [2018] No. 15) issued by the Ministry of Finance and the former State Oceanic Administration in 2018, requiring provinces to reasonably divide sea areas Levels, and formulate local sea area usage fees not lower than national standards.
According to "Circular 15", the coastal provinces are responsible for the formulation of the local non-resident island use fee collection standard (including the collection standard for aquaculture use), which should be completed by the end of April 2019 and reported to the Ministry of Finance and the State Oceanic Administration for the record. However, progress varies from province to province, and some provinces are later than expected. Cui Wanglai introduced that the main reason for the delay was departmental adjustment. In April 2018, the newly formed Ministry of Natural Resources became the department for unified management of all natural resource assets such as landscapes, forests, fields, lakes and grasses, and integrated relevant responsibilities including the former State Oceanic Administration. "The non-inhabited island policy was in charge of the State Oceanic Administration at the time. After the department is adjusted, the focus of work may shift somewhat." Cui Wanglai believes.
After Liaoning announced the transfer policy of non-resident islands, although it has received public attention, some are not well received. Lin Dong, the founder of the Chinese Island Owners Alliance, a non-governmental organization of island owners, told China News Weekly that hundreds of people would consult him after the introduction of the transfer policy for non-resident islands, and even more than a thousand people at the highest point, but the Liaoning policy was introduced. Fewer than 10 people came to consult.
There are two ways for non-resident islands to sell, one is government approval and fixed price; the other is market-oriented transfer, which uses bidding, auction, and listing, and the higher price is paid. In practice, most localities will choose the mode of approval, and market-oriented methods are rarely used. "Many people want to become island owners, but the local government has set up invisible thresholds, and the actual purchase is very difficult." Lin Dong said.
In 2017, Zhuhai's triangle island was transferred. The island is close to Hong Kong and Macau and is well located, attracting many investors. However, the delta was eventually taken by Zhuhai Jiuzhou Holding Group, a state-owned asset platform in Zhuhai. The planned investment of the project is about 2.2 billion yuan and the development cycle is 5 years. "Some island owners and central enterprises have intended to buy, and I have taken them to see it several times. However, the local government suggested that it does not consider foreign funds, and it is recommended that this central enterprise should not participate." Lin Dong introduced, including Delta Island, Many high-quality islands in Zhuhai are given to local companies. In 2014, Gree Real Estate also won another high-quality island-Miaowan Island.
"Enterprises like Evergrande may not be able to get the islands of Zhuhai." Lin Dong said that local governments prefer "internal operations." Like the islands of Liaoning, which invisible thresholds will be set by the local government, which islands can be transferred abroad, and the funds These requirements are unclear.
The local government adopts a conservative approach to the use of non-resident islands, which is related to the scarcity of islands. According to Xu Wei, the researcher and director of the former Sea Island Office of the National Ocean Technology Center, there are 6,693 non-inhabited islands with an area of more than 500 square meters, mainly distributed in Zhejiang, Fujian and Guangdong. “Although there are many islands around us, they are suitable for development. Islands are still relatively scarce. In China, there are only 69 uninhabited islands with an area of more than 1 square kilometer. The remaining islands are too small and have little development value unless they are relatively close to the land."
“In recent years, some places have raised the threshold higher in order to allow the smooth development of islands. Moreover, one island is sold for one less. The best island is sold first, and the rest is getting worse and worse.” Lin Dong said.
In view of the problems in the examination and approval system, the state has begun to implement market-based transfer methods. Cui Wanglai believes that market-oriented transfer can reflect the true value of an island. “Just as the prices of different land parcels in cities vary greatly, the same level of non-resident islands will be different in Liaoning and Zhejiang.”
However, the market-oriented transfer method has been slow to advance, and there are very few cases of actual implementation. Last year, Guangdong took the lead in promulgating the trial method for market-oriented transfer of the use rights of non-resident islands. The method optimized and adjusted the approval process of the transfer plan and reduced the approval process of the provincial people's government. Even so, since the trial implementation of this method, all cities in Guangdong have not adopted market-based transfers. The staff of the Sea Areas and Islands Division of the Department of Natural Resources of Guangdong Province introduced to China News Weekly that after the announcement of the market-oriented transfer method, there has been no island transfer. “I just tell everyone that there is such a document. There will be islands to be transferred in the future. Way to operate."
Many islands are unfinished
"The country has really focused on the ocean since 2002, and the marine economy has risen to a national strategy." Cui Wang said that as an important part of my country's maritime rights and interests, uninhabited islands have received attention.
In 2002, the country implemented a marine development strategy. The following year, the "Regulations on the Management of the Protection and Utilization of Non-inhabited Islands" were implemented, and for the first time it was proposed to allow individuals or institutions to develop and use non-inhabited islands with a lease period of up to 50 years, which set off a wave of development of non-inhabited islands in China. According to the data at the time, China has more than 6,500 islands with an area of more than 500 square meters, of which only 433 are islands with residents, and the rest are islands without residents. There are tens of thousands of uninhabited islands below 500 square meters.
After the policy was announced, a large amount of funds, including foreign investment, flooded into uninhabited islands in coastal provinces. Public reports show that a Singapore investment company plans to invest 400 million yuan to develop Xugong Island in Zhoushan, Zhejiang, and a Taiwanese businessman invests 300 million yuan to develop Fangji Island in Taibai County, Guangdong.
This hot situation took a turning point in 2005. In the same year, the Zhejiang Provincial Government issued a notice that the development and utilization of non-resident islands must be reported to the provincial government for approval. With this as a sign, the development of uninhabited islands quickly cooled down, and the approval of uninhabited island development projects was suspended for the next two years.
Under the development boom, many problems have emerged. According to data, some investors have opened mountains and exploded islands in order to make huge profits, resulting in a decrease in the number of uninhabited islands. Take Zhejiang as an example. Compared with the 1990s, more than 200 islands disappeared in the first 10 years of this century.
In 2010, the state promulgated and implemented the "Island Protection Law", which clarified the ownership and management rights of uninhabited islands. In June of the same year, the state also promulgated the "Administrative Measures for the Collection and Use of Uninhabited Island Use Funds", which clearly stipulated the implementation of a paid use system for uninhabited islands. Taking the "Island Protection Law" as the time node, the previously developed islands are called pre-law use islands. However, no matter whether it is before or after the law, there are few successful people and many losers in the uninhabited island development.
In 2011, the former State Oceanic Administration announced the first batch of 176 uninhabited islands that can be developed and utilized in China. These non-resident islands are distributed in 8 provinces and regions including Guangdong, Zhejiang and Liaoning. The longest development service life is 50 years. Foreigners and foreign-funded enterprises can also apply for development in accordance with relevant regulations, but they must report to the State Council for approval. .
In November 2011, Ningbo Xiangshan Dayangyu Island was officially opened as the first public auction island, with a starting price of 15 million yuan and a service life of 50 years. After multiple rounds of bidding, Yang Weihua, general manager of Ningbo Gaobao Investment Co., Ltd., won it for 20 million yuan. She said at the time that it would be a high-end resort island dominated by the yacht industry.
But Yang Weihua underestimated the difficulty of being an island owner. Due to the strict protection of marine ecology, the environmental assessment of the Dayangyu Island project took a long time. According to media reports, the environmental assessment of the project has triggered research and discussion among marine fisheries departments at the national, provincial, municipal, and county levels. Yang Weihua said, “Expert review meetings have been repeated many times, and data on the ocean needs some time to collect. And monitoring is very time-consuming." Three years have passed from the time the right to use was photographed to the start of construction.
In addition to the time-consuming evaluation process, the cost of island construction also made it overwhelmed. "In terms of details, where do the building materials for infrastructure and building come from? It must be transported from land to the island." Bao Xiwei, then deputy director of the Xiangshan County Ocean and Fisheries Bureau, said in an interview with the media that the same construction Specifications, the cost of building on uninhabited islands is at least three times that of building on land. In this way, even the most basic water and electricity, building a simple house, and clearing cement roads require an investment of about tens of millions of yuan. If the whole building is to be made more refined and perfect, the cost will be higher.
In the end, the development of La Yangyu Island was in trouble. "The local government wants them to invest 500 million yuan. The shareholders of the company do not have 100 million yuan in total. How can they invest? They can only be transferred." Lin Dong said that many people are not familiar with islands and do not know how to raise funds. It dragged down itself, and also dragged down the local government. These failed cases have led local governments to continuously raise the development threshold.
In addition to the high cost and difficulty of construction, the development of islands also needs to face a sensitive ecological environment. Take Phoenix Island in Sanya City as an example. Initially, the right to use sea areas was obtained in the name of Sanya International Passenger Port and International Cruise Port, but the actual land used for real estate development far exceeds that of the port. This has caused the erosion of the western coastline of Sanya Bay and increased pollution of the Sanya River.
According to industry insiders, the development of uninhabited islands requires huge initial investment, sensitive ecological environment, difficult construction, and long investment recovery period. If there is no strong financial strength to support it, it may be a "pit" for developers.
Lack of green channels and long-term incentives
"The local government and the central government are playing games in the use of islands. This phenomenon is more common." Cui Wang said that the local government focuses on economic development and has the impulse to develop, and is generally unwilling to raise the transfer price high. However, the right to use the island is owned by the state, and it is difficult to get approval for many local projects.
Six years after the implementation of the 2011 "Island Protection Law", a total of 26 non-resident islands across the country have obtained real estate registration certificates. However, the actual utilization of uninhabited islands is far more than these, and a large number of uninhabited islands are in "undocumented" status. According to Xu Wei, the researcher of the former Sea Island Office of the National Ocean Technology Center, in 2018, once made a statistics, about 3,000 uninhabited islands were developed and used, "but there are still many islands that have not been included in the management of the island law."
There will also be many games between developers and local governments. According to Cui Wang, who will do the infrastructure of the non-resident islands has become the core issue of the game between developers and local governments. Companies will ask the government to provide infrastructure, but local governments often fail to do so.
How should uninhabited islands develop? A previous paper published by Wang Qi, a professor at the School of Law and Politics, Ocean University of China, introduced two relatively mature non-inhabited island development models. The first is the Maldivian model led by enterprises. “Maldives pays special attention to island planning. For the development of the development, an economic entity first leases an uninhabited island from the government, builds a hotel on the island, and operates and develops in a complete, independent, and closed resort model."
The second model is the government-enterprise cooperation model represented by Guangdong Fangji Island. Fangji Island is considered to be an uninhabited island with a relatively mature development, a high degree of market-oriented development, and a high reputation. In 2004, a Taiwanese businessman entered Fangji Island and invested more than 300 million yuan in early development. Local governments and Taiwanese businessmen will invest in development and construction funds in proportion to share the island development income.
However, in actual operation, enterprises encounter many challenges. Cui Wang said that the management of non-inhabited islands in China has a typical "Kowloon water control" problem. The development of islands involves multiple government departments, causing management chaos.
According to Wang Qi, in actual operation, the island’s development rights are in the hands of the former Ocean Bureau, and investment promotion is coordinated by the China Merchants Bureau. The planning and construction involve the Planning Bureau and the Housing and Urban-Rural Development Bureau. Project demonstration needs to be approved by the Development and Reform Commission, and multi-head management will inevitably bring functions. The phenomenon of overlapping and multiple approvals affects the realization of policy goals.
Wang Qi believes that "the development of non-resident islands in my country lacks a unified coordination department in the'Maldives non-resident island development model', which provides a green channel for private capital to enter the development of non-resident islands."
In addition, there is a lack of long-term incentive mechanisms in current island development policies. For example, for ports and shipyards, there are only 50 years of island use; the most common form of island development-tourism and entertainment, has 25 years of island use; and islands for breeding only have 15 years of use. Developers who have obtained the right to use, according to current regulations, cannot transfer or mortgage the ownership.
From the perspective of industry insiders, the development of islands has a high investment and a long investment recovery period. If long-term use rights are not guaranteed and the ownership transfer and mortgage system cannot be improved, the development of uninhabited islands still looks beautiful.
China News Weekly, Issue 30, 2020
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