Foreign investors in China will find that the filing process
for real estate projects could become swifter. A new notice,
dated June 13th 2008 ("New Notice")
was promulgated by the Ministry of Commerce of China
("MOFCOM") stipulating that the
authority in charge of the filing procedure for new foreign
invested real estate projects shall be transferred from MOFCOM
to its local counterparts at the provincial level
("provincial departments of
commerce") as of July 1st 2008.
Until the adoption of the New Notice, the joint Circular
adopted in May 2007 by MOFCOM and the State Administration of
Foreign Exchange ("SAFE") applied
(Circular on Further Strengthening and Regulating the
Examination, Approval and Supervision of Foreign Investment in
the Real Estate Industry [Shang Zi Han  No. 50]
("Circular 50") . According to
Circular 50, all new foreign invested real estate projects
approved by local counterparts of MOFCOM at the provincial or
lower levels had to be reported to MOFCOM for filing within one
working day following the issue of a certificate of approval
for the project irrespective of the amount of total investment.
Without the green light of MOFCOM, foreign enterprises were not
able to open a foreign currency bank account and convert
foreign currency into Renminbi. Upon completion of filing,
MOFCOM would publish the names of the successful companies on
its website. Foreign invested real estate companies have
struggled with the bottleneck created at MOFCOM level which had
to review hundreds of project application documents. Several
foreign investors have delayed or were even forced to cancel
their investment plans due to the endless procedure and the
corresponding impossibility to finance real estate
With the promulgation of the New Notice and the delegation
of powers at provincial level, it can be expected that the
timeframe of the filing procedure and the timeframe for the
related subsequent injection of capital will be substantially
However, it is unlikely to see provincial departments of
commerce necessarily adopt a more lenient attitude although
they historically have been vested with the responsibility to
attract foreign investment to boost the local economy. Firstly,
according to the New Notice, the filing criteria will remain
strictly the same. Furthermore, if MOFCOM finds any provincial
departments of commerce twice or more in violation of the New
Notice, the delegation of powers may be withdrawn. This
Damocles sword will undoubtly lead a large number of the
provincial departments of commerce to adopt a cautious
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