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Local investment promotion has entered a new era.

The Fair Competition Review Regulations officially came into effect on August 1.

We can probably get a rough idea of ​​the meaning from the name of the file.

The first article of the regulation is straightforward:

Promote fair competition in the market, optimize the business environment, and build a unified national market.

The one that has the greatest impact on the future is Article 10:

Without legal or administrative regulations or approval from the State Council, no tax incentives or selective or differentiated financial incentives or subsidies may be granted to specific operators.

This means that the investment promotion models of "using taxes to attract business" and "returning rewards and subsidies" that were favored by various places in the past, as well as various internal chaos in investment promotion, will gradually disappear from the stage of history.

Recent media reports that various places have been closing down their investment promotion departments and setting up investment promotion companies are major changes against this backdrop.

The 730 Politburo meeting first mentioned "anti-involution", which can be regarded as the first shot fired against involution in the post-investment promotion era.

In fact, this transformation has been brewing for a long time.

In December 2014, the state issued the "Notice of the State Council on Cleaning Up and Standardizing Tax and Other Preferential Policies", which proposed to clean up preferential policies.

You have to know that at that time, investment promotion was in full swing in various places, and there were many obstacles to moving forward.

But I have to say,The Magic City is the Magic City, and Shanghai is the first to dare to try new things.

In 2014, Shanghai proposed to abolish the street-level investment promotion function;

By the end of 2015, all streets in Shanghai had cancelled investment promotion and returned to their service functions.

In the following years, cities such as Nanjing, Chengdu, and Qingdao have partially piloted or completely cancelled investment promotion assessments for streets.

For example, in 2018, Shandong Province issued a document clearly stating that "in the central urban areas of Jinan and Qingdao and other places with conditions, streets can gradually cancel their responsibilities such as economic development and investment attraction and corresponding assessment indicators, and the funds will be guaranteed by the government at the same level."

The official release of the "Opinions of the Central Committee of the Communist Party of China and the State Council on Accelerating the Construction of a National Unified Market" in 2022 also indicates that traditional local government investment promotion departments are facing transformation pressure.

A unified large market means: each region develops its own comparative advantages, optimizes resource allocation, promotes free competition, and improves efficiency.

On June 6 this year, the Prime Minister signed the Fair Competition Review Regulations, which will come into effect on August 1, 2024. Local governments can no longer provide tax incentives and financial subsidies to specific companies.

You have to look at the Magic City Shanghai.

At the end of June, Shanghai issued the "Twenty-Item List of Shanghai's Investment Promotion Rectification Tasks", requiring the immediate cleanup of industrial support policies linked to taxation and a comprehensive ban on "tax preferential policy" investment promotion activities.

From chatting with friends in the investment promotion department, I can sense that the involution of investment promotion is all-round and even fierce.

He said:

First-tier cities and surrounding first-tier cities have higher odds, second-tier cities have higher odds than first-tier cities, and districts and counties under the same city have even higher odds;

We need to get tax reductions and exemptions, build factories, and even help buy some equipment;

Of course, it's not just us who are competing, other countries are also competing, but we are even worse.

For example, Fuyao Glass, which was at the center of controversy a few days ago.

It was reported that the construction cost of Fuyao's 180,000-square-meter factory in Moraine, Dayton, Ohio, was approximately US$40 million, and the government subsidies it received exceeded this amount.

Is it a familiar recipe, familiar taste, familiar routine...

Some people say that it is a good thing for local governments to attract investment, attract businesses, develop the local economy, and drive local employment.

It's a good thing, but too much is as bad as too little.

Attracting enterprises is to promote local economic development, which should be a win-win situation for both the local area and the companies.

However, excessive involution and vicious "competition" will inevitably lead to waste of resources, inefficiency, and deviate from the original intention of attracting investment.

Some local governments have even shouldered additional burdens as a result, which is putting the cart before the horse.

To some extent, we have suffered from "formal investment promotion" and "involutionary investment promotion" for a long time!

In some places, driven by political achievements and economic interests, they even completely violated the essential requirements of attracting investment, and just attracted investment for the sake of attracting investment, turning it into a pure task or game.

In the past, various places used various methods to attract investment.

Mutual increase in the stakes, mutual "poaching", non-standard tax refund promises, unreasonable rewards instead of subsidies, and "drawer agreements" that cannot be put on the table...

When patting their chests, making guarantees and promises, they do not consider the local industrial base, regional advantages and resource endowments at all, and make promises that are beyond their ability to bear, which in turn backfires on the business environment.

In this regard, Xinhua News Agency once published an article titled "Who is poaching whose employees in 'mutually harmful' investment promotion?", reporting that some local governments have increased investment promotion policies in order to compete for projects, poached each other's existing enterprises, and even internal friction has become local "mutual harm".

The rapidly expanding industrial parks are seriously out of sync with the development of industries and the economy, resulting in a large number of vacant parks and the emergence of "zombie" parks.

Public data shows that starting from 2023, the area of ​​my country's industrial parks has been increasing at a rate of 140 million square meters per year, and the total supply is expected to exceed 6.2 billion square meters by 2025.

Due to the various "benefits" given by various places, some "smart" companies have started to specialize in "picking up bargains".

They are called "migratory enterprises".

To put it bluntly, these types of companies are like migratory birds that migrate temporarily between places, not engaging in real business but only seeking subsidies.

They can neither create jobs nor bring in real tax revenue for the local area, and once relocated, they may even cause losses to the local area.

The elimination of investment promotion departments in many places and the decentralization of more power to the market and enterprises is an important step in the transformation of our investment promotion model.

To achieve two goals:Resources will be more optimally allocated, and a unified national market will be created; internal competition, waste of resources, and overinvestment will be reduced, and development will shift from focusing on quantity to focusing on quality.

The cancellation of the investment promotion function of local governments, especially at the grassroots level, will allow them to focus more on social governance and better return to their service functions.

Handing over the investment promotion work to a professional team can not only achieve the goal of reducing costs and increasing efficiency, but also be regarded as a kind of relaxation of "investment promotion for all".

To put it bluntly: what belongs to the government belongs to the government, and what belongs to the market belongs to the market.

In the future, investment promotion will pay more attention to quality and efficiency, and the role of traditional government investment promotion departments will gradually weaken.

Regardless of the model, one thing is certain, which is to introduce market-oriented mechanisms to improve flexibility and efficiency.

Although we have bid farewell to the traditional "using taxes to attract business" model, investment promotion is still an important part of the economic destiny of a city.

The establishment of investment promotion companies in various places may become a trend. From the government's perspective, it is also a way to avoid internal competition.

The "management committee + company" model transfers the management rights of social affairs to the local government, and entrusts market-oriented investment and operation services to professional companies.

Under the corporate system, investment promotion results are linked to performance, which can better mobilize the enthusiasm of investment promotion personnel, help improve efficiency and reduce waste of resources.

But since it is a corporate system, profit is something that must be taken into consideration.

The problems that investment promotion companies are facing now are: high costs, long cycles, difficulty in making profits, and reliance on government resources. It is not easy to find a profit point.

The "capital investment promotion" model that has emerged in recent years is also expected to take center stage.

For example, in June this year, Beijing launched four industrial investment funds with a total investment of 50 billion yuan; Shanghai also officially launched three leading industry mother funds with a total scale of 100 billion yuan.

For a science and technology enterprise that has not yet established a successful business model, investment from an industrial fund is not just a matter of reducing costs, but also a matter of life and death.

A traditional era of investment promotion is coming to an end and a new era is beginning.

But this is just the beginning, and there is still a long way to explore and go in the future.

In recent years, many things have been changing, and some changes are beyond the cognition of many people. Don’t underestimate these changes, as they are a reflection of the historical process.

Times have changed, and the government's KPIs and focus will also change. Personal cognition must also change accordingly. Don't stick to the old ways, don't be path-dependent, and go with the flow.

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Source: Mikuang Investment (ID: mikuangtouzi)

Author: Lao Fan

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