Ways to finance for Hainan Int'l Tourism Island

To be an internationally famous tourist destination, Hainan still has a long way to go. The first problem facing Hainan is the financial gap. The capital market is one of the best places to raise fund.

There are three ways to help Hainan raise money from the capital market. Hainan should support its local enterprises in going public while attracting listed companies from other provinces and international investors to use for construction.

First, the government should encourage powerful local enterprises to go public and help the companies already listed issue additional stocks and bonds.

The government should integrate powerful local tourism enterprises and provide them with privilege policies to help the companies conduct shareholding reform and create conditions to go public.

Big companies can be listed on the Shanghai or Shenzhen stock markets while private small or medium-sized companies can be encouraged to finance from the small and medium-sized boards or growth enterprise market.

Hainan Strait Shipping went public on December 16 last year and raised 1.3 billion yuan (US$190 million). The funds will quickly be used to upgrade ferries as promised, and the travel and transportation conditions of the Qiongzhou Strait are expected to be improved.

Unfortunately, none of Hainan's 20 already listed companies issued additional stocks in 2009 because their performances did not meet refinancing standards set by the China Securities Regulatory Commission. Therefore, helping local listed companies become stronger is an important task for the Hainan government.

Second, listed companies from other provinces are potential resources for Hainan International Tourism Island. The government should attract powerful tourism companies from other provinces to join in the construction of Hainan tourism.

Some companies have already invested in Hainan. For example, Beijing Capital Tourism is running Sanya's Nanshan Mountain Scenic Area. Wuhan Sante Subway is running Lingshui Monkey Island. The join-in of listed companies has solved the financial bottleneck for Hainan's construction. They also improved Hainan's tourism facilities and service quality. The government should work on how to attract more domestic listed companies to Hainan by giving them more preferential tax policies.

Third, international capital is an important force for Hainan's construction. Hainan is constructing an international tourism island. Therefore, international tourists are the main customers. International companies will bring not only capital and but also vision and management to build Hainan into an attractive world tourist destination.

Early in 1995, Hainan Airlines collected US$25 million from Quantum Fund, which provides development funds for the company as well as improves management.

Hainan used to lead China in terms of its capital market in the early days after the foundation of the province in 1988. After more than a decade of downturn, Hainan embraces a new starting point. Therefore, the government should take this chance and bring new forces for the tourism development in Hainan.