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The aim is to boost Hainan's economy by providing new better service to tourists.

Chinese officials in Hainan have been flouting the fact the island province is going to be home to, what will be, the world's largest duty free shop. Tan Li, the vice-governor of Hainan makes the statement during the 2014 Boao Forum for Asia. According to the official, the plan is an attempt to boost Hainan's economy by providing better service to tourists.

"The duty-free store in Sanya will be moved to Haitang Bay and will be expanded from its current 10,000 square meters to 60,000 sq m. It will become the largest duty-free shopping mall in the world when it goes into operation. Another duty-free store in Haikou, the provincial capital, will be enlarged from over 3,000 sq m to more than 4,000 sq m."

Local authorities of the famous tourist destination is now waiting for approval from the central government. Professor Liu Baocheng is with the University of International Business and Economics. He believes once the store is operational, it will benefit both the local economy and consumers. "Such a large duty free store may reduce the cost of transactions, for instance, lowering tariffs and the cost of consumption, thus boosting tourism. There are about 7 such maga duty free stores across the globe. These duty free stores may play a major role in boosting the local economy."

Liu notes that as all transactions are supervised, it is very unlikely that people can take advantages from the duty free store to conduct tax evasion. However, he adds, the government should upgrade certain supportive policies in order to match the expansion. "For instance, if Thai tourists come here to conduct wholesale purchases at the duty free store, will there be an upper limit for the transaction? The current duty free policy is similar to giving people coupons. But if the store becomes bigger, should there be more supportive policies to facilitate large scale consumption and benefit logistics services?"

Official numbers show that duty-free sales in Hainan soared almost 40 percent year-on-year last year. Hainan has gained its reputation as an international tourist destination in recent years. The island province has maintained a growth rate of 10 percent for the past five year, thanks largely to its booming tourism industry.

(Source: english.cri.cn)