SINCE the Shanghai Free Trade Zone (FTZ) has received Beijing's approval, it is expected that new policies will greatly liberalise, even deregulate, many aspects of the shipping sector.

The Securities Times reports that the one of the major breakthrough the FTZ might bring about for the shipping industry is relaxing foreign investment rules.

The proposed opening-up policies for the Shanghai FTZ include relaxing limitations on foreign ownership in joint ventures, allowing Chinese companies to be fully or partly owned by foreigners, as well as using non-Chinese-flagged ships to operate in cabotage as well as allowing the establishment of foreign ship management companies.

These sectors were not open to foreign investors in the past, said Yan Weigang, general manager of a carrier in Shanghai. Foreign-flagged ships were not allowed to operate domestic near-sea container shipping services, even if these ships belonged to Chinese companies, he said.

According to China's regulations on foreign investment on international shipping business issued in 2004, if a foreign company wants to invest in international shipping business in China, it will have do it via a limited joint venture, and its share-holding will be a 49 per cent maximum. Also, foreign-flagged ships are not allowed to operate domestic shipping business. Now these restrictions will hopefully be relaxed.