Pushing Ahead with Foreign-invested Urban Planning Enterprises

Permitted Services

Article 3 of the Provisions defines urban planning services as engaging in the formulation of urban plans and urban planning consulting activities other than in relation to a city's comprehensive plan. The definition of a comprehensive plan and examples of formulation and consulting activities are not given in the Provisions, but may be found in the PRC Urban Planning Law and the Formulation of Urban Plans Procedures.

The Urban Planning Law and Formulation of Urban Plans Procedures set forth three categories of urban plans: comprehensive, detailed and zoning plans.

The major tasks of comprehensive plans are to determine the scope of urban development and make overall arrangements for land use, infrastructure facilities and construction projects. Its content consists of matters such as fundamental construction standards, the general layout of urban land, utilities and transportation systems, lakes and green areas.

The detailed plan sets forth standards and specific design plans for construction projects based on the comprehensive plan. Land use scope for construction in each planned sector of the city, standards for building density and height and general layout and overall plan for engineering pipes and vertical plans should be covered in the detailed plan. Detailed plans are further subdivided into detailed regulatory plans and detailed construction plans, and the specific content for these plans are set forth in the Urban Plan Formulation Measures.

Zoning plans make further arrangements in respect of land use, population distribution, public facilities and infrastructure allocation, using the comprehensive plan as a basis and in connection with detailed plans.

Pursuant to the Provisions, urban planning enterprises are strictly prohibited from involvement with comprehensive plans, but may formulate and consult on detailed and zoning plans. The Provisions stipulate severe penalties, such as revocation of the Urban Planning Certificate (which any urban planning enterprise must obtain from the Ministry of Construction before commencing business), for violation of the prohibition on formulating comprehensive plans.

Qualifications

The Provisions do not give any capitalization requirements. In addition to complying with relevant foreign investment laws and regulations of the PRC, the only other conditions that an urban planning enterprise must meet include:

• the foreign investor is an enterprise engaged in urban planning services in its home country or territory or is a specialized technical professional;
• the urban planning enterprise employs at least 20 specialized technical staff in urban planning, construction, transportation, landscaping and related engineering, among which at least 25% shall be foreign nationals (who must remain in China for a total of six months every year), with at least one foreign expert for each of the aforementioned areas; and
• the urban planning enterprise has technical facilities and a fixed place of business that comply with PRC regulations.

Approval and Supervision

The Provisions allocate responsibility for urban planning enterprises among the local Ministry of Commerce authorities (preliminary examination of establishment), central Ministry of Commerce authorities (establishment), the MOC (qualifications) and urban planning administration departments at the county level and above (supervision). Consequently, the Provisions entail a complicated three-tier approval process for the establishment of these enterprises, involving local Ministry of Commerce authorities, central Ministry of Commerce authorities, and the MOC.

Upon pre-registration of the name of the urban planning enterprise with the State Administration of Industry and Commerce (SAIC), the applicant should submit an application and required documents to the local Ministry of Commerce. Upon approval, the application is to be submitted to the central Ministry of Commerce authorities who have 30 days to approve the application after obtaining the MOC's opinion. Once approved, the investor may register with the SAIC, obtain a business licence, and apply for an Urban Planning Certificate with the MOC.

Conclusion

The Provisions are relatively clear as to the allocation of authority between the different ministries. At the same time however, the complicated approval process for urban planning enterprises is a reminder that while WTO commitments may open previously restricted sectors to foreign investment, they will not necessarily result in less bureaucratic hassle, such as approval requirements, for the foreign investor.