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The Shanghai government has proposed a tax-free bonded area for Pudong International Airport.

If given the go-ahead, it would be the first bonded area at an airport on the mainland.

"The bonded area will greatly improve customs clearance efficiency and help the airport to attract more freight," said Zhang Wan'an, deputy director of customs at the airport.

Enterprises could make use of the tax-free facilities to achieve "just-in-time" inventory control, which has become the standard for high-tech industries in developed economies.

By storing inventories in bonded areas, manufacturers avoid paying tax on components until they are moved out for assembly into products for immediate sale.

Zhang said the Shanghai government has submitted plans to the central government. The bonded area would cover more than 16 square kilometers close to the airport's freight section, which is under construction.

Pudong International Airport handled 1.86 million tons of goods last year, up 13.7 percent from 2004.

Lin Guolong is deputy director of the Modern Logistics Technology Development Centre at Shanghai Maritime University and is involved in planning the bonded area.

He said the Shanghai municipal government sees gaining approval for the project as one of its main tasks this year.

"To build a true shipping centre, Shanghai has to be strong not only in ocean shipping but also in air shipping," said Lin.

Shanghai's foreign trade has changed over the past few years, shifting from bulky machinery to lighter high-tech and electronic products.

The manufacture of value-added products such as electronics and pharmaceuticals has increased rapidly, driving up air freight volume, said Lin.

(China Daily May 30, 2006)