At this year's "Two Sessions" in Beijing, the Chinese government repeatedly highlighted the development of the Hainan Free Trade Port (FTP) in its government work report and policy discussions. This not only demonstrates Hainan's strategic position in China’s new phase of opening up, but also closely aligns with the forthcoming "15th Five-Year Plan."

At this critical juncture – the first year of both the "15th Five-Year Plan" and the island-wide special customs operations in the Hainan Free Trade Port – an important policy signal has been issued regarding China's ongoing commitment to high-level opening up. The "island-wide special customs operations" do not mean isolation; rather, through the management model of "freer access at the first line, regulated access at the second line, free flow within the island," Hainan achieves a higher degree of liberalisation and facilitation in foreign trade and investment.

This reflects not only the nation's strategic determination, but also indicates that Hainan's role in China's opening-up strategy is being continuously enhanced. Its inclusion in the government work report for eight consecutive years demonstrates that the Hainan FTP has gradually moved from policy conception to the implementation of systems and the realisation of its functions.

In this context, for Hainan to better implement national strategies, the key is to transform institutional advantages into practical momentum for cooperation with ASEAN. As the global economic landscape is rapidly changing, Hainan is gradually becoming an important gateway for China to connect with the world, especially with ASEAN.

Hainan FTP has become a buzzword at the Two Sessions

Firstly, from the perspective of China's national strategy, the role of the Hainan Free Trade Port in China's new round of opening-up is becoming increasingly prominent. At the Two Sessions, the emphasis on "high-level opening-up" was reiterated, with the Hainan FTP highlighted as an important lever. The Hainan FTP became a frequently mentioned term at the Two Sessions, underscoring Hainan's significant position in China's broader opening-up strategy.

Notably, this year also marks the first year of the Hainan FTP's island-wide special customs operation. This series of signals is not only an important step for China to deepen its opening-up but also brings new development opportunities for Malaysia and ASEAN countries. In the context of global geopolitical uncertainty and supply chain restructuring, this open strategy holds significant regional importance. China's firm commitment to "opening the door wider and wider" will bring new development opportunities to Malaysia and ASEAN. There is no doubt that Hainan will become an important experimental field for institutionalised opening during the 15th Five-Year Plan period.

For Malaysia and ASEAN countries, the development of the Hainan FTP means new trade channels, investment platforms, and opportunities for industrial cooperation. If they can make advanced arrangements and strengthen policy coordination, they will have the opportunity to gain more development space in the new round of opening-up in China. The 15th Five-Year Plan will place greater emphasis on institutional opening-up, that is, promoting economic development through opening up in terms of rules, regulations, management, and standards.

As one of the most open regions in China, Hainan will continue to advance the zero-tariff policy system, the free flow of cross-border funds, the facilitation of cross-border movement of personnel and data, and the liberalisation of international investment and trade systems. These institutional innovations are not only a pioneering experiment in China's open policy but also provide an operating environment for international enterprises that is closer to international standards.

This means that international goods will enter Hainan more freely, and it will be more convenient for companies to conduct offshore trade in Hainan. Hainan will become an important node in China's global supply chain. For ASEAN enterprises, Hainan is expected to become a stronghold for entering the Chinese market.

A new gateway for trade and market access

Currently, we are more concerned with how Hainan can become a new gateway for international trade and market access in the short term. The Hainan FTP implements a system of zero tariffs, low tax rates, and simplified tax structures. After launching the island-wide special customs operations, it will become one of the most open regions in China. For Malaysia and ASEAN, this means lower trade costs and that ASEAN enterprises can enter the Chinese mainland's market through Hainan.

Additionally, Hainan can become an important hub for ASEAN products entering China, serving as a regional trade transit platform. At the same time, the enhanced synergy between RCEP and the integration of Hainan's policies with RCEP will further reduce trade barriers. It is worth mentioning that Malaysia's advantageous industries, such as palm oil, tropical agricultural products, halal food, and seafood, can enter China's vast consumer market more conveniently through Hainan.

New platform for industrial cooperation and overseas enterprise expansion

At the same time, Hainan is expected to become a new platform for industrial cooperation and for businesses expanding globally. As Chinese enterprises accelerate their internationalisation, Hainan is developing an important industrial cooperation platform connecting with ASEAN. Malaysian enterprises can participate in modern service industries (finance, shipping, legal, digital trade), tourism and healthcare, as well as cross-border e-commerce and logistics through Hainan.

Meanwhile, Chinese enterprises will also use Hainan as a base to further enter the ASEAN market, with Malaysia serving as an important entry point. This "two-way outward expansion" model will create a new industrial cooperation landscape.

In addition, Hainan is promoting higher-level financial opening, such as free cross-border capital flows, offshore trade finance, and the facilitation of international investment. This creates opportunities for Malaysian financial institutions, including financial liberalisation, cross-border capital flows, establishing regional investment platforms in Hainan, participating in the overseas financing of Chinese enterprises, and supporting ASEAN enterprises entering the Chinese mainland’s market. In the long term, Hainan is expected to become an important financial hub connecting China and ASEAN.

China and ASEAN have become each other’s largest trading partners

Currently, the global supply chain is being reshaped, with China and ASEAN becoming each other’s largest trading partners and key nodes in the restructuring of regional supply chains.

In this context, Hainan is set to become a "China-ASEAN Supply Chain Hub," while Malaysia can achieve industrial synergy with Hainan and strengthen cooperation in areas such as electronic manufacturing, green energy, and food processing. This supply chain linkage also supports the regional connectivity promoted by the Belt and Road Initiative.

Hainan has long served as a pilot zone for China to develop an international tourism consumption centre, creating new opportunities for cultural and tourism cooperation. For ASEAN, the aviation and tourism markets will become more open. It will also become more convenient for ASEAN tourists to enter China, and there will be increased opportunities for cooperation in education, healthcare, and exhibition industries. Malaysian enterprises can participate in tourism investment, medical tourism, and international education projects. This offers ASEAN enterprises significant opportunities to engage in the opening up of China’s service sector.

Dr. Ronald Pua is a Malaysia Financial and Industry Commentator, now serving as the Secretary General ofAsean‐China Economic and Trade Promotion Association.