Enterprises applying for permission to start a project usually have to wait over three weeks before approval is granted.

Even the installation of an air-conditioner with power over 5,000 watt requires examination and approval by the Shanghai government.

There are a total of 2,027 items subject to administrative examination and approval in Shanghai which cover almost every aspect of social and economic activity in the city.

"Compared with Beijing and Guangzhou, the examination and approval of items in Shanghai is more complicated," said Mayor Xu Kuangdi in the recent Shanghai Administrative Examination and Approval Reform Conference.

"Complicated and inefficient procedures are an incredible headache for most enterprises in the city," Xu added.

"Most foreign investors told us that the procedures are too complicated and take too much time," said Xia Zhongguang, deputy general secretary of Shanghai Association of Enterprises with Foreign Investment.

To set up an enterprise, there are up to 194 items of examination and approval in the first stage, according to Mayor Xu.

Even in the Pudong New Area, which is the district of highest efficiency in Shanghai, it takes 282 working days to approve an investment project.

Small enterprises such as bars and restaurants find it even more difficult to deal with the examination and approval procedures.

One restaurant owner who declined to be identified said he would never forget the marathon effort required to apply to the government to start a restaurant.

After getting approval for the name of his restaurant, the boss started his long journey through the bureaux of health, environment protection, public security, cigarettes and alcohol. Every examination needed about three to five days. With one bureau it took two weeks to get all the necessary stamps.

"To get the business licence in the end took over a month," said the restaurant owner. "But time is very precious to businessmen. Delay means that we lose money."

Xia said: "Administrative examination is necessary when a project is started, but if it is excessive, investors will be scared off."

With strong support in technology, traffic, finance and human resources, Shanghai's infrastructure is much better than many other places. But in recent years, the city's ability to attract foreign capital has been inferior to that of nearby cities.

Last year, Kunshan, a small city in neighbouring Jiangsu Province, attracted more foreign capital than Pudong New Area, Shanghai's premier site for foreign investment.

In Kunshan it takes only 18 working days to process a foreign investment application as opposed to between 45 days and six months in Shanghai.

"The government runs too much that actually can be managed by enterprises themselves," Mayor Xu said. "Some items are handed down from the period of the planned economy."

Xia said: "In the planned economy, most economic sectors are State owned, so government's examination and approval over them is natural.But now, with more and more economic forms such as private and foreign invested enterprises, their actions should be determined by market conditions rather than to meet governmental approval."

In addition, investors are confused by the refusal of government departments to shoulder any responsibility after examination and approval.

"Without responsibility, I wonder if there is any significance for the existence of the procedure," Xia said.

"Some items of examination and approval are for show and for formality's sake," Xu said, "And when all the procedures are completed, administrative departments seemingly never pay attention to the daily administration and supervision."

The city mayor also calls on all the administrators to focus on long-term administration and supervision.

"Reform is urgently needed as a key to improving the city's economy. Otherwise Shanghai will lose many opportunities to develop itself," the mayor said.

Cutting off procedures

The goal of the first phase of reform is to abolish about 50 per cent of the items of administrative examination and approval.

The focus of the reform will be mainly on the economic field. In the area of public security and ideology, the city will stay in step with the central government.

"This goal of cutting half of the procedures is possible to realize," Xu said.

During similar reforms in Beijing, 50 per cent of items were abolished there.

"The reform is really good news for enterprises. We are left so poor after pursuing all these measures for examination and approval," said Li Yang, CFO with Newave Semiconductor Corp. "But I wonder how much I should believe in the reform."

Li said he had seen too many such reforms before which had no real effect. "I am afraid that this policy will be another empty promise," he said.

"But I think essential procedures must remain or everything will go upside down. The key is to cut unnecessary items precisely and efficiently."

Under the principle of legitimacy and rationality, the city government demands all the administrative departments check up and cut unnecessary items and report to the city government by the end of May.

The reformed regulations will be published this October. The trial implementation will be first launched in four districts including Pudong, Changning, Minhang, Songjiang and four zones including Zhangjiang High-tech Park, Caohejing High-Tech Park, Waigaoqiao Free Trade Zone, and Songjiang Export and Processing Zone.

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