But Yangpu has suffered from Hainan's weak economy. "It is hard to compete with zones with closer proximity to the major centres of population," says Li.
When Yangpu was first envisaged in the late 1980s it was to enjoy more preferential policies than any other SEZ. Today, these have been extended to many other areas of China.
Yet the consortium continues to pump a further US$650,000 a day into Yangpu. Li is confident that Yangpu's fortunes are about to change. "When we defined Yangpu in the late 1980s we thought we would turn it into a Hong Kong-style free port, with banks, service institutions, stock exchange and commodity exchange," he says. "There is a lot of sobriety in our new thinking. Our new strategy is to try to take advantage of the development of energy resources."
The turning point may be his company's key agreement last year with China National Offshore Oil Corporation (CNOOC), to supply the zone with an initial 500m cubic metres of natural gas by the end of next year.
A site agreement with a CNOOC subsidiary has been signed worth US$2.14bn for urea and synthetic ammonia plants in Yangpu. The plants will use gas piped from the nearby fields. "This particular project, signed last year, has generated Yangpu's
f all the plans for Hainan Island in its arly years as a special economic zone, none seemed more ambitious than those for the Yangpu Economic Development Zone.
The isolated 27 sq km area was acquired by a consortium led by Hong Kong construction company Kumagai Gumi (Hong Kong) Limited in an unprecedented agreement in 1992. At that stage the plan was to transform. the barren peninsula 80km south-west of Haikou into a thriving financial, commercial and industrial centre, with a population of 400,000, by early next century. Special privileges and a good natural port were among its key attractions.
Today, the leaders of the consortium's Yangpu Land 'Development Company are more sober in their expectations. Despite investing US$670m in Yangpu's infrastructure, the bonded area shows no signs of fulfilling the original ambitions. Instead, the company is looking to Hainan's rich energy resources to spark a new, more realistic period of industrial growth.
Difficult to compete
Mr Rupert Li, president of the Yangpu Land Development Company and deputy managing director of Kumagai, is realistic in his assessment of prospects. "We have a lot of smaller operations, but the sizeable ones are limited to a power plant, a steel plant and a food processing factory," he says. The US$700m cold-rolling steel mill is mainland-owned and has an annual capacity of 450,000 tonnes. The Yangpu Power Company, also owned by the Kumagai-led consortium, has built and operates a 315MW power plant which supplies electricity to the zone and the Hainan grid.
Although several thousand companies are registered in Yangpu, there are fewer than 20 industrial projects in production and around 20 under construction. Like elsewhere in Hainan, it has attracted its share of seedy night life.
Li estimates that more than US$1.34bn has been invested in Yangpu's infrastructure, spent by the land and power companies, and Chinese authorities. The latter have upgraded its port facilities, with capacity to be increased from 1.2m tonnes to 2m tonnes by the end of this year. There is also a new expressway linking the zone and the provincial capital, Haikou.