Foreign direct investment in Hong Kong strengthens

The Department assisted 144 foreign companies to set up or expand operations in Hong Kong during the first six months of 2005, representing a healthy 13.4% increase from the same period last year.

According to the investors, these projects led to the immediate creation of more than 1,421 jobs. The same investors plan to create 3,072 additional jobs in the next two years. Initial investment by these companies topped HK$1.5 billion ($192.3 million).

CEPA has positive impact

The implementation of the second phase of the Closer Economic Partnership Arrangement (CEPA), the free trade agreement between the Central People's Government and the Government of the Hong Kong Special Administrative Region, appeared to boost Hong Kong's attractiveness to foreign investors. One-fourth of all the investors in projects completed so far this year have indicated that CEPA was either the primary or one of the main factors considered when making the investment.

Mike Rowse, Director-General of Investment Promotion at Invest Hong Kong is encouraged by the results. He said, "Last year was a record year for investment promotion in Hong Kong, with the all-time-highs in our completed projects and the number of regional headquarters operated by foreign companies here. We see a continuing trend in investors using Hong Kong's many advantages as a business hub and two-way platform to and from the Mainland."

Mainland enterprises have increasingly recognised Hong Kong's strategic role as the springboard to expand regionally and globally. About 17% of the completed projects in first-half of 2005 involved Mainland investments.

FDI stays robust

Latest figures show that Hong Kong continues to be a preferred destination for foreign direct investment (FDI). The Census and Statistics Department reported FDI inflows of HK$93.3 billion ($12 billion) during the first quarter of 2005. The preliminary total FDI for all of 2004 is HK$265.1 billion ($34 billion).

Contributing to the strong investment inflows has been the Ministry of Commerce's facilitation policy for Mainland enterprises to invest in Hong Kong as a base from which to expand overseas. According to the latest figures released by the Ministry of Commerce, in the first quarter of 2005, a total of 55 Mainland enterprises with investments valued at HK$2.18 billion ($280 million) were granted approval to invest in the city.

Highlights

During the first half of 2005, Invest Hong Kong supported and participated in major international business events to raise Hong Kong's profile among the international business community. They included the BusinessWeek Asia Leadership Forum in Bangkok and the Canada-Hong Kong Business Forum in Ottawa, as well as international events in Hong Kong such as CIBJO Congress 2005, the 38th International General Meeting of the Pacific Basin Economic Council (PBEC) and the 88th Lions Clubs International Convention.

The Department continued to conduct joint overseas promotions with Mainland provinces or cities from the Pearl River Delta, as well as a seminar with Shanghai last March in Tokyo with over 380 representatives from Japanese enterprises. Invest Hong Kong also stepped up its efforts to promote Hong Kong's advantages to Mainland enterprises.

These activities have borne fruit. During the past six months, for example, the International Gemological Institute (IGI) set up Hong Kong's first international standard gemstones and jewellery testing laboratory; financial services company CMC Group opened its first office in Asia to access the Mainland and other Asian markets; leading storage technology firm SimpleTech established its regional headquarters here. And Beijing-based software company UFIDA and electronic appliances giant Haier both established regional operations in Hong Kong.

Looking forward

Mr Rowse said, "We recognise the importance of bringing in new ideas, services and technologies into Hong Kong to strengthen the overall competitiveness of our economy. InvestHK will intensify our efforts to identify and attract more companies to establish or expand their businesses in Hong Kong, with the aim to further enhance the diversity and depth in key sectors that will contribute to our economic success this year and in the future."