CEPA adds HK's charm for attracting overseas investment

The foreign direct investment inflow to Hong Kong has increased by 107.6 billion HK dollars (13.79 billion US dollars) in the first half of this year, higher than last year's total, according to the latest figures released by the Hong Kong Special Administrative Region.

Invest HK's Director-General Mike Rowse said Hong Kong's foreign investment inflow figures are encouraging and the situation is much better than last year's same period.

He added that the number of overseas funded projects registered in the first half of this year rose by 40 percent over last year's same period.

He said, with the further implementation of Chinese Mainland/Hong Kong Closer Economic Partnership Arrangement (CEPA), and expansion of the Individual Visit Scheme of Chinese mainland tourists to Hong Kong, Hong Kong is expected to absorb more direct overseas investment in the next 12 to 18 months.

Experts here believe that maintaining the traditional values of being an international financial and shipping center with sound legal system, Hong Kong has taken on special charm for luring overseas investment.

Though only limited foreign funded ventures in Hong Kong are enjoying the preferential policies under CEPA, quite a number of foreign companies have shown strong interest to take Hong Kong as a platform for expanding their business in the vast Chinese mainland market.

Christopher Hammerbeck, executive director of the British Chamber of Commerce in Hong Kong said in a telephone interview with Xinhua that CEPA does not have much impact on British companies so far and British companies came to Hong Kong on a regular basis in the first half of this year.

However, quite a number of British companies, especially the medium-sized ones, have shown interest to take Hong Kong as a platform to enter the Chinese mainland market.

He said a large-sized symposium on investment in Hong Kong and the Pearl River Delta Region (PRD) will be held in London in October. Representatives from over 1,000 British companies will attend the symposium, apart from the participation of high-ranking officials from the British government and HKSAR government.

Hammerbeck added that representatives from 12 cities of Guangdong Province will also be invited to the symposium.

A recent survey conducted by the Italian Chamber of Commerce in Hong Kong showed that as most of the chamber members showed great confidence in Hong Kong's business environment, 55 percent of the Italian companies have increased their company's size.

For instance, world leading fashion giant Armani has based its largest store outside Milan in Hong Kong.

Statistics showed that the number of Chinese mainland tourists and tourists to Hong Kong and individual Chinese mainland tourists accounted over half of the 10 million tourists to Hong Kong in the first half of this year.

The record number of visitors to Hong Kong has helped promote Hong Kong's tourism, retail, hotels and restaurants sectors.

The number of Chinese mainland consumers buying international brands has grown rapidly from about 15 percent two years ago to 30 percent to 50 percent now.

Leading fashion brands such as Louis Vuitton and Prada have opened their new flagship boutiques in Hong Kong in the first half of this year, eyeing the further expansion in the Chinese mainland market.

Rowse said Hong Kong has retained its position as Asia's second-largest destination for foreign direct investment (FDI) behind the Chinese mainland, citing the United Nations Conference on Trade Development's World Investment Report 2004.

The report indicated that despite the devastating SARS outbreak and significant economic challenges, the FDI flow to Hong Kong reached 13.6 billion US dollars in 2003, up 40 percent over 9.7 billion US dollars recorded a year earlier.

Richard Wong, vice-chancellor of University of Hong Kong, said the strong inflow of FDI in Chinese mainland's manufacturing sector and Hong Kong service sector is complementary.

He believed that the service sector contributes to over 80 percent of the gross domestic product (GDP) in Hong Kong. The rapid growth of the Chinese mainland's manufacturing industry needs Hong Kong's financial, legal and logistics services, adding Hong Kong's service sector will further benefit from the Chinese mainland's economic development.

So far, Hong Kong's service sector has become the top recipient of direct foreign investment,

Wong believed that with further implementation of CEPA and the inflow of more Chinese mainland tourists, the Chinese mainland related factors would surely play a bigger role for Hong Kong to lure more overseas investment.

Source: Xinhua