The number of regional operations and local offices in Hong Kong operated by overseas and Mainland companies reached its highest-ever level this year, topping 6,350.

The Department yesterday published the results of the 2006 Annual Survey of Companies in Hong Kong Representing Parent Companies Located Outside Hong Kong.

According to the poll, there were 1,228 regional headquarters (up 61 from a year ago), 2,617 regional offices (down 14) and 2,509 local offices (up 35) in Hong Kong representing their parent companies located outside the jurisdiction as at June 1.

Speaking with regard to the survey results, Invest HK's Director-General of Investment Promotion, Mike Rowse noted that was a 5% increase in regional headquarters, despite the 0.5% dip in regional offices.

"It's not spectacular, but 'solid' is a way of describing the numbers," he observed.

The survey revealed that US businesses had the most regional headquarters in Hong Kong, with 295, followed by Japan's 212 and the UK's 114 companies.

The US also topped the list of places with companies having regional offices in Hong Kong, with 594. Japan followed, with 519 companies, and the UK was third, with 223 companies.

Meanwhile, the Mainland had the highest number of local offices in Hong Kong, with 449, followed by Japan's 437 and the US's 391 companies.

Among the factors affecting the choice of location for setting up regional headquarters or offices, 71% of companies considered a low and simple tax system most important.

Other factors in Hong Kong's favour included: free flow of information; absence of exchange controls; communication, transport and other infrastructure; free port status; corruption-free government; geographical location; availability of business services and professional support services; rule of law and independent judiciary; political stability and security; and availability of financial services.

More than 30% of companies polled regarded availability and cost of residential and business accommodations as unfavourable factors for Hong Kong. Still, about 15% of companies regarded them as favourable factors.

Around 55% of the companies indicated that their views were not affected or were just slightly affected by the Mainland-Hong Kong Closer Economic Partnership Arrangement, or CEPA, implemented in January 2004, whilst another 28% indicated that their views were affected to some extent.

Approximately 76% of the companies indicated CEPA had not affected their investment activities, while about 10% said CEPA had affected their investment activities.