Foreign Companies Pile Into Hong Kong

by Mary Swire, for LawAndTax-News.com, Hong Kong

07 September 2005

Hong Kong Chief Executive, Donald Tsang, this week feted mainland and international investors whose firms have been crowding into the city-state, boosting the total number of regional and head offices to nearly 6,000 by the end of 2004.

More than 200 guests representing some 160 overseas and Mainland companies that set up operations or increased their overall investment in Hong Kong from July last year and August this year attended the reception. Consulates General and heads of international chambers of commerce in Hong Kong also joined the event.

Welcoming the guests, Mr Tsang said: “We are just one week away from the opening of Hong Kong Disneyland, thereby joining Tokyo and Paris as international home for some of the world’s best loved characters. In December we play host to the World Trade Organization’s Sixth Ministerial Conference, a clear illustration of the important role Hong Kong plays in international trade. Just one week later we will open AsiaWorld-Expo, our new world class exhibition center at the airport. That in turn will make it possible for us to host ITU Telecom World in December 2006, the first time the event will have been held outside Geneva.”

Director-General of Investment Promotion at Invest Hong Kong, Mr Mike Rowse, said that 2004 was Hong Kong’s most successful year ever for investment promotion. Invest Hong Kong assisted 205 foreign and Mainland companies to set up or expand operations in Hong Kong last year. By the year's end, 5,943 mainland and overseas companies had either regional headquarters, a regional office or a local office in the city. The figure is up from 5,414 in 2003 and 4,867 in 2002.

Mr Rowse also noted that inward investment has stayed on the upswing. At the end of June, Invest Hong Kong had assisted 144 companies to invest or expand in Hong Kong, achieving more than half of its annual target of 220 and representing a healthy 13.4% increase from the same period last year.

These projects led to the immediate creation of more than 1,400 jobs. The same investors plan to create over 3,000 additional jobs in the next two years. Initial investment by these companies investment topped $1.5 billion.

“CEPA had a clearly positive impact on attracting investors,” Mr Rowse said. “A quarter of the companies we have assisted so far this year told us that CEPA played an important role in their decision to invest here.”

“We continue to see increased interest from Mainland companies in using Hong Kong as a springboard to overseas markets,” he said. “It has been 12 months since the implementation of the Ministry of Commerce’s investment facilitation policy for Mainland enterprises to invest in Hong Kong. Between September 1, 2004 and August 15, 2005, 257 Mainland enterprises were granted approval to invest in Hong Kong, according to the Ministry. These projects involve an investment amount of $8.03 billion (US$1.03 billion).”

Mainland companies made up 17% of the department’s completed projects in the first six months, and now constitute around 20% of the current live case-load.

“At the same time, our traditional source markets of investment projects including the Asia-Pacific, Europe and North America, continue to be key contributors to our economy,” Mr Rowse said. They represented 36%, 25% and 19%, respectively, of our total number of projects in the first six months.”

The department is optimistic that the results of investment promotion in 2005 will reflect a steady growth.

“We believe that the opening of new large-scale facilities in Hong Kong later this year, such as Hong Kong Disneyland and AsiaWorld-Expo, will have a positive impact on the growth of various sectors in Hong Kong. Moreover, we have successfully won some significant inward investment projects for Hong Kong in the past few months. We expect these projects will be completed in the next 12 to 18 months.”

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