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    The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) has brought considerable benefits to both business enterprises and the Hong Kong economy as a whole, according to an Administration study on CEPA's economic impact.

    The report of the study, which covers trade in goods, trade in services and the Individual Visit Scheme (IVS), had just been submitted to the Legislative Council's Panel on Commerce and Industry, a government spokesman said today (April 13).

    It essentially assesses the economic impact of the first phase of CEPA (CEPA I) for the first year or so since its implementation in January, 2004, with a forecast of its impact on the Hong Kong economy in 2005.

    For trade in goods, more than 90% of the responding companies considered that CEPA I was beneficial to the Hong Kong economy, and 89% considered the trade pact beneficial to the manufacturing sector.

    In 2004, more than 3,000 certificates of origin were issued under CEPA I, involving products with a total value of $1.15 billion which enjoyed tariff free treatment on importation into the Mainland. It is expected that the value of CEPA exports to the Mainland will increase by $1.2 billion in 2005, doubling that in 2004.

    For trade in services, it is found that 78% and 46% of the responding companies considered that CEPA I was beneficial to the Hong Kong economy and their own industries respectively.

    Noting that more than 660 companies had obtained the Hong Kong Service Supplier certificates in 2004, the study revealed that 27% of them had already set up operation under CEPA I in the Mainland.

    Besides, companies in the 18 sectors covered in CEPA I increased their capital investment in Hong Kong by $1 billion in 2004 due to CEPA. The amount is expected to surge to $4.5 billion in 2005.

    Services receipts generated in 2004 as a result of CEPA I amounted to $1.6 billion and the amount is expected to reach $3.8 billion in 2005.

    As regards the IVS, Mainland residents made 4.26 million trips to Hong Kong in 2004 under the scheme, accounting for 34.8% of all the Mainland visitors or 20% of total visitors. These IVS visitors have generated an additional $6.5 billion in tourist spending during the year.

    Regarding the impact of CEPA I on the labour market, it is estimated that about 29,000 new jobs have been and are forecast to be created for Hong Kong in the first two years of implementing CEPA I.

    While trade and investment facilitation was not covered in the quantitative analysis of the study, the Administration has also assessed the impact of the measures under CEPA on attracting foreign investments to Hong Kong.

    Between end-August, 2004, when the new facilitation policy for Mainland enterprises to invest in Hong Kong and Macao took effect and end-December, 2004,  68 Mainland enterprises, or 42.5% of the total number for the year, were granted approval for coming to invest in Hong Kong. The amount of investment totaled US$470 million or 48.9% of the total amount for the year.

    The economic assessment was conducted by the Commerce, Industry and Technology Bureau, in collaboration with the Trade and Industry Department, the Economic Analysis and Business Facilitation Unit, and the Census and Statistics Department in the fourth quarter of 2004 and the first quarter of 2005. The Hong Kong Tourism Board also provided useful input.

    Questionnaires have been sent to almost 2000 enterprises, including those which have benefited or intended to be benefited from CEPA I, and those which were qualified but yet to be benefited from CEPA I. In addition, consultative interviews have also been conducted with business associations and individual enterprises to collect their views on how CEPA affect their business prospects and strategies.

Ends/Wednesday, April 13, 2005

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