Record year for investment promotion in Hong Kong (With photo)

Record year for investment promotion in Hong Kong (With photo)
********************************************************

Investment promotion in Hong Kong recorded strongly positive growth in 2005. At a year-end press conference today (January 11) the Director-General of Investment Promotion at Invest Hong Kong, Mike Rowse, announced that the Department assisted 232 overseas, Mainland and Taiwan companies to set up or expand operations in Hong Kong during 2005 – representing a substantial increase of 13 per cent over 2004, itself a record year.

The investing companies expect these projects to lead to the creation of over 7,900 jobs. This includes more than 2,517 jobs initially, and an additional 5,407 jobs in the next two years as the same companies expand. More than $8.9 billion was invested by these companies, representing a 91% increase over last year’s record total.

Fruitful year for investment promotion
______________________________________

Mr Rowse welcomed the results as illustrating Hong Kong’s strong attraction for overseas, Mainland and Taiwan companies. He said, “2005 was another year of growth for investment promotion in Hong Kong. We are pleased to see that many of these projects bring along special skills and experience to enrich our existing offerings as an international business hub. Our sector-focused teams will continue to identify, attract and facilitate investors from different sectors from all around the world.

These encouraging results have been reinforced by recognition of Hong Kong’s advantages by respected international organisations. Last week, for example, the Heritage Foundation and Wall Street Journal announced that Hong Kong had retained its position as the world’s freest economy for the 12th consecutive year in the 2006 Index of Economic Freedom. In addition, Hong Kong was selected as the overall winner of “Asia City of the Future 2005/6” by fDi Magazine (published by Financial Times Business Ltd) in a competition involving over 60 cities and regions in Asia Pacific.

Mr Rowse commented that these encouraging results and recognition suggest that Hong Kong’s fundamental advantages – such as the rule of law, free flow of information and low tax regime-remain major attractions for foreign companies. Mr Rowse said, however, in view of the keen competition in the region, we must strive to maintain and further enhance our overall competitiveness. Invest Hong Kong will continue to work closely with the international community to understand their needs.

Key regional and global FDI destination
_______________________________________

Hong Kong has maintained its leading position as the preferred destination for foreign direct investment (FDI). According to the “World Investment Report 2005” released by the United Nations Conference on Trade and Development (UNCTAD), Hong Kong remained the second largest FDI recipient in Asia, after the Mainland. FDI flows to Hong Kong in 2004 reached HK$265.1 billion (US$34.0 billion), up by 150% from an adjusted HK$106.3 billion (US$13.6 billion) in 2003. On a global scale, Hong Kong ranked 7th in FDI inflows in 2004.

Overall foreign direct investment (FDI) into Hong Kong continues to be strong. The Census and Statistics Department reported FDI inflows of HK$208.4 billion (US$26.7 billion) during the first three quarters of 2005, some $14.6 billion higher than the same period last year.

Moreover, both the number of regional headquarters and regional offices in Hong Kong reached all-time highs in 2005, demonstrating that Hong Kong remains the preferred base in Asia for foreign companies to oversee their regional operations. As at 1 June, 2005, there were 1,167 companies that were regional headquarters (RHQs) and 2,631 companies that were regional offices (ROs) in Hong Kong of companies incorporated outside Hong Kong, according to results of the 2005 Annual Survey of Regional Offices Representing Overseas Companies in Hong Kong conducted by the Census and Statistics Department.

Highlights of 2005
__________________

Hong Kong’s unique positioning as the heart of Asia has attracted companies from different industries to set up operations here to access target clients in the region. For examples, leading European electronics company Schneider Electric uses Hong Kong as an important base to manage its operations in the region. In addition to locating its regional headquarters at Cyberport, Schneider has increased its investment in the city by opening a new regional logistics centre in Kwai Chung. The Taiwan-based Fubon Group chose to set up a fully licensed banking entity in Hong Kong - Fubon Bank (Hong Kong) Limited - as a springboard for its internationalisation plan. Hong Kong’s leading position as the international hub of professional services has been further strengthened with the addition of international law firms, including Baker Botts and Hogan & Hartson. Australian labels manufacturer Z-tag (Asia) Limited has set up a factory in Hong Kong, taking advantage of the city’s strong intellectual property protection.

Invest Hong Kong continued its efforts to promote the city’s unique position as the ideal base for foreign companies to expand into the Pearl River Delta.

The Department published the third edition of a study, “The Pearl River Delta - the Facts and Figures,” written by Professor Michael Enright of the University of Hong Kong and author Edith Scott. Since the first edition in 2003, this booklet has become one of the most important sources of credible facts and figures about the Greater Pearl River Delta, which includes Hong Kong and Macau. Factual information provided by the booklet is often referred to by investors in their business development plans for Hong Kong and the PRD.

In 2005, Invest Hong Kong organised 10 joint investment promotion activities with major Mainland provinces and cities including Guangdong, Dongguan, Guangzhou, Shenzhen, Zhuhai, Jiangmen, Fujian and Shanghai. These promotions targeted prospective investors in Milan, San Francisco, Toronto, Vancouver, London, Hamburg, Dusseldorf, Tokyo and Osaka. All of these seminars were extremely well received, with several hundred participants in many of the cities. The large-scale joint investment promotion seminars jointly organised with Guangdong in North America were particularly successful. The “Hong Kong – Guangdong Business Conference USA 2005” in San Francisco and the “Hong Kong – Guangdong Business Conference Canada 2005” in Vancouver attracted 1,300 and 1,400 participants, respectively.

Invest Hong Kong continued to actively promote Hong Kong’s unique advantages as a springboard to expand overseas to Mainland enterprises. During the past 12 months, the department arranged 21 seminars in 17 cities in the Mainland.

In 2005, Invest Hong Kong completed 38 projects related to Mainland investments in Hong Kong. The influx of projects from the Mainland shows that Hong Kong is recognised by these companies as a springboard to expand regionally and internationally. For example, Mainland software company UFIDA set up its Asia-Pacific regional headquarters in Hong Kong to oversee its business in Asia-Pacific. One of the biggest wine manufacturers in the Mainland, Dynasty Fine Wine, utilised Hong Kong’s strength as an international financial centre and listed on the Main Board of the Hong Kong Stock Exchange. And leading Chinese electronics brand Haier set up a new company in Hong Kong as part of its global strategy.

In response to the increasing demand for information on investing in Hong Kong from Mainland enterprises, Invest Hong Kong has strengthened its marketing efforts targeting Mainland investors. With the support from the State Administration of Foreign Exchange, Invest Hong Kong produced a new edition of the “Step-by-step guide” for Mainland enterprises, which included information on the approval procedure for foreign exchange. The department has also launched a simplified Chinese website targeting the Mainland market.

Other investment promotion activities included supporting and participating in major international business events to raise Hong Kong’s profile among key target markets and to identify new prospective investors in Hong Kong. In 2005, these included, for example, the 38th International General Meeting of Pacific Basin Economic Council; the Cable and Satellite Broadcasting Association of Asia (CASBAA) annual Convention; the 3G World Congress and Exhibition; and the 8th Annual Global Conference of The Competitiveness Institute.

CEPA effect
___________

The Closer Economic Partnership Arrangement (CEPA) between Hong Kong and the Mainland has entered into the third phase in 2006. Since the implementation of CEPA in 2004, Invest Hong Kong has been actively organising or participating in seminars in North America, Europe and Asia Pacific to promote the benefits of setting up operations in Hong Kong under CEPA to foreign, Mainland and Taiwan investors.

Out of the 232 investment projects completed in 2005, 63 companies (27%) have indicated that CEPA was one of the factors considered in making the investment. Some 32 companies invested because of CEPA, while 31 others have accelerated their investment plans, and/or invested more capital or employed more staff as a result of CEPA. In 2004, 45 companies (22%) indicated that CEPA was one of the factors of their investments.

Looking Forward
_______________

Mr Rowse noted that in 2005, Invest Hong Kong had successfully attracted investments from different sectors including consumer products, retail, sourcing, financial services, tourism, catering, IT, technology, telecommunications, media and multimedia, professional services, transportation and manufacturing. To retain existing investors and to encourage their expansion in Hong Kong, Invest Hong Kong will continue to provide after-care services to the investors.

To provide better coverage in the Mainland, Invest Hong Kong will devote more resources on that market. In 2006, two investment promotion units will be set up in the new Hong Kong Economic and Trade Offices (HKETOs) in Chengdu and Shanghai. Invest Hong Kong will also expand its presence in the Beijing Office and the HKETO in Guangdong.

Some companies have announced investment plans for Hong Kong beyond 2006. UK home improvement retailer B&Q has expects to invest $200 million and create 200 jobs for the opening of its first store in Hong Kong in 2007. Global restaurant chain KFC made known plans for an additional investment of over $150 million to be devoted to increasing the number of outlets from 52 to 90 by 2009, employing another 1,500 staff.

Mr Rowse is optimistic about investment promotion for Hong Kong in the coming year.

“The opening of AsiaWorld-Expo will further strengthen Hong Kong’s position as the international exhibition hub and also solidify our role as the two-way platform to facilitate investment and trade between the Mainland and international markets. Our renowned expertise in providing world-class services in exhibition, business and professional services, logistics and transportation will also benefit from the intensified business activities in Hong Kong.”

“We will aim to do even better in 2006 to attract even more companies to invest and expand their presence in Hong Kong. Our target for this year is in the range of 240 to 250 completed projects. To achieve this, we will also work closely with the business community in Hong Kong and around the world,” Mr Rowse concluded.

Ends/Wednesday, January 11, 2006
Issued at HKT 11:32

NNNN