Investment promotion in Hong Kong achieved positive results in 2006.  At a year-end press conference today (January 9) the Director-General of Investment Promotion at Invest Hong Kong, Mike Rowse, announced that the Department assisted 246 overseas, Mainland and Taiwan companies to set up or expand operations in Hong Kong during 2006 – representing a healthy growth of 6 per cent over 2005, itself a record year.

     The investing companies expect these 246 projects to lead to the creation of over 7,835 jobs.  This includes more than 3,092 jobs initially, and an additional 4,743 jobs in the next two years as these companies expand. More than $10.24 billion was invested by these companies, representing a 15% increase over last year's record total.

Year of steady growth
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     Mr Rowse welcomed the results. He said, "2006 was another year of steady growth for investment promotion in Hong Kong. The results suggest that Hong Kong remains a highly attractive location for overseas, Mainland and Taiwan companies to do business in the region."

     "We are encouraged by the positive results. However, we must not be complacent as the competition in the region is keen.  The Government is committed to understanding and addressing the needs of the international business community in Hong Kong. We recognise the importance of continuing to improve our investment environment so that investors will continue to find Hong Kong an attractive place from which to do business in Asia. And we at Invest Hong Kong will strengthen our effort to assist foreign, Mainland and Taiwan companies with the establishment and expansion of their businesses in our city."

Hong Kong's role as regional and global FDI destination
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     Hong Kong also has maintained its leading position as the preferred destination for foreign direct investment (FDI).  According to the "World Investment Report 2006" 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 inflows to Hong Kong in 2005 reached HK$261.5 billion (US$33.5 billion). On a global scale, Hong Kong ranked 6th in FDI inflows in 2005.

     Overall foreign direct investment (FDI) into Hong Kong continues to be strong. The Census and Statistics Department reported FDI inflows of HK$230.9 billion (US$29.6 billion) during the first three quarters of 2006, some $40.29 billion higher than the same period of 2005.
 
     Moreover, the number of regional operations in Hong Kong reached new highs in 2006, demonstrating that Hong Kong remains the preferred base in Asia for foreign companies to oversee their regional operations.  As at June 1, 2006, there were 3,845 companies that were regional headquarters and regional offices, 2,509 companies that were local offices in Hong Kong of companies incorporated outside Hong Kong, according to results of the 2006 Annual Survey of Companies in Hong Kong Representing Parent Companies Located outside Hong Kong conducted by the Census and Statistics Department.


Highlights of 2006
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     Hong Kong's unique positioning as the gateway to China and the business hub of Asia has attracted companies from different industries to set up operations here to access clients in the region.  For example, the Chicago Mercantile Exchange opened its Asia Pacific regional headquarters in Hong Kong to increase the level of services to its Asian-based customers; Bayer MaterialScience opened its Asia Pacific headquarters in Hong Kong to oversee the regional management functions of its business and service units; and Methanex, the world's largest producer and marketer of methanol, relocated its Asia Pacific marketing and logistics operation to Hong Kong.

     As part of continued efforts to promote the city's unique position as a base for foreign companies to expand into the Pearl River Delta, the Department published the fourth edition of a study, "The Pearl River Delta - the Facts and Figures", written by Professor Michael Enright of the University of Hong Kong and 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.  Data provided by the booklet is often referred to by investors in their business development plans for Hong Kong and the PRD.

     In 2006, Invest Hong Kong organised 8 joint investment promotion activities with major Mainland provinces and cities including Guangdong, Fujian, Dongguan, Guangzhou, Shenzhen, Zhuhai, Jiangmen, and Foshan.  These promotions targeted prospective investors in Paris, Philadelphia, Copenhagen, Stockholm, Seoul, Florence, San Diego, and Dusseldorf.  All of these seminars were well received, with several hundred participants in many of the cities. The large-scale joint investment promotion seminars jointly organised with Guangdong in Paris were particularly successful. The "Hong Kong – Guangdong Business Conference in Paris 2006" attracted over 2000 participants.

     Invest Hong Kong continued to actively promote to Mainland enterprises Hong Kong's unique advantages as a springboard to expand overseas.  During the past 12 months, the department arranged 17 seminars in 13 cities in the Mainland.  

     In 2006, Invest Hong Kong completed 41 projects related to Mainland investments in Hong Kong, representing 17% of the total number of projects. This indicates that Hong Kong's key role as a preferred base for Mainland companies to expand regionally and internationally for Mainland companies.  For example, one of the largest Mainland-based law firms, Jun He Law Offices, established a Hong Kong office to expand its regional presence; famous traditional Chinese medicine company Tong Ren Tang opened a new R&D manufacturing plant in Tai Po; and Foshan Shipping set up its first overseas office in Hong Kong to offer a full range of services.

     To strengthen the effort in promoting inward investments from the Mainland, Invest Hong Kong has allocated additional resources to improve its coverage in the Mainland markets. Investment promotion units were set up in the Beijing Office and the newly established Economic and Trade Offices in Chengdu and Shanghai. The team in Guangzhou Economic and Trade Office was also expanded.

     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.  The "Step-by-step guide for Guangdong enterprises investing in Hong Kong" was produced, which gives the Guangdong investors a better understanding of the procedures of setting up operations in Hong Kong.

     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 2006, these included, for example, Annual Asian Pacific Bond Congress; MIPIM Asia; the Cable and Satellite Broadcasting Association of Asia (CASBAA) annual Convention; CNBC Asia Business Leaders Awards; and the 3G World Congress and Mobility Marketplace.


CEPA effect
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     Since the implementation of Closer Economic Partnership Arrangement (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 potential investors.  The department also measured CEPA's impact on the companies' investment decisions.

     Out of the 246 investment projects completed in 2006, 61 companies (25%) have indicated that CEPA was one of the factors considered in making the investment.  Some 22 companies invested because of CEPA, while some of the 61 companies have accelerated their investment plans, and/or invested more capital or employed more staff as a result of CEPA.  Similar levels of CEPA's effect on investment have been recorded since it took effect at the beginning of 2004.


Looking Forward
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     In 2006, 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.  Mr Rowse said that, to help retain existing investors and to encourage their expansion in Hong Kong, Invest Hong Kong will reinforce its after-care services to these companies. These services may include, for example, providing relevant information, assistance with regulatory issues or finding places in international schools.    

     The department also remains committed to its targeted investment promotion activities in both traditional investment source markets and emerging markets.

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

     He said, "It is important that we retain and attract even more companies of strategic importance to Hong Kong.  These companies do not only bring along employment opportunities for our people, but also new skills and technologies, which are important for the long-term growth of our economy."

     "Our target for this year is to achieve about 250 completed projects. To achieve this, our sector-focused teams will continue to identify, attract and assist investors in our priority sectors from various regions around the world. At the same time, we will also work closely with the local and international business community in Hong Kong and around the world," Mr Rowse concluded.

Ends/Tuesday, January 9, 2007
Issued at HKT 11:01

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