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Following is a written reply by the Secretary for Security, Mr Ambrose S K Lee, to a question by the Dr Hon Lam Tai-fai in the Legislative Council today (May 5):
Question:
At the meeting of this Council on April 21 this year, the Secretary for Security indicated that the Capital Investment Entrant Scheme ("CIES") had brought around $50 billion of investments to Hong Kong since its implementation in October 2003. He also pointed out that CIES was just one of the ways for foreign investors to come and reside in Hong Kong. Foreign entrepreneurs may also apply to set up their businesses and reside in Hong Kong according to general employment policies. The Government will from time to time review the arrangements of CIES. In this connection, will the Government inform this Council:
(a) of the respective breakdowns of the types of applicants, distribution of investments and amounts of investments each year since the implementation of CIES (set out in table form);
(b) whether it knows the respective numbers and proportion of residential and non-residential properties among the real estates invested by admitted applicants under CIES at present; and in respect of the residential properties among them, of the average asset values and their locations, as well as the respective numbers of applicants who have leased out the properties invested by them at present, occupied the properties themselves or left them vacant;
(c) whether it has compiled statistics on the total number of applicants since the implementation of CIES who sold the real estates invested by them within two years after admission; if it has, of the details; if not, the reasons for that;
(d) whether it has assessed the total number of local jobs created by the capital brought by CIES since its implementation; if it has, of the breakdown by year and job title; if not, the reasons for that;
(e) when it will review CIES afresh and of the details (including when the review will be completed and the outcome published);
(f) whether there is any measure to encourage applicants under CIES to invest in the asset classes that belong to the four pillar industries and the six economic areas where Hong Kong enjoyed clear advantages; if so, of the details; if not, the reasons for that;
(g) whether it has assessed the impact of the rule under CIES to prescribe real estate as one of the permissible investment asset classes on the property prices in Hong Kong at present and the impact of lifting such a rule on the Hong Kong economy; if an assessment has been conducted, of the outcome; if not, whether it will conduct such an assessment; and
(h) given that the Secretary for Security has indicated that entrepreneurs may apply to set up their businesses and reside in Hong Kong according to the general employment policies, of the classes of entrepreneurs who have applied to set up businesses and reside in Hong Kong, their areas of business, the amount of investments involved and the number of jobs created, since the implementation of such policy, as well as their contributions to the Hong Kong economy (set out in table form)?
Reply:
President,
We have indicated in our response to an oral question on the Capital Investment Entrant Scheme (CIES) raised by a Legislative Council (LegCo) Member on April 28, 2010 that the Government would start a review on the CIES. We will take into account views from LegCo Members and different sectors of the community during the review. Subject to the outcome of the review, we would further enhance the CIES to ensure that it brings the most overall interest to Hong Kong.
Our consolidated response to the eight parts of the question is as follows:
(a) & (d) Since the implementation of the CIES in October 2003 till the end of March this year, a total of 6,689 applicants were approved to come to Hong Kong.
[For information on types of applicants (nationality) and types of investments, please refer to the annex.]
The CIES benefits various local sectors, particularly the decoration work sector, property agencies, financial and business services, etc directly or indirectly. Whilst living in Hong Kong, investors and their dependants also contribute to local consumption and related economic activities, which would create job opportunities. However, because of the constraint of limited data, the Government is not able to conduct detailed quantitative analysis in this regard.
(b), (c) & (g) Of the $14.35 billions in real estate investment under the CIES, residential and non-residential properties amounted to $13.35 billion (93%) and $1 billion (7%) respectively. The great majority of applicants who invested in residential properties only invested in a single property, with an average value of around $10 million. The Immigration Department (ImmD) does not have statistical information as to whether the properties are leased out, self occupied or left vacant. Based on an analysis of 200 recent applications, the locations of the properties are set out as follows:
District Percentage
-------- ----------
Kowloon West 29%
Hong Kong Island 25%
East New Territories 23%
Kowloon East 14%
West New Territories 9%
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Total 100%
Applicants investing in real estate are required to notify ImmD within seven working days after the relevant transactions. They are also required to provide ImmD with proof within the specified deadline that they still invested the amount of capital required under the CIES in the designated investment assets. Such proof shall be submitted together with the relevant information. Besides, applicants granted with approval are required to apply to ImmD for extension of stay every two years. ImmD will examine these applications according to the prevailing policy. ImmD's information shows that among the 100 extension cases approved recently, only 10 applicants have changed their properties during the period and they all held the properties concerned for over one year before selling them.
The main factors affecting real estate prices include demand and supply, mortgage rates, investment environment, etc. We believe that the CIES under the ImmD should have no direct and substantive impact on local real estate prices.
(e) We have started a review on the CIES and hope to complete it by end of this year. We will inform the relevant Panel of the LegCo of the outcome of the review.
(f) The review will cover the need to expand the scope and the designated investment asset categories of the CIES. We will make reference to the experiences gained since the implementation of CIES and the practices of similar schemes overseas. We will seek to strike a balance between attracting foreign capital to boost the Hong Kong's economy and the prevention of abuses under the scheme.
(h) Apart from the CIES, overseas entrepreneurs can choose to enter Hong Kong by applying to stay and set up business here under the General Employment Policy. When processing the relevant applications, ImmD will consider whether the applicants can bring economic benefits to Hong Kong, including the number of jobs created, etc. In the three years between 2007 and 2009, a total of 775 entrepreneurs successfully entered Hong Kong through this channel, undertaking their original business plans. As to the breakdown details requested, ImmD has analysed 100 recently approved cases and collated the following information:
Sectors Number of Number of Amount of
Applications Jobs Created Investment
(Millions
Hong Kong
Dollars)
------- ----------- ------------ -----------
General 40 150 30
Trade
Electronic 19 31 15
Advisory 15 33 2
Service
Jewelry 13 37 29
Others 13 43 17
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Total 100 294 93
Ends/Wednesday, May 5, 2010
Issued at HKT 17:32
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