Bright future: A smiling Mike Rowse tells a press briefing he's confident Invest HK can reach its target of attracting 10% more companies to set up shop here in 2005.

Hong Kong continues to shine as a beacon for investors, Invest Hong Kong's year-end results for 2004 suggest. The department helped 205 foreign companies to set up or expand operations here in 2004 - an increase of 44% compared with the 143 companies it assisted in 2003.

At a press briefing this morning, Invest Hong Kong's Director-General of Investment Promotion Mike Rowse noted these companies say they immediately created more than 3,000 jobs and plan to create another 4,600 jobs here in the next two years.

Together, they invested more than $4.6 billion.

"That's a good return compared to the size of the department and its expenditure," Mr Rowse said.

He noted that not all companies that set up shop here are willing to divulge the numbers of jobs they create or the amount of money invested. In 2004, about 90% revealed the job numbers and 75% the size of their investment.

Mainland accounts for nearly 20% of projects

Nearly 30% of the companies investing here last year came from the Asia-Pacific region, including Japan and Australia. Another 30% come from Europe, and almost one-quarter came from North America. The Mainland accounted for nearly 20%.

They also represent myriad sectors: trade-related services (18%); business and professional services (12%); transportation (12%); financial services (11%); technology and information technology (19%); tourism and entertainment (7%); telecoms (5%) and media/multimedia (2%).

"We are glad to see more and more foreign companies in a variety of different sectors choosing Hong Kong to establish or expand operations. These investment projects do not only bring in capital, create job opportunities, but also bring along new ideas and technologies to enrich various industries in Hong Kong," Mr Rowse said.

"These companies have given their vote of confidence in our city and are committed to developing their business with our community."

HK remains preferred destination for FDI

In the first three quarters, Hong Kong attracted more than US$24.8 billion in foreign direct investment . "That's around about twice as much as the whole of last year," he said.

The number of regional headquarters and regional offices in Hong Kong reached record highs in 2004. As of June 1, 2004, there were 1,098 companies with regional headquarters and 2,511 companies with regional offices here.

"These encouraging figures show that investors still regard Hong Kong as the ideal location to operate their businesses in the region. Hong Kong's fundamental advantages including the free flow of information and low tax regime remain major attractions for foreign companies. We are confident that we will continue to attract more foreign investment in Hong Kong in 2005," Mr Rowse said.

The department has raised its target for 2005 by 10%, to 220 investment projects. In response to a journalist's query as to why the target wasn't higher, Mr Rowse replied: "We have less than 100 people in the Hong Kong office, bringing in four new foreign investors a week. I hope we can grow by more than 10%, but if we set the target too high, it's demoralising."

He said the department tried to balance two factors, making the target high enough to be a challenge, but not so high that people become dispirited and anxious that they can't meet it.

"Other economies are aggressive, also, in attracting foreign investors. They're out there fighting for their share, and we compete with different cities at different levels."

More Mainland firms attracted to Hong Kong

There were two significant highlights in the year-end report, the growing flow of companies from the Mainland, and the positive impact the Hong Kong-Mainland Closer Economic Partnership Arrangement is having.

Invest HK helped six companies from the Mainland set up in Hong Kong in 2002, 17 in 2003 and 35 last year, that represented about 17% of completed projects.

These companies are "using Hong Kong as a market in its own right, or as a springboard to go out into the rest of the world," Mr Rowse said.

Dedicated teams at Invest HK are making a proactive effort to attract Mainland firms. They have worked with the Ministry of Commerce to produce a step-by-step guide to investing here, set up a 1-800 number so they can talk to the department anytime at Invest HK's expense, and set up a service centre in its head office in Pacific Place.

Invest HK plans more Mainland visits

Mr Rowse, who had just returned from a whirlwind five-day visit to five Mainland cities, said the department will step up visits in the coming year.

"Our next big joint promotion will be in March with Shanghai. We will go together to Tokyo to do a joint promotion, with the general theme of encouraging Japanese companies to do more in China. That's the first time we'll have gone outside the Pearl River Delta. Later in the year, we will partner with Fujian Province, probably in Germany," he said.

"I wouldn't be surprised if the total number of Mainland customers in our base reaches more than 20%."

CEPA's impact positive influence

There is evidence that CEPA is beginning to have a positive impact. Of 205 finished projects, 19 cited CEPA as the reason for their investment while 26 named CEPA as an additional reason for setting up in Hong Kong.

"For many, it meant they came sooner, or they came in with extra investment," Mr Rowse said. 

He said he expects to see the full impact of the arrangement in mid-2005, since most companies require 18 to 24 months to make an investment decision, and CEPA had been in operation for only a year.

Statistics to be improved

To hone its figures, Invest HK plans to revisit every company it assisted in 2002, to find out what happened, whether they are still here, and how many people they now employ.