Optimistic outlook: Mike Rowse said he's confident Invest HK can reach its target of attracting 240-250 companies to set up shop here in 2006.

Hong Kong remains on top as the preferred destination for foreign investment, Invest Hong Kong's year-end results for 2005 suggest. The department helped 232 foreign companies set up or expand operations here in 2005 - an increase of 13% compared with the 205 companies it assisted in 2004.

At a press briefing this morning, Invest Hong Kong's Director-General Mike Rowse noted these companies say they immediately created more than 2,500 jobs and will add more than 5,400 jobs in the next two years.

Together, they invested more than $8.9 billion - 91% growth over the 2004 record total.

Mr Rowse said many of these projects bring special skills and experience to enrich Hong Kong's  existing offerings as an international business hub. His sector-focused teams will continue to identify, attract and facilitate investors from around the world.

Success attributable to fundamental edges

Respected international organisations' recognition of Hong Kong's advantages have reinforced these encouraging results. The Heritage Foundation and Wall Street Journal have just ranked Hong Kong the world's freest economy for the 12th consecutive year. Hong Kong was also selected as the overall winner of "Asian City of the Future 2005/6" by fDi Magazine among over 60 cities and regions in the Asia Pacific. 

Mr Rowse attributed these successes to Hong Kong's fundamental advantages - the rule of law, free flow of information and low tax regime - which remain major attractions for foreign companies.

However, he said there is no complacency as there is keen competition in the region, and Hong Kong must strive to maintain and enhance its overall edge.

Foreign direct investment up 150%

According to the World Investment Report 2005 released by the United Nations Conference on Trade & Development, Hong Kong remained the second-largest foreign direct investment recipient in Asia, after the Mainland.

In 2004, foreign direct investment here reached US$34 billion, up 150% from the US$13.6 billion in 2003, and ranked 7^th on a global scale.

In the first three quarters of 2005, Hong Kong attracted more than US$26.7 billion in direct foreign investment,  $14.6 billion more than in the same period last year.

The number of regional headquarters and regional offices in Hong Kong reached all-time highs in 2005. As of June 1, 2005, there were 1,167 companies with regional headquarters and 2,631 companies with regional offices here.

Invest Hong Kong has continued its efforts to promote the city's unique position as the ideal base for foreign companies to expand into the Pearl River Delta. It has published the third edition of The Pearl River Delta - the Facts & Figures, written by Professor Michael Enright of the University of Hong Kong and author Edith Scott. 

During the year, Invest Hong Kong has 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.

These seminars were well received, with several hundred participants in many of the cities. The seminars jointly organised with Guangdong in North America were particularly successful. The one in San Francisco attracted 1,300 participants while Vancouver's drew 1,400 participants.

In 2005, Invest Hong Kong arranged 21 seminars in 17 cities in the Mainland and completed 38 projects related to Mainland investments in Hong Kong. The influx of projects from the Mainland shows these companies recognise Hong Kong is a springboard to expand regionally and internationally. 

The department has also strengthened its marketing efforts targeting Mainland investors. With the support of the State Administration of Foreign Exchange, it has produced a new edition of a step-by-step guide for Mainland enterprises, and 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 in key target markets and to identify new prospective investors in Hong Kong.

For example, it was host to the 38th International General Meeting of the Pacific Basin Economic Council, the Cable & Satellite Broadcasting Association of Asia's annual convention, the 3G World Congress & Exhibition and the 8th Annual Global Conference of The Competitiveness Institute.

CEPA's impact positive

The Closer Economic Partnership Arrangement between Hong Kong and the Mainland entered the third phase in 2006. Since its inception in 2004, Invest Hong Kong has been 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.  

Of the 232 finished projects, 32 cited CEPA as the reason for their investment, while 31 named CEPA as an additional reason for setting up in Hong Kong. The respective figures for 2004 were 19 and 26.

Mr Rowse said to retain existing investors and to encourage their expansion in Hong Kong, Invest Hong Kong will continue to provide after-care services.

To provide better coverage in the Mainland, two investment promotion units will be set up in the new Hong Kong Economic & Trade Offices in Chengdu and Shanghai this year. Invest Hong Kong will also expand its presence in the Beijing Office and the Guangdong Office.

Some companies have announced investment plans for Hong Kong beyond 2006. UK home improvement retailer B&Q 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 said the opening of AsiaWorld-Expo will strengthen Hong Kong's position as the international exhibition hub and solidify its role as the two-way platform to facilitate investment and trade between the Mainland and international markets.