attracting and retaining foreign direct investment hong kong: asia’s business capital for china...
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Attracting and Retaining Foreign Direct Investment
Hong Kong:
Asia’s Business Capital for China and Beyond
Simon Galpin
Director General
Mission and Objectives
• Spearhead HK’s efforts to attract and retain foreign direct investment
• Promote HK’s enduring advantages and status as a leading business hub in the region
• Assist companies with potential to contribute to HK’s economy to set up and expand in HK
• Provide aftercare support to the international business community in HK
• Work with policy bureaux and departments on issues of concern to investors to enhance Hong Kong’s competitiveness as a business-friendly location
Investment Promotion – Reaching Out to Companies to Attract FDI
5,576
1,472
657
284
Overseas/Mainland
Meetings
Prospects
Live Projects
Projects Completed 2010
As at 31 Dec 2010
Representation in 26 Cities Around the World
Asia Pacific
Mainland and Taiwan
Europe Middle East
North and South
Americas
Investment Promotion
Units
(in ETOs)
Sydney
Tokyo
Beijing
Chengdu
Guangzhou
Shanghai
Berlin
Brussels
London
- New York
San Francisco
Toronto
Consultants Bangalore
Kuala Lumpur
Mumbai
Osaka
Seoul
Taipei Düsseldorf Gothenburg
Istanbul
Milan
Paris
Moscow
Tel Aviv Bogota
Hong Kong Sales Pitch
RIGHT PLACEHong Kong’s
Enduring Advantages
One Country, Two Systems
• Half the world’s population within 5 hours’ flying time
• The world's 3rd busiest international passenger airport (50.9Mn passengers in 2010)
• The world’s busiest cargo airport (4.1Mn tonnes of cargo handled in 2010)
• One of the world’s busiest container ports (23.7Mn TEUs in 2010)
Heart of Asia and Gateway to China
Forbes Tax Misery Index 2009
Source: Forbes Tax Misery Index 2009, Inland Revenue
Low and Simple Tax System
• NO VAT/GST or sales tax
• NO Capital gains tax
• NO Withholding tax on dividends and interest
• NO Estate duty
• NO Global taxation (offshore income and only HK-sourced income is taxable)
• NO Wine duty
• Only imposes three direct taxes - profits, salaries and property
World Class ICT - Connecting People
• Asia’s most innovative economy (3rd in the world) Global Innovative Index
• Mobile phone penetration rate 193.2%
• 7th most e-ready economy in the world Economist Intelligence Unit
• 3rd highest average broadband connection speedUS-based network provider Akamai Technologies
• Household broadband penetration rate 83.1%
• 9,077 public Wi-Fi access points
• 2nd largest exporter of ICT products in the world (US$142 Bn)
• 3rd largest importer of ICT products in the world (US$150 Bn)
China’s Global Financial Centre
• The largest off-shore RMB platform
• Asia’s leading Asset Management hub
• Home to 70 of the world’s 100 largest banks
• Asia’s 3rd largest stock market
• Stock market capitalization as at end of 2010 - US$2.7 trillion
• Word’s largest securitized derivatives market in 2009
• Global leader in IPOs in 2009 and 2010
• Biggest fund raising centre for Mainland companies
• Pool of financial expertise (15% of CFAs in Asia Pacific – 2nd largest location in the world, number of CFPs exceeded 4,000 in Hong Kong)
Source: HKEx, HKTDC, World Federation of Exchanges, Time Magazine
Ranking City
1 London
2 New York
3 Hong Kong
4 Singapore
5 Shanghai, Tokyo
7 Chicago
8 Zurich
9 Geneva
10 Sydney, Toronto
The Global Financial Centres Index (GFCI) 9, The Z/Yen Group, March 2011
Quality Education and Workforce
• Home to Asia’s leading universities and business schools– HKU 1st and HKUST 6th in Asia, both in the world’s Top 50
Times Higher Education World University Rankings 2010-11
– World’s Top EMBA in 2010: Kellogg - HKUST EMBA Programme
– MBA run by HKUST ranked 1st in Asia and 6th in the world in 2011
Rankings by the Financial Times
• Over 50 international schools serving students of more than 30 nationalities_______________________________________________
• Dependents have automatic right to work
• Permanent residency after 7 years
Quality of Life
RIGHT TIMENew Opportunities
area: 56,000 sq. km
< Ireland, Panama
< 1% of China
Greater Pearl River Delta
• Population 55.26Mn > Spain, Canada
• Exports 7th globally US$387Bn > UK, Canada (> 27% of China’s exports)
• GDP 18th globally US$665Bn > Indonesia, Sweden, Saudi Arabia
CEPA – The Free Trade Pact
Trade in Goods Trade in Services
CEPA applies to: • Over 1,500 categories of products
• Exported direct from Hong Kong to the Mainland
• 42 service sectors
Benefits: • Removes all export duties • Greater market access:
– Lower market entry criteria (capital, trading history etc.)
– Can establish WFOE
Eligibility: • “Made in Hong Kong” products, under specified ‘Rules of Origin’
• Companies must have “substantive operations” in HK
Applications approved (as at 31
December 2010) :
• Trade Certificates of Goods
63,899• Service Supplier Certificates
1,461
Confirmed Double Taxation Relief Agreements with 20 trading partners:
Double Taxation Agreements
In negotiations: • Czech Republic
• Denmark
• Finland
• India
• Italy
• Korea
• Macau
• Malaysia
• Malta
• Mexico
• Pakistan
• Saudi Arabia
• the United Arab Emirates
• Austria
• Belgium
• Brunei
• France
• Hungary
• Indonesia
• Ireland
• Portugal
• Spain
• Switzerland
• Thailand
• UK
• Vietnam
• Japan
• Kuwait
• Luxembourg
• Liechtenstein
• Mainland of China
• New Zealand
• Netherlands
8.5
22.477
13.53
0
5
10
15
20
25
30
35
40
2003 2010
Rest of the World
Mainland China
Increasing Visitor Arrivals
Source: HKTB
Million
• At end 2010, 5,491 Mainland companies have MOFCOM approval to establish subsidiaries in HK with a total investment of US$117.8 bn
• 1,031 new investment projects approved in 2010, with an investment amount of US$33.7 bn (MOFCOM)
• RMB deposits in HK increased to RMB 510 billion as of June 2011
Mainland Companies in Hong Kong
Source: HKEx and MOFCOM
% of Mainland companies listed in HK and their market capitalisation
15%
27%
42%
57%
No. of companies Market capitalisation
2000 2010
Investment in Infrastructure
Lok Ma Chau crossing - 2007
Lok Ma Chau loop joint development – 2009 (studies)
Guangzhou – Shenzhen – Hong Kong Express Rail Link - 2014
New Cruise Terminal at Kai Tak - 2014/15
Tuen Mun – Chek Lap Kok Link - 2016
HK – Shenzhen Western Corridor Bridge - 2007
Sha Tin to Central Rail Link - 2015/19
West Kowloon Cultural District –completion of master planning in mid 2011
Hong Kong – Zhuhai – Macao Bridge overall length of 50km - 2015/16
South Island MTR Line - 2015
Project in progress
Project completed
Total public spending on infrastructure is HK$40 billion (US$5.1 billion) in 2009/10
