Investment - Hong Kong is widely regarded as among the freest and most competitive economies in the world. The city is characterized by a high degree of internationalization, business-friendly environment, free trade and flow of information and superb infrastructure. Even before the 1997 handover, Hong Kong had established extensive trade and investment ties with mainland China, and its autonomous status as a Special Administrative Region now enables it to serve as a point of entry for investment flowing into the mainland. Invest Hong Kong (InvestHK) is a department of the Hong Kong govern
ment responsible for attracting and facilitating inward investment into the city. CHEManager Europe asked Charles Ng, Associate Director-General of Invest HK about the particular assets of the city and initiatives being taken to help companies establish or expand their business presence in Hong Kong.

CHEManager Europe: The Hong Kong Special Administrative Region (HKSAR) is largely self-governing and generally not considered part of mainland China. Why is the city an ideal location for companies from abroad to access mainland China?

C. Ng: Thanks to its unique geographical advantage five hours from half of the world's population and only four hours from any major city within Asia, Hong Kong has played and continues to play a vital role as China's window to the world and the world's gateway to China. Today, Hong Kong has the largest number of regional headquarters and regional offices in Asia and has the largest expatriate community in Asia. Through the successful implementation of "One Country, Two Systems" since 1997's reunification with the mainland, Hong Kong has enjoyed a high level of independence under the Basic Law. Clean and efficient government, low taxation, level playing field of business are invaluable assets of Hong Kong as Asia's Business Capital and Asia's World city. Financial services, trading and logistics, tourism, and professional services are the key pillar industries in the Hong Kong economy. As a leading international financial centre and with its strong economic fundamentals, Hong Kong is poised to embark in developing into a creative and knowledge based economy with major emphasis on green technologies, environmental and renewable energy related industries.

In the 1990s Hong Kong matured to become a financial centre, but was greatly affected by the Asian financial crisis in 1998, and again in 2003 by the SARS outbreak. How has Hong Kong's economy developed since?

C. Ng: The last years have been very successful. The real GDP grew 6.4 % in 2007. For 2008, a growth of 3 % to 3.5 % was forecasted. The unemployment rate stood at 3.8 % in the September to November period
in 2008. In its Credit Analysis Report on Hong Kong on ­November 28, 2008, Moody's has affirmed our long-term ­local and foreign currency ratings at "Aa2". The ratings reflect the ­international recognition of Hong Kong's very high economic resiliency, strong institutional and government financial strength. Regarding the current crisis, a negative growth around minus 2 % to minus 3 % in 2009 seems inevitable.

How has it been affected by the current global economic crisis?

C. Ng: As an externally oriented economy and international financial centre, Hong Kong is not immune to the global financial crisis. However, with its sound fundamentals, Central Government backing and the natural resilience of the Hong Kong people, the city is well equipped to withstand the economic downturn.

In every crisis lies a chance. Do you see the current economic climate holding a chance for Hong Kong to recover more rapidly and prosper more sustainably than other cities or locations?

C. Ng: As Hong Kong is a free and open economy, it has inevitably been affected by the global economic crisis stemming from the U.S. subprime mortgage meltdown, resulting in moderation in exports/re-exports trade and hence dragging the overall economic performance. However, with sound fundamentals, strong regulatory framework, a robust Exchange Fund, production base and market on the mainland, and strong support from the Central Government, Hong Kong's economy is well equipped to withstand the downturn.
Hong Kong is known for its resilient, hardworking spirit and will endeavour to turn crisis into opportunity by vigorously pursuing economic development in areas such as financial services, cross-boundary integration, infrastructure projects, creative industries and scientific research. Hong Kong will continue to uphold the principle of "Big Market, Small Government" in promoting economic development. Nevertheless, economies need to take extraordinary measures at exceptional times like this and the Government should be prepared to intervene in a timely and decisive manner.
In light of the repercussions of the Lehman Brothers incident in Hong Kong, the HKSAR government is in the process of conducting a full and comprehensive systemic review of our regulatory framework for the securities and futures market and will consider, on a policy level, how best to further improve the framework and enhance investor protection and education.

What are Hong Kong's most attractive assets and attributes making it stand out as an investment location for foreign companies among other cities in the region?

C. Ng: Hong Kong can rely on the unwavering support of the Central Authorities in its ongoing development as Asia's world city and China's pre-eminent international financial centre. The HKSAR government continues to negotiate bilateral agreements with foreign governments in many areas including air services, trade, visa abolition, investment promotion and protection, customs co-operation and others. Besides low taxes, legal security, a low level of corruption and a well-educated workforce, infrastructure is one of the most important points. Hong Kong International Airport was voted the world's best airport for the seventh time in eight years by Skytrax last summer. Hong Kong is the world's busiest international air cargo hub. Civil rights and freedoms are protected by law. Hong Kong offers a level playing field for business - local and international companies compete on an equal footing. Furthermore, the government secures a free press and unfettered flow of news and information, the free flow of capital, with stable and freely-convertible currency. A quality living environment is also regarded as fundamentally important. Recent policy initiatives place increased emphasis on factors such as air quality, living space, cultural infrastructure and heritage conservation. Last but not least, Hong Kong is a multi-cultural, tolerant, pluralistic, well-educated and hard-working society.

What assets and infrastructure such as science or industrial parks does Hong Kong offer?

C. Ng: The Hong Kong Science Park was set up in early 2000 to provide infrastructural support to high tech industries including biotech, electronics, precision engineering, IT and telecommunication, green energy and environmental management. The park provides physical space and central facilities for technology companies to carry out R&D. Additionally, a government funded nanotech and advance material R&D centre was set up in 2006 to promote collaborative applied research in nanotech and advance material. The Hong Kong Science Park is now embarking into a new phase to encourage the development of solar energy.

How does Hong Kong cater for technology-based enterprises in terms of special investment initiatives, research grants, and availability of educated workforce?

C. Ng: Government funding is available to support R&D activities for technology companies in Hong Kong. There are six research based universities which generate some 6,000 science related discipline graduates each year. Hong Kong's liberal immigration regime also allows companies to supplement talents from overseas. Furthermore, a training funding scheme is available to subsidise training costs of local staff.

What is the role of InvestHK?

C. Ng: InvestHK's strategy is to carry out investment promotion in a proactive and targeted manner through its promotion units in overseas countries and in the mainland. Its worldwide overseas network includes the Investment Promotion Units (IPUs) in eleven Economic Trade Offices and the Beijing Office of the HKSAR government, as well as external consultant companies in other business cities not covered by the IPUs. Our overseas network meet with potential investors in their markets to promote the benefits of establishing a presence in Hong Kong or using Hong Kong as a gateway to the mainland market. They also meet with the local media and government bodies; participate in significant publicity events and promotional programmes; and speak at business forums, with a view to promoting the strengths of Hong Kong as a superior hub for regional operations in Asia. To serve overseas, Taiwanese and mainland companies interested in setting up an office or a business operation in Hong Kong, InvestHK officers provide a free of charge and confidential service to our clients from 27 cities around the world. In the Head office, sector specialists stand ready to help.

InvestHK recently opened a new representative office in Berlin, Germany. What are the office's tasks?

C. Ng: The Hong Kong Economic Trade Office (HKETO) Berlin is the official HKSAR Government's representative for Hong Kong in commercial relations and other economic and trade matters in Germany, as well as in Austria, the Czech Republic, Hungary, Poland, the Slovak Republic, Slovenia and Switzerland. The main responsibilities of HKETO Berlin include promoting Hong Kong's trade interests and overall image, explaining our policies to counterparts in the region including governments, parliaments and the business sector, as well as enhancing mutual understanding among opinion-formers, politicians, academia and the media.
The HKETO Berlin will assist persons or companies interested in establishing connections and strengthening ties with Hong Kong, or investing in Hong Kong, or in the mainland of China and other parts of Asia via Hong Kong, by providing comprehensive information, support and practical assistance. InvestHK, the HKSAR government department responsible for inward investment promotion, will also attach a team to HKETO Berlin to help firms wishing to set up operations in Hong Kong.

Why Berlin?

C. Ng: Among all the countries in the region, Germany is Hong Kong's largest trading partner within the EU. Bilateral trade volume has increased consistently reaching an average growth rate of about 10 % over the past five years. Total trade in 2008 amounted to €15 billion, a 14 % increase compared to 2007. Our re-export trade to Germany and imports from Germany also showed a two-digit growth last year, at 18 % and 11 % respectively. We attach great importance to the German market and hence decided this is where the new office should be based. Being the capital of Germany, Berlin is a natural choice. It is the city where the federal government offices and embassies are situated, our direct counterparts as the new HKETO Berlin is the official representative office for Hong Kong. Besides, being a new office we are looking for creative ideas to promote the bilateral trade between Germany and Hong Kong. With the vibrant and fast development of Berlin over the last decade, we believe co-operation could be easily bred between the two places.