Hong Kong –World's Freest Economy

Hong Kong – key economic data

Population 6.9 mn (mid-2005) Per capita GDP US$24,100 (2004)Nominal GDP US$166 billion (2004)Total trade in goods US$530 billion (2004)Total trade in services US$84 billion (2004)

Economic growth 7.3% (2005Q1-Q3)Consumer price inflation 1.0% (Jan-Oct 2005)Unemployment rate 5.3% (Aug-Oct 2005)

Hong Kong - a global trading hub

• Economic freedom and free trade are what make it possible for 6.9mn people to have a high standard of living in a small city with very little natural resources

• For decades, Hong Kong is at the forefront of globalization

“ Big market, small government”

• Excellent infrastructure & flexible markets

• Good governance and regulatory framework

• Freedom of entry; open competition; level playing field

• Business leads, government facilitates

• Continuous economic restructuring

FDI Inflows of 10 Neighbouring Economies in Asia (US$billion)

2002 2003 2004

1 Mainland China (52.7)

Mainland China (53.5) Mainland China (60.6)

2 Hong Kong (9.7) Hong Kong (13.6) Hong Kong (34.0)

3 Japan (9.2) Singapore (9.3) Singapore (16.1)

4 Singapore (5.8) Japan (6.3) Japan (7.8)

5 India (3.4) India (4.3) S.Korea (7.7)

6 Malaysia (3.2) S.Korea (3.8) India (5.3)

7 S.Korea (2.9) Malaysia (2.5) Malaysia (4.6)

8 Philippines (1.8) Brunei (2.0) Taiwan (1.9)

9 Taiwan (1.4) Thailand (1.9) Vietnam (1.6)

10 Vietnam (1.2) Vietnam (1.5) Thailand (1.1)

Sources: UN Conference on Trade and Development 2005

Latest Inward Investment Data

• World Investment Report 2005: Hong Kong - 2nd largest recipient of FDI in Asia, 7th

in world

*preliminary figures Sources: UN Conference on Trade and Development 2005 Census and Statistics Department

•Inflow of FDI in Hong Kong

Year 2002 2003 2004 2005(Q1-Q2)Amounts (US$billion) 9.7 13.6 34.0 19.8*

Regional Operations in Hong Kong

2002 2003 2004 2005 % Change

(2004 – 2005)

RHQs 948 966 1 098 1 167 +6.3

ROs 2 171 2 241 2 511 2 631 +4.8

LOs 1 748 2 207 2 334 2 474 +6.0

RHQs+ROs 3 119 3 207 3 609 3 798 +5.2

RHQs+ROs+LOs 4 867 5 414 5 943 6 272 +5.5

Source: Report on 2005 Annual Survey of Regional Offices Representing Overseas Companies in HK

3,798 Regional Operation Centres

Source: Report on 2005 Annual Survey of Regional Offices Representing Overseas Companies in HK

262

204

115

107

75

33

49

45

38

54

168

606

537

215

160

139

133

110

103

73

68

50

437

17

0 100

200

300

400

500

600

700

800

900

1000

The United StatesJapan

The United KingdomThe mainland of China

GermanyTaiwanFrance

SingaporeSwitzerland

Republic of KoreaThe Netherlands

Others

Number of companies that are regional headquarters Number of companies that are regional offices

Hong Kong - 10 Key Advantages

• Rule of law• Unrivalled location• Low and simple taxes• World’s freest economy• Clean government• Free flow of information• World class infrastructure• Skilled workforce• International lifestyle• Gateway to the Mainland

•Inward investment projects completed by Invest Hong Kong

2002 2003 2004 2005 (Q1-Q3)

No of projects: 117 142 205 204

•About 16% of the completed projects in first 9 months of 2005 involved Mainland investments.

Investment projects completed by Invest

Hong Kong

Mainland and Hong Kong Closer Economic Partnership Arrangement

(CEPA)

• With the implementation of CEPA, Hong Kong's attractiveness to foreign investors was further strengthened.

• Out of the 204 investment projects completed by Invest Hong Kong in first 9 months of 2005, - 30 companies said they invested because of CEPA- 56 companies said it was a contributing factor

www.info.gov.hkwww.info.gov.hk/hkecon/press/index.htm

www.investhk.gov.hk