Hong Kong 3rd highest FDI recipient in the world

On August 1, 2011, in Doing Business, Economy,

HK took 30% of the FDI stock pie in 2010, earning it the third position in UNCTAD's World Investment Report 2011

In our previous blog, we have mentioned that Hong Kong has received a record-high inflow of FDI worth HK$535 billion in 2010, up 32% from 2009. It is no surprise then, that the United Nations Conference on Trade & Development’s (UNCTAD) World Investment Report 2011 has recently ranked Hong Kong the world’s 3rd highest foreign direct investment (FDI) recipient. In 2010, the economy represented a 30% share of FDI stock worth over US$1 trillion.

Hong Kong has consistently maintained its position as one of the top foreign direct investment recipients in Asia for 13 years. This year, however, marks its inaugural placement as the third highest FDI recipient in the world in UNCTAD’s report. It also signals an encouraging uptrend and Hong Kong’s burgeoning status as Asia’s investment mecca. In 2008, the city was ranked in the ninth position and in 2009, it climbed five notches up to the fourth position. Additionally, Hong Kong’s FDI stock has grown leaps and bounds since 1990. More than two decades ago, Hong Kong’s FDI stock registered at approximately US$202 billion.

Hence, Hong Kong’s ability to sustain a healthy inflow of capital from investors is one of the factors that continually motivate small to medium enterprises as well as MNCs to form a company in Hong Kong. It cannot be denied that Hong Kong is advantageously positioned in close proximity to China and many investors and companies see it as a gateway to the vast economy. Hong Kong, like many economies in the East, is feeling the benefits of the global interest in Eastern economies following the global financial crisis in 2008. However, the city’s long-standing status as an investment magnet is neither a miracle nor a product of mere good luck. Hong Kong diligently ensures that it has the following necessary elements to keep investors and high net worth individuals (HNWIs) coming and settling in the city through the Hong Kong investor visa scheme:

1. First of all, Hong Kong offers an international business environment for companies wishing to set up a branch or Hong Kong subsidiary. Hong Kong does not impose foreign ownership restrictions, thereby ensuring a level playing field for all entities operating in the city. Hong Kong has consistently been ranked the world’s freest economy by Fraser Institute and Heritage Foundation.

2. Hong Kong offers a simple and low taxation scheme that is attractive to investors and entrepreneurs alike. Profits are taxable at a flat rate of 16.5% and income tax is capped at 15%. It also has no sales tax, witholding tax, dividends tax or capital gains tax. In 2009, Forbes ranked the city the world’s third lowest for tax misery.

3. Hong Kong ensures a steady supply of skilled workforce by implementing a two-pronged approach to employment. Firstly, and as discussed in a previous blog, Hong Kong offers work visas to entice the best talent worldwide to join its workforce – the admission scheme for mainland talents and professionals (ASMTP) and quality migrant admission scheme (QMAS). It also offers the capital investment entrant scheme (CIES), especially for investors and HNWIs.
Secondly, Hong Kong maintains a competitive education system and churns out top graduates. It also is home to three out of 50 top universities worldwide. Therefore, to tap and retain foreign graduates to bolster its workforce, Hong Kong offers the Immigration Arrangements for Non-local Graduates (IANG) scheme.

4. Last but not least, Hong Kong facilitates businesses by plugging them to world-class telecommunications network, land transportation, shipping and logistics connectivity as well as affordable utilities such as water and electricity. Hong Kong’s air cargo made up 35% of its total trade in 2008 and on a yearly basis, the Hong Kong port handles 24 million TEUs of cargo. In order to maintain its position as the 8th most e-ready economy in the world, plans are on the way, fuelled by a HK$2 billion funding, to further develop Hong Kong’s infocommunication technology.

Altogether, these factors show why Hong Kong has remained bullish in attracting investors. Further analysis by GuidemeHongKong indicates that the city is in good stead to attract more foreign capital as stimulate mutual growth when its free trade agreements with the EFTA states as well as reviewed Competition Bill and Companies Bill come into effect.

Interested in doing business in Hong Kong? Learn more about our Hong Kong company registration services.

GuideMe Hong Kong

Incorporate