External Investment

Hong Kong's attractiveness as a place to do business is reflected by two major indicators, namely the inflow of foreign direct investment (FDI), and the number of foreign-owned regional headquarters and regional offices of companies incorporated outside Hong Kong.

A Census and Statistics Department survey shows that Hong Kong's FDI inflow in 2002 amounted to US$9.7 billion. According to the 'World Investment Report 2003' released by the United Nations Conference on Trade and Development, Hong Kong was the second largest recipient of FDI in Asia in 2002.

Hong Kong had 8 978 enterprise groups¹ with inward direct investment at the end of 2002, comprising 380 in the manufacturing sector and 8 598 in the non-manufacturing sectors. The market value of the stock of inward direct investments amounted to $2,622.3 billion. Chart3 shows the major economic activities of these enterprise groups while Chart4 shows source countries/territories of the inward direct investments. Regarding employment, more than 69 per cent of them were enterprise groups employing fewer than 20 persons (Chart 5).

Chart 3: Position of Inward Direct Investment in Hong Kong at Market Value by Major Economic Activity of Hong Kong Enterprise Group at end-2002

Chart 4: Position of Inward Direct Investment in Hong Kong at Market Value by Major Investor Country/Territory at end-2002

Remarks: British Virgin Islands, Bermuda and Cayman Islands are important offshore financial centres commonly used by investors to channel inward direct investment funds to Hong Kong.

Chart 5: Number of Hong Kong Enterprise Groups (HKEGs) with Inward Direct Investment by Employment Size in mid-2002

According to the survey conducted by the Census and Statistics Department, on June 2, 2003, there was a total of 3 207 regional headquarters and regional offices in Hong Kong of companies incorporated outside Hong Kong. Compared with the corresponding figure of 3 119 recorded for 2002, there was an increase of 2.8 per cent.