UN report shows Hong Kong ranks 4th globally by foreign direct investment

Hong Kong, the Asian financial hub, attracted 48.4 billion U.S. dollars of foreign direct investment (FDI) in 2009, down 19 percent from a year earlier, according to a UN report on global FDI released here Friday.

The World Investment Report 2010 entitled "Investing in A Low-Carbon Economy", written by the United Nations Conference on Trade and Development (UNCATD), showed that Hong Kong's ranking was after the U.S., Chinese mainland and France.

FDI inflows into the U.S. last year stood at 129.9 billion U.S. dollars, followed by Chinese mainland's 95 billion U.S. dollars and 59.6 billion U.S. dollars for France, according to the report.

Simon Galpin, Director-General of Investment Promotion at Invest Hong Kong (InvestHK), the city's government agency responsible for attracting and facilitating foreign direct investment, told reporters the fourth place was the highest ranking for Hong Kong since 1990 when UNCATD started released the report.

In 2008, Hong Kong's FDI inflows amounted to 59.6 billion U.S. dollars, ranking the ninth position globally. In 2007, the city attracted 54.3 billion U.S. dollars, ranking 12th place in the world.

Galpin said Hong Kong's status as an international economy was reflected in the record high ranking.

"Hong Kong has many advantages in attracting foreign direct investment, including rule of law, free flows of information, geographic location at the center of Asia and as the gateway to China's mainland," he said.

He also pointed to new developments regarding the city's growing competitiveness and attractiveness in having more FDI inflows, including the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), HK's expanding network of double-taxation agreements with other economies and HK's increasing businesses in the Chinese currency renminbi.

Galpin also said FDI inflows in the first quarter of this year amounted to 20 billion U.S. dollars, a jump of 72 percent from the same period last year, which indicated the city could have a very good year in attracting FDI.

The UN report said the global financial and economic crisis had driven global FDI inflows down by 37 percent in 2009 from a year earlier, but the impact against Asian economies was less profound.

According to the report, FDI inflows worldwide plummeted to 1.114 trillion U.S. dollars in 2009, following a 16-percent decline in 2008. After this freefall, a timid and uneven recovery appears on its way, thanks to better corporate profits and improved economic and financial conditions.

The relative weight of developing and transition economies as both destinations and sources of global FDI is expected to keep increasing, the report said.

Although FDI to developing and transition economies declined by 27 percent in 2009 and FDI outflows from these two groups of economies contracted by 21 percent, they absorbed almost half of FDI inflows in 2009 and accounted for one quarter of global FDI outflows.

These countries are leading the FDI recovery and will remain major destinations for foreign investment, said the report.