Hong Kong moves to shore up investor confidence

A store that was vandalised on Sunday by protesters. Opinion remains divided on what impact the continuing unrest will have on businesses. PHOTO: REUTERS A protester hurling a petrol bomb into the Tsim Sha Tsui Police Station (left), and another vand
A store that was vandalised on Sunday by protesters. Opinion remains divided on what impact the continuing unrest will have on businessesPHOTO: REUTERS
A store that was vandalised on Sunday by protesters. Opinion remains divided on what impact the continuing unrest will have on businesses. PHOTO: REUTERS A protester hurling a petrol bomb into the Tsim Sha Tsui Police Station (left), and another vand
A protester hurling a petrol bomb into the Tsim Sha Tsui Police Station (above), and another vandalising a shop after a pro-democracy march in Hong Kong's Kowloon district on Sunday.PHOTO: REUTERS
A store that was vandalised on Sunday by protesters. Opinion remains divided on what impact the continuing unrest will have on businesses. PHOTO: REUTERS A protester hurling a petrol bomb into the Tsim Sha Tsui Police Station (left), and another vand
A protester hurling a petrol bomb into the Tsim Sha Tsui Police Station, and another vandalising a shop (above) after a pro-democracy march in Hong Kong's Kowloon district on Sunday.PHOTO: AGENCE FRANCE-PRESSE

Govt body releases surveys showing city still attracts foreign, mainland firms and start-ups

The city's embattled government has tried to shore up business confidence as companies, particularly those from the mainland, reel from 20 consecutive weekends of mostly violent demonstrations.

Invest Hong Kong (InvestHK), the government body tasked to attract and retain foreign direct investments, yesterday released two surveys showing that the city continued to attract and retain leading overseas and mainland companies, as well as global entrepreneurs.

There were 9,040 businesses in Hong Kong this year with parent companies overseas and on the mainland, up 9.9 per cent from 2017, said the joint survey by InvestHK and the Census and Statistics Department. The companies employed 493,000 people, an all-time high, and up 11.3 per cent from 2017.

Of these businesses, 1,541 had regional headquarters in Hong Kong, a figure that was up 9.1 per cent. Many are from the mainland, followed by Japan, the United States, Britain and Singapore, among others.

A separate survey by InvestHK found that the number of start-ups operating in major public and private co-work spaces and incubators in Hong Kong jumped 42.8 per cent to 3,184 this year, from 2017. Of the founders, 34 per cent were from outside Hong Kong, with the bulk from the US, the mainland and Britain.

Hong Kong's simple tax system, low tax rate, free flow of information and geographical location were among the top reasons cited for doing business in the city.

The positive figures notwithstanding, opinion remains divided on what impact the continuing unrest will have on businesses.

Mr Stephen Phillips, director-general of investment promotion, noted that it has put a dampener on investment sentiments, and said that InvestHK would devote more efforts to carrying out promotional work to rebuild investors' confidence.

Executive director Terence Chong of the Lau Chor Tak Institute of Global Economics and Finance at the Chinese University of Hong Kong remains confident, even though he expects the city may experience a sharp reduction in the number of company registrations in six months.

 
 
 

"I don't worry about the current situation at all because you have demonstrations everywhere, even in New York, London, and this is not going to last forever, so once the social unrest is gone, Hong Kong will return to the normal situation."

Dr Chong said that it was easier for mainland companies to come to Hong Kong, which has no capital controls.

"There is no other city for them to choose," said Dr Chong.

But managing director of Shanghai-based Kaiyuan Capital Brock Silvers said that even if the absolute number of offshore companies and start-ups in Hong Kong rose, "a more relevant metric might be the measure of opportunity lost, and many companies have been reducing their footprint or forgoing investment rather than fully exiting".

Financial Secretary Paul Chan, in a blog post on Sunday, disclosed that the government was now studying the possibility of rolling out a third round of relief measures to support small and medium-sized enterprises.

Mr Chan had said previously that the clashes between radical protesters and riot police in recent months had weighed down the retail and tourism industry, with many shuttering their businesses or laying off workers. He added that about 100 restaurants had closed, and about 2,000 people were affected in the catering business.

 
 

A number of mega local events, such as the Hong Kong Wine and Dine Festival, the Hong Kong Cyclothon, the Hong Kong Cross Harbour Race and a few sporting events, have been cancelled due to security concerns.

Mr Silvers said Hong Kong was feeling the dual pressure of a slowing Chinese economy and an unsettled local atmosphere, "reflected in its muddling financial markets".

"But should the security situation worsen, not only will foreign companies increase the pace of their withdrawal, but foreign governments will also begin to express their displeasure, which only adds to Hong Kong's economic risk," he said.

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A version of this article appeared in the print edition of The Straits Times on October 22, 2019, with the headline 'Hong Kong moves to shore up investor confidence'. Print Edition | Subscribe