Supplement IX to CEPA boosts access to Mainland market for Hong Kong service industries
Friday, June 29, 2012
The Hong Kong Special Administrative Region Government and the Central People's Government today (June 29) reached agreement on the enhancement of economic and trade co-operation and exchanges between the two places under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).
Witnessed by State Councillor Madam Liu Yandong; the Chief Executive, Mr Donald Tsang; the Director of the Hong Kong and Macao Affairs Office of the State Council, Mr Wang Guangya; the Director of the Liaison Office of the Central People's Government in the Hong Kong Special Administrative Region, Mr Peng Qinghua, and other guests, the Supplement IX to CEPA was signed today by the Financial Secretary, Mr John C Tsang, and the Vice-Minister of Commerce, Mr Jiang Yaoping.
Supplement IX to CEPA provides for a total of 43 services liberalisation and trade and investment facilitation measures, including 37 liberalisation measures in 22 service sectors, strengthens co-operation in areas of finance, trade and investment facilitation, and further promotes the mutual recognition of professional qualifications in the two places. The respective measures are summarised below:
Trade in services
Market access conditions will be further relaxed in 21 existing sectors, namely, legal; accounting; construction; medical services; computer and related services; technical testing and analysis services; placement and supply services of personnel; printing; convention and exhibition; other business services; telecommunications; audiovisual; distribution; environment; banking; securities; social services; tourism; cultural; rail transport; and individually owned stores. Liberalisation measures will also be introduced in a new sector, namely, education services. Including the measures in Supplement IX, the two sides have so far announced 338 liberalisation measures in 48 service sectors.
On legal, to allow Hong Kong law firms that have set up representative offices on the Mainland to operate in association with one to three Mainland law firms.
On accounting, to allow Hong Kong professionals who have obtained the Chinese Certified Public Accountants qualification to become partners of partnership firms in Qianhai on a pilot basis; and documentation requirements will be suitably simplified for applications to conduct business on a temporary basis on the Mainland by Hong Kong accounting firms.
On construction, Hong Kong professionals who have obtained the qualifications of Mainland's supervision engineer, registered architect, structural engineer, registered civil engineer (harbour and waterway), registered public facility engineer, registered chemical engineer, registered electrical engineer are recognised as registered practitioners for the purpose of declaration of engineering enterprise qualifications within Guangdong Province in accordance with the relevant Mainland regulations, regardless of whether they are registered practitioners in Hong Kong.
On medical services, to allow Hong Kong service suppliers to set up on the Mainland, wholly-owned medical institutions or medical institutions in the form of equity joint venture or contractual joint venture with Mainland medical institutions, companies, enterprises and other economic organisations. Medical institutions in the form of equity joint venture, contractual joint venture or wholly-owned medical institutions (other than wholly-owned hospitals and wholly-owned convalescent hospitals) set up on the Mainland by Hong Kong service suppliers, shall be subject to the standards and requirements applicable to medical institutions established by Mainland entities and individuals, and the setting up of the aforementioned medical institutions shall be approved by the health administrative department at the provincial level. The health administrative department at the provincial level of Guangdong Province shall be responsible for project establishment and approval procedures for setting up wholly-owned hospitals by Hong Kong service suppliers in Guangdong Province.
On banking, to allow eligible Hong Kong banks to offer custodian services regarding settlement funds of customers of securities companies and margin deposits on futures transactions.
On securities, to allow Hong Kong securities companies that satisfy the qualification requirements as foreign shareholders of foreign-invested securities companies, and Mainland securities companies that satisfy the requirements for establishing subsidiaries, to set up equity joint venture securities investment advisory companies on the Mainland. The equity joint venture securities investment advisory company shall be a subsidiary of the Mainland securities company, the scope of business of which shall focus specifically on carrying on securities investment advisory businesses. The shareholding of the Hong Kong securities company could, at a maximum, reach 49 per cent of the total shareholding of such a joint venture securities investment advisory company.
On tourism, to allow Hong Kong travel agents established on a wholly-owned or joint venture basis on the Mainland to apply for the operation of group tours to Hong Kong and Macao for registered permanent residents of the original provinces, autonomous regions and municipalities; and to allow one qualified Mainland-Hong Kong joint venture travel agent to operate outbound group tours for Mainland residents on a pilot basis to destinations beyond Hong Kong and Macao (excluding Taiwan).
On computer and related services, to allow Hong Kong service suppliers to provide cross-boundary database services in Qianhai and Hengqin on a pilot basis; and to set up joint venture enterprises on the Mainland to provide database services. The proportion of Hong Kong service suppliers' shareholding should not exceed 50 per cent.
On placement and supply services of personnel, the minimum registered capital required for Hong Kong service suppliers to set up wholly-owned job referral agencies and job intermediaries in Beijing Municipality, Tianjin Municipality, Shanghai Municipality, Chongqing Municipality, Jiangsu Province and Fujian Province follows the requirements applicable to Mainland enterprises in those provinces and municipalities.
On printing, to allow Hong Kong service suppliers to set up equity joint venture enterprises in Qianhai and Hengqin on a pilot basis to engage in the printing of publications and other printed matters. The proportion of Hong Kong service suppliers' shareholding should not exceed 70 per cent.
On convention and exhibition, to allow contractual joint venture enterprises set up by Hong Kong service suppliers on the Mainland to conduct overseas exhibition businesses on a pilot basis, and the participating enterprises should be registered in that province, autonomous region or municipality.
On telecommunications, to allow Hong Kong service suppliers to set up wholly owned enterprises or equity joint ventures in Dongguan and Zhuhai in Guangdong Province on a pilot basis to provide offshore call centre services. There is no restriction on the proportion of Hong Kong capital in shareholding.
On environment, agreement has been made for Guangdong Province to approve Hong Kong service suppliers for undertaking entrusted environmental monitoring activities in Guangdong.
On individually owned stores, the new Supplement expands the scope of services of individually owned stores set up by Hong Kong permanent residents with Chinese citizenship on the Mainland; lifts the restrictions on the number of persons engaged in the operation and the business area of individually owned stores set up by Hong Kong permanent residents with Chinese citizenship on the Mainland; and lifts the identity authentication requirements of Hong Kong permanent residents with Chinese citizenship to set up individually owned stores in Guangdong Province.
On social services, to allow Hong Kong service suppliers to operate elderly service agencies and disability services agencies in the form of wholly-owned profit-making enterprises on the Mainland.
Under CEPA Supplement IX, all measures relating to the liberalisation of trade in services will take effect from January 1, 2013.
The Mainland shall amend and improve the relevant requirements for overseas listing to support Mainland enterprises that satisfy Hong Kong's listing requirements in listing in Hong Kong, and create favourable conditions for Mainland enterprises, especially small and medium enterprises, to raise capital through direct listing in overseas markets. In addition, Supplement IX to CEPA will actively explore ways and means to deepen co-operation between the commodity futures markets on the Mainland and in Hong Kong, and promote the establishment of a futures market system in which both sides can complement each other's advantages, work in co-operation and develop mutually; and will actively explore the lowering of the eligibility requirements for Hong Kong's financial institutions to apply for Qualified Foreign Institutional Investor status in order to facilitate Hong Kong's long-term capital investing in the Mainland's capital markets. Supplement IX also supports qualified Hong Kong financial institutions in setting up joint venture securities companies, fund management companies and futures companies on the Mainland.
Mutual Recognition of Professional Qualifications
The two sides shall continue with the mutual recognition of professional qualifications between real estate appraisers on the Mainland and general practice surveyors in Hong Kong, and between cost engineers on the Mainland and quantity surveyors in Hong Kong.
During his visit to Hong Kong in August 2011, the Vice-Premier of the State Council, Mr Li Keqiang, clearly indicated that the Mainland market will be further opened up for Hong Kong services trade, with a view to basically achieve, through CEPA, liberalisation of trade in services between the Mainland and Hong Kong before the end of the 12th Five-Year Plan period. Supplement IX to CEPA marks a substantial step by the two sides towards this goal. The various measures in the new Supplement further assist Hong Kong service industries in accessing the Mainland market, and are conducive to the continued economic development of the two places.
The public can visit the Trade and Industry Department's CEPA website at www.tid.gov.hk/english/cepa/index.html for details on CEPA.