The Hong Kong Special Administrative Region (HKSAR) of the People's Republic of China is firmly committed to an open market policy. This policy applies to all trade, as well as to all investments in the HKSAR.

Hong Kong has become a Special Administrative Region of the People's Republic of China since 1 July 1997. The "One Country, Two Systems" principle provides the HKSAR with a high degree of autonomy in economic, trade, financial and monetary matters. This is guaranteed by the Basic Law, the mini-constitution of the HKSAR, which ensures that the important elements making Hong Kong a regional business and financial centre will extend well beyond 1997, including continuation of capitalist economic and trade systems, free movement of goods and capital, and status as a free port and separate customs territory. Tariff preferences and other similar arrangements obtained by the HKSAR will be enjoyed exclusively by the HKSAR. The Basic Law also provides that the HKSAR may participate in relevant international organizations and international trade agreements under the name "Hong Kong, China".

In 1986, Hong Kong became a separate contracting party to the General Agreement on Tariffs and Trade (GATT). Hong Kong was one of the original members of the World Trade Organization (WTO) when it was established on 1 January 1995. Hong Kong also became a member of the Customs Cooperation Council (subsequently renamed as the World Customs Organization) in 1987 and the Asia-Pacific Economic Cooperation (APEC) in 1991. The status of the HKSAR in these and other international organizations remains unchanged except that our participation is now under the name "Hong Kong, China".

Trade Relations with Malaysia

• In 2010, Malaysia was Hong Kong's 10^th largest trading partner; 10^th largest market for domestic exports and 16^th largest market for re-exports; and 7^th largest source of imports. 
  
  

• The average annual growth rate in bilateral trade between Hong Kong and Malaysia was 8% from 2006 to 2010. The bilateral trade between Hong Kong and Malaysia increased by 27% from HK$87.2 billion in 2009 to HK$110.5 billion in 2010 (vis-à-vis an increase of 24% for Hong Kong's total trade in 2010 against 2009).
  
  

• Hong Kong is also an important entrepôt for trade between the Mainland of China and Malaysia. From 2006 to 2010, the average annual growth rate for re-export trade between the Mainland of China and Malaysia through Hong Kong was 10%. In 2010, such re-export trade increased by 35% to HK$81.0 billion from HK$60.2 billion in 2009 (vis-à-vis an increase of 23% for Hong Kong's total re-exports in 2010 against 2009). 
  
  

• Hong Kong's domestic export of goods to Malaysia totalled about HK$1.3 billion in 2010. The top three domestic export categories to Malaysia in 2010 were:
  

• Metalworking machinery 
  
  

• Electrical machinery, apparatus and appliances, and electrical parts thereof
  
  

• Telecommunications and sound recording and reproducing apparatus and equipment
  

• Hong Kong's re-export of goods to Malaysia totalled about HK$24.5 billion in 2010. The top three re-export categories to Malaysia in 2010 were:

• Electrical machinery, apparatus and appliances, and electrical parts thereof
  
  

• Telecommunications and sound recording and reproducing apparatus and equipment
  
  

• Office machines and automatic data processing machines
  

• Hong Kong's import of goods from Malaysia totalled about HK$84.7 billion in 2010. The top three import categories from Malaysia in 2010 were:

• Electrical machinery, apparatus and appliances, and electrical parts thereof
  
  

• Office machines and automatic data processing machines
  
  

• Telecommunications and sound recording and reproducing apparatus and equipment
  

• As a first step towards exploring the feasibility of entering into a bilateral free trade agreement (FTA), Hong Kong and Malaysia signed a Joint Declaration on Strengthening Economic Co-operation on 1 December 2009. The Joint Declaration aims at encouraging and promoting bilateral economic co-operation in areas such as: (i) trade in goods; (ii) trade in services; (iii) investment; (iv) science and technology; (v) creative industry; (vi) small and medium enterprises development; and (vii) tourism. The co-operation under the Joint Declaration includes promoting and facilitating trade and investment, promoting mutual visits by business delegations, and facilitating the organisation of, and participation in, trade fairs and exhibitions organised in Hong Kong and in Malaysia.

Bilateral Investment

• At the end of 2009, Malaysia was the 18^th major sources of inward direct investment (IDI) into Hong Kong, with an IDI stock of HK$16.5 billion.
  
  

• At the end of 2009, Malaysia was the 8^th major destination of outward direct investment (ODI) from Hong Kong, with an ODI stock of HK$43.9 billion. 
  
  

• As at 1 June 2010, 7 regional headquarters, 19 regional offices and 33 local offices were set up by Malaysian companies in Hong Kong.
  

Regional Cooperation Division
Trade and Industry Department
July 2011