Press Release
The CEPA benefits Hong Kong economy
Thursday, January 5, 2006
Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), now in its third year of operation, fostered closer economic co-operation between the Mainland and Hong Kong and contributed to the long-term economic development in both places, the Director-General of Trade and Industry, Mr Raymond Young said today (January 5).
Speaking at a seminar organised by the Chinese General Chamber of Commerce, Mr Young said CEPA provided a mechanism for broadening and enriching the liberalisation measures and adopting a building block approach.
Mr Young said the third phase of CEPA (CEPA III), signed in October, 2005, came into effect on January 1. It provides tariff-free access for all products of Hong Kong origin (except prohibited articles) imported into the Mainland upon applications by local manufacturers and upon the CEPA rules of origin being agreed and met.
Under the three phases of CEPA, Hong Kong and the Mainland have reached agreement on the CEPA rules of origins for 1,370 products. For products where there are no agreed rules of origin, the relevant rules will be worked out between the two parties within six months upon applications by manufacturers.
On trade in services, taking the three phases of CEPA together, the Mainland has agreed to provide preferential treatment to Hong Kong service suppliers in 27 service areas. Twenty three liberalisation measures spreading across 10 service areas, namely legal, accounting, audiovisual, construction, distribution, banking, securities, tourism, transport and individually owned stores, became effective from January 1 under CEPA III.
In respect of trade and investment, facilitation measures have been implemented under CEPA with the intention to enhance the flow of trade and investment between the two places. The relaxation of approval procedures for Mainland companies to invest in Hong Kong and the permission for certain types of Mainland securities and futures companies to establish subsidiaries in Hong Kong are cases in point.
Reviewing its operation in the past two years, Mr Young said CEPA had been implemented smoothly since its inception. Many Hong Kong companies, including those owned by foreign investors, had benefited from the liberalisation under CEPA.
More than 10,000 applications for Certificate of Origin under CEPA (CO(CEPA)), with a total export value exceeding HK$3.5 billion have been issued. The products concerned range from textiles and clothing and foods to pharmaceutical, plastics and plastic products. The amount of CO(CEPA) issued and the value of CEPA exports in 2005 both recorded more than 100% increase compared with 2004 after a wide range of products including food and beverages were granted zero-tariff preference under CEPA II.
"It is encouraging to see that there has been a steady increase in both the number of applications for CO(CEPA) and the total export value under CEPA," Mr Young said.
For trade in services, preferential treatment offered under CEPA takes various forms, including relaxation in equity share restrictions, reduction in the entry thresholds such as registered capital and business turnover, as well as relaxation in restrictions over geographical location and business scope. There is a steady growth in the number of Certificate of Hong Kong Service Suppliers issued in the past two years. Trade and Industry Department (TID) has issued Certificate of Hong Kong Service Suppliers to some 900 Hong Kong companies to enable them to apply to the Mainland authorities to launch their business on the Mainland. The most popular sectors are logistics and transport, distribution, advertising, construction and management consultancy. Satisfactory progress was made in helping Hong Kong residents to set up individually owned stores in the Mainland. As at September, 2005, more than 1,770 Hong Kong residents had set up individually owned stores on the Mainland. Of these, 1,640 were established in Guangdong Province.
Mr Young stressed that CEPA was a trade facilitation platform and he encouraged the business sector to better use of it. "The preferences under CEPA are still far from being exploited to the full," he said. "With the emergence of an increasingly wealthy and discerning middle class on the Mainland, the demand for quality products with a 'Made in Hong Kong' label, such as food, clothing, watches, medical and health products, will increase, and these are all within the scope of CEPA."
Since the announcement of CEPA, the Government has organised or participated in about 180 seminars in Hong Kong to promote business opportunities brought about by CEPA to local, foreign and Mainland investors. Large scale exhibitions and promotional activities were held in Hong Kong and overseas to publicise CEPA. TID has been providing free information and one-stop advisory services to the public, who can obtain up-to-date information on CEPA through email, telephone enquiry hotlines, and TID's designated CEPA website. TID has handled more than 55,000 enquiries and the CEPA website has more than 1 million hits since the signing of CEPA.
"In 2006, we will strengthen liaison with Mainland authorities at central, provincial and municipal levels, to help Hong Kong companies to make use of the preferences under CEPA," Mr Young said. The Mainland authorities will be invited to further publicise the services available to Hong Kong companies, streamline application procedures, provide information on laws and regulations governing the provision of relevant services, set up investment guidelines and establish designated enquiry points and one-stop service counters for Hong Kong Service Suppliers where possible.
TID will participate actively in the work of the Guangzhou-Hong Kong CEPA Market Entry Facilitation Group, set up in November, 2005, by the Hong Kong Trade and Development Council and the Bureau of Foreign Trade and Economic Co-operation in Guangzhou, with a view to providing assistance to Hong Kong businessmen who have encountered difficulties in starting businesses or setting up individually owned stores in Guangzhou under CEPA.
On market information, TID is seeking to build up a database of research materials on Mainland rules and regulations in individual service sectors, which will be uploaded on the CEPA website to help Hong Kong enterprises understand more about the application and approval procedures in the Mainland.
"CEPA is an open and developing trade and investment facilitation platform. The Government will continue its efforts to engage the Mainland authorities to achieve further liberalisation in the trade of goods and services between Hong Kong and the Mainland in the years to come," Mr Young said.
Ends