The Director-General of Investment Promotion at Invest Hong Kong, Simon Galpin, explains that Hong Kong ranked the highest in Asia in terms of foreign direct investment (FDI) stock, enjoying a majority share of 37%, or US$912.2 billion, in 2009.

Hong Kong was the world’s fourth-largest Foreign Direct Investment (FDI) recipient in 2009, according to the World Investment Report 2010 (WIR) released by the United Nations Conference on Trade and Development (UNCTAD) on July 23. This marks the first time that Hong Kong has attained fourth place in the global rankings and represents a jump from its ninth position in 2008.

For the 12th consecutive year, Hong Kong continues to be the second-largest FDI recipient in Asia, after mainland China.

Although the global financial and economic crisis drove global FDI inflows down by 37% in 2009 compared with 2008, the impact on Asia was less profound. The US$48.4 billion FDI inflows to Hong Kong, for example, represented a 19% decrease. Hong Kong’s share of FDI inflows into Asia held up at about 21% in 2009, similar to 2008.

In terms of FDI stock, Hong Kong ranked the highest in Asia, enjoying a majority share of 37%, or US$912.2 billion, in 2009. This represented a 12% increase from 2008. As a point of comparison, Hong Kong’s FDI stock was US$201.6 billion in 1990.

Looking ahead, the WIR 2010 provided a glimpse of the global economic recovery picture, highlighting Asia’s rapid recovery in FDI flows compared with the more gradual improvement in global numbers. For example, in the first quarter of 2010, FDI inflows to Hong Kong, amounted to US$20 billion, representing a significant increase of 72% compared with the same quarter last year.

The Director-General of Investment Promotion at Invest Hong Kong, Simon Galpin, said, “Hong Kong’s status as an international economy is reflected in this record- high ranking as the fourth-largest global FDI recipient. With Hong Kong positioned at the heart of Asia and as the gateway to China, it is benefiting from the region's economic recovery.”

Outward FDI from developed countries is expected to recover in 2010 and increase in the medium term, according to the UNCTAD report. Data for the first quarter of 2010 showed that FDI outflows increased by 17% compared with the same period last year. For the BRIC economies (Brazil, Russia, India and China), as well as for countries in Latin America and the Caribbean, outward FDI prospects from transnational corporations were expected to increase as they became more active during the first five months of 2010.

“FDI is important to Hong Kong’s economy, bringing in new technology, transferring soft skills and creating jobs,” Mr. Galpin said. “We are committed to upholding the advantages of Hong Kong to maintain its competitive position as a business location. Measures such as CEPA, the growing network of Double Taxation Agreements and positioning Hong Kong as the offshore center for renminbi trading all support the city’s role as the preferred investment destination for foreign and Mainland companies.”

Invest Hong Kong, a department of the Hong Kong Special Administrative Region Government, was established in July 2000 to take responsibility for FDI and to support overseas, Mainland and Taiwanese businesses in setting up or expanding in Hong Kong. It provides free advice and customized services to help businesses succeed in Hong Kong's vibrant economy. As it celebrates its 10th anniversary, Invest Hong Kong has completed more than 2,000 investment projects, creating more than 25,000 new jobs in the first year of operation or expansion and resulting in US$6.66 billion of investment.

Note: All FDI data and estimates in WIR are continuously revised. Due to ongoing revisions, FDI data reported in the WIR may differ from those reported in earlier reports or other publications of UNCTAD or any other international or regional organizations.