After signing a free-trade agreement (FTA) with China in late June, Hong Kong is gearing up to compete with neighboring countries -- including Taiwan -- for international investors who aim to tap into the Chinese market.
Frederick Lam (林天福), the deputy executive director of the Hong Kong Trade Development Council, is scheduled to host a road show in Taiwan next Monday to promote the benefits of Hong Kong's Closer Economic Partnership Arrangement (CEPA) with China.
The repercussions of Lam's arrival -- four days before the 2003 Taiwan Business Alliance Conference convenes in Taipei on Oct. 19 to solicit new foreign investment -- and what message he will convey to local businesses are yet to be known, a government official said yesterday.
"Benefits under the CEPA may bring in both business opportunities and threats to Taiwan," said Hu Chung-ying (
Regulations for the CEPA need to be outlined before its impact and potential benefits can be prepared for, Hu said.
In principle, the cross-border FTA offers preferential market access, including lower entry thresholds to Chinese markets for Hong Kong-based companies, and zero tariffs on 90 percent of Hong Kong's exports to China.
The trade agreement has given Hong Kong banks an edge over foreign rivals in setting up branch networks.
For example, the advantages of opening a Hong Kong-affiliated bank in China include less working capital -- a differance of between US$6 billion and US$20 billion -- the permission to trade in Chinese yuan and a curtailed schedule for opening branches on the condition that the bank forms a joint venture with Chinese capitalists.
Therefore, the agreement has begun to attract Taiwanese financial service providers trying to hedge their bets.
Fubon Financial Holding Co (
Lin Shiaw-pin (林孝平), chief strategic officer of Chinatrust Financial Holding Co (中信金控) said that benefits under the agreement may not apply to Taiwanese financial groups, which are still bound by restrictions laid down by regulatory authorities here.
But foreign banks will be able to enjoy the benefits of partnering with a Hong Kong-incorporated bank, Lin said.
The FTA would make Hong Kong banks even more attractive if permission to trade in Chinese yuan was granted, he added.
Wang Lee-rong (
She said that Hong Kong has always been a competitive place in attracting capital, and its financial sector continues to play an important role.
Chen Po-chih (
He said that the pact will end up hollowing out the service sector in Hong Kong and putting the territory's economy in a vulnerable position.
"The agreement won't do much to help Hong Kong's economy, which poses no threat at all to Taiwan," Chen said.
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