Friday, December 22, 2006

BVI FDI in the Hong Kong: New Statistics, Facts and Figures

On December 18, the Census and Statistics Department has released the statistics on Hong Kong's Gross National Product (GNP) and External Factor Income Flows (EFIF) for the third quarter of 2006. The figures in general confirm the previous Foreign Direct Investment ratings and tendencies for Hong Kong published some days ago, and analysed in the previous blogposts.

According to the new preliminary statistics for the 3rd quarter 2006, the total factor income inflow into Hong Kong made $158.2 billion in the 3rd quarter of 2006, and increased markedly by 29.5% if compared to this period of 2005. Within total factor income inflow, the Direct Investment Income increased very little – just by 26.7% over the year 2005; the reason for this rise were generally increased earnings of some prominent local enterprises from foreign investments.

Analysing by country or territory, the largest source of Hong Kong's external factor income inflow in the third quarter 2006 is still China Mainland, its stock accounts for 27.9% of the total amount. The second position is again occupied by the British Virgin Islands, with a share of 18.7%. The other major direct investors were the US, with 11.0%, and the UK, with 7.2%.

The British Virgin Islands, along with the Mainland, were also the most important places for Hong Kong's external factor income outflow. In the third quarter of 2006, the stock of the British Virgin Islands made 15.4% of the total amount, while the stock of China Mainland was just some 6% higher and made 21.7%. Other major investors from this list are the Netherlands, at 11.3%, and the US, at 10.8%.

I have compiled the information on dynamics of BVI and China Mainland foreign direct investments to Hong Kong in the table below:

Period (Qtr)Total ($M)BVI ($M)(%)China ($M)(%)
2004 4th111,42922,86620.52%29,52926.50%
2005 1st113,84624,24721.30%28,59325.12%
2005 2nd132,00834,81126.37%36,12927.37%
2005 3rd122,16627,29222.34%30,65225.09%
2005 4th135,94426,86019.76%39,40028.98%
2006 1st*149,20928,16518.88%42,41928.43%
2006 2nd*163,84029,49218.00%51,44431.40%
2006 3rd*158,24329,62018.72%44,19627.93%

$=Hong Kong Dollar

* Preliminary data

As we can see from the table in the last 2 years the level of BVI foreign direct investments to Hong Kong was increasing from quarter to quarter (except one extreme peak at the 2nd quarter of 2005). The fact that in percentage terms the part of BVI direct investments in 2006 is lower than in 2005 can be generally explained with the increase of direct foreign investments from Mainland China. Other countries have substantially lower % of FDI in Hong Kong.

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