Tuesday, December 19, 2006

Hong Kong FDI Statistics for 2005: Leading Positions of the British Virgin Islands

We have already discussed stable positions of BVI as the second largest foreign investor for Hong Kong and in the China, as well as the fact that Hong Kong and China remain the most important foreign investors for each other. The statistics for Direct Investment inflow and outflow for Hong Kong in 2005, published by the Census & Statistics Department, has confirmed the high ratings of the British Virgin Islands in this region.

First of all, the Census & Statistics Department has stated that both the market value of the stocks of inward and outward direct investment in Hong Kong rose significantly in 2005. The market value of Hong Kong's inward direct investment rose 15.2% on 2004 to $4.056 trillion last year, with the ratio to GDP at 293%. Hong Kong's outward direct investment also rose 16.6% to $3.654 trillion, with the ratio to GDP at 264%.

The stocks of inward and outward direct investment amounted to more than 2.5 times the size of Hong Kong's GDP each. This substantial size of investments has emphasized the status of Hong Kong as an international financial centre and regional business headquarters.

The British Virgin Islands accounted the second largest share of the total amount of inward direct investment in Hong Kong's economy. At the end of last year it took up 31.3% of the total stock, and this is just 0.1% less than the amount of direct investment inflow from the Mainland. The Netherlands are in the third place, with 8.1% of the total stock of inward direct investment in Hong Kong's economy. Other major investors are Bermuda with 6.7%, and the US, with 5.1% of the total.

On outward direct investment, the British Virgin Islands, with 44% of the total stock of investments, remained the most popular offshore destination for indirect channelling of direct investment funds. China Mainland remained the most important destination for Hong Kong's outward direct investment, with 40.4% of the total amount.

In 2005 the British Virgin Islands remained also the second major supplier of Hong Kong's direct investment inflow. The investment amount of the BVI made $47 billion, while China Mainland was the most important direct investor with $72.9 billion. In general, if analysed by economic activity, the largest share of the total direct investment inflow in 2005 was made by those engaged in real estate, investment holding and various business services.

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