More relaxed rules for mainland enterprises to invest in Hong Kong and Macao special administrative regions (SARs) will be implemented soon.
The new policy sets out a clear service pledge on handling applications from mainland investors, in order to facilitate approval procedures, said an official from the Ministry of Commerce.
The new arrangement will make the application procedure more transparent and hand over most approval duties to provincial authorities, he said.
Except for enterprises planning to be listed overseas indirectly or investment holding companies, which will still require approval from the Ministry of Commerce, firms going to Hong Kong and Macao can choose to invest through setting up wholly owned or jointly owned businesses, mergers, acquisitions or capital injection under the relaxed rules, the official said.
The provincial approving authorities would seek opinions from the Hong Kong and Macao Affairs Office and the Central Government Liaison Office in the Hong Kong and Macao SARs when needed, he said.
In the past, all applications for investing in Hong Kong and Macao needed to be scrutinized by the Hong Kong and Macao Affairs Office of the State Council.
As for required documents, the applicant no longer needs to submit, as in the past, project proposal and feasibility study documents, he said.
The relaxation is part of the Mainland and Hong Kong/Macao Closer Economic Partnership Arrangement (CEPA) launched last year to boost the SARs' economies by giving them a head start before many of China's promises for accession to the World Trade Organization come into full effect in 2005.
Under the CEPA pacts, zero import tariffs have been given to 374 products deemed of Hong Kong and Macao origin since January 1, 2004.
The Chinese mainland and Hong Kong also broadened their free trade pact by adding 713 types of goods to the zero-tariff list last month.
The official said more facilitation policies on finance would be issued soon.
Analysts say the new policies will allow Chinese mainland enterprises more freedom in making decisions to invest in Hong Kong and Macao based on commercial considerations.
Liu Xueqin, an expert from the Chinese Academy of International Trade and Economic Co-operation, said the new facilitation policy will encourage more mainland enterprises to invest in Hong Kong and Macao, and speed up their decision-making.
She said the policies would shorten approval time to about a month rather than the six months previously needed.
"Many private firms are expected to make use of Hong Kong as a springboard to expand their businesses overseas," she said.
Of the 2.4 million enterprises engaged in manufacturing in the mainland, only about 2,000 have a presence in Hong Kong and most of them are State-owned.
Liu believes the relaxation could duplicate the success of the individual travel scheme.
By the end of June this year, 1.6 million people from the mainland went to Hong Kong under the scheme, which means an influx of billions of US dollars there.
"If each mainland private enterprise sets up one local office hiring two to three staff each, this will help boost the local economy," he said.
More offices of mainland enterprises would help push up the property prices in Hong Kong, Liu said.
She did not expect the relaxed rules for mainland private enterprises to create problems for local businesses.
"Many of Hong Kong's small and medium-sized enterprises are engaged in the service sector and opening the door to more mainland private enterprises is likely to provide additional business opportunities for them," she said.
According to Invest Hong Kong, a local investment promotion agency, accumulated mainland investment in the region by the end of last year was worth US$24.63 billion. The figure includes both State-owned and private enterprises.
(China Daily September 20, 2004)