Hong Kong's services sectors stand to benefit from the 4 trillion RMB stimulus package unveiled by the Central Government last November, the Hong Kong Trade Development Council (HKTDC) said Monday.

Hong Kong's expertise in areas such as infrastructure construction, real estate development, environmental protection, exhibitions and logistics are key areas for services suppliers, said the council in a new study to be published later this week.

Hong Kong's infrastructure and real estate services can expect to play a role in construction and infrastructure projects in the Chinese mainland, especially if foreign investment projects are included, said HKTDC Assistant Chief Economist Dickson Ho, author of the report, at a press conference here.

The stimulus package, introduced to boost domestic demand, centers on construction and infrastructure investment.

"Under the Closer Economic Partnership Arrangement (CEPA), Hong Kong services sectors are allowed to set up wholly owned enterprises on the mainland to provide a variety of construction and related services," said Ho.

The report suggests that Hong Kong companies with strong funding and technical expertise explore opportunities to become main project contractors or sub-contractors, through BOT (Build- Operate-Transfer) and PPP (Public-Private-Partnership), supplying capital, technical skills and project management.

CEPA also allows Hong Kong services providers in the environmental protection industry to operate as wholly owned enterprises on the mainland to provide a range of environmental protection and related services, said Ho.

"In the mainland, Hong Kong companies' strengths in excellent project management, effective communication, and introducing advanced environmental technology for customized applications are well recognized," he said.

The stimulus package, he said, will create opportunities for services providers in sewage and solid waste treatment, water conservation, energy efficiency and pollutant abatement projects.

In addition, the stimulus package will focus on industrial upgrades and services sector development. "Under the stimulus package, local governments have undertaken to promote industrial upgrade and brand development," Ho said.

Hong Kong design and marketing companies should target mainland enterprises wanting to develop and promote their brands, added Ho, especially those situated in production bases, such as Guangdong, Jiangsu and Zheijiang provinces, for light consumer goods.

Hong Kong can also become an effective exhibition platform for mainland enterprises intent on promoting their products and brands internationally, he said.

"Under CEPA, units set up by Hong Kong services providers in Guangdong, Beijing, Tianjin, Chongqing and Zhejiang are allowed to organize overseas exhibitions for enterprises there," Ho pointed out.

Modernizing rural infrastructure and raising rural income feature prominently in the stimulus package as well.

"Hong Kong services providers are renowned for their expertise in distribution, international logistics and supply chain management," said Ho. "They may like to explore opportunities in developing rural distribution centers and logistics services along with mainland counterparts."

"With the active fiscal measures, alongside the adoption of a moderately loose monetary policy and other pump-priming measures, including tax rebates, it is expected that the mainland's economy will pick up steam in the second half of 2009," Ho said.

The findings of the new HKTDC study will be published in a Trade Watch report entitled "The Chinese Mainland's 4-Trillion-yuan Stimulus Package and Opportunities for the Hong Kong Services Sector."

(Xinhua News Agency February 23, 2009)