The central government has lowered the capital requirements for
Hong Kong-based companies on the mainland and granted them wider
access to 11 new industries through a recently signed supplement to
the Closer Economic Partnership Arrangement.
According to the supplement, the asset requirements of Hong Kong
banks hoping to purchase stakes in mainland counterparts was cut to
US$6 billion from US$10 billion. And Hong Kong tourism agencies,
hospitals, public utility-related businesses, and elderly and
environmental services would be given wider access to mainland
markets.
The amendments are scheduled to take effect on January 1,
2008.
Speaking at the signing ceremony, Hong Kong Financial Secretary
Henry Tang said the new CEPA package would provide broader
opportunities for Hong Kong business while reinforcing Hong Kong's
capabilities of better tapping the mainland market.
He said that the new package provides a positive response to a
number of recommendations included in the Final Report of the
Economic Summit of the mainland's 11th Five-Year Plan.
"It's stepping forward gradually, to make ways of doing business
more diversified on the mainland," said James Sung, a political
science lecturer at the City University of Hong Kong.
"The mutual recognition of professional qualifications from both
the mainland and Hong Kong is going to encourage better
cross-border communications."
Broadened areas
The fourth amendment of the arrangement covers 38 different
sectors, making it the furthest reaching yet.
The new accord enhances cooperation in finance, conventions and
exhibitions, and mutual recognition of professional
qualifications.
In addition to easing the capital threshold, the mainland would
also develop green lanes for Hong Kong banks to set up branches in
new areas. And mainland banks and fund management companies would
also be able to establish subsidiaries in Hong Kong.
To boost tourism, the agreement stipulates that the minimum
annual business turnover required of a Hong Kong travel enterprise
setting up a joint venture or wholly owned enterprise on the
mainland would be respectively reduced to US$8 million and US$15
million.
The required capital investment for Hong Kong medical-services
suppliers setting up equity or joint ventures on the mainland would
be reduced from 20 million yuan (US$2.6 million) to 10 million yuan
(US$1.3 million).
Hong Kong service providers would be allowed to operate elderly
service agencies in the form of wholly owned, private,
non-governmental enterprises in Guangdong Province on a pilot basis.
According to the clauses addressing public utilities, Hong Kong
service providers would be allowed to set up wholly owned
operations to construct and operate gas, heating and water-supply
networks, in addition to water-drainage services, for medium-sized
mainland cities.
Warm applause
Vice-Chairman of the Hong Kong Association of Travel Agents Paul
Leung said the arrangement would be a win-win situation.
"It not only helps increase exposure for Hong Kong travel agents
in the mainland market, but also, the quality of mainland players
can be improved through the consequential competition," he
said.
"Small and medium-sized Hong Kong banks can speed up their
mainland expansion with the help of the CEPA," said the Hong Kong
Association of Banks Chairman Peter Sullivan.
(China Daily June 30, 2007)
