Friday, December 14, 2007

BVI - the top outward direct investment destination and the 2nd largest inward direct investment source in Hong Kong economy for 2006

Yesterday, the Census and Statistics Department of the Hong Kong Special Administrative Region (HKSAR) government provided the following information regarding investments in the jurisdiction:

According to official figures released on December 13, 2007, at the end of 2006, the stock of Hong Kong's inward direct investment (DI) rose significantly by 42.3% from a year earlier to $740.9 billion at market value.

The Census and Statistics Department indicated that the substantial increase can to a great extent be explained by the large gain in market values of some listed prominent Hong Kong resident companies upon the surge in their share prices as well as an increase of direct investment inflow to these Hong Kong affiliates.

In accordance with the analysis of immediate source of investment, the 2nd largest investor territory at end-2006 was the British Virgin Islands, which took up 33.8% of the total stock of inward DI. So, one of the most popular offshore jurisdictions was 2nd only to China, which stood at 35.1% and reflected the importance of its investment in Hong Kong.

The BVI was followed by the Netherlands, Bermuda and the US accounting for 6.8%, 6.1% and 4.8% of the total stock of inward direct investment at end-2006 respectively.

Stock and Flow of Inward Direct Investment (DI) of Hong Kong at Market Value by Major Investor Country/Territory, 2005 - 2006
HK$ billion
Major investor country/territoryStock of Inward DIat end of yearDI Inflowduring the year

2005200620052006
Mainland of China1,271.92,024.372.9108.7
British Virgin Islands1,270.71,950.647.078.8
Netherlands327.1390.917.028.1
Bermuda271.5350.136.023.8
USA205.8277.9-29.751.3
Japan131.7151.414.118.0
United Kingdom88.5105.613.715.4
Cayman Islands66.7101.312.018.4
Singapore84.385.211.08.1
Taiwan30.033.73.58.7
Others308.0300.964.0-9.4
Total4,056.35,771.9261.5350.0

As regards outward direct investments, the Census and Statistics Department of the HKSAR said that, at the end of 2006, the stock of the country's outward DI increased by 44.1% from a year earlier to $675.8 billion at market value.

According to the analysis of immediate destination of investment, the British Virgin Islands remained the most popular tax haven economy for indirect channeling of DI funds as at end-2006 it accounted for 46.9% of the total stock of outward DI of Hong Kong.

Stock and Flow of Outward Direct Investment (DI) of Hong Kong at Market Value by Major Recipient Country or Territory, 2005-2006

HK$ billion
Major investor country/territoryStock of outward DIat end of yearDI outflowduring the year

2005200620052006
British Virgin Islands1,609.32,467.618.178.0
Mainland of China1,477.42,117.2130.3166.6
Bermuda126.1137.812.5-5.0
United Kingdom59.662.14.9-0.2
Japan29.760.8-9.234.7
Cayman Islands25.141.114.87.9
India6.737.10.828.9
Thailand23.034.72.66.4
Singapore40.033.16.02.1
USA26.329.10.93.1
Others230.7243.829.826.8
Total3,653.95,264.5211.5349.4

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