Taiwan companies set to benefit from CEPA agreement
(HK Edition, XING ZHIGANG, China Daily staff)
2003-07-08
The landmark free-trade deal between the mainland and Hong Kong will
encourage more Taiwanese enterprises to invest in the mainland with Hong Kong as
a spring board, according to economic researchers.
Cao Xiaoheng, director of the Institute of Taiwan Economic Studies at
Tianjin-based Nankai University, forecast that Taiwan's service sector is set to
benefit most from the Closer Economic Partnership Arrangement (CEPA).
The deal, effective from January 1 next year, is expected to give Hong Kong
enterprises in 17 service industries such as banks and accountancy firms,
greater access to the mainland's rapidly-growing market.
The asset requirement for Hong Kong banks to set up branches on the mainland
will be lowered to US$6 billion from US$20 billion.
The mainland will also allow Hong Kong firms to set up wholly-owned companies
to provide management consulting, advertising, logistics and other services.
Hong Kong firms can also take up to 15 per cent of capital in mainland
insurance companies next year, up from the present 10 per cent.
Cao said easy access to the huge mainland market will make the Hong Kong
Special Administrative Region a magnet to Taiwanese firms in the service sector.
"Given the sagging economy and a small market on the island, no Taiwanese
firm can afford to miss the emerging opportunities to tap the vast mainland
market via Hong Kong," the researcher told China Daily.
He expected an increasing number of Taiwanese firms to first set up their
businesses in the HKSAR and then try to take advantage of the CEPA rules to pour
investment into the mainland.
"In this sense, the mainland, Hong Kong and Taiwan will all benefit from the
free-trade pact," Cao said.
Feng Bangyan, director of the Institute of Hong Kong, Macao and Taiwan
Economic Studies at Guangzhou-based Jinan University, said that
Taiwanese-invested firms on the mainland would also reap economic benefits from
the CEPA.
They will enjoy more quality professional services such as accounting and
logistics after Hong Kong service-sector firms are allowed in, Feng said.
Meanwhile, Taiwanese-invested firms on the mainland can also have wider
access to financial services offered by Hong Kong banks because Hong Kong has
more resources for financing small- and medium-sized enterprises.
By the end of April this year, the number of Taiwanese-funded projects on the
mainland had topped 57,574, with a contracted investment of more than US$64
billion.
Cao with Nankai University predicted that the CEPA is also expected to create
a platform for the mainland, Hong Kong and Taiwan to strengthen their
co-operation while making best use of their unique advantages.
As an international financial centre which boasts the world's top
professional talents, the HKSAR can serve as a capital and service base for
Taiwanese firms.
At present, nearly 20 Taiwanese firms are listed in Hong Kong.
High-tech Taiwanese firms, especially in information technology and
electronics, can play a key role in research and development and product design.
The mainland, with its low labour costs, rich labour resources and advanced
production facilities, can be built into a production base and manufacturing
centre.
"Closer economic co-operation resulting from the CEPA among the three sides
is set to generate new business opportunities for each party," Cao said.
(HK Edition 07/08/2003 page7)
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