CEPA Delivers on Its Promise

A study on the economic impact of the first phase of CEPA has shown that the Closer Economic Partnership Arrangement has brought considerable benefits, both to business enterprises and Hong Kong’s economy as a whole.

More than 90% of the responding companies trading in goods considered that CEPA I was beneficial to the Hong Kong economy, and 89% considered the trade pact beneficial to the manufacturing sector. 

In 2004, more than 3,000 certificates of origin were issued under CEPA I, involving products with a total value of HK$1.15 billion which enjoyed tariff free treatment on importation into the Mainland. It is expected that the value of CEPA exports to the Mainland will increase by double that in 2004. 

In the area of trade in services, the assessment found that 78% and 46% of the responding companies considered that CEPA I was beneficial to the Hong Kong economy and their own industries, respectively. 

Of the more than 660 companies that had obtained Hong Kong Service Supplier certificates in 2004, the study revealed that 27% of them had already set up operation under CEPA I in the Mainland. 

As well, companies in the 18 sectors covered in CEPA I increased their capital investment in Hong Kong by HK$1 billion in 2004 due to CEPA. That figure is expected to surge to HK$4.5 billion in 2005. 

Mainland residents made 4.26 million trips to Hong Kong in 2004 under the Individual Visitors Scheme, accounting for 20% of total visitors. The IVS visitors generated an additional HK$6.5 billion in tourist spending during the year. 

CEPA’s impact on the labour market has been considerable, with an estimated 29,000 new jobs and forecast jobs created for Hong Kong in the first two years of implementing CEPA I. 

While trade and investment facilitation was not covered in the quantitative analysis of the study, the Administration has also assessed the impact of the measures under CEPA on attracting foreign investments to Hong Kong. 

For instance, 68 Mainland enterprises were granted approval to invest in Hong Kong between August, 2004 and December, 2004. The amount of investment totaled US$470 million or 48.9% of the total amount for the year. 

The assessment was conducted by the Commerce, Industry and Technology Bureau, in collaboration with the Trade and Industry Department, the Economic Analysis and Business Facilitation Unit, and the Census and Statistics Department. The Hong Kong Tourism Board also provided useful input.

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