Hong Kong’s business community sees the latest move to further liberalize cross-border trade in services as a boon to consolidate the city’s role connecting the Chinese mainland and the global economy.
The Ministry of Commerce and the Hong Kong Special Administrative Region government on Wednesday signed an amendment under the Closer Economic Partnership Arrangement (CEPA), which will come into effect next March, to implement liberalization initiatives in sectors where the city boasts competitive advantages, such as finance, tourism and testing and certification.
“The latest CEPA will considerably lower market entry barriers on the mainland, helping to sustain first-mover advantages for Hong Kong service suppliers,” said Hong Kong General Chamber of Commerce Chairman Agnes Chan. “In particular, this will benefit businesses struggling amid a sluggish global economy and help them tap into the mainland market.”
Hong Kong enterprises investing on the mainland will be permitted to apply Hong Kong law and conduct arbitration within the city, leveraging its advantages as a global center for legal and dispute resolution services.
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The amendment also removed the three-year period requirement for Hong Kong service providers to operate in the city. Chan said the move will encourage the growth of start-ups in Hong Kong and attract businesses and talent aiming to expand into the mainland.
“This will generate new job opportunities and further solidify Hong Kong’s position as a key value-added hub,” she said.
“With the new provisions, Hong Kong can capitalize on the central government’s strong backing and its international networks under the ‘one country, two systems’ framework,” she added.
The Federation of Hong Kong Industries Chairman Steve Chuang said the amendment not only provides greater development opportunities for Hong Kong’s strategic service industries but also helps the city further integrate with mainland cities in the Guangdong-Hong Kong-Macao Greater Bay Area.
This reaffirms Hong Kong’s role as a “super-connector” and “super value-adder”, enabling the city to enhance its pivotal roles in going global and attracting foreign investment, making active contributions to national development, he added.
Chuang noted that Hong Kong’s professional standards in testing and certification are internationally recognized. The amendment eases certain restrictions on testing and certification, enabling enterprises that market products in the mainland and globally to enjoy “one-stop” testing and certification services in Hong Kong. “This move solidifies Hong Kong's position as a global hub for testing and certification,” he said.
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On the financial service front, the revised agreement lifts the requirement that Hong Kong financial institutions must have total assets of no less than $2 billion at the end of the latest fiscal year to invest in insurance companies. Also, the restriction on foreign bank branches established by Hong Kong service providers from engaging in bank card business will be removed.
Tan Yueheng, chairman of BOCOM International Holdings, said these amendments have greatly encouraged the financial sector, “bringing vitality and new opportunities for growth”.
They will also enable Hong Kong to participate more actively and contribute to the high-quality development of the mainland’s financial system, said Tan, adding that the sector looks forward to the government and relevant departments working together to implement these measures as soon as possible.
Duncan Chiu, a Hong Kong lawmaker representing the technology and innovation sector, said the further reduction or removal of entry barriers for Hong Kong service providers is expected to strengthen the city’s role as the mainland’s gateway to the global market and drive its economic transformation and foster growth.
The update presents a key opportunity for Hong Kong’s technology sector to leverage the development of the mainland and promote industrial transformation, Chiu added.