The Mainland of China retained its No.1 ranking. Hong Kong and the Mainland together accounted for over half of FDI inflows in the region last year.

The Report, presenting the latest data on FDI and traces the global and regional trends, shows that FDI grew in all sectors, with services remaining the dominant sector. By contrast, the share of the manufacturing sector in the total fell in 2005.

Global FDI inflows rose substantially in 2005, for the second consecutive year. The total FDI inflows reached US$916 billion, up 29% from 2004.

Asia remained the largest FDI recipient among developing regions. Mainland China again led Asia, with US$72.4 billion in 2005.

FDI flows to Hong Kong increased by 5.6% to US$35.9 billion. Hong Kong’s inflow was greater than the total of the next three largest FDI recipients in Asia-Singapore (US$20.1 billion), South Korea (US$7.2 billion) and India (US$6.6 billion).

On a global scale, Hong Kong ranked 6th in FDI inflows in 2005, and continued to be classified as one of the “front-runner” economies as a result of the high rankings in both the UNCTAD Inward FDI Potential Index and UNCTAD Inward FDI Performance Index.

Hong Kong led all Asian economies and rose to fourth globally in the amount of inward FDI stock last year, with US$533 billion.

Speaking at a press conference, Director-General of Investment Promotion at Invest Hong Kong Mike Rowse, said, “We are encouraged to see that Hong Kong continues to be a major destination for FDI globally, maintaining our position as the 6th largest recipient of FDI in the world.

“The results reflect Hong Kong’s unique position as the two-way platform for overseas investors accessing the Mainland and rest of the region – and for Mainland companies to expand in the international markets,” he added. “Beyond the numbers, many of these companies are bringing new skills, products and services and job opportunities that contribute substantially to our economic development and competitiveness.”

The Report also discussed prospects for global FDI flows.

Data available on this year’s investment activity to date point to favorable prospects for continued growth in FDI flows worldwide in 2006. In the first half of 2006, for example, cross-border mergers and acquisitions, an important factor in the 2005 increase, rose by 39% in value compared to the same period last year.

Mr. Rowse noted that the finding coincides with Invest Hong Kong’s own recent results. “According to the latest figures released by the Census & Statistics Department, Hong Kong’s inward FDI in the first six months of 2006 amounted to US$20.66 billion,” he said. “During the same period, Invest Hong Kong has assisted 156 overseas and Mainland companies to invest here. We are confident that Hong Kong will remain one of the largest FDI recipients in the region.”

“Despite the encouraging results and a positive outlook, we are not complacent. The Government is well aware of the keen competition for FDI in the region, and is committed to maintaining and enhancing the overall business environment in Hong Kong. Invest Hong Kong will continue to monitor regional and global FDI trends and opportunities and keep up our targeted efforts to attract foreign investors,” concluded Mr. Rowse.