Monday, January 01, 2007The Hong Kong Bridge to China

Lorna SmithEast meets West in the BVI

Just as the growth of China’s economy presents great opportunities for many countries throughout the rest of the world, it is incumbent upon us to take advantage of the tremendous opportunities for the BVI and BVI-registered companies.

From 2003 to 2005, China averaged 32 percent economic growth, an impressive trend which continued throughout 2006. That China’s imports and exports are also growing at near this same rate demonstrates that foreign trade is a key engine of this growth. In fact, Chinese Government statistics show that since 1993 there has been steady and continuous growth amounting to more than 230 percent in foreign investment in China. Since 2003, the BVI International Finance Centre has been working to ensure that the BVI benefits from this remarkable growth. To this end, we hosted a series of road shows in both Shanghai and Hong Kong last year and we visited Beijing where we were well received at the highest levels of Government.

We can proudly state at this juncture that our work has been paying off. The BVI has now become the second largest foreign investor into China, second only to Hong Kong. The People’s Republic of China’s Ministry of Commerce statistics for the period 2003 to the end of 2005 show a steady growth in BVI investment into China mainland, starting with US$5.8 billion and rising to US$9.0 billion in 2005. Japan, was the next largest investor, with its level of investment rising from US$5.1 billion to US$6.5billion for the same period. Investment in the other direction (i.e. China to the BVI) for the years 2003 and 2004 showed a similarly dynamic and robust relationship – US$210 billion and US$386 respectively.

BVI investments into Hong Kong tell a similar story: in 2003 and 2004 annual investments were US$92.6 billion and US$96.5 billion respectively. BVI investments were trailed by China, the United States, and the United Kingdom, with the BVI being in the top ranks of countries which are the recipients of Hong Kong investment overseas.

There continues to be therefore, a strong case for strengthening our ties with China, Hong Kong, and the wider Asia-Pacific Rim. These are relationships that have been paying off for the BVI’s financial services sector over the years and we must ensure that these relationships are sustained.

Strengthening Ties

As the world’s premier corporate domicile, with more than 700,000 companies, the BVI has created an operating environment that is highly attractive to listed and private companies as well. The key to the success of the BVI in the Asia Pacific Rim is, in short, the BVI’s modern regulatory and legal framework, coupled with the professional services offered to clients at cost-competitive prices. Many private companies over the years have fostered this relationship, and we are now in a position where Asian-based business is a major component of the BVI’s financial services industry.

We are proud of our success in marketing our new BVI Business Companies Act, as well as our overall regulatory system, which is world class. We also pride ourselves on the fact that policies have always been developed in close partnership with the private sector. We recognise that our Asian clients are presently using BVI’s investment, trading, and general financial services. As a result, we are looking at opportunities for growth by promoting the use of corporate development and insolvency products, trusts, and fund businesses with the objective of adding value to our offerings. China and Hong Kong-based companies have demonstrated that they are willing to use the services of International Finance Centres for their corporate needs. In these IFCs, they look for a range of qualities including stability, efficiency, cost-competitive company administration; professional and experienced service providers, and continuous development of legislation. Here in the BVI, we are committed to maintaining these conditions and continuing our long-standing relationship with Asia.

In October 2006, as a sign of the continued strengthening of our relationship with Asia, the BVI Government was pleased to welcome a six-man delegation from the State Administration for Foreign Exchange which was visiting in the area. The delegation held discussions with the Minister of Finance, the Regulator and the International Finance Centre – all of whom had visited the SAFE while in China.

As we look to the future, it is clear that China, Hong Kong, and other Pacific Rim jurisdictions will remain an important component of the BVI’s financial services industry. As such, we feel confident that our relationship with the East will move from strength to strength.

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