Guangdong has been giving the green light more frequently to companies in the province to invest in Hong Kong.

The investment relaxation came with the extension last August of the Hong Kong and mainland Closer Economic Partnership Arrangement (CEPA), the move aimed at boosting the SAR's economy.

Thirty-four Guangdong companies received such approvals in the three months after the expanded rules went into effect on August 31. They accounted for about half of the firms that got the go-ahead last year, said Zhu Zenan, deputy director of the provincial department of foreign trade and economic co-operation.

This compared to a total of 44 new approvals issued by mainland authorities in the same period, showing Guangdong acted much faster than other provinces.

Under the new CEPA rules, the right to approve the non-restricted projects falls on provincial-level foreign trade departments, which are required to process an application within 20 working days at the most, Zhu said.

In the past, an application had to go through a lot more government agencies at various levels and all the way up to the State Council, he said at a press briefing for promoting investment of Guangdong companies in Hong Kong.

Zhu pledged to further cut the processing time in practice.

Thanks to the rules, Guangdong companies' investment in Hong Kong is expected to see a significant development this year, said Fu Haikun, director of the foreign economic co-operation division of Zhu's department.

In 2004, a total of 69 Guangdong firms invested US$320 million in Hong Kong, including 24 privately-held firms. They are mostly from the manufacturing sector and are using Hong Kong as a research and development base, and a place to receive orders, to communicate with their overseas customers and to explore the overseas market, Zhu said. Hong Kong serves as an important platform to Guangdong in the mainland's "go abroad" strategy.

Guangdong firms had set up more than 700 company operations in Hong Kong in the past two decades, involving pledged investment of US$2 billion. Hong Kong had taken up about half of Guangdong-invested projects and investment sums overseas, he said.

However, despite the geographical proximity to Hong Kong, many Guangdong companies have yet to fully understand the investment environment of Hong Kong and the benefits it can bring to them, said Peter Leung, director of Hong Kong government's economic and trade office in Guangdong.

Meanwhile, the mainland is expected to expand overseas investment in Hong Kong this year, according to Invest Hong Kong.

The mainland accounted for 17 per cent of the 205 overseas companies that InvestHK helped to expand the business of in Hong Kong last year.

After holding 23 investment promoting seminars in 13 mainland cities and receiving 22 mainland delegations last year, InvestHK would boost its efforts for the purpose this year, said Ophelia Tsang, associate director-general of InvestHK.

Editor: Olivia