Many factories owned by Hongkongers in Guangdong are having a tough time catching up with the tightened environmental protection rules of the province, Hong Kong Economic and Trade Affairs Director in Guangdong Peter Leung Pak-yan said yesterday.

After attending a Metro Radio programme, Leung said some leather, electroplate and dyeing factories owned by Hong Kong residents have had to cut their operations by half because of the new environmental regulations.

In one area of Shenzhen alone, the number of leather factories has been reduced from 40 to 20, with only three of these running full steam, according to Leung.

One of the new environmental measures makes it mandatory for water polluted industrially to have a recyclable rate of 65 per cent by 2010.

The Federation of Hong Kong Industries Deputy Chairman Stanley Lau had earlier said that the licences of some Hong Kong residents' factories were not renewed because they couldn't comply with the strict rules. About 500 Hong Kong-owned factories have been affected by the new rules.

Leung acknowledged the problem, and urged the factories to seek the help of the federation to seek a postponement of the deadline or move their units to industrial parks that provide better facilities.

90,000 business people

"There are 90,000 Hong Kong business people in Guangdong. It's difficult for us to handle every single case because each has his individual needs," he said.

"I hope that the role of the federation can be strengthened to fully reflect the needs of the industry."

The environmental protection authority in Dongguan recently imposed a 11-million-yuan (US$1.37 million) fine on a Hongkonger's factory for emitting 10 million tons of polluted water a year.

But despite the new environmental measures, the GDP of Guangdong's service industry was likely to increase from 2.2 trillion yuan (US$275 billion) in 2005 to 3.5 trillion yuan (US$437 billion) in 2010, he said, and urged Hong Kong's financial professional experts to pursue the market.

Leung said an investment service centre was established under his office in June. It has handled about 2,000 enquiries and interviewed 600 private mainland enterprises since then.

In the reverse flow, about 40 private mainland enterprises had decided to invest in Hong Kong, Leung said.

Editor: Yan