The six annexes to the main text of the Closer Economic Partnership Arrangement (CEPA) signed Monday (September 29th) between Chinese mainland and Hong Kong unveil the details of the pact and show the full picture that how much Hong Kong businesses can benefit from the arrangement.

"Now we can see the full picture of an excellent WTO-compliant free trade agreement that can truly benefit many businesses in Hong Kong and also in the mainland," said Eden Y Woon, chief executive officer of the Hong Kong General Chamber of Commerce.

He said that the chamber is happy to see that many details, which the business community has been asking for in the past three months, are now filled in the annexes of the arrangement. The chamber has encouraged businesses to seriously study the provisions and take steps to use CEPA quickly, since many benefits of CEPA are time-related.

The chamber said that the Rules of Origin for "made in Hong Kong" goods are favorable to Hong Kong. Most have adhered closely to the current principles which Hong Kong use to determine origin of products.

For the goods using 30 percent value-added as criteria, the good news is that design, research and development costs will now be taken into account in the determination of rules of origin, said Woon, adding that the chamber feels that "zero tariff" can stimulate some manufacturing in Hong Kong, and with zero tariff available for all products two years later, the benefits for manufacturing and investment in Hong Kong would be even more extensive.

On services, the chamber welcomed the addition of the telecommunication sector to the original 17 which will enjoy some kind of liberalization and once again urges businesses to take immediate steps to take advantage of CEPA.

Telecom is an important business in Hong Kong. Significantly, it is the first sector where Hong Kong businesses will get a time advantage in Chinese mainland, said Woon, referring to the October effective date of the telecom commitment.

"We fully understand the reason behind some new clarifications in the definition of 'Hong Kong companies' due to change of majority ownership, but we feel that it is an acceptable compromise that will still be able to encourage potential investment activity in Hong Kong due to CEPA," said Woon.

"All in all," he concluded, "although not everyone may benefit from CEPA, and although we need to continue to work on Phase II of CEPA, the current CEPA does usher in a new age of 'middleman platform' for Hong Kong. This is a phenomenon, which has already been recognized not only within Hong Kong, but also by foreign businesses and mainland provinces, cities, and enterprises. It is now up to businesses to use CEPA in their own way quickly. The chamber will now concentrate on helping businesses with the implementation stage in the next few months."

Andrew Leung, chairperson of the Federation of Hong Kong Industries, said that CEPA is a continuous arrangement between Chinese mainland and Hong Kong, and more contents will be included in the pact in the future.

He called on Hong Kong companies to study the contents of CEPA carefully and form more creative business ideas. Many products currently not produced in Hong Kong may be big businesses under CEPA.

He noted that telecommunication companies in Hong Kong are allowed to enter mainland market according to the annexes of CEPA. As a result of that, Hong Kong will further consolidate its status as the information technology center in Asia.

Many banks in Hong Kong share the opinion that the arrangement will also bring more opportunities for the local banks.

Peter Wong Tung Shun, CEO of Standard Chartered in Hong Kong, said that more foreign companies will be attracted to expand their businesses in Hong Kong after the implementation of CEPA. As a result, Hong Kong's banks will benefit from that directly.

David Li Kwok-Po, chairperson and chief executive of Bank of East Asia, said that CEPA will benefit not only the industrial and commercial sectors but also the banks in Hong Kong. He expressed the hope that Hong Kong banks can be allowed to open more services in Chinese mainland.

Editor: Catherine