CONFIDENTIAL
ADVANCE COPY
CONFIDENTIAL
FM HONG KONG
TO DESKBY 23130OZ FCO
TELNO 3085
OF 231045Z OCTOBER 90
INFO IMMEDIATE TOKYO, BTC HONG KONG
167516
MDADAN 1136
YOUR TELNO 1907 AND TOKYO TELNO 936 : JAPANESE INVESTMENT IN HONG
KONG
SUMMARY
1. ALL THE FACTS AND FIGURES SHOW THAT JAPANESE INVESTMENT IN HONG KONG HAS BEEN SUBSTANTIAL AND CONTINUING. CURRENT ECONOMIC DIFFICULTIES IN JAPAN ARE CAUSING A MORE CAUTIOUS ATTITUDE BUT THE JAPANESE CONTINUE TO TAKE A LONG-TERM VIEW. ON THE WHOLE THEY REMAIN BULLISH ABOUT HONG KONG.
DETAIL
JAPAN'S
2. JAPAN, CHINA AND THE UNITED STATES ARE THE THREE MOST IMPORTANT SOURCES OF FOREIGN INVESTMENT IN HONG KONG. ACCORDING TO JAPAN'S MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY, CUMULATIVE INVESTMENT IN HONG KONG UP TILL MARCH 1990 WAS ESTIMATED AT US DOLLARS 8.1 BILLION. FROM 1951 TO 1989, JAPAN'S INVESTMENT IN HONG KONG AMOUNTED TO NEARLY ONE-FIFTH OF ITS
INVESTMENT IN ASIA.
MANUFACTURING SECTOR
3. JAPANESE INVESTMENT IN HONG KONG'S MANUFACTURING INDUSTRIES IS SIGNIFICANT. A SURVEY CARRIED OUT BY THE HONG KONG GOVERNMENT INDUSTRY DEPARTMENT SHOWS THAT JAPAN IS THE SECOND LARGEST INVESTOR, AFTER THE UNITED STATES, IN HONG KONG'S MANUFACTURING SECTOR. TOTAL INVESTMENT AT ORIGINAL COST (I.E. THE SUM OF STOCK OF FIXED ASSETS AT ORIGINAL COST AND WORKING CAPITAL) BY THE JAPANESE IN THIS SECTOR AMOUNTED TO US DOLLARS 0.9 BILLION AT THE END OF 1988, REPRESENTING 26.6 PER CENT OF TOTAL FOREIGN INVESTMENT IN HONG KONG'S MANUFACTURING SECTOR. THE GROSS ADDITION TO FIXED ASSETS BY THE JAPANESE IN 1988 WAS THE HIGHEST AMONG ALL FOREIGN INVESTORS, I.E. US DOLLARS 0.13 BILLION OR 36.6
PER CENT OF THE TOTAL.
4. THE INITIAL FIGURES FOR 1989 INDICATE THAT THERE IS NO
SIGNIFICANT REDUCTION IN THE VALUE OF NEW ADDITIONS TO JAPANESE INVESTMENT IN HONG KONG'S MANUFACTURING INDUSTRIES. THE FACT THAT
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CONFIDENTIAL