ENG-2006 — Page 133

Commerce and Industry 105

The Services Sector

The services sector has grown significantly in the past two decades. Its share of Hong Kong's Gross Domestic Product (GDP) rose from 70.1 per cent in 1986 to 90.7 per cent in 2005. In 2006, 86.3 per cent of total employment was in the services sector. Hong Kong has become one of the most service-oriented economies in the world. Much of this growth was fuelled by the demand for producer services by Hong Kong's globalised production network and the trend towards sourcing goods and services globally.

In 2006, Hong Kong's total services trade amounted to $846.2 billion, making it the world's 16th largest trading entity in terms of value of services trade. In the same year, Hong Kong exported $562.3 billion worth of services, contributing to 38.2 per cent of GDP. Hong Kong ranked fourth after Japan, the Mainland and India in the region in terms of absolute value of exports of services. In the global league table of exports of services, Hong Kong ranked 11th in 2006.

Hong Kong's exports of services comprise mainly merchanting and other trade- related services, transport and travel services, which accounted for 32 per cent, 31 per cent and 16 per cent respectively of the total value in 2006. The corresponding share for exports of financial services was 12 per cent, and that for exports of insurance and other services was 9 per cent. In addition to being a net exporter of services in overall terms, analysed by component of services trade, Hong Kong in 2006 recorded a surplus in merchanting and other trade-related services ($162.3 billion) and transport services ($84.6 billion) and financial services ($57.4 billion).

External Investment

Hong Kong's attraction as a place to do business is evident from the inflow of foreign direct investment (FDI) and the number of regional headquarters and regional offices in Hong Kong set up by companies outside Hong Kong.

A Census and Statistics Department survey shows that Hong Kong's FDI inflow in 2005 amounted to US$33.6 billion. According to the 'World Investment Report 2006' released by the United Nations Conference on Trade and Development, Hong Kong was the second largest recipient of FDI in Asia in 2005.

Hong Kong had 9 075 enterprise groups' with inward direct investment in 2005, comprising 245 in the manufacturing sector and 8 830 in the non-manufacturing sectors. The market value of the stock of inward direct investment amounted to $4,056.3 billion. Chart 3 shows the major economic activities of these enterprise groups while Chart 4 shows source countries/territories of the inward direct investment. Regarding employment, 66 per cent of them were enterprise groups employing fewer than 20 persons (Chart 5).

1

An enterprise group may consist of a parent company, its subsidiaries, associates and branches.