ENG-2007 — Page 143

Commerce and Industry | 103

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 71.3 per cent in 1987 to 91.2 per cent in 2006. In 2007, 86.6 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 2007, Hong Kong's total services trade amounted to $965.4 billion, making it the world's 16th largest trading entity in terms of value of services trade. In the same year, Hong Kong exported $645.3 billion worth of services, contributing to 40.0 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 12th in 2007.

Hong Kong's exports of services comprise mainly merchanting and other trade- related services, transport and travel services, which accounted for 31 per cent, 29 per cent and 17 per cent respectively of the total value in 2007. The corresponding share for exports of financial services was 15 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 2007 recorded a surplus in merchanting and other trade-related services ($177.6 billion) and transport services ($85.0 billion) and financial services ($75.9 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.

Census and Statistics Department data show that Hong Kong's FDI inflow in 2006 amounted to US$45.1 billion. According to the 'World Investment Report 2007' released by the United Nations Conference on Trade and Development, Hong Kong was the second largest recipient of FDI in Asia in 2006.

Hong Kong had 9 712 enterprise groups1 with inward direct investment in 2006, comprising 326 in the manufacturing sector and 9 386 in the non-manufacturing sectors. The market value of the stock of inward direct investment amounted to $5,771.9 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, 62 per cent of it was from enterprise groups employing fewer than 20 persons each (Chart 5).

1

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