Mainland manufacturers now enjoy a 50 per cent reduction on deposits placed on the import of raw materials destined for export processing, according to Guang dong trade officials. The reduction, which took into effect from May 1, applies on smaller-scale manufacturers. In general, the deposit accounts for 28.7 per cent of the import value of materials and is designed to prevent the imported raw materials, which are exempt from customs duty, from being sold on the domestic market. Authorities decided on the rate cut after Hong Kong's business community lobbied the mainland hard to show leniency in their treatment of export processing industry. The import deposit, equal to the sum of 10 per cent customs duty and 17 per cent import value-added tax, is levied on the import of raw materials classified as 'restricted commodities' which are in protected or sensitive sectors on the mainland. Hong Kong manufacturers account for a substantial amount of Guangdong exports, which in turn make up about 40 per cent of the mainland's export value. Deputy director general of the Department of Foreign Trade & Economic Co-operation of Guangdong Province Zhao Yufang said during a trade visit to Hong Kong that the industry welcomed the decision. Ms Zhao said the central Government was still studying the plan to allow for additional means of payment. The Government is believed to have made the concession after seeing the continuous fall in foreign capital inflow last year. Actual foreign investment in Guangdong fell 1.9 per cent year on year in the first quarter of this year. The value of contracts, agreements and letters of intent landed by Guangdong in the first three days of a four-day trade fair in the SAR fell slightly to US$7.72 billion from US$8.1 billion of the same period of the fair held a year earlier.