HONG KONG companies are Chengdu's biggest investors, pumping US$667.8 million (HK$5.2 billion) into the city and establishing almost 600 projects. Property development accounted for more than 57 per cent of total investment from the territory. Wu Jian, vice-chief of the Commission for Foreign Economic Relations and Trade in Chengdu explained that before October 1, 1989, all local projects were subject to central government approval. Since then, the city government had been able to approve projects which, he claimed, had encouraged foreign investment. About 990 foreign projects had been approved by the city government by the end of June this year, amounting to US$9.54 million. Among foreign investment sources, Hong Kong accounted for 70 per cent in monetary terms, with 596 projects, followed by Taiwan with 186 projects, which accounted for 13.3 per cent. The third largest investors were US companies, which were showing signs of increasing their investment share, said Mr Wu. The 103 property projects approved accounted for 50.86 per cent of all foreign investment. Investment in industry accounted for 33.9 per cent. Mr Wu said the austerity programme launched by the central government might slow the growth in foreign investment, but the number of investments was increasing. By the end of June this year, 415 projects had been approved, almost the same number (465) as for all of last year, indicating the pace of foreign investment was quickening. Popular foreign investment areas include textiles, building and construction materials, food manufacturing and the chemical industry. In terms of numbers, industrial projects were the major target for foreign joint-venture capital, accounting for 33.9 per cent of total foreign investment in the first half of this year, followed by property development, 50.86 per cent. The remainder consisted of 97 textile projects, or 4.4 per cent; 113 electrical and telecommunication equipment projects, six per cent; 26 restaurant, food and beverage projects, 4.69 per cent; 42 building and construction materials, two per cent; 26 chemical industrial projects; and 12 hair salons, 2.88 per cent. In order to encourage foreign investment, project loans granted by foreign governments receive a four-per cent annual interest rate with 20 years repayment. In addition, no tariffs are levied on imported machinery for these foreign projects. Mr Wu cited some examples, such as a US$14-million loan for a natural gas project granted by the French Government, and a US$9 million loan for a telecommunication project from Belgium. He said many investors would choose to invest in China's hinterland as investment in the coastal areas were reaching saturation point. And as Chengdu was situated at the centre of southwest China, it was an obvious choice for investors. However, Chengdu, like other major cities, is facing a common problem of poor infrastructure. Mr Wu admitted congestion was a major problem, and many agricultural products went to waste because there was no infrastructure to get them to markets to be sold. For this reason, the food industry in Chengdu possesses great potential. Many food manufacturing projects are under discussion. For example, Taiwan's President Group is looking into a project to manufacture canned vegetarian food. Other projects included fast food outlets and restaurants, said Mr Wu. In order to speed up the approval of investment applications, the Commission for Foreign Economic Relations and Trade had computerised its information system.
