Foreign Correspondents' Club September 24 Elizabeth Bosher Director general Aerospace Forum Asia Dear Ms Bosher, I see from the letters to the editor that you invite me to participate in an 'exchange of views' with your forum on the appropriate level of usage charges for our airport. Choose your time and place. I shall be glad of another opportunity to remind my fellow taxpayers that, while our airport is ours and our air space is ours, there is no such thing as 'our' airlines. Let us have a crowd. Open it to all comers, press included, and I shall see if I can get the boss to give us a little promo for the event. These matters badly need more public debate. Yours truly, Jake van der Kamp AND, SPEAKING OF matters that need clearing up, I see that the coals-to-Newcastle crowd is active again with InvestHK boss Mike Rowse trumpeting a recent United Nations report that ranks Hong Kong as second in Asia and 11th in the world in inflows of foreign direct investment (FDI) - US$13.6 billion last year. Big figure, Mike. Did you know that it was US$62 billion three years before? Not quite so big now, is it? What is more, I did not see the word 'net' used here. Let us deduct the corresponding outflows of FDI from Hong Kong and we get US$9.7 billion for net FDI last year. Now advance the figures just three months by taking the year to the end of March and we get a net FDI outflow of $3.9 billion. Oh well. The first chart shows you the basic story. Our net international investment position, the sum total of what we own abroad less what foreigners own in Hong Kong, amounted at the end of last year to HK$3.1 trillion. It is the equivalent of 2.5 times the size of our annual gross domestic product and it is growing fast. I suppose that one or two European principalities could still beat us on this ratio but let us get this straight: We are one of the world's biggest providers of foreign capital and why, in that case, all the clamour about inflows? You are standing on your head, Mike. This town is in the outflow business. The bar chart shows you a breakdown of that net international investment position. The largest and fastest growing component, in fact the one that accounts for all the growth over the last four years, is portfolio investment. More than 80 per cent of it is comprised of debt securities. We are cautious international investors. Next we get the blue bars, which represent our official foreign reserves. This figure has not changed much and, once again, more than 80 per cent of it is in debt securities, mostly United States government debt. Then comes the 'others' classification - the green bars - and 98 per cent of it is cash and loans. The purple bars, representing our net position in FDI, are obviously the ones that stand out here. First of all, because they represent money that goes into direct equity capital ownership, mostly property, and secondly, because, yes indeed, foreigners have more FDI in Hong Kong than we have abroad. But so what? Hong Kong is a financial centre and it should be no surprise that most of its international investment activities are financial ones. FDI inflows are a big thing for poor countries that desperately need foreign investment to build up their capital base. This may describe Cambodia or Papua New Guinea. It does not describe Hong Kong. Rest assured that if we were short of money to invest in equity ownership of businesses in Hong Kong, we would very quickly see some of those outflows to portfolio and other debt investments abroad stay at home to answer the need. Chasing FDI inflows, as Mr Rowse does, is pointless. If you want to play trivial pursuits, Mike, haul out the board game. But here is an idea for you: We are spending HK$233 million on your department this year while cutting an additional $360 million from support for the elderly and disabled. Let's fold up that board game and we can then be two-thirds of the way to taking decent care of people who need the money.