JAPAN continued to be the territory's biggest overseas investor after China last year, in spite of the country's prolonged economic slump, according to Director-General of Industry Denise Yue Chung-yee. Although some Japanese companies have reduced their Hong Kong operations or pulled out altogether because of domestic troubles, Japanese companies still managed to pump US$12 billion worth of investment into the territory last year. This accounted for about 20 per cent of Japan's total direct investment in the whole of Asia last year. China invested about $20 billion in 1992, a 100 per cent increase over 1989. Ms Yue said Hong Kong would remain the favoured location in the region for direct foreign investment. She was speaking yesterday at an investment seminar in Yokohama, Japan, to promote the territory. Hong Kong's strategic position in the region and maximum government support contributed to the high level of foreign economic activity in the territory, said Ms Yue. She said Hong Kong's proximity to the mainland and years of experience in doing business with the Chinese made it the ideal location to engage in business with China. She added that the territory was a major centre for air and sea transport with modern facilities to handle the flow of containers, cargo and people. The Government offered investors generous tax deductions for facilities, protection of intellectual property rights, grants for staff training and applied research. The territory also offered a highly educated and flexible workforce, technical expertise, free port facilities and an efficient infrastructure, said Ms Yue.