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Hong Kong Services: Openess

Hong Kong business information websites, import tariffs and regulations, as well as how to do business with Hong Kong companies.

Hong Kong Services: Openess

Postby bridgat » Sun Nov 16, 2008 5:13 am

The past 20 years have brought a steady decline in the manufacturing share of Hong Kong's GDP, from 23.7 percent in 1980 to 17.6 percent in 1990 and 6.5 percent in 1997. This makes Hong Kong one of the most services-dependent economies in the world. Not surprisingly, therefore, the government of the Special Administrative Region (SAR) has placed a high priority on services trade liberalization and hong kong maintains a generally open services regime.

Except for banking, utilities, broadcasting and transportation, Hong Kong imposes essentially no restrictions on foreign companies wishing to set up, acquire or dispose of businesses. In some sectors firms must apply for a license and fulfill certain professional criteria before they can open for businesses. However, these criteria are generally transparent and apply to all market
participants, irrespective of ownership.

Health Related and Social Services

Hong Kong imposes no market access restrictions on the provision of health care services including hospitals, clinics, outpatient facilities and nursing homes. Institutions that wish to provide health services must register with the Department of Health. The government does not impose quantitative restrictions on hospitals or clinics. Under the Hospitals, Nursing Homes and Maternity Homes Registration Ordinance, applicants are required to meet "fit and proper person" criteria under which the situation, construction, accommodation, and staffing of any premises used as a hospital or nursing home are reviewed. The person in charge of a hospital should be a qualified medical practitioner (M.D. or equivalent) or a registered nurse who is resident in the hospital.

Hong Kong imposes no limit on the number of foreign medical service suppliers. However, all medical practitioners must be registered with the Medical Council, a professional self-regulatory body. The requirements for registration include a medical degree from a university in Hong Kong or an overseas medical degree combined with passage of a local licensing examination. In practice, this requirement for local certification has been used to maintain an informal cartel in medical services that raises the cost of private medical services.

There is no residency requirement for the provision of social services. Foreign organizations that want to provide social services in Hong Kong must register either as a non-profit making society with the Home Affairs Bureau or as a profit-making company with the Companies Registry of Hong Kong. In both instances, registration is intended to guarantee service quality.

Education and Training Services

Hong Kong imposes no market access restrictions on the provision of education and training. According to the Education Ordinance, a school is defined as an institution that provides for 20 or more persons during any one day, or 8 or more persons at any one time, any nursery, kindergarten, primary, secondary or post-secondary education or any other educational course by any means, including correspondence. All schools must register with the education department.

In reviewing a registration application, the Education Department will consult with the Fire Services Department and the Building/Housing Department to certify that the premises are structurally safe and fit for school purposes. While the director of a school can be any nationality, the manager of the school must reside in Hong Kong for at least 9 months in each year and be younger than 70 years old. A training center (teaching students Microsoft word, for instance) that does not fall within the definition of a school can open as soon as it gets a valid Hong Kong business registration.

Foreign institutions that want to offer an overseas higher or professional education in Hong Kong must be registered with the Education Department under the "non-local higher and professional education ordinance." This registration requirement is intended to protect Hong Kong consumers by guarding against the marketing of substandard non-local courses, controlling advertisements, and ensuring the availability of refunds. In reviewing a non-local registration, the Education Department will focus on the applying institution's home-country qualifications. In the case of a course leading to the award of non-local higher academic qualification, the course must be offered by a recognized institution that is itself recognized by its home-country. For a course leading to the award of non-local professional qualification, the institution must be recognized by the relevant professional body in the home country. These registration requirements are not onerous and there are many foreign institutions that actively market their educational services in Hong Kong.

Non-local courses conducted in collaboration with specified local institutions of higher education may be exempted from registration. "Pure distance learning courses" are excluded from the registration requirement in consideration of the need to avoid possible restrictions on the freedom of expression guaranteed under Article 16 of Bill of Rights Ordinance.

Travel and tourism services

Hong Kong accords full market access to the lodging and food serving sectors, as well as to travel and tourism services. The government requires that travel agents obtain a license and be a member of the approved organization, which is the Travel Industry Council of Hong Kong.

The government can refuse a license if:(a) the applicant or any person in Hong Kong responsible for the management of the business of the travel agent is not a "fit and proper" person to carry on business as a travel agent; or (b) the premises of the travel agent is not suitable for the operation. A person may be considered not "fit and proper" if that person has been convicted of an offence involving fraudulent, corrupt or dishonest acts whether in Hong Kong or elsewhere.

The Travel Industry Council of Hong Kong has three types of members; association members, ordinary members and affiliate members. To become an ordinary member of the Council, a company should be incorporated or registered in Hong Kong, with a paid-up capital of HK$ 500,000 and an additional HK$ 250,000 for each branch office. Affiliate membership requires paid-up capital of HK$ 150,000.

Banking, Securities and Other Financial Services

Hong Kong imposes some barriers on foreign financial institutions. The Hong Kong Monetary Authority (HKMA), the de facto central bank, licenses banks in accordance with the banking ordinance. Foreign banks established after 1978 are permitted to maintain only three branches in Hong Kong, including automatic teller machines, which meet the definition of a branch. This three branch limit reflects an early 1999 relaxation of HKMA's "one building" rule.

Current banking policy also restricts foreign banks to one back office and one regional office in separate buildings. The HKMA has promised to consider removing this restriction to allow banks to open any number of back and regional offices providing these offices do not conduct financial transactions. This relaxation will be considered by the HKMA in the first quarter of 2001.

Foreign banks can and do acquire local banks that have unlimited branching rights, thus providing a way around the branching restrictions. Acquiring a 10 percent or greater interest in the voting share capital of a local bank requires approval from the HKMA.

Foreign banks incorporated outside hong kong that wish to establish a licensed branch in the SAR must: (1) have assets of at least US$ 16 billion; and (2) the bank's country of incorporation must provide an acceptable form of reciprocity to Hong Kong banks. In practice, foreign banks are expected to first establish a representative office prior to upgrading to a licensed branch.

Hong Kong imposes no market access constraints on foreign securities firms establishing representation in Hong Kong via branching, acquisition or subsidiary operations. Under the Securities Ordinance, applicants are required to be registered with the Securities and Futures Commission (SFC). Besides net capital and liquidity margin requirements, the SFC requires that applicants satisfy "fit and proper person" criteria. These relate generally to ensuring that the applicant is fair, honest, and financially sound. In practice, foreign securities firms typically establish via subsidiaries, which can be wholly or partially owned.

A firm can be declared an exempt dealer for purposes of the Securities Ordinance if its main business is not in securities dealing, or if its main business is securities dealing only at the wholesale level, with any securities dealing at the retail level done through a registered member of the Stock Exchange of Hong Kong or through other authorized channels. Licensed banks and trustee companies may also be eligible for exempt dealer status even if they do not satisfy these criteria. A firm can be declared an exempt investment adviser if it gives investment advice only to people residing outside of Hong Kong.

Hong Kong accords full market access to foreign insurance companies. Any company interested in carrying on insurance business in or from Hong Kong may apply to the Insurance Authority for authorization under the insurance companies ordinance. The minimum requirements for authorization include paid-up capital, solvency margin, fitness and properness of directors and controllers and adequacy of reinsurance arrangements.

An insurer carrying on solely general business or long term business is required to have a minimum paid-up capital of US$ 1.3 million (HK$ 10 million). For an insurer carrying on both general business and long-term business or carrying on any status insurance business, the minimum is US$ 2.6 million (HK$ 20 million). The minimum paid-up capital for a captive insurer, however, is US$ 0.26 million (HK$ 2 million).
Hong Kong imposes no market access restrictions on providers of pension fund services. The government offers equal and fair access to all suitably qualified license applicants. A firm that wishes to manage Hong Kong's Mandatory Provident Fund (MPF) is required to be registered as a MPF intermediary if it, through its officers, agents or employees, is engaged in (a) selling MPF schemes; or (b) advising clients on constituent funds or underlying approved pooled investment funds of MPF schemes.

The firm must be supervised by at least one of three financial regulatory regimes: the Insurance Authority Regime (as authorized insurers, appointed life insurance agents, authorized insurance brokers, or their respectively staff), the Monetary Authority Regime (as authorized institutions or their staff) and the Securities and Futures Commission Regime (as investment advisers, securities dealers, investment representatives or dealer's representatives).

MPF intermediaries who intend to give advice on both securities and insurance policies need to comply with the licensing requirements of both the SFC and IA. In addition to the above requirements, all MPF intermediaries that are individuals must pass a Mandatory Provident Fund Intermediaries Examination recognized by the MPF authority.

Under the companies ordinance, principal officers of financial institutions are required to be resident in Hong Kong. In practice, however, this requirement has not been enforced.

Computer and Related Services

Hong Kong accords full market access to computer and related service providers. A foreign company that wishes to provide these services in Hong Kong must be a Hong Kong incorporated company or an overseas company that is registered with the Companies Registry of Hong Kong.
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