HONG KONG: Hong Kong remains the second largest foreign direct investment recipient in Asia, attracting

$ 63 billion inward investment in 2008, despite the global financial downturn, the United Nations Conference on Trade and Development said on Friday.

The amount of foreign direct investment in Hong Kong has jumped 15.9 percent year-on-year, while the city also has the highest foreign direct investment stock in Asia, amounting to nearly $835.8 billion.

Topping the list in Asia, the mainland has attracted $108.3 billion foreign direct investment inflow in 2008, surging 29.7 percent as compared to a year earlier.

The mainland has also moved up four places to be the world's third largest foreign direct investment recipient, while Hong Kong ranked as the seventh globally.

Simon Galpin, director-general of Investment Promotion at Invest Hong Kong, told reporters in Hong Kong on Friday that the foreign director investment inflows into the city were at an "all-time high" last year, but that the investment amount is expected to drop in 2009.

"We have to be quite cautious, because in the first quarter of 2009, foreign direct investment has actually decreased in Hong Kong," Galpin said, adding that foreign companies are now becoming more risk-reserved in making overseas investment, as they are 'fighting fires at home'".

"We recognize that businesses are operating in very tough global economic conditions and that we have to work doubly hard to attract them to expand in these uncertain times," Galpin said.

The United Nations' annual results also showed that the Asian region excluding Japan has attracted a record high of $297.6 billion foreign direct investment in 2008, rising 17.3 percent year-on-year.

However, the performance of foreign direct investment varied significantly in the major Asian economies. Foreign direct investment inflows to Hong Kong, the mainland, India and South Korea increased, but fell sharply in Singapore and Taiwan.

Leonard Cheng, Dean of the School of Business and Management of the Hong Kong University of Science and Technology, said Hong Kong is very likely to maintain its second-place position in foreign direct investment in Asia, despite an expected drop in investment inflows in 2009.

"The economies in Hong Kong and the mainland are relatively more stable than the rest of the world," Cheng said, adding, "The drop in foreign direct investment may narrow in the rest of the year."

He noted that the SAR government can help facilitate more foreign company investment on the mainland, which will also give a boost to the city's foreign investment inflows.

Globally, foreign direct investment inflows declined 14.1 percent in 2008 to $1.7 trillion, from a historic high of $1.98 trillion in 2007.

The United Nations forecasts suggest that global foreign direct investment inflows will fall to below $1.2 trillion in 2009, with a slow recovery in 2010, speeding up in 2011.

(HK Edition 09/19/2009 page2)