Hong Kong - Country Commercial Guide
Investment Climate Statement-Hong Kong & Macau

This information is derived from the State Department's Investment Climate Statement.

Last published date: 2022-01-21

The U.S. Department of State’s Investment Climate Statements provide country-specific information on the business climates of more than 170 countries and economies. They are prepared by economic officers stationed in embassies and posts around the world and analyze a variety of economies that are or could be markets for U.S. businesses of all sizes.

The Investment Climate Statements address market conditions, including issues critical to maintaining high standards, such as labor protections, environmental considerations, and responsible business conduct.  Topics include:  Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

A welcoming investment climate can help attract high quality, durable investment and support global recovery from the COVID-19 pandemic.  The reports highlight those areas in which countries have improved local investment conditions, as well as remaining barriers that may hinder opportunities for U.S. companies.

Our diplomatic and consular posts overseas are working with partner countries to address these barriers, creating opportunities for Americans and U.S. businesses at home and around the world.  Transparent and predictable business climates not only attract international investors, they also help spur domestic investment and are key to long-term economic growth and development.  

To access the ICS, visit the U.S. Department of State Investment Climate Statement website.

Executive Summary

Hong Kong

Hong Kong became a Special Administrative Region (SAR) of the People’s Republic of China (PRC) on July 1, 1997, with its status defined in the Sino-British Joint Declaration and the Basic Law.  Under the concept of “one country, two systems,” the PRC government promised that Hong Kong would retain its political, economic, and judicial systems for 50 years after reversion.  The PRC’s imposition of the National Security Law (NSL) on June 30, 2020 undermined Hong Kong’s autonomy and introduced heightened uncertainty for foreign and local firms operating in Hong Kong.  As a result, the U.S. Government has taken measures to eliminate or suspend Hong Kong’s preferential treatment and special trade status, including the suspension of most export control waivers, revocation of reciprocal shipping income tax exemption treatments, the establishment of a new marking rule requiring goods made in Hong Kong to be labeled “Made in China,” and imposition of sanctions against former and current Hong Kong government officials.

Since the enactment of the NSL in Hong Kong, U.S. citizens traveling or residing in Hong Kong may be subject to increased levels of surveillance, as well as arbitrary enforcement of laws and detention for purposes other than maintaining law and order.

On economic issues, Hong Kong generally pursues a free-market philosophy with minimal government intervention.  The Hong Kong government (HKG) generally welcomes foreign investment, neither offering special incentives nor imposing disincentives for foreign investors.

Hong Kong provides for no distinction in law or practice between investments by foreign-controlled companies and those controlled by local interests.  Foreign firms and individuals are able to incorporate their operations in Hong Kong, register branches of foreign operations, and set up representative offices without encountering discrimination or undue regulation.  There is no restriction on the ownership of such operations.  Company directors are not required to be citizens of, or residents in, Hong Kong.  Reporting requirements are straightforward and are not onerous.

Despite the imposition of the NSL by Beijing, significant curtailments in individual freedoms, and the end of Hong Kong’s ability to exercise the degree of autonomy it enjoyed in the past, Hong Kong remains a popular destination for U.S. investment and trade.  Even with a population of less than eight million, Hong Kong is the United States’ twelfth-largest export market, thirteenth largest for total agricultural products, and sixth largest for high-value consumer food and beverage products.  Hong Kong’s economy, with technically sophisticated institutions and regulatory systems, is bolstered by its competitive financial and professional services, trading, logistics, and tourism sectors, although tourism suffered steep drops in 2020 due to COVID-19.  The service sector accounted for more than 90 percent of Hong Kong’s nearly USD 348 billion gross domestic product (GDP) in 2020.  Hong Kong hosts a large number of regional headquarters and regional offices.  According to Hong Kong census data, 1,267 U.S. companies are based in Hong Kong, with more than half regional in scope.  Finance and related services companies, such as banks, law firms, and accountancies, dominate the pack.  Seventy of the world’s 100 largest banks have operations in Hong Kong.

Macau

Macau became a Special Administrative Region (SAR) of the People’s Republic of China (PRC) on December 20, 1999.  Macau’s status since reverting to Chinese sovereignty is defined in the Sino-Portuguese Joint Declaration (1987) and the Basic Law.  Under the concept of “one country, two systems” articulated in these documents, Macau enjoys a high degree of autonomy in economic matters, and its economic system is to remain unchanged for 50 years following the 1999 reversion to Chinese sovereignty.  Macau, a separate customs territory, describes itself as a liberal economy and a free port.  Tourism is the basis of the Macau economy.

The Government of Macau (GOM) maintains a transparent, non-discriminatory, and free-market economy.  The GOM is committed to maintaining an investor-friendly environment.  In 2002, the GOM ended a long-standing gaming monopoly, awarding two gaming concessions and one sub-concession to consortia with U.S. interests.  This opening encouraged substantial U.S. investment in casinos and hotels and has spurred rapid economic growth in the tourism, gaming, and entertainment sector, in which the gaming industry constitutes the most important pillar of Macau economy.  In 2020, Macau government levied nearly USD 3.73 billion on the gross gaming revenue of casinos and comprised 40 percent of all government revenue collected in 2020.

Macau is today the biggest gaming center in the world, having far surpassed Las Vegas in gambling revenue.  However, Macau has been hit worse by the pandemic than Las Vegas as inbound travel restrictions mandated by the Macau government in January 2020 drastically reduced the number of travelers from mainland China, who account for the vast majority of Macau’s tourists entering Macau.  Macau ended 2020 with USD 7.57 billion in gaming revenue, a 79.3 percent decline from 2019 when casinos generated USD 36.5 billion in gaming revenues, also the first time Macau casinos collected less than USD 10 billion in gaming revenue since 2006.

Although business remains below average in the casinos of Macau more than a year and a half into the COVID-19 pandemic, all six gaming concessionaires will see their gaming licenses expire on June 26, 2022.  The first step to the retendering is a modified draft bill following completion of Macau gaming law public consultation, which the GOM have to publish before mid-March as required by law.  The modified draft bill will be subsequently sent to the Legislative Assembly for deliberation and vote, a new public re-tender process will then follow after the legislative process.  However, the Macau government could extend the current license term of Macau’s casino concessionaires by up to three years to 2024, which is also permitted by the current law.

A major shake-up is also occurring in the VIP gaming space as Macau’s casino concessionaires are on the verge of terminating all contracts with junket partners in a move that would put an end to the long-running opaque junket system within short space of time, after Alvin Chau, the head of Macau’s largest casino junket operator, was arrested by Macau police over his alleged links with illegal cross-border gambling and money laundering syndicate.  Junkets are third party brokers that lure high net worth Mainland bettors to Macau through VIP services such as loans, luxury accommodations, and private gaming spaces. The city’s gambling watchdog Gaming Inspection and Co-ordination Bureau has also issued an order on December 7 to mandate all junket operators, a move which is tantamount to cutting off a major source of income for junket operators.  The wide-ranging crackdown on junkets deals a severe blow to the already-declining VIP gaming sector and marginally affects the whole city’s gaming sector in the short term, as investors and gamblers may assess the sudden uptick in scrutiny of junket operation as a signal of a potentially boarder clampdown on gambling activities within the territory.  

U.S. investment over the past decade is estimated to have exceeded USD 23.8 billion.  In addition to gaming, Macau aspires to position itself as a regional center for incentive travel, conventions, and tourism, though to date it has experienced limited success in diversifying its economy.  In 2007, business leaders founded the American Chamber of Commerce of Macau.

Macau also seeks to become a “commercial and trade cooperation service platform” between mainland China and Portuguese-speaking countries.  The GOM has various policies to promote these efforts and to create business opportunities for domestic and foreign investors.  Many infrastructure projects are currently underway, such as new casinos, hotels, subways, airport extension, and the Macau-Taipa 4th vehicular harbor crossing that started construction in August 2020.

Complete 2021 Macau Investment Climate Statement.