Two years after the Asian economic crisis began, renewed, though cautious, optimism is returning to Hong Kong's business environment, according to a survey released by the American Chamber of Commerce (AmCham) on December 16.

Findings show that 84 percent of AmCham member companies responding to the survey foresee a "good" or "satisfactory" outlook for the year 2000, compared with only 54 percent forecast for 1999.

"The results suggest that the Hong Kong economy is recovering, with greater recovery occurring within the next year. After a painful two-year process of corporate downsizing and lower profits, this is encouraging news for the American business community and for Hong Kong," AmCham Chairman Jason Felton said at a press conference, where the survey was published.

AmCham's 1999 Business Outlook Survey, conducted by ACNielsen, was mailed to 1,036 corporate representatives and a total of 393 responses were received between October 4 and November 5, representing a 38 percent response rate.

The survey results also suggest the business environment of the Hong Kong Special Administrative Region (HKSAR) will improve sharply in 2001 with respondents expecting this positive outlook to be sustained through 2004.

Against this backdrop, 53 percent of the member companies plan to expand business in Hong Kong, as against 46 percent in 1998.

Another finding this year is that of the 75 percent of respondents that have regional headquarters in Hong Kong, 81 percent said they would retain their regional base in Hong Kong, while 15 percent were "unsure" of whether their headquarters would remain in Hong Kong.

"Given that the bulk of survey responses were collected during the month of October -- just prior to the announcement of the Disney deal, the landmark US-China WTO Agreement, and other confidence-building economic indicators -- I am confident that, had our survey been conducted a few weeks later, much of this uncertainty would have evaporated," AmCham President Frank Martin said at the press conference. Martin attributed the confidence of American companies in the outlook for the business environment in Hong Kong and for the future of Hong Kong to three major factors.

"The first is there is widely-held view that the worst of regional economic crisis is now behind us and that the recovery we are currently experiencing will continue into the future although at times there maybe some setbacks in the individual countries in the Asia-Pacific region," he said.

According to a report released by the Hong Kong SAR Government last month, the gross domestic product of Hong Kong grew 4.5 percent in real terms in the third quarter of 1999 over a year earlier.

Martin said the second factor was that American companies are very pleased that the "One Country, Two Systems" principle is working and they are confident that will continue to be the case in the future.

"The third reason is that there is recognition that Hong Kong has one of the best legal systems in the Asia-Pacific region. It is an open, transparent, dependable system and the judicial area is not subject to corruption as it is elsewhere in the region," he said.

Martin also said that many reports by the Western media predicting doom for Hong Kong and the death of the legal systems of Hong Kong after its return to China were wrong.

"From the business perspective, we believe that events have subsequently proven that our view was correct that the transition would go smoothly and would be without any real major incidents that would cause confidence in the commercial sector to erode," he said.

AmCham member companies continue to value and assess highly Hong Kong's geographical location, communications network, taxation system, free port status, and infrastructure, while the quality of the environment, costs of doing business, and human resources quality and costs are still Hong Kong's key weaknesses.

In terms of factors that affect their business decisions, companies indicated that the maintenance of a strong legal and regulatory system, and the availability of high quality personnel were their top considerations.

Turning to China, Martin said that China's moves toward the World Trade Organization accession in the wake of the summit meeting between US President Bill Clinton and Chinese President Jiang Zemin during the Auckland Asia-Pacific Economic Cooperation forum in early September had "positively buoyed confidence levels toward the China market."

According to the survey, 97 percent, up from 91 percent in 1998, of respondents believe the outlook for the business climate in the mainland of China over the next five years will be favorable, with a huge increase in the proportion of respondents predicting a " very favorable" outlook, up from 19 percent in 1998 to 61 percent in 1999.

Seventy-five percent of respondents currently have operations in China and the survey results suggest that this trend is likely to continue. (Xinhua)