GUANGZHOU: The market-access standards have been lowered by the Guangdong provincial commercial and industrial administration in order to attract more investors.

"Contribution of shareholding is allowed among domestic inventors," said Lu Binghui, director of Guangdong Commercial and Industrial Administration. "Guangdong is the first province to allow this form of investment."

Contribution of shareholding means that once a person, who has had shareholding in one company, wants to jointly set up another company with other people, he can use the equity of his shareholdings in the previous company as part of the capital of the new company.

"So, that the investor can take out less cash to build up a new company," Lu said. "I believe more investors will be interested in investing in Guangdong in the future.

"However, this policy is only effective for domestic investors at present," Lu added. "For foreign investors, there are some other favoring policies."

Starting on June 1, all companies, including foreign ones, can make corporation registration in Guangdong's local commercial and industrial administrations. They used to have to go to the national administration in Beijing to do the same thing before.

Chemical fertilizer is a type of State-controlled good. Only State-owned agencies are allowed to sell the product.

"We are applying for allowing private companies or even individuals to sell chemical fertilizer," Lu said, adding that he believes the application will be approved soon.

In addition, self-employed people are encouraged to upgrade their small-sized shops to corporations.

"Guangdong has about 2.79 million self-employed individuals," Lu said.

If their shops are upgraded to corporations, their business will have a very bright future, he said.

Experts believe that the lower market access will encourage more Hong Kong and Macao businessmen to invest in the province.

When Guangdong focuses on upgrading its industry structures, more and more Hong Kong-invested labor-intensive manufacturing factories are moving out of the province.

"The province needs more new investors to balance the loss," said economist Peng Haibin.

Up to the first quarter this year, Guangdong had 67,857 registered foreign-invested corporations. Among those, 44,258 are Hong Kong-invested, accounting for 65 percent of the total.

At present, 2.2 percent of Hong Kong corporations are engaged in the primary industry, 24.6 percent are in service sector, and more than 70 percent are in the secondary industry.

"The government hopes the service sector can be developed significantly," Peng said. "So they lower the market access."

He believes more favoring investment policies aimed at Hong Kong investors will be enacted later when a new session of Closer Economic Partnership Arrangement (CEPA) is held in the second half of this year.

(HK Edition 05/19/2008 page2)