Hong Kong's business community is becoming more optimistic about local economy in 2004 and 2005, according to the findings of the Hong Kong General Chamber of Commerce's (HKGCC) sixth annual Business Prospects Survey released on Thursday.

"While not every business will benefit from CEPA (Closer Economic Partnership Arrangement), many will directly and others indirectly. At the very least, confidence has returned to Hong Kong thanks in a large part to CEPA," HKGCC CEO Eden Woon said at a press conference.

For 2004, 19.1 percent of survey respondents expect overall business conditions in Hong Kong to be "good" or "very good", up from 3.1 percent a year earlier. Although 66.3 percent of respondents are only willing to agree to "satisfactory" conditions next year, this number doubles the 2003 level.

Looking ahead to 2005, conditions are expected to be "good" or "very good" in 43.6 percent of the responding companies, and "poor " or "very poor" in just 5.6 percent of the surveys.

"The prospects for Hong Kong's economy are at the brightest in years and we are glad to see that a lot of business confidence is coming back. This will likely be feeding through into employment and consumer spending," Woon said.

With the signing of the CEPA between the Chinese mainland and Hong Kong, nearly 60 percent of respondents said that CEPA will figure in their business plans.

The Chamber's sixth annual Business Prospects Survey was conducted from mid-October to mid-November this year. It contained 44 questions covering a broad range of topics of concern to the local business community. Among these are the outlook for economic and business conditions, Hong Kong's competitiveness, government's role, Hong Kong's situation, mainland economic relations, and background information of the respondents.

There were 303 valid responses received for a 10 percent response rate. The survey has been conducted every year since 1998.

Woon said that about 80 percent of respondents believe Hong Kong's GDP will rise between 1 percent and 4 percent in real terms in 2004. At the other end of the scale, just 6.3 percent think a contraction is likely.

On the government front, the survey revealed extremely strong support for reducing spending, through civil service reform and greater cooperation between the public and private sectors, Woon noted.

A total of 77.9 percent of respondents support reducing the size of the civil service while 73.3 percent favor a cut in civil service pay.

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