Foreign enterprises rated Shanghai’s business environment as ideal, despite the lack of an adequate energy supply and rising operational costs, China Business News reported.   Shanghai Foreign Economic Relations and Trade Commission released a report yesterday, analyzing Shanghai’s overall investment environment and the latest progress of investment environment improvement measures. The report provides an overview of the city’s infrastructure, investment services, industry developments, and intellectual property protection.   The report includes a survey on foreign enterprise leaders’ opinions on the investment environment of Shanghai. Most foreign enterprises said that Shanghai’s investment environment is competitive, with good infrastructure and quality labour, but the inadequate legal system and the lack of transparency are the major areas needing improvement.   Liu Jinping, a senior official with the Shanghai Foreign Economic Relations and Trade Commission, said that since the survey is conducted anonymously this demonstrates that Shanghai’s appeal not only lays with the government’s incentives, but also market opportunities and freedoms the city offers. The restrictive factors, however, include energy issues, electricity supply and transport conditions.   In addition, rising operational costs are a common concern of both foreign enterprises and the government. The report shows that in 2005, Shanghai’s average daily rent of first class offices rose to 0.84 US dollars per sq. meter with Pudong’s Lujiazui exceeding 1 US dollar per sq. meter per day and Nanjing Xi Lu exceeding 1.04 US dollars per sq. meter per day. Whether foreign enterprises can handle the rise of operational costs has become one of the limiting factors.   Song Jinbiao, president of Shanghai Foreign Investment Commission, said that Shanghai is working on more efficient use of space and land to meet the demands for office venues. The city is gradually turning vacant old buildings into more low-cost urban industrial parks and business offices. In Wangpu, Jinan and Luwan districts where office prices are usually higher, the daily rent of such urban industrial parks is around 1 yuan per sq. meter, which is far lower than high-rise business buildings.   Song added that while Shanghai would strengthen the supply and protection of energy and resources, a services provider would be established to cultivate foreign investment.   According to the statistics of Shanghai Foreign Economic Relations and Trade Commission, from January to July 2006, the amount of invested foreign capital totaled 86.39 million US dollars and direct foreign investment totaled 47.51 million US dollars. Both hit historical highs during this period.   “During the first half of 2006, foreign investment in Shanghai’s service sector exceeded 65 percent of total investment. This not only reflects Shanghai’s improved investment quality and bigger size, but also the composition of the city’s industries development is changing,” said Liu.