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The following is the full text of the speech given by the Chief Executive, Mr Tung Chee Hwa at a luncheon of the Australian Chamber of Commerce today (Thursday):
Thank you very much indeed for those very kind words.
Friends, ladies and gentlemen, I am very honoured and happy to be here again, 13 months after I made the first talk to you. What I will do is to make some offhand remarks, off-the-cuff remarks about a number of issues you might be concerned about, then I will be very happy to answer any questions you might have. And please try not to be polite, the difficult questions are usually more challenging and probably can bring the best out of me and out of yourselves also.
I was very careful to avoid taking a sip of your wonderful Australian red wine just now so that I can be in the best spirit and in the best of mind when I talk to you.
The first subject I just want to mention briefly is about my visit to Australia. I was really very deeply, deeply touched by the warmth of the friendship and the hospitality Australia accorded to me and to my colleagues. It was a wonderful visit. The visit certainly reaffirmed the very important relationship that Australia and Hong Kong have.
I was particularly very pleased to see the vibrancy of the entire nation, the movement and the success in the technology aspect which is something that we in Hong Kong would find very interesting in working together.
Of course the beautiful coastline of Sydney is something you'll want to go back again and again. Melbourne, too, we had glimpses of the sun while we were there.
Your leaders and I had wonderful opportunities to exchange views on a whole lot of issues. But one thing I came back very convinced of is that multi-culturalism will not change in Australia. I came back strongly convinced of this and in fact every opportunity I have had with all my friends in Hong Kong I have told them how strongly I feel Australia will be moving in the direction where they have been very successful in the past. I came to this conclusion not easily but because I had the opportunity to meet the political leaders across a wide spectrum as well as business leaders, community leaders. And the strong message I had was that what made Australia successful is going to continue. And I am very glad that is the case and certainly, from Hong Kong's point of view, this is very important too.
You know, Australia has a very special position in the Asia-Pacific region. You are part of Asia-Pacific. You are not quite part of Asia but you are part of Asia also. Certainly in Asia we count you as part of Asia. You are wonderful friends of Asian people and in the geo-political sense, as well as in the areas of trade and commerce, Australia plays an increasingly important role in this part of the world. And I came away with the distinct impression Australians know where the destination is and there it is in the Asia-Pacific, and I came away happy and content in knowing that Australia and Hong Kong's friendship will grow from strength to strength in the years to come.
I want to just, if I may, speak for a few minutes about our economy, a subject I know many of you will be interested in. We are really having a very difficult time. Our second quarter GDP growth - the figures will come out next week - will be negative. The third quarter and the fourth quarter will be very, very difficult and I think difficulties will go well into next year, into 1999.
We have seen, during the past few months, substantial correction in our property prices, in our stock market. We have also seen unemployment going up and I know, unfortunately, it will continue to go up in the months ahead.
The Asian financial turmoil has really impacted Hong Kong, as it has done with other communities and nations in the region, in a very, very serious manner. As I said when I was in Australia, in the year of 1997 alone, excluding China and Japan, over US$100 billion of capital was withdrawn from the Asian region and the resulting credit crunch obviously had created an economic condition which at least contributed towards the economic condition which all of us in Asia are now suffering.
Do I see an end to it yet? Unfortunately, I do not. We all hope Japan will get on with it and we know we are all very impatient, but I think it is right to give Mr Obuchi and his government the time to get his things going. And I know that things need to be done, and I believe, will be done. The fact is that the Asian turmoil has now affected other emerging markets, whether it is Russia or South America and that if we don't, in Asia, get things right, the impact is not just to Asia, to the emerging markets, to Russia - I think it will impact Australia and New Zealand - it will impact all the rest of the world also. So it is not just an Asian problem, it is a global problem that really needs some global solutions.
It is very often easy for us to blame all our problems on the financial turmoil in Asia. That would be easy. But the fact is that by the early part of 1997 or since 1996, or even before that, the property prices in Hong Kong were already at an unrealistically high level. The bubble was there already. Salaries, wages, were at a level which made Hong Kong, in the long term, uncompetitive in a very competitive world. So adjustment would have been necessary anyway. The Asian financial turmoil accelerated that adjustment, created very sharp pain in our community, but nevertheless I have to say these adjustments would have to be made in any case. And in fact I have said to myself many times: sharper and shorter pain probably is better than a prolonged battle. Coming earlier on rather than later gives us more opportunities to work out our problems.
I think if you look at Hong Kong, is it all doom and gloom? I really think not. Because the fact is that we are a government which, because of very prudent financial management and very good financial management, (has) huge fiscal reserves. We have a civil service whose head is really screwed-on, working very hard, totally uncorrupt.
We have a society which gives great emphasis to the rule of law. And I know many of you will be concerned, as I was, yesterday, about what happened to one of our journalists. This is obviously unacceptable and this will not be tolerated. But by and large our rule of law has been very good and it is something we have been maintaining - we are trying very hard to maintain - and we know we will do well.
Our investment in education which is so important to our future is continuing, and will continue as we move into the 21st century because we know that without the quality of people, we will not be competitive and in a knowledge-based society, nothing is more important than that.
We are also putting HK$235 billion in infrastructure projects over the next five years, of which $100 billion will be in the railway expansion programme. So these are all ongoing and we are totally, completely committed to all these investments. And where else, when you have such a difficult economic climate, as we do, you still can go ahead and make all these commitments - (a) because we have good solid foundations and (b) because we have confidence in our own future.
Ladies and gentlemen, I know you probably would ask me about the action we took last Friday, and maybe I will say a few words on that first.
Let me say this, that we are not out there to support the stock market at a certain level, we are not there to support the stock market at any level. Neither are we against people taking short positions on the stock market. That is all part of a free market economy and wherever is the stock market level, the market will find its own level.
What we do take - but we do become very concerned and as a government we must act, is that when we see there are manipulations in our foreign exchange market which create conditions and high interest rates which enables the same people to take huge positions in the short market they have created. That is something which is not acceptable to us. So our effort is a very narrow effort, it is very defensive effort targeted specifically at this particular action, and no more than that. We are not out there - if I may repeat again - we are not out there to support the stock market. That is not our role.
People have asked me: Mr Tung, when would you stop? Will you do it again? Well, let me say this, that as long as those conditions exist, we will do it. I was asked: When are you going to do it? Well, I think it would be silly for me to give an answer. We will do it at the right time when it is necessary to protect our currency market, to protect our stock market - the integrity of our market needs to be protected. But we are not departing from our traditional free market economy principles.
I might add that the financial management team in Hong Kong is really one of the best I have seen. I was a businessman before and I was privileged to know a whole lot of people around the world in this business and I am very happy and very proud to be working with them.
So having said all this, David, I am happy to answer any questions you might have or elaborate on any points you might want me to elaborate. Thank you very much.
End/Thursday, August 20, 1998
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