*******************************************

The rule of law reigns supreme in Hong Kong and seeking an interpretation of the Basic Law does not diminish the rule of law or judicial independence in Hong Kong, said Principal Hong Kong Economic and Trade Representative in Tokyo, Mr Paul Leung, today (Friday).

Speaking at a business seminar in Kanazawa City of Ishikawa Prefecture, Mr Leung stressed that seeking an interpretation was not an attempt to overrule or reinterpret the CFA's judgement, which the Hong Kong Special Administrative Region Government (HKSARG) respected. Instead, what the HKSARG had been doing was to seek a legal remedy to the problem of a potential influx of 1.67 million Mainland immigrants, and to establish the true legislative intent of the relevant provisions in the Basic Law governing the Right of Abode in Hong Kong.

"An interpretation would not undermine judicial independence. It simply reflects the respective roles given to the CFA and the Standing Committee of the National People's Congress of China as clearly spelt out in the Basic Law."

He added that the move had the overwhelming support of the community and a clear majority of Hong Kong's legislature.

"The cost of providing new homes, hospitals, schools, transport infrastructure and social services for the new migrants is of course very substantial but we are even more concerned about the land supply: an almost impossible task for a small place like Hong Kong."

Mr Leung also gave the audience an update on how Hong Kong had fared after the handover under the unique concept of "One Country, Two Systems". He stressed that notwithstanding the recession, the HKSARG continued to maintain its traditional fiscal prudence and invest heavily in education, public health, infrastructure development and information technology.

Regarding HK government's incursion into the stock and futures markets last year, Mr Leung said that the move had been essential to end the manipulation that threatened to destroy Hong Kong's economy.

"During all of this, we remained completely honest and transparent. We have learnt from the episode and are preparing for the wider fields of competition in the 21st Century," Mr Leung added.

Concerning the disposal of a portion of shares owned by the government, Mr Leung said that would be done through a unit trust tracking the Hang Seng Index.

"The unit trust approach has three main advantages: it could cater to the needs of retail and institutional investors; it was 'market neutral' because it did not involve selecting individual stocks; and it would be the least disruptive to the stock market," he said.

He also reminded the audience that Hong Kong was ranked as the world's freest economy by the U.S. Heritage Foundation, the World Trade Organisation and the Cato Institute of the U.S.

On the question of the possible development of a direct air link between Hong Kong and Komatsu, Mr Leung said that Hong Kong welcomed the development of more air links with new points in Japan and continued to see lots of potential in Komatsu. To pursue the matter further, Mr Leung suggested that it would be useful if possible interest of Japanese carriers in operating the flights could be explored.

The business seminar, entitled "Hong Kong: New Era, New Opportunities", attracted over 250 prominent guests from the political and business sectors. It was the first of a series of business seminars organised by the Hong Kong Economic and Trade Office in Tokyo for this fiscal year.

Also speaking for the seminar were Managing Director of West River (Hong Kong) Limited, Mr Hisaki Nishi; Director (Japan) of Hong Kong Trade Development Council, Mr Louis Ho;and Regional Director (North Asia) of Hong Kong Tourist Association, Mr Kunio Kano.

The seminar was followed by a reception attended by Mayor of Kanazawa City, Mr Tamotsu Yamade.

End/Friday, June 25, 1999

NNNN