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The following is the transcript of remarks by the Chief Executive, Mr Tung Chee Hwa, to reporters in San Francisco today (Thursday, HK time):

Q: So with all the concerns about software piracy in China and Taiwan should Silicon Valley investors feel comfortable investing in Hong Kong?

Mr Tung: Well let me first say that protection of intellectual property is the most important government objective if we are to be successful in this area. In the area of innovation and technology, protection of intellectual property is very important. We have a very strong protection regime but obviously we need to do more and we will do more to make sure that intellectual property is well protected.

Q: The Cox Report has indicated that Hong Kong could be an entry port for the leaking of high-tech information into China. Are you concerned that by building up a Silicon Harbour in Hong Kong there will be some worries in the minds of the investors that it could be something that gets in the way?

Mr Tung: I would think not because Hong Kong has a separate and independent Customs regime and we have a very strong and transparent system to ensure that strategic commodity trade is well monitored and well controlled. I would not be concerned. And the fact is that the administration has come out strongly in supporting and endorsing what the Hong Kong government has done all along. So I would feel that everyone should feel at ease on this issue.

Q: What would happen to the Silicon Harbour project if Congress decided to extend the restrictions on semi-conductor manufacturing equipment to Hong Kong?

Mr Tung: Well I think that's a very hypothetical question. I don't think this will happen. In fact, what is going to happen will be beneficial for both Hong Kong and the United States.

Ends/Thursday, July 22, 1999

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