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Following is the full text of the speech (English only) by the Financial Secretary, Mr Donald Tsang, at a lunch co-hosted by KwaZulu Marketing Initiatives and Hong Kong Trade Development Council at Durban today (Thursday, South African time):

Ian Wilson, Anna (Lai), distinguished guests, ladies and gentlemen:

Sa ni bonani.

Thank you Ian for that kind introduction. I am delighted to be here in Durban today - the great port city of the African continent and the land of the Zulu's. What a memorable welcome we received earlier today as we checked into our hotel. To see the enthusiasm on the faces of the young dancers - the future of South Africa!

I have long harboured a desire to visit this remarkable part of the world. And it is only now that I have achieved that wish as head of the first official business mission from Hong Kong to South Africa. It is indeed an honour for me and members of my delegation.

We have just arrived from three days of packed meetings and business seminars in Pretoria and Johannesburg, and I can honestly say that the warmth of the welcome has been most touching. It may be the first visit for many of us but we have been treated like old friends. And I'm sure that same friendliness will continue for the remainder of the trip.

Believe it or not, there are some striking similarities between Hong Kong and Durban. The most obvious is our strategic positions on the sea lanes of the world and the fact that our economic development is irrevocably tied to the sea. We are both melting pots of cultural diversity - Hong Kong where east meets west; and Durban where African, Asian and European influences create a rich cosmopolitan society. And we share a sub-tropical climate.

There is one major difference, however, we are some 200 square kilometres smaller than the Durban Metropolitan Area, but with a population approaching 7 million - nearly three times larger than that of the DMA. So you can imagine just how crowded we are!

Being such a tiny place possibly explains why Hong Kong people love to travel. To explore new areas. To seek out new adventures. To find new partners. You know the thing that struck me most when I first put foot on South African soil was the sheer vastness of the land. The horizon seems to stretch forever. For me that can mean only one thing - opportunities abound.

That's why we are here today. We want to raise the stakes. To put the partnership between Hong Kong and South Africa on a new level. And how do we do that? By forging a strategic economic and trade alliance to carefully exploit those opportunities for our mutual benefit.

I believe our mission is already paying dividends. And it is receiving enthusiastic support from the highest quarter. On Tuesday, we had the pleasure of meeting President Mbeki in Pretoria, and he made it clear that he wants to see some flesh on the proposition and milestones on the way to its implementation.

While that may be proving a headache for government officials in two continents, members of my business mission are already networking with their South African contacts. It is too early to predict any outcome, but there are some small signs that their efforts may bear fruit in the future.

And this cuts to the heart of the matter. The success of any alliance between our two economies rests squarely on the shoulders of our respective private sectors. Governments can help facilitate business connections, but it is up to the business themselves to run with the baton.

From what I have seen of the indomitable spirit of the south Africans - who have gone through so much suffering and faced so many difficulties in their recent history - then I am convinced an alliance will succeed.

This doggedness in the face of adversity has manifested itself in different ways. One small example came to our notice only yesterday (Wednesday), during a visit to the Johannesburg Stock Exchange. A new internet-based support system has been developed and introduced by the JSE to help jumpstart small and medium-sized enterprises.

The novel scheme indirectly emerged from the struggle to survive during the period of isolation. And is a perfect example of the determination of the people of South Africa to succeed - a determination to overcome the hardships of the transition and put the past behind you.

We have recently come through a transition ourselves following our reunification with China on July the 1st, 1997. Despite dire predictions by some commentators, the transition was seamless. What little change there was we have taken in our stride.

Hong Kong people are running Hong Kong with a high degree of autonomy under the "one country two systems" concept. This guarantees that our way of life and capitalist system will continue for 50 years until 2047.

All our systems remain intact. The rule of law. An independent judiciary. A free and open market. Freedom of the press. Freedom of speech. The protection of property rights and foreign investment. A freely-convertible Hong Kong Dollar. The freedom to run our own economic and fiscal policies without interference. Low and business-friendly taxes - that means 16% profits tax and a maximum 15% salaries tax. A clean and efficient administration. And a level playing field for all those doing business in Hong Kong. That simply means a South African businessman being treated exactly the same way as one from the United States, Australia, Britain, or Hong Kong.

We continue to be separated from the Mainland by a physical and clearly defined boundary which is policed by our own enforcement agencies. And we operate as a separate customs territory.

These special characteristics are unique to Hong Kong. We are part of China, but we operate under our own system. And the Central Government in Beijing has continued to adopt a hands-off approach. They have readily offered to lend support. But they have made it clear they want Hong Kong to be governing itself in all areas except in defence and foreign affairs as provided for in the 1984 Sino-British Joint Declaration.

That's not to say the past two years have been uneventful. Quite the reverse. Our problems have stemmed directly from the impact of the Asian financial crisis. But, together with other countries in the region, we have been strengthening our systems to ensure they can withstand any future shocks.

We have embarked on a programme to restructure the economy. To diversify away from our former heavy reliance on property into new areas, such as innovation and technology.

We are reforming our financial markets to make them more competitive and more accountable, especially in the light of global trends such as 24-hour stock trading, electronic- commerce and on-line brokerages. We are branching out into new areas of innovation and technology, and carving ourselves a niche in the development of information technology.

On top of this we are building on our traditional strengths such as our close trade and investment ties with the mainland of China and our strategic position as a communications and transport hub between the time zones of Europe and the Americas.

And, we are also actively surveying the world looking for new opportunities and strategic partnerships. That's why I'm here today with such an impressive business mission. We know the potential.

For South African businessmen and entrepreneurs, this may mean taking advantage of our position as the pre-eminent gateway to the massive markets in the mainland of China, and greater East Asia.

There is no doubt, Hong Kong is THE bridge to the Mainland. We handled almost US$600 million worth of re-export trade, mainly from China, to South Africa in 1998. Probably a fair proportion of it coming through the port of Durban. And the likely entry of China into the World Trade Organisation will enhance our middle-man role and boost our direct involvement in the Mainland's economic development.

Although the Asian financial crisis has spilled over to the Mainland, its economy has continued to grow at a healthy pace. Last year it was almost 8% and this year, the official guidance growth target is a respectable 7% - by far the highest GDP target in the region.

For Hong Kong entrepreneurs, your location as the gateway to southern Africa with its market reach of almost 200 million people is an added incentive for them to invest in South Africa. And you have the best infrastructure and services in the region with which to access that market. One only needs to look at the port of Durban to realise that. And I am looking forward to our planned visit to the port in a short while.

As you may be aware, Hong Kong has, until recently, been the busiest container port in the world handling over 14 million TEUs (20-foot equivalent units). And we are continuing our port expansion with the construction of the 9th terminal just starting. It is an investment by the private sector of more than US$1 billion. This will help maintain our port capacity.

I understand the KwaZulu Natal Province is one of the major tourist destinations in South Africa with your fine beaches and national parks. As I alluded to earlier, Hong Kong people love to travel. So, I'm sure something can be done to capitalise on the natural beauty and diversity of your tourist attractions to entice even more of our people to visit this wonderful part of the world.

What we are doing in Hong Kong is establishing a distinct position for ourselves as Asia's most cosmopolitan city. We are continually reaching out to consolidate ties with our trading partners and develop new partnerships.

There are many areas for mutual co-operation which we can develop through a wide range of government-to-government contacts. There is even more scope and flexibility in the private sector in promoting our bilateral economic relationship, although I will gladly leave this to those members of the delegation who can do it far better than me.

If you are looking for co-operation with Hong Kong in developing services in areas such as maritime transport, port development and management, import and export trade, technology exchanges, air cargo, e-commerce and tourism, then I am sure we can facilitate this. After all, that's what we're good at doing.

And we can help in further developing your small and medium enterprises. As you may know, they form the backbone of our economy. We have over a quarter of a million SMEs which employ about 60% of our total workforce. Their ability to quickly adapt to new and changing trends is legendary.

Finally, I would like to thank the KwaZulu Marketing Initiatives and Hong Kong Trade Development Council for giving me this opportunity to speak to some of Durban's leading business people. I'm delighted also that KMI has been successful in attracting investment from Hong Kong. While the total amount may be relatively small, it represents what I would call, untapped opportunities. And jobs are being created.

It is a good beginning and I hope it will lead to much greater investment in the future.

Thank you.

End/Thursday, July 29, 1999

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