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Following is a speech by the Secretary for Trade and Industry, Mr CHAU Tak Hay, at the Launching Ceremony of ON Semiconductor today (Monday): (English only)

Mr Hanson, Mr Leung, Ladies and Gentlemen,

I am most delighted that ON Semiconductor has invited me to take part in this grand ceremony - the grand launch of ON Semiconductor in Hong Kong.

ON Semiconductor is well-known as a world leader in analogue, logic and discrete semiconductor components. It is a great honour to us that the company has chosen Hong Kong as the home of its Asia Pacific headquarters.

Because of our world-class transport, telecommunications and financial infrastructure, our strong legal system and independent judiciary, our low and simple taxation, our clean and stable government, our position as the premier gateway to the mainland of China, and our being situated midway between north and south Asia, Hong Kong is a favoured business co-ordination centre for transnational enterprises.

Our convenient location is particularly relevant to ON Semiconductor, which has production plants in Japan to the north, Malaysia and the Philippines to the south, and a major joint venture in Sichuan in China.

Like other economies in the region, Hong Kong was badly hit by the Asian financial crisis. Insofar as external investment is concerned, we saw in its immediate aftermath of the financial crisis a decrease in the number of regional headquarters in Hong Kong.

But every cloud has a silver lining. Having been through difficult times, the past year has seen the resurgence of international interest in Hong Kong as a business hub. There are good reasons for this.

First, I believe the substantial downward adjustment in prices has restored to Hong Kong much of the competitiveness that it lost due to an overheated economy. For example, office rentals and the cost of staff accommodation have fallen by at least 30 per cent since the height of the property market in 1997. The level of operating costs overall has also dropped.

It may be true that Hong Kong is still more expensive than some other locations in Asia. But our present cost structure is in keeping with our premier status and we are now offering much better value for money to overseas investors.

Another major factor is our new policy of promoting innovation and technology upgrading. The Hong Kong Government is committed to providing the most conducive environment and the requisite infrastructure to realise the vision of making Hong Kong an innovation and technology centre for the Region.

This policy vision has focussed attention on opportunities across the technology sectors in Hong Kong. Many international investors are now looking at Hong Kong's potential against this backdrop, taking into account also our traditional strengths of course.

To make Hong Kong more attractive to international as well as local investors, we have been unrelenting in upgrading our technology and human resources infrastructure.

In the next few years, our technology infrastructure will see the addition of a Cyberport, an Applied Science and Technology Research Institute and the Science Park. A five-billion-dollar Innovation and Technology Fund has already been set up to support projects beneficial to innovation and technology upgrading.

The Fund will commence operation later this year. To enhance our human capital, we are pursuing as a matter of priority the admission of Mainland talents into Hong Kong.

Our various initiatives and our strong commitment to innovation and technology must have played a part in ON Semiconductor's decision to locate its Asia Pacific headquarters in Hong Kong.

Another key factor is the resourcefulness of the Industry Department and the Provisional Hong Kong Science Park Company in devising solutions that meet ON Semiconductor's requirements. This is a clear demonstration that Hong Kong is able and willing to provide practical responses to the needs of international investors.

As a former division of Motorola, ON Semiconductor will know that Hong Kong has a cordial and deep relationship with Motorola which goes back many many years.

I have every reason to believe that we will be able to maintain the same sort of relationship with ON Semiconductor on a harmonious and lasting basis.

In conclusion, I would like to wish ON Semiconductor every success in Hong Kong.

Thank you very much.

End/Monday, September 27, 1999

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