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Following is the speech (English only) delivered by the Chief Secretary for Administration, Mrs Anson Chan, at the Australian Chamber of Commerce luncheon today (Friday):

Good afternoon ladies and gentlemen,

First of all, thank you for giving me this opportunity to address members of the Australian Chamber of Commerce. I think it's been many many years since I last addressed this Chamber - if my memory serves me correctly, I think the last time I spoke was in my capacity as Secretary for Economic Services and I remember speaking on the airport project. Of Course, in that interval we've built the airport, and fortunately and happily the airport is now operating very well, and I hope you'd agree. So it's very good to be back.

I have been asked today to talk about my recent trip to Australia. I am, of course, happy to oblige, and I think I can sum it up in one word: which is that it was a great visit. But let me give you, first of all, a broad overview before I go into the specifics of the visit.

We received a tremendously warm and positive reception in Australia. I found a considerable depth of knowledge about Hong Kong, about our transition and the challenges we have faced as a Special Administrative Region since July 1, 1997. This has been helped by the fact that Hong Kong and Australia not only have strong business, but also strong social and personal ties. Both of our governments are advocates of free and open trade in the WTO and APEC. We are both important trading partners for each other - bilateral trade was worth about A$6 billion in 1998. The 350 Australian companies in Hong Kong employ about 200,000 people - that's about six per cent of our workforce. More than 17,000 Hong Kong students study in Australia and more than one-third of our Native English-speaking Teachers are Aussies. In the past three years, the Chief Executive, the Financial Secretary and myself, in 1996, have visited Australia to further strengthen bilateral links. We have an Economic and Trade Office in Sydney whose prime objective is to help Australian companies do business in Hong Kong. So there is already a great depth of understanding and contact. And because of this I believe there is less anxiety about our future among Australians than perhaps there is in other parts of the world. And we find that very reassuring.

That is not, of course, to say Australians, or the Australian media, are not curious or even critical about some of the major issues we have faced. There was, for example, considerable interest in high-profile court cases that we have dealt with and which specifically dealt with Hong Kong's constitutional interface with the Mainland. What I found comforting was that concerns about these issues were expressed openly and honestly with a view to better understand our legal processes and development, rather than to disparage them. There was a recognition that, for the first time in Hong Kong's history, we have a written constitution and that this in itself is bound to be the subject of litigation, or even controversy. I see this as a healthy sign - a sign of a dynamic and evolving legal system - and I believe that most of those I met in Australia shared this view. The discussions on our legal system also gave me the opportunity to reinforce the Hong Kong Government's unyielding commitment to the bedrock of our success and that is the rule of law based on the English Common Law and a fiercely independent judiciary. We know that once we lose that, we lose everything. I know it, and our friends in Australia know it too.

Overall there was a general recognition that Hong Kong's transition has been - and continues to be - a success. There was a high degree of insight into how Hong Kong is moving ahead economically and how we are positioning ourselves for future growth. But by being able to start from such a strong base, it made my principal task of promoting Hong Kong all the more easy, and enjoyable, when I was in Sydney, Canberra and Melbourne last November.

Boosting business opportunities was, naturally, a central and recurring theme of my visit. There was a great deal of interest in initiatives such as the Cyberport, Hong Kong Disneyland and liberalisation of the telecommunications markets. Our response to Australia's bid to replace Hong Kong as the pre-eminent financial centre in the region also attracted a great deal of attention. And I think I hope, at least,that I was able to point out that Hong Kong was ready for the challenge.

China's accession to the WTO generated considerable attention. I was frequently asked: How will this affect Hong Kong's middleman role? My answer: Very well, thank you. China's accession to the WTO will also provide many opportunities in Hong Kong for international corporations and investors. China's trade as a result of accession to the WTO is expected to double within the next six years. Foreign direct investment will double from today's level of US$45 billion to somewhere close to between US$90 billion to US$100 billion. So we expect that China's accession to the WTO will provide more - not less - opportunities for Hong Kong to build on and expand its traditional role as a gateway and as a facilitator. Our entire history, our language and cultural ties have given us the world's greatest reservoir of experience in dealing with China-related enterprises. This invaluable human resource has been tapped by many international companies and we want more to benefit from Hong Kong's undoubted advantages.

The alignment of China's practices and regulations with the world's multi-lateral trading system will make market access easier, more transparent and more predictable for all. In particular, China's services sector offers great potential. Hong Kong companies are already searching for opportunities in areas such as telecommunications, finance, banking, insurance and transportation. I expect Australian companies will be doing the same.

While I was in Australia I did offer a little advice: Get in quick before it is too late. There was a great deal of interest - particularly from small and medium sized enterprises - to expand their operations into China. And I would encourage anybody taking this course to start now so they can capitalise quickly on the opportunities that will present themselves over the next few years as the Mainland market continues to open up.

Two topical areas which sparked interest were the environment, and our plans to beautify the waterfront. We know in Hong Kong that we must do more to protect and improve the environment in Hong Kong if we are to really stake our claim as Asia's premier international city. We must be a great place to live, as well as a great place to do business. We need clean air, as well as a clean administration. We have a magnificent harbour but we have taken it for granted. As a result, we have not allowed the people of Hong Kong, or visitors from around the world, to fully enjoy its natural beauty and stunning location. If you have walked along the shores of Sydney Harbour, around Circular Quay and Darling Point, you will get an idea of what I mean. We have a good deal to learn, and Australian companies have a lot to offer. What we must now do is to bring those two strands together - in simple terms, match demand with supply. I have encouraged Australia's Minister for Environment and Heritage to visit Hong Kong with a business delegation. There is considerable potential for Australian companies in environmental consultancy and environmental technology.

Information technology is another area where clearly there are opportunities for Australian companies advanced in both networking hardware and software, and Internet-based applications. Such companies may want to team up with partners in Hong Kong, or go it alone. Either way, their presence, expertise and creativity are most welcome as we in Hong Kong continue to carve ourselves a niche as an IT and Internet hub for the Asia-Pacific region. One of Hong Kong's greatest advantage in this field is our experience in developing Chinese-language, or bilingual applications and content. There have been some recent deals involving Hong Kong and Australian companies looking to capitalise on each other's strengths. The Cyberport project was of great interest as was the entrepreneur behind that development, Mr Richard Li. There was considerable coverage in the media about Hong Kong's high-tech ambitions, which is not only encouraging but also reinforces our belief that Hong Kong is fast becoming a 'hot spot' of information technology.

Building and construction services, health education, and care for the elderly are other areas where we see potential for co-operation, investment or new business ventures. So that, in a nutshell, is most of the ground we covered on the business front.

The visit also gave me a chance to tap into Australia's experience and expertise in several areas where we in Hong Kong are looking for new ideas, and perhaps some inspiration. The way in which sporting venues are built and managed is of special interest now that we have thrown our hat into the ring for the 2006 Asian Games.

Our visit to the Olympic Village in Sydney gave us an insight into how mega-scale, international sporting events are brought to fruition. I was particularly impressed by the way in which environmental concerns have been factored into the design of the facilities, as well as how they successfully merge the practicality of world-class competition venues and the user-friendliness of leisure and recreation assets for the community as a whole. Solar power and heating, advanced water collection and distribution systems, energy efficient lighting and cooling - all of these green measures are part and parcel of the normal development parameters. These are some of the things that we should be looking at for our sporting facilities in Hong Kong. I was most heartened by offers of assistance from the New South Wales Government, which was more than willing to share its experience in bidding for - and winning - the right to hold the Millennium Olympics. This is the sort of experience we need to tap into if we are to secure the 2006 Asian Games for Hong Kong.

On the other hand, such magnificent and well thought-out sporting venues come as no surprise in Australia, a nation in which sport has an almost religious significance. Sometimes, when you read an Australian newspaper, you wonder whether there is any other news once you get past the cricket, the rugby, the tennis, the swimming, the football and the netball - all on the front page! And Australia is really enjoying a dream run on the international sporting stage at the moment. Australians have won so many world championships in the past year you are now probably the World Champions of world championships.

Of course, sport is all about competition. And competition makes us strive to be the best. Without competition, progress can be stifled. That is why we in Hong Kong are watching very closely as Australia sets its sights on becoming a centre for global financial services. Some of the reforms that we have undertaken in our financial services sector over the past two-and-a-half years mirror similar reforms taken in Australia. But what I would like to stress is that we do not see such competition as a win or lose situation. Such competition is a win-win, for Australia as well as for Hong Kong. It makes us both strive to be better. It reinforces our shared values of free and open trade, of well-regulated and transparent markets. It opens up new areas of co-operation, for example, in examining strategic alliances between the Australian and Hong Kong stock and futures exchanges.

Finally, a couple of observations and a quick report-card on Hong Kong's prospects.

There is an extremely positive atmosphere in Australia - some call it the 'feel-good' factor. The economy is doing well and pretty much escaped the fallout from the Asian financial turmoil, growing by more than four per cent in 1998/99 and predicted to grow by about three per cent in the current financial year. Just walking down the street, you can feel the optimism, confidence and prosperity of a dynamic and go-ahead nation. It was quite hard, in fact, for us to book the top venues for our various promotions - the TDC conference, the film gala, tourism events, our Gala dinners - even nine months in advance. So, it's 'all happening', as they say. After visiting Australia, and seeing all it has to offer, it made me realise that we have to do more in Hong Kong to recapture some of our liveliness and vigour.

The other point I want to make follows on from this. Promotional visits such as my Australian trip provide us with an insight into how we are doing on the global stage. In Australia, our hosts left us in no doubt that Hong Kong should continue to maintain a high international profile. It is not only in our interests to do so, but also in the interests of our major trading and investment partners such as Australia.

This serves two purposes: Firstly, it keeps us in the news and maintains interest in what we are doing and what we stand for. It allows us to explain our policies and to allay fears or misgivings that may surface from time to time - the concerns expressed about our constitutional law being a case in point.

Secondly, it reinforces and strengthens our image as a distinct economic entity, and as a vibrant, cosmopolitan community. It allows us to highlight the differences between Hong Kong and any other major Chinese city - our common law legal system, our clean administration, our low and predictable taxes, the freedom of travel and expression, our excellent transport and communications infrastructure, even our enormous choice of restaurants. All of these make us unique in Asia and we must constantly strive to make sure that this is always the case.

Let me conclude with a brief look at Hong Kong's economic prospects. Our Third Quarter figures showing GDP growth of 4.5 per cent were released while I was in Australia. We are now looking at GDP growth of about 1.8 per cent for 1999. There are a few encouraging signs that we will be able to maintain the current, positive momentum. The property market has stabilised. The unemployment rate, while still too high, is stable. Consumer prices have eased considerably. Our currency remains rock-solid, backed by reserves of more than US$125 billion, or about A$191 billion. As you would all have seen, the Hang Seng Index looks like a roller coaster these days but the stock market is operating smoothly and efficiently. So, this is the base from which we operate at the moment. As confidence returns to the region, Hong Kong's fortunes are bound to improve. In the medium to long term, China's accession to the WTO and our enormous potential as a hub for IT, the Internet, telecommunications and broadcasting will offer a host of new and exciting opportunities for international businesses.

Ladies and gentlemen, Australia and Hong Kong already have a very strong bilateral relationship which, as I have said, covers more than trade and business but also family and friends. The new millennium holds great promise for both of our communities, but even greater promise if we work together to realise our potential.

Thank you

End/Friday, January 14, 2000

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