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Following is the transcript (English only) of the Financial Secretary, Mr Donald Tsang's questions and answers session during the Joint Chambers of Commerce luncheon today (March 20, 2000):

Question: Donald, in the light of recent development, would you like to comment on the economic prospects for relationship between the HKSAR and Taiwan?

Financial Secretary: Martin's the first one, the first person below the belt. Hong Kong clearly is a very open market. We are affected by events all over the world. So if there were major elections in the region, whether in Taiwan or elsewhere, are likely to affect Hong Kong. So that is inevitable. But we must remember Hong Kong is a very self-assured and pretty matured market and luckily over the last year, in 1999, we have done considerable reforms, thanks to the Asian financial crisis. Our banking system is far more robust than it had been although it was arguably the strongest in Asia even in 1998. Our reserves stand very, very full, and very robust. Financial market is very steady. Our securities market has now been reformed and structured and much stronger than before. Hence, I must explain to you the market generally is quite calm today in Hong Kong. But it is also a situation where I think the economy will follow political events. I am sure people realise, in ... of responsibility. One has to look at the interests of its own people, interests of the nation, interests of the region and in fact the world. Because, we like it or not, we are all in the same boat. So in the short term, we might see some volatility but we must have faith in Hong Kong market and Hong Kong people to deal with it. I think what we have seen so far reflect the maturity. That's strength. That's self-confidence. No over-reacting, but doing what we have to do best. And also you look at the whole situation in the context of what have happened around us. Mainland China would become a member of the World Trade Organisation, we hope will be within this calendar year. That will bring in enormous business opportunities. And also the market architecture in Hong Kong is changing and the same thing applies to the Mainland China and also in Taiwan, Singapore and elsewhere. In fact there are lots and more than business opportunities and economic opportunities that mesmerize our minds than political ripples of one kind and other. So I see that as far as Taiwan is concerned we have seen restrained tension across the Strait several times in the past and each and every time I think we worked out alright and I do not see the present one will present even more difficulties. I would believe that we will forever be vigilant. We will be looking at our own affairs but we will make sure that we are an international player, we'll do our own things. I think we should be alright. And bring with the new dimension, perhaps even more business opportunities in the medium term. Today, for instances, I tried to put my ears on the ground, nothing really happened. Even the rumour-mongering machine was not working well this morning. So I think all's well on the commercial front. And ...this might be, it might augur well for the medium term, it could be a very calm affair of a carefully deliberations and a leisure movement.

Question: AmCham has always been a strong supporter of the environment here in Hong Kong, and we're very supportive of the Chief Executive's initiatives in the past year's address. Yet this Budget did not leave much room for the environment in terms of ...I wonder how you might plan to fiscally help us keep Hong Kong competitive and bring in those hi-tech ... we're looking for in support of the environment.What do you have in mind for that?

Financial Secretary: Thank you for asking me the question. When I left the (Legislative) Council Chamber on Wednesday, there were a few irate faces. One pointed fingers at me and said: "You did not say anything about the Asian Games." And then there was another lady who came to me: "You did not talk anything about equal rights". Well, the Budget is a limited affair. Environment is top on the agenda of the whole administration. There is no doubt about it. Every initiative which the Chief Executive mentioned has now been funded. All the things that we could do, for instance conversion of our taxi fleet from diesel to LPG driven, have all been funded. All the major measures are going to take place. I did not mention it because it has been the main theme of the Chief Executive. I thought it has been accepted by all and sundry that we in the administration will deliver it anyway. So, I tried to focus on the sort of things that he has not mentioned as secondary importance. But I can assure you environment ranks the highest in terms of our agenda for year 2000, not only because it is important for our health and for our younger generation, it is important for business. If we want international community to come here to work and prosper and establish basis here, we have to clean up the act. There is no doubt about it. And for that reason, as far as I am concerned, there is absolutely not a question of restraining resources, it is a question of reprioritising and we are putting a lot more resources this year from other programmes into the environment. We will do the same in the coming year. We must be, as far as environment goes, not inferior to the situation as in London or in New York. That is what we are trying to be. And we will be there given us three or four years. And we have to work hard, not only within Hong Kong, but also with our Guangdong brothers and sisters. I think we are all living in the same region to make sure that there will be pollution control methodology, coherent one, between ours and theirs. I can assure you that we are not letting this one go easily. We will try to work hard on it.

Question: I have a question that probably relates to everyone in the business community in Hong Kong, and that relates to the introduction of the Mandatory Provident Fund (MPF) later this year. My question is: perhaps coming out of such a deep economic downturn in Hong Kong, perhaps the delay of the implementation of the MPF may be being considered at this point of time. And secondly, do we think that the Hong Kong community is ready for MPF as far as introduction goes?

Financial Secretary: We have been arguing about some form of retirement protection, some form of provident funds for the community for the last 30 years. Eventually we put up our sword and decided on this scheme three years ago and worked hard at it. We worked hard at it through arguing among ourselves what's the best arrangement for it, and then we pilot through legislation through our legislature which was not always co-operative on various occasions. But we've done it. Now this will be implemented given further confirmation and so on take place at the end of this year. This is the year of revival. If I can think of a year in which we're going to choose a year to do it, this is really the best year to do it when recovery is taking place, when there is no new taxation around. And it is a time we must focus on our future. When we all get old, decrepit looking for help and we know there is something there. I think it is also a time when the new industries will come forth to accept it in that the new fund managing business will see a new plateau as a result of the scheme. Also it will help our debt market. I can see it is a social measure, important economic measure which will stablise Hong Kong not only as an economic entity but also stablise it as a social community which is peaceful, which is calm and ... which would look after its elderly.

End/Monday, March 20, 2000

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