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Following is the transcript (English part) of a stand-up media session given by the Financial Secretary, Mr Donald Tsang, after attending the meetings of the Legislative Council's Financial Affairs Panel and Finance Committee this morning (June 5):

Financial Secretary: You know the Government attach great importance to consulting the Legislative Council in the preparation of our annual Budget. Although we have just finished the 2000-01 Budget, I've already started work on the year 2001-02 Budget. And this year because of the Legislative Council election, I've advanced the consultation period to make sure that I have abreast all the views of incumbent members and I will repeat this exercise when the Legislative Council rises and the new members are returned. I will do this again in October/November, by which time I hope we have their views on the revenue side of the Budget as well.

I have told members that we are acutely conscious that sentiment in the market, particular in the community, remains rather weak, largely because of the rather intransigently high unemployment. By Hong Kong standard, five per cent plus is high. We should work hard to reduce that level as much as possible in the coming months and quarters. I also told them that I'm acutely conscious that people because of the negative assets are worried about declining property prices. This is, I've explained to them, a consequence of the Asian Financial Crisis and property market in doldrums is a phenomenon you see all over East Asia. And this is something we have to address, but something we know that is a temporary phenomenon. Particularly in Hong Kong, we have a lot of people living in very small place, in a economy which is rising at 6%, economy will revive, rental value will be enhanced, and investment in property will continue to be very attractive in the long run. So, I hope it is a temporary phenomenon and meanwhile we are addressing various other distortions in the market which might have contributed to this problem. And this is something I'm sure the Chief Executive and myself will consider.

Question: (inaudible.)

Financial Secretary: The feel good factor is a very illusive thing. In fact we have a pretty good feel good factor immediately following the announcement of the year 2000 Budget. But then the residual effect of the Asian Financial Crisis set in, as it has taken place elsewhere in Asia as well. So, I think we are going through this up and down en route in the coming quarters. But I do believe the fundamentals remain quite good, the recovery is quite robust. And we should see improvement in sentiments later in the year. As regard our proposals for expenditure in the coming year, we're still planning a growth rate of 2.5%. Within that, we still have scope for new expenditure items because of the EPP (Enhanced Productivity Programme) system we are introducing, which we are now reaping some fruit, as well as the growth we have allowed. So, in the coming year, we are still talking about new services. And there are of course better scopes in the capital expenditure programme. The most important of all, the priority items that members have expressed to me coincide with ours. These are education, environment and employment. These would be the areas we are focusing in directing our future resources.

Financial Secretary's transcript (Chinese Part)

End/Monday, June 5, 2000

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