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Following is the full text of the speech (English only) by the Financial Secretary, Mr Antony Leung, at the Institute of Directors' Annual Dinner tonight (October 16):

Moses [Cheng], Ladies and Gentlemen,

It is good to be here tonight, to be among so many friends and former colleagues, and to be part of the inaugural Directors of the Year Awards ceremony. I'm delighted the Institute has seen fit to introduce the awards which seek to recognise the outstanding executive talent we have in Hong Kong while publicising good corporate governance and promoting professionalism among directors.

Tonight's event couldn't have come at a more appropriate time. Last week, the Chief Executive has announced his package of measures to help people and business through the present economic downturn: and it coincides with the end of the consultation period on the first set of proposals to strengthen Hong Kong's corporate governance - another matter close to all our hearts. But more critical to all this is the changing nature of the global economy in the light of the downturn and the aftermath of the terrible events in New York and Washington.

These are very difficult and uncertain times. As Mr Tung said last Wednesday, we are facing the most acute economic problems for many years. The latest unemployment figure of 5.3% vividly reflects the worsening employment situation. The Government is fully aware of that and has been constantly and closely monitoring the development. During our meetings with the full spectrum of our community recently, the Government has received the strong message that a stable job with a stable income is the prime concern of the public at large. This is exactly why creating jobs and enhancing business environment are but the main themes of this year's Policy Address.

To help improve the employment situation, the Chief Executive has pledged to create more than 30,000 job opportunities. These jobs will be in areas such as recreation and culture, housing management, education, environmental protection, greening programmes, health care and welfare services. Some of the jobs will be short term, but others will be permanent. We are also expediting work on projects without sacrificing quality and speeding up the assessment processes on others to bring them on line more quickly.

These are designed to help alleviate the more immediate problems. For the medium to long term, we believe that the creation of job opportunities rests mainly with the private sectors. And that comes to the point about improving our business environment.

We in the administration have always appreciated the role of the private sector in driving our economy, through the good and bad times. The business acumen of our entrepreneurs in predicting trends and seizing the opportunities ahead of the competition has been one of Hong Kong's strengths. My colleagues and I in the Administration see ourselves as the facilitator. We create and enhance the environment, and you - the decision-makers of companies - generate and regenerate the wealth.

The Policy Address outlines the range of measures the Government is implementing to improve the business environment. I know many of the Institute's members are associated with small and medium-sized enterprises. In this regard, the $1.9 billion we will be injecting into four new funds being established by the Small and Medium Enterprises Committee will go a long way to help boost training, open up markets, raise competitiveness and purchase new equipment. More than 100,000 SMEs are expected to benefit from this injection of funds. We are implementing as many as 30 other new proposals recommended by the Committee to help SMEs.

In other related areas, our proposal to inject up to $2 billion into the construction of a new exhibition centre at Chek Lap Kok, in conjunction with the Airport Authority, will highlight Hong Kong's advantages as a top convention and exhibition centre. The airport itself will play a pivotal role in the development and promotion of Hong Kong as Asia's logistics hub together with our port and other world-class infrastructure. And our commitment to assess the impact of proposed new policies and legislation on the business environment before they are implemented will provide the certainty you need to make those critical business decisions.

All these go hand in glove with the combined government-private sector initiatives to improve corporate governance and to strengthen our systems for greater transparency in corporate dealings so that the interests of all stakeholders are better protected. We are updating our securities legislation to enhance market transparency and combat corporate misconduct and fraud. The listing rules are being improved by the stock exchange to enhance disclosure and streamline enforcement. And the Standing Committee on Company Law Reform is carrying out a fundamental review of our corporate governance regime by phases. It has received a number of submissions from the public on the first phase of the review and will need to go through these before submitting its recommendations to us. Once that happens we will begin implementing recommendations from next year on issues that will bring significant changes to the duties and responsibilities of directors; the rights of shareholders; and corporate reporting.

It is true that these initiatives to improve our business environment and enhance corporate governance might seem remote to the people. On the face of it, the measures can do little to save those members of the public who are living under the shadow of job losses, or have actually lost their jobs. But they do provide tangible benefits for improving the business environment and by doing this we are creating conditions that will ultimately enable the private sector to create new job opportunities. And that is, after all, what we rely on to stimulate economic growth.

Yet to create a conducive business environment is not all that is required. As Hong Kong is transforming to a knowledge-based economy, knowledge is the new currency. Indeed, constantly upgrading ourselves is the best assurance of job security. In this regard, the Government has committed in the Policy Address to devote considerable resources to education and training to upgrade our human resources. An essential part of this is the $5 billion announced by the Chief Executive to be used to support our citizens in their pursuit of continuing education. We believe that the trend for life-long learning will become even stronger through Government encouragement and the active support and participation of the people.

I hope the business community, including the Hong Kong Institute of Directors and all of you here tonight, will work with us to help the community through the current economic difficulty. And while I fully acknowledge the fiduciary duties directors have to their shareholders, as good corporate citizens they also have an important part to play in the community especially during such uncertain times. Taking a longer term perspective, the two roles can live harmoniously with each other.

So, if they have to look at introducing cost-cutting measures including the possibility of laying off staff, perhaps they could pause a moment and talk to their employees to explore other options that may be available. You never know, they might be able to come up with proposals that can achieve the savings goal without adding to the worsening unemployment situation. Please don't take this to imply that we are somehow trying to influence your decision-making process. That is certainly the wrong interpretation. It is simply a reminder of the principles I know you follow when making crucial corporate decisions that impact on the shareholders and the long-term future of your company, and may I say the well-being of Hong Kong.

These are challenging times for everyone, not just for the people of Hong Kong. But no one can ever accuse Hong Kong of giving up on a challenge. We thrive on them and, in the end, our society is much better off as a result. And you, the executives of Hong Kong, are taking up another challenge in your own fields of endeavour, by ensuring that we lift our standards of corporate governance to the highest levels. Tonight's ceremony is a case in point when our top directors are rewarded for their outstanding talents and professionalism. My sincere congratulations to all the winners and a big vote of thanks to the Hong Kong Institute of Directors for its foresight in inaugurating the Directors of the Year Awards.

Thank you very much.

End/Tuesday, October 16, 2001

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