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Following is the transcript (English portion) of the press conference by the newly-appointed Financial Secretary, Mr Henry Tang, at the Central Government Offices this evening (August 4):

I am honoured and privileged to be nominated by the Chief Executive and appointed by the Central People's Government as the third Financial Secretary of the Hong Kong Special Administrative Region.

At a time when we are facing unprecedented challenges - economic restructuring, unemployment, fiscal deficit, deflation - I am keenly aware of the heavy responsibilities bestowed on this position and Hong Kong people's expectation on me as I take up this post.

My foremost priority is to improve Hong Kong's economy. Despite the current economic difficulties we are facing, we should not lose sight of our unique advantages and our good economic fundamentals. Hong Kong's close economic links with the Mainland is a key advantage for us and this will be further strengthened by the recently signed Mainland / Hong Kong Closer Economic Partnership Arrangement. I am fully confident that Hong Kong will rise again stronger than before if our community can work together to face and overcome those challenges.

During the past year, I have built up a good working relationship with other principal officials and my civil service colleagues. In the months ahead, I will engage in active dialogues with a cross-section of our community in order to understand better their aspirations. I will also consult the Members of the Legislative Council, business community, and all sectors of the society on effective measures to tackle our economic challenges.

I am determined and I have every confidence that I will be able to work closely with our community to overcome our economic difficulties and develop a prosperous, harmonious and caring society. I hope the public will work together with me to achieve this goal. Thank you very much!

Reporter: You mentioned that one of your priorities will be to improve the economy. Can you give more details on that? And will you delay the balancing of the budget beyond 2006-07? And what's your view on the linked exchange rate, do you think it should be changed or not?

FS: The fiscal deficit is a serious problem that we have a constitutional responsibility to tackle (it). According to the Basic Law, we have to strive to achieve a balanced budget and this is a constitutional responsibility I will not shirk.

Secondly, I also have a responsibility to ensure the stability of our financial system and the currency board system, and this is again a responsibility that I will stand fast and not shirk. But in the course of dealing with our fiscal deficit I have a responsibility that we must consider views from all sectors of our community and I will take a realistic approach to set a target on how we will strive to balance our books and also what is the timetable that we are looking at in the medium term. The consultation process will be onerous, it will be wide, we will listen to views from all sectors of the community.

Reporter: You have said one of your priorities will be to improve the economy. Can you give more details and what do you think about the linked exchange rate? Do you think it should be maintained or changed?

FS: I believe most people in Hong Kong today, first and foremost in their minds will be how are we going to revitalise our economy. There are many, many measures at our disposal, some of which are more palatable, some of which may have better effects, some of which can be very expensive. I believe I should not be the only person to close the door and formulate a policy. I believe in a very open and transparent manner, that there will be wider consultation to collect views from all sectors of the community, whether it's Members of the Legislative Council, business community, other sectors, labour sector. We will listen to their views and formulate a policy together with a high degree of transparency on how we will revitalise (the economy) and pay for projects along the way.

Reporter: How about the linked exchange rate, what's your viewpoint?

FS: I said that earlier. The linked exchange rate is something we will stand fast and it is one of my responsibilities on financial stability and the linked exchange rate.

Reporter: Will you maintain the current timetable for balancing the budget or will you defer it?

FS: I think I have answered that question already.

Reporter: In your previous portfolio and indeed before you became a principal official, you talked a lot about innovation technology, the need to have tax breaks - I think you gave an interview last year about that - to encourage particular industries in Hong Kong. Are those views you still stand by as Financial Secretary? Is this one way to revitalise the economy by using tax breaks to target the sort of industries you've talked about before?

FS: Actually, I'm glad there's an innovation and technology question. I thought everyone had forgotten about that already. If I see where we are going in terms of our economy, it's easy to say we want to revitalise the economy, but it's not that easy. The challenges are numerous and the difficulties are daunting. So I think we have to make certain choices. I don't think we can compete with the Mainland on cheap labour; we cannot compete with them on low value-added manufacturing; and we cannot compete with them on things that we do not add value or have innovation or provide a sophistication where they are not able to do in the Mainland. So the complementary role is very, very important, value-added is very important. I will support measures for industries, for services that have those factors, that they are innovative, that they are creative and that they create jobs for Hong Kong.

Reporter: And that could include tax break as you've said in the past?

FS: Not necessarily. Our fiscal deficit is a problem that we have to deal with, so I am not a cook that has a lot of choices, so therefore, how do I make those choices? Through various consultations, through a high degree of transparency and through collective efforts to formulate policies to revitalise our economy and achieve a balanced budget.

Reporter: You three times, I think, used the word progressive, and I'm wondering what exactly that word means to you - might it mean for example progressive taxation, what is the implication of that word and meaning to you? Also, as your predecessor left under an ethical cloud, I wonder if you feel that there is anything you feel that you can do with your own personal holdings to resolve any ethical questions that people might have about whether any conflict of interest might exist between your new position and your financial holdings?

FS: I have declared my interests, my holdings according to the standards set by the Principal Officials and all of that is disclosed and the public version is for public perusal. You are welcome to read it.

In the past 13 months as Secretary for Commerce, Industry and Technology, I think my actions speak louder than my words. I don't think anyone has accused me of biasing towards any of the businesses that I own. So I am not afraid of a high degree of transparency and I will continue my job as Financial Secretary along that line.

And you want to engage in a philosophical discussion of 'progressive'? I will be happy to engage at another occasion when we will have longer than a one-minute answer.

Reporter: You used the term three terms, so in practical terms what do you mean by it?

FS: I wish to see a progressive society where we are a diversified, open and also vibrant economy and harmonious society. That is my definition of a progressive society. I believe Hong Kong is a very sophisticated society. We have a lot of independent-minded people but we also have a lot of vitality and a lot of ambition. We are very critical of ourselves if we are not the best. Therefore, I very much appreciate and I love the Hong Kong people's spirit, so I will rely on the spirit of Hong Kong and the people of Hong Kong to pull all ourselves out of this challenging situation.

(Please also refer to Chinese portion of the transcript.)

Monday, August 4, 2003

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Floor/ Cantonese/ Putonghua/ English