Hong Kong's smooth transition and two-way trade and investment ties with ASEAN nations were raised during meetings between Hong Kong SAR Chief Executive, Mr Tung Chee Hwa, and Malaysian leaders today.

In his first overseas trip as Chief Executive, Mr Tung held what he described as 'very useful discussions' first with Malaysia's Deputy Prime Minister Anwar Ibrahim and then with Malaysia's Prime Minister, Dr Mahathir bin Mohamad.

Talks were also held with Malaysian Minister of Transport Ling Liong Sik and Minister of Foreign Affairs Abdullah bin Haji Ahmad Badawi.

Mr Tung and his wife were also honoured at a reception hosted by China's Ambassador to Malaysia, Mr Qian Jin Chiang, at the Chinese Embassy.

During his meeting with Mr Anwar, the Chief Executive stressed it was very much "business as usual" in Hong Kong and that there had been no change in lifestyle.

He told the Malaysian Deputy Prime Minister that Hong Kong's economy was very strong and that under the 'One Country, Two Systems' concept Hong Kong had retained its common law system and its own monetary system.

During talks with Malaysian Prime Minister Dr Mahathir, Mr Tung stressed the importance of nurturing and developing two-way trade and investment ties between Hong Kong, Malaysia and other ASEAN nations.

The recent financial turmoil in Asian currency markets was also discussed.

"I am sure it is only a short-term phenomena. Malaysia has made outstanding achievements in the past two decades. It has a very strong economy and I am sure it will go from strength to strength," Mr Tung said during the talks.

Mr Tung said he also discussed livelihood issues including housing and education with Dr Mahathir.

At a Chinese Embassy reception in his honour, Mr Tung told foreign dignitaries and guests that July 1, 1997 was a very special day for everyone in Hong Kong.

"It was a day which filled our hearts with pride and with confidence," he said.

"Pride, that after 156 years, Hong Kong was at last reunited with her family, with China, to become a member of a large family.

"Confidence in the sense that being masters of our own destiny we know Hong Kong will be better tomorrow for our children and for our grandchildren."

Mr Tung said that all branches of Government - Judiciary, Legislative and Executive - were functioning normally.

He said the lifestyle to which Hong Kong people had become very accustomed had not changed and that the economy continued to expand.

"The fact is the very foundations of 'One Country, Two Systems', Hong Kong people governing Hong Kong with a high degree of autonomy is laid as we move forward during the last two months," he said.

"I have come to Malaysia with a view to explain to my friends what has happened after July 1, 1997.

"I have also come to strengthen a very important relationship between Hong Kong and Malaysia, to compare notes as we move forward. Indeed there are areas where we can share our experience."

Mr Tung earlier told reporters that Hong Kong's 'very important trade relationship' with Malaysia had been growing at about 25 per cent per annum.

"It is an important relationship which we want to strengthen," he said.

"We also have a very important relationship with the ASEAN nations. Trade growing at 21 per cent over the last five years and Malaysia this year takes the chair of ASEAN, so it is appropriate for me to be here as the first stop of my overseas trip and to have the opportunity to meet with the Prime Minister and the Deputy Prime Minister.

"It was a very useful discussion."