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The following is the transcript of the Chief Executive, Mr Tung Chee Hwa's Question-and-Answer session in the Microsoft Asia Enterprise Summit '99 held today (Tuesday, 9 March 1999):

Question: I was wondering what role do you see Hong Kong playing, if any, in the development of the information technology in China?

Mr Tung: Let me first say something else and I will answer that question. I hope you would have concluded by my speech that I am not a specialist in information technology, nor am I a specialist in science, in technology. I must say I studied as an engineer at the university but I have given it back all to my lecturers and professors. So if I don't get the right answer, please understand.

I would say this, that there is a huge pool of talents on the mainland of China and obviously they are moving forward in developing information technology, as they should be. But I think we in Hong Kong, given the environment we have, will be able to provide companies in Hong Kong the opportunity, really, to enter into the mainland market if we are good at developing the software programmes and do the things here in Hong Kong. In Hong Kong we do have the advantage of all the international connections, the advantage of working together with many, many international companies, understanding what is happening in this area of business, so we can provide, really, a vital bridge working together. And this is what I said in my speech, that we would like to become the hub for Internet service and contents for Asia, and obviously that applies to the mainland of China also.

Question: In the United States, one of the success factors for the growth of the technology industry has been the capital markets generally and venture capital funds specifically. What evolution do you think needs to take place in Asia in the capital markets to foster the start-up of technology companies?

Mr Tung: You know one of the things about Hong Kong is this, that if you look around Asia, we are probably a community which produces some of the most successful entrepreneurs anywhere around the world. Many started with practically nothing, to become what they are today. This spirit of entrepreneurship is very important in my view in the development of innovation and technology as we move forward. The creativity of our people is also very, very important. So that is one thing.

As a government, we want to facilitate the provision of venture capital and the government has, in fact, a $750 million Applied Research Fund - equivalent to about US$100 million - which is used by the government, with the help of three banks, to identify projects to invest, to kick-start, to provide venture capital funds. And the other thing is that towards the end of this year, we are very much hopeful that our second board - you know we have a stock exchange - we are going to kick-in a second board and the purpose of the second board is really for the new enterprises to come through.

Now, there is a whole lot of capital here and there is a whole lot of entrepreneurial spirit here in Hong Kong, and I would hope very much this gives us the added edge as compared with some of the other cities in this part of the world as we move forward.

Question: Changing the subject somewhat, sir, I was reading recently that Hong Kong's magnificent new airport may be starting to price itself out of the market by the fees that it's charging. Now, I know not the truth of those assertions but it seems to me that Hong Kong's new airport is germane to Hong Kong's future success. Do you have a thought on that issue?

Mr Tung: First of all let me say this, that we are very proud of our new airport and if you are from overseas you might, reading the newspaper, that our airport is a shambles and is really not working. But the Travel & Leisure Magazine which is a US magazine - I don't know whether it is owned by Time or not, but they rank Hong Kong's new airport as the best in the world and so on. So we are very proud of our new airport. Yes, we had a bit of a difficulty in the beginning stage but we sorted them out very quickly.

Secondly is that in the month of January, actually we noticed a very substantial increase of tourism. Now, Hong Kong has more tourists coming to a city than anywhere else in Asia, and in 1998 the figure was just shy of 10 million visitors. Less than what we had in 1997 because of the economic downturn but still about 10 million. And we expect this year the figure will be better. One of the reasons is because of the new airport.

Now the pricing of the new airport for instance, we are sort of in the middle compared with the other Asian cities. For instance we are cheaper than some of the Japanese airports, we are more expensive, let's say, than the old Kai Tak airport. Are we pricing ourselves out of the market? I don't think so. But on the other hand, can we do better at it? Would a lower cost structure help to bring the tourists? If it does, I would think that the Airport Authority will certainly be very carefully looking at these things, which I know they are. So to answer you is that, yes, we are very conscious of the need for more tourists to come and we are constantly reviewing the cost structure and if there is a need, I am sure the Airport Authority will want to do the right thing.

Now let me tell you this. One other issue about Hong Kong is that the Airport Authority, like many of the other government bodies, although they are government bodies they are charged to run the business as a commercial entity, so they are conscious of trying to run it as a commercial entity, so we are very often balancing all the forces to come up with the right decision. I am sure they will come up with the right decision.

Question: Sir, can you tell, if since you want to be the hub for the Mainland China, do you have a single agency here which will co-ordinate the investment opportunities or business opportunities for Mainland China out of Hong Kong?

Mr Tung: Yes, we have a government department which does the co-ordination. But let me tell you that it is really not a simple answer because it will depend on which area of economic co-operation. The single point is the conduit but there are many supporting forces behind it. So, for instance, if it is about information technology it's one thing. If it is about building a bridge across from Hong Kong to one point across the border it's something else. And we are talking about building a new railway connection to link up with Shenzhen subway - that's something else again. So, yes, we have a centre point of conduit but behind it there are many departments at work, it depends on which subject you are talking about.

But I would like to take this opportunity to emphasise one thing, that the development of economic links will be done basically with government again providing the frame work but the private sector leading the way - as the Cyberport is the case. It is our private sector who led the way to the development of this Cyberport. Because in Hong Kong we passionately believe in having the private sector leading the way because I think government is not as good as the private sector in doing business. Thank you very much.

End/Tuesday, March 9, 1999

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