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Following is the full text of the speech (English only) by the Chief Secretary for Administration, Mrs Anson Chan, at a luncheon hosted by the Hong Kong Trade Development Council in Rio de Janeiro, Brazil, on May 22 (Rio time):

"Hong Kong - Brazil : New Century, New Opportunities"

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Vice Governor Mrs Benedita Souza da Silva, Secretary of State Mr Tito Ryff, Consul General Mr Chen Duqing, distinguished guests, ladies and gentlemen:

Thank you for those kind words of welcome. It is a great pleasure and an honour to visit your wonderful country even if it is for such a brief period. And to have the opportunity to meet with you and address this important gathering in what must one of the world's most visually stunning cities.

This is my first visit to Brazil. Unfortunately, it is one of the all too rare visits by a senior government official from Hong Kong to the South American continent. I say unfortunately, as I feel there are enormous opportunities waiting to be tapped by establishing closer economic and trade links with Brazil, in particular. I have been here but a few hours, but already I can feel the vastness of this great country and the energy of this marvellous city by the beach.

Having seen this for myself, you can be sure we will be doing everything we can to strengthen and expand our existing business and commercial interests with Brazil. The upgrading of the Brazilian Consul General's office in Hong Kong to Ambassador status just over a year ago has already resulted in a greater exchange of information and commercial activity. And Ambassador Marques Porto is personally behind the establishment of a new partnership between Brazil and Hong Kong. He can count on my personal support. While the tyranny of distance is an ever present challenge, it should not be a barrier to such a partnership.

In this context, I am pleased to note that trade between our two communities, which had taken a battering from the fallout of the Asian financial crisis, is showing signs of picking up. In the first three months of this year, bilateral trade amounted to US$262 million - an increase of 29 per cent over the same period last year. And, if this trend continues our total two-way trade for the year will top the US$1 billion mark. While that is just a very small percentage of the overall trade of both Hong Kong and Brazil, it does mean there are plenty of opportunities yet to be explored.

But before doing that, let me tell you a little about Hong Kong. Because we're virtually at opposite sides of the globe - some 30 hours flying time - I guess there's a lot that we don't know about each other. To you here in Rio, we probably seem no more than a dot on the world map. An area of just over 1,000 square kilometres with a population of 7 million compared to Brazil's eight-and-a-half million square kilometres and a population of over 160 million.

The contrasts couldn't be more palpable. But in some ways we have similar topography to what you have here, where the hills and peaks rise majestically from the water's edge.

Nevertheless, our small size belies the dynamic nature of Hong Kong. We are the world's 10th largest merchandise trading entity, with trade last year valued at some US$350 billion. This is quite an achievement for a community with no natural resources apart from one of the world's finest and busiest deepwater harbours - a stretch of water that sees one ship entering or leaving every 1.2 minutes. But we do have a huge hinterland to help service - the mainland of China - for which we are the principal gateway and the springboard for international companies wanting to set up there or for investment flowing into the country.

Our links with the Mainland have become much stronger since we were reunited with China on July the 1st 1997 after more than 150 years of British administration. I am delighted to say that the transition under what we call the 'one country two systems' principle - has been virtually seamless. Our capitalist way of life and the legal, judicial and administrative systems that were in place prior to the handover are still in place today. The foundations on which our society and our economy have developed - the rule of law, an independent judiciary, a level playing field for business, free and open markets, the free and unfettered flow of information, and the freedoms of the individual that are so essential in today's society - all remain intact. And, they are guaranteed in our constitutional document, the Basic Law.

Our system is vastly different from that operating in China. This in itself underscores the unique position in which we find ourselves. On the one hand we are proud that we are now an integral part of the Mainland. But on the other we need to jealously guard the high degree of autonomy given to us under the Basic Law. In other words, apart for defence and foreign affairs, Hong Kong people running Hong Kong.

This sends an important message to the international community both in Hong Kong and elsewhere that their investments, their business dealings, their commercial contracts and their human rights and freedoms are protected by a legal system and an independent judiciary based on English common law.

The handover was to mark the birth of a new beginning - the start of an era in which Hong Kong people would be the masters of their own destiny. However, within days of our reunification with China, countries in the region were hit by the Asian financial crisis; and, as you are only too painfully aware, it spread to other parts of the world, including Brazil. The impact was devastating and we slipped into our worst recession in decades. I know your country faced similar problems too. Now, fortunately, we are both on the rebound. Last year our Gross Domestic Product grew by 2.9 per cent, a remarkable turnaround from the negative growth of 5.1 per cent in 1998. This year's forecast is for the economy to grow by around 5 per cent and I am pleased to note that the Brazilian economy is also expected to show healthy growth.

The suddenness of the Asian financial crisis caught us all off guard, and so too the speed with which the recovery is now taking hold. But the turnaround owed much to the remarkable flexibility of our work force and entrepreneurs who cut costs and diversified into new areas of growth : while the economic recovery has been largely export-led as a result of the resurgence of demand in Asia as well as the stronger U.S. market. And, as I mentioned earlier, an upturn in trade with other markets including that of Brazil. This brings me back to the point I wish to develop a little further, the potential for greater economic ties between Hong Kong and Brazil.

At present, meat and meat preparations represent almost half of all our imports from Brazil, with the rest being made up of a range of other goods such as leather manufactures and paper related products. Our exports and re-exports to you are professional and scientific instruments, watches and clocks, telecommunications and sound recording and reproducing equipment. Hopefully, in time, we will be able to develop new trade patterns with Brazil, or through Brazil as a gateway into other Mercosul bloc countries or the wider Latin American Association of Integration.

Conversely, Brazilian companies could capitalise on Hong Kong as a dynamic market in its own right and as the entry point to China. Indeed, Hong Kong is at the very heart of the whole Asian market, located as it is within five hours flying time of half the world's population. With Asia's economies on the march again, this is no small consideration.

The growing importance of the Chinese market cannot be overstated, particularly with negotiations for China's entry to the World Trade Organisation now reaching their final stages. As the gateway to this vast market, Hong Kong offers unrivalled advantages through our cultural, commercial, and historical links and the knowledge and expertise our entrepreneurs have built up over decades of trading and doing business with China. And this in-built advantage will only be enhanced by China's accession to the WTO.

So far, I have concentrated on trade as a key to developing closer links between Brazil and Hong Kong. But it is just one area. Hong Kong companies and entrepreneurs are amongst the biggest investors in enterprises in the East Asian region and as far south as Australia. They have a keen eye for investment opportunities and there could well be scope for Brazilian companies to link up in joint ventures either here, in Hong Kong or in southern China. In our free and open market in Hong Kong, there are no barriers to overseas investment. In fact we welcome it, and overseas companies are treated exactly the same way as local ones. We do not pick favourites in Hong Kong.

Our government's policies are to leave business decisions to businessmen and women. The market place is no place for bureaucrats. We see it as our role to provide the physical hardware and the regulatory software to maximise the opportunities for the individual.

Tourism is another area that could be further developed as some of you here are no doubt aware from this morning's seminar. It is a little disappointing that visitor numbers from Brazil have declined over the past few years. Nevertheless, I was encouraged to see that last year they were still above the 10-thousand level [10,591]. And while we don't have the exact figures for travellers from Hong Kong to Brazil, more than 2,200 people are recorded as visiting South and Central America from Hong Kong in 1999. Of course, that figure does not include visitors who may have come here by way of Los Angeles.

But one possible way of arresting the decline could be through the re-introduction of the air link between Brazil and Hong Kong which ceased operating in September 1998. Our officials have been discussing the subject with the Brazilian Consulate General in Hong Kong. And we are prepared to look at ways in which the service could be made more attractive to an airline willing to take it on. With our economies now recovering from the impact of the Asian financial crisis, I hope that we will eventually be able to see direct flights being restored, not only for passengers but for cargo trade as well.

I know that the people of Rio and Brazil are amongst the most dedicated followers of sport anywhere in the world. Hong Kong people are avid soccer fans and delight in the passion with which Brazilians both play and support football. Indeed, my main mission here is to present Hong Kong's bid to host the Asian Games in 2006 to members of the Olympic Council of Asia who are meeting in Rio.

But, as the representative of a city that works hard and plays hard, I think it has been just as important for me to speak with you today as a first step in strengthening relations between our two communities. We may be separated by vast stretches of ocean and two continents, but we can bridge this divide by establishing greater trade and commercial links and organising more exchanges of officials and business delegations to fully explore the potential that both our economies have to offer each other.

Thank you very much for having me here today and giving me this opportunity to meet you all.

End/Monday, May 22, 2000

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