Issued by Hong Kong Special Administrative Region Government Information Services
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Saturday, September 20, 1997 CONTENTS ======== 1. Opening address by the Chief Executive 2. Transcript of the Q & A session by the Chief Executive 3. Speech by the FS at breakfast briefing 4. HK's role as China's international financial centre: FS 5. FS's transcript 6. 4th APEC SME Ministerial Meeting 7. Proposal to de-register Fenfluramine and Dexfenfluramine 8. Encouraging response to "Volunteer Trail" project 9. Education Day to mark the new school year 10. Heritage exhibition extended until November 11. Fresh water cut in Tai Po 1. Opening address by the Chief Executive ************************************** Following is the opening address by Mr Tung Chee Hwa, the Chief Executive of Hong Kong Special Administrative Region of the People's Republic of China, at the 1997 Annual Meetings Program of Seminars "Asia and the World: Capital, Competitiveness, and Community" today (Saturday): Good morning, Mr Wolfensohn, Honourable Ministers and Governors, Distinguished Guests, Ladies and Gentlemen, In 1995, the World Bank Group and the International Monetary Fund started a program of seminars for the Annual Meetings. These seminars provided more opportunities for exchange of views and reinforced the Bank and the Fund's efforts to increase dialogue with the private sector. Two years later, the Seminar program has grown to become a most important and fruitful part of the Annual Meeting. On behalf of the people of Hong Kong, I extend our warmest welcome to you all. We are delighted that China is host to the 1997 Annual Meetings of the World Bank Group and the International Monetary Fund. We here in Hong Kong are also honoured to act as host to you. We believe that this event, held two months after the handover, is a vivid testimony to China's commitment to the stability and prosperity of Hong Kong. It also demonstrates China's readiness to show to the international financial community how Hong Kong will carry on business as usual, if not better. Ladies and gentlemen, many have billed the 21st Century to be the "Asian Century". Undoubtedly, Asia today has grown to become more successful and confident than many of us can remember in recent history. We cannot, however, take this success for granted. After more than a decade of uninterrupted growth, we should rethink and re-examine our competitive edge. We should ask ourselves: Can Asia as a region maintain its pace of development as we move into the 21st Century? Can we further enhance our competitiveness? To answer these questions, it is perhaps appropriate for us to look to the past for the ingredients of Asia's recent success, and thereafter, look into the future in search for appropriate solutions. Indeed, Asia has achieved remarkable success in economic growth and development over the past few decades. GDP per Capita in East Asia has more than tripled from 1965. Average real per capita income in developing Asia rose by 3 per cent in the 1970's and 5 per cent in the 1980's. As recently as a decade ago, the developing economies in Asia accounted for only one-sixth of world output. Today, they account for a quarter. By year 2005, Asia is projected to account for one third. Indeed, despite the recent turmoil in the financial market which has caused temporarily setback in some of the countries. I am sure, having learned the lesson and after making necessary policy adjustment, these countries will return to the path of growth and Asian economy as a whole will continue to march forward. How were we able to achieve such remarkable growth and development over the past decades? I would like to emphasise three important ingredients: namely, trade, human and capital investment. Economic growth around the world has undoubtedly been fueled by the increasingly open global trading system. This could not have been achieved without the relative peace and stability that has prevailed since the Second World War. The open trading practices of the west allowed the free flow of capital, goods and information. Borderless trade, coupled with global financial integration, has created an efficient world market. It has enabled each economy to seize its own competitive advantage and capitalise such advantage into growth for the local economy. Asia has benefited tremendously from the process, especially when the region's growth has been largely export led. Over the past ten years, thanks to this increasingly open trading system, the emerging economies of Asia have nearly doubled their share of world exports. Human capital was also an integral part of Asia's success. Our labour force, whether due to cultural or historic reasons, have proved to be dedicated, diligent, and efficient. This cost efficient and highly skilled labour force has played a crucial role in the success of our export driven economies. Together with our cultural emphasis on education, our traditional spirit of self-reliance and entrepreneurialship, the people of Asia has become an invaluable asset to the region at large. Today, the human element remains a cornerstone of our success. Capital investment has also played an enormous role in Asia's development. Thanks to Asia's stable political and macroeconomics environment, private savings and investment in most of Asia have been twice as high as the rest of the world. Gross national savings as a percent of GNP in East Asia averaged more than 30 per cent from 1981 to 1990. This trend has continued, if not further improved in the 1990's. East Asia, Southeast Asia, and South Asia together enjoyed some US$65 billion of Foreign Direct Investment in 1995. This accounted for over 65 per cent of total developing country FDI flows. This high capital accumulation has allowed us to expand and improve our production base, and lay a foundation for future growth. It is true that Asia, leveraging off global trade growth and its human and investment capital, has achieved a spectacular level of growth and development over the past decades. But we cannot afford to sit idly by and expect future success. With the ever increasing globalization in trade flow, funds flow and information flow, competition across countries and regions will intensify. We must not underestimate the challenges which lie ahead. In order to remain competitive in the world, I see four major tasks facing Asia today. The first is upgrading our infrastructure. Infrastructure is the very foundation of our economy. Basic infrastructure in many Asian economies remains inadequate. Poor infrastructure threatens export performance and in turn prevent full realisation of our growth potential. We must continue to invest and upgrade the communication and transportation networks in the region, covering both physical assets and the quality of service. This itself is an enormous task. In East Asia, an astounding US$1.5 trillion will be needed for investment in infrastructure in the decade up to year 2004. To accomplish this solely within public means is neither cost efficient nor management efficient. Private sector participation is essential. Second, we must maintain a liberal world trading system. Without question, trade is essential to our growth. At the same time, free trade exposes industries to competition. There will emerge some industries with reduced competitiveness. These sunset industries may need to reconfigure their businesses or alternatively relocate to more cost competitive areas. This is inevitable as we move up the technology ladder, and our production base shifts to higher value-added goods. To remain competitive, we must constantly improve productivity and efficiency. Trade barriers itself is only delaying tactic rather than a real solution. An increasingly prominent issue in world trade has to do with regional arrangements. We need to ensure that regional trade initiatives are compatible with global trade liberalisation. Regional trade blocs have emerged in the past decade. If this regionalism gives rise to a "fortress mentality", it may lead to increased trade friction, and thus reduce the welfare of all. Another dimension of free trade is the mobility of capital and investment. Capital inflows have been and will continue to be a crucial element of development. Especially within the region, the financial sector serves as the crucial intermediary for funding of infrastructure developments. But we must remain vigilant in managing the risks that are associated with them. Volatility of capital flows can unsettle an otherwise perfectly sound system, as we are vividly reminded by the recent turmoil in the Asian currency markets. This brings out the third point -- financial stability. Maintaining financial stability is more of a challenge than many of us had thought. But it can be done. Our financial policies and institutions must operate in a prudent manner to maintain public confidence. Transparent and predictable policies and a reliable legal system are essential for a stable investment climate. In addition, our banking and financial systems must be sound and healthy if we are to withstand external shocks or policy adjustments. Fourth, we must shift our traditional concentration away from physical assets and instead enhance our focus and investments in "intangible" asset items such as human capital and capital for innovation and creativity. Physical investments undoubtedly fuel economic growth. As a economy progress, however, the relative contribution of physical investments will begin to decline. At a more advanced stage of economic growth, competitiveness can be enhanced not by injection of cash into physical assets, but by technical innovation creativity, management restructuring and organisational improvements. What does this mean for us in a concrete manner? It means that we must increase our emphasis on research and development activities. Imitation will put the local economy at a disadvantage. We must go beyond imitation and promote innovation. Only then can we truly reap the benefits of a "high tech" sector. Equally important, we must expand our horizon and realize that "high tech" does not only apply to the industrial sector, but should and must include the financial sector and other service sectors as well. It means that we must increase our emphasis on human resources. This includes providing a solid foundation for our youth in terms of education. Education creates opportunity; Opportunity creates drive; And drive will help us to harness the full potential of the community. It includes the encouragement of post graduate and professional research that puts a community at the forefront. Last but not least, it includes the enhancement of the quality of life for our citizens. Our life style, our leisurely pursuits, and the environment in which we live must be consistent with the wealth of society. These are not merely economic issues but can have wider impact on the overall stability and productivity of the community as a whole. Like our neighbours around the region, Hong Kong too is faced with similar challenges. Can we sustain our growth and development going forward? How can Hong Kong ensure that it will continue to play a central role in facilitating the region's growth and prosperity? To maintain our pre-eminent position, we must uphold the rule of law, and ensure the independence and the transparency of our judiciary. We must maintain our prudent and conservative financial management, and consistently offer the best infrastructure and workforce. We must ensure a high quality and forward looking civil service. We must recognize and continue to encourage the contribution of the foreign community here in Hong Kong. As predominantly a service centre, our competitiveness is a function of both the quality of our infrastructure and the cost at which these services can be provided vis-a-vis our neighbouring competitors. The challenge for my colleagues and I is to contain our cost, without damaging the soundness and the vitality of the economy. We must enhance our economic vitality by providing an educated and well-trained workforce that will promote the service sector, the development of high value-added industries, and the development of information-technology industries and infrastructure. We will aim to give each person in Hong Kong a modern, and well-balanced education. We will enable more citizens to realize the dream of home ownership for the sake of personal security, dignity and social stability in as short a time as possible. We will develop a comprehensive policy for our ageing population, and provide our elderly with a sense of security, belonging and worthiness. Ladies and gentlemen, today's theme, "Capital, Competitiveness, and Community", lies at the heart of Asia's economic success, past, present and future. With the combination of these elements, I am sure that Asia will continue to prosper. There is much work to be done. But we in Hong Kong look forward to the challenges. We are excited by the prospect of Asia in the coming Century, and we look forward to playing a meaningful part in Asia's continued growth and development. End 2. Transcript of the Q & A session by the Chief Executive ****************************************************** Following is the transcript of the question and answer session of the Chief Executive, Mr Tung Chee Hwa, during the 1997 Annual Meetings Program of Seminars - Asia and the World at HKCEC this (Saturday) morning: Question (Peter Wong - HK): Mr Tung, in your speech you mentioned in your last point about the need for a sustainable economy. The environment is quite an important thing for the quality of life. Do you find that, now, in the Asian cities, the headlong drive to economic success will now have to be tempered with looking at the environment to make sure that people, in spite of having a good GDP per person, they are getting a decent quality of life? Mr Tung: I think each country, each society, at different stages of development has different priorities. And speaking for Hong Kong, I would say that our GDP per capita is probably one of the highest in Asia. But as we move forward we are moving upscale in the level of services we can provide in the high technology sector and you need to attract the best people around the world to come and work here, to come and live here, and to retain our best citizens to remain committed to Hong Kong, and I think we are not going to be able, even from an economic point of view, to achieve our objectives if we do not have a good environment, apart from the fact that the environment is very fundamental to all of us. So, certainly in Hong Kong, we will be committed, as we move forward, to be very conscious of the need for a better environment for everybody. It is always easier said than done, especially when I am sitting in the position that I am sitting, because, for instance, we are pushing very hard to create more land for housing. As you know, we have an acute problem in housing and housing obviously needs to be the priority for our community. So when you are in my position you try to define the priorities, try to make sure things go ahead, but at this moment our priority is housing. But we will do so very mindful of the importance of the environment and the need, not just because it is the right thing to do from a human point of view, but because it is the right thing to do from an economic point of view. Question (Margaret Wilson - US): In view of the global economy and global world in which we now live, and I know you have recently been in the United States meeting with our President, but I wonder what suggestions you might have of either what the US Government or business policy and relations and actions, and your role as well, might be with Hong Kong, China and Asia, in order to make this an even more productive world for business and finance so that we can all prosper more? Mr Tung: I think the most important thing is really the open global system for free flow of capital investment and trade. I think the inclusion of China into the WTO is a very important part of that process and I would hope that this will happen sooner rather than later. Asia is moving forward very well, as I said when I was in America, but many of the Asian nations, 50 years ago, were colonies, and over the last 50 years they have achieved success in terms of prosperity, human dignity, which a generation ago people would not have even dared to dream about. This was made possible because of the very open trading system of the West, because of a peaceful environment after the Second World War, and because of the very open trading system, particularly the United States market, and the generosity of the United States after the Second World War. And many of these countries now have achieved a level of prosperity and success that they justifiably are proud of and I think it is important that the voices of these countries are heard. As to how we in Asia has built up these communities, and increasing dialogue in this sort of area will always be helpful in improving understanding which in turn will improve capital flow, human relationship, in the building of a global village. So I think it is a subject which I can spend hours with you on but I need to be very brief in my remarks. Question (Singapore): Lately, I find that not only in Hong Kong but also in Singapore, Malaysia and many other countries, the governments are inviting the best brains from foreign countries. Does this mean that there is sufficient amount of talent not available in the countries? And don't you think that by putting too much emphasis on this, you will give a distinct feeling of an inferiority complex among the local talents? Mr Tung: I think the world is becoming increasing global. It is right for countries to attract some of the best talents and we should remain open to the best talents in the world. I don't think, certainly in Hong Kong, we will not be afraid of this competition. I hope, and I don't believe we have this inferior complex. We need all the best brains we can get in America. The fact that America has been very successful is their ability to attract all the best brains from around the world to be there and this is quite evident. So if we can create an environment in Hong Kong to attract some of the best people, we will be very happy to do that. And as I said in my speech, the international community is a very important part of Hong Kong and we will want them to contribute to our success. Question (HK): Mr Tung, you have mentioned many times that housing is a serious problem in Hong Kong. In fact most property companies in Hong Kong have land banks supply adequate to supply any growth in five to ten years. And the reasons why land supply are being used for the cost of holding land in Hong Kong is low due to the ... of interest ... because of the peg ... even though the peg will not be broken by ... circumstances. So in terms of the cost for maintaining the peg, isn't it time to re-examine the economic cost to the Hong Kong community of maintaining the peg? And many experts have told me that Hong Kong dollar, because of the peg, have ... against any currency. Mr Tung: It is a loaded question. Firstly, I would say the peg has served us very well for 14 years. In these 14 years we have seen our economy continues to sustain growth, we have seen the benefit to Hong Kong, and there is no reason, absolutely no reason for us to move away from that peg. 83 per cent of our economy is now in the service sector and there the competitiveness - one is cost and the other is the quality of service we can provide - and we aim to provide that service, we aim to be competitive not only thinking about the costs but thinking about the quality of the service we can provide, thinking about the uniqueness of service we can provide. And this is not to say that we are not conscious of cost. But we feel that one of the reasons we have inflationary pressure is from areas of housing where we have a supply side bottleneck because not enough land has been released into the market place to build more homes. And the other side, the supply side bottleneck is in fact people in terms of the fact that we have now an unemployment rate of 2.4 per cent, I think. And that supply side bottleneck is not just in the labour sector but also in the areas of managerial and professional ranks where we have some bottlenecks. So these are the ways we are going to try to resolve these problems and we feel this is the right way forward. We provide a unique service, we are mindful of our costs, we tackle it not by competitive devaluation but by providing better service and opening up the bottlenecks. Now, as far as housing is concerned, government is the largest landlord in Hong Kong and we will provide more land to achieve the objective of building 85,000 homes every year. And I, myself, and the whole government, and Donald Tsang who is sitting here, our Financial Secretary, is responsible for all this. And we will make it work. We are very confident that it will work. Question (Karen Lang - HK): You talked about the need for financial stability. Are you not concerned about the recent volatility of the stock market and high inter-bank interest rates here in Hong Kong? Mr Tung: Obviously, the volatility of the stock market is a concern for us but we felt that the best way to address this issue is to continue to make sure that our market mechanism is good, our regulation is transparent, and that we will make sure that every day all the settlements can be completed during the day, and then let the market forces take care of itself because we believe this is the best way forward for us. We believe this is the essence of success, letting market forces look after it and making sure that we have the proper regulation and proper oversight of these areas. You know, ladies and gentlemen, we learned the lesson hard way because in 1987 our market cap (capital) halved overnight and from there we begin to pick up the pieces, learn all the lessons of what need to be done. So, I think we are very confident in our stock market. Question (Colombia): You have been, world-wide, admired because of your leadership in this process with China. What do you think will be your role with Latin America for the future - Hong Kong's role with Latin America? Mr Tung: I'm sorry, I didn't quite catch that. Speaker: Hong Kong's role with Latin America in the future. What is the role of Hong Kong with Latin America in the future? Question (Colombia): You have been playing a very important role in Asia but what about Latin America? Do you think you're friends? Mr Tung: I attended the Chilean National Day celebration yesterday and to find out that it is going to take 40 hours of flying to get there. So, obviously our major partners in trade, apart from our own country, China, are the United States, the European Union, Japan and also the ASEAN countries. But I would hope very much that as the new century unfolds and as Latin America becomes more important, certainly we should be looking at doing more things together. You know we are a member of APEC and so is Mexico and so is Chile, and I think it is a good beginning that we now have some trade. It is not a whole lot but since our development - even from Chile, I was told yesterday, a lot of wine and foods and so on are moving from Chile actually all the way into Hong Kong. So things are happening and global trading won't be developed overnight but I am sure that as the 21st century unfolds we will be doing more with Latin America. From Hong Kong's point of view we will always say: the world is our home. We will be looking at the whole world. We have wonderful 6.5 million very entrepreneurial people and they are looking at the world all the time. Thank you very much. End 3. Speech by the FS at breakfast briefing ************************************** Following is the speech by the Financial Secretary, Mr Donald Tsang, at the Breakfast Briefing for Private Sector Participants at 1997 WBG/IMF Annual Meetings today (Saturday): "Hong Kong: At the Centre of International Finance and Business" Good morning, ladies and gentlemen, First of all, I would like to thank the Trade Development Council for organising this briefing. It is my honour to speak to the most distinguished financiers coming from all over the world this morning. Just a few months ago, the IMF classified Hong Kong as an "advanced economy". This was a vote of recognition of Hong Kong's economic performance. Now, the World Bank and IMF are holding their Annual Meetings in the Hong Kong Special Administrative Region (HKSAR) within 90 days of the resumption of Chinese sovereignty. This is a vote of confidence in the HKSAR, trusting that Hong Kong's prosperity will continue under the "one country, two systems" concept, or I should say the "one country, two systems" principle as the concept has been realised and is being practised. This principle emphasises the importance of maintaining Hong Kong's capitalist system. The legal instrument of implementing this principle is the Basic Law, our mini-constitution, which stipulates that Hong Kong will enjoy a high degree of autonomy in all our affairs other than foreign affairs and national defence. Financial Autonomy In financial and monetary terms, this means that within one country, there are two currencies, two monetary systems and two monetary authorities. Under the Basic Law, the SAR Government has full autonomy in formulating its own monetary and financial policies. We will continue to safeguard free flow of capital. The Hong Kong dollar remains the only legal tender in Hong Kong as before. In performing its central bank functions, the Hong Kong Monetary Authority is fully independent from its counterpart in the Mainland - the People's Bank of China. The US dollar link is still being maintained. The stronghold for maintaining the link is the combined assets of the Exchange Fund and the Land Fund totalling US$81 billion as at the end of July 1997. This link has contributed significantly to the monetary stability of Hong Kong for 14 years since its inception in 1983 and will continue to do so. Market Performance after the Reunification Before the reunification, there were sceptics who cast doubt on whether the guarantees enshrined in the Basic Law would be honoured at all. Facts have dispelled such scepticism. Business is as usual here. The strong feeling of stability and enthusiasm is palpable everywhere you go in Hong Kong. This explains why investors have still strongly favoured Hong Kong after July 1, 1997. Let us look at the stock market. Turnover at the Hong Kong Stock Exchange has increased substantially since the beginning of this year. The average daily turnover since 1 July has been US$2.5 billion per day, which is about 50 per cent higher than the average for the first six months. We saw some adjustments in major international and Asian securities markets at the end of August and in early September. Being an international financial centre with an entirely open regime, Hong Kong was no exception. However, the market has functioned in an orderly way, thanks to the much improved trading and settlement systems and the pre-emptive measures taken by the Securities and Futures Commission, the Stock Exchange, the Futures Exchange and the Clearing Houses. Haphazard turbulence has not shaken our strong fundamentals at all. I am confident that the liquidity, the transparency and sound regulation will continue to be the underlying strengths of Hong Kong's market. At the same time, we are also committed to further developing our market to meet different investors' needs. A couple of months ago, we began trading regional derivative warrants and convertible bonds on the Hong Kong Stock Exchange. Through linking up the Stock Exchange of Hong Kong with the Philadelphia Exchange and the Hong Kong Futures Exchange with the New York Mercantile Exchange, we have also enabled trading on their currency options and commodities futures contracts respectively in Hong Kong during Asian business hours. More recently, we have introduced two red-chip index futures to the market. I am sure you all know that red-chips refer to Hong Kong or overseas-incorporated companies with a significant shareholding by Mainland Chinese entities and usually with the majority of their assets in Mainland China. In less than a week's time, we will be putting the Hong Kong Interbank Offer Rate futures contracts for trading on the Automatic Trading System of the Hong Kong Futures Exchange. All of these are indications of our commitment to maintain and enhance Hong Kong's competitiveness and our readiness to answer the market needs. Hong Kong as China's international financial centre The introduction of red-chip securities products in the Hong Kong markets heralds an even closer economic relationship between the Mainland and Hong Kong. Hong Kong has become the most important capital-raising centre for Mainland Chinese enterprises. As at the end of August 1997, there were 34 Chinese state-owned enterprises listed in Hong Kong, having raised about US$7 billion through our market. More such listings are in the pipeline. Financial transactions between the Mainland and Hong Kong have grown substantially. At end-March 1997, external claims by Hong Kong's authorised institutions on Mainland banks and non- banking entities amounted to US$38 billion and US$9 billion respectively. Their corresponding external liabilities to banks and non-bank customers in the Mainland amounted to US$36 billion and US$2 billion. The economic outlook for the Mainland remains favourable. Indeed, a recent World Bank report on global economic prospects has named Mainland China among the "Big Five" - the new engine house for world growth over the next quarter century. Most analysts put the forecast real GDP growth rate for 1997 at around 9-11 per cent. Over the medium term, the economy is targeted to grow by an average of about 8% per annum in the period up to 2000. Against this favourable background, we expect Hong Kong's role as China's international financial centre will grow in parallel. For Hong Kong is not just privileged by the natural linkage with Mainland China, it also has the best concentration of infrastructure and human resources in the world to serve the Mainland's huge funding needs. We have already mapped out plans to maintain this position in the 21st century. First, we will encourage the development of new financial products in the markets. In the debt market, the soon-to-be-introduced Mandatory Provident Fund scheme will create huge demand for quality debt instruments. The newly founded Mortgage Corporation intends to start its first purchase of mortgages to build up its portfolio in the last quarter of 1997, with a view to securitising mortgage soon after. On the stock market, I have earlier mentioned red- chip securities products. Even without a crystal ball, I can envisage that more red-chip-related derivatives will flourish. Moreover, we will continue to examine the feasibility of trading Depository Receipts on the Hong Kong Stock Exchange and the setting up of a Second Board for growing small and medium size enterprises. Our efforts in the exploration and development of new products to respond to market needs will continue. Second, we will gear up efforts to upgrade the infrastructure in the financial services sector to meet future needs. On the banking front, we introduced a Real Time Gross Settlement System for our interbank payment system to reduce the settlement risk last year. Our plan is to link up Hong Kong's local payment system with that of the Mainland to provide a Payment versus Payment facility for exchange transactions between the Hong Kong dollar and Renminbi. For the stock market, the Exchange has expanded the capacity of the computer system so that it can deal with a daily turnover of US$6.5 billion and eventually US$13 billion. For the debt market, we plan to establish bilateral linkages with the domestic central depositories in the region to facilitate cross border trading and investment in debt securities. We are also looking at the linkage and integration of the various settlement and clearing systems. Equipped with such sophisticated infrastructure, Hong Kong is in the best position to function as China's international financial centre. Third, we recognise the importance of human resources. With a service sector accounting for over 80 per cent of the GDP, we have been adapting our education system to the service-based economy. The future focus will be on information technology. We aim to strengthen students' computer knowledge at all levels. That is why the Chief Executive and I were especially interested in visiting institutes in this field during his recent visit to Singapore and mine to Australia. Another area of emphasis is language skills. Our aims are to raise the students' language proficiency in both English and Chinese and enable them to command Putonghua which is the main language of our trade with the Mainland. In the years ahead we will strive to ensure an ample supply of skilled workers and professionals for the financial sector through training and research. Conclusion As a concluding remark, I wish to say that this grand event means a lot to the people of Hong Kong. The World Bank and IMF hold their annual meetings outside Washington only once in every three years. The event has not only brought the top officials of the World Bank and IMF and distinguished guests like yourselves to Hong Kong. It has also drawn the world's attention to how Hong Kong has been doing since July 1, 1997. You and other participants of the meetings and seminars will have the chance to bear witness to our way of life in Hong Kong uninterrupted across July 1. Perhaps, the single difference that you can sense is the removal of the air of uncertainty and impossible vitality of the city. With the rapid economic development and reform in the Mainland, Hong Kong strides ahead at the same pace and serves as China's foremost international financial centre in the next millennium. Thank you. End 4. HK's role as China's international financial centre: FS ******************************************************* The Financial Secretary, Mr Donald Tsang, said today (Saturday) Hong Kong's role as China's international financial centre would grow in parallel against the favourable economic outlook for the Mainland. Speaking at a breakfast briefing for leading international bankers and financial executives participating in the 1997 World Bank Group/International Monetary Fund (IMF) Annual Meetings, Mr Tsang said Hong Kong had become the most important capital-raising centre for Mainland Chinese enterprises. As at the end of August 1997, there were 34 Chinese state-owned enterprises listed in Hong Kong, having raised about US$7 billion through our market, he said. "Financial transactions between the Mainland and Hong Kong have grown substantially. At end-March 1997, external claims by Hong Kong's authorised institutions on Mainland banks and non-banking entities amounted to US$38 billion and US$9 billion respectively," Mr Tsang said. "Their corresponding external liabilities to banks and non-bank customers in the Mainland amounted to US$36 billion and US$2 billion." The Financial Secretary said Hong Kong was not just privileged by the natural linkage with Mainland China, it also had the best concentration of infrastructure and human resources in the world to serve the Mainland's huge funding needs. "We have already mapped out plans to maintain this position in the 21st century," he added. These included encouraging the development of new financial products in the markets; gearing up efforts to upgrade the infrastructure in the financial services sector to meet future needs; and recognising the importance of human resources by adapting the education system to the service-based economy. On new financial products, Mr Tsang said the soon-to-be introduced Mandatory Provident Fund scheme would create huge demand for quality debt instruments. "The newly founded Mortgage Corporation intends to start its first purchase of mortgages to build up its portfolio in the last quarter of 1997, with a view to securitising mortgage soon after," he said. On stock market, the Government would continue to examine the feasibility of trading Depository Receipts on the Hong Kong Stock Exchange and the setting up of a Second Board for growing small and medium size enterprises, Mr Tsang said. "Our efforts in the exploration and development of new products to respond to market needs will continue." On infrastructure upgrade, Mr Tsang said Hong Kong planned to link up Hong Kong's local payment system with that of the Mainland to provide a Payment versus Payment facility for exchange transactions between the Hong Kong dollar and Renminbi. "We also plan to establish bilateral linkages with the domestic central depositories in the region to facilitate cross border trading and investment in debt securities," he said. "We are also looking at the linkage and integration of the various settlement and clearing systems. Equipped with such sophisticated infrastructure, Hong Kong is in the best position to function as China's international financial centre." On human resources, Mr Tsang said the future focus would be on information technology. The aims would be to strengthen students' computer knowledge at all levels and to raise the students' language proficiency in both English and Chinese and enable them to command Putonghua which was the main language of Hong Kong's trade with the Mainland, he pointed out. "In the years ahead, we will strive to ensure an ample supply of skilled workers and professionals for the financial sector through training and research," Mr Tsang said. "With the rapid economic development and reform in the Mainland, Hong Kong strides ahead at the same pace and serves as China's foremost international financial centre in the next millennium." As a concluding remark, the Financial Secretary told the gathering of international bankers that the holding of the annual meetings of the World Bank and IMF here meant a lot to the people of Hong Kong. "The holding of these Meetings within 90 days of the resumption of Chinese sovereignty was a vote of confidence in the Hong Kong Special Administrative Region, trusting that Hong Kong's prosperity will continue under the 'one country, two systems' concept," he said. Recapitulating on Hong Kong's market performance after the reunification, Mr Tsang told his audience that the average daily stock exchange turnover since July 1 had been US$2.5 billion per day, which was 50 per cent higher than the average for the first six months. Commenting on the recent adjustments in major international and Asian securities markets, Mr Tsang said, "haphazard turbulence has not shaken our strong fundamentals at all." "I am confident that the liquidity, the transparency and sound regulation will continue to be the underlying strengths of the Hong Kong market," he added. End 5. FS's transcript *************** Following is the transcript of the questions and answers with the Financial Secretary, Mr Donald Tsang, at the breakfast briefing for international bankers participating in the World Bank Group/International Monetary Fund Annual Meetings this (Saturday) morning: Question: With the recent turmoil in South Asia, and Hong Kong has been shelved from that turbulence, what channel would the Minister in this region like to create in order to avoid any systematic risk that would have an impact on any single economy in the future? Mr Tsang: The question of co-operation and co-ordinated activities in this field has been a subject of intense discussion among the Central Bankers, i.e., in East Asia. This started quite a long while ago after the Mexican crisis, and then there were very stimulating papers written by Bernard Fraser in Australia, of Central Bank, and then it has been translated into a series of meetings amongst Central Bankers under the umbrella of EMIB, which is the executive meeting of the East-Asia Pacific Central Banks. They have been discussing this all along. They discussed it, for instance, not too long ago in Shanghai; how they can get together and do more co-operative efforts. A lot of things have happened. First of all, the East- Asian monetary authorities and Central Banks have entered into a repo arrangements of different values to help liquidity issues which might crop up from time to time, and they also talked about another form of co-operation and that has borne fruit. Look at what happened immediately after the Thai crisis. The Central Bankers of the region got together with the help of IMF and raised sufficient funds to help meet the needs of our neighbours in Thailand, and that, I think, is a product of co-operation among the Central Bankers in this region. And of course finance ministers have not been sitting on their hands either. They have been talking to each other, too. But that is only the beginning. I will wish very much to see some form of standing arrangement whereby we will need to borrow, of course, the discipline of the IMF but with an Asian facility, to help any countries under economic attack of the kind we have seen recently. I'm sure what we have seen in the recent two months, we galvanised all the central bankers and the finance ministers to work likewise. There's a strong urge to act, a strong act to talk to each other and to act together. This is a region of growth; the engine of growth in the next century. We all know, we all Finance Ministers in Asia realise the world's focus is on us. We must never let you down, and I think that is achievable. End 6. 4th APEC SME Ministerial Meeting ******************************** The Secretary for Trade and Industry, Miss Denise Yue, participated in the fourth Asia-Pacific Economic Co- operation (APEC) Ministerial Meeting on Small and Medium Enterprises (SME) in Ottawa, Canada, on September 18-19. APEC Ministers responsible for SMEs issued a Joint Statement reaffirming the contribution of SMEs to international trade within the region and to the further development of all APEC economies. They underlined their commitment to strengthen the SME Agenda and to deliver activities that will provide meaningful results to SMEs. The Joint Statement also sets out the direction of future actions to facilitate the growth of SMEs. At the meeting, Ministers agreed to present to the APEC Economic Leaders for adoption at their Meeting in November in Vancouver the Framework for APEC SME Activities to benefit small businesses. The Framework is built around five key areas that affect the growth of SMEs and which Ministers discussed in detail, namely information access, financing access, market access, technology access and human resources access. Hong Kong shared our experience in these areas with other participants. Miss Yue placed great emphasis on technology access. She said: "Some 98 per cent of companies in the manufacturing and services sector incorporated in Hong Kong are SMEs. The Government of the Hong Kong Special Administrative Region (HKSAR) attaches great importance to assisting SMEs in dealing with, and capitalising on, technology access." "The HKSAR Government strives to nurture and nourish entrepreneurship and self-help by providing the most business-conducive and favourable environment for SMEs. It also partners with SMEs and industry and business support organisations to provide a wide range of services for the development and application of technology for SMEs," she said. At the meeting, Ministers discussed the progress of existing, and welcomed new, initiatives in the SME Action Plan. They also interacted with business representatives from the different APEC economies. Ministers welcomed the increasing participation of the private sector in APEC's SME work. Ministers found their dialogue with young entrepreneurs on issues of concern to them extremely productive. Business representatives of Hong Kong who took part in the session were the Chairman of the Small and Medium Enterprises Committee, Mr Denis Lee, and the President of the Hong Kong Women Professionals and Entrepreneurs Association, Ms Marina Wong. The Ministerial Meeting was chaired by the Honourable John Manley, Minister of Industry of Canada, and attended by all the 18 APEC economies, namely, Australia, Brunei Darussalam, Canada, Chile, China, Hong Kong China, Indonesia, Japan, Korea, Malaysia, Mexico, Papua New Guinea, New Zealand, Philippines, Singapore, Chinese Taipei, Thailand and the United States. End 7. Proposal to de-register Fenfluramine and Dexfenfluramine ******************************************************** A committee of the Pharmacy and Poisons Board in charge of registration of pharmaceutical products in Hong Kong proposed at a meeting yesterday (Friday) to de-register products containing Fenfluramine and Dexfenfluramine used for obesity. Manufacturers and suppliers of these two drugs were advised to voluntarily withdraw such products from sale in Hong Kong. They were given four weeks to submit evidence, if any, on why their products should not be de-registered. The above decision was made after members considered information available so far which suggested an association between some heart valve diseases and the use of these two drugs. Meanwhile, the Department of Health advised the public not to use these two drugs until more information is available. "Those already using any of these two drugs should consult their doctors on gradual withdrawal to avoid withdrawal effects." There are 31 products containing such contents registered for sale in Hong Kong. They are: Products containing DEXFENFLURAMINE - ADIFAX CAP 15MG; SIRAN CAP 15MG; DURAFEN CAP 15MG; NATALIE-15 CAP 15MG; QUICKSLIM CAP 15MG; DAFNEGIN CAP 15MG Products containing FENFLURAMINE - FENBESY P.A.CAP 60MG; PONDERAX PACAPS CAP 60MG PROLONG ACTION; PONDERAX TAB 20MG; PONTAMIN CAP; ANTOSAN CAP 30MG; OBEKIMIN CAP; FENFLURAMINE TAB 20MG; POUFENAMINE A TAB 20MG; WATE-DOWN TAB 20MG; FENFLURAMINE TAB 20MG (MITIM); ANOREXIN TAB 20MG; OBESIN TAB 20MG; BOLARMIN CAP; DIET B CAP; ANDAVITA CAP; FENFLUVITA CAP; OBEVITA CAP; PONDEVITA CAP; QUALIRAMINE 20MG SUGAR-COATED TAB; ADIPOMIN CAP 20MG; OBEDREX CAP; FENFLURAMINE CAP 30MG (VIDA); ANTIPOND CAP 20MG; DIETOFF TAB 20MG; ANTIFEN TAB 20MG. One supplier had already announced earlier this week the voluntary withdrawal of three such products, namely PONDERAX PACAPS CAP 60MG PROLONG ACTION; PONDERAX TAB 20MG; and ADIFAX CAP 15MG. Another local manufacturer informed the Department of Health yesterday that it would voluntarily withdraw the sale of ANTOSAN CAP 30MG and OBEKIMIN CAP. End 8. Encouraging response to "Volunteer Trail" project ************************************************* The Director of Home Affairs and Co-chairperson of the Organising Committee of the "Volunteer Trail" project, Mrs Shelley Lau, today (Saturday) praised the success of the community building project which had attracted about 60,000 visitors to local social service units resulting in the signing up of some 1,500 new volunteers. Speaking at the "Volunteer Trail Award Presentation Ceremony", Mrs Lau said that the success of the project was largely due to the tremendous support and active participation of 535 social service units which committed themselves to opening to the public from May 17 to August 2 this year to enhance public understanding of welfare services and encourage participation in voluntary work. The "Volunteer Trail" project is jointly organised by the Home Affairs Department and the Hong Kong Council of Social Service (HKCSS) to complement the handover celebrations and mark HKCSS's 50th anniversary. Mrs Lau pointed out that about 35,000 of the visitors had visited at least three service units, 15,000 had visited at least five units and 10,000 over seven units, adding that many of them should be commended for submitting constructive suggestions following their visits. "We have achieved the aims of the project. For we have not only succeeded in increasing public interest and understanding of welfare services in Hong Kong, we have also managed to attract more than a thousand new volunteers. "We believe that the number of new volunteers registered will continue to grow and the message of helping one another and serving the community we have been promoting will be carried on," said Mrs Lau. Another Co-chairperson of the Organising Committee and HKCSS representative, Dr Marion Fang, thanked all participating groups and individuals, including voluntary agencies, the Social Welfare Department, the Education Department and "Caring Ambassadors" from various community groups, for their contributions to organising the event. Officiating guests at the ceremony included HKCSS Chairman, Mr Eric Li Ka-cheung, who presented awards to nine winners of the Volunteer Chop Design Competition; HKCSS Director, Mr Hui Yin-fat; Director of Social Welfare, Mr Andrew Leung; and Assistant Director of Education, Mr Ng Kwok-chuen; who all presented enthusiastic Participation Awards to the district representatives. End 9. Education Day to mark the new school year ***************************************** Special church services to mark the start of the new school year will be held tomorrow (Sunday) which has been designated Education Day. Teachers and students are welcome to attend the services at the following churches: * Catholic Cathedral (Chinese Service) 11 am 16 Caine Road, Hong Kong * St John's Cathedral (English Service) 11.30 am Garden Road, Hong Kong * St Teresa's Church (English Service) 11.15 am 258 Prince Edward Road, Kowloon Tong, Kowloon * Holy Trinity Church (Chinese Service) 11 am 135 Ma Tau Chung Road, Kowloon City, Kowloon Attending the service will be the Director of Education, Mrs Helen C P Lai Yu (Catholic Cathedral); Deputy Director of Education, Mr Kwan Ting-fai, (St John's Cathedral); Acting Senior Assistant Director of Education, Mr Chong Kwok-kit (St Teresa's Church); and Senior Assistant Director of Education, Mr Tsui See-ming (Holy Trinity Church). End 10. Heritage exhibition extended until November ******************************************* The exhibition on "Hong Kong's Heritage -- A History of 6,000 Years" has received an encouraging response since its opening in June and is now extended until the end of November. A spokesman for the Antiquities and Monuments Office (AMO) said today (Saturday): "The exhibition enables local citizens as well as visitors from all over the world to appreciate the local heritage which demonstrates that Hong Kong is by no means a cultural desert but a place of rich and respectable culture." The display introduces the rich relics from different historical periods with special emphasis on archaeological finds and historical buildings. Exhibits include unearthed artefacts and archaeological evidences of the Middle Neolithic Period (2500 B.C.). The exhibition is held in the Heritage Resources Centre of the AMO at 136 Nathan Road, Tsim Sha Tsui, Kowloon. The opening hours are as follows: Mondays to Saturdays: 9 am to 5 pm Sundays and Public Holidays: 1 pm to 5 pm Tuesdays: Closed The event is one of the highlights of the various activities of the "Year of Heritage" jointly organised by the Antiquities Advisory Board, the Lord Wilson Heritage Trust and the AMO of the Broadcasting, Culture and Sport Bureau. For further information, please contact the AMO on 2721 2326. End 11. Fresh water cut in Tai Po ************************* Fresh water supply to some premises in Tai Po will be suspended from 10 pm on September 23 (Tuesday) to 7 am the following day for watermain connection works. The suspension will affect all premises along a section of Ting Kok Road between Tai Po East Fire Station and Tai Mei Tuk Brides Pool Road, including Tung Tze Road, Sam Mun Tsai Road, Yu On Street, Sha Lan Road, Shan Liu Road, Lo Fai Road, Lo Ping Road, Forest Hill, Hong Kong Institute of Education, Fortune Garden, Tai Po East Fire Station, A Shan, Tsiu Lam, Wong Yue Tan Village, Sha Lan Villa, Shuen Wan Chan Uk Village, Shuen Wan Lei Uk Village, Shuen Wan Chim Uk Village, Villa Palona, Sam Mun Tsai Village, Sam Mun Tsai New Village, San Tau Kok Village, Hong Kong Police Bungalow, Scout Training Centre, Ha Tei Ha, Wai Ha Village, Tung Tze Village, Tung Tze Lo Wai, Po Sam Pai Village, Lai Pik Shan Village, Ting Kok Village, Lo Tsz Tin Village, Lung Mei Village, Wong Chuk Village, Tai Mei Tuk Village, Tai Mei Tuk Water Sport Centre, Ta Mei Tuk Government Quarters, Tai Mei Tuk Bungalow, Agriculture & Fisheries Department Tai Mei Tuk Country Park Office and Tai Mei Tuk Water Pumping Station. End
