Following is the speech by the Secretary for Trade and Industry, Miss Denise Yue, at the Opening of the Third APEC Investment Symposium today (Tuesday):

Mr Tulloch, Distinguished Guests, Ladies and Gentlemen,

On behalf of Hong Kong, China, may I first of all extend to you a very warm welcome to the Third APEC Investment Symposium held here in Hong Kong. The Symposium is an important forum for business representatives and policy officials in the APEC region to discuss issues relating to cross-border investment. Hong Kong, China is privileged to be the host of this event in 1997, the first year of our reunification with China.

The modern world economy is characterised by increased globalisation, with growing internationalisation of production systems and foreign direct investment, or FDI in short. Let me quote some figures to illustrate this. Between 1982 and 1994, global FDI stock increased fourfold, 400 per cent, and doubled as a percentage of world GDP to nine per cent. In 1996, global FDI stock was a colossal US$3.2 trillion, and FDI inflow reached a new record of US$350 billion.

FDI brings immense economic benefits to not only the host economies, but also the originating or investing economies. For the host or recipient economies, FDI often brings about or facilitates the broadening of industrial base, transfer of technology, enhancement in management expertise and marketing skills, creation of employment and access to international markets. FDI is therefore an important engine for sustained economic growth and development. For the originating economies, the ability to invest overseas is also a powerful motive for these economies to concentrate on what they are good at doing in order to reap the benefits of comparative advantage, and the end result is a win-win situation for all.

Today, attracting FDI is one of the top priorities of many economies. This wish to attract FDI has resulted in a greater willingness to establish a more liberal investment framework. In the period 1991-96, some 600 changes were made to the FDI regulatory regimes around the world - 95 per cent of them were in the direction of liberalisation. At the national level, this often means the opening up of industries previously closed to foreign investment, abolition or streamlining of approval procedures and improvement in standards of treatment. At the bilateral level, these efforts at liberalisation are complemented by a surge in the number of bilateral investment treaties completed. As at January 1997, 1,330 such treaties had been concluded by 162 countries, which represented a threefold increase over the corresponding figure five years ago.

The trend towards liberalisation notwithstanding, restrictions still exist in many investment regimes due to historical, economic, national security and other reasons. These restrictions often take the form of admission barriers, foreign ownership control, export requirements, local content requirements and technology transfer requirements. We need to further dismantle these investment barriers and enhance the transparency of investment regimes in order to be able to realise the full benefits of liberalisation.

I am all too aware that, given events in the past few months, there are bound to be questions as to whether free flow of investment is all that good. Some will point to the havoc purportedly wreaked on regional financial markets by overseas investors as proof that investment and liberalization bring with them disbenefits. Even those who do not subscribe to such claims may have doubts as to the value of FDI in a volatile market. However, these recent problems actually reinforce, and not weaken, in my view the arguments for a stable investment environment and a robust investment regime. Only where such environments and regimes are sustained may we expect to reap the full benefits of FDI. Increased liberalization, bolstered by transparent regulations and built on solid macro-economic foundations, should therefore continue to be our goal.

Hong Kong, China is very pleased that from the outset, APEC has set itself the task of improving the investment environment in the Region. The Non-Binding Investment Principles adopted in 1994 contain significant political commitments and underline the determination of APEC members to further the work on investment liberalisation. In 1995, the Osaka Action Agenda adopted by Economic Leaders specifically called for a dialogue on the ways to improve APEC's investment environment, and for drawing on the experience and views of the business community. In line with this spirit, two investment symposia have been held in Bangkok and Tokyo, and were well attended by the business sector and governments. Through the Investment Experts Group, chaired by Mr Hayden, APEC members have agreed on a Collective Action Plan on investment, as well as promulgated their own Individual Action Plans on this front. These plans contain concrete deliverables for attaining the twin goals of investment liberalisation and facilitation.

Hong Kong, China is a staunch supporter of APEC's efforts in trade and investment liberalisation. We also fully recognise the importance of listening to the views of the business sector, in pursuing the goal of free and open trade and investment in the Asia-Pacific region. Our hosting of this Symposium underlines the commitment of Hong Kong, China to the APEC process in general and to investment liberalisation in particular.

Hong Kong is a befitting venue for today's symposium because we have one of the most liberal investment regimes in the world. We are firmly committed to free trade and free markets. We firmly believe that our economy must be driven by market forces and led by the private sector. The Government sees its role as following sound macro-economic policies, putting in place the infrastructure necessary for business development, providing the education and training necessary for meeting the needs of a knowledge-based economy, and enforcing the rule of law. As an open economy, we have no special approval procedure for foreign investments. We impose no conditions for admission. We do not interfere with management. We provide highly transparent laws and regulations and we enforce them through an independent judicial system.

Hong Kong, China is also a significant investing economy in the region. We are the largest external investor in the Mainland of China, accounting for some two-thirds of its FDI. We are also the fourth largest outward investor in the world, with an investment amount of US$27 billion in 1996. Our entrepreneurs have invested substantially in countries like Thailand, Malaysia, Indonesia, the Philippines and Vietnam.

I am pleased to see that the Symposium this morning and tomorrow is joined by a good number of distinguished speakers, coming from different parts of the world. I am grateful to them for sharing their experience and insight with us. Today's Symposium provides a good channel for the business sector to put across its views to governments on how investment regimes may be improved, and for policy officials to broaden and deepen their understanding of the concerns and priorities of the business sector. Finally , I would like to take this opportunity to wish the Symposium and all its participants every success. Thank you very much .