Thank you for the kind introduction. First of all, I would like to thank Ken, the Hong Kong Canada Business Association (Winnipeg), Industry Canada, Manitoba Trade, and the Winnipeg Chamber of Commerce for inviting me to take part in the breakfast seminar this morning. I hope you will find the session worthwhile and fruitful.

I am not an engineer, just a civil servant, but today I hope to do a little engineering of my own. I hope to engineer a new awareness of Hong Kong amongst you. It is not just a highly-successful business and service centre of Asia, but a hub of infrastructural developments of unparalleled global significance. And most importantly, what all these mean to you.

As you are probably aware, we opened in July our new airport, the culmination of a C$31 billion project, the biggest single construction project ever undertaken in Hong Kong. The new airport was built on an artificial island of 1238 hectares in size. Approximately 3/4 of the airport island came from reclamation and the remaining 1/4 came from excavation of two islands. But the airport, magnificent as it is, is just a part of the Airport Core Programme. This programme also includes a new town housing 250,000 people, the longest road and rail suspension bridge in the world, an expressway and a railway connecting the airport with urban centres in Kowloon and Hong Kong Island, and tunnels under Victoria Harbour to carry these road and rail links, not to mention massive reclamation projects in Central and in West Kowloon on both sides of Victoria Harbour.

In 1991, when we embarked on these new airport projects, some people still had grave doubts about our determination and capability. But let me show you some slides and you will actually see for yourselves how we reclaimed land from the sea and how we put a new town, highways and a rail network on it.

Some of you might have heard of the teething problems in passenger and air cargo services at the new airport when it was opened in July. I am glad to tell you that all the teething problems have been resolved. The new airport is now running very efficiently and its services have indeed surpassed that of Kai Tak in many respects e.g. passengers can now complete immigration formalities within 15 minutes and the average waiting time for luggage is only 10 minutes.

By the way, I would strongly recommend that you allow yourself more than adequate time at the new airport. I mention this not because I do not have confidence in our fine Airport Railway. I can indeed assure you that you can travel from Central to the new airport comfortably in less than 30 minutes. Nor do I have doubts on the very efficient automatic driverless train within the passenger terminal building. What I meant was that you and your companion would be disappointed if you do not find enough free time for shopping at the new airport. Yes, one of the major attractions of the terminal building is its gigantic mall with 33,000 square metres of shopping area - one of the largest in Hong Kong. And the prices of all the items sold in the new airport are controlled to make sure that they are comparable with downtown prices.

It is a magnificent undertaking, probably the world's biggest infrastructure project, but, as far as our infrastructure planners are concerned, it is all in the past. We are looking to future projects.

In February, the Chief Executive of the Hong Kong Special Administrative Region, Mr. Tung Chee-Hwa, announced that the Government will invest in the next five years C$47 billion (HK$235 billion) on infrastructural development to stimulate economic growth, raise the competitiveness of Hong Kong, increase land supply and provide more job opportunities. These new infrastructural projects will be of a much larger scale and will exceed the new airport projects which cost C$31 billion. In other words, even more and better business opportunities for you.

Hong Kong is a phenomenal success. Just less than 1100 square kilometres in area, it is the world's eighth largest trading entity, has the world's busiest container port, the world's busiest international cargo airport and the fifth busiest international passenger airport. Its success has been due to minimum interference by a clean government that believes in providing a low tax base and an efficient infrastructure so that businessmen can do what they do best - run their business and make profit. By the way, our Financial Secretary has just reduced corporate profit tax to 16% to make Hong Kong even more attractive to you.

By far the largest portion of infrastructure spending will go to transport. Hong Kong, one of the most densely populated places on earth, has some of the most congested roads in the world with 500,000 vehicles using just 1500 kilometres of road.

The Government will invest C$5 billion (HK$25 billion) in the next five years to implement a number of ambitious programmes for the planning and building of a series of new road projects. These projects include the widening of the Tolo Highway in the New Territories and widening of the Island Eastern Corridor on Hong Kong Island.

With extensive planned developments to take place in Kowloon Peninsula after the closure of Kai Tak Airport, we expect the east-west traffic demand across Kowloon Peninsula to increase. The Government therefore is looking at the possibility of building the Central Kowloon Route - a dual-two-tunnel linking West Kowloon and South-east Kowloon. A detailed design consultancy study and site investigation works have already commenced.

The Government is working on a blueprint for transport infrastructure for the next decade including the Third Comprehensive Transport Study to assess overall transport needs.

The Railway Development Study is essential because Hong Kong, with its limited space, cannot build new roads forever, that is why priority will be given to rail transport. The government policy will be to develop rail transport to the extent that it is economically viable to reduce reliance on road transport.

More than C$22 billion (HK$110 billion) has been set aside for railway development in the next five years. The projects include the West Rail, the Tseung Kwan O extension of the Mass Transit Railway, the Ma On Shan Link, and another railway linking Hung Hom to Tsim Sha Tsui in Kowloon, with the possibility that this will be extended under the harbour to Hong Kong Island.

The biggest of these projects is the 54-kilometre West Rail that will connect Kowloon with the large urban centres of Tsuen Wan, Yuen Long and Tuen Mun on the western side of the New Territories. West Rail will improve transport services for some 1.4 million residents in the North West New Territories. The West Rail will also continue to the border where a new crossing will be established to connect with mainland China's rail system.

West Rail will provide three services: a freight rail link to the container port, a cross border passenger service, and a domestic passenger service linking West Kowloon to Tuen Mun. Because of the pressing need for local transport services, the 30-kilometre rail passenger service between Kowloon and Tuen Mun, Phase 1, will be built first and is expected to be ready in 2003. The cross border passenger and freight services, Phase II, will be completed later. The expected cost of Phase I is nearly C$13 billion (HK$64 billion). While pre-qualification of many special purchase and detailed design and construction contracts has just been completed in the last quarter, a few contracts in commercial communications, tunnel ventilation and locomotive and auxiliary vehicles are still available. Altogether, 14 civil contracts will be awarded by mid-1999. So, I am not talking about a project that is still several years down the road. It is a project with lucrative contracts - your business opportunities - which will be available in the next few months.

Another major railway project is the 12.5-kilometre extension of the existing Mass Transit Railway (MTR) system to the new town of Tseung Kwan O, also known as Junk Bay, on the Eastern New Territories. The thriving new town at Tseung Kwan O will have a population of 500,000 by the year 2011. So, there is an urgent demand for new transport links with the urban centres in Kowloon and Hong Kong Island. The MTR extension will move people rapidly and economically between these centres. It will cost about C$6 billion (HK$30.5 billion). This project is expected to begin before end of this year for completion by end of 2002.

Hong Kong's Mass Transit Railway Corporation is wholly owned by the Government but it is run as a private company and on strict business principles. It is one of the few, if not the only, mass transit systems that make a profit every year.

A third major rail project is a 10-kilometre rail passenger link in the New Territories between the new towns of Ma On Shan and Tai Wai where it will connect with the existing Kowloon Canton Railway and Mass Transit Railway systems. This will cost C$3 billion. We are now proceeding with the detailed planning and design of the project, with a view to starting the work in 2000 for completion in 2004.

Together, these three projects will increase Hong Kong's total rail mileage from 121 kilometres to 225 kilometres i.e. an increase of more than 85%.

Of course, none of the massive infrastructure projects that Hong Kong is undertaking, including the new airport and other huge future projects, would have seen the light of day if it were not for Hong Kong's port.

The phenomenal growth of Hong Kong as a manufacturing, service and financial centre has tended to overshadow the fact that Hong Kong was founded as a port for China trade and it was on this foundation that everything else was built. Without the port, there would be no Hong Kong as we know it today. Port related industrial and commercial enterprises contribute some 20% of Hong Kong's Gross Domestic Product (GDP) and provide jobs for nearly 22% of its workforce.

We operate the busiest container port in the world and last year it handled 14.6 million twenty-foot-equivalent units (TEUs). This was an increase of 8.2% over 1996. The Government's latest forecasts show that by 2016 there will be a demand for Hong Kong to handle 33 million TEUs a year. Let me put that into perspective. It means handling five twenty-foot containers every four seconds, 24 hours a day, 365 days a year.

To meet the growing demand at the port, Container Terminal 9 (CT9) is being built at Tsing Yi Island, opposite the existing eight terminals at Kwai Chung. CT9 is expected to come into operation in late 2001 and will increase the port's throughput capacity by 2.6 million TEUs a year. After that, there will be no more room for expansion in the Kwai Chung area.

To cope with the demand in the 21 Century, we have made very preliminary plans to build a completely new container port on Lantau Island with twice the capacity of the present port at Kwai Chung. Building this new port, on a series of artificial islands stretching south-east from north Lantau, will be one of the world's biggest civil engineering projects. The new port is vital, not only for Hong Kong, but for southern China, one of the fastest industrialising areas in the world. More than 64% of the cargo passing through Hong Kong is entrepot trade with mainland China. Despite the upgrading of mainland China port facilities, Hong Kong is likely to remain the hub port for the region well into the next century.

As has been the case with the existing container port, all the new terminals will be built and operated by private enterprise. Hong Kong is the only major port in the world not run by a port authority. This system has worked well to make Hong Kong not only the busiest, but one of the most efficient ports in the world. For instance, last year, one single berth terminal handled over one million TEUs - more than three times the rate of most other ports in the world.

But do not let me give you the impression that Hong Kong is some soulless, business machine, good only for making money. It is home to nearly 6.8 million hard-working, ambitious people who seek a better life for themselves and their families. Our investment in infrastructure is, fundamentally, aimed at providing that better life. One of the priorities of a good life is adequate housing and Hong Kong has one of the most ambitious housing programmes in the world. Nearly half it's population lives in low-cost housing built by the Government.

To ensure adequate housing, the Government plans to build, as a long-term target, 85,000 housing units a year. That is a rate slighter faster than one new flat every 10 minutes. This will be more than meet demand, which computer models show, will be 80,000 flats a year over the next decade. The Government is responsible for building 50,000 units a year while private developers should be able, subject to market developments, to produce 35,000 flats a year from the year 2000 onwards.

But the Government does not just want to provide housing, it wants to encourage home ownership. We plan to achieve 70 per cent home ownership by the year 2007. The Government firmly believes that this drive for wider home ownership in the community will foster social stability and a sense of belonging, and help families to provide for their own financial security. Much of the housing will be built as a result of some of the infrastructure projects I have already mentioned.

Additional housing and a growing population means bigger demands on water and sewage systems. In the next few years we will spend C$370 million a year on water treatment works, service reservoirs and water mains. We have this year begun work on two large waterworks projects costing C$1.3 billion and a third major contract will be signed soon. The HK Electric Company Limited will also proceed with studies on the possible construction of additional electricity generating facilities which will be needed in 2003. This study will cover the use of natural gas, which is more environmentally friendly than coal, as fuel for any new generating units.

I know one question lingering in your mind is whether there will be any further developments beyond 2002. We are now mapping out the longer-term developments in Hong Kong. We have recently completed a Territorial Development Strategic Review. We expect Hong Kong's population to increase to 8.1 million in 2011 i.e. an additional 1.3 million on top of the current 6.8 million population. We need to develop 3,000 hectares of land in areas like Tseung Kwan O, North Lantau, Southeast Kowloon, and in the future in Northwest New Territories, North-east New Territories, Hong Kong Island South and Lamma Island.

The Government plans to develop the Kai Tak airport and the adjacent area now that the new airport has opened. This move will make available more land in the urban area around Kai Tak available for development. The area will be developed into a Garden City which will accommodate 320,000 people and create 90,000 jobs by 2016. Population intake is expected to start in 2003. This ambitious development, known as the South East Kowloon Development, comprises 579 hectares of which 280 hectares comes from the existing airport site while the rest will come from reclamation. Site formation is expected to start later this year. It will have a Metro Park of 50 hectares, a world-class international sports stadium with a retractable roof, an Aviation Academy and Museum, 45 schools, a hospital, and office and recreational buildings.

To entice people to move to less convenient locations, we must improve the transportation link between the New Territories, Lantau Island and the rest of Hong Kong. The Government has just appointed a consultant to investigate and design a new route - Route 10 - linking North Lantau and Yuen Long. This proposed 17.5-km-long route is scheduled to commence in 2002 for completion in phases by 2007 and will carry a suspension bridge over Ma Wan Channel. Estimated cost for this project is more than C$4 billion (HK$23 billion). This highway would cater for the future growth in the Northwest New Territories and the Lantau Port development. Together with some other highways under planning or construction, this highway will further improve cargo and people's flow on the western side of Hong Kong to China.

The Government will also build the section of Route 5 in the New Territories (between Tsuen Wan and Cheung Pei Shan). In addition, we will complete Route 16 from West Kowloon to Sha Tin in 2004. The project, which cost around C$1.6 billion (HK$8 billion), will improve considerably traffic flow between Northwest New Territories and the urban area. Another project is Route 9 linking Tsing Yi and Cheung Sha Wan. This project is expected to be completed by 2006 at an estimated cost of C$2 billion (HK$10 billion). Preliminary planning is being made for Route 7 between Kennedy Town and Aberdeen.

At the same time, we have recently commissioned a consultant to conduct a 18-month second railway development study to formulate a comprehensive railway network expansion plan so as to meet the transport need of 8.1 million people. Proposals to be investigated will include:

• a fourth rail crossing under Victoria Harbour
• a new Mass Transit Railway line from Central, through Wanchai to Causeway Bay, with a possible extension tunnelling through Hong Kong Island itself south to Aberdeen
• a new East Kowloon line to serve the present Kai Tak airport area when it is developed into a massive housing and commercial centre
• a western extension of the MTR Island Line to Kennedy Town and other potential lines

There will be high-rise housing and commercial developments above the stations on the airport rail-line and on the other railroad projects that I have mentioned. So, I would strongly urge you to keep a close eye on all these developments in Hong Kong.

Let me stress one point. All along, the Hong Kong Special Administrative Region Government puts much emphasis on level playing field in approving and awarding contracts. Take the new airport projects as an example, more than 77% by value of the C$19 billion contracts have been awarded to overseas firms. We do not care about the nationality of the bidders. Our awarding principles are easy to understand and very simple: value for money and timely delivery of quality products. We do not show favouritism towards contractors including those from Hong Kong or China nor will we discriminate against any particular economies. Hong Kong has been able to benefit from this approach. Indeed the cost of the new airport projects has been reduced by C$2 billion from C$33 billion to C$31 billion and this is partly a result of our adoption of this level-playing field approach. I can assure you that Hong Kong will continue to maintain this very important approach. And do not forget, Hong Kong will continue to observe the rule of law seriously and whole-heartedly.

I know some of you are not contractors but bankers and financiers. You might be thinking what has all this to do with you. Well, I would like to cheer you up by saying that the government's policy is not to foot all the cost of these projects out of the public purse even though we do have the capability to do so if we so desire - don't forget we have US$92 billion foreign reserve and no government debt. Some of the statutory bodies responsible for these projects may raise commercial loans to partially fund these massive projects. Indeed, if you examine our new airport projects, you will find that around C$4 billion, out of the C$31 billion came from commercial loans. While many financial details on these new projects are still being hammered out at this stage, I can tell you that the Kowloon Canton Railway Corporation is going to raise commerial borrowings of C$5 billion to fund its nearly C$13 billion West Rail project.

All of you must have read about the financial turmoil in Asia and you may be surprised that Hong Kong is undertaking such large infrastructure projects and committing itself to so much spending in such difficult times.

Well, we are not denying times are hard, but Hong Kong is better placed than any Asian country to weather the present downturn. In 1997/98, we had a record budget surplus of C$14 billion, more than double the surplus forecast at the beginning of 1997. While we anticipate that this year we will have a negative growth of 4%, we are confident that the new projects which I just mentioned will give us the much needed impetus and boost the growth of our economy in the next few years.

So, as you can see, our economy is sound and all of the projects I have mentioned are highly necessary for the future growth of Hong Kong's economy. When Hong Kong builds for the future it builds, like the wise man in the Bible, not on sand, but on the firm rock of sound finances and prudent planning. We firmly believe that the year 2000 will usher in the Pacific Century, and we are determined to take a leading part in building the prosperity of the Pacific Rim by maintaining the pace of our infrastructure and developments. As for Canada, I hope I have succeeded in convincing you that Hong Kong remains a place full of business opportunities. I hope you will capitalize on these opportunities and take part in our infrastructure projects.