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Following is the full text of the speech (English only) by the Financial Secretary, Mr Donald Tsang, at the Opening Ceremony of the Pacific Telecommunications Council Mid-year Meeting today (June 20):

'The Internet Age: Asia Pacific into the 21st Century'

Ms [Jane] Hurd, Mr [Eiji] Hayashi, distinguished guests,

ladies and gentlemen,

I am delighted to be able to address this mid-year meeting of the Pacific Telecommunications Council. But I am especially pleased that Hong Kong is playing host to this gathering of regional leaders in the telecommunications sector. It gives us a chance to report to you just how quickly Hong Kong has embraced the Information Age, and to show you the excellent telecommunications infrastructure that has allowed the telecommunications and Internet sectors to flourish here. And perhaps - if you pardon the pun - some of you may even consider making more of a connection with Hong Kong by investing in our IT sector.

The theme for this year's conference dovetails nicely with Hong Kong's vision for the future, and that is to carve ourselves a niche as the Internet content and service hub in East Asia. The Internet is becoming even more pervasive. It affects the way we work, the way we live, the way we learn and the way we do business.

We all know that e-commerce is THE engine of future economic growth. Just look how e-commerce has grown. A report commissioned by Cisco Systems last year put the value of e-commerce transactions at US$102 billion in 1998, and predicted growth of 500% by the end of this year. In Hong Kong, we have seen an explosion of Internet-related businesses. In 1999 alone, the number of dot.com companies registered in Hong Kong jumped from about 200 to almost 1750; the number of dot.net companies increased from 18 to more than 130.

In the virtual world there are virtually no boundaries. So governments around the world are also learning to live, work and do business in the cyber domain. In Hong Kong, we have a clear focus of how to make the most of this e-volution. We must excel in information technology and multi-media applications, in Internet content and services, and in telecommunications. And we will use IT in all its forms to enhance our competitive edge and to drive economic expansion.

In November 1998, we articulated our strategy in a policy paper "Digital 21". "Digital 21" provides the framework for realising our goals. It contains three essential elements designed to make Hong Kong an international IT hub:

* First, we build high-capacity telecommunications infrastructure - a pre-requisite for Internet and e-commerce development.

* Second, we institute a regulatory regime that provides a clear legal framework for the development of telecommunications and e-commerce on a level playing field;

* Third, we enhance international co-operation because the Internet and e-commerce have created a world without walls.

Let me briefly touch on these three key areas.

Whether we can reap the full benefits of the Internet Age will depend, to a great extent, on how fast we get connected. Hong Kong now has one of the most competitive telecommunications markets in the world. Our broadband network, entirely private sector driven, covers all commercial buildings and more than 80 per cent of households.

Thanks to an aggressive liberalisation policy for fixed-point communication, Hong Kong's seven million people are served by five wire-based fixed telecommunications networks, and another five using wireless technology.

For mobile phones, six operators offer services on 11 mobile networks, achieving a penetration rate of 57%. This is the highest in Asia and the second-highest in the world after Scandinavia.

Our external services market is fiercely competitive. There are more than 140 licensees offering lower and lower IDD prices. We issue licences freely, on demand. This policy helps to meet the greater demand for external connectivity arising from Internet growth.

We have so far invited 13 applicants to operate satellite-based external telecommunications facilities, and another 14 to operate cable-based external facilities. Hong Kong's external connectivity is thus poised to increase 10-fold in the next three years. We estimate the private sector will spend about HK$10 billion - around US$1.3 billion - on these external facilities. The increased competition that will result from so many new market entrants will not only mean lower prices but a greater depth of high quality and innovative services.

Hardware is important. But what about the software - the regulatory framework and laws and the business environment? These elements must be blended together to create an environment of free and fair competition, to facilitate Internet development and to embrace e-commerce, and M-commerce.

Just two weeks ago our Legislature amended the Telecommunication Ordinance, making our regulatory regime the most up to date in current time. The law enshrines the cardinal principles of mandatory interconnection and sharing of facilities, as well as competition safeguards within the telecommunications industry. We are also one of the first jurisdictions to provide statutory access for mobile services to public shielded areas such as shopping centres and tunnels to ensure widespread coverage of mobile services in Hong Kong.

A sound legal framework is needed if we want e-commerce to take hold and flourish in Hong Kong. Earlier this year, we enacted the Electronic Transactions Ordinance to give electronic records and digital signatures the same legal status as their paper-based counterparts. The law also established a framework for the operation of certification authorities to ensure the integrity of electronic transactions.

Besides a sound legal and regulatory framework, the Hong Kong government is pushing full steam ahead with efforts to build an e-government. An Electronic Service Delivery scheme will be launched in October to provide public services on-line, 24 hours a day, seven days a week. This will enable us to improve the quality, efficiency, and accessibility of public service delivery. It will also allow the public to become more familiar with Internet transactions which in turn will help promote the wider use of e-commerce.

Rapid IT development and media convergence mean that we also need to be extremely responsive to technological advances. 3G mobile services, for example, will revolutionalise mobile phone operations and services. Network coverage is no longer the main concern. Applications and content development will have considerably more influence on the 3G market.

We have yet to truly fathom the business opportunities that will flow from 3G mobile services. But what we do know is that 3G will provide consumers with access to a wide range of multi-media services via mobile broadband. Data and graphics communications, movies, music, Internet access - all on your phone. The applications are astounding. No more standing in the queue to buy a cinema ticket on a Saturday afternoon - just push a few buttons on your phone. A couple of cold beers with a few friends after a chance meeting in a shopping mall - a meeting made possible because your phone picked up their phone signals and alerted you to call them. Take part in a video conference at the other side of the world. Verify your bank account details with a thumbprint placed on the screen of your phone. And just think, less than a decade ago we were carrying around those long, chunky mobile phones that were heavy enough for defending yourself against a mugger. Nowadays people wear mobile phones around their neck like a piece of jewellery.

To ensure that we take full advantage of 3G versatility, we are working towards timely introduction of these services in Hong Kong. We are now consulting our own people on how best they want us to license 3G operators. We are on course to invite licence applications within this year.

Our first-class business environment remains our greatest strengths in promoting the development of the Internet, e-commerce and telecommunications. It is no good having an advanced e-conomy without a business-friendly environment. Hong Kong has been consistently rated the world's freest economy. We have no controls on capital flows through Hong Kong, we have a freely convertible and stable currency, low taxes, no foreign investment controls, no tariffs, no trade barriers and no customs duties except for alcohol, tobacco and petroleum products. The rule of law is rigorously upheld by an independent judiciary and we have a clean, corruption-free administration which never seeks to impose its wishes on the people it serves.

Hong Kong is a pluralistic, tolerant society. We have a hard-working, entrepreneurial workforce, many of whom are bilingual. We have a deep pool of professionals in key sectors such as law and accounting, logistics and transport, management and corporate services. We have long, close and national ties with the Mainland. We have well-regulated financial markets and Asia's best regulated banking sector. Most of all, Hong Kong enjoys freedom of the press, free flow of information and freedom of expression, which are enshrined in our constitution - the Basic Law. This allows investors to know the social, economic as well as political movements in the community in making investment decisions. Indeed, without these freedoms, no city can rightly claim to be an international financial centre or IT hub of the first rank. All these added-values make Hong Kong a great place - we believe the best place - to do business in Asia.

Part of this software, as I just mentioned, is a mature and well-regulated financial sector. And there have been two important developments in our local stock market that will help consolidate our IT ambitions. The first is our Growth Enterprise Market - or GEM as we call it. The GEM has been modelled in part on the NASDAQ and provides emerging growth companies - many of which are in the technology sector - with access to funds from the investing public. The GEM is open to companies from all industries and of all sizes, but is particularly attractive to small and medium enterprises. Entry requirements are different to those on the Main Board. There are no requirements on profits but there are more stringent requirements on disclosure. If you are looking for a listing vehicle in Asia then Hong Kong has a 'gem' product.

The second development was the listing of seven NASDAQ stocks on the Hong Kong stock exchange on May 31. They have been dubbed by the media as the 'Magnificent Seven', and five of them are tech counters. This is the first time that NASDAQ stocks have been traded real-time, in another time zone. It also marks the first step in fulfilling the need for global capital formation and liquidity requirements. It will help provide worldwide, instant price discovery and trade execution in a fair, orderly, low-cost and well-regulated environment, without time-zone limitations. We are very excited about Hong Kong's involvement in this global venture. Reciprocally, before too long, selected Hong Kong stocks will also be listed on the NASDAQ.

I would now like to turn to international co-operation. 'Melissa', 'CIH' and the previously innocuous words 'I Love You' have taught us, in a rather painful way, the importance of a secure, global network. Cyber space is a new frontier for global security risks. And these risks need to be managed.

For example, we need mutual recognition of the certification authorities in different countries before cross-border trading can develop fully. We need a mechanism to align standards, ensuring that information and communications technologies are compatible, so businesses can easily access different markets. Just as we have systematically promoted free trade and broken down trade barriers, so too must the same efforts be applied in removing invisible barriers on the technological front.

On this score, Hong Kong has formed partnerships with many leading IT economies, including Canada, Australia, the United Kingdom, Finland, India and Israel, by signing of Memoranda of Understanding or co-operation agreements on issues relating to the development of information and communications technologies.

Ladies and Gentlemen, three small letters - w w w - have already changed our lives. They will continue to have a profound impact on our future. But let me suggest that to take full advantage of the potential of the 'World Wide Web', we must also work on three other w w w applications: 'Wiring, Warding and Welding'. In the Internet Age, we must be extensively wired; we must ward against the risks which could damage our business environment; and we must weld together international partners to explore the enormous opportunities in the world of ones and zeros. This is the challenge that we face as a government. This is the challenge that all of you face as leaders in the Internet Age. We will be watching with great interest your deliberations.

I wish you every success.

Thank you.

End/Tuesday, June 20, 2000

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