"Hong Kong and the Pearl River Delta must be seen as a regional economy, and the integration with the Pearl River Delta was a natural process that we should embrace," Tung said at a Hong Kong General Chamber of Commerce luncheon.

Dubbed as a "one-plus-one-equals-three" scenario, Tung said a more prosperous Pearl River Delta will contribute positively to the SAR's economy.

Some in the Hong Kong business community fear the mainland's entry into the WTO could lessen the role of Hong Kong as "the middleman" between the mainland and the world.

The most recent sounding of concerns came from a report of the Economist Intelligence Unit (EIU), a service of the Economist magazine, which downgrades the SAR's ranking as an international business centre from third to 12th place.

Referring to the ranking, Tung cited a story of a "very, very famous international magazine" which carried an article called "The Death of Hong Kong" in 1997.

"About two years ago they came out with another article singing praises about Hong Kong," Tung recalled for the audience of around 400 business people.

"So there you are, they make these assessments, and my job is to prove them wrong all the time," Tung thumped.

Hong Kong must be confident of its strategic location, Tung stressed.

"We understand that the faster the cities and townships in the Pearl River Delta grow, the more trade they will generate through Hong Kong," he said. "The more prosperous the Pearl River Delta is, the more opportunities for Hong Kong businesses to invest in the area." All these are pluses for us and will contribute positively to our economy," Tung noted.

Hong Kong economy is inextricably linked to the mainland, so mainland's accession to the WTO would consolidate the SAR's status as a gateway to the mainland, he said.

The SAR would become the base of operations for many multinational businesses, particularly the international small- and medium-sized enterprises, he predicted.

A common vision of a Pearl River Delta regional economy has been shared by leaders in Guangzhou, Shenzhen and Dongguan and the Macao Special Administrative Region, Tung noted.

"In the months ahead, we will study and hope to identify some measures to promote co-operation in these areas," Tung said, citing great opportunities in information technology development, financial services, retail and distribution, import and export, professional services such as legal services, construction and project management, and transport and logistic services.

But Tung also emphasized that the initiative must come from the private sector, with the SAR government acting as a facilitator.

"I can assure you that the SAR government will endeavour to provide a conducive environment for attracting investment and promoting the free flow of people, talents, and goods and services," Tung promised.

This includes tackling environmental problems, he said.

(China Daily 02/23/2001)