Midnight on Sunday June 30 marked the fifth anniversary of the historic return of Hong Kong sovereignty to the Mainland. It also marked the last day in office of the first Hong Kong SAR Government under the Chief Executive, Tung Chee-hwa, and the advent of his second administration, following his re-election as Chief Executive on May 24.

Five years after the handover, Hong Kong's return to Chinese sovereignty under the "one country, two systems" can be judged a success. The smooth handover lived up to the highest expectations of those involved and put to rest the fears of those who had expected there would be problems. Economically, however, the SAR has not done well. Two economic downturns in five years -- the first the result of the East Asian economic crisis of 1997-98 and the second due to the impact of the global slowdown and terrorism strikes of last year -- have taken their toll on the local community. The time has come to regroup and rebuild.

The establishment of Mr Tung's second SAR Administration, with its new system of accountability for principal officials and an economy already showing signs of "bottoming-out," offers an unprecedented opportunity for regeneration of the Hong Kong "can-do spirit" and a return to growth and prosperity. So, too, does the Mainland's entry to the World Trade Organisation, with all the opportunities that brings for the further opening of the Mainland economy, the Hong Kong community in general and its vibrant private sector in particular. The resilience Hong Kong has shown over the past five years should stand it in good stead for the challenges that lie ahead.

Fortunately, the Hong Kong SAR has its own inherent strengths to build on, as well as the post-WTO strengths of the Mainland economy. During the Chamber's visit to Beijing last month, Vice Premier Li Lanqing, impressed me with his views on how China's new "going out" strategy could benefit Hong Kong. The SAR has assisted in, and benefited enormously from, China's opening, the growth in inward investment and the resultant export trade. Now it stands to benefit from -- and assist in -- the Mainland's further expansion, by using its financial market and international connections to assist in outward investment flows, the listing of Mainland companies in Hong Kong and elsewhere and otherwise helping Mainland firms to invest and expand abroad.

More recently, our own Chief Executive, Tung Chee-hwa, outlined in a speech to the Chamber how the SAR must move up the "value chain" and encourage technological advancement if it is to succeed in its own economic restructuring. "Our objective is to use science and technology to enhance the innovative capability of Hong Kong, to strengthen the competitiveness of industry and to create knowledge-based, high value added industries and, through the acquisition of science and technology, to help individuals to move up the value chain also," he said.

None of this means that we can expect the times immediately ahead to be easy. The local economy is still showing little or no growth; our property market is still extraordinarily weak compared with the early-to-mid-1990s; unemployment is quite high and both consumer demand and domestic investment are lacklustre. The world economic outlook is still uncertain and the campaign against terrorism continues.

Nevertheless, Hong Kong has its real strengths. Just as importantly, the second Hong Kong SAR Administration of Mr Tung has already shown a new determination to deal with difficulties facing us (at least those that are within its direct control). This is evident in the new accountability system, but more importantly it is evident in the drive to build on Hong Kong's inherent strengths and its relationship with the Mainland to create an even more vibrant local economy. Mr Tung is establishing a new agenda for Hong Kong's future growth.

Your own Chamber's agenda, at least the early part of the second SAR Administration, is firmly in place. Domestically, we will pursue policies that support more rapid economic expansion and protect the interests of Hong Kong business. We will advocate smaller government, reduced government spending and much-needed civil service reform. Externally, we will support Hong Kong businesses in their pursuit of new Mainland opportunities following its WTO entry, monitor the Closer Economic Partnership Arrangement (CEPA) negotiations, and seek a more open border and greater integration with the Pearl River Delta (PRD). We would also like to see freer recruitment of Mainland professionals from sectors other than those currently allowed in information technology and financial services.