After all the scaremongering in the lead up to the British handover of Hong Kong to China, the policy of "one country, two systems'' seems to be operating successfully, Jardine Matheson Holdings company secretary Harry Wilken said yesterday.

"It is not an unreasonable argument that, given the fact that zero democracy exists within China itself, the current Hong Kong version with a mixture of directly elected members, selectively appointed members and key industry representatives in the Legislative Council, Hong Kong's version of the House of Assembly, is appropriate and workable for Hong Kong -- there are of course those who disagree,'' he said during an address to the Hamilton Rotary Club.

Still Hong Kong's economy is in the doldrums since the handover June 30 last year. The "city-state'' is important to Bermuda as over half of the 600 companies on the Stock Exchange of Hong Kong are registered in Bermuda.

Jardine chose Bermuda as a domicile in 1984.

"Bermuda remains the domicile of choice and the name of Bermuda is held in the highest esteem in Hong Kong, and thus in China itself,'' he said.

Economic troubles in Asia, and a slump in tourism have hurt Hong Kong more than the perceived threat of China's power in the region. Thousands of brokers and bankers have lost their jobs as securities firms cut costs, and in the tourism and retail sectors more people are being made redundant. The downturn is not likely to be short term.

"For across the board, corporate profits and indeed many actual businesses are under threat, for if the Hong Kong dollar remains pegged (to the US$), companies can see that their profits may be hurt by rising costs and falling regional competitiveness,'' he said. "The alternative, should the currency peg go, will see the Hong Kong dollar depreciate quite substantially and the stock market falling in step.'' Still Hong Kong has advantages which could serve to rejuvenate the economy.

Hong Kong still `successful' "It has certain advantages such as its huge efficient container port, a sophisticated and hard working labour force, a high savings rate and a continually improving physical infrastructure which incidentally will see its brand new colossal airport open in July,'' Mr. Wilken said. ".. .Now Hong Kong needs to reinvent itself again. It will need to move to a higher level of technology both for its trade and its services and if that doesn't happen, some would argue that Hong Kong could eventually be headed for a dead end -- particularly if other mainland China centres such as Shanghai are seen to be catching up.'' Jardine Matheson was founded in Canton in 1832 and the group now has operations in over 30 countries. It maintains a physical presence in Bermuda at Jardine House on Reid Street.

Harry Wilken