As we say happy New Year to family and friends today will we ask ourselves whether it is merely a wish or a rational prediction? Though the ongoing financial storm has led some of us, particularly those in the tourist, restaurant, retail or financial sectors, to believe that we have awfully hard times ahead, I believe that, apart from a reduced GDP growth forecast, 1998 will be tough but nonetheless a year of opportunity for Hong Kong. I say this as a realistic optimist, if such a creature exists. My claim to optimism stems in part to my confidence in a smooth transition founded on the 'one country, two systems' concept and the resilience and resourcefulness of Hong Kong people. As this has not changed why should we be diffident about the future? For many years Hong Kong and the world regarded 1997 as the watershed for everything we value. Emigrants, investors and tourists had to decide to stay or not to stay, or to come or not to come in 1997. Isn't 1998 the time to bid farewell to the 1997 syndrome? At least the media will, hopefully, stop describing events as 'the last before the handover' or 'the first since the handover' and allow normality to return to our lives. Pessimism, like optimism, is contagious. As a community we are full of excesses, extreme highs and lows. Despite our diminishing wealth since October and the difficulties our workforce will face in the coming months, we must resist the temptation to seek quick-fix solutions. Surely sober and mature consideration of our 'predicament' will prove how fortunate we are, compared to our regional neighbours. As the development of this barren rock has demonstrated, as long as we uphold our success formula - the rule of law, clean and lean civil service, low tax, free market and free society - investment opportunities will abound. Our entrepreneurs will be the quickest to find out where they are. Last year the world witnessed a seamless transfer in our civil service and judiciary. The freedoms we have enjoyed are intact, demonstrated not the least by an ever-vigilant press disclosing administrative blunders. Let events of past years and recent months remind us we must work hard to keep or improve everything we treasure. In 1998 the SAR administration will tackle vital issues: housing and retirement benefits. Housing should focus on not just the sale of public rental housing or increasing housing supply, but also ensuring a stable property market. As for retirement benefits, all sectors involved should resolve their differences to ensure a successful launch of the Mandatory Provident Fund Scheme. We must resolve these two concerns, plus related matters like labour importation, so that our energies can be directed towards resolving issues brought about by recent turmoils. As for our executive-led government, our first SAR Legislative Council will be a new challenge as will the relationship between the executive and legislative councils. Expectations of government accountability and transparency will not diminish. On the contrary, the 'Hong Kong people ruling Hong Kong with a high degree of autonomy' formula will be tested to the full. If this is not enough we also have to tackle the review of the municipal councils and district boards, not to mention public concern over the bird flu situation. The handover party is over. The regional stock market and financial crisis provides much for sober reflection. Six months into the SAR era, the community and its leaders are better equipped to assess what we must do to preserve our distinctiveness in being open and free, as a gateway to and a bridge between the mainland and the world and a melting pot of East and West. But, whatever the medicine, one thing is certain for 1998: no pain, no gain.