The report notes, however, that the state 'continues to carry higher levels of debt in relation to GSP than other mainland states, and this imposes limits of budget flexibility'.

This is why South Australia has been selling off some of its high-risk assets such as power, identified industries of the future and also bolstered its efforts to 'go knocking on the doors of our international partners', as the state Premier John Olsen put it during a visit to China last year.

Investment, the state believes, means more wealth and more jobs. While encouraging investment on the one hand, the state is opening its doors to skilled migrants and business migrants. It hopes to increase the migrant intake to about 20,000 each year and is promoting itself as a destination for migrants.

South Australia is also continuing to explore new markets abroad for its products and services, while expanding its network of overseas offices. In 1998, its representatives abroad helped generate an estimated A$83 million (about HK$424 million) in exports.

Some of South Australia's products have made inroads into markets overseas and have earned acclaim. Wine is a good example.

The state is regarded as the home of Australia's wine industry, accounting for the biggest share of exports. Out of a total of A$1 billion in Australian wine exports, South Australian wines accounted for A$700 million in 1998-99.

Wine is the state's biggest export, according to the Australian Bureau of Statistics.

Strong sales overseas were achieved at a time the state's exports reached a record A$5.3 billion in 1998-99, largely the result of wine, seafood and motor vehicle exports, which together accounted for about A$1.6 billion.

Premier Olsen has noted that South Australia has assisted the wine industry through export facilitation schemes and incentives and marketing.

Encouraged by the export data, Mr Olsen characterised South Australia as 'a state on the move', adding that 'the strong export performance is yet another sign that the government is pursuing the right economic policies'.

Manufactured exports form the bulk of South Australia's exports and more than 40 per cent of manufacturers sell their products overseas.

Strategic policies have helped create a climate in which business and industry can thrive. Over the years, a multitude of enterprises in a variety of sectors have set up operations in the state.

Bankers Trust, British Aerospace (defence/electronics), BTR Automotive (motor vehicle components), Compaq Computer Australia, EDS, F H Faulding (pharmaceuticals), General Motors Holden, Group Pernod Ricard (wine), Lion Nathan, Mitsubishi Motors, Telstra Group, Western Mining Corp and Westpac are among the many corporations that have taken advantage of South Australia's costs, skills and infrastructure.

Cathay Pacific Airways, too selected Adelaide to train pilots at British Aerospace Flight Training Australia at Parafield.

Last month, Hongkong Electric and Cheung Kong Infrastructure, both units of Hutchison Whampoa, committed A$3.5 billion for the right to manage and operate ETSA Utilities and ETSA Power for 200 years.

Premier Olsen will discuss the project and related issues today in Hong Kong at a press briefing, Joyce Mak, chief representative of the South Australian Government Commercial Representative Office, said. The deal will be finalised at the end of this week in Adelaide.

In the wake of the deal, Standard & Poors upgraded the state's credit rating from AA to AA+. Premier Olsen, said the current rating demonstrated the benefits of the asset sale.

He said the main bene fits would be in terms of making the state more at tractive to investors.

Mr Olsen noted that one of the state's biggest achievements in the past six years, had been the 'recovery of our reputa tion with the investment community'.

The South Australian Business Vision 2010 In dicators Report, says the economic climate has im proved rapidly in the late 1990s. 'Business expec tations for operating in come were more positive in South Australia than elsewhere in Australia and the state government was taking a lower share of the value produced in the state than it did earlier in the decade,' the report says.

It also notes that unemployment rates have fallen since the beginning of the decade, but 'remain the highest in mainland Australia.' The state's share of private investment, meanwhile, has been growing the report says.

Ms Mak, said there were many established and emerging sectors that were attractive to investors. These included water management, Information Technology, defence, horticulture, telecommunications, aquaculture, health, infrastructure, food and beverage, motor vehicle manufacturing, space technology and back office and call centres, among others.

Some industries have enormous potential. The mining and minerals sector, which the government is determined to further develop, is estimated to be worth A$4 billion annually by 2020, employing 40,000, according to a task force report.

The food industry is worth A$7 billion a year. South Australia is the largest producer of farmed seafood with aquaculture valued at more than A$100 million.

And the food and fibre sectors currently contribute about A$7.5 billion to the economy. Premier Olsen has already outlined the government's intentions to 'double this contribution' in 10 years.

As the economic base continues to change, Mr Olsen emphasises that South Australia needs to attract the right industry and he encourages a collaborative, co- operative approach between state, local government and business.