Hong Kong Yearbook - Annual Report for the Year 1987

ONG KONG 1988

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1

HONG KONG 1988

A review of 1987

市政局公共圖書館 UCPL

3 3288 00676064 1

HONG KONG 1988

Editor:

Aladin Ismail,

Government Information Services

Designer:

Arthur Hacker,

Government Information Services

Photography: David H. P. Au, Augustine K. C. Chu

and other staff photographers,

Government Information Services

Special

Contributor:

Derek Jones (Chapter 1)

Statistical Sources:

Census and Statistics Department

The Editor acknowledges all contributors and sources

Copyright reserved

Code No.: F300188 (ISBN 962-02-0058-6)

Price: HK$38.00

US$9.00

UK£6.50

URBAN COUNCIL PUBLIC LIBRARIES !

Acc. No. 799966

Class.

Author

HR951.25

HON

HKCT

Cover: A traditional Dragon Dance celebrating the Mid- Autumn Festival in Statue Square, with the old Supreme Court building, now the Legislative Council Chambers, in the background.

  Frontispiece: Spring-time open day at Government House gardens in the month of March, when the azaleas are in bloom.

URBAN COUNT PUT PRARIES

RATE ACE LIBRA

Contents

Chapter

Page

1

2

HONG KONG BUILDING FOR THE FUTURE

CONSTITUTION AND ADMINISTRATION

1

17

3

THE LEGAL SYSTEM

33

4

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

41

5

THE ECONOMY

46

6

INDUSTRY AND TRADE

67

7

EMPLOYMENT

86

8

PRIMARY PRODUCTION

96

9

EDUCATION

103

10

HEALTH

133

11

SOCIAL WELFARE

149

12

HOUSING

159

13

LAND, PUBLIC WORKS AND UTILITIES

171

14

TRANSPORT

192

15

PUBLIC ORDER

211

16

TRAVEL AND TOURISM

233

17

THE ARMED SERVICES

236

18

COMMUNICATIONS AND THE MEDIA

241

19

20

21

2 2 2 2 2

RELIGION AND CUSTOM

256

RECREATION AND THE ARTS

261

22

23

THE ENVIRONMENT

HISTORY

APPENDICES

283

POPULATION AND IMMIGRATION

302

308

317

372

INDEX

Frontispiece

The Governor

Events

Illustrations

Between pages

4-5

12-3

Fun

44-5

Construction

76-7

Leisure

108-9

Countryside

140-1

New Towns

172-3

Recreation

204-5

Old Buildings

Festivals

END-PAPER MAPS

Front:

The Territory of Hong Kong

Back:

Hong Kong Building for the Future

236-7

268-9

Appendices

Appendix

1

UNITS OF MEASUREMENT

Page

320

2-5

CONSTITUTION AND ADMINISTRATION

323

6

OVERSEAS REPRESENTATION

328

7-14

THE ECONOMY

331

15-16

INDUSTRY AND TRADE

343

17-20

EMPLOYMENT

347

21-23

PRIMARY PRODUCTION

352

24-27

EDUCATION

354

28-31

HEALTH

355

32

SOCIAL WELFARE

358

33

HOUSING

361

34-35

LAND, PUBLIC WORKS AND UTILITIES

362

36-37

TRANSPORT

364

38-41

PUBLIC ORDER

366

42

COMMUNICATIONS AND THE MEDIA

370

43

RECREATION AND THE ARTS

371

44

THE ENVIRONMENT

371

When dollars are quoted in this report, they are, unless otherwise stated, Hong Kong dollars. Since October 17, 1983, the Hong Kong dollar has been linked to the US dollar, through an arrangement in the note-issue mechanism, at a fixed rate of HK$7.80=US$1.

*

Some figures in the text are estimated; actual figures appear in the appendices.

1

Hong Kong-Building for the Future

竹園

健榮花 藝(r)

    ONE striking fact about Hong Kong is that, physically, it is, in so many ways a new city. Aspects of it which its inhabitants now take for granted, but which they have come to rely on and have built into the fabric of their lives, did not exist even a few years ago.

     Nine years ago there was no Mass Transit Railway, which now carries nearly two million passengers a day. The Island Line, indeed, was opened less than three years ago. Six years ago there were no electric trains, which now carry almost 350 000 passengers daily to and from the New Territories. Ten years ago the now thriving and bustling commercial and shopping centre of East Tsim Sha Tsui was a near-empty wasteland.

     The spectacular new towns were little more than rural villages less than 15 years ago. And the strategic road network, which now stretches from Hong Kong Island to the further reaches of the New Territories, was then no more than a planners' blueprint. At that time, also, the Cross-Harbour Tunnel had only just opened to end the era when the only means of getting from Hong Kong Island to Kowloon was by ferry. The Kwai Chung container port, now the second largest in the world in terms of throughput and bidding to become the largest, was empty seabed only 20 years ago. And, perhaps as significant as anything, 30 years ago none of the hundreds of high rise buildings, which now surround the harbour in such profusion, existed.

     Almost all the old pre-war Hong Kong has by now been swept away, in a 30-year frenzy of construction which has completely transformed the whole face of the territory from the Central business district to some of the remoter parts of the New Territories.

All this means that Hong Kong has been building for the future almost continuously for more than a generation. The process has been going on without stop since the late 1950s, in some years more intensively than in others, although even the relatively quiet periods would have appeared busy in most other places. In boom years, particularly during the late seventies and early eighties indeed, parts of Hong Kong were almost literally transformed into continuous building sites.

     The results have been spectacular, not only in the physical development of the territory, but also in the overall scale of its economy and the standard of living of its inhabitants. The Hong Kong of the mid-fifties was poor and dilapidated, still struggling to adjust to the ravages of the Second World War and the loss of much of its entrepôt trade. Many of its 2.5 million inhabitants were recent immigrants from China, squatting on hillsides or on rooftops and lucky to find employment at subsistence wages. Now Hong Kong is a modern and thriving metropolis of about 5.6 million people, fully employed and much better housed, one of the major centres of world trade, communications and finance and with a standard of living that has increased four or five times in a generation.

     The rate of development, moreover, is continuing at a fast pace. Numbers of large new projects are either being built or are planned to start soon. Beyond them, plans are being

2

HONG KONG BUILDING FOR THE FUTURE

formulated for yet more ambitious developments, stretching into the 21st century, that bid fair, once again, to transform the face of the territory and lift it onto a new plane of activity. The massive size of some of these projects, and the commitment being shown to them, by not only the public sector, but by private capital, both local and overseas, as well, provide an impressive vote of confidence in the prospects for the Hong Kong economy and the stability of its society, not just in the next decade of transition, but beyond it, after Hong Kong becomes a Special Administrative Region of China under the terms of the Sino-British Joint Declaration.

Looking to the Future

(1) Infrastructure

Some of the more important of the new developments concern the further expansion of the basic economic infrastructure of communications, both internal and external, which are essential for the continued growth of the economy and of social activities. An outstanding example is the Eastern Harbour Crossing, now being built by a consortium of overseas and local private companies at an estimated cost of $3.4 billion. When completed at the end of 1989, this will provide an additional road and rail link under the harbour to relieve pressure on both the existing Cross-Harbour Tunnel and the Mass Transit Railway's present line across the harbour. The payback period for the investment involved will run into the next century. The new crossing will later be joined, via a bypass of the industrial area of Kwun Tong, to another tunnel, the Tate's Cairn Tunnel, under the Kowloon foothills to the new town of Sha Tin and its extension at Ma On Shan. This tunnel will also be built by private enterprise and a number of consortia have, again, shown considerable interest in the project. Due for completion in 1992, it will provide an alternative route to the eastern New Territories and much needed relief for the existing heavily utilised Lion Rock Tunnel.

     Road access is also being improved, not just between the New Territories and the Metropolitan area, but also to the container port and across the border with China. A new road (Route 5), also largely in tunnel, is now being built to link Sha Tin with the industrial town of Tsuen Wan, next to the container port at Kwai Chung. This will, by 1990, provide an alternative route to the container port for goods from China and the eastern New Territories. Border crossing facilities will also be greatly improved by a major new crossing being constructed at Lok Ma Chau. This will be joined to the New Territories Circular Road (which links up all the new towns) and, when completed in 1989, it will more than quadruple existing border crossing capacity to some 50 000 vehicle movements a day.

     The modernisation and electrification of the Kowloon Canton Railway (KCR) line from the border to Kowloon has also been a major factor in revolutionising the transport situation in the New Territories. Since it commenced service in 1982, passenger movement has increased by some six times to almost 350 000 per day and is still rising. The movement of freight has also increased from 1.073 million tonnes in 1981 to 2.265 million tonnes in 1987. Further land reclamation from the harbour at the terminus at Hung Hom will substantially expand the area of the freight terminal and thus the capacity of the railway to handle freight.

     The port, also, is being expanded. Two more terminals are being built by private enterprise to add to the existing five terminals at the Kwai Chung container port. This will increase the number of berths from six to nine and, together with the provision of additional backup areas, should increase handling capacity by some 50 per cent above

HONG KONG

BUILDING FOR THE FUTURE

3

present levels by the early 1990s. Additional wharfs for conventional cargo handling are also being built and more mooring buoys are being provided for ocean going vessels to anchor in the harbour. A new terminal in Kowloon to handle passenger vessels travelling to China will also open in the summer of 1988.

Finally, more capacity to handle both passengers and freight is being provided at Kai Tak airport. The latest expansion of the passenger terminal will enable it to accommodate some 18 million passengers a year compared with about 12.7 million experienced in 1987. The freight terminal, operated by a private company, also has a capacity to handle 680 000 tonnes of cargo, compared with 611 700 tonnes handled in 1987. The ultimate capacity of the airport will, however, be determined by the limitations of its single runway, which is likely to reach saturation in the 1990s.

(2) Other Major Developments

Important as it is, the basic infrastructure accounts only for a part of the development now being carried out in Hong Kong. There is much more being undertaken by both the private and the public sectors, some of it very substantial. Many of the more impressive projects are in, or close to, the Central business district, and in Tsim Sha Tsui facing it across the harbour in Kowloon. This is the commercial heart of the territory which contains not only the headquarters of all the major banks and finance houses, but also most of the main hotels and shopping centres, as well as being the centre of government. It is in this area that new and, in many cases, yet more grandiose and prestigious developments are continuously being undertaken. Current examples are the new developments now underway on Queens- way in the old Victoria Barracks, including hotel, office and shopping facilities; and the new buildings for the Standard Chartered Bank and, particularly, the 74-storey tower being erected by the Bank of China on Garden Road. The new Exhibition Centre on the Wan Chai reclamation will also include hotel, office and residential developments.

Within the public sector, two new, very large hospitals, among the biggest in the world, are now being built in the new town of Tuen Mun and in the Eastern District of Hong Kong Island, to add to the nine large hospitals already in the territory. The number of hospital beds will increase by at least 50 per cent over the next decade. The fact that the average expectation of life in Hong Kong, which now stands at 74 years for men and 79 for women, is among the highest in the world is an indication that the standard of health care, including preventive health care, is good.

      In the field of higher education, there are already two universities, two polytechnics and another post-secondary college in Hong Kong, all offering degree courses. A third university, the Hong Kong University of Science and Technology is now being established in the southeast of the New Territories, with its first students expected to be enrolled in 1991. Altogether, the number of degree places available in these institutions is expected to double over the next 10 years.

      Considerable sums, totalling some $3 billion a year, are continuing to be spent on building the new towns, including the new generation new towns at Ma On Shan, Junk Bay and, later, Tin Shui Wai. Access to the new town at Junk Bay will be provided by a tunnel, now under construction and expected to be fully operational in 1990. Later, a Mass Transit Railway link may also be built to serve the new town.

      A striking, new Cultural Centre is being constructed on the site of the old railway station in Kowloon. When opened in 1990, it will possess, among other facilities, a large 2 200-seat concert hall and a 1 800-seat theatre, to add to the substantial halls and stadia already established in the metropolitan area and in the larger new towns. The recently-established

4

HONG KONG

BUILDING FOR THE FUTURE

Hong Kong Academy for the Performing Arts boasts some of the best facilities to be found anywhere for training professional musicians, actors and dancers.

(3) Housing

The provision of housing for a constantly-growing population, particularly public housing for the lower income levels, has been a special concern in Hong Kong for many years. It was, for instance, the major reason for starting the New Towns programme in 1972. The numbers of new apartments built have increased steadily over the years and their quality has also gradually improved. In 1987, the public and private sectors combined built some 80 000 new flats, of which around 45 000 were for sale and 35 000 were public sector rental units. In 1988, total building is likely to be nearer 90 000 units. By now almost half the population are accommodated in public housing and the Hong Kong Housing Authority can claim to be the biggest landlord in the world. Even so, there is still some way to go before all the population can be considered adequately housed. Moreover, as the general standard of living increases, the pattern of demand for housing is changing. More and more people want to own their own homes or are looking for better-quality housing.

These changing attitudes are recognised in the Hong Kong Government's Long Term Housing Strategy, which was published in April 1987. This sets a target of providing homes for an additional one million families from the public and private sectors combined by the early years of the next century. It also aims to provide more opportunities for home purchase, as well as additional higher quality rental accommodation and a comprehensive redevelopment programme for the older public housing estates. As part of the strategy, the Housing Authority, which is responsible for building and managing public housing, will be charged with the task of overseeing an overall housing programme in partnership with the private housing sector.

     To carry out this programme will require not only a commitment to complete the New Towns programme in the nineties, but it will also call for a major programme of urban development, renewal and expansion in the core metropolitan area around the harbour. This will link it in with major new plans now under consideration which, if they are proceeded with, could once again bring about fundamental changes in the physical structure of the territory and fit it to face the challenges of the 21st century.

Towards a New Dimension of Development

In summary, these plans would involve, first, a renewal and restructuring of the older parts of the metropolitan area with the help of large new reclamation projects in various parts of the harbour area. The reclamations would also assist in the construction of new transport corridors, both road and rail. Secondly, there would be a major expansion in port facilities and, probably also, the construction of a new airport to replace Kai Tak. Thirdly, the new port and airport facilities would be connected to the metropolitan area with the help of the new transport corridors on the reclamations and also by the provision of one or more new transport arteries through the New Territories to the Chinese border.

All this would involve the expenditure of hundreds of billions of dollars over a period of years, probably more than a decade. The sums involved would be such that the close collaboration of both the public and the private sectors would be required throughout the programme, and almost certainly the involvement of overseas capital as well. The omens for such collaboration, however, appear to be good. The general thrust of the alternatives now being studied by the government and its advisers shows considerable similarities with proposals for port, airport and other development prepared last year by a group of major

The Governor, Sir David Wilson, presiding at his first meeting of the Legislative Council on May 6, 1987, after taking office

Sir David Wilson on a visit to Central --and Western districts in the summer

with Lady Wilson at the Martha Boss Community Centre, Ho Man Tin

HONG KONG

BUILDING FOR THE FUTURE

5

Hong Kong companies. Should the plans proceed, therefore, the chances of reaching an acceptable consensus would seem to be high. Moreover, the lead times involved in such comprehensive developments should assist Hong Kong over the threshold of the change of sovereignty in 1997 and into its new status as a Special Administrative Region.

      The question that remains to be answered is whether the resources involved can be found without overstraining the economy or, in other words, whether what is needed can be afforded. It will help on considering this question to place it in context by examining how Hong Kong's development has progressed over the last 30 years in relation to the growth of the economy, and then to analyse what are the economic and physical challenges facing the territory in the latter years of the century and how the planning process is seeking to cope with them.

The Early Stages of Development

In the early years following the Second World War, Hong Kong was very poor and unable to afford grandiose development projects. Throughout the fifties it was also struggling to adapt its economy to the loss of a large part of its traditional entrepôt trade following the Korean War and the United Nations embargo on trade with China. The priority then was for the development of industry, and the creation of new industrial areas, such as Kwun Tong, absorbed a major part of the investment capacity of the territory. It was also the time when public housing of a minimal, basic, standard was initiated following the disastrous squatter area fire at Shek Kip Mei at Christmas 1953. Only when the economy began to grow again, on the back of expanding industrial exports, could anything more than the basics be afforded.

      The first real post-war building boom began after the change in the Building Regulations in 1959, which permitted much greater density of development and thus the construction of higher-rise buildings. It was the time when the territory truly began to build for the future. The economy had by then reached the stage of self-sustaining growth, when increasing exports of manufactured goods created the resources for more capital investment and the investment, in turn, created the capacity for further expansion in the economy. It was also the period when, as more and more workers were absorbed into the industrial labour force, wages and the standard of living began to move up, away from the subsistence levels of earlier years.

This boom, which saw the first phase of the physical transformation of Hong Kong, petered out in the second half of the sixties. It led to an over-extension of credit by the banking system and the banking crisis of 1964-5. This was quickly followed by the destabilising 'Star Ferry' riots in 1966 and the Chinese Cultural Revolution disturbances in 1967.

In the face of these shocks, fixed investment fell quite sharply in the later sixties; but it did not cease, and development spending continued at a slower pace. At the same time, and in contrast, exports continued to increase rapidly, as did also investment by industry in plant, machinery and equipment. Despite the declining rate of capital spending, therefore, the economy continued to grow and it was only a matter of time before fixed investment picked up again. There was also another factor coming rapidly to the fore the need for greater spending on the basic infrastructure - transport systems, water supplies, sanitation, social amenities and so on, if the economy and social system were to continue expanding without running into serious bottlenecks. Because much of this investment did not generate revenue directly, a great deal of it had to be undertaken by the public sector. The age of large-scale public works had arrived.

6

HONG KONG

BUILDING FOR THE FUTURE

The Need for Infrastructure Even in the era of make-do and mend in the fifties there were certain imperatives that had to be provided for. The first, and most pressing, was water supplies. The pre-war system of reservoirs on Hong Kong Island and in Kowloon were clearly inadequate to meet the demands of a rapidly-expanding population and industry, and new sources of supply had to be developed as a matter of urgency. As it was, even when supplemented by water bought from China, supplies were not sufficient in years of drought to prevent severe water rationing until the large new reservoir at Plover Cove was commissioned in 1968. This was followed in 1978 by the even bigger development at High Island. These were both very considerable investments, with the High Island complex alone costing some $1.5 billion. Since that time, continued expansion in the demand for water has been met by increasing purchases from China so that, today, more than half Hong Kong's water supplies come from the Mainland. Even so, considerable additional investment in distribution facilities - pipelines, pumping stations and treatment plants -- continues to be necessary.

      Another area which grew in urgency with the expansion of the economy was transport. Little investment in new roads or other facilities was needed, or could be afforded, in the fifties and travel demands were largely accommodated within the existing road system. This came under increasing strain during the sixties as the numbers of vehicles and journeys steadily grew. So new roads and systems were planned and built and existing facilities improved. The most striking development in that period was the Cross-Harbour Tunnel, commenced in 1969 and opened in 1972. By joining the road systems of Hong Kong Island and Kowloon, the tunnel gave an immense fillip to travel between what had hitherto been two separate cities, linked only by ferries. One striking development was a tremendous growth in cross-harbour bus services through the tunnel which created entirely new travel patterns. In terms of the benefits it provides to the economy and society, the money spent on building this tunnel must be one of the best investments that Hong Kong has ever made. It undoubtedly played a part in moving the economy into a new and accelerating phase of growth as the seventies progressed. Yet, at the time, it was considered by many to be a speculative investment and there was great hesitation before the decision was made to start construction.

A yet more ambitious development was the Mass Transit Railway (MTR), which runs under some of the most congested parts of the urban area. Altogether, this took almost 11 years to build, from 1975 to 1986, at a total construction cost of over $20 billion. It was conceived in the sixties and the decision to build it was taken by 1973, again after much hesitation and scepticism in some quarters. Within the same period, also, the existing surface railway, the Kowloon Canton Railway (KCR), was modernised, double-tracked throughout, and electrified, to provide a fast link between Kowloon and the Chinese border. The two railways have an interchange facility at Kowloon Tong which is very heavily utilised and which effectively integrates them into one system.

The capacity of the road system has also been greatly expanded over the years, including the construction of tunnels, overhead roads and flyovers. There is now a strategic network of mostly dual-carriageway roads that extends throughout the territory and is still being added to. Without these roads, supplemented by the carrying capacity of the railway net- work, traffic would long ago have seized up and the economy would have been strangled.

Links with the Outside World

Another important preoccupation has been the development of the facilities necessary to maintain and expand Hong Kong's links with the outside world - the port, the airport and

HONG KONG

www.

BUILDING FOR THE FUTURE

7

telecommunications facilities - all essential for trade and other economic relations. The business of the territory has centred on the harbour since its beginnings and still does. In recent decades the major activities of the port have tended to shift westwards from the central harbour area and this process was accelerated when, in 1968, construction began on the new container port at Kwai Chung. In terms of throughput, this is now the second busiest container port in the world. As already indicated, plans are in hand to add two more terminals to the five already in operation.

      The airport, too, has had to be constantly expanded to meet increasing traffic demands for passengers and freight. This has involved lengthening the runway, an almost continuous growth in terminal facilities for passengers and freight, and improvements in instrumenta- tion. Efficient telecommunications, both internal and external, have been another vital factor in the development of Hong Kong as a leading industrial, commercial and financial centre. Here again, facilities have been continuously developed by private companies acting under government regulation. They include land and submarine cables and radio links, as well as satellite links, via the Indian Ocean and Pacific Ocean satellites, from an earth satellite station in Hong Kong.

The expanding economy and population also led to rapid increases in the demand for electricity. It is not surprising either that, as resources became more plentiful, the provision of social and educational facilities - schools, colleges, hospitals and clinics - began to make major and growing calls on the government's capital works budget from the sixties onwards.

The New Towns Programme

Until the early 1970s, large-scale development in Hong Kong was mainly confined to the urban areas stretching around the harbour and back to the Kowloon foothills. The only exception was up the west coast to Kwai Chung, where the new container port was being built, and further on to the growing industrial centre of Tsuen Wan and its neighbouring Tsing Yi Island. Although this area was, in many respects, an extension of the urban area - and was later to be joined to it by an MTR line - it has continued to be administered as part of the New Territories. Beyond it and to the east, the rest of the New Territories remained largely rural, with village settlements and a few small market townships, such as Sha Tin, Tai Po, Fanling, Yuen Long and Castle Peak.

       These rural settlements, together with Tsuen Wan, were in the seventies and eighties to become the nodal points of an ambitious programme of new town development. Started in 1972, this was to transform the face of the New Territories in little more than a decade. The impetus was the decision to undertake a much more ambitious housing programme, with the aim of providing adequate housing for the whole community at affordable prices.

      It was estimated at the time that this would require the building of new housing for 1.8 million people but, because of population growth, the gradual raising of standards and the need to replace sub-standard housing, this has since proved to be an underestimate. Now, 15 years after the programme was announced, the target of housing 1.8 million people has been met, but there is still some way to go before the whole community is adequately housed at current standards.

      Since the mid-seventies, more than a half of all government capital expenditure has been spent on the New Towns programme. This has involved much more than the building of public housing. In the first place, land has had to be formed, much of it by filling in seabed with material obtained by cutting away hillsides, often creating platforms for additional development. This has been necessary because most of Hong Kong's land area consists of

8

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BUILDING FOR THE FUTURE

rugged hillside or uplands, unsuitable for development, or which need to be retained as water catchment areas. Some of it consists of outlying islands, equally hilly or difficult of access. Most urban development has therefore had to take place on flatter land near the sea, or on tidal inlets, with more space being obtained by filling in the adjoining seabed. The land thus formed had then to be serviced with internal roads, drainage and sewage disposal, water supplies and other necessary amenities. And at that stage, apart from housing, provision had to be made for all the requirements and amenities of a town in accordance with planning standards to include, for instance, industry, offices, shops and other commercial development, as well as social requirements such as schools, hospitals and clinics, police and fire stations, public buildings, parks and other open space, sporting and leisure facilities and a town centre. On top of the very considerable public spending in- volved in all this, it has also required large expenditure by the private sector on residential and commercial facilities and industrial buildings.

-

      Over the past 15 years the New Towns programme has provided land for some 200 000 public housing apartments and more than 130 000 private sector units. The result has been that by 1987 the population of all the new towns has risen to two million, more than a third of the total estimated population of 5.6 million in the whole of Hong Kong. The population of the New Territories as a whole, also, has trebled since 1972, when the New Towns programme started.

The Seventies - Into Accelerated Growth

The early seventies saw a recovery from the relative slow down in both public and private development expenditure that occurred in the late sixties. Apart from the completion of the Cross-Harbour Tunnel, it also saw the construction of the first of the really tall buildings, the Connaught Centre. It was, too, the period when more ambitious planning for the future began to take shape, for instance the public housing and new towns programmes and plans for building the MTR. The years 1972 and 1973 also witnessed the first substantial stock exchange boom and its subsequent collapse.

      The recovery suffered a sharp setback in 1974 and 1975, when the first oil price explosion was followed by a severe worldwide recession and, in the early stages, substantial price inflation. For a short period, in late 1974 and early 1975, exports fell so sharply, in response to the recession in Hong Kong's major markets, that unemployment rose to over 10 per cent of the labour force. There was, however, a substantial rise in exports in 1976, followed by a jump in capital expenditure in 1977. Hong Kong had bounced out of the recession and did not look back until another recession, following the second oil price shock, caught up with it in 1982-3, at a time of political uncertainty over its own future.

      The five years from 1977 to 1981 saw higher growth in the gross domestic product - (GDP) -- at an average of over 10 per cent per annum in real terms, and a bigger sustained expansion in investment, than any other five-year period in the history of Hong Kong. Indeed, by the beginning of the eighties, gross domestic fixed capital formation was equivalent to more than a third of GDP. Given the fact that the GDP was itself substantially higher than previously, this meant that the total volume of investment was very much greater than in earlier years.

      These were not only the years of growing investment in railway construction, in new town development, and in road building. They were also boom years in private construc- tion of all kinds for residential, commercial and industrial purposes. Easy availability of credit fuelled a speculative bubble of demand that drove up land prices to unprecedented heights, even though at least twice as much land was being put on the market than ever

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9

     before. The results could be seen in the new buildings going up all round the harbour and in the new towns. Old dockyards disappeared and were replaced by massive housing developments such as Taikooshing; old godowns on the Tsim Sha Tsui waterfront were replaced by the Ocean Centre and Harbour City developments; the MTR 'hole' at Admiralty was topped by a massive complex of commercial and office buildings; empty near wasteland in Tsim Sha Tsui East was transformed into thriving streets of offices, shopping centres and hotels; the gap between Wan Chai and Central disappeared and the Wan Chai reclamation, all but empty for many years, began to fill with substantial new buildings. During this period, the topography of Hong Kong was experiencing its biggest transformation ever.

The Crucial Role of Power Supplies

The growth of the economy and of the population naturally gave rise, and continues to give rise, to an expansion in the demand for basic services, particularly water and electricity. Water supplies are provided by the government. Electricity is provided by two private groups of companies and is equally crucial for industry, commerce and domestic existence. Any failure to meet peak demand for electricity, resulting in power cuts, could be crippling in a place such as Hong Kong, so heavily reliant on lift services and air conditioning in its high-rise buildings and on electricity for industry, railways and trams. The companies have, therefore, always planned well ahead for additional capacity to meet expected demand.

      In the late 1970s, both groups of companies, China Light and Power (CLP), supplying Kowloon, the New Territories and some outlying islands, and Hongkong Electric (HEC), supplying Hong Kong Island and Ap Lei Chau and Lamma islands, started work on new power stations to contain dual-fire coal oil generating units. The CLP group's Castle Peak 'A' station at Tap Shek Kok was completed by the mid-eighties, with four 350 megawatt (MW) units. Construction is still proceeding on the adjoining Castle Peak 'B' station which, when completed in 1990, will contain four 677 MW generating units, two of which are already in operation. When finished, the combined stations will have a total capacity of over 4 000 MW, creating the largest power station complex in Southeast Asia and one of the largest in the world. The power is transmitted by a 400 kilovolt (KV) overhead primary transmission system, 90 kilometres long, which circles the New Territories and links in to sub-stations.

HEC's new complex on Lamma Island was started at about the same time and the first phase of 750 MW was completed in 1985. The second phase will add another two 350 MW units. Almost all transmission is carried underground or by submarine cable. The two systems are interconnected across the harbour and can exchange power both ways.

These new power systems, built by privately-owned companies, are huge investments, among the largest in Hong Kong and in a league with the MTR. The payback period for some of their borrowings stretch beyond the end of the century.

The Early Eighties - How Much of a Slowdown?

After the period of rapid economic growth from 1976 to 1981, which saw the GDP almost double in size in six years, there was a definite slowing of growth in the years 1982 to 1985. But it was certainly not a stoppage, and the GDP in 1985 was still more than 20 per cent higher in real terms than in 1981. The really bad years were 1982 and 1985, in both of which domestic exports fell in real terms. In 1982 this was largely due to the post oil-crisis world recession, which was then at its height. In 1985, on the other hand, the major reason was the

10

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appreciation of the Hong Kong dollar due to its link with the then very high US dollar. Despite these factors, the growth of the GDP was more than respectable in 1983 and 1984, at 6.5 per cent and 9.5 per cent respectively.

Of course, there were other elements operating at that time. The puncturing of the speculative boom in land not only led to a steep fall in land prices, but also to a massive drop in land sales, a factor which hit the government budget very hard and helped to drive it into deficit; and these developments were accentuated by the crisis of confidence sur- rounding the negotiations on the political future of the territory.

Nevertheless, the evidence shows that investment which reached a height of over $50 billion (at 1980 prices) in 1982, did not fall very much in real terms in the succeeding years. Its low point was just over $46 billion in 1985 and in every year it remained above its 1980 level, again in real terms. As another example, at its low in 1985, capital formation was still twice as big as in 1976. In other words, a great deal of capital investment was still being undertaken by both the public and private sectors during those difficult years.

      The evidence for this was apparent on the ground. For instance, the new Hongkong Bank building and Exchange Square, among other large buildings in Central District, were erected during this period. The New Towns and Public Housing programmes continued, if anything at a more rapid pace. Among public buildings, the new Supreme Court and the Queensway Government Offices were constructed. The Island Line of the MTR was largely completed and, as already indicated, the construction of the new electric power stations continued apace. The road building programme also carried on, with the opening of, for instance, the Island Eastern Corridor to Shau Kei Wan and the Sha Tin to Tai Po coastal highway. It was a period of continuing investment for the future, without which the economy would not have been able to move back into double digit growth in 1986 and 1987.

      The years 1986 and 1987 have, indeed, witnessed a very remarkable resurgence of growth, with the GDP increasing by almost 25 per cent in the two years combined. The major driving force was a boom in exports on the back of a depreciating Hong Kong dollar due to its link with the declining United States dollar. There was also a very large increase in trade, including entrepôt trade, with China and a significant increase in investment in plant and machinery. In contrast to the boom of the late seventies and early eighties, therefore, which was led by an expansion of internal demand, growth on this occasion was more externally led. Whatever the cause, however, the growth in output is, in turn, inducing a growth in capital investment which is beginning to put a strain on the capacity of the construction industry and is raising costs and contract prices.

The Balance Sheet

     Hong Kong as an economy is completely open to world market forces and is guided by them in almost all its economic activities. Trade in the broadest sense is its lifeblood and it makes the goods or performs the services which, when sold in the world market, bring in the best profit. Likewise it buys what it needs from outside as cheaply as it can.

      Hong Kong can only expand its economy and its purchasing power and standard of living, however, by increasing its own production of goods and services and their sophistication. This requires capital investment in all directions, from new buildings for factories, offices, shops, hotels and housing, new plant and equipment, and roads, railways, port and airport, water supplies, power stations, telecommunications and all the other basic infrastructure. It also calls for upgrading of the skills of the labour force through schools, colleges and other training facilities and for maintaining a healthy population well provided with hospitals and clinics.

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11

      All this investment must ultimately come from savings made from the collective income, but the physical and human investment, in turn, increases the productive potential of the economy and thus the ability to save and invest more in the future. This is the process which has been going on in Hong Kong over the last three to four decades. The start, from a position of poverty and low incomes, had necessarily to be modest. But, as time has gone by, the achievements have become increasingly impressive.

Of course, there have been ups and downs in the investment cycle. But looked at over a run of years, there has been a remarkable stability also. The most serious downturn was in the late sixties, when capital investment fell away sharply compared with the earlier years of that decade. Thereafter, apart from a hiccup during the world recession in 1974-5, fixed investment increased steadily until the boom years of 1977-82, when it expanded rapidly.

In the latter part of that cycle construction costs, as well as land costs, began to increase sharply and capacity constraints appeared. Inflation in the whole economy was also high at that time. Since then, and until recently, an easing in the demand for construction has served to stabilise costs and contract prices or even, in some cases, to bring about reductions. This has helped to cushion the fall in the volume of work being undertaken. Over the past year or more, however, there have been signs of a renewed rise in the demand for construction and, if this continues, it could again lead to serious capacity constraints and price rises.

      Looking at capital investment in real terms in relation to the GDP over the 20-year period from 1966 to 1985, however, it is remarkable how stable the percentage has been when viewed in five-year cycles, as the following figures show:

Gross domestic fixed capital formation in relation to the gross domestic product at constant 1980 prices

1966-70

27.85

1971-75

27.75

Five-year average percentages

1976-80

1981-85

30.0

29.0

Over the whole 20 years, the lowest percentage was 23.8 in 1969 and the highest was 33.2 in 1980. Although it is not possible to draw firm conclusions from this evidence alone, it does suggest that, when capital investment rises above the equivalent of 30 per cent of the GDP, capacity constraints begin to occur and inflationary pressures to increase, but that, if the figure falls much below 25 per cent, investment may not be sufficient to maintain a satisfactory growth rate in the economy over the long run.

Planning for the Future

     Looking back again at developments over the past 30 years, it becomes apparent that, as the economy expands, it comes up against a series of physical and infrastructural thresholds which have to be surmounted for growth to continue smoothly. Examples were the decision to embark on the New Towns programme to meet the housing needs of an expanding population, or the decision to construct a Mass Transit Railway. The private sector, also, is reaching similar thresholds which have to be jumped over for business to continue expanding. Jumping over the thresholds involves more investment, sometimes very sub- stantial. It is the task of planning to anticipate where the constrictions will occur and to organise the necessary investments to overcome them.

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      The Hong Kong Government's physical planning has come to be centred on land formation and use and transport systems. This is because these are the areas of scarcity in Hong Kong's circumstances, the expansion of which often requires heavy investment and long lead times. Planning for their expansion has therefore to be at the centre of the government's development strategy.

      As has already been explained, useable land is scarce in Hong Kong because of the topography. Flat land suitable for development is scarce and much of what there is has been produced artificially, by cutting into hillsides and using the material to fill in the seabed. This is why, in Hong Kong, land development is often called 'land production'. It also explains the paradox of why, in a territory where 'land' (which means land suitable for development) is so scarce, as much as 40 per cent of its area has been turned into country parks.

      The shortage of developable land, in relation to the size of the population and the activities of the economy, explains also why transport systems rate such high priority. When 3.5 million increasingly affluent people are concentrated in a belt surrounding the harbour, and another two million in six new towns in the New Territories, travel within them and between them is bound to be heavy.

When costly motor roads have to be provided to meet this demand, much of them on overhead structures or tunnelling through hillsides or under the harbour, and costly railway systems also, it is small wonder that transport planning has loomed so large in Hong Kong for more than 20 years. And among costly transport systems we should also include port and airport development, the roads leading into them and the provision of land for backup areas and for cargo and passenger handling facilities.

      Land development planning and transport planning were brought more closely together by the first Comprehensive Transport Study finished in 1976. This showed that land-use patterns and transport demands were intimately linked, to the extent of being two sides of the same coin. The link was carried further in the preparation of the Territorial Develop- ment Strategy, the initial results of which were completed in 1984. This used a complicated Land Use/Transport Optimisation Process to assess detailed development options pro- duced in studies on five sub-regions and to come up with a preferred territory-wide solution. The preferred strategy places greater emphasis on reclamations around the harbour in the next stage of development as compared with further dispersed developments in the New Territories.

      The strategy is now being further refined to take into account the need for urban renewal in some of the older and more overcrowded and dilapidated parts of the metropolitan area. And it is also having to be meshed in with plans for the additional expansion of port facilities and, possibly also, for the building of a replacement airport. The necessary transport systems - roads, railways, tunnels and bridges to serve the new developments and to link them to other parts of the territory and on into China - are also having to be considered.

      A second Comprehensive Transport Study is currently being undertaken to update the previous study and bring it forward into the new century, and the result of this, as well, will have to be related to the other studies in drawing up a revised and expanded Territorial Development Strategy for the nineties and on into the new century.

The Growing Inter-relationship with China

The new dimension is not just the growing demands resulting from the expansion of Hong Kong's own economy, substantial as they are. It arises rather from the exceptional

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     demands placed on the infrastructure, in particular, arising from the mushrooming of Hong Kong's economic relations with China over most of the past decade and the directions they are taking.

      If Hong Kong had continued to develop in the eighties along the same lines as it did in the sixties and seventies - that is, depending mainly for its living on its own domestic exports of goods and services and maintaining only limited economic relations with China the substantial developments described earlier, plus further incremental additions from time to time, would probably have been sufficient for the needs of the economy for some years to come. But this is clearly not the situation today. The opening of the Chinese economy to the outside world since the end of the 1970s and the adoption of more market-oriented policies have substantially improved the growth of production and incomes, and of trade with the outside world. This process has had a major and beneficial effect on Hong Kong.

       First, the amount of Chinese trade passing through Hong Kong, to take advantage of its modern port facilities and international shipping connections, has increased tremendously. Secondly, there has been an equally explosive growth in Hong Kong's re-export trade. Over the last decade its volume has grown at least six times and as much as 80 per cent of this involves China. Thirdly, the volume of direct trade between Hong Kong and the Mainland has also increased rapidly. A major factor in this has been the growth of processing activities being sub-contracted in China by Hong Kong manufacturers, much of them in their own factories. As many as one million Chinese workers may be involved in one way or another in this activity, and the materials they are engaged in manufacturing have to be moved from Hong Kong and back again by the transport system.

      In addition, there has been a very considerable growth in travel between Hong Kong and the Mainland. Visits by Hong Kong people to China now total some 12 million a year. Almost 750 000 overseas visitors a year are also travelling to China through Hong Kong. This has added to the pressure on cross-border transport facilities, by rail, road, sea and air, on top of the very large growth in freight traffic.

      As examples of increasing demands on Hong Kong's port and airport facilities, the number of containers handled in the port increased by 50 per cent in three years, from 1.84 million 20-foot equivalent units (TEUs) in 1984 to 2.77 million in 1986; and the expansion in 1987 (3.4 million) has been even greater, at 22.7 per cent. The number of passengers handled at Kai Tak airport has also increased from 8.6 million in 1982 to 12.7 million in 1987, or by 47.6 per cent in five years; and airfreight movements have risen from 306 000 tonnes to 611 700 tonnes, or by 100 per cent over the same period.

      Finally there has been an equally impressive expansion in investment by Hong Kong companies in China and by Chinese-owned companies in Hong Kong. And Hong Kong has acted as a gateway for other countries to trade with, invest in, travel to, and conduct business negotiations with, China. It is small wonder then that China is now Hong Kong's largest trading partner and that Hong Kong is China's biggest export market.

      The growing inter-relationship of the two economies which all this illustrates has undoubtedly done much to assist Hong Kong's economic growth over the last few years. On the other hand, the growth in the volume of trade and other activities has made bigger and bigger demands on Hong Kong's economic infrastructure, particularly its transport facilities, and there is every indication that these demands will continue to grow in the future. This is what has created the new threshold - essentially a threshold in transport and other economic infrastructure that will need to be crossed to ensure, not only the continuance of Hong Kong's own economic growth, but also its continued usefulness to

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14

HONG KONG BUILDING FOR THE FUTURE

China. It is the issue to which the strategic planning studies now being undertaken are essentially addressing themselves.

Strategic Planning Studies

There are a number of these studies being carried out at present, but the three major ones, which will incorporate the results of some of the other studies, are:

(a) an umbrella study on port/airport development and related issues which has just

started and which will be completed in the summer of 1989;

(b) the Second Comprehensive Transport Study, and

(c) Metroplan, dealing with the redevelopment and restructuring of the metropoli-

tan area.

When all these studies are completed they will need to be drawn together into a new master strategy for development in the nineties and beyond.

      The emphasis in most of these studies is on the metropolitan area and the harbour area to the west.

      In the 1970s a high priority of government planning was to provide more housing for a growing population and this called for substantial expansion into the New Territories. Now, even in housing, the emphasis is on improving quality as much as quantity and on a bettering of the living environment. Hence the need to replace the older housing estates and to restructure the older parts of the metropolitan area generally.

      The major priority for the 1990s and beyond, on the other hand, will be to expand and upgrade the essential economic infrastructure of the territory. And, because this, of necessity, must be close to and related to the major centres of activity, what it requires in many ways complements what is needed for urban renewal.

The key to meshing the two requirements together seems likely to be the harbour reclamations proposed in the Territorial Development Strategy. There were five major reclamation areas proposed - at Aldrich Bay on the east of Hong Kong Island, Hung Hom next to the railway terminus, the Central/Wan Chai area, the extreme west of Hong Kong Island and west Kowloon. Of these, the last three are the most important for the overall strategy in terms of urban expansion and renewal, improved transport facilities and to ease the building of links to any new port and airport developments.

      The developments involved are so large that they must be considered comprehensively and be related to each other in the context of a strategic plan. For instance, new, essential, port developments will need to be located somewhere in the western harbour area. Any new airport will also have to be in the same general area to the west of the territory, either as previously envisaged at Chek Lap Kok to the north of Lantau Island, or on reclamation to the east of Lantau. If it is decided to proceed with both port and airport developments, they must be looked at together, particularly as regards access, whether from the border and the New Territories or from the main urban area. They must also be considered in relation to the new harbour reclamations and their configurations, which are still under study. This will ensure that the investments undertaken will as far as possible complement each other and serve multiple needs.

The harbour reclamations envisaged can be expected to generate substantial revenue from private development when completed, both in terms of land premia to the government and, more generally, from the boost they can give to the economy. This is especially the case with the Central/Wan Chai reclamation on Hong Kong Island, which will provide much needed space for the expansion of the business district and for an additional transport corridor. Developments of this sort should therefore be given priority.

HONG KONG

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15

Furthermore, what is done must be within the capacity of the economy to finance and also the public sector involvement must be capable of being financed within the limits of government revenues and prudent borrowing. (The MTR is a case in point where substantial loan finance was involved).

      Here it is possible to make a very rough assessment of the resources that could be available. Assuming that the economy (the GDP) continues to grow at an average of eight per cent per year in real terms and that up to 30 per cent of the GDP can be spent, in real terms, on capital investment (gross domestic capital formation), then, over the next decade as a whole, additional resources of not far short of $250 billion (at 1980 prices) should, theoretically, be available for capital investment over and above the current level of investment. On average over the 10 years this would amount to an increase of about 50 per cent over present levels in the sums available for gross domestic capital formation. Within this total, also, about $50 billion should be available over the same period for additional investment by the public sector as compared with the levels achieved in recent years. How these potential additional resources are applied will depend on priorities, but it does seem that substantial sums could be made available for spending on essential infrastructure if this were to be given the requisite priority. The availability of these resources will, of course, depend on the economy continuing to grow at close to the average rate achieved over the last 20 years and on the maintenance of confidence. But to embark on the massive projects involved would not only, in itself, help to maintain the momentum of economic growth but would also provide a significant boost to confidence. In this regard, it is worth recalling the hesitations there were in the sixties and seventies over the Cross-Harbour Tunnel and Mass Transit Railway projects, and the arguments adduced in some quarters then that they could not be afforded, or even that they would be of little benefit. Now it would be inconceivable that Hong Kong could function without either of them.

Finally, in an economy such as Hong Kong's, it is no longer possible for new develop- ments of the order envisaged to be built, financed and operated entirely by the public sector. Although the overall planning and co-ordination would need to be in the hands of the government, and much of the investment would have to be undertaken by the public sector, the private sector would also need to be intimately involved. What is required is a partnership between public and private investment which could also involve new forms of organisation and co-operation.

      The general concept is not new to Hong Kong, as seen in developments ranging from the Cross-Harbour Tunnel to the Private Sector Participation Scheme for home ownership and a number of other schemes. The indications are that the private sector will be willing and eager to participate in large-scale, co-ordinated, development, as seen in the ambitious proposal, already mentioned, by a partnership of major Hong Kong companies, for port, airport and related developments. There is also a possibility that Mainland Chinese interests may wish to become involved in view of the benefit which could accrue to their own economy from a substantial improvement in Hong Kong's basic economic infrastructure.

A Better Environment through Urban Renewal

An important part of the planning outlined and assessed above concerns the proposals for urban renewal. Despite the many modern buildings and other developments in Hong Kong, it cannot be denied that, as in any large city, there are rundown and dilapidated areas and other environmental blackspots. This is not surprising, considering how rapidly Hong Kong's economy has grown. Some areas which were developed as recently as 30, or

16

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even 20, years ago were built to lower standards when the territory was less affluent, and have since deteriorated. In most of these run-down areas, also, there is severe overcrowding and a general lack of space for normal amenities.

This is why the plans being drawn up for new land reclamations around the harbour are being co-ordinated with proposals for redeveloping some of the more rundown areas and reducing excessive densities. The government, itself, is planning new public housing and a restructuring of the road network in certain areas to assist in this process. And a new Land Development Corporation is being established to undertake, promote and facilitate private sector redevelopment in these areas, either by acting on its own to acquire and develop run-down property, or by entering into joint ventures with other developers.

      All this again underlines the crucial importance which the harbour reclamations now being planned will play in future development strategy. For they will need to serve a number of complementary purposes. First, they will provide an opportunity to build new roads and other transport links which will help relieve overcrowding on existing systems and speed journey times. Secondly, some of them may assist in providing efficient transport connections between any new port and airport developments and the rest of the territory. Thirdly, in providing more space adjacent to the existing urban areas around the harbour, they will assist in plans for urban renewal and restructuring. Finally, in deciding where and how to proceed, attention will have to be paid to environmental factors, particularly the need to improve water quality within the harbour and nearby coastal waters where there is already evidence of potentially serious deterioration. There is no doubt that, whatever decisions are made on these interlocking issues, they will profoundly affect not only the future physical development of the territory, but also the future development of its economy and social structure.

Conclusion

One conclusion that stands out from the above story is that over the years each new phase of development in Hong Kong has been more ambitious than the previous one. This is because each phase of investment has provided the underpinning for further growth in the economy which, in turn, has produced the extra resources to undertake the next phase of development. Throughout the process the private and the public sectors have played complementary roles. The private sector has provided the investment for the development of industry, commerce, finance and much residential development, as well as some fundamental facilities such as the container port and the electric power stations. The public sector has, in turn, provided most of the basic economic and social infrastructure, including roads and railways, the airport, water supplies, schools and hospitals and so on.

      There is no doubt that over the years each has shown confidence in the future of Hong Kong and faith in the future growth of its economy and society. There are many concrete signs at the present time that this confidence and faith in the future of the territory as a prosperous, expanding and dynamic society is continuing.

      There is plenty of building for the future still to be done. In particular, the new horizons which have emerged for Hong Kong in recent years, as the Chinese economy has opened to the outside world and is conducting more trade and business through, and with the help of, Hong Kong, are providing new opportunities and new challenges. By maintaining its confidence in its ability to seize the opportunities and face the challenges, Hong Kong's future prosperity will be assured.

2

Constitution and Administration

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     HONG KONG is administered by the Hong Kong Government, and its administration has developed from the basic pattern applied in all British-governed territories overseas. The head of the Hong Kong Government is the Governor. Under the terms of the Joint Declaration of the British and Chinese Governments on the question of Hong Kong which entered into force on May 27, 1985, Hong Kong will become, with effect from July 1, 1997 a Special Administrative Region of the People's Republic of China.

The Governor has the ultimate direction of the administration of Hong Kong. He is advised on the development of policy and other matters by an Executive Council. Legislation is enacted and funds provided by the Legislative Council, the members of which also debate policy and question the administration. There are two municipal councils, the Urban Council and the Regional Council, which have a statutory responsibility to provide public health, cultural and recreational services in their respective geographical areas. In addition, 19 District Boards cover the territory. They advise the administration on the implementation of policies at the district level and provide an effective forum for public consultation.

On May 27, 1987 a Green Paper entitled 'The 1987 Review of Developments in Representative Government' was published and made widely available. The purpose of the review was to consider whether the systems of representative government in Hong Kong should be developed in 1988 and, if so, in what manner. An independent survey office was established to collect the views of the public concerning this and over 135 000 submissions were received. A White Paper setting out the government's proposals for the further development of representative government will be published in early 1988.

Role of the Governor

The Governor is the representative of the Queen in Hong Kong. He has ultimate direction of the administration of Hong Kong and is also the titular Commander-in-Chief of the British Forces stationed in Hong Kong. As head of the government, he presides at meetings of both the Executive Council and the Legislative Council. The Governor is in close touch with the administration of the territory and exerts a major influence over the direction of affairs.

Following the death of the former Governor, Sir Edward Youde, in December 1986 the Chief Secretary, Sir David Akers-Jones was appointed Acting Governor until Sir David Wilson assumed office as Governor on April 9, 1987.

The Governor is appointed by the Queen and derives his authority from the Letters Patent passed under the Great Seal of the United Kingdom. The Letters Patent establish the basic framework of the administration of Hong Kong and, together with the Royal Instructions passed under the Royal Sign Manual and Signet which lay down procedures

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that must be followed, form the written constitution of Hong Kong. However, there are various well-established practices which substantially modify the operation of this formal constitution. For instance, although from the constitutional instruments described above, Her Majesty's Government would appear to have absolute power over the affairs of Hong Kong, in practice Hong Kong for the most part is left to run itself with a high degree of autonomy. Similarly, the Governor by convention rarely exercises the full extent of his powers: there is extensive consultation with the community on all major issues of policy and the conduct of the administration. Hong Kong thus enjoys a unique form of government by

consensus.

The Letters Patent create the office of Governor and Commander-in-Chief of Hong Kong, and require him to observe its laws and the instructions given to him by the Queen or the Secretary of State. They also deal with the constitution of the Executive and Legislative Councils, and the Governor's powers in respect of legislation, disposal of land, the appointment of judges and public officers, pardons, and the tenure of office of Supreme Court and District Court judges.

The Royal Instructions deal with the appointment of members of the Executive and Legislative Councils, the nature of proceedings in the Executive Council, the Governor's responsibility to consult the Executive Council and his right to act against its advice (a right not exercised in recent times - see below). They also deal with the membership of, and election to, the Legislative Council, the nature of proceedings there, the format of the legislation passed by the council, and the nature of legislation which may not be passed. The Standing Orders of the Legislative Council, made under the authority of Royal Instruction XXIII, provide how Bills are to be passed.

Central Government

Executive Council

The Executive Council consists of four ex-officio members - the Chief Secretary, the Commander British Forces, the Financial Secretary and the Attorney General - together with other members who are appointed by the Governor with the approval of the Secretary of State. As at December 31, 1987 there are 10 appointed members, including one official member. Appointed members hold office for fixed periods.

The council meets at least once a week, in camera, and its proceedings are confidential, although many of its decisions are made public. In theory, the function of the council is to advise the Governor, who is required by the Royal Instructions to consult it on all important matters of policy. Subject to certain procedures being followed, the Royal Instructions allow the Governor to act against the advice of the council and to refuse a member's request that a specific matter be put before the council. There is no instance in recent times of the Governor having done either of these things. In practice, policy is decided corporately. The Governor in Council - the Governor acting in consultation with the Executive Council - is Hong Kong's central and most important executive authority.

In addition to policy matters, the Governor in Council decides appeals, petitions and objections under those ordinances which confer a statutory right of appeal. The council also considers all principal legislation before it is introduced into the Legislative Council, and is responsible for making subsidiary legislation (regulations) under numerous ordin- ances. The council's advice on matters of policy involving the expenditure of public funds is subject to the approval of the necessary funds by the Finance Committee of the Legislative Council.

CONSTITUTION AND ADMINISTRATION

Legislative Council

19

The Legislative Council is constituted by virtue of the Letters Patent, and its primary function is the enactment of legislation, including legislation for the appropriation of public funds. A Bill passed by the Legislative Council does not become law until the Governor gives his assent to it; after the Governor's assent a Bill becomes an ordinance without being subject to external approval, although the Queen has reserve powers to disallow an ordinance. The power of disallowance has not been used for many years.

The Legislative Council has a maximum membership of 57, comprising the Governor, who is the President; three ex-officio members, namely the Chief Secretary, the Financial Secretary and the Attorney General, seven official members, 22 appointed members and 24 elected members.

The official and appointed members are appointed by the Governor with the approval of the Secretary of State. Official members normally remain appointed for as long as they hold office under the Crown in Hong Kong. Appointed members can be appointed for up to three years and may be re-appointed for further periods of not more than three years each. Elected members are elected by nine functional constituencies and by an electoral college comprising the members of the district boards, the Urban Council and the Regional Council.

       Each functional constituency represents an occupational or professional group: com- mercial; industrial; financial; labour; social services; medical; teaching; legal; and engineer- ing and associated professions. Of these, the commercial, industrial and labour functional constituencies elect two members each while the other six elect one member each.

For the electoral college, the 19 district boards are grouped into 10 geographical constituencies, each consisting of between one and four district boards, and representing roughly 500 000 people. The members of the Urban Council and the Regional Council form two additional constituencies.

Elections are normally held at three-year intervals. The Governor has power to dissolve the council; on dissolution all elected members shall vacate their seats and an election shall be held within three months. A by-election is held should a casual vacancy arise.

The Legislative Council meets in public once a week, but takes a recess of about two months in August and September. Proceedings are bilingual; members may address the council in Chinese and English, and simultaneous interpretation is provided.

       Legislation is enacted in the form of Bills, which go through three readings and a committee stage. Most business, including Bills, is transacted by way of motions, which are decided by the majority of votes. If a clear majority either for or against any motion is not apparent from a voice vote, the President may order the council or the committee to proceed to a division, when votes will be taken from members individually and recorded by the Clerk to the Council. Official members are expected to vote with the government on all issues, except those where a 'free vote' is expressly permitted. Private Bills, not representing government measures and intended to benefit particular persons, associations or corporate bodies, are introduced from time to time and enacted in the same way. All Bills after passing through the Legislative Council receive the assent of the Governor and are then gazetted as ordinances.

Apart from the enactment of legislation, the business of the council includes two major debates in each legislative session: a wide-ranging debate on government policy which follows the Governor's address at the opening of the new session of the council in October each year, and the budget debate on financial and economic affairs which takes place in February and March during the second reading of the annual Appropriation Bill.

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      Members may also question the government on policy issues for which the government is responsible, either seeking information on such issues or asking for official action on them. Members may request either oral or written answers to the questions asked, and supplementary questions for the purpose of elucidating an answer already given may also be asked.

      Other business of the council includes motions on subsidiary legislation, statements and policy papers (Green Papers and White Papers) for debate. A complete record of all papers laid before the council together with a verbatim record of proceedings (Hansard) is kept in respect of each legislative session.

Finance Committee

The Finance Committee of the Legislative Council consists of the Chief Secretary (Chair- man), the Financial Secretary, one official member of the council (at present the Secretary for Lands and Works) and all the remaining members other than official members. It scrutinises public expenditure, both at special meetings held in March at which members examine the draft Estimates of Expenditure, and at regular meetings held throughout the year to consider requests which entail changes to the provisions agreed by the Legislative Council in the estimates each year, or to note financial implications of new policies. Both the special and regular meetings are held in public. The Finance Committee has two sub- committees, the Establishment Sub-Committee and the Public Works Sub-Committee.

      The Establishment Sub-Committee consists of 28 members of the Legislative Council, one of whom is the Chairman, plus the Secretary for the Civil Service and the Deputy Financial Secretary, who are the only public servants on the committee. It examines in detail proposals for directorate posts, the creation of new ranks and changes in salary scales and makes recommendations on them to the Finance Committee. It also considers reports on value for money studies and reports to Finance Committee on changes in departmental establishments and on the size and cost of the Public Service.

The Public Works Sub-Committee consists of the Financial Secretary (Chairman), the Secretary for Lands and Works and 25 other members. It reviews the progress and priority of works in the Public Works Programme, and makes recommendations to the Finance Committee on proposals for changes to the programme.

Public Accounts Committee

The Public Accounts Committee, established by resolution of the Legislative Council on May 10, 1978, is a standing committee of the Legislative Council consisting of a chairman and six members, none of whom is an official member of the council. The main function is to examine and report on the findings of the Director of Audit's Report on the audit of the government's annual statements of account prepared by the Director of Accounting Services, on any matter relating to the performance of his duties and the exercise of his powers under the Audit Ordinance, and on any matter relating to value-for-money audits carried out by the Director of Audit. Value-for-money audits are carried out under a set of guidelines tabled in the Legislative Council by the chairman of the Public Accounts Committee on November 19, 1986. The guidelines were agreed between the committee and the Director of Audit and have been accepted by the administration. The prime concerns of the committee are to see that public expenditure has not been incurred for purposes other than those for which the money was granted, that full value has been obtained for the sums expended, and that the administration has not been faulty or negligent in its conduct of financial affairs.

CONSTITUTION AND ADMINISTRATION

21

       The Director of Audit's report is tabled in the Legislative Council in November. The committee then meets in public and the controlling officers of different heads of expenditure give evidence on the different aspects of public expenditure covered in the Director of Audit's report. The committee's report is laid on the table of the Legislative Council within three months of the laying of the Director of Audit's report. The government's response to the report of the committee is contained in the government minute, which describes the measures taken to give effect to the committee's recommendations or the reasons why acceptance of those recommendations is not considered appropriate. This minute is also laid on the table of the Legislative Council within three months of the laying of the Public Accounts Committee's report each year. In response to a recommendation made by the committee, the annual cycle of the Public Accounts Committee will, with effect from 1988, be split into two phases, each involving the examination of reports by the Director of Audit and a subsequent response by the committee.

Select Committees

The Legislative Council may appoint select committees to consider matters or bills which the council may refer to the committee. The purpose is to enable a small group of members to examine a problem usually by the taking of evidence, and to report their findings and recommendations to the council. In recent years select committees have been appointed to consider such diverse subjects as the trial of complex commercial crimes and the future management of the Hong Kong War Memorial Fund. No select committee was appointed in the 1986-7 session.

OMELCO

OMELCO, which stands for Office of the Members of the Executive and Legislative Councils, is the office of the members (other than official members) of the two councils. Members play a significant role in the administration of Hong Kong. They advise on formulation of and change to government policy; scrutinise, process and enact legislation; consider complaints from members of the public against government departments and agencies; control public expenditure; and monitor the effectiveness of public administration.

       Through their work, members are involved in the major public issues. They study and comment on bills and major policy initiatives proposed by the government, taking into account the views of the public through members' contacts with various constituencies, district boards, as well as representations received from members of the community.

       There are 21 specialist panels formed by members which regularly monitor the policy and progress of work of different areas of activity. These include constitutional affairs, economic services, education and manpower, environmental affairs, finance and monetary affairs, health and welfare, housing, lands and works, language, the public service, public relations, public utilities, trade and industry, recreation and culture, security, taxation and transport. Besides meeting among themselves, panel members hold sessions with senior government officials and interest groups to hear their views.

There is also an OMELCO group appointed by the Governor to monitor the handling of complaints against the Independent Commission Against Corruption. In addition, mem- bers serve on more than 200 committees and boards dealing with matters of public concern. Members also maintain regular informal contact with district boards. They keep in close touch with what is happening throughout the territory by regular visits to government departments and to the 19 districts. They obtain the latest information on development plans and the problems people face, and it is a result of these contacts and visits that many

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of the questions in the Legislative Council are raised. OMELCO is also a channel through which the public may express grievances. Members deal with public representations on government policy, appeals and complaints alleging maladministration by government officers. A full record of the work of OMELCO is contained in its annual report.

The Legislative Council Building, which houses the Council Chamber, also provides accommodation for members and staff of the OMELCO Secretariat. The office is not a government department, although it is funded by the government and includes a number of seconded government officers who provide research and administrative support to members.

Urban Council, Regional Council and District Administration

Urban Council

The Urban Council is the statutory council with responsibilities for the provision of municipal services to almost 3.6 million people in the urban areas. As such, the council has considerable executive authority and is charged with full responsibility over a wide range of municipal functions. These functions include street cleansing, collection of refuse, control of general environmental hygiene, and ensuring the hygienic handling and preparation of food in, among other places, restaurants, shops and abattoirs.

      During the past two years the council conducted a comprehensive review of the policy governing street traders and public markets. District boards were consulted and the Commissioner of Police provided two senior officers to give a police input to formulate proposals. Control of street traders (hawkers) has proved difficult because of the large scale and long tradition of the practice of hawking in Hong Kong.

Within the urban area, the Urban Council also provides and manages all public sporting facilities such as swimming pools, parks, playgrounds, indoor and outdoor stadia, tennis courts, football grounds, squash courts and basketball courts and promotes a large number of sports at district level. The council manages museums, public libraries and several major cultural venues and multi-purpose facilities, including the City Hall, Queen Elizabeth Stadium and Hong Kong Coliseum. It is currently engaged in planning for the construction of a major Museum of Science and Technology. Meanwhile, a new Museum of Art is also under construction within the Hong Kong Cultural Complex area, in Kowloon, which will also contain a new concert hall, opera house and theatre to complement facilities already being run by the council elsewhere in the urban area a new theatre was opened during the year in the Ngau Chi Wan Civic Centre. The council promotes cultural performances and runs a comprehensive programme of public entertainment throughout the urban areas.

The council consists of 30 members, 15 elected from district constituencies and 15 appointed by the Governor. It meets in public once a month, when it passes by-laws, deals with finances, formal motions and questions on its activities. The routine business of the council is conducted by the Standing Committee of the whole council supported by 13 select committees and 21 sub-committees. The standing committee now conducts most of its business in public, and the Liquor Licensing Board and the Libraries, Food Hygiene and Clean Hong Kong Select Committees have opened their meetings to the public.

The council's chief executive is the Director of Urban Services, who controls the operations of the Urban Services Department with a staff of 18 000. The director is charged with carrying out the council's policies and implementing its decisions.

The council has been financially autonomous since 1973, and during 1987-8 will be spending about $2,400 million on council-controlled activities and projects. The council is

CONSTITUTION AND ADMINISTRATION

23

      financed by a share of the rates which provides about 70 per cent of its income, with the balance coming from various licence fees and other charges.

       The council has individual or collective ward offices spread throughout the urban areas where councillors deal with and answer complaints from the public on a great variety of matters. Although the majority of matters raised lie outside the council's jurisdiction, councillors are often able to assist and obtain redress where appropriate from the various government departments and public bodies.

Regional Council

The Regional Council was established on April 1, 1986 and is the statutory municipal authority for the area outside the jurisdiction of the Urban Council comprising the new towns of Tsuen Wan, Kwai Chung, Sha Tin, Tuen Mun, Tai Po, Fanling/Sheung Shui and Yuen Long and their hinterlands, together with the rural areas of Sai Kung and the Islands. Like the Urban Council, the Regional Council is responsible for all matters concerning environmental hygiene, public health, sanitation, liquor licensing and the provision of recreation and cultural facilities and services within its jurisdiction, the Regional Council area, where 1.8 million people live.

The Regional Council comprises 36 members. Twelve of the members are elected directly from the 12 constituencies in the Regional Council area. Nine representative members are elected from the nine district boards in the same area, 12 are appointed by the Governor and the remaining three are ex-officio members being the Chairman and two Vice- Chairmen of the Heung Yee Kuk, a statutory advisory body which represents the indigenous inhabitants of the New Territories.

      The Regional Council's policies are implemented by its executive arm, the Regional Services Department, which has a staff of 8 800.

The Regional Council is financially autonomous. Its main source of revenue comes from rates collected in the Regional Council area which provide about 85 per cent of the total revenue, with the remainder being fees and charges and interest on deposits. During its first year of existence, 1986-7, total revenue amounted to $1,033 million while total recurrent and non-recurrent expenditure amounted to $779 million. Expenditure on capital works projects, however, is funded by the government under an interim arrangement which will continue to apply until 1988-9.

The Regional Council meets monthly to deal with policy issues, formal motions, and questions on its activities. The council has set up four functional select committees, nine geographically based district committees and a liquor licensing board. The four select committees deal with finance and administration, capital works, environmental hygiene, and recreation and culture while the district committees deal with and monitor the provision of services and the management of Regional Council facilities in individual districts. The select committees meet monthly, the district committees meet bi-monthly and the liquor licensing board meets quarterly. All meetings of the Regional Council, its select committees, district committees as well as the liquor licensing board are open to the public.

      The Regional Council maintains close liaison with the district boards in the Regional Council area and the Heung Yee Kuk to ensure that local aspirations and views are taken into account in its deliberations. Some members of district boards as well as non-district board members are co-opted to the district committees of the Regional Council, providing an opportunity for the views of local district representatives to be taken into account in the planning and provision of service and facilities.

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District Administration

District boards are statutory bodies established in 1982 to provide an effective forum for public consultation and participation in administration at the district level.

There are 19 district boards throughout the territory. They consist of members elected from constituencies in each district, appointed members, and Urban Councillors or rural committee chairmen who have seats reserved for them on the boards in the urban areas and in the New Territories respectively. There are altogether 237 elected members, 132 appointed members and 57 ex-officio members on the boards.

The functions of the district boards as laid down in the District Boards Ordinance are principally advisory. The boards discuss and advise the government on a wide range of matters affecting the well-being of the people in the district. Through the advice they give, the boards make important contribution to the management of district affairs. They also help to monitor the work of the government at the district level.

      At the same time, the district boards also give views on important policy matters with territory-wide implications, such as the development of representative government, the long-term housing strategy, film censorship, control of noise pollution and of agricultural waste, and other proposals relating to law reform. They are also responsible for minor environmental improvements and the promotion of recreation and cultural activities in their respective districts, with funds allocated specifically for this purpose. A sum of $39 million was provided to the 19 district boards for this purpose for 1987-8.

      In order to keep in close contact with the views of local residents, many board members take part in the meet-the-public scheme. Under this scheme, local residents can make appointments to meet their board members in the district office and to express their views on local issues and problems. In the task of local administration, the boards work closely with district management committees (DMCs), which are chaired by the district officers and comprise representatives from the various government departments working in the districts. The DMCs provide a forum for inter-departmental consultation and discussion to help ensure that action taken by the government is co-ordinated and responsive to local needs and that, as far as possible, the advice of the district boards is taken into account.

The 67 Public Enquiry Centres in the district offices and their sub-offices served 16 million people during the year. These centres provide a wide range of services free of charge to members of the public, including answering general enquiries on government services, distributing government forms and information materials, administering statutory declara- tions, and managing the Free Legal Advice Scheme and the Rent Officer Scheme.

      Area committees and mutual aid committees form an integral part of the district administration scheme. The area committees are based on geographical areas, each containing about 40 000-50 000 people. Members are appointed from a wide cross-section of the community. The mutual aid committees are building-based residents organisations established with the aim of improving the security, cleanliness and management of, in the main, multi-storey buildings. There were 110 area committees and 4 243 mutual aid committees throughout the territory, providing an effective channel of communication between the government and local residents at the grass-roots level.

      During the year, the government conducted a thorough review of district administration and implemented measures to improve its effectiveness. These included the introduction of a series of administrative measures to ensure that the government as a whole became more responsive to the advice and requests from district boards and the provision of additional staff for district offices to strengthen liaison with area committees and mutual aid committees.

CONSTITUTION AND ADMINISTRATION

Links Between the Representative Institutions

25

All members of the Urban Council sit on urban area district boards: elected councillors are ex-officio members of the boards in which their constituencies lie, while appointed councillors are assigned to various other boards. The capital works programme of the Urban Council is presented to each district board with a view to ensuring that it meets district priorities within the council's financial, staffing and land resources.

New Territories district boards maintain a close relationship with the Heung Yee Kuk (a statutory advisory body which represents the indigenous population of the New Territories). Seats are reserved on the district boards for rural committee chairmen who are also ex-officio members of the Heung Yee Kuk's executive committee.

With the formal establishment of the Regional Council in April 1986, a close link has been created with district boards in the New Territories. Each district board has a representative member on the Regional Council, and district board members are also included in the recently-established committees under the Regional Council. Through these channels, the district boards are consulted on a wide range of council matters affecting their areas.

The Regional Council also has a formal link with the Heung Yee Kuk, through the ex-officio membership of the chairman and the two vice-chairmen on the council. Moreover, three of its appointed members have also been chosen from members of the kuk to ensure a strong relationship with the traditional inhabitants of the New Territories.

       The Urban Council and Regional Council which cover much the same fields in their respective areas have, during the year, set up liaison meetings between the two bodies and have also instituted joint ventures. In particular the Keep Hong Kong Clean Committee now encompasses both councils. The annual Flower Show is also a responsibility of both councils and is held in each council's areas in alternate years.

In addition, district boards and the Urban Council and Regional Council have links with the Legislative Council. The district boards are grouped into 10 electoral college con- stituencies, each returning one member to the Legislative Council. The Urban Council and Regional Council separately form electoral college constituencies, each returning one member to the Legislative Council.

Electoral System for the Urban Council, Regional Council and District Boards Elections to the Urban Council, Regional Council and district boards are on a geogra- phical constituency basis and through a broad franchise. Practically everyone who is 21 years of age or over and who is a Hong Kong permanent resident, or has been resident in Hong Kong for the preceding seven years, is eligible to apply for registration as an elector in the constituency in which he lives. Registration of new electors is conducted on a voluntary basis annually in August and September although applications for registration can be made at any time of the year. The major registration exercise for 1987 resulted in the addition of 164 786 new electors to the electoral roll. At the end of the year, the electoral roll carried 1 610 998 names, representing 46.7 per cent of an estimated total potential electorate of 3.4 million. Of these electors, 1 066 155 are entitled to vote at Urban Council elections and at district board elections in the Urban Council area. The remaining 544 843 are entitled to vote at Regional Council elections and at district board elections in the Regional Council area.

During the year, the district board electoral boundaries were revised, based mainly on physical development and the growth, movement and geographical spread of the popula- tion. For the district board elections which will be held in March 1988, there will be an

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increase of 12 constituencies, making a total of 87 constituencies in 10 districts in the Urban Council area and 70 constituencies in the nine districts in the Regional Council area.

      The number of Urban Council constituencies remains at 15, each being a single-seat constituency comprising a fair number of district board constituencies in the Urban Council area. There are 12 single-seat constituencies for the Regional Council, each consisting of a number of district board constituencies in the Regional Council area. The next elections to these two councils are due in March 1989.

An elector may vote only in the constituency in which he has been registered. He may, however, stand for election to the Urban Council, the Regional Council or a district board in any constituency, provided he has been resident in Hong Kong for the preceding 10 or more years and his nomination is supported by 10 electors in that constituency. Elections are held on a three-year cycle, and voting is by simple majority.

Electoral System for the Legislative Council

The system for indirect election to the Legislative Council was introduced in 1985 and involves an electoral college and nine functional constituencies. The electoral college comprises two special constituencies, the Urban Council and the Regional Council, and 10 district board constituencies, each returning one member to the Legislative Council. The functional constituencies, covering the commercial, industrial, financial, labour, social services, medical, legal, teaching and engineering and associated professions sectors, also return a total of 12 members.

The franchise for Legislative Council elections is prescribed as follows: for the electoral college, an elector must be a member of the Urban Council, the Regional Council or a district board making up the respective special constituencies and district board con- stituencies. For functional constituencies, an elector who is an individual must have been registered under the Electoral Provisions Ordinance for the Urban Council, Regional Council and district board elections and be a member of an organisation forming part of the rele- vant constituency. No person may be registered in more than one functional constituency even if he is eligible. An elector who is not an individual must nominate a person not already an elector in his own right in the same constituency to be its authorised representative to vote at an election. That person may not be the authorised representative of another elector in the same or any other constituency. However, if eligible, a person may be registered to vote both in the electoral college and in the functional constituency to which he belongs apart from voting as an authorised representative. For the year, the number of electors reg- istered in the electoral college and the functional constituencies stands at 438 and 42 581 respectively, as compared to the corresponding potential electorate of 439 and 71 656.

     The qualifications for candidature are simple: for an electoral college constituency, any person who is an elector registered under the Electoral Provisions Ordinance (and not necessarily be an elector in any electoral college constituency) and who has been resident in Hong Kong for the preceding 10 or more years, may be nominated if supported by five electors in that constituency. For a functional constituency, any person who is an elector registered under the Electoral Provisions Ordinance, has been resident in Hong Kong for the preceding 10 or more years and has a substantial connection with the relevant functional constituency may be nominated if supported by 10 electors in the constituency concerned.

Voting is by absolute majority, with the use of a repeated ballot system for electoral college constituencies and a preferential voting system for functional constituencies. Elections are conducted every third year after 1985.

CONSTITUTION AND ADMINISTRATION

Advisory Committees

27

The network of government boards and committees is a distinctive feature of the system of government in the territory which seeks to obtain, through consultation with interested groups in the community, the best possible advice on which to base decisions. Thus advisory bodies of one kind or another are found in nearly all government departments and quasi-government bodies. In general, advisory bodies may be divided into five categories: statutory bodies which give advice to a head of department (such as the Po Leung Kuk Advisory Board); statutory bodies which give advice to the government (such as the Board of Education); non-statutory bodies which give advice to a head of department (such as the Advisory Committee on Social Work Training); non-statutory bodies which give advice to the government (such as the Transport Advisory Committee), and committees which are executive in nature (such as the Hong Kong Examinations Authority).

Government officials and members of the public are represented on these committees. Well over 5 000 members of the public are appointed to serve on a total of 432 boards and committees, and some serve on more than one of these advisory bodies. These members are appointed on account of their specialist knowledge or expertise, or through their record or interest in contributing to the life of the community. Increasing importance has been attached to the contribution they make to the formulation and execution of government policies and, in order to utilise their potential to the full, a systematic and regular monitoring of the composition and effectiveness of these bodies is carried out. Where appropriate, the government will broaden the cross-section of representation and encour- age an inflow of new ideas through a reasonable turnover of membership.

The Administration

Role of the Chief Secretary

The Chief Secretary advises the Governor on matters of policy, and is principally responsible for its implementation. He is the head of the Public Service. The Chief Secretary, together with the Financial Secretary and the Attorney General are the Governor's principal advisers.

The Chief Secretary has a very small personal staff. He exercises direction primarily as head of the Government Secretariat, the central organisation comprising the secretaries of the policy branches and their staff. Since 1902, when the office of Lieutenant-Governor lapsed, the Chief Secretary (or his predecessor, the Colonial Secretary) has deputised for the Governor during his absence. He is the Senior Official Member of the Executive Council and the Legislative Council and is the Chairman of the Finance Committee.

Role of the Financial Secretary

The Financial Secretary is responsible for the fiscal and economic policies of the Hong Kong Government, and is an ex-officio member of both the Executive and Legislative Councils. He is, in addition, a member of the Finance Committee of the Legislative Council, and Chairman of the Public Works Sub-Committee of the Finance Committee. As the government officer with primary responsibility for Hong Kong's fiscal and economic policies, the Financial Secretary oversees the operations of the Finance, Monetary Affairs, Trade and Industry, and Economic Services Branches of the Government Secretariat.

The Financial Secretary is responsible under the Public Finance Ordinance for laying before the legislature each year, the government's Estimates of Revenue and Expenditure. In his capacity as an official member of the Legislative Council, he delivers a major speech

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each year, outlining the government's budgetary proposals and moving the adoption of the Appropriation Bill, which gives legal effect to the annual expenditure proposals contained in the Budget. He is also personally responsible under a number of ordinances for carrying out various executive duties, such as setting levels of certain charges and remunerations, and overseeing the accounts of certain trust funds and statutory bodies.

Role of the Director of Audit

The audit of all the government's accounts is carried out by the Director of Audit. He also audits the accounts of the Urban Council, the Regional Council, the Housing Authority and more than 50 statutory and non-statutory funds and other public bodies, and reviews the financial aspect of the operations of the multifarious government-subvented organisa- tions working in Hong Kong. The director's appointment, tenure of office, duties and powers are prescribed in the Audit Ordinance and in guidelines tabled in the Legislative Council by the Chairman of the Public Accounts Committee on November 10, 1986. To ensure his complete autonomy and independence in the exercise of his functions, the Director of Audit is not a public servant, and the ordinance provides that he shall not be subject to the direction or control of any other person or authority. It also prescribes certain safeguards against his dismissal or premature retirement from office.

Structure of the Administration

The Administration of the Hong Kong Government is organised into branches and departments. The branches, each headed by a secretary, collectively form the Government Secretariat. There are currently 12 policy branches, two resource branches concerned with finance and the Public Service, and a branch with special responsibility for co-ordinating measures to implement the terms of the Sino-British Joint Declaration on the question of Hong Kong. There is also an Office of the Deputy Chief Secretary, which co-ordinates work on issues which span the responsibilities of two or more branches and undertakes specific tasks in relation to constitutional development.

The policy branches whose secretaries report directly to the Chief Secretary are: Administrative Services and Information, City and New Territories Administration, Education and Manpower, Health and Welfare, Housing, Lands and Works, Municipal Services, Security and Transport. The Civil Service Branch, a resource branch, the General Duties Branch and the Office of the Deputy Chief Secretary also come under the aegis of the Chief Secretary. The policy branches whose secretaries report directly to the Financial Secretary are: Economic Services, Monetary Affairs and Trade and Industry. The Finance Branch, a resource branch, is also responsible to the Financial Secretary. The head of the Finance Branch is the Deputy Financial Secretary who, despite his title, is of the same rank and status as the other secretaries.

With certain exceptions, the heads of government departments are responsible to the branch' secretaries for the direction of their departments and the efficient implementation of approved government policy. The exceptions are such bodies as the Audit Department and the Independent Commission Against Corruption, whose independence is safeguarded by their director and commissioner, respectively, reporting directly to the Governor; the Judiciary, which is the responsibility of the Chief Justice, and the Legal Department, which is the responsibility of the Attorney General. There are currently 59 departments and agencies in this structure.

To assist in the co-ordination of government policy, there have been established under the umbrella of the Chief Secretary's Committee six policy groups which bring together

CONSTITUTION AND ADMINISTRATION

29

branch secretaries in related programme areas. The four which are chaired by the Chief Secretary are the Community Affairs; Constitutional Affairs; Lands, Works, Transport and Housing; and Social Services Policy Group. The Legal Affairs Policy Group is chaired by the Attorney General, and the Finance Group is chaired by the Financial Secretary.

Foreign Relations

The Role of the British Government and the Political Adviser Because of Hong Kong's status as a dependent territory, the Secretary of State for Foreign and Commonwealth Affairs is constitutionally responsible to the British Parliament for the actions of the Hong Kong Government and he has authority to give directions to the Governor of Hong Kong. In practice, however, such formal directions have not been issued in living memory, and Hong Kong conducts its affairs with a high degree of autonomy in all domestic matters. The relationship between London and Hong Kong is also essentially one of co-operation. For example, one important task regularly undertaken by the Foreign and Commonwealth Office is to ensure that Hong Kong's interests and views (which are not always identical with those of the United Kingdom) are properly considered within the British Government machinery, particularly when new policies are being formulated by other Whitehall departments.

       Hong Kong's foreign relations are constitutionally the direct responsibility of the British Government. Thus the British Government is internationally responsible for ensuring that the Hong Kong Government fulfils its obligations under the many international conven- tions and agreements which extend to Hong Kong as well as to the United Kingdom. But in the day-to-day conduct of external affairs, Hong Kong in practice enjoys a considerable degree of autonomy, particularly regarding trade matters. It is a contracting party to the General Agreement on Tariffs and Trade in its own right.

       The Political Adviser is a senior member of the British Diplomatic Service, seconded to the Hong Kong Government principally to advise the Governor and the Chief Secretary on matters concerning Hong Kong's relations with China. His office is part of the Hong Kong Government. Following extensive involvement in the Sino-British negotiations which culminated in the Joint Declaration, the Political Adviser's office, in conjunction with the General Duties Branch, is closely involved in the work of implementing the Joint Declaration. In addition, the Political Adviser's office continues to offer advice, and, in some cases, to co-ordinate action on a great many more routine matters, notably in promoting the wide range of contacts between Hong Kong Government departments and their counterparts in Guangdong Province, particularly in the Shenzhen Special Economic Zone. Close and effective cross-border co-operation has developed in such diverse areas as opening new border crossing points and transport links, and in coping with environmental pollution and flooding problems, as well as on questions concerning immigration, customs, postal services and telecommunications. The Political Adviser's office is also one of the channels of communication between the Hong Kong Government and foreign and Commonwealth missions in Hong Kong. These missions do, however, deal directly with the relevant departments of the Hong Kong Government over most day-to-day matters.

External Commercial Relations

Hong Kong possesses full autonomy in the conduct of its external commercial relations. The General Agreement on Tariffs and Trade (GATT), the basic aim of which is to liberalise world trade and protect the most-favoured-nation principle, is the cornerstone of

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CONSTITUTION AND ADMINISTRATION

Hong Kong's external trade relations. The Multi-Fibre Arrangement (MFA), which aims at the orderly development and expansion of international trade in textiles, provides the framework within which Hong Kong negotiates bilateral restraint agreements with textiles importing countries.

     On April 23, 1986 Hong Kong became the 91st contracting party to the GATT. Hitherto, Hong Kong had already been participating in GATT activities from within the United Kingdom delegation. The United Kingdom spokesman for Hong Kong was invariably a Hong Kong Government official. The arrangement had enabled Hong Kong to take positions that were different from those of the EEC, and, by implication, the United Kingdom. With effect from April 23, 1986, the Head of the Hong Kong Government Office in Geneva has been appointed as the permanent representative of Hong Kong to the GATT.

In the United Kingdom declaration concerning Hong Kong's separate GATT contract- ing party status, the British Government formally informed the Director-General of the GATT that Hong Kong possesses full autonomy in the conduct of its external commercial relations and of the other matters provided for in the GATT. At the same time as the British Government made this declaration, the Chinese Government also made a parallel declaration that, with effect from July 1, 1997, the Hong Kong Special Administrative Region will meet the requirements for a separate customs territory to be deemed to be a contracting party and therefore may, using the name of 'Hong Kong, China', continue to be deemed to be a separate contracting party to the GATT. By their respective declarations, therefore, the British and Chinese Governments have taken the necessary concrete steps to secure the continuance of Hong Kong's participation in the GATT and the MFA in the years leading to and beyond 1997.

Hong Kong Government Offices Overseas

The Hong Kong Government maintains offices in Geneva, Brussels, Washington, New York, San Francisco and London mainly to safeguard and advance Hong Kong's economic and commercial interests overseas.

     The Geneva Office represents Hong Kong in the General Agreement on Tariffs and Trade. The office keeps under review developments arising from the deliberations in the GATT and other international organisations in Geneva and has been heavily involved in the past year in the New Round of multilateral trade negotiations. The Brussels Office represents Hong Kong's economic and related interests concerning the European Com- munity and the governments of Member States (other than the United Kingdom). The New York, Washington and San Francisco offices keep under review economic or other developments, proposed legislation, and other matters in the United States of America that might affect Hong Kong's economic interest in general and two-way trade with the United States in particular. The New York and San Francisco offices incorporate the Industry Department's industrial investment promotion offices.

     Compared with other overseas offices, the London Office carries a much wider range of functions. It acts as a point of direct contact between Hong Kong and British Government departments, Members of Parliament, the media and organisations with an interest in Hong Kong and keeps under review British commercial, economic and industrial develop- ments and official thinking on international trade policies, and advises the Hong Kong Government on the likely repercussions of these developments. In addition, the office represents Hong Kong, wherever necessary, in commercial relations consultations for certain European countries, and it incorporates an industrial promotion office to advise

CONSTITUTION AND ADMINISTRATION

31

United Kingdom firms about opportunities for investment in Hong Kong industries. The office also provides assistance to Hong Kong people in the United Kingdom, including Hong Kong students, supervises the recruitment and training of Hong Kong public servants in the United Kingdom as well as providing publicity services aimed at projecting Hong Kong's image there. In view of Britain's role in the implementation of the Joint Declaration and her constitutional responsibilities for Hong Kong until 1997, the London Office will continue to occupy a special place among Hong Kong's overseas offices.

Details of representation overseas are at Appendix 6.

Public Service

The Public Service provides the staff for all government departments and other units of the Administration. With Hong Kong's centralised form of government, the Public Service operates a wide range of services which in many countries would be administered by other public authorities. These include medical services, public works and utilities, urban cleansing and public health, education, fire services and the police force. The departments in charge of these areas, namely, the Medical and Health Department, with an establish- ment of 26 036, the Lands and Works group of departments (22 344), the Municipal Services group of departments (26 415), the Education Department (6 533), the Fire Services Department (7 081) and the Royal Hong Kong Police Force (31 695) account for 67 per cent of the establishment of the entire Public Service.

      To meet the demands for new and improved services, the size of the Public Service in 1986-7 was increased by 2.3 per cent over that of the previous year. At April 1, 1987, the total strength of the service was 179 053, more than 98 per cent of this number being local officers.

      Responsibility for the management of the Public Service lies with the Civil Service Branch of the Government Secretariat. The branch deals with such matters as appoint- ments, pay and conditions of service, staff management, manpower planning, training and discipline and is also the focal point for consultation with the principal staff associations.

       Recruitment and promotions to the middle and senior ranks of the Public Service are subject to the advice of the Public Service Commission, which is independent of the government. The commission has a full-time chairman and leading citizens serving as members.

      The government is advised on matters relating to pay and conditions of service by two independent bodies. The Standing Committee on Directorate Salaries and Conditions of Service advises on matters affecting directorate officers (the 1 000 or so most senior public servants). The Standing Commission on Civil Service Salaries and Conditions of Service deals with all other public servants. During the year, the two advisory bodies tendered their advice on the pay structure of several individual grades. A Pay Level Survey was also completed by an independent firm of consultants. The survey aimed to establish whether or not the remuneration of public servants, including both salaries and fringe benefits, was broadly in line with that of employees in the private sector doing comparable work. Consultations were subsequently held with staff group representatives on how the general results of the survey should be reflected in the level of public service remuneration in the future. At the same time, Public Service housing benefits were reviewed with the aim of bringing those more into line with the private sector and encouraging home ownership.

      During the year, arrangements to permit public servants occupying co-operative housing flats to obtain title to these flats were implemented. Revised leave and passage arrange- ments for public servants were also introduced. Another major new development in 1987

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CONSTITUTION AND ADMINISTRATION

was the introduction of a new pension scheme for the Public Service. One major change in the new scheme was the raising of the retirement age from 55 to 60 in keeping with present day working-life expectancy. The new scheme is a result of a continuing review aimed at modernising public service conditions of service.

The government fully recognises the value of good staff relations in the Public Service. Apart from providing a wide range of welfare and recreational facilities to staff, much effort is devoted to the promotion of effective staff consultation. The formal consultative machinery comprises two service-wide central consultative councils: the Senior Civil Service Council and the Model Scale 1 Staff Consultative Council, a Police Force Council for members of the Police Force, and departmental consultative committees for staff in all other departments. Outside these councils and committees, individual members of the Public Service or staff associations have ready access to their heads of departments or grades and the Civil Service Branch. The major review of the existing consultative machinery, which was started in 1985-6, has made good progress and is almost completed. Continued efforts were made in 1986 to increase productivity and to improve the quality of service to the public. To this end, value for money studies and work improvement studies were carried out in various departments. These studies brought about not only improve- ments in the quality of service, but also more effective deployment of staff as well as significant savings in resources.

The government attaches great importance to the training of the public servants to improve their operational efficiency, to prepare them for new challenges and higher responsibilities and to meet the developing manpower requirements of the service. The Civil Service Training Centre co-ordinates the training undertaken by public servants at local and overseas institutes and is also responsible for administering the Government Training Scholarship Scheme. The centre organises management and language skills training, and provides advice and assistance to departments on training matters. During the year increased emphasis was given to the training of junior and middle-ranking officers in management skills.

      Courses conducted under the auspices of the Senior Staff Course Advisory Board continue to prepare mid-career officers for senior management responsibilities. Each course lasts for 12 weeks and has up to 40 participants. The main objectives are to enable senior officers to develop a better understanding of the environment in which government operates and to enhance their skills of problem analysis, policy and decision making. Links with the private sector are fostered through participation of executives from the private sector. Set up in 1984, the Senior Staff Course has now firmly established itself as an important component of the government's management development programme.

Language

The official languages of Hong Kong are English and Chinese. The government has taken the lead in using both English and Chinese languages in its communications with the public, and simultaneous interpretation services are provided at meetings of the Legislative Council, Urban Council, Regional Council, district boards and other government boards and committees. English is used predominantly in the commercial, financial and profes- sional circles but is also widely understood by the local Chinese population. The majority of the local Chinese community speak Cantonese, a South China dialect, and interest in learning Putonghua (Mandarin) for work or leisure is gaining momentum as closer ties with China are being developed.

3

The Legal System

度啸

LAW in Hong Kong

Generally, the law of Hong Kong follows that of England and Wales. The Application of English Law Ordinance was passed in 1966 to declare the extent to which English law is in force in the territory. Section 3 provides that the common law of England and the rules of equity shall be in force in Hong Kong so far as they are applicable to the circumstances of Hong Kong or its inhabitants subject to such modifications as such circumstances may require.

      Additionally, the ordinance applies some English Acts to Hong Kong, such as the Justices of the Peace Act of 1361 and the Habeas Corpus Act of 1679.

      On occasions, English laws are applied to Hong Kong either directly or by order of Her Majesty in Council, the power to make all such law as may appear necessary for the peace, order and good government of the territory being expressly preserved by Article IX of the Letters Patent. In practice, this is largely confined to matters which have a bearing on Hong Kong's international position. For example, the Air Navigation (Overseas Territories) Order 1977 is an Order in Council applying provisions of civil aviation treaties, to which the United Kingdom is a party, to the United Kingdom's overseas territories, including Hong Kong.

In order to ensure that by 1997 Hong Kong possesses a comprehensive body of law which owes its authority to the Legislature of Hong Kong, it will be necessary to replace such English laws by local legislation on the same topics. A legislative programme has therefore been adopted by the Hong Kong Government to disapply English laws applying to Hong Kong and replace them by Hong Kong ordinances. The Hong Kong Act 1985 gave power by Order in Council to confer on the Hong Kong legislature the necessary additional powers in specified fields and the Hong Kong (Legislative Powers) Order 1986 specified the fields of civil aviation, merchant shipping and admiralty jurisdiction. It is anticipated that further orders will be made in future conferring similar powers in other fields.

Local legislation (that is, ordinances passed by the Legislative Council and assented to by the Governor) usually starts with one of the policy branches of the Hong Kong Govern- ment formulating drafting instructions for the Drafting Division of the Attorney General's Chambers. The instructions are prepared after consultation with the relevant government departments and, if appropriate, with interested public groups, as to the policy to adopt. After a Bill has been drafted, it is submitted to the Governor in Council for approval to submit it to the Legislative Council. If the Bill is passed by vote of the Legislative Council, the Governor is empowered to enact by giving his assent to it and it is passed into law.

In much the same way that the common law of England has evolved, so has that of Hong Kong, based on the English common law and rules of equity, following and applying local

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THE LEGAL SYSTEM

     ordinances and English or United Kingdom Acts where applicable. Hong Kong ordinances are often closely modelled on United Kingdom statutes, or the legislation of Common- wealth countries if considered more appropriate. Cases from Commonwealth countries and the United States of America are quoted in the courts and considered with respect. The Hong Kong courts apply a doctrine of binding precedent similar to that adopted by the English courts. The Hong Kong Court of Appeal is bound by its own previous decisions. Appeal from the Court of Appeal lies to the Privy Council and it was said in a Full Court case in 1969 that the Hong Kong courts were 'clearly bound by decisions of the Privy Council and of the House of Lords'. The Full Court again considered the question of precedent in 1973 and stated that 'any relevant decision of the Privy Council' was binding on the Hong Kong courts.

The Attorney General's Chambers has assumed responsibility for drafting new laws in both Chinese and English and translating existing laws into Chinese. The Chinese text will be an authentic version of the laws that the courts can look to, with the English text, in ascertaining the meaning of an enactment. A discussion paper, canvassing ways in which laws in both Chinese and English might best be introduced, was issued by the Attorney General's Chambers in May 1986 for public comment. The discussion paper was favour- ably received, and enabling legislation was enacted in March 1987. Initially, only new principal legislation is to be enacted bilingually. Translation of existing laws into Chinese will be spread over a number of years. The Chinese language team in the Drafting Division of the Attorney General's Chambers started on the work of drafting laws in Chinese in July 1986.

Judiciary

The Chief Justice is the head of the Judiciary. He is assisted in the discharge of his administrative duties by the Registrar as well as Deputy and Assistant Registrars of the Supreme Court.

The Chief Justice, the Justices of Appeal and the Judges of the High Court are appointed by Letters Patent issued under the Public Seal by the Governor on instructions from the Queen, conveyed through the Secretary of State. District Judges are appointed by the Governor, by instrument under the Public Seal, and Magistrates by the Governor by

warrant.

The Judiciary tries all prosecutions and determines civil disputes, whether between individuals or between individuals and the government. The principle of English consti- tutional law, that in the performance of their judicial acts members of the Judiciary are completely independent of the executive and legislative organs of the government, is fundamental in Hong Kong.

      The courts of justice in Hong Kong are the Supreme Court (comprising the Court of Appeal and the High Court), the District Court, the Magistrates' Court, the Coroners' Court, the Juvenile Court, and also include the Lands Tribunal, the Labour Tribunal and the Small Claims Tribunal.

      The Lands Tribunal, established in 1974, has three principal judicial functions. First, it determines the sums payable by the government and others for compensation to persons whose land is compulsorily resumed or has its value reduced because of public or private developments. Second, the tribunal has an appellate jurisdiction from the Commissioner of Rating and Valuation. This includes appeals in respect of rateable values under the Rating Ordinance and appeals against certificates of increase in rents and other determina- tions under the Landlord and Tenant (Consolidation) Ordinance. Third, since 1982, the

THE LEGAL SYSTEM

35

tribunal's jurisdiction has included all claims for possession of premises under the Landlord and Tenant (Consolidation) Ordinance, and ancillary money claims.

In the exercise of its jurisdiction, the tribunal has the powers of the District Court. In addition, it enjoys the powers of the High Court in relation to certain matters and is empowered, so far as it thinks fit, to follow the practice and procedure of the High Court.

The Small Claims Tribunal deals with monetary claims involving amounts not exceeding $8,000. The procedure followed is simple and informal, and legal representation is not allowed.

       The Labour Tribunal deals with individual money claims arising from contracts of employment. The informal procedure followed is initially directed at reconciling the parties to the dispute.

Magistrates exercise criminal jurisdiction over a wide range of indictable and summary offences. Their powers of punishment are generally restricted to a maximum of two years' imprisonment, or a fine of $10,000, though cumulative sentences of imprisonment up to three years may be imposed for two or more offences tried together.

Proceedings in all indictable offences originate in a Magistracy. The Attorney General may apply to have a case transferred to the District Court or committed to the High Court depending on the seriousness of the case. Committals to the High Court for trial are usually made by a magistrate if, after hearing the evidence in a preliminary inquiry, he is of the opinion that there is sufficient evidence to put the defendant on trial in the High Court. The exceptions are in cases where the defendant elects to have an automatic committal.

Lay assessors sit as advisers with newly-arrived magistrates recruited from overseas. Assessors are local residents with a knowledge of local customs, traditions and community feelings. They are drawn from a panel of about 320 assessors.

Nine Cantonese-speaking special magistrates, who are not legally qualified but are experienced in judicial work, were appointed to deal with cases of a more routine nature, such as hawking and minor traffic cases. Their powers of punishment, however, do not include the power of imprisonment.

       Two coroners conduct inquiries into the cause of, or cirumstances connected with deaths which occur suddenly, by accident or violence, or under suspicious circumstances. They may sit with a jury of three people.

The Juvenile Court has jurisdiction to hear charges against children (aged under 14) and young persons (aged between 14 and 16) for any offence other than homicide.

      The District Court, established in 1953, has limited jurisdiction in both civil and criminal matters. It has civil jurisdiction to hear monetary claims up to $60,000 or, where the claims are for recovery of land, the annual rent or rateable value does not exceed $45,000. In its criminal jurisdiction, the court may try the more serious cases with the exception of a few very serious offences such as murder, manslaughter and rape. The maximum term of imprisonment it can impose is seven years. It also exercise appellate jurisdiction in appeals against the assessment of stamp duty imposed by the Collector of Stamp Revenue.

       The jurisdiction of the High Court is unlimited in both civil and criminal matters. The court also exercises jurisdiction in bankruptcy, company winding-up, adoption, probate and lunacy matters.

       The most serious criminal offences, such as murder, manslaughter, rape, armed robbery and drug offences involving large quantities, are tried by a judge of the High Court, sitting with a jury of seven or, where a judge orders, nine. It is the jury which decides whether the accused is guilty or not guilty. The decision of the jury must be unanimous in cases in which

36

THE LEGAL SYSTEM

the law provides for a death sentence. In other cases, a jury may return a majority vote of five to two.

The Court of Appeal is the highest court in Hong Kong. It hears appeals on all matters, civil and criminal, from the High Court and the District Court, as well as appeals from the Lands Tribunal. It also makes rulings on questions of law referred to it by the lower courts. Further appeals can be brought from the Court of Appeal to the Judicial Committee of the Privy Council in London. Such appeals are not frequent because of the expense involved and the stringent conditions which govern the grant of special leave to appeal.

Attorney General

The Attorney General is the Governor's legal adviser. The Royal Instructions provide for him to be an ex-officio member of both the Executive Council and the Legislative Council. In addition, he is chairman of both the Law Reform Commission of Hong Kong and the Long Term Prisoners' Board of Review and a member of both the Judicial Services Commission and the ICAC Operations Review and Complaints Committee. He is also titular head of the Hong Kong Bar.

The Attorney General is Chairman of the Legal Affairs Policy Group, one of several policy bodies established under the umbrella of the Chief Secretary's Committee to bring together branch secretaries in related programme areas. The group plays an important co-ordinating role in legal policy matters and decision-making, including allocation of responsibility for further legislative initiatives which have a substantial legal policy content. Often, the group will call upon the Attorney General to take responsibility as sponsor and spokesman for legislative proposals to be submitted to the Executive and Legislative Councils.

All government departments requiring legal advice receive it from the Attorney General. He is the representative of the Crown in all actions brought by or against the Crown. He is further responsible for the drafting of all legislation and for the conduct of all prosecutions. The Attorney General's Chambers are divided into four divisions and a Special Duties Unit each headed by a law officer to whom the Attorney General delegates certain of his powers and responsibilities. The Civil Division is headed by the Crown Solicitor, and is responsible for giving all legal advice in civil matters and conducting all civil litigation involving the Crown. The Prosecutions Division is headed by the Crown Prosecutor who is responsible for the investigation and conduct of criminal proceedings. The Law Drafting Division is headed by the Law Draftsman who is responsible for drafting all legislation and subsidiary legislation. The Solicitor General heads the Policy and Administration Division, a part of which consists of the Law Reform Commission Secretariat. The Special Duties Unit has been set up to consider treaties to which Hong Kong is a party and other international obligations in the light of the Sino-British Joint Declaration.

     In the courts, the Attorney General is usually represented by Crown counsel who are members of his chambers. On occasions, the services of outside counsel are obtained.

      It is the Attorney General who is responsible for all prosecutions in Hong Kong, and it is for him alone to decide whether or not a prosecution should be instituted in any particular case, and it is his responsibility to conduct and control the action. In this respect, the Court of Appeal in Hong Kong held in 1979 that the powers and responsibilities of the Attorney General in Hong Kong were mutatis mutandis, the same as those of the Attorney General in England.

The vast majority of minor prosecutions heard before magistrates are routine matters which are dealt with by law enforcement departments along settled guidelines issued under

THE LEGAL SYSTEM

37

the authority of the Attorney General and without individual reference to the Attorney General's Chambers. Where such cases are complicated matters, or give rise to difficult points of law, then advice is sought from the Prosecutions Division. The advice of the Attorney General's Chambers must be sought in the case of serious offences where the venue of trial will be the District Court or the Supreme Court.

Law Reform Commission

The Law Reform Commission was appointed by the Governor in Council to consider and report on such topics as may be referred to it by the Attorney General or Chief Justice. Its membership includes Legislative Councillors, academic and practising lawyers, and prominent members of the community. The commission's proposals on commercial arbi- tration, bills of exchange, community service orders, contribution between wrong-doers and damages for personal injuries and death have been enacted. Reports on aspects of insurance law, the admissibility of confession statements, the legal effects of age, and coroners have been published and will shortly be followed by reports on contempt of court and unfair contract terms.

The commission is considering hearsay evidence in civil proceedings, breach of con- fidence actions, wills and intestate succession, the law relating to bails, arrest and detention, interest on debt and damages and the competence and compellability of spouses.

Registrar General

The Registrar General is a statutory office established by the Registrar General (Establish- ment) Ordinance. The functions of the Registrar General's Department are carried out by the Land Office which deals with the registration of land, the Companies Registry which keeps records of companies, the Trade Marks Registry which handles the registration of trade marks, the Patents Registry which examines patent applications and the Money Lender Registry which processes applications for money lender licence.

The Registrar General also acts as: the Official Receiver who is appointed trustee or liquidator in bankruptcy and liquidation cases, the Insurance Authority who scrutinises applications to become authorised insurance company, the Official Trustee and the Official Solicitor.

Legal Aid

      Hong Kong has now a well established system of legal aid emphasising the government's continuing desire and effort to promote social justice. Most civil and criminal cases lie within the scope of legal aid offered by the Legal Aid Department. The Law Society, through an executive committee which includes representatives from the Bar Association, provides free legal representation to defendants in certain criminal cases heard in the Magistrates' Courts and Juvenile Courts of Hong Kong. These aspects of legal welfare are funded by the government.

       Any litigant in Hong Kong, resident or non-resident, may apply for legal aid and such aid will be granted if the Director of Legal Aid is satisfied with the applicant's financial eligibility and the justification for legal aid.

Civil Legal Aid

The present maximum financial eligibility for legal aid provided by the Legal Aid Department is a disposable monthly income of $2,200 per month and disposable capital of

38

THE LEGAL SYSTEM

     $15,000. Disposable income and capital are arrived at after 'allowances' have been deducted from actual earnings and capital of applicants. Legal aid is provided either free or on payment of a contribution, depending on the amount of the disposable income and capital.

In addition to financial eligibility, the applicant must satisfy the Director of Legal Aid in civil cases that he has a reasonable chance of succeeding in the litigation for which he seeks aid and in recovering the judgement debt thereafter. Legal aid is available for a wide range of civil proceedings in the District Courts, High Court, Court of Appeal, and appeals through the Judicial Committee of the Privy Council in London. Examples of civil proceedings that lie within the scope and jurisdiction of the department are: traffic accident claims, claims in respect of industrial accidents and employees' compensation, immigration matters, general ligitation cases involving landlord and tenant disputes and every branch of family law. An applicant who is refused legal aid may appeal against such refusal to the Registrar of the Supreme Court or in Privy Council cases to a Committee of Review.

The total estimated expenditure for 1987-8 was $37.5 million in civil cases. In 1987, 15 601 applications were received for legal aid in civil matters; 5 207 legal aid certificates were granted with the sum of $83.6 million being recovered for aided clients in civil cases.

      In October 1984 the Supplementary Legal Aid Scheme was established in order to provide legal aid to those whose resources exceeded the financial limits under the existing scheme but whose ability to pursue a claim for substantial damages for death or personal injury in the High Court was jeopardised by a lack of means sufficient to instruct lawyers to conduct a privately-funded action.

      A fund was set up, initially with moneys provided by way of an interest-bearing loan from the Lotteries Fund, to finance litigation instituted on behalf of those eligible under the scheme.

      In place of the limit of financial eligibility under the existing scheme the supplementary scheme enables an applicant with a gross monthly income of $15,000 and disposable assets of $100,000 to apply. The same merits test is applied but instead of requiring a contribution as under the existing scheme, a successful litigant under the supplementary scheme pays a proportion of the damages he recovers back into the fund so as to assist further litigants in future litigation.

      The total estimated expenditure in 1987-8 was $1.1 million. Since inception of the scheme, 290 applications have been received and 119 have been granted with 59 pending a decision as to the merits. During 1987, 84 applications were received of which 52 were granted, and 59 applications were pending.

The department was also actively engaged in the implementation of the Supplementary Traffic Accident Victims Assistance Scheme. The scheme was established by the govern- ment to provide compensation to those unable to recover compensation due to them as a result of road traffic accidents because of the failure of five motor insurance companies. The department acted as the processing agency for the 444 claimants, investigating their claims, assisting in the assessment of compensation and being responsible for making the appropriate payments. The total sum thus dispensed was in excess of $70 million.

Legal Aid in Criminal Cases

     Legal aid is also available for criminal proceedings in the District Courts, High Court, Court of Appeal, the Judicial Committee of the Privy Council, for representation at proceedings in the Magistrates' Courts where the prosecution is seeking committal of a defendant to the High Court for trial and for assistance in preparing petitions for clemency

THE LEGAL SYSTEM

39

to the Governor in Council. The majority of accused persons in proceedings in these courts are legally-aided.

For High Court criminal trials, legal aid is invariably given, subject to financial eligibility, because of the costs involved, the severity of the charge coupled with the possible gravity of sentence. Legal aid can also be given to conduct pleas in mitigation of sentence. For appeals against conviction for murder irrespective of whether there are grounds of appeal the granting of legal aid is mandatory so as to ensure that all relevant matters are placed before the court by the appellant's legal representative. For all other criminal appeals, including appeals from the decisions of magistrates, legal aid will be given again subject to financial eligibility if the Director of Legal Aid is satisfied that there are arguable grounds of appeal. A person who is refused legal aid in a criminal matter may nevertheless be granted legal aid subject to financial eligibility by a trial judge or by the Court of Appeal or in relation to appeal to the Judicial Committee of the Privy Council by a committee of review.

The total estimated expenditure in 1987-8 was $43.2 million in criminal cases. During 1987, 3 414 applications were received for legal aid in criminal cases and 2066 were granted.

The year saw the further expansion of the department's services to the public. An amendment to the Legal Aid Ordinance now provides for legal aid to be available in relation to the Deportation, Immigration and Registration of Persons tribunals. In addition, Hong Kong's spiralling divorce rate has prompted the department and the Hong Kong Catholic Marriage Advisory Council to introduce an independent counselling agency whereby applicants for legal aid in matrimonial cases may have counselling with a view to reconciliation or conciliation. This scheme, funded by the Royal Hong Kong Jockey Club, is in operation in the department's Kowloon office in Mong Kok. If the project proves successful, a similar counselling service may be made available in the Hong Kong office.

     If a person is granted legal aid, the Director of Legal Aid will assign the matter either to a private solicitor and a barrister where necessary, or to one of his professional officers. The department maintains its own litigation units specialising in personal injuries litigation, family law and workers wage claims.

The department has its headquarters at Queensway Government Offices, with a branch office in Mong Kok, Kowloon. The establishment comprises 355 persons, of whom 44 are professional lawyers and 104 are law clerks. Training for the law clerks, whose grade comprises 29 per cent of the total establishment, is provided by the professional officers. From time to time officers at all levels attended service training courses provided by the Civil Service Training Centre. In addition, the department is providing articles of clerkship to trainee solicitors and also participates in the training programme for articled clerks and barristers' pupils whose articles are with members of the other legal service departments.

Legal Advice and Duty Lawyer Schemes

Since November 1978, the Law Society of Hong Kong with the support of the Hong Kong Bar Association has administered three schemes to provide free legal representation, legal advice, and legal information for people in Hong Kong. The government funds these schemes by subvention, which amounted to $20,825,275 in the 1987-8 financial year.

The Duty Lawyer Scheme operates in the eight magistracies and four juvenile courts, and utilises the services of 514 lawyers (barristers and solicitors) through roster and assignment, to provide free legal representation to defendants charged with certain offences in criminal

40

THE LEGAL SYSTEM

cases. In the Magistrates' Courts these are: membership of a triad society, loitering, unlawful possession, being equipped for stealing, resisting arrest, possession of dangerous drugs for unlawful trafficking, possession of dangerous drugs, possession of apparatus fit for using dangerous drugs and possession of offensive weapons. Additionally, free legal representation is available for extradition proceedings, and in discretionary circumstances, although such cases are necessarily limited in number in view of the limit in resources. All but the least serious offences attract free legal representation in Juvenile Courts. There is no means test. During the year, a total of 16 288 adults and juveniles received advice, and representation at trial.

The Free Legal Advice Scheme operates in the evening at centres in Sha Tin, Tsuen Wan, Wan Chai, Eastern, Mong Kok, Wong Tai Sin, Kwun Tong and Yau Ma Tei district offices through 354 volunteer lawyers. Some 3 218 people are advised annually, having been referred through 138 agencies. Once the problem is identified, appointments are given within seven to 10 days, and, because details of the problems are written down by the staff of the agencies during their interviews with clients, the lawyers are able to give authoritative advice based on the necessary research done before the meeting. People are assisted on matrimonial and employment matters, landlord and tenant queries, and a host of other subjects.

In 1984, the Law Society introduced 'Tel-Law' whereby taped legal information on a number of legal topics was made available during working hours and evenings on 10 telephone lines. The tapes are of 24 minutes duration and encourage people who identify legal problems of their own from listening to the tapes, to use the Free Legal Advice Scheme. The tapes, which are frequently updated, concentrate on four principal areas of interest matrimonial, landlord and tenant, criminal and financial law but a large number of new tapes has been added, detailing for example, consumer law and employ- ment. There has been an increase in the number of people with queries on these topics. Fifty-nine tapes were available, in Cantonese and English, and 40 354 calls were answered during 1987.

4

Implementation of

The Sino-British Joint Declaration

95

合田

實聲洗

     THE pattern of solid achievements which was built up in 1985 and 1986 implementing the terms of the Sino-British Joint Declaration on the Question of Hong Kong continued into the third year. This was a clear demonstration of the commitment by both the British and Chinese governments to translate into reality the promises made in the Joint Declaration, and to bring about a smooth transition from present day Hong Kong to a Special Administrative Region (SAR) of China. Good progress in this most important task was possible because of the close co-operation and good relations established between the British and Chinese sides in the Joint Liaison Group and the Land Commission.

The Joint Liaison Group

The Sino-British Joint Liaison Group (JLG) was established in accordance with the provisions of Annex II to the Joint Declaration. Its functions are to conduct consultations on the implementation of the Joint Declaration, to discuss matters relating to the smooth transfer of government in 1997, and to exchange information and conduct consultations on such subjects as may be agreed on by the two sides. As the JLG is an organ for liaison, and not an organ of power, it plays no part in the administration of Hong Kong.

      The JLG comprises a senior representative and four other members on each side. Supporting staff and experts also attend meetings as appropriate. It meets in Peking, London and Hong Kong at least once each year. The first JLG meeting was held in London in July 1985, the second in Peking in November 1985, the third in Hong Kong in March 1986. The second cycle of meetings ended with the sixth meeting in Hong Kong in March 1987. The seventh meeting took place in July 1987 in London and the eighth was held in November in Peking. The JLG will continue to meet in these three locations until the year 2000. From July 1988, the JLG will have its principal base in Hong Kong.

      Since its establishment, the JLG has built up a solid record of achievements in the implementation of the Joint Declaration. Its meetings are conducted in a friendly and co-operative atmosphere. A good working relationship has been established and mutual trust between the two sides is growing steadily. Building on the progress made in the first year and a half of its existence, the JLG has achieved positive results in a number of areas of major importance for the future of Hong Kong.

Hong Kong and the Customs Co-operation Council

The Joint Declaration provides for Hong Kong to remain a separate customs territory after June 30, 1997. As such a territory, it is important that Hong Kong is able to participate fully in the main international organisation dealing with customs matters, the Customs Co-operation Council (CCC). Hitherto, Hong Kong representatives had participated in the council as part of the United Kingdom delegation. To provide Hong Kong with a more.

42

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

appropriate status, which would continue after 1997, the British and Chinese sides agreed at the sixth meeting of the JLG that Hong Kong should become a member of the CCC.

To secure this objective, the United Kingdom proposed to the CCC Secretary-General that in accordance with Article II(a)(ii) of the Convention establishing the CCC, Hong Kong should be admitted as a separate member of the CCC. The Government of the People's Republic of China made a parallel declaration, making it clear that if Hong Kong were admitted as a separate member of the council, the Hong Kong SAR might, using the name 'Hong Kong, China', continue such membership with effect from July 1, 1997.

      Following these declarations, at a meeting of the CCC in Ottawa on June 25, 1987, the CCC approved the admission of Hong Kong as a member. As a result of the JLG's efforts over the past years Hong Kong now has, and will retain after 1997, a separate standing in the General Agreement on Tariffs and Trade, the Multi-Fibre Arrangement and the CCC, and is thus better placed to protect its own interests in world trade both before and after 1997.

Right of Abode and Travel Documents

Agreement was reached in the JLG in 1986 that British National (Overseas) - BNO - passports and Certificates of Identity issued from July 1, 1987 would include an endorse- ment indicating that the holder had a permanent identity card which stated that he had the right of abode in Hong Kong. At the sixth meeting of the JLG, the group confirmed specific principles concerning legal aspects of the right of abode endorsement in these travel documents. With effect from July 1, 1987, BNO passports and Certificates of Identity containing the right of abode endorsement were issued. These would remain valid for the normal 10-year period from the date of issue.

In the case of Documents of Identity, of which there are about 360 000 in circulation, agreement was also reached at the sixth meeting of the JLG that such documents issued before July 1, 1997 would continue to have, as before, a seven-year validity and would remain valid after June 30, 1997 until expiry.

Air Service Agreements

A common view was reached at the fourth meeting of the JLG regarding procedures for separating Hong Kong's interests from existing United Kingdom Air Service Agreements (ASAs). The first 'separate' Hong Kong ASA was signed with the Netherlands on September 17, 1986 and entered into force on June 26, 1987. Negotiations on a number of other Hong Kong ASAs continued throughout the year, and progress was further discussed at the eighth meeting of the JLG.

New Pension Scheme for Civil Service

At the fifth meeting of the JLG, a thorough discussion of the Hong Kong Government's proposals to modernise pension arrangements for the civil service took place. These proposals, which would have financial and other implications for the government of the Special Administrative Region after June 30, 1997, were designed to contribute towards maintaining a stable and efficient civil service, an objective which the JLG recognised as being of great importance. Full agreement on the proposals was reached in the JLG and the new pension scheme came into effect on July 1, 1987, following the enactment of the Pension Benefits Ordinance. A significant feature of the scheme is the raising of the retirement age from 55 to 60, in keeping with working-life expectancy.

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

Defence and Public Order

43

     Both in the JLG itself and in talks at expert level held between JLG meetings, useful discussions took place during the year on the implementation of the Joint Declaration in respect of defence and the maintenance of public order.

At the eighth meeting the two sides reviewed with satisfaction the progress made in these discussions and agreed that it was important that timely arrangements be made in relation to defence and public order. The Chinese side explained the role of the Chinese military forces to be stationed in the Hong Kong Special Administrative Region with the re- sponsibility for defence in accordance with the Joint Declaration. The British side gave a briefing on their provisional planning for the phased withdrawal of the British garrison.

      The two sides agreed in principle that to enable the Hong Kong Police Force to discharge its responsibility for the maintenance of public order before and after 1997, including the prevention of illegal immigration, the Police Force should undergo appropriate limited expansion. The existing Auxiliary Air Force would be re-organised to form a Civil Government Flying Services Department with responsibility for providing the Hong Kong Government with necessary flying services.

The two sides will continue to discuss the practical arrangements to be made before 1997 for the transfer of defence responsibilities in 1997 between the British and Chinese military forces. The two sides will continue their close consultation and co-operation on defence and public order arrangements in future meetings of the JLG.

Localisation of Laws

     Some United Kingdom legislation is currently in force in Hong Kong, e.g. in the fields of civil aviation and merchant shipping. Many of the provisions of such legislation will continue to be required after 1997, and it will therefore be necessary to re-enact them locally in Hong Kong (i.e. to 'localise' them). This is a technical but important task which is necessary to ensure that the Special Administrative Region will have a complete body of law in place on July 1, 1997. At the eighth meeting of the JLG the two sides reached an identity of views on general principles relating to this task.

Terms of Service for the Judiciary

At the eighth meeting of the JLG the two sides exchanged views on the Hong Kong Government's intention to introduce revised terms of service for the Judiciary. One of the main purposes of the revised terms will be to attract more local lawyers to join the Judiciary.

Sub-group on International Rights and Obligations

The first standing sub-group set up by the Joint Liaison Group, the Sub-group on International Rights and Obligations, was formally established in July 1986 to examine and discuss matters relating to the continued application of international rights and obligations affecting Hong Kong and to report its conclusions to the Joint Liaison Group. The sub-group consists of three experts on each side, supplemented as necessary by other experts and supporting staff. It has its principal base in Hong Kong, although it may meet, if necessary, in Peking or London.

      The large number of treaties and international obligations relevant to Hong Kong which the sub-group will have to examine individually means that its work will take a number of years to complete. So far the sub-group has held four meetings and has made good

44

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

progress. Expert exchanges in the sub-group have led to agreement in principle between the two sides at the JLG on Hong Kong's participation in the following organisations after 1997:

Universal Postal Union: the SAR should maintain its own separate postal administra- tion and its representatives should participate as members of the Chinese delegation in meetings of the Universal Postal Union.

• World Meteorological Organisation: the SAR should continue to have its own meteorological service and should remain a member of the World Meteorological Organisation.

• International Maritime Organisation: the SAR should retain its associate member status in the International Maritime Organisation and the maritime conventions applying to Hong Kong should continue to be applied after 1997 to the SAR.

• International Telecommunication Union: the SAR should continue to participate in an appropriate capacity in the activities of the International Telecommunication Union, exercising the same autonomy in telecommunications services as at present. United Nations Conference on Trade and Development: the SAR should continue with the present form of participation in the United Nations Conference on Trade and Development after 1997.

·

Economic and Social Commission for Asia and the Pacific: the SAR should continue to participate as an associate member in the Economic and Social Commission for Asia and the Pacific.

International Labour Organisation: the SAR should continue to participate in meetings of the International Labour Organisation and international labour conven- tions applying to Hong Kong should continue to be applied after 1997 in the SAR. The SAR may also have new international labour conventions applied to it even if these conventions do not apply to China as a whole.

Food and Agriculture Organisation: the SAR should continue to participate in activities of subsidiary bodies of the Food and Agriculture Organisation in the Asian Pacific Region and maintain business and technical contact with these bodies and the organisation itself.

The Land Commission

      The Sino-British Land Commission was established in accordance with Annex III to the Joint Declaration. Its function is to conduct consultations on the provisions of Annex III on land leases and other related matters. The commission is composed of three officials on each side, assisted by a number of supporting staff. Meetings of the commission are held in Hong Kong at times agreed by both sides.

      During 1987, four meetings of the commission were held, and agreements were reached on a number of important matters. These include:

Agreement on the extension of the vast majority of land leases in the New Territories, which would expire before July 1, 1997, to the year 2047 by legislative means. In accordance with the terms of Annex III to the Joint Declaration, extension of these leases will be free of premium, but from the date of extension an annual rent equivalent to three per cent of the rateable value of the property at that date, adjusted in step with any changes with the rateable value thereafter, will be charged.

Agreement on the land disposal programme for the 1987-8 financial year. The agreed programme comprises just under 75 hectares of new land, as compared with the annual limit for the disposal of new land of 50 hectares specified in paragraph 4 of Annex III

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IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

45

to the Joint Declaration. (Under paragraph 7(c) of Annex III, this annual limit may be increased by agreement of the Land Commission.)

      Under the terms of paragraph 6 of Annex III to the Joint Declaration, premium income obtained by the Hong Kong Government from land transactions shall, after deduction of the average cost of land production, be shared equally between the Hong Kong Govern- ment and the future Special Administrative Region Government. The average cost of land production is determined and adjusted by the Land Commission annually, and for the 1987-8 financial year, the agreed figure was $1,625 per square metre. The future SAR Government's share of premium income is held in a trust fund, called the Hong Kong Special Administrative Region Government Land Fund, established by the Chinese side of the Land Commission pursuant to agreement reached by both sides in the commission. The fund is managed by an Investment Committee, the membership of which includes prominent bankers in Hong Kong, as well as a monetary expert in the Hong Kong Government. To date, over $4,000 million, representing the future SAR Government's share of premium income for the period May 27, 1985 to September 30, 1987, has been transferred to the fund.

The Basic Law

Paragraph 3(12) of the Joint Declaration states that the basic policies of the People's Republic of China (PRC) regarding Hong Kong, and the elaboration of them in Annex I to the Joint Declaration, will be stipulated in a Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China, by the National People's Congress of the PRC, and they will remain unchanged for 50 years. The Chinese Government, which is responsible for drafting the Basic Law, has appointed a 59-member drafting committee, called the Basic Law Drafting Committee (BLDC), which includes 23 members from Hong Kong. At its first meeting held in July 1985 in Peking, the drafting committee adopted a timetable which envisaged publishing a first draft for public consultation in early 1988 and, after repeated redrafting in the light of public comments, enactment of the Basic Law in 1990. Subsequently, the drafting committee held six plenary meetings; the sixth plenary meeting was held from December 12 to 16, 1987 in Guangzhou. Also at its first meeting, the BLDC approved the establishment of a committee to canvass views from members of the public in Hong Kong. Thus, the Basic Law Consultative Committee (BLCC) was formally inaugurated on December 18, 1985. It consisted of 180 members drawn from a wide cross-section of the community.

A great deal of progress has been made by the BLDC in the drafting of the Basic Law. It is expected that a 'discussion draft' of the Basic Law will be published in early 1988, as scheduled. Throughout the drafting process, Hong Kong people have taken a great interest in what goes into the Basic Law, and important issues have been debated in both the drafting committee and the consultative committee as well as publicly in the media.

5

300

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The Economy

THE Hong Kong economy continued to grow rapidly in 1987. Following an increase of 11.2 per cent in 1986, the gross domestic product (GDP) rose by an estimated 13.6 per cent in real terms. The volume of domestic exports was about 23.2 per cent larger. The strong growth in domestic exports provided the main impetus to the overall economic growth, while, in line with rising incomes, domestic demand also picked up considerably.

Buoyant economic activities resulted in a very tight labour market, with the unemploy- ment rate staying at an historic low level of 1.8 per cent during most of 1987 and with a sharp rise in vacancies compared with a year ago. Earnings in all major economic sectors registered significant increases both in money terms and in real terms. In the property market, there was sustained demand for most types of property, and property prices and rentals recorded significant gains over the levels in 1986. Construction activity intensified. As regards capital investment, retained imports of capital goods grew by about 26 per cent in real terms, following an increase of six per cent in 1986.

The rate of inflation, as measured by the Consumer Price Index (A), was 5.5 per cent in 1987, whereas in 1986 it was only 2.8 per cent. Notwithstanding this acceleration, the rate of inflation in 1987 was still moderate compared with Hong Kong's experience over the past decade, when an average annual increase of 8.7 per cent in consumer prices was recorded.

There were signs that the growth rate of the economy was moderating towards the end of 1987. This slow-down in growth was probably largely a result of the develop- ment of bottlenecks in the economy following sustained strong economic performance over some 20 months, although the crash in the stock market in October might also be relevant.

Structure and Development of the Economy

     Because of its limited natural resources, Hong Kong has to depend on imports for virtually all of its requirements, including food and other consumer goods, raw materials, capital goods, fuel and even water. It must, therefore, export on a sufficient scale to generate the foreign exchange earnings to pay for these imports, and the volume of exports must continue to grow if the population is to enjoy a rising standard of living.

      The externally-oriented nature of the economy can be seen from the fact that in 1987 the total value of visible trade (comprising domestic exports, re-exports and imports) amounted to 210 per cent of the GDP. If the imports and exports of services are also included, this ratio becomes 216 per cent. Between 1977 and 1987, Hong Kong's domestic exports grew at an average annual rate of about 11 per cent in real terms, which was roughly twice the growth rate of world trade. As a result, Hong Kong ranks high among the world's trading economies.

THE ECONOMY

Contributions of the Various Economic Sectors

47

The relative importance of the various economic sectors can be assessed in terms of their contributions to the GDP and to total employment.

      Primary production (comprising agriculture and fishery, and mining and quarrying) is small in terms of its contributions to employment and to the GDP.

      Within secondary production (comprising manufacturing; the supply of electricity, gas and water; and construction), manufacturing accounts for the largest share of the GDP and of employment. The contribution of the manufacturing sector to the GDP declined steadily from 31 per cent in 1970 to 21 per cent in 1982, but recovered to 24 per cent in 1984. However, this relative contribution dropped to about 22 per cent in both 1985 and 1986. The share of the construction sector in the GDP increased from four per cent in 1970 to eight per cent in 1981, before settling at about five per cent during the period 1984 to 1986.

      The contribution of the tertiary services sectors as a whole (comprising the wholesale, retail and import/export trades, restaurants and hotels; transport, storage and communica- tion; financing, insurance, real estate and business services; and community, social and personal services) to the GDP increased from 61 per cent in 1970 to 65 per cent in 1982. This share in the GDP remained stable at around 62 to 64 per cent during the period 1983 to 1986.

      The tertiary services sectors are highly diversified. The contribution of the wholesale, retail and import/export trades, restaurants and hotels to the GDP varied between 19 and 23 per cent during the past 15 years. The contribution of the transport, storage and communication sector to the GDP was stable at around seven to eight per cent. The contribution of the financing, insurance, real estate and business services sector to the GDP, however, experienced considerable fluctuations. It rose gradually from 15 per cent in 1970 to 24 per cent in 1981, but fell to 16 per cent in 1984, mainly reflecting the depressing effect of the slump in the property market. In 1986, its contribution to the GDP increased again to 17 per cent.

      In terms of employment, the most notable change in recent years was that, whereas employment in the manufacturing sector still accounted for the largest share of the employed workforce, its share has been on a continuous decline. According to figures from the population censuses, this share declined from 47 per cent in 1971 to 41 per cent in 1981, and further to 36 per cent in 1986. On the other hand, the share of the tertiary services sectors as a whole in the total employment increased from 41 per cent in 1971 to 47 per cent in 1981, and further to 55 per cent in 1986.

Nature and Relative Importance of Manufacturing

     Though the trade statistics indicate that Hong Kong's domestic exports are still dominated by a few major product groups, there has been considerable upgrading of quality and diversification within these product groups. The pressure of protectionism and the growing competition from other economies have intensified the efforts of local manufacturers to diversify, not only in respect of products but also in respect of markets. It is estimated that up to 90 per cent of Hong Kong's manufacturing output is eventually exported.

Firms in Hong Kong must be flexible and adaptable in order to cope with the frequent changes in demand patterns and to maintain their external competitiveness. The existence of many small establishments and of an extensive local sub-contracting system has greatly facilitated the necessary shifts in production and has helped to increase the flexibility of the economy. Moreover, increasing use has been made of the outward processing facilities in

48

THE ECONOMY

China for carrying out certain specific production processes. Because of the limited amount of usable land, Hong Kong's manufacturing industries are generally those which can operate successfully in multi-storey factory buildings. This, in practice, implies concentra- tion in the production of light manufactures.

Since the post-war years, many new industries have emerged and grown, the most notable ones being plastics and electronics. The textiles and clothing industries, however, remain prominent. Other developing industries include fabricated metal products, watches and clocks, toys, precision and optical instruments, and genuine and imitation jewellery.

      Between 1973 and 1985, the value of net output by the manufacturing sector grew at an average annual rate of 15 per cent, while manufacturing employment grew at an average annual rate of only two per cent. Within the manufacturing sector, the most significant change occurred in the textiles industry. Over the period, the share of this industry in the net output of manufacturing declined from 27 per cent to 15 per cent, and its share in manufacturing employment from 21 per cent to 13 per cent. Offsetting this decline was the expansion of the clothing, electrical products and electronics, and professional and scientific equipment (including watches and clocks) industries. Between 1973 and 1985, their shares in the net output of manufacturing increased from 20 per cent to 23 per cent, from nine per cent to 14 per cent, and from one per cent to five per cent respectively, while their shares in manufacturing employment increased from 26 per cent to 30 per cent, from 11 per cent to 13 per cent, and from two per cent to five per cent respectively.

      Domestic exports in 1987 consisted principally of wearing apparel and clothing acces- sories (33 per cent of the total value), electronics (22 per cent), textiles (eight per cent), plastic products (seven per cent), watches and clocks (seven per cent), electrical household appliances (three per cent), and metal products (three per cent). In terms of the shares in total domestic exports, the most significant changes over the past 10 years have been the decline in the relative importance of clothing (from 40 per cent in 1977 to 33 per cent in 1987), and the increase in the relative importance of electronics (from 15 per cent in 1977 to 22 per cent in 1987) and of watches and clocks (from five per cent in 1977 to seven per cent in 1987).

      Market diversification is partly a result of the promotion efforts financed by the government. Since the late 1950s, the United States has become Hong Kong's largest export market, in place of the United Kingdom and the Commonwealth countries. Gradually, the share of domestic exports going to such countries as the Federal Republic of Germany, Japan, Canada and Australia, and to the economies in Southeast Asia has also increased. In recent years, Hong Kong has diversified further into new markets, including countries in the Middle East, Eastern Europe, Latin America and Africa. China, in particular, has become the second largest market for Hong Kong's domestic exports.

Financial Institutions

     Hong Kong's financial sector comprises an integrated network of institutions and markets which, under various forms of regulation, provide a wide range of services and products to both local and international customers and investors.

Since 1981, deposit-taking institutions in Hong Kong have been classified into three separate groups, namely licensed banks, licensed deposit-taking companies and registered deposit-taking companies.

Banking licences are granted at the discretion of the Governor in Council in accordance with the provisions of the Banking Ordinance. At present, in order to be considered for a banking licence, a local company (that is, a company incorporated in Hong Kong and

THE ECONOMY

49

predominantly beneficially owned by Hong Kong interests) must have a paid-up capital of at least $100 million, must have been in the business of taking deposits from and granting credit to the public for at least 10 years, and must have at least $1,750 million of deposits from the public and at least $2,500 million of assets. A bank incorporated outside Hong Kong wishing to apply for a banking licence is required to satisfy a separate set of criteria: it must have total assets (net of contra items) of at least US$14,000 million (unless it is of exceptionally high standing and unless banks from its country of incorporation are under-represented in Hong Kong), and its country of incorporation must exercise an adequate form of prudential supervision on banks and offer some acceptable form of reciprocity to banks from Hong Kong.

At the end of 1987, there were 154 licensed banks in Hong Kong, 34 of which were locally incorporated. They maintained a total of 1 387 offices in Hong Kong. In addition, there were 141 representative offices of foreign banks. The total deposit liabilities of all the licensed banks to customers at the end of the year was $642 billion.

      Only licensed banks may operate current or savings accounts. They may also accept deposits of any size and any maturity from the public. The interest rate rules of the Hong Kong Association of Banks (of which all licensed banks are required under their licensing conditions to be members) result in the setting of maximum rates payable on bank deposits of original maturities up to 15 months less a day, with the exception of deposits of $500,000 or above with a term to maturity of less than three months, for which banks may compete freely.

Licensed deposit-taking company status is granted at the discretion of the Financial Secretary. Licensed deposit-taking companies are required to have a minimum issued share capital of $100 million and paid-up capital of $75 million, and to meet certain criteria regarding size, ownership and quality of management. They may also take deposits of any maturity from the public, but in amounts of not less than $500,000. There are no restrictions on the interest rates they may offer. At the end of 1987, there were 35 licensed deposit-taking companies, and their total deposit liabilities to customers was $28 billion.

      The authority to register deposit-taking companies rests with the Commissioner of Banking. Since April 1981, the Commissioner has, at the direction of the Governor, restricted new registrations to companies which, as well as meeting certain basic criteria such as having a minimum paid-up capital of $10 million, are more than 50 per cent owned by banks in Hong Kong or elsewhere. Registered deposit-taking companies are restricted to taking deposits of not less than $100,000 with a term to maturity of at least three months. At the end of 1987, there were 232 registered deposit-taking companies, and their total deposit liabilities to customers was $34 billion.

During the year, the Commissioner of Banking undertook a review of this three- tier system in consultation with the industry. Some changes may emerge as a result of the review.

      Apart from deposit-taking, conventional lending, and foreign exchange dealings, banks and deposit-taking companies in Hong Kong are increasingly diversifying into other financial services, including securities business, fund management, investment advice and insurance.

Dealers in securities and commodities, investment advisers, and their representatives are required to be registered with the Office of the Commissioner for Securities and Com- modities Trading. At the end of 1987, there were 6 597 persons so registered. In addition, 264 persons had been granted exempt status under the Securities Ordinance.

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THE ECONOMY

     Only members of the Stock Exchange of Hong Kong Limited are permitted to trade as stockbrokers. At the end of 1987, the Stock Exchange had 773 corporate members and individual members. Only members and shareholders of the Hong Kong Futures Exchange Limited can trade as dealers in futures. At the end of 1987, the Futures Exchange had 92 members.

     Insurance companies are authorised by the Insurance Authority to transact insurance business in Hong Kong. At the end of 1987, there were 278 authorised insurance companies. Of these, 152 were overseas companies from 28 countries. As at end-December 1987, there were 16 applications for authorisation outstanding, 13 of which were from overseas companies.

Financial Markets

Hong Kong has a well-established and active foreign exchange market, which forms an integral part of the corresponding global market. The link with other major overseas centres enables foreign exchange dealing to continue 24 hours a day round the globe. The major currencies traded on the local market include the US dollar, Deutschemark, Yen, Sterling, Swiss franc, the Australian dollar and the Hong Kong dollar. As a market in foreign exchange, Hong Kong is favoured by its time zone location, by its large volume of trade and of other external transactions with the resulting demand for and supply of foreign currencies, by the presence of a large number of international banks with experience in foreign exchange transactions, by the absence of exchange controls, and by a highly advanced telecommunications system.

     Equally well-established and active is the interbank money market, in which wholesale Hong Kong dollar deposits and foreign currency deposits (mainly in US dollars) are traded both between deposit-taking institutions in Hong Kong, and between local and overseas institutions. This market is mainly for short-term money - from maturities ranging from overnight up to six months for Hong Kong dollars and up to 12 months for US dollars. The traditional lenders of Hong Kong dollars in the market tend to be the locally-incorporated banks with well-established deposit bases, while the major borrowers are those foreign banks without a strong deposit base in Hong Kong. As an indication of the size of the market, at end-December 1987, Hong Kong dollar interbank liabilities constituted 33 per cent of that part of the total liabilities of the banking sector which are denominated in the local currency; the corresponding share for foreign currency interbank liabilities was 80 per cent. A further money market in which banks and deposit-taking companies participate is the Hong Kong dollar forward rate market. This market has become increasingly active since the introduction in February 1987 of standard terms and conditions by the Hong Kong Association of Banks.

     As the Hong Kong Government is a net lender rather than a net borrower and as the amount of government debt outstanding is very small, the term 'capital market' normally refers to the market in private sector negotiable debt instruments. The two main types of debt instruments traded in the market are certificates of deposit (CDs) issued by deposit- taking institutions and commercial paper (CP) or bonds issued by other types of companies. This market has developed rapidly over the last three years or so, gaining momentum from the global trend in securitisation and from the importation of innovative financial products, notably interest rate swaps. However, 1987 was a year of consolidation for the market as a whole.

     The stock market continues to provide an important source of capital for local enterprises, with significant and growing interest from both local and overseas investors;

THE ECONOMY

51

276 public companies, with a total market capitalisation by the end of the year of $420 billion, were listed on the Stock Exchange. This made it the largest stock market in Asia outside Japan.

The Hong Kong Commodity Exchange Limited operates five markets offering contracts in cotton (but no trading in cotton has taken place in recent years), sugar, soyabeans, gold, and the Hang Seng Index futures. The last of these markets started trading on May 6, 1986. The Chinese Gold and Silver Exchange Society operates a gold bullion market. Gold traded through the Society is of 99 per cent fineness, and is measured in taels (one tael equals approximately 1.2 troy ounces) and quoted in Hong Kong dollars. After allowing for exchange rate fluctuations, prices follow closely those in the major markets in London, Zurich and New York.

      There is another active gold market in Hong Kong, in which the main participants are banks, major international bullion houses and gold trading companies. It is commonly known as the loco-London gold market, with prices quoted in US dollars per troy ounce of gold of 99.95 per cent fineness and with delivery in London. Trading in this market has grown significantly in recent years.

Regulation of the Financial Sector

The authority for the prudential supervision of banks and deposit-taking companies, collectively called authorised institutions, is vested in the Commissioner of Banking. His authority is derived from the new Banking Ordinance which was introduced in March 1986, replacing the previous Banking Ordinance and Deposit-taking Companies Ordinance. The provisions of the ordinance relate to the regulation of banking business, particularly the business of taking deposits, and the supervision of authorised institutions, so as to provide a measure of protection to depositors and to promote the general stability and effective operation of the banking system.

       The Commissioner's Office obtains regular returns from and sends examination teams to the authorised institutions, including the overseas branches of Hong Kong incorporated banks and deposit-taking companies. The principles of the revised concordat issued by the Committee on Banking Regulations and Supervisory Practices, which meets regularly at Basle in Switzerland, and the principles of world-wide supervision of banking groups based in Hong Kong, are accepted and practised.

      The Commissioner for Securities and Commodities Trading exercises prudential super- vision of the securities, financial investment and commodities futures industry in Hong Kong by administering the Securities Ordinance, the Protection of Investors Ordinance and the Commodities Trading Ordinance.

      The Securities Ordinance provides a framework within which dealings in securities are conducted and the Stock Exchange operates, enabling trading practices in securities to be regulated. It requires registration of dealers, dealing partnerships, investment advisers, and investment advisers' partnerships and representatives. The ordinance also provides, inter alia, for the investigation of suspected malpractice, and for the maintenance of a Compensation Fund to compensate clients of any defaulting stockbroker.

       The Protection of Investors Ordinance prohibits the use of fraudulent or reckless means to induce investors to buy or sell securities, or to induce them to take part in any investment arrangement in respect of property other than securities (the latter being controlled by the Securities Ordinance). It regulates the issue of publications related to such investments by prohibiting any advertisement inviting investors to invest without the advertisement first being submitted to the Office of the Commissioner for authorisation.

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THE ECONOMY

The Commodities Trading Ordinance provides a regulatory framework within which the Futures Exchange operates and dealers, commodity trading advisers and representatives conduct their business. It includes, inter alia, provisions for the maintenance of a Compensation Fund to compensate clients of any defaulting commodity dealer.

Companies transacting insurance business in Hong Kong are subject to the Insurance Companies Ordinance. The ordinance brings all classes of insurance business under a comprehensive system of regulation and control by the Registrar General (Insurance Authority). The carrying on of insurance business in or from Hong Kong is restricted to authorised companies, to Lloyd's, and to certain underwriters approved by the Governor in Council. All new applications for authorisation are subject to careful scrutiny by the Insurance Authority to ensure that only insurers of good repute who meet all the criteria of the ordinance are admitted. The ordinance stipulates minimum share capital and solvency requirements for all authorised insurers and requires them to submit financial statements and other relevant information to the authority on an annual basis. It provides that any person who is not considered by the authority to be a fit and proper person to be associated with an authorised insurance company cannot acquire a position of influence in relation to such company. It also empowers the authority to intervene in the conduct of the business of insurance companies in certain circumstances. Where the authority has a cause of concern it may take remedial or precautionary measures to safeguard the interests of policy holders and claimants, including the limitation of premium income, the restriction of new business, the placing of assets in custody, and petitioning for the winding-up of the company involved.

Hong Kong as an International Financial Centre

The favourable geographical position of Hong Kong, which provides a bridge in the time gap between North America and Europe, together with the strong links with China and the Southeast Asian countries and excellent communications with the rest of the world, has helped Hong Kong to develop into a significant international financial centre.

      A total of 102 of the licensed banks are among the top 500 banks in the world in 1987, and 76 are ranked among the top 100. Most of the foreign banks in Hong Kong are international banks and are ranked top of the list in their own countries. In addition, many of the most important merchant banks or investment banks operate in Hong Kong. A substantial proportion of the transactions in the banking sector are international in nature; over 40 per cent of the sector's aggregate assets and liabilities are external, spreading over more than 80 countries. The financial markets, particularly in foreign exchange and gold, form an integral part of the corresponding global markets. Moreover, Hong Kong serves as an important centre for the intermediation of international flows of savings and investment, particularly through the syndication of loans and international fund management. Inter- national investors play a significant and increasing role in Hong Kong, and Hong Kong's investments overseas is also believed to be considerable.

Increasing Economic Links between Hong Kong and China

China's adoption of an open door economic policy since 1979 in support of its modernisa- tion programmes has given rise to increased economic links between Hong Kong and China which have had a significant impact on the growth and development of the Hong Kong economy.

The most conspicuous development has been the rising importance of China as a trading partner. From a relatively low base in 1979, Hong Kong's trade with China has grown by

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53

1 105 per cent in value terms over the past eight years. Since 1985, China has been Hong Kong's largest trading partner. In 1987, the value of visible trade between Hong Kong and China amounted to $205 billion. China was the largest supplier of goods to Hong Kong (accounting for 31 per cent of Hong Kong's total import value in 1987), and was the second largest market for Hong Kong's domestic exports (accounting for 14 per cent of the total domestic export value).

      In respect of Hong Kong's entrepôt trade, China was Hong Kong's largest re-export market as well as the largest source of goods re-exported through Hong Kong. In 1987, nearly 80 per cent of Hong Kong's entrepôt trade was related to China, either as a market or as a source of supply. Although the growth rates of some of these trade flows slowed down in 1986 as a result of China's tightening of control on its imports since early 1985, overall trade with China grew rapidly in 1987.

Besides merchandise trade, various forms of invisible trade between Hong Kong and China also increased. These included tourism and travel services, transport services, financial services, and professional and other business services.

In 1987, 14.1 million trips were made to China by Hong Kong residents. Another 800 000 trips were made to China through Hong Kong by foreign visitors, reflecting Hong Kong's position as a convenient gateway to China for business and tourism.

      In line with the growth in trade and in passenger movements, the demand for transport services connecting Hong Kong with China has grown substantially in recent years. For cargo transport, the average annual growth rates in tonnage terms between 1979 and 1987 were about 12 per cent for inward cargo from China and about 51 per cent for China- bound outward cargo. Parts of these cargo movements were transhipments. Most of the cargo was transported by sea, although an increasing proportion of it was carried by road and by rail. Passenger traffic grew by an average of 21 per cent per annum between 1979 and 1987. The increase was mainly in trips by rail and, only to a lesser extent, by sea and air.

       Reflecting the increasing financial links between Hong Kong and China in recent years, external liabilities of Hong Kong's financial institutions to banks in China grew by 227 times, from $213 million at end-1979 to $48.4 billion at end-1987. During the same period, external claims of Hong Kong's financial institutions on banks and other enterprises in China grew by 11.2 times from $5.9 billion to $65.8 billion. Apart from being a source of funds, Hong Kong also provided China with access to the world's major financial markets. The business of the Bank of China Group in Hong Kong has grown substantially since the late 1970s, as reflected by its much enlarged retail banking network and the increasing variety of financial services it offers.

With regard to investment, Hong Kong's direct investment in China has been concen- trated in hotel and tourist-related facilities, and in light manufacturing industries, such as electronics, plastics, textiles and wearing apparel. Most of the investment has been in the form of joint ventures with Chinese enterprises. Moreover, many Hong Kong manufac- turers have established compensation trade and outward processing arrangements with Chinese enterprises particularly in the Shenzhen Special Economic Zone and in the Pearl River Delta area. At the same time, enterprises involving Chinese interests have increased their investment in Hong Kong, and their activities have diversified from trading to such areas as property development, manufacturing, supermarkets, hotels and infrastructural projects.

      The increasing economic relations between Hong Kong and China have been mutually beneficial, and have added a new dimension to Hong Kong's economic growth.

54

The Economy in 1987

THE ECONOMY

The Hong Kong economy remained buoyant in 1987, and displayed a considerable degree of flexibility and resilience at a time when production was running up against capacity. Continuing the trend established in 1986, domestic exports and re-exports grew rapidly, as did domestic demand, including both consumption demand and investment demand. Against this background, the unemployment rate dropped to an historic low level and shortages of labour were experienced in many sectors, resulting in significant upward pressure on wages and salaries. The rate of inflation accelerated but was still moderate compared with Hong Kong's experience over the past decade. The demand for most types of property remained firm during 1987, and trading in the property market was active.

     Preliminary estimates show that the growth rate in real terms of the GDP was 14 per cent in 1987, following an increase of 11 per cent in 1986. Thus the economy has enjoyed double-digit growth for two consecutive years. Economic growth in 1987 was mainly export-led, but the upsurge in domestic demand also contributed. However, largely because of the economy adjusting itself to the rapid growth and possibly because of the stock market crash in October, there were signs that the economy was settling to a more moderate growth rate towards the end of 1987.

External Trade

In 1987, domestic exports grew by 27 per cent in money terms, or by about 23 per cent in real terms. This compared with an increase of 19 per cent in money terms or 16 per cent in real terms recorded in 1986. A major factor behind this strong performance was the sustained demand for imports in Hong Kong's major overseas markets. The depreciation of the Hong Kong dollar, in line with that of the US dollar under the linked exchange rate system, against most major currencies also helped to improve the price competitiveness of Hong Kong's products. Domestic exports to the United States, which was Hong Kong's largest market, grew by about 10 per cent in real terms. Much faster growth was, however, recorded for domestic exports to other major markets, such as Japan (at about 41 per cent in real terms), the Federal Republic of Germany (about 27 per cent), and the United Kingdom (about 27 per cent), the currencies of which were relatively strong against the Hong Kong dollar. Domestic exports to China, which was Hong Kong's second largest market, grew by about 52 per cent in real terms. This substantial growth was, however, largely attributable to the increased outward processing trade with China. As a result of this growth pattern, the relative importance of the United States market in Hong Kong's overall domestic exports dropped to 37 per cent in 1987 from 42 per cent in 1986.

     In terms of the major product categories, domestic exports of clothing grew by about 17 per cent and those of textiles by about 38 per cent in real terms in 1987. They accounted for 33

per cent and eight per cent respectively of the total value of domestic exports. Substantial increases were also recorded for domestic exports of radios (about eight per cent in real terms), domestic electrical appliances (about 13 per cent), and metal manufactures (about 27 per cent). As regards domestic exports of other products, the growth rate was about 23 per cent in real terms.

In 1987, re-exports grew by 49 per cent in money terms, or by about 46 per cent in real terms, representing a sharp increase from the corresponding growth rates of 16 per cent and 14 per cent in 1986. This rapid growth was mainly due to the flourishing entrepôt trade with China, which featured prominently both as a source and as a market for Hong Kong's re-exports. Nearly 80 per cent of Hong Kong's re-exports during the year were associated with the China trade. The other major re-export markets were the United States, Taiwan,

THE ECONOMY

55

the Republic of Korea, Japan and Singapore. With regard to the origins of the re-exports, the major suppliers apart from China were Japan, the United States, Taiwan, and the Republic of Korea. When analysed by end-use categories, a major proportion of Hong Kong's re-exports comprised raw materials and semi-manufactures, and consumer goods, representing 40 per cent and 42 per cent respectively of the total value of re-exports. Re-exports of textile yarn, fabrics and made-up articles, clothing, travel goods, and miscellaneous manufactured articles showed more rapid increases in real terms than other items.

      Imports grew by 37 per cent in money terms or by about 32 per cent in real terms, which compared favourably with the corresponding growth rates of 19 per cent and 14 per cent in 1986. The major sources of imports were China, Japan, Taiwan, the United States, the Republic of Korea and Singapore. Apart from the upsurge in re-export trade, a significant proportion of this growth was attributable to retained imports, which registered an increase of about 21 per cent in real terms. Retained imports of raw materials and semi- manufactures and of capital goods, in particular, grew by about 27 per cent and 26 per cent respectively.

       As the value of total exports (domestic exports plus re-exports) was slightly higher than that of imports, a visible trade surplus of only $87 million was recorded in 1987. Thus, the visible trade account was virtually in balance. This compared with a surplus of $0.6 billion, equivalent to 0.2 per cent of the total value of imports, recorded in 1986. As the prices of imports rose slightly faster than those of total exports, the terms of trade deteriorated slightly over the level in 1986.

Domestic Demand

The growth rate of domestic demand, at 12 per cent in real terms, was higher than that recorded in 1986, at nine per cent. Reflecting generally higher personal incomes and an improved standard of living, private consumption expenditure grew by 11 per cent in real terms in 1987, following a 10 per cent growth recorded in 1986. Government consump- tion expenditure grew by five per cent in real terms. This was lower than the six per cent growth recorded in the previous year, and was well below the growth rate of the GDP, reflecting the government's policy of keeping public expenditure under control. Investment demand, measured in terms of the gross domestic fixed capital formation, grew by 15 per cent in real terms in 1987, whereas the increase in 1986 was seven per cent. Among its main components, expenditure on building and construction rose by seven per cent in real terms in 1987, reflecting the work in progress on a number of major infrastructural projects and large-scale building developments. Expenditure on plant, machinery and equipment grew by 27 per cent in real terms, following an increase of 10 per cent in 1986. A significant proportion of this growth was attributable to higher investment in plant and machinery for use in the manufacturing sector, which helped to increase its productive capacity and improve its efficiency.

The Labour Market

As 1987 was the second consecutive year of rapid economic growth, the overall demand for labour was even stronger than in 1986. However, there was a slow-down in the growth of labour supply, largely caused by a slight reduction in the labour force participation rate. With the demand for labour outstripping supply at the prevailing wage levels, the labour market became very tight. Shortages of labour were experienced in many sectors, and

56

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THE ECONOMY

     a sharp increase in vacancies was recorded over a year ago. The seasonally-adjusted unemployment rate dropped to an historic low of 1.8 per cent towards the middle of 1987, while the underemployment rate averaged around one per cent. During the fourth quarter, the seasonally-adjusted unemployment rate was 1.9 per cent and the underemployment rate was 1.0 per cent, compared with the corresponding rates of 2.2 per cent and 1.2 per cent in the same quarter in 1986.

Manufacturing output, as measured by the quarterly index of industrial production, was 19 per cent higher in the first three quarters of 1987 than in the same period in 1986. This compared with an increase of 16 per cent for 1986 over 1985. A major part of these increases in output was derived from a higher degree of capacity utilisation, more overtime work and the installation of new machinery, together with a general improvement in labour productivity.

A comparison of September 1987 with the same month in 1986 shows that manufac- turing employment increased by 0.6 per cent to 875 300, while employment in the services. sectors as a whole increased by six per cent to 1 175 200. Within the services sectors, employment in the wholesale, retail and import/export trades increased by seven per cent, that in restaurants and hotels by 0.5 per cent, and that in financing, insurance, real estate and business services by 10 per cent. Employment on building and construction (in- cluding civil engineering) sites rose by three per cent over this period, in line with the intensive building and construction activities. For the building and construction industry as a whole, employment (covering both site workers and non-site workers) increased by 11 per cent.

      The strong economic growth and tight labour market conditions resulted in a marked increase in labour incomes. Employees in the manufacturing, trading and services sectors enjoyed a significant increase in earnings (measured by payroll per person engaged) both in money terms and in real terms during the 12 months ending September 1987. Over the same period, construction wage rates also rose substantially.

The Property Market

The property market remained active for most of 1987. The take-up rate was maintained at a high level. Notwithstanding an increased supply of new property in the private sector, vacancy rates for all major types of property remained low. Supported by rising incomes and relatively low mortgage rates, the demand for residential property was firm, partic- ularly for flats in well-planned estates with convenient transport access. However, as the prices of residential flats edged up further, there were signs of consolidation in the latter part of the year. Prices and rentals for commercial and industrial property, particularly for premises in favoured locations, rose significantly in 1987.

As many developers remained optimistic about the outlook of the property market, land prices were driven higher during most of 1987. Most lots put out at government auctions were favourably received, and in many cases the prices fetched were much higher than a year earlier.

The Financial Scene

The financial scene in Hong Kong during 1987 was characterised by a weakening of the Hong Kong dollar against the major currencies other than the US dollar, continuing popularity of unit trusts and, until the latter part of October, gradually rising interest rates and active stock and index futures markets.

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57

       Under the linked exchange rate system, the Hong Kong dollar moved for most of the time within a narrow range of HK$7.77 to HK$7.81 per US dollar during 1987. Along with the US dollar, however, it depreciated by 23 per cent against the Japanese yen and by 18 per cent against the German Deutschemark during the year. The Hong Kong dollar's overall exchange value, measured in terms of a new effective exchange rate index, fell by nine per cent. The depreciation of the Hong Kong dollar, particularly against the Japanese and European currencies, helped Hong Kong's export performance in these markets, although it also added to the inflationary pressure in the economy through higher import prices.

      Another consequence of the linked exchange rate system is that the movement of interest rates in Hong Kong should broadly follow that of the corresponding US dollar interest rates. Until the latter part of October, interest rates in the United States remained generally stable with a gradual upward trend. Consistent with this trend, local money market interest rates firmed up gradually, before easing sharply towards the end of the year. Deposit interest rates administered by the Hong Kong Association of Banks, following a downward adjustment early in the year, were adjusted upwards five times until the crash in the stock market in October, after which the rates were adjusted downward again. Averaged over the year, interest rates were still low compared with their levels in recent years.

      Demand for loans was generally strong as a result of the buoyant economic activity. Outstanding loans and advances extended by deposit-taking institutions grew by 56 per cent during the year. Among these loans, 52 per cent were for use within Hong Kong. Deposits with deposit-taking institutions and the money supply also increased, both by 28 per cent. As in the previous years, their foreign currency components grew faster than the overall totals, reflecting in part the development of Hong Kong as an international financial centre. At the end of 1987, about 40 per cent of the total deposits were in Hong Kong dollars. Rising local interest rates during the first three quarters of the year, however, dampened activities in the market for fixed-rate debt securities, which comprised pre- dominantly certificates of deposit. Most of the new issues were on floating-rate terms. At the end of December 1987, the total value of certificates of deposit issued and outstanding was $34 billion. On the same date, there was a total of eight Hong Kong dollar money market or capital market funds holding assets of about $341 million. These funds provide a useful vehicle for small investors to participate indirectly in the wholesale financial markets. The Hong Kong stock market had been extremely active up to October 19, 1987. Turnover for the first 10 months of the year amounted to $333 billion, 273 per cent higher than the corresponding period in 1986. The Hang Seng Index at the beginning of October stood at 3 950, compared with 2 090 a year earlier.

On October 19, 1987, as part of a world-wide collapse of equity markets, the Hang Seng Index dropped by 421 points. The Stock Exchange of Hong Kong subsequently closed the market for four days, during which time volatility and downward pressures continued to dominate markets overseas. On the re-opening of the local market on October 26, 1987, the Index dropped by an historic 1 121 points, wiping off 33 per cent of the total market value of the local stocks. The market continued to be volatile for a short while, in line with the situation in the overseas markets, but gradually stabilised thereafter.

Over the year, the total volume of turnover in the stock market amounted to $371 billion, 202 per cent higher than in 1986. The Hang Seng Index (July 31, 1964 = 100) ended the year at 2 303, compared with 2 568 at the end of 1986. There were 19 instances of companies going public and 28 rights issues, as well as 40 reconstructions of companies or re-activations of shell companies. A total of $44.1 billion of capital was raised in the stock market in 1987.

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THE ECONOMY

     The plummeting of the stock market in October precipitated a grave problem in the Hang Seng futures market, which suspended trading at the same time as the stock market. There was a large number of defaults on outstanding contracts, resulting in a substantial demand on the Guarantee Corporation which guarantees payment on all contracts executed on the Futures Exchange. To enable the Guarantee Corporation to meet its obligations and the futures market to continue operation, the government put together a rescue package to provide credit facilities of up to $4 billion to the corporation. Apart from the Exchange Fund, others parties also contributed significantly to the facilities, including a few banks, some members of the Futures Exchange and shareholders of the Guarantee Corporation. In the event, the rescue package succeeded in achieving the objective of ensuring continued operation of the futures market, and only $1.8 billion of the $4 billion facilities was actually utilised.

Before the crash, trading in Hang Seng Index futures was at a high level: turnover amounted to about 3.55 million lots for the first 10 months of 1987. Trading dropped significantly after October, however. For the year as a whole, about 3.61 million lots were traded.

As a result of the problems in the stock and futures markets, the government set up a Securities Review Committee in mid-November to review the management and operation of the Stock and Futures Exchanges and of the various regulatory bodies. The aim is to consider what changes are desirable to ensure the integrity of these markets, to protect investors, and to maintain Hong Kong as a major international financial centre. The review committee is expected to report in about six months.

Turnover in commodities futures during the year remained modest. For sugar, there were 282 237 lots of 50 long tons each; for soyabeans, 635 975 lots of 30 000 kg each; and for gold, 5 698 lots of 100 troy ounces each.

Unit trust funds continued to develop rapidly. The total number of unit trusts and mutual funds authorised in Hong Kong was 265 on December 31, 1987, compared with 211 at the end of 1986. This figure does not include the numerous sub-funds of authorised umbrella funds. There were 125 applications for authorisation outstanding at the end of 1987, compared with 68 a year earlier.

The price of loco-London gold moved between US$400 and US$498 a troy ounce during 1987, with active trading particularly in the latter part of the year. Movements in the price of gold in the bullion market operated by the Chinese Gold and Silver Exchange Society were similar to those of loco-London gold. The tael price of gold fluctuated between $4,606 and $3,644 during 1987, ending the year at $4,502.

Inflation

The rate of consumer price inflation, as measured by the Consumer Price Index (A), was 5.5 per cent in 1987. The corresponding rate in 1986 was 2.8 per cent. The pressure of demand on resources and the lagged effect of the increase in import prices brought about by the depreciation of the Hong Kong dollar were the main factors contributing to the more rapid increase in consumer prices. On the other hand, relatively stable import prices of goods from China provided some cushioning effect.

Among the various components of goods and services in the CPI(A), foodstuffs, transport and vehicles, and miscellaneous goods recorded the most rapid increases in prices in 1987, at average rates of increase of 9.6 per cent, 9.2 per cent and eight per cent respectively. These three components together accounted for 71 per cent of the overall increase in the Index.

THE ECONOMY

Government's Involvement in the Economy

Economic Policy

599

Economic policy in Hong Kong is to a large extent dictated, and constrained, by the special circumstances of the Hong Kong economy. Owing to its small and open nature, the economy is vulnerable to external factors, and government actions designed to offset unfavourable external influences are of limited effectiveness. Further, the government is of the view that, except where social considerations are regarded as over-riding, the allocation of resources in the economy will normally be most efficient if market forces are relied on and if government intervention in the private sector is kept to a minimum.

      This basically free-enterprise, market-disciplined system has contributed to Hong Kong's economic success. The narrowly-based tax structure with relatively low tax rates provides incentives for workers to work and for entrepreneurs to invest. Both workers and entrepreneurs are highly motivated, given that all individuals have equal opportunity to pursue the goals of individual betterment and the accumulation of wealth. The primary role of the government is to provide the necessary infrastructure and a stable legal and administrative framework conducive to economic growth and prosperity.

Monetary Policy

The government has consistently worked towards providing a favourable environment in the financial sector, with sufficient regulation to ensure, as far as possible, sound business standards and confidence in the institutional framework, but without unnecessary im- pediments of a bureaucratic or fiscal nature.

Unlike most major economies, Hong Kong has no central bank. Most of the functions which might normally be performed by one - such as prudential supervision of financial institutions, managing official foreign exchange reserves, undertaking certain types of open market operations, issuing banknotes, and providing banking services to the government - are carried out by different government offices under the Monetary Affairs Branch of the Government Secretariat or by selected commercial banks.

      There are few instruments available to the government for monetary policy purposes. From November 1974 until October 1983, the Hong Kong dollar was a floating currency. During this period, the government's role in directly influencing the exchange rate through intervention in the foreign exchange market was limited to ironing out short-term fluctuations.

On October 17, 1983, after a period of much instability in the exchange rate of the Hong Kong dollar, a revised exchange rate system was introduced. Under the new arrangement, certificates of indebtedness issued by the Exchange Fund, which the two note-issuing banks are required to hold as cover for the issue of Hong Kong dollar notes, are issued and redeemed against payments in US dollars at a fixed exchange rate of HK$7.80=US$1. In practice, therefore, any increase in note circulation is matched by a US dollar payment to the Exchange Fund, and any fall in note circulation is matched by a US dollar payment from the Exchange Fund. The two note-issuing banks in turn extend this fixed exchange rate to their note transactions with all other banks in Hong Kong. The market exchange rate of the Hong Kong dollar against the US dollar has remained stable and close to the fixed rate for banknotes since October 1983.

      This important aspect of Hong Kong's monetary framework means that the exchange rate is no longer a variable in the economy's adjustment process. Under the linked exchange rate system, interest rates, the money supply and the level of economic activity tend to

60

THE ECONOMY

adjust automatically to balance of payments pressures, without government intervention being necessary. Interest rates have therefore assumed a more passive role than before, changing more frequently in response to the inflows and outflows of funds.

The Hong Kong Association of Banks, which sets the maximum rates of interest payable on deposits of original maturities up to 15 months (except those of $500,000 or above with a term to maturity of less than three months) with licensed banks, has a statutory obligation to consult the government on the determination of these interest rates. This procedure is designed to ensure that the association takes the wider public interest into account in making its decisions, including their effect on the exchange rate. Under the linked exchange rate system, the interest rates administered by the association tend to follow the market interest rates quite closely. It is, therefore, no longer necessary or desirable for the government to play an active role in this process.

Through its bankers, the Exchange Fund operates a scheme which enables it to draw short-term funds out of the local interbank market and to ensure that these funds are not recycled back into that market. This arrangement has the effect of tightening up the local money market and putting upward pressure on short-term market interest rates. Thus, despite the change in the monetary framework which took place in October 1983, arrangements whereby the government may influence interest rates through the Hong Kong Association of Banks or the local money market still remain in place.

The Exchange Fund

The Hong Kong Government's Exchange Fund was established by the Currency Ordin- ance of 1935 (later renamed the Exchange Fund Ordinance). Since its inception, the Exchange Fund has held the backing to the note issue. In 1976, the role of the Exchange Fund was expanded, with the assets of the Coinage Security Fund (which held the backing for coins issued by the government) as well as the bulk of foreign currency assets held in the government's General Revenue Account transferred to the Fund. In both cases, the transfer was made against the issue by the Exchange Fund of interest-bearing debt certificates denominated in Hong Kong dollars. On December 31, 1978, the Coinage Security Fund was merged with the Exchange Fund and all the debt certificates held by the Coinage Security Fund were redeemed.

The Exchange Fund was further expanded in 1978 when the government began to transfer the Hong Kong dollar balances of its General Revenue Account (apart from the working balances) to the Exchange Fund against the issue of interest-bearing debt certificates. Thus the bulk of the government's financial assets are now held in the Exchange Fund, mainly in the form of bank deposits in certain foreign currencies and in Hong Kong dollars, and of interest-bearing instruments in foreign currencies.

     The principal activity for the Exchange Fund is the day-to-day management of these assets. Its statutory role as defined in the Exchange Fund Ordinance is to influence the exchange value of the Hong Kong dollar. The Exchange Fund is managed by the Monetary Affairs Branch of the Government Secretariat under the direction of the Financial Secretary, who is advised by a committee comprising prominent members of the banking and financial community.

     Another function related to the Exchange Fund is the supply of notes and coins to the banking system. Apart from a very small fiduciary issue, which is backed by securities issued or guaranteed by the British or Hong Kong government, currency notes in every- day circulation (currently of $10, $20, $50, $100, $500 and $1,000 denominations) may only be issued by the Hongkong and Shanghai Banking Corporation and the Standard

THE ECONOMY

61

     Chartered Bank Limited against holdings of certificates of indebtedness issued by the Exchange Fund.

These non-interest-bearing liabilities of the Exchange Fund are issued or redeemed as the amount of notes in circulation rises or falls. When the Hong Kong dollar was pegged to sterling prior to June 1972, certificates of indebtedness were issued against and redeemed in sterling at a fixed exchange rate. Between June 23, 1972 and November 24, 1974, when the Hong Kong dollar was pegged to the US dollar, and between November 25, 1974 and October 15, 1983, when the Hong Kong dollar was floating, such payments were made in Hong Kong dollars. Since October 17, 1983, certificates of indebtedness have been issued and redeemed by the two note-issuing banks against payments in US dollars at a fixed exchange rate of HK$7.80=US$1. The Exchange Fund bears the costs of maintaining the note issue (apart from the proportion of the costs which relates to the fiduciary issue), and the net profits of the note issue accrue to the fund. Coins of $5, $2, $1, 50 cent, 20 cent, 10 cent and five-cent denominations, and currency notes of one-cent denomination, are issued by the government. The total currency in circulation at the end of 1987, with details of its composition, is shown at Appendix 9.

Public Sector and Public Finances

     For analytical purposes, the public sector is conventionally taken to include the Hong Kong Government itself, together with the Housing Authority and the Urban and Regional Councils. Expenditure by institutions in the private or quasi-private sectors is included to the extent that it is met by government subventions but expenditure by organisations in which the government has only an equity position, such as the Mass Transit Railway Corporation and the Kowloon-Canton Railway Corporation, is not included.

      The government controls its finances through a series of fund accounts. The General Revenue Account is the main account for day-to-day departmental expenditure and revenue collection. Six other funds have been established mainly to finance capital expenditure and to make loans. They are the Capital Works Reserve Fund, the Develop- ment Loan Fund, the Home Ownership Fund, the Lotteries Fund, the Mass Transit Fund and the Student Loan Fund.

      The Capital Works Reserve Fund finances the Public Works Programme and land acquisitions. With effect from the entry into force on May 27, 1985 of the Sino-British Joint Declaration, the fund was re-structured to allow for implementation of Annex III to the Joint Declaration dealing with the accounting of premium income obtained from land transactions. The income of the fund is derived mainly from this source and from transfers from the General Revenue Account.

The Development Loan Fund is used mainly to finance social and economic develop- ments including, in particular, loans to the Housing Authority for the construction of public housing estates. Transfers are made from the General Revenue Account to the fund to meet the loan requirements of the Housing Authority. Otherwise the fund's income is derived from interest payments and capital repayments.

      The Home Ownership Fund finances mainly the construction of flats for sale under the Home Ownership Scheme. The Housing Authority is the government's agent for the design, construction and marketing of these flats. The fund was initially established by a transfer from the General Revenue Account, and derives its income from the proceeds of sales of the flats. The fund also finances the recurrent expenditure on the administration and planning of housing under the Private Sector Participation Scheme.

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THE ECONOMY

      The Lotteries Fund is used to finance the development of social welfare services through loans and grants. It derives its income mainly from a share of the proceeds of the Mark Six lotteries.

      The Mass Transit Fund is used to finance the purchase of government equity in the Mass Transit Railway Corporation. Its income is derived entirely from transfers from the General Revenue Account.

      The Student Loan Fund is used to finance loans to students at the two universities, the two polytechnics, the Baptist College and other approved post-secondary institutions, and to Hong Kong students studying in the United Kingdom. Transfers are made as necessary from the General Revenue Account to enable the fund to meet its commitments, the only other source of income being loan repayments.

Medium Range Forecast

The main technique used by the government in managing its own finances is the Medium Range Forecast. This is a rolling five-year forecast of expenditure and revenue which concentrates on the consolidated financial position of the General Revenue Account and of all the funds except the Lotteries Fund. Expenditure projections take account of expected increases in the demand for and supply of government services. Revenue projections reflect expected patterns of collection in the light of fiscal policies, fees and charges for government services, and the general economic outlook.

      Several principles underlie the strategy adopted in the Medium Range Forecast. The first is that the rate of growth of public sector expenditure should not exceed that of the Gross Domestic Product. The second is that there should be a broad balance of revenue and expenditure, although erring on the side of surplus to ensure that the government's fiscal reserves remain generally intact. The third is that, to preserve the stability of the government's finances, at least half of the capital expenditure should be financed from the operating surplus - the excess of recurrent revenue over recurrent expenditure. There are also other principles. These concern taxation policy, capital spending, and the size of the Civil Service.

The Budget presented by the Financial Secretary to the Legislative Council each year is set within the context of the Medium Range Forecast to ensure that full regard is given to these principles and to longer-term considerations.

The Public Sector

     Consolidated public sector expenditure in 1986-7 was $47.9 billion, of which the govern- ment itself accounted for $42.7 billion. The growth rate of public expenditure over the preceding year was 10.3 per cent in money terms, or 2.6 per cent in real terms after discounting for the effect of inflation.

A comparison of the growth rate of consolidated public sector expenditure with the rate of economic growth is at Appendix 12. The ratio of consolidated public sector expenditure to the Gross Domestic Product rose to 19.1 per cent in 1982-3, but fell back to 16 per cent in 1984-5 following budgetary measures to correct an underlying deficit at that time. Since then, it has remained at around 16 per cent.

Total government revenue and expenditure in 1986-7 were $48.6 billion and $42.7 billion respectively. The consolidated surplus of $5.9 billion comprised $3.9 billion in the balance on the General Revenue Account and $2 billion in the balances of the other funds. The surplus reflected higher profits tax yield than anticipated and higher stamp duty yield resulting from the higher turnover in the stock market. Details of the revenue sources and

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expenditure components for 1986-7 and estimates for 1987-8 are at Appendix 11. An analysis of expenditure by function is at Appendix 13.

      Some $12 billion (or 25 per cent) of consolidated account expenditure in 1986-7 was of a capital nature. The operating surplus for the year was sufficient to finance 73 per cent of this capital expenditure. The remainder was financed from capital revenue including revenue from land sales. The principle that at least half of the capital expenditure should be met from the operating surplus was, therefore, adhered to, and it is expected to be maintained in 1987-8.

There was no recourse to borrowing in 1986-7, and the balance of the government's outstanding borrowings at the end of the year was $1.4 billion.

Public Expenditure

The estimated expenditure on the General Revenue Account is set out in the draft Estimates of Expenditure, which are presented by the Financial Secretary to the Legislative Council when he delivers his annual Budget speech. It is the total estimated expenditure on the General Revenue Account for which appropriation is sought in the Appropriation Bill introduced into the Legislative Council at the same time.

      The Estimates of Expenditure contain details of the estimated recurrent and capital expenditure of all government departments, including estimated payments to subvented organisations and estimated transfers to the statutory funds. They also provide for the repayment of public debt.

      With only four exceptions, the General Revenue Account has shown a surplus of income over expenditure at the end of each year in the past 20 years. The exceptions were 1974-5 when there was a deficit of $380 million, 1982-3 when there was a deficit of $3,500 million, 1983-4 when there was a deficit of $2,993 million, and 1984-5 when there was a deficit of $1,563 million, of which $1,004 million was financed by the issue of Government Bonds. The accumulated net surpluses on the General Revenue Account form the government's fiscal reserves. These secure the government's contingent liabilities and ensure that it is able to cope with any short-term tendency for expenditure to exceed revenue.

      The Urban Council and Regional Council, operating through the Urban Services Department and Regional Services Department, draw up their own budget and expenditure priorities. The expenditures of the Urban Council and of the Regional Council are financed mainly from a fixed percentage of the rates from property in the Urban Council area (Hong Kong, Kowloon and New Kowloon) and in the Regional Council area (New Territories). Other income comes from the fees and charges for services provided by the councils.

      The Housing Authority, operating through the Housing Department, is also financially autonomous. Its income is derived mainly from rents. Where the cash flow is inadequate to meet the construction costs of new estates, the authority borrows from the Development Loan Fund on concessionary terms. The Housing Authority is provided with land for the construction of rental housing at nil premium, but the value of the land is shown in its balance sheet as a government contribution. Part of the authority's recurrent expenditure is financed from the General Revenue Account for such activities as squatter control and the management of Temporary Housing Areas. The authority is also responsible for carrying out a programme of squatter area improvements funded from the Capital Works Reserve Fund.

Revenue Sources

There is no general tariff on goods entering Hong Kong, but duties are charged on six groups of commodities irrespective of whether they are imported or manufactured locally.

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     These are hydrocarbon oil, alcoholic liquor, methyl alchohol, tobacco, non-alcoholic beverages, and cosmetics. All firms engaged in the import, export, manufacture or storage of these commodities must be licensed and, additionally, a sale licence is also required in certain cases.

Duty is payable on European-type liquor, except beer, cider and perry, at the rate of 20 per cent of the c.i.f. value of the liquor and, in addition, at the relevant specific duty rates. The specific duty rates on alcoholic liquors range from $1.28 a litre on beer to $67 a litre on brandy. On tobacco, the rates range from $43 a kilogram on Chinese prepared tobacco to $220 a kilogram on cigarettes. On motor and aircraft spirits the duty is $2.40 a litre, and on diesel oil for road vehicles it is $1.20 a litre. On methyl alcohol the duty is $4.30 a litre. On non-alcoholic beverages the duty is $60 a hectolitre. There is a 25 per cent ad valorem duty on the c.i.f. price for imported, or on the wholesale price for locally produced, cosmetics.

      Rates are levied on the occupation of landed property at a percentage of the assessed rateable value which is, briefly, the annual rent at which the property might reasonably be expected to be let. New valuation lists are prepared periodically as directed by the Governor, enabling rateable values to be reviewed and updated in line with market rental levels. The current lists came into effect on April 1, 1984, with all rateable values determined by reference to rents as at July 1, 1983. For newly assessed premises, the rateable values are also based on rental levels as at this reference date.

The percentage charges on rateable values are determined annually by resolution of the Legislative Council. For 1987-8 the charge is six per cent. In the Urban Council area (Hong Kong, Kowloon and New Kowloon) part of the rates charged is paid to the Urban Council, the remainder being credited to the General Revenue Account, whereas in the Regional Council area (New Territories) all the rates are paid to the Regional Council.

The relief scheme introduced on April 1, 1984 to cushion the impact of the increase in rates on ratepayers following the last revaluation was removed with effect from April 1, 1987. Rates are payable quarterly in advance and exemptions are few. However, the govern- ment generally provides financial assistance towards the payment of rates to non-profit- making educational, charitable and welfare organisations if the premises they occupy are being run in accordance with an approved target or policy. No refund of rates is allowed for vacant domestic premises but half of the rates paid may be refunded in the case of vacant non-domestic premises.

      During the year, a general review of all rateable values proceeded as planned. The new rateable values will take effect on April 1, 1988.

The taxes and duties making up the internal revenue, with the exception of the air passenger departure tax and the Cross Harbour Tunnel passage tax, are collected by the Inland Revenue Department. These consist of betting duty, entertainments tax, estate duty, hotel accommodation tax, stamp duty, and earnings and profits tax.

Betting duty is imposed on bets on authorised totalisators and on the proceeds of Mark Six lotteries. The rate of duty is either 9.5 per cent or 16 per cent of the amount of the bet, depending on the type of bet placed, and is 30 per cent on the proceeds of lotteries.

      Entertainments tax is imposed on the prices of admission to cinemas and to race meetings at rates which vary with the admission prices. These average about nine per cent in the case of cinemas and 29 per cent in the case of race meetings.

Estate duty is imposed on that part of a deceased's estate situated in Hong Kong. The rates of duty charged range from a minimum of six per cent on estates valued between $2 million and $2.5 million to a maximum of 18 per cent on estates valued in excess of $5 million. Estates valued at less than $2 million are exempt from duty.

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Hotel accommodation tax of five per cent is imposed on expenditure on accommodation by guests in hotels and guest houses.

The Stamp Duty Ordinance imposes fixed and ad valorem duties on different classes of documents relating to assignments of immovable property, leases and share transfers.

Earnings and profits tax are levied under the Inland Revenue Ordinance. Hong Kong has a schedular system of taxation whereby persons liable to tax may be assessed on four separate and distinct sources of income, namely business profits, salaries, income from property, and interest income. Personal assessment is a form of aggregation superimposed upon the schedular system. The standard rate of tax is 16.5 per cent.

Profits tax is charged only on profits arising in Hong Kong, or derived from Hong Kong from a trade, profession or business carried on in Hong Kong. Profits of unincorporated businesses are taxed at 16.5 per cent whereas profits of corporations are taxed at 18 per cent. Assessable profits are determined on the actual profits for the year of assessment. The tax is paid provisionally on the basis of profits of the year preceding the year of assessment. As in many countries, profits assessable to profits tax in Hong Kong are the net profits. Generally, all expenses incurred in the production of assessable profits are deductible. There is no withholding tax on dividends paid by corporations, and dividends received from corporations are exempt from profits tax.

      Salaries tax is charged on emoluments arising in or derived from Hong Kong. The basis of assessment and the method of payment are similar to the system for profits tax. Tax payable is calculated on a sliding scale which progresses from five per cent to 25 per cent at multiples of five per cent on segments of net income (that is, income after deduction of allowances) ranging from $10,000 (for the first two tax bands) to $20,000 (for the remaining two tax bands). However, the overall effective rate is restricted to a maximum of 16.5 per cent of income before the deduction of personal and other allowances.

Property tax is charged on the owner of land or buildings in Hong Kong at the standard rate of 16.5 per cent on the actual rent received, less an allowance of 20 per cent for repairs and maintenance. A system of provisional payment of tax similar to that under the profits tax and salaries tax applies. Property owned by a corporation carrying on a business in Hong Kong is exempt from property tax but the profits derived from the ownership are chargeable to profits tax.

      Interest tax is charged on interest arising in or derived from Hong Kong. This is basically a withholding tax deducted at source unless the interest forms part of the profits of a corporation carrying on a trade or business in Hong Kong, in which case it is subject to profits tax. The rate of interest tax on chargeable interest is 16.5 per cent. Interest paid on deposits with financial institutions carrying on business in Hong Kong is exempt from tax. Interest paid or payable by the government and the public utilities is also exempt from tax, provided it does not exceed a specified rate, which varies according to the prevailing level of interest rates.

      Business registration fees, which form part of the revenue from fees and charges, are also collected by the Inland Revenue Department. Business registration is compulsory for companies incorporated in Hong Kong, overseas companies with a place of business in Hong Kong, and businesses operating in Hong Kong, except those run by charitable institutions and licensed hawkers. The annual registration fee is $550, but exemption from payment is granted where the business is small. Every branch of a business is required to obtain a branch registration certificate and pay an annual registration fee of $15. In addition, a levy of $100, payable to the Protection of Wages on Insolvency Fund, is imposed on each business registration certificate issued to a business or its branch.

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      Other revenue arises from taxes on the registration of motor vehicles, fines, forfeitures and penalties, royalties and concessions, yields from properties, investments and land transactions, reimbursements and contributions, the operation of government utilities, and from fees and charges for the provision of a wide range of goods and services.

Audit of Public Accounts

The audit of all of the government's accounts is carried out by the Director of Audit. He also audits the accounts of the Urban Council, the Regional Council and the Housing Authority, and of more than 50 statutory and non-statutory funds and other public bodies, as well as reviews the financial aspect of the operations of the government-subvented organisations in Hong Kong. These include value-for-money audits, which are essentially an examination into the economy, efficiency and effectiveness with which any party under audit has been discharging its functions. The director's appointment, tenure of office, duties and powers are set out in the Audit Ordinance, and in guidelines tabled in the Legislative Council by the Chairman of the Public Accounts Committee on November 19, 1986. The Audit Ordinance also provides that the director shall not be subject to the direction or control of any other person or authority.

      The Director of Audit's report on the annual accounts of the government is submitted to the Governor as President of the Legislative Council for tabling. It is then referred to the Public Accounts Committee, comprising a chairman and six members, all of whom are members of the Legislative Council. In the exercise of its authority, the committee may call any public officer or other person concerned to give information and explanations and to produce any documents and records it may require. The committee holds its meetings in public except where the committee is of the opinion that the public interest requires confidentiality. The report by the Public Accounts Committee on the Director of Audit's report relating to the accounts of the government is also tabled in the Legislative Council. Both are copied to the Secretary of State. In response to a recommendation made by the committee itself, with effect from 1988, the annual cycle of the Public Accounts Committee will be split into two phases, involving the examination of reports by the Director of Audit and a subsequent response by the committee.

6

簡仁

Industry and Trade

      DUE to increased demand for Hong Kong products in most major overseas markets, the manufacturing industries performed very well in 1987. The value of domestic exports during the year amounted to $195,254 million, 27 per cent more than in 1986.

      Overall, the major factors that contributed to Hong Kong's success as a leading manufacturing and commercial centre continued to work well. Among these are a simple tax structure, a flexible and industrious workforce, a modern and efficient seaport with one of the world's leading container ports, a centrally located airport with a computerised cargo terminal, excellent world-wide communications, and the government's commitment to free trade and enterprise.

      Manufacturing industries are an important component of the Hong Kong economy, accounting for some 22 per cent of the gross domestic product and 35 per cent of total employment. It is estimated that up to 90 per cent of Hong Kong's manufacturing output is eventually exported. The shortage of usable land has generally constrained diversification into capital and land-intensive industries. Light manufacturing industries, producing mainly consumer goods and operating in multi-storey factory buildings, predominate. About 70 per cent of the total industrial workforce is employed in the textiles, clothing, electronics, plastic products, electrical appliances, and watches and clocks industries. These industries together accounted for 80 per cent of Hong Kong's domestic exports in 1987.

      Notwithstanding the concentration in light manufacturing, there has been a continuous process of up-grading in terms of quality and product range. Many new and sophisticated product lines have been introduced and many simpler ones abandoned, partly because of external competition and partly in response to demand in Hong Kong's established markets.

Trade

The year was another eventful one for trade. In the first half of the year, the last two bilateral textiles agreements due for renegotiation in the current cycle, those with Norway and Sweden, were renewed on less restrictive terms.

      A feature of the year was the decision by a number of Hong Kong's major trading partners, and by Hong Kong, to adopt in 1988 a new international system of trade classification, known as the Harmonised Commodity Coding and Description System. Consultations were held with a number of countries to ensure that the effects of any consequential tariff revisions would be neutral. Protracted and complicated negotiations were also necessary to deal with various problems arising from the introduction of the harmonised system on Hong Kong's bilateral textiles agreements.

      Much attention was again focused on developments with regard to protectionist legislation in the United States. The continuing American trade deficit maintained the

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impetus of the protectionist lobby. Considerable support was evident in the United States Congress for broad legislation to bring about so-called 'fair' trade. (Fortunately, there were signs of overdue recognition of Hong Kong's open market and fair trading practices, as a result of which the emerging legislative proposals, while unwelcome, did not pose a direct serious threat to Hong Kong. Of much greater concern was the proposed Textile and Apparel Trade Act 1987, the enactment of which would result in the abroga- tion by the United States of the international obligations under its existing bilateral textiles agreements. Again, however, there were signs of recognition in Congress that further protection for the American textile industry was unwarranted. By the end of 1987 it appeared unlikely that the measure could attract enough support to override a presidential veto.)

Hong Kong continued to participate actively in talks in the General Agreement on Tariffs and Trade (GATT) in Geneva. The Uruguay round of multilateral trade negotia- tions gained headway in 1987. While it was too early to predict how successful this round would be, the level of activity in Geneva was a clear indication of the importance attached by contracting parties to the many subjects discussed.

Textiles and Clothing

Textiles and clothing make up Hong Kong's largest industry, accounting for about 42 per cent of the total domestic exports and about 43 per cent of the industrial employment. Domestic exports of textiles and clothing in 1987 were valued at $81,326 million, compared with $63,117 million in 1986.

The spinning sector produces a variety of yarns. Cotton yarn remains the dominant product despite the increase in production of man-made fibre-blended yarns in recent years. The output of yarn of all fibres in 1987 was 232 million kilograms, compared with 198 million kilograms in 1986. Most of the yarn produced was used locally.

The weaving sector, with 22 819 looms, produced 885 million square metres of woven fabrics of various fibres and blends, compared with 801 million square metres in 1986. The bulk of the production - 96 per cent - was of cotton. A major proportion of the locally woven and finished fabrics was purchased by local clothing manufacturers.

The knitting sector exported 64 million kilograms of knitted fabrics in 1987 - of which 23 per cent was of man-made fibres or blended cotton man-made fibres, and 76 per cent was of cotton compared with 42 million kilograms in 1986. In addition, a large quantity of knitted fabric of all fibres was used by local clothing manufacturers.

-

The finishing sector provides sophisticated support facilities to the spinning, weaving and knitting sectors. It handles a large amount of textile fabrics and yarns for bleaching, dyeing, printing and finishing. The processes include yarn texturising, mercerising multi- colour roller, rotary and screen printing, heat transfer printing, sanforising, stone- wash, acid-wash, permanent pressing, polymerising, shearing, napping, glazing and schreinering.

     Clothing is the largest single sector of the industry, employing some 298 130 workers or about 34 per cent of the industrial employment. Domestic exports of clothing in 1987 were valued at $65,321 million, compared with $52,162 million in 1986.

Electronics

The electronics industry is the second largest export-earner after clothing. Domestic exports of electronics products in 1987 were valued at $42,048 million, compared with

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     $33,393 million in 1986. The industry comprises 1913 establishments employing 104 935 workers. Well known for its ready adaptability to fast-changing consumer requirements, it produces a wide range of sophisticated and high quality products and components, such as radios, cassette recorders, hi-fi systems, CD players, television sets, electronic watches and clocks, heart-beat monitors, electronic toys and games, wired and cordless telephones with built-in memories and automatic dialing functions, modems, PABX, cellular phones, calculators, photocopying equipment, microcomputers, disk drives, floppy disks, printers, switching power supplies, computer memory systems and add-on cards, read-write mag- netic heads, and computer-aided design and testing equipment. It also produces multi-layer printed circuit boards, liquid crystal displays, quartz crystals, and semi-conductor devices, including integrated circuit wafers.

Plastics

     The plastics industry produces a large variety of products including toys and dolls, household products, travel goods and handbags, packaging products, plastic footwear and plastic flowers. It accounted for seven per cent of the total domestic exports and 10 per cent of the total industrial employment in 1987. Domestic exports of plastic products during the year were valued at $13,876 million, compared with $12,716 million in 1986. The industry has 5717 establishments and 85 836 workers. Hong Kong continues to be one of the world's leading suppliers of toys, which represented the bulk of the industry's output.

Watches and Clocks

Hong Kong is an important world exporter of watches and clocks. Domestic exports in 1987 were valued at $13,856 million compared with $11,667 million in 1986. The industry has 1 666 establishments employing 31 433 workers. Production includes both mechanical and electronic watches, clocks, watch cases, dials, metal watch bands, assembled watch movements and watch straps of various materials.

Electrical Appliances

The electrical appliances industry accounted for three per cent of the total domestic exports and three per cent of the total industrial employment in 1987. Domestic exports of electrical appliances during the year were valued at $5,606 million, an increase of 16 per cent over 1986. The industry has 771 establishments and employs around 29 482 workers. Hong Kong continues to be one of the world's leading suppliers of electro-mechanical and domestic fans, which represented some 20 per cent of the industry's exports.

Other Industries

Other important light industries produce metal products, jewellery, optical and photo- graphic goods and travel goods, handbags and similar articles.

      The manufacture of machinery, machine tools and their parts provides support to other local industries and also contributes to Hong Kong's export trade. Of particular impor- tance are blow-moulding, extrusion, and injection moulding machines of up to 12 256-gram injection capacity for the plastics industry; power presses; lathes, shapers and drilling machines; polishing machines; printing presses; textile knitting and warping machines, and electroplating equipment.

      Hong Kong's shipyards provide a competitive repair service and build a variety of vessels. Several large shipbuilding and repair yards on Tsing Yi Island provide services to the shipping industry and construct and service oil rigs.

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The aircraft engineering industry has a high international reputation and provides extensive maintenance and repair services. Facilities are available for the complete overhaul of airframes and engines for many types of aircraft.

Industry Development Board

The Industry Development Board, which is chaired by the Financial Secretary, is the government's advisory body on all major industry-related matters. Members of the board comprise prominent industrialists, government officials and representatives from the tertiary education sector and other trade and industry organisations.

Support for Industry

The government aims to ensure, as far as possible, that the infrastructure - which in its broadest sense covers, for example, the physical, financial and legal infrastructure of Hong Kong - enables business activities, including manufacturing, to flourish. The government also seeks to encourage industry to increase its competitiveness and supports its efforts in this direction by providing services which help promote productivity, quality, product innovation and industrial investment.

Industry Department

The Industry Department is responsible for the implementation of the government's industrial policies. It carries out techno-economic studies and market research studies on the major industries, as well as smaller-scale surveys of other industries, to enable the government to chart the course for providing the necessary support for industry. It promotes the wider application of quality assurance by maintaining measurement and documented standards as authoritative points of reference for industry, calibration services and a laboratory accreditation scheme. The department also promotes overseas investment in manufacturing, principally to encourage overseas manufacturers to introduce new and improved products, designs and processes and management techniques into Hong Kong.

During the year, a scheme to train engineers in the design of applications-specific integrated circuits was introduced and plans for a plastics technology centre, to provide technological assistance to the plastics conversion industry, were formulated.

In September, the department launched a six-month Industrial Extension Service pilot scheme, involving visits by its staff to over 300 small and medium-sized factories in the manufacturing sector, to promote greater use of the industrial support services provided directly or indirectly by the government. During these visits, possible operational and other improvements were discussed with the factory management and referrals were made to the particular organisations able to assist.

      Additional land and accommodation was made available for industry. The government put up for sale by auction or tender 13 pieces of industrial land with a total area of 56 493.1 square metres. Developers completed 540 600 square metres of flatted factory space. Of the stock of flatted factory space available in the market, 804 300 square metres or 76 per cent was taken up.

      Calibration services for electronic, electrical, temperature, mass and length measure- ments were provided by the Standards and Calibration Laboratory, which has been accredited by the United Kingdom's National Measurement and Accreditation Service.

      Demand for information and technical advice on overseas product standards continued to grow and was met by the Product Standards Bureau.

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The Hong Kong Laboratory Accreditation Scheme, which seeks to introduce quality assurance in Hong Kong's testing laboratories, accredited nine laboratories during the year and extended the scope of its accreditation to include laboratories which test construction materials.

The Industrial Investment Promotion Division, through its 'One Stop Unit' in Hong Kong and overseas offices in San Francisco, New York, London, Brussels and Tokyo, helped to attract $306.25 million worth of overseas investment into Hong Kong during the year, despite a fiercely competitive environment in which prospective investors are pressed by other parties in the region and by development authorities in their own country. These investments channel valuable new technology and expertise to Hong Kong.

Hong Kong Productivity Council

The Hong Kong Productivity Council was established by statute in 1967 to promote the increased productivity of industry in Hong Kong. It is financed by an annual government subvention and by fees earned from its services. The council consists of a chairman and 20 members appointed by the Governor. Its membership is drawn from the management, labour, academic and professional fields and from government departments.

The council has over 300 staff members with expertise in a wide range of disciplines. It provides a variety of training programmes, industrial and management consultancies and technological support services using resources available in its nine operational divisions: Computer Services, Electronics Services, Engineering Services, Metals Development, Indus- trial and Management Consultancy, Training, Environmental Management, Information Services and Administration.

Its facilities include five training centres - in Tsim Sha Tsui headquarters, To Kwa Wan, Tai Kok Tsui, Mong Kok and Central District; electronic data processing facilities; microprocessor application, industrial chemistry, metal finishing, heat treatment, die casting and environmental control laboratories; a computer-aided design service centre and computer aided manufacturing workshop; a technical reference library and an on-line information retrieval service.

Funds were provided by the government for the second year of a three-year programme to enable the council to provide an integrated industrial automation service and an enhanced metals development service. Initial efforts were concentrated on equipment installation, staff recruitment and training, and developing basic skills in computer-aided design and manufacturing. Limited manufacturing support services and training pro- grammes in advanced machining, and design and manufacture of moulds were offered to industry on a progressive basis.

There was sustained demand for the consultancy and technical support services from both local and overseas companies. The council completed 480 consultancy projects, including feasibility studies, production management, new plant projects, personnel recruitment, marketing and technical assistance.

The council organised over 500 training courses for 12 500 participants, covering man- agement and supervisory techniques, advanced programming and electronic data processing, and a range of technology programmes for various industries. It also organised exhibitions on clothing technology, computer software and automation technology. Twenty-six overseas study missions and visits were organised for local industrialists to gain first-hand information on the latest technology in various areas, including electroplating, electroform- ing, hot metal working, environmental control, Just-In-Time system, quality control, precision tooling, advanced plastic processing and computerised materials management.

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      The council celebrated its 20th anniversary in 1987. With the increasing demand for its services, the council sought a grant of land in Kowloon Tong during the year for the construction of a special-purpose building to bring all its activities under one roof and to accommodate its planned expansion.

      The council is the government's implementing agent on all matters concerning the Asian Productivity Organisation (APO). During the year, under the sponsorship of the APO, the council held two seminars, attended by delegates from most Asian countries, on strategic land use and environmental management.

The Hong Kong Industrial Estates Corporation

The Hong Kong Industrial Estates Corporation develops and manages fully-serviced industrial estates to enable industries with a relatively high level of technology that cannot operate in ordinary multi-storey factory buildings to set up in Hong Kong. There are two industrial estates. The Tai Po Industrial Estate now has a total of 69 hectares of land. The Yuen Long Industrial Estate provides 67 hectares of industrial land.

Land on the industrial estates is sold by the corporation to applicants at premia based on cost. By the end of 1987, 91 companies had been granted sites on the two estates.

Besides providing sites to industrialists for the construction of their own purpose-built factory buildings, the corporation also provides pre-built factory premises for those who wish to begin production with a minimum of delay. These standard factories are fully serviced and provide maximum flexibility. One four-storey standard factory and three blocks of single-storey standard factories in each of the estates have been constructed and occupied and a contract has been awarded for a further two single-storey standard factories to be built on the Yuen Long Industrial Estate.

      By the end of 1987, 52 hectares of land remained available for application. Consideration is being given to the construction of a third industrial estate.

External Trade

External trade was buoyant in 1987. Total merchandise trade amounted to $755,982 million, an increase of 37 per cent over 1986. Imports rose by 37 per cent to $377,948 million and re-exports by 49 per cent to $182,780 million while domestic exports increased by 27 per cent to $195,254 million. Domestic exports and re-exports together, valued at $378,034 million, registered an increase of 37 per cent. Appendices 15 and 16 provide summary statistics of external trade.

Imports

Hong Kong is almost entirely dependent on imported resources to meet the needs of its population of 5.66 million and its diverse industries. In 1987, imports of raw materials and semi-manufactured goods totalled $165,470 million, representing 44 per cent of total imports. The principal items imported were fabrics of man-made fibres ($17,734 million); transistors, diodes, semi-conductors and integrated circuits ($12,690 million); plastic moulding materials ($11,590 million); woven cotton fabrics ($10,678 million); iron and steel ($7,939 million) as well as watch and clock movements, cases and parts ($8,587 million).

Consumer goods, valued at $119,990 million, constituted 32 per cent of total imports. The major consumer goods imported were: clothing ($25,944 million); radios, television receivers, gramophones, records, amplifiers and tape recorders ($12,785 million); diamonds ($8,278 million); baby carriages, toys, games and sporting goods ($7,382 million); watches ($6,459 million); travel goods, handbags and similar containers ($5,912 million) as well as cameras and photography supplies ($3,916 million).

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      Imports of capital goods amounted to $56,914 million, or 15 per cent of total imports. Imported capital goods consisted mainly of electrical machinery ($8,854 million), transport equipment ($7,276 million), office machines ($4,841 million), textile machinery ($3,501 million), electronic components and parts of computers ($6,892 million).

      Imports of foodstuffs were valued at $26,754 million, representing seven per cent of total imports. The principal imported food items were fish and fish preparations ($5,859 million), fruit ($3,747 million), meat and meat preparations ($2,952 million) and vegetables ($2,708 million).

       Mineral fuels, lubricants and related materials worth some $8,819 million were im- ported in 1987, representing two per cent of total imports.

      China and Japan were the two principal suppliers of imports in 1987, providing 31 per cent and 19 per cent, respectively, of the total. China alone supplied 40 per cent of Hong Kong's imported foodstuffs. Taiwan ranked third, providing nine per cent of total imports, followed by the United States, the Republic of Korea, Singapore, the United Kingdom and the Federal Republic of Germany.

Exports

Clothing remained the largest component of domestic exports, being valued at $65,321 million or 33 per cent of the total. Exports of miscellaneous manufactured articles consisting mainly of plastic toys and dolls; jewellery; goldsmiths' and silversmiths' wares as well as plastic articles were valued at $29,983 million, representing 15 per cent of total domestic exports. Textiles were valued at $16,005 million (eight per cent of the total). Telecommunications and sound recording and reproducing apparatus and equipment amounted to $14,873 million or eight per cent of the total. Domestic exports of photo- graphic apparatus, equipment, supplies and optical goods, watches and clocks, valued at $15,646 million, contributed another eight per cent to the total. Other important exports included electrical machinery, apparatus and appliances consisting mainly of household type appliances; transistors and diodes (seven per cent) as well as office machines and automatic data processing equipment (five per cent).

      The direction and level of Hong Kong's export trade is much influenced by economic conditions and commercial policies in major overseas markets. In 1987, 59 per cent of all domestic exports went to the United States and the European Economic Community (EEC). The largest market was the United States ($72,817 million or 37 per cent of the total), followed by China ($27,871 million or 14 per cent), the Federal Republic of Germany ($14,855 million or eight per cent) and the United Kingdom ($12,905 million or seven per cent). Domestic exports to Japan and Canada increased to $9,489 million and $5,656 million respectively, with Japan representing five per cent and Canada three per cent of total domestic exports. Other important markets were the Netherlands, Singapore and France.

Re-exports

Re-exports showed very significant increases in 1987, and now account for 48 per cent of the combined total of domestic exports and re-exports. The principal commodities re-exported were textiles ($28,332 million); clothing ($18,279 million); miscellaneous manufactured articles ($17,884 million); electrical machinery, apparatus and appliances ($15,956 million); telecommunications and sound recording and reproducing apparatus and equipment ($11,955 million) as well as photographic apparatus, equipment, supplies and optical goods, watches and clocks ($8,163 million). The main places of origin of these

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re-exports were China, Japan, the United States and Taiwan. The largest re-export markets were China, the United States, Taiwan, the Republic of Korea and Japan.

External Commercial Relations

Hong Kong believes in free trade. The aims of Hong Kong's external commercial relations policy are thus to safeguard its rights and to discharge its obligations in the pursuit of free trade. The most important of these rights and obligations are contained in the General Agreement on Tariffs and Trade (GATT) and the Multi-Fibre Arrangement (MFA).

Textiles

Textiles trade is the major sector that has been hardest hit by restraints. Bilateral agree- ments negotiated under the MFA govern Hong Kong's textiles exports to Austria, Canada, the European Economic Community, Finland, Norway, Sweden and the United States.

     The new bilateral textiles agreement between Hong Kong and the EEC, concluded at the end of 1986, governs Hong Kong's exports of cotton, man-made fibres and wool textiles to the 12 member states of the EEC from 1987 to 1991. In October and November, two rounds of consultations between Hong Kong and the EEC were held to address the problems arising from change of product definitions due to the adoption of the Harmonised Commodity Description and Coding System by the EEC. Agreement was reached on adjustments to the quota levels of 16 categories restrained under the bilateral textiles agreement.

The bilateral textiles agreement with Norway expired in June 1987. Negotiations in March and April led to a new and somewhat less restrictive three-year agreement which contained improved growth and flexibility provisions. The bilateral textiles agreement with Sweden also expired in August 1987. Negotiations in June led to a new agreement with improved provisions for a further period of five years.

A new five-year textiles agreement was concluded with Canada on January 17, with retroactive effect from January 1. The main features of the agreement are the extension of coverage to silk blends and non-cotton vegetable fibres for nine apparel items and the introduction of a group structure for application of the swing provision. The new agreement further tightens restraints on apparel categories as the average growth rates have been reduced although the overall growth rate is about the same as before. The new agreement is restrictive, especially as regards apparel. There are nevertheless no cutbacks and modest growth has been provided for the textiles trade in the next five years.

A major threat to Hong Kong's textile trade was the introduction of the Textile and Apparel Trade Act of 1987 to the US Congress on February 19. The bill contained provisions to limit imports of textiles and apparel into the US to 1986 import levels on a product-by-product basis with annual growth at one per cent.

If the bill were passed, it would lead to widespread disruption in the textiles and apparel trade. It would be in violation of the GATT, the MFA and the bilateral agreements between the US and various developing exporters including Hong Kong. Moreover, the bill would undermine efforts to strengthen the world trading system through the Uruguay Round of trade talks under the GATT. While it was not possible to assess precisely the full implications for Hong Kong if the bill were to be enacted, it was certain the institution of global quotas would inevitably lead to cutbacks in Hong Kong's market access.

     Like its predecessor, the "Textile and Apparel Trade Enforcement Bill' (generally known as the Jenkins Bill), the bill was indicative that protectionist sentiment was still strong in the US. Hence, Hong Kong's battle against the textile bill lasted for most of 1987. In this

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connection, Hong Kong worked in concert with various countries and organisations on both the multilateral and domestic fronts to counter the bill.

Non-textiles Issues

     French Quantitative Restrictions: The quantitative restrictions on Hong Kong digital quartz watches, toys and radio imports into France were lifted at the beginning of 1987.

Generalised Systems of Preferences (GSP): In June, the EEC Commission proposed exclusion of 31 Hong Kong products from GSP benefits in 1988. Hong Kong made a detailed submission to the Commission in July opposing the exclusion. The EEC eventually decided to reduce the GSP benefits of these products by 50 per cent in 1988.

Hong Kong actively took part in the general review of the United States Generalised System of Preferences mandated by the United States Congress when the GSP programme was extended for 8 years in January 1985. Under the review, the United States President was required to determine the extent of preferential treatment granted to beneficiary countries, taking into account individual beneficiary's level of development, its com- petitiveness in respect of GSP articles and its trade practices. In January 1987, the results of this general review were announced and Hong Kong was able to maintain its level of benefits under the system. Modifications made as a result of the review took effect in July. The Harmonised Commodity Description and Coding System (Harmonised System or HS): the HS is scheduled for adoption by the world's major trading entities, including Hong Kong, from 1988. Hong Kong entered into consultations with its trading partners to ensure that the recalculation of duty rates for some products brought about by the introduction of the system would not adversely affect Hong Kong's trade. Consequently, there were no duty increases for some of the items of major trading interest to Hong Kong. In some cases the talks ended in tariff savings in overall terms for Hong Kong.

Documentation of Imports and Exports

As a free port, Hong Kong keeps its import and export licensing requirements to a minimum. Products over a wide range do not need licences to enter or leave Hong Kong. Where licences are required, they are intended to achieve two main objectives. Firstly, they help Hong Kong to fulfil its international obligations to restrain exports of textiles products and, related to this, to monitor the flow of these products into Hong Kong. Thus there is a requirement for all imports and exports of such products to be covered by licences issued by the Director of Trade. Secondly, they help Hong Kong to control, on health or safety grounds, exports and imports of a few types of non-textile products such as strategic commodities, pharmaceuticals and agricultural pesticides.

There is in Hong Kong a certification of origin system to establish the origin of the goods which Hong Kong exports and to meet the requirements of the importing authorities. The Trade Department administers and safeguards the integrity of this system, and issues certificates of origin where required. Other government-approved certificate-issuing organ- isations are the Hong Kong General Chamber of Commerce, the Indian Chamber of Commerce, the Federation of Hong Kong Industries, the Chinese Manufacturers' Associa- tion of Hong Kong, and the Chinese General Chamber of Commerce.

Trade Department

The Trade Department is responsible for Hong Kong's commercial relations with foreign governments. It implements trade policy and agreements, and procedures for import and export licensing and origin certification. On matters of policy affecting trade, the Director

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of Trade takes advice from the Trade Advisory Board and the Textiles Advisory Board, both of which are appointed by the Governor and chaired by the Secretary for Trade and Industry.

The department consists of five divisions. Three of them deal with bilateral commercial relations with Hong Kong's trading partners. Their work includes the conduct of trade negotiations and the implementation of textile agreements, as well as collecting and disseminating information on developments, especially those relating to trade policy in Hong Kong's major markets, which may affect Hong Kong. The distribution of work among these three divisions is by geographical area. The fourth division deals with the multilateral aspects of Hong Kong's external commercial relations, such as its participation in the General Agreement on Tariffs and Trade and in the negotiation of the Multi-Fibre Arrangement. The fifth division is responsible for common services, origin certification, the import and export licensing of commodities other than textiles, and a rice control scheme. The department's work is assisted by Hong Kong Government Offices in London, Brussels, Geneva, New York, Washington and San Francisco. Details are at Appendix 6. These overseas offices are administered by the Trade and Industry Branch of the Government Secretariat. They represent Hong Kong's commercial relations interests on a day-to-day basis and provide information on international developments which may affect Hong Kong.

Customs and Excise Department

The main functions of the Customs and Excise Department are to enforce the laws of Hong Kong related to dutiable commodities, dangerous drugs, import and export controls, intellectual and industrial property rights, to collect revenue on dutiable commodities and to carry out trade related inspections and investigations.

     The department is organised into three major branches: the Headquarters Branch is responsible for administration, revenue and training; the Operations Branch comprises the three Customs and Excise Service regions together with the four Trade Inspection divisions; and the Investigation Branch comprises the Customs Investigation Bureau, the Trade Investigation Bureau and the Trading Standards Investigation Bureau. The functions of the department are carried out by two groups of staff: the Customs and Excise Service which is described in Chapter 15 (Public Order) and the Trade Controls Group.

     The Trade Controls Group is manned by officers of the Trade Controls Officer Grade. Its Trade Inspection Group is responsible for inspection of factories and consignments in connection with certificates of origin, textile quota controls, import and export licences, verification of trade declarations and manifests, and control of reserved commodities. Its Trade Investigation Bureau and Trading Standards Investigation Bureau are responsible for investigating licensing and origin fraud, false trade descriptions, infringements of industrial and intellectual property rights and for handling trade complaints.

During the year, the group completed 67 768 inspections of factories and consignments, 1 582 costing checks in connection with certificate applications under the Generalised Schemes of Preferences (Form A) and 102 101 enquiries and verifications relating to trade declarations and manifests. It conducted 6 851 assessments on trade declarations, which resulted in the collection of $4.4 million in ad valorem charges and administrative penalties. As a whole, the Trade Controls Group completed 2 875 investigations. Successful prosecutions in this area resulted in the imposition of fines totalling $24.8 million as well as prison sentences. The work of the Trading Standards Investigation Bureau is further explained in Chapter 15.

a new

bridge for Tsing Yi Island

further extension to the Central financial and business district

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-structure for new Bank of China,

overlooking Chater Gardens

BLEENTED

Cultural Centre taking shape în Tsim Sha Tsui .

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tunnel work site for Eastern Harbour Crossing

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Hong Kong Trade Development Council

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The Hong Kong Trade Development Council is a statutory body responsible for promoting and developing Hong Kong's overseas trade and publicising the opportunities and advantages of Hong Kong as a trading partner.

      The chairman is appointed by the Governor and the 18 other members include representatives of major trade associations, leading businessmen and industrialists, and two senior government officials. The council is financed by the net proceeds of an ad valorem levy on all exports and on imports other than foodstuffs, and by miscellaneous income from sources such as advertising fees and sales of publications.

The council was established in 1966 and has built up a network of 23 offices throughout the world, in addition to the head office in Hong Kong and local branch offices in Tsuen Wan and Kwun Tong. All offices process trade enquiries, provide up-to-date trade and economic information and offer advice to businessmen interested in developing trade with Hong Kong. The overseas representatives and consultants can put traders in touch with any of the 30 000 Hong Kong manufacturers and exporters registered in the Trade Enquiries Service computer. Furthermore, local businessmen can find markets for their goods through 100 000 overseas importers and buyers registered with the council.

      The computerised Trade Enquiries Service of the council processed more than 170 000 overseas and local trade enquiries. The Research Department continued to publish special market surveys and detailed product reports, specifying opportunities in overseas markets for Hong Kong exports.

      Council staff carried out an extensive trade promotion programme in 1987, organising more than 80 major international projects. In the United States, these included the Winter Consumer Electronics Show in Las Vegas and the Summer Consumer Electronics Show in Chicago, the American Toy Fair in New York, the International Houseware Exposition in Chicago and the New York International Gift Fair.

      In Europe, the council participated in the International Toy Fair in Nuremburg, the Frankfurt International Spring and Autumn Fairs, the Birmingham International Spring Fair and Domotechnica in Cologne, as well as the Swiss Industries Fair in Basle.

      This year saw the opening of another HKTDC office in the People's Republic of China - Shanghai. The council also took part in 16 projects in China, including seminars, missions, exhibitions and business groups.

      A variety of Hong Kong business groups under the auspices of the council visited the United States, Europe, China, the Middle East and Japan to enhance old, or establish new, trade contacts. The council also received more than 200 inward missions from more than 40 countries, most notably from the United Kingdom, the United States, Japan, China, the Federal Republic of Germany, Canada and Sweden.

      In Hong Kong, the council staged a Hong Kong Fashion Week and was involved in the sixth Hong Kong Watch and Clock Fair, the Hong Kong Fur Fair and the Hong Kong Gifts and Houseware Fair.

      In the very successful store promotions, the HKTDC joined forces with Hertie Waren und Kaufhaus GmbH in West Germany for a country wide promotion in September involving 62 stores. In Japan, the council staged promotions at the Seibu department store in Tokyo in March and once again in seven of the A.I.C. chain of department stores in October and November.

      The council produces two product magazines, a fashion magazine and a newspaper for general circulation. They are Hong Kong Enterprise, a monthly general products magazine; the annual Hong Kong Toys, published each January to coincide with the Hong Kong

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International Toys and Games Fair; Hong Kong Apparel, a prize-winning quarterly fashion magazine and the Hong Kong Trader, a bi-monthly newspaper (sent airmail) giving news and views of the territory. The council also publishes five specialised trade magazines - Hong Kong Jewellery Annual, Hong Kong Watches and Clocks, Hong Kong Household and Hong Kong Gifts and Premiums (all annuals), plus a biannual, Hong Kong Electronics - which are distributed only at trade fairs and exhibitions throughout the world. A guidebook, Hong Kong For The Business Visitor, is published annually in seven languages (English, Chinese, French, German, Italian, Spanish and Japanese).

      The council's Overseas Associations Section administers the Hong Kong-United States Economic Co-operation Committee. In June, the 10th plenary session of the Hong Kong- Japan/Japan-Hong Kong Business Co-operation Committee was held in Hong Kong and focused on the general threat to world trade from protectionism.

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This section also monitors the activities of nine overseas associations - in Sweden, Spain, Canada, Austria, the Netherlands, the United Kingdom, Italy, Australia and New Zealand. Construction work is proceeding on the Hong Kong Convention and Exhibition Centre, the cornerstone of which was laid by the Queen during her visit in October 1986. Supporting facilities for the centre include two five-star hotels with a total of 1 500 rooms - and two towers containing office space, a trade mart and service apartments. The government provided the 2.96 hectare site on the Wan Chai waterfront through a private treaty grant, free of premium. The portion of the development to be retained by the council will ultimately comprise around 73 000 square metres, and will include two 9 100 square- metre exhibition halls, a 2 000 square-metre conference/convention hall, two auditoria with seating for 700 and 360, plus a variety of small function rooms - and two towers containing office space and service apartments. The centre is scheduled to open in late 1988.

Hong Kong Export Credit Insurance Corporation

The Hong Kong Export Credit Insurance Corporation (ECIC) is a statutory corporation established in 1966 to issue insurance contracts which protect exporters and manufacturing exporters against risks of monetary loss arising from non-payment by their overseas buyers for goods and services supplied on credit. The ECIC is autonomous in its day-to-day operations, with major formulation and changes in policy being subject to the approval of the Financial Secretary. Its capital of $20 million is provided by the government which also guarantees the underwriting liabilities up to $4,200 million. The corporation, which is required to operate commercially, is assisted in the conduct of its business by a 12-member advisory board.

      As a member of the International Union of Credit and Investment Insurers (the Berne Union), the corporation has regular access to confidential and updated economic and marketing information on all major trading countries.

      The primary function of the corporation is to improve the competitiveness of Hong Kong's exports, by protecting policy-holders against losses arising from those risks not normally covered by commercial insurers, namely, commercial risks of an overseas buyer and the political risks of his country. The maximum percentage of indemnity is 90 per cent. The protection provided by the corporation's policies helps policy-holders to obtain from their bankers trade finance and discount facilities for export operations.

The corporation also provides policy-holders with supporting services in resolving pay- ment difficulties, and in the supply of political and economic intelligence on overseas markets, as well as giving indications as to the credit-worthiness of individual overseas buyers.

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Transactions which include documents against payment, documents against acceptance and open account invoices concluded on short-term credits (maximum 180 days) are normally insured under a Comprehensive Shipments Policy which gives protection from the date of shipment. Cover can also be made effective from the date of the contract of sale instead of the date of shipment so as to provide the exporter with protection during the manufacturing stage. For exports of capital goods and services sold on medium or long-term credits with payments spreading over two to five years or longer, the corporation provides other types of insurance policies to cater to the individual needs of the exporters. There has been a tendency for overseas buyers to establish their own buying offices in Hong Kong. More recently, the buying offices have gradually moved away from their traditional role as agents for the overseas parent companies to become principals in their own right in transactions with local manufacturers or suppliers. This means when the buying office defaults or becomes insolvent, the Hong Kong manufacturer has no legal right to pursue payment from the parent company of the buying office. To protect Hong Kong manufacturers, the corporation created in early 1987 a new facility to cover the credit risks on sales by Hong Kong manufacturers and suppliers to the buying office.

      Although the corporation itself does not provide finance, exporters find the 'letter of authority' a useful form of collateral security in negotiating export finance facilities. For exports on medium and long-term credits, the corporation can, upon application, provide a full unconditional guarantee directly to the exporter's banker.

       Many of the corporation's business operations have been computerised. This enables the corporation to deal with policyholders' enquiries speedily in respect of around 55 000 overseas buyers and to process some 10 000 credit limit applications a year.

      In 1987, close to $8,800 million in goods and services were insured by the corporation, which earned a premium income of more than $54 million. Some 80 claims were paid, involving a total of $13 million.

Other Trade and Industrial Organisations

The Hong Kong General Chamber of Commerce, founded in 1861, is the oldest and largest trade and industrial association in the territory. It comprises more than 2 700 companies representing all branches of commerce and industry. The chamber is actively involved in promoting Hong Kong's trade and attracting new industries. It is a member of the International Chamber of Commerce and has been approved by the Economic and Social Commission for Asia and the Pacific to arbitrate in commercial disputes. The chamber provides a wide range of services to its members and to more than 8 000 non-member companies. These include the issue of certificates or origin, commercial carnets, endorse- ment of invoices and the processing of trade and industrial enquiries. The government regularly consults the chamber on important issues affecting trade, industry and aspects of social development.

       An independent body incorporated in 1981, the Hong Kong Trade Facilitation Council was set up to promote, stimulate and assist the facilitation of international trade procedures and the documentation and information flows associated with them. Its members comprise representatives of the government, and of trade and industrial organisations. In recent years, the emphasis in trade facilitation work has shifted from paper to the transmission of essential trade data by sophisticated electronic means. In line with this trend, the council is looking into a proposal for a comprehensive electronic system for the transfer of data between interested parties. To keep itself abreast of developments elsewhere, the council

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liaises closely with other international bodies and sends representatives to attend United Nations-sponsored and other international meetings from time to time.

The Federation of Hong Kong Industries was established by statute in 1960 to promote and protect the interests of Hong Kong industry, and to provide a strong central organisation to which all manufacturing industries in Hong Kong could belong. It keeps watch on all matters affecting the manufacturing industries and reflects their views to government. It has a membership which is broadly representative of all industries. The federation provides a wide range of services to both members and non-members, covering certificates of origin, a custom built multi-risks insurance policy, consultancy work on all aspects of quality assurance, trade enquiries and joint venture requests, translation services, and specialised research tailored to particular needs.

Through its Design and Packaging Centre, which is the executive arm of the Design Council of Hong Kong, the federation offers design depository, design index, packaging consultancy and testing services. It organises the annual Governor's Award for Hong Kong Design competition, Hong Kong Young Designer of the Year Award and various design and packaging certificate courses. It operates the Q-Mark scheme, under the supervision of the Hong Kong Q-Mark Council, through which licences are issued in respect of products found to comply with internationally approved standards and manufactured under an adequate quality control system. It also services the Hong Kong Toys Council and Transport Services Council, which are open to all companies and manufacturers interested in the toy and transport business in Hong Kong. To cater for companies in the non- manufacturing sector, the federation runs a consultancy service which entitles sub- scribers to a full range of its services. It publishes a monthly magazine, the Hong Kong Industrial News, and a biennial Members' Directory. It sponsors exhibitions and fairs, and organises seminars and conferences on various industrial issues.

The Chinese Manufacturers' Association (CMA) of Hong Kong was established in 1934. It has a membership of over 3 600 industrial and trade establishments. A member of the International Chamber of Commerce, the CMA has played an important role in the industrial development of Hong Kong and is consulted by the government in connection with formulation and implementation of public policies. It is authorised by the government to issue certificates of origin. It operates a trade enquiry section, organises missions and sponsors trade fairs in support of trade promotion, promotes product development and investment cooperation between local and overseas industrialists, and holds the annual Hong Kong New Products Competition. It also provides services to introduce new technology and assist manufacturers to upgrade product quality standard. The CMA Testing and Certification Laboratories provide a wide variety of services including product testing, certification, production and pre-shipment inspection and technical consultancy. The association promotes industrial safety and manpower development in the industrial sector and runs two prevocational schools which provide technical education for more than 2 000 students. It has organised the annual CMA and Donors Scholarships Scheme since 1964 as a token of its support to technical education.

      Founded in 1900, the Chinese General Chamber of Commerce, Hong Kong, is an association of Chinese firms and businessmen resident in Hong Kong. It has a membership of more than 6 000. In addition to the traditional activities of a chamber of commerce, it maintains close contact with trade organisations in China and actively seeks to promote two-way trade between China and Hong Kong. This is highlighted by the fact that since 1957 the chamber has been authorised by the Chinese Export Commodities Fair authorities to issue invitations on their behalf to Chinese firms situated in Hong Kong. It is also one of

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the five commercial and industrial organisations authorised by the government to issue Hong Kong certificates of origin. In 1985, it became a functional constituency of the Legislative Council together with the Hong Kong General Chamber of Commerce, the Federation of Hong Kong Industries and the Chinese Manufacturers' Association.

      The Hong Kong Management Association is an incorporated body established in 1960 for the purpose of improving the effectiveness and efficiency of management in Hong Kong.

      The association regularly offers management consultancy services and management training courses. Other services provided include the publication of a bilingual journal "The Hong Kong Manager', and a series of Chinese language books on management, library and information services, seminars and forums, translation services and inter-firm competitions.

      Under the auspices of the association, there are 10 specialists clubs which provide opportunities for executives with similar interests to share and further develop their expertise. In addition, a Business Enterprise Management Centre was established to promote better management practice in small and medium-sized businesses.

      A highlight of the association's activities is its Annual Conference, a major one-day event, which provides a platform for prominent local and overseas speakers to share their knowledge, experience and new thoughts on the practice of management with senior business executives.

Consumer Council

The Consumer Council has the responsibility of protecting and promoting the interests of consumers of goods and services. It comprises a chairman, a vice-chairmen and up to 15 members who are appointed by the Governor from various walks of life. It has a staff of 99 and is financed primarily by an annual subvention from the government.

      The council provides a comprehensive consumer protection service covering consumer representation and legislation, advice and complaints, research and testing, information and education. It maintains close co-operation with the government through the Trade and Industry Branch and is represented on many committees to tender specialist advice on a wide range of consumer issues and concerns.

      A main focus of the year's programme on research and testing concerned consumer- product safety. In a test on infant feeding-bottle nipples, pacifiers and teethers, some models were found to contain high levels of carcinogenic substances causing grave concern among parents. The government has promised a review of the situation concerning carcinogens in consumer products. The council's continuous effort in product safety also resulted in the control of toxicity of domestic insecticides which had previously been confined to agricultural pesticides.

      Another highlight of the year was the continuing growth in the circulation of the council's Chinese-language monthly magazine 'Choice'. One issue which featured a test report on air-conditioners, had a record sale of 65 000 copies. The format of the magazine was changed in July, and an English version, entitled 'Choice Buying Guide 1988' will be published in January 1988. To carry the consumer message to a wider audience, the council has been liaising closely with the mass media and other bodies interested in the promotion of consumer information and education. Plans have been made to launch a large-scale campaign early next year on the right of consumers to be informed.

      The sudden collapse of a number of major tour operators just before the Lunar New Year, affecting the travel plans of thousands of consumers, prompted the government to review the protection afforded consumers under the existing Travel Agents Ordinance,

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which had come into operation a year earlier. The council took an active part in the review in an effort to secure a workable package that would resolve the issue of compensation and the long-term protection of consumers.

Another piece of legislation that came under review, following repeated complaints from consumers, is the Money Changers (Disclosure of Rates, Charges and Commissions) Ordinance.

     The ordinance was the subject of a Working Party review in which the Consumer Council took part and which was published in November for public consultation, with a closing date of January 31, 1988.

The recommendations contained in the review include the requirement that money changers display, prominently and only, the net conversion rates (the amount the consumers will ultimately receive) of the currencies.

     New legal protection is also expected in the light of the Report on the Control of Exemption Clauses by the Law Reform Commission, which recommended the control of liability exemption clauses in contracts or similar documents.

     The council was vigorous in its efforts in cracking down on dishonest sales practices of retailers of household electrical appliances. Such practices have consistently been one of the main sources of consumer dissatisfaction, representing some 30 per cent of all complaints on goods and services. On three separate occasions, the council publicly named five electrical shops for adopting so-called 'bait-and-switch' tactics on consumers. This led to widespread publicity in the media, including a half-hour TV documentary investigating these malpractices. A 'refund guarantee' scheme, designed to tackle the problem at its root, was subsequently agreed upon by an association of the trade, and steps have been taken to put it into practice.

      During the year, the council dealt with 8 770 complaints and 209 457 enquiries for advice. For the greater convenience of tourists who wish to lodge complaints, which represented 10 per cent of all complaints, plans are at hand to set up a new Consumer Advice Centre in the heart of the tourist district of Tsim Sha Tsui in Kowloon, bringing the total number of such centres throughout Hong Kong to 16.

     A delegation of the Consumer Council attended the 12th World Congress of the International Organisation of Consumers Unions (IOCU) in September. The Hong Kong Consumer Council was re-elected as a member of the IOCU, together with 12 other country organisations. The Hong Kong Consumer Council maintains strong ties with similar councils elsewhere, including China.

Trade in Endangered Species

    The possession, importation and exportation of endangered species of animals and plants, including parts and derivatives, into and out of Hong Kong is strictly regulated by the Animals and Plants (Protection of Endangered Species) Ordinance which gives effect to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). While the licensing policy allows legitimate trade in scheduled specimens, import licences may not be granted in certain cases to help the survival of a species. Hong Kong maintains its place as an important centre for legitimate trade in African ivory.

     The ordinance is administered by the Agriculture and Fisheries Department and is enforced by officers of the department and the Customs and Excise Department. The Trade Department is authorised to issue certificates for ivoryware carved in Hong Kong. Illegal trade is investigated and prosecutions follow if there is evidence of a breach of the ordinance. During 1987, there were 420 seizures and 390 prosecutions under the ordinance.

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Metrication

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In the field of metrication, the government's objective is to facilitate progressive adoption of the International System of Units (SI) in those areas for which it is responsible, and the positive encouragement of the use of metric (SI) units by the private sector. The Metrication Ordinance, enacted in 1976, provides for the eventual replacement of non- metric units by SI units in all legislation in Hong Kong. Most government departments are now using metric units exclusively.

      A Metrication Committee, consisting of representatives of industry, commerce, manage- ment and consumer affairs, and government officials appointed by the Governor, is the focal point of liaison on all matters concerning metrication. It advises and encourages the commercial and industrial sectors in the framing of their metrication programmes. Partly through the efforts of the committee, public awareness of metrication has increased, and considerable progress has been made in the adoption of metric units in the private sector.

Trade Marks and Patents

The Trade Marks Registry, which is a sub-division of the Commercial Division of the Registrar General's Department, is a registry of original registration. Trade marks are registered under the Trade Marks Ordinance, the provisions of which are similar to trade marks legislation in the United Kingdom. The procedure in applying for registration is laid down in the Trade Marks Rules, and the prescribed forms may be obtained free from the Trade Marks Registry, Registrar General's Department. Every mark, even if already registered in the United Kingdom or any other country, must satisfy all the requirements of the Trade Marks Ordinance before it may be accepted for registration. During 1987, 8 510 applications were received and 3912, including many made in previous years, were accepted and allowed to be advertised. A total of 3 460 marks were registered in 1987, compared with 3 120 in 1986. The principal countries of origin were: United States of America, 811; Hong Kong, 740; Japan, 396; United Kingdom, 281; West Germany, 245; France, 229; Switzerland, 141; Italy, 126; Netherlands, 71; Taiwan, 51. The total number of marks on the register at December 31, 1987 was 48 616.

       Unlike the Trade Marks Registry, the Patents Registry, which is another sub-division of the Commercial Division of the Registrar General's Department, is not a registry of original registration. The Registration of Patents Ordinance provides that any grantee of a United Kingdom patent or European Patent (UK) may, within five years from the date of its grant, apply to have the patent registered in Hong Kong.

      A total of 1 020 patents were registered in this way during the year, compared with 1 010 in 1986. Registration of a United Kingdom patent or European Patent (UK) in Hong Kong confers on the grantee the same privileges and rights as if the patent had been granted in the United Kingdom with an extension to Hong Kong. The privileges and rights run from the commencement of the term of the patent in the United Kingdom, and continue as long as the patent remains in force there.

Companies Registry

The Companies Registry of the Registrar General's Department keeps records of all companies incorporated in Hong Kong and of all overseas companies that have established a place of business in Hong Kong.

      Local companies are incorporated under the Companies Ordinance, which was originally based, to a large extent, on the Companies Act 1929 - formerly in force in Britain but now replaced by various statutes culminating in the Companies Act 1985. However, following

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recommendations made by the Companies Law Revision Committee (June 1971 and April 1973), several parts of the Companies Ordinance - notably those dealing with prospectuses, accounts and audit -were amended and now incorporate most of the relevant provisions of the Companies Acts of 1948 and 1967. Most of the remainder of the recommendations in the committee's second report are given effect in the lengthy Companies (Amendment) Ordinance 1984, which was enacted in January and came into force on August 31, 1984. The ordinance is subject to continual revision and improvement on the advice of the Standing Committee on Company Law Reform which was set up in 1984. The primary task of the committee is to ensure that Hong Kong's company law meets the most up-to-date needs of government and business. Further amendments to the ordinance were made by the Companies (Amendment) Ordinance 1987 and the Companies (Amendment) (No. 2) Ordinance 1987 which were enacted on February 20, 1987 and July 3, 1987.

On incorporation, a company pays a registration fee of $600 plus $6 for every $1,000 of nominal capital. In 1987, 26 380 new companies were incorporated - 9 637 more than in 1986. The nominal capital of new companies registered totalled $4,133 million. Of the new companies, 99 had a nominal share capital of $5 million or more. During the year, 7 108 companies increased their nominal capital by amounts totalling $48,995 million on which fees were paid at the same rate of $6 per $1,000. At the end of 1987, there were 185 588 local companies on the register, compared with 161 986 in 1986.

Companies incorporated overseas are required to register certain documents with the Companies Registry within one month of establishing a place of business in Hong Kong.

A registration fee of $500 and some small filing fees are payable in such cases. During the year, 240 of these companies were registered and 189 ceased to operate. At the end of the year, 2 289 companies were registered from 64 countries, including 575 from the United States, 341 from the United Kingdom and 274 from Japan.

     The Companies Registry also deals with the incorporation of trustees under the Registered Trustees Incorporation Ordinance, and with the registration of limited partnerships.

Money Lenders

    Under the Money Lenders Ordinance, which came into force in December 1980, anyone wishing to carry on business as a money lender must apply to a Licensing Court, consisting of a magistrate and two lay assessors, for a licence. In the first instance, the application is submitted to the Registrar General as Registrar of Money Lenders and a copy is sent to the Commissioner of Police, who may object to the application.

     The application is advertised, and any member of the public who has an interest in the matter also has the right to object. During the year, 430 applications were received and 425 licences were granted. At year-end, there were 440 licensed money lenders.

      The ordinance provides severe penalties for a number of statutory offences, such as carrying on an unlicensed money lending business. It also provides that any loan made by an unlicensed money lender shall not be recoverable by court action. Any person, whether a licensed money lender or not, who lends or offers to lend money at an interest rate exceeding 60 per cent per annum commits an offence and agreement for the repayment of any such loan or any security given in respect of such loan shall be unenforceable.

Bankruptcies and Liquidations

The Official Receiver's Office of the Registrar General's Department administers estates in bankruptcy and estates of companies in compulsory winding-up.

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The Registrar General, who is, among his other duties, also the Official Receiver, becomes the receiver of the property of the debtor against whom a receiving order is made, or the provisional liquidator of the company against which a winding order is made. He continues to act as such until he or another person is appointed as trustee in bankruptcy or liquidator.

The Official Receiver realises and distributes the property of the debtor or insolvent companies as trustee or liquidator, under the Bankruptcy Ordinance and the Companies Ordinance. He also carries out his statutory functions of supervising and assisting other trustees and liquidators appointed by creditors.

During the year, there were 370 petitions in bankruptcy and 252 petitions for the compulsory winding-up of companies. The court made 293 receiving orders, five admin- istration orders and 222 winding-up orders. As in past years, the Official Receiver was appointed trustee or liquidator in most cases. Assets realised by the Official Receiver during 1987 amounted to $242 million.

Official Trustee, Official Solicitor and Judicial Trustee

The Registrar General also exercises the powers and performs the duties conferred or imposed upon the Official Trustee, the Official Solicitor and the Judicial Trustee. At the end of the year the total funds administered by the Official Trustee under 12 trusts amounted to $1.4 million. The Official Solicitor agreed to act in six cases.

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Employment

THE economy was buoyant throughout the year and this, coupled with a further decline in the unemployment rate, resulted in higher wages in the manufacturing and construction

sectors.

     After allowing for rises in consumer prices, workers' wages increased by 3.4 per cent in real terms during the 12 months ending in September 1987. The overall average daily wage rate for workers was $124, being $149 for males and $109 for females.

     Unemployment for the third quarter of 1987 fell to 1.8 per cent, and underemployment to one per cent. A shortage of workers became apparent in some sectors during the latter part of the year.

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     Hong Kong's resourceful and energetic workforce totals 2.7 million of which 63 per cent are men and 37 per cent are women.

     This estimate is based on the results of the July-September 1987 General Household Survey. The workers are mainly engaged in: manufacturing, 34.8 per cent; wholesale and retail trade, restaurants and hotels, 23.2 per cent; community, social and personal services, 17 per cent; transport, storage and communications, 8.5 per cent; construction, 8.1 per cent; and financing, insurance, real estate and business services, 6.3 per cent.

     According to a survey of Employment, Vacancies and Payroll in the manufacturing sector, conducted in September 1987, 875 250 people were engaged in 50 409 establish- ments. The survey covered working proprietors and partners, employees receiving pay, and unpaid family workers affiliated to business organisations, but excluded out-workers. Some 381 373 people - the largest portion of the manufacturing workforce - were engaged in the textile and wearing apparel industries. The electrical industry and the plastics industry were the next two largest employers. Details of the distribution of manufacturing establishments, and of the number of people engaged in them, are given at Appendices 17 and 18.

     The bulk of the manufacturing workforce is concentrated in the urban areas of Hong Kong Island and Kowloon and satellite towns in the New Territories. Industrial develop- ment in the New Territories is increasing and 35 per cent of the manufacturing workforce now works there.

Labour Legislation

In 1987, 12 items of labour legislation were enacted to provide for better standards of safety, health and welfare for the workforce. This brings the total number of items of labour legislation enacted in the last 10 years to 135 under the overall policy of achieving a level of legislation on safety, health and welfare broadly equivalent to Hong Kong's neighbouring countries at a similar stage of economic development. The more significant items of labour legislation which came into force during the year were the Protection of Wages on Insolvency (Amendment) Ordinance, which extended the scope of the Protection

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of Wages on Insolvency Fund to cover wages in lieu of notice and the amendments to the maternity provisions under the Employment Ordinance.

As a dependent territory of the United Kingdom, Hong Kong is not a member of the International Labour Organisation (ILO) and is not called upon to ratify any International Labour Conventions, which set international labour standards. However, the United Kingdom government makes declarations on behalf of Hong Kong with regard to the application of conventions it ratifies. This is done after full consultation with the Hong Kong government. As at December 1987, Hong Kong has applied 29 conventions in full and 19 with modification, making a total of 48. This compares favourably with most member nations in the region.

During the year, there were 3 962 prosecutions for breaches of ordinances and regula- tions administered by the Labour Department. Fines totalling $9,065,600 were imposed.

Wages and Conditions of Work

There is no statutory minimum wage rate in Hong Kong. The wage levels prevailing are essentially the result of an interplay of the economic forces of supply and demand.

Wage rates are usually calculated on a time basis such as hourly, daily or monthly, or on an incentive basis depending on the volume of work performed. The pay period is normally 15 days for daily-rated and piece-rated workers and a month for monthly-rated workers. Most semi-skilled and unskilled workers in the manufacturing industries are piece-rated, although daily rates of pay are also common. Monthly-rated industrial workers are usually employed in skilled trades or in technical, supervisory, clerical and secretarial capacities. On the other hand, monthly rates of pay are most common for workers in the non- manufacturing industries. Men and women receive more or less the same rate for piece-work. Women on average are paid less when working on a time-basis, but there may not be strict job comparability.

Wage rates of manufacturing workers continued to increase in money terms during the year. After allowing for rises in consumer prices, there was an increase in wage rates of 3.6 per cent in real terms during the 12 months ending in September 1987. The rate of increase in wages slowed down slightly compared with the previous year, while unemployment and underemployment remained stable at a low level due to the continued expansion of the service sectors of the economy.

In September, 75 per cent of manual workers engaged in manufacturing industries received daily wage rates (including fringe benefits) of $95 or more (males $118 and females $90), and 25 per cent received $143 or more (males $169 and females $128). The overall average daily wage rate was $121 (males $147 and females $109).

     Besides granting statutory holidays, annual leave, rest days and other entitlements under the Employment Ordinance, some employers in the manufacturing sector provide workers with different kinds of fringe benefits, including subsidised meals or food allowances, attendance bonuses, free medical treatment and free or subsidised transport. Many employees also enjoy a year-end bonus of one month's pay or more under their employ- ment contract, which is usually paid during the Lunar New Year. In recent years, an increasing number of employers have introduced provident fund schemes to provide improved long term security for their employees.

The Employment of Children Regulations, made under the Employment Ordinance, prohibit the employment of children under the age of 15 in any industrial undertakings. Children who have attained the age of 13 and who have completed Form 3 may be employed in non-industrial establishments, subject to stringent conditions which aim

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at ensuring a minimum of nine years education and at protecting their health, safety and welfare.

Under the Women and Young Persons (Industry) Regulations, young persons aged 15 to 17 and women are permitted to work eight hours a day and six days a week in industry. Women and young persons aged 16 and 17 must be given a break of at least 30 minutes after five hours of continuous work. In the case of young persons aged 15, the break must not be less than one hour. Overtime employment for women is restricted to two hours a day and 200 hours a year while persons under the age of 18 are not permitted to work overtime. However, the Commissioner for Labour may, under special circumstances, increase the hours of overtime employment allowed for an industrial undertaking. Women are not usually allowed to work between 8 p.m. and 6 a.m. while persons under the age of 18 are prohibited from working between 7 p.m. and 7 a.m. Permission has been given by the Commissioner for Labour to some large factories - mostly those engaged in cotton- spinning to employ women at night, subject to certain stringent conditions. Women and young persons must not be employed on more than six days in any week. The regulations also prohibit women and young persons from working underground or in dangerous trades.

In 1987, the Labour Inspectorate made 242 791 day and night inspections to both indus- trial and non-industrial establishments; two special campaigns were conducted against the employment of children and illegal immigrants, covering 10 654 establishments. During the year, 107 cases of child employment involving 107 children were brought before the courts.

Controls on Illegal Employment

Under the Immigration Ordinance, employers are prohibited from employing persons who have no valid proof of identity and those Vietnamese refugees who are not permitted to obtain employment. The ordinance also requires all employees to produce proof of identity for inspection and employers to maintain up-to-date records of their employees. These legislative requirements, which aim at stopping the flow of illegal immigrants into Hong Kong, are enforced by the Labour Department.

Long-Service Payment

From January 1, 1986, employers were required by the Employment Ordinance to give long service payment to their employees under certain circumstances. An employee who has worked continuously for the same employer for more than five years, and who has been dismissed other than by way of summary dismissal or redundancy is entitled to a long service payment calculated at the rate of two-thirds of a month's wages for each year of service. In the case of redundancy, he may claim severance payment calculated at a similar rate.

The amount of long service payment can vary with the age of the employee. An employee aged 40 or above is entitled to the full payment, while younger ones are entitled to only 50 per cent or 75 per cent, depending on their age. In early 1987, the Labour Department carried out a review of the long service payment scheme and proposed extending the eligibility for long service payment to employees who resign on grounds of ill health or old age and to dependants of deceased employees.

Trade Unions

Trade unions in Hong Kong must be registered under the Trade Unions Ordinance, which is administered by the Registrar of Trade Unions. Once registered, they are corporate bodies and enjoy immunity from certain civil suits.

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During the year, 13 new unions were registered. At the end of the year, there were 458 unions, comprising 415 employees unions with about 368 090 members, 29 employers associations with some 3 000 members, and 14 mixed organisations of employees and employers with about 22 010 members.

The majority of the blue collar employees unions are affiliated to one or the other of the two local societies registered under the Societies Ordinance - the Hong Kong Federation of Trade Unions and the Hong Kong and Kowloon Trades Union Council.

      The Hong Kong Federation of Trade Unions has 78 affiliated unions with about 171 600 members. Its affiliated unions are concentrated in shipyards, textile mills, public transport, public utilities and the printing and carpentry trades.

The Hong Kong and Kowloon Trades Union Council has 69 affiliated unions with a membership of about 31 560. These unions are mainly in the catering and building trades. The remaining 268 employees unions have a membership of about 164 930, mostly drawn from the Public Service and the teaching profession.

Labour Administration and Services

The Labour Department has an establishment of 1 662. Regional offices throughout the urban areas and the New Territories deal with labour matters raised by local employers and employees. The Commissioner for Labour is the principal adviser to the government on labour affairs. He is also the Commissioner of Mines.

The department initiates labour legislation and ensures that Hong Kong's obligations under international labour conventions are observed. Other major activities of the department include - enforcement of ordinances regulating employment conditions; providing employment assistance; promoting harmonious labour relations; providing assistance to employees injured at work and persons suffering from pneumoconiosis in obtaining compensation; protecting and promoting the safety and health of workers; and administering legislation on explosives, prospecting, quarrying and mining.

      During the year, the Staff Training and Development Division organised one induction course for 26 new recruits and 23 In-service Training Programmes for 1 048 serving officers. In addition, 24 officers were sent overseas for further training and in preparation for new areas of service to be provided to the public.

Labour Relations

The Labour Relations Ordinance provides machinery for special conciliation, voluntary arbitration and boards of enquiry for settling trade disputes that cannot be resolved through ordinary conciliation. The Employment Ordinance provides for the protection of the wages of employees and regulates the general conditions of employment. In 1986, a committee on labour relations was set up by the Labour Advisory Board to promote good labour-management relations.

In 1987, the Labour Relations Service of the Labour Department conciliated in 140 trade disputes which led to 14 work stoppages, with a loss of 2 773 working days, compared with 4 907 working days lost in nine work stoppages in 1986. The service also dealt with 16 232 claims for wages in lieu of notice, wages in arrears, annual leave pay, holiday pay, end-of-year payment, severance payment, long-service payment and others.

      The Promotion Unit of the Labour Relations Service promotes good labour- management relations in the private sector through a variety of activities. These included - 202 visits to employers, employees associations and trade unions; 13 certificate courses

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comprising 80 half-day and 24 evening sessions on labour relations and labour legislation, two of which were organised with the Chinese Manufacturers Association of Hong Kong and the Federation of Hong Kong Industries; two symposia for the clothing industry and construction industry; two district-based seminars on labour relations, and six exhibitions. In addition, the unit, in conjunction with two district boards, organised two festivals on labour relations for residents in their respective districts. The unit also published a quarterly newsletter, and leaflets and pamphlets on a wide range of personnel management

matters.

Maternity Leave

Female employees with 26 weeks service or more are entitled, as from July 10, to mater- nity protection for the whole period of pregnancy. This is an improvement over the previous situation when maternity protection began only 12 weeks before the start of the maternity leave.

Protection of Wages on Insolvency Fund

From July 3, 1987, the scope of the Protection of Wages on Insolvency Fund which allows workers who are owed wages by their employers to apply for ex-gratia payment, was extended to cover seven days wages in lieu of notice, subject to a maximum of $2,000, in addition to wages still outstanding.

During the year, 4 397 applications were received and 2961 were approved, with payments totalling $7.2 million.

The Labour Tribunal

The Labour Tribunal, which is part of the judiciary, provides a quick, inexpensive and informal method of adjudicating certain types of dispute between employees and employers, with a minimum of formality. The tribunal deals with claims of right, wherever possible in the language of the parties.

      In 1987, the tribunal heard 4 426 cases involving employees as claimants, and a further 384 cases in which the claims were initiated by employers. More than $24 million was awarded by the presiding officers. Of the cases dealt with by the tribunal, 98.94 per cent were referred by the Labour Relations Service after unsuccessful conciliation attempts.

Finding Employment

The Local Employment Service of the Labour Department provides a free placement service to assist employers to recruit suitable staff and job-seekers to find suitable employment. It operates from 15 offices linked by a facsimile system for the rapid exchange of information on vacancies notified by employers. The Central Recruitment Unit, working closely with the Local Employment Service, is a central agency for all government departments in the recruitment of non-pensionable staff such as artisans, drivers and workmen. It also co-ordinates employment services provided to large employers in the private sector with territory-wide recruitment needs. To help alleviate the general labour shortage, the service intensified its publicity efforts through television and promotional visits to employers so as to encourage more people to use the free services. During the year, 28 686 people were placed in employment, including 4 071 who found jobs in the Public Service.

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The Higher Education Employment Service provides free employment assistance to job-seekers who possess either university, post-secondary or professional qualifications. To facilitate its operation, the service has installed a computer to handle job-matching and produce promotional materials. During the year, 412 people found employment through this service. In September, seven seminars were organised for those job seekers who had registered with the Higher Education Employment Service to enable them to have a better understanding of the labour market situation so as to assist them to find suitable jobs.

The Selective Placement Division provides a free employment counselling and placement service to the blind, the deaf, the physically handicapped, the mentally retarded and discharged mental patients seeking open employment. The division operates from three offices in Hong Kong, Kowloon and the New Territories.

The placement of socially maladjusted job-seekers is still the responsibility of the Hong Kong Council of Social Service and other voluntary agencies.

During the year, the Selective Placement Division launched a series of activities to publicise its work and to promote the employability of the disabled. In 1987, some 1 030 disabled persons were placed in employment.

Careers Guidance

The Youth Employment Advisory Service of the Labour Department provides careers guidance to young people through various programmes and activities. In 1987, officers of the service delivered 529 careers talks in 375 schools and five voluntary agencies, covering an audience of 96 087. Regional careers projects were organised jointly with the Vocational Training Council. Some 1 000 students from 40 schools took part in a Work Orientation Programme which comprised 40 visits to various establishments in the private and public sectors. In addition, more than 100 000 students from 248 secondary schools took part in the annual careers quiz.

       The 16th annual careers exhibition was held for the first time at the Sha Tin Town Hall in collaboration with the Regional Council. It aimed to show young people the widest possible range of information on careers available in Hong Kong. Altogether, 22 exhibitors from commerce, industry, the services, professional bodies and the government took part in the 10-day exhibition which attracted some 84 000 visitors.

To promote careers education, the service organises annually a certificate course and a seminar for careers teachers in co-operation with the Education Department and the Hong Kong Association of Careers Masters and Guidance Masters. It also produces various careers publications which are distributed free of charge to schools, youth centres and other interested persons.

At present, the service operates three careers information centres, each equipped with a reference library and audio-visual recordings of information on employment and training opportunities. In 1987, the centres recorded a total of 34 288 visitors who made use of the facilities there.

Overseas Employment

The Contracts for Employment Outside Hong Kong Ordinance requires employment contracts entered into in Hong Kong by manual workers who take up employment outside Hong Kong to be attested by the Commissioner for Labour before the employee leaves Hong Kong. An employer or his agent who fails to comply with the provision is liable on conviction to a fine of $50,000. During the year, 255 contracts were attested, compared with 256 in 1986.

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The Labour Department attests employment contracts for foreign domestic helpers, the majority of whom come from the Philippines. The attestation aims to control and protect the employment conditions of these helpers. In 1987, 31 138 such contracts were attested.

     The department also conciliates in disputes arising from the employment of foreign domestic helpers. In 1987, 377 claims, 557 consultations and 48 326 enquiries relating to the employment of such helpers were handled.

Employment Agencies

The Employment Ordinance and the Employment Agency Regulations made under the ordinance govern the licensing and operation of employment agencies in Hong Kong. During the year, the Labour Department issued 277 licences to employment agencies dealing with employment of persons within Hong Kong, 72 licences to agencies handling employment of persons outside Hong Kong and two certificates of exemption to non-profit making agencies.

Industrial Safety

The Factory Inspectorate of the Labour Department is responsible for enforcing the Factories and Industrial Undertakings Ordinance and its subsidiary regulations. These regulations provide for the safety and health of workers in factories, on building and engineering construction sites and in other industrial undertakings. Advice and assistance are given to management on various safety and health aspects, including the adoption of safe working practices and layout of new factories to achieve a better working environment. The inspectorate also investigates industrial accidents and dangerous occurrences.

     The Factories and Industrial Undertakings (Safety Officers and Safety Supervisors) Regulations were approved by the Legislative Council in October 1986. They provide for the compulsory employment of safety officers and safety supervisors in construction sites above a certain size, the establishment of a Safety Officer Advisory Committee and the registration of safety officers. The provisions on the establishment of the Safety Officer Advisory Committee and the registration of safety officers came into operation in December 1986. The provisions on the employment of safety officers and safety supervisors came into operation in December 1987.

     Throughout the year, the Factory Inspectorate's Industrial Safety Training Centre conducted safety training courses for workers, supervisors and managers from various industries. Safety talks were arranged for technical school teachers and students. These talks were also arranged for other types of secondary schools during the summer holidays. During the year, the centre began giving talks on safety management to business studies students in post-secondary institutions. In conjunction with the Hong Kong Polytechnic, the centre continued to organise two evening and one part-time day-release courses leading to the award of a Certificate of Proficiency in Industrial Safety and two evening courses leading to the award of a Certificate of Proficiency in Advanced Industrial Safety. The department continued to assist the Construction Industry Training Authority to run construction safety officer courses. For the first time, the department also helped the Training Authority to run courses to train safety supervisors for the construction industry.

     The Factory Inspectorate, in collaboration with the Information Services Department, continued its publicity programme for the promotion of industrial safety through extensive use of the media and other means. Eight episodes of documentary drama were presented

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between July and August as part of the popular television programme 'Enjoy Yourself Tonight'.

To reflect more accurately its increased scope of activities and to prepare for its eventual development into a statutory occupational safety and health council, the Labour Advisory Board Committee on Industrial Safety and Accident Prevention was renamed the Indus- trial Safety and Health Committee on January 1, 1987. The committee's composition was also re-structured to facilitate its effective operation and to eliminate duplications.

The six sub-committees for the construction, textiles, plastics, ship-building and ship- repairing, metalware and electronics industries, which were set up between 1980 and 1985 under the Industrial Safety and Health Committee, continued to undertake various activities to promote work safety, including the preparation of codes and pamphlets on safe practices, safety seminars and a safety competition. These industry-based safety sub- committees, following the ILO recommendation, comprise representatives of employers, workers and the government.

To mark the 10th anniversary of the Industrial Safety and Health Committee, a Safety Week, which was by far the largest single safety promotional activity ever launched in Hong Kong, was held from March 14 to 20. Through a series of imaginative and entertaining activities, the Safety Week was able to achieve its aim of focusing public attention on industrial safety.

The Pressure Equipment Division administers the Boilers and Pressure Receivers Ordinance and the Gasholders Examination Ordinance. The Boilers and Pressure Receivers Ordinance stipulates that boilers, steam receivers, steam containers, air receivers and cement tanks mounted on trucks or trailers must be approved and registered with the division and must be examined periodically by qualified engineers in the private sector acting as appointed examiners.

The division conducts examinations for boiler attendants for the issue of certificates of competency. Comprehensive training courses for the attendants operating electrically heated boilers are organised in collaboration with the Haking Wong Technical Institute. Short training courses are also organised by the division for persons who wish to obtain a provisional certificate of competency. Pamphlets on statutory, technical and safety aspects of pressure equipment are published for both the owners and attendants of such equipment. The division monitors the operation of pressure equipment through spot checks to ensure compliance with statutory requirements and carries out investigations into accidents involving pressure equipment.

The division also approves the design of gasholders and carries out inspections during fabrication and subsequent annual inspections as laid down in the Gasholders Examination Ordinance. It gives technical assistance to the Fire Services Department concerning the safety of storage and handling of Category 2 dangerous goods.

Occupational Health and Hygiene

The Occupational Health Division of the Labour Department provides an advisory service to the government and the public on matters concerning the health of workers and the hygiene of the workplace and complements the Factory Inspectorate Division in supervising health standards and practices in industry. It works to maintain and improve the physical and mental well-being of workers and to protect them against any health hazard arising from their employment. During the year, the division took part in a number of seminars and exhibitions for the promotion of occupational health and also published a series of booklets and codes of practice on the prevention of occupational diseases. Occupational

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health promotion and education activities were carried out by nursing officers to arouse employees and employers' awareness of occupational hazards in workplaces.

     A prime responsibility of the division is to investigate notified occupational diseases and potential health hazards reported by the Factory Inspectorate and to determine preventive action. Surveys are conducted in various industries and epidemiological studies on health and hygiene conditions in the following trades were completed within the year; glass-making, button-making, joss-stick making, tunnelling and caissons, and off-set printing. Monitoring programmes of factories with possible lead hazards, quarries with dust hazards, factories with cotton dust hazards and solvents in major chemical factories are being carried out.

The division also carries out medical examinations of personnel exposed to ionising radiation and government employees engaged in compressed air, diving, pest control and flouridation work. It also deals with cases of silicosis under the Pneumoconiosis (Compensation) Ordinance. The division's registered nurses handle medical clearance for employees' compensation cases and its occupational health officers are appointed as members of Special Assessment Boards and Prostheses and Surgical Appliance Boards under the Employees' Compensation Ordinance.

The Occupational Health Division's laboratory carries out analytical tests on biological samples from workers and other environmental samples taken during site visits.

Employees' Compensation

The Labour Department administers the Employees' Compensation Ordinance and the Pneumoconiosis (Compensation) Ordinance. The department ensures that injured em- ployees and dependants of deceased employees covered by the Employees' Compensation Ordinance obtain from their employers, without undue delay, compensation in respect of injuries or deaths caused by accidents arising out of and in the course of employment, or by occupational diseases. It also ensures that persons covered by the Pneumoconiosis (Compensation) Ordinance obtain compensation as soon as possible from the Pneu- moconiosis Compensation Fund, which is financed by a levy imposed on the construction and quarry industries.

Under the two-tier Employees' Compensation Assessment Board system, employees with work-related injuries which are likely to result in permanent incapacity are assessed by the assessment boards at eight major hospitals in Hong Kong. In 1987, Ordinary Assessment Boards convened 531 sessions and completed assessment of 17 964 cases referred to them by the Commissioner for Labour and 1 157 review cases. Special Assessment Boards convened eight sessions and completed assessment of seven cases referred to them by the Ordinary Assessment Boards and two review cases.

In February, tumour of the urinary tract due to occupational exposure to certain aromatic amines was added to the list of occupational diseases in the Second Schedule of the Employees' Compensation Ordinance. The Employees' Compensation Regulations were also amended to replace the existing Form 2 (Notice of Accident) and Form 2A (Notice of Occupational Disease) with new forms with effect from July 1, 1987 in order to assist employers in giving more accurate information relating to their employees' death or incapacity due to accidents or occupational diseases.

Compensation levels under the Employees' Compensation Ordinance and the Pneu- moconiosis (Compensation) Ordinance are to be increased by about 15 per cent from January 1, 1988, to take into account changes in wage levels since their last revision in 1986. The Labour Department is also responsible for enforcing the provisions of compulsory insurance under the Employees' Compensation Ordinance. This ordinance requires all

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employers to take out an insurance policy for their employees to cover compensation in respect of injury or death resulting from accidents arising out of and in the course of employment. Employers must also display notices at the workplace giving details of the insurance policy.

Owing to a gradual decline in the last few years in the number and size of claims for compensation from the Pneumoconiosis Compensation Fund, it has been possible to reduce the fund's income by way of levy substantially. The rate of levy applicable to construction works with a value of $1 million or more, and to quarry products, was reduced from 0.15 per cent to 0.05 per cent from February 8, 1987. The Pneumoconiosis (Compensation) Ordinance was also amended to enable the Pneumoconiosis Compensa- tion Fund to be used to conduct and finance education, publicity and research programmes for the prevention of pneumoconiosis.

Labour Advisory Board

The Labour Advisory Board is appointed by the Governor to advise the Commissioner for Labour on matters affecting labour, including legislation and conventions and recommen- dations of the International Labour Organisation. The board has been expanding its role and functions in recent years. It has played an active part in the formulation of labour policies and has given advice on all major labour legislation.

The Commissioner for Labour or his deputy is the ex-officio chairman of the board. There are 12 members, six representing employers of whom four are nominated by the major employer associations and two appointed by the government. Six members represent employees of whom four are elected by registered employee trade unions and two are appointed by the government. To cope with the increasing range and complexity of work and to encourage greater participation by employers and employees, committees on special subject areas such as employment services, the implementation of international labour standards, industrial safety and accident prevention, labour relations and employees' compensation have been set up. A number of employers and employees are co-opted from time to time to serve on these committees.

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Primary Production

WORKING on a very small agricultural base, Hong Kong's farmers produce mainly high-value foods to cater to the local consumers' preference for fresh, rather than frozen or chilled, foods.

Only about nine per cent of the total land area is suitable for crop farming, and about two per cent of the work force is engaged in primary production - agriculture and fisheries. Each day, the people consume about 1 000 tonnes of rice, 1 300 tonnes of vegetables, 10 300 pigs, 500 head of cattle, 330 tonnes of poultry, 430 tonnes of fish and 1 200 tonnes of fruit. Much of this is imported, but Hong Kong farmers help to satisfy some of the demand.

In terms of quantity, local farmers produce about 34 per cent of fresh vegetables, 39 per cent of live poultry, 17 per cent of live pigs, and 12 per cent of freshwater fish. The fishing fleet of some 4 700 vessels supplies about 86 per cent of all live and fresh marine fish eaten.

     The locally-produced foods are generally of a higher quality than the same type of imported foods and thus fetch higher prices in the markets.

     Based on these figures, Hong Kong people, according to the United Nations Food and Agriculture Organisation, are among the world's highest consumers of protein.

     Foodstuffs account for about 12 per cent of Hong Kong's imports from China. Local production, which complements rather than competes with imports, is aimed at maintain- ing some degree of self-sufficiency with respect to highly perishable foodstuffs.

Agriculture and Fisheries Department

The Agriculture and Fisheries Department encourages the productive use of agricultural land in the rural areas. It assists in the development of agriculture, especially in the form of irrigation projects. New concepts, techniques and material input to the farming and fishing industries are evaluated and actively promoted. Controls are exercised to prevent the introduction and spread of plant and livestock pests and diseases.

     Investigatory programmes of the department cover crops, pest control, animal health and husbandry and fisheries. Experiments are conducted on government experimental stations to improve the quality and yield of vegetables, flowers and fruit. The department advises livestock farmers on disease prevention and control, and modern methods of animal production, supplies good quality seeds and breeding stocks of pigs and poultry, and provides an artificial insemination service for pigs.

     Fisheries studies are conducted on marine resources, aquaculture and the environmental impact of development activities on fisheries. In marine resources, emphasis is placed on optimising production from the fisheries resources exploited by the local fishing fleet and investigating the development potential of under-exploited resources.

     Aquaculture studies are concerned with the development of more efficient culture systems to increase productivity of the marine and pond fish culture sectors. Hydrographic

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investigations are designed to supply environmental information for an assortment of biological programmes. Studies of the marine environment are conducted to assess the impact of pollution, including red tides, on fisheries, particularly mariculture, in order to minimise production loss.

      Low-interest loans are administered by the department to help farmers and fishermen to finance their operational or long-term investment requirements. The department also organises and finances vocational and technical training for those directly and indirectly involved in primary production. In addition, it is responsible for the registration and supervision of co-operative societies and credit unions. The department manages large areas of open countryside and is responsible for soil and water conservation, woodland management and landscape repair as well as fire-fighting - and the development of recreational services in country parks.

      Consumer demand and local primary production are monitored to enable appropriate development planning. Statistics on production factors and food supplies, including imports, are collected and analysed to help formulate local production and marketing policies. The business efficiency of different sectors within the primary industries is studied to establish and update productivity standards and to identify areas for improvement.

Farming and Fishing Development

Owing to the shortage of farm labour in Hong Kong and its rising cost, the main development in the agricultural industry in recent years has been the introduction of labour-saving devices. Farmers use pre-emergence herbicides for weed control in market garden crops and there is widespread use of small farm machines and sprinkler irrigation. At the end of the year, there were 1 970 rotary cultivators and 2 160 sprinkler units in use on vegetable farms.

Integrated pest management, a safe method of pest control on vegetables without the use of toxic pesticides, is the subject of an active development programme undertaken by the Agriculture and Fisheries Department. The use of a safe microbial organism to control the Diamond-back moth, a major pest on leafy green vegetables, has been adopted by local farmers. Seminars and demonstrations are also organised to publicise and promote integrated pest control and safe use of pesticides.

Technical assistance, agricultural loans and related services have been made available to farmers to promote better farming results.

The cultivation of edible mushrooms has gained considerable popularity in recent years and at the end of 1987 there were 48 mushroom farms. The locally produced fresh mushroom has a 63 per cent share of the local market.

Teams of agricultural extension officers are posted by the department throughout the New Territories to deal with farming problems, and to liaise with co-operative societies and rural associations.

      Credit facilities and technical advice are available to farmers and the agricultural development officers also assist them in land development and rehabilitation.

      In the rural development programme during the year, more than 760 farmers took part in group discussions led by professional and technical officers from the department and officers made 48 090 visits to farmers and co-operative societies. Visits were also arranged for farmers to see government experimental farms and farming projects.

Fisheries development work involves modernising fishing craft and introducing more efficient fishing gear and navigational aids. An advisory service on hull design, deck arrangement and fishing method is provided for fishermen, while experiments and

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demonstrations are conducted to test the suitability of new fishing gear and methods. Training classes in navigation, engineering, radiotelephone operation and business management for fishermen are organised in the main fishing centres.

      Education is provided for the children of fishermen at 11 schools run by the Fish Marketing Organisation. At the end of 1987, more than 2 170 children were attending these schools. A further eight were attending other schools on scholarships awarded by the organisation.

Close contact with the fishing community is maintained through liaison with producer associations and fishermen's co-operative societies. Nine Fish Marketing Organisation liaison offices operate in the main fishing centres to provide a link with fishermen.

Loans

Loans are available to the agricultural industry through three main funds: the Kadoorie Agricultural Aid Loan Fund, the J. E. Joseph Trust Fund and the Vegetable Marketing Organisation Loan Fund. All are administered by the Agriculture and Fisheries Department.

By December 31, 1987, loans issued since the inception of these three funds had reached a total of $249.2 million. Of this, $241.5 million had been repaid.

The Fisheries Development Loan Fund, with capital of $7 million, is administered by the Director of Agriculture and Fisheries specifically for developing the fishing fleet.

      Finance from the World Refugee Year Loan Fund for Co-operative Societies, donated by the United Nations High Commissioner for Refugees in 1962, is also available to members of fishermen's co-operative societies.

The Fish Marketing Organisation Loan Fund, which has operated as a revolving loan fund since January 1, 1983, by the transfer of funds from the organisation's surplus and deficit account is another important source of loan finance for fishermen. At the end of 1987, the fund capital was $18 million.

The department administers another revolving loan fund, financed by the Co-operative for American Relief Everywhere (CARE), specifically for shrimp fishermen.

By December 31, 1987, loans issued since the inception of these four funds totalled $175 million, of which $153 million had been repaid.

Co-operative societies operate under a Co-operative Societies Ordinance, which provides for the appointment of a registrar - the Director of Agriculture and Fisheries. His powers and duties relate to the registration of co-operative societies and their by-laws, the auditing of accounts, inspection and enquiry, general supervision of operations, and such matters as mediation in disputes and dissolution of co-operative societies when necessary.

      At the end of the year, some 12 100 farmers and 1944 fishermen were members of co-operative societies.

There were 70 societies and two federations among the farming community, and 68 societies and four federations supported by fisherfolk.

Land Usage

Hong Kong's land area totals 1 071 square kilometres. About 80 per cent of the territory consists of hilly land which is too steep for large-scale comprehensive development. The main urban built-up areas are still concentrated on the northern coast of Hong Kong Island and Kowloon Peninsula. In order to accommodate the growing population and economy, it has been necessary to establish new towns and expand residential areas in the New Territories. This has led to the conversion of some of the agricultural land for urban

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     development purposes. However, most of the land consists of woodlands, grass or scrub lands. The following table shows the distribution of different land uses in the territory:

Par Class

(i) Urban built-up lands

Approximate area (square kilometres)

105

Percentage of whole

9.8

(ii) Rural developed lands

75

7.0

(iii) Woodlands

220

(iv) Grass and scrub lands

533

(v) Badlands

(vi) Swamp and mangrove lands (vii) Arable

232

20.5 49.8

44

4.1

1

0.1

72

6.7

(viii) Fish ponds

21

2.0

Remarks

Main urban area of Hong Kong Island, Kowloon and eight new towns in the New Territories (Tsuen Wan, Tuen Mun, Yuen Long, Fanling, Tai Po, Sha Tin, Junk Bay and Tin Shui Wai) including district open space (parks and gardens) but excluding all other non-built-up land.

Rural market towns and villages and other developed sites in the New Territories such as reservoirs, roads and railways.

Natural and established woodlands.

Natural grass and scrub lands, including those

within country parks.

Stripped of cover. Denuded granite country.

Capable of regeneration.

and mangrove.

Coastal brackish swamp

Cultivable lands, including orchards and market gardens, under cultivation and fallow.

Fresh and brackish water fish farming exclud- ing coastal marine fish farms but including fallow farms.

Agricultural Industry

The government's policy is to enhance the productivity of the local agricultural industry, through increased technical and economic efficiency, improved stability of production and maintenance of orderly and efficient marketing. It also seeks to protect the consumer from unnecessarily high food prices by ensuring that local produce of acceptable standards is marketed efficiently and to maintain a reliable source of fresh primary products to the community.

      Common crops are vegetables, flowers, fruit and other field crops. The value of crop production has increased from $93 million in 1963 to $439 million in 1987. Vegetable production accounts for more than 82 per cent of the total value, having increased from $64 million in 1963 to $359 million in 1987.

      The main vegetable crops are white cabbage, flowering cabbage, lettuce, Chinese kale, radish, watercress, leaf mustard, spring onion and chives. They grow throughout the year, with peak production in the cooler months. Water spinach, string beans, Chinese spinach, green cucumber and many species of Chinese gourd are produced in summer. A wide range of exotic temperate vegetables including tomato, sweet pepper, cabbage, celery, head lettuce, cauliflower and carrot is grown in winter. Straw mushroom is also produced, using industrial cotton waste as the growing medium.

      Among the common types of flowers, gladioli and chrysanthemums grow throughout the year: dahlias, roses, asters, snapdragons and carnations are produced in winter; ginger lilies and lotus flowers in summer. A wide range of ornamental plants - including philoden- drons, dieffenbachia, bamboo palms and poinsettia - is produced in commercial nurseries. Peach blossom and ornamental citrus are grown specially for the Lunar New Year. The area of land under vegetables and flowers increased from 910 hectares in 1954 to 4 790 hectares in 1976 but declined gradually to 2 510 hectares in 1987, mainly as a result of new town development.

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     The amount of land used to cultivate rice dropped from 9 450 hectares in 1954 to less than 10 hectares in 1987. Rice production has given way to intensive vegetable production, which gives a far higher return.

Much former paddy land around the more remote villages has fallen into disuse and now lies fallow.

Various types of fruit are grown in Hong Kong. The principal crops are longan, lychees, wampei, tangerines, local lemons, bananas and guavas. Land under orchards in 1954 totalled 390 hectares, but by 1987, it was 530 hectares. Other field crops such as sweet potatoes, taro, yams and sugar cane are cultivated on a small scale in the remote and drier areas where water and transport facilities are inadequate for growing vegetables. Some 50 hectares were under rain-fed crops in 1987 compared with 1 410 hectares in 1954.

Because there is insufficient land for extensive grazing, pigs and poultry are the principal animals reared for food. Pigs in Hong Kong are mostly crosses of local animals with exotic stock. The value of locally produced pigs killed in 1987 amounted to $378 million.

The production value of poultry, including chickens, ducks, pigeons and quails, amounted to $611 million in 1987. Local chicken production was about 17 million birds, representing 43 per cent of total consumption.

Friesian cattle are kept by dairies, all of which are in the New Territories.

Sporadic outbreaks of a mild type of foot-and-mouth disease (Type O) and swine fever still occur, but are kept under control by vaccination. Newcastle Disease in poultry is controlled by the use of Ranikhet and intranasal-drop vaccines. Investigations to establish the incidence of intercurrent disease in both pigs and poultry are carried out at the government's veterinary laboratory.

Stringent rabies control measures remained in force throughout the year. These include extensive immunisation of dogs and cats against rabies, intensive catching and elimination of stray dogs, and restriction of canine movement into and out of the gazetted rabies- infected area. The gazetted infected area covered the Frontier Closed Area. In addition, Sing Ping San Chuen, Ta Kwu Ling and Pat Heung, Yuen Long were also designated as rabies infected areas in May and June respectively after the confirmation of four indigenous canine rabies cases. By the end of 1987, 22 456 dogs had been humanely destroyed and another 49 869 licensed and inoculated against rabies.

As a standard practice, all imported dogs and cats, other than those directly from Britain, Ireland, Australia and New Zealand, are subject to six months quarantine. Any dog that has bitten a person is required to be detained for observation in government kennels for seven days. All cattle and pigs imported for food are quarantined on arrival in Hong Kong. Importation for breeding purposes is also subject to strict control.

Fishing Industry

Marine fish constitute one of Hong Kong's most important primary products. More than 150 fish species of commercial importance frequent the waters of the adjacent continental shelf. Most important of these in terms of landed weight are golden thread, big-eyes, lizardfishes, melon seeds and squids. Total production from the two major sectors - marine capture and culture fisheries - is estimated at about 227 000 tonnes with a wholesale value of $2,300 million in 1987. These figures represented increases of 6.5 per cent in weight and 10 per cent in value compared with 1986. Of the total production, 96 per cent in weight came from marine capture and four per cent from culture fisheries. In terms of wholesale value, 88 per cent came from marine capture and 12 per cent from culture fisheries.

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101

An estimated 24 000 fishermen work the fleet of some 4 700 vessels, of which over 83 per cent are mechanised. There are four major types of fishing in terms of gear: trawling, lining, gill-netting and purse-seining. Trawling is the most important, accounting for 75 per cent or 150 000 tonnes of marine fish landed in 1987. The total landed catch of live and fresh marine fish available for local consumption in 1987 amounted to 110 000 tonnes, with a wholesale value of $980 million. This represented 86 per cent of the local consumer demand.

Pond fish farming is one of the most important culture activities. Fish ponds under active cultivation covering 1 400 hectares are located in the New Territories, mostly in the Yuen Long district. Traditional pond fish farming is similar to that practised in China for hundreds of years. Several different carp species are cultured in the same pond, each deriving its food from a different source and so making the utmost use of the nutrients introduced. Owing to the increasing urbanisation of the New Territories, the land area devoted to fish ponds has gradually declined. During the year, the ponds yielded 6 500 tonnes, or 12 per cent of the local consumption of freshwater fish.

      Marine fish culture has developed considerably in the past decade. Young fish captured from their natural environment as well as imported fish fingerlings are reared in cages suspended from rafts in sheltered bays throughout Hong Kong, particularly in the eastern New Territories. Under the Marine Fish Culture Ordinance, 28 fish culture zones have been designated and all marine fish culture operations are now required to be conducted at sites within these zones under licences issued by the Director of Agriculture and Fisheries. By year-end, 1 854 licences had been issued. Live marine fish supplied by this activity in 1987 amounted to 2 870 tonnes, valued at $187 million.

Marketing

      Much of the wholesale marketing of primary products - particularly fresh foods - is the responsibility of the Agriculture and Fisheries Department and the Vegetable and Fish Marketing Organisations. This year, 32 per cent of the total quantity of locally-produced vegetables, and 60 per cent of the total landings of marine fish were sold through the organisations.

      The Vegetable Marketing Organisation operates under the Agricultural Products (Marketing) Ordinance, which also provides for the establishment of a Marketing Advisory Board to advise the Director of Marketing (the Director of Agriculture and Fisheries). The organisation is responsible for transporting locally produced vegetables from the New Territories to the wholesale market in Kowloon, providing marketing facilities, and supervising sales and financial transactions in the market. Revenue is obtained from a 10 per cent commission on sales.

      The organisation is non-profit-making. It seeks to maximise returns to farmers by minimising marketing costs. It also provides ancillary services such as the acquisition and sale of agricultural supplies to farmers and the awarding of secondary and tertiary education scholarships to the children of farmers. During the year, 57 300 tonnes of local vegetables valued at $142 million were sold through the organisation.

      The Fish Marketing Organisation operates under the Marine Fish (Marketing) Ordin- ance, which also provides for the establishment of a Fish Marketing Advisory Board. The ordinance provides for the control of the landing, wholesale marketing, and the import and export of marine fish. The organisation operates seven wholesale fish markets. Revenue comes from a six per cent commission on the proceeds of sales. Surplus earnings are channelled back into the industry in the form of various services such as low-interest loans

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to fishermen, improvements to the markets, financial support for the 11 schools for fishermen's children, and scholarships for secondary and tertiary education.

      In 1987, the wholesale fish markets handled 68 000 tonnes of marine fish, crustacea and molluscs which were sold for $494 million. This included 3 100 tonnes of imported marine fish sold through these markets.

      Facilities in the existing wholesale markets are becoming inadequate for handling the ever-increasing quantities of imported fresh vegetables, fruit, poultry, eggs, freshwater fish and crustacea. Marketing activities have spilled on to adjacent public streets, causing obstruction, traffic congestion and hygiene problems. To improve the situation, plans are going ahead to establish new wholesale market complexes in Kowloon and on Hong Kong Island to centralise the wholesale marketing of fresh foodstuffs. In the interim, the government has introduced a number of temporary wholesale markets at Cheung Sha Wan in Kowloon for freshwater fish, poultry and imported vegetables, and at Western District on Hong Kong Island for fruit and poultry.

Mining

At the end of 1987, one mining lease, one mining licence and one prospecting licence for the extraction of feldspar and kaolin were in operation. Details of the leases and licences are published twice a year in the Government Gazette.

The Mines Division of the Labour Department enforces legislation and safety regula- tions relating to mining and explosives. It processes mining and prospecting applications, inspects mining and prospecting areas, stone quarries, blasting sites and explosives stores, and issues shotfirers' blasting certificates. The division also controls the possession, conveyance, storage, manufacture and use of explosives in Hong Kong, including the delivery of explosives from government depots to blasting sites. In addition, it manages government explosives depots which provide bulk storage facilities for imported explosives. Construction work on the Eastern Harbour Crossing and Route 5 were at their peak during 1987 and the total consumption of explosives for the year was 4 773 tonnes.

     Storage space was provided for 8.12 tonnes of fireworks for a display in January to mark the Lunar New Year. Additionally, transit storage facilities were provided for explosives imported from the United States and France for use by off-shore oil well drilling companies in the South China Sea.

9

Education

DOY

WITHIN the Government Secretariat, policy responsibility for education matters rests with the Secretary for Education and Manpower. A number of bodies are, however, involved in an executive or advisory capacity in the administration and development of the educational system.

Education Commission

In the light of recommendations made in the report of a visiting panel of education experts published in November 1982, an Education Commission was established in April 1984. Its overall objective is to provide the Governor with consolidated advice on the development of the educational system as a whole, in the light of the needs of the community.

       The terms of reference of the Education Commission are: to define overall education objectives, formulate education policy, and recommend priorities for implementation having regard to resources available; to co-ordinate and monitor the planning and development of education at all levels, and to initiate educational research.

      The commission is composed of 16 members. Thirteen of these, including the chairman, are non-government members appointed with a view to ensuring that a broad range of per- sonal and professional experience is brought to bear upon the issues before the commis- sion. Included among these, ex-officio, are the chairmen of the Board of Education, the Uni- versity and Polytechnic Grants Committee and the Vocational Training Council. The three remaining members are government officials - the Secretary for Education and Manpower (who is vice-chairman), the Deputy Financial Secretary and the Director of Education.

The commission's second report was published in September, 1986. The report contained far-reaching recommendations on language in education, the structure of the sixth-form, pre-primary education, teacher preparation, open education and the financing of educa- tion. Following publication, the report was the subject of six months' public consultation. During 1987 various working groups considered how the recommendations in the commission's second report should be put into effect, in the light of the public comment received. Major recommendations which have subsequently received policy approval include those on open education and those on the financing of education. The latter entailed a consultancy to advise the government on the construction of a computer network to analyse the financial implications of proposals for improving Hong Kong's education system. The proposals on open education are discussed below.

The commission expects to publish its third report in early 1988. This will include a study of the structure of tertiary education.

Board of Education

The Board of Education was first formed in 1920. It is a statutory advisory body appointed by the Governor in accordance with Section 7(1) of the Education Ordinance, Chapter 279

104

EDUCATION

of the Laws of Hong Kong. It advises the government on the formulation of educational policy and planning. The composition of the board reflects a wide range of interests in education matters with individual members providing a wealth of experience and expert knowledge.

Of the current 16 members, 14 (including the chairman) are appointed, the two official members being the Director of Education (vice-chairman) and the Deputy Secretary for Education and Manpower. The board is serviced by the Education Department.

The board meets at monthly intervals and visits schools, educational institutions and centres from time to time.

University and Polytechnic Grants Committee

The University and Polytechnic Grants Committee (UPGC) is appointed by the Governor to advise the government on the development of and funding requirements for higher education in Hong Kong and to administer government grants for the tertiary institutions. There are at present five institutions funded through the UPGC: the University of Hong Kong, the Chinese University of Hong Kong, the Hong Kong Polytechnic, the City Polytechnic of Hong Kong, and the Hong Kong Baptist College.

     Recurrent funding for the institutions is normally by block grants, provided on a triennial basis. Capital grants are considered annually at the same time as the government's estimates are prepared.

     In addition to monitoring directly the academic development and funding of the institutions, the UPGC is responsible for providing advice on a wide variety of issues involving higher education. During the year the committee was consulted on such subjects as the need for a second law school, in addition to the existing school at the University of Hong Kong; appropriate student targets for degree courses at the non-university institu- tions; the validation of those courses; recommendations included in the Report of the Planning Committee on Academic Awards; the introduction of speech therapy courses; the appropriate level of, and organisation for, research funding at the tertiary institutions; the development of engineering studies at the Chinese University of Hong Kong; and draft legislation for the Hong Kong University of Science and Technology. Members also advised the Education Commission on subjects relating to tertiary education, including the reform of the sixth form and open education.

     There is no government representation on the UPGC. Membership comprises two categories: overseas members, who are distinguished senior academics from the United Kingdom, Australia and North America, and local members, who are prominent Hong Kong citizens drawn from the professions, business and commerce including, since 1986, senior academics.

The UPGC Secretariat, which is staffed by public servants, comprises two separate parts. The first services the UPGC. The second, the Student Finance Section, is responsible to the government for the administration of two means-tested schemes through which financial assistance is provided to Hong Kong students attending higher education institutions in Hong Kong and in the United Kingdom.

Vocational Training Council

The Vocational Training Council was set up in 1982 under the Vocational Training Council Ordinance. The council is composed of 22 members appointed by the Governor, four of whom are official members - the Secretary for Economic Services, the Director of Educa- tion, the Commissioner for Labour and the Director of Technical Education and Industrial

EDUCATION

105

Training. Its role is to advise the Governor on measures necessary to ensure a comprehen- sive system of technical education and industrial training suited to the developing needs of Hong Kong; to set up, develop and operate training schemes for training operatives, craftsmen, technicians and technologists necessary to maintain and improve Hong Kong's industry, commerce and services; and also to establish, operate and maintain technical institutes and industrial training centres.

       Under the council are 19 training boards and seven general committees. The training boards cover all major economic sectors: accountancy; automobile repair and servicing; banking; building and civil engineering; clothing; electrical industry; electronics; hotel, catering and tourism; insurance; jewellery; journalism; machine shop and metal working; merchant navy; plastics; printing; shipbuilding and ship repair; textile; transport and physical distribution; and wholesale/retail and import/export trades. The seven general committees, which are concerned with areas of training relevant to more than one sector of the economy, deal with apprenticeship and trade testing; electronic data processing training; management and supervisory training; precision tooling training; technical education; training of technologists; and translation.

The training boards assess the future manpower needs of their respective industries or sectors and recommend measures to meet such needs, prepare job specifications, design training programmes and trade test guidelines and carry out other duties, such as operating and maintaining training centres. During 1987, the training boards carried out manpower surveys in the following 11 sectors: building and civil engineering; clothing; electrical industry; electronic data processing; hotel, catering and tourism; insurance; jewellery; journalism; plastics; textile; and transport and physical distribution. In the same period, the training boards prepared or revised job specifications, training programmes and trade test guidelines for principal jobs in their industries.

       The council and its training boards and committees are serviced partly by its own staff and partly by staff of the Technical Education and Industrial Training Department.

Education Department

The Director of Education, supported by the Education Department, is responsible under the terms of the Education Ordinance for general oversight of education in Hong Kong at nursery, kindergarten, primary and secondary levels. He directly controls all government schools, the Colleges of Education, the Hong Kong Technical Teachers' College and the Institute of Language in Education. All other schools, with minor exceptions, are required to register under the ordinance, thus enabling the department to ensure that acceptable standards are maintained.

Schools which receive financial assistance from the government under the codes of aid are in addition subject to the provisions of these codes, which deal with matters like general administration, grants awarded, staffing, and conditions of service. Inspectors of the department pay regular visits to all these schools to ensure that acceptable standards are maintained. Institutions registered under the Post Secondary Colleges Ordinance are also supervised by the Director of Education.

In addition to these duties of supervision and control, the department is concerned with provision, through its Advisory Inspectorate, of advice to schools on teaching methods; with curriculum development, and with the provision of educational television and other services. The planning and development of education, the school building programme, the allocation of school places and the conduct of educational research are also important responsibilities of the department.

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EDUCATION

To improve educational services further and in keeping with the district administration system, the department operates on a regional basis, under which the whole of Hong Kong is divided into 15 educational districts. Each district is headed by a Senior Education Officer. The function of the senior education officers is to supervise the administration of schools within their districts and to provide advice and assistance to schools, teachers, parents and students as well as to act as a channel of communication between them and the department. Senior education officers also attend district board meetings to assist with discussions on educational matters.

The Education Records Unit is now preparing for the development and implementation of the Education Management Information System (EMIS) and the Pupil Record Card System (PRCS). For the EMIS, a mini-computer system with five work-stations will be purchased to store, retrieve and process data on schools, teachers and personnel data of the department so as to enhance its capability in administration, planning and provision of educational facilities. The mini-computer system will be delivered by January 1988 and the system will be ready for operation by April 1989. The PRCS, which is a computer-based system, will record information on about one million pupils from Primary 1 to Secondary 7. The system will be implemented in stages over a period of four to five years. With such a computerised and up-to-date pupil register, the department will be able to identify dropout pupils for the purpose of enforcing compulsory education. Valuable statistics will also be derived from the system to assist in the planning, formulation and administration of education policies.

Expenditure

The annual estimates of expenditure for the financial year beginning in April 1987 provided for $1,001 million in capital expenditure for educational projects and $8,757 million in recurrent expenditure, representing 18 per cent of the total budget.

Kindergartens

    Pre-primary education for children in the three-to-six age group is provided in kindergar- tens, which are operated by voluntary organisations and private bodies. In September, there were 829 kindergartens with an enrolment of 225 108 children. These kindergartens are registered under the Education Ordinance and supervised by the department. In addition to the allocation of premises to non-profit-making kindergarten operators in public housing estates, other government assistance for this level of education includes the reimbursement of rates and rents to the non-profit-making kindergartens and fee assistance to needy parents.

     Officers of the department are responsible for the supervision of kindergartens and also offer professional advice to school managers, teachers, parents and the public. In-service training for teachers is provided through seminars, workshops, exhibitions and training courses, including a two-year part-time course conducted by Grantham College of Education and a 12-week part-time course operated twice a year by the Advisory Inspectorate of the Education Department, with annual intakes of 240 and 360 teachers respectively. In addition, a 12-week part-time evening course for kindergarten teachers was offered during the year by the Grantham College of Education. The Kindergarten Section of the Advisory Inspectorate also organised workshops on the promotion of civic education in schools.

     Four serving kindergarten teachers were released from their teaching duties, through the courtesy of their employers, to serve as members of the Education Department's kindergar-

EDUCATION

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ten curriculum development team to assist with the production of teaching resource materials.

      The curriculum development committee's kindergarten education committee completed the draft Chinese version of 'Guidelines on Nursery Class Activities in Kindergartens', providing suggestions to schools in planning activities for three-year-olds.

Primary Education

Primary education has been free of charge in all government schools and in nearly all aided schools since September 1971. In the few aided primary schools where fees are charged, fees may be remitted in cases of genuine hardship. To assist needy parents, an annual textbook grant of up to $255 per pupil is also available to a maximum of 25 per cent of pupils enrolled in government and aided primary schools. A minority of parents continue to send their children to the 83 private primary schools, although places are available in the public sector.

      In September, the primary school enrolment totalled 534 309 compared with 531 993 in the previous year. Enrolment in primary-level evening schools for adults totalled 1 550. During the year, 19 new primary schools were completed providing 36 480 primary school places. Fifteen of these schools were located in the developing new towns to cater for the needs of the growing population.

Of the 82 135 children who took part in the fifth cycle of the Primary One Admission System, 46 106 or 56.13 per cent were allocated discretionary places in schools of their parents' choice. The remainder were allocated places in schools in their own districts, account again being taken of parental preference.

      Primary 6 leavers are allocated junior secondary school places in the public sector through the Secondary School Places Allocation (SSPA) System. The system is based on internal school assessments, scaled by a centrally administered Academic Aptitude Test, allocation taking account of parental choice. In July, 86 618 Primary 6 pupils participating in the SSPA were allocated Form 1 places in government schools, aided schools, private non-profit-making schools in receipt of per caput grants, and private independent schools in the 'bought place' scheme.

      Preparations were underway for the implementation in 1988 of modifications to the system. These include the provision of new linkages in the nominated school scheme under exceptional circumstances, the reduction of the existing 25 school nets to 19 in line with district administration boundaries, the setting up of a single SSPA Advisory Committee to replace the existing SSPA Central Committee and the District Councils, and new pro- cedures for handling discretionary places.

      The Student Guidance Scheme provides a school social work service to 768 primary school sessions, covering a pupil population of 394 022.

Secondary Education

Provision of secondary education continued to expand to meet approved policy targets. During the year, 12 new secondary schools, including two prevocational schools, were completed, providing 13 600 school places. An additional 23 new secondary schools planned for completion between 1989 and 1993 were included in the secondary school building programme for the reprovisioning of substandard secondary schools to areas where there is a demand for secondary school places.

      There are four main types of secondary school in Hong Kong: Anglo-Chinese grammar schools, Chinese middle schools, technical schools and prevocational schools. There were

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    351 Anglo-Chinese grammar schools with enrolments totalling 372 152 compared with 339 and 372 422 in 1986. These schools offer a five-year secondary course in a broad range of academic and cultural subjects leading to the Hong Kong Certificate of Education Examination (HKCEE), the medium of instruction being mainly English. Students with satisfactory results in the HKCEE may enter a two-year sixth-form course leading to the Hong Kong Advanced Level Examination for admission to the University of Hong Kong and other tertiary level courses. Many students also sit for the United Kingdom General Certificate of Education Examination (GCE) at both ordinary and advanced levels. Some Anglo-Chinese schools also offer a one-year sixth-form course to prepare their students for the Hong Kong Higher Level Examination with a view to admission to the Chinese University of Hong Kong.

In 1987, there were 60 Chinese middle schools accommodating 34 640 pupils, compared with 58 and 35 585 respectively in 1986. Students attending these schools also take courses leading to the HKCEE. Instruction is mainly in Chinese with English taught as a second language. Most Chinese middle schools also offer a one-year Middle 6 course leading to the Hong Kong Higher Level Examination.

     Of these two types of schools, 83 were private Anglo-Chinese schools and 24 were private Chinese middle schools. In September 1987, the government bought a total of 57 916 Form I to III places from 60 such schools through the 'Bought Place Scheme'.

     Secondary technical courses are provided for 22 237 students in 22 schools. Ten of these schools are run by the government, 11 are government-aided and one is private. Secondary technical schools prepare their students for the HKCEE with emphasis on technical and commercial subjects. Suitably qualified candidates can continue their studies in Form 6 or in technical institutes, the Hong Kong Polytechnic, the City Polytechnic of Hong Kong or the Hong Kong Technical Teachers' College.

     Prevocational schools are government-aided secondary schools which provide students with a general education and an introduction to a wide range of technical skills upon which future vocational training may be based. The curriculum in Secondary 1 to 3 is made up of about 40 per cent technical subjects and about 60 per cent general subjects. The technical content is reduced to about 30 per cent in Secondary 4 and 5. After completion of Secondary 3, students may enter approved craft apprenticeship schemes with associated part-time day-release courses at technical institutes. Credit units are given by the institutes for technical subjects which have been studied in depth at school. In addition, direct entry into the second year of an approved craft apprenticeship may be permitted.

     At present, there are 18 prevocational schools providing 14 440 places. A further 10 schools of this type are included in the Secondary School Building Programme.

     The Junior Secondary Education Assessment (JSEA) System, which selects and allocates Secondary 3 leavers to Secondary 4 places in the public sector, completed its seventh cycle in July. Of the 76 072 students presented for assessment, 57 857 or 76.1 per cent were allocated aided places in Secondary 4 or full-time craft courses. Of those who were allocated Secondary 4 places, over 86.8 per cent obtained places in their own schools. The review of the JSEA System, which began in March 1985, was finalised early in 1987. Starting from September 1987, an enhanced JSEA System has been introduced which does not require participants to attend a public scaling test.

     In accordance with the government's objectives for the promotion of practical/technical education for junior secondary students, as stated in the 1978 White Paper on the Development of Senior Secondary and Tertiary Education, the Practical Education Centre commenced operation in September 1986. This centre, operated and maintained by the

open day at Government House gardens

planting for a greener Hong Kong

keeping fit with the family

JIM Y & EMIRY

ぜだ

higher

HO

Xu

VOETRICOUL

ANY OFF

直播

'walk for millions' on Eastern Island Corridor

馬拉松

pacing for charity with superstar

Jackie Chan

EDUCATION

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government, has 15 fully-equipped workshops/special rooms with a total maximum weekly enrolment of 9 600. Courses offered include Design and Technology (Woodwork, Metal- work and Plastics), Home Economics (Cookery, Needlework) and Art and Design (Painting, Pottery and 3-Dimensional work). Schools which lack either the facilities or trained staff to run the courses are encouraged to send students to attend courses at the centre free of charge. Courses are provided for students at Secondary 1 to 3 levels and may be extended to Secondary 4 and Secondary 5 levels at a later date.

      The Careers Education Section of the department promotes the development of careers education and student guidance in secondary schools. During the year, it continued to work closely with the Labour Department and the Careers Division of the Hong Kong Association of Careers Masters and Guidance Masters to provide a comprehensive service for young people. The section also co-operates with the Guidance Division of the association and school social workers in providing guidance services to secondary school students.

Special Education

The provision of special education continued to develop in line with the objectives of the White Paper on Rehabilitation published in 1977 and subsequent annual reviews of the Rehabilitation Programme Plan. A total of 13 516 special places for handicapped children was provided in 1987.

There were 71 special schools providing 8 496 places for the more severely handicapped. These schools provided special education for the blind, the deaf, the physically handicap- ped, the mentally handicapped, the maladjusted and socially deprived and children with learning difficulties. Some 830 residential places were provided in boarding sections of 15 special schools. In addition, there were 337 special education classes in ordinary schools providing 5020 places for the partially sighted, partially hearing, and children with learning difficulties.

A three-year pilot scheme, launched in 1985 to provide remedial support for mildly disabled children integrated in non-profit-making kindergartens, was in progress.

Intensive remedial services were also provided by the Special Education Section of the Education Department for children with learning difficulties and adjustment problems in ordinary classes. These services included remedial support outside school hours in resource teaching centres and adjustment units, a peripatetic teaching service in ordinary schools during school hours, and advisory services to schools.

      Screening and assessment services were provided to identify special educational needs among school-age children so that remedial action could be taken as early as possible. Primary 1 pupils are screened under the combined screening programme with screening tests for hearing and eye-sight. This programme also provided checklists and guides for teachers to detect children with speech problems and learning difficulties. Pupils requiring further assessment were given audiological, speech or psychological assessment while those in need of remedial services such as speech and auditory training, speech therapy and counselling were given such services at the Special Education Services Centres. An earmould laboratory was run in one of the centres to provide earmoulds to hearing- impaired pupils.

      A centralised braille production centre, established in late 1986, and operated by the Hong Kong Society for the Blind under government subvention, produced braille reading material, including textbooks, and carried out research to improve braille production in both English and Chinese.

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     Two-year part-time in-service courses of training for teachers of children with special educational needs were operated by the Sir Robert Black College of Education. Short courses, seminars, and workshops as well as refresher courses were frequently held by the Special Education Section to enhance the professional knowledge of staff in the special education field.

Post-Secondary Education

There are two approved post-secondary colleges registered under the Post Secondary Colleges Ordinance. They are Hong Kong Shue Yan College and Lingnan College. The Hong Kong Shue Yan College, registered in 1976, has three faculties - Arts, Social Science and Business - with 13 departments offering day and evening courses with a total enrolment of 4 059 students. It operates a four-year diploma programme without government financial assistance. Lingnan College, registered in October 1978, has three faculties Arts, Business and Social Science and an enrolment of 1 367 students. It offers two-year Secondary 6 courses and a two-year Post-Secondary 6 higher diploma course, for which it receives government financial assistance. It also offers a fifth-year course leading to an honours diploma for students who successfully complete the higher diploma course.

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      Students of the two-year post-Secondary 6 courses at Lingnan College are eligible for grants and loans, the maximum levels for which were revised to $3,700 and $4,400 per annum respectively in the 1987-8 academic year. Loans up to a maximum of $8,000 per annum were available to students in the fifth-year course at Lingnan College and to students in the four-year course at Shue Yan College.

University of Hong Kong

The University of Hong Kong, situated on the slopes above the Western District of Hong Kong Island, is the oldest tertiary education institution in Hong Kong. Established in 1911 and originally housed in just one building, the university has grown to its present size of 8 500 students, and now occupies an additional two sites: the Faculty of Medicine is situated in Pok Fu Lam, adjacent to its teaching hospital, Queen Mary Hospital, and the Faculty of Dentistry is housed in the Prince Philip Dental Hospital at Sai Ying Pun.

The structure of the degrees and the governance of the university are based mainly on the British system. The university has nine faculties: Arts, Architecture, Dentistry, Education, Engineering, Law, Medicine, Science and Social Sciences. Each faculty teaches both undergraduate and postgraduate courses, with the exception of the Faculty of Education, which at present teaches postgraduates only.

      Most undergraduate courses are of three years' duration. Exceptions are the curricula for the Bachelor of Architecture, Bachelor of Dental Surgery, and Bachelor of Medicine and Bachelor of Surgery degrees, which last for five years. All courses, apart from some in the Department of Chinese, are taught and examined in English.

The university offers three kinds of higher degree, two of which, the Master of Philosophy and the Doctor of Philosophy, are awarded on the basis of original research. Another Master's degree is obtainable by coursework. In 1987, higher degree enrolment constituted about 11 per cent of total student registration.

      Research at the university is active and ongoing, with almost every member of the academic staff engaged in research of some nature. Funds for the support of research are limited, but the main financial sources are the government, private benefactions and private

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     companies. In 1986-7, a special grant of $6.8 million was provided by the government to fund 'strategic' research of particular relevance and value to Hong Kong. Research is considered a vital function of the university, and projects undertaken in cooperation with the commercial and industrial sectors of the community, and collaborative research and exchange at an international level, are encouraged and supported as far as possible. The university has a number of specialist research centres: the Centre of Asian Studies, which serves as a focal point for multi-disciplinary research on China, Hong Kong, East Asia and Southeast Asia; the Centre of Urban Studies and Urban Planning, the Kadoorie Agricul- tural Research Centre, a Social Sciences Research Centre which was established at the beginning of 1987, and a Marine Sciences Research Centre, which is in the development stages at Cape d'Aguilar. Research institutes in other disciplines like molecular biology are also being planned.

Close links are maintained with universities abroad, through individuals and depart- ments, as well as through the Association of Commonwealth Universities and the Association of Southeast Asian Institutes of Higher Learning. Academic staff are recruited by international advertisement.

      New academic developments are undertaken in close consultation with the University and Polytechnic Grants Committee, as well as with relevant government departments and other agencies, such as the Education and Manpower Branch of the Government Secretariat, the Environmental Protection Department, the Social Welfare Department, and the Industry Development Board. Close contact enables the university to plan new initiatives in direct response to specific community and manpower needs. A new Depart- ment of Speech Sciences, scheduled to have its first intake in 1988-9, represents one such response, as well as new curricula in Environmental Management, and Environmental Science and Engineering, which will help to provide professional personnel in these fields in Hong Kong.

      To keep pace with academic developments and increasing student numbers, the univer- sity is undergoing substantial physical redevelopment. A 20-storey academic building on the main estate will be ready for occupation by 1988, while work to expand the main library is underway, and due for completion by 1990-1.

      Accommodation is currently provided by the university for about 25 per cent of its undergraduate students. There are seven residential halls, and two non-residential halls. A further two 300-place halls of residence are planned for medical students, and an 'on-call' clinical students hall is also to be built. A number of postgraduate students and academic visitors to the university can be accommodated at the Robert Black College on the main estate. Three student amenities centres provide study, recreational and restaurant facilities for those students who are unable to obtain a place in a hall of residence.

      The University Main Library, with its collection of over 840 000 printed volumes, is one of the best equipped in Southeast Asia, and includes a unique and invaluable collection of Chinese works. There are other specialist libraries located in the Faculties of Dentistry, Education, Law, Medicine and Music. The university also has its own publisher and bindery.

      Apart from the regular student enrolment, the university offers about 1 000 courses to some further 30 000 students each year, through its Department of Extra-Mural Studies. While the department teaches a considerable number of courses in the liberal arts, the main thrust of its programmes is in the direction of education at a high level. Most of the students attend courses at the end of the working day, mainly at the Extra-Mural Studies Town Centre, in the Shun Tak Centre, Connaught Road, Central.

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The Chinese University of Hong Kong The Chinese University of Hong Kong was inaugurated in 1963 as a federal university and a self-governing corporation which draws its income mainly from government grants. The campus occupies more than 110 hectares of land near Sha Tin.

      The university comprises three original colleges - New Asia College (founded in 1949), Chung Chi College (founded in 1951) and United College (founded in 1956). A fourth college, the Shaw College, named after its donor Sir Run Run Shaw, will become operational in 1988 at the northwest part of the campus.

Since its inception, the university has adopted a curriculum structure based on a combination of the credit unit system and degree examination system. Students admitted to the undergraduate programme after six years of secondary education are granted a Bachelor's degree upon completion of a number of course credits and the passing of a degree examination assessed by external examiners from home and abroad.

The university started a comprehensive curriculum review in 1983 which resulted in the adoption of a new curriculum structure for its undergraduate studies, based solely on the credit unit system. The new curriculum is applicable to students admitted in 1986-7 and thereafter. Under this new structure, general education is strengthened, language standards are emphasised, minor programmes become optional and degree examinations are replaced by course examinations with the external examiner system retained.

In 1987-8, the university offered full-time undergraduate students 32 major subjects and 35 minor subjects through its 47 departments grouped under five faculties, namely, Arts, Busi- ness Administration, Science, Social Science and Medicine. The first four faculties offer four- year programmes, leading to Bachelor's degrees. The Faculty of Medicine runs a five-year programme with two years of pre-clinical studies followed by three years of clinical work. Clinical teaching is conducted mainly in the university's teaching hospital - the Prince of Wales Hospital in Sha Tin. The university emphasises bilingualism. Students have to be pro- ficient in both Chinese and English on admission, and both languages are used in teaching. At the postgraduate level, there are 55 academic and professional programmes leading to the degrees of Doctor of Medicine, Doctor of Philosophy, Master of Philosophy, Master of Business Administration, Master of Social Work, Master of Divinity, Master of Science, Master of Arts, and Master of Arts in Education as well as diplomas in Education and Social Work.

Part-time degree programmes leading to Bachelor's degrees (Bachelor of Business Administration; Bachelor of Arts in Chinese and English, Music; and Bachelor of Social Science in Social Work) and Master's degrees in Translation, Business Administration and Social Work as well as professional diplomas in both Education and Social Work are offered to working adults.

New postgraduate programmes launched in 1987-8 comprised a Specialisation MBA Programme in Finance and Accounting, and a Master of Philosophy programme in Anthropology. Expansion in the fields of education, medicine, electronics and computer science is expected in the coming years. Plans are also in hand to establish engineering studies in the near future.

The university is strongly committed to research and other academic activities. In addition to research work conducted in the teaching departments, six research centres are operating under the Research Institutes of Chinese Studies, Science and Technology, and Social Studies.

     Competition for university places is intense. Over 30 000 candidates sat the various public examinations held in 1987, and around 1 430 were admitted to first year studies. Enrolment as of September 1987 totalled 7 629, comprising 5625 full-time and 602

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part-time undergraduate students and 443 full-time and 959 part-time postgraduate students. Almost all students are local, and about half of them are given hostel places.

      In 1986-7, the Department of Extramural Studies offered more than 1 600 courses with a total enrolment of more than 55 600. Besides general courses and those leading to the award of diplomas and certificates, the department also offered correspondence courses, courses on radio and by newspapers, and self-learning courses packaged in the form of audio tapes, programmed texts and resource materials. In addition, the department ran courses in China.

     Development of the campus continued with the Ho Tim Building for the School of Education, including a multi-purpose hall for Chung Chi College, and an extension to the Marine Science Laboratory completed during the year. An extension to the Institute of China Studies Building, a new academic building by the University Mall for science-based activities, a new staff/student centre and the Phase 1 development of the Shaw College comprising a hostel and amenities building complex and an administration and education block are in various stages of construction.

     The library system consists of the University Library, the Medical Library, and three branch libraries in the colleges. The total collection in 1987 was 934 700 volumes.

The university participates in the affairs of regional and international associations of universities, and has from time to time launched co-operative projects with foreign governments and individual institutions. It is a member of the Association of Common- wealth Universities, International Association of Universities, the Inter-University Council for Higher Education Overseas and the Association of Southeast Asian Institutions of Higher Learning.

Hong Kong Polytechnic

The Hong Kong Polytechnic was established in 1972, taking over the campus of the former Hong Kong Technical College which formed the basis of the polytechnic's initial development.

      Since then, student and staff numbers have increased greatly. At the beginning of the 1987-8 academic year, there were 7 830 full-time, 1 480 sandwich, 910 mixed-mode, 2 910 part-time day release and 13 240 part-time evening students. There were also 310 students enrolled on a self-study programme which entered its second year of operation. The staff strength stood at 2 520, comprising 924 teaching, 246 senior administrative and 1 350 technical, clerical and ancillary staff.

     To cope with expanded activities and to improve effectiveness, an academic restructuring of divisions and departments was implemented at the end of 1986 and in 1987. The polytechnic now has 25 academic units grouped under seven divisions.

The Division of Applied Science and Textiles comprises the Departments of Applied Biology and Chemical Technology, Applied Physics, and the Institute of Textiles and Clothing. The Division of Business and Management Studies comprises the Departments of Accountancy, Business Studies, Management Studies, and Hospitality Management.

The Division of Communication comprises the Departments of Chinese, Translation and Interpretation, English, and the Swire School of Design. The Division of Construction and Land Use comprises the Departments of Building and Surveying, Building Services Engineering, Civil and Structural Engineering, and the Centre of Land and Engineering Surveying. The Division of Engineering comprises the Departments of Electrical Engi- neering, Electronic Engineering, Manufacturing Engineering, Mechanical and Marine Engineering, and Nautical Studies.

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The Division of Health and Social Studies comprises the Departments of Applied Social Studies, Diagnostic Sciences, Health Sciences, and Rehabilitation Sciences. The Division of Mathematical and Computing Studies comprises the Departments of Computing Studies, and Mathematical Studies.

The polytechnic offers a wide range of courses to meet the demands of commerce, industry and the community. For 1987-8, 200 courses were being offered in different modes of attendance, namely full-time, sandwich, part-time day release, part-time evening, mixed-mode and self-study. Successful completion of these courses leads to the awards of degree, associateship, professional diploma, higher diploma, diploma, post-registration diploma and certificate, endorsement certificate, higher certificate, certificate and certificate of proficiency.

     Degree programmes offered in the 1987-8 academic year include: BA(Hons) in Business Studies; BA(Hons) in Computing Studies; BA in Design; BA in Language and Com- munication; BA(Hons) in Textile and Clothing Marketing; BEng(Hons) in Building Services Engineering; BEng(Hons) in Civil Engineering; BEng(Hons) in Electrical En- gineering; BEng(Hons) in Electronic Engineering; BEng(Hons) in Manufacturing Engi- neering; BEng(Hons) in Mechanical Engineering; BSc in Building Technology and Management; BSc(Hons) in Combined Studies in Mathematics and Science; and Bachelor of Social Work. The Bachelor of Social Work was offered in both the full-time mode and mixed-mode.

During the year, the polytechnic accepted the first batch of candidates for registration on Master of Philosophy programmes. The period of registration for research degree can- didates is normally two years on a full-time and three years on a part-time basis.

      Since 1981, the polytechnic has conducted a phased schedule of discontinuing the bulk of its diploma and certificate level work as corresponding courses are offered by the technical institutes. This phased schedule reflects the polytechnic's move towards a greater propor- tion of higher level academic work.

      The polytechnic also offers short full-time and extension courses to meet the needs of the community. A total of 487 students enrolled on short full-time courses and 10 887 students enrolled in the extension courses in 1986-7.

In 1985, the polytechnic embarked on the development of complementary studies in the form of voluntary extra-curricular programmes for its full-time students. These pro- grammes help students to broaden their intellectual outlook, develop their knowledge and skills in areas that are useful to their profession or desirable for adult life and to enhance their understanding of society and sense of civic responsibility. In 1986-7, 107 complemen- tary studies courses were offered, with 9 246 students competing for 3 275 places.

The polytechnic continued to establish new contacts and maintain close liaison with academic, research and professional institutions in China and overseas.

Liaison and cooperation with the City Polytechnic of Hong Kong further developed during the year. From 1987-8, the Hong Kong Polytechnic invited applications jointly with the City Polytechnic of Hong Kong. Applicants were required to complete only one application form and could indicate a maximum of two choices of programmes in each polytechnic. The subsequent selection of candidates was conducted by the two polytechnics independently.

Research activities continued to grow significantly, with the research grant in 1986-7 being increased by 50 per cent over the previous year. Funds were allocated to support 41 new research projects and 42 on-going projects. The major areas of research included environmental studies, immunoassay techniques, offshore engineering, CAD/CAM, electric

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power systems, industrial automation, textile technology, VLSI fabrication techniques together with applied biology and chemistry.

      A recent significant development of the polytechnic was the establishment of specialist centres to foster further development of activities such as applied research, consultancy, specialist training, in a particular area. In May 1986, the Royal Hong Kong Jockey Club donated HK$41.9 million to finance the setting up of a Rehabilitation Engineering Centre. In July 1986, a partnership programme was reached with International Business Machines Corporation for the installation of HK$10.7 million worth of equipment to set up a CAD/CAM Research and Education Centre. Both centres began operation in 1987.

      The polytechnic also gave high priority to staff development. The funding of staff development programmes in 1986-7 increased by 54 per cent over the previous year.

Each year, the polytechnic receives donations in the form of grants, equipment, scholarships and bursaries for students, from organisations, firms, professional associa- tions and individuals. In 1986-7, donations of HK$13.8 million were received from the private sector.

      The polytechnic library has seating capacity for 1 600 readers, as well as special facilities for disabled persons. Its book collection has grown to 360.000 volumes and over 7 000 titles of periodicals. Various kinds of audio-visual materials including 95 000 slides, laser discs and micro-computer software are available.

       The campus covers nearly nine hectares and is located in Hung Hom, Kowloon. Con- struction of the proposed Phase IIIA development began during the year to provide a new administration block, additional teaching and staff accommodation, a small theatre, and an improved main entrance. A new sports pavilion and outdoor sports facilities had been completed early in the year and were in full use. A temporary building was constructed on campus to house the Rehabilitation Engineering Centre and the Rehabaid facilities before completion of permanent premises in the planned Phase IIIB development.

City Polytechnic of Hong Kong

In November 1987, the City Polytechnic conferred academic awards on its second group of graduates which numbered four times that of the previous year. The 488 graduates were 36 holders of the Postgraduate Diploma in Management Studies, 275 holders of Professional Diplomas in Accountancy, Business Studies and Company Secretaryship and Administra- tion, 52 awardees of the Higher Diploma in Business Studies, 73 awardees of the Diploma in Social Work, and 55 recipients of Higher Certificates in Data Base and Translation and Interpretation. By the end of the year, most of the graduates had found employment in industry and commerce.

       The year in review witnessed remarkable progress in the introduction of more bachelor's degree and postgraduate courses in the polytechnic. Five bachelor's degree courses, which were offered previously at professional diploma level, were successfully validated. They were: Building, Computer Studies, Electronic Engineering, Information Technology and Quantita- tive Analysis for Business. Four postgraduate diploma courses in Business Information Technology, Construction Management, Electronic Systems Design and Translation and Interpretation were also introduced. They were designed for applicants with substantial working experience and managerial responsibility in industry and commerce who sought to further their studies on a part-time basis. Altogether, 25 courses were offered at various levels and in different modes of attendance. Course planning, and other academic activities, moved onto a longer-term footing with the approval by the University and Polytechnic Grants Com- mittee of the polytechnic's major academic plan for the 1988-91 triennium early in the year.

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      Another significant development was the establishment of three new academic depart- ments in the polytechnic - Applied Science, Law and Manufacturing Engineering - bringing the number of teaching departments to 11. The expansion underscored the institution's commitment to develop courses to meet a diversity of academic interests and vocational needs in Hong Kong. The Department of Law, which will enrol its first group of degree students in October 1988, is the second law school in Hong Kong.

      Site formation work for the polytechnic's 12.2-hectare permanent campus at Tat Chee Avenue in Kowloon Tong was completed in early 1987 and construction work began immediately on schedule. In June, the Governor officiated at the foundation stone-laying ceremony on the site of the permanent campus, the first phase of development of which is expected to be completed by October 1988. Meanwhile, the polytechnic is still operating from its interim premises in the Argyle Centre Tower II in Mong Kok.

      In the summer, the two polytechnics introduced a joint admission programme for students. Applicants seeking entry to courses offered by either of the two institutions in the academic year 1987-8 were able to do so by submitting a single application form. Subsequently, in October, the City Polytechnic admitted about 2 000 new full-time and part-time students, bringing its total student population to 4 800. It also participated in the exchange of information on offers of admission with the other UPGC-funded institutions in Hong Kong in an exercise intended to ensure that all the available tertiary education places were filled as expeditiously as possible. It is envisaged that cooperation in student admissions and related matters among the tertiary education institutions will be further extended.

      During the year, the polytechnic continued to develop its research activities. Existing policies were strengthened by engaging external assessors, in evaluating larger research projects and monitoring their progress. Priority in the allocation of funds was given to strategic research work that could lead to the advance of knowledge which had important practical significance in the context of Hong Kong. Moreover, additional sources of funding within and outside the polytechnic were identified to support smaller scale projects in order to supplement the research support grant from the University and Polytechnic Grants Committee. Research which promoted links with institutions and individuals in China was undertaken, and contacts with China in general were fostered through the polytechnic's China liaison arrangements.

Hong Kong Baptist College

Founded in 1956 by the Baptist Convention of Hong Kong, the Hong Kong Baptist College became a degree-granting institution in 1986. As an autonomous institution which draws its income mainly from government grants, the college is governed by its own Ordinance enacted in 1983. Its governance structure is in line with internationally accepted practice, with its statutory governing bodies being composed predominantly of members independently appointed by the Governor from the sectors of commerce, industry and education.

For 1987-8, the college offered three degree courses: a BSc(Hons) in Combined Sciences; a Bachelor of Social Work; and a Bachelor of Business Administration(Hons). A fourth course, a BSocSc(Hons) in Communication has also been validated. In addition, there were six courses leading to the award of the honours diploma, and one diploma course in computing studies. These courses are offered through 17 departments grouped under four faculties, together with the language centre, centre for computing studies and services, and physical education unit. The faculties are: Arts (departments of Chinese

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language and literature, English language and literature, music and fine arts, religion and philosophy); Business (departments of accounting, business management, economics, secretarial management); Science (departments of biology, chemistry, mathematics, phys- ics); and Social Sciences (departments of communication, geography, history, social work, sociology).

      All courses require three years of full-time study (except the computing studies diploma which requires two years), and students are admitted on the results of the Hong Kong Advanced Level (HKAL) Examination. Demand for places has always outstripped the supply and for 1987-8 there were nine qualified applicants to every place. In October 1987, the total full-time student enrolment was 2 569, with a breakdown by faculty of: Arts 468, Business 721, Science 500, and Social Sciences 880. Additionally, there were 68 students in a special two-year pre-music course, preparing them to sit the HKAL examination. The teaching staff strength stood at 205. Most staff hold higher degrees from overseas institutions. Senior academic and administrative staff are recruited through international advertisement.

       Under the central educational philosophy of educating students to become well-balanced in academic achievement, professional competence and character development, each course is designed to be broad-based and with two essential components - liberal education and vocational preparation. The development of communication skills is always emphasised. As a provider of such courses, the college fulfils a role distinct from the universities and polytechnics and plans to introduce postgraduate courses while increasing the number of undergraduate courses in the coming years. The degree courses are academically validated by the UK Council for National Academic Awards (CNAA). In 1987, the BSocSc(Hons) in Communication was approved by the CNAA, while two other degree course proposals - BA(Hons) in Music, and BA(Hons) with majors in Arts and Social Sciences - were submitted to the CNAA. External examiners are appointed to all courses.

       The Division of Continuing Education helps to satisfy the rising demand for education by people in employment, through offering a broad spectrum of courses, mostly part-time, which are professional, vocational, and of general or cultural interest. The 1 000 courses offered during the year were attended by 40 000 students.

       The year also witnessed increasing funding support for research work and growing academic exchanges with institutions in China and other countries overseas. The collection in the fully-automated library has expanded to 188 000 volumes, and additionally there is a collection of rare materials for research on contemporary China. The centre for educational development provides support to staff in the areas of educational technology, software production, and curriculum development.

       Construction work has begun on two new buildings, which are for student amenities and for additional teaching accommodation for the Communication Department. Three other buildings - to accommodate the Science and Business and Administration faculties; and to provide a Sports Centre - are at an advanced stage of design. Altogether, this campus re-development will increase the space provision by 80 per cent and will be completed in 1989-90, in time to cater for the needs of 3 000 students in undergraduate and postgraduate

courses.

Planning for Hong Kong University of Science and Technology

      Following a decision by the government to establish a third university in Hong Kong, a Planning Committee was appointed in September 1986. The Planning Committee is charged with the task of giving advice to the government on all matters relating to the

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setting up of a university which will be a grouping of professional schools emphasising science, technology, engineering, management and business studies; which will provide degree places for 7 000 full time and equivalent part time students by 1999-2000, with room for further development up to about 10 000; and which will have its first intake no later than the 1994-7 triennium.

The committee which had also the task of recommending for appointment the first Vice-Chancellor and other senior staff of the university has, following a very comprehen- sive recruitment exercise and with the agreement of the Governor, selected Dr Chia-wei Woo as the first Vice-Chancellor.

      The committee has from the outset interpreted its terms of reference to mean that it should move as quickly as possible towards first student intakes and has been encouraged in this view by tremendous enthusiasm and support for the project from the government and the public. As a result, planning has progressed smoothly and speedily enabling the committee to set a target date for first student intakes of October 1991.

To date, a name, the Hong Kong University of Science and Technology, has been chosen for the new university after a public competition; a 42 hectare site in the eastern New Territories has been chosen and allocated, and the necessary enabling legislation to incorporate the new university as an autonomous degree awarding institution has been enacted.

The Planning Committee has been further encouraged by a donation of HK$1.5 billion from the Royal Hong Kong Jockey Club to cover the cost of the campus construction and an undertaking by the government to meet any amount by which the capital cost may exceed the donation. An architectural competition was conducted during the year to obtain the best design for the campus. The annually recurrent costs of the university will be met by government grants, fees and other revenue.

      On the academic side, the committee will in due course recommend a modular system, and has drawn up a preliminary model of the academic profile of the new university indicating degree courses to be offered at undergraduate and postgraduate levels, reflecting the areas of emphasis in its terms of reference and seeking to meet the economic requirements of Hong Kong in addition to providing for the social demand.

Provisional Hong Kong Council for Academic Accreditation

Since the introduction of degree courses at Hong Kong's non-university institutions of higher education in 1983-4, the Council for National Academic Awards in the United Kingdom has been responsible for validating the proposed courses to ensure that the awards are comparable in standard to those of British universities. In May 1986, however, the government decided that there should, in principle, be a Hong Kong Council for Academic Awards. There being an average of 11 degree courses a year to validate in the foreseeable future, it was considered viable for Hong Kong to arrange and manage its own external validations of non-university degrees, and thereby develop a greater self-sufficiency in Hong Kong's higher education.

A Planning Committee on Academic Awards was set up in October 1986 to consider in detail how full local validation of degrees awarded by the non-university educational institutions in Hong Kong might best be arranged and managed. Following the Report of the Planning Committee in May 1987, a Provisional Hong Kong Council for Academic Accreditation was set up in November to prepare for the creation of a Hong Kong Council for Academic Accreditation as an independent statutory body. The Provisional Council meets in Hong Kong twice a year and comprises five eminent overseas academics, five

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     academics drawn from each of the tertiary institutions in Hong Kong, and five lay members. Its remit includes understudying and participating in the Council for National Academic Awards' validations of proposed degree courses at the non-university institu- tions in Hong Kong, and the presentation of a progress report to the government before the Hong Kong Council for Academic Accreditation is established as an independent body. The Provisional Council will ensure that the local body will be both able to maintain the continued internationally recognised academic standards of these degree awards, and take full academic and administrative responsibility for the entire future programme of validation and revalidation exercises in Hong Kong.

Open Education

A Planning Committee is to be set up in January 1988, for the Open Learning Institute of Hong Kong. The Open Learning Institute is being set up to offer a comprehensive range of open education courses, from sub-degree to second degree level. It will provide a second chance for those who have been unable to go on to further education after leaving school, as well as opportunities for workers and managers to up-date their qualifications and skills and for personal development.

The Planning Committee for the institute includes prominent local people with experi- ence of the needs of commerce and industry, as well as distinguished academics both from Hong Kong and overseas. The committee's terms of reference require it to recommend the appointment of the first chief executive of the institute, to draw up a detailed implementa- tion plan, to advise, in consultation with the UPGC, on the future relationship between the institute's own programme and the extra-mural or part-time courses of other institutions and to conduct surveys of demand and need.

      The committee hopes to complete these tasks in time for the first students to be admitted to the institute in late 1989.

Student Finance

      Full-time students attending the local tertiary institutions are eligible for grants to cover their faculty expenses, tuition fees and student union fees, together with loans to meet their living expenses. This scheme is administered by the Secretariat of the University and Polytechnic Grants Committee. Loans granted from the 1987-8 academic year are subject to an interest charge of 2.5 per cent per annum, which will commence to accrue upon the student's graduation. During the year 7 033 students received grants totalling $32.7 million and 8 556 students received loans totalling $72.9 million.

      Also administered by the Secretariat of the UPGC is a joint-funding arrangement between the United Kingdom and Hong Kong governments, under the terms of which grants are made to full-time students from Hong Kong attending first degree or Higher National Diploma courses in the United Kingdom, to meet the difference between home and overseas tuition fees. However, if the total requirement exceeds the joint contribution of the two governments, then each applicant's grant will be proportionately reduced, with the balance made up by an interest-free loan, offered solely by the Hong Kong Govern- ment. During the year, grants totalling £4 million and loans totalling $2.5 million were paid to 120 institutions on behalf of 1 476 students.

Sir Edward Youde Memorial Fund

In December 1986, following the sudden death of the Governor, Sir Edward Youde, the government decided to set up the Sir Edward Youde Memorial Fund, to centralise the

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management of public donations received in his memory. Accordingly, an enabling ordinance was enacted and the fund brought into being on April 1, 1987.

The moneys and assets of the fund stood at over $85 million as at July 31 and donations are still being received. It is managed by the Board of Trustees of the Fund consisting of Lady Youde and four prominent Hong Kong people.

In accordance with Lady Youde's wishes, it has been provided in law that the income of the fund is to be used for promoting the education and learning of the people of Hong Kong and encouraging research activities.

The uses of the income of the fund are determined by the Council of the fund which consists of Lady Youde and six prominent Hong Kong people. For the 1987-8 academic year, the council awarded 19 fellowships to post-graduate research students at the two local universities and the Hong Kong Polytechnic, 60 scholarships to final year students at all five local tertiary institutions, and 462 prizes to senior students in local secondary schools. These awards were made on the basis of nominations by heads of the tertiary institutions and secondary school principals followed by interviews by the council as appropriate. The total amount of awards given was about $2 million.

      In addition to the local awards, the council has also announced a scheme of overseas scholarships and fellowships, to enable deserving students to pursue undergraduate or post-graduate education in overseas institutions for 1988-9. Applications have been invited and are being processed and it is estimated that the expenditure involved will be about $1.5 million.

Technical Education

With the completion of Chai Wan Technical Institute in July 1987, the number of technical institutes in Hong Kong rose to eight. These provide courses at craft and technician levels with full-time, block-release, part-time day-release and part-time evening attendance. A large number of short courses are also offered and these are mainly designed to update the knowledge and skills of people in employment.

     The main disciplines covered by the institutes include: applied science, clothing, commercial studies, computing studies, construction, design, electrical engineering, general studies, hotel-keeping and tourism studies, industrial technology, marine engineering and fabrication, mechanical engineering, motor vehicle engineering, printing and textiles. New courses offered by the Chai Wan Technical Institute include environmental studies and food technology. Most technician level courses have been validated by the United Kingdom Business and Technician Education Council and students attending these courses are able to register for the council's awards.

      The demand for places on most courses remained high. Enrolments for the 1987-8 academic year totalled 10 000 full-time, 14 000 part-time day and 2 800 part-time evening students. In September 1987, the number of full-time teaching staff in the technical institutes was 783 and there were some 711 supporting staff.

     Each technical institute has on average 70 computer work-stations comprising ter- minals linked to medium-scale computers and microcomputers. In addition, computer- aided design and drafting facilities have been installed in the technical institutes. These enable the study of computer appreciation and application to be included in most

courses.

The annual employment survey of graduates from full-time courses again showed that they had little difficulty in finding employment in their respective disciplines after comple- tion of their studies.

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      To meet the increasing demand for courses, plans were in hand to provide additional accommodation at the Kwai Chung and Kwun Tong Technical Institutes and to redevelop the annex of the Morrison Hill Technical Institute.

Industrial Training

The Vocational Training Council operates 16 training centres for training manpower for the automobile, banking, electrical, electronic data processing, electronics, gas, hotel, insurance, jewellery, machine shop and metal working, plastics, precision tooling, printing, shipping, textile, and welding industries. Together they provide off-the-job basic or updating training for over 17 000 trainees a year on a full-time or part-time basis, with skill levels ranging from the operative to the technologist.

The Engineering Graduate Training Scheme, launched by the council in 1983, aims at bringing about sufficient opportunities for post-graduate training for engineering graduates of a standard acceptable to the Hong Kong Institution of Engineers and other equivalent institutions for corporate membership purposes. Since April 1985, the scheme has been extended to cater to the training needs of students on certain sandwich degree courses. In 1987, 101 engineering firms participated in the scheme and provided suitable training places. The council also administers a scheme on behalf of the Industry Department for the training of engineers in the design of application specific integrated circuits (ASIC). The scheme was launched in May 1987 to assist local electronic firms to train 90 local engineers in overseas facilities.

      The Management Development Centre of Hong Kong carries out research, develop- ment, co-ordination and promotion of management training. Its programmes and projects include work with owner-managers and entrepreneurial firms, the creation of learning materials, and activities with management teachers and trainers and business executives.

      Apart from apprenticeship schemes in the industrial sectors, commercial traineeship schemes are also beginning to gain popularity in the accountancy and insurance sectors. A Subsidised Training Course Programme is also being operated with the aim of upgrading in-service personnel in the accountancy, banking, journalism, transport and physical distribution and wholesale/retail and import/export sectors. Employees in these sectors can attend courses sponsored by the council but run by one of the teaching or training institutions. About 50 per cent of the course fee will be refunded upon satisfactory completion of the course.

Training Authorities

The Clothing Industry Training Authority and the Construction Industry Training Authority are statutory bodies set up in 1975 to establish and operate training centres for these particular industries. The former is financed by a training levy based on the export value of clothing items while the latter is financed by a levy based on the value of con- struction works exceeding $1 million. There are now two training centres for construction trades with a third being built, and two centres for training in clothing manufacture.

Apprenticeship Scheme

The Apprenticeship Ordinance provides a legal framework for the training of craftsmen and technicians. It requires an employer to enter into a contract of apprenticeship when engaging a person aged between 14 and 18 in one of the 42 designated trades specified in the ordinance, unless that person has completed an apprenticeship in the trade. The contract must be registered with the Director of Technical Education and Industrial Training.

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Contracts for apprentices engaged in non-designated trades or for apprentices aged over 18 engaged in designated trades may also be registered voluntarily.

The Apprenticeship Section of the Technical Education and Industrial Training Depart- ment is responsible for administering the ordinance. Its duties include advising and assisting employers in the training and employment of apprentices, ensuring that the training is properly carried out, helping to resolve disputes arising out of registered contracts, and co-operating with educational institutes to ensure that apprentices receive the necessary complementary technical education. Courses of instruction for apprentices, normally on a part-time day-release basis, are provided at the Hong Kong Polytechnic and the technical institutes.

Apprenticeship contracts registered in 1987 totalled 4 800, of which 960 were for non-designated trades. These contracts covered 4 050 craft apprentices and 750 technician apprentices. By the end of the year, 9 800 apprentices were being trained in accordance with the ordinance.

Vocational Training for the Disabled

Vocational training and support services for disabled people are provided by the Technical Education and Industrial Training Department.

The department administers two government and subvents three skills centres for disabled trainees with a total capacity of 756 places and boarding facilities for 30 per cent of the trainees. These skills centres offer two broad groups of courses. The first and major group prepares disabled people for open employment while the second group prepares trainees for mainstream technical education.

In addition to this training the department provides three main support services. The Vocational Assessment Section assesses a disabled person's potential and provides guidance in the selection of a suitable vocational training course. Recent research and development conducted by this section has enabled new programmes of assessment to be designed. These programmes, together with a greater use of the computer in the inter- pretation of the psychological tests, has enabled this service to be expanded by some 50 per cent.

To improve the opportunity for employment of a disabled person the Technical Aids and Resource Centre designs and manufactures about 40 technical aids and adaptations to standard equipment and machinery per year. These technical aids enable disabled people to gain employment or improve their productivity.

The third support service is an Inspectorate Unit whose services cover such areas as advice to skills centres on teaching methods, curriculum development, administration and setting training standards. It also provides guidance and counselling to about 120 disabled students in the technical institutes.

The department's annual surveys of disabled leavers from full-time courses of technical institutes and skills centres have shown a steady increase in numbers of skills centre leavers and those who enter mainstream technical institute courses. The number of leavers who fail to obtain employment is less than 15 per cent.

Teacher Preparation

The training of non-graduate teachers for primary and secondary schools is undertaken by the three Colleges of Education -- Grantham, Northcote and Sir Robert Black - and the Hong Kong Technical Teachers' College (HKTTC). All four colleges are directly financed and staffed by the government and administered by the Education Department.

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      The three general colleges of education conduct initial full-time teacher-training courses of two years' duration for students possessing the required Hong Kong Advanced Level Examination qualification, and of three years' duration for students with the required Hong Kong Certificate of Education Examination qualification. Part-time in-service training courses of two or three years' duration are also offered to serving kindergarten, primary and secondary teachers and to teachers of students with special educational needs; retraining courses of seven or eight weeks' duration to teachers in primary and secondary schools and part-time courses of 12 weeks' duration for serving assistant kindergarten teachers.

Technical teacher training is offered by the HKTTC for future teachers of technical subjects in secondary and prevocational schools. A one-year full-time course is available to mature students who are well qualified in a technical field and wish to take up technical teaching as a career. Grants are offered to attract suitable recruits. A three-year full-time course is open to secondary school leavers who have prior studies in either technical or commercial subjects. The college also offers in-service courses for teachers and lecturers in the technical institutes as well as a variety of short courses for instructors working with the handicapped, and for supervisors and instructors employed in industry.

All four colleges also offer a one-year full-time Advanced Course of Teacher Education in cultural, practical and technical subjects.

In October, there were 1 248 students in the three-year full-time course, 1 052 students in the two-year full-time course, 12 students in the one-year full-time course, 123 students in the Advanced Course of Teacher Education and a total of 2 559 students in the in-service training and retraining courses.

Financial assistance in the form of interest-free loans and maintenance grants is provided by the government for students enrolled in the full-time courses at the four colleges.

Basic training courses in educational management for heads of schools in the public sector are provided by the Training Unit of the department. During the year, 40 newly- appointed primary school heads in two groups attended a 10-day management course, 120 experienced primary school heads in six groups attended a seven-day management course, while 18 secondary school heads attended a nine-day management course and 54 secondary school heads in three groups attended a six-day management development course. A four-day management course for 20 senior teachers in secondary schools was conducted for the first time. Various seminars and short courses for professional officers and induction and basic training courses for new recruits of the department were also offered.

Adult Education

     The Adult Education Section of the Education Department provides formal and non- formal education in the evening through a number of courses and activities and a subvention scheme for voluntary organisations.

      The formal education courses ranging from primary to secondary and post-secondary studies were offered in 45 centres. The Adult Education Course (General Background), offering Chinese, English, Mathematics and Social Studies, provided free primary educa- tion for educationally deprived adults to acquire the skills of reading, writing and numeracy. Some classes were jointly operated with the Correctional Services Department, Social Welfare Department and Urban Services Department. At the secondary level, the Secondary School Course and Government Evening Secondary School Course, operating in both Chinese and English Sections, offered arts and science subjects for adults and

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adolescents to qualify themselves at the Hong Kong Certificate of Education level. To improve proficiency in English and enhance job opportunities and career advancement, English courses at primary, secondary and GCE levels were run, preparing students to sit for the English Language Paper (Syllabus B) of the HKCEE and the GCE 'O' Level Examination. At the post-secondary level, the Evening School of Higher Chinese Studies offered school leavers short courses in Chinese language, classics and culture for personal enrichment. Under the credit unit system, students may be awarded a diploma if they are able to accumulate the required units within five years. The teachers' courses provided refresher courses for serving teachers in a variety of academic and cultural subjects. During the year, over 20 000 people enrolled in these formal courses.

Non-formal education was promoted through a variety of cultural, social, recreational and educational activities. The adult education courses (practical background) offered in 30 centres taught practical skills such as sewing and knitting, cookery and woodwork for household purposes. Over 4000 students attended these courses during the year. Many creative and educational activities were organised in 18 Adult Education and Recreation Centres to stimulate social awareness, cultivate creative ability and to develop individual talents and skills. Various activities were organised with other government departments and organisations, such as the Independent Commission Against Corruption, the Con- sumer Council and the St John Ambulance Brigade. During the year over 17 000 people participated in the courses. Microcomputer courses were also run for members of the Adult Education and Recreation Centres with a total enrolment of about 600 during the year.

Voluntary agencies continued to assist the department to run courses through a subven- tion scheme to complement and supplement adult education services in various areas. The scope of the scheme has been broadened to meet the changing needs of the community. In 1987-8, government subsidies were granted to 180 projects operated by 61 organisations.

Language in Education

To improve the quality of Chinese teaching, the Education Commission's Report No. 1 recommended that an additional graduate teacher of Chinese be provided to every public-sector secondary school with 18 classes or more. This recommendation will be implemented in September 1988. For those schools with fewer than 18 classes, an additional half non-graduate post for a teacher of Chinese has been provided since September 1986.

On the teaching of English, the report recommended that secondary schools which use Chinese as the instructing medium should be given additional teachers and other resources to strengthen the teaching of English so as to avoid any drop in standards because of reduced exposure to the language. This recommendation will be implemented from September 1988.

To evaluate the effect on English teaching in Hong Kong secondary schools of having at least two expatriate teachers of English in a school, a two-year Expatriate English Language Teacher Pilot Scheme was introduced in September 1987. Expatriate teachers for this scheme have been recruited by the British Council, which is employing them on contract terms for two years. The scheme is being closely monitored by both the British Council and the Education Department.

A Chinese Textbooks Committee (CTC) was established in May 1986 with the task of assessing the demand for such textbooks, in the light of the policy of encouraging schools to adopt Chinese as the medium of instruction, and to ensure the availability in time for the 1989-90 school year of an adequate supply of Chinese textbooks of good quality and

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     appropriate standard. The committee is composed of members of the community and government officials, and is serviced by the department. In May 1987 the government accepted the CTC's recommendation of an incentive award scheme to encourage publishers to publish textbooks in Chinese, and a commitment of $7.2 million was allocated for financial assistance to publishers participating in the scheme. Editorial assistance was also provided to ensure that the textbooks produced were of good quality. Chinese textbooks for 16 subjects at secondary level are expected to be available for use in September 1989.

Institute of Language in Education

     Founded in September 1982 as a 'centre of excellence' on all matters relating to language teaching in Hong Kong schools, the Institute of Language in Education organises in- service refresher courses for teachers of English and Chinese, conducts research into areas of language learning and teaching, arranges workshops, seminars and international conferences on language and language learning, provides consultancy services on language teaching and language teacher education, designs and develops language learning and teaching materials for use in schools and publishes books and articles on language teach- ing. The institute is a centre for courses leading to the Royal Society of Arts Diploma for Overseas Teachers of English.

      During the year, the institute conducted refresher courses for 1286 primary and secondary school teachers of English and Chinese. Courses on the use of Chinese for secondary school teachers of specific subjects were begun in February and these were attended by 310 teachers of Integrated Science, Physics, Chemistry, Biology, History, Geography, Economics and Public Affairs and Social Studies. In addition to the refresher courses, two seminars were conducted for primary and secondary school heads; two summer courses for the learning and teaching of Putonghua were offered, and a three-day international conference on 'Languages in Education in a Bi-lingual or Multi-lingual Setting' was organised, and was attended by scholars from over 15 countries. Two teachers' guides and two books continuing language teacher education were published, one in English and one in Chinese. The third volume of the institute's professional journal - the ILEJ was issued in October. Institute research focused on the effectiveness of extensive reading in secondary schools, aspects of Cantonese pronunciation, the application of questioning in the teaching of reading, an examination of the normal speeds of speech of varieties of British English and computer-assisted language learning. Two exhibitions of language learning and teaching materials were mounted during the year and attended by some 2 400 visitors.

Education Research

The Hong Kong Attainment Tests constructed by the Educational Research Establishment (ERE) of the Education Department were used for monitoring the educational standards of the three basic subjects: Chinese, English, and Mathematics. The annual monitoring of the standards at Primary 4 to 6 level continued to take place in May/June. The monitoring of the standards at Secondary 1 to 3 was started in May/June, and the monitoring of the standards at Primary 1 to 3 will begin in May/June 1988. Thus the academic standards from Primary 1 to Secondary 3, covering the nine-year free and compulsory education, will be fully monitored by 1988.

      Other tests being developed by the ERE included the three versions of the aptitude test for the selection of students for prevocational education, and the aptitude tests for career guidance at the end of junior secondary education.

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Specific educational research projects on programme evaluation conducted by the ERE during the year 1987 covered the Activity Approach to Teaching in Primary Schools, the Remedial Teaching Scheme, Effects of Kindergarten Education on Primary Pupils, and the Split-Class Teaching of English Pilot Scheme.

Advisory Inspectorate

The main function of the Advisory Inspectorate of the Education Department is to monitor and improve the quality of teaching. This involves school inspections conducted by subject inspectors to advise on curriculum matters, teaching methods and utilisation of resources, and the provision of in-service training courses, seminars and workshops for teachers. The inspectorate is also responsible for curriculum development, evaluation of textbooks and instructional materials, and the provision of audio-visual teaching aids, educational television and library services to schools. It also organises various activities designed to stimulate good citizenship among pupils.

The Curriculum Development Committee and its many subject committees continued to advise on curriculum innovation and revision at pre-primary, primary and secondary levels. In 1987, a new syllabus in Computer Literacy at junior secondary level as well as revised syllabuses in Music at primary level, Science at junior secondary level, and Principles of Accounts and Computer Studies at senior secondary level were issued. To encourage the adoption of Chinese as the medium of instruction, handbooks with technical terms in English and Chinese for 19 subjects at secondary level were compiled for teachers' reference. The activity approach, a more child-centred and less formal approach to learning in primary schools, continued to expand. The textbooks committee, as in previous years, provided guidance to schools in the selection of textbooks through the publication of recommended lists and also maintained close contact with publishers of educational materials.

Teaching and Resource Centres

The Advisory Inspectorate operates six teaching centres concerned with the teaching of Chinese, English, Mathematics, Science, Social Subjects and Cultural Crafts and three resource centres in connection with Civic Education, Religious/Ethical/Moral Education and Sex Education. A Field Studies Centre is open to sixth-form students and teachers.

      During the year, the Chinese Language Teaching Centre conducted 71 refresher courses, workshops and seminars for 3 850 teachers of Chinese in secondary and primary schools. Nine courses and seminars on Putonghua teaching were conducted for 560 teachers. Four periodic displays on special topics were organised and attracted some 1 700 teachers. Both primary and secondary schools benefited from the centre's free dubbing service and over 1 200 teaching tapes were made during the year, and 23 sets of video tapes and 12 sets of slides on the teaching of the Chinese Language as well as the teaching of Putonghua were produced for in-service training purposes. Three curriculum pamphlets on remedial teaching were published for teachers' reference.

      The English Language Teaching Centre organised a number of seminars, workshops, talks and exhibitions in support of the English curriculum in primary and secondary schools. As well as offering schools a free non-commercial tape-dubbing service, the centre had a collection of English language books, journals and cassette tapes for teachers' reference.

      The Mathematics Teaching Centre serves as an in-service training venue and resource centre for mathematics teachers. A total of 20 seminars, courses and workshops were conducted for primary and secondary mathematics teachers. More than 1 820 teachers

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visited the centre for in-service training, viewed the display of teaching aids and obtained information on resource materials.

      The Science Teaching Centre is used extensively for conducting refresher courses, seminars, workshops and teachers' meetings as well as for the display of equipment and resource materials for science teaching. More than 3 800 primary and secondary school teachers and laboratory technicians visited the centre. The science laboratory provided facilities for trying out science experiments in relation to curriculum development projects, making prototype apparatus and performing practical work during science workshops. A new science education resource room was established at the centre in March, and since then it has been open on a regular basis to provide a central reference point on science education and relevant advisory services to science teachers and laboratory technicians.

      The Social Subjects Teaching Centre provides supporting services to teachers of Eco- nomics and Public Affairs, Economics, Geography, History and Social Studies at primary and secondary levels. Various teaching materials, projects, teaching kits and audio-visual equipment relating to these subjects are on display. Over 1 200 teachers visited the centre during the year. At the same time over 20 courses and workshops were conducted for more than 1 000 teachers.

      The Cultural Crafts Centre co-ordinates the promotion of practical/technical subjects and provides training facilities for teachers of Art and Design, Art and Craft, and Home Economics. Some 70 in-service training programmes were attended by more than 2 500 teachers, and the exhibitions mounted in the centre attracted more than 30 000 visitors. In addition, resource materials including guidelines, handouts, recipes, slides, and video tapes were produced for the use of teachers. The centre also organised participation in overseas art exhibitions for local students.

      The Civic Education Resource Centre and the Religious/Ethical/Moral Education Resource Centre continued to be popular among teachers. The resource materials at these centres have been regularly up-dated and special displays have been organised to introduce to teachers a variety of civic/moral education projects produced by secondary and primary schools.

      A Sex Education Resource Centre continued to provide primary and secondary school teachers with central reference material on sex education and advisory services on its teaching. Over 3 000 visitors visited the centre and used the resources on display, such as video programmes, slides, library books, teaching kits, magazines and journals. Seminars on sex education were also organised to help strengthen sex education in secondary and primary schools.

      The Field Studies Centre in Sai Kung was well patronised by sixth-form students and secondary school teachers pursuing ecological and geographical studies. Thirty-one resi- dential ecology and geography courses were organised for a total of 1 400 sixth formers. Various in-service training courses and seminars were held for 520 biology and geography teachers to acquaint them with methods and techniques used in field studies. The centre was also used as a venue by various educational institutions for running activities related to field work and environmental education for students and student teachers.

Visual Education

The Visual Education Section makes available through its Audio Visual Resources Library a wide range of audio-visual aids on free loan to schools. The stock includes 16 mm films, video-cassette tapes, film-strips, slides and transparencies, filmloops, learning packages and cassette tapes. The section's Media Production Services Unit in Canton Road is open seven

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days a week to assist teachers in the production of teaching aids. The facilities of the unit include photographic, reprographic, graphic, model making, tape duplicating, booklet binding, picture preservation and screen printing equipment, a video system and a microcomputer system. During the year, 7 000 teachers made use of the facilities of the unit and over 130 courses and workshops on the production of audio-visual materials were organised, with a total attendance of more than 3 000 teachers.

Physical Education

The Physical Education Section is responsible for the improvement of teaching standards in physical education in schools and the promotion of school sports, outdoor education camps and dance. In 1987, some 40 courses and seminars in physical education were conducted for over 1 600 teachers.

      In January, the 23rd Schools Dance Festival attracted 3 914 participants from over 263 secondary, primary and special schools. In April and May, 152 school dance teams comprising 1 597 students took part in nine school dance performances at the City Hall, the Tsuen Wan Town Hall and Sha Tin Town Hall. In June, the Hong Kong Schools Dance Team took part in the 30th International Council for Health, Physical Education and Recreation World Conference and staged performances in Vancouver and Victoria, British Columbia, Canada. The team also took part in the Macau International Youth Dance Festival in July.

During the year, 360 courses and 10 competitions in various sports were conducted for students. Among these, the Summer Sports Scheme for Schools and the Schools Summer Olympiad were the highlights. In addition, 130 courses in various sections of the Duke of Edinburgh's Award Scheme were conducted for member schools in the scheme.

      The section continued to administer the Jockey Club Fund for the Summer Youth Programme for schools, benefiting 200 000 students from 520 primary and secondary schools.

Through the Hong Kong Schools Sports Council, the section also played an active role in the promotion of school sports. Jing Ying Competitions in seven sports were held at both primary and secondary levels. Interport competitions among Hong Kong, Macau and Guangdong were organised in nine sports. Two school football teams took part in the international schools championships held in Thailand and China in April and August respectively. Training schemes in badminton, basketball and football were conducted to help develop prominent young athletes in schools.

Music Education

The 1987 in-service training programme, which included refresher and enrichment courses, seminars for the promotion of civic education through the teaching of music, and basic courses for non-specialist music teachers, was well received by music teachers in primary and secondary schools.

A general Music Syllabus for Secondary 4 to 5 and a revised Music Syllabus for Primary Schools were published and distributed to schools.

A Kodaly Choral Method Demonstration and Concert, which marked the completion of a six-year project to try out the Kodaly Method in Hong Kong schools, was enthusiasti- cally received by capacity audiences at two performances at the Sha Tin Town Hall. This method will continue to be disseminated through in-service training courses.

Demand increased for places in the Centralised Scheme of Music Training, which provides opportunities for further study in music at senior secondary level in courses

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leading up to the Certificate of Education, Higher Level and Advanced Level Music Examinations. Forty more places were offered in an additional Secondary 4 Certificate of Education class. Students of the scheme continued to obtain very good results in public examinations.

       There were 6 362 entries for the 39th Annual Schools Music Festival organised by the Hong Kong Schools Music and Speech Association. Over 66 000 pupils competed in 272 classes judged by five overseas and nine local adjudicators and the festival ended with a series of five prize-winners concerts.

Technical and Commercial Education

The teaching of technical and commercial subjects as part of the general curriculum in secondary schools continued to expand. During 1987, some 180 secondary schools offered courses in Design and Technology. Compared with 42 schools in 1974, this represented a growth rate of over 400 per cent during the past 12 years. The revision of the teaching syllabus for Technical Drawing was completed and approved by the Curriculum Develop- ment Committee. The draft of the English-Chinese Glossary of Terms commonly used in the teaching of technical and commercial subjects was also revised. To provide a venue and resources for running the in-service teacher training programme, the Technical Teaching Centre was set up in the former Lok Fu Government Primary School at Junction Road, Kowloon. The centre provided an ideal location for technical teachers to make teaching aids and to share their experiences in technical teaching. As in previous years a competition to find the 'Young Hong Kong Designer of the Year' was organised jointly by the Federation of Hong Kong Industries, the Design Council of Hong Kong and the Education Department.

The Commercial Subjects Section organised the fifth Commercial Projects Competition with the Chinese Gold and Silver Exchange Society. The aims of the competition were to arouse the interest of secondary school pupils in various commercial activities in Hong Kong and to encourage a more lively approach to the teaching of commercial subjects. 'Commerce and Civic Education' was chosen as the theme of the 1987 projects and about 1 500 pupils took part in the competition. The section also assisted in promoting civic education by organising seminars as well as producing reference materials for teachers of commercial subjects.

Computer Education

To expand computer education in Hong Kong schools, a new subject, called Computer Literacy was introduced into the junior secondary curriculum in September 1987. The aim of this subject is to enable all students to receive some basic knowledge of computers while going through their nine years of free education. A Computer Education Centre, a training and resource centre for teachers established with a grant of $4.5 million from the MacLehose Fund, was opened by the Acting Governor, Sir David Akers-Jones in February.

Community Youth Club

The Community Youth Club (CYC), established in 1977, continued to take part in building up a strong community spirit and in promoting civic-mindedness among students. Its 250 000 members contributed substantially towards various public campaigns. There are now 19 district committees whose boundaries correspond with those of the City and New Territories Administration.

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Thousands of members gained awards under the Merit Award Scheme which requires them to set examples of good citizenship by offering services to the community.

      To mark the 10th Aniversary of the scheme, 25 outstanding members, including nine secondary school members from 19 districts and five primary school members from the five CYC regions, were selected for a seven-day educational visit to Singapore in July. Other celebration activities included a summer camp for 700 members in August, a parade for 12 000 members in November, a fun day for 900 old people in December.

Educational Television

Programmes produced by the Educational Television Service (ETV) are considered the most useful audio-visual supplement to classroom teaching and regular viewing of the educational television programmes has become a normal part of school life in Hong Kong. In the academic year 1986-7, the total audience of ETV programmes was estimated to be 351 000 primary and 265 000 secondary school pupils.

     ETV programmes are produced jointly by the Education Department and Radio Television Hong Kong, and are transmitted to schools by the two commercial television stations. They are based on syllabuses used in primary and secondary schools. Programmes for secondary schools cover Chinese Language, English Language, Mathematics, Social Studies and Science at the Secondary 1 to 3 level, while those for primary schools are produced for Primary 3 to 6 in the same five subjects and in Health Education. In conjunction with these programmes, notes for teachers including suggested preparation and follow-up activities, and notes for pupils with consolidation exercises are provided.

Apart from syllabus-based programmes, supplementary programmes on special curriculum-related topics for knowledge enrichment purposes are produced from time to time. In June, a programme on 'Nuclear Energy' was produced and transmitted to secondary schools.

To facilitate reception and utilisation of ETV programmes in schools, TV equipment including colour television receivers and video-cassette recorders is provided and installed in all government and aided schools and private secondary schools with 'bought places'. In the financial year ending in March 1987, some $3.2 million was spent on the provision of equipment for these schools.

School Library Services

School library services expanded with the training of half a librarian for government and aided secondary schools with fewer than 18 classes and with the training of more school li- brarians in secondary schools. In primary schools, the Class Library Scheme was fully im- plemented in Primary 1 to 6 classes in all government and aided primary schools. Each class was provided with an initial grant of $500 for bookcases and $10 per pupil per year for library books. In addition to training courses, workshops and seminars were organised for second- ary and primary school teachers to promote the understanding of school library services.

Hong Kong Examinations Authority

The Hong Kong Examinations Authority, an independent statutory body, has adminis- tered the HKCEE since 1978, the Hong Kong Higher Level Examination since 1979, and the Hong Kong Advanced Level Examination since 1980. In 1987, a total of 153 185 candidates entered for the HKCEE, 6956 for the Hong Kong Higher Level Examination and 21 432 for the Hong Kong Advanced Level Examination. For the Higher Level Examination, the drop in candidature was very significant, from 9 219 in 1986 to 6 956 in

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      1987. This was attributable mainly to the introduction of the Provisional Acceptance Scheme by the Chinese University of Hong Kong.

      The authority also assumes responsibility for conducting a large number of overseas examinations on behalf of various examining bodies in the United Kingdom and elsewhere. These examinations include the GCE, the Test of English as a Foreign Language, the London Chamber of Commerce and Industry Examinations, and many others which enable students to acquire academic and professional qualifications.

Hong Kong Students in Britain

      The Students Division of the Hong Kong Government Office in London is responsible for the welfare of Hong Kong students and nurses in training in the United Kingdom. The division liaises with the Education Department regarding the admission of students from Hong Kong to institutions in the United Kingdom and problems encountered by on-course students. It also works closely with the Secretariat of the University and Polytechnic Grants Committee, assisting the latter in administering the United Kingdom-Hong Kong Joint Funding Scheme.

       The division monitors developments in education in the United Kingdom and, in order to promote the interests of Hong Kong students, establishes and maintains close relations with universities, polytechnics and colleges, British government departments, local educa- tion authorities, the British Council, welfare organisations and, in the case of trainee nurses, medical authorities. In addition to advising and assisting individual students, it maintains close contact with the Hong Kong student community through college-based student societies.

Hong Kong Students Overseas

The Overseas Students and Scholarships Section of the Education Department gives advice to students wishing to further their education overseas and supplies information on educational establishments in Britain and other countries.

       Altogether 4 254 students went to Britain during the school year 1986-7; 3 405 went to Canada; 2 245 to the United States and 812 to Australia.

British Council

The aim of the British Council in Hong Kong is to promote an enduring understanding of Britain, its language, its education and its culture.

       Perhaps the best known of the council's activities in Hong Kong are those of the English Language Centre which has 90 qualified teachers. During the year a total of 25 205 students enrolled on 12-week courses of three hours per week. A one-month summer school was run for 5 700 secondary school students. Another area of activity was teacher training, where 191 primary school teachers and 185 secondary school teachers sponsored by the Educa- tion Department were trained in the year. In-house training of council teachers continued. The teaching of English for companies in Hong Kong has been expanded and is seen as a growth market.

      The council has this year been awarded two contracts by the Hong Kong Government for sending 70 local English-language teachers to the United Kingdom for a month and for bringing to Hong Kong on a two-year pilot project up to 84 native speaking English teachers to work in Hong Kong schools. Six scholarships were awarded to outstanding students at different levels of the English Language Centre to enable them to pursue their studies in the UK.

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      The Educational Counselling Service continued to provide advice on educational opportunities in Britain, and received some 11 000 enquiries. Two missions of academics from Britain visited Hong Kong during the year, the larger being for the British Education Exhibition in February. Opened by the Acting Governor in the presence of the Rt Hon Kenneth Baker, MP, Secretary of State for Education and Science, this exhibition attracted some 66 000 visitors.

      Through its Arts programme, the council seeks to further the understanding and appreciation of British arts in Hong Kong, and to develop closer links with local arts organisations. This year, the council organised and sponsored over 20 arts events, covering all areas of the visual and performing arts. Notable events include the London Contem- porary Dance Theatre, British Film Week, the English Shakespeare Company and Hong Kong's first exhibition of works by artists from Northern Ireland.

      The library represents all aspects of British life and culture, including literature, history, government, politics and the arts. It has a membership of 14 000 and offers a wide

range of books, periodicals, and audio and video cassettes. There is also a comprehensive section on English Language Teaching, and a new teachers' library. Book exhibitions this year included 'Contemporary Art and Design'.

British specialists visiting Hong Kong included Robert McCrum - author and contribu- tor to the BBC TV series 'The Story of English', a specialist in Sports Injuries and Sports Medicine, and the director of one of the largest housing authorities in Britain. Among the visits arranged to Britain, was a visit by a group of school children, co-sponsored by the council, for a week's study tour, as prizewinners of the Chinese Essay Competition organised by the Urban Council. Scholarships were given at postgraduate level and covered subjects such as Law, International Relations, Social Work, Stage Management and Production, and Labour Relations.

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THE Medical and Health Department is carrying out an extensive development programme which includes the construction of at least four major acute government hospitals and 23 additional clinics and polyclinics in the coming 10 years.

      On the construction side, the 1600-bed Tuen Mun Hospital is due for completion in 1988, providing a comprehensive range of medical services for the west New Terri- tories region.

       On Hong Kong Island, site formation work is being carried out for the 1 600-bed Pamela Youde Hospital, with construction work due for completion in 1991.

      Work on Stage II of the extension to Queen Mary Hospital is expected to be completed in 1989, providing two multi-storey blocks with an addition of 844 beds, and some new psychiatric and paediatric facilities.

At the same time, funds have been approved for extensive redevelopment of the 280-bed Ruttonjee Sanatorium in Wan Chai, to convert it from an institution for chest and tuberculosis patients into a general hospital, with 614 beds.

      During the year, work was also completed on two new government clinics, the Pamela Youde Polyclinic in Kwun Tong and the Mona Fong Clinic in Sai Kung.

      After extensive consultation and careful consideration of the report on 'The Delivery of Medical Services in Hospitals', the government has agreed to the establishment of a statutory Hospital Authority to oversee the delivery of hospital services, and a provisional body is expected to be established on April 1, 1988.

      The Working Party on Postgraduate Medical Education and Training, set up in October 1986, continued to examine the various aspects of postgraduate medical training in Hong Kong.

      The working party includes 14 members from local universities, medical professional bodies, government and subvented hospitals, medical and health administration and the University and Polytechnic Grants Committee.

It is expected to make recommendations to the government within two years.

      For the 1987-8 financial year, the Medical and Health Department's estimated expenditure is $2,996 million. In addition, subventions totalling $1,496 million are being made to many non-government medical institutions or organisations. The capital expenditure on new hospital projects and other buildings, including equipment and furniture, totals $539 million.

Health of the Community

The general level of health of the population remains good, largely due to anti-epidemic and disease surveillance measures, developments in preventive and personal health services, and a high standard of living. This progress is further reflected in the highly satisfactory health indices and the low incidence of major communicable diseases.

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The leading causes of death today are cancer, heart disease and cerebrovascular diseases. The low infant mortality rate is attributed to the provision of comprehensive family health care and neo-natal care facilities as well as improvements in environmental and socio-economic conditions. Six cases of AIDS (Acquired Immune Deficiency Syndrome) were reported during the year, bringing the total number of AIDS cases on record to nine, of which eight had died.

      As there is still no cure for AIDS and no vaccine available, education and publicity remain the only effective preventive measure.

To intensify the health education efforts, which began in 1983, a Committee on Education and Publicity on AIDS was formed in January 1987, co-ordinating the work on the subject by various government departments. The AIDS publicity campaign was then launched in phases starting in April with press releases, media publicity, distribution of leaflets, exhibitions, and advertisements on the MTR, newspapers and cinemas. In addition, seminars and health talks were organised for specific groups, including teachers, nurses, social workers and youths. Earlier in the year, workshops were also organised for doctors. Surveys carried out later indicated there was more public awareness of AIDS.

In April, the AIDS Counselling and Consultative Service, which provides assistance to people at risk of developing AIDS, was expanded with the addition of more telephone lines and an extension of hours.

The Surveillance Programme for infection by the AIDS virus, begun in April 1985, continued under the monitor of the Expert Committee on AIDS.

Blood screening for antibodies to the AIDS virus, introduced by the Hong Kong Red Cross Blood Transfusion Service in August 1985, was maintained to prevent the possible transmission of the disease through blood transfusion.

Four cholera case were reported in the year, including two among Vietnamese refugees and one imported case. However, close surveillance on the disease and intensified health education and environmental measures were continued. There was no report of any other quarantinable disease.

An insecticide identified as methamidophos, was found in vegetables imported from across the border.

Four cases of animal rabies were reported in the New Territories, but there was no case of rabies in humans.

During the year, 106 cases of malaria were notified, most of them imported cases, with the most frequent source of infection from India, Vietnam and China.

An active surveillance programme was undertaken on all notified malaria cases to minimise the possibility of a build-up of parasite density in the community. Through the Inter-departmental Co-ordinating Committee on Malaria Control, prevention and treat- ment programmes were co-ordinated. The combined efforts towards early case detection, vector control and health education were sustained. With the establishment of the Central Reference Laboratory for malaria, all positive slides of blood smears as well as 10 per cent of negative slides were routinely cross-checked for the presence of the parasite, thus assisting greatly in early detection and treatment of patients.

Tuberculosis remains an important disease in Hong Kong. In spite of continued diligence and a dynamic programme in the fight against the disease, there were 7 269 notifications during the year, representing a notification rate of 129 per 100 000. The local BCG immunisation scheme effectively covered some 99 per cent of the new born. Booster doses were also given to primary school children and to new immigrant children after an initial mantoux test. Death from tuberculosis dropped from 407 in 1986 to 405 in 1987 and the death rate dropped from 7.36 to 7.21 per 100 000.

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      Immunisation programmes against common childhood infections were carried out in schools as well as Family Health Service Centres. Primary 1 and 6 school children receive booster vaccination against diphtheria, tetanus and poliomyelitis. In addition, girls in Primary 6 are given rubella vaccination. The coverage was up to 98 per cent.

      To increase the protection of the at-risk group, namely women at child-bearing age, rubella vaccination is made available to nurses, teachers and social workers who are in constant contact with children. The vaccination is also given to eligible women attending Family Health Service centres.

      Viral hepatitis remains prevalent in the community, with 1 554 notified cases and 23 deaths reported. To reduce the long term effects of hepatitis such as cirrhosis and liver cancer, the Hepatitis B Vaccination Programme was introduced in 1983. Under the present strategy, immunisation is given to babies born to mothers who are carriers of the disease, and health care workers who are in frequent contact with blood and other tissue products, as they are at risk of contracting the disease.

      The combined neo-natal screening programme for glucose-6-phosphate dehydrogenase deficiency and congenital hypothyroidism, introduced in 1983, was continued so as to facilitate early diagnosis and treatment of these conditions which may lead to disability. The programme has been extended to cover all babies born in Hong Kong, including private hospitals, in 1986.

Hospitals and Development Programmes

There are three types of hospitals in Hong Kong-government, government-assisted and private - with a total of 25 004 beds, representing 4.5 beds per thousand of the population. During the year, pressure was experienced in all sections of the service. This was reflected by the increase in attendance at out-patient clinics and accident and emergency depart- ments, and by the number of hospital admissions.

      The Medical and Health Department's overall plan for the decade involves the construction of at least four more government hospitals: a 1 600-bed hospital in Tuen Mun, a 1 600-bed hospital in Chai Wan, a 1 500-bed hospital in East Kowloon and a 1 200-bed hospital in North District. Plans include the provision of extension blocks to the first three regional hospitals: the Queen Mary, Queen Elizabeth and Princess Margaret hospitals.

      Other projects in the pipeline include further extensions to the United Christian Hospital, Yan Chai Hospital, Pok Oi Hospital and the Tung Wah Eastern Hospital. The Ruttonjee Sanatorium will be redeveloped into a general hospital with 614 beds and the Alice Ho Miu Ling Nethersole Hospital will be reprovisioned in Tai Po. There was also emphasis on provision for the elderly infirm and the severely disabled. A total of 2 400 beds have been planned for the coming decade.

      In 1987, the total attendance at government and government-assisted accident and emergency departments was 1 195 000, averaging 3 265 attendances per day. More than 668 000 patients were treated at 14 government and 20 government-assisted hospitals.

Clinics

     General out-patient services form a vital part of the health care system. The government now operates 66 public general out-patient clinics as well as polyclinics and specialist clinics. Evening, Sunday and public holiday sessions continue at clinics in the more densely populated areas as part of the overall measures to meet the expanding demand for

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out-patient services. The medical development programme includes 23 clinic and polyclinic projects throughout the territory.

     Mobile dispensaries and floating clinics take medical services to the outlying islands and the more remote areas of the New Territories. Other inaccessible areas are visited regularly by the 'flying doctor' service, with the assistance of the Auxiliary Air Force.

      At the end of the year, 306 clinics were registered under the Medical Clinics Ordinance. Of these, 97 clinics were under the control of a registered medical practitioner and 209 were registered under the provisions for exempting certain clinics. Registered medical practi- tioners in the Estate Doctor Association set up clinics in housing estates to provide a low-cost service for residents.

The total attendance figure at government out-patient clinics was 16 million, 5.7 per cent more than in the previous year.

Family Health

The Family Health Services of the Medical and Health Department operate 45 Maternal and Child Health Centres, providing a comprehensive health programme for women of child-bearing age and children aged up to five years. Ante-natal and post-natal medical consultation as well as family planning service are offered to women. Immunisation programmes are carried out against tuberculosis, diphtheria, whooping cough, tetanus, poliomyelitis and measles. During the year, about 93 per cent of newborn babies attended the Family Health Service centres.

     Under a comprehensive observation scheme, children are assesed at different ages for detection of early developmental abnormalities. If necessary, they are referred for specialist care or to child assessment centres for further examination.

At present, there are two child assessment centres. The multi-disciplinary approach adopted ensures early rehabilitation for the child. Six more child assessment centres will be established in the coming decade.

Health education is an essential component of the family health services. In addition to health talks and counselling on child care offered at centres, health education for expectant mothers is also extended to government hopitals, with particular emphasis on the promotion of breastfeeding. A telephone service is available to answer enquiries from the public.

The government-subvented Family Planning Association of Hong Kong runs 27 birth control clinics, providing such services as pre-marital counselling, contraception, sterilisa- tion, vasectomy and advice on sub-fertility. There is also emphasis on health education and publicity on family planning and sex education.

School Health

The School Medical Service Scheme is operated by an independent School Medical Service Board. Participation is voluntary and for a token fee of $10 a year children from Primary 1 to Form 3 can receive free medical attention from a general medical practitioner of the school's choice. The government contributes $65 a year for each pupil enrolled and also bears the administrative cost. The general response to the scheme is good: more than 369 000 children from 887 schools have taken part - representing about 46 per cent of the eligible school population - and about 400 general medical practitioners have enlisted.

      The School Health Service, a government responsibility, deals with the environmental health and sanitation of school premises and the control of communicable diseases. School health officers, health visitors and health inspectors make frequent inspections of schools to

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advise on matters concerning the health of children and organise health education activities and immunisation campaigns.

Mental Health

     Medical services for the mentally ill include treatment in hospitals, out-patient clinics and day hospitals. The Mental Health Service of the Medical and Health Department, in conjunction with other local academic and voluntary bodies, provides a comprehensive psychiatric service for the territory as a whole.

      Currently 3 445 beds are provided in psychiatric hospitals, and 624 beds in psychiatric units of general hospitals. In line with the universal trend for the latter type of provision, 2 238 additional beds are being planned for the mentally ill in the coming decade.

      Psychiatric patients are treated, as far as possible, in the community. Apart from attending out-patient clinics or day hospitals, patients may also be visited at home by specially trained community psychiatric nurses. Started in 1982, the Community Psychi- atric Nursing Service aims to provide continuity in after-care treatment programmes for discharged mental patients, to assist them in social readjustment and to educate the patients and their families in mental health. There are now six such centres, accepting referrals from hospitals and psychiatric out-patient clinics, and four more centres have been planned.

      Other complementary rehabilitative services include day centres, half-way houses, long-stay care homes, vocational training, selective placement and social clubs offered by various government departments and voluntary agencies.

      Severely mentally handicapped persons requiring intensive nursing and medical treat- ment are cared for at the 200-bed Siu Lam Hospital and 300 beds in Caritas Medical Centre. A further 704 beds in this category have been planned for the next decade to meet the continuing need.

Dental Services

The School Dental Care Service aims at promoting dental health among school children. Services provided include regular dental examination, treatment and oral health education. During the year, the programme was extended to all primary school children, and 352 500 took part in the service, representing 65.5 per cent of the school population. Oral health education on dental care for the community was also organised from time to time.

The Government Dental Service provides dental care for all monthly-paid government servants, pensioners and their dependants, as well as simple dental treatment for inmates of penal institutions and specialist treatment for patients in government hospitals. Emergency treatment is also provided for the public at a number of district dental clinics.

Port Health

The Port Health Service is the control authority to prevent the introduction of quarantin- able diseases into the territory via air, land, rail or sea, and enforces the measures stipulated under the Quarantine and Prevention of Disease Ordinance and the International Health Regulations.

The service provides facilities for vaccination and the issue of international vaccination certificates. It also inspects and supervises the eradication of rats from ships on inter- national voyages. It provides medical assistance to ships in the harbour, transmits medical advice to ships at sea, operates a 24-hour health clearance service for all incoming vessels, and grants radio pratique to ships.

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      The health staff also maintains close surveillance of the food catering service provided for international airlines to ensure that food and water supplied to flight kitchens are clean and safe. Epidemiological information is exchanged regularly with the World Health Organisation in Geneva and its Western Pacific regional office in Manila, and with neighbouring countries.

Special Services

The Pathology Service provides clinical and public health laboratory services for govern- ment hospitals and clinics, and a consultant service for the government-assisted sector. It also administers hospital mortuaries and blood banks.

The Institute of Immunology undertakes the monitoring and quality control of bio- logical products, including vaccines for use in the local health services. The Virus Unit provides a central laboratory service for the diagnosis and surveillance of viral infections, including AIDS. In addition, it provides laboratory support for the screening, assessment and guidance of vaccination programmes against viral infections.

A Central Neo-natal Screening Laboratory was established in 1984 in the Kwong Wah Hospital on a temporary basis. The main function of this unit is to co-ordinate the laboratory activities of the territory-wide neo-natal screening programme on congenital hypothyroidism and glucose-6-phosphate dehydrogenase deficiency.

      The Forensic Pathology Service, through its forensic laboratory, works closely with the Police Force on the medical aspects of criminology and other medical-legal work. It also administers public mortuaries.

The Institute of Radiology and Oncology comprises two major divisions: the Diagnostic Radiology Division and the Radiotherapy and Oncology Division.

The Diagnostic Radiology Division provides a diagnostic organ-imaging service for government institutes and one government-subvented hospital, the Nam Long Hospital. A consultant service is available to all government-subvented hospitals and private medical practitioners on a fee-charging basis.

The Radiotherapy and Oncology Division provides comprehensive radiotherapy pro- grammes and a chemotherapy service. The division also operates a cancer registry covering the whole territory.

The Radiation Health Unit undertakes regular visits to medical, commercial and industrial premises to inspect the working conditions of radiation workers. Radiation licences are also issued in accordance with the Radiation Ordinance and Regulations.

The Pharmaceutical Service is made up of two main divisions. The Hospital and Clinic Pharmaceutical Service has a staff of 791, including 61 pharmacists. The second division is the Forensic Pharmacy Service with an establishment of 17 pharmacists supported by a number of clerical staff. During the year, continued action against the illegal sale and distribution of poisons and antibiotics was carried out, resulting in 91 prosecutions.

Community Nursing Service

The Community Nursing Service provides domiciliary and rehabilitation nursing care and treatment to the sick, the elderly infirm, and the disabled in their own homes.

Jointly operated by eight agencies including the Medical and Health Department, the service operates from a network of 48 hospital stations and satellite centres. During the year, 12 300 patients were served and more than 227 000 home visits were made.

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The Central Health Education Unit of the Medical and Health Department is responsible for organising, co-ordinating and promoting health education activities. During the year, the unit was actively involved in a number of campaigns, including the AIDS education and publicity campaign, home safety campaign, and organ donation campaign.

In the summer, the sixth course of the popular Young Health Leader Training Project was conducted, training 168 students from 31 secondary schools in health and leader- ship skills.

An exhibition to promote the proper use of medicine and to introduce the medical and health services was organised in October and attracted a large audience.

Other activities for youths included anti-smoking, adolescent health and sex education workshops at the audio-visual centres. Voluntary agencies and schools may also borrow film, video and slides, free of charge, for their own health education activities.

Increased community concern for health was evidenced from the increased patronage to the various health education programmes offered, such as the 24-hour telephone informa- tion service and the slide and video shows at out-patient clinics.

Close liaison was maintained with the media, medical professionals and other govern- ment departments for the smooth implementation of various campaigns and activities. During the year the unit took part in many press interviews and television and radio programmes, among which was a TV series on nutrition. Collaboration with medical bodies and various units in the department resulted in the increased production of useful health education materials for the general public.

Medical Charges

     Medical charges remained low, reflecting a substantial subsidy from public funds despite the adjustment in September. Patients in the general wards of government hospitals were charged $23 a day and the fee covered everything from meals, medicine and laboratory tests, to surgery or any other treatment required. The charge may also be reduced or waived in cases of hardship as certified by the medical social worker. A limited number of private beds are provided at major government hospitals with higher maintenance and treatment charges.

The charge for consultation at general out-patient clinics was $12 while that for specialist clinics was $18. Charges for physiotherapy, occupational therapy, child assessment and home visits by community nurses were $18. These fees may also be waived if warranted.

The charge for injection and dressing in general out-patient clinics was $5 while visits to family planning clinics and methadone clinics remained at $1.

Free medical services continued to be offered at maternal and child health centres, tuberculosis and chest clinics, social hygiene clinics, accident and emergency departments, floating clinics and through the 'flying doctor' scheme.

Training of Health Personnel

The basic training of doctors is provided by the University of Hong Kong and the Chinese University of Hong Kong. Graduates of the two medical schools are awarded degrees recognised by the General Medical Council of Great Britain. The student intake at the University of Hong Kong remains at 150 a year. During the year, the Chinese University of Hong Kong produced its second group of 70 doctors, and these will be ready for full registration in 1988.

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The government and the two universities maintain a comprehensive post-graduate training programme for doctors, providing opportunities for doctors to receive training overseas, sit for higher professional examinations, attain higher qualifications, and attend professional conferences, seminars and workshops. In 1987, about 140 doctors went overseas for further training under government sponsorship, or with the help of scholarships.

Under the licentiate scheme, 42 externally trained doctors passed the local licentiate examination in 1987.

The Prince Philip Dental Hospital produced 67 dentists in 1987. The training of dental therapists is provided at the Tang Shiu Kin Dental Therapists Training School.

      The basic training for general registered nurses is conducted at government, government- assisted and private hospitals. There are now eight such training schools with an average annual training capacity of about 1 070 places. Three more student-nurse training schools and one more pupil-nurse training school are planned over the next decade. The annual training capacity is to be increased from 1070 to 1 540 for general registered nurses and from 550 to 670 for general enrolled nurses.

The training of registered psychiatric nurses is conducted at the Kwai Chung Hospital and Castle Peak Hospital, and of psychiatric enrolled nurses at Castle Peak Hospital. The average in-take capacity for psychiatric registered nurses and enrolled nurses is 160 and 60 respectively. Three more training schools for psychiatric nurses have been planned for the coming decade to meet the steady demand on the Mental Health Service.

The need for continued training and education for nurses is recognised. The post-basic school of the Nurse Training Unit provides post-registration courses in midwifery, health nursing and community health nursing on a regular basis.

The Institute of Medical and Health Care at the Hong Kong Polytechnic provides training for para-medical and para-dental staff, including radiographers, physiotherapists, occupational therapists, medical laboratory technicians, dental technicians and dental surgery assistants. There are opportunities for overseas training in specialised areas for nursing, para-medical and para-dental staff. The Shatin Technical Institute of the Technical Education and Industrial Training Department provides training for dispensers which is complemented by in-service departmental training. There is also in-service training for prosthetists and mould laboratory technicians in the respective units.

Government Laboratory

The Government Laboratory conducts analytical, advisory and investigative work in chemistry and the allied sciences and provides scientific support for the implementation of government policy on health. The laboratory offers comprehensive and impartial scientific advice to government departments and public institutions.

Air, water and waste management samples were analysed mainly for the Environmental Protection Department. Analytical support was also provided to the Royal Observatory for the Background Air Pollution Monitoring Network and the Background Radiation Monitoring Programme.

The laboratory also carried out measurements of industrial emissions and factory atmospheres on behalf of the Labour Department. A 24-hour support service was provided to assist the emergency services in cases of chemical spills, fires involving dangerous goods and accidents caused by gases in confined spaces.

Medicinal products purchased by the government for use in hospitals and clinics were tested for compliance with pharmacopoeia or other specifications. Pharmaceutical prepa- rations intended for use and sale locally were examined in accordance with registration and

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a duck farm in Tai Po

Sai Kung West country park

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Shing Mun country park

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sampan vigil off Sha Tau Kok

reservoir combined with country park

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labelling requirements. Herbal medicines were checked for the presence of synthetic drugs and toxic metals.

A wide range of foods commonly consumed by the public is examined for harmful adul- terants, metallic contaminants, mycotoxins, pesticide and drug residues and non-permitted additives for compliance with the Public Health and Municipal Services Ordinance.

Other aspects of the laboratory's work included the classification of dangerous goods, quality checks on government purchases and certain export commodities, analyses of pesticide formulations and residues and identification of a variety of spurious consumer goods. Dutiable items were examined for revenue purposes. Biannual tables showing cigarette brands ranked according to tar and nicotine yields continued to be published to support the government's anti-smoking efforts. A gold assay laboratory has been estab- lished to support the enforcement of the Trade Description (Marking) (Gold and Gold Alloy) Order.

The laboratory also provided a urinary testing service for the methadone maintenance programme in the treatment of drug abusers.

Narcotics

Drug abuse is a long-standing problem in Hong Kong with serious social, economic, legal, medical and psychological implications. The government's policy is to stop the illicit trafficking of narcotic drugs into and through Hong Kong, to develop a comprehensive treatment and rehabilitation programme for drug addicts and to dissuade people, parti- cularly young people, from experimenting with drugs so as to eradicate drug abuse in the community.

The exact number of addicts in Hong Kong is not known. However, findings from the government's computerised Central Registry of Drug Abuse and other linked indi- cators show that at the end of 1987 the size of the known and active addict population was about 38 000.

Data collected by the registry, based on 350 000 reports on 58 000 individuals, indicate that 91 per cent are male and nine per cent female. As for age distribution, 51 per cent were over 30 as at the end of 1987, 34 per cent were in the 21 to 30 bracket and 15 per cent were under 21. The principal drug of abuse in Hong Kong is heroin, which was used by 96 per cent of the addicts reported to the registry in 1987. However, there are now indications that more and more young people have been abusing psychotropic substances, particularly Mandrax and cannabis in the last two years or so, although the abuse of these drugs is at present not as serious a social problem as heroin addiction.

In response to this change, the government has adopted a number of measures to increase public awareness of the dangers of psychotropic substances and the legal consequences of possessing and trafficking in these drugs. A large-scale survey was conducted in November to assess the extent of abuse of psychotropic substances among secondary school students in Hong Kong. The results of the survey will now be studied by the Action Committee Against Narcotics.

In early 1988, a pilot counselling centre with medical backup facilities will be set up in Tsim Sha Tsui to provide counselling services for psychotropic substance abusers. If this proves successful, more such centres will be established.

Overall Strategy and Co-ordination

The government's overall strategy to combat drug abuse consists of four main elements: law enforcement, treatment and rehabilitation, preventive education and publicity and

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international co-operation. Law enforcement is the responsibility of the Narcotics Bureau and individual district formations of the Police Force, and the Customs and Excise Department. Treatment and rehabilitation are undertaken by the Medical and Health Department, the Correctional Services Department and a number of voluntary agencies, the largest being the Society for the Aid and Rehabilitation of Drug Abusers (SARDA) which is subvented by the government. Preventive education and publicity rests mainly with the Narcotics Division of the Government Secretariat, the Information Services Department and various government district offices concerned with community building. International co-operation is the responsibility of all.

The work undertaken in each of these four areas is inter-related. Effective law enforce- ment action pushes up the price of illicit drugs and reduces their supply, thus inducing addicts to seek treatment voluntarily. Addicts who wish to rid themselves of their drug habits are offered a wide range of treatment programmes, the effectiveness of which reduces the demand for illicit drugs. At the same time, preventive education and publicity measures are used to dissuade others, especially the young, from experimenting with drugs. Co-operation at the international level enhances the effectiveness of efforts in these three areas through the exchange of information and experience.

      All these efforts are co-ordinated by the Action Committee Against Narcotics (ACAN), a non-statutory body comprising a chairman, 10 government officials and 11 members from the community. The committee, formed in 1965 and reconstituted in 1974, is the government's sole advisory body on all anti-narcotics policies and actions, whether internal or external, and whether related to government departments or voluntary agencies. It is serviced by the Narcotics Division, which is headed by the Commissioner for Narcotics.

Legislation and Law Enforcement

The government's determination to eradicate drug trafficking is evident in its decision to adopt measures to attack traffickers' assets. In May, the Executive Council approved a scheme of confiscation orders based on the United Kingdom's Drug Trafficking Offences Act 1986 as a means to deprive convicted drug traffickers of their ill-gotten and often enormous profits. Drafting of the new legislation and consultation with relevant govern- ment departments and community bodies have been carried out during the second half of this year.

      Police and Customs action resulted in 11 320 prosecutions for drug offences in the year. Due to the unrelenting efforts of the enforcement agencies, there was a wide fluctuation in drug prices and purity level. As a result of close liaison between Hong Kong and Chinese government authorities regarding the significant upsurge in the incidence of trafficking in Mandrax tablets from China in 1986, the Chinese government announced stringent control over the production and distribution of methaqualone (Mandrax) in the early part of 1987. During the year, seizures of Mandrax tablets were considerably less than in 1986. However, the amount of cannabis seized was more than six times the total quantity seized in 1986.

Treatment and Rehabilitation

The methadone treatment programme which provides both maintenance and detoxification for out-patients caters for the majority of addicts who volunteer for treatment. Methadone maintenance is a long-term treatment approach intended to prevent an addict's return to illicit heroin or other forms of narcotic abuse, while detoxification is a short-term form of treatment aimed at eliminating the physical dependence on narcotics. As the methadone

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treatment programme has proved to be very effective in serving both the addict and the community, a new evening methadone clinic was opened in Tai Po in January, bringing to 25 the number of such clinics operated by the Narcotics and Drug Administration Division of the Medical and Health Department.

      The largest voluntary in-patient treatment programme is run by SARDA. The society operates two treatment centres, one for men and the other for women. The male centre, on the island of Shek Kwu Chau, has capacity for 500 patients, while the Women's Treatment Centre, in Wan Chai and in Sha Tin can handle 39 patients. Linked to these centres are three units for the intake of patients, five regional social service centres, six halfway houses, an employment placement office and a clinic which provides pre-admission medical examination and methadone treatment, urine analysis and post-discharge medical care.

      A compulsory treatment programme is operated by the Correctional Services Depart- ment under the Drug Addiction Treatment Centres Ordinance. The ordinance provides for the sentencing of a drug dependent person who has been found guilty of an offence punishable by imprisonment to detention in a drug treatment centre. The department now runs two addiction treatment centres on the island of Hei Ling Chau, one for male adults and the other for young males under 21. The former has capacity for 938 and the latter 136. Adult female addicts receive treatment in a section of the Tai Lam Centre for Women specially set aside for this purpose, while the treatment programme for young women under 21 is conducted in the Tai Tam Gap Correctional Institution. These treatment programmes range from two to 12 months, and all persons discharged are given one year of statutory after-care.

      In 1987, the two voluntary treatment programmes and the Correctional Services Department's compulsory treatment programme admitted 15 650 addicts. On average, there were 16 000 addicts and ex-addicts receiving some form of treatment, rehabilitation and after-care every day.

Preventive Education and Publicity

Work in these areas is focused on heightening public awareness of the dangers of drug abuse, promoting community involvement in tackling the problem, dissuading young people from experimenting with drugs or becoming involved in drug crime, and encourag- ing addicts to come forward for treatment. The objectives of the publicity campaign in 1987 were to publicise the severe penalties in trafficking in psychotropic substances, and to educate the public on the harmful effects of abusing such drugs.

      Five district campaigns with community involvement were held. Among the events organised to drive home the anti-narcotics message were carnivals, concerts, camps, drama performances, film shows, seminars and exhibitions.

       The School Talks Team in the Narcotics Division continued to give drug education talks to secondary school students throughout the territory. The target audience of the talks was extended to cover students between 12 and 17 years of age. During the year, 69 258 students from 116 schools attended the talks.

      To provide students with more information on the dangers of non-opiate psychotropic substances and the penalties for possession and trafficking in these drugs, the Narcotics Division produced an additional set of slides with commentary scripts for inclusion in the secondary school drug education teaching kit. A territory-wide seminar involving secondary school administrators, teachers and school social workers was organised in November to introduce the supplementary material and to enlist their support in the fight against drugs.

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      Parents play an important role in preventing young people from experimenting with drugs or being involved in durg-related activities. Through the Mutual Aid Committees, seminars and talks were organised to educate parents about the dangers of drug abuse. In March, an Anti-Narcotics Family Camp was held at the YMCA Wu Kai Sha Youth Village which attracted some 350 parents and children residing in Chai Wan district. Parents learned about the disastrous effects of drug abuse and were urged to take care of their children.

For the seventh year, the Youth Against Drugs Scheme provided encouragement and financial support to young people who wished to participate directly in the planning and implementation of anti-narcotics projects. The scheme helped nine groups of young people to implement nine anti-narcotics promotional activities. The 43-strong member ACAN Youth Volunteer Group, established in 1981 with a view to training and encouraging young volunteers to play an active part in anti-narcotics work, participated in the district campaigns and organised various community involvement activities.

Anti-narcotics talks were given to a total of 72 boy scouts who had chosen the Fight Against Drug Abuse Programme for the Community Involvement Badge of the Scout Association of Hong Kong. After completing a practical task and taking part in one of the drug abuse prevention activities, 46 boy scouts were awarded the badge.

      To support these activities and to publicise the anti-narcotics message, television and radio announcements of public interest, films, posters, leaflets as well as an anti-narcotics theme song were produced. The appeal through TV for drug addicts to seek voluntary treatment was particularly successful.

During the year, the ACAN Drug Abuse Telephone Enquiry Service received 1714 enquiries from both addicts and non-addicts. Most enquiries were related to drug addiction treatment facilities.

International Action

     Externally, Hong Kong continued to play an active and important part in international anti-narcotics operations by maintaining close links with the United Nations, inter- governmental agencies - such as the Colombo Plan Bureau, Interpol and the Customs Co-operation Council - and with governments of countries in Southeast Asia, Europe and North America. Hong Kong took part in 23 regional and international meetings and seminars concerned with anti-drug policies, law enforcement, treatment and rehabilitation, and preventive education. In 1987, Hong Kong increased to $110,000 its annual contribu- tion to the United Nations Fund for Drug Abuse Control, whose activities include an opium poppy crop-substitution programme in the 'Golden Triangle' on the borders of Burma, Laos and Thailand, the source of most of Hong Kong's opiate drugs.

      The techniques and methods employed by Hong Kong in its anti-narcotics work have made it an important venue for training anti-narcotics personnel from overseas. During the year, 152 visitors from 21 countries came to Hong Kong on study visits and training courses, either through bilateral arrangements with their governments or under the sponsorship of a United Nations body. Hong Kong Narcotics Bureau and Customs Officers travelled overseas as lecturers or consultants on training courses related to anti-narcotics work.

      Hong Kong was represented at the International Conference on Drug Abuse and Illicit Trafficking held at the United Nations Centre in Vienna in June, the biggest anti-drug conference ever held at ministerial level. The Hong Kong exhibition attracted considerable interest from a very wide range of delegates.

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The work of the Urban Services Department and the Regional Services Department includes street cleansing, collection and removal of refuse and nightsoil, cleansing of gullies, management of public toilets and bathhouses, pest control and the disposal of the dead.

      In the urban areas, a regular workforce of about 5 190 is employed in cleansing duties. The cleansing force uses a fleet of 378 specialised vehicles which include refuse collection vehicles, street-washers, mechanical sweepers, nightsoil collectors and gully emptiers. All streets are swept at least once daily, either mechanically or manually, while busier thoroughfares are swept from four to eight times a day. Streets are also hosed down regularly. A daily refuse collection service is provided and about 2 800 tonnes of refuse and junk are collected every day. A free nightsoil collection service is also provided in those areas which do not have a water-borne sewage disposal system.

The Keep Hong Kong Clean committees of the Urban Council and the Regional Council jointly implemented a six-phase operation programme covering block-to-block cleansing, clean-up of beaches, competitions among schools, clean-up of countryside, clean your home, and clean up of squatter areas. A tree-planting programme was also incorporated into the operation programme. In addition to education and publicity, community involvement and law enforcement remained the major tactic against littering. During the year, 36 514 people were fined $7,718,800 for littering offences.

      In the Regional Council area, regular cleansing duties are mainly carried out by a workforce of 3 500 and a specialised fleet of 200 vehicles, with the exception of street sweeping in Shek Wu Hui and Luen Wo Hui in the North District which is being carried out by contract labour.

The waste collection service collects an average of 1 300 tonnes of refuse and junk every day. Law enforcement remained the major tactic in combating indiscriminate littering and in 1987, 8 368 people were convicted of litter offences in the Regional Council area.

Controls

In maintaining and improving standards of hygiene through the enforcement of the Public Health and Municipal Services Ordinance and its subsidiary legislation, health inspectors of the Urban Services and the Regional Services departments regularly inspect licensed and permitted premises, common parts of residential and commercial buildings, construction and vacant sites and squatter areas. They also carry out inspections to deal with complaints on sanitation and vermin infestation. Both departments also work closely with the staff of the Medical and Health Department in the investigation and control of food poisoning outbreaks and infectious diseases.

      Pest control staff continued with the integrated programmes to control rodents, mosquitoes, flies and other public health pests. Measures taken included environmental improvement, health education, eradication of breeding places, use of pesticides and law enforcement. The Pest Control Advisory Section of the Municipal Services Branch continued to provide technical support to the two departments.

      Manned by the health inspectorate, the Health Education Unit continued to promote behaviour conducive to better public health, and better use of public health services. Programmes were carefully designed to meet the needs of different groups. During the year, seven major territory-wide programmes were organised, including a painting and project competition for school children, a food hygiene campaign for the food trade, a hygiene competition for restaurants, and several other publicity campaigns for the general public to

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promote health and improve the environment. Specific needs of organisations, such as schools and voluntary agencies, were also handled by the unit.

Food

The health inspectorate, backed by medical consultancy and supported by laboratory resources, controlled food for sale, both imported and locally produced. In the wake of the Chernobyl reactor accident in April 1986, close monitoring of commodities, especially from Europe, continued to be carried out for possible radioactive contamination, so as to ensure that they were safe for human consumption. A sudden and massive outbreak of chemical food poisoning occurred late in the year and was brought under control within a few days. The vehicle was identified to be vegetables imported from across the border which had been contaminated with methamidophos, an agricultural pesticide the sale and use of which are prohibited in Hong Kong.

The growing number of food establishments and the quantities and varieties of food items available on the local market have increased the importance of law enforcement. This entails systematic food inspection and surveys, including sampling for laboratory examina- tions. Parallel to this is the increasing demand for services for certification of foods for export and re-export to foreign countries.

      Hong Kong has an up-to-date, detailed and effective body of food law which compares well with the food legislation of many much larger advanced countries. During the year, the local legislation was strengthened by extending its control on bottled drinking water, and on the sources of imported milk and milk beverages for sale for human consumption.

      Externally, Hong Kong maintains a close tie with the Food and Agriculture Organisa- tion, the World Health Organisation and other international authoritative bodies, to keep abreast of developments in food science and technology. Up-to-date information is used not only for the purpose of food control, but also for the benefit of the food trade and

consumers.

Markets

The Urban Council runs 56 public markets with more than 7 500 stalls selling different commodities ranging from fresh foodstuffs such as meat, fish, poultry, vegetables and fruits, to general merchandise such as clothing, household goods and other daily necessities. Increasingly, new cooked-food centres are built within market complexes to resite existing on-street cooked-food stalls.

It is a continuing aim of the Urban Council to reprovision old markets, and, where possible, demolish outdated ones and to rebuild on the site new multi-purpose complexes providing not only markets but such modern facilities as games halls, libraries, and auditoria for the performing arts. This is a far more efficient and productive use of the land. There are now six such multi-purpose complexes in the Urban Council area.

The Regional Council is responsible for the management of public markets in the Regional Council area. There are 42 public markets with a total of 4 471 market stalls and 374 cooked food stalls under its management. One new market, the Cheung Tat Road Cooked Food Market on Tsing Yi Island was commissioned in 1987, providing 12 additional cooked food stalls.

Hawkers

The Urban Council is responsible for the management and control of hawkers in the urban areas, and receives some assistance from the police in controlling unlicensed hawkers in certain areas. In mid-1987 there were about 20 500 licensed hawkers in the urban areas, a

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decline of 1 500 compared with 1986. This reduction was attributable to the council's general policy of not normally issuing any new hawker licences, natural wastage, and the continuous effort of the council to move on-street hawkers into newly completed market and off-street hawker bazaars. The council this year re-introduced a scheme for granting ex-gratia payments to licensed cooked-food hawkers who surrender their licences for cancellation. This also helped reduce the number of licensed hawkers. Meanwhile the estimated total of unlicensed hawkers in mid-1987 was about 12 400, a significant reduction of 3 600 compared with 1986 estimates. This decrease was due in part to more accurate headcounts plus intensified enforcement action against the illegal hawkers, more police support in certain areas, and better management and supervision of the General Duties Teams following the introduction of strengthened leadership in the hawker control operations. The teams continued to enforce the Urban Council's policies for the manage- ment and control of both licensed and unlicensed hawkers throughout the urban areas.

      The Working Party to Review Hawker and Related Policies, set up by the Urban Council in February 1984, after wide consultation with interested bodies, published its report with recommendations for consideration by the Urban Council and by the government. If accepted, its recommendations on all aspects of hawker management and control will be implemented in the urban areas.

      The management and control of hawkers in the Regional Council area are the responsibility of the Regional Council. In 1987, there were 3 332 licensed hawkers in the Regional Council area, a drop of 246 compared with 1986. The number of unlicensed hawkers was estimated to be 1 832.

      Through the deployment of general duties teams, which have an establishment of 943, the Regional Services Department maintains control over the hawker situation. While illegal hawking activities are increasing with the urbanisation of the Regional Council area, the number of licensed hawkers is gradually declining as more and more of them are resited into new markets to become market stall lessees.

Abattoirs

The Urban Council's two abattoirs at Kennedy Town on Hong Kong Island and at Cheung Sha Wan in Kowloon continued to supply the bulk of the fresh meat. During the year, 2 424 000 pigs, 122 000 head of cattle and 10 000 goats were slaughtered in the abattoirs.

       Slaughtering services in the Regional Council area are provided by three licensed private slaughterhouses in Kwai Chung, Yuen Long and Tai Po districts. They handled a total of 1 158 040 pigs, 59 319 head of cattle and 404 goats during the year. The slaughterhouse at Kwai Chung, which can slaughter up to 3 000 pigs a day, also helps to meet the demand from Kowloon. The Tai Po slaughterhouse ceased to operate on September 1. In the long term, a site at Sheung Shui has been reserved for the construction of a private slaughterhouse with a possible throughput capacity of 2 500 pigs and 200 cattle and a small slaughterhouse is being planned for Cheung Chau to cater for the needs of the island.

All animals slaughtered in these abattoirs and slaughterhouses were inspected by qualified health inspectors of the Urban Services and the Regional Services departments.

       Proposals for the privatisation of the Urban Council abattoirs have been accepted in principle and are being studied further. Privatisation would affect the slaughtering activities, but not the meat inspection duties of the Health Authorities.

Cemeteries and Crematoria

It is the government's policy to encourage cremation rather than burial for the disposal of the dead. During the year, over 65 per cent of the dead were cremated. Human remains

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buried in public cemeteries are subject to exhumation after six years. The exhumed remains are then either cremated or removed to an urn cemetery.

      The Urban Council operates two funeral depots, one on Hong Kong Island and one in Kowloon, which provide free services for the disposal of the dead. In the urban areas there are five public cemeteries, two public crematoria and 18 private cemeteries. There are two war cemeteries under the management of the Commonwealth War Graves Commission.

      In the Regional Council area, there are three public crematoria at Kwai Chung, Fu Shan and Wo Hop Shek under the management of the Regional Council. The first two are used for the cremation of dead bodies while the third is used solely for cremation of exhumed skeletal remains. Niches are provided at the columbaria in these three areas. The depart- ment also manages five public cemeteries, including the Wo Hop Shek Cemetery, the biggest public cemetery in use in Hong Kong, and oversees eight private cemeteries in the Regional Council area. To meet the demand of local inhabitants of outlying islands, a public cemetery is being constructed at Mui Wo to replace the Tai O cemetery which is expected to be full by early 1988.

Auxiliary Medical Service

The Auxiliary Medical Service, formed in 1950, is a volunteer medical civil defence organisation with members trained and equipped to provide an essential service to the public, especially in times of emergency. In 1987, the establishment was 5 835. About 1 500 of the members are professionally qualified in medical, nursing, para-medical or hospital administration services, while other volunteers come from all walks of life.

      The primary role of the service is to augment the Medical and Health Services and the Ambulance Services. Emergency supply stores and teams of AMS members are evenly distributed throughout the territory, including Lantau, Cheung Chau and Peng Chau Islands. In the event of a major disaster, emergency medical resources would be available from the AMS to treat the injured on the spot, to convey casualties to hospitals, and to care for patients at both acute and convalescent hospitals.

      In addition to emergency work, the members perform a variety of duties, such as first aid coverage at public functions, manning of medical posts at refugee camps, staffing methadone treatment centres and providing lifeguard services on public beaches and swimming pools.

The service has a fleet of eight ambulances and six motorcycle ambulances. On weekends and public holidays, ambulance services are provided in country parks and suburban areas in addition to motor-cycle ambulance patrols and first aid posts.

      In addition, AMS is the agency in providing first aid training for government servants. Since 1972, some 17 786 civil servants have completed the basic first aid courses and passed the examinations. AMS first aid certificate holders are officially recognised as qualified first aiders.

11

Social Welfare

福社

!

新藥

IN the constant effort to provide more and better welfare services to meet the rising expectations of the people, the Social Welfare Department works closely with the subvented welfare agencies.

The Director of Social Welfare is responsible for carrying out government policies on social security and social welfare, based on the objectives set out in three White Papers - Integrating the Disabled into the Community: A United Front (1977), Social Welfare into the 1980s (1979), and Primary Education and Pre-primary Services (1981).

In its social welfare work, the government is also advised on policy by two groups - the Social Welfare Advisory Committee, covering the area of social welfare, and the Rehabili- tation Development Co-ordinating Committee, on matters of rehabilitation. Members of these committees are appointed by the Governor, with unofficial members as chairmen.

Most of the subvented welfare agencies, which play a big role in providing welfare services, are affiliated to the Hong Kong Council of Social Service.

As a result of the combined efforts of the government and community groups in promoting mental health education, there is now a greater understanding by the people of mental illness, as well as more acceptance of half-way houses established for discharged mental patients to help reintegrate them into society.

In response to the United Nations' designation of 1987 as the Year of Shelter for the Homeless, various services were introduced for street sleepers. A day relief centre and a temporary shelter were opened to provide personal facilities and temporary residential care and four outreaching teams from family service centres were set up to look into the needs of street sleepers and to render service.

As for the care of the growing elderly population, various welfare services were developed for them, including residential care. There was also an increasingly felt need for care and attention home places for the frail aged. In addition to planning to provide purpose-built care-and-attention homes, special effort is being made to set up care-and- attention units in homes for the aged in public housing estates.

In the area of services for offenders, the Community Service Orders Pilot Scheme was implemented from January this year in three magistracies. This enables the courts to order youths over the age of 14 years who are convicted of an offence punishable by imprison- ment to perform unpaid work of benefit to the community in place of, or in addition to, another sentence. The scheme will be reviewed after two years to consider its suitability for Hong Kong.

Based on a proposal by the Fight Crime Committee, a Young Offender Assessment Panel, comprising professional staff from the Correctional Services Department and the Social Welfare Department, was set up in April to offer advice on rehabilitation with the view to assisting the courts in the sentencing of young offenders.

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Attention was also given to reviewing the provisions of the Protection of Women and Juveniles Ordinance and the Child Care Centres Ordinance, and proposals for amendments have been made in the light of changing needs and expectations.

     To speed up the provision of welfare services in new public housing estates, efforts were made to finalise the drawing up of typical layout plans and fitting-out requirements for home-for-the-aged cum care-and-attention units. Together with day nurseries, children and youth centres, social centres, hostels for the elderly and half-way houses for the discharged mental patients, the number of services with standard layout plans placed under the Rolling Programme, will be increased to six. The Rolling Programme is an arrangement to entrust the Housing Department with carrying out the fitting-out work of welfare premises.

     During the year, nine new day nurseries, five homes for the aged, eight social and day care centres for the elderly and seven children and youth centres were established. The provision of these additional services and the increase in the social security caseload were reflected in increased recurrent expenditure.

     The total estimated expenditure on social security and social welfare services in the 1987-8 financial year - including Social Welfare Department recurrent expenditure and subventions to voluntary welfare agencies - is $2,878.9 million, an increase of more than 15 per cent over the previous provisions.

     The Community Chest, which organises and co-ordinates fund-raising activities for its member agencies, raised $42 million in 1986-7, compared with $38.1 million in 1985-6.

Social Security

Social security schemes are non-contributory and are designed to meet the basic as well as the special needs of the vulnerable groups in the community who require financial assistance. These schemes include the Public Assistance Scheme, the Special Needs Allowance Scheme, the Criminal and Law Enforcement Injuries Compensation Scheme, the Traffic Accident Victims Assistance Scheme and Emergency Relief.

The Public Assistance Scheme, which is means-tested, aims at bringing the income of needy individuals and families up to a prescribed level. The basic factors for determining eligibility criteria are the length of residence in Hong Kong, the level of income and savings, age and employment. A person must have resided in Hong Kong for at least one year and must prove that his income and other resources are insufficient to meet his basic needs. The Director of Social Welfare is empowered to waive the residence requirement in cases of genuine hardship. An able-bodied unemployed person aged 15 to 59 is eligible only if he is actively seeking employment and has registered with the Local Employment Service of the Labour Department.

     The rates of assistance are regularly reviewed to keep up with the cost of living. The current monthly basic allowance is $510 for a single person, $370 for each of the first three eligible members of a family, $315 for each of the next three eligible members and $245 for each additional eligible member. Separate allowances are paid to cover the cost of accommodation. An old age supplement, a disability supplement and a long-term supple- ment may also be given. An old age supplement of $255 per month is given to those aged 60 and over who are not receiving a special needs allowance or a disability supplement. A disability supplement of $255 per month is payable to those who are partially disabled with at least 50 per cent loss of earning capacity and are not in receipt of an old age supplement or a special needs allowance. An annual long-term supplement of $1,290 for a family or $645 for a single person is given to those who have received public assistance continuously for 12 months to enable them to meet the cost of replacement of household wares and

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durable goods. In addition, special supplements are given to certain categories of clients to meet other special needs.

      To encourage self-help, an individual's earnings up to $255 per month are disregarded in the calculation of entitlement for assistance.

      At the end of 1987, the number of public assistance cases was 63 180, compared with 63 160 in 1986. Expenditure on public assistance in the 1986-7 financial year amounted to $678.4 million, an increase of 8.5 per cent over the previous year.

      The Special Needs Allowance Scheme, which is non-means tested, provides a flat rate allowance for the severely disabled and for elderly persons aged 70 and over who have continuously resided in Hong Kong for five years after the age of 65. Any person, regardless of age, who is severely disabled and has resided continuously in Hong Kong for at least one year prior to claiming the allowance, is eligible for a disability allowance. The current monthly rate of disability allowance and old age allowance are $510 and $255 respectively. The number of people receiving these two allowances at the end of the year was 305 490, compared with 291 090 at the end of 1986. Expenditure on special needs allowance in the 1986-7 financial year was $965.2 million, an increase of 6.1 per cent over the previous year.

      The Criminal and Law Enforcement Injuries Compensation Scheme provides cash assistance for people injured and for dependants of those killed in crimes of violence, or through the action of law enforcement officers in the execution of their duties. This scheme, which is non-means tested, is administered by the Criminal Injuries Compensation Board and the Law Enforcement Injuries Compensation Board. Total payments in 1987 amounted to $5.1 million, compared with $5.3 million in the previous year.

      The Traffic Accident Victims Assistance Scheme provides early financial assistance to the victims of traffic accidents or in the case of fatal accidents, to their dependants, regardless of the means of the family or who was at fault in causing the accident. To be eligible, the traffic accident must be one defined under the Traffic Accident Victims (Assistance Fund) Ordinance (Cap 229) and must have been reported to the police. The application must be lodged within six months of the accident. In case of injury not causing death, evidence of not less than three days' sick leave must be shown. Payments are made for death or personal injury. Damage to property is not covered. The scheme does not affect the applicant's right to claim legal damages or compensation from other sources. Beneficiaries who receive damages or other compensation in respect of the same accident are required to reimburse the payments they received from the scheme, or the amount of damages or compensation, whichever is less. During the year, 6 420 applications were received and 5 750 were approved for assistance with payments amounting to $39.5 million.

      Emergency relief is provided to victims of natural or other disasters in the form of immediate material aid such as hot meals, eating utensils and other essential articles. Grants from the Emergency Relief Fund are also paid to disaster victims or their dependants. During the year, emergency relief was given to 3 940 registered victims on 180 occasions.

      To prevent abuse of the various schemes, a special team conducts in-depth investigation in cases of suspected fraud or difficulties encountered in repayment. During the year, the team completed investigation of 258 cases, some of which were referred to the Attorney General for legal advice and possible prosecution.

The Social Security Appeal Board is an independent body which considers appeals from individuals against decisions by the Social Welfare Department concerning public assist- ance, special needs allowances and traffic accident victims assistance payments. It heard a

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total of 84 appeals during the year. Of these, four were related to public assistance, 79 to special needs allowance, and one to traffic accident victims assistance.

Services for Offenders

The Social Welfare Department has several statutory duties in the field of services for offenders. These duties have the objective of giving effect to the directions of the courts on the treatment of offenders through social work methods. The overall aim is to rehabilitate offenders through probation supervision, residential training for young offenders and after-care services.

     Probation applies to offenders of all age groups. It allows offenders to remain in the community under the supervision of probation officers and subject to prescribed rules set by the courts. Volunteers from many walks of life participate in the 'Volunteer Scheme for Probationers', which enhances community participation in the rehabilitation of offenders.

      Under the Community Service Orders Ordinance, the courts may order offenders of or over 14 years of age who are convicted of an offence punishable by imprisonment to perform unpaid work of benefit to the community for a number of hours not exceeding 240 in a period of 12 months. A two-year pilot scheme on Community Service Orders was implemented from January 1 in three magistracies - Central, Kwun Tong and Tsuen Wan. The Community Service Order aims at being both punitive and rehabilitative. Offenders subject to a Community Service Order are supervised by probation officers who provide them with counselling and guidance and arrange work for them.

In April, a Young Offenders Assessment Panel was set up jointly by the Social Welfare Department and the Correctional Services Department. The panel, comprising profes- sional staff from the two departments, provides additional assistance to magistrates' courts in the sentencing of convicted young offenders through the provision of a co- ordinated view on the most appropriate programme of rehabilitation. This represents an improvement in the arrangement of dealing with young offenders aged between 14 and 25. The Social Welfare Department operates seven residential institutions, each with a slightly different training programme to cater for the needs of the residents. Educational, pre-vocational, and character training is provided to assist juvenile offenders to return to the community as law-abiding citizens. The Begonia Road Boys' Home and Ma Tau Wai Girls' Home are combined remand and probation institutions for juvenile offenders and youths in need of statutory care and protection. The Pui Chi Boys' Home has helped to alleviate overcrowding in the probation section of the Begonia Road Boys' Home. Similarly, the Pui Yin Juvenile Home, operating since February 1986, has contributed to improving the conditions at the remand sections of the Begonia Road Boys' Home and Ma Tau Wai Girls' Home. The Castle Peak Boys' Home is a reformatory school for boys aged 14 to 16 on admission, while the O Pui Shan Boys' Home is a similar institution for those aged under 14 on admission. The Kwun Tong Hostel is a probation hostel for young men aged between 16 and 21. Following a review of the educational programmes in these institutions, the department is planning to introduce major improvements to the curricula, teaching standards, and facilities for academic teaching and vocational training. There are also long-term plans to improve residential facilities by constructing a new girls' home in Tuen Mun and reprovisioning the Castle Peak Boys' Home and Begonia Road Boys' Home.

The Social Welfare Department also operates an after-care unit which helps offenders to rejoin society by preparing them before they leave reformatory schools and supporting them after discharge. Besides the work carried out by the Social Welfare Department,

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several welfare agencies also provide services to help young offenders and young people with behavioural problems to reintegrate into the community.

Family Welfare

The Social Welfare Department and a number of welfare agencies are involved in the provision of family services with the objective of maintaining and strengthening the family unit through helping individuals and families to solve problems and prevent them from arising.

The department operates a network of 27 family service centres and the subvented welfare sector operates 24 such centres. Services provided under this programme include counselling on personal and family problems; care and protection of young people aged under 21; residential and foster care for children up to the age of 21; day care for children under six; referrals for schooling, housing, employment, financial assistance, legal advice, medical attention, home help and, where appropriate, placement in institutions for elderly or disabled persons.

      A number of statutory responsibilities arising from the Protection of Women and Juveniles Ordinance, the Offences Against the Persons Ordinance, the Marriage Ordinance, the Guardianship of Minors Ordinance and the Matrimonial Causes Ordinance lie with the Social Welfare Department. The department provides supervision and residential accom- modation for young people aged under 18 whose parents or guardians fail to exercise proper care of them, and for those under 21 who have no parents or guardians or who are adopted other than by a court order.

To give better support services to battered women and other needy women and young girls, the department set up the Wai On Home for Women which came to full operation in January. The home, with a capacity of 40, provides short term accommodation for women with or without children who are having serious personal or family problems and are in need of temporary shelter. These women and children may be victims of domestic violence or girls aged between 13 and 21 years facing a crisis and feeling helpless.

In line with the 1987 International Year of Shelter for the Homeless, the department stepped up efforts, in co-operation with other government departments, to tackle the problem of street sleeping. This is carried out by four regional outreaching teams which focus on the unmotivated and difficult cases requiring assistance, while the family services centres continue to work with the willing street sleepers. Services provided to street sleepers include housing, medical, financial and material assistance and other welfare services. Furthermore, an inter-departmental co-ordinating committee on street sleepers was set up under the auspices of the Health and Welfare Branch to examine policies and programmes in order to co-ordinate action relating to street sleepers.

In the area of child care services, the department operates the Chuk Yuen Children's Reception Centre and the Sha Kok Children's Home for the temporary care of children aged up to eight. The Child Protective Services Unit provides services for children who are, or have been abused, whether physically, psychologically, sexually or grossly neglected. The department's Adoption Unit co-ordinates adoptions both in Hong Kong and overseas, the latter with the assistance of the local branch of the International Social Service. During the year, there were 533 new applications for adoption; 294 local adoption orders were granted; and 166 adoption cases were handled. Through the Central Foster Care Unit, the Social Welfare Department works closely with three subvented foster care agencies to promote foster care services in Hong Kong. In 1987, the total number of foster care places was 180.

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The special working group which was set up under the auspices of the Health and Welfare Branch to examine policies on the provision of residential services for children in need of care and protection completed its task during the year. While it considered the existing range of residential child care services to be broadly satisfactory, it proposed improvement in the depth and quality of services.

Child care centres are established for children aged under six. Such centres must comply with the standards laid down in the Child Care Centres Ordinance and are subject to registration and inspection. At the end of the year, there were 27 695 places in day child care centres and 798 places in residential child care centres. Families with a low income and a social need for children to attend a child care centre may apply to the Social Welfare Department for assistance in meeting fees charged. A total of 9 402 children were receiving fee assistance at the end of the year.

A hotline service is operated to deal with enquiries from the public concerning the services of the department and to provide immediate telephone counselling or advice where necessary.

      Social work services are also provided by medical social workers stationed in 101 medical social service units in government hospitals and clinics. These medical social work units together with family service centres form a network of services to families in need.

Family life education programmes have been provided for all age groups in the community to improve the quality of family life through the promotion of interpersonal relationships and social consciousness which may help to prevent family breakdowns and social problems. The 1987 theme of the annual publicity campaign 'Love and Care Help Build Up a Happy Family', was aimed at encouraging people to express truthfully their feelings and concerns towards one another. In response to the central publicity campaign, promotional and educational activities have also been organised by social workers at the district level through 12 district committees and 56 family life education workers from 14 subvented welfare agencies. A central resource centre provides the necessary audio- visual equipment and resource materials in support of the service. All these activities are co-ordinated by the Social Welfare Department.

Care of the Elderly

'Care in the Community' remains the guiding principle in the implementation and planning of services for the elderly in Hong Kong. Subvented welfare agencies are the main provider of a wide range of community support services for the elderly which aim at encouraging families to look after their elderly members at home and enabling old people to live independently. The community support services include counselling, home help, canteen, laundry, bathing services, community education, day care and social and recreational activities. At the end of the year, there were three outdoor recreational pool buses, 46 home help teams, 90 social centres for the elderly, 12 multi-service centres for the elderly and four day care centres. Priority allocation of public housing is available for elderly people and families with elderly members or relations.

Residential facilities are also provided for those elderly people, who, for health or other reasons, can no longer live alone or with their families. At the end of the year, there were 7 553 places in homes/hostels for the elderly and 1 570 places in care and attention homes. Future provision of residential places will be significantly expedited by the decision of the Housing Authority to equip and operate sheltered housing schemes for the able-bodied elderly and to make premises available for old people's homes and care and attention

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homes in new public housing estates. A number of purpose-built care and attention homes are also being planned. The department also provides sheltered housing for 595 elderly people in good health and capable of living independently through the purchase of 103 flats in two separate private housing developments.

      A Central Committee on Services for the Elderly comprising representatives from various government departments and voluntary agencies was set up under the auspices of the Health and Welfare Branch. The committee plans to review the policy on services for the elderly in the light of social changes and the changing needs of the elderly.

Services for Young People

A wide range of services has been designed for young people under the age of 25. The overall objective is to assist and encourage young people to become mature and responsible members of society by fostering the development of their personality, charac- ter, sense of civic responsibility, social aptitudes and ability to use their leisure time beneficially.

      To achieve these goals, the Social Welfare Department organised a wide variety of programmes, with special emphasis on the development of the potential of the youths. Community centres not only provide residents with a venue for community functions, but also house various welfare services, such as day-care for pre-school children, and services for the elderly and the handicapped. Following the transfer of the management of community centre facilities to the City and New Territories Administration, the depart- ment was able to devote more of its resources to promoting and strengthening group work activities.

      Children and youth centres operated mainly by voluntary agencies serve as focal points for a variety of programmes and activities for the development of individual character, leadership, social ability and responsibility. In 1987, three children's centres, two youth centres and five combined children and youth centres were opened. At the end of the year, there were 157 children's centres and 169 youth centres in operation - with 105 being combined children and youth centres.

The Opportunities for Youth Scheme which has been administered by the department since 1974, continued to receive enthusiastic response from young people with plans to implement service projects to meet the specific needs of the community. In response to the International Year of Shelter for the Homeless, the scheme enlisted the support of the 19 district boards in encouraging young people to offer services for street sleepers and people deprived of proper homes. The Best Opportunities for Youth Scheme Award is organised to give recognition to outstanding projects.

      The value of providing outreaching social work service for the 'unattached' young people who do not normally participate in organised youth activities is generally recognised. During the year, the criteria for selecting priority areas for service, and the overall provision of outreaching social work service have been examined. Depending on resources available, it was planned to provide six additional teams in the next three years. There were 18 teams in 1987.

      School social work service has been provided by social workers in secondary schools, and guidance service to primary school students has also been provided by student guidance officers. These services are to help students with personal problems or problems in adjusting to school life. Upon the recommendations of the Social Welfare Advisory Committee, a number of improvements were made including the manning ratio, work approaches, and training of workers.

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Rehabilitation of the Disabled

SOCIAL WELFARE

The object of rehabilitation services in Hong Kong is to integrate the disabled into the community. Services provided by government departments and welfare agencies are aimed at enabling handicapped people to develop their physical, mental and social capabilities to the fullest extent. These services are carefully co-ordinated by the Commissioner for Rehabilitation who also conducts an annual review of the Rehabilitation Programme Plan. The Social Welfare Department is responsible for the planning and development of a wide range of services for the disabled in order to meet their general welfare and social rehabilitation needs, either through direct service provision or subvention to welfare agencies. The Education Department is responsible for all aspects of the education and training of disabled children of school age and for boarding care and transport services in special schools. The Technical Education and Industrial Training Department co-ordinates vocational training for disabled young people and adults. Job placement for the deaf, the blind, the physically disabled, the mentally handicapped and discharged mental patients is the responsibility of the Selective Placement Service of the Labour Department. In April, the subvention and supervision responsibility for special transport for the disabled - the Rehabus - was transferred from the Social Welfare Department to the Transport Depart- ment, following the recommendation made by the Working Party on the Transport Needs of the Disabled.

The Social Welfare Department provides the handicapped with direct services including counselling, compassionate rehousing, financial assistance, and day and residential care. It also operates directly some facilities including an integrated programme in a child care centre, a composite club for the handicapped, residential homes and hostels, work activity centres and sheltered workshops. The services provided by subvented agencies include pre-school care, education and training programmes, integrated programmes in child care centres, special child care centres, home help service, halfway houses for discharged mental patients, sports, social and recreational programmes, sign language interpretation services, ear-mould production, hearing aid repair and mobility and orientation programmes for the blind.

By the end of the year, the Social Welfare Department and subvented welfare agencies provided a total of 1 120 day activity places and 2 905 sheltered workshop places. These facilities provide work or employment for disabled adults who are unable to compete in the open job market.

Disabled persons who cannot live independently and cannot be adequately cared for by their families, or who live in areas too remote from their places of training or employment are provided with residential care. By the end of the year there were 1 055 places in homes for mentally handicapped adults, 185 places in homes for the physically handicapped adults, and 398 places in homes for the blind.

For pre-school disabled children, subvented agencies and SWD provided 574 places for mildly disabled children in integrated programmes in child care centres, 660 places for moderately and severely mentally handicapped children in 14 special child care centres and 515 places for pre-school disabled children in seven early education and training centres.

Voluntary agencies also provided 18 social centres and two sports associations, and a fleet of 25 Rehabuses operating 23 scheduled routes for the use of handicapped people.

Further efforts were made to improve after-care and rehabilitation services for dis- charged mental patients. By the end of the year, 515 places were provided in half-way houses. The Committee on Public Education in Rehabilitation continued its efforts to foster a more positive public attitude towards mental illness.

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During the year, new rehabilitation services were conceived, such as day centre service for discharged mental patients, respite service for families with mentally handicapped persons and foster care for mildly mentally handicapped children. These services are expected to be implemented in the near future.

Staff Development

The education of professional social workers is provided by the two universities, two polytechnics and the post-secondary colleges. The Social Welfare Department and welfare agencies assist in the provision of practical work placements for social work students from these training institutions. The Social Welfare Department, through its training section at the Lady Trench Training Centre, provides in-service training programmes including basic social work training, staff development programmes, induction training and orien- tation courses for both departmental staff and social workers employed in the voluntary welfare sector.

During the year, 151 programmes, seminars and workshops were organised by the training section, compared with 143 in 1986. The section also operates a child care centre which, besides providing day care for 100 children aged between two and five, serves as a training facility for trainees in child care work.

      To equip staff with updated and specialised skills in the various areas of welfare service, the department sponsors experienced personnel to attend advanced training courses or international conferences. During the year, 118 officers attended 20 such courses and conferences. The Social Work Training Fund and other scholarships also provide funds to promote advanced social work training.

Research and Evaluation

The Research and Statistics Section provides supporting service to the department by preparing estimates and carrying out surveys. Six studies were conducted during the year to obtain statistical information for reviewing and planning welfare services and social security schemes. The section also runs a standardised Law and Order Statistical System for offenders under the care of the department and a data system on information concerning street sleepers.

The Evaluation Section of the department is responsible for monitoring and assessing services provided by the subvented welfare agencies. For this purpose, departmental staff make regular visits to these agencies which are in turn required to send service statistics to the department at specified intervals. Where appropriate, findings are submitted to the Subventions and Lotteries Fund Advisory Committee which advises on allocation of subventions. During the year, the department conducted five in-depth evaluations of the service programmes of subvented agencies and launched two evaluations of experimental projects financed by the Lotteries Fund.

Community Building

     'Community building' serves to foster among the people of Hong Kong a sense of belonging, mutual care and civic responsibility as the society undergoes rapid socio- economic changes. Community building efforts involve the provision of purpose-built facilities for group and community activities, formation of citizens' organisations and encouragement of community participation in the administration of public affairs, in solving community problems, in promoting social stability and in improving the quality of life in general.

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A number of government departments and voluntary organisations contribute towards the community building programme which is co-ordinated by the Community Building Policy Committee. The City and New Territories Administration and the Social Welfare Department are the two departments principally responsible for the implementation of this programme. The City and New Territories Administration, through its network of district offices, is primarily concerned with promoting mutual care and community spirit through local organisations such as area committees, mutual aid committees, rural committees, kaifong welfare associations, women's organisations and local arts and sports associations. The Social Welfare Department is responsible for various aspects of group and community work aimed at promoting the development of individuals and groups and at fostering a sense of community responsibility. Community centres, run by the City and New Territories Administration, are provided throughout the territory to serve as a base for community building work.

Central Committee on Youth

Having regard to the rapid expansion of youth activities in recent years and following the celebration of the 1985 International Youth Year, a Central Committee on Youth was set up by the government in May 1986. The objective of the committee is, among other things, to identify the needs and aspiration of young people in Hong Kong, to liaise with, and assist organisations concerned to promote youth development and to enhance youth participa- tion in community affairs, and to examine the need for a comprehensive youth policy.

The committee has now prepared a draft report recommending the institution of a youth policy. The draft report also proposes the setting up of a standing committee to oversee the implementation of the policy, to review and to recommend changes to it in the light of changing circumstances. When finalised, the report will be submitted to the government for consideration.

During the year, three surveys on youth matters were conducted, and a conference was organised.

Committee on the Promotion of Civic Education

In response to the need to promote civic education in Hong Kong, the government set up in 1986 the Committee on the Promotion of Civic Education. The committee provides a focus for the promotion of civic education outside the school system while the Education Department continues to be responsible for civic education within schools. It advises the government and community organisations on the objectives and scope of civic education and promotes community participation in civic education activities. As part of its efforts to encourage community participation in the promotion of civic education, the committee provided community organisations with financial assistance for implementing broad-based civic education projects. During the year, the committee sponsored 23 projects involving the allocation of $500,000.

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Housing

SOME 2.7 million people, or 48 per cent of the population, are now accommodated in subsidised rental and home ownership public housing as a result of the continuing priority being given in the allocation of public funds to housing.

      During the year, $6,360 million or 11.9 per cent of the government's Consolidated Annual Expenditure was devoted to the development and maintenance of subsidised public housing.

The Housing Authority produced 20 520 rental units, and offered for sale 12 242 units under the Home Ownership Scheme (HOS) and the Private Sector Participation Scheme (PSPS). The demand for assisted home purchase was so great that these flats were 15 times over-subscribed.

      The private residential property market remained buoyant with production reaching a level of 32 470 units, compared with 37 140 in 1986.

      The Hong Kong Housing Society continued to supplement the provision of public housing through its rental and rural public housing projects and its urban redevelopment schemes. Next year, it will be launching a new flats-for-sale scheme.

      Extending its commitment to housing, the government adopted in March a new Long Term Housing Strategy which aims to make the provision of housing more demand-led. In line with rising expectations, it undertook to improve living standards in older housing estates through comprehensive redevelopment. Opportunities for assisted home purchase will also be increased by providing more flexibility in the balance between rental and HOS production to meet annual demand, and by introducing a Home Purchase Loan Scheme (HPLS). In future, prospective rental tenants will be offered an option to buy or rent. Under the HPLS, those eligible for HOS/PSPS will be offered the alternative of interest-free loans of $70,000 to buy private sector flats. The scheme will start with 2 500 loans next year.

As a demand-led approach to housing requires close monitoring and co-ordination of both private and public sector production, consideration is being given to expanding the responsibilities of the Housing Authority to take charge of the overall housing programme and an outcome is expected in early 1988.

Housing Authority

The Hong Kong Housing Authority, established under the Housing Ordinance, is a statutory body responsible for co-ordinating all aspects of public housing. It advises the Governor on all public housing policy matters and, through its executive arm, the Housing Department, plans and builds public housing estates for various categories of people as determined by the authority with the approval of the Governor. It also manages public

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housing estates, Cottage Areas, Temporary Housing Areas and Transit Centres throughout the territory; clears land for development; prevents and controls squatting, and plans and co-ordinates improvements to squatter areas. On behalf of the government, the authority plans, builds and manages flats provided under the HOS. It also nominates purchasers for flats built under the PSPS.

     The authority meets quarterly under the chairmanship of the Secretary for Housing to review the work of six standing committees on finance, building, management, home ownership, operations, and appeals. In addition, there are two special committees respon- sible for ensuring the smooth implementation of the Extended Redevelopment Programme and overseeing the clearance of the Kowloon Walled City.

The authority comprises 19 members representing a wide spectrum of the community, and six members from government departments directly involved in housing matters. All members are appointed by the Governor. There are also 21 co-opted members, who sit on one or more of the committees. Many of the members of the authority also serve the community as Legislative, Urban or Regional Councillors, or as members of the New Territories Heung Yee Kuk, district boards, area committees and mutual aid committees. Together, they have a broad range of experience and representation and are able to apply a critical and conscientious perspective in determining public housing policies.

     The Housing Authority is responsible for its own finance and management. Capital funding for the public housing programme is provided by the government on the basis of a four-year expenditure forecast rolled forward annually. The government subsidises the programme by providing free land for rental and home ownership projects, and loans on concessionary terms from the Development Loan Fund to finance the construction of rental estates. The HOS is financed by the government, which recoups its expenditure from the sale of flats produced under the scheme.

The authority obtains loans from the Development Loan Fund for the construction of the domestic portion of public rental housing estates. The loans are repayable over 40 years at an annual interest rate of five per cent on the reducing balance. However, to alleviate the cash flow burden on the authority, the government does not require the interest to be paid in cash. The interest charges must, nonetheless, be fully accounted for, along with the value of the free land provided, in the authority's balance sheet as part of the government's contribution to public housing. On March 31, the government's contribution stood at $32,391.8 million, which included, among other subsidies, $28,133.5 million for free land and $2,365.2 million for interest foregone. Furthermore, the 40-year repayment period for loans means that, having regard to the declining value of money over time, the government recovers only a fraction of the real value of the loans.

In the 1986-7 financial year, recurrent expenditure on the Housing Authority's domestic rental properties - covering mostly management and maintenance costs totalled $2,336 million, while income from domestic rents was $2,250.1 million, resulting in a deficit of $85.9 million. This deficit was due to the fact that the low rents in old estates were insufficient to cover management expenses and the high cost of maintenance and improve- ments. The authority was able to offset this deficit from income derived from its commercial properties which in the same period generated $1,206.2 million against an expenditure of $608.9 million. Any surplus funds left are used to help finance the public housing construction programme.

     The authority spent $2,783 million on its capital programmes, of which $1,268.9 million was financed by the government (mostly loans on concessionary terms) with the balance being financed from the authority's funds. In addition, the authority, acting as

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the government's agent, spent $626.7 million on the construction of flats for sale under the HOS.

Construction

The Housing Authority produced 29 900 flats in 1987, comprising rental, HOS and PSPS units. This achievement is in line with the government's new housing strategy in which the authority is committed to producing 232 000 flats in the first five-year development period from 1985 to 1990, comprising 162 000 public rental flats, 65 000 Home Ownership and Private Sector Participation Scheme flats and 5 000 flats earmarked for possible transfer from rental housing to home ownership. The authority is also planning to produce a further 215 000 flats and 162 000 flats in the second and third five-year development periods respectively, taking production up to the year 2001. The scale and type of production will be reviewed periodically in response to actual demand.

      Twenty-eight building contracts, with a total value of $4,500 million, were let in 1987 and 60 per cent of these contracts have specified the use of panel formwork construction systems under the 'Large Panel Formwork Programme'. Since its introduction last year, this programme has expanded rapidly and the practice has succeeded in upgrading the quality of workmanship and is now widely accepted by contractors. It is intended to expand this programme further, not only to maintain and improve standards, but also to encourage more mechanisation in an industry which is still very labour-intensive. In the year, some contractors experienced difficulty in meeting contract completion dates due to labour shortages.

       With a view to improving the efficiency of its own workforce, the Construction Branch of the authority has doubled the number of work stations in its Computer Aided Draughting and Design System and is increasing the number of projects designed on the computer. Furthermore, a Central Project Monitoring System (CPMS) has been installed to stream- line the monitoring of production and programme data for each project.

Urban Housing

On Hong Kong Island, work has started on one of the biggest site formations under- taken by the authority, involving the excavation of more than 3 000 000 cubic metres of material at Shau Kei Wan East. When completed, this site will provide 5 564 rental flats. Site formation for Kellett Bay Phase 1 was completed during the year and Phase 2 is on schedule for completion in 1988. Together, the two phases will provide 3 060 rental and 1 400 HOS flats.

      Following completion of site formation works at Siu Sai Wan, construction for Phases 1 and 2 of an estate is progressing well and, when completed in 1989, will provide 4 094 rental and 660 HOS flats. The final phase of Lei Tung Estate on Ap Lei Chau, comprising 3 248 rental flats, was completed. Also completed was the PSPS project, Kornhill Court, providing 2 180 flats for sale.

       In Central Kowloon, 3 256 rental flats in Phase 4 of Chuk Yuen Estate were completed. Construction work on Phase 1 of another estate at Diamond Hill North has started and the site formation for the remaining Phases 2 and 3 will be completed in 1988. The whole estate, comprising 5 476 rental flats, is scheduled for completion in 1990-1.

In West Kowloon, 378 HOS flats in Po Lai Court, constructed on top of an Urban Council market in Po On Road, Sham Shui Po, were completed.

      In East Kowloon, Phase 2 of an estate in Lam Tin and Phase 1 of the nearby Hong Wah Court were both completed, providing 2 448 rental and 1 680 HOS flats respectively. Site

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formation for Phases 3 and 4 of the estate will be completed in 1988, providing land for a further 3 844 rental and 1 400 Home Ownership flats scheduled for completion in 1990-1.

Housing in New Towns and Rural Townships

In Sha Tin, most of the new development was taking place at Ma On Shan where 2 488 rental flats in Phase 3 of Heng On Estate and 1 050 HOS flats in Kam On Court were completed. Also completed were 2 000 flats for sale in Phases 1 and 2 of a PSPS project at Ma On Shan, with the remaining 1 932 flats in Phase 2 scheduled for completion in 1988. A total of 1 680 HOS flats were completed in Ka Tin Court in Sha Tin.

     On Tsing Yi, 3 426 rental flats were completed under Phase 1 of Cheung On Estate and 1 340 HOS flats in Ching Wah Court. Construction work on the remaining Phases 2 and 3 of Cheung On Estate was well underway and, when completed in 1988 and 1989, will provide a further 6 466 rental flats and 816 HOS flats.

      In Tuen Mun, 892 rental flats in Leung King Estate Phase 2 were completed, with a further 2 652 flats under Phase 1 to be completed in early 1988 and 3 920 flats under Phase 3 in mid-1989. Work on 2 100 Home Ownership flats in the adjacent San Wai Court also continued and is expected to be completed in the second half of 1989. Construction of two other rental estates, Tin King and Kin Sang, and a HOS court has also begun and is due for completion between 1990 and 1991.

In Fanling, work has started on Tin Ping Estate and Wah Ming Estate, which will provide 9 204 rental flats between 1988 and 1990. In Tai Po, Phase 1 of Tai Wo Estate will provide a further 3 230 rental flats in mid-1988.

     In Yuen Long, the final two phases of Long Ping Estate were completed, providing 5 140 flats.

In Junk Bay, the first two housing estates, Tsui Lam and Po Lam, were completed providing altogether 7 420 rental flats. On completion of King Ming Court and Ying Ming Court in the area, a further 2 800 HOS flats will be provided. Nearby, work on King Lam Estate with 7 387 rental flats and Yan Ming Court with 1 750 HOS flats, is scheduled for completion between 1989 and 1991.

In Mui Wo on Lantau Island, construction of 441 flats in Ngan Wan Estate is expected to be completed in early 1988.

Redevelopment

A total of 12 Mark I/II estates comprising 240 blocks were built between 1954 and 1964 to provide emergency housing for victims of natural disasters and squatters displaced by development clearances. Since these estates provided only basic accommodation with few communal facilities, they were considered socially unacceptable. Following the success of a pilot conversion scheme in 1968, a redevelopment programme was launched in 1972.

With a view to rehousing all the remaining Mark I/II estate tenants by 1990-1, it was decided in 1983 to accelerate the redevelopment programme by rehousing an average of 6 000 families annually. Families who wish to improve their living environment in advance of scheduled redevelopment, are offered the opportunity of moving to other rental flats or purchasing HOS flats with priority in flat selection.

      The year saw the successful rehousing of families living in nine Mark I/II blocks, leaving 84 blocks to be redeveloped by 1990-1. A total of 1 604 rental flats were completed in Phase 4 of Wang Tau Hom Estate and Phase 3 of Tung Tau Estate, and a further 5 865 rental flats are scheduled for completion in 1988 in Phase 5 of Wang Tau Hom Estate, Phases 4B and 5 of Tung Tau Estate, Phase 2 of Lei Cheng Uk Estate and Phase 3 of Tai Wo Hau Estate.

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The extended redevelopment programme involving the clearance of 26 sub-standard blocks in 11 middle-aged estates progressed smoothly during the year, with more than half of the affected 15 000 families now rehoused. The redevelopment of Phase 1 of Kwai Fong Estate, comprising 905 new rental flats, was completed and demolition of blocks under Phase 2 will be completed in 1988. Other blocks at Kwai Hing, Sau Mau Ping, Wong Chuk Hang, Shek Pai Wan and Lam Tin Estates are scheduled for demolition in 1988 and the whole rehousing process of the sub-standard blocks is expected to be completed in 1989-90.

As part of a new housing strategy, the Housing Authority has recognised the need not only to complete the redevelopment of Mark I/II estates, but also to extend the redevelop- ment programme to include most of the Mark III to VI and former government low cost housing estates. The extended programme takes due consideration of the conditions of the individual blocks and estates concerned, with a view to bringing them into line with the latest standards.

      Extension of the redevelopment programme will increase the overall estimated demand for new flats by 125 000 units and it has, therefore, been necessary to identify additional urban area sites to rehouse the families affected. Currently, supplementary sites are being developed at Kwai Chung, Shun Tin Estate Phase 4, Chuk Yuen Estate Phase 6 and the Sham Shui Po Reclamation. When completed in 1988 and 1989, these sites will provide a total of 4 520 rental flats. Further supplementary sites have been earmarked at Ma Chai Hang, Chuk Yuen, Ho Man Tin and Ngau Chi Wan, while other possible sites are under study. The redeveloped sites will on completion provide a mix of rental and HOS flats together with a wide range of amenities.

Home Ownership Scheme

To meet the community's growing aspirations, the government established the HOS to help lower-middle income families and public housing tenants become home-owners.

The scheme is administered by the Housing Authority with government funds to provide flats for sale to these families and tenants at prices below market value.

Private sector applicants for HOS flats may not own domestic property and are subject to a household income limit of $8,500 per month. These restrictions, however, do not apply to rental estate tenants. The latter restriction is not applied to residents of temporary housing areas and cottage areas managed by the Housing Authority, households displaced by clearance of squatter areas for development, natural disaster victims and junior civil

servants.

Since the scheme started in 1978, a total of 85 357 flats, including 23 158 flats produced under the complementary PSPS, have been sold to eligible families. About 42 per cent of these families were public housing tenants, who were required to surrender their rental flats to the authority on obtaining HOS flats. Since the beginning of 1985, 2 306 flats have been sold to prospective public housing tenants, who were in return required to forgo their rights to rental accommodation.

      To encourage public housing tenants to become home-owners and therefore give up their rental accommodation for those families who are in greater need of public housing, public housing tenants are accorded priority in selecting HOS flats. This incentive is also extended to prospective public housing tenants, so that rental flats which would have been allocated to them can be let to applicants in greater need.

As another form of assistance, the government undertakes to indemnify financial institutions which provide mortgage loans to HOS flat purchasers. As a result, these

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purchasers are able to enjoy favourable mortgage terms provided by over 50 financial institutions. 'Green Form' priority status purchasers are able to borrow up to 95 per cent of the flat prices with repayments extending up to 20 years while private sector purchasers may borrow up to 90 per cent of the flat prices.

During the year, a total of 12 242 flats, including 1 932 PSPS flats, were offered for sale in three periods. The first sale (phase 9A) was held in February when 4 070 flats in three HOS projects, namely Ching Wah Court Stage II on Tsing Yi, Ka Tin Court in Sha Tin and Kam On Court at Ma On Shan, were sold with flat prices ranging from $177,900 for a 48-square-metre (gross area) flat in Kam On Court to $399,900 for a 77-square-metre flat in Ching Wah Court Stage II.

      The second sale (Phase 9B) was held in June for 2 180 HOS flats in Ching Tai Court on Tsing Yi and 1 932 PSPS flats in Chevalier Garden Stage II at Ma On Shan. HOS flat prices ranged from $199,900 for a 48-square-metre flat to $407,800 for a 77-square-metre flat. Prices for the PSPS flats were in the range of $182,800 to $340,600 for flats ranging from 45 square metres to 63 square metres in area.

The third sale took place in November involving three HOS projects, namely Kam Hay Court at Ma On Shan, King Ming Court at Junk Bay and Yue On Court on Ap Lei Chau, comprising a total of 4 060 flats. The prices of the flats in King Ming Court, the first HOS project in the Junk Bay New Town, were in the range of $178,100 for a 48-square-metre flat to $381,000 for one of 77 square metres. The flat prices for Yue On Court ranged from $286,900 for a 53-square-metre flat to $398,400 for a 57-square-metre flat, while those for Kam Hay Court were from $196,300 to $404,100 for flats of 48 square metres and 77 square metres respectively.

Allocation

The Housing Authority possesses 570 000 rental flats in 123 housing estates. These flats are of different sizes, amenities and rent levels to meet the wide-ranging requirements of families in need of public housing.

During the year, 27 000 new flats and 7 000 vacated flats were let to the various categories of eligible applicants. The biggest share went to waiting list applicants (41 per cent), followed by tenants involved in the redevelopment of the old Mark I and II blocks and in the extended redevelopment programme (26 per cent), and families affected by develop- ment clearances (18 per cent). Junior public servants, victims of fire and natural disasters, occupants of huts and other structures in dangerous locations, and compassionate cases recommended by the Social Welfare Department took up the rest of the flats.

Information on the public housing waiting list and allocation of rental flats has been computerised with information regarding nearly three million applicants and tenants stored in the Housing Applications and Tenancies Management Information System. Computer- isation enables housing allocation and duplication checks to be carried out effectively and produces useful statistical information.

During the year, 14 000 flats, mainly in Tuen Mun, Sha Tin, Tai Po and Sheung Shui, were allocated to successful waiting list applicants. Waiting time varied from eight years for estates in Sha Tin to three years for those in Tuen Mun.

Applications for public rental housing were considered in the order of registration and in accordance with the choice of districts indicated by applicants. Accommodation was offered to those who, on investigation, were found eligible in respect of their family income and other reasons. The income limits range from $4,200 for a family of two to $8,000 for a family of 10 or more. The number of live applications at the end of the year stood at

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     151 000. In addition, there were 19 100 applications on the Single Persons Waiting List which was established in January 1985. The income limit for single persons is $2,900.

      The authority provides a priority scheme under which elderly couples or single elderly persons applying in groups of two or more will be allocated public housing within two years. So far, 4 700 flats have been allocated to this category. In 1982, the authority approved an incentive scheme under which families with elderly parents are allocated housing one year ahead of their normal waiting time. So far 3 600 families have benefited from this scheme. In 1986, the authority introduced a Sheltered Housing Scheme with warden services for the able-bodied elderly. This scheme was launched during the year at Heng On Estate in Ma On Shan, where 138 units were allocated to applicants attain- ing 60 years of age who were eligible under the compulsory rehousing categories, and to qualified elderly applicants from the Single Persons Waiting List and the Elderly Persons Priority Scheme.

Rent Policy for Public Housing

Rents for domestic premises in public housing estates have been maintained at low levels despite increasing operating and maintenance costs. This has been possible because of heavy government subsidies in the form of free land and low-interest loans.

Upon a recommendation of the Domestic Rent Policy Review Committee in December 1986, domestic rents for new public housing estates are set at not more than 15 per cent of the median rent-income ratio of the prospective tenants. Rents are at present set at $21.9 per square metre for the newest urban estates, with downward adjustments for others to reflect the difference in estate values. These rent levels represent about one-third of current market rents.

Rents are reviewed on a biennial basis and adjusted to take account of increases in rates, maintenance and other costs, estate values in terms of location, facilities and services provided, as well as tenants' ability to pay. On average, public housing tenants are paying seven per cent of their income as rent. Owing to the very low rents in old estates where maintenance and improvement costs are high, there is an overall deficit in the Housing Authority's estate working account for domestic properties.

Some 659 premises in estates are let for the provision of welfare services. These include children and youth centres, nurseries, social and community service centres, libraries, study rooms, sheltered workshops, and hostels and centres for the mentally or physically handicapped. There are also hostels for the elderly which are let to voluntary agencies and sheltered housing built and managed by the authority. During the year, 44 welfare lettings were made. In order to maintain a balanced community in public housing estates, a total of 488 premises have been let for educational purposes, such as kindergartens, primary and secondary schools. In most cases, kaifong and residents' associations and mutual aid committees are provided with office accommodation in the estates. Offices are also let to District Board and OMELCO members; Urban and Regional Councillors, various government departments and doctors to operate medical clinics.

Management

Senior staff of the Housing Department continued to foster close contact with district boards and mutual aid committees, as well as local interest groups by participating in their meetings and community activities. In addition, they made regular visits to the estates to obtain a better understanding of local matters. Estate staff maintained close contact with tenants through door-to-door visits. Housing managers also met mutual aid committee

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office-bearers once a month to discuss sanitary and security problems as well as other day-to-day management matters, with the contractors concerned in attendance.

A new policy on housing subsidy was introduced during the year. Under the policy, families who have lived in public housing estates for 10 years or more and whose household incomes exceed the subsidy income limit, which is twice the income limit for waiting list applicants, will be required to pay double net rents. However, certain categories of tenants, including the elderly, are exempted. Preparatory work was underway during the year with a view to implementing the new policy from April 1988. Initially, it will be applied to tenants who have been in public housing for 23 years or more.

The Housing Ordinance empowers the authority to introduce road restrictions in estates and impose charges for the impounding and removal of vehicles parked illegally within the estates. Alternatively, offending car owners or drivers may be prosecuted under the provisions of the Housing (Traffic) By-laws. These arrangements make it possible to keep the access roads in estates free from obstruction caused by illegal parking and hawking, thereby improving the estate environment. So far, roads in 104 rental estates, eight factory estates and 35 HOS courts have been so restricted and put under the authority's control.

During the year, the authority endorsed a trial scheme for the privatisation of carpark management in 29 selected public housing estates. It also approved a 50-per cent reduction in monthly carparking charges for disabled car owners living or working in the estates.

     Estate management staff continued to take vigorous action against illegal hawking activities inside public housing estates. Since the formation of a Major Operation Team in November 1985, more than 2 500 illegal hawkers have been cleared, and this action has led to a pleasant environment being restored, much to the appreciation of tenants and other concerned groups.

Letting of Commercial Properties

The Housing Authority manages 40 747 sets of commercial premises with a total area of 1.1 million square metres in its various estates. These premises include facilities such as shops, market stalls, banks and restaurants, and generated total rental income of $1,144 million during 1986-7.

The stock includes 9 031 'graded' shops in the former resettlement estates. These shops were initially let at very low rents, and their current rents are still far below the prevailing market level despite moderate biennial increases since 1976. Rents for other commercial premises are fixed at, or close to market levels, in keeping with the authority's policy not to subsidise commercial operators.

The management of commercial premises continued to be consolidated during the year. An increasing emphasis on research and design has ensured that new commercial centres are best suited to the needs of both tenants and local residents. Promotional activities were held in more than 50 estates with the aim of sustaining and enhancing the competitiveness of the authority's existing commercial facilities. Shops and market stalls continued to be let mainly by rental tendering, thus enabling small operators with limited capital to obtain a tenancy. However, greater flexibility has been introduced through letting by negotiation of some of the larger premises, such as chain-stores. This approach has attracted a number of well-known retailers into the estates.

Premises affected by the extended redevelopment programme continued to receive special consideration with rents being reviewed at six-month intervals to ensure that tenants were not being asked to pay in excess of the market value. Ex-gratia payment were made to these tenants who had to vacate their shops and they were offered, where possible,

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reprovisioning in alternative premises through restricted tender. A three-month rent-free period was then granted.

Temporary Housing

Temporary Housing Areas (THAs) are built to provide accommodation for homeless people who are not immediately eligible for permanent public housing. These are mainly people displaced by development clearances or made homeless by fires or natural disasters and who have been in Hong Kong for less than 10 years. At the end of the year, there were 58 THAs with a total capacity of 139 500 person spaces.

      As there has been a shortage of temporary housing spaces, especially in the urban areas, the Housing Department has had to obtain additional sites for the development of new THAS. Accommodation in new THAs comprises full-built structures with electrical fittings, individual water supply and kitchens/shower rooms.

      During the year, temporary housing spaces for 14 157 people were completed, against a loss of 9 020 spaces mainly through the development of existing sites. Meanwhile, 11 new THAs with 22 633 person spaces were under construction. During the same period, 21 279 people moved into such areas while 21 092 left for other accommodation, mainly in permanent public housing.

      Residents in THAs may be rehoused in permanent public housing through the waiting list, trawling, purchase of HOS flats for which they are given priority, or through the clearance of THAs for development.

Transit Centres

Transit Centres provide short-term emergency accommodation for people rendered home- less, mainly by fires or natural disasters, until they are rehoused either in permanent or temporary accommodation depending on eligibility. There were eight transit centres through- out the territory with a total capacity for 1 608 people at the end of the year.

Cottage Areas

Cottage Areas are being phased out through clearances. The Fu Tau Wat Cottage Area in Shau Kei Wan was cleared during the year to make way for a public housing project. As at the end of the year, a total of 10 450 people were living in seven cottage areas.

Squatter Control

The Squatter Control Division of the Housing Department operates a system of daily patrols to deter new squatting and, as a result, full control over squatting has been maintained and racketeering in constructing squatter huts for sale has been suppressed. In 1987, 13 000 illegal structures or extensions were demolished. The squatter population has steadily declined from about 434 000 to 408 000 during 1987 as a result of on-going clearance programmes and squatters moving to permanent housing through the general waiting list.

Improvement to Squatter Areas

The government introduced a five-year Squatter Area Improvement Programme in 1983 to improve safety and to provide basic services for the benefit of 100 000 squatters in the most congested squatter settlements in the urban areas, including Tsuen Wan. A total of 51 projects have so far been completed, and six more are under construction. During 1987, efforts continued to improve conditions in squatter areas which have over 500 residents and

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which will not be cleared within three years. In addition to safety and environmental improvement measures provided in squatter areas, a stepped-up programme was started to install 600 street lights in 40 smaller squatter areas. A total of 286 street lights installed in other squatter areas by district boards have been taken over by the Housing Department for management and maintenance. In addition, improvement works continued in a few selected squatter areas in the New Territories under a pilot scheme.

As the improvement programme entered its final year, a review was conducted and approval given to extend the programme for a further two years to smaller squatter areas, each with a population of not less than 300 people, in order to benefit an additional 19 300 squatters.

Squatter Clearance

During the year, 320 hectares of land were cleared for development, resulting in 18 000 people being allocated permanent housing and 13 900 temporary housing. Some 1 430 industrial, commercial and agricultural undertakings affected by clearances were given ex-gratia allowances. In addition, a total of 3 100 people rendered homeless as a result of fires and landslips were provided with permanent or temporary accommodation.

Kowloon Walled City Clearance

A Special Duties Division was formed in early 1987 to undertake the clearance of the Kowloon Walled City. Following an announcement by the government on January 14, 1987, a pre-clearance survey was carried out to assess and freeze the clearance commitment. Some 32 000 people and 1 050 commercial undertakings were identified during the survey. The clearance will take about three years to complete and the site will then be developed into a public park by the Urban Council.

Management of Private Residential Buildings in Multiple Ownership Privately owned buildings constitute more than half of the territory's housing stock and accommodate about half of the population. Most of these buildings are high-rise blocks which are held by a number of owners who may or may not be residents of the building.

The nature of ownership of these buildings, combined with other factors, has resulted in a situation over the years where the management of some private properties has deteriorated.

Although the management of privately owned buildings is the responsibility of property owners, the consequences of consistent neglect are of serious concern to the government.

The government is, therefore, taking steps to provide a better legal and administrative framework to enable those concerned to manage their properties more effectively.

Work is in hand to amend the Multi-Storey Buildings (Owners Incorporation) Ordinance to make it easier to form owners' corporations. Such corporations act in the interests of individual owners regarding their rights, power, duties and liabilities in relation to those parts of a building held in common ownership. Although the existence of an owners' corporation does not guarantee good management of a building, it has been found from experience that management standards in buildings which have owners' corporations have generally been better than in cases where no comparable management body exists.

There will also be other amendments dealing with management standards and proce- dures. These clauses define more clearly the powers and responsibilities of the corporations' management committees.

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      Separately, it has been agreed with the Law Society that all Deeds of Mutual Convenant arising from new, non-industrial leases granted since February 1986 as well as all Deeds of Mutual Covenant arising from all non-industrial redevelopments will be drawn up following a set of guidelines aimed at improving the management of common areas in a building and achieving a better balance of interests between the developers and owners.

      Furthermore, district building management co-ordination teams have been set up in seven districts so far to offer advice to owners' corporations, mutual aid committees and other building management bodies, at a district level.

      These teams of professional housing managers and assistants play an important role in encouraging the formation of owners' corporations and in providing advice to the members of management committees. They also work towards improving public awareness in building management matters by means of seminars and discussion groups.

Rent Control in the Private Sector

Statutory controls on rents and security of tenure in Hong Kong date back to 1921. The present legislation governing these matters is the Landlord and Tenant (Consolidation) Ordinance.

      The legislation is under constant review to improve its working and to achieve the objec- tive, recommended in 1981 by a Committee of Review and endorsed by the government, that as soon as circumstances permit, rent control should be phased out.

      At present, statutory controls apply only to domestic premises in the private sector unless otherwise exempted. Tenants are afforded rent increase control and security of tenure. Unless a tenant voluntarily vacates the premises, a landlord must apply on certain specified grounds and obtain an order from the Lands Tribunal before he can recover possession.

      Heavy penalties are prescribed for harassment of a protected tenant with intent to induce him to leave. However, provisions exist to facilitate negotiations by which the parties may reach an agreement whereby the tenant surrenders his protected tenancy in exchange for a consideration.

      The Rating and Valuation Department publishes explanatory pamphlets to help people understand their position in relation to the legislation, and provides an advisory and mediatory service to deal with the many practical problems arising from rent controls. It also operates a scheme under which rent officers attend district offices on set days each week to deal with referred cases and answer enquiries on landlord and tenant matters.

Pre-war Premises

Legislation controlling rents of pre-war premises and providing security of tenure was instituted by proclamation immediately after World War II and in 1947 was embodied in the Landlord and Tenant Ordinance - since re-enacted as Part I of the Landlord and Tenant (Consolidation) Ordinance.

      Part I previously applied to both domestic and business premises but as from July 1, 1984, it applies only to domestic premises. It restricts rents by reference to pre-war levels (standard rent). New or substantially reconstructed buildings are excluded from Part I controls.

      Increases in rents have been permitted annually in recent years, the latest being in July 1987 when the legislation was amended to provide for permitted rents to be 35 times. (previously 30 times) the standard rent (i.e. the rent payable in respect of the unfurnished premises on or most recently before December 25, 1941). However, in no case is the

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permitted rent to exceed the prevailing market rent. The Commissioner of Rating and Valuation is empowered to certify the standard rent and the prevailing market rent.

There is provision in the legislation for the exclusion from control of premises for the purpose of redevelopment, and generally possession is subject to the payment of compensa- tion to the protected tenants. Jurisdiction under Part I is exercised by the Lands Tribunal while technical functions are performed by the Commissioner of Rating and Valuation.

Post-war Premises

Comprehensive rent control legislation affecting post-war domestic premises has been in force in one form or another since 1963 - apart from the period between 1966 and 1970 - and is now embodied as Part II of the Landlord and Tenant (Consolidation) Ordinance.

Part II, which provides security of tenure and controls rent increases, now covers the majority of tenancies and sub-tenancies in post-war domestic premises completed or substantially rebuilt after August 16, 1945. It does not, however, apply to tenancies in buildings first certified for occupation after June 18, 1981, nor to new lettings created on or after June 10, 1983, nor to tenancies of premises having a rateable value of or above $30,000 as at June 10, 1983.

Under Part II, landlords and tenants are free to agree on an increase in rent, but such agreements must be endorsed by the Commissioner of Rating and Valuation. Increases, except by agreement, are permitted only once every two years. Where an increase is not agreed, the landlord may apply to the commissioner for his certificate of what increase may be made to the current rent. From December 19, 1986 the permitted increase is arrived at by taking the lesser of (i) the difference between the prevailing market rent and the current rent, or (ii) 30 per cent of the current rent. However, if the increase so determined, when added to the current rent, results in a rent being less than 60 per cent of the prevailing market rent, the permitted increase will be an amount necessary to bring the current rent up to 60 per cent of the prevailing market rent. Both landlord and tenant are at liberty to apply to the commissioner for a review of his certificate and further to appeal to the Lands Tribunal against the commissioner's review.

For domestic tenancies outside these controls, Part IV of the Landlord and Tenant (Consolidation) Ordinance provides a measure of security of tenure for a sitting tenant who wishes to renew his tenancy and who is prepared to pay the prevailing market rent on renewal. However, Part IV does not impose control on rents. Under these provisions, a new tenancy must be granted unless the landlord can satisfy the Lands Tribunal that he requires the premises for his own occupation or that he intends to rebuild the premises, or on one of the other grounds specified in the legislation. The parties are free to agree on the rent and terms for the new tenancy but failing agreement they can apply to the Lands Tribunal for a determination.

The scheme under Part IV is intended as a permanent framework regulating the relationships of landlords and tenants for nearly all domestic tenancies not otherwise subject to the Part I or II controls. Moreover, there are provisions enabling tenancies to be transferred, under certain statutory conditions, from the ambit of Part II to Part IV.

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Land, Public Works and Utilities

THE primary objectives of the government's lands and works policies are to ensure an adequate supply of land to meet the short-term and long-term needs of both the public and private sectors, to optimise the use of land within the framework of land use zoning and development plans and to ensure co-ordinated physical development in infrastructure and buildings.

Policy responsibility for land, public works and private development rests with the Secretary for Lands and Works who heads a branch which, in addition to its policy functions, monitors the performance of the seven departments in the Lands and Works group, namely the Architectural Services, Buildings and Lands, Civil Engineering Services, Electrical and Mechanical Services, Highways, Territory Development and Water Supplies departments. He is the Chairman of the Town Planning Board and of the Development Progress Committee, which is responsible, among other things, for considering and approving detailed planning briefs and planning layouts for development areas in accord- ance with standards laid down by the Land Development Policy Committee.

The Land Development Policy Committee, chaired by the Chief Secretary, is responsible for overseeing all aspects of the physical development of the territory and for approving, in principle, all major proposals affecting the development or planned use of land. The Land and Building Advisory Committee with the chairman and eight members drawn from the private sector, advises the government on a wide range of issues, including the adequacy of the land development programme and of the policies and procedures relating to land, buildings and the construction industry.

The Sino-British Land Commission met regularly in 1987 to discuss issues arising from the implementation of the agreement on land leases set out in Annex III to the Sino-British Joint Declaration on the future of Hong Kong which included the projected long-term land disposal requirements, the purpose of which is to enable the Land Com- mission to prepare each year's land disposal programme in the light of longer-term development requirements.

Another notable development regarding land leases in 1987 was the introduction into the Legislative Council of the New Territories Leases (Extension) Bill, which seeks to extend the vast majority of New Territories leases to the year 2047 without requiring payment of a premium, in accordance with Annex III to the Joint Declaration.

Arising from a review in 1987 of the territorial planning strategy in support of Hong Kong's future economic development, a Port and Airport Development Strategy Study will commence in early 1988. It will review the various options for port and airport development and their planning implications.

     In line with the government's objective to improve the living environment of the metropolitan areas around the harbour, a special team was established in the Strategic

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Planning Unit of Lands and Works Branch in 1987 to undertake the preparation of a planning statement for the metropolitan areas. The harbour reclamation proposals at Hung Hom, Central and Wan Chai, west Kowloon and Green Island will provide the opportunity for replanning of the metropolitan areas to relieve congestion and redress the shortfall in community facilities. Planning and engineering studies for these proposals are underway.

     Urban redevelopment and improvement are also the objectives of the Land Development Corporation, to be set up in early 1988. The corporation will undertake and promote comprehensive redevelopment of part of the older urban areas. It has powers to acquire and develop properties, either on its own or as a joint-venture with private developers.

     To cope with Hong Kong's future development, the government continues to invest heavily in capital works. In 1987-8, funds allocated for capital works amounted to $5,800 million, about 13 per cent of the total approved expenditure for the period. About 50 per cent of the provision was for civil engineering, environmental protection and highways projects. About 30 per cent of the provision was for building items and 11 per cent for waterworks. In addition, $1,200 million was allocated for acquisition of land for the public works projects involved.

Discussion also continued between government and relevant professional institutions on the statutory registration of engineers, architects, surveyors and planners.

Land Administration

The Land Administration Office of the Buildings and Lands Department co-ordinates all aspects of land administration throughout the territory. The 14 district lands offices: three on Hong Kong Island, two in Kowloon and nine in the New Territories, are responsible for most aspects of land administration and land disposal, while the headquarters formulate general policies and advise on more complex matters.

Land Supply

All land in Hong Kong is held by the government which sells or grants leasehold interests. Land grants and leases throughout the territory are now made in accordance with the terms set out in Annex III to the Joint Declaration. The total amount of new land to be granted is limited to 50 hectares a year (excluding land to be granted to the Hong Kong Housing Authority for public rental housing), although the Land Commission may increase this limit. Premium income obtained from land transactions is, after reduction of the average cost of land production, shared equally between the Hong Kong Government and the future Hong Kong Special Administrative Region Government.

     Normal land grants and leases are now made for terms expiring not later than June 30, 2047. They are made at a premium and nominal rental until June 30, 1997, after which date an annual rent equivalent to three per cent of the property's rateable value will apply. With the enactment of the New Territories Leases (Extension) Ordinance in 1987, leases expiring in or before 1997, with the exception of short-term tenancies and leases for special purposes were extended to 2047 without payment of an additional premium. An annual rent equivalent to three per cent of rateable value will be charged in the same way as for the grant of new leases.

     The first priority with regard to land supply is to make available sufficient land for the government's development programmes, including the public housing programme. Land for the Hong Kong Housing Authority's public rental estates is provided free by the government, as is land for the residential element of the authority's Home Ownership

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Ma On Shan housing development

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     Scheme. Land for the rental estates constructed by the Hong Kong Housing Society, a non-profit-making body with aims similar to those of the Housing Authority, is pro- vided on concessionary terms. Land is also granted by private treaty, at nil or nominal premium, to non-profit-making charitable institutions which operate schools, hospitals, and social welfare and other community services in accordance with the government's policy objectives.

       Most land available for private sector commercial, industrial or residential development is sold by public auction or tender. The formulation of overall targets for the production of land is carried out under the auspices of the Land and Building Advisory Committee. Regular auctions are held by the government and a provisional land sales forecast is published every six months. In the New Territories, however, where much of the land required for development has to be resumed, a high proportion of land is disposed of by tender. Since 1984, it has been possible for the holders of Land Exchange Entitlements to bid in auction and tender sales of New Territories sites by offering to surrender these entitlements in lieu of cash.

       Leases for certain special purposes, which have particular site requirements or other factors which would make public auction inappropriate, are also offered for sale by public tender. Such special purposes include capital-intensive industries which introduce new technology and cannot be adequately housed in more conventional multi-storey flatted factory buildings. Such sales are initiated only in response to formal applications and, in certain circumstances, may be concluded by private treaty.

Land Acquisition

When private property needed for carrying out public works projects cannot be acquired by negotiation, the use of compulsory powers becomes necessary. Property may then be acquired under either the Crown Lands Resumption Ordinance, the Land Acquisition (Possessory Title) Ordinance, the Mass Transit Railway (Land Resumption and Related Provisions) Ordinance, or through the Roads (Works, Use and Compensation) Ordinance. These ordinances provide for the payment of compensation based on the value of the affected properties at the date of reversion. If agreement cannot be reached on the amount payable, either party can refer the claim for compensation to the Lands Tribunal for determination.

      For development in the New Territories, a system of ex-gratia payments applies with enhanced rates paid for land situated within the new town development areas and progressively reduced rates paid for land situated outside these areas. In the case of building land, an ex-gratia payment is offered in addition to the statutory compensation.

      The need for land for development has continued to grow. During 1987, about one million square metres of private land was acquired in the New Territories to carry out various public works projects and the total land acquisition and clearance cost involved was about $950 million. These projects included the phased development of Sha Tin, Tai Po, Fanling and Junk Bay new towns, New Territories Circular Road Improvements section from Au Tau to Fan Kam Road, Route 5 between Tsuen Wan and Sha Tin and Vehicular Border Link at Lok Ma Chau Stage II.

In the urban areas of Hong Kong Island and Kowloon, about $9 million was paid in compensation for land and buildings acquired during the year for public works projects, either under compulsory powers or by agreement. These projects included Ap Lei Chau North Reclamation, the Folk Museum at Chai Wan, sewage screening plant at Shau Kei Wan and Tate's Cairn Tunnel.

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LAND, PUBLIC WORKS AND UTILITIES

The Land Registration Ordinance provides for the registration in the Land Office, a Division of the Registrar General's Department, of all instruments affecting land. Registra- tion is effected by means of a memorial containing the essential particulars of the instrument which are then placed on a register card relating to the particular piece of land. Register cards are kept also in respect of individual premises such as residential flats, shops and commercial and industrial premises. The register cards provide a complete picture of the title to each property from the grant of the government lease and are available for search by the public in photostat form on payment of a small fee. The memorials and a complete copy of each registered instrument are kept and are available for search in microfilm form by the public, again on payment of a fee.

The Land Registration Ordinance also provides that all instruments registered under it shall have priority according to their respective dates of registration. This provision applies unless they are registered within one month of execution, in which case priority relates back to the date of the instrument. In the case of charging orders made by the court and pending court actions, priority runs from the day following the date of actual registration. The ordinance further provides that unregistered instruments, other than bona fide leases at a rack rent for a term not exceeding three years, shall be null and void as against any subsequent bona fide purchaser or mortgagee for valuable consideration. Registration is therefore essential to the protection of title, but does not guarantee it.

The records of transactions affecting land on Hong Kong Island and in Kowloon, New Kowloon and some of the urban areas of the New Territories are kept at the Land Office, Victoria, while those relating to transactions affecting land in the remainder of the New Territories are kept in the appropriate District Land Offices in the New Territories. During the year, 336 347 instruments were registered at the Land Office, compared with 292 796 in 1986. Detailed statistics are at Appendix 34. At the end of the year, the card index of property owners contained the names of 600 624 owners, an increase of 64 607 over the previous year.

Work on the computerisation of the information on the Land Office register cards, with a view to introducing a computerised land registration system, continued during the year, and conversion into computerised data began in November, 1986. This exercise is expected to be completed by late 1989.

The Land Office also provides a conveyancing and legal advisory service to the government for all government land transactions and associated matters. It is responsible for the issue, renewal, variation and termination of government leases as well as for the drafting, completion and registration of conditions of sale, grant and exchange of government land, the granting of mining leases, the registration of owners' corporations, the apportionment of government rents and premia, and the recovery of outstanding rents. It also provides conveyancing services for the Housing Authority in connection with the sale of flats built under the Home Ownership Scheme and for the Financial Secretary Incorporated in connection with the extension of non-renewable government leases, mortgages to secure interest-free loans to private schools, the purchase of properties for government staff quarters and group housing schemes for the elderly.

Land Sales

Important land transactions in 1987 included the sale by public auction of a prime site of 2 098 square metres in the Central business area on Hong Kong Island for commercial, including hotel, development. This site is located in Des Voeux Road opposite the Central Market.

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      The sale by private treaty to the Mass Transit Railway Corporation of a site of 5 956 square metres above the Sai Wan Ho Station on Hong Kong Island was completed in March. Urban Council facilities will be included in the development on this site together with high-density residential units.

A site in Kowloon Bay comprising 2.23 hectares was sold by auction in November for development as a trade exhibition centre, an innovative use prompted by an application from an American firm.

A sale by private treaty to the Housing Authority comprising a site of 4.95 hectares at Ma On Shan for a Home Ownership Scheme was completed in December. The develop- ment will provide 3 500 flats on completion of its two phases.

During the year four sites were sold under the Private Sector Participation Scheme (PSPS). The Tuen Mun PSPS site of 2.2 hectares was sold by public tender in January. This development will provide about 2 200 flats for sale to purchasers within limited income groups nominated by the Housing Authority. It was followed by three more PSPS tender sales, one each in Sha Tin, Shek Wu Hui (Fanling) and Junk Bay, which together will provide a further 6 416 flats.

In the New Territories a site of 1.52 hectares adjacent to the Kowloon-Canton Railway Station at Tai Po was sold by tender in October for commercial and residential develop- ment which will also include the provision of a transport interchange in the podium at ground level. This tender was restricted to holders of land exchange entitlements (Letter A/B).

Town Planning

In view of the scarce land resource in Hong Kong and the pressure on land as a result of population growth and economic development, it is necessary to plan the use of land very carefully to ensure proper planning of the limited land resource to meet competing demands so as to provide a good living and working environment for its present and future population.

      The Territorial Development Strategy (TDS) outlines a long-term land-use and transpor- tation strategy for Hong Kong to cater for the target population and associated socio- economic activities which will produce the highest quality environment within resource and time constraints. Further updating of the TDS continued and an outline works programme to guide major long-term development projects was prepared.

In line with the Territorial Development Strategy proposals, detailed sub-regional planning statements and district plans are prepared to provide guidance for more detailed land use planning and development control. During the year, the North-Western New Territories Sub-Regional Planning Statement was approved by the Development Progress Committee. The statement sets out the government's intention on the future use and development of land in this sub-region, which serves as a general guide in the preparation of district plans and in development control.

      Planning statements were prepared for all the four sub-regions in the New Territories, and work began on the preparation of the planning statement for the remaining sub-region, that is, the metropolitan areas.

      At the district level, two types of plans are prepared - statutory and departmental. Their purpose is to control land use and building volume on individual sites to meet the demands of the territory's growing population and to ensure, as far as possible, adequate provision of the required community facilities and public utility services.

      Statutory town plans, normally called outline zoning plans, are prepared under the provisions of the Town Planning Ordinance, under the direction of the Town Planning

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    Board. These plans show areas zoned for residential, commercial, industrial, open space, government institution and community or other specified purposes. They provide a guide to public and private investment by indicating the future broad land use pattern. Once a statutory plan is gazetted for public inspection, it has statutory effect. Under the Buildings Ordinance, the Building Authority may refuse to give approval to any plan of building works which would contravene any draft or approved plan prepared under the Town Planning Ordinance.

     In 1987, the board published 21 statutory plans, including new plans for Shouson Hill - Repulse Bay and Fanling - Sheung Shui and 19 amended plans for various parts of the main urban areas and new towns. It also considered 29 objections to the published plans, and, as a result, some of the plans were amended for future public examination. At the end of the year, 37 out of 43 planning areas in the main urban areas were covered by statutory plans. In the New Territories, there were eight statutory plans covering Tsuen Wan, Kwai Chung, Tsing Yi, Sha Tin, Tai Po, Tuen Mun, Fanling-Sheung Shui, and South Lantau coast. Two statutory plans were also approved by the Executive Council during the year.

The Town Planning Ordinance makes provision for a schedule of notes to be attached to each statutory plan. This schedule shows the land use permitted in a particular zone together with other uses for which the Town Planning Board's permission must be sought. This provision for applications for planning permission allows greater flexibility in land use planning within the bounds of planning guidelines, and improves control of development to meet changing needs. During the year, the board considered 209 applications, compared with 150 in the previous year. Should the board refuse to grant permission, the applicant may apply for a review of the decision. In 1987, there were 26 applications for review, compared with six in 1986.

Some planning applications involve relatively large-scale comprehensive redevelopment schemes with significant impact on the districts in which they are located. During the year, such schemes considered by the board included the redevelopment of Shell depots at North Point, Ap Lei Chau and Kwun Tong, comprehensive redevelopment of the old depot and electricity power station in Ap Lei Chau and commercial/residential development in Tai Po Area 2.

      Outline development and layout plans are used administratively within the government to guide development. While outline development plans and layout plans are both prepared within the framework of the sub-regional planning statements and statutory outline zoning plan, layout plans are usually of local significance and apply to newly-formed land or to areas requiring comprehensive redevelopment. They are action plans enabling land to be prepared and released for public and private development. Compared with statutory plans, they are normally drawn to a larger scale, showing road proposals and the disposition of sites in greater detail. Examples of such plans prepared during the year included layout plans for Ma On Shan Town Centre, eastern part of Yuen Long Town, eastern private housing areas of Tin Shui Wai and northwestern Tin Shui Wai.

The 'Hong Kong Planning Standards and Guidelines' provide guidelines and standards for the reservation of land for various uses, standards of provision for community facilities, and locational and use requirements crucial to the preparation of town plans and planning briefs. The document is constantly kept under review to take account of changes in government policies, demographic characteristics and social and economic trends. Any changes to the document must be approved by the Land Development Policy Committee. Sections revised during the year were related to community facilities, industry, utility services, environment and density of residential development.

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Surveys in land and floor uses covering the whole territory were conducted or updated to provide the basic input in the preparation of statutory and departmental plans. Land use surveys were completed for Happy Valley, Chai Wan and Ho Man Tin Hill. Studies such as forecast of future land supply and demand, industrial employment, space requirement of showrooms in industrial buildings, uses beneath flyovers, characteristics of petrol filling stations and dangerous goods storage were carried out during the year. Special studies, such as planning strategy for Kowloon Tong Garden Estate and pedestrianisation of vehicular streets were also carried out. These studies provide information for the formula- tion of land development and planning policies. Site searches for major projects of territorial or sub-regional significance were also conducted.

The General Information and Technical Administration Unit of the Town Planning Office, established in 1980, provides a common channel through which planning informa- tion is released to the public. The unit also promotes public understanding of town planning and development in Hong Kong by issuing pamphlets, reports, and other forms of publication. A total of 3 050 enquiries from members of the public were handled by or through the arrangement of this unit, representing a 68 per cent increase compared with 1 820 enquiries in 1986. Persons seeking planning advice and planning information included various overseas visitors and officials, professionals, property owners, district boards, developers, journalists and students.

New Towns and Rural Townships

The launching of a major housing programme in 1972 provided the impetus for the new towns development programmes. The objective of this housing programme was to provide proper housing for 1.8 million people, the majority of whom were to be accommodated in new towns in the New Territories. This target was substantially achieved and the new towns programmes have since been extended into the 1990s. The 'first generation' new towns - Tsuen Wan, Sha Tin and Tuen Mun are already housing 1.4 million people and are expected to reach substantial completion by the early 1990s. Extensive developments are still continuing in other new towns - Tai Po, Fanling, Yuen Long and Junk Bay, which now have a population of some 390 000 and the major works will be completed by the mid-1990s. Work has also begun on land formation at Tin Shui Wai for a new town that will accommodate about 140 000 people and which should reach final development by the late 1990s. On completion of the present development programmes, the population of the New Territories will have risen to nearly 3.5 million people compared with the present two million and less than half a million in 1970.

      To ensure proper co-ordination of the planning and implementation of development works in the whole territory, the Territory Development Department is constituted on a multi-disciplinary basis and includes professional officers with expertise in civil engineering, town planning, architecture and landscaping. A close working relationship is maintained with the Housing Department in implementing the public housing programme and the City and New Territories Administration, Urban Services Department and Regional Services Departments in fostering the growth of new well-balanced communities.

      The private sector also plays a major role in the provision of consulting services to the new town development offices and in a range of privately financed housing developments and facilities.

Tsuen Wan

Since its birth in the post-war years as an industrial satellite of urban Kowloon, Tsuen Wan New Town, which includes Kwai Chung, Tsing Yi and Tsuen Wan, has grown to a thriving

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township housing almost 700 000 people. When all major developments are completed in the early 1990s the new town will have a population of about 800 000 with job opportu- nities for 400 000 workers in the industrial sector.

      The town has the world's second busiest container port which is being further extended by reclamation at the southern end of Kwai Chung to meet future growth.

     Development on Tsing Yi Island is now progressing rapidly. This will result in a major increase in population in the next few years to be accommodated mainly in large public housing estates. On the southern and western parts of the island site formation is in progress for special land-intensive industries.

      Transport continues to be a matter of prime concern. Severe congestion was experienced on the single bridge connecting Tsing Yi to the mainland, but the completion of the Tsing Yi North Bridge in late 1987 has brought about improvement of access to the island. Work has now started on the Kwai Chung Road-Castle Peak Road junction and the Route 5 tunnel connection to Sha Tin. Several other large road improvement schemes are also due to start to provide links to existing major roads and to the container port. These include the New Container Port Road and the flyover across Kwai On Road.

To meet the recreational needs of the expanding population, there is an extensive programme to provide additional park and recreational areas. The Gin Drinker's Bay controlled tip is now being turned into a park with innovative recreational facilities to make this a regional attraction. Plans have also been drawn up to relocate the Yeung Uk Road Sportsground, which is near the town centre, to an area in the Shing Mun Valley to form the nucleus of a major sports and recreation complex.

      The land made available from the relocation of the Yeung Uk Road Sportsground and from the Tsuen Wan Bay reclamation will be used for modern commercial/residential development to revitalise the town centre and provide the catalyst for redevelopment of the older and congested buildings nearby. Redevelopment of some of the older public housing estates has already begun to provide better living conditions and environment for the residents.

During the year, 11 hectares of land were produced on completion of the Kwai Chung Creek reclamation and another 7.5 hectares were reclaimed in Tsuen Wan Bay and Tsing Yi Bay. Site formation projects on hillslopes provided a further 15 hectares.

Sha Tin

Sha Tin has already reached an advanced stage of development. About 460 000 people have moved into this new town since construction began about 15 years ago. By the mid-1990s the population of the town is expected to reach 750 000, about 46 per cent of whom will be accommodated in public housing, 17 per cent in Home Ownership and Private Sector Participation Schemes and the remainder in private housing.

     Improvement to external transport continues to be a principal concern in the planning of the new town. Work has started on Route 5 linking Sha Tin with Tsuen Wan and on Nai Chung Road linking Sha Tin to the Sai Kung district. Construction of the Tate's Cairn Tunnel, which will provide an additional link between Sha Tin and east Kowloon, is expected to begin in 1988.

A new road and sewer providing access and drainage connections to the first public housing estate in Ma On Shan with a population of about 30 000 has been completed. Further engineering works for the reclamation, land formation and other supporting infrastructure are in progress. About 11 hectares of land were reclaimed in Ma On Shan during the year, using fill from borrow areas and public dumped material.

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      The focal point of Sha Tin is the town centre where a wide range of commercial and cultural facilities have been provided. These include the Sha Tin Law Courts, the Sha Tin Cultural Complex, the commercial complex - New Town Plaza and the recently-completed Sha Tin Central Park. An office block and a hotel are also currently under construction.

      To meet the needs of the expanding community, further community facilities have been added, namely, two primary schools, one secondary school, one divisional police station, one area community centre and two indoor recreation centres, together with open spaces.

      Other important territory-wide and regional facilities in the new town include the 1 400-bed Prince of Wales Hospital, the Chinese University of Hong Kong and the Sha Tin Technical Institute.

Tuen Mun

The population in Tuen Mun is at present about 300 000 and will reach over 500 000 upon full development by the mid-1990s.

      High-density development is concentrated on land reclaimed from Castle Peak Bay and along the adjoining valley floor between the Castle Peak ridge and the Tai Lam Hills. In this 'urban core', eight public housing estates have been built and are occupied by some 180 000 people. Two more public housing estates are under construction which will provide accommodation for another 70 000 people. Seven Home Ownership and Private Sector Participation schemes have been completed, accommodating some 51 000 people and another five similar schemes are to be built in the coming years.

      The town centre has grown rapidly. The commercial complex is substantially complete and will provide a variety of retail and commercial facilities. The development of the adjoining civic and cultural complex is also well advanced with the recent completion of the auditorium and the magistracy. The facilities of the town centre are complemented by the Tuen Mun Town Park.

      To keep pace with the population build-up, a wide range of community facilities are under construction, including a regional hospital, two indoor recreation centres and a community centre. The predominantly young age structure of the population has created an abnormally high level of demand for primary and secondary school places and as a result, construction of a number of schools has been advanced under the school building programme.

      Work is proceeding quickly on the Tuen Mun-Yuen Long Light Rail Transit System which will provide rail links within the new town and to Yuen Long. At the southern end of the system, a transport interchange is being constructed to provide facilities for light rail trains, buses, taxis, and public light buses. It adjoins the new ferry pier which provides a direct hoverferry service to the Central business area on Hong Kong Island.

In the low-density residential areas along the coast to the southeast of the town, work on a marina is in progress. This will provide berths for 300 crafts as well as hotel and commercial facilities.

       Land production during the year included about six hectares of reclamation and three hectares on terraced slopes.

Tai Po

     Historically, Tai Po served as a market town for its rural hinterland, but a rapid population build-up in recent years has overshadowed this traditional role. The present population is about 150 000 and this will grow to about 290 000 in the mid-1990s. About 180 000 people will be accommodated in six public housing estates, four of which will include flats for the

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Home Ownership Scheme. Good external transportation links are provided by the Tolo Highway and the electrified Kowloon-Canton Railway.

     Northeast of the town adjacent to Ting Kok Road is the first planned industrial estate in Hong Kong - Tai Po Industrial Estate, which, by supplying factory space for establish- ments applying relatively high-level technology, helps to broaden Hong Kong's industrial base. The first unit of the Hong Kong and China Gas Company's new gas production plant at the estate became operational in late 1986.

Some 23.5 hectares of land were formed, including 9.5 hectares on reclamation during the year.

Fanling

    Fanling New Town includes Fanling, Luen Wo Hui, Shek Wu Hui and Sheung Shui. It lies about eight kilometres north of Tai Po. It will be linked to Yuen Long, Sha Tin and Tai Po by the New Territories Circular Route now under construction. With the opening of Fanling Bypass, Tolo Highway and the Tai Po Bypass, the new town enjoys a high-speed road link to Kowloon. This link, or alternatively the electrified Kowloon-Canton Railway, enables people to travel quickly to the centre of Kowloon.

     The population of the new town is at present about 110 000 and is projected to reach 220 000 within the next decade with about 140 000 people in public housing.

     Plans are in hand for the existing retail and commercial 'cores' of Shek Wu Hui and Luen Wo Hui to be redeveloped with improvements to infrastructure. Improvement to the On Lok Tsuen industrial area, which included river-training works, has been completed.

About 21.5 hectares of land were formed during the year.

Yuen Long, Tin Shui Wai and the Northwestern New Territories

The growth and development of Yuen Long Town continues at a rapid pace. The present population of about 111 000 is expected to reach 181 000 by 1997. Construction of a major new public housing estate, located at Long Ping to the northwest of the town and designed to accommodate 35 000 persons, has been substantially completed.

     Yuen Long will be linked to the neighbouring Tuen Mun New Town by the Tuen Mun-Yuen Long Light Rail Transit System, which is scheduled for commissioning in August 1988. A large transport terminal to serve the town is under construction.

     Design work has been completed on the town park, which will include a wide range of landscape features and attractions. Meanwhile, work is nearing completion on a town square to provide an important open space feature in the eastern part of the town. Public dumping during the year produced about one hectare of land.

     The pollution of the Yuen Long nullahs has been a matter of concern to the residents in the past years. Consultants commissioned in December 1986 to identify a suitable scheme for reducing the smell and visual impact of the nullahs have recommended the construction of an inflatable dam and a pumping station to control the flow of water in the nullahs.

Initial construction works have begun on a comprehensively planned new town at Tin Shui Wai which is planned to be linked with the Light Rail Transit System. The main land formation works contract has started and the first public housing intake is expected in 1991. Based on a comprehensive planning study, design work has begun to upgrade existing infrastructural systems to improve the services to, and the environment of, certain existing settlements. A study was completed on the northwestern New Territories sewerage scheme to serve the developments in Tin Shui Wai, Yuen Long-Tuen Mun corridor and Yuen Long Town extension areas.

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Part of the first phase of the public housing estates in Junk Bay New Town, namely, Po Lam and Tsui Lam Estates, has been completed and construction of a number of other estates is in progress.

The planned population for Junk Bay Phase I is 223 000. Work is in hand to revise the Outline Development Plan to include Junk Bay Phase II for a total population of 325 000. Junk Bay New Town will be served by a centrally-located and easily accessible major commercial complex which will include open space, community facilities and a transport interchange. The principal external access linking Junk Bay with east Kowloon will be the twin-tubed Junk Bay Road Tunnel now under construction and scheduled for commission- ing in 1990. In the meantime, Po Lam Road has been widened and improved and with its continuation into Sau Mau Ping Road provides an external road link to east Kowloon.

During the year, about 25 hectares of land including 17 hectares on reclamation were formed with excavated material from borrow areas and imported fill mostly coming from site formation works for the Lam Tin Estate.

The possible future extension of the Mass Transit Railway from Kwun Tong to Junk Bay, which is provided for in the Outline Development Plan, is being studied.

Outside the new town, plans for Sai Kung District have given priority to recreational development and to discouraging urban sprawl outside selected development areas. Sai Kung Town and its immediate hinterland is the main selected development area in the district with a design population of around 40 000.

At Sai Kung Town, minor roads and reclamation works have been completed and the construction of a sewage treatment plant is well advanced. The sewerage system serving Sai Kung and nearby villages will be connected to the treatment works when it becomes operational in 1988.

Islands District

In recent years, the outlying islands have taken on an increasingly important role in catering for the recreational needs of the people of Hong Kong. As part of the Islands District development programme, projects continued during the year to provide for existing and future growth in population, to upgrade living standards, and to improve general facilities for the increasing number of visitors to the islands. Although development remains generally low-rise and rural in character, the programme of works is comprehen- sive and diverse, concentrating mainly on the population centres of Mui Wo and Tai O on Lantau, and on Cheung Chau and Peng Chau. Reclamation works in Peng Chau during the year included the formation of about 0.3 hectare of land.

      Construction of a new rural public housing estate at Mui Wo for about 2 000 people will be completed in early 1988. This will add to the existing rural public housing estates at Tai O and Cheung Chau. Planning for the development of more rural public housing estates in the rural district centres is underway. More facilities have been programmed for develop- ment throughout the district, including ferry piers, schools, market buildings, recreational facilities, sewage treatment plants and abattoirs.

New Urban Development Areas

Five potential development areas at Aldrich Bay, Hung Hom Bay, west Kowloon, Central and Wan Chai and Green Island, all of which require reclamations in Victoria harbour, have been identified to meet forecast development needs and provide for further growth in the 1990s. Work continued throughout the year on the planning and engineering feasibility

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studies on some of these areas which will provide about 630 hectares of land for development and housing for up to 480 000 people.

      The reclamation of 36 hectares of land at Hung Hom Bay to cater for expansion of the Kowloon-Canton Railway freight yard and for residential and other uses commenced in mid-1986 and is scheduled for completion in 1992-3. About five hectares of land have been reclaimed with material from public dumping and site formation works. A report on the freight yard expansion and associated developments was submitted by the Kowloon- Canton Railway Corporation to the government for consideration.

The study on Aldrich Bay Reclamation, which will produce about 17 hectares of land, was completed and as a first phase, work on reprovisioning the typhoon shelter is scheduled to start in early 1988.

In-house planning and civil engineering studies for the west Kowloon Reclamation con- tinued. Consultants have been commissioned to undertake the Central and Wan Chai Recla- mation study, which will be followed by the Green Island Reclamation study in early 1988. The effects of these proposed reclamations on the hydraulics and water quality in the harbour will be assessed by model studies.

Urban Renewal

The Land Development Corporation is to be set up in early 1988 to facilitate the process of urban renewal in areas where satisfactory development is inhibited by factors such as multiple ownership of properties, small size of the site or obsolescent layout. Its main task will be to negotiate the surrender of existing properties and to oversee comprehensive redevelopment of the area.

During the year, the Town Planning Office carried out a number of preliminary development studies for some of the identified Possible Special Development Areas (PSDA) in Mong Kok, Central, Kowloon City and Tai Kok Tsui. The redevelopment potential of these PSDAs was evaluated in terms of their rehousing commitment, ease of implementa- tion, constraints and demographic characteristics. These studies provide information for the Land Development Corporation in determining initial development priorities.

Urban environmental improvement schemes particularly with regard to the provision of open space, continued to be given impetus in 1987. About $36 million was spent to acquire private properties within those sites earmarked for open space and government, institu- tional and community uses in the town plans for the urban areas. Considerable efforts were also made towards assembling project sites that had been partially acquired in the urban improvement districts of Western, Wan Chai and Yau Ma Tei.

Resumption of private streets for subsequent government control to improve the local environmental conditions is supported by district boards and the public. There are about 300 private streets in the territory with various problems. It is therefore important to draw up a set of selection criteria for the purpose of determining priority. Having considered the factors of safety risks, traffic considerations and environmental nuisances, a total of 11 streets were selected for resumption this year.

Urban renewal schemes implemented by the Hong Kong Housing Society continue to be accorded special attention. To assist the Housing Society in processing its schemes, 86 properties at Sheung Wan and Yau Ma Tei were planned to be resumed and cleared by the end of the year.

Public Building

The Architectural Services Department undertakes building projects under the Public Works Programme and the building programmes of the Regional and Urban Councils and

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the British Forces. During 1986-7 the department completed 90 building contracts under various programmes. The total capital expenditure on these projects including that on minor works was $1,985 million. In addition to this the Maintenance Branch of the department spent $423 million in providing routine maintenance and minor alteration works to 6 400 government, Urban and Regional councils and British forces buildings. The overall expenditure at $2,408 million shows an increase of 14 per cent over the 1985-6 expenditure of $2,112 million.

      Tendering on all types of projects continued to be very active and competitive. During the 12-month period to March 1987, tender prices increased by about eight per cent while over the same period labour and basic materials costs rose by 14 per cent and 12 per cent respectively. Tender prices continued to rise further during the year, reflecting cost increases and the continuing upturn in the construction industry.

The 47-storey Queensway Government Offices, the tallest Government building in Hong Kong, was completed in 1987. It provides 54 000 square metres of office space for 12 departments. Work also began on another phase of the Harbour Road Development, the Wan Chai Tower 2 government building. This office block of 49 storeys will be completed in phases, with the first phase of 27 storeys scheduled for completion in mid-1989.

      Further additions to the Hong Kong Law Courts were made with the completion of the Sha Tin and Tuen Mun Law Courts during the year, each of which has eight storeys and eight courtrooms.

      Several projects for the disciplined forces were completed in 1987. These included Tai Po and Tsing Yi District Headquarters and divisional police stations, new fire stations in Shek Kip Mei, Shek Kong, Lamma Island, Mui Wo, an ambulance depot and fire station in Pok Fu Lam and the 274 quarters for the Drug Addiction Treatment Centre at Hei Ling Chau. Construction of Phase I of the new Police Headquarters commenced in February 1987. This seven-storey building with a gross floor area of 35 000 square metres will house, among others, the Regional Control and Command Centre/HK Island, a computer suite and firing ranges, a fitness training centre and communications branch workshop. It is scheduled for completion in mid-1989. Other important projects for the disciplined forces commenced during the year included the superstructure for the Police Tactical Unit in Fanling and the new border crossing at Lok Ma Chau.

      During the year construction began on the Kennedy Town Wholesale Market. It will provide 62 000 square metres of market space in phases to accommodate wholesale facilities for fish, fruit and poultry and vegetables. Phase I is scheduled to be completed in 1990.

       Expansion of medical facilities for Hong Kong continued during 1987, with work progressing on the 1 600-bed Tuen Mun Hospital and the adjacent nurses' training school and staff quarters. These are scheduled for completion in 1988. As regards the Eastern District Hospital, foundation work was near completion and tenders for the main superstructure were called at the end of the year. Construction of the hospital's superstruc- ture is expected to start in May 1988, and work on the nurses' training school, nurses' quarters and senior staff quarters associated with the hospital is scheduled to start in mid-1989, with the whole project scheduled for completion in late 1991 at an overall projected cost of $1,670 million. This project ranks as the largest hospital development under construction in the world.

       In addition to the above two large projects, the caisson and site services diversion works for the Queen Elizabeth Hospital extension were completed in late 1987 and the superstruc- ture contract will be completed in phases by 1990. Work also continued on the second and

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third phases of the extension of Queen Mary Hospital. The entire improvement and extensions to Queen Mary Hospital will be completed in 1992, when the existing wards will be upgraded to provide a total facility of 2 000 beds by 1994. Piling work for the Sha Tin Convalescent/Infirmary Hospital started in early 1987 and is scheduled for completion in early 1988. This project, the first of its type in Hong Kong, will provide 700 beds upon its completion in 1990, to ease the shortage of infirmary beds and reduce the occupation of valuable bed space in district and regional hospitals by convalescent and infirm patients.

      With regard to recreational and cultural facilities, the Tuen Mun Town Hall, with a 1 450-seat auditorium was completed in 1987. The multi-purpose Urban Council Complex at Ngau Chi Wan was also completed during the year, with a 440-seat theatre auditorium, exhibition and lecture halls, a district library, an indoor games hall and a two-storey market. A notable milestone was achieved on the Hong Kong Cultural Centre on the Tsim Sha Tsui waterfront, when completion of the unique suspended cable roof structure over the auditorium was celebrated by a topping out ceremony in October 1987. This scheme now encompasses the redevelopment of the adjacent Kowloon Public Pier and is targeted for overall completion in late 1988. Foundation work on the adjacent Museum of Art progressed and will be completed early in 1988. Work on the superstructure will follow with completion expected in 1990.

Stage 5 expansion work for the Hong Kong International Airport Kai Tak Passenger Terminal, entered its final phase with the demolition of the last remaining vestiges of the single storey structure which served as the terminal building until the early 1960s, to give way to an extension of the 'arrivals' and 'departures' roads and flyovers bringing traffic direct from Prince Edward Road. The whole project will be completed during 1988, providing an annual passenger throughput capacity of 18 million.

Apart from carrying out its own building contracts, the Architectural Services Depart- ment also has considerable involvement in joint-venture projects between the government and private developers, and in community facilities which are the subject of subvention by the government. Among the joint-venture projects completed or under construction in 1987 are residential flats in Ho Man Tin and Nga Tsin Wai Road, Kowloon and Tai Tam and Shouson Hill, Hong Kong, from which the government will receive a total of over 390 flats. Other major projects include MTRC developments at Tai Po Central Market, Southorn Playground, Shau Kei Wan and Chai Wan; and the new China Passenger Ferry Services Terminal currently under construction in Kowloon. The department is also involved in monitoring over 370 subvented projects with a total value of over $4.3 billion. Major works in this area include the removal of acoustic plaster containing asbestos from the ceiling of school halls, noise abatement measures for schools affected by aircraft noise and overseeing the development of subvented private medical projects.

Private Building

In 1987, 716 proposals for private building development were submitted to the Buildings Ordinance Office for approval compared with 597 in 1986. Occupation permits issued for completed buildings totalled 440, providing usable floor area of 2.63 million square metres, an increase of five per cent compared with the previous year. The total sum spent on private building works, excluding land value was $9,575.5 million, a decrease of 31 per cent.

New private residential developments continued to thrive as shown by the sizeable residential development at Park View, which consists of 18 domestic towers with ancillary and recreational facilities, including a kindergarten. Approval was given for the develop- ment of the Pacific Place on Hong Kong Island. It comprises three hotel towers and one

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office building. Commercial development completed during the year also included the Exchange Square Site B and the twin-tower Bond Centre. Approval was given to the Chartered Bank to be redeveloped on its original site adjacent to the new Hong Kong Bank building.

      In addition to administering the Buildings Ordinance and Regulations, the Buildings Ordinance Office performed a number of other related functions, such as assessing the suitability of licensed premises. For this, 763 places of entertainment and 25 storage installation were examined.

With regard to the maintenance of dilapidated private buildings, the Building Authority closed 66 dangerous buildings and served 791 orders requiring the demolition or repair of dangerous buildings.

      In view of an increasing awareness among members of the public of the problems associated with illegal structures and unauthorised building works, large scale enforcement operations were launched during the year which included one in the Eastern District of Hong Kong Island where five service lanes were identified as causing risks to life because of squatter structures obstructing the inspection and maintenance of gas mains in the lanes. With the assistance of the Eastern District Board, Eastern District Office, Housing Department, and the Police Force, a joint operation to remove these unauthorised structures commenced in October 1986 and was completed in October 1987.

As a continuation of the effort to lessen the pollution of Hong Kong's watercourse by industrial effluents and waste, a specialised team, the Drainage Unit, in the Buildings Ordinance Office exercises control over illegal, defective and unsanitary drains and sewers in private buildings. A package of proposals drawn up by a government committee involving changes in legislation, policy and procedures for the control of unauthorised building works was agreed by the Land and Building Advisory Committee. The proposals were also generally welcomed by district boards and will be put to the Executive Council for consideration.

Survey and Mapping

The Survey and Mapping Office of the Buildings and Lands Department is mainly engaged in establishing and maintaining survey control throughout the territory, as a basis for land and engineering surveys, and the production and revision of all mapping at various scales. Some of the other services provided include large-scale basic mapping, production of special use maps, aerial photography and photogrammetric and reprographic services.

Horizontal and vertical control networks covering the whole territory, known as geodetic control systems, have been established and maintained to a high order of accuracy. These networks provide the necessary origin and control points for the production of cadastral (or property boundary) surveys, mapping surveys at various scales, engineering surveys and all other land survey related activities.

      Cadastral surveys in the urban areas are a constant and ongoing requirement. The majority of the work is in the definition of leasehold property boundaries, and the demarcation of land required for government purposes. In the New Territories the emphasis has shifted from new towns to village house lots where an increasing number of boundary surveys are being carried out. Other tasks include the re-establishment of old lot boundaries for redevelopment purposes, and the maintenance of the cadastral records that define land allocation and occupation for every region of Hong Kong.

Comprehensive map coverage of the territory is provided, ranging from the 3 000-sheet large scale basic mapping series at 1:1 000, through 1:5 000, 1:20 000 and 1:50 000 series

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down to the single small scale sheets at 1:100 000 and 1:200 000. A new single-volume guide map of the developed areas was completed to replace the previous two volumes. Country- side leisure and tourist guide maps remain in high public demand, necessitating continuous action on revision and periodic redesign and replacement.

     The wide range of cartographic services provided to other government departments include end-paper maps for the Hong Kong Annual Report, the geological map series, base maps for weather forecasting service, glide path plans, electoral boundary maps, country parks maps and pollution control plans. The Reprographic Unit also provides essential back-up to the cartographic sections in map production as well as the provision of copies of all monochrome series. As a by-product the unit provides extensive and sophisticated photographic and photo-reproduction services to other departments.

     The Air Survey Unit operating from Royal Hong Kong Auxiliary Air Force aircraft continued to provide aerial photographs for engineering design work, volumetric calcula- tions of quarries and reservoirs, environmental studies and large scale mapping. Processing and production of the required data continues to be carried out by the Survey and Mapping Office photogrammetric unit. Vertical and oblique photography has been taken using an air survey camera in a RHKAAF helicopter, and has been particularly useful for obtaining photography of dangerous slopes.

     The three computing sections in Hong Kong, Kowloon and Tai Po District Survey Offices, each equipped with a microcomputer and a pen plotter, are being fully utilised to process survey calculations and to plot survey plans. All remote district survey offices are linked up with these computing sections through telephone lines for direct and fast data transfer. Three sets of Electronic Theodolite Distancer with on-line data recorders are being used for the survey of large areas and the data captured can be transferred directly to the computing section for processing and plotting.

Work on the implementation of a computerised Land Information System began during the year. The new system will modernise land information management and will be a powerful tool for decision making in land administration. The whole system will go into full operation by mid-1992, while some district units will be operative before that date.

Port Works

Two kilometres of seawall were completed at Aberdeen, Aldrich Bay, Stonecutters Island and Sai Kung Town, which enabled a total of 20 hectares of seabed to be reclaimed for roads, open space and other industrial and government uses. A 180-metre breakwater for naval vessels at Stonecutters Island was completed. Also completed were a pier for the maximum security prison at Shek Pik, and the extension to the existing Yung Shue Wan Public Pier.

     Other port works under construction included the extension to the existing ferry pier at Cheung Chau, construction of three piers and a pumphouse fronting the Western Wholesale Market, a slipway and reclamation for the Marine Police Base at Tai Lam Bay and dredging and rock removal work to provide marine access to the proposed boatyard sites at the Ap Lei Chau East Reclamation.

Geotechnical Control

The Geotechnical Control Office (GCO) of the Civil Engineering Services Department exercises control over the geotechnical aspects of public and private building and civil engineering works in the interest of public safety. In 1987 it made checks on 4 365 design proposals for public and private building and civil engineering works. The GCO also

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inspected some 312 landslip and related incidents and gave advice on emergency precau- tions, evacuation and remedial works.

Expenditure under the Landslip Preventive Measures Programme was $65 million for the year. Major stabilisation works were completed on 27 slopes and retaining walls, and works were commenced on a further 24 sites.

Under the geotechnical advisory services to government departments, the GCO under- took in 1987 detailed geotechnical designs for 58 projects, advised on 115 other projects, and conducted geotechnical feasibility studies for major construction and tunnelling proposals which included an investigation to locate up to 100 million cubic metres of marine fill to be used in large-scale reclamation projects.

      The Geotechnical Information Unit, which houses a large collection of geotechnical data including maps, a rock collection, field photographs, serves as a reference centre for geotechnical information.

Under the ongoing Hong Kong Geological Survey 1:20 000 scale maps and explanatory memoirs covering the northwest New Territories, south Hong Kong Island and Lamma Island were published. Geotechnical Area Studies Programme Reports were published for the central, west, northwest and north New Territories, and engineering guides on site investigation and on rock and soil descriptions were also published.

Quarrying and Materials Testing

The GCO manages the government quarry at Mt. Butler, and supervises five private quarries and two private rock-crushing plants operated under government contracts. The government quarry at Diamond Hill was closed and a site formation contract was underway to prepare for building development. The private quarry at Cha Kwo Ling was closed to make way for the Eastern Harbour Crossing. The territory's total production of aggregates, crushed rock fines and sand was approximately 10 million tonnes. The total consumption was approximately 18 million tonnes, with the balance of eight million tonnes being imported, mainly from China.

      During the year, some 280 000 tests were performed on construction materials by the several laboratories situated throughout the territory operated by GCO. The materials tested ranged from soil and rock to reinforcing steel, concrete, timber, aggregates and bituminous products. Construction also commenced on the new Public Works Central Laboratory at Kowloon Bay.

Water Supplies

Full supply was maintained throughout the year. At the beginning of 1987, there were 352 million cubic metres of water in storage, compared with 396 million cubic metres at the start of 1986. The combined storage of Hong Kong's largest reservoirs, High Island and Plover Cove, was 293 million cubic metres. Rainfall for the year was 2319 millimetres compared with the average of 2 225 millimetres. Water piped from China during the year totalled 432 million cubic metres. The Lok On Pai Desalting Plant was not operated and continued to remain as a 'stand-by resource'. The salinity of water at High Island remained at about 11 milligrams per litre while at Plover Cove the salinity varied from 50 milligrams per litre at the beginning of the year to 38 milligrams per litre at the end of the year.

      A peak consumption of 2.35 million cubic metres per day was experienced, compared with the 1986 peak of 2.22 million cubic metres per day. The average daily consumption throughout the year was 2.06 million cubic metres, an increase of 6.7 per cent over the 1986 average of 1.93 million cubic metres. The consumption of potable water totalled 750

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million cubic metres compared with 703 million cubic metres. In addition, 108 million cubic metres of salt water for flushing was supplied, compared with 107 million cubic metres.

Planning studies completed in 1987 included the increase in water treatment capacity of the territory by providing a new treatment works at Au Tau and extending the ones at Yau Kom Tau and Pak Kong, the provision of water supply system to developments at the high level areas of Shau Kei Wan and the extension of water supply to remote villages in the New Territories. Major studies in hand included the improvement of fresh water supplies to areas in southern Junk Bay hinterland, Sham Tseng and Tsing Lung Tau in New Territories, Repulse Bay and Stanley on Hong Kong Island.

During the year, construction of the reception and distribution systems for future increases in the supply from China continued. The second pumping station at Tai Mei Tuk was commissioned at the end of 1987. The Harbour Island pumping station and the Tolo Channel aqueduct supplying water from Plover Cove Reservoir to the future Pak Kong Treatment Works was near completion. Construction work continued at Pak Kong Treatment Works and for the transfer facilities for supplying water to the Junk Bay New Town development and for augmenting supplies to Kowloon East and Hong Kong Island East while design work continued on laying the associated eastern cross harbour main. Construction of a centralised workshop at Lung Cheung Road was in progress.

      To improve the water supply systems on Hong Kong Island, design and construction of waterworks installations continued at Shau Kei Wan, Wan Chai and Pok Fu Lam and commenced at Chai Wan, Sai Wan Ho, Central and Western, Stanley, Chung Hom Kok and Shek O. Construction work for uprating the Red Hill Treatment Works also continued.

In the New Territories, design of Au Tau Treatment Works was completed and construction work is due to start in early 1988. Tuen Mun Treatment Works Stage 5 was commissioned.

      Submarine mains from the mainland to Tsing Yi and from Lantau Island to Cheung Chau were completed while construction work continued for the submarine main from the mainland to Ma Wan. Construction of a treatment works and the associated service reservoir at Cheung Sha on Lantau Island and a service reservoir and associated submarine pipeline supplying Peng Chau Island commenced in 1987.

      Distribution systems in general were extended and enlarged to meet urban and rural demands in the territory. Some 550 villages in the New Territories have been provided with metered water supplies under the New Territories village water supply scheme. Salt water for flushing was supplied to most areas on Hong Kong Island and the Kowloon peninsula as well as to Tsuen Wan, Kwai Chung, Tsing Yi and Tuen Mun in the New Territories.

Several mechanical and electrical installations for pumping stations and service reser- voirs were commissioned during the year. These included additional pumpsets at Bowen Road, Shum Wan Shan, and Brick Hill as well as new pumping plant at Sheung Tsuen, Tai Mei Tuk, Ma Chai Hang, Ha Wong Yi Au and Pokfulam Road. The second stage of the work to provide water supplies to high level villages and squatter areas in the New Territories was in progress with 14 pumphouses commissioned.

Consumer enquiry centres were opened in Kwun Tong, Stanley, Causeway Bay, Mong Kok, Tsuen Wan, Sha Tin, Tai Po and Sai Kung. The network continued to prove successful and plans are in hand to extend it throughout the territory.

      Regionalisation of the operational functions of the Water Supplies Department contin- ued to move ahead. Following the setting up of the first region on Hong Kong Island, four other regions were established on the mainland covering the activities of Kowloon, New

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     Kowloon and the New Territories. Planning of new regional offices and depot facilities in Kowloon and New Territories was put in hand for full implementation of regionalisation.

Electricity

Electricity supply is currently provided by two commercial companies at a cost which is among the lowest in the Southeast Asian region. These two companies are the Hongkong Electric Company (HEC), which supplies Hong Kong Island and the neighbouring islands of Ap Lei Chau and Lamma, and the China Light and Power Company (CLP), which supplies the whole of Kowloon and the New Territories, including Lantau and a number of outlying islands.

The two power companies are investor-owned and do not operate on a franchise basis. The government monitors the financial arrangements of the companies through schemes of control. The schemes require the long-term financing plans of the companies and the forecast tariff levels to be submitted to the Governor in Council for approval.

An American firm of consultants was appointed in 1983 to examine the arrangements for monitoring the operations of the power companies. In their report published in March 1985, the consultants offered a number of recommendations on how the operational aspects of the monitoring process could be improved. A special working party responsible to the Secretary for Economic Services was set up to develop the recommendations. The working party's report was submitted to the Executive Council, and plans for implementing the recommendations were drawn up during the year.

In 1963, CLP and Exxon began a partnership in financing the generating development programme. CLP and Exxon now jointly own three electricity generating companies -- Peninsula Electric Power Company Limited (PEPCO), Kowloon Electricity Supply Com- pany Limited (KESCO) and Castle Peak Power Limited (CAPSO). The total installed capacity of the system at the end of 1987 was 4 778 MW.

      PEPCO, KESCO and CAPCO have operating service agreements with CLP under which CLP constructs, commissions, operates and maintains the electricity generating facilities for these companies. Operation of the power companies owned by the affiliated electricity generating companies is in the hands of CLP. PEPCO owns the two generating plants: at Tsing Yi 'A' (720 MW) and Tsing Yi 'B' (800 MW). KESCO owns 504 MW of gas turbine capacity, together with the Castle Peak 'A' Station consisting of four 350 MW coal-fired or oil-fired dual fuel units. Adjacent to the Castle Peak 'A' Station is the Castle Peak 'B' Station, owned by CAPCO. This station, scheduled for completion in 1990, will provide four 677 MW dual fuel (coal or oil-fired) units. The first two units were commissioned in early 1986 and 1987, the remaining two units are due for commissioning in early 1988 and 1990. The Castle Peak 'A' and 'B' power stations together will have a combined capacity of over 4 000 MW and will become the largest power station complex in Southeast Asia.

      CLP's transmission system operates at 400 kV, 132 kV and 66 kV, and distribution is effected mainly at 33 kV, 11 kV and 346 volts. The supply is 50 hertz alternating current, normally at 200 volts single phase or 346 volts three phase. Supply for bulk consumers is available at 33 kV and 11 kV.

      Work continued during the year on the development of an extra high voltage transmis- sion system at 400 kV to transmit power from the Castle Peak Stations to the various load centres. This 400 kV network comprises two transmission rings. One ring, a primary ring encircling the New Territories, was completed in late 1985. It consists of 90 kilometres of double circuit overhead lines and four extra high voltage substations at Lei Muk Shue, Tsz Wan Shan, Tai Po and Yuen Long. The other ring, scheduled for completion in 1988, will

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    provide 22 kilometres of cable circuits linking the major sub-stations at Tsz Wan Shan, Tai Wan and Lai Chi Kok.

     HEC's generation system comprises the Ap Lei Chau Power Station and Lamma Power Station. The former, with an installed capacity of 761 MW, is made up of six 125 MW oil-fired generating units together with one gas turbine of 11 MW. The Lamma Power Station, at the present stage, consists of 3 × 250 MW and 1 × 350 MW dual fuel (coal or oil-fired) units together with one gas turbine of 54 MW. Another 350 MW unit will be commissioned in early 1988. The combined installed capacity of the two stations will be 2 265 MW. This will meet rising demand up to the early 1990s.

     In HEC's system, transmission of electricity is carried out at 275 kV, 132 kV and 66 kV and distribution is effected mainly at 11 kV and 346 volts. With the exception of a small proportion of 132 kV overhead transmission lines, all transmission and distribution are carried out underground or by submarine cables. The supply is 50 hertz, 200 volts single phase and 346 volts three phase. Supplies at high voltage are also made available to

consumers.

      The transmission systems of CLP and HEC are inter-connected by a cross-harbour link, thereby achieving cost savings to consumers through economic energy transfers between the two systems and a reduction in spinning reserve requirements. The inter-connector, which was commissioned in 1981, now has a capacity of 480 MVA. Upon full completion, the total capacity will rise to 720 MVA.

     CLP's system is also inter-connected with that of Guangdong General Power Company of China and about four million units of electricity are transmitted to Guangdong Province each day. This inter-connection results in better utilisation of the company's generating plant during off-peak demand periods. On the other hand, CLP also has signed a contract with the China Merchants Steam Navigation Company to supply power to the industrial zone of Shekou. This arrangement, which affords Shekou a reliable electricity supply without subsidy from Hong Kong consumers, is another example of the close co-operation on energy matters which has developed on the two sides of the border.

On January 18, 1985, the Hong Kong Nuclear Investment Company (a wholly-owned subsidiary of CLP) and the Guangdong Nuclear Investment Company (wholly owned by the Chinese Ministry of Nuclear Industry) signed the Joint Venture Contract for the formation of the Guangdong Nuclear Power Joint Venture Company, to construct and operate a nuclear power station at Daya Bay in Guangdong Province.

     The Daya Bay Nuclear Power Station will comprise two 900 MW pressurised water reactors which are scheduled for commissioning in 1992 and 1993. About 70 per cent of the power from the station will be supplied to Hong Kong to meet part of the territory's rising demand for electricity in the 1990s.

Main electricity statistics and sales figures are at Appendix 35.

Gas

Gas for domestic, commercial and industrial use in Hong Kong is supplied either as manufactured towngas and substitute natural gas (SNG) by the Hong Kong and China Gas Company Limited (HKCG) or in the form of liquefied petroleum gas (LPG) by most of the major oil companies in Hong Kong. Manufactured towngas and SNG accounted for about 56.1 per cent of the total gas sold and LPG for 43.9 per cent in 1987.

     About 30 per cent of the total LPG local sales is distributed through a dealer network in portable cylinders and about 70 per cent in the form of a piped gas supply from bulk LPG storage and vaporiser installations located on or adjacent to the developments being served.

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Towngas is produced in two gas works, one at Ma Tau Kok and the other one at the Tai Po Industrial Estate. The two gas works have capacities of 3.63 and 2.84 million cubic metres per day respectively. Both plants use naphtha as feedstock. The gases produced are interchangeable and are distributed through an integrated distribution system which comprises high pressure transmission pipelines and intermediate, medium and low pressure distribution systems.

Towngas is currently supplied to the urban areas of Hong Kong Island, including Aberdeen, Repulse Bay, Stanley and Ap Lei Chau, as well as the urban area of Kowloon and many towns in the New Territories, including Sha Tin, Tai Po and the industrial towns of Kwun Tong, Yau Tong, Tsuen Wan and neighbouring Tsing Yi Island.

      SNG is produced by HKCG at its temporary gas works located in the new towns of Yuen Long and Tuen Mun, and is supplied through separate distribution systems within each township. When the towngas high pressure transmission pipeline reaches these two towns in the early 1990s, the temporary gas works will be decommissioned.

      In 1987, sales of LPG increased by 3.2 per cent over the previous year, while towngas and SNG sales increased by 17 per cent, mainly as a result of increased sales to housing estates.

14

Transport

THE government's transport policy is to keep Hong Kong moving, in pace with the growth of the economy and the demands for travel. This is not an easy task in the densely developed environment of Hong Kong. Economic activity and the rapid increase in international traffic, in both passengers and goods by land, sea and air, do not only place a great strain on Hong Kong's internal transport systems, but also demand a constant updating of the strategy and development programmes in respect of cross-border links, railway extensions and port and airport facilities. Thus the construction of transport infrastructure is a never-ending process.

      During the year, the government spent $1.7 billion on building roads and highways, not including the Eastern Harbour Crossing, which is being financed and built by a private consortium. After much preparatory work, negotiations were in progress, at the end of the year, with private interests for a franchise to construct and operate the four-kilometre long Tate's Cairn Tunnel, the longest road tunnel yet planned for Hong Kong. The franchise will be awarded early in 1988, with construction due to start in May or June, and be completed in 1992.

A new container terminal at Kwai Chung (Terminal 6) is under construction and will provide two additional berths for third-generation container vessels. This development is also being undertaken by private investment. Work is also in hand to reclaim part of Hung Hom Bay to provide land for the extension of the railway terminal at Hung Hom, as well as housing and other facilities.

      Investment even on this scale is, however, unlikely to meet Hong Kong's transport demands for long. Transport planning is thus an important, and a continuing, activity.

The Second Comprehensive Transport Study, which began in late 1986 and is due to be completed in mid-1988, will provide a transport investment programme for road and rail developments and will set out policy options for tackling Hong Kong's land transport requirements up to the year 2001. It will also provide a computerised transport model, which can be updated to take account of changing conditions, to aid future transport planning. The Port and Airport Development Study, which was started in late 1987, will examine Hong Kong's port and airport requirements into the 21st century and will propose the development strategy to meet these needs.

Administration

The Transport Branch of the Government Secretariat, headed by the Secretary for Transport, is responsible for the overall policy formulation and the direction and co-ordination of all transport matters. In discharging this responsibility, the Secretary for Transport is assisted on major issues by the Transport Advisory Committee (TAC), which advises the Governor in Council on transport policies and major issues. The TAC has

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     18 appointed members, including the chairman and six official members. The Secretary for Transport chairs the Transport Policy Co-ordinating Committee, made up wholly of official members, to oversee the co-ordination and implementation of policies and projects.

The Commissioner for Transport heads the Transport Department, which administers the Road Traffic Ordinance, and other legislation regulating public transport operations other than railways. His responsibilities cover road traffic management, including govern- ment road tunnels, carparks and metered parking spaces, and the regulation of internal road and waterborne public transport. On these matters, he is advised by the Standing Conference on Road Use and the Standing Committee on Waterborne Transport. He is also responsible for the licensing of drivers and the registration, licensing and inspection of vehicles.

The Director of Highways heads the Highways Department. Under the policy direction of the Transport Branch, the Highways Department is responsible for designing and building all highways and roads, and for their repair and maintenance.

      The Police Force enforces traffic legislation and prosecutes offenders. However, in April, the Transport Department set up its own Prosecutions Unit, which later in the year took over from the police some of the prosecution duties, namely those involving buses, driving offence points, breach of tunnel regulations and vehicle safety equipment.

A Transport Tribunal, chaired by an appointed member and set up under the Road Traffic Ordinance, provides members of the public with an avenue of appeal against decisions made by the Commissioner for Transport in respect of the registration and licensing of vehicles and the issue of hire-car permits and passenger service licences.

Planning

To improve the long-term transport planning process, the Transport Department is conducting a Second Comprehensive Transport Study to formulate policy options and recommend an implementation programme for the provision of strategic transport facilities in Hong Kong up to the year 2001, taking into account anticipated future travel demands and likely resource constraints. This study is scheduled to be completed in mid-1988.

      During the year, studies were carried out on traffic and transport by the Transport and Highways departments and their consultants to assess regional requirements. They included the updating of the Pok Fu Lam Traffic Study, the Western District Traffic Study, the Tsim Sha Tsui Traffic Study and the East Kowloon Joint Traffic Study. The last study also included a preliminary design of the Kwun Tong By-pass and associated traffic management schemes.

      The Kowloon-Canton Railway Corporation (KCRC) completed a feasibility study of railway terminal expansion on Hung Hom Bay Reclamation and investigated the financial viability of extending the light rail transit system from north-west New Territories to the metropolitan area. The Mass Transit Railway Corporation (MTRC) also investigated a potential MTR extension to Yuen Long.

      Work began on the Engineering Feasibility Study of Route 'X', which will link the north-west New Territories with western Kowloon. Detailed planning and design con- tinued on the following projects: the Yuen Long Southern By-pass, the Yuen Long-Tuen Mun Eastern Corridor, the Hiram's Highway Improvement Stage I, the Kwun Tong By-pass Phases II and III. On Hong Kong Island, detailed design was in progress for Victoria Road Improvements, and the Hillside Escalator link between Central and Mid-Levels.

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    Traffic between Hong Kong and China via the road crossing point at Man Kam To continued to rise, with the number of vehicles travelling in both directions increasing from 7 220 per day in December 1986 to 8 460 per day in December 1987. Traffic at the Sha Tau Kok crossing remained stable at 1 131 vehicles per day in December 1987 (778 per day in December 1986). Goods vehicles accounted for 92 per cent of traffic at both crossing points, reflecting the rapid growth in trading and industrial links with China. At the end of the year, 23 companies operated tourist coach services across the border. There was also a limited number of private cars, primarily used by businessmen with interests in Shenzhen. Road crossing facilities will be substantially improved by the Lok Ma Chau crossing which will have a direct link into the New Territories Circular Road. The first bridge of the crossing will be completed in early 1989 and the second later in that year. This will increase the capacity at the three border crossing points to about 52 000 vehicles per day, compared with 12 000 per day at present.

     The Kowloon-Canton Railway also plays an important role in the growing traffic between Hong Kong and China. Some 3.5 million tonnes of freight (1986: 3.28 million tonnes) and 2.13 million head of livestock (1986: 2.21 million) were brought into Hong Kong by rail. Exports to China by rail accounted for 1.1 million tonnes, a significant increase over the 848 000 tonnes carried in 1986. Hong Kong's ability to handle the increasing volume of rail freight from China will be much improved by the planned expansion of the KCRC freight yard in Hung Hom Bay. Conditions for cross border rail passengers were greatly improved by the new terminal building at Lo Wu opened in early 1987. Cross border passenger traffic on the KCR increased from 20.8 million in 1986 to 25.4 million in 1987. A further extension of the terminal is now being planned to cope with the anticipated future growth in traffic.

     Ferry services between Hong Kong and China also carried more passengers, with a total of eight operators carrying 2.8 million passengers (2.4 million in 1986) from the two China ferry terminals at Central on Hong Kong Island and Tai Kok Tsui in Kowloon. The new China ferry terminal in Canton Road will open in mid-1988, to provide much improved facilities and sufficient capacity to meet demand beyond the turn of the century.

Road Network

Good progress was made in the road building programme. Several major projects opened to traffic, and some 38 projects are under construction and another 57 are being actively planned by the Highways Department. Expenditure on highway projects was about $1,000 million, while another $300 million was spent on improving and maintaining existing roads. Hong Kong's roads have one of the highest vehicle densities in the world. At the end of the year, there were 322 076 registered vehicles and only about 1 400 kilometres of roads - 388 on Hong Kong Island, 364 in Kowloon and 643 in the New Territories. This high vehicle density, together with the difficult terrain and dense building development in the territory, presents a constant challenge to its road builders. Already, there are four major road tunnels, over 570 flyovers and bridges, 299 footbridges and 162 subways to keep vehicles and people on the move.

Strategic Road Network

The principal feature of the strategic road system is Route 1, which runs from Aberdeen on the southern shore of Hong Kong Island to Sheung Shui in the northern New Territories, and includes three tunnels - Aberdeen, Cross Harbour and Lion Rock. On Hong Kong

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Island, Route 8 runs along the northern shore from the Cross Harbour Tunnel through the Island Eastern Corridor to Shau Kei Wan and Chai Wan in the east. Route 7 stretches from the Cross Harbour Tunnel, along the north shore, through Harcourt Road and Connaught Road to Kennedy Town in the west. In Kowloon, Route 2 follows the west coast of Kowloon Peninsula and runs from the Cross Harbour Tunnel through the West Kowloon Corridor to Lai Chi Kok. Route 3 follows the east coast of Kowloon Peninsula from the Cross Harbour Tunnel through the East Kowloon Way and the Airport Tunnel to Kwun Tong. Route 4 runs along the base of the foothills separating Kowloon from the New Territories, and connects Kwun Tong with Lai Chi Kok.

       The strategic road system in the New Territories connects each of the new towns. The major link in the western New Territories is Route 2, which consists of the Tsuen Wan Bypass and its connections into Kowloon, the Tuen Mun Highway and the existing dual carriageway from Tuen Mun to Yuen Long. Route 6, also in the western New Territories, connects Lai Chi Kok with Tsuen Wan by way of Castle Peak Road. In the eastern New Territories, the major link is the continuation of Route 1 from Sha Tin through Tai Po and Fanling to Pak Shek Au in the north.

Further improvements to this strategic road network are being constructed or planned. On Hong Kong Island, a major project (Route 7) to provide a dual-two-lane free flow facility along Connaught Road from Harcourt Road to Hill Road is being constructed at an estimated cost of $525 million, with completion expected in late 1989. It involves the construction of two flyovers at Harcourt Road and Rumsey Street, an underpass at Pedder Street, widening Connaught Road West, six footbridges and ancillary road works. The final stage of the Island Eastern Corridor (Route 8) from Shau Kei Wan to Chai Wan is being constructed. When completed in late 1989, the corridor will total nine kilometres in length. The total estimated cost is about $1.7 billion.

In Kowloon, Route 2 will be improved by the completion of the Cheung Sha Wan section of the West Kowloon Corridor. Route 1 is being improved by the reconstruction of the Princess Margaret Road Flyover. The old flyover, which was built in 1966, had only three traffic lanes for two-way traffic and has been a bottleneck for some time. The new flyover, which will be completed in mid-1989, will provide two lanes in each direction. Another strategic route being constructed in Kowloon is the Kwun Tong Bypass Phase 1 which involves the construction of elevated roads linking Junk Bay Road and Lei Yue Mun Road with Wai Yip Street and the Eastern Harbour Crossing. It will be completed in late 1989 to tie in with the opening of the Eastern Harbour Crossing. Construction of Phases II and III will be programmed for completion to coincide with the opening of the proposed Tate's Cairn Tunnel. When fully completed, the Kwun Tong Bypass will provide a direct connection between the new Eastern Harbour Crossing, Junk Bay Tunnel and Tate's Cairn Tunnel without the need to pass through ground level roads in Kwun Tong. The total estimated cost of the Kwun Tong Bypass is $940 million.

       For cross harbour travel, a second road and rail crossing known as the Eastern Harbour Crossing is under construction for completion in late 1989.

       In the New Territories, another section of the New Territories Circular Road from Fanling to Pak Shek Au was completed in April 1987. The remaining section from Pak Shek Au to Au Tau is being carried out in stages at a total cost of about $750 million and will be completed in 1991. A principal road link with China at Lok Ma Chau, which will connect with the New Territories Circular Road by a grade separated interchange, is also being constructed. It will cost $280 million and will be largely completed in late 1988.

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Between Tuen Mun and Yuen Long, a Tuen Mun to Yuen Long Eastern Corridor and a Yuen Long Southern Bypass have been planned to provide an eastern continuation of Route 2.

     Elsewhere in the New Territories, a seven kilometre-long dual-two-lane trunk road connecting Sha Tin with Tsuen Wan (Route 5), is being constructed at an estimated cost of about $1 billion. When completed in 1989, it will form part of the New Territories Circular Road.

Other Road Projects

    The second Tsing Yi Bridge connecting Tsing Yi with Tsuen Wan was completed during the year. A $120-million project to provide grade-separated vehicular and pedestrian access facilities to the Wan Chai reclamation area will be completed early next year. A flyover from Cheung Sha Wan Road to Boundary Street will also be completed next year. Good progress was made on the construction of the Tai Po Road improvement project and the Lam Kam Road flyover. Other major projects being constructed include access roads for Ma Chai Hang and Chuk Yuen, extension of Gascoigne Road Flyover to span over the junction of Gascoigne Road and Wylie Road, two one-way flyovers linking Kai Tak Airport Passenger Terminal Building with the eastbound carriageway of Prince Edward Road East, a link road from Ma On Shan to Nai Chung and the improvement of Man Kam To Road.

Tunnels

Due to the hilly terrain and the harbour, road tunnels are an important part of Hong Kong's road network. Of the four existing tunnels, the Lion Rock, Aberdeen and Airport tunnels are managed by the Transport Department, and the Cross-Harbour Tunnel is owned and operated by the Cross-Harbour Tunnel Company Limited.

      Lion Rock Tunnel links Kowloon to Sha Tin and the north-eastern New Territories. It opened in 1967 with a single tube, and in 1978 a second tube was added. Because of the rapid development in the north-eastern region of the New Territories, the traffic in this tunnel had increased to 92 000 vehicles per day by the end of 1987, and during peak hours traffic volume had reached the tunnel capacity, causing increasing delays, particularly in the morning rush hour. In view of the growing congestion, the government has commissioned consultants to study ways of improving the traffic flow. Findings of the study are expected in mid-1988.

     Aberdeen Tunnel, opened in 1982, links the north and south sides of Hong Kong Island. The average daily traffic is 41 000 vehicles. The toll for both Lion Rock and Aberdeen tunnels is $3 one way for all vehicles.

     The toll-free Airport Tunnel provides direct road access from the central area of Kowloon to Hong Kong International Airport, and also crosses underneath the airport runway to Kwun Tong. Since the tunnel opened in June 1982, the volume of traffic using it has been increasing steadily and now averages about 44 000 vehicles per day.

The Cross-Harbour Tunnel, opened in 1972, runs beneath the harbour between Hong Kong Island and the Kowloon peninsula. The tunnel's traffic increased over the years to such an extent that, with an average of 110 000 vehicles using it per day in 1983, it became the world's busiest four-lane facility. The eight-class toll structure, with charges varying from $2 for motorcycles to $20 for the largest goods vehicles, has remained unaltered. To reduce congestion, the government, in June 1984, introduced a passage tax of $2 to $5 on all vehicles using the tunnel, except public and private buses and vehicles used by disabled drivers and members of the consular corps. After the introduction of this tax, there was an

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initial drop of 15 per cent in the number of vehicles using the tunnel, but the figure rose to 115 000 per day by the end of 1987.

Construction work was being carried out on three new tunnels. One tunnel - the Eastern Harbour Crossing, is a commercial venture undertaken by the New Hong Kong Tunnel Company, an international consortium formed specially for the project. It will link Quarry Bay on Hong Kong Island and Cha Kwo Ling in Kowloon by means of an immersed twin-tube crossing incorporating both road and rail (MTR) links. The other road tunnels being built by the government are the Shing Mun Tunnel (formerly known as Route 5 Tunnel), linking Sha Tin and Tsuen Wan, and the Junk Bay Tunnel from Kwun Tong to Junk Bay New Town. All three are scheduled for completion by 1990. In April, the government decided that the Tate's Cairn Tunnel, linking Diamond Hill in Kowloon to Sha Tin in the New Territories, should be built and managed by the commercial sector. When completed in 1992, this tunnel will greatly ease the congestion in the Lion Rock Tunnel.

Traffic Management and Control

On Hong Kong Island, short term traffic management measures were implemented in connection with the upgraded Connaught Road project. In Kowloon, the traffic diversion scheme for the reconstruction of the Princess Margaret Road Flyover worked satis- factorily. To prevent congestion on Ngau Tau Kok Road, public light buses were re-routed to side streets for picking up and setting down passengers. At the New Territories approach to the Lion Rock Tunnel, a 670-metre-long bus-only lane was introduced from Hung Mui Kuk Interchange to the toll plaza southbound resulting in time savings for bus passengers during the morning peak period.

      About 690 sets of traffic light signals were in operation in the territory. These included about 240 sets in Kowloon and 90 sets on Hong Kong Island under centralised computer control. Work was being carried out on the expansion of the existing computerised Kowloon Area Traffic Control System into Wong Tai Sin and Kwun Tong. The system is scheduled to be commissioned in 1989. A contract was awarded in late 1986 for the expansion of the West Kowloon Closed Circuit Television System from 10 camera sites to 24 by 1988. Work was progressing on the installation of a new computer system for the Hong Kong Island Final Area Traffic Control System. When completed, it will be able to provide traffic control to about 170 sets of traffic light signals extending from Kennedy Town to Shau Kei Wan.

Private Car Restraint Measures

     Private car licence fees were increased to keep pace with general inflation and to maintain the restraining effect on car ownership. There were no increases in tolls or passage tax at any of the road tunnels during 1987. Despite decreases in the number of private cars licensed since 1982, from about 190 000 to about 146 000 by the end of 1987, the number of other classes of vehicle has increased so that the total number of vehicles remained stable at 270 000.

Parking

During the year, 11 multi-storey carparks, providing 7 112 parking spaces, were being managed on the government's behalf by a private company, while four open-air carparks comprising 520 car and lorry parking spaces and 24 motorcycle spaces were being operated by the Transport Department. Other off-street public parking is provided by the Civil

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Aviation Department at Hong Kong International Airport and by the Kowloon-Canton Railway Corporation at railway stations. Surveys conducted in late 1986 showed that there were about 50 000 parking spaces in multi-storey, housing estate and open-air carparks owned and operated by the private sector throughout the territory. On-street parking is usually metered and is only provided at locations where traffic conditions permit. By the end of the year, there were some 14 300 metered spaces throughout the territory, most of which operate between 8 a.m. and midnight from Monday to Saturday. In Causeway Bay, Happy Valley, Western and Tsim Sha Tsui districts and in the carparks of the Hong Kong International Airport and the Peak where parking demand is high, meter operation has been extended to include Sundays and public holidays. Towards the end of the year, metered parking charges were doubled from $1 and 50 cents to $2 and $1 for each half hour.

Licensing

The number of new private cars registered rose from 13 900 in 1986 to 19 870 in 1987, an increase of 43 per cent. Despite the introduction of the compulsory private car inspection scheme since January 1986 for six-year old cars, the total number of cars licensed increased from 139 321 in December 1986 to 145 612 in December 1987, a growth of 4.52 per cent.

There was an increase in the number of goods vehicles - from 86 633 in December 1986 to 102 082 in December 1987.

At the end of 1987, the total number of licensed vehicles in all classes was 289 478, an increase of 8.5 per cent over the previous year.

     The number of new learner drivers rose from 4 000 per month in 1986 to 5 800 per month in 1987, representing a 45 per cent increase.

     Under the Driving-offence Points System implemented in August 1984, 2 098 driving licence holders were disqualified after accruing 15 or more points for committing offences scheduled under the Road Traffic (Driving-Offence Points) Ordinance.

Vehicle Examination

The Transport Department operates four vehicle examination centres at Kowloon Bay, To Kwa Wan, Sheung Kwai Chung and So Kon Po, carrying out annual re-licensing inspections of all public service vehicles, older goods vehicles and vehicles licensed to carry dangerous goods. Transport Department vehicle examiners were also based at three regional police vehicle detention pounds to inspect vehicles which were involved in accidents or suspected to be defective. Airport vehicles were inspected at the airport, while franchised buses were examined at the company depots.

     Annual re-licensing inspection was extended to all private light buses from January 2, 1987. From June 1, goods vehicles, special purpose vehicles and trailers manufactured before 1978 required compulsory inspection before relicensing.

     From April, all private cars manufactured before 1981 were required to be examined at one of the 17 designated car testing centres. A total of 52 079 cars were examined during the year under the scheme, compared with 27 737 in 1986.

     Certificate of Fitness and Certificate of Roadworthiness inspections continued to be carried out on franchised buses and non-franchised buses. These, together with spot check inspections, were effective in improving the overall standards of bus maintenance. Prosecu- tion in respect of serious defects found during unscheduled inspections remained at a low level.

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Traffic accidents involving injury increased by 10.7 per cent in 1987. There were 16-169 accidents, of which 4 644 were serious and 272 fatal, compared with 14 610 in the previous year (4 100 serious, 280 fatal). In-depth investigations using computerised records were carried out at 129 traffic accident blackspots to identify accident causes. Remedial accident prevention measures were recommended at 82 of these locations. Remedial measures have been shown to reduce accidents by 28 per cent on average.

Road safety campaigns continued to play an important role in the government's attempt to reduce traffic accidents. The major themes of the 1987 campaigns emphasised the important role of parents and teachers in educating the children on road safety, elderly pedestrian safety, and cycling safety. Apart from the use of posters, announcements of public interest, leaflets and TV programmes as publicity media, four issues of a 'Road Safety Quarterly' were produced and given wide distribution.

      A new comprehensive Road Users' Code, much larger and more detailed than the previous Highway Code and aimed at promoting safety for all road users, was published in July. The code, available in both English and Chinese, was widely used in schools and by all those concerned with road safety. In addition, a 'Provisional Code of Practice for the Load- ing of Goods Vehicles' was published in May and circulated to goods vehicle operators for comment. The final code of practice is expected to be published early next year.

By the end of 1987, the Road Safety Association of Hong Kong operated 212 School Road Safety Patrols with the objective of ensuring the safety of school children on their way to and from school. The Road Safety Council, an advisory body, continued to co-ordinate all road safety matters in the territory.

Mass Transit Railway

     Efforts to improve personal mobility through expansion and improvement of public transport services continued.

In May, the Mass Transit Railway (MTR) extended its peak frequency service during the morning rush hours. The construction of an extension of the railway to link Kwun Tong in Kowloon to Quarry Bay on Hong Kong Island as part of the Eastern Harbour Crossing project progressed as planned. The feasibility of a rail link between the north-west New Territories and the urban area and an extension to Junk Bay was also examined.

The MTR system now comprises three lines, operating as an integrated whole with 37 stations on the overall length of 38.6 kilometres, and with interchange facilities at Prince Edward, Mong Kok, Yau Ma Tei, Admiralty and Central stations. Trains run at two-minute intervals during the morning peak hours and 2.5-minute intervals during the evening peak hours on both the Tsuen Wan and Kwun Tong Lines. On the Island Line, trains run at 3.5-minute intervals during both morning and evening peaks. The arrival of trains at destinations within two minutes of the scheduled time was maintained at 99.9 per cent during the year.

The MTR carried a daily average of 1.8 million passengers at the end of the year, making it one of the most heavily utilised underground railway carriers per route kilometre in the world. A record number of 2.27 million passengers was carried on October 7, 1987.

An overall fare increase of seven per cent was introduced in May. Adult fares were within a range of $2 to $5.50. Purchasers of the higher value common stored-value tickets enjoyed purchase discounts for higher value tickets and cheaper fares for off-peak journey plus a last ride bonus. By the end of the year, the MTR network was served by 34 feeder bus routes. To encourage motorists to use the system, multi-storey carparks are provided adjacent to the MTR stations in Kwai Fong, Tsuen Wan, Sheung Wan and Central.

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Promotional activities were also held to attract additional passengers and to increase the awareness of the benefits of the stored-value tickets. In addition, public announcement and extensive poster campaigns helped to promote a spirit of courtesy among passengers travelling on the MTR, in particular, to allow passengers to alight first.

Kowloon-Canton Railway

During the year, the KCRC completed a modification programme to increase the train-carrying capacity of the existing carriages and the first of the 25 sets of newly-ordered three-car electric multiple units was put into service in July.

The number of passengers using the electrified Kowloon-Canton Railway (KCR) between the towns of Sha Tin, Tai Po and Fanling and the urban area, as well as those travelling to and from China via Lo Wu increased significantly during the year. An average of 368 700 passengers was carried each day by the railway, 194 per cent above the 190 500 it carried four years ago before electrification and double tracking.

There were 466 trains running each day between 5.52 a.m. and 0.12 a.m. with four through trains to China operating each day between Kowloon and Canton. In operation were 42 feeder routes to KCR stations provided either by the Kowloon Motor Bus Company or minibus operators. The construction of the first phase of the North-west Railway between Tuen Mun and Yuen Long was in full swing during the year. It is expected to go into service in August 1988. In addition, three regional extensions comprising five kilometres of double track and 10 stops have been approved, and the construction of these is expected to be completed by the end of 1991. In September, the KCRC introduced its first bus service in the North-west Transit Service Area to replace one KMB internal bus route. It is intended that when the North-west Railway goes into service, all the internal bus services within the North-west Transit Service Area will be operated by the KCRC to enhance integration of the railway and bus services.

Early in the year, the KCRC completed investigations on the feasibility of an extension of the railway to provide a rail link between the north-west New Territories and the urban area. The new Lo Wu station was commissioned in January, replacing the temporary station. A new Tai Wo station, serving Tai Po, is now under construction and will be commissioned in late 1988.

Buses

The standard and level of bus services continued to improve through more effective planning and monitoring. With the new town development, the New Territories enjoyed the largest expansion of bus services. The cross harbour bus service network also had a moderate expansion during the year when the cross harbour section of the MTR had reached its capacity in the peak period.

     There are three franchised bus companies in Hong Kong, and they carry four million passengers per day on a total of 365 regular routes.

The Kowloon Motor Bus Company (1933) Limited (KMB) operated 217 bus routes in Kowloon and the New Territories in addition to 23 cross-harbour routes jointly operated with the China Motor Bus Company Limited. The company also operated three cross- harbour services of its own, including two air-conditioned coach services to and from the airport. At the end of 1987 the company had a fleet of 2 900 vehicles, comprising 2 798 double-deckers, 64 single-deckers and 38 coaches.

Most of the expansion of bus services operated by KMB took place in the new towns in the New Territories, including two new express services with one inter-new-town service

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and one external service to Kowloon. Nine air-conditioned 24-seat buses were also used by KMB on two routes which had previously been operated with the use of larger buses. The company also tried out air-conditioned double deckers on inter-new-town express routes.

During the year, the company carried 1 100 million passengers and operated 220 million vehicle-kilometres, which represented a decrease of two per cent and an increase of five per cent respectively over the previous year.

      Bus fares for Kowloon and New Territories routes as well as all cross-harbour tunnel routes were increased on February 1. Fares on urban routes range from 80 cents to $1.70 whereas fares on rural routes range from 80 cents to $4.40. All cross-harbour tunnel urban routes had a flat fare of $2.80, with a section fare of $1.20 after passing through the tunnel. Higher fares, however, applied to the airport coach service, recreation services, express, the suburban and New Territories cross-harbour routes. In March 1986 KMB's franchise was extended to August 31, 1995.

     The China Motor Bus Company Limited (CMB) operated 96 routes on Hong Kong Island and Ap Lei Chau, and 20 cross-harbour routes jointly with KMB. At the end of 1987, its fleet comprised 923 double deckers and two single deckers. These vehicles carried 316 million passengers and travelled 56 million vehicle-kilometres during the year.

     CMB bus fares remained unchanged in 1987, except on its cross-harbour routes, Fares on urban routes were from $1 to $1.70, and those on suburban routes from $1 to $3.50. During the year CMB's franchise was extended to August 31, 1991.

     On Lautau Island, the New Lantao Bus Company (1973) Limited (NLB) operated six regular and two recreational routes with a fleet of 55 buses, 42 of which were double- deckers. In 1987, NLB vehicles carried an average of 6 800 passengers every weekday, but recreational demand boosted this figure to 17 000 on Sundays and public holidays. NLB bus fares were revised in June, and ranged from 90 cents to $6.60 on weekdays and from $1.80 to $10 on Sundays and public holidays. During the year NLB's franchise was extended to March 31, 1993.

     Franchised bus services were supplemented by a fleet of 2 407 non-franchised public buses which are operated on a contract-hire basis, as well as 124 private buses operated by private housing developments and factories for their own needs.

Minibuses

The size of the public light bus (PLB) fleet has been fixed at 4 350 since May 1976. PLBs are 14-seater minibuses authorised under the Road Traffic Ordinance to carry passengers at separate fares. Some PLBs are used on scheduled service (green minibus services) and others on non-scheduled services (red PLB services). A review of the PLB policy began during the year in the light of changing transport and traffic developments.

In 1987, there were 3 130 red PLBs carrying about one million passengers daily. There is no control of fares and routes for red PLBs, which are popular with passengers prepared to pay higher fares for a quick, direct and comfortable service with the added advantage of being able to board or alight anywhere along unrestricted sections of the route. However, they contributed to congestion as they tended to concentrate in the main bus and tram corridors, delaying high capacity carriers and other traffic by their frequent stopping.

     The expansion of the green minibus scheme continued in 1987, with red PLBs being converted to fixed routes and fares under the control of the Transport Department, to serve areas of particular need. At the end of the year, 170 green minibus routes utilising 1 200 PLBs were in operation throughout the territory, with about 578 000 passengers being

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carried daily. Concessionary fares for handicapped passengers, elderly persons and students are offered on some green minibus routes.

     A fleet of 2 300 private light buses was maintained by schools, private residential developments and commercial enterprises for their own needs. The approval for green minibuses in the New Territories to carry goods for hire and reward was given on June 30.

Residential Coach Services

Residential coach services were first introduced in 1982 to serve the peak-hour transport needs of residential areas not served by franchised services. These services are scheduled and authorised under a passenger service licence, with routes, timetables and stopping places approved by the Commissioner for Transport. A licence is usually valid for one year, and may be renewed, depending on the continued need for the service and any effect it may have on parallel franchised services.

At the end of the year, there were 22 residential coach routes in operation - three on Hong Kong Island and 19 in the New Territories. Some 6 300 passengers were carried in 1987, representing a 13 per cent increase over the previous year.

Trams

The electric tramway on the north shore of Hong Kong Island began operation in 1904, and has been operating under the name of Hongkong Tramways Limited since 1922. The system comprises 13 kilometres of double track route between Kennedy Town and Shau Kei Wan and nearly three kilometres of single track around Happy Valley, which together support six overlapping services. Tramway patronage increased slightly, averaging 349 000 passengers per day during 1987. The tramcar fleet comprised 161 double-deck cars for normal use and two vintage-style open balcony cars for tourist services and private hire. During the year a contract was signed to replace most of the existing trams by new cars of similar outline but more contemporary appearance. Fares were last revised in 1983 and remained at 60 cents for adults, 20 cents for children under 12 years of age and 30 cents for student travel card holders.

     The Peak Tramway Company Limited has been operating a funicular railway between Garden Road in Central and Victoria Gap, 397 metres above sea level, since 1888. There are four intermediate stations on the line, and in places the gradient is as steep as one-in-two. The line is popular with tourists and also provides a commuter service for Peak residents. In 1987 a daily average of 7 300 passengers was carried, an increase of one per cent compared with 1986.

Aerial Ropeway

An aerial ropeway operates at Ocean Park in the Southern District of Hong Kong Island. The line carries visitors between the park's lowland and headland sites, and employs 246 six-seat cabins with a total capacity of 1 476 passengers. During the year the system carried an average of 3 500 passengers a day.

Ferries

Ferries were once among the most popular modes of transport in Hong Kong, but the availability of improved road network, tunnels and the Mass Transit Railway has reduced their role. Nonetheless, waterborne transport still contributes significantly to cross-harbour movement and remains essential to commuters of the outlying islands. The majority of ferry travel is catered for by two franchised company operators - the Hong Kong and Yaumati Ferry Company Limited (HYF) and the 'Star' Ferry Company Limited (SF). The

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     SF operated 10 vessels across the harbour from Edinburgh Place on Hong Kong Island to Tsim Sha Tsui and Hung Hom in Kowloon. During the year the company carried 39 million passengers on these two routes. SF was granted the franchise to operate a new passenger ferry service between Tsim Sha Tsui and Wan Chai not later than April 1988. HYF operated 27 ferry services, including four cross-harbour vehicular and/or passenger services, nine outlying district services, two excursion routes, and two vehicular charter services to Lantau. The company operated 76 vessels, ranging from vehicular ferries and high capacity triple-deck passenger vessels to high-speed hovercraft. Fares ranged from $2.50 for an inter-island adult passenger fare to $600 for a heavy vehicle on the occasional ferry service to Lantau. During the year HYF carried 75 million pasengers and four million vehicles, compared with 76 million and four million respectively in 1986.

Following a study of cross-harbour public transport services in 1985, a rationalisation of HYF's cross-harbour passenger ferry network was recommended, and one route was withdrawn in 1986. The process continued in 1987, with the withdrawal of three cross- harbour routes during the year - Sai Wan Ho to Kowloon City, Central to Kwun Tong, and North Point to Tsim Sha Tsui East.

In addition to the services provided by the two franchised ferry companies, nine minor ferry services were operated to or between outlying islands by six licensed operators. These were supplemented by 'kaitos', or small boat services, which cater for local demand, mainly in remote rural areas. During the year 126 'kaitos' were deployed by 103 operators. Both types of services are controlled by licences issued by the Transport Department under the Ferry Services Ordinance.

Taxis

Hong Kong is served by three types of taxis: Hong Kong and Kowloon taxis which may operate anywhere within Hong Kong Island, Kowloon and the New Territories but primarily serve the urban areas; New Territories taxis which operate only in permitted areas in the New Territories, and Lantau taxis which operate only on Lantau Island.

Urban and New Territories taxis fares were raised from March 15 and August 24 respectively. Urban taxi fares were $5.50 for the first two kilometres and 70 cents for each subsequent 250 metres. New Territories taxi fares were $4.50 for the first two kilometres and 90 cents for each subsequent 400 metres. Lantau taxi fares were $5 for the first two kilometres and $1 for every subsequent 400 metres. Luggage fee for these three types of taxis was increased to $2 per article of baggage. A new surcharge of $1 for every hiring arranged through telephone booking for urban and New Territories taxis, and for Lantau taxis was introduced on March 15 and December 14 respectively. A double toll charge was applicable for taxis crossing the harbour through the Cross-Harbour Tunnel.

     A comprehensive review of taxi policy is being carried out by a sub-committee of the Transport Advisory Committee. District boards were consulted on the issue between September and November and the review is scheduled to be completed in early 1988.

Port Development and Shipping Services

The port of Hong Kong continued to meet efficiently the demands of an increasing number of ship arrivals as well as a growth in both the volume of cargo handled and passenger numbers.

Victoria Harbour, lying between Hong Kong Island and Kowloon, is the centre of shipping activity. It has an area of 5 000 hectares and varies in width from 1.2 to 9.6 kilometres.

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      Port facilities are continuously being modernised, and receive optimum utilisation. This efficiency is reflected by the average turn-round time of ships working cargo both at harbour mooring buoys and Kwai Chung container terminals, where they remain on average for two-and-a-half days and 13 hours respectively. These are probably the fastest turn-round times for any port in the Far East.

     The administration of the port is the responsibility of the Director of Marine. He is advised by various committees through which close liaison with shipping and commercial interests is maintained to ensure that facilities and services are developed to meet the changing needs of Hong Kong and of ships using the port.

In 1987, some 15 170 ocean-going vessels and 86 490 river-trade vessels called at Hong Kong and loaded and discharged more than 70 million tonnes of cargo. This included 47 million tonnes of general goods from ocean-going vessels, of which 48 per cent was containerised cargo.

Although containerisation is a major cargo transport method, a considerable amount of dry cargo handled in Hong Kong is transported at some stage by lighters and motor cargo boats. About 2 000 of these vessels were operating at the end of 1987, some 30 per cent of which were self-propelled. Break-bulk cargo is normally handled using ships' gear, but floating heavy-lift cranes are available when required.

The port of Hong Kong handled 3.4 million TEUs (20-foot equivalent units) in 1987. The container terminals at Kwai Chung provide six berths with more than 2 300 metres of quay backed by about 114 hectares of cargo handling area. This area includes container yards and container freight stations, all of which are operated by private companies. Up to six 'third generation' container ships can berth simultaneously at the container terminals. One of the terminal operators at Kwai Chung provides a 12-storey multi-purpose godown with the first two floors serving as a container freight station while another terminal accommodates a new six-storey container freight station capable of accommodating 40-foot containers. This is the largest such facility in the Far East. A second phase is under construction and due to be completed by early 1988. Various other multi-storey godowns in the vicinity of Kwai Chung provide additional storage facilities.

Other wharves and terminals provided and operated by private enterprise are capable of accommodating vessels up to 305 metres in length with draughts up to 14.6 metres. Cargo handling facilities in the public sector include cargo working areas at Wan Chai, Yau Ma Tei, Kwun Tong, Tsuen Wan, Western District, Rambler Channel, Chai Wan, Sham Shui Po, Sheung Wan, Kowloon Bay and Tuen Mun. These areas are administered by the Marine Department. Government policy calls for the provision of public cargo working areas throughout the territory to maintain swift and efficient internal cargo movement.

Following the Port Development Strategy Study which was completed in May 1986, the government awarded a contract to consultants to carry out a Water and Hydraulic Model Study of Victoria Harbour and its environs. The study began in January 1987 and will take two years to complete. The findings of the study will be used by the government to assess various options for future expansion of port facilities to meet growing demands.

      While Hong Kong already ranks as the leading container port in Asia and the second largest in terms of throughput in the world, further expansion of the Kwai Chung Container Port is taking place. The reclamation of Kwai Chung Creek was completed in August, adding a further 26 hectares of land to help relieve the burden on the current high utilisation of ground space at the terminals due to increases in throughput experienced during the year.

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Work also commenced on the reclamation of a further 29 hectares of land at Kwai Chung for the provision of Terminal 6, which will comprise three berths and associated terminal facilities. Construction of this new terminal is expected to be completed by mid-1989. The government gazetted the tendering for the new Terminal 7 in September, with the contract to be awarded in early 1988 and completion expected by early 1993.

      During the year, 11 million passengers were carried between Hong Kong and Macau by dynamically supported ferries and conventional ferries operating from either the Macau Ferry Terminal in Central on Hong Kong Island, or the Macau Ferry Terminal in Sham Shui Po in Kowloon.

      About 2.8 million passengers travelling between Hong Kong and over 20 destinations in China, representing an increase of 17 per cent over 1986, passed through the temporary terminals at Tai Kok Tsui and Central. A mixture of dynamically supported ferries and conventional ferries operate on these routes.

       The new China Ferry Terminal being constructed in Tsim Sha Tsui in Kowloon is expected to open in the summer of 1988. It will replace the temporary terminals at Tai Kok Tsui and Central.

       The Marine Department provides and maintains 71 mooring buoys within the port of Hong Kong for ships to work cargo in the stream. These moorings are classified as 'A Class' and 'B Class' and are suitable for vessels up to 183 and 137 metres in length respectively. Many of these moorings are special typhoon moorings to which vessels may remain secured during the passage of tropical cyclones, so improving working efficiency and reducing operational costs.

      Immigration and quarantine facilities for vessels calling at Hong Kong are available on a 24-hour basis at the Western Quarantine Anchorage. At the Eastern Quarantine Anchorage, these services are available only between 6 a.m. and 6 p.m. daily and in the case of the quarantine service, only on request through the Port Communications Centre. These services, including advance clearance, may be applied for by radio.

      Compulsory pilotage is being introduced in phases in Hong Kong and, at present in Phase 2, applies to all vessels over 5 000 gross registered tons, and in certain circumstances to smaller vessels. The final phase is expected to come into effect in 1989, when all ships of 1000 gross registered tons and over will be required to engage the services of a Hong Kong-licensed pilot when navigating in the pilotage area.

       All licensed pilots are members of the Hong Kong Pilots Association, which is a commercial organisation, operating under the provisions of the Pilotage Ordinance and the powers of the Pilotage Authority, who is the Director of Marine.

      All navigation buoys in Hong Kong coastal waters conform with the International Association of Lighthouse Authorities Maritime Buoyage System, and those marking major fairways are lit and fitted with radar reflectors. Aids to navigation in the harbour and its approaches are constantly being improved to ensure greater maritime safety.

       The Port Communications Centre, which is manned by professional officers at all times, controls and monitors shipping movements within Hong Kong waters, and is equipped with various communications systems, VHF Radio, teleprinter, telephone and facsimile. These systems provide comprehensive maritime communications both within the harbour and its approaches and, through commercial links with Cable and Wireless, on a world- wide basis.

       Marine Department launches patrol the main harbour area and its approaches. They are in continuous radio contact with the Port Communications Centre, so enabling them to respond to any emergency and fulfil the executive functions of the duty officer in the Port

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Communications Centre. Well-equipped fleets of fire boats, tugs, and marine police vessels are also readily available to respond to emergencies in the harbour.

     The Marine Department, by international agreement, is the Maritime Search and Rescue Co-ordinator for the area of the South China Sea north of Latitude 10°N and west of Longitude 120°E, excluding the immediate coastal waters of neighbouring states. The Maritime Rescue Co-ordination Centre can be manned at any time on receipt of an emergency message through the various international emergency communication channels which are continuously monitored, and a full Search and Rescue Mission can then be activated and run by staff fully trained in search and rescue techniques. Various search and rescue units are available for use in the form of vessels, aircraft (both fixed and rotary wing), and additional assistance can be obtained from the Rescue Co-ordination Centres of other states in the region.

     The implementation phase of a Vessel Traffic System to reduce navigational risks in Hong Kong waters commenced in January 1987 and is expected to be completed in 1989.

     The system will consist of five remote radar sites located at Black Point, north-east Lantau, Shek Kwu Chau, Bluff Head and Waglan Island, with the Vessel Traffic Centre located at the new Macau Ferry Terminal. It is intended that the system will be put into operation by phases as major elements are installed.

     Bunkering facilities within the port are readily available to all vessels at wharves, oil terminals, or from a large fleet of bunkering barges. Fresh water can also be provided at alongside berths, or from a private fleet of fresh water boats.

     The port has extensive facilities for repairing, dry-docking, and slipping all types of vessels, including oil rigs. Vessels of up to 40 000 tonnes deadweight, and 230 metres in length can be accommodated. A large number of minor shipyards are available to undertake repairs to small vessels, and are also equipped to build and maintain sophis- ticated patrol craft and pleasure vessels.

     Hong Kong is a prominent centre for shipowning and management activities. As a British port of registry, the tonnage of shipping registered in Hong Kong is of significance internationally. Despite a general recession in world shipping, the Hong Kong registered fleet reached eight million gross tons during the year, bringing the position of the Hong Kong shipping register to within the 10 largest registers in the world. The regulatory administration of ships registered in Hong Kong is the responsibility of the Shipping Division of the Marine Department, in respect of maritime control, safety standards and international certification to facilitate their world-wide operation. Hong Kong shipowners also control a significant percentage of the world's deadweight tonnage other than those registered in Hong Kong. Most local shipowners and associated businesses are represented by the Hong Kong Shipowners Association.

     Ships registered in Hong Kong adopt, in all key aspects, the same standards of construction, safety, manning and merchant shipping legislation as those registered in the United Kingdom. This status cannot continue beyond 1997. The Sino-British Joint Declaration provides that the future Hong Kong Special Administrative Region may continue to maintain a shipping register under its own legislation. It is therefore necessary to modify existing laws and administration systems applicable to Hong Kong, concerning registration and merchant shipping, to put them into a form in which they can continue to exist under British administration until 1997 and under the government of the Hong Kong Special Administrative Region thereafter.

The Sino-British Joint Liaison Group at its fourth meeting in July 1986 agreed on the general principles to be adopted for establishing a modified register of shipping for

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     Hong Kong. It is envisaged that this new Hong Kong register of shipping will be set up in the early 1990's. A steering group has been formed by the government to consider detailed proposals in accordance with the general principles.

      As regards the present register, the Shipping Division of the Marine Department undertakes the survey and certification of Hong Kong registered vessels under various international conventions, and also provides a plan approval and survey service. Statutory surveys of vessels intended for Hong Kong register are undertaken world-wide by surveyors of the division. Locally, surveyors are made available to British or foreign ships for the issue of certificates under the International Convention for the Safety of Life at Sea (SOLAS) 1974, and other international maritime conventions.

      A number of such international certificates were issued to foreign flag ships at the request of foreign governments. Additionally, one of the world's largest fleets of high technology dynamically-supported craft, comprising jetfoils, hydrofoils, side wall hovercraft and jetcats, operates from Hong Kong under the survey and certification of the shipping division. With some exceptions, vessels plying within the waters of Hong Kong need to be licensed under the Shipping and Port Control Ordinance. Such vessels are inspected and issued with certificates.

      Hong Kong-registered ships maintain a high standard of safety in compliance with the SOLAS convention and its amendments for improved safety measures. This conven- tion is generally regarded as the most important of all international treaties relating to maritime safety.

      Hong Kong is a centre for the recruiting of seafarers. The Seamen's Recruiting Office and the Mercantile Marine Office register and supervise the employment of about 7 500 active seafarers on board some 700 ships of many flags. Considerable attention has been given to provide more comprehensive training for Hong Kong seafarers and, in this respect, construction of permanent premises for the Seamen's Training Centre at Tai Lam Chung in the New Territories was completed in the last quarter of the year. The centre now provides pre-sea training courses for new entrants and in-service training for seamen to comply with the requirements of the International Convention on Training and Certification of Seafarers.

       The Examination Section conducts a wide range of examinations for persons requiring certificates of competency for service on vessels of all sizes and types operating in local and international waters. The section also monitors all aspects of training at approved establishments for the acquisition of various maritime qualifications recognised by the Hong Kong Government and required by international convention.

      A convention of particular significance which is in force internationally and observed by Hong Kong registered vessels, is the International Convention for the Prevention of Pollution from Ships (MARPOL) 1973 as modified by its 1978 Protocol. Hong Kong- registered vessels comply with the requirements of the convention and are issued with International Oil Pollution Prevention (IOPP) certificates. As a result, Hong Kong ships are now able to produce authoritative evidence of compliance with MARPOL, thereby making a positive contribution to the environmental protection of the sea. Moreover, as visiting ships are required to comply with MARPOL standards, the risk of pollution to Hong Kong waters has been reduced.

      During the year, Hong Kong also adopted an important annex to the international convention of MARPOL 73/78 (Annex II), which applies to chemical tankers registered or licensed in Hong Kong as well as foreign tankers entering the port of Hong Kong. The new requirements specify strict standards concerning the way in which noxious liquid

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substances, such as chemicals, may be discharged as wastes from ships into the waters of Hong Kong or to the open sea. The observance of these new international measures by Hong Kong ships will make a positive contribution to the curbing of chemical pollution and to a cleaner marine environment internationally.

Civil Aviation

The Civil Aviation Department is responsible for all aspects of civil aviation in Hong Kong other than the licensing of scheduled air services, which falls within the purview of the Air Transport Licensing Authority (ATLA), an independent statutory body.

      Prior to the establishment of the Airport Development Studies Division in October 1987, the department consisted of five divisions dealing with air traffic control, aviation safety, technical and planning matters, international relations governing air services, and manage- ment of Hong Kong International Airport. The new division was established to consider the future development of the airport and to examine options available to the government as regards the timing, location and provision of any replacement airport. The department is also provided with accounting services to control revenue and expenditure, and office management services for staff establishment, discipline and welfare.

Hong Kong International Airport, a single-runway airport, is the product of a con- tinuous programme of modification and development to meet the significant growth in air traffic and the introduction of new aircraft types in recent times. A full range of facilities is available, including aircraft engineering and maintenance, in-flight catering and one of the largest air freight complexes in Asia.

Passenger throughput and cargo traffic increased considerably in 1987. There were 12.7 million passengers, which represented an increase of 19.8 per cent over the total of 10.6 million in the previous year. General cargo, including manufactured goods imported, exported and re-exported by air, totalled 611 000 tonnes as compared with 536 000 tonnes in 1986. The value of airborne goods totalled $162,649 million. Viewed against Hong Kong's total trade in imports, exports and re-exports, imports by air made up about 20 per cent, exports by air about 27 per cent and re-exports by air about 18 per cent in value terms. The United States was the major market for exports and re-exports by air, accounting for 47 per cent and 22 per cent respectively, of the trade.

An increase of 13.2 per cent in aircraft movements was recorded, bringing the annual total to 73 370. More than 80 per cent of the aircraft calling at Hong Kong were wide-bodied.

The year saw the introduction or re-introduction of scheduled air services to Hong Kong by Rosenbalm Aviation, Federal Express, All Nippon Airways, World Airways and Air New Zealand. This raised the number of scheduled airlines serving Hong Kong to 37, which together operated about 1200 direct flights weekly between Hong Kong and some 77 other cities. In addition, an average of 80 non-scheduled flights were operated each week.

Throughout 1987, Cathay Pacific Airways continued to increase the frequency and capacity of its services to major cities. To cope with this increase, it acquired a fifth B747-300, a second B747 freighter and a 10th L1011. The acquisition of the additional freighter enabled the airline to double its cargo capacity on European routes and mount additional all-cargo services to Japan and Taiwan. Cathay Pacific Airways also operates eight B747-200 aircraft, and so by the end of 1987 it had a fleet of 25 aircraft.

Hong Kong Dragon Airlines continued to operate scheduled services to Chiangmai and Phuket in Thailand, and non-scheduled services to a number of cities in Asia. The airline increased its fleet to three B737s with the arrival of a third aircraft in April.

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      In May, Transcorp Airways (Hong Kong) Limited, after receiving its air operator's certificate, began non-scheduled cargo services between Hong Kong and Sydney with a B707 freighter.

      The Hong Kong/Netherlands Air Services Agreement, which was concluded by Hong Kong under specific authorisation from the United Kingdom Government, entered into force on June 26. This was the first in a series of air services agreements which Hong Kong aims to conclude with other governments in the coming years. These agreements have been specifically designed with the relevant provisions of the Sino-British Joint Declaration on the Question of Hong Kong in mind.

      The Civil Aviation (Aircraft Noise) Ordinance, which provides, inter alia, for the prohibition of aircraft not meeting international noise standards from landing and taking off in Hong Kong, came into force on May 1. The relevant provisions of the ordinance are to be implemented in stages. The first stage, effective from May 1, applies to subsonic jet aircraft registered in Hong Kong and subsonic jet aircraft not registered in Hong Kong, but owned or operated by a Hong Kong company or resident. The second stage, covering foreign aircraft, has yet to be implemented.

      At Hong Kong International Airport, progress was made on a number of ongoing projects, and new projects were launched.

      Work continued on the Stage V extension of the Passenger Terminal Building and is expected to be completed in the third quarter of 1988. The capacity of the terminal building will then be increased by about 50 per cent - to 18 million passengers per annum.

      The 22-month-long project to provide paved shoulders along the full length of the runway to eliminate the severe soil erosion problem caused by jet efflux, which commenced in May 1986, continued on schedule. This project is scheduled for completion in March 1988. During this period, the runway is closed to aircraft operations from midnight to 8.45 a.m. daily.

      In March, new walk-through metal detectors and film-safe X-ray baggage inspection machines were introduced for security screening of departing passengers and their hand baggage.

      A new money-changing system was introduced on March 15 to provide an improved service. Under this system, the money changers must apply the exchange rates which are used by major local banks and displayed on a TV monitor installed at their premises. A single service charge not exceeding five per cent of the Hong Kong dollar value of the transaction is levied.

From September 1, Duty Free Shoppers (1973) Limited ceased to be the contractor for the duty-free liquor and tobacco concession after 25 years of operation. A new concessionaire, Kiu Fat Investment Corporation Limited, has taken over and will operate there for five years. In October, a short-range radar capable of monitoring aircraft and vehicle movements on the runway, taxiway and apron areas at night and in poor visibility, was commissioned. An advanced computerised radar data processing and display system is to be introduced in the air traffic control centre to enhance the efficiency of the air traffic control service. A set of new air traffic control simulators, used for the initial and refresher training of air traffic control staff, was acquired to replace the old simulators and to match the new functional system. Installation of the equipment progressed on schedule, and the two systems will be commissioned in phases in the first half of 1988.

In the latter part of 1987, two studies were started in respect of the airport.

      An airport ground noise consultancy study began in September. Its objectives are to determine the extent of ground noise and to recommend abatement measures. This study

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will take six months to complete. In October, a consultant was engaged to carry out a 10-month study on the capacity and development potential of the airport. Under the supervision of the newly-established Airport Development Studies Division, the study will seek to define the constraints on the present airport, forecast air traffic demand up to the year 2010, and explore methods of meeting the projected demand within the constraints identified.

During the course of 1987, ATLA granted 14 licences. Taken together with those granted in previous years, this meant that, at December 31, Cathay Pacific Airways held licences to operate scheduled services to 49 cities in 26 countries, and Hong Kong Dragon Airlines was licensed to serve 39 cities in eight countries.

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Public Order

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THE high priority given by the Hong Kong Government to the battle against crime is reflected in the work of the Fight Crime Committee, chaired by the Chief Secretary, which continued to provide advice and recommendations on areas of public concern and for the maintenance of law and order.

The Royal Hong Kong Police Force is responsible for preventing and detecting crime. In tackling the illicit trade in drugs, the police maintain close liaison with the Customs and Excise Department, which also works closely with overseas law enforcement agencies to combat smuggling and to enforce the Copyright Ordinance.

      The Independent Commission Against Corruption, which enforces the Prevention of Bribery Ordinance and educates the community on the evils of corruption, also continued to play an important role in law enforcement.

      The Correctional Services Department administers the penal system, runs rehabilitation and correctional programmes, and manages closed centres for Vietnamese refugees.

      In the crowded areas of Hong Kong, fire fighting is not an easy task. The Fire Services Department, nevertheless, continued to work efficiently on fire protection, fire fighting and rescue work, and ambulance service.

Fight Crime Committee

The Fight Crime Committee continued to reflect the high priority given by the government to the fight against crime. It gave advice on a wide range of issues, such as triad and gang activities, the control of imitation firearms, approaches to juvenile crime and young offenders, nuisance caused by vice establishments, regulation of Hong Kong's security industry, and home security.

      The menace posed by triads, gangs and organised crime continued to be the focus of much attention. The committee considered in detail the action to be taken following publication of the discussion document, 'Options for Changes in the Law and in the Administration of the Law to Counter the Triad Problem', which contains a number of legislative and other options aimed at making the fight against triads and organised crime more effective. Legislation was enacted to increase penalties for people convicted of offences related to triad membership. Draft legislation aimed at cracking down on illegal gambling is being prepared and draft legislation to give effect to a scheme of renunciation of triad membership is under consideration. A major publicity campaign was launched to warn people, especially the young, about the evil of triads and to discourage them from becoming involved with triads.

      Government departments have been asked to look at areas under their responsibility in which triads and gangs might be operating and to consider tightening controls and changing procedures to prevent criminal activity.

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     The Fight Crime Committee continued to pay close attention to the problem of juvenile crime. The Young Offender Assessment Panel, set up to co-ordinate advice given to the courts on the backgrounds of young offenders and the correctional programmes most likely to reform them, has since considered 133 cases. The committee also considered in depth the question of triad influence and juvenile crime in schools, and as a result, has compiled a detailed report on its findings for consideration by the Education Commission.

     The committee continued to monitor the implementation of the standardised law and order statistical system, which became fully operational in July 1986, and which provides compatible statistics from major branches of the criminal justice system. To gather comprehensive data on the criminal justice system and on recidivism, a more sophisticated integrated statistical system was planned. A preliminary design of the system was drawn up and a mini-computer system will be developed when funds are available.

     Liaison with goldsmith and jewellery trade associations continued in order to keep up the pressure on shopowners to provide adequate security measures in their premises. The proposed criminal closure order scheme was further refined, with a view to controlling more effectively nuisances caused by vice establishments in residential buildings.

     The District Fight Crime Committees continued to play a vital role in the fight against crime by monitoring the state of crime and law enforcement in the districts, and co- ordinating district efforts to help the police. They also organised their own fight-crime activities in support of the various central government initiatives, such as the Neighbour- hood Watch Scheme and the anti-triad publicity campaign, and maintained close links with the central committee.

Discussions continued with the Security Association on how best to regulate the security industry to ensure that the services it provided met adequate standards. The possibility of introducing legislation to regulate the industry and replace the Watchman's Ordinance was examined. Draft legislation to improve the standard of burglar alarms was also considered.

Police Force

The year saw continued development throughout the Royal Hong Kong Police Force, no- tably in the Marine Region, which underwent further modernisation and the expansion of its fleet by two command launches, seven harbour patrol launches and 25 inflatable boats. It was also a busy year for Marine Police personnel responsible for intercepting the major surge of Chinese illegal immigrants and Vietnamese illegal immigrants from China. However, the task of maintaining the professional and technical standards of officers was made easier with the opening of the extension to the Marine Police Training School.

     On land, planning continued for the split of the Kowloon region into two regions by 1991 and it was decided also to split the New Territories region into two regions by 1993.

In May, the Commissioner of Police visited Peking, Shanghai and Guangzhou to discuss counterfeiting, narcotics, illegal immigration and other operational matters. The commis- sioner described his nine-day visit as fruitful and worthwhile.

Triad society influence in the community continued to be a major public concern. The year saw progress on proposals in the Fight Crime Committee's discussion document on options for changes in the law and in the administration of the law to counter the triad problem. These include a triad renunciation scheme, the use of one-way mirrors at identification parades and intensive anti-triad publicity in schools.

Another crime trend which came under scrutiny was the upsurge in pickpocketing. A series of operations by the regional anti-pickpocket units, formed in November 1986, resulted in the number of reported cases dropping significantly.

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In 1987, 82 914 crimes were reported, compared with 81 411 in 1986. There were 5 461 robberies, compared with 5 372, and 11 587 burglaries compared with 11 942 in 1986. The overall detection rate was 46.2 per cent, against 47.9 per cent in the previous year.

      A total of 37 561 people were arrested and prosecuted, compared with 37 863 in 1986. There were 34 301 adults and 3 260 juveniles (under 16 years) prosecuted, compared with 35 265 and 2 598, respectively, in 1986.

Organised and Serious Crime

The Organised and Serious Crimes Group increased its operations against triad societies and organised crime syndicates, with notable successes. There were 147 robberies involving the use of genuine or imitation firearms, about the same number as last year. Altogether, 37 genuine firearms were seized and 27 persons were arrested and charged with various related offences. Robberies against goldsmith, jewellery and watch shops dropped, a total of 28 such cases being recorded, accounting for the loss of property valued at $50 million.

Commercial Crime

The major areas of concern involved letters of credit, missing or false shipments of cargo and attempts by international groups to use Hong Kong as a base for advance fee frauds.

      Hong Kong continues to be a centre for the production of high quality counterfeit currency and other security printed documents. During the year, a number of workshops producing counterfeit currency and cheques were located and neutralised. In June, four members of a syndicate operating out of Pakistan were arrested when they flew into Hong Kong with equipment for the production of high quality counterfeit travellers' cheques. In another case, following the arrest of two Hong Kong citizens and the seizure of $3 million in counterfeit notes in China, a further five people were arrested in Hong Kong and charged with conspiring to forge banknotes.

Narcotics

Yet another heavy opium crop in the Golden Triangle - Hong Kong's almost exclusive source of opiates - resulted in widespread drug trafficking throughout Southeast Asia and an influx of opiates into Hong Kong. Continued action by police and customs units resulted in fluctuations in both prices and purity levels.

      Mainly as a result of tighter controls over the availability of Methaqualone (Mandrax) in China, there was a decrease in the seizures of this drug.

      Some 745 kilograms of opiate drugs, including heroin base, No. 3 heroin, No. 4 heroin and opium were seized by police and customs, compared with 643 kilograms in 1986. There were 11 233 prosecutions for narcotics offences, compared with 12 494 in the previous year.

Bomb Reports

The Explosive Ordnance Disposal Unit dealt with 185 incidents during the year. Opera- tions included the neutralisation of two improvised devices, the investigation of four explo- sions attributed to improvised devices, 22 incidents involving the seizure of explosives and 72 related to the clearance of World War II relics. In addition, 380 reports concerning suspicious objects were received and investigated either by the unit or general duty officers. There were four major bomb incidents in June and July. In one, 14 people were injured at Taikoo Shing, and in the other three damage was caused to the Queensway government office block, the Yau Ma Tei multi-storey carpark and the Tsim Sha Tsui Centre.

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Consideration is being given to the introduction of legislation to reduce both the environmental impact of intruder alarms and the number of systems which repeatedly cause false alarms. Following intensive training, a small unit is now operating within the Crime Prevention Bureau to provide the public with professional and technical advice relating to alarm systems. Consideration is also being given, in consultation with the Security Association of Hong Kong, to introducing legislation to govern various aspects of the security industry.

Crime Information

The Police Operational Nominal Index Computer System, which is maintained and operated by the Criminal Records Bureau, continued to be effective, with about 9 000 enquiries being handled each day.

The Identification Bureau specialises in fingerprint technology and forensic photo- graphy. Staff of the Scenes of Crime Section attended 24 733 crimes scenes to examine fingerprints, resulting in 586 persons being identified as having connection with 650 cases. The Advanced Technology Unit, which began operation at the end of 1986, handled 196 cases.

The main fingerprint collection contains 596 654 sets. During the year, 71 297 arrest fingerprints were processed and, from these, 37 519 people were identified as having previous convictions. The section also carried out searches on 78 625 sets of fingerprints for vetting purposes.

      The Certificate of No Criminal Conviction Section received 53 471 applications for certificates.

     The Photographic Section produced 588 466 black and white photographs and 244 910 colour slides and photographs.

Public Order and Internal Security

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There were no major incidents affecting Hong Kong's internal security during the year. Officers of the Police Tactical Unit continued to play an important role in maintaining order at major public functions. In May, they shared with the Coldstream Guards and the Royal Hong Kong Regiment (The Volunteers) the honour of mounting guard at Government House during the visit of Princess Margaret.

During the year, 1 900 officers from the rank of constable to superintendent received training in internal security tactics and methods of crowd control at the Police Tactical Unit base in the New Territories.

Illegal Immigration

Illegal immigration continued to be one of the most serious problems facing the security forces. An average of 780 police officers were deployed daily to counter all forms of illegal immigration, including the detection and apprehension of persons who have evaded security surveillance. A total of 4 298 such evaders were apprehended during the year. This compared with 22 455 illegal immigrants arrested while attempting entry to Hong Kong.

     A change of policy in April, under which all minor illegal immigrants were to receive the same treatment as adult illegal immigrants, effectively curtailed child smuggling.

     Specific action was taken against those employing illegal immigrants, as a result of which 171 persons were prosecuted. In addition 347 persons were prosecuted for bringing illegal immigrants into Hong Kong.

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Of the illegal immigrants, only 0.35 per cent were found in possession of forged identity cards. This compares with 0.5 per cent in 1986.

The new-style identity card, issued in July, has proved difficult to forge, and computer- ised checking procedures make it possible to identify evaders who use lost or stolen cards belonging to bona fide Hong Kong residents.

Vietnamese Refugees and Ex-China Vietnamese Illegal Immigrants

During the year, 3 395 Vietnamese refugees arrived in Hong Kong. Most of these people left Vietnam for economic reasons with the intention of seeking settlement overseas.

      A significant number of Vietnamese refugees had settled in China in the late 1970s and the early 1980s. From time to time, some of these Vietnamese would enter Hong Kong illegally, claiming to be refugees directly from Vietnam. Their identities would be checked with the Chinese authorities and all those confirmed to have come from China would be repatriated. In July, there was a sudden influx of these people, who had been prompted by false rumours circulating in Guangdong that an amnesty for Vietnamese illegal immigrants was in the offing in Hong Kong and that they would be quickly resettled in Western countries. By mid-August, the number of arrivals reached 6 500. However, following urgent talks between the Hong Kong Government and Chinese officials in Guangzhou, repatriation of these illegal entrants began on August 22 and the inflow gradually decreased.

      These illegal entrants totalled 247 in December 1987, compared with 107 in Decem- ber 1986.

      At the end of the year, the Vietnamese refugee population was 9 530. Of these, 6 566 were in closed camps and 2 964 in open centres. During the year, 2 212 were resettled and 319 births were registered.

Traffic

     Traffic accidents causing personal injury increased by 8.7 per cent over the previous year - the first increase since 1982. While this was not unexpected at a time when both road usage and the number of vehicles were increasing, it served to highlight the need for sustained effort in the fields of road safety education and traffic control and enforcement.

      Road safety campaigns were mounted throughout the year, with particular attention being paid to the elderly and to children under the age of 15. In addition, a road safety exhibition centre was opened at the Police Traffic Wing Headquarters in United Centre, Queensway, on Hong Kong Island. The improved Road Safety Town at Sau Mau Ping continued also to be visited by schools and other organisations.

       On December 31, provisional figures for accidents causing personal injury showed there were: 282 fatalities and 21 198 cases of injury.

Community and Media Relations

During the year, the government launched its first anti-triad drive as the backbone of the Fight Crime Campaign. The publicity campaign was aimed at exposing the general public to the sordid activities of triads and the danger of becoming involved with them. The campaign centred on a seven-episode drama documentary TV series entitled 'Wayward Youth', which showed the harm that can result when young people become involved with triad gangs. Wide-ranging activities were also organised by the central and district fight crime committees and all publicity methods were used to drive home the anti-triad message.

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     Other anti-crime fronts were not neglected. Emphasis was placed on home security, anti-shoptheft and the phased expansion of the Neighbourhood Watch Scheme.

      The scheme continued to be well-received by the community. Two more phases were launched during the year, bringing to 63 506 the total number of participating families in the four phases completed since the scheme began in 1984.

     With enhanced public awareness of home security and the success of the scheme, the number of burglaries in 1987 continued to decline.

     Junior Police Call (JPC) - one of the largest police-youth organisations in the world - has kept on growing and developing. About 3 000 youngsters applied each month to join the JPC, and the total number who have joined the movement since its inception in 1974 now stands at over 466 700. As well as providing healthy recreational pursuits for its young members, the movement is involved in raising funds for charity, and members take part in a wide variety of community programmes. To commemorate the outstanding performance of JPC members in community service, an award scheme, sponsored by a leading bank, is held each year to select the best member, leader, council and school club in the movement.

     A territory-wide campaign based on the theme 'Care for the Elderly', was launched during the year. The campaign was aimed at promoting, among the younger generation, an awareness of the problems of the elderly by fostering greater respect for old people in Hong Kong. It was strongly supported by the community.

     Another means of encouraging public support in the fight against crime is the 'Good Citizens Award Scheme', in which those who actively help in arresting criminals are given cash awards. During the year, 97 Good Citizens received awards totalling $158,000. The Good Citizen of the Year Award, which was introduced in 1985 for outstanding efforts by members of the public, continued to attract nominations, and one such award was made during the year. The readiness of the public, as a whole, to co-operate with the police was illustrated by the fact that 4 547 criminals were actually arrested by members of the public. This represented 12.1 per cent of the total arrest. The public also continued to make full use of the police 'hotline' telephone to pass on crime information. The number of criminals arrested as a direct result of hotline information reached the 5 700-mark by September 1987.

     Television programmes jointly produced by the Police Public Relations Branch (PPRB) and Radio Television Hong Kong continued to prove popular, and 'Crimewatch', the pro- gramme which features re-enactments of actual crimes and asks for assistance from the public, has proved to be a great success, both in terms of viewing figures and audience response. 'Police 15', a 15-minute programme, aired on the Chinese channels every week and which offers simple crime prevention advice as well as asks for witnesses to crime to come forward, reached its 11th anniversary in October.

Training

    Facilities at the Police Training School were further expanded and improved to meet increasing demand. Recruit inspectors continued to undergo a 36-week course and recruit constables began their career with a 22-week course. The courses covered criminal law, social studies, police and court procedures, drill and musketry, first aid and, for overseas inspectors, an eight-week course in colloquial Cantonese. Recruit traffic wardens under- went a six-week course covering traffic legislation and procedures. The wide range of specialist and continuation training continued.

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     The Police Cadet School at Fanling continued to provide an alternative style of education for young men aged between 15 and 17. Since its formation in 1973, the establishment of the school has been progressively increased from its original 150 to its present 750. During its 14 years of operation, 3 488 cadets have graduated from the school. Of these, 3 219 joined the Police Force, 42 entered the Fire Services, 75 opted for the Customs and Excise Service and 54 joined the Correctional Services Department.

Complaints Against Police Office

The Complaints Against Police Office (CAPO) was set up in 1974 to investigate complaints from the public concerning the conduct and behaviour of members of the Police Force, including civilian staff and auxiliary police officers. Over the years the number of complaints has increased steadily and in 1977 the OMELCO Police Group was set up to monitor all complaints. The chairman and members were drawn from the Executive and Legislative councils and appointed by the Governor. The Attorney General was a co-opted member.

      In 1978, 2 264 complaints were tabled before the group. By 1984 the total had risen to 4 389, indicating both an increased awareness of the system and confidence in the investigative procedures of the police. This confidence has continued and is reflected in the fact that over 90 per cent of complaints are made in person, or by telephone, to the three regional CAPO offices or to police stations.

      However, by 1984 the rise in complaints had put increased pressure on members of the group and a working party was established to examine methods of reducing this workload, while at the same time maintaining a detailed and independent monitor. As a result, in early 1986 the Police Complaints Committee (PCC) was formally established, supported by its own independent secretariat staffed by full-time public servants.

The PCC consists of a chairman and two vice-chairmen drawn from the Executive Council and the Legislative Council and at least eight Justices of the Peace - all appointed by the Governor. The Attorney General remains a co-opted member.

      In 1987, 3 885 complaints were registered representing a decrease of 14.3 per cent over the 4 533 complaints received in 1986. A total of 80 police officers were disciplined and 37 were charged with offences resulting from complaints. The rate of substantiated complaints was 7.2 per cent against 8.2 per cent classified as false. Investigations are still to be completed into 1 395 complaints reported during the year.

      In addition to investigating complaints, CAPO has a preventive role and is responsible for educating the force on complaint trends and associated problems. To achieve this, a video tape on common complaint situations was produced in conjunction with Police Public Relations Branch, and an intense programme of lectures extending throughout 1986 and 1987 covered a large proportion of all operational junior police officers. It is hoped, in this way, to reduce conflict situations with members of the public and to enhance public relations.

Planning and Development

Construction of Phase One of a new Police Headquarters complex continued on schedule and is expected to be completed in early 1989. Planning for Phase Two was well advanced also and completion is scheduled for late 1991. During the year, new police stations were completed at Tai Po, Tsing Yi and Lo Wu.

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Design work is nearing completion for the Integrated Radio Services System, which will replace the existing Beat Radio Scheme, extend portable radio coverage to areas not covered by that scheme, and replace most of the other existing UHF and VHF networks for police officers on foot, in vehicles or deployed in the internal security role. The new system will be implemented with the Command and Control II project which will replace and expand the computer-assisted command and control system. Planning has also commenced on new maintenance arrangements for sophisticated systems which will come into service in the next few years.

For public convenience, specially-designed automatic telephones were installed outside Neighbourhood Police Offices, for use when these offices are not manned.

Transport

The fleet now consists of 1900 vehicles, including 650 motorcycles. An examination of vehicle types in use is being conducted with a view to greater standardisation. In addition, a computer is used for monitoring the deployment and utilisation of vehicles, and other aspects of fleet management.

Information Technology

Steady expansion continued in the use of computers within the Police Force. The Computer Development Branch has been reorganised and strengthened, with the transfer from the Government Data Processing Agency of a senior assistant data processing manager as head of the branch, with responsibility also for further developing the Police Force's information strategy. The branch has been renamed the Information Technology Branch.

The Personnel and Training Computer System was introduced in July to aid manage- ment in career planning and resources development at inspectorate rank and above. A review, scheduled for early 1988, will determine whether the system should be extended to cover other ranks. New computer systems will also be developed for the maintenance and analysis of statistics at the Complaints Against Police Office, and for handling criminal intelligence. The Information Technology Branch, which has been actively involved in providing data processing support for major crime investigations, is also acquiring an increasing number of microcomputers and word-processors for use by various formations of the police.

Licensing and Societies Registration

Replacement of the existing controls on watchmen with legislation governing all aspects of the security industry is being considered. Proposals to tighten further the controls on imitation firearms in the Firearms and Ammunition Ordinance were not pursued.

The numbers of licence permits and registrations for which the Commissioner of Police is the authority continued to increase steadily. At the end of the year 80 969 watchmen were registered, and 1 532 arms licences, 148 massage establishment licences and 608 other licences were in force. There were also 4 193 registered societies and 666 societies exempted from registration.

The Police Force investigates applications for a number of licences issued by the Commissioner for Television and Entertainment Licensing and the Urban and Regional Councils. The premises so licensed are supervised by the police. In this category there were 2 812 liquor licensed premises and 819 amusement game centres, besides public dance halls, mahjong schools and billiard saloons.

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Police dogs are trained at the Police Dog Unit at Yuen Long in the New Territories and are used for such work as patrolling, tracking and detecting dangerous drugs. Comprehensive training programmes were regularly attended by the handlers and their dogs to ensure that high standards of operational performance were maintained. The unit has 90 police dogs, most of them German Shepherds.

Personnel

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an

     At the end of the year, the force establishment totalled 26 626 disciplined posts increase of 669 over the corresponding figure in 1986. In addition, the force had an establishment of 5 796 civilians, representing 17.88 per cent of the overall establishment.

      During 1987, 7 197 people applied to join the Police Force as constables and 924 were appointed, of whom 16.6 per cent were women. A total of 215 persons were appointed as police inspectors during the year, of whom 88 were direct-entry local appointees, 47 were direct-entry overseas appointees and 67 were junior police officers appointed through the 'potential officer' selection scheme.

      Promotion prospects remained excellent at all levels. During the year, 12 gazetted officers were promoted to senior superintendent and above, 32 to superintendent, 80 to chief inspector, 141 to station sergeant and 332 to sergeant. In addition, 13 exceptionally experienced station sergeants were promoted to the rank of inspector.

Welfare

The Police Welfare Branch provides a wide range of welfare, psychological, sporting, recreational and catering services for both disciplined and civilian members of the force and their families.

      During the year, 5 541 interviews were conducted in the regional welfare offices and 5 293 visits were made by Welfare Branch staff to officers and their families at home or in hospital. Some 4 174 children of both regular and auxiliary police officers were granted bursaries from the Police Children's Education Trust and the Police Education and Welfare Trust.

The Police Sports and Recreation Club in Boundary Street provides a wide range of facilities for all ranks, while the Police Officers' Club in Causeway Bay provides facilities for officers of inspectorate rank, and above, and their civilian counterparts. Thirty holiday homes and recreation centres, situated at scenic spots, were also available to members of the force.

Royal Hong Kong Auxiliary Police Force

The Royal Hong Kong Auxiliary Police Force comprises volunteers from all walks of life. Its current strength is 5 009, about 10 per cent of whom are women officers. The force assists the regular police force in day-to-day constabulary duties and provides additional manpower if needed. In 1987, the average daily turnout of auxiliaries for constabulary duties was 700.

Police Complaints Committee

The Police Complaints Committee is an independent monitoring group appointed person- ally by the Governor. Its main function is to monitor the processing by the Complaints Against Police Office (CAPO), Royal Hong Kong Police Force of complaints made against the police by the public.

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During the year, the committee examined in detail 3 997 complaint cases embracing 6 045 separate points of complaints. In examining these cases, the committee also proposed a number of reviews of, and changes to, police practices, procedures and instructions with a view to improving the overall effectiveness of the complaints system and assisting the Commissioner of Police in minimising public complaints against the police.

Customs and Excise Department

The major component part of the Customs and Excise Department is the Customs and Excise Service, a disciplined and uniformed force of 2 633. Apart from law enforcement and revenue protection functions, the responsibilities of the service include the prevention and detection of illegally imported goods which are prohibited or restricted for public health or safety reasons or to meet international obligations.

Revenue Protection

There are six groups of dutiable commodities in Hong Kong - hydrocarbon oil, alcoholic liquor, methyl alcohol, tobacco, non-alcoholic beverages and cosmetics. The Customs and Excise Service is responsible for collecting and protecting revenue on dutiable commodities. The Dutiable Commodities Ordinance imposes controls on the import, export, manufac- ture, sale and storage of these commodities. In 1986-7, a total revenue of $3,467 million was collected on dutiable commodities, compared with some $3,092 million in 1985-6.

Anti-Narcotics Operations

The service shares responsibility with the Police Force for the prevention and suppression of illicit trafficking in narcotics and other dangerous drugs. It intercepts illegal imports and exports and takes action against drug manufacturing, trafficking and abuse in Hong Kong. The service co-operates closely with the Police Force, overseas customs authorities and other law enforcement agencies.

      During the year, 270 kilograms of opiate drugs and cannabis were seized, including 44 kilograms of No. 4 heroin, 86 kilograms of No. 3 heroin, six kilograms of heroin base, 86 kilograms of opium, and 48 kilograms of cannabis. In addition, 36 600 tablets of assorted synthetic dangerous drugs, mainly methaqualone, were seized. A total of 1 550 persons were charged with drug offences.

Anti-Smuggling Operations

The service carries out import and export controls at all entry points, and patrols Hong Kong waters. Import and export cargo not properly manifested and prohibited articles not covered by licences are liable to seizure. In 1987, the service detected 182 smuggling cases under the Import and Export Ordinance and arrested 242 persons with $21 million worth of goods seized. Of these cases, 87 per cent related to smuggling activities between Hong Kong and China. Seizures relating to import were mainly raw silk, Chinese herbs, frozen meat and antiques whereas those for export were textile piece goods, clothing and electrical goods.

Intellectual and Industrial Property Rights Protection

The service is responsible for protecting the copyright of literary, dramatic and musical works. While the problem of pirated sound recordings has been contained, illicit copying of motion pictures and television programmes and unauthorised photocopying of books remains a problem. In 1987, the Copyright Division made 130 copyright investigations,

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which resulted in 143 persons being charged. In addition, as an offshoot of the division's activities in this field, 797 pornographic video tapes were seized and 23 persons charged with offences under the Objectionable Publications Ordinance.

      The department is also responsible for protecting industrial property rights. It inves- tigates false and misleading trade marks and descriptions of commercial goods under the Trade Descriptions Ordinance, and infringements of industrial design copyright under the Copyright Ordinance. During the year, the Trading Standards Investigation Bureau and the Copyright Division made 1 326 investigations, resulting in 1 400 persons being charged with offences under the Trade Descriptions Ordinance and the Copyright Ordinance. Fines totalled $5.5 million and prison sentences were imposed.

Independent Commission Against Corruption

The Independent Commission Against Corruption (ICAC), which is in its 14th year, con- tinued its fight against corruption in Hong Kong during the year by devoting considerable attention to the private sector. Its growing international reputation in anti-corruption methods was further enhanced when it hosted the Third International Anti-Corruption Conference in November.

To improve its effectiveness, the commission introduced amendments to two of the ordinances under which it operates - Prevention of Bribery (Amendment) Bill 1987 and Independent Commission Against Corruption (Amendment) Bill 1987. Both amendments were passed into law by the Legislative Council in July.

      The ICAC is independent of the Civil Service and the Commissioner is directly responsible to the Governor. The Advisory Committee on Corruption, consisting of leading citizens and senior government officials, provides guidance on policy matters concerning staffing, financial estimates, administration and other aspects of the commis- sion's work. Each of the three functional departments of the commission, dealing with operations, corruption prevention and community relations, is also guided by an advisory body with members drawn from various sectors of the community and public service. All complaints against the commission and its staff are handled by a complaints committee, which comprises five members of the Executive and Legislative councils and a law officer. A total of 19 such complaints received during the year were thoroughly investigated.

Operations

The Operations Department investigates all reports of suspected offences under the Prevention of Bribery Ordinance, the ICAC Ordinance and the Corrupt and Illegal Practices Ordinance.

       The Prevention of Bribery Ordinance and the ICAC Ordinance were amended in 1987 to enhance the department's powers to investigate corruption offences and to impose additional penalties on public servants convicted of offences of maintaining a standard of living above that commensurate with, or being in control of pecuniary resources or property disproportionate to, present or past emoluments.

      During the year, the department received 2 299 corruption reports. Of these 742 were made by members of the public in person, 915 by telephone and 450 by letter, and 192 were received from government departments. Of these reports, 66 per cent were made by persons prepared to identify themselves.

      Large-scale commercial fraud facilitated by corruption continued to demand the deployment of large numbers of investigators, many of whom travelled extensively to investigate and bring to justice offenders who had fled from Hong Kong. To facilitate such

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investigations, an extensive network of international liaison and co-operation has been established with other law enforcement agencies.

A total of 485 persons were prosecuted for corruption or related offences and 322 prosecutions were completed with 260 convictions; 77 persons were officially cautioned under new procedures ratified by the Attorney General. At the end of the year, 163 cases were awaiting trial and 591 investigations were in progress.

      On the advice of the Operations Review Committee, reports concerning 174 serving or former government officers were referred to the heads of departments and the Civil Service Branch for consideration of disciplinary or administrative action.

Corruption Prevention

     The Corruption Prevention Department reviews procedures which could be conducive to corruption in government departments and public bodies and recommends changes. Free advice is also available to private organisations or individuals on request.

During the year, 91 assignment studies were completed, bringing the total since 1975 to 1214. These studies were detailed examinations of specific areas of a government department's or a public body's activities, covering policy, law, instructions, work methods and management. Reviewing the effectiveness of previous studies and monitoring corrup- tion prevention measures continued to be an important aspect of the department's work.

The department maintained a close working relationship with a large number of government departments, offering advice on draft legislation, new procedures and instruc- tions. The department also played an active part in departmental and inter-departmental working groups, being represented on 44 working groups or committees. The Corruption Prevention Groups established at directorate level in government departments continued to provide a co-ordinated approach to corruption prevention studies. At the end of the year there were 33 such groups.

Training programmes for supervisors in the government, public bodies, and the private sector continued to be organised. The programmes covered the concepts of supervisory accountability, management's role in corruption prevention, delegation of responsibility and authority and general corruption prevention advice. Training for senior and junior supervisors in the government helped to build corruption prevention measures into government policies and procedures as they evolved.

The department's Advisory Services Group, which gives confidential and free advice to the private sector on corruption prevention measures, was in contact with 117 organisa- tions. Advice, whether in detailed reports or in informal discussion, was designed to meet the clients' specific needs. Since its inception in 1985, the group has provided advice to 198 private sector organisations.

The department continued to take part in management seminars organised by the Shenzhen University for managers and executives in China. Case studies were developed with a view to demonstrating common management weaknesses which were conducive to corruption.

Community Relations

The Community Relations Department is responsible for educating the public against the evils of corruption, harnessing public support in the fight against corruption, and, in the long term, promoting higher moral standards and a greater sense of civic responsibility in the community. The department operates through two divisions, namely the Liaison Division and the Media and Education Division.

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      Direct liaison was maintained with all sectors of the community with 17 792 liaison functions and 164 special programmes conducted for 326 500 people.

      In its liaison with the private sector, the department organised a number of seminars and management game competitions for business executives during which case studies were used to stimulate discussion on law-related and ethical issues. A seminar for the travel industry was also organised in which 180 representatives from 150 travel agencies discussed anti-corruption aspects of this industry.

      In an effort to reach new immigrants from China, daily video presentation sessions incorporating basic anti-corruption matters were conducted at the Chinese Extension Section of the Immigration Department.

      In the department's Media and Education Division, the Public Education Office continued to work through the primary and secondary school system to promote a higher standard of personal and social ethics in children and youths. A teaching package on 'Rights and Responsibilities' which adopted a cross-curriculum approach was designed for primary schools. After exhaustive testing and evaluation, the package was ready for production by the end of the year.

      In conjunction with Radio and Television Hong Kong, the department produced a series of radio plays for young listeners. The plays, which were received enthusiastically by children, were designed to convey messages of honesty, responsibility and frugality.

      In March the department and the Education Department jointly organised a Moral Education Conference for 400 secondary school teachers. The conference provided an opportunity for exchange of views among teachers engaged in moral education and offered practical advice and materials to facilitate their work in school.

      A scriptwriting project on the theme 'Money Isn't Everything', was organised for students of 10 institutes of tertiary education. A number of scripts were incorporated into a booklet of plays produced for use in secondary schools.

      During the year good use was made of television to broadcast anti-corruption messages. Two programmes, 'Towards A Fuller Life' and 'Message from the ICAC', were shown on the Chinese channels of the two local television stations. The former was aimed at inculcating morality and balanced social values in young people, while the latter served to inform the public of anti-corruption laws.

The commission's annual anti-corruption advertising package comprising television, radio and press advertisements and posters was launched in two phases. The first phase, intended to enhance public awareness of the corruption problem in the private sector, commenced in December 1986 and attracted over 300 enquiries for advice and assistance. The second phase, which aimed to sustain the commission's long-publicised deterrent messages to the potentially corrupt, was launched in April. Towards the end of the year, more advertisements designed for the private sector were being prepared.

      Meanwhile, production work on a new television drama series based on the commission's investigative successes was progressing smoothly. The series will consist of 13 half-hour episodes and is expected to be ready for telecast in late 1988.

Government Laboratory

     Government departments concerned with law enforcement rely increasingly on strong scientific support to combat the modern criminal - and this support is provided by the Government Laboratory.

The laboratory's Forensic Science Division undertakes a wide variety of work relating to almost all types of crime, including a comprehensive analytical service with a large range of

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modern instrumental techniques, and a scene-of-crime examination service with over 600 scenes a year visited by laboratory staff.

The lack of laboratory space and an ever-increasing caseload led to a reorganisation of the sectional responsibilities in 1987, and the division now has eight specialist sections, including a newly-formed Instrumentation and Quality Assurance Section which co- ordinates and centralises instrumental support for the whole division.

With the emphasis in modern analytical laboratories on automatic methods, steps have been taken to introduce these wherever possible. To this end, quantitative analysis of opiate-based narcotic drugs is now operated routinely on a 24-hour basis, covering an average of 100 seizures a day.

In the latter part of 1987, semi-automatic analysis of fire debris was introduced, enabling another area of high caseload to be dealt with more efficiently.

The division's role in traffic accident investigation and reconstruction has continued to grow in support of increasing police activity in this area. Interpretative tachograph technology was added to the expertise available in the laboratory after the return of a specialist who had been sent to the United Kingdom for training.

Microcomputers acquired for the division at the beginning of the year proved invaluable for compiling casework and exhibit-handling records, providing intelligence on current workflow, and for statistical analyses. Computers are also used for compiling case-related indexes, the most comprehensive of which is currently the blood group index for sexual assault cases, which provides the police with information which may aid in linking similar crimes.

Correctional Services

The Correctional Services Department administers a wide range of treatment and training programmes for adult offenders, young offenders, drug addicts, and offenders with mental illness. With an establishment of 6 385 staff, the department operates 20 correctional institutions, three half-way houses, a staff training institute and an escort unit. There is capacity for 8 876 inmates, and the average daily population in 1987 was 8 160 compared with 8 107 in 1986. The department is also responsible for managing three closed centres for Vietnamese refugees. At the end of 1987, there were 6 341 Vietnamese refugees in these centres compared with 4 226 in 1986.

Staff Training

The department's Staff Training Institute trains both new staff and serving officers. All recruit officers and assistant officers undergo a 26-week orientation training programme, which is followed by a further four weeks training prior to the completion of their probationary period. The syllabus includes a study of the Laws of Hong Kong, foot-drill, self-defence, weaponry, riot-drill, first-aid, criminology and penology, basic psychology and social work.

Development training and job-oriented courses are provided throughout the year to all serving officers to update professional knowledge, prepare officers for promotion and equip selected officers for duties in specialised fields, such as counselling, aftercare, nursing, psychological services and physical education.

Adult Male Offenders

Prisoners are assigned to an institution according to their security rating, which takes into account the risk they pose to the community, and whether or not they are first offenders. Recidivists are separated from first offenders.

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Eleven prisons accommodate adult male prisoners, four being maximum security institutions. Stanley Prison and Shek Pik Prison house prisoners serving long sentences, including life imprisonment. Siu Lam Psychiatric Centre accommodates the criminally insane and those requiring psychiatric treatment. Adult males awaiting trial or remanded in custody during court hearing are detained at Lai Chi Kok Reception Centre. Male civil debtors who are occasionally admitted are held in separate sections at this centre.

Ma Po Ping Prison, Tung Tau Correctional Institution and Victoria Prison function as medium security institutions for male offenders. Victoria Prison also houses illegal immigrants pending repatriation to China.

      There are four minimum security institutions - Tai Lam Correctional Institution, Pik Uk Prison, Tong Fuk Centre and Ma Hang Prison. They hold prisoners who normally work outside the institutions in community projects. A special section within Ma Hang Prison has been set aside for prisoners who are certified by a medical officer to be clinically old. All convicted prisoners who are medically fit are required to work.

Young Male Offenders

The department operates four different correctional programmes for young male offenders under the Prisons, Training Centres, Drug Addiction Treatment Centres and Detention Centres Ordinances. The average daily population of young offenders in custody during 1987 was 1 073, compared with 1 062 in 1986.

      Pik Uk Correctional Institution, a multi-purpose-built maximum security institution for young offenders, operates as a reception centre, a training centre as well as a prison. Young adults under 25 years of age are also detained at this institution for pre-sentence reports on their suitability for admission to a detention centre.

Lai Sun Correctional Institution on Hei Ling Chau provides accommodation for young prisoners aged between 14 and 20.

Cape Collinson Correctional Institution and Lai King Training Centre are equipped with a full range of facilities for offenders sentenced to a training centre. Cape Collinson accommodates those between the ages of 14 and 17 and Lai King accommodates those between 18 and 20.

A very effective programme is operated at Sha Tsui Detention Centre. This medium security institution has two sections, one for young offenders aged between 14 and 20 and the other for young adults between 21 and 24. The detention centre programme emphasises strict discipline, strenuous training, hard labour and a vigorous routine.

Phoenix House is a halfway house for young persons released under supervision from detention or training centres. Residents usually stay in the house for up to three months before being permitted to live at home or in other accommodation while continuing under after-care supervision. All residents of Phoenix House are required to go to work or attend school in the daytime and to return in the evening.

Female Offenders

Tai Lam Centre for Women in the New Territories provides accommodation for adult females sentenced to imprisonment. It has a remand section and a drug addiction treatment section. The majority of women are employed in a large industrial laundry which provides services to a number of government departments and public hospitals.

      Female offenders under 21 years of age are accommodated at Tai Tam Gap Correctional Institution, where there are separate sections for training centre inmates, drug addiction treatment centre inmates, young prisoners and remand.

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Bauhinia House serves as a halfway house for girls released under supervision from the training centre.

Drug Addiction Treatment

The Drug Addiction Treatment Centre Ordinance (Chapter 244 of the Laws of Hong Kong) empowers the courts to sentence drug addicts found guilty of an offence punishable by imprisonment to detention in a drug addiction treatment centre. The period of detention ranges from two months to 12 months, depending on individual inmate's progress. This is followed by a 12-month statutory aftercare supervision.

There are two drug addiction treatment centres for male addicts. Hei Ling Chau Addiction Treatment Centre accommodates adult addicts, and the nearby Nei Kwu Chau Addiction Treatment Centre is for those under the age of 21. For female addicts, the treatment centre for adults is located in Tai Lam Centre for Women and for young addicts it is at Tai Tam Gap Correctional Institution. At the end of the year, there were 1 013 inmates undergoing treatment: 820 were in Hei Ling Chau Addiction Treatment Centre, 110 in Nei Kwu Chau Addiction Treatment Centre, 73 in Tai Lam Centre for Women and 10 in Tai Tam Gap Correctional Institution.

The drug addiction treatment programme aims to detoxify and to restore the physical health of the drug addicts, and then, through the application of therapeutic and reha- bilitative treatment, to wean addicts from their physical, psychological and emotional dependence on drugs.

Assistance for re-adjustment, such as post-release employment and accommodation, as well as intensive follow-up supervision by an after-care officer are important parts of the programme. Temporary residence is available in New Life House, a halfway house, for those in need of such support immediately following release. Contravention of supervision requirements may result in a supervisee being recalled for further treatment.

After-care Services

After-care plays an important role in helping inmates to reintegrate into society after release, and to lead an industrious and law-abiding life. This service is available to inmates from training centres, detention centres, drug addiction treatment centres and young prisoners.

The after-care programme begins immediately after admittance to an institution. An after-care officer interviews him and discusses his immediate problems with a view to helping him cope with institutional life. A sound relationship between the inmate, his family and the after-care officer is established to help the inmate overcome obstacles to rehabilitation.

Inmates are assisted, through individual and group counselling, to gain a better insight into problems arising from their social inadequacies. They are helped to become better prepared to cope with these difficulties upon release.

After-care officers regularly contact the supervisees after their release. They provide them with assistance and guidance, and ensure that the terms of the supervision order are strictly complied with. Breach of a supervision order may result in the person being recalled for a further period of detention.

      The success of the programmes is measured by the percentage of persons who complete their supervision period without reconviction and, where applicable, remaining drug free. At the end of the year, 94 per cent successfully completed their detention centre supervision. Percentages at the end of 1987 were: 66 in the case of the male training centre inmates, 93 in

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      the case of the female training centre inmates, 86 in the case of young male prisoners and 92 in the case of the young female prisoners.

Correctional Services Industries

Correctional Services Industries enable prisoners and inmates to be usefully employed during their sentence. They provide goods and services to the government and help offenders develop good work ethics, which helps prepare them for release. Garment- making and laundry are the principal trades employing the largest number of prisoners. Other trades include pre-cast concrete, metal work, carpentry, shoe-making and silkscreen- printing. Some prisoners are also employed in the domestic and maintenance activities of the institutions. The Correctional Services Industries employed 4 314 prisoners and inmates on manufacturing activities, 214 on services activities and 2 421 on domestic functions at the end of the year.

A second concrete workshop was set up at Tai Lam Correctional Institution to increase both the quantity and the range of kerbstones and pavement slabs for various highways projects. During the year improvements were also made to many other workshops. Higher quality standards and better quality measurement routines were developed. Most trades are now covered by quality assurance programmes. Workshop efficiencies continue to improve through better workshop management techniques and measurement processes. The com- mercial value of goods and services provided by the Correctional Services Industries for the year was $157.1 million, an increase of 19 per cent over the previous year.

Education

      Offenders under the age of 21 attend educational classes conducted by qualified teachers. Textbooks used in schools are modified by the teachers to provide the inmates with more suitable and practical learning materials.

       Adult offenders may, on a voluntary basis, attend evening classes run by part-time lecturers from the Adult Education Section of the Education Department. Jointly with the Extra-mural Studies Department of the Chinese University of Hong Kong, an advanced course in painting was also organised for adult prisoners.

A number of prisoners prepare for external examinations through correspondence courses, self-study courses and special courses but the majority are prepared through the institutions' vocational training courses. These examinations include the Food and Beverage Service Examination and Telecommunications Examination of the City and Guilds of London Institute, Pitman Examinations, the London Chamber of Commerce and Industry Examinations and the Hong Kong Certificate of Education Examination.

Medical Services

All institutions have a medical unit providing treatment and health care, including radiodiagnostic and pathological examinations as well as prophylatic inoculations for persons in custody. Basic medical care is administered within the institutions. Inmates requiring specialist treatment are either referred to a visiting consultant or transferred to a government hospital. Essential dental treatment is also provided.

Siu Lam Psychiatric Centre and a psychiatric observation unit at Lai Chi Kok Reception Centre treat prisoners with mental health problems, and offer psychiatric consultations and assessment for inmates referred by other institutions and the courts.

       Ante-natal and post-natal care is available at institutions for women and in the closed centres for refugees. Births are normally given in government hospitals.

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Psychologists and specially-trained officers provide a wide range of counselling services for prisoners and inmates with emotional difficulties, behavioural or personality problems. In-depth reports are prepared for the courts to assist them in their sentencing. These reports also help the department in assessing an offender's suitability for participation in various programmes. Research projects are also undertaken to improve treatment programmes and reduce recidivism.

Visiting Justices

Justices of the Peace appointed by the Governor visit institutions, including closed centres for the Vietnamese refugees, either fortnightly or monthly, depending on the type of institution. Their statutory duties include investigating complaints, inspecting diets and reporting on the standards of living and working conditions. They also advise the Commissioner on the employment of prisoners and work opportunities after release. In 1987, a total of 551 visits were made to institutions and closed centres, normally without prior notice.

Closed Centres

The Correctional Services Department has been responsible for the management of closed centres for Vietnamese refugees since their establishment in July 1982. Chi Ma Wan Closed Centre accommodates refugees from South Vietnam, and Hei Ling Chau Closed Centre accommodates those from North Vietnam, while Tuen Mun Closed Centre houses both southerners and northerners, including unaccompanied females and minors, and family groups who have been carefully selected for their ability to live in harmony with one another.

     The refugee population continued to increase during the year to 6 341 compared with 4 226 at the end of 1986. Efforts are being made to increase the capacity of these three centres. Facilities for education, vocational training and recreation have also been improved.

The Save the Children Fund, World Relief, the Salvation Army and the International Social Service, operating under the aegis of the United Nations High Commissioner for Refugees, organise social services, including educational classes, vocational training and cottage industries as well as recreational activities for the refugees.

Ex-China Vietnamese Illegal Immigrants

During July and August, 7 306 Vietnamese who had previously settled in China arrived in Hong Kong illegally. This sudden influx placed a strenuous demand on resources. In addition to Cape Collinson Correctional Institution, three new detention centres had to be set up to accommodate these illegal immigrants, who are not refugees according to the criteria of the United Nations High Commission for Refugees.

Discussions were held with the Chinese authorities to repatriate these illegal immigrants. By the end of the year, 7 150 had been returned to China.

Society for the Rehabilitation of Offenders, Hong Kong

The Society for the Rehabilitation of Offenders, Hong Kong, founded in 1957 and formerly known as the Hong Kong Discharged Prisoners' Aid Society, is a voluntary organisation which provides care and supervision for ex-offenders who are given non-custodial sentences and persons released from prisons.

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     The services rendered by the society include casework, group work, counselling, hostel accommodation, employment guidance, recreational activities as well as care for those who have a history of mental illness.

Young Offender Assessment Panel

The Young Offender Assessment Panel was established in April 1987 to provide magis- trates with a co-ordinated view on the most appropriate programme for a particular young offender. Members include professional staff from the Correctional Services and the Social Welfare Departments. As a start, this service was confined to the Central Magistracy on a direct referral basis but in September it was extended to North Kowloon and Juvenile Courts. An overall review and assessment of the functions of the panel will be carried out when the scheme has run for a year.

Release under Supervision

     Legislation for a Release Under Supervision Scheme and a Pre-release Employment Scheme is complete and the two schemes will be introduced in 1988 to facilitate re-integration of prisoners into society. Prisoners who have served not less than half or 20 months (whichever period is the longer) of a sentence of three years or more may apply for release under the supervision of after-care officers. Prisoners who breach the supervision order are liable to be recalled to serve the remainder of their sentence. Under the Pre-release Employment Scheme, prisoners who are serving a sentence of two years or more and are within six months of completing their sentence may apply for release to take up employment and reside in a designated hostel under the supervision of after-care officers for the remaining period of their sentence. A prisoner who breaches his supervision order is liable to be recalled.

Fire Services

During the year, the Fire Services Department answered and handled 20 807 fire calls, 12 928 special service calls, and 281 401 emergency and 119 636 non-emergency ambulance calls. Fires caused 21 deaths, and injured 621 people, including 23 firemen. A total of 750 persons were rescued and hundreds of others were led to safety by Fire Services personnel.

Buildings and Quarters

In line with the government policy to provide an emergency response to all areas within minimum set times according to the category of risk, seven new fire stations were commissioned in 1987. These were at Pok Fu Lam on Hong Kong Island, Shek Kip Mei in Kowloon, Tin Sum, Castle Peak Bay, Pat Heung, Mui Wo and Lamma Island in the New Territories. Three ambulance depots were also completed in Tai Po, Tin Sum and Pok Fu Lam. There are now 56 fire stations, 22 ambulance depots/stations and five fireboat stations in the territory. The new 12-storey Fire Services Headquarters building in Tsim Sha Tsui East was officially opened on February 26. At the end of the year, more than 2 100 staff quarters were occupied or were available for occupation. A 50-unit Officers' Married Quarters was completed and planning was in hand for 1 376 additional married quarters for firemen and ambulancemen at selected sites.

Fire Prevention

The department is responsible for enforcing fire safety regulations. It also advises and assists all sections of the community with regard to fire protection measures generally and in the abatement of fire hazards. The Fire Protection Bureau plays an important role in

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educating the public on fire prevention. Publicity campaigns launched during the year increased the community's awareness of fire safety, resulting in requests for more fire prevention lectures, exhibitions and demonstrations from kaifong associations, rural committees, schools and community groups. The number of complaints - 6 813 - received from members of the public was seen as an indication of the level of public concern over potential fire hazards and a growing awareness of the services provided by the department.

     Direct prosecution of cases of obstruction to means of escape and indiscriminate blocking of fire exits in multi-storey buildings began at the beginning of the year. Fire Services personnel made 79 157 inspections of all types of premises and, where fire hazards were found, abatement notices or summonses were issued. There were 1 323 prosecutions for non-compliance with abatement notices and for summonses resulting in fines amount- ing to $2.95 million. All new building plans are vetted by the department, which specifies the requirements for built-in fire protection and advises on related matters. Some 9 258 new building plans were processed during the year. The department is also responsible for carrying out research into matters associated with fire safety.

Ambulance Services

The Fire Services Department operates the government ambulance service with a strength of 1 833 in all ranks of uniformed staff, and 147 civilian employees. The service operates 228 ambulances from 22 ambulance depots or stations throughout the territory and from 16 fire stations. During the year, 281 401 emergency calls and 119 636 non-emergency calls, involving 510 048 people, were handled - representing an average of 1 099 calls every 24 hours. The number of calls represents an increase of 9.7 per cent over that in 1986. Facilities in ambulance are constantly reviewed and all ambulances are equipped with analgesic apparatus, piped oxygen, inflatable splints, special stretchers and incubator-carrying capability. Following the advice of the Executive Council on the Review of Hong Kong Ambulance Service in April, the government adopted in principle the major recommenda- tions of the Health Operational Research Unit Consultancy on improvements to the ambulance service. A programme to implement the recommendations has been prepared.

Appliances and Workshops

The department has some 700 modern operational appliances and vehicles fitted with up-to-date fire-fighting and rescue equipment to ensure that fast and efficient fire-fighting and rescue operations can be carried out. Thirty-two new or replacement appliances and vehicles of various kinds were put into service. The six mini-appliances purchased in 1986 specially for outlying islands proved to be successful. Three more mini-appliances were ordered for use on Lamma Island. The department is constantly evaluating new products from different parts of the world with a view to introducing them into service if they meet local requirements.

     To maintain its fleet of fire appliances and rescue equipment, the department operates three workshops, one each in the Hong Kong, Kowloon and New Territories regions.

Staff Training

All recruits except those in the specialist communications ranks of senior fireman (control) and senior firewoman (control) are trained at the Fire Services Training School at Pat Heung in the New Territories. The courses vary in content and last from eight to 26 weeks. The training of senior firemen (control) and senior firewomen (control) is conducted at the

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Fire Services Communication Centre in Kowloon by instructors from the Training School. During the year, 510 recruits successfully completed initial training.

The school also conducted fire protection courses for senior station officers and station officers, refresher courses for ambulance personnel, basic courses on fire fighting, fighting fires on ships and on the use of breathing apparatus for government departments and private organisations in Hong Kong. Some 771 people attended these courses during the year. The Driving Training School conducted courses for 1 325 officers and other ranks.

Establishment and Recruitment

The uniformed establishment of the Fire Services Department at the end of 1987 totalled 6665. The number of civilian staff employed by the department increased to 661. Recruitment exercises were held, resulting in the appointment of 49 officers and 365 firemen and 63 ambulancemen. Standards are high and on average only about five per cent of all applicants are accepted for appointment.

Civil Aid Services

The role of the Civil Aid Services is to provide a uniformed and disciplined volunteer force of men and women trained in counter-disaster duties, in support of the regular emergency services and government departments. Members of the Civil Aid Services are trained to handle a very wide variety of emergency duties on such occasions as tropical cyclones, landslips and flooding, search and rescue, building collapses, forest fire fighting, refugee feeding and camp management, oil pollution at sea, crowd control, life saving, rabies control, and mountain rescue.

      The service is also very heavily committed to assisting in performing civic duties during more peaceful times.

       During the year, adult volunteers helped to organise charity fund-raising walks, govern- ment campaigns, charity drives and other public functions.

       The service was also kept busy helping fight forest fires and patrolling the country park areas, on tropical cyclones and mudslip standby duties and in helping in anti-oil pollution tasks.

      The Mountain Rescue Unit of the service responded to 28 emergency calls for search and rescue of persons in distress, trapped, lost or injured.

      Between July and September, CAS personnel were busily engaged in the management of two Refugee Reception Centres for the Ex-China Vietnamese Illegal Immigrants on Green Island and in the 25-storey Hoi Tai government-owned factory building in Tuen Mun. Due to the extreme urgency of the situation, the CAS were mobilised to help set up the centres in less than three days and to help process their arrival.

       The service has two main training centres, and a 20-hectare training camp. The two training centres are on Hong Kong Island and in Kowloon. The training centres have simulated smoke-rooms, facilities for rescue from confined spaces, towers for practising rescue from heights and classrooms for indoor instruction.

The 20-hectare training camp at Tsing Lung Tau which incorporates an old Chinese village dating back 260 years was completely re-built several years ago and has now been furnished and equipped with farming equipment of the period. The camp is extensively used not only by the Civil Aid Services for training but also by many other government and non-government organisations. It has facilities for outdoor activities as well as two classrooms for indoor instructions. The outdoor facilities include a swimming pool, a jogging track, a rope initiative course, a soccer field, and camping areas.

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     A new training camp is being developed at Tai Tan, Sai Kung, to provide accommoda- tion and classrooms for persons wishing to take part in all forms of water-borne activities. It will be ready by mid-1988.

In addition to the 3 697 adult volunteer officers and members, the Cadet Corps, comprising 3 030 youths in 28 units, expanded its activities. From mid-1987, girl cadets were being enrolled into the Corp Cadets entering at the age of 12 to 14 go through a series of useful and beneficial studies. They leave the corps on reaching the age of 18. Tuition includes training in basic mechanical and electrical engineering, carpentry and fibre- glassing, printing and book binding as well as useful training in photography and interior decorating. The cadets are trained in countryside preservation, fire fighting, first-aid, crowd control psychology, road safety, rock climbing, orienteering, expeditions and trekking. They are encouraged to participate in the Duke of Edinburgh Award Scheme and in 1987, six cadets qualified for Gold Awards, 14 for Silver Awards and 95 for Bronze Awards.

Royal Hong Kong Auxiliary Air Force

The Royal Hong Kong Auxiliary Air Force, based at Hong Kong International Airport, provides a variety of flying services for the government. It operates a fleet of seven aircraft: a Beech B200C Super King Air Twin Turbo-prop (which replaced a Cessna Titan in November 1987), a Britten-Norman Islander, two Scottish Aviation Bulldog trainers and three Aerospatiale Dauphin twin-engined helicopters. With a self-sufficient engineering squadron and an establishment of 85 permanent staff and 133 volunteers, the RHKAAF can operate round-the-clock for seven days a week during an emergency. About 3 000 hours were flown during the year.

     The RHKAAF responded to 200 requests for emergency medical evacuation and rescues during the year. Some of these requests came from the local fleet of about 5 000 fishing boats, many of which now have high-frequency radios enabling them to call for assistance when necessary. Sixty search and rescue operations were carried out, involving both helicopters and fixed-wing aircraft. During the dry season, the Dauphins assisted in over 60 fire-fighting operations and dropped over 1 000 tonnes of water on bush and forest fires in areas inaccessible to conventional fire-fighting appliances.

     The Police Force and the Correctional Services Department made frequent use of helicopters for training and operational purposes. Helicopter flights were routinely pro- vided to transport engineering staff to hilltops to carry out maintenance and repair work at communications repeater stations. During the year, about 5 700 government officers were flown to various areas in the course of their duties. Flying services were also provided to give official visitors from overseas an overview of the territory.

      The Islander, Titan and subsequently the Super King Air maintained regular offshore patrols in connection with anti-illegal immigration operations and were also heavily employed in support of the Buildings and Lands Department's continuing need for aerial survey, photography and map-making. The Bulldogs are used for pilot training for the squadron's own volunteers and student air traffic controllers.

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Travel and Tourism

HONG KONG'S out-bound travel business is carried out by some 989 travel agents who are licensed by the Registrar of Travel Agents, under the Travel Agents Ordinance, enacted in August 1985.

      About half of the licensed travel agents, including most of the major tour operators, are members of one or more of the six associations which make up the Travel Industry Council of Hong Kong.

These associations are: the Hong Kong Association of Travel Agents, the Society of IATA Passenger Agents, the International Chinese Tourist Association Limited, the Federation of Hong Kong Travellers, the Hong Kong Association of China Travel Organisers, and the Taiwan Tourist Operators Association.

Tourism

Tourism earned an estimated $24,000 million for Hong Kong during the year, an in- crease of 35 per cent over the 1986 figure.

Hong Kong Tourist Association

The Hong Kong Tourist Association (HKTA) is a statutory body set up in 1957. Comprising members from the private sector whose businesses are based on tourism, the HKTA co-ordinates the activities of the industry and advises the government and the industry itself on measures aimed at ensuring growth.

In December 1987, it had 1 590 members, an increase of 4.2 per cent over the 1986 figure. The Chairman and Members of the Board of Management are appointed by the Governor.

      The association derives over 90 per cent of its income from a subvention from the government, and the remainder of its revenue from membership dues and the sale of publications and souvenirs, and from tours.

The HKTA has its headquarters in Connaught Centre in Central, on Hong Kong Island. It operates an Information and Gift Centre there, and similar centres at the Star Ferry Concourse in Kowloon and at the Empire Centre in Tsim Sha Tsui East. These centres and the information counter at the Hong Kong International Airport assisted 1.4 million visitors in 1987. The association also runs 'hotline' telephone services in both English and Japanese, and these together handled 40 000 enquiries during the year. All calls are monitored to provide further insight into visitors' interests and spending patterns.

The marketing overseas of Hong Kong as a tourist destination is carried out primarily through the HKTA's 11 overseas offices and representatives, working closely with the travel trade. Offices are located in San Francisco, New York, Chicago, Sydney, Singapore, Tokyo, Osaka, London and Frankfurt, and there are representative offices in Paris and

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    Rome. There is also an agreement with Hong Kong-based Cathay Pacific Airways whereby the airline acts as the HKTA's information agent in 44 cities worldwide.

     During the year, the HKTA continued to promote Hong Kong as the 'Celebration for all Seasons' travel destination. The 'Hong Kong Food Festival - The World on a Plate' was organised from August 16 to September 16 to promote Hong Kong as the 'Culinary Heart of Asia'. This event was heavily promoted overseas with emphasis on Hong Kong's dining, wining and entertainment opportunities. This year, one of the highlights was "The World of Flavours' - an international food bazaar at the Tai Pak Floating Restaurant in Aberdeen, which featured a range of booths where both visitors and residents could sample cuisine from all over the world. Some 60 000 people attended this bazaar.

Another feature was the 'Gourmet Dining Scheme', which enabled visitors to sample the top award-winning dishes in the 1986 Hong Kong Food Festival Culinary Awards. In addition, a 'Food Festival Bonus Scheme', involving 180 top food and beverage outlets in Hong Kong, offered visitors special bonuses during the food festival month. Visitors were also able to enjoy the popular, self-guided 'Yum Sing - Night on the Town' tour, which had been created for the first festival in the previous year as an easy way to experience Hong Kong's sophisticated nightlife.

     There has been steady growth in the number of international conferences and exhibitions held in Hong Kong, rising from 15 in 1976 to 480 in 1987.

The association's Convention and Incentive Travel Bureau stepped up the promotion of Hong Kong as the ideal conference site in Asia and the marketing of the Hong Kong Convention and Exhibition Centre which is due to open in 1988. The centre, located on the Wan Chai waterfront, will be among the most versatile and best-equipped meeting and exhibition complexes in the region, providing 18 000 square metres of exhibition space and an area for meetings of up to 8 000 people in one seating.

     The HKTA's marketing strategies are designed to attract higher-yield visitors, with emphasis on increasing the amount spent in Hong Kong and encouraging visitors to return. Some 4.4 million visitors came to Hong Kong in 1987, an increase of 20 per cent over the previous year's. They came primarily from Japan (23 per cent), the United States and Canada (21 per cent), Southeast Asia (17 per cent), Western Europe (16 per cent) and Australia and New Zealand (7 per cent).

The HKTA places emphasis on co-operative advertising overseas in conjunction with airlines, wholesaling tour operators and hotels. Special seasonal campaigns for summer and winter are held with Hong Kong hotels in various overseas markets. Promotional visits are arranged for overseas travel agents and media representatives to Hong Kong to experience the tourism product. During the year, 4 149 agents and 1 040 media representatives were hosted in Hong Kong and briefed on new and future tourism developments. Such visits are usually arranged to coincide with specific events. For example, during the 1987 Hong Kong Dragon Boat Festival International Races, 50 members of the overseas press were hosted by the HKTA. This was the 12th year of the races, which were inaugurated by the associa- tion. A total of 20 overseas and 99 local teams took part, and the 'Row for Charity' races, held at the same time, raised $780,000 for the Community Chest.

     The HKTA continued to organise three special tours aimed at increasing Hong Kong's appeal to visitors. These were the 'Come Horseracing' tour, which enables visitors to attend races at Hong Kong's two courses; 'The Land Between Tour', which gives an insight into the rural areas of the New Territories, and the 'Sports and Recreation Tour', which permits visitors the use of facilities at a private golf and country club. Nearly half of all visitors to Hong Kong take at least one organised tour in the territory.

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The association again conducted the Student Ambassador Programme, under which 100 Hong Kong students going overseas to study in tertiary institutions take part in a month-long programme to acquaint themselves with all aspects of Hong Kong so that they may speak more knowledgeably about their home while overseas. This was the 20th year of the programme.

The second 'Tour Co-ordinator of the Year Award' was also organised, to highlight the professionalism of this sector of the industry and to enhance its image to both visitors and the trade.

The HKTA also continued its 'Effective Selling Skills' Certificate Programme, designed to assist people in the retail trade who wish to optimise their retail opportunities through courteous service. The emphasis that the HKTA places on training within the travel industry is reflected by the fact that the association created a new industry training department during the year.

Several new hotels opened during 1987, to bring the total number of rooms to 20 850, and the association continued to conduct the hotel reservation monitor system, which assists the travel trade overseas in making advanced bookings.

17

車房

The Armed Services

THE Armed Services operate in Hong Kong under the overall command of the Commander British Forces, who advises the Governor on matters affecting the security of Hong Kong and who is also responsible to the Chief of Defence Staff in London. The Armed Services are stationed in the territory primarily to assist the government in maintaining security and stability and to sustain confidence in the United Kingdom's stated commitment to Hong Kong.

The Royal Navy, the British Army and the Royal Air Force are all represented. During the year, the permanent garrison comprised five Royal Navy patrol craft, one United Kingdom and three Gurkha infantry battalions, a Gurkha engineer regiment, a Gurkha signals regiment, a Gurkha transport regiment, an Army Air Corps helicopter squadron with eight Scout helicopters and a Royal Air Force squadron with eight Wessex helicopters. A Royal Marine raiding squadron has also been present since 1980 as a reinforcement for anti-illegal immigration operations.

Hong Kong also has its own locally enlisted regiment of part-time volunteer soldiers, the Royal Hong Kong Regiment (The Volunteers).

Hong Kong contributes towards the costs of maintaining the garrison in accordance with the Defence Cost Agreement between the Hong Kong and United Kingdom governments. The influx of illegal immigrants is a continuing problem and it has been necessary for all three services to concentrate a significant part of their effort on the task of preventing illegal immigration by land and sea.

     Throughout the year, there was continued emphasis on training for internal security operations and combined exercises - involving the Royal Navy, the Army, the Royal Air Force, the Royal Hong Kong Police Force and the Royal Hong Kong Regiment (The Volunteers) - helped improve proficiency in such operations. The armed services also provided assistance in handling the influx of ex-China Vietnamese illegal immigrants during the summer months.

Royal Navy

The Royal Navy, based at HMS Tamar in Central District, continued to patrol the waters of Hong Kong. Its force of five patrol craft, and fast pursuit craft of the Third Raiding Squadron, Royal Marines, acted in close support of the Royal Hong Kong Police Force in deterring and apprehending illegal immigrants from China, and conducting operations against smugglers and others who illegally infringe territorial waters.

     The Captain-in-Charge Hong Kong has responsibility for the operational control of the Hong Kong Sea Area of Interest which extends to 91 kilometres from Kowloon Clock Tower. He has responsibility for all Royal Navy forces deployed on search and rescue operations in the South China Sea and works closely with the Director of Marine and the

COKING

票售

Hong Kong Railway Museum at old Tai Po Market Railway Station

1913

|

站車火 TAI PO MARKET

墟埔大

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·

King Yin Lane,

a private home on Stubbs Road

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للغلا

old French Mission building,

1 Battery Path, now GIS offices

Tung Chung Fort on Lantau Island

Taoist Pak Tai temple on Cheung Chau island

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Director of Civil Aviation. The naval base of HMS Tamar maintains a recompression chamber for use in diving emergencies and a small clearance diving team assists the police in the recovery of drugs and smuggled goods and is trained in the techniques of searching for and neutralising underwater explosives. The Captain-in-Charge also admin- isters the naval staff in Singapore, where the Royal Navy maintains berths and an oil fuel depot.

      Visitors include warships from Australia, New Zealand, Sweden, France and the United States. During the past year ships from the Hong Kong Squadron have been deployed throughout the Far East region. The deployments are made to show a continued British interest in this vast free trade area.

      The Hong Kong Squadron consists of five 'Peacock' Class Patrol Craft: HM Ships Peacock, Plover, Starling, Swallow and Swift. The five ships, built by Hall Russell Limited, Aberdeen, Scotland have been specially designed for patrol duties in Hong Kong waters, including search and rescue and have the ability to stay at sea during typhoons. All the vessels are of a steel and aluminium construction and are 63 metres long, 10 metres wide and have a gross tonnage of 763 tonnes.

      All the ships are armed with a single 76 mm Oto Melara gun and its associated British Aerospace fire control system. Up to four general purpose machine guns can be positioned about the upper-works. There are two, two-inch rocket launchers amidships. High definition radar, direction finding equipment, an echo sounder and a very accurate gyro compass form part of the equipment fitted to give accurate navigation through confined Hong Kong waters. Satellite navigation and long range radio aids give the ships distant sea capability. Boarding tasks are usually achieved by using two rigid inflatable Avon Seariders which are widely used throughout the service, or by fast pursuit craft. A comprehensive communications fit enables the ships not only to talk to boarding parties and shore authorities but to have the ability to send messages to any part of the world.

      Under the direction of the Captain-in-Charge, a team co-ordinates a scheme of control for the protection of commercial shipping using the port of Hong Kong in times of tension or war. Personnel include officers of the Royal Naval Reserve, United States Naval Reserve and the Canadian Armed Forces Reserve who are resident in Hong Kong and can be ready at short notice. The team enjoys a close liaison with the Marine Department and shipping companies and uses an advanced computer system.

      The strength of the Royal Navy, including reinforcements, is about 670, supported by about 70 locally employed civilians. The patrol craft are jointly manned by Hong Kong Chinese ratings and United Kingdom naval personnel serving in Hong Kong. Altogether, about 370 locally entered personnel are employed ashore and afloat in the seaman, engineering, supply and medical branches. Manning laundries on ships of the Royal Navy is another task traditionally undertaken by Hong Kong men.

      The Royal Navy plays an active part in the community and during the year personnel provided sea training for the Sea Cadet Corps and the Hong Kong Sea School, and provided facilities for many other organisations and charities.

The Army

The Army provides the biggest share of the forces in Hong Kong, under the direct command of the Commander Land Forces. Command of operational units is exercised on behalf of the Commander Land Forces by the Commander 48 Gurkha Infantry Brigade, while logistic units, grouped as support troops, come under the Commander Support Troops.

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      The 1st Battalion Coldstream Guards are the current United Kingdom Battalion but will hand over to the 1st Battalion The Duke of Edinburgh's Royal Regiment (Berkshire and Wiltshire) in February 1988. The 2nd Battalion the 2nd King Edward VII's Own Gurkha Rifles replaced the 6th Queen Elizabeth's Own Gurkha Rifles. The 1st Battalion the 2nd King Edward VII's Own Gurkha Rifles and the 10th Princess Mary's Own Gurkha Rifles were resident in Hong Kong throughout the year. The 2nd Battalion King Edward VII's Own Gurkha Rifles was disbanded early in 1987.

Support is provided by a number of units permanently based in Hong Kong. These include the Queen's Gurkha Engineers, the Queen's Gurkha Signals, the Gurkha Transport Regiment, 660 Squadron Army Air Corps, the Composite Ordnance Depot, the British Military Hospital, and 50 Hong Kong Workshops, Royal Electrical and Mechanical Engineers.

Hong Kong people play an important role through their support of the Royal Hong Kong Regiment (The Volunteers) - a locally enlisted regiment of part-time soldiers - and the Hong Kong Military Service Corps, which is also locally enlisted but forms part of the British Army. The latter corps is staffed by full-time regular soldiers and numbers 1 272 Chinese officers and men who serve throughout Hong Kong as guards, military policemen, interpreters, dog-handlers, drivers, cooks, clerks, seamen and storemen. The Hong Kong Military Service Corps provides a valuable contribution to the garrison and has played an important role in operations against illegal immigrants.

     The primary role of the Army is to support the Police Force in maintaining internal security, and to be responsible for preserving the integrity of the border. In recent years, its major task has been to help with the control of illegal immigration, with individual battalions spending an average of three months a year on border duties. A high level of border vigilance was maintained throughout the year. Improvements to border security are constantly being made and anti-illegal immigration operations continue to play a major part in the daily life of the Army.

Owing to limited space and the unsuitability of much of Hong Kong's terrain for training, a series of overseas exercises was mounted to maintain high standards of military skills, and, as a contribution to stability in the region, participation in a Five Power Defence Agreement exercise in Malaysia. Units of 48 Gurkha Infantry Brigade also played host to visiting detachments from the 6th Battalion Royal Australian Regiment, the Royal Brunei Armed Forces, and New Zealand Forces based in Singapore. The garrison participated in disaster relief operations during 1987 in the Cook Islands and Vanuatu.

     The high standard of shooting of Hong Kong-based units was demonstrated at the 1987 Regular Skill at Arms Meeting held at Bisley, England. The 6th Queen Elizabeth's Own Gurkha Rifles won the Major Units Championship while the four other Gurkha Regiments were placed in the top 11 shooting teams throughout the British Army. The team from the Depot Hong Kong Military Service Corps came sixth out of 30 minor units but the teams finishing first to fourth were using the new SA80 rifle with optical sights. The Depot team won the sub-machine gun match while the Defence Animal Support Unit, made up of Chinese soldiers, won the pistol match.

Royal Air Force

The main element of the Royal Air Force in Hong Kong is based at Sek Kong in the New Territories. The No. 28 (Army Co-operation) Squadron operates eight Wessex helicopters from Sek Kong airfield supported by engineering and administrative squadrons. Included in the supporting element is an Air Traffic Control Unit, which also provides an advisory

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control service outside Hong Kong International Airport airspace. Movement of military personnel and cargo by air from Hong Kong International Airport is controlled by the RAF Airport Unit based at Kai Tak, while the RAF Provost and Security Services Unit is located at Blackdown Barracks, San Po Kong. Additionally, RAF personnel serve on the staff of Headquarters British Forces, in the Joint Air Tasking Cell, and in the Joint Services Movements Centre.

      The Wessex helicopters are employed in direct support of the Army and can each carry up to 14 troops or 1 400 kilograms of freight anywhere within Hong Kong. The helicopter is the only practicable way of moving troops, rations and equipment quickly to outlying areas, and its speed and flexibility have been significant factors in the success of the security forces' operations.

Although illegal immigration has been substantially reduced across the land border many persons still attempt to enter Hong Kong in speedboats. These clandestine opera- tions, which are normally carried out at night, are countered by combined operations involving surface vessels and Wessex helicopters. The Wessex uses its 65-million candle- power Nightsun to illuminate the area, assisting in the capture of the speedboat and occupants by surface vessels.

Although the primary responsibility for search and rescue duties lies with the Royal Hong Kong Auxiliary Air Force, one Royal Air Force helicopter is available throughout the normal working day for such duties and this is sometimes used to carry out longer-range search and rescue missions. In addition, one helicopter is often placed on stand-by for territory-wide aeromedical evacuation. During the dry season, the Royal Air Force provides assistance in fighting fires in areas inaccessible to normal fire appliances; the Wessex can carry a suspended bucket containing 1 000 kilograms of water for release over the fire.

      In addition to its operational task, No. 28 (AC) Squadron provides training and support for the Police Force and has assisted with a number of community projects, including the removal of abandoned vehicles from remote areas, transporting young people to camps in the New Territories on government sponsored schemes, and the provision of air experience flights for a large number of the Air Scouts and Air Cadet Corps of Hong Kong.

Royal Hong Kong Regiment (The Volunteers)

The Royal Hong Kong Regiment (The Volunteers) is a light reconnaissance regiment of part-time volunteers. Its role, though primarily one of internal security, includes reconnais- sance, anti-illegal immigration operations and assistance to other government departments in the event of natural disasters. It is administered and financed by the Hong Kong government but if called out it is commanded by the Commander British Forces and forms part of 48 Gurkha Infantry Brigade.

The regiment has an establishment of 946 volunteers and 54 permanent staff, including nine regular soldiers, one of whom is the Commanding Officer, on loan from the British Army. The volunteers come from all walks of life and are of various nationalities, although over 95 per cent are Chinese.

      The regiment is composed of four reconnaissance squadrons, a home guard squadron and a headquarters squadron.

      In addition, a women's troop provides support in internal security and anti-illegal immigration operations as searchers and interpreters. There is also a junior leaders' corps of 300 boys, aged from 14 to 17, trained in youth activities and leadership. As part of the youth activities geared to the Duke of Edinburgh Award Scheme, a junior leaders' band was formed in 1984 to give performances at youth functions.

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     The Regimental Headquarters is located in the busy residential area of Happy Valley on Hong Kong Island where the volunteers have been based since 1950. The regiment does not have a training camp of its own and has to share the training facilities of the British Army in Hong Kong.

The training commitment is two evenings and one weekend each month as well as centrally organised regimental training, such as regimental camps and exercises. Regimen- tal camps, the highlights of the year's training, take place over seven days each in April and November. For the November camp, the regiment is deployed on the border to relieve a regular battalion of its anti-illegal immigration duties. During the year, selected volunteers were sent for overseas training in the United Kingdom. All officer cadets are trained at the Royal Military Academy, Sandhurst.

18

Communications and The Media

潘勿舖

霸孔 業

By expressing their own views, reflecting the mood of the general public, and making available information on the government's policies and activities, Hong Kong's intensely active news media play a vital role in the process of communication and public information. The freedom they enjoy to air their opinions was clearly evident in the wide coverage and vigorous editorial comment given during the year to the many -- and varied - issues of public import.

Among the major topics treated were the debate on further development of a system of representative government best suited to Hong Kong, the influx of refugees from both China and Vietnam, the question of film censorship, the sudden sharp movements of the stock market and futures exchange that occurred in October, and the retention of the provision about the publishing of false news likely to cause public alarm.

The latter was part of a legislative package to repeal the Control of Publications Consolidation Ordinance, first enacted in 1951, which contained a number of very restrictive provisions. Most of these provisions were deemed no longer necessary in the light of present-day circumstances. Only one of the provisions was retained and was transferred in a modified form to the Public Order Ordinance. Although the main effect of the package was a liberalising one, retention of this one provision was viewed by the media and some sections of the public as an encroachment on the freedom of speech. The government, and some members of the general public, saw it as a necessary measure to prevent irresponsible reports for the maintenance of public order. It was debated in the Legislative Council, and eventually passed, with an assurance by the government that the measure would not be used to inhibit personal or press freedom, and would be reviewed in future in the light of experience.

Continuing attention was given to the on-going discussions of the Basic Law Drafting and Consultative Committees, which are assisting the Chinese government in drafting the basic law for the post-1997 Hong Kong Special Administrative Region, and also to the two diplomatic bodies set up in accordance with the Sino-British Joint Declaration, namely the Joint Liaison Group and the Land Commission.

      Through its links with most parts of the world by the use of the latest in telecommunica- tions technology, Hong Kong ensures an efficient and continuous interflow of up-to-the- minute information, and at the same time fosters its continuing growth as a world trading, manufacturing and financial centre. These sophisticated communication facilities serve also to attract international media representatives seeking to establish a regional base for their operations. News agencies, newspapers with international readerships and overseas broadcasting companies and corporations about 90 of them have opened offices in Hong Kong. Furthermore, regional publications produced in Hong Kong have flourished, reflecting the territory's enhanced position as a centre of industrial and trading expertise.

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Among Hong Kong's own media catering to the local public are many daily newspapers, a variety of periodicals, two private television companies, one government radio-television station, one commercial radio station, and one radio service station for the British Forces. The free, critical and outspoken press, both printed and electronic, provide an efficient and speedy supply of information to a literate, industrious and healthily inquisitive society. They also play a vital part in the territory's precautionary measures against sudden climatic threats, so that when typhoons approach or rainstorms spell danger they react to alert, inform and advise the population.

     To keep pace with the rapid advances and innovations in the communications field in recent years, the Hong Kong government has been expanding its information services, and has been producing and taking part in an increasing number of public affairs programmes on radio and television.

Information Policy

    The Secretary for Administrative Services and Information has overall policy responsibility for the government's relations with the media. The main aim is to keep the media fully informed of the government's policies and thinking, as well as proposed legislation and forthcoming events, thus providing a valuable means of communication with the general public to enhance public awareness. On this front, the Administrative Services and Information Branch is responsible for supervising the work of the Government Informa- tion Services, Radio Television Hong Kong and the Television and Entertainment Licensing Authority. Apart from formulating policy on a wide range of information and broadcasting matters, the Secretary for Administrative Services and Information also over- sees the planning and implementation of major government publicity campaigns and advises the government on the presentation of its policies and on public relations matters generally.

Liaison Division

The Liaison Division of the Administrative Services and Information Branch is respon- sible for overseas public relations matters. It serves as a point of contact between the government's overseas offices and non-government bodies, such as the Trade Development Council, the Hong Kong Tourist Association, chambers of commerce and consulates and commissions. An Overseas Public Relations Group comprising government and non- government representatives co-ordinates overseas public relations activities.

     Receiving overseas visitors is another major function of the division. A Visits Office was set up in September 1983 to handle parliamentary visits from the United Kingdom. The role of this office has since been expanded to include the arrangement of programmes of visits and briefings for VIP visitors from all over the world. In this task the office maintains close contact with the government's overseas offices, commissioners and consuls-general of foreign countries in Hong Kong.

     To promote Hong Kong's overseas public relations, the Visits Office has, since May 1985, been co-ordinating programmes on overseas speaking engagements for prominent people. Suitable platforms are arranged for influential Hong Kong personalities and other internationally-known people to speak for Hong Kong before audiences in North America, the United Kingdom and other European countries.

Overseas Conferences

The Hong Kong Government's office in Brussels, in collaboration with various trade. organisations in Belgium and with the support of the Belgian government, organised a

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     successful Hong Kong Business Conference in that city in May, for about 150 European businessmen.

Prior to the business conference, a regional liaison meeting was held in Brussels between Hong Kong based organisations in Europe, to allow their representatives to discuss and co-ordinate their public relations strategies. The meeting, chaired by Sir David Akers- Jones, Special Adviser to the Governor, was attended by some 30 overseas representatives from government, quasi-government and private organisations.

Public Relations Consultants in the United States

To strengthen the public relations efforts in the United States, which is Hong Kong's largest overseas market, the government commissioned the New York firm of Gavin Anderson and Company in late 1986 to develop a plan and strategy for Hong Kong.

Proposals drawn up by the company for a public relations programme on the basis of market research were found to be acceptable to the government. With the approval of the Central Consultants Selection Board, Gavin Anderson and Company were employed as the Hong Kong government's principal public relations consultant in the United States to implement the programme.

The Press

Hong Kong's flourishing free press consists of 68 newspapers and 549 periodicals, which have a high readership. The registered newspapers include 44 Chinese-language dailies and two English-language dailies. A number of news agency bulletins - Chinese, English and Japanese are also registered as newspapers.

Of the Chinese-language dailies, 34 cover mainly general news, both local and overseas, while others cover solely entertainment, especially television and cinema news, and one concentrates on finance. The larger papers include Chinese communities overseas in their distribution networks, and some have editions printed outside Hong Kong, in particular in the United States, Canada, Britain and Australia.

      Hong Kong is the Southeast Asian base for many newspapers, magazines, news agencies and the electronic media. Among the international news agencies with offices in Hong Kong are Associated Press, Reuters, United Press International and Agence France Presse. Newsweek and Time magazines have editions printed in Hong Kong, which is also the base for the regional magazines Asiaweek and the Far Eastern Economic Review, as well as the Asian Wall Street Journal and the International Herald Tribune.

Several organisations represent and cater for people working in the news media in Hong Kong. The Newspaper Society of Hong Kong represents Chinese and English news- paper proprietors. It is empowered to act in matters affecting the interests of its members. The Hong Kong Journalists Association seeks to raise professional standards by recommending better training, pay and conditions in journalism, and advises its members in the event of disputes with employers. The Foreign Correspondents' Club offers its members social facilities and a range of professional activities, including news conferences, briefings and films. The Hong Kong Press Club provides an opportunity for journalists to meet socially. The Journalism Training Board of the Vocational Training Council has, among its various tasks, the job of determining the total manpower and training needs in journalism and related fields of activity.

The board also looks into the institutional training facilities available to journalists, and prepares job specifications, training programmes and trade test guidelines for the principal jobs in the mass media.

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In December, the board conducted its fourth biennial manpower survey on the mass media. It also began preparation of training programmes.

With an allocation of $200,000 from the council, the board continued to sponsor subsidised training courses for working journalists to upgrade journalistic standards, as a joint effort with teaching and training institutions.

During the year, courses were conducted for journalists on such topics as law, English oral and written communication skills, Putonghua, translation, reporting, editing, econo- mics and feature writing.

     The annual journalism symposium, an intensive three-week modular course conducted by the board itself, was held in October-November.

Sound Broadcasting

There are 10 radio channels in Hong Kong - five operated by Radio Television Hong Kong (RTHK), three by the Hong Kong Commercial Broadcasting Company, more popu- larly known as Commercial Radio (CR), and two by the British Forces Broadcasting Service (BFBS).

     Policy guidelines for RTHK require the publicly-financed station to provide balanced and objective broadcasting services to inform, educate and entertain the people of Hong Kong. The aim is to serve the best interests of the community by providing impartial and balanced news and public affairs programmes reflecting accurately the views of both the government and the public. The Director of Broadcasting is its editor-in-chief.

RTHK now broadcasts 700 hours a week and operates a 24-hour service in Chinese and English. The most recent independent survey showed that the total number of radio listeners was 72 per cent of the population aged nine and above. The station has developed an individual identity for each of its five channels.

Radio 1 of the Chinese Service provides news bulletins and summaries on a half-hourly basis between 6 a.m. and 11 p.m. and hourly throughout the night. It also broadcasts regular financial reports during normal trading hours with round-up reports at 1 p.m. and 6 p.m. on trading days, in addition to traffic reports during rush hours. During the year, major political and social events in the territory were covered extensively. In addition, the channel's phone-in programmes served to reflect the public's sentiments on various current issues. With the interim FM plan in operation, it now relays Legislative Council meetings on its FM service every Wednesday, while continuing the normal programmes on the AM service. Radio 2 has acquired popularity as a channel mainly for young people. Although popular music is the salient feature, more magazine programmes have been introduced. During the year, the channel continued to strengthen its early morning and late evening magazine programmes to attract an even broader audience. To meet the needs of the more mature audience, financial news is broadcast three times daily. The channel adopts a lively approach to civic education and community service. It helped promote major publicity campaigns and also organised a number of large scale fund-raising activities. In its continuing effort to promote local music talent, the channel also organised its 10th 'Top Ten Chinese Gold Songs' presentation.

Radio 3, the station's news and information channel for the English-speaking popula- tion, continued to cover both local and overseas events. A morning programme of news, information and guests entitled 'Hong Kong Today' was introduced daily between 7 a.m. and 10 a.m. 'Open Line', the channel's phone-in programme on Saturdays - from 8.30 a.m. to 10.30 a.m. - continued to be a valued link between the people of Hong Kong and the government. In addition, the weekly financial programme 'Money This Week' was

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      resumed to cater for the needs of its audience. During the year, the channel increased its emphasis on discussions and interviews in the programmes. Apart from the use of stories, comedies and quiz programmes from overseas and those produced locally, the coverage of events with specially arranged outside broadcasts continued. The channel also relayed the weekly meetings of the Legislative Council.

Radio 4, the channel for fine music and the arts, covered major music and arts events throughout the year. The bilingual presentation of these programmes was welcomed by listeners. In 1987, the channel organised the '1988 Hong Kong Young Instrumentalists of the Year Competition', the final of which will take place in January 1988. Through co-operation with other cultural organisations, the Academy of Performing Arts, the Urban Council, the Regional Council and government departments, it was possible for the channel to maintain its broadcasts of concerts and recitals at various venues throughout the territory. Concerts were also held in the RTHK studios, featuring local and overseas artists and ensembles.

Radio 5 relays the BBC's World Service from 6 a.m. to 7 a.m. and again from 5 p.m. to 2.30 a.m. daily. Outside these hours, it provides an additional FM service of Chinese programmes, such as Cantonese opera, provincial music, as well as programmes in Putonghua. Programmes for the elderly and programmes on Chinese classics and the arts were further strengthened in the year.

Work on the planning and engineering of the extension of the VHF Radio Service in Hong Kong has continued. Completion of the project, which will provide territory-wide coverage for seven services, is expected in 1989.

Commercial Radio operates two Cantonese and one English language channels in the AM wave band with simulcasts on FM to some areas in the New Territories and the north side of Hong Kong Island where AM reception is less satisfactory.

Although basically an entertainment station, Commercial Radio continued to take part in fund raising for charity as part of its public service commitment. The station was involved in several large-scale live stage presentations organised for charity purposes. Of particular interest were the 'All Star 888', 'Pop Star '87' and 'Pop Song Awards Concert' organised in aid of victims of China's Heilongjiang disaster, Hong Kong's elderly and a private hospital. The annual 'Superstars Charity Basketball Match' helped raise funds for the Sir Edward Youde Memorial Fund.

The British Forces Broadcasting Service (BFBS) is part of the radio division of the Services Sound and Vision Corporation, a world-wide organisation providing entertain- ment, information and training films, video, television and radio services for the British Forces, under contract to the Ministry of Defence.

BFBS provides two radio services designed for the particular needs of the Gurkha and British Forces serving in Hong Kong, Brunei and Nepal.

      Nepali programmes, broadcast for more than 80 hours each week, cater for the interests of the Brigade of Gurkhas, providing music and features reflecting daily life in Nepal, Nepalese and world news, news reviews, quiz shows and audience participation phone-in programmes.

The English-language service broadcasts 24 hours a day. The breakfast and lunchtime shows originate from the BFBS Studio in HMS Tamar, with the rest of broadcasting coming from the main studio complex in Sek Kong in the New Territories.

The BFBS satellite news service has enabled BFBS to broadcast BBC Radio 4's "The World This Weekend' and BBC Radio 2's 'Sport on Two' live to their listeners in Hong Kong, as well as hourly bulletins of home and international news and sport.

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About 40 hours are provided each week by the BFBS production centre in London, which keeps listeners in touch with home and provides specialist programmes involving many of Britain's premier broadcasting personalities.

Broadcasting Review Board Report

Significant progress was made in 1987 in implementing the government's decisions on the major recommendations of the Broadcasting Review Board, as announced towards the end of 1986.

These decisions related, among other things, to regulation of the broadcasting industry, programme quality and advertising and censorship standards.

The follow up measures taken included:

(a) Establishment of a Broadcasting Authority, with responsibility over wireless TV on September 1, comprising 12 members - nine members from a wide-cross section of the community, and three government officers. The Broadcasting Authority's functions will initially be confined to administering television matters, but will later be extended to cover radio and cable television, when legislation for these services has been drawn up. (b) Arising from the issue of cable TV, engagement of independent consultants to give advice on whether a second public telecommunications network should be developed in Hong Kong. The consultants, appointed in September, were to submit their report in the first quarter of 1988. At the same time, work was in progress on the formulation of broadcasting policies.

(c) Further tightening of the code of practice on tobacco advertising with regard to the manner of presentation of the advertisements, as an interim step towards the introduction of a total ban on tobacco advertising on TV and radio with effect from December 1990 and the extension of the hours of ban on TV from 4.30 - 6.30 p.m. to 4.30 - 10.30 p.m. in December 1988. These restrictions came into effect in mid-November.

(d) Continuation of the work on the future administrative and financial arrangements for the future RTHK, with the intention of introducing the necessary legislation in 1988.

Television

Television viewing continued to be Hong Kong's prime leisure activity, with more than 98 per cent of households owning one television set or more. Two franchised commercial wireless broadcasting stations, Television Broadcasts Limited (TVB) and Asia Television Limited (ATV), transmit an average of 500 hours of programming each week and together provide two English and two Chinese-language services for the community. The UHF 625-line PAL colour system is standard and virtually all transmission is in colour. Both TVB and ATV maintain large, well-equipped studios and office complexes using the latest production and transmission technologies.

The Broadcasting Authority replaced the Television Authority and Television Advisory Board to become the authority responsible for all matters relating to the television industry. Its major functions are to administer the provisions of the Television Ordinance, Cap 52, and to secure proper standards of television broadcasting with regard to both programme content and technical performance of broadcasts.

One of its first tasks was to lay down the terms and conditions for the renewal of the two existing television licensees whose licences are due to expire in December 1988. A

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     Complaints Committee was also established under its ambit to handle complaints relating to the industry.

The Commissioner for Television and Entertainment Licensing is the principal execu- tive officer of the authority. He is responsible for the enforcement of the programme, advertising and technical standards required of licensees, and for monitoring regularly the performance of the television stations to ensure compliance with the terms and conditions of their licences.

In the area of technological developments, major advancements were made during the year in television transmission coverage. With the completion of the two new transposer stations at Sha Tau Kok and Sha Tin, bringing the total number of transposer stations in the territory to 18, television reception is now made possible for nearly all areas in Hong Kong with a population of over 4000 within a radius of three kilometres. The two television stations have also agreed to improve and standardise the quality of television reception by replacing the separate antennae used for the individual channels at the Temple Hill main transmitter station with a combined broad-band antennae system. The system is expected to be in full operation in mid-1988.

On the other hand, competition between the stations remains keen. At the beginning of the year, ATV renamed its Chinese and English language services as the Gold and Diamond channels. Both stations introduced major changes to their routine scheduling patterns to attract more viewers. Strip programming is still predominant and station- produced serialised drama remains the main attraction on the Chinese services. Historical epics, dramas on legendary figures, martial arts dramas, situation comedies, soap operas and action adventures are still popular. The long serialised drama, single plays and one-off drama have also made a comeback. The introduction of the 'docudrama', adaptations of classical and contemporary works of literature are also well received. There is also a significant increase in the broadcast of drama productions made in China.

The output of informative and educational enrichment programmes, which often take the form of documentaries, magazine shows and 'two-minuters', has continued to increase. There is also a marked increase in the production of current affairs programmes related to matters of social controversy and civic education. The series of panel discussions and forums held on the Green Paper on the 1987 Review of Developments in Representative Government is a notable example.

In addition to the above, beauty pageants, talent contests, award presentations and variety spectaculars remain a staple fare of light entertainment. Coverage of local and international sports events is still extensive, and includes regular satellite transmissions of the Superbowl, Wimbledon, FA Cup, South American soccer championships, world snooker and other major sports tournaments.

The television productions are more varied, sophisticated and technically proficient. Television Home Viewing Groups appointed by the Commissioner for Television and Entertainment Licensing have been in operation since 1982 in each of Hong Kong's 19 districts. These groups, set up with the assistance of district offices and having a total membership of 570, provide the commissioner with a continuing flow of public opinion on programming and advertising across a broad spectrum of the population. Three Regional Advisory Panels, one each for Hong Kong Island, Kowloon and the New Territories, consisting of representative members from each area, were established in 1983 and have served to keep the Broadcasting Authority in close contact with the Home Viewing Groups. Radio Television Hong Kong, which uses the transmission services of the two commer- cial stations, produced 12 hours of public affairs programmes each week.

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      Policy guidelines for RTHK require its programmes to provide a channel of com- munication between the government and the public in order to promote civic responsibility and identity, to serve minority interests and, in general, to educate and inform. The programmes produced fall basically into six areas of interest: current affairs, drama, information and community services, variety and games shows, children and youth programmes, and general educational productions.

      RTHK productions are generally popular and have won local and international acclaim. In 1987, RTHK produced a number of innovative public affairs programmes. The new programmes, Today In LegCo and Pentaprism provided sharp and lively coverage of up-to-date events, while the relatively new addition to the police group of programmes, Crime Watch, helped forge closer links between the public and the police. In the English Current Affairs programme area, The Answer's Yours, which comprised interviews with top policy-makers, and another new programme which focused on lifestyles were also launched in the year and proved to be successful. In drama, the introduction of Writers' Series generated much interest in the local literary scene. A number of long standing series such as Below The Lion Rock, Children's Drama and On the Beat remained very popular. As for variety shows, Swinging Summer, which aimed at promoting summer youth activities, changed its format to that of a concert which has proved to be highly successful. Furthermore, a variety of charity and campaign oriented shows, such as the Walk Appreciation Concert and the Charity Top Pop Marathon also contributed greatly to the promotion of popular music and civic responsibility.

As in previous years, RTHK produced programmes on important annual events, such as the Governor's New Year Message, and the Budget. It also organised live coverage of a very sad event for the people of Hong Kong - the funeral service for the Governor, Sir Edward Youde in December 1986. Early in 1987, the satellite press conference given by the new Governor, Sir David Wilson, and his subsequent arrival in Hong Kong, were given live coverage by RTHK. On several occasions such as these, RTHK provided pool coverage for both local and international broadcasting stations and news agencies.

RTHK has continued to place emphasis on educational programmes for audiences of different ages. To promote civic awareness, it produced a second series on Civic Education, explaining citizens' rights and responsibilities. To help the public understand the Green Paper on the Development of Representative Government more readily, it produced the series, Green Paper Made Easy.

Sex Education was another new series, consisting of stories depicting problems about sex roles, behaviour and attitudes through different stages of life. Language education continued with two series teaching Putonghua and one, the Follow Through, teaching the practical use of English. A breakthrough in the teaching of English grammar was achieved by introducing English Through Songs. This had previously been a well-received radio programme, and the TV version added visual impact and a new creative element to the teaching material. For public education, a Food and Health series was produced with the advice of doctors and nutrition experts. A series of Public Education programmes on topics such as home-safety, road safety, radiation, AIDS, anti-narcotics and so forth was also produced. With the continuation of Dial-A-Tutor and Pre-school programmes, a new pre-school certificate course programme on Child Care Education was introduced. While the two children's programmes Music Time and Story Time were cultivating an interest in art in the hearts of the young. Performing Arts was a new cultural series produced this year for youth and adults fond of dance, music and drama.

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      RTHK's Educational Television Division and the Education Department continued their joint efforts in producing educational programmes for schools. The government's Educational Television Service, which utilised the transmission facilities of the commercial stations for eight hours every weekday during term time, was watched by 616 000 school children in primary and secondary schools. The programmes were devised and written by specialist Education Department staff who provided schools with programme literature and follow-up work. The programmes were produced by RTHK and made in colour with the use of film animation, drama and documentary techniques.

      During the year, RTHK moved its main television operations into a newly-acquired, three-studio TV production centre on Broadcast Drive. This permitted future expansion of the station's output as well as better co-ordination of production and associated production service activities.

Information Services Department

The Information Services Department - known also as GIS, the Government Information Services - provides the link between the administration and the information media and, through them, the people of Hong Kong.

       The work of the GIS is carried out by several divisions. The News Division distributes a great variety of government information through its teleprinter and facsimile networks, which are directly linked with leading newspapers, radio and television stations, and news agencies. The facsimile system, which is especially important for communicating in the Chinese language, is designed to transmit to the media both photographs and typed or printed messages. Telex and international facsimile services enable government offices overseas to receive messages without delay and to communicate directly to the department and, through it, to the rest of the government. The News Division operates a 24-hour media enquiry service, handling an average of 20 000 questions every month.

The division is also responsible for organising and conducting press conferences, in- cluding the year-round meet-the-media sessions by heads of government departments. In addition, a media service team is charged with the responsibility of planning and providing press facilities for public functions performed by top government officials and visits by VIPs from overseas. Extensive arrangements were made for local and overseas journalists to cover the arrival of the new Governor, Sir David Wilson, in April, and the visit of Princess Margaret in May.

       In an emergency such as a typhoon, the newsroom becomes a co-ordination centre. It disseminates information to the media, particularly the radio and television stations, to keep the public informed of developments. Apart from this mobilisation of both manpower and equipment in the newsroom, other staff man various key positions within the government's organisation for managing emergencies, contributing to the minute-by- minute flow of information.

The Public Relations Division has three sub-divisions: media research, departmental units and overseas. The media research sub-division keeps the government fully informed of public opinion as expressed in the information media. It produces the Gist, a daily news sheet in English which summarises news and editorial comment in the major Chinese language papers, as well as opinions voiced on radio and television. Other publications include Opinion, a weekly review of Chinese editorial comment, What the Magazines Say and special reports on media coverage of subjects of particular interest to the government. The sub-division is also responsible for producing the Hong Kong News Digest, a fortnightly newspaper in Chinese which helps Hong Kong Chinese overseas to maintain

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contact with Hong Kong, and The Week in Hong Kong, a newsletter mainly on trade and economic matters distributed to overseas subscribers.

     The departmental units sub-division co-ordinates the operation of the 27 information and public relations units in government departments. These units issue press releases, arrange press conferences and site visits and answer many media enquiries concerning the activities and aims of their respective departments. Through these efforts they play a major role in maintaining the flow of information and helping to improve relations with the public.

     The overseas public relations sub-division (OPRS) assists in the government's publicity efforts overseas and produces and distributes promotional material, including feature articles and video newsclips for television. Assistance is provided for visiting journalists requiring information and interviews with government officers, and close liaison is main- tained with news agencies and overseas journalists based in Hong Kong. This year, the unit assisted 344 overseas journalists and 72 other visitors, distributed 59 features, and produced 17 video items for television.

      The Publicity Division embraces the creative, publishing and promotional resources of the department. Its ambit includes photography and film-making, an extensive photo- graphic library, the staging of exhibitions, the design of books, leaflets and posters and the design and placement of all government advertising. GIS produces a wide variety of publications ranging from leaflets and fact sheets to the Hong Kong Annual Report and other full-colour books. Sales of government publications rose by 21 per cent to more than $27 million in 1987, compared with $22.3 million in 1986. The main emphasis of publishing activity continued to lie with information material for free distribution. During the year some 930 items totalling 8 420 000 copies were given out to the public. These included leaflets advising on procedures for obtaining a wide range of government services, together with fact sheets covering 57 topics, which are updated annually with the latest statistics.

      The Publicity Division also plans and carries out all government publicity campaigns. The Anti-Narcotics, Crime Prevention, Industrial Safety, Road Safety, Fire Prevention and Civic Education programmes continued to be accorded status as major campaigns, along with the Clean Hong Kong Campaign, Issue of New Identity Cards, Electoral Promotion, Safety in the Home, Anti-Smoking, Police Recruiting and Rehabilitation programmes. Two new campaigns were launched in 1987 to promote the easy travel scheme and to alert the public to the threat posed by AIDS. Other topics treated in publicity programmes included Country Parks, Summer Youth Activities and Rabies Inoculation. In support of these exercises, numerous promotional events were organised through mobile exhibitions, live shows, television and radio programmes as well as competitions.

      The News and Public Relation Division of the Hong Kong Government Office in London works closely with GIS to provide a press service on Hong Kong matters for the British media and for Hong Kong journalists based in the United Kingdom, and enquiry and information services for the public about events and developments in Hong Kong. It also organises a panel of speakers, made up at present of about 100 former senior government officers and businessmen who have retired to the UK.

     The News Section monitors British parliamentary proceedings and media coverage of Hong Kong affairs, and keeps the Hong Kong Government informed on a daily basis by telex and facsimile transmission. It also publishes a fortnightly newsletter, 'Dateline Hong Kong', which is distributed among organisations and individuals with a close interest in Hong Kong.

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The Public Relations Section was responsible for co-ordinating the arrangements in the UK for visits by the Hong Kong Children's Choir and the Hong Kong Youth Symphony Orchestra. The choir performed nightly at 'Chinese Osterley', a four-day event, and among the guests attending were Princess Alexandra and the Governor. The choir also gave a recital at St Paul's Cathedral and a concert in the Commonwealth Institute Theatre. It later took part in the International Festival of Youth in Aberdeen, Scotland.

The Youth Orchestra toured the UK and, in London, it gave concerts at St James's, Piccadilly, and the Commonwealth Institute.

In common with the London office, the Hong Kong government offices in New York and Brussels were kept busy catering to media interest in Hong Kong.

North America is covered by information units in the government's Economic Affairs Offices located in New York and San Francisco. They provide a general news and information service for the media and work with GIS to produce special features and articles tailored to the needs of American publications.

Emphasis is placed on regular liaison with representatives of the media in all the major centres, especially through visits by information officers who help establish a better understanding of Hong Kong, particularly in relation to questions applying to the Sino-British Joint Declaration and the steps being taken to ensure a smooth transfer of sovereignty. Hong Kong's role as a major trading partner of the United States, and its status as a free and fair trader, is also publicised as is the danger posed to the territory's economy by protectionist legislation.

      The units also monitor the North American media and provide regular reports and analyses to the government on stories affecting the territory. A number of journalists who visited Hong Kong during the year were briefed and assisted in planning their programmes. Assistance was also given to incoming VIPs from Hong Kong in planning speaking engagements and providing media coverage.

      The major media event of 1987 was the official visit to the United States by the Governor, Sir David Wilson, in October. The New York information unit provided logistical support and arranged for Sir David to address the National Press Club in Washington and to give interviews and briefings to the news media in both the capital and New York.

      The Brussels office is responsible, among other things, for the government's publicity efforts in the 12 Member States of the European Community, except the United Kingdom. The office's information section works closely with GIS to provide material on Hong Kong matters in response to enquiries from the European media and to provide briefings for journalists visiting Hong Kong.

      It also invites people of influence in member states' governments, the Commission of the EEC and the European Parliament who have shown an interest in Hong Kong to visit the territory, under sponsorship of the Hong Kong government. In addition, it arranges speaking engagements in many EEC countries for senior Hong Kong government officials and representatives of the business community, distributes feature articles and news releases to selected media contacts, and offers a more general enquiry and information service to the public.

Film Industry

     Going to the cinema remains a popular leisure activity, second only to watching television. Annual cinema attendance totalled about 62 million, compared with about 60 million in 1986. In line with the trend over the last few years, the number of cinemas in Hong Kong continued to increase, totalling 115 by the end of the year. This compares with 105 in the

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previous year and 83 in 1980. The new cinemas are, however, generally smaller and located mainly in the New Territories where there has been a rapid growth in population.

     While imported films continued to be popular, good quality local films remained the favourite with most cinema patrons.

     The number of locally-produced films was 110 (including eight co-productions with other territories), compared with 100 (including 13 co-productions) in 1986. The trend towards making locally-produced films in Cantonese rather than Mandarin continued. Although action films and comedies were dominant, a number of so-called 'hero films' also proved popular. The biggest box-office successes for the year included Armour of God which grossed $35 million; Project A II ($31 million); Prison on Fire ($30 million); It's a Mad, Mad, Mad, Mad World ($27 million) and An Autumn's Tale ($25 million).

     All films intended for public exhibition in Hong Kong must be submitted to the Film Censorship Authority, which is part of the Television and Entertainment Licensing Authority. Censorship standards are drawn from ascertained community views. A panel comprising about 120 members of the public assists the film censors by reflecting community views. During the year, 783 films were submitted for censorship (including films intended for cine-clubs and cultural organisations). Of the total number submitted, 544 were approved without excisions, 235 were approved after excisions and four were banned. These figures do not include films intended for television use.

     In 1988 a new Film Censorship Bill will be considered by the Legislative Council. The bill proposes the establishment of a three-tier classification for films, i.e. those approved for exhibition to persons of any age, those to be advertised as 'not suitable for children', and those restricted to persons who have attained the age of 18.

Printing and Publishing

The international status of Hong Kong's printing industry has continued to grow steadily in recent years, based upon a reputation for quality and economy. As a leading centre for printing and publishing, the territory's growth has led to the establishment of over 3 610 printing factories, employing around 34 190 people, and more than 200 publishing houses, including many from overseas which have set up offices or regional headquarters here. Continued growth of the industry during the year can be attributed to the confidence of employers in the future of Hong Kong, and to the relative depreciation of the Hong Kong dollar against most other currencies which has enabled Hong Kong printers to obtain more orders from overseas. Hong Kong printers are still investing substantially in advanced machinery and equipment and are taking a more positive step in developing the United States market.

The industry constitutes seven per cent of all manufacturing establishments and four per cent of employment in the manufacturing sector. Most of the printing factories (77 per cent) are engaged in general jobbing work, and most of the remainder deal with related work, such as typesetting and bookbinding. There are also 33 newspaper printers.

     Use of the latest technology, especially computerised equipment, has enabled the industry to become highly specialised. The local electronics industry contributes to the plant and equipment of the more sophisticated printing companies and also the publishers, who are becoming increasingly involved in the use of data and word-processing systems for editorial production and stock control.

     The sales and marketing of data and word-processing systems are now handled by more than 100 companies offering over 200 systems. The output data can be converted or interfaced with typesetting equipment at realistic cost to provide publishers with the

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     additional benefits of fast and cost-efficient printing. An increasing number of Chinese language word-processors are being installed to meet demand.

Domestic exports of printed matter increased in value terms by 27 per cent over the previous year. Material printed locally with a total value of $2,258 million was exported, with the United States, China, the United Kingdom, Australia and Taiwan being the main customers. Books and pamphlets, newspapers, journals and periodicals accounted for over 62 per cent of exports of printed products. The biggest customers for this reading material were the United States, the United Kingdom and Australia.

Overall, the printing and publishing industries contributed five per cent of the net output of the manufacturing sector.

Postal Services

Despite the growth in the volume of letters handled, the Post Office maintained its aim of delivering most local mail within 24 hours of posting.

      In the case of airmail postings made at the four main offices - the General Post Office in Central, the Tsim Sha Tsui and Kowloon Central post offices and the International Mail Centre - the aim is to have the letter mail despatched on the same day if outgoing flights are available. Other airmail postings are generally despatched to their overseas destinations within 24 hours.

      Two mail deliveries are made on each weekday in the urban and industrial areas, and one delivery elsewhere.

This year, 685 million letters and parcels - a daily average of 1.9 million - were handled, an increase of 11 per cent over the 1986 figure. About 4 788 tonnes of letter mail and 4 581 tonnes of parcels were despatched by air during the year, an overall increase of 13 per cent. The Speedpost service continued to grow rapidly, and is now available to 54 countries, including all of Hong Kong's major trading partners, such as Australia, Canada, China, France, West Germany, Japan, Singapore, Taiwan, the United Kingdom and the United States. During the year, 1 780 053 items were handled, an increase of 27 per cent over 1986. The Intelpost service was merged with the Bureaufax service of Cable and Wireless (Hong Kong) Limited on April 1 to form a joint public facsimile service called Postfax. The Postfax service is now available to 70 countries, including all the major countries trading with Hong Kong. It offers high-speed facsimile transmission of high-quality black and white reproductions of documents, handwritten materials, drawings and personal messages up to A4 size. Items can be posted at 31 acceptance offices, and will be ready for delivery overseas within a few hours.

Wong Tai Sin Post Office was reprovisioned to provide for improved and increased facilities to cope with rising postal demand in the district. The total number of post offices in the territory is 103.

The Post Office issued five sets of special stamps in 1987. The first issue, comprising four stamps and a souvenir sheet was released in January to mark the Year of the Rabbit, the second in the current Lunar New Year series. The second issue, depicting historical scenes of Hong Kong, was released in April.

New definitive stamps, comprising 15 sheet stamps and two reel stamps specially designed for stamp-vending machines, were issued in July. Commemorative covers were also issued with a hand-back service to mark the last day of sale of the old definitive stamps on July 11.

      Another set of four stamps commemorating the centenary of the Alice Ho Miu Ling Nethersole Hospital and the Faculty of Medicine of the University of Hong Kong was

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released in September. The last special issue, consisting of four stamps, was released in November and featured historical Chinese costumes. Post cards of enlarged versions of the four stamps were also issued.

A set of new 'postage due labels' comprising six denominations was issued in March to replace the old labels which had not changed in design since 1923.

Telecommunication Services

As a leading financial, commercial and industrial centre in Asia, Hong Kong depends on efficient and reliable telecommunications both within the territory and internationally.

     Telecommunication services are provided by two franchised local companies, Hong Kong Telephone Company Limited and Cable and Wireless (Hong Kong) Limited.

The Postmaster General is the Telecommunications Authority and he administers the Telecommunication Ordinance and the Telephone Ordinance which govern the establish- ment and operation of all telecommunication services. He also acts as adviser to the government on matters concerning the provision and operation of public telecommunica- tion services and the technical aspects of radio and television broadcasting.

     The Post Office is responsible for the management of the radio spectrum to ensure that it is utilised efficiently. It draws up frequency allocation plans for the territory and assigns frequencies to specific applications with the aid of a computer. It also co- ordinates with neighbouring territories to share the radio spectrum without causing radio interference.

     It grants licences, under the Telecommunication Ordinance, for all forms of radio communication within Hong Kong, maintains surveillance of the radio frequency bands to detect illegal transmissions and interference emanating from sources within and around the territory, and carries out type-approval tests on radio equipment to ensure that they will not cause radio interference when used in Hong Kong.

     As demands for radio spectrum are increasing rapidly, studies are performed on the possibility of applying new spectrum conservation techniques to ensure efficient utilisation of the spectrum.

     The Post Office conducts examinations leading to the issue of the Certificate of Competence in Radiotelephony or Radiotelegraphy to radio operating personnel in compliance with the International Radio Regulations. It also conducts inspections of ships' radio stations to ensure compliance with the International Convention for the Safety of Life at Sea.

     During the year, the Post Office took part in the World Administrative Radio Con- ference for Mobile Services 1987 and other international meetings.

     The Post Office also provides advisory and planning services for the communication requirements of government departments, and co-ordinates and regulates the use of all radio communication sites. Major systems planned in 1987 included a campus-wide voice and data communication network for the Hong Kong Polytechnic, a new radio network for the Highways Department and the Civil Engineering Services Department, and the provision of a new Fire Services mobilising system.

     The basic public telecommunication services in Hong Kong - telephone, telex and telegram - are operated by the two franchised companies on an exclusive basis. Customer premises terminal equipment is provided on a competitive basis, but 'permission to connect' is required in respect of each type of equipment. Other telecommunication services may be operated competitively, provided the service has been licensed under the Telecom- munication Ordinance.

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The internal telephone service is provided by the Hong Kong Telephone Company Limited. With over 2.6 million telephones served by more than 1.9 million lines, the territory has a density of around 46 telephones for every 100 people.

      The company also operates a public data network using a special transmission switching technique, known as packet switching, to provide the public with more advanced data communication facilities.

The network helped the introduction of 'cashless shopping', as it enabled the electronic transfer of funds to go into operation at selected retail outlets.

      Hong Kong's international telephone service is provided jointly by the Hong Kong Telephone Company Limited and Cable and Wireless (HK) Limited. A world-wide operator-connected service is available and International Direct Dialling can be made to more than 180 overseas destinations as well as to over 5 000 ships at sea fitted with satellite communication equipment.

International telecommunication services, which include public telegram, telex, tele- phone, television programme transmission/reception, leased circuits, ship-shore and air- ground communications, are provided by the Cable and Wireless (HK) Limited under an exclusive licence granted under the Telecommunication Ordinance. The company also operates the local telex and telegram service. International facilities are provided through land and submarine cables, radio systems and satellite links from the Stanley earth station which operates via satellite over the Indian Ocean and the Pacific Ocean.

New submarine cables and radio links are put into service from time to time, thereby further improving Hong Kong's telecommunication facilities for communication with other territories.

To meet the high demand for telecommunication between Hong Kong and Guangzhou, Cable and Wireless (Hong Kong) Limited signed two contracts for the supply and installation of equipment for the Hong Kong-Guangzhou optical fibre cable system, scheduled to be in operation by August 1988. The digital system with a capacity of 46 080 telephone circuits will be initially equipped for 7 680 circuits to carry telephone, telex, telegraph and 64 kb/s data.

In addition to the basic services provided by the two franchised companies, a number of telecommunication services are operated by private companies under non-exclusive licences granted by the Telecommunications Authority. Services such as radio paging, mobile radiotelephone, data facsimile transmission, videotex, electronic mail, and community repeater are offered competitively by a number of organisations. Radio paging services are especially popular, and over 330 000 pagers are now in service.

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FOXX:

    HONG KONG's population includes communities of different ethnic and cultural back- grounds, and all of the world's major faiths are practised here with complete freedom.

Buddhist monasteries and Taoist temples co-exist with Christian churches, mosques, and Hindu and Sikh temples. All major religious bodies have established schools which offer a general education besides religious teachings.

Buddhism and Taoism

    Buddhism and Taoism, the leading Chinese religions, maintain a strong hold on the population, especially among the older folk. Ancestral worship is also widely practised as advocated by Confucianism which, though not truly a religion, teaches a moral code based on human relations.

Hong Kong has more than 360 Chinese temples. Some temples are centuries old, built by fishermen or old settlers, some are of more recent construction, while others are housed inside multi-storey buildings and cater for the spiritual needs of smaller circles of city dwellers.

     All temples are required to be registered under the Chinese Temples Ordinance. The Chinese Temples Committee manages some 40 public temples and the income, from donations by worshippers, is used for the preservation and restoration of not only public temples but also privately owned temples of historical value. Most of the large temples and monasteries are open to the public.

     Each temple is dedicated to one or two deities enshrined in the main hall, with side halls housing subsidiary deities. Since Buddhism and Taoism, basically two different faiths, are often regarded as related in that they both involve sacred rites of traditional origins, Buddhist and Taoist deities may be honoured together within one temple. Leading deities include Buddha, Kwun Yum (the Buddhist Goddess of Mercy), and Lui Cho (a Taoist god).

     There are also a diversity of deified mortals traditionally worshipped as a result of their performance of actual or mythical feats. Foremost among these is Tin Hau, the Queen of Heaven and Protectress of Seafarers, worshipped originally by the fishing population but now by others in the community as well, reflecting Hong Kong's dependence on fishing and on sea trade. There are at least 24 Tin Hau Temples in Hong Kong, the most famous being the one in Joss House Bay, which is visited by tens of thousands of worshippers each year at Tin Hau Festival on the 23rd day of the third lunar month.

Other deified mortals include Kwan Tai, the God of War and Righteousness; Pak Tai, Lord of the North and Patron of Cheung Chau Island; Hung Shing, God of the South Seas and a weather prophet, and Wong Tai Sin, a Taoist deity, in whose honour a temple originally built 65 years ago in north-eastern Kowloon in traditional Chinese architectural

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style has been enjoying great popularity. Dedicated to the Gods of Literary Attainment and Martial Valour, the Man Mo Temple in Hollywood Road on Hong Kong Island, run by the Tung Wah Group of Hospitals, a charitable organisation, is also very popular.

Traditional Festivals

There are five major festivals in the Chinese calendar, all of which are statutory public holidays. First and foremost is the Lunar New Year, when visits and gifts are exchanged between friends and relatives, and children receive 'lucky' money. The Ching Ming Festival in the springtime provides an opportunity to visit ancestral graves. The Dragon Boat Festival is celebrated on the fifth day of the fifth moon in early summer with dragon boat races and by eating cooked rice wrapped in lotus leaves. The Mid-Autumn Festival falls on the 15th day of the eighth moon, when gifts of mooncakes, fruit and wine are exchanged, and adults and children go into the parks and countryside at night, carrying colourful lanterns. The Chung Yeung Festival is on the ninth day of the ninth moon, and is celebrated by large crowds climbing hills in remembrance of an ancient Chinese family's escape from plague and death by fleeing to the top of a high mountain. Family graves are also visited on this day.

Roman Catholic Community

The Roman Catholic Church has been present in Hong Kong since the territory's early days. The church was established as a Mission Prefecture in 1841 and as an Apostolic Vicariate in 1874. It became a diocese in 1946.

In 1969, Francis Chen-peng Hsu was installed as the first Chinese Bishop of the Hong Kong diocese, and he was succeeded in 1973 by Peter Wang-kei Lei. The present Bishop, John Baptist Cheng-chung Wu, was consecrated in 1975.

About 267 321 people, or five per cent of the population, are Catholics. They are served by 347 priests, 79 brothers, and 745 sisters. There are 60 parishes and 31 centres for Mass. The majority of the services and other religious activities are conducted in Chinese, with a few churches providing services in English.

      The diocese has established its own administrative structure while maintaining tradi- tional links with the Pope and with other Catholic communities around the world. It uses the same scriptures and has similar ecclesial communions in the universal Church throughout the world, with which it maintains close fellowship. The assistant secretary- general of the Federation of Asian Bishops' Conference has his office in Hong Kong.

      Along with its apostolic work, one of the prime concerns of the diocese has been for the well-being of all the people of Hong Kong. In education, there are 291 Catholic schools and kindergartens which have about 308 075 pupils. There is the Catholic Board of Education to assist in this area. The medical and social services include six hospitals, 10 clinics, 16 social centres, 12 hostels, 10 homes for the aged, one home for the handicapped and many self-help clubs and associations. Caritas is the official social welfare arm of the church in Hong Kong.

      These services are open to all people - indeed, 95 per cent of those who have benefited from the wide range of services provided by the diocese are not Catholics.

To reach people through the media, the diocese publishes two weekly newspapers, Kung Kao Po and The Sunday Examiner. In addition, the Diocesan Audio-Visual Centre produces tapes and films for use in schools and parishes and, overall, the Hong Kong Catholic Social Communications Office acts as an information and public relations channel for the diocese.

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The presence of the Protestant community in Hong Kong dates back to 1841. The earliest established church groups were the Congregationalists, the Lutherans, the Baptists, the Anglicans and the Methodists.

In the 146 years since the first Protestant church came into being in Hong Kong, the Protestant community has grown to 210 000 in 620 congregations among the 50 de- nominations and sectarian groups. The largest denominational group in Hong Kong is the Baptist, followed by the Lutheran, which is divided into five groups. Other major denominations are the Adventist, the Anglican, the Christian Alliance, the Church of Christ in China, the Methodist and the Pentecostal. Since the seventies, the number of independent congregations has increased rapidly due to the strong evangelical zeal of the lay Christians.

     The Protestant church runs three post-secondary colleges, 115 secondary schools, 156 primary schools, 159 kindergartens, seven hospitals, 24 clinics, 159 social service centres, 27 homes for the elderly and hostels, three schools for the deaf and 10 training centres for the mentally handicapped, 17 theological seminaries and bible institutes. There are also four international hotel-type guest houses operated by the YMCA and the YWCA.

There are 36 para church agencies and 54 Christian publishing houses and bookshops catering to the needs of the Protestant community. Due to the growing affluence in Hong Kong, the church has also been sending out Chinese missionaries to various parts of the world to set up mission stations. In recent years, the church has also been involved in overseas aid, supporting emergency relief and development projects in third world countries. The 'Five Loaves and Two Fish Campaign' sponsored by the Hong Kong Christian Council was the first overseas aid project in Hong Kong.

     There are two ecumenical bodies which facilitate the co-operative work among the Protestant churches. The oldest of these two, dating back to 1915, is the Hong Kong Chinese Christian Churches Union. About 200 congregations make up the membership of the Churches Union. The Church Union publishes the newspaper Christian Weekly, which serves all the Protestant congregations. The second co-operative body is the Hong Kong Christian Council, formed in 1954. The council bases its membership on the major mainline denominations and the ecumenical services bodies. The Christian Council is committed to serve the wider community in Hong Kong by involving its member churches and organisations as well as through its agencies like the Christian Industrial Committee, Hong Kong Christian Service, United Christian Medical Service, Alice Ho Miu Ling Nethersole Hospital and Christian Family Service Centre.

A city-wide evangelistic crusade was the highlight of the year among the Protestant community, with some 20 000 Christians being mobilised for the seven-day gathering that drew 200 000 participants. Another important project of the Protestant community is the billion dollar extension of the United Christian Hospital which will enlarge the existing 640-bed capacity to 1 400.

Muslim Community

There are about 50 000 Muslims in Hong Kong. More than half of them are Chinese with the rest being either locally born non-Chinese or believers from Pakistan, India, Malaysia, Indonesia and Middle Eastern and African countries. Three principal mosques are used daily for prayers. The oldest is the Jamia Mosque in Shelley Street on Hong Kong Island which was built before the turn of the century and rebuilt in 1915. It can accommodate a congregation of 400.

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      Also on Hong Kong Island is the Masjid Ammar and Osman Ramju Sadick Islamic Centre. Opened in 1981, this eight-storey centre in Wan Chai houses a mosque on two floors, a community hall, a library, a medical clinic, classrooms and offices. The mosque, which is managed by the Islamic Union of Hong Kong, can accommodate 700 people but up to 1 500 if necessary, by using other available space in the centre.

Situated on what is sometimes called the 'Golden Mile' in Nathan Road is the Kowloon Mosque and Islamic Centre which was opened in May 1984. This imposing building, with white marble finishing is a new landmark in Tsim Sha Tsui. The mosque can accommodate a congregation of about 2 000 and has in addition to the three prayer halls, a community hall, a medical clinic and a library.

There are two Muslim cemeteries, both on Hong Kong Island - one at Happy Valley and the other at Cape Collinson, Chai Wan. The cemetery at Cape Collinson also has a mosque. The co-ordinating body for all Islamic religious affairs is the Incorporated Trustees of the Islamic Community Fund of Hong Kong. A board of trustees comprising representatives of four Muslim organisations, namely the Islamic Union of Hong Kong, the Pakistan Association, the Indian Muslim Association and the Dawoodi Bohra Association is responsible for the management and maintenance of mosques and cemeteries. The trustees are also responsible for organising the celebration of Muslim festivals and other religious events. Charitable work among the Muslim community, including financial aid for the needy, medical facilities and assisted education, is conducted through various local Muslim organisations.

Hindu Community

     The religious and social activities of the 12 000 members of Hong Kong's Hindu community are centred on the Hindu Temple in Happy Valley. The Hindu Association of Hong Kong is responsible for the upkeep of the temple, which is also used for meditation periods, yoga classes and other community activities. Naming, engagement and marriage ceremonies are performed at the temple according to Hindu custom. Religious music sessions, discourses and recitals are conducted every Sunday morning and Monday evening. The Sunday sessions are regularly attended by members of the community. Every Sunday a free community meal is served at the temple.

      The temple is frequently visited by swamis and learned men from overseas who give spiritual lectures to the community. A number of festivals are observed, the more important being the Holi Festival, the Birth of Lord Krishna, Shivaratri, Dussehra and Diwali. Various linguistic groups among the Hindus organise additional festivals and prayer meetings on occasion of special significance to their group.

      Other important services rendered by the temple are to administer the last rites and arrange for cremation and related ceremonies. The temple is also responsible for the upkeep of the Hindu crematorium at Cape Collinson, and operates a free Sunday clinic, which is open to all.

Sikh Community

The Sikhs - distinguished by their stylised turbans and unshorn hair - first came to Hong Kong from the Punjab in North India as part of the British Armed Forces in the 19th century. Because of their generally strong physique, they also comprised a large segment of the Royal Hong Kong Police Force before World War II.

Today, members of the community are engaged in a variety of occupations. The centre of their religious and cultural activities is the Sikh Temple at 371 Queen's Road East, Wan

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Chai, Hong Kong. A special feature of the temple, which was established in 1901, is the provision of free meals and short-term accommodation for overseas visitors of any faith. Religious services, which include hymn singing, readings from the Guru Granth (the Sikh Holy Book) and sermons by the priest, are held every Sunday morning. The temple also houses a library which contains a good selection of books on the Sikh religion and culture, and runs a 'starters' school for Indian children aged between four and six to prepare them for English primary schools in Hong Kong.

     The main holy days and festivals observed are the birthdays of Guru Nanak (founder of the faith), Guru Gobind Singh (the 10th and last Guru) and Baisakhi (birthday of all Sikhs).

Jewish Community

Hong Kong's Jewish community - comprising families from various parts of the world -- worship on Friday evenings, Saturday mornings and Jewish holidays at the Synagogue 'Ohel Leah' on Robinson Road, Hong Kong Island. The synagogue was built in 1901 on land given by Sir Jacob Sassoon and his family. The site includes a rabbi's residence and a school as well as a recreation club for the 1 000 people in the congregation. There is also a Jewish cemetery, which is located in Happy Valley. The Recreation Club is now serving Kosher meals prepared under rabbinical supervision from 8 a.m. to 10 p.m.

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LEISURE time activities play a significant part in the everyday lives of the people of Hong Kong.

With their improved standard of living and the increased provision of a diversified range of recreational, sports and cultural facilities and programmes, the people have a wide choice as to how they spend their leisure time. While large numbers take part in or watch the many sporting events that are regularly held, others spend their leisure time going to the theatre, the countryside, the beaches and the many other available facilities at weekends or holidays. A great deal of interest is also shown in cultural events, as Hong Kong develops into a leading centre in Southeast Asia, with several large new cultural venues having recently been opened or about to open. Thousands of events are now held throughout the year. These events range from traditional Cantonese opera and puppet shows to ballet perform- ances, theatre, and orchestral music.

Funds and facilities for these pursuits, as well as further training and coaching opportunities for young sportsmen and students of the arts, have been made available largely by the government, the Urban Council, the Regional Council, governing sports bodies, voluntary associations and many private organisations.

On the cultural side, the City Hall marked its silver jubilee with 'A Celebration of Hong Kong Artists', a festival demonstrating the achievements of local talent since the opening of this cultural landmark in Hong Kong.

The Ngau Chi Wan Civic Centre, the first of a number of fully-fledged community arts centres in the urban area, staged its opening events in May. These centres aim to enhance the development and promotion of the arts in various districts.

The objectives of the Hong Kong Academy for the Performing Arts are to foster and provide training, education and research in the performing arts and related technical fields. The academy offers unique facilities and opportunities for the multi-disciplinary and bi-cultural training in Chinese and Western music, drama, dance and related technical arts. The building was financed by a $300-million donation from the Royal Hong Kong Jockey Club and its annual running costs are being met by the government.

Countryside

Countryside recreation is an accepted part of the way of life for many people in Hong Kong. Country parks and woodlands on the urban fringes are used extensively by city dwellers for morning walking, shadow boxing and jogging, and by students for nature study, while more remote parks are used for hiking, picnicking, barbecuing, cycling, kite flying, orienteering and camping by those seeking a relaxing change of pace.

There are 21 country parks throughout Hong Kong, covering about 40 per cent of the land area. Within these country parks recreational amenities include picnic and barbecue

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places, waymarked walks, shelters, toilets, and information and educational services. Road access is being improved to enable park staff to deal more effectively with fires and litter - the most serious problems created by visitors.

     About 9.3 million visits were made to the parks during the year. Although the parks are used more in the drier and cooler months, with October to April accounting for 65 per cent of the total visitors, increasing numbers of people now go to the countryside during the summer. Evening visits to roadside picnic sites are also becoming popular.

     The Director of Agriculture and Fisheries is the Country Parks Authority and, advised by the Country Parks Board, is responsible for these facilities and for the provision of manage- ment and protection services for all lands designated as country parks and special areas.

Urban Council

The Urban Council continues to play a vital role in community life by providing a wide range of recreational and cultural facilities in the urban area of Hong Kong. The Urban Services Department, as the executive arm of the council, manages a total open space of 511 hectares. Other than parks and playgrounds, major recreational facilities provided by the council include stadia and sports grounds, swimming pools, beaches, indoor games halls, tennis and squash courts.

     Urban Council projects completed in 1987 include the Extension of Cape Collinson Columbarium and Diamond Hill Columbarium, Wah Fu Estate Playground, Nam Long Shan Cooked Food Centre, Kwun Tong Ferry Pier Square and To Kwa Wan Recrea- tion Ground.

     To maximise land use, more and more multi-storey Urban Council market complexes were planned with some floors constructed exclusively for recreational or cultural use. The facilities provided include indoor games halls, libraries, auditoria for performances, multi-purpose rooms for rehearsals, training, lectures and community functions, visual arts studios and exhibition areas. The concept of building multi-purpose complexes was reviewed during the year and recommendations were made to improve the design of complexes and to overcome various constraints arising from usage.

     Three complexes were completed in 1987. They are located in Sham Shui Po, Kowloon City and Kwun Tong Districts in Kowloon. Another seven complexes were under construc- tion in various districts.

The provision of indoor recreational facilities has been strengthened by the completion of eight indoor games halls during the year in Wan Chai District on Hong Kong Island and Sham Shui Po, Kwun Tong, Wong Tai Sin, Mong Kok and Kowloon City Districts in Kowloon. In addition six new indoor games halls were under construction and 14 were under various stages of planning.

The construction of Phases II and III of the Hong Kong Cultural Centre at Tsim Sha Tsui progressed smoothly during the year. Phase II comprises an Auditoria Building, an Arts Library, an Administration Building and a Restaurant Block, while Phase III is the Museum of Art providing gallery facilities for exhibition purposes. Phase II is scheduled for completion in 1989, and Phase III in 1990. Construction of the Museum of Science and Technology Phase I in Tsim Sha Tsui East is due to commence in 1988 with completion scheduled for 1990.

     Extensive redevelopment work on Kowloon Park, also progressed according to schedule. The project, due to be opened in early 1989, will provide an expanded Museum of History, and a wide range of active and passive recreational facilities, including an Olympic-size swimming pool.

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With a budget of $5.5 million in 1987, the Urban Council, through its Sports Promotion Office, provided financial support to events jointly promoted with governing bodies of sports and other organisations. The 3 679 sports and recreational events promoted in this way included territory-wide leagues and championships, matches and training sessions, spectator events and special projects such as school sports, the annual Festival of Sport, and sports activities for the disabled. Some 256 680 people took part in these activities which attracted many spectators.

With a programme budget of $7 million, the Urban Council promotes community-based recreation and sports programmes and elementary learn-to-play courses for the general public, through its network of 10 Recreation, Amenities and Sports District Offices and four District Fitness Centres. During the year, about 241 000 people took part in 5 520 programmes and activities, including 31 840 people in the Learn-to-Swim Scheme, and 85 000 people in fitness and dance programmes.

Regional Council

The Regional Council, formed on April 1, 1986, is the statutory authority for the provision of recreational and sports facilities in the Regional Council area, serving a population of two million. The Regional Services Department, being the council's executive arm, takes charge of the planning and daily management of these facilities.

      Building projects completed in 1987 include two indoor recreation centres and the second phase of Tuen Mun Town Park at a total capital cost of $43 million. Another three centres are scheduled to be completed in January 1988. In keeping with population growth in the Regional Council area, many more recreational and sports facilities are being built, including in particular major town parks and swimming pool complexes at population centres, as well as an ambitious building programme for indoor sports facilities, which consists of more than 30 indoor recreation centres at various stages of planning.

There are at present six indoor recreation centres in the Regional Council area, offering purpose-built facilities for various sports including basketball, volleyball, badminton, table tennis, squash and gymnastics. During the year, more than 600 000 paid users made use of these facilities.

The council is responsible for the management and maintenance of 268 hectares of open space, providing such facilities as parks, gardens, sports ground, soccer pitches, basketball courts and playgrounds. On top of that, the up-keep of some 80 hectares of amenity plots and soft landscape along public roads and highways also come under the council's jurisdic- tion. In 1987, over 570 000 trees, shrubs, palms, creepers, ground covers and seasonal flowers were planted by the council to beautify the environment.

      To encourage fuller use of leisure time and the development of healthy leisure pursuits, a wide range of activities are organised by the council at the district level for all walks of life, including basic instruction courses in sports, camp programmes, excursions, fun days, sports competitions and fitness programmes. Special recreation and sports programmes sensitive to the needs of the very young, the elderly and the disabled are also organised. In 1987, altogether 4 037 such community-based recreation and sports programmes were organised for 245 060 people living in the Regional Council area.

The above includes activities jointly organised with other government departments and outside bodies, such as district boards. These joint ventures include district sports festivals, carnivals and fun fairs activities aimed at enhancing social cohesion through community involvement and mass participation. In 1987, some 94 870 people attended these activities.

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The council also offers cash subsidies to sports and community bodies for the organisa- tion of programmes aimed at promoting sports. During the year, subsidies amounting to $1.5 million were allocated in support of 92 projects, benefiting 78 975 people.

     The council at present operates two holiday camps and two water sports centres, which also offer over-night accommodation of one form or another for members of the public to enjoy a few peaceful and healthy days in a rural environment, away from the rigours of city life. Apart from meeting recreational needs, the two water sports centres also provide opportunities for training beginners in various types of water sports. This year, 61 125 day- users and 99 688 over-night campers made use of the facilities provided by the council at the Lady MacLehose Holiday Village, Sai Kung Outdoor Recreation Centre, Tai Mei Tuk Water Sports Centre and Chong Hing Water Sports Centre.

Beaches and Swimming Pools

Swimming is by far Hong Kong's most popular form of summer recreation. During the year, some 18 million people visited the beaches and another 5.6 million used the public swimming pools managed by the Urban Council and the Regional Council.

     There are at present 42 gazetted bathing beaches: 12 on Hong Kong Island managed by the Urban Council and 30 in the New Territories including the newly gazetted Butterfly Beach in Tuen Mun managed by the Regional Council. Facilities provided at these beaches range from changing rooms, toilets, showers, first-aid posts, lookout towers, light refresh- ment kiosks to picnic areas and other ancilliary facilities. The water quality of these beaches is regularly checked and made known to the public.

     There are 20 public swimming pool complexes managed by the two councils - 13 in the Urban Council area and seven in the Regional Council area. The competition pools in these complexes are built to international standards. There are six public swimming pool projects under planning in the urban area and 14 in the New Territories.

The two councils regularly organise learn-to-swim classes to promote water safety. During the year, 1 621 swimming classes and training programmes were held, attracting 38 152 participants.

The two councils also offer assistance to promote the formation of life-guard clubs at their swimming venues. Apart from providing opportunities for the public to learn life-saving skills and to take part in community service, these venue-based life-guard clubs serve to maintain a steady supply of voluntary life-guards to augment the councils' regular life-guard service. At the end of the year, 20 life-guard clubs were operating at swimming pools and bathing beaches managed by the two councils.

City Hall

The City Hall - Hong Kong's most popular centre for the performing and visual arts over the past two decades - celebrated its silver jubilee during the year.

With an area of 11 000 square metres, the City Hall houses in its Low Block a 1 480-seat Concert Hall, a 467-seat Theatre, an Exhibition Hall and both Chinese and Western restaurants. In the High Block are the Hong Kong Museum of Art, an Exhibition Gallery, a 116-seat Recital Hall, two committee rooms, a public library and a Marriage Registry. The two blocks are connected by the Memorial Garden.

The City Hall has been the major venue for international and local arts festivals as well as cultural and entertainment presentations by the Urban Council performing companies and various cultural organisations. Performances by renowned international artists are also staged in the City Hall round the year. In 1987, these events included a

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violin-piano-cello recital by Issac Stern, Emanuel Ax and Yo-yo Ma; concerts by the Pittsburgh Symphony Orchestra under the baton of Lorin Maazel and a vocal recital by Roberta Peters.

During the year, 483 850 people attended 1045 performances at the Concert Hall, Theatre and Recital Hall. In addition, 119 exhibitions were held in the Exhibition Hall and Exhibition Gallery.

Town Halls

Opened in 1980, the Tsuen Wan Town Hall is the first civic centre in the Regional Council area, and has been a focus of cultural activity.

Its facilities include a 1 424-seat auditorium, a Cultural Activities Hall for small-scale per- formances, a 450-square metre Exhibition Gallery, a lecture room and a conference room. During 1987, some 155 580 persons enjoyed 350 performances at the Tsuen Wan Town Hall, and a total of 16 exhibitions were presented at the Exhibition Gallery.

      The Sha Tin Town Hall has as its main feature a 1 400-seat multi-purpose auditorium. Its 323-square metre stage, together with two side stages and an orchestra pit, is designed for both musical and theatrical performances.

Other facilities at the Sha Tin Town Hall include a Cultural Activities Hall, a 378-square metre Exhibition Gallery, a Dance Studio and a Music Studio each of about 250 square metres, two lecture rooms, a conference room, three practice rooms and a Chinese

restaurant.

      Since its opening in January this year, the Sha Tin Town Hall has rapidly gained in popularity. Some 372 190 people enjoyed 646 performances at the town hall, and 32 exhibitions were presented in the gallery.

The Tuen Mun Town Hall was opened in May this year by Princess Margaret.

Its facilities are similar to those of the Sha Tin Town Hall. Located at the Tuen Mun Town Centre, the Tuen Mun Town Hall is easily accessible by public transport.

Some 30 960 persons enjoyed 94 performances at the Tuen Mun Town Hall, and a total of 49 exhibitions were presented at the Exhibition Gallery.

Hong Kong Cultural Centre

     Funded by the government and the Urban Council, the Hong Kong Cultural Centre is being constructed in phases on a choice waterfront site at the tip of the Kowloon peninsula. In the first phase, the Hong Kong Space Museum was completed in 1980. Work on the second phase - which includes a 2 200-seat Concert Hall, a 1 800-seat Grand Theatre, a Studio Theatre for 300 to 500, an Arts Library, administrative offices and two restaurants - began in November 1984 and will be completed in 1989. Work on the third phase, the new Museum of Art, began in May this year, and is due for completion in 1990. The final phase, a garden, will be completed in 1992.

Community Arts Centres

The Aberdeen Civic Centre, located on the fifth floor of the Urban Council Aberdeen Complex, provides facilities for a variety of small-scale cultural performances and such community activities as exhibitions, classes, lectures, seminars, meetings and rehearsals.

      During the year, the Urban Council presented 38 cultural performances here, some of them with local cultural groups.

      The completion of the Ngau Chi Wan Civic Centre in February marked another step in the council's continuous efforts to enrich the quality of life for the people of Hong Kong.

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      The centre consists of a 443-seat theatre, an exhibition hall, a lecture room, a dance practice room, two music practice rooms and two art studios. It is the first fully-fledged community arts centre built by the Urban Council and serves as a focal point of cultural activities for residents in the vicinity and in neighbouring districts.

      A similar centre in the Urban Council Sheung Wan Complex is expected to be ready next year, while another one, in the Urban Council Sai Wan Ho Complex, is being planned.

      Three small civic centres are being managed by the Regional Council besides the three major town halls. These include the Lut Sau Hall at Yuen Long, North District Town Hall at Sheung Shui, and Tai Po Civic Centre. Each has an auditorium for about 800 people and a rehearsal room or dance studio.

Ko Shan Theatre

The Ko Shan Theatre is a purpose-built 'theatre-in-the-park' with 3 000 seats, 2000 of which are in the open air. Equipped with sophisticated lighting, sound and pro- jection systems, the theatre provides a good venue for entertainment, cultural and community events.

During the year, some 135 750 people attended 217 performances in the theatre.

Indoor Stadia (Hong Kong Coliseum and Queen Elizabeth Stadium)

The Hong Kong Coliseum and the Queen Elizabeth Stadium, which are under the management of the Urban Council, are both equipped with the latest electronic scoring, sound and lighting systems, and a wide range of sports and stage facilities.

      During the year, the 12 500-seat arena of the Hong Kong Coliseum was the venue for a wide variety of concerts by local and overseas artists, family entertainment ice-shows, trade fairs and exhibitions, and sports events. Altogether 1 390 914 people attended 186 shows and events at the Coliseum.

The more compact Queen Elizabeth Stadium was also a very busy venue for various activities. In addition to a 3 500-seat arena where medium-sized spectator events are staged, the stadium provides other facilities, including three committee rooms, three gymnasia, three squash courts, two table-tennis play areas and a multi-purpose hall suitable for indoor sports. Some 445 029 people attended events and activities at the stadium, which also houses the Amateur Sports Federation and Olympic Committee of Hong Kong and 23 affiliated sports bodies.

Hong Kong Arts Centre

As a popular community centre for cultural activities easily accessible to the public, the Arts Centre continued to present a wide range of events, including drama, music, dance, film and the visual arts. These events, with their emphasis on promising local artists, enjoyed much public support. The three auditoria at the Arts Centre, including the Shouson Theatre, Recital Hall and Studio Theatre were used for 983 performances and its arts galleries hosted about 60 exhibitions during the year. The arts and crafts studios, music practice rooms and other areas were used for organising around 530 arts- related classes.

Main events held during the year included a 'Children's Festival', 'Film Festivals', and a series of popular drama. Exhibitions organised included 'Ceramics by Peter Ting', photographic collections by Hiroji Kubota and Fay Godwin, master works of contem- porary Chinese painters featuring 'Wu Guanzhong - A Retrospective' and 'A State of Transition - Contemporary Paintings from Shanghai'. A special event "Ten Years of Hong

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Kong Painting' was held in October to portray the development in local paintings over the past decade and to commemorate the tenth anniversary of the Arts Centre.

Cultural Presentations

During 1987, the Urban Council Cultural Presentations Office presented 376 performances by local and overseas artists.

      These performances, which drew 277 676 people, included instrumental, vocal and orchestral concerts, drama, ballet, folk and modern dances, Chinese and Western operas, mime, films and others. Some of them were presented in conjunction with other cultural organisations, such as the Hong Kong Philharmonic Society, the British Council, the Goethe Institute and the Alliance Francaise.

Highlights of the year included performances by the Pittsburgh Symphony Orchestra, the Broadway Musical 'A Chorus Line', the guitar recital by Narciso Yepes, Emanuel Ax (piano), Isaac Stern (violin) and Yo-yo Ma (cello) in concert, the Opera 'Il Trovatore', and the Mummenschanz Swiss Mime-Mask Theatre.

The Urban Council will continue to present a balanced programme of events for the public and provide more performing opportunities for local artists and groups.

The Regional Council also presented a variety of cultural programmes at its civic centres. It played an important role in the district arts festivals by contributing programmes and providing professional expertise. It took part in the Tsuen Wan Arts Festival and Yuen Long Arts Festival and the Kwai Tsing and Sha Tin Festivals.

Some 1 580 cultural presentations were organised by the Regional Council, attracting 695 235 people. These events included presentations of local artists, joint presentations with local cultural bodies and performing companies, and performances by distinguished overseas artists such as the Academy of St Martin-in-the-Fields, the London Contem- porary Dance Theatre, the Berlin Philharmonic Chamber Orchestra, and the Shanghai Symphony Orchestra.

To encourage students and senior citizens to enjoy these performances, the council offered them half-price tickets.

Entertainment Programmes