Hong Kong Yearbook - Annual Report for the Year 1988

HONG KONG 1989

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REFERENCE LIBRA KŸ

HONG KONG 1989

A review of 1988

市政局公共圖書館 UCPL

3 3288 00219612 1

HONG KONG 1989

Editor:

Aladin Ismail,

Government Information Services

Designer:

Arthur Hacker.

Government Information Services

Photography: Augustine K. C. Chu

and other staff photographers, Government Information Services

Special Contributor:

Robin Hutcheon (Chapter 1)

Statistical Sources:

Census and Statistics Department

The Editor acknowledges all contributors and sources

Copyright reserved

Code No.: F300189 (ISBN 962-02-0075-6)

Price: HK$42.00

US$9.00

UK £6.50

855272

FKSM.25

HON

HKCT

  Cover: A part of the Tropical Garden which is among the many features and amenities of the newly-built, eight- hectare Sha Tin Central Park-home of 110 000 plants of 40 different species.

Frontispiece: Spring-time at Mai Po Marshes bird

sanctuary.

Chapter

Contents

CALENDAR OF EVENTS IN 1988

Page

1

1

STATE OF THE ARTS

6

2

CONSTITUTION AND ADMINISTRATION

23

3

THE LEGAL SYSTEM

41

4

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

49

5

THE ECONOMY

53

6

INDUSTRY AND TRADE

76

7

EMPLOYMENT

95

8

PRIMARY PRODUCTION

106

9

EDUCATION

113

10

HEALTH

146

11

SOCIAL WELFARE

164

12

HOUSING

175

13

14

15

3 4 5

LAND, PUBLIC WORKS AND UTILITIES

189

TRANSPORT

212

PUBLIC ORDER

229

16

TRAVEL AND TOURISM

255

17

THE ARMED SERVICES

258

18

COMMUNICATIONS AND THE MEDIA

263

2 2 2 2

19

RELIGION AND CUSTOM

278

22

23

HISTORY

20

21

THE ENVIRONMENT

POPULATION AND IMMIGRATION

RECREATION AND THE ARTS

283

307

328

334

APPENDICES

343

INDEX

401

Frontispiece

Royal Visitors

Events

New Buildings

Illustrations

Between pages

4-5

28-9

60-1

Aberdeen Scenes

92-3

Music and Drama

124-5

Recreation

156-7

Transport

Serving the People

Vietnamese Boat People

Chinese New Year

END-PAPER MAPS

Front:

The Territory of Hong Kong

Back:

Hong Kong Arts and the Media

188-9

220-1

252-3

284-5

Appendices

Appendix

Page

1

UNITS OF MEASUREMENT

346

2-5

CONSTITUTION AND ADMINISTRATION

349

6

OVERSEAS REPRESENTATION

354

7-14

THE ECONOMY

357

15-16

INDUSTRY AND TRADE

369

17-20

EMPLOYMENT

374

21-23

PRIMARY PRODUCTION

379

24-27

EDUCATION

381

28-31

HEALTH

382

32

SOCIAL WELFARE

385

33

HOUSING

389

34-36 LAND, PUBLIC WORKS AND UTILITIES

390

37-38

TRANSPORT

393

39-42

PUBLIC ORDER

395

43

COMMUNICATIONS AND THE MEDIA

399

44

RECREATION AND THE ARTS

400

45

THE ENVIRONMENT

400

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.

Calendar of Events in 1988

1.1.88

2.1.88

20.1.88

26.1.88

1.2.88

10.2.88

00

牌手

life

The chairman of the planning committee for the Open Learning Institute is appointed. The institute will take its first group of 3 000 students in 1989.

A new management committee of the Hong Kong Stock Exchange is set up following the arrests of its chairman and two other senior officials by the Independent Commission Against Corruption.

The House of Commons debates various developments in Hong Kong, including the political system and the Vietnamese refugee situation.

The Hong Kong Government and the Swiss Federal Council sign Hong Kong's second independent air services agreement. The first was signed with the Netherlands in September 1986.

The Director of Marine announces that a growth of 24.6 per cent in throughput for 1987 has placed Hong Kong ahead of Rotterdam, to become the world's number one container port.

The government publishes a White Paper on the Development of Repre- sentative Government.

1.3.88

2.3.88

9.3.88

10.3.88

15.3.88

Consultants are appointed for a Port and Airport Development Strategy Study.

The Financial Secretary, Piers Jacobs, proposes in his Budget reductions from 16.5 to 15.5 per cent in personal tax and from 18 to 17 per cent in profits tax.

The Governor, Sir David Wilson, leaves for a four-day visit to Japan to promote trade relations.

Elections are held for District Boards, which are statutory bodies to provide a forum for public consultation and participation in Hong Kong's administration.

Sir Ti Liang Yang is sworn in as Hong Kong's first Chinese Chief Justice.

2

6.4.88

11.4.88

16.4.88

28.4.88

3.5.88

16.5.88

23.5.88

29.5.88

2.6.88

4.6.88

10.6.88

CALENDAR OF EVENTS IN 1988

A $4.4-billion contract is awarded for operating container terminal No. 7 at Kwai Chung. The terminal, which can handle 975 000 standardised containers each year, will become fully operational in 1993.

The Governor inaugurates the Council of the Hong Kong University of Science and Technology, which will admit its first group of students in October 1991.

The President of the Philippines, Mrs Corazon Aquino, arrives for a two-day visit following a trip to China.

A consultative document on the Draft Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China is published. The Basic Law will provide a framework for the administration of Hong Kong after 1997.

The Chief Secretary, Sir David Ford, departs for a visit to Peking and Chengdu, China.

The government publishes the first consultative document on Metroplan, which provides a detailed blueprint for urban renewal for the 1990s and beyond.

The House of Lords debates the Vietnamese boat people problem of Hong Kong.

China's Vice Premier, Tian Jiyun, arrives from Vancouver for a six-day visit at the invitation of the New China News Agency (Hong Kong Branch).

The Foreign Secretary, Sir Geoffrey Howe, arrives for a three-day visit. In a major speech he emphasises the British Government's commitment to full and faithful implementation of the Joint Declaration on the future of Hong Kong.

The Securities Review Committee publishes its report on Hong Kong's securities industry. Among its many recommendations are the setting up of a statutory Securities Commission and restructuring of the Stock and Futures Exchanges.

The Governor officiates at the opening of World Environment Day and pledges the government's determination to deal with pollution problems by allocating $10 billion in the next 10 years to deal with water treatment and disposal of chemical waste.

A debate on Hong Kong is held in the House of Lords to call attention to recent developments relating to implementation of the Joint Declaration.

CALENDAR OF EVENTS IN 1988

15.6.88

24.6.88

29.6.88

1.7.88

4.7.88

11.7.88

13.7.88

15.7.88

17.7.88

3.8.88

4.8.88

8.8.88

31.8.88

1.9.88

3

The government announces that all boat people arriving from Vietnam from midnight of June 15 will be interviewed to determine their qualifica- tions as genuine refugees according to internationally accepted criteria.

An air services agreement is signed between the Hong Kong and Canadian governments, the third Hong Kong has signed with other countries.

The Minister of State with special responsibility for Hong Kong, Lord Glenarthur, starts a three-day visit, his third since he took office in 1987.

The permanent office of the Sino-British Joint Liaison Group is set up in Hong Kong. The Joint Liaison Group was established after the signing of the Sino-British Joint Declaration in 1984 to facilitate arrangements for the transfer of government in 1997.

The Financial Secretary announces that a new Defence Costs Agreement with the British Government has been reached.

Construction starts on the $2-billion Tate's Cairn Tunnel, the second to link Sha Tin with Kowloon. The tunnel is due to open in August 1991.

The Legislative Council starts a two-day debate on the Draft Basic Law.

The House of Commons debates the Draft Basic Law.

The Governor flies to London for regular consultations with United Kingdom Ministers and officials.

A contract is signed for construction of the Pamela Youde Hospital. The hospital, one of the largest in the world, will be completed in December 1991.

After a two-day meeting in Hanoi, a joint communique is issued by the Hong Kong and Vietnamese governments, expressing agreement that realistic and effective measures are urgently needed to solve the problem of the Vietnamese boat people.

The tallest building in Hong Kong, the 70-storey Bank of China, is topped out. The building is expected to be completed in April 1989 at a cost of $1,100 million.

A CAAC Trident jetliner from Canton skids off Kai Tak airport runway into the harbour during a heavy rainstorm, killing six crew members and one passenger.

Proposals are invited from local and overseas parties for the establishment of a cable TV system in Hong Kong.

4

15.9.88

18.9.88

20.9.88

22.9.88

30.9.88

12.10.88

13.10.88

15.10.88

17.10.88

1.11.88

2.11.88

14.11.88

CALENDAR OF EVENTS IN 1988

Princess Anne starts a four-day visit to Hong Kong.

The $1-billion Light Rail Transit system between Tuen Mun and Yuen Long opens. The 23-kilometre system operates three routes between the two towns.

The Hong Kong Government and the UNHCR conclude a memorandum of understanding concerning the treatment of Vietnamese boat people arriving in Hong Kong.

Elections are held for the Legislative Council. Thirteen candidates are elected, and another 13 are returned uncontested.

The government appoints the Provisional Hospital Authority. The Hos- pital Authority will come into existence in 1990 and be responsible for overseeing management of all publicly-funded hospitals.

The Governor opens the New China Ferry Terminal at Tsim Sha Tsui. It is designed to handle 19 million passengers a year.

In his policy speech at the opening of the 1988-9 Legislative Council session, the Governor stresses the importance of developing the infra- structure and of improving the environment and the quality of life.

Following talks in London, the British, Hong Kong and Vietnamese governments agree to begin immediately the phased return to Vietnam of those boat people who have applied to go back.

The Governor begins a visit to Germany, Belgium and France to promote trade and investment.

A 'break-through' ceremony of the Eastern Harbour Crossing is held. The $3.4 billion crossing will open to road and rail traffic in September 1989.

The new council of the Hong Kong Stock Exchange is elected.

The government announces its decision not to pursue a proposal to host a World Exposition in Hong Kong in 1997 on the grounds that resources should not be diverted from more essential projects.

The Duke of Edinburgh arrives for a four-day visit in his capacity as president of the World Wild Life Fund for Nature International.

The Governor departs for Peking for a five-day visit. He meets Chinese Premier Li Peng and other senior Chinese officials.

The ground-breaking ceremony of the Hong Kong University of Science and Technology takes place.

Prince Philip, visiting in early November as President of World Wide Fund for Nature International, with the Governor

HMS Ark Royal, Flagship of the Royal Naval Task Group in which the Duke of York served during a visit to Hong Kong in August

The Pring. Royal, Ma Lady

Wise

at the Hongong Society

for the Protection of Children's new Portland Street Centre,ich sh

opened in September

.

CALENDAR OF EVENTS IN 1988

15.11.88

25.11.88

26.11.88

8.12.88

22.12.88

5

The $550-million first phase of the City Polytechnic is inaugurated. The project, due for completion in 1989, will be followed by a second phase due to be completed in 1992-3.

The Hong Kong Convention and Exhibition Centre, the largest of its kind in Asia, is opened by the Governor.

The Chief Secretary leaves for visits to the United Kingdom and the United States.

The Triad Renunciation Scheme comes into operation, allowing people to abandon their triad involvement.

The British Government announces it will take a further 1 000 Vietnamese refugees from Hong Kong over the next two to three years, provided other countries are prepared to do so commensurately.

1

State of the Arts

VOD

BOAS

    Hong Kong is well known as a centre of trade, industry and finance. Can it one day also become one of culture and the arts, which have undergone a boom in recent years? Robin Hutcheon, in this article, looks at the past and present and offers a prospect of how it might evolve in future. Editor

    TRANSFORMING majestic forests and lush jungles into arid deserts is one of the more deplorable human achievements of the 20th century.

Hong Kong, in its unending quest to set new records, is busily reversing the process. Not ecologically, but culturally.

Where is the desert, pray?

Don't bother turning to an ordinary map for it won't be shown, though if you turn to the end page of this Annual Report, you will see its regeneration graphically illustrated.

It's what we used to call the great cultural desert. And like the Gobi in northwest China, it would blow its stinging, accusing sands into our myopic eyes, daring us to take up the challenge.

For in the years gone by, Hong Kong's rare cultural achievements were listed as endangered species - dying through neglect.

     Today, the desert is fast disappearing, and luxuriant concrete and glass edifices are sprouting in the many barren cultural sand dunes that none but the most intrepid artistic explorer once ventured to visit.

     The newest and most sumptuous will be inaugurated in November 1989 on the site of Hong Kong's first railway station. For, in its finishing stages is the lavish $513-million cultural complex, High Kirk of the Performing Arts, with seating for 4 500 in its three facilities, with a museum of art and surrounding gardens, together with appropriate car parking, to be completed in the next three years.

      Though not in any sense a rival to Sydney's Opera House, with its billowing marble- tiled sails, internally it will offer as much both in the numbers of seats and the quality of appointments.

     The Hong Kong Government, which has contributed three quarters of the cost and the Urban Council, responsible for the other quarter and its management, are justifiably proud of the result. Indeed, both the Urban and Regional Councils have co-operated with the government in providing a profusion of cultural venues in many parts of the territory.

      This postwar enthusiasm for the arts began with the building of the City Hall in 1962 on Hong Kong Island's Central waterfront, with a 1 400-seat concert hall and 450-seat theatre. Today this venue is the most intensively used facility that Hong Kong possesses, having played host to the world's greatest orchestras and musicians.

STATE OF THE ARTS

7

      Without this initiative, taken by the second postwar Governor, Sir Alexander Grantham, Hong Kong would have been condemned as the most artistically sterile, soul-less and mercenary city in the world.

If Hong Kong looks back on a long history of cultural neglect, that is because the administrators of the Ching (Qing) dynasty saw no use for the arts; its small trade and sea-oriented population were people of simple tastes, with a little piracy thrown in to provide the spice of life.

      Looking back through the historical record, we see there was little to distinguish our early inhabitants from other coastal dwellers of southern China. The archaeological artifacts that survive from these earliest years show the barest concession to artistic design - functional pots and bowls, unglazed and with incised simple geometric patterns, simple tools, but little that would bring the world beating a path to our doors. If they do so today, it is for other reasons.

      Even the discovery of a cruciform Han dynasty tomb in a hillside at Li Cheng Uk in 1954, rich in pottery and funerary ware, did little to embellish the cultural record, as many hundreds of similar tombs were discovered in parts of South China. There were no bronze flying horses, jade suits stitched with gold threads or gilt chariots, but just enough artifacts to satisfy an itinerant hungry ghost, visiting an old haunt, that he had not been forgotten.

      Historians will remind us that centuries later, royalty did visit our shores - albeit on the run from the Mongol invaders; he was a young nephew of the last of the Sung emperors. We still possess the stone which testifies to that visit - the Sung Wong Toi, or terrace of the Sung Emperor. But a royal city Hong Kong was not destined to be.

A Million Lights

An ancient seer once predicted that one day a million lights would glow on the island. But when British traders, evicted from Canton and Macau by an irate imperial Commissioner Lin Tse-hsu, took refuge here in 1841, Lord Palmerston could find no better description for it than 'a barren rock with hardly a house on it.'

      What existed in the form of indigenous culture at that time can only be guessed. While a thriving school of Western painters had taken root in Macau and Canton, influenced by the visits of early British and European artists, including Thomas and William Daniell, William Alexander (with the Macartney mission in 1793) and George Chinnery (1825-1852), Hong Kong had no artists of its own. Chinnery spent a mere six months in the new colony and hated it, returning to the peace of Macau. Many others, however, moved from Canton to Hong Kong with the British, among them Lamqua, a brother, Tingqua, and the Portuguese artist, Marciano Baptista. These and other artists provide us with the only pictures of Hong Kong's early years.

With a few exceptions, the cult died out when photography arrived. Calligraphy flourished in nearby Canton Commissioner Lin was an exponent of the art - but if there were any talented men of the brush and palette in Hong Kong then, their works are not known.

Apart from the occasional dragon or lion dance and a festive performance of traditional Cantonese opera and the itinerant story teller, Hong Kong was for many years too poor to afford a thriving community of artists. The money in those early colonial years was concentrated in few hands whose one concession to artistic taste was the stately com- pradoric style of architecture which graced many of Hong Kong's earliest residences.

For these merchant grandees and their ladies, our city fathers erected a majestic City Hall in Central District; in front of it one of our early Taipans erected a graceful fountain resting

8

STATE OF THE ARTS

on the backs of four seated lions. Through the building, and its palm-lined concert hall, passed many of the great artistes of the day including musicians, actors and dancers. Pavlova was one; the famous female impersonator of Beijing opera, Mei Lan-fang another, as well as Dame Clara Butt, and the inspiring Spanish Flamenco dancer, L'Argentina. Great authors and playwrights like Joseph Conrad, George Bernard Shaw (a friend and admirer of Sir Robert Ho Tụng, comprador par excellence), Noel Coward and Somerset Maugham all visited the Colony, but little of their talent rubbed off on Hong Kong; rather Mr Maugham put a number of high-placed noses out of joint with a novel about the amours of a certain colonial secretary. Little wonder that the literati found little favour in Hong Kong in those early years.

      Nor, curiously, did the media of the day do much to kindle an interest in the arts. Though the English language press could trace its origins to the early years of the last century, beginning in Canton and moving to Hong Kong shortly after, there was little interest among the merchant princes of the day in the arts, unless it was to be seen among well coiffed and tail-coated celebrities attending a musical soirée. The Chinese press was a much later starter, partly due to the problems of setting and composing Chinese characters by hand and partly to the limited readership. The national reform movement and the spreading of republican sentiments among students gave it a boost in the 1880s. By 1895 there were 19 Chinese newspapers publishing; three years later the number had quadrupled. But the interest was almost wholly political - and national politics at that - and there was little if anything to say about subjects artistic and cultural.

-

-

      The 280 000 Chinese who made Hong Kong and Kowloon their home at that time were left blissfully unaware through the columns of their press that the arts even existed. And besides the City Hall was not the place to which any but the very few educated locals repaired. Literacy was then the privilege of the minority, with Hong Kong boasting little more than 80 schools offering subsidised education to about 5 300 pupils, backed by a large number of unsupervised vernacular primary schools. Indeed, as late as 1913, the Governor, Sir Henry May declared the state of education to be 'chaotic' - just slightly better than the arts.

Ballet and Dancing

The City Hall, built by public subscription in 1869 on land donated by the government, was thus a venue for Hong Kong's upper crust, not for the masses. It contained a museum, library, ballroom, supper room, theatre and a hall. To be sure, the theatre named Royal was not the first. Many years earlier, a matshed Theatre Royal was erected for perform- ances and since 1844 there had been an Amateur Dramatic Society; a similar group per- formed in Macau in earlier years for which George Chinnery painted the scenery and occasionally acted, Mrs Malaprop being one of his minor triumphs. The City Hall survived until 1934 when the Hongkong and Shanghai Bank, its neighbour, required additional space to erect its new headquarters. As some of its directors had subscribed to the old City Hall, there was little argument over priorities, and the gracious old building succumbed to become reclamation fodder.

     Just shortly before this two ladies named Violet Capell and Daisy O'Keefe sought to popularise ballet and dancing in the colony and regularly staged shows at the Theatre Royal and at the King's and Queen's theatres. The young ladies of Violet Capell's classes included Chinese, Eurasians, Portuguese as well as expatriates. Though not the first dancing school to be formed, it reached out to all sectors of the community, albeit a wealthy and educated minority of girls fortunate enough to gain places at church or government schools, where English was taught and a Western outlook on life encouraged.

STATE OF THE ARTS

The Nutcracker and Les Sylphides found expression in the pitter patter of tiny feet across the floorboards of the Royal. For variety's sake the classes of teenage girls were taught tap-dancing, and Scottish dancing for St Andrew's day was one of the notable occasions when the girls could display their talent, sure of an audience of patriotic Scots waiting to drown their nostalgia in the hooch and haggis that followed. One year even the great Harry Lauder consented to make a visit.

      Another form of art beginning to creep out of the shadows at that time was a new school of local painters who, under the guidance of 31-year-old Luis Chen, set up the Hong Kong Art Club. Chen, though working in Chinese ink, was an innovator in the use of Western ideas and influences which were to lead him and his fellow artists to expression in oil, water-colour and eventually acrylic. By 1953, Chen was not only a painter but a teacher whose enthusiasm would be widely felt in the sphere of art.

      The teaching of music, again the preserve of an educated and prosperous minority, received a boost in the 1920s and 1930s with the arrival of an increasing number of Russian and Jewish emigrés from Europe and Russia. These arrivals would also bolster the ranks of the fledgling orchestra, some of whom persevered to become leading figures in music and the arts. The most notable is the violinist and conductor Dr Solomon Bard, who went on to distinguish himself as an associate conductor of the Hong Kong Chinese Orchestra in the 1980s, after earlier associations with the Sino-British and the Hong Kong Philharmonic Orchestras. Two other valuable 'imports' were ballet teachers George Goncharov and Vera Volkova. They achieved fame through their star pupil, Margot Fonteyn, whom they trained in Shanghai when she was known as Peggy Hookham.

It cannot truthfully be said that the Japanese invasion in 1941 nipped Hong Kong's artistic development in the bud. Many of the pre-war celebrities such as tenor Gaston D'Aquino, musician and teacher Elizio Gualdi, and the Woods sisters, Doris and Aileen had their careers cut short and others were scattered, interned or made prisoners of war during the 3-year occupation, but the cultural desert showed little sign of intensive cultivation in the pre-war years. The Japanese Army, however, left its mark in two striking edifices - one a memorial on top of Magazine Gap, which the returning British promptly blew up (no loss, that) and the other, the distinctively Japanese tower on Government House which survives to this day as a permanent and not unattractive reminder of those years.

The reoccupation was again a discouraging time for the arts, with the priorities on post-war reconstruction and bread today. Tomorrow's jam would have to wait . . . and wait... and wait. One small concession was the launching of the Garrison Players by the Commander British Forces to build closer relations between the public and the large number of men in the forces at that time. It survives to this day, depending on gifted amateurs as does its older rival, the Hong Kong Stage Club, to strut and fret their hour upon the stage.

      So little progress was made in other areas that in 1952, the author Harold Ingrams, whose book 'Hong Kong' was sponsored by the Colonial Office, wrote: 'The deplorable fact that a city of the size and wealth of Hong Kong has no concert hall shows the lack of interest taken in Western cultural activities. Nevertheless, there are the Stage Club, the Hong Kong Chamber Music Club, the Hong Kong Singers (the oldest musical society), and the Sino-British Orchestra, and various other dramatic and musical societies, to all of which Hong Kong owes a great deal, for they endeavour to foster music and drama in spite of difficulties such as finding places in which to practise and perform. Indeed the community is not yet sufficiently alive to the importance of supporting them. It is hardly conceivable that a colony of any power except Britain could show such indifference to culture.'

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With concerts and performances being given in such venues as the Hong Kong University's Loke Yew Hall and the stage of the China Fleet Club, it was a widely lamented fact that the cultural desert was a stain on the landscape that was beginning to look as if it might be permanent. Something had to be done to remedy it.

At first, the new Governor, Sir Alexander Grantham, was preoccupied by more urgent and basic needs. For with the end of the Chinese civil war and the establishment of the People's Republic in 1949 came hundreds of thousands of refugees. Grantham's priorities were clear: the people must be housed and their well-being secured. Having launched what would become one of the world's greatest public housing schemes, covering today more than 45 per cent of the population, and having encouraged the growth of new industries by refugee capitalists from the north (primarily textiles and garments), Grantham sought to tackle other needs. A new airport was required at Kai Tak for a new era of jet airliners, led by Britain's ill-fated Comets. And, under the constant taunts of a dogged newspaper editor, Mr Henry Ching of the South China Morning Post, a new City Hall would be built on the site of the new Central reclamation, 200 metres north of the original shoreline.

      The airport is not a totally irrelevant factor in this chapter on Hong Kong's cultural development, for the new runway established Hong Kong firmly on the crossroads of Asia. With China no longer open, Japan emerging from American postwar occupation, and Southeast Asia hesitantly recovering from colonial slumber and negligence, war- time occupation and imperial dissolution, the new Kai Tak runway opened a gateway to Hong Kong that would prove crucial to the interchange of ideas and influences with the outside world.

No less important was the new City Hall, opened by Grantham's successor, Sir Robert Black in 1962, fulfilling a pledge made almost 30 years earlier when the old one was torn down. Thus in the barren desert a small shrub appeared which would grow to a large tree with abundant flowers ever blooming in the years to come.

      Initially it was dismissed even by the more astute of Grantham's officials as a white elephant. But to the Governor, a promise was a promise, and he handed over the finished project to the Urban Council, then virtually another government department, led by an official chairman, with an official membership and a handful of appointed members, later to be supplemented by elected councillors.

High Priority

In those days, the Urban Council had hardly outlived its prewar reputation as the Sanitary Board, established over a century ago following trenchant criticism of appalling squalor and to enforce effective hygiene laws and regulations. It was still considered the 'department' which cleared nightsoil, killed live cattle and pigs for sale to the markets and cleaned urban streets, with garbage disposal occupying a high priority. In its new 'Urban Council' role it sought a new identity. The hopes of a political minority for an elected municipal council, with control of education and housing, were dashed when the Legislative Council rejected the reform plans of Sir Mark Young, the first postwar Governor, following the outbreak of the Chinese civil war. The Urban Council thus needed a new raison d'être and the virtual dumping of 'cultural activities', parks and libraries into its lap was a gift from the gods. It hungrily seized on these responsibilities as a new and exciting challenge. The 10-storey City Hall and its complex of theatres and the memorial garden was a symbol of its metamorphosis, and indeed in time, of Hong Kong's, with its distant promise of a desert that would bloom. Venues, of course, are not everything. There must be players, musicians and performers and even more important, a receptive and ticket-buying public who wish to see and hear

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them. The Chinese civil war, which by 1962 had quadrupled Hong Kong's postwar population, had brought in many talented people from the North, ranging from Beijing, Nanjing, Shanghai and Guangdong province, including many artistes who helped swell the ranks of local performers. A thriving Cantonese opera was giving regular shows, with such exciting stars as Ma Tse-tsang, who broke tradition by introducing a 'tremolo' in certain notes, widely criticised by the purists but a delight to the less fastidious. Later, there was his equally famous namesake, Sun Ma Tse-tsang. Then there was Hung Sin-nui, with her magnificent array of operatic dresses. She began impersonating male roles at the age of 15 to become a leading lady of the local stage, as did Pak Suet-sin, whose hair styles were legendary and widely discussed among the audience. These were years when Father Sheridan, a Jesuit teacher at Wah Yan College, was translating popular Chinese opera into English, with actors of the eminence of the barrister Patrick Yu playing many a princely role, complete with swaying pheasant tail feathers, on the City Hall stage.

      The influx of new blood from China cannot be too strongly emphasised. In the years since the Tai Ping rebellion in 1851, a growing exodus of people from China began. Thousands emigrated to the United States and Australia and thousands more crossed to Europe in the Chinese Labour Corps in World War I and as students in the post-war years. The growth of travel and education under the Kuomintang which occurred between the wars, coupled with a growing national consciousness and patriotism, led to an increased appreciation of the arts and in the achievements of Chinese civilisation. Student groups living in Britain, Europe and the United States saw for the first time the diversity of European civilisation and its cultural achievements in fields such as music, art, drama, ballet, opera, as well as the vigorous growth of the film industry.

A Cantonese film company was launched in Hong Kong in the early 1930s, and from those years have come legendary names like Chan Wan-sheung and Butterfly Wu. Twenty years later there were at least three companies using mostly American equipment, with some of the directors trained in the United States, and most of the stars from Beijing and Shanghai. The language of the films in those years was Mandarin, with Cantonese dubbing for the local audiences. Well remembered was Lin Dai, the darling of the silver screen in the 1950s, before her tragic death.

The Mandarin emphasis was to change dramatically with the arrival of newcomers such as Run Run Shaw and Raymond Chow, who would turn to Cantonese films as a local audience developed to replace the closed markets of China, then under a straitjacket of political censorship. This would receive a significant boost when television at first shyly peeped, and then triumphantly burst on to the scene, dominated as it was by TVB in the mid-1960s with its colour broadcasts and a winning entertainment formula which squared millions of eyes nightly. It wasn't art, of course, much less culture, but it did have the effect of producing actors, singers, producers, directors, musicians and technicians in growing numbers and widening the horizons of many viewers to the potential of the stage and screen. Moreover, in the early years of the 1950s, Hong Kong was cut off politically from China neither as a source of cultural influence and it perforce developed its own special genre completely Chinese nor Western, but a mixture of both. This was assisted by a surge in education with an international perspective based on the use of English as the medium of instruction. While insular colonial attitudes may have largely motivated this direction, as English became accepted as the medium of international communication, the move proved enlightened.

     The language was not just the written variety seen in books, newspapers and a variety of cultural journals and magazines, but in the new media the spoken word became paramount --

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radio and later television. Radio made its debut in Hong Kong in 1928 with the setting up of an English language station by the government, ZBW, to be followed in 1934 by a Chinese station, ZEK. Commercial interests fluffed the chance to be first on the airwaves and in any case the government felt that the best way of retaining control was to launch its own type of 'BBC', humble and amateurish though it was at first. It did however feature both local artistes and good music on records and its place in the history of Hong Kong's cultural development deserves recognition. This embryo Radio Hong Kong and the Eng- lish language press of the prewar years were the first promoters of the arts though their role remained indirect for many years. Serious criticism of the arts was never a popular pastime in the media, though in the early postwar years, the South China Morning Post's Father Ryan's comments on music and records, to be taken up in later years by Ruth Kirby, and Father Sheridan on drama, filled a void that was almost as bleak as the cultural desert itself. Today all newspapers attempt reviews and criticisms on some scale, but while those in the English press enjoy the services of professionals, those in the Chinese media, in the words of a dedicated reader, range between 'the superficial and the unintelligible.' The media does, however, open a small window on Hong Kong's artistic output, and with many people enjoying greater prosperity, more leisure time and money to spend on films, entertainment and travel, there is a rising interest in what the arts world has to offer.

Looking Back

We must keep in mind the difference between what enlightens and what merely entertains. The pop scene in Hong Kong with its hotbed of pulsating, electronically-stimulated warblers, claims far greaters devotees than the Philharmonic Orchestra or the best Chinese opera, often at far higher prices and playing to a far younger age group. While not denying the ascendancy of the Alan Tams and the Anita Muis as big crowd-pullers, man - and woman - cannot live on jam alone: the bread and butter of art is equally impressive.

      But before considering today's scene, it is essential to cast an eye backwards on the last 25 years since the City Hall was built to trace the development that has taken place in the years and to see how the cultural desert has turned into something of a cultural jungle.

      They say that a country without history has no culture. How true in Hong Kong's case. For there are few families with long memories of the colonial past; Hong Kong attracted people to live here because it offered hope of a better way of life than in dynastic China. The population grew slowly, and when the Japanese invasion engulfed the city in 1941 it lost two-thirds, most never to return. Again, when the civil war broke out in China, Hong Kong gained a new population innocent of the ways of British colonialism and whose memories of China were dominated by the bitterness and oppression of war, suffering, hunger, sickness, torment and upheaval.

In Hong Kong, while the decade of the sixties was no bed of clover and the seventies were years of rising social expectations, a sense of attachment, belonging and stability emerged. So much so, indeed, that the events of the 1980s evoked a sense of keen disappointment and frustration, posing a dilemma in the minds of many of whether to pack their bags and leave once again or to stay and give the new Special Administrative Region a chance.

     A strong streak of cynicism is apparent in much of the new work of dramatists and writers at the present time, yet it is a far more literate age and a far better and more roundly educated population than ever before. Only 12 per cent of the population are illiterate, and those mostly in an older age bracket. Whatever criticisms are made of Hong Kong's postwar education system and in spite of all the tedious gear-changing of the past three decades, the achievements are impressive not only in numbers educated but in the quality of

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that education. Ninety-six per cent of children leaving school these days have at least three years of secondary schooling with some formal music tuition or group choral experience, such as choirs or recorder bands. One pleasing development is the significant increase in the publication of books in Chinese in the past 10 to 12 years, even if most of it is what Urban Councillor Lo King-man would describe as 'leisure reading'. However, he believes this is stimulating public interest in reading with the possibility that it could lead to deeper and more serious subjects.

In the field of culture, many of the children at local schools vie for annual awards in the Schools Music Festival and its accompanying Speech and Drama Festival. Launched more than 40 years ago by the late Donald Fraser, the festivals today attract more than 120 000 -- or about one in 10 of the school population and last three weeks each. Leading international musicians and instrumentalists attend as adjudicators. The lists of past winners include some of Hong Kong's most talented performers and instrumentalists, including the Wu sisters, Melody, Enloc and Mary, violinists Raymond Leung and Ivan Chan, Violet Lam, a film music composer, Julia Hsiao, associate concert master with the Hong Kong Philharmonic Orchestra, and many others. So popular is the event that many of those who took part have kept their school choral groups together, providing about 90 per cent of the choirs active in Hong Kong today. The festival secretariat not only holds annual competitions - and its prizewinners' festival is a major event in the musical calendar - but is also involved in teaching students and holding workshops for teachers in instruments; these range from the humble recorder to the piano. It also helps teachers develop their proficiency in organising choral speech.

The Schools Music Festival is one of a number assisting in the musical training of students, though pride of place at the tertiary level goes to the Royal Hong Kong Jockey Club-funded $308 million Academy for Performing Arts. The Jockey Club has, in addition, pumped $31 million into performing arts groups since 1971, donated $4 million to the Hong Kong Arts Centre and given numerous scholarships to help students with their education. Its next venture is to set up Hong Kong's third university at a cost of $1.5 billion. Let none say that the punter's passion to plunge money on horses in an exercise in futility; the community certainly gains handsomely in this and many other ways.

     If the sixties were years when the population demonstrated increasing self-consciousness and maturity, particularly following the bank runs of 1965, the Star Ferry riots of 1966 and the backlash of China's Cultural Revolution in 1967, Hong Kong also realised it needed more than housing schemes, primary education and a dash of social welfare to build a sense of belonging. There were large gaps in our social planning and the arrival of a dynamic Governor, Sir Murray MacLehose, the former Political Adviser to the Hong Kong Government, raised hopes that some of the more glaring of these gaps would be filled. He governed somewhat ruthlessly by postwar standards, but with a Legislative Council and civil service that stood in awe of him, many new initiatives were launched, and no part of local life fared better than the arts, sports and recreation.

     It was not one man alone who achieved this breakthrough; rather it was his recognition of what others were saying and doing, and the encouragement he gave them. MacLehose was not the only strong-minded activist of those years. Another who deserves credit was the Chairman of the Urban Council, Mr A. de O. Sales, who brought an imperious Iberian determination to the task of spreading the cultural gospel to many parts of the territory. With government funds and active Urban Council support, new town halls were built in Tsuen Wan, Sha Tin and Tuen Mun, while multi-purpose facilities such as the Ko Shan

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theatre in Kowloon, the Queen Elizabeth stadium in Wan Chai and the Coliseum in Hung Hom - in all offering more than 20 000 seats - were built.

Again, the streak of rugged independence displayed by Mr Sales launched the Urban Council into a field of activity that places it today as the leading cultural agency in the territory, not only in its virtual monopoly of venues (most of which it manages) but also in the way it has sponsored, and in other cases, created orchestras, as well as dance, choral and repertory groups. Among its major initiatives coming to fruition following completion of the Cultural Centre at Tsim Sha Tsui this November is its imaginative custom-built 'hands-on' Museum of Science and Technology, as well as a Museum of Art able to house the 4300 objets d'art and the 2 360 Western and local paintings and drawings it has carefully collected over the years.

Western Music

The Urban Council also runs the Space Museum, and an outstanding, and indeed unique Museum of Teaware in Hong Kong's oldest building (completed in 1846) - the former Flagstaff House, home of the Commander British Forces - as well as the Museum of History. It is also building a Visual Arts Centre on Hong Kong Island at a cost of $20 million for artists to work on prints, lithography, sculpture and ceramics.

One of Hong Kong's most successful ventures in the field of Western music is the Philharmonic Orchestra, once an amateur group known as the Sino-British Orchestra, which has evolved into a highly-sophisticated professional body of 86 players. Not only does it give regular well-attended concerts numbering 130 in a season, and feature top international soloists, but it also tours overseas, and backs up top visiting orchestras invited to play at the annual International Arts Festival. This orchestra, now the responsibility of the Urban Council, has grown from 60 players in the early 1980s to the point where it is destined to reach full strength with eight more players this season. It has been a costly venture running this year to $36 million and has generated much controversy at the player and conductor level, as well as among the audience and the orchestra's backers. But it appears today to be solidly on its feet, and able to hold its own with all but the best in Asia. It is an isolated achievement and far from representative of the cultural field as a whole, however.

Arguably, the greenest jade in the crown of the Urban Council's performing groups, is the Hong Kong Chinese Orchestra, founded 12 years ago, and with an establishment of 85, making it the largest of its kind in the world, and enjoying an average 83 per cent attendance rate during its three-to-six month season, with seat prices ranging from $20 to $55. It has toured overseas to Australia, Japan, South Korea, Singapore, Beijing and Taiwan. About 70 per cent of the members have had their music education in China, but increasingly with graduates coming from the Academy for Performing Arts, more places will be filled by 'home-grown' artistes.

      A dance group of 35 performers and a repertory group of 24 performers make up two other professional companies run by the Urban Council. The Hong Kong Repertory Theatre Company does about seven productions a year which include Chinese plays, Western classics translated into Chinese, and original plays by local writers. The Hong Kong Dance Company, founded in 1981, concentrates on traditional dance but is keen to pioneer new works by local choreographers and to show its skills at modern dancing as well.

There are other dance and drama groups not run by the Urban Council, notably the Chung Ying Theatre, subvented by the government and receiving its initial impetus from

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the British Council. In addition to its many outstanding public performances, it makes a point of taking theatre to the schools with productions mainly in Chinese but also in English; it is also achieving increasing notice for its experimental plays by local playwrights, 10 of which have been staged in the last four years, and which explore current attitudes to life, politics and topical issues. It has 12 full-time actors and four technical staff and also trains people to teach acting and drama.

The Hong Kong Ballet, despite the lurid headlines it attracted last year over leadership quarrels, resulting in the departure of its general manager, is the only professional Western ballet group and is now celebrating its 10th anniversary. It is a performing and education group regularly visiting schools, as much to kindle the interest of children in ballet as to develop audiences for the future. The company has 25 full-time dancers and increasingly its members will be drawn from graduates of the Academy for Performing Arts, as well as international dancers who are keen to be part of it.

The City Contemporary Dance Group is another regular performer to both the general public and schools and draws inspiration from local themes as well as from Western countries well versed in contemporary dance. This stress on a cultural mix is made by many in the arts world who say Hong Kong cannot afford to be the frog in the well but must take advantage of its international status and the opportunities to travel and broaden its vision.

Offering a considerable boost to all these activities is the Academy for Performing Arts, opened in 1985 and soon to turn out graduates in music, dance, drama and the technical arts. It is designed for 600 full-time students and is virtually Hong Kong's university of the arts, unique in running comparable courses in all four disciplines. Each school is headed by a Dean, and the Academy has 60 full-time and 150 part-time teachers, with recurrent costs of about $60 million a year. So highly esteemed is its reputation and so strong is the demand for places that hundreds apply for the 40 places available each year in each school, with the technical arts being particularly favoured because they provide well-paid openings not just in television studios but also in the many theatres that have mushroomed over the territory. An international accreditation panel, headed by the former Vice-Chancellor of the Hong Kong University, Dr Rayson Huang, and including the former Vice-Chancellor of the Chinese University, Dr Ma Lin, is at present assessing how its diplomas are likely to be rated in international performing arts circles. The academy also has a 1 200-seat lyric theatre, a 400-seat drama theatre, a studio theatre, and open-air theatre, a concert hall and a recital hall which together with the stage facilities of the nearby Arts Centre, provide yet another complex of performance venues now regularly patronised by the public, as well as giving students ample opportunity to show off their talents.

Instrumental Music

While the academy teaches and trains at a tertiary level, many other institutions are doing equally good work at a lower level. The government's Music Office, launched by Sir Murray MacLehose more than 10 years ago following a strong recommendation in an enlightened and far-sighted report by David Stone, runs an instrumental music training scheme to promote interest among the young. It has more than 700 classes for 4 000 students and runs 22 orchestras and bands. Like the Schools Music Festival, it numbers among its graduates many of Hong Kong's outstanding musicians. It also hires out musical instruments to enable students to take them home to practise, and regularly takes its best students to international festivals, last year to Australia for performances in Brisbane, Sydney, Melbourne and Canberra.

URBAN COUNCIL PUBLIC LIBRARIES

REFERENCE LIBRARY

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The dimensions of the cultural scene can thus be perceived and there is a growing cacophony of sound to be heard from the tangled branches of this jungle - some delightful, some discordant, but all adding up to a distinctively Hong Kong cultural blend. Nor are the words and music to be heard, and the images to be seen, all foreign creations and compositions. Beethoven, Brahms, Shakespeare, Shaw, Verdi and Wagner all have their place, but many are the works of Hong Kong writers, musicians composers and choreographers.

As literature is the basis for all performing arts, let's begin there. Hong Kong writers vary from good to mediocre, and their themes range from the historical romances of Louis Cha, publisher of the Ming Pao Daily News, and fellow writers, Yick Shu and Ngai Hong, all read widely in China, Taiwan and Hong Kong, to the novels (in English) of Timothy Mo, the varied works of Austin Coates, and the scatter of historical potboilers and contempor- ary cliffhangers by various transient expatriates. There is no shortage of writers but quality is another matter. T. L. Tsim, Publisher of the Chinese University Press and for many years a press columnist, agrees with the writer Jan Morris, that the meeting of two great cultures has produced nothing of significance, either in literature or the arts.

He recalls John Osborne's writing in Britain, of the generation growing up in the aftermath of World War II, having lost an empire yet unable to discover a new role; Tsim has not seen any writing to match the style, depth and challenge of Osborne in Hong Kong. Today there are avant garde dramatists experimenting with form and content, but some have great problems with dialogue and there are many flaws in the experimental theatre. However, he feels, 'they are starting to come together. There are rumblings. I don't know whether they will flourish, but this is an age which should bring forth great literature'. Apart from Xi Xi in Taiwan, however, he has not read 'anything that is really worth the name of literature'. One reason is that it does not pay to be a writer because the outlets and the rewards are too limited, with print runs of about 5 000 copies and royalties of about $3 a copy. However, under him, the Chinese University Press has extended its traditional role of an academic publisher of scholarly works to provide opportunities for new, younger writers. The financial rewards, however, remain too small to encourage professional writers and a far greater blossoming of the cultural scene will have to take place to make it possible for writers to survive on their literary efforts.

There are today not only playwrights who translate works in English to Chinese, ranging from Shakespeare to Stoppard and Beckett, but also some who adapt existing plays to a local setting, with Hong Kong idiom, and others who write on themes of our times, including that tantalising date, 1997. There are musicians scoring for the Chinese Orchestra (and even for the Philharmonic), as well as for films and television, and there are dancers choreographing for local ballet groups. There are growing opportunities for the best composers and writers to see their work produced, with more than 50 major dramatic productions on the live stage last year and more than 100 different groups staging performances, not to mention the openings in television and radio.

      Indeed such is the demand for stages that many groups are unable to arrange venues or are offered time slots that are inadequate to make the production worthwhile, or where dress rehearsals have to be held at other venues without a full stage setting, props and lighting. Particularly is this so at the time of major festivals which are occurring with increasing frequency.

      The biggest event for Western culture is the International Arts Festival, which has been held each year with increasing support and consistently high standards since 1972. The first festival, organised by the late Ian Hunter, enlisted some of the greatest artistic names, such

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as Sir Yehudi Menuhin, Sir Malcolm Sargent and the London Philharmonic Orchestra, and Dame Margot Fonteyn. Its immediate success drew in that other great 'King of Hong Kong Showbiz', Sir Run Run Shaw, and also the Hong Kong Government, Urban Council and the Jockey Club. With this kind of support it could only rise to greater heights. It is still with us, with a $15 million a year budget and a firm place on the musical calendar. Other local impresarios, noting its success, have recognised there is a market for excellence and are drawing top orchestras, ballet and drama groups and prominent instrumentalists, to play at other times of the year or in other local festivals, such as the International Arts Carnival and the Festival of Asian Arts, both run by the Urban Council.

       These provide local audiences with performances of exceptional quality, and also contribute to raising standards of Hong Kong's own cultural groups who can measure their own productions against the highest international standards.

The International Arts Festival in turn spawned a 'fringe', based on the experience of other major international festivals, which has given impetus to many younger experimental groups on a year-round basis, supervised and encouraged by its own highly-committed secretariat supported by several voluntary workers. The 'fringe', however, is not evolving as an alternative to the conventional mainstream of arts so much as supplementing existing art forms, as well as providing much-needed classes and workshops with opportunities for performances in its own small studio theatre, supported by the Hong Kong Government, Urban Council and private sponsors. It has thus become much more a training venue for artistes and has found an important niche for itself in developing mime and street theatre, among others.

Film Industry

      In addition to these festivals, the Urban Council stages an International Film Festival which draws the unusual and exceptional film productions from many parts of the world, alas all too briefly. This is an attempt to provide a small counterweight to the tons of celluloid which deluge the commercial screens, much of it by Hong Kong producers, but only a small proportion worthy of international recognition.

      The film industry, indeed, is commercially the strongest yet culturally the weakest element in the arts world; more properly it is seen as entertainment and with its links to television it would happily accept that this is its main role in life. Yet it also has links in other countries to the live stage and relies as much on the efforts of the writer as on the producer, the actor and the technician to attract its audience. While film groups were active in China and in Hong Kong in the 1930s, the local industry owes much to the arrival of producers, directors and entrepreneurs from Shanghai and Singapore. Names like Sir Run Run Shaw and Raymond Chow are as legendary among Hong Kong people as Alexander Korda, Louis B. Mayer, Arthur Rank, Lew Grade, Cecil B. de Mille, and other moguls of Tinseltown are to the international film-goer.

      Without this background in films, Hong Kong's foray into television would have languished. Instead, after a fumbling, stumbling start by a British group transmitting through cables in the 1950s, broadcast television was an instant success - indeed, to such an extent that Hong Kong scriptwriters are now writing for local audiences in Cantonese rather than Mandarin, as well as exploring new forms of drama, which in turn has enriched the film industry and given us such talented producers as Anne Hui, Yim Ho and Tsui Hark. It has also given actors more freedom and opportunity to move between films and television, though as yet the commercial live stage is not able to provide a third string to the actor's bow, as it does in Britain, the United States and Europe. Likewise, the musician

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writing for films has gained new outlets for his talents in television, and as a result, in the view of Legislative Councillor and television executive Mrs Selina Chow we have succeeded in promoting a 'very Hong Kong type of Cantonese culture, particularly through drama'. But regrettably not much more than that.

     Part of the reason is that Hong Kong people have not yet caught up with the cultural upsurge that has taken place; with other distractions dominating their thinking and planning at present, they may never be able to give it the attention and support that it deserves, at least in so far as an older age group is concerned, though there is more hope for the young. For most of the new productions that take place in Hong Kong these days are patronised by the under-35s and among this group there is increasing support for what is being produced and performed.

     Slightly better off in this respect are the artist and sculptor who at least have an established convention on their side, namely home decoration. No matter how humble the home, convention decrees the need for ornaments and pictures, and with rising affluence and increasingly sophisticated tastes, there is a quest for not just colour and beauty but also aesthetic and spiritual expression. The tawdry trivia which littered the sideboards of our grandparents survive in museums, and for those who aspire to original rather than copied works of art, there is a thriving school of artists in Hong Kong whose work clamours for patronage.

The Urban Council, at its Museum of Art, has opened an outlet for the works of young sculptors and artists, charging a small commission but otherwise allowing them to set their own price. These, like the works of the young writer, hardly repay the months of effort needed to translate an inspiration or vision into artistic reality. This has not discouraged an active community of artists which, perhaps more than any other cultural group, has developed largely by its own efforts and in its indigenous form must rank as one of the oldest, tracing its origins back to the earliest days of Hong Kong. The China trade paintings, with their meticulous fine brush work, have today become costly and widely collected works of art. But far from burying their heads in the past, today's community of artists have proved themselves among the most innovative and original, working in a variety of media and intermixing cultural influences, yet also embellishing traditional forms. The list of successful Hong Kong artists and sculptors consists of both expatriates and locals, who exhibit regularly at private galleries and exhibitions and whose works are also collected and displayed by local banks and businesses as well as by many individuals. Such artists as Luis Chen, Wucius Wong, Lui Shou-kwan, Van Lau, Hon Chi-fun, Gaylord Chan, the late Douglas Bland, Rosamund Brown, Martha Lesser, Kwong Yeu-ting, Yang Shen-sum, Ting Yen-yung and Fang Chao-lin, together with sculptors like Ma Ji-bo, Chu Hon-sun, Ruth Sulke and Cheng Yi, have established not only their own reputations but that of Hong Kong as a thriving and indeed exciting centre of art and sculpture.

     Happily, Hong Kong has an extensive reservoir of fine artistic treasures from the past to be found in hundreds of private collections as well as in the displays of our museums. At the same time, the Antiquities and Monuments Board has named 33 sites to be preserved as historical monuments on the ground. Many may feel this to be too little, too late and that far more should have been preserved from the wreckers' hammers, including some fine old colonial buildings. The Chinese sage was it Confucius or Mencius? - warned of the futility of shedding tears over a bowl of spilt tea, however, and the Antiquities Board is working hard to extend what remains of Hong Kong's heritage for the benefit of future generations.

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In the past 30 years, and particularly the latter half, Hong Kong has sown its artistic seeds widely though somewhat wildly. We have jungle and rain forest lushness in some parts of our cultural island and wilderness and desert in others. The growth has been haphazard and uncoordinated, with too much irrigation and fertiliser applied to some parts, while others have been neglected. And while there is a general belief Hong Kong needs more money and public interest to be invested in the arts scene, the how, where and when are less easy to answer. For almost 15 years the Chairman of the Council for Performing Arts, Alex Wu, had been clamouring in the Legislative Council and elsewhere for greater co-ordination and stronger emphasis on culture in our education system. He argued this when, in the mid-1970s, it appeared that local youth were losing direction, lacking responsibility and needing more outlets to absorb their creative energies. He felt Hong Kong was not a cultural desert but 'a culturally under-developed area which simply needs an irrigation plan'. He criticised our cultural achievements at that time on the grounds that 'they reach only the elite few'. He called on the government to establish a policy on subsidies, and to adopt a more planned and active role as a patron of the arts. He proposed a central organisation 'such as an arts council' which would act as an overall cultural co-ordinator, avoid overlapping and establish policy guidelines.

Government Response

The government's response to this was two-fold. It set up a Music Office more than a decade ago which has done great things in music training of the young, arranging its own concert tours overseas and locally. It also established the Council for Performing Arts in 1981 to give advice on how it should encourage and support these activities. This led to the government handing out subsidies to a variety of deserving groups in the form of grants, both capital and recurrent, to 'foster artistic excellence'. The Municipal Services Branch is the executive arm of this council, and provides 'infrastructural support for the development and promotion of performing arts'. The Urban Council and Regional Council operate the various venues in their areas, and while the Urban Council manages performing companies, they both present performances and hold exhibitions.

How is it all working out?

While the artistic juggernaut is making progress, the gears are not synchronising well. For while in theory the arrangement looks tidy, in practice it is beset by problems resulting from rivalry, jealousy, pettiness and a good deal of bickering. One close observer describes the Council for Performing Arts as a 'toothless tiger'. He added: 'When the Council for Performing Arts was established, the vision was not clear enough; they did not foresee the difficulties ahead. They haven't got enough money; they can't ask the Urban Council to comply. Only when they get much more money can they project themselves as an effective council'. The causes of the division are understandable. The Urban Council's monopoly of the major venues is resented by many who either cannot get bookings (about half are unsuccessful) or cannot get access for rehearsals or have to accept what the Urban Council will provide in terms of sound systems and lighting. The Urban Council reply that, as the pioneers, they had not only to promote and sell their venues but also to create and support some of the principal users, for had they not done so the cultural take-off might not have happened as quickly and as broadly as it has in recent years. They have also taken the lead in developing the visual arts and at the same time have shown a responsible attitude to expenditure such as by axing eight of the 11 proposed district civic centres which could not be justified, at the risk of upsetting many district boards which would have liked to have had them built.

20

STATE OF THE ARTS

Without the initiatives by successive Urban Council chairmen - Sales, Cheong-leen and Forsgate the state of the arts would be far less spectacular than it is. Hong Kong, however, remains lopsided in its development and lacks basic co-ordination; a lot of money is being pumped in by various authorities, amounting to more than $160 million, not counting inputs from the Jockey Club and private sponsorship. Yet of the government's funding, two-thirds goes to the Academy for Performing Arts. No sensible and sympathetic supporter would deny that the academy will play a highly significant part in producing a steady flow of graduates who should enrich Hong Kong's cultural scene, if they are not lost in the emigration rush in the next few years. But the academy and the Hong Kong Philharmonic Orchestra and the Urban Council's various groups tend to get the lion's share of the official handouts, and the rest go begging for scraps. Let no one deny they are in some cases quite meaty and tasty scraps; but many fear for the future, for there is no assurance of continuity and growth and no basis for future planning.

     It would be foolish now to embark on a cornucopia policy, liberally sprinkling rewards to whichever supplicant made the correct ritual kowtows. How then do we evolve a rational policy which achieves fair deals for all, with a living wage for professional performers, and adequate venues, which in turn attract good public attendance and support?

     Do we need a cultural supremo, a Mr Big who would be appointed by the government, surrounded by bureaucracy and immured in one of our splendid new glassfront office blocks, dictating the establishment of more orchestras, 20 per cent more drama for Tsuen Wan and 10 per cent less for Junk Bay, more censorship, less ballet in Tuen Mun but more in Sai Kung, less this and more that and none of this new fangled nonsense, thank you?

No one in the arts world I spoke to wants such a co-ordinator, particularly with 1997 on the horizon, yet all feel the need for more co-ordination. And not just at the programme level to avoid clashing dates, but in building the basic infrastructure of our cultural effort.

     The government's desire to encourage the arts is sensible and consistent with what many enlightened and democratic governments are doing. An Arts Council representing both the main streams and the side streams of the arts, and preferably including all spending authorities may well be needed, but should not be dominated by the central government or a Mr Big, however enlightened and acceptable that person may be. The council could perhaps meet annually at a seminar or workshop where its chairman would be elected for a two-year or three-year term by all involved in the arts or their constituency representatives. This might become a sort of self-regulating 'parliament of the arts' in which all can have their say, and through which policy can evolve and co-ordination and future planning be achieved, as well as official funds allocated and dispensed. This is a personal view based on conversations with many in the arts world, who recognise the need for co-ordination but strongly oppose domination by one all-powerful authority.

Big things are in the offing with Urban Council cultural projects exceeding $1 billion in the next three years, and a budget for museums, entertainment, libraries and culture in the current financial year amounting to $350 million, with $63 million going to the performing arts. The government will be spending about $93 million and the district boards $9 million. In terms of expenditure per head of population this works out at about $30 per head, which contrasts with the $60 a head that Australia spends, $90 by countries such as Britain, the United States and Italy, and $250 by Canada, West Germany, France, Netherlands and Sweden. Clearly this is big money, and if Hong Kong is to approach the levels even of Australia people will want to see it spent wisely and productively with results for all to recognise.

STATE OF THE ARTS

Cultural Building Boom

21

There is a feeling among some in the arts world that there is a lot of 'fever' but not enough professionalism in the way we administer the arts and that the overall effort is characterised by amateurism. At the same time, many things done by artists do not fit conveniently into conventional patterns of cost effectiveness. As one administrator said: 'You need to love the arts before you can be sympathetic'. Ideally the administrators need to understand both the bureaucrat and, increasingly, the artist and how best to bring out his talents and spur his creativity.

      As for the cultural building boom that Hong Kong has plunged into in recent years, Nicholas James, General Manager of the Arts Centre, feels we have adopted a 'third world mentality' in building more for the sake of prestige than for the real needs of the community. But whatever the motives, there is no denying that there is a zest today to see them used. He acknowledged that 'you could be out every night going to something different if you spoke Cantonese'. The quality, however, is inconsistent and while the orchestra, the ballet and the best of the dramatic groups are filling their houses regularly, we have to make a serious effort to build up others that need support, perhaps bring others together to form stronger units with a wider field of skills, and provide more training for others to try and mould them into effective units.

      Obviously, not all will fit into this pattern; others will prefer to make their own way and do their own thing. The government, the Academy, the Fringe Club, the Music Office, the Schools Music Festival office and the many others involved have an important role to play, not just in training future instrumentalists, dancers, actors and technicians but also in educating more and more people to enjoy what is offered and to widen their capacity to appreciate what the artists are doing. That aspect is crucial, for selling seats is less important than giving people enjoyment, stimulating imagination and building a sense of belonging to a community which provides for the artistic tastes and cultural pleasures of its people.

An Urban Councillor, Lo King-man said: 'Having created a milieu where professional artists are being trained and educated, we need to create a demand that will enable them to survive by increasing admission to cultural events'. He feels that to do this more will have to be spent to reduce prices to encourage people to take an interest, not just in the performing arts, which have been the focus of greatest attention in the past 12 years, but in the visual arts as well. This suggests a need for more public exhibition areas and more opportunities for artists to see their works and cultivate their own tastes. He added: 'We are at the crossroads of a new policy development because of the very rapid increase in seats available and it becomes extremely important to balance the programmes in such a way that we continue to encourage local talents and the production of locally-created works. There is a fair amount of truth, however, in the belief that if you don't have a creative community, you get the best of other people's talents. What we require in Hong Kong is to get the best of both'. So this has to be taken into consideration in our cultural planning - not simply educating and training talented locals, but raising their horizons and those of the community by continuing to import quality performers and works of art from abroad. Nor is this just a matter of catering for increasingly sophisticated urban dwellers, but in recognising the different tastes of many living in the new towns who are more traditional in their outlook and others from a rural background who might not wish to venture outside their limited cultural experience. Regional Councillor Richard Ho says that this is one reason why his council has not gone in for performing groups as the Urban Council has; moreover, it does not have the money to do so and thus its function is to provide venues for

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STATE OF THE ARTS

    groups to perform in. These groups vary from district to district. Where it would be possible to use Sha Tin's town hall for a performance by the Hong Kong Philharmonic or other top orchestras, Yuen Long and Tuen Mun, with their rural links, may prefer a performance of Chinese opera.

      'We want to have a good spread and to please everybody, but we have no hard and fast rules on what we do and how we present it. Our budget for cultural performances this year is $17 million, and with that we have to try and cater for all sorts of tastes'. As for venues, he believes that with three town halls, supplemented by three civic centres, these should be enough for the present, but as the population of the New Territories continues to grow, there may be a need for an additional facility. 'Eventually the Regional Council area will be no different from the Urban Council area in terms of taste because of the changing character of the population'. But that may be a few years off.

So what should Hong Kong do?

      In October 1988, the Governor, Sir David Wilson, announced a major step aimed at improving co-ordination by all involved in promoting the arts. The government would set up a policy branch under a Secretary covering culture, recreation, entertainment and broadcasting. This high-level branch would work closely with the two municipal councils to ensure that the activities of all concerned were well co-ordinated.

---

     He noted that the Urban Council had taken on responsibility for the Hong Kong Philharmonic a move which would ensure the orchestra's financial future. He also announced that the government had accepted in principle some of the proposals by the Council for the Performing Arts to increase the level of funding in the next financial year.

However, he felt it would be wrong for such groups to rely too heavily on public funds and said the government wanted to encourage the private sector to increase its sponsorship of the arts. The Council for the Performing Arts was being asked to put forward proposals to achieve this, drawing on experience elsewhere in the world where it had proved successful. He noted that when the Hong Kong Cultural Centre opens in November 1989, more than 21 000 seats in theatres and concert halls would be available. "This is more than five times the number in 1978, a rate of growth probably unmatched elsewhere in the world. We must now ensure that these seats are filled. This means organising high-quality performances by both local and overseas artists,' he added.

      Certainly all this amounts to a big step forward for the performing arts. But there are other branches of the arts and culture that need help and encouragement. And while the government has a duty to ensure that the large sums of taxpayers' money going into the arts are spent wisely and productively, it should not become the arbiter of cultural output and development - and no doubt does not wish to assume such a role.

      A fully-representative autonomous Council of the Arts that can allocate funds, like the University and Polytechnic Grants Committee, should be able to give the various sectors the scope and stimulus to grow at their own speed. It should also be able to devise and apply sound guidelines and take a lead in building up private and corporate sponsorship which, apart from the Royal Hong Kong Jockey Club, is badly lacking. Only when this is significantly increased will it be possible for an autonomous Arts Council to assert itself as a credible organisation capable of doing justice to the cultural and artistic needs of the community.

      Such an initiative might succeed one day in giving Hong Kong not just a better balance in its cultural output but also a reputation for being an international centre of the arts, in the same way as it is today a centre of commerce, trade and industry, shipping, banking and finance.

2

Constitution and Administration

UR

HE

     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.

In May 1987, the government published a Green Paper entitled 'The 1987 Review of Developments in Representative Government', which sought the views of the community on whether the system of representative government should be further developed in 1988 and, if so, in what manner. An independent survey office was set up to collect public opinion on the Green Paper and the response was unprecedented: over 131 000 written submissions were received.

      On February 10, 1988, a White Paper entitled 'The Development of Representative Government: The Way Forward' was published. It set out the government's decisions on the next steps in the development of representative government. The decisions took full account of all the views expressed by the public during the period of the review and enshrined the following four objectives of the government:

⚫ that the system of representative government should continue to evolve to suit Hong

Kong's circumstances;

⚫ that its development should be prudent and gradual;

that any reforms should have the widest possible support so as to command the confidence of the community as a whole; and

⚫ that the system in place before 1997 should permit a smooth transition in 1997 and a

high degree of continuity thereafter.

      The White Paper contained a number of major decisions in relation to elections to the Legislative Council (including, in particular, the introduction of 10 directly elected seats in 1991); the composition of the Legislative Council; the presidency of the Legislative Council; the role and composition of the two Municipal Councils and the District Boards; the

24

CONSTITUTION AND ADMINISTRATION

links between the three tiers of representative government, and various practical electoral arrangements.

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.

The present Governor, Sir David Wilson, assumed office 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 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 consultation and 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 Legisla- tive 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 (a right not exercised in recent times) to act against its advice. 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 September 1, 1988, 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

CONSTITUTION AND ADMINISTRATION

25

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 various ordinances which confer a statutory right of appeal to that body. 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 ordinances. 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.

Legislative Council

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, 20 appointed members and 26 elected members.

The official and appointed members are appointed by the Governor with the approval of the Secretary of State. 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: commer- cial; industrial; labour; social services; medical and health care; finance and accountancy; teaching; legal; and engineering and associated professions. Of these, the commercial, industrial, finance and accountancy, labour and medical and health care functional constituencies elect two members each while the other four 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 vacate their seats and an election must 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

26

CONSTITUTION AND ADMINISTRATION

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.

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 (Chairman), the Financial Secretary, one official member of the Council (at present the Secretary for Lands and Works) and all 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 sub-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 which have staffing implications and reports to the Finance Committee on changes in departmental establishments and on the size and cost of the Public Service.

The Public Works Sub-Committee consists of 25 members of the Legislative Council, the Financial Secretary (Chairman) and the Secretary for Lands and Works. It examines the priority and reviews the progress of capital works projects in the Public Works Programme, and makes recommendations to the Finance Committee on the commencements of projects and changes to the scope and estimates of items in the programme.

CONSTITUTION AND ADMINISTRATION

Public Accounts Committee

27

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.

      The annual cycle of the Public Accounts Committee has been split into two phases. With effect from 1988, the Director of Audit submits two reports to the Legislative Council in each year. The first is a combined report dealing with regularity audits and value-for-money audits. The second deals with value-for-money audits only. The first report is tabled in the Legislative Council in November and the second report in April each year. In each case, after tabling of the Director of Audit's report, the committee 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 commit- tee's recommendations or the reasons why acceptance of those recommendations is not considered appropriate. The minute is also laid on the table of the Legislative Council within three months of the laying of the Public Accounts Committee's report.

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 last two years.

OMELCO

OMELCO, which stands for Office of the Members of the Executive and Legislative Councils, is the office of 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; control public expenditure, and monitor the effectiveness of public administration.

28

CONSTITUTION AND 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 16 specialist panels formed by members which regularly monitor the policy and progress of work of different areas of activity. These are: constitutional development; economic services and public utilities; education; manpower; environmental affairs; finance, taxation and monetary affairs; health and welfare; housing; lands and works; the civil services; welfare; trade and industry; culture, recreation and sports; security; community and New Territories affairs; 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, members 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 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 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.

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 Urban Council has considerable executive authority and is charged with full responsibility over a wide range of municipal functions. These functions include street cleansing, refuse collection, control of general environmental hygiene, and ensuring the hygienic hand- ling and preparation of food in restaurants, shops, abattoirs and other places. During the past three years, the Urban Council conducted a comprehensive review of the policy governing street traders and public markets. Some recommendations have been imple- mented and the aspects of licensing and hawker control are being studied by an inter- departmental group.

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 Urban Council manages museums, public libraries and several major cultural venues and multi-purpose facilities, including the City Hall, Queen

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CONSTITUTION AND ADMINISTRATION

29

Elizabeth Stadium and Hong Kong Coliseum. It is currently engaged in planning for the construction of a major Museum of Science and Technology. A new Museum of Art is also under construction within the Hong Kong Cultural Centre area in Kowloon which will also contain a new concert hall, an opera house and a theatre to complement facilities already being run by the Urban Council elsewhere in the urban areas. The Urban Council promotes cultural performances and runs a comprehensive programme of public enter- tainment throughout the urban areas.

The Urban Council consists of 30 members, 15 elected from district constituencies and 15 appointed by the Governor. The size of the Urban Council will be increased from 30 to 40 members in 1989 with the addition of ten representative members from the urban district boards. 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 Urban Council is conducted by the Standing Committee of the Whole Council, supported by 13 select committees and 16 sub-committees.

The Standing Committee now conducts most of its business in public. The Liquor Licensing Board, the Libraries and Food Hygiene Select Committees as well as the Keep Hong Kong Clean Committee have also opened their meetings to the public.

The Urban Council's chief executive is the Director of Urban Services, who controls the operations of the Urban Services Department with a staff of 18 600. The director is charged with carrying out the council's policies and implementing its decisions.

       The Urban Council has been financially autonomous since 1973, and during 1988-9 will be spending about $2,530 million on council-controlled activities and projects. The council is financed by a share of the rates which provides about 80 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 is the statutory municipal authority for the new towns of Tsuen Wan, Kwai Chung/Tsing Yi, Sha Tin, Tuen Mun, Tai Po, Fanling/Sheung Shui and Yuen Long and their hinterlands, as well as the rural areas of Sai Kung and the Islands. Like the Urban Council, the Regional Council is responsible for all matters concerning environmen- tal hygiene, public health, sanitation, liquor licensing and the provision of recreational and cultural facilities and services within its jurisdiction, the Regional Council area, where over two million people live.

      The Regional Council consists of 36 members. Twelve of the members are elected directly, nine are elected as representatives of the nine district boards within the Regional Council area and twelve are appointed by the Governor. The remaining three are ex-officio members, being the Chairman and two Vice-Chairmen of the Heung Yee Kuk. The Chairman and Vice-Chairman of the Regional Council are elected by members among themselves.

      The Regional Council's policies are implemented by its executive arm, the Regional Services Department, which has a staff of over 9 000.

      The Regional Council is financially autonomous. Its main source of revenue comes from rates collected in the Regional Council area which provide about 86 per cent of the total

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revenue, with the remainder being fees and charges and interest on deposits. In 1987-8, total revenue amounted to $1,132 million while total recurrent and non-recurrent expen- diture amounted to $928 million. To enable the Regional Council to assume full respon- sibility for financing and processing all new projects in its capital works programme with effect from 1988-9, the government has agreed to provide a grant of $273.6 million per annum for three years from 1988-9 to 1990-91. A review will be undertaken by the government in 1990-91 to determine the level of an annual grant (if any) after 1990-91, having regard to the actual surpluses accumulated by the Regional Council from 1988-9 to 1990-91 and the Regional Council's forecast of revenue and expenditure from 1991-2 onwards.

The Regional Council meets monthly to deal with policy issues, formal motions, and members' 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, environ- mental hygiene, and recreation and culture while the district committees deal with and monitor the provision of services and advise on 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.

Within the Regional Council area, the Regional Council manages public libraries, museums, cultural venues and a variety of sporting facilities which include seven swimming pool complexes, nine sports grounds and 12 sports and recreation centres. In addition, the council promotes and organises many cultural and entertainment programmes both inside and outside the six civic centres under its management, including the Sha Tin Town Hall which features one of the most modern and best equipped auditoria in Hong Kong. A large-scale festival called 'RegCo 88' was organised from early November to early December. The festival comprised a variety of cultural and sports programmes which gave emphasis to participation, creativity and development.

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. Four members from district boards as well as other personalities are co-opted to each of the district committees of the Regional Council, thus providing an opportunity for the views of district representatives to be taken into account in the planning and provision of services and facilities.

District Administration

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

      There are 19 district boards throughout the territory. Each board consists of appointed non-government members, elected members from the respective constituencies and, in the case of the New Territories, rural committee chairmen. The elected members are in the majority. For the present term of the district boards (1988-1991), there are altogether 264 elected and 141 appointed members.

      The last district board elections were held on March 10, 1988, when 493 candidates contested the 264 seats. Thirty-four candidates were returned unopposed. Of the 1.4 million registered voters in constituencies where the seats were contested, 424 444

or 30.3 per

cent turned out to vote.

CONSTITUTION AND ADMINISTRATION

31

       The functions of the district boards are basically to advise the government on a wide range of matters affecting the well-being of the people living and working in the districts. Through the advice they make important contributions to the management of district affairs. They also help monitor the work of government departments at the district level. In addition, they are often invited to give views on important territory-wide issues, such as the further developments of representative government, education reforms, youth policy, the long-term development of sports and recreation in Hong Kong. Where funds are available, they undertake minor environmental improvement projects and help organise and sponsor activities to promote recreation and culture. In 1988-9, $42.68 million was provided for these purposes.

Each district board operates a 'meet-the-public' scheme under which district residents may, through advance appointment, meet the board members face-to-face to express their views on any district problems and suggest ways for improvement. The scheme has been well received by the general public and proved effective in providing a direct channel for collecting public views on local issues and reflecting them to the government.

       In each district, there is a district management committee. The committee, chaired by the district officer, comprises representatives of departments providing essential services in the district. It serves as forum for inter-departmental consultation on district matters and co-ordinates the provision of public services and facilities to ensure that district needs are met promptly. The DMC works closely with the district board and, as far as possible, follows the advice given by the board.

       The 67 Public Enquiry Centres in the 19 District Offices and their sub-offices handled 17 million cases during the year. These centres provide a wide range of free services to members of the public, including answering general enquiries on government services, distributing government forms and information materials, administering oaths and dec- larations, referring cases under the Meet-the-Public Scheme, Free Legal Advice Scheme and Rent Officer Scheme.

       Area committees and mutual aid committees have become an important component of the district administration scheme. They were set up in the early 1970s throughout the territory in support of the Keep Hong Kong Clean Campaign and Fight Violent Crime Campaign. Each area committee serves a population of about 40 000 to 50 000, and members are appointed from a wide spectrum of the community. Mutual aid committees are building-based resident organisations established to improve the security, cleanliness and general management of largely multi-storey buildings. At present, there are 117 area committees and 4 330 mutual aid committees. They provide an extensive and effective network of communication between the government and the people at the local grass- roots level.

Links Between the Representative Institutions

As a result of the 1987 review of developments in representative government, the government has decided to improve the link between the Urban Council and the urban District Boards by providing for each of the ten district boards in the urban area to elect a representative to sit on the Urban Council and the election will first take place in March 1989. Such a link would obviate the need for members of the Urban Council to sit on urban district boards and hence Urban Councillors will cease to be ex-officio members of the urban district boards after April 1989.

       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

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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 exists between the Regional Council and the 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 district 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 Heung Yee 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.

At present the district boards are grouped into 10 electoral college constituencies, 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 geographical 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. At the end of 1988, the electoral roll carried 1 604 048 names, representing 45.1 per cent of an estimated total potential electorate of 3.6 million. Of these electors, 1045 073 are entitled to vote at Urban Council elections and at district board elections in the Urban Council area. The remaining 558 975 are entitled to vote at Regional Council elections and at district board elections in the Regional Council area.

There are 157 constituencies for district board elections, comprising 87 in the 10 districts in the Urban Council area and 70 constituencies in nine districts in the Regional Council area. For Urban Council elections, there are 15 constituencies, each being a single-seat constituency made up of a number of district board constituencies in the Urban Council area. The Regional Council has 12 single-seat constituencies, each made up 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. Voting is by simple majority.

CONSTITUTION AND ADMINISTRATION

33

        At the District Board elections held in March 1988, 493 candidates stood for election to the 264 seats in the 157 constituencies. Thirty-four were elected unopposed. Of the 1 401 690 electors in the contested constituencies, 424 201 cast their votes, giving a turnout of 30.3 per cent.

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, that is, 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. For the second term starting in 1988, two additional seats have been provided in the functional constituencies for the accountancy and the health care professions.

       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 consti- tuencies. 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 relevant 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 1988, the number of electors registered in the electoral college and the functional constituencies stands at 467 and 61 052 respectively, as compared to the corresponding potential electorate of 468 and 97 838 respectively.

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 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.

      A preferential elimination voting system is adopted for both electoral college consti- tuencies and functional constituencies.

In the elections held in September 1988, a total of 26 candidates were validly nominated in the 12 electoral college constituencies; three were elected unopposed and the remaining 23 candidates contested the other nine seats. Of the 388 electors in the contested con- stituencies, 380 cast their votes. In the functional constituencies, a total of 20 candidates were validly nominated for the 14 seats; 10 were elected unopposed and the remaining 10

34

CONSTITUTION AND ADMINISTRATION

     candidates contested the other four seats. Of the 16 445 electors in the contested functional constituencies, 8 887 cast their votes, a turnout of 54 per cent.

Advisory Committees

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 interest- ed 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. About 5 000 members of the public are appointed to serve on a total of 434 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 Official Member of both the Executive and Legislative Councils. He is, in addition, a Member of the Finance Committee of the Legislative Council, and the Chairman of the Public Works Sub-Committee of the Finance Com- mittee. As the government officer with primary responsibility for Hong Kong's fiscal and economic policies, the Financial Secretary oversees the operations of the Finance, Mone- tary Affairs, Trade and Industry, and Economic Services Branches of the Government Secretariat.

CONSTITUTION AND ADMINISTRATION

35

      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 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 Vocational Training 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 organisations 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 19, 1986. To ensure his complete autonomy and independence in the performance of his duties and the exercise of his powers, the Audit Ordinance provides that the director 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 11 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, 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

36

CONSTITUTION AND ADMINISTRATION

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 seven policy groups which bring together branch secretaries in related programme areas. The five which are chaired by the Chief Secretary are the Community Affairs; Constitutional Affairs; Lands, Works, Transport, Housing and Environmental Protection; Public Services; 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.

Office of the Commissioner for Administrative Complaints

In August 1986, the government published a consultative document entitled 'Redress of Grievances', inviting public comments on the adequacy of the existing systems for the redress of grievances and on options for improving those systems. Following public consultation, the government accepted that an independent authority should be established to deal with complaints alleging maladministration. The Commissioner for Administrative Complaints Ordinance was enacted on July 20, 1988.

      The ordinance provides for the establishment of a Commissioner for Administrative Complaints. It is intended to provide, for the ordinary citizen, some means whereby an independent person outside the public service can investigate, and report on, grievances arising from administrative decisions, acts, recommendations or omissions. The establish- ment of the commissioner is designed to supplement and strengthen the existing channels for the redress of grievances, but not to replace them.

     The commissioner's office will come into operation in early 1989. Though funded by the government, the office will not be a government department.

     The commissioner will be able to investigate complaints alleging maladministration against all government departments, except the Police Force and the Independent Commis- sion Against Corruption, which already have independent authorities overseeing com- plaints against them.

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 govern- ment 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-

CONSTITUTION AND ADMINISTRATION

37

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 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 con- tracting-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 Adminis- trative 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' con- tinue to be deemed to be a separate contracting party to the GATT. By their respective

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CONSTITUTION AND ADMINISTRATION

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, London, Washington, New York, San Francisco and Tokyo 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 closely involved in the Uruguay Round of multilateral trade negotiations. The Brussels Office represents Hong Kong's economic and related interests concerning the European Community and the governments of Member States (other than the United Kingdom). Hong Kong's commer- cial relations with the United Kingdom, Austria and the Nordic countries (Finland, Sweden and Norway) are handled through the London Office. The Washington, New York 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 Hong Kong Economic and Trade office in Tokyo was established in September 1988 for the development of Hong Kong's commercial, economic and public relations interests in Japan. The Brussels, London, New York, San Francisco and Tokyo offices also incorporate the Industry Department's industrial promotion units which advise firms in the host countries about opportunities for investing in Hong Kong industries. All overseas offices, except the Geneva Office, act as a point of direct contact betwen Hong Kong and the host country, the media and organisations with an interest in Hong Kong, keep under review the commercial, economic and industrial developments and official thinking on international trade policies, and advise the Hong Kong Government on the likely repercussions of these developments. The London Office, in addition, provides assistance to Hong Kong people in the United Kingdom, including Hong Kong students, and super- vises the recruitment and training of Hong Kong public servants in the United Kingdom. The Marine Adviser based in London is Hong Kong's permanent representative to the International Maritime organisation, and provides an information centre for technical, legal and general maritime matters pertaining to Hong Kong. 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 depart- ments in charge of these areas - namely, the Medical and Health Department, with an establishment of 27 222, the Lands and Works group of departments (22 908), the Municipal Services group of departments (26 890), the Education Department (6 691), the Fire Services Department (7 389), and the Royal Hong Kong Police Force (32 467) account for 65 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 1987-8 was increased by three

CONSTITUTION AND ADMINISTRATION

39

per cent over that of the previous financial year. At April 1, 1988, the total strength of the service was 182 843, over 98 per cent of this number being local officers. It is structured into some 430 grades or job categories in administrative, professional, technical and manual fields, with 1 188 ranks or job levels.

      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. It 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.

      In January 1988, a new independent body, the Standing Committee on Judicial Salaries and Conditions of Service, was established to advise on matters affecting judicial officers.

      In March 1988 an independent Review Committee on Disciplined Services Pay and Conditions of Service was appointed. It submitted a preliminary report to the Governor in July and a final report in October. The Review Committee's recommendations, which provide a comprehensive framework for determining the pay and conditions of service of the disciplined services, were accepted by the government in December. Steps are in hand to implement these recommendations.

The year also saw the appointment, in October, of an independent Committee of Inquiry to look into the 1988 pay award and related matters. The committee was appointed under the 1968 Agreement between the Hong Kong Government and the main staff associations represented on the Senior Civil Service Council. It reported on the first phase of its work in November, and is expected to submit its final report in March 1989.

      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 already access to their heads of department or grade and the Civil Service Branch.

Continued efforts were made in 1988 to increase productivity and to improve the qua- lity 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 improvements in the quality of service, but also more effective deployment of staff, as well as significant savings in resources.

      The quality of service is also maintained by way of a disciplinary code which applies to all public servants. It provides sanctions against misconduct and sub-standard performance where other staff management measures fail, while safeguarding the interests and rights of individual public servants. The government is developing its use of manpower planning

40

CONSTITUTION AND ADMINISTRATION

techniques and practices in order to ensure that the public service possesses the right mix of officers in terms of numbers, experience, qualifications and skills to achieve its objectives and goals. Particular care and attention is paid to the selection and grooming of senior government officials.

Proper training plays a crucial role in ensuring that public servants are able to fulfil their existing responsibilities and meet new challenges in an effective and efficient manner. The Civil Service Training Centre conducts a wide range of management, language and computer courses and co-ordinates the training undertaken by public servants at local and overseas institutions. The centre also provides advice and assistance to departments on all training matters.

The Senior Staff Course Centre, first established on an experimental basis in 1984, is now a permanent feature of the management training offered to senior public servants. The centre is primarily concerned with the running of two three-month senior manage- ment development programmes each year. Participation by private sector executives is encouraged.

Language

The official languages of Hong Kong are English and Chinese. The government has taken the lead in ensuring that both English and Chinese languages are used in its communica- tions with the public. Major government reports and publications of public interest are now available in both languages. In addition, simultaneous interpretation services are provided at meetings of the Legislative Council, Urban Council, Regional Council, District Boards and other government boards and committees. The majority of the local Chinese community speak Cantonese, a South China dialect, and interest in learning to speak Putonghua (Mandarin) is gaining momentum as closer ties with China are being developed. With the establishment of the Bilingual Laws Advisory Committee, a major step has been taken in the publication of laws in both official languages.

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 provides for the Hong Kong legislature to exercise the necessary powers to replace English laws in specified fields with Hong Kong ordinances, 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.

     The Governor acting with the advice and consent of the Legislative Council has plenary powers to enact ordinances for the peace, order and good government of Hong Kong and most of the legislation applicable in Hong Kong is, and has been since its earliest days, enacted in this form or as subsidiary legislation made under an ordinance. Such legislation is usually initiated by one of the branches of the Government Secretariat.

     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.

42

THE LEGAL SYSTEM

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.

The laws of Hong Kong are published in a 31 volume loose leaf compilation known as 'The Laws of Hong Kong'. This is brought up to date by annual supplements.

      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 ordinances and English or United Kindgom Acts where applicable. 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 1973 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. 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 constitu- tional 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 Magistracy, the Coroners' Court, the Juvenile Court, and also include the Lands Tribunal, the Labour Tribunal, the Small Claims Tribunal and the Obscene Articles Tribunal.

      The Lands Tribunal, established in 1974, has three principal judicial functions. Firstly, 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. Secondly, 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 determinations under the Landlord and Tenant (Consolidation) Ordinance. Thirdly, since 1982, the tribunal's jurisdiction has included all claims for possession of premises under the Landlord and Tenant (Consolidation) Ordinance, and ancillary money claims.

THE LEGAL SYSTEM

43

      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 $15,000. 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.

The Obscene Articles Tribunal, established in 1987, has two judicial functions. Firstly, it has exclusive jurisdiction to determine whether an article referred to it by a court or a magistrate is an obscene or indecent article and where the matter publicity displayed is indecent. These referrals by the court are a result of a defendant facing a charge under the penal provisions of the Control of Obscene and Indecent Articles Ordinance. Secondly, a tribunal also has power to classify an article as Class I (either obscene nor indecent), Class II (an indecent article) or Class III (an obscene article). An author, printer, manufacturer, publisher, importer, distributor or owner of copyright of an article, can submit it to a tribunal for classification.

      Magistrates exercise criminal jurisdiction over a wide range of indictable and summary offences. Although there is a general restriction of two years imprisonment or a fine of $10,000 on indictable offences which are dealt with summarily, a growing number of ordinances give magistrates the power to impose sentences up to three years imprisonment and substantially larger fines, in some cases up to $1,000,000.

      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 300 assessors.

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

Three coroners conduct inquiries into the cause of, or circumstances 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 $120,000 or, where the claims are for recovery of land, the annual rent or rateable value does not exceed $100,000. 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 exercises appellate jurisdiction in appeals against the assessment of stamp duty imposed by the Collector of Stamp Revenue.

44

THE LEGAL SYSTEM

      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 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 a member of both the Judicial Services Commission and the ICAC Operations Review and Complaints Committee.

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 legal matters 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.

The Attorney General 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 proceedings.

THE LEGAL SYSTEM

45

Most minor prosecutions heard before magistrates are routine matters which are dealt with by law enforcement departments along settled guidelines issued under the authority of the Attorney General and without individual reference to the Attorney General's Chambers. Where such cases are complicated, or give rise to difficult points of law, advice is sought from the Prosecutions Division. The advice of the Attorney General's Chambers must be sought in the case of serious offences which are to be heard in 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 reports on Commercial Arbitration, Bills of Exchange, Community Services Orders, Contribution between Joint Wrongdoers and Damages for Personal Injuries and Death have been implemented by the government. The Commission has published reports on the Laws Governing Homosexual Conduct, Confessions in Criminal Cases, Insurance, Young Persons - Effects of Age in Civil Law, Control of Exemption Clauses, Contempt of Court, the Model Law of Arbitration and Coroners.

It is considering Evidence in Civil Actions, Breach of Confidence Actions, Wills and Intestate Succession, Bail, Interest on Debt and Damages, Competence and Compellability of Spouses, Arrest and Detention, Sales of Goods and Supply of Services, Copyright, Loitering and Fraud.

Registrar General

The Registrar General, a statutory office established by the Registrar General (Establish- ment) Ordinance, combines the statutory offices of Land Officer, Registrar of Companies, Registrar of Trade Marks and Patents, Insurance Authority, Official Receiver, Official Trustee and Official Solicitor. The Registrar General's Department is divided into four main divisions. The Land Division operates the Land Registry under the provisions of the Land Registration Ordinance and also provides a conveyancing and legal advisory service to the government in all of its land transactions. The Commercial Division comprises the Companies Registry, the Trade Marks and Patents Registries and the Money Lenders Registry. The Companies Registry administers the provisions of the Companies Ordinance, while the Trade Marks and Patents Registries provide and administer a system of trade marks and patents registration and protection under the provisions of the Trade Marks Ordinance and the Registration of Patents Ordinance. The Insurance Division provides prudential supervision, under the provisions of the Insurance Companies Ordinance, over insurance companies carrying on insurance business in, or from, Hong Kong, and the Insolvency Division provides an insolvency service to the private sector as trustee in bankruptcy and liquidator in companies winding-up.

The Registrar General is also an ex-officio member of the Securities Commission, the Insurance Advisory Committee and the Standing Committee on Company Law Reform and represents the Financial Secretary as an ex-officio member of the Council of the Hong Kong Society of Accountants.

Legal Aid

Hong Kong has developed over the years a very comprehensive system of legal aid, emphasising the government's continuing desire and effort to promote social justice.

46

THE LEGAL SYSTEM

This system is administered by the Legal Aid Department and provides legal representation in both civil and criminal courts. The Law Society of Hong Kong, through an Executive Committee which includes representatives from the Bar Association, provides free legal advice and free legal representation to defendants in certain criminal cases in the Magistrates' Courts and Juvenile Courts, which are areas not covered by the Legal Aid Department. These two aspects of legal welfare are funded by the Hong Kong Government. Legal aid is available for legal representation to both residents and non-residents in Hong Kong. A person who wishes to receive legal aid as provided by the Legal Aid Department has to satisfy the Director of Legal Aid on financial eligibility and justification for legal action. The financial limits in both civil and criminal cases are the same. The maximum eligibility limits for legal aid is a disposable income of $2,200 per month and a disposable capital of $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. If a legally-aided person in civil litigation is successful and legal costs are recovered in the proceedings, then any contributions he may have paid may be refunded to him. In unsuccessful litigation the liability for costs of a legally-aided person is only limited to the amount of the contributions, if any, paid by him.

Legal Aid in Criminal Cases

Legal aid is available for criminal proceedings in the District Courts, High Court, Court of Appeal and the Judicial Committee of the Privy Council, and for representation at proceedings in the Magistrates' Courts where the prosecution is seeking committal of a defendant to the High Court for trial. Legal aid is also available for assistance in preparing petitions for clemency 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 serious nature of the charge and the gravity of sentence. Legal aid is also given for appeals against conviction for murder irrespective of whether there are grounds of appeal as the granting of legal aid is mandatory so as to ensure that all relevant matters are placed before the court by the appellant's lawyers. For all other criminal appeals, including appeals from the decision of the magistrates, legal aid will be given 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 in London, by a Committee of Review.

The total estimated expenditure for 1988-9 is $35 million in criminal cases. During 1988, 4 600 applications were received for legal aid in these cases and 2 527 were granted legal aid.

Civil Legal Aid

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 legal representation and in recovering the judgment 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 are: traffic accident claims, claims in respect of industrial accidents and employees' compensation, immigration matters and every branch of family law ranging from divorce, separation, maintenance and custody to wardship. Other cases such as bankruptcy

THE LEGAL SYSTEM

47

and companies winding-up proceedings are also undertaken together with general litiga- tion cases involving landlord and tenant disputes, breach of contract and professional negligence. 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 1988-9 was $43 million in civil cases. In 1988 15 757 applications were received for legal aid in these cases and 4 745 legal aid certificates were granted. A sum of $91 million was recovered for the legally-aided persons in civil cases.

      In the light of the rising divorce rate in Hong Kong an independent counselling agency is provided by the Hong Kong Catholic Marriage Advisory Council to help applicants for legal aid in matrimonial cases with a view to conciliation or re-conciliation. This counselling scheme, funded by the Royal Hong Kong Jockey Club, is in operation in the Legal Aid Department's Kowloon Branch Office.

      If a person is granted legal aid in civil matters, the Director of Legal Aid will assign the case either to a private solicitor and a barrister where necessary, or to one of his own professional officers. The department maintains its own litigation units undertaking personal injury litigation, family law and workers' wage claims. The department has various sections specialising in enforcement of judgments for damages and legal costs, application for the grant of letters of administration in fatal cases and preparation of itemised Bills of Costs, all of which provide a support service for cases assigned to private practitioners and its in-house lawyers.

Supplementary Legal Aid

The supplementary legal aid scheme provides legal assistance to those persons in the sandwich-class whose resources place them outside the financial limits under the Legal Aid Scheme but are not sufficient to meet the high costs of conducting litigation on a private basis. This supplementary scheme introduced in October 1984 is available for claims in the High Court for damages for personal injuries or death.

Under this scheme applicants may be granted legal aid if their gross income does not exceed $15,000 per month and their disposable capital does not exceed $100,000. In arriving at the disposable capital the value of an owner-occupied residence and other allowances similar to those under the Legal Aid Scheme are deducted from the gross capital. This scheme was initially funded with an interest-bearing loan from the Government Lotteries Fund and is administered by the Director of Legal Aid. The same merit test for civil legal aid is applied but instead of requiring a contribution a successful litigant under this supplementary scheme pays a percentage of the damages he recovers back into the Scheme's fund so as to assist further litigants in future litigation. The percentage deducted from the damages ranging from 10 per cent to 12.5 per cent depends on the amount recovered and on whether the case is settled prior to the trial of the action.

The total estimated expenditure in 1988-9 was $1.2 million. During 1988, 90 applications were received of which 41 were granted.

      The department has its headquarters at Queensway Government Offices on Hong Kong Island and a branch office in Kowloon. The establishment comprises 371 persons, of whom 50 are professional lawyers and 114 are law clerks who are para-legal personnel. Training for the law clerks is provided by the professional officers and from time to time officers at all levels attended job related training courses provided by the Civil Service Training Division. The department is also providing articles of clerkship to trainee solicitors and participates in the training programme for articled clerks and barristers' pupils whose articles or pupilage are with members of the Attorney General's Chambers.

48

Legal Advice and Duty Lawyer Schemes

THE LEGAL SYSTEM

Since November 1978, the Law Society of Hong Kong, with the full support of the Bar Association, has administered three schemes to provide free legal representation, legal advice, and legal information for people in Hong Kong. The three schemes are: the Legal Advice Scheme which provides free legal advice in both civil and criminal law matters; the Duty Lawyer Scheme which offers free legal representation to those who are charged with any of the nine scheduled offences in magistrates' courts; and Tel-law, which provides legal information on a wide range of topics by taped telephone messages. The schemes are administered through a management committee which comprises nominees from both branches of the legal profession. The schemes are fully subvented by the government, and received slightly over $20 million in 1987-8.

      The Duty Lawyer Scheme has 544 remunerated lawyers (barristers and solicitors) on its panel. The lawyers are rostered by computer or assigned through the central assignment system to represent eligible defendants in magistrates and juvenile courts. The nine scheduled offences covered in the magistrates' courts are: membership of a triad society, loitering, unlawful possession, going equipped for stealing, resisting arrest, possession of dangerous drugs, possession of apparatus fit for using dangerous drugs, possession of dangerous drugs for unlawful trafficking, and possession of offensive weapon. In addition, free legal representation is available in extradition proceedings. In 1988, 15 609 adult and juvenile defendants facing 21 792 charges were assisted by the Duty Lawyer Scheme.

      The Legal Advice Scheme operates eight centres in Sha Tin, Tsuen Wan, Wan Chai, Eastern, Mong Kok, Wong Tai Sin, Kwun Tong and Yau Ma Tei District Offices. Each centre opens once a week in the evening. Members of the public can approach any of the scheme's referral agencies to make an appointment to see a lawyer at the centre convenient to them. Generally, clients can see a lawyer within 14 days. However, in genuinely urgent cases, special arrangements are made for an early appointment. The scheme has over 100 referral agencies, including all District Offices, Caritas Services Centres and many other social services bodies. There are 355 lawyers (barristers and solicitors) on the Legal Advice panel. They are rostered to give advice at the various centres bi-monthly, and give their service completely without charge. Over 3 200 clients are advised by the volunteer lawyers each year. Legal advice may be sought on any issue, but the most frequent enquiries concern matrimonial, employment, and landlord and tenant problems.

      The Tel-law Scheme was introduced in 1984. It provides taped legal information by telephone. Each taped message lasts 2.5 minutes and is available in both English and Chinese. There are over 60 tapes available. The main purpose of the service is to provide basic information on the legal aspects of everyday problems, and to encourage people who have such problems to use the Free Legal Advice Scheme. The tapes are updated as necessary, and cover matrimonial, landlord and tenant, criminal, financial, employment and some administrative law. New tapes are added when a new subject is identified as being of interest to the public. During the year, Tel-law handled 37 582 calls.

4

Implementation of

The Sino-British Joint Declaration

05合中

價聲機 間

88

THIS was another fruitful year in the implementation of the Sino-British Joint Declaration on the Question of Hong Kong.

      The close co-operation and liaison that have been built up over the past three years between the British and Chinese sides have paved the way for good progress to continue to be made in both the Joint Liaison Group and the Land Commission. It was also an important year in that the Draft Basic Law for the Hong Kong Special Administrative Region of the People's Republic of China (For Solicitation of Opinions) was published in April.

The Sino-British 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 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. In accordance with the provisions in Annex II to the Joint Declaration, the JLG has since July 1, 1988 taken Hong Kong as its principal base. The establishment here of the Offices of the British and Chinese Senior Representatives has made possible an even closer working relationship between the two sides, thus facilitating discussion in the JLG. The JLG will, nevertheless, continue to hold plenary sessions at least once in every annual cycle in London and Peking as well as in Hong Kong. The fourth cycle of meetings began with the tenth meeting which took place in London from September 20 to 23 and was followed by the eleventh meeting in Hong Kong from December 6 to 9.

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 which assists the two sides in finding practical and flexible solutions to the complex and unique problems with which they are presented. The overriding consideration of the two sides is to find solutions in the best overall interests of Hong Kong and its future.

Defence and Public Order

      Both in the JLG itself and in talks at expert level between JLG meetings, discussions continued during the year on the implementation of the Joint Declaration in respect of defence and the maintenance of public order. Agreement was reached on various practical

50

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

    arrangements relating to the resumption of border patrol responsibilities by the Hong Kong Police Force from the British Garrison. Information was exchanged on a wide range of practical matters. Such exchanges of information are important for developing under- standing between the two sides and will continue so as to ensure that there is a smooth transfer of defence responsibilities from Britain to China in 1997.

Travel and Identity Documents

In 1986 and 1987 the JLG considered and agreed on transitional arrangements for a wide range of travel and identity documents. The only Hong Kong travel documents remaining to be considered in this context were the Hong Kong Seaman's Identity Books and Seaman's Certificates of Nationality and Identity. These documents issued under Inter- national Labour Convention No. 108 are important for facilitating travel by those in seagoing employment. Following discussion at the ninth and tenth meetings of the JLG, transitional arrangements for these documents were agreed, thus marking the completion of the JLG's consideration of transitional arrangements for all existing Hong Kong travel and identity documents.

Terms of Service for the Judiciary

At the tenth meeting of the JLG, the two sides reached full agreement on revised terms of service for the Judiciary which will have important implications lasting beyond 1997. A major aim of the revised terms is to attract more local lawyers to join the Judiciary.

Court of Final Appeal

The Joint Declaration provides for the establishment of a court of final appeal in the Hong Kong Special Administrative Region. During 1988, the two sides began discussion of the establishment of such a court in Hong Kong before 1997.

Surrender of Fugitive Offenders

At the eleventh meeting of the JLG the two sides reached agreement on the basic principles for the future arrangements for the surrender of fugitive offenders between Hong Kong and foreign jurisdictions. Under the agreement, Hong Kong will be authorised to negotiate, conclude, and maintain after 1997 its own agreements with foreign jurisdictions.

Localisation of Laws

There is a large number of United Kingdom enactments which currently apply to Hong Kong. These United Kingdom enactments will cease to have legal effect in Hong Kong after 1997. It will, therefore, be necessary to 'localise' them before 1997, that is, to replace them by legislation enacted in Hong Kong which will survive 1997. At the eighth meeting of the JLG held in November 1987, the two sides agreed on the general principles relat- ing to the localisation of United Kingdom enactments. Agreement was subsequently reached at the tenth meeting of the JLG on the localisation of United Kingdom enact- ments relating to Admiralty jurisdiction in respect of civil proceedings. The Supreme Court (Amendment) Bill, which is the first piece of localised legislation, will be introduced into the Legislative Council in January 1989.

Air Service Agreements

Negotiations on Hong Kong Air Service Agreements (ASAs) continued throughout the year. ASAs were signed with Switzerland and with Canada on January 26, 1988 and June

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

51

24, 1988 respectively. The former will enter into force on completion of Swiss constitutional procedures, and the latter entered into force on the date of signature.

Sub-group on International Rights and Obligations

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

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 eight meetings and has made good progress. In 1988, expert exchanges in the sub-group have led to agreement between the two sides at the JLG on Hong Kong's continued participation in the following organisations after 1997:

World Health Organisation: the SAR should maintain the present direct contacts with the World Health Organisation and should continue to participate in the Organisation's Regional Committee in its own capacity.

International Hydrographic Organisation: the SAR should continue to participate in activities of the International Hydrographic Organisation and produce its own navigational charts for Hong Kong waters.

International Atomic Energy Agency: the SAR should continue to participate in activities of the International Atomic Energy Agency and receive technical assistance from the agency.

Asia-Pacific Telecommunity: the SAR should continue to be an Associate Member of the Asia-Pacific Telecommunity. Hong Kong entities may, upon the nomination of the Hong Kong SAR Government, continue to be Affiliate Members.

     • United Nations Commission on Narcotic Drugs: Hong Kong's current participation in the United Nations Commission on Narcotic Drugs will be maintained.

Interpol: Interpol Hong Kong should continue to be a Sub-bureau of Interpol and should continue with its present participation.

Land Commission

The Sino-British Land Commission was established in 1985 in accordance with Annex III to the Joint Declaration. Its function is to conduct consultations on the implementation of the provisions of Annex III on land leases and other related matters. The commission is com- posed of three officials on each side. Meetings of the commission are held in Hong Kong.

       During 1988, the Land Commission held two formal meetings. Agreement was reached on the 1988-9 Land Disposal Programme to make available about 155 hectares of land, including 31.5 hectares for Container Terminal No. 7 and 60 hectares for the University of Science and Technology. In addition, the Land Commission agreed that a further five hectares of land may be released for commercial, residential and industrial development in the course of the year, if there was a demand for it. So far, 1.9 hectares have been added to the Land Disposal Programme.

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 cost of land production, be shared equally between the Hong Kong Government and

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IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

the future Special Administrative Region (SAR) Government. The average cost of land production is determined and adjusted by the Land Commission annually, and for the 1988-9 financial year, the agreed figure was $2,150 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. The fund is managed under the direction and advice of an Investment Committee, which includes among its members prominent bankers in Hong Kong, as well as a monetary expert of the Hong Kong Government. Over $9,700 million, representing the future SAR Government's share of premium income for the period May 27, 1985 to September 30, 1988, has been transferred to the fund. The Hong Kong Government's share, including the cost of land production, stands at around $10,910 million.

The Basic Law

Paragraph 3(12) of the Joint Declaration provides that the basic policies of the People's Republic of China (PRC) regarding Hong Kong will be stipulated in a Basic Law of the Hong Kong Special Administrative Region by the National People's Congress (NPC) of the PRC, and will remain unchanged for 50 years. For the purpose of drafting the Basic Law, the Chinese Government appointed a Basic Law Drafting Committee (BLDC), which comprises mainland as well as Hong Kong members. A Basic Law Consultative Committee (BLCC), consisting exclusively of Hong Kong members of broad representation, was also established to solicit extensively the views of Hong Kong people on the draft Basic Law.

      After more than two years of deliberations in the BLDC, the first complete draft of the Basic Law, called 'The Draft Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China (For Solicitation of Opinions)', was published in April subsequent to its endorsement at the Seventh BLDC Plenum. A five-month consultation exercise, conducted by the BLCC, was then held in Hong Kong. Two delegations of the mainland members of the BLDC, led by senior Chinese officials, visited Hong Kong in June and September to canvass public opinion on the Draft Basic Law at first hand.

A wide range of views on various aspects of the Draft Basic Law were expressed during the consultation period. In June and July, both Houses of the British Parliament debated the document. On both occasions, Her Majesty's Government, as a co-signatory of the Joint Declaration, reaffirmed their commitment to ensuring the full and faithful reflection of the Joint Declaration in the Basic Law. Debates on the Draft Basic Law were also held in the Legislative Council, the two Municipal Councils and a number of District Boards. The records of some of these debates, including those of the Legislative Council debate held in July, were conveyed to the Chinese Government through diplomatic channels.

In November, the five Special Groups under the BLDC resumed discussion to consider how the first draft of the Basic Law should be revised. A second draft, subject to endorsement by the Standing Committee of the NPC, is expected to be published in early 1989 for further public consultation. The Basic Law will be enacted by the NPC in 1990.

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The Economy

FOLLOWING two consecutive years of double-digit economic growth, the overall growth rate of the Hong Kong economy was more moderate in 1988. The growth momentum of domestic exports eased further during the first half of the year. The year-on-year growth rate in real terms of domestic exports declined from 23 per cent for 1987 as a whole to 11 per cent in the first quarter and six per cent in the second quarter of 1988, while in the third and the fourth quarters the corresponding growth rates were eight per cent and 11 per cent. The gross domestic product (GDP) rose by an estimated 7.4 per cent in real terms in 1988. Reflecting a more balanced pattern of growth between external demand and domestic demand, domestic exports rose by about 8.9 per cent, and total domestic demand by about 7.2 per cent, in real terms in 1988.

       With the economy operating virtually at full capacity, conditions in the labour market remained tight and vacancies were widespread. The seasonally adjusted unemployment rate fell to 1.3 per cent towards the end of 1988. Earnings in the manufacturing sector and in most of the service sectors increased significantly in money terms. After discounting the effect of inflation, the gains in real terms in many of those sectors were still significant.

      In the property market, demand for residential and commercial property was strong during 1988. Prices and rentals for these two types of property recorded significant increases over their levels in 1987. However, there were signs of stabilisation in the market for industrial property towards the end of the year. Investment in both plant and machinery, and building and construction remained strong.

      The Consumer Price Index (A), as one of the major indicators of inflation, averaged 7.5 per cent higher in 1988 than in 1987. The corresponding figure for 1987 over 1986 was 5.5 per cent. The rate of increase in consumer prices experienced in 1988 was higher than the average annual increase of 5.4 per cent recorded over the last five years, but was still below the average of 8.9 per cent for the past decade.

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, fuels, and even water. It must, therefore, export on a sufficient scale to generate the foreign exchange earnings to pay for those 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 1988 the total value of visible trade (comprising domestic exports, re-exports and imports) amount- ed to 234 per cent of the GDP. If the value of imports and exports of services is also included, this ratio becomes 267 per cent. Between 1978 and 1988, Hong Kong's domestic exports grew at an average annual rate of about eight per cent in real terms, which was

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roughly twice the growth rate of world trade. As a result, Hong Kong ranks high among the world's trading economies.

Contributions of the Various Economic Sectors

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 shares 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. It was 23 per cent in 1983, 24 per cent in 1984, and stabilised at about 22 per cent during the period 1985 to 1987. The share of the construction sector in the GDP increased from four per cent in 1970 to eight per cent in 1981. It then declined to seven per cent in 1982 and six per cent in 1983, before settling at about five per cent during the period 1984 to 1987.

The contribution of the tertiary service 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. It fell to around 62 to 64 per cent during the period 1983 to 1986, before rising to 65 per cent in 1987.

The tertiary service 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 nine per cent. The con- tribution 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 slump in the property market. In 1987, the contribution of this sector to the GDP stood at 18 per cent. With regard to employment, the most notable change since the early 1970s was that, whereas employment in the manufacturing sector still accounts for the largest proportion of the employed workforce, its share has been on a continuous decline, from 47 per cent in 1971 to 41 per cent in 1981, and further to 32 per cent in 1988. On the other hand, the share of the tertiary service sectors as a whole in the total employment increased from 41 per cent in 1971 to 47 per cent in 1981, and further to 57 per cent in 1988.

Nature and Relative Importance of Manufacturing

Although 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 growing competition from other economies have led to local manufacturers intensifying their efforts 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.

Manufacturing 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 supporting an extensive local sub-contracting system has greatly facilitated the necessary shifts in production and has helped to increase

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the flexibility of the economy. Moreover, increasing use has been made of the outward processing facilities in China for handling some of the 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 concentration in the production of light manufactures.

Over the past 30 years, many 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, electrical appliances, watches and clocks, toys, jewellery, and printing and publishing.

During the period 1973 to 1986, the value of net output by the manufacturing sector grew at an average annual rate of 16 per cent, while manufacturing employment grew at an average annual rate of only three per cent. Thus, a significant secular improvement in labour productivity was apparent, even taking into account the price factor in the value of net output.

Within the manufacturing sector, the most significant change occurred in the textiles industry. The share of this industry in the net output of manufacturing declined from 27 per cent in 1973 to 18 per cent in 1986, and its share in manufacturing employment from 21 per cent to 14 per cent. Offsetting this decline was the expansion of the clothing, electrical appliances and electronics, and watches and clocks industries. Between 1973 and 1986, 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 three 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 one per cent to three per cent respectively.

Domestic exports in 1988 consisted principally of wearing apparel and clothing acces- sories (31 per cent of the total value), electronics (26 per cent), watches and clocks (eight per cent), textiles (seven per cent), plastic products (five per cent), electrical household appliances (three per cent), and metal products (three per cent). In terms of the shares in the total value of domestic exports, the most significant change over the past ten years has been the decline in the relative importance of clothing, from 39 per cent in 1978 to 31 per cent in 1988. This decline was offset by increases in the relative importance of such commodities as telecommunications and sound recording and reproducing equipment, electrical machinery and appliances, and office machines and automatic data processing equipment. The share of these three commodity groups in the total value of domestic exports rose from 15 per cent in 1978 to 22 per cent in 1988.

Market diversification is the combined result of the initiatives taken by local manufac- turers and exporters, and the promotion efforts financed by the government. Since the late 1950s, the United States has been the largest market for Hong Kong's domestic exports, 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 South East Asian economies has also increased. In recent years, China has become the second largest market for Hong Kong's domestic exports. In addition, Hong Kong has diversified further into new markets, including countries in the Middle East, Eastern Europe, Latin America and Africa.

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.

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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 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 ten years, and 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 1988, there were 158 licensed banks in Hong Kong, 35 of which were locally incorporated. They maintained a total of 1 397 offices in Hong Kong. In addition, there were 148 representative offices of foreign banks. The total deposit liabilities of all the licensed banks to customers at the end of the year was $779 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 1988, there were 35 licensed deposit-taking companies, and their total deposit liabilities to customers was $31 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 1988, there were 216 registered deposit-taking companies, and their total deposit liabilities to customers was $36 billion.

      Following a review of this three-tier system in consultation with the industry, the Commissioner of Banking is formulating a series of proposed changes to the system.

Apart from deposit-taking, conventional lending and foreign exchange dealings, banks and deposit-taking companies in Hong Kong are increasingly diversifying into other

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      financial services, including securities business, fund management, investment advice and insurance.

      Dealers in securities, investment advisers, commodity dealers and commodity trading advisers and their representatives are required to be registered with the Office of the Commissioner for Securities and Commodities Trading. At the end of 1988, there were 6 892 persons so registered. In addition, 268 persons had been granted exempt status under the Securities Ordinance.

       Only members of the Stock Exchange of Hong Kong Limited are permitted to trade on the Stock Exchange. At the end of 1988, the Stock Exchange had 739 corporate and individual members. Only shareholders who have applied for and been granted member- ship of the Hong Kong Futures Exchange Limited can trade on the Futures Exchange. At the end of 1988, the Futures Exchange had 83 members and 151 shareholders.

       Insurance companies are authorised by the Insurance Authority to transact insurance business in Hong Kong. At the end of 1988, there were 276 authorised insurance com- panies. Of these, 149 were overseas companies from 29 countries.

Financial Markets

Hong Kong has a mature 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 Canadian dollar, the Australian dollar and the Hong Kong dollar. Banks and deposit-taking companies also participate in the Hong Kong dollar forward market, which has become increasingly active since the introduction in February 1987 of standard terms and conditions by the Hong Kong Association of Banks. 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 authorised institutions in Hong Kong, and between local and overseas institutions. This market is mainly for short-term money - with maturities ranging from overnight to six months for Hong Kong dollars and to twelve months for US dollars. The traditional lenders of Hong Kong dollars in the market tend to be the locally-incorporated banks, while the major borrowers are those foreign banks without a strong Hong Kong dollar deposit base in Hong Kong. As an indication of the size of the market, at the end of 1988, interbank liabilities accounted for 35 per cent of the total Hong Kong dollar liabilities of the banking sector; the corresponding share for foreign currency interbank liabilities was 78 per cent.

      The term 'capital market' as commonly used in Hong Kong refers to the market in private sector negotiable debt instruments. (The only government debt instrument out- standing in the market is the $1 billion negotiable five-year bond issued in 1984, which, however, is virtually locked up by investors as a long-term investment and seldom traded.) The two main types of debt instruments traded in the market are certificates of deposit issued by authorised institutions and commercial paper issued by other types of companies. This market has developed rapidly over the past few years or so, gaining momentum from

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the global trend of securitisation, the importation of innovative financial products, and the moderate interest rates during most of the period.

The stock market continues to provide one of the important sources of capital for local enterprises, attracting interest from both local and overseas investors. At the end of 1988, 303 public companies, with a total market capitalisation of $583 billion, were listed on the Stock Exchange. This made it the third largest stock market in Asia outside Japan.

The Hong Kong Futures 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 commenced trading on May 6, 1986.

The Chinese Gold and Silver Exchange Society operates one of the four largest gold bullion markets in the world. Gold traded through the Society is of 99 per cent fineness, weighed in taels (one tael equals to approximately 1.2 troy ounces) and quoted in Hong Kong dollars. After allowing for exchange rate fluctuations, prices follow closely those in the other major gold 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 supervi- sion 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 the registration of dealers, dealing partnerships, investment advisers and other intermediaries, and also provides for the investigation of suspected malpractice and the maintenance of a Compensation Fund to compensate clients of defaulting stockbrokers.

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

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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 Commissioner for authorisation.

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 provisions for the maintenance of a Compensation Fund to compensate clients of defaulting commodity dealers.

      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 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.

The Securities Review Committee

Following the stock market crash in October 1987, the Governor appointed a Securities Review Committee (SRC) to review the operation and management of the Stock and Futures Exchanges and of the various regulatory bodies in Hong Kong. The report of the committee was published in June 1988. The committee recommended, inter alia, the establishment of a new regulatory authority outside the Civil Service to replace the existing regulatory structure. It also recommended a fundamental revision of the constitution and management of the two exchanges. On the settlement system for stock transactions, the committee recommended that the old arrangements, which were unable to cope with sudden increases in trading volume, should be replaced by a central clearing system under the management of a new statutory clearing house. It also recommended an extension of the settlement period.

      The government announced its acceptance of the general thrust of the committee's recommendations following the publication of its report. A special unit in the Monetary Affairs Branch was set up to facilitate the early implementation of these recommendations. It was decided that a new regulatory body, to be called the Securities and Futures Commission, should be established as soon as practicable. A bill establishing the com- mission and empowering it to function effectively during its initial stage of operation will be introduced into the Legislative Council on January 18, 1989. The new commission is expected to begin operation within the first half of 1989. It will take over the functions and responsibilities of the former Securities Commission, Commodities Trading Commission

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and the Office of the Commissioner, as recommended by the SRC. Further steps will be taken over the next 18 months, with a view to bringing Hong Kong in line with the major international financial centres regarding securities regulation.

       The two exchanges have undergone substantial changes both in their constitution and in their management since the events in October 1987. After a successful reconstitution exercise, which was completed within one year of the crash, the Stock Exchange now has a more broadly-based and representative council consisting of lay, individual and corporate members. The Stock Exchange and other parties involved, including a number of major banks, are now working on the detailed design of a new settlement system, which should be in place by early 1990. The Futures Exchange has reached an advanced stage in its reconstitution exercise. It has also prepared a new set of rules aimed at significantly strengthening its risk-management system, which involves a clear delineation of respon- sibilities among the clearing house, the brokers and the exchange itself, and the establish- ment of a properly-constituted guarantee fund. These reforms will be introduced shortly.

      Thus, in less than 18 months, Hong Kong has been able to rectify most of the important weaknesses which were revealed during the market collapse in October 1987. The new Securities and Futures Commission will proceed to implement a large number of relatively minor recommendations of the Securities Review Committee.

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 strong links with China and with other economies in the South-east Asian region as well as excellent communications with the rest of the world, has helped Hong Kong to develop into an important international financial centre.

      A total of 77 of the licensed banks were among the top 100 banks in the world in 1988. Most of the foreign banks in Hong Kong 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 50 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 interna- tional flows of savings and investment, particularly through the syndication of loans and international fund management. International investors play a significant and increasing role in Hong Kong, and Hong Kong's investment 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 led to a rapid increase in economic links between Hong Kong and China, with a profound impact on the growth and development of the Hong Kong

economy.

      The most conspicuous development has been the rising importance of China as Hong Kong's trading partner. Between 1978 and 1988, merchandise trade between Hong Kong and China grew by 39 per cent per annum in Hong Kong dollar value terms. In 1988, this amounted to $289 billion. Since 1985, China has been Hong Kong's largest trading partner. China is now the largest market for Hong Kong's re-exports, and the second largest market

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for Hong Kong's domestic exports. China is also the largest supplier of goods to Hong Kong. In 1988, China accounted for 29 per cent of Hong Kong's overall external trade (17 per cent of its domestic exports, 34 per cent of its re-exports, and 31 per cent of its imports). Reciprocally, Hong Kong overtook Japan to become China's largest trading partner in 1987, and accounted for 27 per cent of China's overall external trade in that year (35 per cent of its exports and 19 per cent of its imports).

       On entrepôt trade, China has, since 1979, been Hong Kong's largest re-export market as well as the largest source of goods re-exported through Hong Kong. In 1988, nearly 80 per cent of Hong Kong's re-exports were related to China, either as a market or as a source of supply.

       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 1988, about 16.5 million trips were made to China by Hong Kong residents. Another 1.2 million 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 between Hong Kong and China has grown substantially in recent years. For cargo transport, the average annual growth rates in tonnage terms between 1979 and 1988 were about 10 per cent for inward cargo from China and about 49 per cent for China-bound outward cargo. Part of these cargo movements were transhipments. Most of the cargo was transported by water, although an increasing proportion was carried by road. Passenger traffic grew by an average of 21 per cent per annum between 1979 and 1988. The increase was mainly in trips by rail and, to a lesser extent, by water and air.

       Reflecting the increased financial links between Hong Kong and China in recent years, the external liabilities of Hong Kong's financial institutions to banks in China rose from $213 million at the end of 1979 to $59.1 billion at the end of 1988. During the same period, the external claims of Hong Kong's financial institutions on banks and other enterprises in China rose from $5.9 billion to $99.9 billion. Apart from being a source of funds, Hong Kong has 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 light manufacturing industries such as electronics, plastics, textiles and wearing apparel, and in hotels and tourist-related facilities. Most of the investment is in joint ventures of various forms with Chinese enterprises. Hong Kong is now the most important source of external investment in China, accounting for 50 to 70 per cent of the total. Moreover, many Hong Kong manufacturers have established compensation trade and outward processing arrangements with Chinese enterprises, mainly those in the Pearl River Delta region and the Shenzhen Special Economic Zone. On the other hand, enter- prises involving Chinese interests have increased their investment in Hong Kong in recent years. Their activities have also diversified from the traditional banking, and trade and related activities, like transportation and trade financing, to such new areas as property development, stock broking, manufacturing, supermarkets, hotels and infrastructural projects.

      The growing economic relations between Hong Kong and China have brought great bene- fits to both economies, and have added a new dimension to Hong Kong's economic growth.

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The Economy in 1988

THE ECONOMY

Following two consecutive years of double-digit economic growth, the overall growth rate of the Hong Kong economy was more moderate in 1988. There was a marked deceleration in the growth rate of domestic exports. Re-exports, however, continued to grow rapidly. In line with the consolidation of the economy, there was also a slow-down in the growth rate of domestic demand.

With the economy operating virtually at full capacity, the unemployment rate remained low throughout the year, and vacancies were widespread. The rate of consumer price inflation increased, although in terms of the average annual rate of inflation it was still lower than the average figure recorded over the past decade. The demand for residential and commercial property was strong, with significant increases in prices and rentals for these two types of property. The market for industrial property, however, showed signs of stabilisation towards the end of the year.

     Preliminary estimates show that the growth rate in real terms of the GDP was seven per cent in 1988, following increases of 12 per cent in 1986 and 14 per cent in 1987. Thus, the economy grew at an average annual rate of 11 per cent over the past three years, an enviable record by any standards. Economic growth in 1988 showed more balanced contributions from external demand and domestic demand.

External Trade

In 1988, domestic exports grew by 11 per cent in money terms, or by about nine per cent in real terms. This represents a marked slow-down when compared with an increase of 27 per cent in money terms, or 23 per cent in real terms, recorded in 1987. The slow-down was concentrated in the first half of 1988, when the year-on-year growth rates in real terms of domestic exports were 11 per cent in the first quarter and six per cent in the second quarter. In the third and the fourth quarters, the corresponding growth rates were eight per cent and 11 per cent. The slower growth in overall imports in some of the major overseas markets, and the restraining effect on the external competitiveness of Hong Kong's products as the US dollar gained some strength during the first nine months of 1988, contributed to this deceleration in the growth rate of domestic exports.

Domestic exports to the various major markets showed a mixed performance in 1988. Significant growth was recorded for domestic exports to the United Kingdom (at about 16 per cent in real terms) and Japan (22 per cent). Domestic exports to the Federal Republic of Germany grew by only four per cent. Domestic exports to China, which was Hong Kong's second largest market, grew by about 34 per cent in real terms. This strong growth reflected partly the continued surge in imports by China to satisfy its own demand, and partly the increase in outward processing activities. On the other hand, domestic exports to the United States, which was Hong Kong's largest market, recorded a decline of two per cent in real terms. As a result of the decline in relative importance of the United States as a market, Hong Kong's domestic exports to that country dropped to 33 per cent in 1988, from 37 per cent in 1987 and 42 per cent in 1986. The continuing efforts of local manufacturers and exporters to diversify their markets also contributed to this development.

In terms of the major product categories, domestic exports of clothing increased by about two per cent in real terms in 1988 over 1987, while those of textiles dropped by about four per cent. They still accounted for 31 per cent and seven per cent respectively of the total value of domestic exports in 1988. Domestic exports of radios dropped substantially by about 35 per cent in real terms. However, substantial increases were recorded in domestic exports of electronic components (about 44 per cent in real terms), metal manufactures (20 per cent), and watches and clocks (20 per cent).

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In 1988, re-exports grew by 51 per cent in money terms, or by about 46 per cent in real terms, following an increase of 49 per cent in money terms, or 46 per cent in real terms, in 1987. This rapid growth was a result of the buoyant entrepôt trade with China in particular and with the Asia-Pacific region generally.

      While China continued to feature prominently both as a source and as a market for Hong Kong's re-exports, the value of those re-exports which were not related to China also grew rapidly. Besides China, the other major re-export markets were the United States, Japan, Taiwan, the Republic of Korea and Singapore. With regard to the origin 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, which represented 39 per cent and 42 per cent respectively of the total value of re-exports in 1988. Re-exports of electrical machinery, sound recording and reproducing equipment, clothing, textile yarn, and textile fabrics and made-up articles showed more rapid increases than those of other commodity items.

      Imports grew by 32 per cent in money terms or by about 27 per cent in real terms in 1988, compared with increases of 37 per cent and 32 per cent respectively in 1987. The major sources of Hong Kong's imports were China, Japan, Taiwan, the United States, the Republic of Korea and Singapore. A major part of this growth was attributable to the upsurge in re-export trade. There was, however, an increase of about 12 per cent in real terms in retained imports. Retained imports of capital goods and of raw materials and semi-manufactures, in particular, grew by about 16 per cent and 14 per cent respectively in 1988 over 1987.

      As the value of total exports (domestic exports plus re-exports) was smaller than that of imports, a visible trade deficit of $5,729 million, equivalent to 1.1 per cent of the total value of imports, was recorded in 1988. If an estimate of the imports of gold for industrial and commercial use is included, the deficit was $8,105 million. This compares with a visible trade surplus of only $87 million (or a deficit of $1,955 million after a similar adjustment for gold imports) recorded in 1987. As the prices of imports rose slightly faster than those of total exports in 1988, the terms of trade deteriorated slightly when compared with 1987.

Domestic Demand

As the overall growth rate of the economy became more moderate, the growth rate in real terms of domestic demand also slowed down, from 12 per cent in 1987 to seven per cent in 1988. Private consumption expenditure grew by eight per cent in real terms in 1988, following an increase of 11 per cent in 1987. Government consumption expenditure grew by six per cent in real terms, while the corresponding growth rate in the preceding year was four per cent. It was the third consecutive year that the growth rate of government consumption expenditure was below that of the GDP, reflecting the government's policy of keeping the growth in public expenditure under control. Investment demand, measured in terms of the gross domestic fixed capital formation, grew by five per cent in real terms in 1988, compared with an increase of 15 per cent in 1987. Among its main components, expenditure on building and construction showed little change in real terms in 1988. On the other hand, expenditure on plant, machinery and equipment grew by 13 per cent in real terms. This rapid growth was prompted in part by the difficulty in recruiting labour, resulting in the adoption of more labour-saving production methods.

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     Conditions in the labour market remained tight throughout 1988. Stronge demand for labour was experienced in virtually all sectors. Both the unemployment rate and the underemployment rate were at very low levels during the year. In the fourth quarter, the seasonally-adjusted unemployment rate was at an historic low of 1.3 per cent and the underemployment rate was 0.7 per cent. The corresponding figures in the fourth quarter of 1987 were 1.9 per cent and 1.0 per cent.

      Manufacturing output, as measured by the index of industrial production, was five per cent higher in the first three quarters of 1988 than in the same period in 1987. This compares with an increase of 16 per cent for 1987 over 1986. Part of these increases in output were derived from a general improvement in labour productivity, given the substantial invest- ment in plant and machinery over the past few years. Shifting the more labour intensive production processes to China has also helped to increase labour productivity in the local manufacturing sector.

Between September 1987 and September 1988, manufacturing employment decreased by four per cent to 844 600, while employment in the service sectors as a whole increased by eight per cent to 1 264 800. Thus, the relative shift in employment from the manufactur- ing sector to the service sectors continued in 1988. Among the various service sectors, employment in the wholesale, retail and import/export trades increased by 10 per cent, that in restaurants and hotels by two per cent, and that in financing, insurance, real estate and business services by 10 per cent in September 1988 over a year earlier. Employment on building and construction (including civil engineering) sites rose by two per cent over this period. For the building and construction industry as a whole, employment (covering both site workers and non-site workers) increased by seven per cent.

The strong demand for labour allied to its limited supply led to a sustained increase in labour incomes. Between September 1987 and September 1988, nominal earnings rose significantly in the manufacturing sector and in most of the service sectors. For example, payroll per person engaged was higher by 14 per cent in manufacturing, by 20 per cent in financial institutions, by 13 per cent in the wholesale, retail and import/export trades, by 18 per cent in restaurants and hotels, and by 17 per cent in transport, storage and communication. After discounting the effect of inflation, the gains in real terms in many of those sectors were still significant. With an annual increase of over 20 per cent in nominal wages, construction workers generally enjoyed a substantial improvement in real income.

The Property Market

The demand for residential and commercial property was strong during 1988, and the take- up rates were at a high level. Trading in the property market was active during most of the year. Prices and rentals for most major types of property recorded significant increases over their levels in 1987. Increased household incomes and a general desire for home ownership contributed to the strong demand for residential flats, and this gave rise to speculative activities in some of the new residential developments. The market for shopping and office space, particularly in the prime locations, was tight. While the demand for shopping space was supported by a high level of retail sales to both local residents and incoming tourists, the demand for office space reflected the flourishing external trade and the increasing importance of Hong Kong as a major commercial and financial centre in the region. The demand for flatted factories, however, showed signs of stabilisation towards the end of the year.

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      In line with the general increase in property prices and rentals, land prices were also driven higher in 1988. Almost all lots put out at government auctions during the year were favourably received.

The Financial Scene

The major financial markets in Hong Kong generally exhibited less volatility in 1988 than in 1987. Monetary and credit expansion became more moderate, against the background of firmer interest rates and a more moderate growth rate of the economy.

      Speculation on a revaluation of the Hong Kong dollar, which began in late 1987 and continued in January 1988, caused a temporary strengthening of the exchange rate to HK$7.76 against the US dollar. However, the speculative pressure subsided rapidly thereafter in the face of the government's determination to maintain the linked rate at HK$7.80 to US$1 and the threat of imposing charges on large Hong Kong dollar deposits under the Interest Rates Rules announced by the Hong Kong Association of Banks. For the rest of 1988, the exchange rate of the Hong Kong dollar moved within a narrow range of HK$7.7600 to HK$7.8220. During 1988, the Hong Kong dollar fluctuated, along with the US dollar against other major currencies. Thus the overall exchange value of the Hong Kong dollar, measured in terms of the effective exchange rate index, moved within a range of 99.5 to 103.7 and closed the year at 100.6. At the end of 1987, the index was 100.5.

      Apart from a short period at the beginning of 1988 when local interest rates were depressed to very low levels in response to the inflow of speculative funds, interest rates in Hong Kong generally followed an upward trend over the course of the year, in line with increases in US dollar interest rates. At the end of 1988, the interest rates set by the Hong Kong Association of Banks on savings deposits and three-month deposits with banks stood at 5.25 per cent and 6.5 per cent respectively. The best lending rate was 10 per cent. These rates were significantly higher than those recorded at the end of 1987, at 1.5 per cent, 2 per cent and 5.5 per cent respectively.

Loans for use in Hong Kong including those to finance trade, grew by 30 per cent in 1988, the same as in 1987. At the end of 1988, local loans accounted for 55 per cent of the total amount of loans and advances outstanding. Total deposits (in all currencies) with authorised institutions, on the other hand, grew by 20 per cent during 1988, compared with 28 per cent in 1987. Analysed by major currencies, deposits denominated in Hong Kong dollars and in US dollars continued to grow less rapidly than those denominated in other currencies. The growth rates for these three categories of deposits during 1988 were 12 per cent, 20 per cent and 35 per cent respectively. As a result, the proportion of Hong Kong dollar deposits in the total fell from 44 per cent at end-1987 to 41 per cent at end-1988. To a large extent, the rapid increases in foreign currency deposits were the result of measures taken by a number of authorised institutions to compete for deposits, such as the acceptance of foreign currency deposits in lower minimum denominations, the offer of a greater variety of currencies, and the introduction of deposits with less exchange rate risks to depositors. The monetary aggregates, on all definitions, grew at slower rates in 1988 than in 1987. HK$M3, for example, grew by 13 per cent during the year, following an increase of 27 per cent in the preceding year.

The market for debt instruments experienced a modest recovery towards the end of 1987 and at the beginning of 1988, as local interest rates were depressed during the period. The rise in local interest rates since February, however, dampened investor interest in debt instruments, particularly those on fixed-rate terms. For 1988 as a whole, the Securities

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Commission authorised a total of 65 issues of negotiable certificates of deposit, of which 46 were fixed-rate issues. Most of the fixed-rate issues were authorised in the first quarter of the year. At the end of 1988 the total value of certificates of deposit outstanding amounted to $34 billion, the same as that a year ago.

      The local stock market was less volatile in 1988 than in 1987. The Hang Seng Index moved within the range of 2 220 and 2 770 during 1988, ending the year at 2 687. The total volume of turnover for the year as a whole, at $200 billion, was much lower than in the preceding year, at $371 billion. In 1988, a total of 26 companies raised $2,487 million from the market by new share issues, 29 companies raised $6,280 million by rights issues, and another 32 companies raised $7,037 million by private placements. The total amount of funds raised during the year was thus $15.8 billion, substantially lower than the sum of $44.1 billion raised in 1987.

      Trading in the market for Hang Seng Index futures contracts was subdued in 1988. The total turnover amounted to 140 000 contracts, well below the 3.61 million contracts re- corded in 1987. Trading in soyabean futures was boosted during the first half of the year by reports of a severe drought in the US Midwest, but became less active during the second half. In 1988, a total of 356 642 lots of soyabeans (30 000 kg each) were transacted. Trading in sugar and gold futures was more moderate, and their total turnovers were 201 461 lots (112 000 lbs each) and 1 984 lots (100 troy ounces each) respectively.

      The price of loco-London gold fluctuated between US$394 and US$489 a troy ounce, while the gold price on the Chinese Gold and Silver Exchange Society ranged between $3,690 and $4,525 per tael. Turnover on the latter exchange totalled 59 million taels in 1988, compared with 64 million taels in 1987.

Consistent with the recovery in stock market activity after the crash, there was some revival of interest in unit trust and mutual funds in 1988. At the end of the year, the total number of unit trusts and mutual funds authorised in Hong Kong (including the various sub-funds of umbrella funds) stood at 563, compared with 504 at the end of 1987.

Inflation

The rate of consumer price inflation, as measured by the Consumer Price Index (A), averaged 7.5 per cent in 1988, having risen from the corresponding figure of 5.5 per cent in 1987. This rate of inflation was higher than the average annual increase of 5.4 per cent recorded over the last five years, but was still below the average of 8.9 per cent for the past decade. The pressure of demand on resources within the economy, the surge in world commodity prices earlier in the year, and the higher prices of goods imported from China have all contributed to the increase in inflation.

Among the various components of goods and services in the CPI(A), foodstuffs, services, and clothing and footwear recorded the most rapid increases in prices in 1988 over 1987. Their respective rates of increase were 9.6 per cent, 9.1 per cent, and 9.1 per cent. These three components together accounted for 77 per cent of the overall increase in the CPI(A).

Government's Involvement in the Economy

Economic Policy

Economic policy in Hong Kong is to a large extent dictated, and constrained, by the special circumstances of the 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,

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      except where social considerations are regarded as over-riding, the allocation of resources in the economy will normally be achieved in the most efficient way 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 en- trepreneurs are highly motivated, given that all individuals have equal opportunity to pursue the goals of individual betterment and accumulation of wealth. The primary role of the government is seen as the provision of 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 impedi- ments 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 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.

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 (CIs) issued by the Exchange Fund, which the two note-issuing banks are required to hold as cover for the issue of Hong Kong dollar banknotes, 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 decrease 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. In the foreign exchange market, the exchange rate of the Hong Kong dollar continues to be determined by forces of supply and demand. However, the inter-play of arbitrage and competition between banks ensures that the market exchange rate stays close to the rate of HK$7.80 to US$1 fixed for the CIs.

With the adoption of the linked rate system, the exchange rate is no longer a variable in the economy's adjustment process. Under this system, interest rates, the money supply and the level of economic activity adjust automatically to balance of payments pressures.

       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.

To deter the persistent speculation on a revaluation of the Hong Kong dollar which emerged in late 1987 and continued in early 1988, the Hong Kong Association of Banks, after consultation with the Financial Secretary, introduced new Interest Rates Rules whereby banks may impose deposit charges ('negative interest rates') on large Hong Kong

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dollar credit balances maintained by their customers, if the need arises. In practice, however, there has been no need to impose the deposit charges, as the mere threat of their imposition has been effective in deterring the speculation.

      To enable the government, through the use of the Exchange Fund, to exercise more effective influence over the availability and price of money in the interbank market and thus to assist it better to maintain exchange rate stability within the framework of the linked- rate system, new accounting arrangements were entered into in mid-July 1988 between the Exchange Fund and the Hongkong and Shanghai Banking Corporation (HSBC) as the Management Bank of the Clearing House of the Hong Kong Association of Banks. Under these arrangements, HSBC is required to maintain, in an account newly-created with the Exchange Fund, a Hong Kong dollar balance which is no less than the net clearing balance (NCB) of the rest of the banking system. HSBC has to ensure that either its own balance in the account does not fall short of the NCB, or the NCB is not in debit. Otherwise it will have to pay an interest to the Exchange Fund. The Exchange Fund will use the account, at its discretion, to effect settlement of its Hong Kong dollar transactions with HSBC or with other banks.

Consequent upon these new accounting arrangements, the Exchange Fund effectively becomes the ultimate provider of liquidity in the interbank market, a role which until mid-July 1988 was performed by the HSBC. Through its borrowing Hong Kong dollars in the interbank market, or selling foreign currencies for Hong Kong dollars in the foreign exchange market, the Exchange Fund is now able to reduce the supply of liquidity and hence raise interest rates in the interbank market, and thus offset a weakening of the exchange rate of the Hong Kong dollar against the US dollar. Similarly, it may also increase the interbank liquidity and lower interest rates by taking such actions in the opposite direction, thereby offsetting a strengthening of the exchange rate.

      Along with these new accounting arrangements between the Exchange Fund and HSBC, the Treasury also maintains a Hong Kong dollar account with the Exchange Fund where money transferred from the General Revenue to the Fund in return for interest bearing debt certificates is accounted for. Through the issuance and redemption of the debt certificates under the new arrangements, the Exchange Fund has an additional tool to affect interbank liquidity.

      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 provides a further mechanism for the Exchange Fund to tighten up liquidity in the local money market, and thereby putting upward pressure on short-term market interest rates.

The Exchange Fund

The Hong Kong government's Exchange Fund was established by the Currency Ordinance 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.

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      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 everyday 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 Chartered Bank 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. Since October 17, 1983, when the Hong Kong dollar was linked to the US dollar, certificates of indebtedness have been issued to and redeemed from 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 relate 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. However, the five-cent coins will be withdrawn from circulation from January 1, 1989. The total currency in circulation at the end of 1988, with details of its composition, is shown at Appendix 9.

Public Sector and Public Finances

In accounting terms, the public sector is conventionally taken to include the Hong Kong Government itself, together with the Housing Authority and the Urban and Regional Councils. Government grants to institutions in the private or quasi-public sectors are included but expenditure by organisations in which the government has only equity, 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. Five other funds exist mainly to finance capital expenditure and to make loans. They are the Capital Works Reserve Fund, the Development Loan Funds, the Lotteries Fund, the Mass Transit Fund the the Student Loan Fund. Following the enactment of the Housing (Amendment) Ordinance 1988 which reorganised the Hong Kong Housing Authority and its financial relationship with the government, the Home Ownership Fund, which had been in operation since 1977, was de-established. Under the new arrangements, the assets and liabilities of the Home Ownership Fund as at March 31, 1988 were handed over to the authority on April 1, 1988 to form part of the permanent government capital of the authority.

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The Capital Works Reserve Fund finances the Public Works Programme and land acquisitions. Since April 1, 1988, it has also covered capital subventions and major equipment systems previously financed from the General Revenue Account. On May 27, 1985 when the Sino-British Joint Declaration came into effect, the fund was re-structured to enable the premium income obtained from land transations to be accounted for in accordance with the arrangements in Annex III to the Joint Declaration. The income of the fund is derived mainly from premia and transfers from the General Revenue Account.

The Development Loan Fund is used mainly to finance social and economic develop- ments. The fund's income is derived from interest payments and capital repayments and transfers from the General Revenue Account. On April 1, 1988, following the enactment of the Housing (Amendment) Ordinance 1988, the outstanding balance of loans to the Housing Authority under this fund was waived and capitalised to form part of the per- manent government capital of the authority.

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.

Management of the Budget

The government manages its finances against the background of a rolling five-year Medium Range Forecast of expenditure and revenue. This models the consolidated financial position of the General Revenue Account and of all the funds except the Lotteries Fund. Expenditure projections are regularly updated to take account of expected increases in the demand for and supply of government services. Revenue projections are made and updated to reflect the government's fiscal policies, changes in fees and charges for government services, and the general economic outlook.

     A number of key principles underlie the government's management of public expendi- ture. 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, erring on the side of surplus to ensure that the government maintains adequate reserves. The third is that at least half of the government's capital expenditure should be financed from operating surpluses - the excess of recurrent revenue over recurrent expenditure. Other guiding principles concern taxation policy, capital spending, and the rate of growth of the Civil Service.

The Budget presented by the Financial Secretary to the Legislative Council each year is developed against the background of the Medium Range Forecast to ensure that full regard is given to these principles and to longer-term trends in the economy.

      In recent years the Administration has embarked on a programme of internal financial management reforms which are intended to help departments, and the government as a whole, obtain progressively better value for money. The main emphasis of this programme

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     is on ensuring that expenditure priorities are set at key points in the planning process, on focussing line managers' attention more directly on the results they intend to achieve with public funds and on clearly delegating the responsibility for value for money to the line managers in departments who are best placed to achieve improvements.

The Public Sector

     Consolidated public sector expenditure in 1987-8 was $53.6 billion, of which the govern- ment itself accounted for $47 billion. The growth rate of public expenditure over the preceding year was 11.9 per cent in money terms, or 3.5 per cent in real terms.

The growth rate of consolidated public sector expenditure is compared with the rate of economic growth at Appendix 12. Consolidated public sector expenditure has been kept stable at around 16 per cent of the Gross Domestic Product since 1984-5.

      Total government revenue and expenditure in 1987-8 were $60.9 billion and $48.4 billion respectively. The consolidated surplus of $12.5 billion comprised $11.6 billion in the balance on the General Revenue Account and $0.9 billion in the balances of the other funds. The surplus reflected higher than anticipated profits tax yields and increased stamp duty yields resulting from high levels of activity in the stock market. Details of revenue by source and of expenditure by component for 1987-8 and revised estimates for 1988-9 are at Appendix 11. An analysis of expenditure by function is at Appendix 13.

      Some $13.6 billion (25 per cent) of consolidated account expenditure in 1987-8 was of a capital nature. The operating surplus for the year ($16.1 billion) represented more than 110 per cent of this capital expenditure. The principle that at least half of the capital expenditure should be met from the operating surplus was adhered to, and this is expected to be the case also in 1988-9.

       There was no additional borrowing in 1987-8. The balance of the government's outstanding borrowings at the end of the year was $1 billion.

Public Expenditure

The draft Estimates of Expenditure on the General Revenue Account are presented by the Financial Secretary to the Legislative Council when he delivers his annual Budget speech. In the Appropriation Bill introduced into the Legislative Council at the same time the administration seeks appropriation of the total estimated expenditure on the General Revenue Account.

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

       With the exception of only four years (1974-5, 1982-3, 1983-4 and 1984-5) in the past 20 years, the General Revenue Account has shown a surplus income over expenditure at the end of each year. 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 fluctuations in expenditure relative

to revenue.

       The Urban Council and Regional Council, which operate through the Urban Services Department and Regional Services Department respectively, are financially autonomous. They draw up their own budgets and expenditure priorities. The expenditures of the two councils 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

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Council area (New Territories). Additional income derives from fees and charges for the services the councils provide. The government has agreed to provide a grant of $273.6 million per annum to the Regional Council for three years from 1988-9 to 1990-1 to enable the Regional Council to assume responsibility for financing and processing all new projects in its capital works programme.

The Housing Authority, operating through the Housing Department, is also financially autonomous. Its income is derived mainly from rents. If the authority's cash flow is inadequate to meet the construction costs of new estates, it may request an injection of capital by the government. The Housing Authority is provided with free land for the construction of rental housing; the value of the land is shown in its balance sheet as a government contribution. Part of the authority's recurrent expenditure, for such activities as clearances and squatter control, is financed from the General Revenue Account. The authority is also responsible for carrying out a programme of squatter area improvements which are funded from the Capital Works Reserve Fund.

Revenue Sources

Duties are levied on six groups of commodities - hydrocarbon oils, alcoholic liquor, methyl alcohol, tobacco, non-alcoholic beverages and cosmetics. The Customs and Excise Depart- ment is responsible for collecting and protecting duty revenue. The Dutiable Commodities Ordinance imposes controls on the import, export, manufacture, sale and storage of dutiable items. In 1987-8, $3,389 million was collected in duties, compared with some $3,467 million in 1986-7.

Specific duty rates on alcoholic liquors range from $1.36 a litre on beer to $55 a litre on brandy. In addition, duty is payable at the rate of 30 per cent of the c.i.f. value of spirits and 20 per cent of the c.i.f. value of wines. On tobacco, duties range from $45.50 a kilogram on Chinese prepared tobacco to $175 per 1 000 cigarettes. On motor and aircraft fuels the duty is $2.55 a litre, and on diesel oil for road vehicles it is $1.27 a litre. Duty is levied on methyl alcohol at a rate of $4.55 a litre, and on non-alcoholic beverages at $60 a hectolitre. On cosmetics there is a duty at 25 per cent of the c.i.f. price of imported products and the wholesale price of locally produced products.

      Rates are levied on the occupation of landed property at a percentage of the assessed rateable value. This is an estimate of the annual rent at which the property might reasonably be expected to be let. New valuation lists are prepared periodically to bring rateable values into line with market rental levels. The current lists came into effect on April 1, 1988, with all rateable values determined by reference to rents as at October 1, 1986. The rateable values of newly-assessed properties are based on estimates of rental levels at the same reference date.

      Charges on rateable values are determined annually by resolution of the Legislative Council. For 1988-9 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. The full revenue from rates in the New Territories is paid to the Regional Council.

Rates are payable quarterly in advance. Exemptions are few, although the government 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 approved guidelines. 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. The total net revenue from rates for 1987-8 amounted to $4,264 million.

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      The Inland Revenue Department is responsible for the collection of betting duty, en- tertainments tax, estate duty, hotel accommodation tax, stamp duty, and earnings and profits tax.

Betting duty is imposed on bets and on the proceeds of Mark Six lotteries. The rate of duty is 9.5 per cent or 16 per cent of the amount of the bet, depending on the type of bet placed, and 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 28 per cent in the case of race meetings.

Estate duty is imposed on estates 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.

      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. In Hong Kong, 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.

      Profits tax is charged only on net profits arising in Hong Kong, or derived from a trade, profession or bussiness carried on in Hong Kong. Profits of unincorporated businesses are taxed at 15.5 per cent and profits of corporations are taxed at 17 per cent. Tax is payable on the actual profits for the year of assessment. Tax is paid initially on the basis of profits made in the year preceding the year of assessment and is later adjusted according to profits actually made in the assessment year. 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 three per cent to 21 per cent at multiples of three per cent on the first seven segments of net income (that is, income after deduction of allowances) of $10,000 each and then to 25 per cent on the remaining net income. No-one, however, pays more than 15.5 per cent of their total income.

The owner of land or buildings in Hong Kong is charged property tax at the standard rate of 15.5 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 15.5 per cent. Interest paid on deposits with financial institutions carrying on business in Hong Kong is exempt from tax. Interest paid or payable by 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.

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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.

Audit of Public Accounts

The Director of Audit, supported by the Audit Department, audits all the government's accounts. He also audits the accounts of the Urban Council, the Regional Council, the Vocational Training Council and the Housing Authority, and of more than 50 statutory and non-statutory funds and other public bodies. In addition he is responsible for reviewing the finances of the operations of government-subvented organisations in Hong Kong to ensure that the subventions are put to proper and effective use. The Audit Department's work includes value-for-money audits, which are essentially examinations of 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 provides that the director shall not be subject to the direction or control of any other person or authority.

      Under the terms of the Audit Ordinance 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. The committee may call any public officer or other person concerned to give information and explanations on any relevant matter 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 is also tabled in the Legislative Council. Both are copied to the Secretary of State. Since 1988, in response to a recommendation made by the committee itself, the annual cycle of the Public Accounts Committee has been split into two phases, each involving the examination of a report by the Director of Audit and a subsequent response by the committee. The Director of Audit's first report is on the annual accounts of the government and the results of value for money audits whilst the second report is on the results of value for money audits only.

Science and Technology

As Hong Kong's industry, economy and society become more complex and sophisticated, there is a need to pay more attention to the part that modern science and technology can play in furthering development. The government believes that the ability to adopt technological advances and new applications is critical to the prosperity of an international trading city such as Hong Kong.

To ensure that Hong Kong keeps abreast of the rapid technological changes and that the best advice is obtained in this area, the Governor appointed a Committee on Science and

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Technology in March. Its purpose is to seek out and develop new scientific ideas of relevance to Hong Kong and to advise the government on how these ideas might best be applied locally. The committee comprises members drawn from both the academic and the industrial sectors as well as from government departments whose work involves a significant scientific and technological content. Together, they form a pool of expertise in different disciplines of science and technology and provide management experience in dealing with important, large-scale issues.

The government believes that innovative changes in science and technology will continue to be made steadily in various parts of the world. Hong Kong needs to keep up with these changes in order to maintain a high level of economic performance in the future.

6

Industry and Trade

THE manufacturing industries continued to perform well in 1988 but, due to slackening demand overseas for Hong Kong products, growth was slower than in 1987. The value of domestic exports during the year grew by 11 per cent to $217,664 million, compared with 27 per cent growth in 1987.

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 32 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 diversifica- tion into capital and land-intensive industries. Light manufacturing industries, producing mainly consumer goods and operating in multi-storey factory buildings, predominate. About 69 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 74 per cent of Hong Kong's domestic exports in 1988.

      Notwithstanding the concentration in light manufacturing, there has been a continuous process of up-grading 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

As from 1988, Hong Kong and a number of its major trading partners have adopted a new international system of trade classification, known as the Harmonised Commodity Coding and Description System (the Harmonised System). The United States will adopt the new system on January 1, 1989. Implementation of the new system was closely monitored to ensure it would have no adverse effect on Hong Kong's external trade.

On the multilateral front, the pace of the Uruguay Round of multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT) intensified during the year. Together with other like-minded participants, Hong Kong advanced its views on a number of important subjects including tariffs, non-tariff measures, textiles, dispute settlement, safeguards, trade-related intellectual property rights and services. In December 1988, Hong Kong also took part at the GATT Ministerial Meeting held in Montreal to review progress in the first two years of the negotiations and to impart new political impetus to the ongoing negotiations.

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Textiles and Clothing

77

Textiles and clothing make up Hong Kong's largest industry, accounting for about 38 per cent of the total domestic exports and about 42 per cent of industrial employment. Domestic exports of textiles and clothing in 1988 were valued at $82,860 million, compared with $81,326 million in 1987.

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 yarns of all fibres in 1988 was 222 million kilograms, compared with 233 million kilograms in 1987. Most of the yarn produced were used locally.

The weaving sector, with 17 278 looms, produced 848 million square metres of woven fabrics of various fibres and blends, compared with 889 million square metres in 1987. The bulk of the production - 95 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 66 million kilograms of knitted fabrics in 1988 of which 21 per cent was of man-made fibres or blended cotton man-made fibres, and 74 per cent was of cotton - compared with 64 million kilograms in 1987. A large quantity of knitted fabric of all fibres was also 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.

Hong Kong is one of the world's leading suppliers of clothing. The clothing industry is also the largest single sector of Hong Kong's manufacturing industry, employing some 286 221 workers or about 34 per cent of industrial employment. Domestic exports of clothing in 1988 were valued at $67,309 million, compared with $65,321 million in 1987.

Electronics

The electronics industry is the second largest export-earner after clothing. Domestic exports of electronics products in 1988 were valued at $55,561 million, compared with $42,048 million in 1987. The industry comprises 1939 establishments employing 109 677 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, fax machines, microcomputers, disk drives, floppy disks, printers, switching power supplies, computer memory systems and add-on cards, read-write magnetic 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.

Watches and Clocks

Hong Kong is an important world exporter of watches and clocks. Domestic exports in 1988 were valued at $17,346 million compared with $13,856 million in 1987. The industry has 1 729 establishments employing 31 180 workers. Production includes both mechanical and electronic watches, clocks, watch cases, dials, metal watch bands, assembled watch movements and watch straps of various materials.

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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 five per cent of the total domestic exports and nine per cent of the total industrial employment in 1988. Domestic exports of plastic products during the year were valued at $11,847 million compared with $13,876 million in 1987. The industry has 5 572 establishments and 72 412 workers. Hong Kong continues to be one of the world's leading suppliers of toys, which accounted for most of the industry's output.

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 1988. Domestic exports of electrical appliances during the year were valued at $5,460 million, a decrease of three per cent over 1987. The industry has 689 establishments and employs around 25 482 workers. Hong Kong continues to be one of the world's leading suppliers of electro-mechanical and domestic fans, which accounted for about 12 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 importance are blow-moulding, extrusion, and injection-moulding machines of up to 21 030 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.

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, chaired by the Financial Secretary, is the government's advisory body on all major industry-related matters. Members of the board include prominent industrialists, government officials and representatives from the tertiary educa- tion sector and other trade and industry organisations.

Support for Industry

The government's industrial policies aim at facilitating growth through the provision of necessary infrastructural support and at encouraging industry to enhance its competitive- ness through developments in the support services which promote productivity growth, quality improvement, design 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 and market research studies on the major

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industries, and smaller-scale studies of other selected industries, to enable the government to assess where its support is needed. It monitors the adequacy of Hong Kong's industrial infrastructure, particularly the availability of land and trained manpower. It encourages, in a variety of ways, domestic investment in manufacturing and also promotes overseas investment, especially where this introduces new or improved products, designs, processes and management techniques into Hong Kong.

An increasingly important part of the department's work is to promote the wider application of quality assurance in the manufacturing sector. The department's Quality Services Division has three main roles at present: to maintain measurement and docu- mented standards as authoritative reference points for industry, to provide calibration services, and to operate a laboratory accreditation scheme. Measurement standards, including the mass, length and volume standards required in support of the new Weights and Measures Ordinance, are held by its Standards and Calibration Laboratory, and documented standards by its Product Standards Information Bureau, which maintains a large and growing library to meet demand for information and technical advice on overseas product standards. The Standards and Calibration Laboratory, which has been indepen- dently accredited by the United Kingdom's National Measurement and Accreditation Services (NAMAS) for a wide range of measurements, also provides a calibration service to manufacturers to enable them to meet measurement standards required for their products. And to promote the use of quality assurance in Hong Kong's testing laboratories, the Hong Kong Laboratory Accreditation Scheme (HOKLAS) has been developed by the Quality Services Division to accredit laboratories in various testing disciplines.

A number of industrial support initiatives were launched during the year. In June, the Hong Kong Plastics Technology Centre was formed to provide technical assistance to the plastics industry. The centre, which will be located in the Hong Kong Polytechnic, was established with help from the government, the polytechnic, and a major local manufac- turer of plastics conversion machinery. On the advice of the Industry Development Board, the government also commissioned consultants to prepare a detailed feasibility plan for setting up a technology centre in Hong Kong.

Additional land and accommodation was made available for industry. The government put up for sale by auction or tender 14 pieces of industrial land with a total area of 44 659 square metres, and 1 138 000 square metres of flatted factory space were completed by private developers. The Director of Industry is also the Chief Executive of the Hong Kong Industrial Estates Corporation. During the year the HKIEC sold 17.2 hectares of land in its two estates.

      An experimental Industrial Extension Service was provided by the department from September 1987 to March 1988. During the experiment, 340 medium-sized factories were visited and the manufacturers concerned were assisted in the use of a variety of industrial support services. The results were encouraging and additional staff were recruited to enable a permanent Industrial Extension Service to be introduced in early 1989.

The Inward Investment Division, through its 'One Stop Unit' in Hong Kong and overseas offices in San Francisco, New York, London, Brussels and Tokyo, helped to attract $210.45 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 countries. These investments channel valuable new technology and expertise to Hong Kong, often from world leaders in particular areas. Significant new investments of this kind included a large establishment for the manufacture of personal computers, a regional plastic technical

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centre and polypropylene composite plant, a factory for the production of photoconductive drums (the central component in photocopying machines), and an advanced electronics plant which will produce high-quality semiconductors using the latest computer-aided technologies.

The Quality Services Division studied the possibility of meeting growing demand for the services of the Product Standards Information Bureau by developing a computer-based system, linked to local and overseas databases, for storage and retrieval of product standards information. The Standards and Calibration Laboratory began to extend its coverage of measurement standards to include force, pressure and precision mechanical measurements. HOKLAS continued to develop its range of services and by the end of the year had accredited 14 laboratories in various testing disciplines. The scope of the accreditation scheme was widened to include environmental testing facilities. HOKLAS also discussed with several major overseas accreditation authorities the possibility of reaching bilateral recognition agreements, whereby laboratory test data and certificates would become mutually acceptable. The division also employed consultants to draw up proposals for an overall quality strategy for Hong Kong, in preparation for a sustained quality drive planned by the government.

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 370 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, Industrial Consultancy, Training, Environmental Management, Information Services and Administration.

Its facilities include five training centres in its 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 cast- ing 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.

The council implemented the third year of a three-year programme to strengthen the various technical branches by providing an integrated industrial automation service and an enhanced metals development service. Funds were also provided by government for the introduction of new productivity enhancement services. The programme included setting up a surface mount technology laboratory, a radio frequency and digital communication laboratory, and a new textiles and apparel division; developing capabilities in photo- chemical machining, sheet metal working, and enhancing capability in advanced produc- tion management techniques; and undertaking studies of new technologies with potential for industrial applications.

There was sustained demand for the consultancy and technical support services from both local and overseas companies. The council completed 823 consultancy projects,

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including feasibility studies, production management, new plant projects, personnel recruitment, marketing and technical assistance.

       The council organised over 530 training courses for 13 500 participants, covering management 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. Fifteen overseas study missions and visits were organised for local industrialists to gain first-hand information on the latest technology in various areas, including diecasting and metal forming, electroplating, surface mount technology, advanced mould and die manufactur- ing, photochemical machining, tooling for electronic products, textile machinery, and just-in-time system.

The council's proposal to construct a special-purpose building in Kowloon Tong was approved by government with the granting of the site at a nominal premium and a loan from the Development Loan Fund.

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 advanced manufacturing technology and foreign investment.

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. Currently the corporation is responsible for managing two industrial estates. The Tai Po Industrial Estate, which has a total of 69 hectares of land, is virtually full. The Yuen Long Industrial Estate provides 67 hectares of industrial land, about 40 per cent of which has already been sold or allocated to manufacturers. Feasibility studies are under way with a view to developing a third estate of about 90 hectares in Junk Bay new town.

       Land on the industrial estates is sold by the corporation to applicants at premia based on cost. By the end of 1988, more than 100 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 the minimum of delay. The standard factories, which can either be leased or purchased, are fully serviced and provide maximum flexibility.

External Trade

External trade was buoyant in 1988. Total merchandise trade amounted to $991,867 million, an increase of 31 per cent over 1987. Imports rose by 32 per cent to $498,798 million and re-exports by 51 per cent to $275,405 million while domestic exports increased by 11 per cent to $217,664 million. Domestic exports and re-exports together, valued at $493,069 million, registered an increase of 30 per cent. Appendices 15, 16a and 16b provide summary statistics of external trade.

Imports

Hong Kong is almost entirely dependent on imported resources to meet the needs of its population of 5.736 million and its diverse industries. In 1988, imports of raw materials and

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semi-manufactured goods totalled $216,345 million, representing 43 per cent of total imports. The principal items imported were transistors, diodes, semi-conductors and integrated circuits ($27,204 million); plastic moulding materials ($20,892 million); fabrics of man- made fibres ($18,600 million); iron and steel ($12,139 million) watch and clock movements, cases and parts ($11,804 million); as well as woven cotton fabrics ($10,227 million).

Consumer goods, valued at $164,388 million, constituted 33 per cent of total imports. The major consumer goods imported were: clothing ($32,360 million); radios, television receivers, gramophones, records, amplifiers and tape recorders ($21,171 million); diamonds ($11,600 million); baby carriages, toys, games and sporting goods ($10,330 million); watches ($8,898 million); travel goods, handbags and similar containers ($8,459 million) as well as household-type electrical equipment ($5,640 million).

Imports of capital goods amounted to $77,182 million, or 15 per cent of total imports. Imported capital goods consisted mainly of electrical machinery ($12,400 million), office machines ($6,949 million), transport equipment ($6,616 million), electronic components and parts of computers ($6,075 million) and textile machinery ($3,912 million).

Imports of foodstuffs were valued at $32,070 million, representing six per cent of total imports. The principal imported food items were fish and fish preparations ($7,634 million), fruit ($4,409 million), vegetables ($3,642 million) as well as meat and meat preparations ($3,473 million).

      Mineral fuels, lubricants and related materials worth some $8,813 million were imported in 1988, representing two per cent of total imports.

China and Japan were the two principal suppliers of imports in 1988, providing 31 per cent and 19 per cent, respectively, of the total. China alone supplied 41 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 Federal Republic of Germany and the United Kingdom.

Exports

Clothing remained the largest component of domestic exports, being valued at $67,309 mil- lion or 31 per cent of the total. Exports of miscellaneous manufactured articles consisting mainly of jewellery, goldsmiths' and silversmiths' wares; plastic toys and dolls as well as plastic articles were valued at $29,911 million, representing 14 per cent of domestic exports. Photographic apparatus, equipment, supplies and optical goods, watches and clocks were valued at $19,317 million (nine per cent of the total). Electrical machinery, apparatus and appliances consisting mainly of household type appliances; transistors and diodes amount- ed to $17,498 million or eight per cent of the total. Domestic exports of telecommunications and sound recording and reproducing apparatus and equipment, valued at $17,319 million, contributed another eight per cent to the total. Other important exports included textiles (seven per cent) as well as office machines and automatic data processing equipment (six per cent). The direction and level of Hong Kong's export trade is much influenced by economic conditions and commercial policies in its major overseas markets. In 1988, 55 per cent of all domestic exports went to the United States and the European Economic Community (EEC). The largest market was the United States ($72,884 million or 33 per cent of the total), followed by China ($38,043 million or 17 per cent), the Federal Republic of Germany ($16,157 million or seven per cent) and the United Kingdom ($15,524 million or seven per cent). Domestic exports to Japan and Canada increased to $11,435 million and $5,984 million respectively, with Japan representing five per cent and Canada three per cent of total domestic exports. Other important markets were Singapore, Netherlands and France.

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Re-exports

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      Re-exports showed very significant increases in 1988, and now account for 56 per cent of the combined total of domestic exports and re-exports. The principal commodities re-exported were textiles ($34,375 million); electrical machinery, apparatus and appliances ($28,661 million); miscellaneous manufactured articles ($28,328 million); clothing ($24,697 million); telecommunications and sound recording and reproducing apparatus and equip- ment ($19,858 million) as well as photographic apparatus, equipment, supplies and optical goods, watches and clocks ($10,597 million). The main places of origin of these re-exports were China, Japan, Taiwan and the United States. The largest re-export markets were China, the United States, Japan, Taiwan and the Republic of Korea.

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 agreements negotiated under the MFA govern Hong Kong's textiles exports to Aus- tria, Canada, the European Economic Community, Finland, Norway, Sweden and the United States.

As a result of the consultations held in May 1988, the Hong Kong/Finland Textiles Agreement (1987-91) was amended to include an additional export authorisation item and an additional restraint item, the quota level of which took into account previous levels of export plus growth.

       Improvements to the current Hong Kong/Norway Textiles Agreement (1987-90) were achieved during bilateral consultations held here in October. These included the complete liberalisation of three restraint items and abolition of the entire export authorisation arrangement.

       Following consultations held in Hong Kong in October/November, an additional item was brought under restraint under the Hong Kong/Austria Textiles Agreement (1987-90) whereas part of an existing restraint item was derestrained and came under the export authorisation arrangement.

       The current bilateral textiles agreement between Hong Kong and the EEC governs Hong Kong's exports of cotton, man-made fibres and wool textiles to the 12 member states of the EEC from 1987-91. Four rounds of consultations between Hong Kong and the EEC were held in 1988 to address problems arising from changes of product definitions or codings on the adoption of the Harmonised System by the EEC. Agreement was reached on adjustments to the quota levels of four categories of textile products restrained under the bilateral textiles agreement.

       Five rounds of consultations in 1987 were required to reach agreement with United States changes to the HK/US Textiles Agreement (1986-91) to take account of the United States' adoption of the Harmonised System. In the event, Congress' approval of the Harmonised System was delayed, so pending full adoption of the new arrangements by the United States, Hong Kong implemented a dual licensing system as from January 1, 1988 for textile exports to the United States to facilitate customs clearance.

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     The United States Textiles and Apparel Trade Act introduced into Congress in 1987 continued to pose a serious threat to Hong Kong and world trade in textiles. The bill contained provisions to limit imports of textiles into the US from all sources to 1987 import levels with one per cent annual growth and would have caused considerable uncertainty and disruption to international trade in textiles and garments. The Bill passed by both Houses of Congress was vetoed by President Reagan on September 28, 1988. A vote by the House of Representatives on October 4 failed to override the President's veto.

Non-textiles Issues

    Most trading nations adopted the Harmonised System as from January 1, 1988 which involved tariff changes for some of the products imported from Hong Kong. Bilateral consultations were held with Hong Kong's major trading partners to ensure that Hong Kong would not have to pay higher tariffs.

      The United States Government announced on January 29 its decision to remove Hong Kong, South Korea, Singapore and Taiwan from the list of countries eligible for duty free treatment under the US Generalised System of Preferences as from January 2, 1989. The action was taken after an examination of a broad range of economic indicators relating to the development and competitiveness of the territories affected. About 16 per cent of Hong Kong's exports to the United States benefited from the tariff preferences provided under the scheme. The move caused disappointment in the Hong Kong business community but it was generally felt that its effects would not be very damaging.

In June, Hong Kong made a detailed submission to the EEC Commission on the EEC's 1989 GSP Scheme. Despite Hong Kong's representations, the EEC decided to exclude 32 Hong Kong products from GSP benefits in 1989.

In response to public concern in the United States about the large trade deficit the US Congress expressed its determination to pass legislation which would tackle unfair trading practices. Early drafts of a generic trade bill contained protectionist provisions which would have been very damaging to the multilateral trading system. In April, Senate and House representatives agreed on a compromise version of the bill in which the more protectionist clauses had been removed or modified. The new legislation, under the title: 'The Omnibus Trade and Competitiveness Act of 1988' was signed into law by President Reagan on August 23, 1988. Passage of the bill should help to reduce protectionist pressure in the United States.

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

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organisations 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 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 collection and dissemination of information on developments which may affect Hong Kong's external trade, especially those relating to trade policies and measures adopted in Hong Kong's major markets. 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, San Francisco and Tokyo. 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 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; and the Investigation Branch comprises the Customs Investigation Bureau, the Trade Inspection and Verification 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 and Verification Bureau 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, in- fringements of intellectual property rights and for handling trade complaints.

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During the year, the group completed 73 251 inspections of factories and consignments, 1493 costing checks in connection with certificate applications under the Generalised Schemes of Preferences (Form A) and 103 981 enquiries and verifications relating to trade declarations and manifests. It conducted 9 140 assessments on trade declarations, which resulted in the collection of $5.1 million in ad valorem charges and administrative penalties. As a whole, the Trade Controls Group completed 2 321 investigations. Successful prosecutions in this area resulted in the imposition of fines totalling $37.3 million as well as prison sentences. The work of the Trading Standards Investigation Bureau is further explained in Chapter 15.

Government Supplies Department

The Government Supplies Department which was established in 1938, is the government's central purchasing and supply agency. It buys equipment, goods and services ranging from simple office sundries to aircraft and complex computer systems for 50 departments and units of the Hong Kong Government. In addition to giving advice on purchasing and supply matters, the department also seconds staff to other departments to ensure a pro- fessional approach to acquisition and maintenance of supplies throughout the government.

To ensure continuity of supply, the department maintains goods which are generally required by other departments in its main stores in Hong Kong and Kowloon and the five sub-stores specially established to serve the engineering workshops.

In conformity with Hong Kong's commitments as a signatory to the Agreement on Government Procurement of the GATT, the departments' purchases of significance are widely advertised and open to competitive bidding. In the taxpayers' interest, all purchases are made entirely on the basis of best value for money regardless of the source of supply. Due to its open procurement policy, goods and services are procured from over 35 coun- tries and some 4 000 registered suppliers.

     In 1988, the year of its 50th anniversary, the department placed orders to a total value of $2.383 million.

Hong Kong Trade Development Council

The Hong Kong Trade Development Council is a statutory body responsible for promot- ing 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 19 other members include repre- sentatives of major trade associations, leading businessmen and industrialists, and two senior government officials.

      The council was established in 1966 and has built up a network of 27 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 32 000 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 200 000 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.

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      Council staff carried out an extensive trade promotion programme in 1988, 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 HKTDC offices in Taiwan, Vancouver and Miami.

      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 30 countries, most notably from China, the United States, Japan, Canada, the United Kingdom, France and Sweden.

      In Hong Kong, the council staged a Hong Kong Fashion Week, Hong Kong Inter- national Toys and Games Fair, Hong Kong Electronics Fair, the Hong Kong Jewellery Show, the Hong Kong Watch and Clock Fair, the Hong Kong International Fur Fair and the Hong Kong Gifts and Houseware Fair.

In the very successful store promotions, the HKTDC joined forces with Bloomingdale's in New York City and Sunrise in Taipei. In Japan, the council staged promotions at the Daimaru department store in Osaka and once again in the AIC chain of depart-

ment stores.

      The council produces seven product magazines, a fashion magazine and a newspaper for general circulation and distribution at trade events around the world. They are: Hong Kong Enterprise, a monthly general products magazine; the annuals Hong Kong Toys, published each January to coincide with the Hong Kong International Toys and Games Fair, Hong Kong Jewellery Annual, Hong Kong Watches and Clocks, Hong Kong Household and Hong Kong Gifts and Premiums; a biannual, Hong Kong Electronics; Hong Kong Apparel, a prize-winning quarterly fashion magazine and the Hong Kong Trader, a bimonthly newspaper (sent airmail) giving news and views of the territory. 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. The fourth plenary session met in New York City in September while in March the 11th plenary session of the Hong Kong-Japan/Japan-Hong Kong Business Co-operation Committee was held in Tokyo.

This section also monitors the activities of overseas associations in Sweden, Spain, Canada, Austria, the Netherlands, the United Kingdom, Italy, Finland, Norway, Australia and New Zealand.

      Construction work is proceeding on the Hong Kong Convention and Exhibition Centre and commissioning began in November. 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 2000 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.

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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 $5,000 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 of goods and services by protecting policy holders against monetary losses arising from those risks not normally covered by commercial insurers, namely, commercial risks of an overseas buyer and the political risks of the country in which the buyer is located. The maximum percentage of indemnity is 90 per cent.

      The corporation provides protection on transactions which include documents against payment, documents against acceptance or open account invoices concluded on short-term credits (maximum 180 days) from the date of shipment. The cover is normally in respect of domestic exports and re-exports from Hong Kong. Shipments from a third country directly to overseas buyers may similarly be covered. Cover can also be provided from the date of the contract of sale of domestic goods insured so as to protect the manufacturing exporter 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 cor- poration can provide tailor-made insurance policies to cater for individual needs of the exporters.

The corporation also provides policyholders with supporting services in the supply of political and economic intelligence on overseas markets, indications as to the credit- worthiness of individual overseas buyers and in resolving payment difficulties.

Although the corporation itself does not provide finance, exporters find the insurance policy a useful form of collateral security in obtaining export finance facilities. For exports on medium and long-term credits, the corporation can, however, provide a full uncondi- tional guarantee directly to the exporter's banker.

      The corporation's business operations have been computerised. This enables the cor- poration to deal with policyholders' enquiries speedily in respect of around 60 000 overseas buyers and to process some 10 000 credit limit applications a year.

      In 1988, close to $10,000 million in goods and services were insured by the corporation, which earned a premium income of more than $63 million. Some 70 claims were paid, involving a total of $37 million.

Other Trade and Industrial Organisations

There are a number of major trade and industrial organisations, each formed to provide for the needs of their members. In common, they represent their members' views to the government and other bodies, and are in turn consulted on many issues. The organisations include: The Hong Kong General Chamber of Commerce, founded in 1861, comprises more than 2 700 companies representing all branches of commerce and industry. The chamber is

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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. It provides a wide range of services to its members and to more than 8 000 non-member companies. These include the issue of certificates of origin, commercial carnets, endorsement of invoices and the processing of trade and industrial enquiries.

Incorporated in 1981, the Hong Kong Trade Facilitation Council was set up to facilitate international trade procedures and the documentation and information flows associated with them. Its members include representatives of government, trade and industrial organisations and private sector companies. In recent years, the emphasis in trade facilitation work has shifted from paper to the transmission of trade data by elec- tronic means.

      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 an organisation to which manufacturing industries in Hong Kong could belong. It has a membership which is broadly representative of all industries. The federation provides a range of services to both members and non-members, covering certificates of origin, a custom built multi-risks insurance policy, consultancy work on quality assurance, trade enquiries and joint venture requests, translation services and specialised research.

      Through its Design and Packaging Centre, which is the executive arm of the Design Council of Hong Kong, the federation offers various design-related 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 for products complying with international standards and manufactured under approved quality control systems. It also services the Hong Kong Toys Council, Transport Services Council and Chemical and Pharmaceutical Industries Council.

The Chinese Manufacturers' Association of Hong Kong (CMA), established in 1934, is a non-profit making chamber of commerce and industry. It is a member of the International Chamber of Commerce. It has a membership of over 3 600 industrial and trade establish- ments. The association has played an important role in fostering the industrial development of Hong Kong. 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. The association is active in promoting new product development 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 provides 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 2000 students. It also awards scholarships to those studying in universities, polytechnics and technical institutes through the 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, covering a wide spectrum of trade. The aim of the chamber is to promote trade and prosperity of Hong Kong. In addition to the traditional activities of a chamber of commerce, it maintains close contact with trade organisations in China and

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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. The chamber is authorised by the government to issue Hong Kong certificates of origin.

      The Hong Kong Management Association was established in 1960 with the aim of improving the effectiveness and efficiency of management in Hong Kong. It runs manage- ment training courses, provides management consultancy services, publishes a bimonthly journal 'The Hong Kong Manager', offers library information and translation services, and organises seminars, forums and inter-firm competitions.

Consumer Council

The Consumer Council is responsible for protecting and promoting the interests of consumers of goods and services. It comprises a chairman, a vice-chairman and up to 15 members who are appointed by the Governor from various walks of life. It has a staff of 105 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, and informa- tion and education. It maintains close co-operation with the government through the Trade and Industry Branch and is represented on many committees dealing with a wide range of consumer issues and concerns.

During the year, the council carried out a campaign of education and publicity on the need for adequate and accurate information on which consumers could make their purchasing decisions. The campaign made extensive use of the news media, printed material and community involvement activities that included a weeklong exhibition.

      The right-to-information theme will continue to be the focus of the council's activities in the year ahead.

      When the Weights and Measures Ordinance comes into force in January 1989, it will mean that all consumers can expect to secure a fair deal in the quantity of goods they purchase. To assist consumers, the council has equipped all 16 of its Advice Centres throughout the territory with electronic scales that will enable them to check the quantity of their purchases.

After much public debate, the amended Travel Agents Ordinance came into operation, providing a new package of measures to protect consumers of outbound package tours in case of the financial collapse of travel agencies. Under the ordinance, a new compensation fund was set up by the Travel Industry Council, which is responsible for the self-regulation of the outbound travel industry.

Consumer product safety remains a constant concern of the council, despite progress made in such areas as the control of domestic insecticides, and toy safety. The need for further legislative control is being reviewed by a government working group.

The scope of the council's research and testing has been expanded to cover such goods and services as air courier and speedpost services, photocopying machines and facsimile machines which are of interest primarily to corporate consumers. Increasingly, the council co-operates with its counterparts abroad in joint tests of a more sophisticated nature, enabling it to make use of the best possible testing facilities at the most economical cost.

Consumer interest in the work of the council is evident from the steady growth in circulation of the council's Chinese-language monthly magazine 'Choice'. One issue which highlighted the reliability of condoms, among other items, saw sales rise to a record of over

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70 000 copies. The inaugural issue of the annual English language 'Choice Buying Guide' met with a favourable response from the public. Close liaison was maintained with the mass media to disseminate consumer information, and, a new teaching kit on 'Advertisements and Consumers' was produced to assist teachers and community workers in the promotion of consumer education.

      An electrical appliance business, which changed its name four times, became the first trader to be named by the council for malpractices during the year. This marked the beginning of a more positive stance by the council to deter repeated malpractices by delinquent shops, which will be warned that once a complaint is substantiated, it risks the possibility of public exposure if it fails immediately to cease such malpractices. During the year, the council dealt with 9 431 complaints and 316 255 enquiries for consumer advice.

      The Consumer Council of Hong Kong is a Council Member of the International Organisation of Consumers Unions (IOCU) and maintains strong ties with similar councils elsewhere.

Trade in Endangered Species

In Hong Kong, the possession, importation and exportation of endangered species of animals and plants, including parts and derivatives, 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). The licensing policy follows closely the principles of the convention and licences are only granted to facilitate the trade of species permissible under CITES, whereas the trade in highly-endangered species is strictly forbidden.

Ivoryware, wild American ginseng roots imported for medicinal purposes, and reptile skins imported for the leather trade are the major commodities in the trade in endangered species. The internal sale of remaining pre-CITES stocks of rhinoceros horn and hide in the territory ceased to be permitted as from August 1, 1988 through an administrative arrangement prohibiting the transfer of existing possession licences. That month, the ordinance was amended to bring the schedules of endangered species in line with the updated CITES lists and to extend the control to cover the import of worked ivory, some 800 other endangered species and the manufactured products of some of the highly- endangered animals.

       Plans are well advanced for the ordinance to be further amended to enhance its enforcement, including proposals to increase the maximum penalties for contravention of the law, and to prohibit the local sale of all medicinal products claiming to contain rhinoceros ingredient.

The ordinance is administered by the Agriculture and Fisheries Department and is enforced by officers of the department and the Customs and Excise Department through checkings at entry points, markets, shops and restaurants, as well as the inspection of the licenced shipments. The Trade Department is authorised to issue certificates for ivoryware carved in Hong Kong. All suspected offences are thoroughly investigated and prosecutions follow if there is evidence of a breach of the ordinance. During 1988, there were 369 seizures and 298 prosecutions under the ordinance.

Metrication

The government's metrication policy is to facilitate progressive adoption of the Inter- national System of Units (SI) in those areas for which it is responsible, and to encourage the use of metric (SI) units by the private sector. The Metrication Ordinance, enacted in 1976,

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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. Con- siderable progress has now 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 1988, 8 956 applications were received and 4 075, including many made in previous years, were accepted and allowed to be advertised. A total of 4 360 marks were registered in 1988, compared with 3 460 in 1987. The principal countries of origin were: Hong Kong, 1063; United States of America, 977; Japan, 383; United Kingdom 348; France, 296; West Germany, 285; Italy, 210; Switzerland, 148; Australia, 79; Taiwan, 79. The total number of marks on the register at December 31, 1988 was 51 493.

     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 1 070 patents were registered in this way during the year, compared with 1 020 in 1987. 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 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.

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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, the Companies (Amendment) (No. 2) Ordin- ance 1987 and the Companies (Amendment) Ordinance 1988, the Companies (Amend- ment) (No. 2) Ordinance 1988 and the Companies (Amendment) (No. 3) Ordinance 1988 which were enacted on February 20, 1987, July 3, 1987 and February 12, 1988, July 8, 1988 and December 2, 1988.

      On incorporation, a company pays a registration fee of $600 plus $6 for every $1,000 of nominal capital. In 1988, 30 474 new companies were incorporated - 4 094 more than in 1987. The nominal capital of new companies registered totalled $4,400 million. Of the new companies, 112 had a nominal share capital of $5 million or more. During the year, 8 613 companies increased their nominal capital by amounts totalling $45,052 million on which fees were paid at the same rate of $6 per $1,000. At the end of 1988, there were 213 515 local companies on the register, compared with 185 588 in 1987.

      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, 250 of these companies were registered and 191 ceased to operate. At the end of the year, 2 348 companies were registered from 64 countries, including 587 from the United States, 344 from the United Kingdom and 275 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. During the year the Money Lenders (Amendment) Ordinance 1988 was enacted. This contained a number of provisions to amend both the procedures and the substantive law. The main purpose of the amendments is to make it clear that genuine financial transactions between parties of equal bargaining status may be excluded from some or all of the provisions of the Money Lenders Ordinance while at the same time ensuring that protection is retained for the private individual in a typical money lending transaction.

      Any application for a licence is in the first instance 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, 442 applications were received and 426 licences were granted. At the end of 1988, there were 448 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. With certain exceptions, primarily authorised institutions under the Banking Ordinance, 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

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the repayment of any such loan or any security given in respect of such loan shall be unenforceable.

Bankruptcies and Compulsory Winding-up

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

     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 or liquidator.

     The Official Receiver realises and distributes the property of a debtor or an insolvent company 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 276 petitions in bankruptcy and 219 petitions for the compulsory winding-up of companies. The court made 215 receiving orders, one admini- stration orders and 163 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 1988 amounted to $342 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 13 trusts amounted to $2.05 million. The Official Solicitor agreed to act in six cases.

7

Employment

業剂

     In the midst of Hong Kong's continuing buoyant economy, a shortage of workers was felt in some sectors during the year.

The increased economic activity resulted in a further decline in the unemployment rate, and in higher wages, particularly in the manufacturing and construction sectors.

      The average wage rates for all employees (including workers or wage earners and salaried employees up to supervisory level) increased in money terms by 10.2 per cent between September 1987 and September 1988 while those for workers (or wage earners) increased by eight per cent over the same period. After allowing for rises in consumer prices, wage rates for all employees increased in real terms by 1.4 per cent and those for workers decreased by 0.6 per cent. The overall average daily wage rate for workers in September 1988 was $142, being $170 for males and $126 for females. While the increase of wages rates in real terms was small, the increase of average earnings was more significant. For example, between September 1987 and September 1988, average earnings for employees in the manufacturing sector, in terms of payroll per person engaged, rose by 13.8 per cent in money terms, or by 4.6 per cent in real terms.

      Unemployment for the third quarter of 1988 was at a low of 1.6 per cent, and underemployment was 0.6 per cent.

      Hong Kong's resourceful and energetic workforce of 2.8 million comprises 64 per cent males and 36 per cent females. These figures are based on the results of the July- September 1988 General Household Survey. The workers are mainly engaged in: manufac- turing, 31.9 per cent; wholesale and retail trade, restaurants and hotels, 24.3 per cent; community, social and personal services, 17.4 per cent; transport, storage and communi- cations, 9.1 per cent; construction, 8.5 per cent; and financing, insurance, real estate and business services, 7 per cent.

      According to a Survey of Employment, Vacancies and Payroll in the manufacturing sector conducted in September, 844 575 people were engaged in 50 606 establishments. The survey covered working proprietors and partners, employees receiving pay and unpaid family workers affiliated to business organisations, but excluded out-workers. Some 364 655 people the largest portion of the manufacturing workforce were engaged in the textile and wearing apparel industries. The electronics and plastics industries were the next two largest employers. Details of the distribution of manu- facturing establishments, and of the number of people engaged in them, are given at Appendices 17 and 18.

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       The bulk of the manufacturing workforce is concentrated in the urban areas of Hong Kong Island, Kowloon and satellite towns in the New Territories. Industrial development in the New Territories is increasing and 36 per cent of the manufacturing workforce now work there.

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Labour Legislation During the year, 14 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 11 years to 149 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 Occupational Safety and Health Council Ordinance, which established the Council to promote higher standards of safety and health for people at work, amendments to the Employment Ordinance to improve the provisions for long service payment, and amendments to the Factories and Industrial Undertakings (Dangerous Substances) Regulations concerning the labelling and safe use of such substances.

      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 1988, Hong Kong has applied 29 conventions in full and 18 with modification, making a total of 47. This compares favourably with other member nations in the region.

During the year, there were 4 095 prosecutions for breaches of ordinances and regula- tions administered by the Labour Department. Fines totalling $12,662,935 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 in the manufacturing sector continued to increase in money terms during the year while unemployment and underemployment remained at a low level due to the continued expansion of the service sector of the economy. However, after allowing for rises in consumer prices, the wage rates for all employees and workers decreased in real terms by 0.1 per cent and 0.8 per cent respectively between September 1987 and September 1988.

      In September, 75 per cent of manual workers engaged in manufacturing industries received daily wage rates (including fringe benefits) of $111 or more (males $135 and females $105), and 25 per cent received $159 or more (males $193 and females $147). The overall average daily wage rate was $139 (males $169 and females $126).

      Besides granting statutory holidays, annual leave, rest days and other entitlements under the Employment Ordinance, some employers in the manufacturing sector provide workers with various kinds of fringe benefits, including subsidised meals or food allowances,

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attendance bonuses, free medical treatment and free or subsidised transport. Many employees also enjoy a year-end bonus under their employment contract of one month's pay or more, 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 may be employed in non-industrial establish- ments, subject to stringent conditions which aim at ensuring a minimum of nine years education and at protecting their health, safety and welfare.

      Under the Women and Young Persons (Industry) Regulations, persons aged 15 to 17 and women are permitted to work eight hours a day and six days a week in industry. By agreement between the employer and the women and young persons employed, the working hours of the woman and young person may exceed eight on one or more days in any week or 48 in a week, provided that the total number of hours worked (excluding overtime) does not exceed 96 hours in any two consecutive weeks, but in any case the maximum working hours per day (including overtime) remain at 10. Women and young persons must be given a break of at least 30 minutes after five hours of continuous work.

      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. As a general rule, overtime employ- ment for women is reckoned by reference to an industrial undertaking. However, an employer may, subject to compliance with conditions imposed by the Commissioner for Labour, opt to calculate overtime by reference to different parts of his undertaking, or to different sets of women in different processes, or to the individual woman.

Women are not usually allowed to work after 11 p.m. and before 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 and except with the written permission of the Commissioner for Labour, no person shall employ any female person of whatever age or any male young person under 16 years of age in any dangerous trade.

      In 1988, the Labour Inspectorate made 227 010 day and night inspections to both industrial and non-industrial establishments; seven special campaigns were conducted against the employment of children and illegal immigrants, covering 26 073 establishments. During the year, 124 cases of child employment involving 124 children were brought before the courts.

From July 1, a special team of Labour Inspectors was set up to monitor employers' compliance with the requirements of the Employment Ordinance concerning rest days, statutory holidays, annual paid leave, sickness allowance and maternity leave pay.

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

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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 make long service payment to their employees under certain circumstances. An employee who has worked continuously for the same employer for a specified number of years ranging from five to 10 years, depending on the employee's age, 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. However, the amount of long service payment varies 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 the case of redundancy, he may claim severance payment calculated at a similar rate.

      From July 1988, the long service payment scheme was extended to cover eligible employees who resign on grounds of ill-health and old age. Long service payment is also payable to family members of eligible employees who die in service.

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.

In June, the Trade Unions Ordinance was amended to permit use of union funds to support candidates standing for elections to the Legislative Council, Regional Council, Urban Council and the District Boards. Two unions have amended their rules to enable them to use their funds for this purpose.

      During the year, 16 new unions were registered. At the end of the year, there were 472 unions, comprising 430 employees unions with about 382 800 members, 29 employers associations with some 2930 members, and 13 mixed organisations of employees and employers with about 19 980 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 81 affiliated unions with about 175 200 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 71 affiliated unions with a membership of about 17 100. These unions are mainly in the catering and building trades.

The remaining 278 employees unions have a membership of about 190 500, mostly drawn from the Public Service and the teaching profession.

Labour Administration and Services

The Labour Department has an establishment of 1 660. Branch 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.

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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; pro- viding employment assistance; promoting good 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 administer- ing legislation on explosives, prospecting, quarrying and mining.

       During the year, the Staff Training and Development Division organised one induction course for 24 new recruits and 19 in-service training programmes for 666 serving officers. In addition, a total of 39 officers were sent overseas for training or duty visits and in pre- paration 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 1988, the Labour Relations Service of the Labour Department conciliated in 160 trade disputes which led to eight work stoppages, with a loss of 2 345 working days, compared with 2773 working days lost in 14 work stoppages in 1987. The service also dealt with 15 434 claims for wages in lieu of notice, wages in arrears, annual leave pay, holidays pay, end-of-year payment, severance payment, long-service payment and others.

The Promotion Unit of the Labour Relations Service promotes harmonious labour- management relations in the private sector through a variety of activities. In 1988 these included 315 visits to individual establishments, employers' associations and trade unions, three symposia for the catering and retail trades, 40 seminars, three exhibitions, 230 talks delivered to individual establishments and organisations and the publication of a quarterly newsletter, and leaflets and pamphlets on labour legislation and a wide range of labour relations matters. The unit also organised courses on labour legislation, labour relations and supervisory management on a recurrent basis. During the year, there were 15 certificate courses, three of which were jointly organised with two employers associations, and 13 staff relations management courses for supervisors.

A special promotion programme, entitled 'Labour Relations 88' was organised in November and December in conjunction with the Labour Relations Promotion Sub- committee of the Labour Advisory Board. The programme, the first of its kind in Hong Kong, aimed at promoting harmonious labour relations in Hong Kong through educational as well as entertaining activities, including a territory-wide labour relations conference, 10 district seminars, nine exhibitions, quizzes on labour relations on radio and in the press, a photo competition and a gala night on television.

Protection of Wages on Insolvency Fund

In June 1988, the Protection of Wages on Insolvency Fund Ordinance was amended to make it possible for ex-gratia payments to be made to workers who are barred by law from presenting a bankruptcy petition against their insolvent employers because the amount of wages involved does not exceed $5,000.

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      During the year, 4096 applications were received and 3 549 were approved, with payments totalling $9.9 million.

Maternity Leave

Female employees were entitled, as from July 1987, to maternity protection from the date a notice of pregnancy and intention to take maternity leave is served on the em- ployer. Previously, maternity protection began only 12 weeks before the start of the maternity leave.

The Labour Tribunal

The Labour Tribunal, which is part of the judiciary, is intended to provide 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 1988, the tribunal heard 3 182 cases involving employees as claimants, and a further 482 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, 90.52 per cent were referred by the Labour Relations Service after unsuccessful conciliation attempts.

Finding Employment

The Local Employment Service of the Labour Department provides free placement services to help employers recruit staff and job-seekers to find suitable employment. It operates from 15 offices linked by a facsimile system for the rapid exchange of vacancy information. The Central Recruitment Unit is a central agency for all government departments to use in the recruitment of non-pensionable staff, such as artisans, drivers and workmen. It also co-ordinates employment services provided to large private concerns with territory-wide recruitment needs. During the year, 26 071 people were placed in employment, including 5 523 who found jobs in the Public Service. The service also organised three 'job bazaars' to help participating companies from different trades and industries to recruit staff and to attract potential workers. Publicity efforts through the mass media and promotional visits were also intensified to encourage more people to use these free employment services.

The Higher Education Employment Service provides free employment assistance to job-seekers who possess either university, post-secondary or professional qualifications. It has computerised its operation to handle job-matching and produce promotional materials. During the year, 317 people found employment through this service. Seminars were also organised to advise job-seekers on job-hunting techniques and employment opportunities. The Selective Placement Division provides a free employment counselling and placement service to the physically disabled, mentally retarded and ex-mentally ill persons seeking open employment. The division operates from offices in Hong Kong, Kowloon and the New Territories.

      The placement of socially maladjusted job-seekers is 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. Some 1 126 disabled persons were placed in employment in 1988.

Careers Guidance

The Youth Employment Advisory Service of the Labour Department provides careers guidance to young people through various programmes and activities. It was renamed the

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     Careers Advisory Service in September, in order to reflect more accurately the nature of its work. Officers of the service delivered 440 careers talks in 215 schools and six voluntary agencies covering an audience of 76 830. The service also organised a series of regional careers projects in conjunction with the Vocational Training Council. About 115 000 students from 253 schools participated in the Careers Quiz which aimed at arousing their careers awareness. It also mounted a work orientation programme which enabled some 1 200 students from 45 schools to obtain a better insight into the world of work by visiting various establishments in the private and public sectors.

The 17th annual careers exhibition was held in December at the City Hall in collabora- tion with the Urban Council. Young people were given the chance to obtain information about a wide range of 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 90 500 visitors.

      To promote careers education, the service organises annually a certificate course for careers teachers in co-operation with the University of Hong Kong, the Education Depart- ment and the Hong Kong Association of Careers Masters and Guidance Masters. A seminar was also held to provide a forum for careers teachers to update their knowledge on recent issues in careers guidance. The service regularly produces various careers publications which are distributed free of charge to schools, youth centres and other interested persons.

       The service now operates three careers information centres. Each centre is fully equipped with a reference library and audio-visual recordings of information on employment and training opportunities. A total of 26 235 visitors used the centre's facilities in 1988.

Foreign Workers

The Immigration Department is responsible for controlling the entry of foreign workers for employment in Hong Kong. Generally speaking, foreigners who have special skills or experience of value to and not readily available in Hong Kong are allowed entry. Those who are able to contribute substantially to the economic well-being of Hong Kong, such as bankers and entrepreneurs and other persons whose activities are likely to stimulate local employment are also considered for entry. In all cases, normal immigration requirements must be met. The Immigration Department considers special cases in consultation with the Labour Department and other expert departments.

      During the year, 9 896 professionals and other persons having technical expertise or administrative and managerial skills from over 30 countries were admitted for employment.

Foreign Domestic Helpers

The entry of foreign domestic helpers is subject to the condition that the employer is a bona fide resident of Hong Kong who is able to provide suitable accommodation to the helper and is willing to undertake his or her maintenance in Hong Kong and repatriation to the country of origin. The demand for foreign domestic helpers has increased steadily. At the end of the year, there were 45 154 foreign domestic helpers in Hong Kong, compared with 36 831 in 1987, representing an increase of 22.6 per cent. Of these, 41 700 are citizens of the Philippines.

Attestation of Employment Contracts for Foreign Domestic Helpers

For the purpose of controlling and protecting their employment conditions in Hong Kong, the Labour Department attested to 37 068 employment contracts for foreign domestic helpers in 1988.

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      The Labour Department also provides a conciliation service to parties involved in disputes arising from the employment of foreign domestic helpers. During the year, 473 claims, 801 consultations and 48 508 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. In 1988, the Labour Department issued 357 licences to employment agencies handling employment of persons within Hong Kong and 90 licences to agencies dealing with employment of persons outside Hong Kong. For various reasons, five licences were revoked or refused renewal in 1988.

Employment Outside Hong Kong

     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 departure of the workers from 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, 218 fresh contracts were attested, compared with 255 in 1987.

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 (Dangerous Substances) Regulations were approved by the Legislative Council in June. These regulations, which came into operation in December, provide that the proprietor of a specified industrial undertaking is responsible for labelling in a prescribed manner dangerous substances which are used, handled or stored in his workplace; providing his employees with information on the hazards and the precautions necessary in handling these substances; providing adequate safety instructions, training and suitable protective clothing and equipment to employees exposed to such substances; and ensuring that the clothing and equipment are properly used. The regula- tions also require employees to comply with the safety instructions and to take other precautions.

     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 organised for teachers and students of technical institutes. Special safety courses were arranged for potential summer-job seekers before the summer school holidays commenced. As in the past, the centre gave talks on safety management to business students in post-secondary institutions. In collaboration 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 also continued to assist the Construction Industry Training

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Authority to run training courses to train safety officers and safety supervisors for the construction industry.

      The Safety Programme Promotion Unit helped industry to develop a sense of self- regulation towards the promotion of in-plant safety and health. The unit assisted manage- ment and employees to recognise and rectify safety and health hazards and to develop or improve their own in-plant safety and health programmes. Guidance materials were published regularly to assist industry to understand the technical aspects of self-regulation. The unit also assisted in organising seminars, safety training courses and other activities to promote the concept of self-regulation. In July, a three-day Residential Seminar on Self- Regulatory Approaches in Labour Inspection was organised jointly with the Asian and Pacific Project for Labour Administration of the International Labour Organisation.

       The Factory Inspectorate, in collaboration with the Information Services Department GIS - 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 between July and August as part of the popular television programme 'Enjoy Yourself Tonight'.

The Labour Advisory Board Industrial Safety and Health Committee and the six industry-based safety sub-committees formed under it continued to undertake various activities to promote work safety. These activities included the preparation of codes and pamphlets on safe practices, safety seminars, an industrial safety carnival day and promotional visits to factories and construction sites.

The Occupational Safety and Health Council Ordinance was enacted by the Legislative Council in July. The main objects of this ordinance are to establish a statutory body with the purpose of fostering, through safety education, training and promotion, safer and healthier working conditions in Hong Kong and to provide for the payment of a levy by employers to provide the council with the funds necessary for its establishment, mainten- ance and operation. The council's first meeting was held in September.

       The Boilers and Pressure Receivers (Amendment) Ordinance (1988) was enacted and came into force in December. The title of the Ordinance is now the Boilers and Pressure Vessels Ordinance. The Commissioner for Labour has been appointed as the Boilers and Pressure Vessels Authority under the Ordinance. He has delegated most of his powers to officers of the Pressure Equipment Division of the Labour Department.

       The Boilers and Pressure Vessels Ordinance stipulates that boilers, steam receivers, steam containers, air receivers and pressurised cement tanks mounted on trucks or trailers must be approved and registered with the Pressure Equipment Division and must be examined periodically by qualified engineers in the private sector acting as appointed examiners. Thermal oil heaters are now included in the definition of a boiler. 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 equipments.

The Boilers and Pressure Vessels Authority has the power to recognise independent inspection bodies for assisting in the system of control under the Ordinance.

       The Pressure Equipment Division conducts examinations for boiler attendants for the issue of certificates of compentency under the same Ordinance. Under the Gasholders Examination Ordinance, the division approves the design of gasholders and carries out inspections during fabrication and repairs, and subsequent annual inspections.

       In collaboration with the Haking Wong Technical Institute, the devision organises comprehensive training courses for attendants operating electrically-heated boilers. Short

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training courses are also organised for persons who wish to obtain a provisional certificate of competency. Pamphlets on statutory, technical and safety aspects of pressure equipment are published for dissemination to owners and attendants of such equipment.

The division also provides technical assistance to the Fire Services Department concern- ing 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 super- vising 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 arranged several exhibitions for the promotion of occupational health. The division also published a series of booklets and codes of practice on the prevention of occupational diseases. Occupational health promotion and education activities were carried out by nursing officers to arouse the awareness of employers and employees to 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 were conducted in various industries and the following epidemiological studies on health and hygiene conditions have been completed: solvent hazard in printing; silica hazard in road breaking and trench work; bladder cancer survey; hazard of cutting fluid in the metal manufacturing industry; health effects of the use of moulding powder associated with the metal casting process; and the health hazards of sulphuric acid during handling, charging and storage of stationary batteries. A programme to monitor factories with possible lead hazards, quarries with dust hazards, factories with cotton dust hazards and major chemical factories using solvents is carried out regularly.

     The division also carries out medical examinations of personnel exposed to ionising radiation, users of compressed air breathing apparatus, government employees working in compressed air or engaged in diving and pest control. 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 collected 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 employees and dependants of deceased employees covered by the Employees' Com- pensation 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 Pneumoconiosis Compensation Fund, which is financed by a levy imposed on the construction and quarry industries.

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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 1988, Ordinary Assessment Boards convened 549 sessions and completed assessment of 18 088 cases referred to them by the Commissioner for Labour and 1 187 review cases. Special Assessment Boards convened five sessions and completed assessment of four cases referred to them by the Ordinary Assessment Boards and one review case.

The Employees' Compensation Ordinance was amended in July. The new provisions will be brought into operation by stages. With effect from July, the maximum which an employer may advance on account of compensation claimed under the ordinance was increased from $10,000 to $20,000. On October 6, the application of the ordinance was extended to cover employees who are employed in Hong Kong by a Hong Kong employer and who are injured at work performed outside the territory. From January 1, 1989, the existing authority of the Commissioner for Labour to assess compensation payable in cases with no loss of earning capacity will be extended to those where such loss is assessed at not more than five per cent.

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 0.05 per cent to 0.02 per cent from June 26. The Pneumoconiosis (Compensation) Ordinance was also amended in June to clarify and enhance the Pneumoconiosis Com- pensation Fund Board's power to make an advance on account of compensation claimed under the Ordinance from $1,000 to $20,000. The principal regulations to the ordinance were also amended to set the minimum amount to be considered as monthly earnings at $920 and to reduce to 40 the number of weekly working hours defining an employment as full time.

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 ad personam by the government. Six members represent employees of whom four are elected by registered employee trade unions and two are appointed ad personam by the government. Some changes will be made to the com- position of the Labour Advisory Board from January 1, 1989. Under the new arrangement, the board will still consist of 12 members. However, the number of elected employees' representatives and the number of nominated employers' representatives will be increased from four to five in each case. As a result of these changes, the number of employer and employee members appointed ad personam on each side will be reduced from two to one.

To cope with the increasing range and complexity of work and to encourage greater participation by employers and employees, committees have been set up on special subject areas such as employment services, the implementation of international labour standards, industrial safety and health, labour relations and employees' compensation. A number of employers and employees are co-opted from time to time to serve on these committees.

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Primary Production

HONG KONG's farmers, working on a very small agricultural base, 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, 1 140 tonnes of vegetables, 10 050 pigs, 500 head of cattle, 330 tonnes of poultry, 450 tonnes of fish and 1200 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, 38 per cent of live poultry, 18 per cent of live pigs, and 12 per cent of freshwater fish. The fishing fleet of some 4 900 vessels supplies about 83 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. Among the major on-going programmes to this end are the agricultural land rehabilitation scheme and projects for irrigation maintenance and development. Furthermore, 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 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.

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Aquaculture studies are concerned with the development of more efficient culture sys- tems and improved husbandry techniques to increase productivity of the marine and pond fish culture sectors. Hydrographic investigations are designed to supply environmental information for an assortment of biological programmes. Studies of the marine environ- ment are conducted to assess the impact of pollution, including red tides, on fisheries, particularly mariculture, in order to prevent pollution and 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.

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Consumer demand and local primary production are monitored for development planning purposes. Statistics on 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.

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 become an active development programme in recent years. New strains, high quality spawn and technical advice are made available to growers based on experimental results. In 1988, there were 40 mushroom farms producing 60 per cent share of fresh mushroom for 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 840 farmers took part in group discussions led by professional and technical officers from the department and officers made 35 000 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 fishing vessel hull design,

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fishing method and fishing equipment is provided for fishermen, while experiments and demonstrations are conducted to test the suitability of new fishing gear and methods. Training classes in navigation, engineering, radiotelephone operation and seminars on safety on board fishing vessels at sea for fishermen are organised in the main fishing ports. Education is provided for the children of fishermen at 10 schools run by the Fish Marketing Organisation. At the end of 1988, more than 1 640 children were attending these schools. A further seven 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. Eight 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 Market- ing Organisation Loan Fund. All are administered by the Agriculture and Fisheries Department.

      By December 31, loans issued since the inception of these three funds had reached a total of $267.1 million. Of this, $253.3 million has 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 1988, the fund capital was $19 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, loans issued since the inception of these four funds totalled $190 million of which $161 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 12 090 farmers and 1937 fishermen were members of co-operative societies.

      There were 70 societies and two federations among the farming community, and 67 societies and four federations supported by fisherfolk.

Agricultural Industry

Due to the limitation of land, agriculture in Hong Kong will continue to be directed towards the production of high quality fresh foods through intensive land use. The continued loss of productive land to urban use posed significant problems for agricultural development. To meet this problem, agricultural land rehabilitation pilot projects are being undertaken in selected areas with a view to bringing fallow land back to cultivation.

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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 increased from $93 million in 1963 to $417 million in 1988. Vegetable production accounts for more than 79 per cent of the total value having increased from $64 million in 1963 to $332 million in 1988.

The main vegetable crops are white cabbage, flowering cabbage, lettuce, 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.

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      Among the common types of flowers, gladioli and chrysanthemums grow throughout the year, while dahlias, roses, asters, snapdragons and carnations are produced in winter, and ginger lilies and lotus flowers in summer. A wide range of ornamental plants - including philodendrons, 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 2 400 hectares in 1988, mainly as a result of new town development.

The amount of land used to cultivate rice dropped from 9 450 hectares in 1954 to less than one hectare in 1988. 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 1988 it was 540 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 1988 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 1988 amounted to $406 million. However, the production of local pigs is expected to decline in the long run as a result of the implementation of the Animal Waste Control Scheme by the government.

      The production value of poultry, including chickens, ducks, pigeons and quails, amounted to $619 million. Local chicken production was about 16 million birds, represent- ing 42 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

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the incidence of intercurrent disease in both pigs and poultry are carried out at the government's veterinary laboratory.

Rabies Control

Following successful control of the rabies outbreak in 1987, the declarations of Rabies Inspected Areas in Ta Kwu Ling and Pat Heung were rescinded in early 1988. Stringent rabies control measures, however, 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 Frontier Closed Area which continues to be in force as a Gazetted Rabies-Infected Area to act as a buffer against the most likely route of re-introduction of the disease.

      During the year, 21 730 dogs were humanely destroyed and another 33 300 licensed and inoculated against rabies.

All imported dogs and cats, other than those directly from Britain, Ireland, Australia and New Zealand, are subject to a period of quarantine, ranging from 30 days to four months, depending on the rabies situation of the country of origin.

If a dog or cat bites a person, it will be held for observation in a government kennel for at least seven days.

Fishing Industry

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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, lizard-fishes, melon seeds and squids. Total production from the two major sectors marine capture and culture fisheries -- is estimated at about 238 060 tonnes with a wholesale value of $2,388 million in 1988. These figures represented increases of four per cent in weight and eight per cent in value compared with 1987. 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, 87 per cent came from marine capture and 13 per cent from culture fisheries. An estimated 23 400 fishermen work the fleet of some 4 900 vessels, of which over 87 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 135 000 tonnes of marine fish landed in 1988. The total landed catch of live and fresh marine fish available for local consumption amounted to 100 000 tonnes, with a wholesale value of $950 million. This represented 83 per cent of the local consumer demand.

Pond fish farming is one of the most important culture activities. Fish ponds under active cultivation and 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 6 640 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 fingerings 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

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within these zones under licences issued by the Director of Agriculture and Fisheries. By year-end, 1810 licences had been issued. Live marine fish supplied by this activity amounted to 3 280 tonnes valued at $222 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, 47 per cent of the total quantity of locally-produced vegetables, and 65 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, 62 300 tonnes of local vegetables valued at $152 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, transport, 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 to fishermen, improvements to the markets, financial support for the 10 schools for fishermen's children, and scholarships for secondary and tertiary education.

       In 1988, the wholesale fish markets handled 75 600 tonnes of marine fish, crustacea and molluscs which were sold for $591 million. This included 5 250 tonnes of imported marine fish sold through these markets.

      Facilities in most of the existing wholesale markets are 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 progressing well in establishing 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

The Mines Division of the Labour Department enforces legislation and safety regulations relating to mining, quarrying and explosives. It processes mining and prospecting applica- tions, inspects mining and prospecting areas, stone quarries, blasting sites and explosives

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stores. At the end of 1988, one mining lease for the extraction of feldspar and kaolin was in operation. Details of mining leases and licences are published twice a year in the Government Gazette.

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, and issues shotfirers' blasting certificates. In addition, it manages government explosives depots which provide bulk storage facilities for imported as well as locally manufactured explosives.

The Eastern Harbour Crossing and Route 5 (Sha Tin to Tsuen Wan) projects were large users of explosives in 1987, but used much less in 1988. However, the overall consumption of explosives in the territory was reduced by only 13 per cent. Total consumption of explosives during 1988 was 4 160 tonnes.

     Storage space was provided for the fireworks which were imported from both the United States and Japan for the Lunar New Year fireworks display in February. Transit storage facilities were also provided for explosives imported from the United States and France for use by off-shore oil well drilling companies in the South China Sea.

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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 educa- tional system.

Education Commission

Following 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 educational objectives, to 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 personal and professional experience is brought to bear upon the issues before the commission. Included among these, ex-officio, are the chairmen of the Board of Education, the University 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 published its third report in June 1988. The report contained re- commendations on two key issues: the structure of tertiary education and the future of private schools. On tertiary education, the commission's most important recommendations were for all tertiary institutions to adopt a single point of entry to first degree courses, following two years of sixth form education; for a unified system of admission to universities and polytechnics; and for the length of first degree courses in principle to be the same for any given subject. The commission's recommendations on private schools aimed to establish a strong private sector to complement the government and aided schools.

Following publication, a four-month period of public consultation took place. The government's decisions on the commission's recommendations are expected in early 1989.

Board of Education

      The Board of Education was 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 of the Laws of Hong Kong. Although the board is an advisory body without executive

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functions, it plays a key role in planning and formulating education policy. The composi- tion of the board reflects a variety 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 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.

The committee was established in 1965, as the University Grants Committee (UGC), based on the British UGC. It was retitled the University and Polytechnic Grants Com- mittee (UPGC) in 1972, when the Hong Kong Polytechnic came within its purview. 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.

      The UPGC is assisted by three sub-committees. The Medical Sub-Committee advises on medical, dental and para-medical studies, the Research Funding Sub-Committee deter- mines the disbursement of funds from the special earmarked grants which are now provided for research, and the Hong Kong University of Science and Technology Sub-Committee has been set up to provide advice on the development of the new university, which will be funded through the UPGC from 1991.

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

In addition to monitoring the academic development and funding of the institutions, the UPGC is responsible for providing advice on a wide variety of issues involving tertiary education. During the year, the committee was consulted on such subjects as student targets for the 1991-4 triennium and planning projections from 1994 to the end of the century, the mix of degree and sub-degree places to be provided at the Polytechnics and the Baptist College, the possible expansion of the Baptist College, and the appropriate level of funding for research activities at all the institutions. It was also consulted on the introduction and, where appropriate, the validation of higher degrees and first degree courses at the Polytechnics and the Baptist College, legal education, the provision of additional places in architecture, space norms for the Hong Kong University of Science and Technology, and the establishment of the Hong Kong Open Learning Institute.

     Members also provided advice to the Education Commission on subjects relating to tertiary education. During the year, the committee received a proposal from the University of Hong Kong to introduce a foundation year. Further discussion on this subject will be held after the government has considered the recommendations contained in Education Commission Report No. 3 on the length of degree courses at the tertiary institutions.

     There is no government representation on the UPGC. Membership comprises three categories: distinguished overseas academics from the United Kingdom, Australia and North America, eminent Hong Kong-based academics, and prominent local professionals and industrialists.

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      Until July 31, 1988 the UPGC Secretariat, which is a government department staffed by civil servants, comprised two separate parts: the secretariat which services the committee and its sub-committees, and the Student Finance Section, which administers means-tested schemes through which financial assistance is provided to Hong Kong students attending higher education institutions in Hong Kong and in the United Kindgom. On August 1, 1988 responsibility for the administration of the Student Finance Section was transferred to the Education and Manpower Branch of the Government Secretariat.

Vocational Training Council

     The Vocational Training Council was set up in 1982 and comprises 22 members appointed by the Governor. Four are official members - the Secretary for Economic Services, the Director of Education, the Commissioner for Labour and the Director of Technical Education and Industrial Training. The council's role is to advise the Governor on measures to ensure a comprehensive 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 to maintain and improve Hong Kong's industry, commerce and services; and also to establish, operate and maintain technical institutes and 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.

      All training boards and some of the general committees assess the future manpower needs of the economic sectors or areas of their concern and recommend measures to meet such needs, prepare and disseminate training materials such as job specifications, training programmes and trade test guidelines and carry out other duties, such as operating and maintaining training centres or training schemes. During 1988, manpower surveys were conducted in the following 12 sectors: accountancy; automobile; banking; electronics; footwear; furniture; machine shop and metal working; management and supervisory training; merchant navy; printing; shipbuilding, ship repair and offshore engineering; and wholesale/retail and import/export trades. The training boards and general committees also continued to prepare or up-date job specifications, training programmes, trade test guidelines, training curricula and glossaries of common technical terms.

      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 kindergarten, primary and secondary levels. He directly controls all government schools, the Colleges of Education (including the Hong Kong Technical Teachers' College) and the

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Institute of Language in Education. All other schools, with minor exceptions, are required to be registered under the Education Ordinance and to comply with its requirements.

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, staffing, and conditions of service. Inspectors of the Education 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 has major responsibilities in the area of educational development. It continued to be heavily engaged in implementing new policies arising from recommendations of the Education Commission, in particular, language improvement measures and the extension of a standard two-year Sixth Form to all types of secondary school.

Through its Advisory Inspectorate, the department provides advice to schools on teaching methods, and plays an important part in curriculum development. Other major aspects of the department's work include the provision of educational television and other services, implementation of the school building programme, school place allocation and educational research.

To improve educational services and in keeping with the district administration system, the Education Department has divided Hong Kong into 17 educational districts, each headed by a senior education officer whose function is to supervise the administration of schools within the district, to provide advice and assistance to schools, teachers, parents and students, and to act as a channel of communication between them and the department. Senior education officers also attend district board meetings to assist with discussion on educational matters.

Expenditure

The annual estimate of expenditure for educational services in the financial year beginning in April 1988 provided for $1,240 million in capital expenditure for educational projects and $10,020 million in recurrent expenditure, representing 18 per cent of the total budget.

Kindergartens

In September 1988, there were 814 kindergartens providing pre-primary education for 214 703 children in the three-to-five age group. All kindergartens are privately operated, but an increasing number, especially in the recently-completed public housing estates, are operated by non-profit-making oganisations. Apart from allocating premises to non- profit-making kindergarten operators in public housing estates, the government provides assistance for this level of education in the form of rent and rates reimbursement for non-profit-making kindergartens, and fee assistance to needy parents.

Officers of the department are responsible for supervising kindergartens and offering professional advice to school managers, teachers, parents and the public. For basic professional training, a two-year, part-time day-release course and a 12-week, part-time evening course are conducted by Grantham College of Education, while an identical 12-week part-time day-release course is operated by the Advisory Inspectorate of the Education Department. In addition, the Kindergarten Section of the Advisory Inspectorate organises seminars, workshops and exhibitions to help heads and teachers improve their standards.

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Five serving kindergarten teachers were seconded, by courtesy of their employers, to serve on the Education Department's kindergarten curriculum development team to help in producing teaching resources. Staff of the Kindergarten Section also produced a series of leaflets with suggested activities for teachers to use.

The curriculum development committee's kindergarten education committee completed the Chinese version of 'Guidelines on Nursery Class Activities', which contain suggestions for designing activities for three-year-olds. This was issued to schools in June 1988.

Primary Education

Primary education has been free in all government schools and in nearly all aided schools since September 1971. In the few aided primary schools where fees are charged, the fees may be remitted in cases of hardship. To assist needy parents, an annual textbook grant of up to $270 a pupil is also available to a maximum of 25 per cent of pupils enrolled in government and aided primary schools. Some parents continue to send their children to the 81 private schools, although places are available in the public sector.

      Most primary schools operate on a bisessional basis, with children attending either a morning or an afternoon session. In October the government announced that a programme was being drawn up to convert schools to whole-day operation.

      In September, primary school enrolment totalled 535 037 compared with 534 309 in the previous year. Enrolment in primary-level evening schools for adults totalled 1 474. During the year, 19 primary schools were completed, providing 35 520 primary school places. Of these schools, 16 were located in the developing new towns to cater for the needs of their growing populations.

Of the 81 343 children who took part in the sixth cycle of the Primary One Admission System, 46 116 or 56.69 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 school internal assessments, scaled by a centrally-administered Academic Aptitude Test, with allocation taking account of parental choice. In July, 85 407 Primary 6 pupils participating in the SSPA were allocated Secondary 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.

Modifications to the system were made in 1988. These included the reduction of the number of school nets from 25 to 19, the setting up of a single SSPA Advisory Committee and a new method of filling discretionary places. From 1989, new links between some primary and secondary schools under the nominated schools scheme may be permitted.

The Student Guidance Section provided guidance to 809 primary schools, covering a pupil population of 426 905.

Secondary Education

Provision of secondary education continued to meet the approved policy targets. During the year, 11 secondary schools, including four prevocational schools, were completed, providing 12 120 school places. Another 23 new secondary schools, planned for completion between 1989 and 1993, were included in the Secondary School Building Programme for reprovisioning schools from areas of surplus to areas where there is a demand for

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secondary school places. A further seven secondary schools, planned for completion in 1991 and 1992, were included in the programme to provide for an increase in overall enrolment. There are four main types of secondary schools in Hong Kong: Anglo-Chinese grammar schools, Chinese middle schools, technical schools and prevocational schools. There were 343 Anglo-Chinese grammar schools with enrolments totalling 365 330 compared with 344 and 370 410 in 1987. These schools, in which the medium of instruction is mostly English, 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).

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 at both ordinary and advanced levels. Some Anglo-Chinese schools also offer a one-year sixth-form course preparing their students for the Hong Kong Higher Level Examination with a view to admission to the Chinese University of Hong Kong.

      There were 57 Chinese middle schools, with 32 973 students, compared with 60 and 34 640 respectively in 1987. 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 sixth-form course leading to the Hong Kong Higher Level Examination.

Among these schools 75 were private Anglo-Chinese schools and 24 were private Chinese middle schools. To supplement the supply of secondary school places, the government bought a total of 47 997 Secondary 1 to 3 places from 48 private schools of a sufficiently high standard through the 'Bought Place Scheme' in 1988. Proposals to improve further the standards of these schools and to strengthen the role of the private secondary school sector in general have been made by the Education Commission and are being considered by the government.

In September 1988, a working group was convened with representation from the secondary and tertiary education sectors, to advise on the implementation of a unified two-year sixth form, as recommended by the Education Commission in its Second Report. One major task of the working group will be to advise on the introduction of a new intermediate or 'I' level examination, to be taken at the end of Secondary 7 in parallel with A-levels, in order to broaden the sixth form curriculum.

Several language-improvement measures were introduced in September 1988, designed to increase the use of Chinese as the language of instruction while maintaining students' ability to use English as a second language. These measures will bring to an end the traditional distinction between Anglo-Chinese and Chinese middle schools, and schools are being encouraged to remove such reference from their school names.

Secondary technical courses are provided for 22 086 students in 22 schools, ten of which are run by the government, while 11 are government-aided, and one is privately run. Secondary technical schools prepare their students for the HKCEE with an emphasis on technical and commercial subjects. Qualified candidates can continue their studies in the sixth form or in technical institutes.

Prevocational schools are secondary schools which provide students with a general education and an introduction to 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 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

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craft apprenticeship schemes with associated part-time day-release courses at technical institutes. Credit is given by the institutes for technical subjects which have been studied in depth at school, and direct entry to the second year of an approved craft apprenticeship may be permitted for graduates of prevocational schools.

There are now 21 prevocational schools providing 16 760 places. A further seven schools of this type are included in the Secondary School Building Programme.

The Junior Secondary Education Assessment (JSEA) System, which allocates suitable Secondary 3 leavers to Secondary 4 places and post-Secondary 3 craft courses, completed its eighth cycle in August. The system has been improved and participants are no longer required to attend a public scaling test. Of the 76 137 students presented for allocation, 60 699 or 79.7 per cent were allocated aided places in Secondary 4 or full-time craft courses. Of those who were allocated Secondary 4 places, 85.4 per cent were able to continue studying in their own schools.

      In order to promote practical/technical education for junior secondary students in schools which do not have suitable facilities, a Practical Education Centre was opened in September 1986. This centre, operated and maintained by the government, has 15 fully-equipped workshops and special rooms to cater for a maximum weekly enrolment of 9 600. Courses, which are free of charge, include Design and Technology (Woodwork, Metalwork and Plastics), Home Economics (Cookery, Needlework) and Art and Design (Painting, Pottery and 3-Dimensional work). The centre caters for students at Secondary 1 to 3 levels. Courses may later be extended to Secondary 4 and 5 levels.

The Careers Education Section of the Education Department promotes careers educa- tion and student guidance in secondary schools. 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. A Guidance Teacher Resource Centre was set up in July to provide resources support to secondary schools.

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 the subsequent annual reviews of the Rehabilitation Programme Plan. A total of 14 291 special places for handicapped children were provided in 1988, compared with 13 516 places in the previous year.

There were 72 special schools providing 8 741 places for the more severely handicapped. These schools provided special education for the blind, the deaf, the physically handi- capped, the mentally handicapped, the maladjusted and socially deprived and children with learning difficulties. The boarding sections of 16 special schools provided 866 residential places. There were also 376 special education classes in ordinary schools providing 5 550 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 successfully com- pleted, and an integrated kindergarten programme has since been fully implemented to meet the special need of young children below the age of six who are mildly disabled.

Intensive remedial services were 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

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     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 were screened under the Combined Screening Programme for defects in hearing and vision. 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. One of the Special Education Services Centres operates an ear mould laboratory to provide ear moulds to hearing impaired pupils.

      The 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.

      Two-year, part-time in-service training courses 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 (Chapter 320). They are the Hong Kong Shue Yan College and Lingnan College. The Hong Kong Shue Yan College, registered in January 1976, has three faculties - Arts, Social Science and Business with 13 departments offering day and evening courses to 4 024 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 - with seven departments and an enrolment of 1 162 students. It attracts government financial assistance for its two-year sixth-form courses and the two-year post-sixth-form higher diploma course. However, no financial assistance is given to the fifth year course leading to an honours diploma for students who successfully completed the higher diploma course.

      In late November 1987, the government invited the United Kingdom Council for National Academic Awards (CNĂA) to examine courses provided by Lingnan College to determine its academic standard. This assessment was in line with the terms of the 1978 White Paper on the Development of Senior Secondary and Tertiary Education, which stipulated that the standards of the qualifications awarded by those post-secondary colleges which received government financial assistance should be assessed to ensure comparability with those of the Hong Kong Polytechnic. As a result of the assessment, Lingnan College became eligible for greater financial assistance from government in 1988-9 and thereafter. The college also began phasing out its sixth-form courses in September 1988, and modifying its present 2 + 1 structure for post-sixth-form diploma courses so that students can follow an integrated three-year course in future.

Students of the first and second years of the integrated three-year diploma course at post-sixth-form level at Lingnan College were eligible for grants and loans, the maximum levels for which were revised to $3,900 and $4,700 a year respectively in the 1988-9

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academic year. Loans up to a maximum of $8,600 a year were available to final year students at Lingnan College and to students in the four-year course at Hong Kong Shue Yan College. Final-year students at Lingnan College will also be eligible to apply for grants from September 1989.

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 8 700 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.

      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, and the Bachelor of Science in Quantity Surveying (four years). All courses, apart from some in the Department of Chinese, are taught and examined in English. In the university's 1988 admission exercise, 18 998 candidates competed for 1 993 first-year places.

      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 1988, higher degree enrolment constituted about 16 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 form. Funds for the support of research are limited, but the main financial sources are the government, private benefactions and private companies. A special grant of $20.4 million was provided by the government during the 1985-8 triennium to foster 'strategic' research of particular relevance and value to Hong Kong. Research is considered a vital function of the university, and projects undertaken in co-operation with the commercial and industrial sectors of the community, and collabora- tive research and exchange at an international level, are encouraged and supported as far as possible. In July 1988, for example, the university signed a Letter of Agreement with the National Aeronautics and Space Administration of the United States for collaborative activities in space research.

      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 Agricultural Research Centre, the Social Sciences Research Centre, and the Swire Marine Laboratory at Cape d'Aguilar, due to be opened formally in the autumn of 1989. 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 Asso- ciation of Southeast Asian Institutes of Higher Learning. Academic staff are recruited by international advertisement.

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      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 De- partment of Speech and Hearing Sciences, which had its first intake in September 1988, 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 has just been completed, while work to expand the main library is underway and due for completion by 1990-1.

      Hostel places are provided by the university for about 25 per cent of undergraduate students. There are seven residential halls, and two non-residential halls. Two additional 400-place halls of residence are planned, plus a 150-place hall for 'on-call' clinical students. A number of postgraduate students and academic visitors to the university can be housed in 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 880 000 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. The Fung Ping Shan Museum, situated in Bonham Road, is a University Museum which is open to the public on weekdays. The museum's collections are chiefly Chinese paintings, ceramics and bronzes, dating back to the third millenium BC.

      Apart from the regular student enrolment, the university offers about 1 200 courses to some further 33 000 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, almost entirely on university prem- ises either in the Extra-Mural Studies Town Centre in Central District, or else at the university campus.

Graduate Teachers

The training of graduate teachers for secondary schools is undertaken by the Faculty of Education at Hong Kong University and the School of Education of the Chinese University of Hong Kong.

In University of Hong Kong, 134 students were enrolled in the one-year full-time Postgraduate Certificate in Education, and 748 students in the two year in-service pro- gramme in 1987-8. For the further professional and academic development of teachers, the faculty offers Advanced Diploma and M Ed programmes by coursework and dissertation in a variety of curriculum areas. The Advanced Diploma electives offered were Language Teaching (20 students), Educational Administration (20 students), Education Evaluation (15 students), and in the M Ed the electives were Curriculum Studies in Science (13 students), and Curriculum Studies in Social Sciences (9 students). Partly as a result

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of the numbers of students who have graduated from the Masters programme over the 10 years since it was instituted, the numbers of applications for research degrees (M Phil and Ph D) in education continued to rise. There were 14 enrolments in 1987-8, and the Faculty intends to increase the numbers of places available for study at this level in the next few years.

A major recent innovation undertaken by the Faculty of Education has been the provision of a wide range of In-service Teacher Education Programme (INSTEP) courses of varying length aiming to cater for a wide diversity of needs in the education community. Sixty-five courses were taken by 1 082 students in 1987-8.

Education Research

Members of the Faculty of Education at Hong Kong University are engaged in over 50 research projects in education, ranging from pre-primary to tertiary level and from broad issues of educational planning and curriculum development to studies of particular learning contexts. The faculty has continued its active co-operation in research with the Education Department, and is gradually extending its work with colleagues in China.

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 (1951) and United College (1956). A fourth college, the Shaw College, named after its donor Sir Run Run Shaw, became 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 1988-9, the university offered full-time undergraduate students 33 major subjects and 36 minor subjects through its 47 departments grouped under five faculties, namely, Arts, Business 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. Clinical teaching is conducted mainly in the university's teaching hospital - the Prince of Wales Hospital in Sha Tin. The degrees of MB ChB conferred by the university are recognised by the General Medical Council of the United Kingdom and the Medical Council of Hong Kong for the purposes of provisional and full registration of medical practitioners. The university emphasises bilingualism. Students have to be proficient in both Chinese and English on admission, and both languages are used in teaching.

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     At the postgraduate level, there are 55 academic and professional programmes leading to the degrees of Doctor of Medicine, Doctor of Science, Doctor of Philosophy, Master of Philosophy, Master of Business Administration, Master of Social Work, Master of Divinity, Master of Science, Master of Arts, Master of Arts in Education and Master of Social Science, as well as diplomas in Education and Social Work.

     Part-time degree programmes leading to Bachelor's degrees in Business Administration, Chinese and English, Music, Primary Education and 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.

     A new Master of Social Science Programme in Clinical Psychology was launched in 1988-9. 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, a new programme in Information Engineering having been already introduced during the year.

     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. Of the 28 000 candidates who sat the various public examinations held in 1988, approximately 1 550 were admitted to first year studies. Enrolment as of September 1988 totalled 7959, comprising 5 836 full-time and 681 part-time undergraduate students and 446 full-time and 976 part-time postgraduate students. Almost all students are local, and about half of them are given hostel places.

      In 1987-8, the Department of Extra-Mural Studies offered more than 1 650 courses with a total enrolment of more than 56 100. In addition to general courses and those leading to the award of diplomas and certificates, the department also offered correspondence courses, courses on radio and TV and by newspapers, and self-learning courses packaged in the form of audio tapes, programmed texts and resource materials. Apart from running courses in China, the department co-operates with the University of British Columbia, Canada, in offering several diploma courses. A Bachelor of Business degree programme in Accounting was jointly organised for the first time in 1988 with the Darling Downs Institute of Advanced Education, Australia. The Distance Education Unit of the depart- ment also collaborates with Radio Television Hong Kong on popular radio and TV courses, and is planning to launch more certificate and diploma courses by means of distance learning in future.

     Meanwhile, the university's campus continues to expand to cater for an increasing student number and for new programmes. The Institute of Chinese Studies acquired an extension wing, the science-based departments acquired an extra academic building by the University Mall, staff and students have a new amenities centre, and the new Shaw College built two 300-bed hostels and an amenities building complex, an administration and education building and a block of staff quarters. Building projects about to be put out to tender include the Leung Kau Kui Building (teaching facilities) at Central Campus, the Phase I Redevelopment of the Teaching Buildings Complex of Chung Chi College and a Lecture Theatre Complex under the Shaw College Development. Several other capital projects covering teaching, amenities, sports and domestic facilities are at various stages of planning and design.

     The library system consists of the University Library, the Medical Library, and three branch libraries in the colleges. The total collection in 1988 was 968 400 volumes.

L

Schools Festival fan dancers

This image is unavailable for access via the Network

due to copyright restrictions. To view the image, please contact library staff for a printed copy of the copyright work.

a helping hand backstage of the drama

Concubine Yi

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players in the ge-hu bass section of

the Hong Kong Chinese Orchestra

performing the Korean drum dance

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      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, and the Association of Southeast Asian Institutions of Higher Learning. The university has also been closely associated with the Committee for International Co-operation in Higher Education in the United Kingdom.

       To mark the university's 25th Anniversary in 1988, a series of activities were held throughout the year. Celebration programmes included five Anniversary Lectures and two Tanner Lectures by renowned scholars, an Anniversary Concert, a Silver Jubilee Ball, a Congregation featuring the foundation day ceremony, special exhibitions and a number of international conferences.

Hong Kong University of Science and Technology

With the incorporation of the Hong Kong University of Science and Technology on April 10, 1988, the Planning Committee appointed in September 1986 to establish a third university in Hong Kong was replaced by the Council of the University with members appointed by the Governor in his capacity as Chancellor of the University.

       The Council of the University, chaired by Sir Sze-yuen Chung, has since appointed Professor Chia-wei Woo as the first Vice-Chancellor of the university. Other senior personnel, including the pro-vice-chancellors and the deans, are being recruited.

      The university campus, which is being built as a turnkey building project managed by the Royal Hong Kong Jockey Club, will be located on a 60 hectare site at Clear Water Bay, Sai Kung. This project, costing over $2 billion, of which $1.5 billion will come from a Jockey Club donation, will be completed in two phases: Phase I in 1991 and phase II in 1993. When completed, the campus will have a full range of academic and research facilities, and excellent recreational facilities and hostel places for at least 30 per cent of its student population and quarters on campus for at least 50 per cent of its eligible staff.

      The university will provide undergraduate and postgraduate courses in its three schools: Science, Engineering, and Business and Management, and a General Education Centre will be established which will, in addition to undertaking a service role, offer postgraduate and research programmes. A modular system is planned for undergraduate courses and this will allow for a large measure of flexibility, enabling academic subjects to be grouped in various combinations. Seven hundred full-time or part-time equivalent students will be admitted in October 1991, increasing to the approved student target of 7 000 places during the 1994-7 triennium and to 10 100 by the end of the century.

      The undergraduate courses in the School of Engineering will include Computer Science, Electrical and Electronic Engineering, Industrial and Manufacturing Engineering, Civil and Structural Engineering, Mechanical Engineering, and Chemical Engineering. Post- graduate programmes will be determined mainly by the needs of the community and also to some extent by the specialities of the academic staff recruited and by the availability of equipment and facilities. In addition to a Research Centre, a Technology Transfer Centre will be established on the university campus.

      The undergraduate courses in the School of Science will include Biology, Biochemistry, Mathematics and Physics. Postgraduate programmes will depend again on community needs, the specialities of academic staff recruited and the availability of laboratories.

      The School of Business and Management will offer a general business programme for undergraduate students, comprising an integrated package with many required

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modules and a limited number of speciality electives. It is intended that the school offer two separate but complementary postgraduate courses. The first is a standard two-year MBA course, shaped to suit Hong Kong's needs. This course will emphasise finance and entre- preneurship and will be technology oriented. The second is a one-year Masters course in business and technology, designed for people already well trained or experienced in technology.

The General Education Centre will cover such areas as Chinese and China Studies, Local and Regional Studies, History, Geography, Philosophy, Psychology and Linguistics.

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 academic year 1988-9, there were 7 920 full-time, 1 740 sandwich, 1 160 mixed-mode, 2 570 part-time day release and 11 970 part-time evening students. There were also 560 students enrolled on a distance learning course. The staff strength stood at 2 537, comprising 926 teaching, 251 senior administrative and 1 360 technical, clerical and ancillary staff.

     The Hong Kong Polytechnic has 25 teaching 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 Accoun- tancy, 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 Engineer- ing, Electronic Engineering, Manufacturing Engineering, Mechanical and Marine Engineer- ing, and Nautical Studies.

     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 1988-9, 190 courses are being offered in different modes of attendance, namely full-time, sandwich, part-time day release, part-time evening, mixed-mode and distance learning. Successful completion of these courses leads to the awards of degree, associateship, professional diploma, higher diploma, diploma, post- registration diploma, post-registration certificate, endorsement certificate, higher certi- ficate, certificate and certificate of proficiency.

Degree courses offered in the 1988-9 academic year include: BA(Hons) in Accountancy; BA(Hons) in Business Studies; BA(Hons) in Computing Studies; BA in Design; BA in Hospitality Management; BA in Language and Communication; BA(Hons) in Textile and Clothing Marketing; BEng(Hons) in Building Services Engineering; BEng(Hons) in Civil Engineering; BEng (Hons) in Electrical Engineering; BEng(Hons) in Electronic Engineering; BEng(Hons) in Manufacturing Engineering; BEng(Hons) in Mechanical Engineering; BSc in Building Technology and Management; BSc(Hons) in Building Surveying, BSc

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in Quantity Surveying; BSc in Land Management; BSc(Hons) in Combined Studies in Mathematics and Science; and Bachelor of Social Work. The Bachelor of Social Work course was offered in both the full-time mode and mixed-mode.

      The polytechnic continued to register candidates for the Degree of Master of Philosophy by research. The period of registration for research degree candidates is normally two years on a full-time or three years on a part-time basis.

Since 1981, it 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 proportion of higher level academic work.

It also offers short full-time and extension courses to meet the needs of the community. A total of 535 students enrolled on short full-time courses and 9 563 students enrolled in the extension courses in 1987-8. In 1987-8, the polytechnic started to offer extension courses leading to academic awards.

In 1986-7, the polytechnic introduced its distance learning courses. Four more distance learning courses are being developed.

       Since 1985, the polytechnic has offered extra-curricular complementary studies courses to its full-time students, which can be taken on a voluntary basis. The objectives of devel- oping complementary studies are to broaden the students' intellectual outlook, develop their knowledge and skills in areas that are useful to their profession or desirable for adult life, and enhance their understanding of society and sense of civic responsibility. In 1987-8, 113 complementary studies courses were offered, and attended by 3 129 students.

      The polytechnic continued to establish new contacts and maintain close liaison with academic, research and professional institutions in China and overseas.

       Similar to the arrangements in 1987-8, the polytechnic invited applications jointly with the City Polytechnic of Hong Kong for all courses other than postgraduate courses in 1988-9. Applicants were required to complete only one application form and could indicate a maximum of two choices of courses in each polytechnic irrespective of the modes of attendance and levels of study. The subsequent selection of candidates was conducted by the two polytechnics independently.

Research activities continued to grow significantly, with the research grant in 1987-8 being increased by 20 per cent over the previous year. Funds were allocated to support 67 new research projects and 55 on-going projects. The major areas of research included environmental studies, applied social studies, immunoassay techniques, offshore engineering, CAD/CAM, electric power systems, industrial automation, textile technology, VLSI fabrication techniques together with applied biology and chemistry.

      The polytechnic also gave high priority to staff development. The funding of staff development programmes in 1987-8 increased by 20 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 1987-8, donations of $1.64 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 collection has grown to 550 000 items and over 8 000 titles of periodicals. Various kinds of audio-visual materials including 140 000 slides, laser discs, interactive video and computer software are available. Extensive use of CD-ROM databases is made by students and staff. The library is currently replacing its in-house automated system with turnkey software.

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Situated on a nine-hectare campus partly on reclaimed land in Hung Hom, Kowloon, the Hong Kong Polytechnic is still in the midst of an extensive building development programme. Construction of its Phase IIIA project, which also incorporates the Poly- technic's long-awaited main entrance development, began in 1987 and has been progressing satisfactorily despite labour and materials shortages. The project is scheduled for com- pletion in April 1989 and will house the directorate and most of the polytechnic's adminis- trative departments as well as teaching and staff accommodation, and a small theatre.

     Construction of the Phase IIIB development began in April 1988 and is scheduled for completion in mid-1990. This development will provide additional specialist and general teaching accommodation, research space, staff offices, administrative facilities, new canteen and staff facilities, a new sports hall, and accommodation for some specialist centres.

City Polytechnic of Hong Kong

It was a year of further growth for the City Polytechnic, particularly in terms of the numbers of students admitted and graduating. It was also the second year in which the polytechnic and the Hong Kong Polytechnic co-operated in a joint admission programme. Competition for places remained keen: the polytechnic received about 46 000 applications for 3 600 places on courses in various modes of attendance. With the intake of new students in October, the total student population reached 7 000 at the year's end, about half of them being on full-time and sandwich mode courses.

The 1988-9 academic year also saw a significant increase in the number of courses offered. With the establishment of new academic departments of Applied Social Studies, Economics and Finance, and Law, 16 new courses at levels ranging from higher certificate to postgraduate diploma were introduced in October, bringing to 36 the total number of programmes of study from which students could choose. Notable among the additions were a Bachelor of Laws degree with honours, a Bachelor of Engineering degree with honours in Computer Engineering and two postgraduate diplomas, in Language and Law and in Banking and Finance. These courses underlined the polytechnic's continuous commitment to meeting a diversity of academic and vocational needs in Hong Kong. The polytechnic has been particularly pleased to have the opportunity to establish Hong Kong's second Law School.

     In November, the polytechnic conferred academic awards on its third group of graduates. The 1 124 graduates, the highest number since the polytechnic came into operation and twice as many as the previous year, included 55 postgraduate diplomates, 136 bachelors with honours, 353 professional diplomates, 383 higher diplomates, 42 higher certificate awardees and 155 diplomates. By the year's end, most of these graduates had found employment relevant to their studies.

      Along with the increase in the number of graduates came the need to set up an alumni association to promote and foster relations among past students. A planning committee of both graduate and staff representatives was set up during the year to draft the association's constitution and to prepare for its incorporation.

     The year also witnessed the completion and occupation of Phase 1A of the polytechnic's permanent campus at Tat Chee Avenue in Kowloon Tong. In October, five academic departments - Applied Science, Building and Construction, Computer Studies, Electronic Engineering and Manufacturing Engineering - were relocated to the permanent campus together with the Centralised Laboratories and some other administrative and support services. Phase 1A, with a net floor space of 12 000 square metres, accommodates both teaching and supporting facilities for more than 200 staff and 1 000 students.

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Construction of the whole of Phase 1 of the campus was progressing on schedule and is expected to be completed by October 1989. When completed, the permanent campus will give the polytechnic a firm base for its future development, particularly in allowing a wider scope to plan courses that require substantial laboratory resources.

      The polytechnic continued to put an appropriate emphasis on research. During the year, regulations on research degrees were promulgated and in July an additional associate director's post responsible for research and development was filled. With the approval of the University and Polytechnic Grants Committee, the polytechnic introduced in October a small number of candidatures for the degree of Master of Philosophy, thereby heralding in an era of research work and advanced studies which will give the polytechnic a better balanced academic profile.

      Another major institution-wide effort was the review of the polytechnic's academic structure as a result of the rapid build-up in student population and increasing diversity of levels of course on offer in the coming years. The review, under the supervision of the Academic Board, proposed the establishment of three faculties to co-ordinate and monitor the courses and academic support facilities which fall within the areas of competence of each.

Hong Kong Baptist College

During the year, the Hong Kong Baptist College reached another milestone in the development of its academic programmes: the successful mounting of the degree course BA(Hons) with majors in Chinese, English, Geography, History and Religious Studies.

      The BA(Hons) is the latest addition to the college's four existing degree courses: BSc(Hons) in Combined Sciences, BSW in Social Work, BBA(Hons) in Business Adminis- tration, and BSocSc(Hons) in Communication. The two remaining departments (Music and Sociology) which currently offer honours diploma courses are expected to mount degree courses in 1989-90. In addition, the college continues to offer a two-year post- advanced level diploma course in computing through its Computing Studies Department.

Founded in 1956, the college has been fully funded by the government since 1983. It is now a fully autonomous institution and is governed by its own ordinance. Its statutory governing bodies, the Board of Governors and the Council, are composed predominantly of members independently appointed by the Governor from sectors of commerce, industry and education, together with members nominated by the Baptist Convention of Hong Kong.

      The college aims to educate students to become well-balanced in academic achievement, professional competence and character development. Each course is therefore designed to be broad-based and comprises two essential components -- liberal education and vocational preparation. Development of communication skills is also emphasised. The college also aims to launch new degree courses in areas that will meet the needs of the community. All its degree courses are academically accredited by the UK Council for National Academic Awards (CNAA), and external examiners are appointed to all courses to ensure mainten- ance of academic standards. A proposed degree course in China Studies which involves interdisciplinary studies in Economics, Geography, History and Sociology, recently under- went accreditation by a CNAA visiting team in November 1988 and is targeted to start in September 1989. Other new degree courses are being planned and it is expected that by 1990-1 the college will have 3 000 students all enrolled in undergraduate and postgraduate

courses.

      Courses are currently offered through 20 departments grouped under three faculties and one school. They are: the Faculty of Arts (Departments of Chinese Language and

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Literature, English Language and Literature, Music and Fine Arts, Religion and Philo- sophy); the Faculty of Science (Departments of Biology, Chemistry, Mathematics, Physics, Computing Studies); the Faculty of Social Sciences (Departments of Communication, Geography, History, Social Work, Sociology); and the School of Business (Departments of Accountancy, Administrative Information Management, Economics, Finance, Human Resources Management, Marketing). In addition, the Language Centre and the Physical Education Unit provide teaching services to students from all courses.

     To enable the previous honours diplomates of the college to upgrade their qualifications to that of a Bachelor's Degree, the college began to offer in 1988-9 part-time conversion courses for the BSc(Hons) in Combined Sciences and the BSW in Social Work. As of October, 310 students were enrolled in these part-time courses. Apart from these and a two-year diploma course in Computing Studies, all regular courses of the college require three years of full-time study, and students are admitted on the results of the Hong Kong Advanced Level (HKAL) examination. In 1988-9, applications for admission continued to exceed by far the number of available places with an average of nine qualified applicants to every place.

In October, the total full-time student enrolment was 2 696, with a breakdown of: Arts 468, Business 718, Science 618, and Social Sciences 892. While 87 per cent of the first year students were on degree courses, the number of students on degree courses for all years constituted 57 per cent of the total enrolment. Additionally, there were 69 students enrolled in a special two-year course preparing them to sit for the HKAL examination in music. The teaching staff strength stood at 220, with the majority of them holding higher degrees from overseas institutions. Senior academic and administrative staff are recruited through international advertisement.

Two new buildings, one for student amenities and the other for additional teaching accommodation for the Communication Department, were completed for use during the year. Construction work has also begun for three other new buildings which will provide facilities for the Science and Business Faculties, administrative offices, and indoor sports facilities. The entire campus redevelopment project will be completed in 1989-90 and will increase the space provision by 80 per cent, in time for the growth of the student population to 3 000.

     The college's main library has a unique integrated computer system covering all the major library services. The collection of books increased to 230 000 during the year. There is also a branch library which holds a special collection of research materials on contemporary China between 1949 and 1976. With increases in research funding from the UPGC and from the college endowment funds, staff research and consultancy continued to grow significantly, and there were also increases in academic exchanges with institutions in China and overseas.

The Division of Continuing Education also offers a broad range of cultural, vocational and professional courses to meet the needs of people in employment. These courses are mostly part-time and held in the evening using the campus and off-campus centres. There was a total enrolment of 40 000 during the year for the 910 courses offered by the division.

Provisional Hong Kong Council for Academic Accreditation

In August 1987 the government decided that Hong Kong should manage its own external validation of non-university degree courses to ensure that their academic standards are comparable to those of an internationally-recognised degree level. For this purpose, the

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      Provisional Hong Kong Council for Academic Accreditation (PHKCAA) was set up in November 1987, to prepare for the establishment of a Hong Kong Council for Academic Accreditation (HKCAA). When established as an independent statutory body the HKCAA will assume the responsibilities, now undertaken by the UK Council for National Academic Awards (CNAA), for validating degree course proposals from Hong Kong's non-university institutions of higher education.

       Membership of the provisional council includes five overseas academics, five academics from the tertiary institutions in Hong Kong and five non-academics drawn from the industrial, commercial and professional sectors of Hong Kong. The provisional council meets twice a year in Hong Kong and will be submitting a progress report to the government by mid-1989. In this past year, the provisional council has understudied the work of the CNAA, and has refined the role and functions of the future council to ensure that it will be sufficiently flexible to meet the changing needs of Hong Kong and its non-university degree awarding institutions. The provisional council has also forged useful links with similar accrediting bodies overseas, particularly in North America where a four-member delegation of the provisional council exchanged information with representa- tives of these organisations during a visit in May. Preparatory work has progressed well, and the provisional council is confident that the future council will be able to assume full responsibilities for validation and accreditation in Hong Kong.

Open Education

Following the appointment of a Planning Committee in January 1988, steady progress has been made in the setting up of an Open Learning Institute of Hong Kong (OLI).

       The director of the OLI was selected towards the end of the year after an extensive search locally and overseas and the recruitment of other academic and administrative staff is actively underway. Agreement was reached with the government for the allocation of five floors at Argyle Centre Tower II in Mong Kok to house the headquarters of the new institute. Academic planning is well advanced and undergraduate and other programmes in science, business studies and arts are expected to be offered in 1989. Agreement has also been reached with government on funding the OLI over the next few years.

       Draft legislation for the new institute is expected to be considered by the Legislative Council early in 1989. The OLI itself is expected to be formally established around April 1989, to allow the target date of student admission by September 1989 to be met.

       The OLI will offer 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 update their qualifications and skills and for personal development.

Student Finance

      Full-time students attending the local tertiary institutions are eligible, on the basis of need, for grants to cover their faculty expenses, tuition fees and Student Union fees, and for loans to meet their living expenses. This scheme is means-tested and is administered by the Student Finance Section, Education and Manpower Branch, Government Secretariat. Loans provided with effect from the 1987-8 academic year are subject to an interest charge of 2.5 per cent a year which will begin to accrue upon the student's graduation. During the year 8 178 students received loans totalling $73.3 million and 6 784 of these students also received grants, totalling $35.5 million.

Also administered by the Student Finance Section is a joint-funding arrangement between the governments of the United Kingdom and Hong Kong. Under the terms of the

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arrangement, grants are made on the basis of need to full-time students attending first degree or Higher National Diploma courses in the United Kingdom, to meet the difference between home and overseas student fees. However, if the total requirement exceeds the joint contribution of the two governments, then each applicant's grant will be propor- tionately reduced, with the balance made up by an interest-free loan, provided solely by the Hong Kong Government. During the year, grants totalling $59 million and loans totalling $12 million were paid to 118 institutions on behalf of 1 575 students.

UK-HK Scholarships

The scope of the joint-funding arrangement was expanded in 1988 to include a number of UK-HK Scholarships awarded on merit.

The aim of the scholarships is to provide further educational opportunities at the tertiary level in the United Kingdom for local students who have the potential to contribute significantly to mutual understanding between the United Kingdom and Hong Kong and to Hong Kong's future well-being. Those selected are expected upon return to number among the future leaders, decision makers and formers of opinion in Hong Kong.

     The scholarship fund is made up of an annual total of up to £250,000 contributed equally by the United Kingdom government and the Jockey Club on behalf of the Hong Kong government.

     The scholarships are administered by the UK-HK Scholarships Committee appointed by the Governor. For the 1988-9 academic year, a total of nine undergraduate and post- graduate scholarships were awarded.

Sir Edward Youde Memorial Fund

The Sir Edward Youde Memorial Fund was set up in December 1986 to centralise the management of public donations received in memory of Sir Edward Youde, who was Governor between 1983 and 1986.

The money and assets of the fund stood at over $82 million on March 31, 1988. The fund is managed by the Board of Trustees consisting of Lady Youde and four prominent members of the community appointed by the Governor.

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 a Council consisting of Lady Youde and six prominent members of the community appointed by the Governor. For the 1988-9 academic year, the council awarded 20 fellowships to post-graduate research students, 60 scholarships to undergraduate students, and 520 prizes to senior secondary school students. These awards were generally made on the nominations of the heads of the tertiary institutions and secondary school principals followed by interviews by the council as appropriate. During the year, four students who excelled in local public examinations and six disabled students also received awards.

The total value of the local awards made was about $1.4 million.

     In addition, five students also received fellowship and scholarship awards from the council to pursue studies overseas: three in Oxbridge and two in the United States.

Technical Education

The Vocational Training Council operates eight technical institutes in Hong Kong which provide courses at craft and technician levels with full-time, block-release, part-time

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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 and Electronic Engineering, Environmental Studies, Food Technology, General Studies, Hotel-keeping and Tourism Studies, Industrial Technology, Marine Engineering and Fabrication, Mechanical and Production Engineering, Motor Vehicle Engineering, Printing and Textiles. 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 in most courses remained high. Enrolments for the 1988-9 academic year totalled 11 000 full-time, 16 000 part-time day and 30 000 part-time evening students. In September, there were 800 full-time teaching staff and some 700 supporting staff in the technical institutes.

       Each technical institute has on average 70 computer work-stations comprising terminals 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 after completion of their studies.

To meet the increasing demand for study places, the Kwai Chung, Kwun Tong and Morrison Hill technical institutes are being expanded. Construction work began in mid- 1988 and is expected to be completed in the next two years.

Industrial Training

Industrial training is promoted and co-ordinated by the Vocational Training Council.

The council administers and operates a number of industry-wide training schemes for the major industries and assists individual employers in setting up or improving their own staff training schemes. Young persons wishing to obtain organised training may also approach the council for assistance.

       In 1988, the Vocational Training Council operated 16 training centres for training man- power 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, the centres provide off-the-job basic or updating training for over 21 000 trainees a year on a full-time or part-time basis, at skill levels ranging from the operative to the technologist. The council was in the process of setting up a training centre for the wholesale/retail and import/export trades.

       The Engineering Graduate Training Scheme aims at bringing about adequate practical training opportunities for engineering graduates and engineering students in sandwich courses to enable them to complete their overall training as engineers and satisfy the training requirements of the Hong Kong Institution of Engineers as well as other recognised institutions for professional status. In 1988, 80 engineering firms took part in the scheme and provided training places.

       Since May 1987, the council has been administering an experimental scheme on behalf of the Industry Department for the training of engineers in the design of application specific integrated circuits (ASIC). The scheme involves the provision of a government grant to assist employers to train local engineers in overseas facilities in the field of ASIC design.

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The Management Development Centre of Hong Kong is responsible for research, development, 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.

     Technicians and craftsmen in the industrial sectors and supervisory and clerical per- sonnel in the commerical sectors are effectively trained through apprenticeship schemes and traineeship schemes. To up-grade or up-date the work force, the training boards organised subsidised training courses for in-service workers in conjunction with education and training institutions. Participants in these courses were refunded about 50 per cent of the course fee by the council upon satisfactory completion of the course.

     In accordance with the council's decision to introduce a voluntary trade testing and certification system, five training boards - the Automobile, Building and Civil Engineering, Electrical, Machine Shop and Metal Working, and Printing training boards - had plans to conduct trade tests for specific trades in their sectors.

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 their industries. The former is financed by a training levy based on the export value of clothing and footwear items while the latter is financed by a levy based on the value of construction works exceeding $1 million. There are now two training centres for construc- tion trades with a third being built, and two centres for training in clothing and footwear 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. 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 period of the designated trades is normally three or four years. However, the period may be shortened by any period not exceeding one year if the apprentice has obtained relevant special qualification before entering into an apprenticeship.

      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.

To enforce the ordinance, inspectors of the Apprenticeship Section conduct inspections and visits at regular intervals to apprentices and establishments covered by the ordinance. Apprenticeship contracts registered in 1988 totalled 4 900, of which 800 were for non- designated trades. These contracts covered 4250 craft apprentices and 650 technician

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     apprentices. By the end of the year, 10 000 apprentices were being trained in accordance with the ordinance.

Vocational Training for the Disabled

The Technical Education and Industrial Training Department provides vocational training for disabled persons. It operates two government skills centres for the disabled and subvents another three centres operated by voluntary agencies. The total capacity of these five centres is 756 training places, of which 240 are provided with residential facilities. These skills centres offer two broad groups of courses. The first and major group prepares disabled persons for open employment while the second group prepares them for mainstream technical education. In addition to this training the department also provides three main support services for the disabled trainees in the skills centres and in the technical institutes.

      First, Vocational Assessment Section assesses a disabled person's potential and provides guidance on his career plan. A pilot five-day vocational assessment programme was also completed in 1988. Under this programme, all final year special school students who are mildly mentally handicapped were assessed prior to leaving school. The aim was to facilitate and expedite their placement process for further training or employment. The programme was a success and will become a regular service in 1989.

Second, the Technical Aids and Resource Centre designs and makes about 40 different kinds of technical aids and adaptations to standard machinery each year for disabled persons. The aim is to improve their employment prospects and training attainments.

Third, the Inspectorate Unit gives advice to skills centres on administration, curriculum development, instructional methods and training standards. It also provides guidance and counselling to disabled students in the technical institutes.

      The annual employment survey of disabled students completing full-time courses at the technical institutes and skills centres showed that an increasing number was able to obtain employment on completion of their training.

      During the year, construction work started for a new vocational training centre for the disabled in Tuen Mun. This new centre is scheduled to come into operation in late 1990 and will provide another 300 training places.

Teacher Preparation

Three Colleges of Education - Grantham, Northcote and Sir Robert Black - and the Hong Kong Technical Teachers' College (HKTTC) train non-graduate teachers for primary and secondary schools. All four colleges are directly financed and staffed by the government and administered by the Education Department.

       The three general colleges of education conduct initial full-time teacher-education courses lasting two years for students with the required Hong Kong Advanced Level Examination qualification, and three years 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 school 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.

      The HKTTC provides courses for future teachers of technical subjects in secondary and prevocational schools. A three-year full-time course is open to secondary school leavers who have studied 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

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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 1 156 students in the three-year full-time course, 1 080 students in the two-year full-time course, 119 students in the Advanced Course of Teacher Education and a total of 2 484 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 eligible 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, three ten-day management courses were held for a total of 58 newly-appointed primary school heads. Three seven-day management courses were held for 61 experienced primary school heads, while 27 newly-appointed seconday school heads attended a nine-day management course. Following a well-received pilot four-day management course for senior teachers in seconday schools last year, 10 repeat courses were run this year for a total of 202 senior teachers. Various seminars and short courses were also offered for professional officers and induction and basic training courses for new recruits of the department.

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 assists voluntary organisations through a subvention scheme.

      The formal education courses covered remedial education, second chance education and education for personal development. They ranged from primary to secondary and post-secondary studies and were offered in 48 centres. The Adult Education Course (General Background), offering Chinese, English, Mathematics and Social Studies, pro- vided free primary education 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 Government Evening Secondary School Course, operating in both Chinese and English Sections, offered arts and science subjects to adults and adolescents wishing to obtain Hong Kong Certificate of Education qualifications. The evening Secondary School Course for school-aged children, which used to supplement day school provision, was phased out in September 1988 as a result of the greatly increased day-school provision in recent years.

To improve proficiency in English and enhance job opportunities and career advance- ment, English courses were provided at primary, secondary and GCE levels, preparing students 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. Teachers' courses provided opportunities for serving teachers to refresh their knowledge and skills in a variety of academic and cultural subjects. During the year, over 20 000 people enrolled in these formal adult education courses.

Non-formal education was offered through a variety of cultural, social, recreational and educational activities. The Adult Education Courses (Practical Background) offered in 30

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centres, taught practical skills such as sewing and knitting, cookery and woodwork for household purposes. About 4 000 students attended these courses during the year. One Adult Education and Recreation Centre was operated in each of the 19 Administrative Districts. Members of these centres could choose from many creative and educational activities designed to stimulate social awareness, cultivate creative ability and develop individual talents and skills. Various activities were organised with other government departments and organisations, such as the Independent Commission Against Corrup- tion, the Consumer Council, the Regional Council and Regional Services Department, the Royal Hong Kong Police Force, the St John Ambulance Brigade and the Family Planning Association. During the year over 19 000 people participated in the courses and activities. Microcomputer courses were also offered in these centres, with a total enrolment of about 600 during the year.

The government also promoted adult education by subventing voluntary agencies to run courses supplementing and complementing those run by the department. The scope of the subvention scheme has been broadened to meet the changing needs of the community. In 1988-9, government subsidies were granted to 247 projects operated by 60 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 1989. For schools with fewer than 18 classes, an additional 0.5 non-graduate post for teaching Chinese has been provided since September 1986.

To encourage schools to increase the use of Chinese as the language of instruction in seconday schools, the Education Commission's Report No. 1 recommended that secondary schools which made greater use of Chinese should be given additional teachers of English and other resources to avert any consequential drop in the standard of English due to reduced exposure. This recommendation was implemented in September 1988.

      A two-year Expatriate English Language Teacher Pilot Scheme began in September 1987, under which interested secondary schools are provided with at least two expatriate teachers of English. Teachers were recruited by the British Council on contract terms for two years. The scheme is being closely monitored and evaluated by the British Council and the Education Department.

       The Chinese Textbooks Committee (CTC), established in May 1986, continued to assess the demand for Chinese textbooks in the light of the policy of encouraging schools to adopt Chinese as the medium of instruction, and to advise on ways to ensure that an adequate supply of Chinese textbooks of good quality and standard is available in time for the 1989-90 school year.

The committee comprises members of the community and government officials, and is serviced by the Education Department. The first phase of the incentive award scheme recommended by CTC and accepted by the government in May 1987 proceeded smoothly, with the aim of making available Chinese textbooks for 14 subjects at secondary level for use in September 1989. In July 1988, the government accepted the CTC's recommendation of a second phase incentive award scheme to encourage publishers to produce textbooks in Chinese for practical and technical subjects, and $3.6 million was allocated for financial assistance to participating publishers. The department is providing editorial assistance to ensure that textbooks will be of good quality. Chinese textbooks for eight practical and

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technical subjects at secondary level are expected to be available for use in prevocational and technical schools in September 1991.

Institute of Language in Education

The Institute was founded in September 1982 as a 'centre of excellence' on all matters relating to language learning and teaching in Hong Kong schools. It offers in-service refresher courses for teachers of English and Chinese in primary and secondary schools, conducts research into areas of language learning and teaching, organises 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 resources for use in schools and publishes books and articles on language teaching. The institute also serves as a centre for courses leading to the Royal Society of Arts Diploma for Overseas Teachers of English.

     During the year, 1 334 primary and secondary school teachers of English and Chinese participated in 16-week full-time refresher programmes offered by the institute. The secondary school English teachers' course was extended for seven weeks into the summer to include an intensive language proficiency programme involving residential components both locally and in the United Kingdom. Another 550 secondary school teachers of Integrated Science, Physics, Chemistry, Biology, History, Geography, Economics and Public Affairs, Social Studies, Mathematics, Music, Home Economics and Design and Technology attended part-time courses on the use of Chinese for teachers of specific subjects. In addition to the refresher courses, the institute organised two seminars for primary and secondary school heads, two summer courses for the learning and teaching of Putonghua, one summer workshop on computer-assisted language learning for secondary school teachers of English, and a three-day international conference on 'Teaching and Learning Styles Within and Across Cultures: Implications for Language Pedagogy', which was attended by scholars from 21 countries.

      The fourth volume of the ILEJ, the Institute's professional journal, two teachers' guides and two seminar books on Languages in Education in a Bilingual or Multi-lingual Setting, one in English and one in Chinese, were published. In the area of research, the institute completed a study on the effectiveness of extensive reading in English in secondary schools and launched a similar study on extensive reading in Chinese in primary schools. It con- tinued to focus on aspects of Cantonese pronunciation, the application of questioning in the teaching of reading and computer-assisted language learning in secondary schools. It also conducted research into approaches to help teachers to read professional articles and to undertake self-access learning. Two exhibitions of teacher-produced language learning and teaching materials were mounted, which attracted 1 200 visitors.

Education Research

The Educational Research Establishment (ERE) continued to monitor the academic standards of Primary 4 to Secondary 3 students in the three basic subjects of Chinese, English and Mathematics by means of the Hong Kong Attainment Tests. Construction of a battery of tests for Primary 3 was completed in April, while work continued on tests for Primary 1 and 2.

      Reference materials developed by the Educational Research Establishment during the year included An Introduction to Educational Assessment for Teachers in Hong Kong and the Teacher's Handbook for the Aptitude Test for Secondary 3 Students.

     Other research projects undertaken included an evaluation of the Expatriate English Language Teachers Pilot Scheme, a study of the effects of the change of medium of

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instruction in secondary schools, a further assessment of the Activity Approach in primary schools and an evaluation of the Extensive Reading 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, the operation of resource centres and a field studies centre, and the provision of audio-visual teaching aids, educational television and library services to schools. It is also involved in developing civic education, sex education and moral education in schools, and organises various activities and publishes reference materials in support of these.

The Curriculum Development Committee (CDC) and its many subject committees continued to advise on curriculum innovations and revision at pre-primary, primary and secondary levels. New guidelines were issued on nursery class activities, revised syllabuses in Physical Education at primary level, Physical Education and Technical Drawing at both junior and senior secondary levels, and Chinese Literature and Physics at senior secondary level. Handbooks for 19 subjects with technical terms in English and Chinese were issued to schools to encourage teachers to adopt Chinese as the medium of instruction. With continuous support from the CDC and the Advisory Inspectorate, a more child-centred and less formal approach to primary learning known as the Activity Approach continued to expand.

In September 1988, the CDC was reconstituted as a council, with significantly fewer official members, and a number of new co-ordinating committees were set up for different levels of education, namely kindergarten, primary, secondary and sixth form. These continued to co-ordinate the work of a large number of subject committees. The objective of the reorganisation was to enable the CDC to respond more flexibly to present and future needs for curriculum development in Hong Kong. Other changes included the creation of a Special Education Co-ordinating Committee and a Textbooks Co-ordinating Committee to advise the Director of Education. The Advisory Inspectorate, with the assistance of the Textbooks Reviewing Panels, continued to help schools in the selection of textbooks by publishing lists of recommended books. Continuous contact was maintained with pub- lishers of educational materials in order to upgrade the quality of their textbooks.

Together with the re-organisation of the CDC, a School-based Curriculum Project Scheme was launched in September 1988. The scheme provided grants which are available to educationalists, including teachers, school heads, and lecturers at the colleges of education and the school/faculty of education of the universities who wish to develop curriculum projects catering for the varied needs of pupils of a wider ability range.

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 covering Civic Education, Religious/Ethical/Moral Education and Sex Education. A Field Studies Centre is open to secondary 6 and 7 students and teachers.

During the year, the Chinese Language Teaching Centre conducted 47 refresher courses, workshops and seminars for 1 436 teachers of Chinese in secondary and primary schools. Twelve courses and seminars on Putonghua teaching were conducted for 1 433 teachers.

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Five periodic displays on special topics were organised, which attracted 1053 teachers. Both primary and secondary schools benefited from the centre's free dubbing service and 137 teaching tapes were made during the year. Twelve sets of video tapes and 13 sets of slides on teaching Chinese Language, including Putonghua, were produced for in-service training purposes. Two curriculum pamphlets on remedial teaching were published.

     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 tape-dubbing service, the centre has a collection of English language books, journals and cassette tapes for teachers' reference.

     The Mathematics Teaching Centre continued to serve as an in-service training venue and resource centre for both primary and secondary mathematics teachers. The subjects of the seminars, courses and workshops conducted in the year included topical teaching, remedial teaching, activity approach, civic education, internal assessment and the role of a panel chairman in mathematics. Apart from receiving in-service training, many teachers visited the centre to view the display of teaching aids and other resource materials, obtain information and exchange experience on mathematics teaching.

     The Science Teaching Centre is used extensively for conducting refresher courses, seminars, workshops and teachers' meetings and for displaying equipment and resource materials for science teaching. In 1988 more than 3 000 primary and secondary school teachers and laboratory technicians visited the centre. The science laboratory provides facilities for trying out science experiments in connection with syllabus development, making prototype apparatus and performing practical work during science workshops. The two science education resource rooms at the centre are open twice weekly, serving as central reference points on science education and providing advice to teachers and laboratory technicians.

     The Social Subjects Teaching Centre provides supporting services to teachers of Economic and Public Affairs, Economics, Geography, History, Social Studies and Health Education at primary and secondary levels. Teaching materials, projects, teaching kits and audio-visual resources relating to these subjects are on display. Over 1 500 teachers visited the centre during the year, and 28 courses and workshops were conducted for more than 1 400 teachers.

     The Cultural Crafts Centre encourages and oversees the introduction of practical and technical subjects in secondary schools in the public sector. The Subject Inspectors also promote Art and Design, Art and Craft, and Home Economics in all schools. During the year more than 70 in-service training programmes were organised, attended by some 4 000 teachers. The centre mounted five major exhibitions relating to these subjects, which attracted more than 36 000 visitors. Resource materials including bulletins, glossaries of terms, guidelines, recipes and visual aids were produced for teachers' use. The centre also organised participation by students in local and overseas art exhibitions.

     The Civic Education Resource Centre and the Religious/Ethical/Moral Education Resource Centre continued to be popular with teachers. During the year computers were installed to store and retrieve information on resource materials, and reference corners were set up to display noteworthy projects collected from schools. Teaching kits newly produced by the Education Department on such topics as Anti-triad Education, Anti-shoptheft Education and Elections were added to the stock of the centres.

     The Sex Education Resource Centre provides primary and secondary school teachers with central reference material on sex education and advisory services on how to teach it. Over 3 200 people visited the centre and used the resources on display, such as video

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programmes, slides, library books, teaching kits, magazines and journals. Seminars on sex and AIDS education were also organised to help strengthen sex education in secondary and primary schools. An AIDS corner with a collection of pamphlets, teaching resources, video programmes, books and board displays was set up to supply teachers with up-to-date information from local and overseas sources. Publications such as the Sex Education Resource Catalogue and Chess Games on Puberty were published and distributed free to all visitors at the centre.

       The Field Studies Centre in Sai Kung was well patronised by Secondary 6 and 7 students and secondary school teachers pursuing ecological and geographical studies. Thirty-one residential ecology and geography field courses were organised for a total of 1 400 Secondary 6 and 7 students. In-service training courses and seminars were held for 530 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 to run activities related to field work and environmental education for students and student teachers.

The Hong Kong Teachers' Centre

The Hong Kong Teachers' Centre, the first multi-purpose centre of its kind in Hong Kong, was established to promote continuous professional development and a greater sense of unity and professionalism among teachers. An Advisory Management Committee, set up to formulate the policy of the centre, will comprise 63 members appointed by the Director of Education. Of these 60 (including the Chairman) will be nominated from professional groups, such as teachers' unions and associations, school councils, and sponsoring bodies of schools and teachers. Since most of the members of the Advisory Management Committee will be practising teachers, the Hong Kong Teachers' Centre will be largely run by teachers for teachers.

Visual Education

The Visual Education Section's Audio Visual Resources Library makes a wide range of audio-visual aids available on free loan to schools. The stock includes 16 mm films, video-cassette tapes, filmstrips, slides and transparencies, filmloops, learning packages and cassette tapes. The section's Media Production Services Unit in Canton Road is open seven days a week to help teachers produce 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, 6 400 teachers used the facilities of the unit and 123 courses and workshops on the production of audio-visual materials were organised, with a total attendance of 2 460 teachers.

Physical Education

The Physical Education Section is responsible for improving teaching standards in physical education in schools and for promoting school sports, outdoor education camps and dance. In 1988, 34 courses and seminars in physical education were conducted for 1 200 teachers. The 24th Schools Dance Festival held in January attracted 253 secondary, primary and special schools with nearly 4 000 participants. In April, over 1 800 students from 169 school dance teams selected from the Schools Dance Festival took part in 10 performances at the City Hall, Tsuen Wan Town Hall and Sha Tin Town Hall.

      During the year, 363 courses and 12 competitions in various sports were successfully conducted. Of these, the Summer Sports Scheme for Schools and the Schools Summer Olympiad held in the summer holidays were the highlights.

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The section continued to administer the annual Summer Youth Programme for Schools. With funds totalling $4 million, including a government grant and a subvention of $1,280,000 from the Jockey Club, the Summer Youth Programme attracted nearly 312 000 students and teachers who took part in more than 2 850 events.

     To promote and develop sports within Hong Kong Schools, the Hong Kong Schools Sports Council continued to organise Interport and Jing Ying Competitions in various spots. Several training schemes were also conducted to identify and develop potential athletes in schools.

For the first time, the Hong Kong Schools Sports Council hosted the 17th Asian Schools Football Tournament, in which 12 Asian teams took part.

The number of school user units in the Duke of Edinburgh's Award Scheme, for which the Education Department is the operating authority, increased to 165, with 24 156 students enrolled as members. Over 120 courses at Bronze, Silver and Gold levels were conducted to meet the increasing demand from user units.

     The under-twelve Hong Kong Schools football team took third place in the 4th Boys Invitational Soccer Tournament hosted by Hong Kong in April, and took part in an invitational tournament in Guangzhou in July.

     The Hong Kong Schools basketball teams went to the Philippines in August for a series of friendly matches as part of the basketball development scheme.

     Six students were selected to represent Hong Kong in the Olympic youth camp held in Seoul, Korea in September.

Music Education

    Special features of the 1988 in-service music training programme included seminars on the new general music syllabus for Secondary 4 and 5 and the revised primary music syllabus, as well as a workshop on 'Composing and Improvising in the Classroom'. A total of 16 in-service training courses, workshops and seminars were attended by over 1 300 music teachers in secondary and primary schools.

Demand continued to increase for places in the Centralised Scheme of Music Training, which provides opportunities for further study of music at senior secondary level. Students of the scheme obtained very good results in public examinations.

     The Hong Kong Schools Music Festival, celebrating its 40th anniversary this year, attracted 7 261 entries involving over 63 000 pupils competing in 289 classes. The festival ended with a series of seven prize-winners concerts.

Technical and Commercial Education

There was continued expansion of technical and commercial education in the secondary school curriculum. Several new syllabuses, for example, Silversmithing and Jewellery, were drafted and well received by prevocational schools. Some existing syllabuses such as Office Practice, Metalwork and Electrical Studies were revised. The English-Chinese Glossary of terms commonly used in teaching technical and commercial subjects was also revised. Chinese textbooks for Design and Technology, Commerce and Principles of Accounts were written under the Chinese Textbook Award Scheme.

     Thirty-six in-service courses were organised at the Technical Teaching Centre following its official opening in November 1987. There was good response to these courses from serving technical teachers.

For the first time, the Governor's Award was introduced into the Hong Kong Young Designer of the Year Award Scheme, jointly organised by the Education Department and

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the Design Council of the Federation of Hong Kong Industries. The standard of student entries was well received by the public.

Continued support by the Chinese Gold and Silver Exchange Society contributed to another successful Commercial Subjects Project Competition. The theme of this year's competition was 'Commerce and Civic Education', which enabled pupils to experience commercial studies as an integral part of general education in the overall curriculum.

Computer Education

During the year, the Computer Education Centre organised 37 training courses, 20 seminars and 24 study visits for 2 360 teachers, school administrators and student teachers. About 6 000 people visited the centre. Since the course on Computer Literacy was introduced in September 1987 in junior secondary classes, altogether 70 aided and government secondary schools have been teaching it.

Community Youth Club

The Community Youth Club (CYC) was established in 1977, as part of the Education Department's effort to build a strong community spirit among school children through organised activities. These activities aim to inform members about the community and to help them develop into concerned and caring individuals.

       The CYC has been very successful in helping to promote moral and civic education in schools and has contributed substantially to community service campaigns in Hong Kong. The aims of the scheme are summed up in its motto: 'Learn, be concerned and serve'. Over 260 000 students from about 1 000 primary and secondary schools are taking part in the activities. There are now 19 district committees co-ordinating activities at the local level.

       Thousands of members have gained awards under the CYC Merit Award Scheme, which requires them to set examples of good citizenship by offering services to the community. Overseas educational visits for outstanding members are the highlight of the Merit Award Scheme. This year, two teams totalling 23 members were selected to visit Japan and Singapore during summer.

Educational Television

Educational television (ETV) programmes produced jointly by the Education Depart- ment's Educational Television Section and Radio Television Hong Kong are considered by schools as the most useful audio-visual supplement to classroom teaching. Regular viewing of ETV programmes has become a normal part of school life in Hong Kong. In the 1987-8 academic year, some 351 000 primary and 266 000 secondary school pupils watched ETV.

Programmes are transmitted to schools through the two local commercial television stations. Their content follows the syllabuses used in primary and secondary schools. Programmes for secondary schools cover Chinese Language, English Language, Mathe- matics, Social Studies, and Science at the Secondary 1 to 3 level, while those for primary schools cover the same five subjects for Primary 3 to 6 and in addition cover Health Education. Accompanying notes for teachers suggest preparation and follow-up activities, and pupils are supplied with notes and consolidation exercises.

Apart from syllabus-based programmes, supplementary programmes are produced from time to time on special curriculum-related topics for knowledge enrichment purposes. One special programme on 'AIDS', and two special series of four programmes each on 'Civic Education' and 'Family Life Education' were produced for secondary schools.

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TV equipment, including colour television receivers and video-cassette recorders, is provided in all government and aided schools and private secondary schools with bought places. In the financial year ending in March 1988, some $2.7 million was spent on the equipment for these schools.

School Library Services

    School library services expanded with the employment of more school librarians in secondary schools. In the school year 1987-8, 310 schools were provided with either a full or a half post for a school librarian. The variety of resource materials in secondary school libraries continued to increase. In primary schools, the Class Library Scheme was fully implemented in Primary 1 to 6 classes in all government and aided primary schools. Apart from training courses and workshops, seminars on cross-curricular subjects were also organised to furnish teachers with ways and means of using library resources in support of the school curriculum.

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 1988, a total of 146 245 candidates entered for the HKCEE, 6 426 for the Hong Kong Higher Level Examination and 21 315 for the Hong Kong Advanced Level Examination.

     The authority also conducts 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 (TOEFL), 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 liaised with the Education Department concerning the admission of students from Hong Kong to institutions in the United Kingdom and discussed the problems encountered by on-course students. It also worked closely with the Student Finance Section of the Education and Manpower Branch, Government Secretariat, in administering the United Kingdom-Hong Kong Joint Funding Scheme and the new United Kingdom-Hong Kong Scholarships.

     The division also monitored developments in education in the United Kingdom and, in order to promote the interests of Hong Kong students, established and maintained close relations with universities, polytechnics and colleges, British government departments, local education authorities, the British Council, welfare organisations and, in the case of trainee nurses, medical authorities. In addition to advising and assisting individual students, it maintained 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.

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       Altogether 3 856 students went to Britain during the school year 1987-8; 3 808 went to Canada, 4 215 to the United States and 3 147 to Australia.

British Council

The aims of the British Council in Hong Kong are to promote an enduring understanding of Britain, its language, its education and its culture and to encourage the interchange of persons.

       As far as the English language is concerned, the council's English Language Centre ran courses for 26 000 Hong Kong residents, held a summer school for 6 000 secondary school students, ran a summer school refresher course for 150 secondary school teachers and held a conference on developing and testing language skills for another 160 secondary school teachers. In addition one Royal Society of Arts diploma and two Royal Society of Arts certificate courses in teaching English as a foreign language to adults were conducted.

       Off-site business English courses were organised for a variety of organisations and several other contracts with similar firms were in the pipeline. The council has two contracts with the Education Department to bring some 80 expatriate teachers of English to work in Hong Kong schools and to send a similar numbers of Chinese teachers of English to the United Kingdom.

The council's English Language Centre, in conjunction with RTHK, also started teaching English by radio this year and ran a jointly-sponsored scholarship scheme to send outstanding students, business executives and a journalist to the United Kingdom on four-week courses.

       The promotion of British education is done by the Educational Counselling Services and by the Education Promotion Service. These services gave advice and assistance to 8 000 students seeking admission to British institutes of higher education in 1988. Two missions from British universities and polytechnics representing some 60 institutions visited Hong Kong during the year.

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Council-sponsored visitors to Hong Kong came from a wide variety of disciplines including physical education, music, law, literature, fine arts, building use and safety research, socio-linguistics, and English language teaching. The council also sent leading academics and language teachers for familiarisation visits and courses to the United Kingdom from Hong Kong.

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. It organised, sponsored and co-sponsored many arts events, especially in the areas of visual and performing arts. Perhaps the most notable events were the Sadler's Wells Royal Ballet, the English Shakespeare Company, the London Festival Orchestra, a Monty Python Film Week and 'The Elusive Sign' - British Avant Garde Film and Video 1977-87.

       The council's library represents all aspects of British life and culture, though the emphasis is on English language teaching and teacher training. There is also a film and video library covering a wide range of topics. Exhibitions held in the library in 1988 included one to celebrate the centenary of the birth of T. S. Eliot and two concerned with 'English through Microcomputers' and 'Learning with Computers'. Library membership is open to all Hong Kong residents.

       The council celebrated its 40th year in Hong Kong in 1988, and intends to continue to maintain and expand its activities here for the foreseeable future.

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Health

    THE Medical and Health Department provides a balanced programme of preventive, curative and rehabilitative services at a nominal cost to members of the community.

The preventive health service is responsible for the provision of personal health services, anti-epidemic work, control of infectious diseases and promotion of positive health. The services provided include family health, general public health, port health, school health, health education, social hygiene, chest health and tuberculosis, occupational health and dental health.

On the curative side, the services are provided through a network of hospitals and clinics. A multi-disciplinary approach in medical rehabilitation is undertaken which includes the provision of occupational therapy, physiotherapy, prosthetic service, psychological serv- ices, speech therapy and community care in medical rehabilitation centres, day hospitals, out-patient clinics and polyclinics.

     The department is also embarking on an extensive development programme which includes the construction of at least four additional major acute government hospitals and 18 additional clinics and polyclinics in the coming 10 years. Rehabilitation services are also included in the overall planning of the programme.

On the construction side, the 1 600-bed Tuen Mun Hospital is near completion, and will provide a comprehensive range of medical services for the west New Territories region.

On Hong Kong Island, construction work is being carried out on the 1 600-bed Pamela Youde Hospital and will be completed 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 about 800 beds, and some new psychiatric and paediatric facilities.

Meanwhile, 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.

     In 1987, the government decided to establish a Hospital Authority to oversee the delivery of hospital services for the whole of Hong Kong. In doing so, it set up in October 1988, a Provisional Hospital Authority, chaired by Sir S. Y. Chung to prepare for the formation of the statutory Hospital Authority.

      Earlier, in October 1986, a working party on Postgraduate Medical Education and Training had been established to examine the various aspects of postgraduate medical training in Hong Kong. The purpose of this is to ensure a continuing high standard of medical education. The working party submitted its report to the government towards the end of the year.

     For the 1988-9 financial year, the Medical and Health Department expects to spend $3,386 million. In addition, subventions totalling $1,464 million are being made to many

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non-government medical institutions or organisations. Capital expenditure on new hos- pitals and other buildings, including equipment and furniture, amounted to $546 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 comparatively high standard of living. This is reflected in the highly satisfactory health indices. Infant mortality has stayed below 10 per 1 000 live births and the average life expectancy is 80 for females and 74 for males.

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.

Seven cases of AIDS (acquired immune deficiency syndrome) were reported during the year, bringing the total number of AIDS cases on record to 16, of which 11 have died.

As there is no effective cure for AIDS and no vaccine available, the Medical and Health Department has put the emphasis of prevention and control on education and publicity.

In addition to the on-going health education and publicity efforts started in 1983, a 'Community AIDS Concern Week' was launched in the first week of December in support of the World AIDS Day of the World Health Organisation. It enlisted the participation and support of various government departments, voluntary bodies, the media as well as a number of religious groups. Activities organised included an exhibition, a Sunday concert, an inter-school debate, and a series of seminars for medical professionals, social workers, business corporations and the media.

The AIDS Counselling and Health Education Service expanded its work to include a heavy commitment in health education. Health talks are regularly delivered to various groups, including students, office workers, prison inmates and intravenous drug abusers.

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.

An outbreak of hepatitis A occurred between January and April 1988, with more than 800 confirmed cases notified. Epidemiological investigation revealed that the outbreak was associated with the consumption of contaminated bivalve shellfish.

Surveillance and public health control measures were intensified. An inter-departmental Committee was set up to co-ordinate the various control measures, such as increased inspection of food premises and control of unlicensed food hawkers.

Health education messages on the importance of personal and food hygiene were widely disseminated to the public through television, radio, press releases, posters, pamphlets, a 24-hour telephone information service, and broadcasting at points of exit.

The concerted efforts of the different departments involved in the imposition and enforcement of the various food hygiene measures helped greatly to arouse public awareness of the problem. The outbreak was contained by May, and the number of cases returned to the normal level.

Two cholera cases were reported in the year, one local case and one case imported from Macau. Close surveillance of the disease and intensified health education and environ- mental measures were continued. There was no report of any other quarantinable disease.

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     One imported case of human rabies was reported in a 29-year-old man. There was no case of animal rabies.

     During the year, 98 cases of malaria were notified, most of them imported cases, with the most frequent source of infection from Vietnam, China and Africa.

     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. The establishment of the Central Reference Laboratory for malaria also assisted in early detection and prompt treatment of patients.

     There was an outbreak of measles early in the year. Epidemiological analyses of the cases showed that most had not received the anti-measles immunisation, confirming that the outbreak was due to the accumulation of susceptible cases.

     Between January and July, over 3 000 cases were reported, reaching a peak in May with a monthly total of 1 179. Eight children, all of whom had not received the vaccination, died during the outbreak from the complications of measles.

     Prompt control measures were instituted and included intensified health education and publicity on the importance of measles vaccination, utilising the mass media, printed matter as well as interpersonal counselling of parents. The recommended age of measles vaccina- tion was advanced to six months and five special vaccination centres were set up to provide vaccination or revaccination for children aged between 6 and 14. Inoculation teams visited kindergartens, child care centres and primary schools to provide vaccination to susceptible children.

     The response to the efforts was satisfactory, and over 70 000 were vaccinated between the end of April and July. Notification of measles dropped from June onwards, and reached a normal level in early August, when the age of anti-measles vaccination was reverted to 12 months and the special vaccination centres were closed.

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 7 021 notifications during the year, representing a notification rate of 124 per 100 000. The local BCG immunisation scheme effectively covers some 99 per cent of the newborn. Booster doses were also given to primary school children and to new immigrant children after an initial Mantoux test. Death from tuberculosis dropped from 405 in 1987 to 388 in 1988 and the death rate dropped from 7.21 to 6.83 per 100 000.

     Immunisation programmes against common childhood infections are carried out in schools as well as Maternal and Child Health 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 99 per cent.

To increase the protection of the at-risk group, namely women of child-bearing age, rubella vaccination is made available to nurses, teachers and social workers and other female staff in the government service. The vaccination is also provided for eligible women attending maternal and child health centres.

To reduce the long term effects of hepatitis B, such as cirrhosis and liver cancer, the Hepatitis B Vaccination Programme was introduced in 1983. Under the present strategy, immunisation is given to newborn babies, and health care workers who are in frequent contact with blood and other tissue products, as they are at risk of contracting the disease. During the year, the vaccination programme was expanded to cover all new born babies.

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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 now covers all babies born in Hong Kong, including those born in private hospitals.

Hospitals and Development Programmes

There are three types of hospitals in Hong Kong - government, government-assisted and private - with a total of 25 057 beds, representing 4.4 beds per thousand of the population. During the year, pressure was experienced in all sections of the service. This was reflected by the constantly high attendance at out-patient clinics and accident and emergency departments, 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.

Other projects in the pipeline include further extensions to the United Christian Hospital, Yan Chai Hospital, Pok Oi Hospital and the Tung Wah East 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 is also emphasis on provision for the elderly infirm and the severely disabled, and 2 400 beds have been planned for the coming decade.

The total attendance at government and government-assisted accident and emergency departments during the year was 1 206 000, averaging 3 295 attendances per day. More than 679 000 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 68 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 out-patient services. The medical development programme includes 18 additional clinics and polyclinics 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, 290 clinics were registered under the Medical Clinics Ordinance. Of these, 94 clinics were under the control of a registered medical practitioner and 196 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, 1.3 per cent less 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

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   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 90 per cent of newborn babies attended the maternal and child health centres.

    Under a comprehensive observation scheme, children are assessed 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 three child assessment centres. The multi-disciplinary approach adopted ensures early rehabilitation for the child. Five 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 hospitals, 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 30 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 parent'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 380 000 children from 912 schools have taken part -- representing about 48 per cent of the eligible school population - and about 440 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 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 Psy- chiatric 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

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     and their families in mental health. There are now seven 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. Since 1987, the programme has been extended to all primary school children. In 1988, 373 608 took part in the service, representing 69 per cent of the school population. Oral health education on dental care for the community is 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 whose function is to prevent the introduction of quarantinable diseases into the territory via air, land, rail or sea and to enforce the measures stipulated under the Quarantine and Prevention of Disease Ordinance and the International Health Regulations.

The service provides facilities for vaccination and the issuing of international vaccination certificates. It also inspects and supervises the eradication of rats from ships on interna- tional voyages and ensures adequate standards of hygiene and sanitation on board vessels or aircraft. It provides medical assistance to ships and planes within the territory, and telecommunicates medical advice to vessels at sea. It operates a 24-hour health clearance service for all incoming vessels, including those ferrying refugees, and grants radio pratique to ships.

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 Organisa- tion 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.

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A Central Neo-natal Screening Laboratory was established in 1984. 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-phosphatase dehydro- genose 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 the government subvented 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 programmes 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 divisions, with a total establishment of 874 including 77 pharmacists. The first division provides pharmaceutical service to all government hospitals and clinics. The second division deals with the inspection and licensing of pharmaceutical manufacturers and dealers and the registration and import- export control of pharmaceutical products and medicines. During the year, continued action was carried out against the illegal sale and distribution of pharmaceutical products and medicines, resulting in 75 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 functions from a network of 48 hospital stations and satellite centres. During the year, 12 300 patients were served and more than 232 000 home visits were made.

Health Education

The Central Health Education Unit of the Medical and Health Department is responsible for organising, co-ordinating and promoting health education activities. The unit was actively involved in a number of campaigns, including the AIDS education and publicity campaign, the 'Health for All, All for Health' campaign, food hygiene and anti-malaria campaign.

Due to the outbreak of hepatitis A and measles in the early part of the year, the unit was enlisted to provide health education support to the control of the two diseases. This included media interviews, the production and distribution of pamphlets, posters, and videos, and the setting up of the 24-hour telephone information service.

During the summer, more Young Health Leader Training Project courses were con- ducted, training 114 students from 22 secondary schools in health and leadership skills. The programme included lectures, games, slide shows on health-related subjects so that the young health leaders could help to promote health inside their schools.

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.

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      In November, the major campaign 'Health for All, All for Health' was launched with an exhibition that attracted a large audience. And in December, the unit was heavily involved in the 'Community AIDS Concern Week'.

      Increased community concern for health was shown by the popularity of the various health education programmes offered, such as the 24-hour telephone information 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. The unit took part in many press interviews and television and radio programmes, including a TV series on health knowledge. Collaboration with medical bodies and various units in the department resulted in the increased production of useful health education materials for the public.

Medical Charges

Medical charges remained low, reflecting a substantial subsidy from public funds despite the adjustment in August. Patients in the general wards of government hospitals were charged $26 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 a medical social worker. A limited number of private beds are provided at major government hospitals with correspondingly higher maintenance and treatment charges.

The charge for consultation at general out-patient clinics was $13 while that for specialist clinics was $20. Charges for physiotherapy, occupational therapy and child assessment were $20. Attendance at geriatric or psychiatric day centre and home visits by community nurses cost $21. These fees may also be waived if warranted.

      The charge for injections and dressings 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 and accident and emergency departments.

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 remained at 150 for the year. During the year, the Chinese University of Hong Kong produced its third group of 70 doctors, and these will be ready for full registration in 1989.

      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 1988, 172 doctors went overseas for further training under government sponsorship, or with the help of scholarships.

Under the licentiate scheme of the Hong Kong Medical Council, 30 externally trained doctors passed the local licentiate examination in 1988.

      The Prince Philip Dental Hospital produced 68 dentists in 1988. 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 nine such training schools with an average

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annual training capacity of about 1 130 places. One more student nurse training school and one more pupil nurse training school are planned over the next decade. The annual training capacity is to be increased from 1 130 to 1 400 for general registered nurses and from 560 to 660 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 is 160 and for enrolled nurses is 70. Three more training schools for psychiatric nurses have been planned for the coming decade to meet the steady demand for nursing care in 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 nursing on a regular basis.

      The departments of Diagnostic Sciences, Rehabilitation Sciences and Health Sciences of the Hong Kong Polytechnic provide training for para-medical and para-dental staff, including radiographers, optometrists, physiotherapists, occupational therapists, medical laboratory technicians and dental technicians. There are opportunities for overseas training in specialised areas for nursing, para-medical and para-dental staff. The Chai Wan 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 is responsible for the provision of comprehensive advisory and technical services in chemistry and related scientific disciplines to government depart- ments which request them. Much of the work is concerned with public health, revenue collection, law enforcement, industrial safety and protection of the environment. Some of the laboratory's individual functions are statutory.

      It continued to test food regularly for harmful additives and contaminants. These tests included surveys on colours, preservatives, toxic elements, mycotoxins, residues of hor- mones, antibiotics and pesticides as well as certain chemical carcinogens in a wide variety of foods. Much of this work has arisen from food legislation. A continuous check was kept of fallout radionuclides in imported foods following the Chernobyl accident which happened two years earlier.

      The laboratory's involvement in environmental matters remained at a high level and samples of sewage and industrial effluents were frequently checked for the discharge of hazardous substances. The demand on the laboratory for the analysis of air samples continued undiminished. There was an increase in the number of requests to investigate occupational atmospheres for a wide range of chemicals. The analysis of asbestos dust. continued to be an important area of interest. In addition to counting and analysis, on-site surveys were undertaken to identify the location of materials containing asbestos. The Background Radiation Monitoring Programme continued to require considerable labora- tory support in the pre-treatment of environmental samples and some selected commodities from the local food chains for ultimate radioactivity measurements.

The laboratory continued to examine monthly samples of the main cigarette brands on sale locally to determine their tar and nicotine yields. The results from this testing programme were periodically published which showed the brands ranked according to tar yield. Dutiable commodities including tobacco, wines and spirits, beer and other beverages and toilet preparations were routinely examined on behalf of the Customs and Excise

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Department for the assessment of duties. Expert guidance was also provided on the use of denatured industrial alcohol within the revenue framework.

Technical advice backed by experimental evaluation was given on the chemical hazards associated with the carriage and storage of dangerous goods including their classification under the Dangerous Goods Regulations. A number of scenes of accidents and fires involving spillage and leakage of hazardous chemicals were attended by laboratory staff to render emergency assistance to fire service personnel.

      One of the functions of the laboratory is to provide analytical services to the Medical and Health Department in relation to the registration of pharmaceutical products as well as the enforcement of regulations for their control. Medicines dispensed for public use in government hospitals and clinics were regularly examined for efficacy and quality.

      Other aspects of the laboratory's work included examinations of agricultural and domestic pesticides, unmanifested import and export seizures, spurious goods, precious metals, commodities for metrological measurements and urines from methadone clinics.

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 indicators show that at the end of 1988 the size of the known and active addict population was about 44 000, which was 0.9 per cent of the population aged 11 and above.

Data collected by the registry, based on 385 000 reports on 60 000 persons, 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 1988, 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 persons reported to the registry in 1988. However, there are indications that more young people have been abusing psychotropic substances in the last few years, although the abuse of these drugs is not as serious a social problem as heroin addiction.

As a first step to assess the extent of abuse of psychotropic substances a large scale survey was conducted on students in secondary schools and technical institutes in late 1987. The findings of the survey, released in June 1988, revealed among other things that only 1.1 per cent of the secondary school students surveyed and 2.8 per cent of the students enrolled in technical institutes had abused psychotropic substances, mainly Mandrax and cannabis.

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 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,

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    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, through the exchange of information and experience, enhances the effectiveness of efforts in these three areas.

All these efforts are co-ordinated by the Action Committee Against Narcotics (ACAN), a non-statutory body comprising a chairman, 10 government officials and 10 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. After months of preparation, law drafting and consultation with government departments and professional bodies, the Drug Trafficking (Recovery of Proceeds) Bill was scheduled to be introduced into the Legislative Council in early 1989. The bill aims to empower the court to confiscate the proceeds of drug trafficking from a convicted drug trafficker and prevent the laundering of money derived from drug trafficking. If passed, the legislation will be a useful tool to root out the vicious cycling of money in the illicit drug trade and in other criminal activities.

Due to the unrelenting efforts of the Police Force and the Customs and Excise Department, seizures of No. 3 heroin, the major drug of abuse in Hong Kong, increased from 358 kilograms in 1987 to 570 kilograms in 1988. The upsurge in the incidence of trafficking in Mandrax from China which had started in 1986 died down in 1988 following the imposition of stringent controls by the Chinese authorities over the production and distribution of the drug in 1987. This was evidenced by the low level of seizure of the drug (10 200 tablets) in 1988 as compared with 1987 (58 699 tablets). As a result of joint operations with overseas law enforcement agencies, a number of international drug trafficking syndicates were neutralised with large quantities of firearms and ammunition seized and a number of ring leaders arrested locally and abroad. During the year, police and customs action resulted in 12 000 prosecutions for drug offences.

Treatment and Rehabilitation

The methadone treatment programme, which is operated by the Narcotics and Drug Administration of the Medical and Health Department, provides both maintenance and detoxification for out-patients. It 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

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short-term form of treatment aimed at eliminating the physical dependence on narcotics. The methadone treatment programme has proved to be very effective in serving both the addict and the community. At present, there are 25 methadone clinics located in various districts throughout Hong Kong.

       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 a 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 department 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 1988, the two voluntary treatment programmes and the Correctional Services Department's compulsory treatment programme admitted 13 000 addicts. On average, there were 14.000 addicts and ex-addicts receiving some form of treatment, rehabilitation and after-care every day.

      On the advice of ACAN, a pilot counselling centre was set up in Tsim Sha Tsui in April to provide counselling and telephone enquiry services for the public as well as psychotropic substance abusers. Operated by the Hong Kong Christian Service with financial support from the Lotteries Fund, the centre handled 100 cases and 1 500 enquiries since its inception.

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 1988 were to educate the public, in particular youngsters, on the harmful effects of abusing drugs, and to arouse parents' awareness in the fight against drug abuse.

      Five district campaigns with community involvement were held. Among the events organised to drive home the anti-narcotics message were carnivals, concerts, telematch games, a family sports day, a variety show, a disco night, visits, exhibitions and seminars.

      Co-operation with community organisations in implementing anti-drug educational and publicity campaigns was also enhanced during the year. One of the typical examples was the joint venture of the ACAN and the Hong Kong Amateur Athletic Associa- tion in organising the 1988 Hong Kong International Marathon. With the theme of 'Be An Anti-Drug Runner', the event was held on January 24 on the Island Eastern Corridor on Hong Kong Island. More than 900 runners from 18 countries/territories took part.

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In support of the first United Nations International Day Against Drug Abuse and Illicit Trafficking (June 26), ACAN staged a 'Hong Kong International Anti-Drug Day' commemorative ceremony and exhibition in Sha Tin.

The major event of the year was the 'Anti-Drug Week' held between October 16 and 22. Comprising a mix of activities, including a two-day large-scale Anti-Narcotics Family Camp at Lei Yue Mun Park Holiday Village, exhibitions, seminars, drama competition, television features, variety show, and radio drama series, the event highlighted the dangers of drug abuse and the significance of participation by the youth and parents in the battle against drugs. Through these activities, especially those broadcast by television and radio, the anti-narcotics message reached an audience of 3 000 000 throughout the territory.

During the year, the School Talks Team in the Narcotics Division gave a total of 180 drug education talks to 80 000 students in 113 secondary schools throughout the territory. The Narcotics Division also organised a territory-wide seminar involving school adminis- trators and social workers in October to solicit their views on anti-drug education work with special reference to the findings of the survey on abuse of psychotropic substances among school students.

For the eighth 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 eight groups of young people to implement their anti-narcotics promotional activities during the year. The 50 member ACAN Youth Volunteer Group, established in 1981 with a view to training and encourag- ing young volunteers to play an active part in anti-narcotics work, took part in the district campaigns and organised various community involvement activities.

      To support these activities and to publicise the anti-narcotics message, television and radio announcements, films, posters, leaflets as well as an anti-narcotics theme song were produced.

The ACAN Drug Abuse Telephone Enquiry Service (DATES) received 1 525 enquiries from both addicts and non-addicts, most concerning 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 22 regional and international meetings and seminars concerned with anti-drug policies, law enforcement, treatment and rehabilitation, and preventive education. In 1988, Hong Kong made its annual contribution of $110,000 to the United Nations Fund for Drug Abuse Control in support of its world-wide anti- narcotics activities, which include opium poppy crop-substitution programmes 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, 254 people from 22 countries and international bodies 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.

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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 services for the dead.

       In the urban areas, a regular workforce of about 5 029 is employed in cleansing duties. The cleansing force uses a fleet of 343 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 manually or mechanically, while busier thoroughfares are swept from four to eight times a day. Streets and lanes are also hosed down regularly. A daily refuse collection service is provided and about 2 783 tonnes of refuse and junk are collected every day. A nightsoil collection service is also provided daily in those areas which do not have a water-borne sewage disposal system. These services are free.

       During the year, contracting-out of cleansing services to private contractors continued for the cleansing of Shau Kei Wan Squatter Area, public toilets and bathhouses in West Kowloon, and six urban public cargo working areas and extension of this type of scheme to other urban areas is being considered. Meanwhile, two self-help cleansing projects undertaken by residents of Ma Hang Village, Stanley and Telegraph Bay Village, Southern District are progressing well.

Regular cleansing duties in the Regional Council area are carried out by a work force of 3 500 and a specialised fleet of 224 vehicles. The waste collection services collect an average of 1 380 tonnes of refuse and junk every day.

The 'Keep Hong Kong Clean' campaign co-ordinated by a Joint Urban Council- Regional Council Steering Committee launched a seven-phase clean-up programme covering the environment, beaches, roads, schools, homes and the countryside, with emphasis on community involvement, education and publicity. Enforcement of laws, however, remained the major weapon in the war against littering. During the year 34 945 people were fined $8,623,000 for littering offences in the Urban Council area. In the Regional Council area, 10 750 people were fined $2,050,000.

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 Department and the Regional Services Department regularly inspect licensed and permitted premises, common parts of residential and commercial buildings, construction and vacant sites and squatter areas throughout the territory. They also carry out inspections to deal with complaints on poor sanitation and vermin infestation and 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 of the Urban and Regional Services Departments 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 provided technical support to the two departments.

Under the theme 'Healthy Life Style, Happy Life', the Health Education Unit organised activities to help foster a healthy life style among members of the public, in particular the younger generation. The subjects covered by the year's major territory-wide programmes included the prevention of nuisances caused by air-conditioners, better food hygiene,

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prevention of mosquito breeding, rat prevention and hygienic ways of preparing vegetables and other foods. In addition to the major campaigns, other health education activities were also held, including health talks, broadcasting services and a health education hotline.

Food

The health inspectorate, backed by medical consultancy and supported by laboratory resources, controlled food for sale, both imported and locally produced. Early in the year, there was a massive outbreak of viral hepatitis A but its spread was checked by efforts of an interdepartmental co-ordinating committee. In July, there was an outbreak of chemical food-poisoning, but this was brought under control within a few days, after the cause was found to be pesticide-contaminated vegetables imported from across the border. Food commodities, especially those from Europe, continued to be monitored for possible radioactive contamination arising from the Chernobyl reactor accident.

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 and territories. Hong Kong has up-to-date, detailed and effective food laws which compare well with the food legislation of many much larger advanced countries. The review of food legislation is an on-going exercise. During the year, consideration was being given to proposed amendments to the Imported Meat and Poultry Regulations and the Milk By-laws. These proposed regulations will have the effect of providing improved controls on imported meat and poultry, imported game animals and birds, imported raw milk for processing, and the transportation of raw milk.

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 food control, but also for the benefit of the food trade and consumers. As the bulk of the local food supply comes from the Mainland, a close working relationship has been developed with the Food Control Service in China.

Markets

The Urban Council is responsible for the management of public markets within its region. There are 58 markets with a total of 9 014 stalls selling fresh foodstuffs and a whole range of clothing and household goods.

The Urban Council reprovisions old markets and, where possible, rebuilds new ones to replace outdated markets on the same sites. To maximise the use of land, new markets are now being accommodated on the lower floors of multi-purpose complexes. These com- plexes provide not only retail market facilities and a cooked food centre, but also a variety of amenities for indoor sports activities, and educational, cultural and recreational pursuits. There are now 10 such multi-purpose complexes in the Urban Council areas.

      New markets are becoming more evenly spread in the Urban Council areas, to meet the retail needs of the public. A new market-planning strategy was put into effect during the year, so that instead of building large markets with sufficient stalls for all the street traders in the immediate vicinity, a more consumer-oriented approach was adopted to make markets more viable and to provide a better environment for both the stall-operators and the buying public.

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       The Regional Council is responsible for the management of public markets in its region. There are 45 public markets with a total of 4 622 market stalls and 386 cooked food stalls under its management. Two new markets, the Tsuen King Circuit Market in Tsuen Wan and the Kwai Shun Street Cooked Food Market in Kwai Chung will be commissioned in early 1989, providing an addition of 302 market stalls and 12 cooked food stalls.

Hawkers

The Urban Council is responsible for the licensing of street hawkers in the urban areas and also maintains an enforcement organisation in respect of hawker offences. In June, the council issued 18 845 hawker licences, 1 668 less than in 1987. The reduction was mainly due to the continued effort of the council to move on-street hawkers into newly-completed markets. The ex-gratia payment scheme, which began in June 1987 for licensed cooked food operators who surrendered their licences for cancellation, also helped to reduce the number of licensed hawkers. In mid-1988, there were about 11 100 unlicensed hawkers, some 1 300 less than the number in 1987. The decrease was due mainly to intensified enforcement action by the General Duties Teams against illegal hawkers, together with prospects of higher wages in the commercial and industrial sectors.

Following the recommendations of the Urban Council's Working Party on Hawker and Related Policies, hawker licensing policy was relaxed. As a first step, the council began issuing licences since early 1988 to newspaper hawkers, some of whom are itinerant and some unlicensed. The issue of other classes of licences to hawkers will depend largely on the availability of suitable sites identified to be viable and publicly acceptable.

To achieve more effective management, the council completed its computerisation of all hawker licensing particulars in April. Plans are in hand to computerise conviction records of both licensed and unlicensed hawkers for possible use in courts.

The management and control of hawkers in the Regional Council area are the responsibility of the Regional Council. In 1988, there were 2 906 licensed hawkers in the Regional Council area, a drop of 303 compared with 1987. There were 1 696 unlicensed hawkers.

Through the deployment of general duties teams, who number 888 men, the Regional Services Department maintains control over the hawker situation. Although there are illegal hawking blackspots in the new towns, the problem is generally contained, and the number of licensed hawkers is gradually declining as more and more of them are given sites in new markets.

The Regional Council has a firm policy of not issuing any new hawker licences, except Fixed Pitch (Newspaper) Hawker Licences.

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, 2 206 000 pigs, 121 000 head of cattle and 12 000 goats were slaughtered in the abattoirs.

Proposals for the privatisation of Urban Council abattoirs have been accepted in principle and are being studied further. Meanwhile, efforts were focused on drawing up terms for negotiations with the trade and abattoir staff concerned. Upon privatisation, running of the slaughtering service in the urban area would be handed over to private operators but this would not affect the Urban Council's meat inspection duties at these abattoirs.

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Slaughtering services in the Regional Council area are provided by two licensed private slaughterhouses in Kwai Chung and Yuen Long districts. They handled a total of 1 128 700 pigs, 59 000 head of cattle and 5 000 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 in Kowloon. To meet long-term demand, 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. In addition a small slaughterhouse is being planned for Cheung Chau.

     All animals slaughtered in these abattoirs and slaughterhouses were inspected by qualified health inspectors of the Urban Services and the Regional Services departments.

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 67 per cent of the dead were cremated. Human remains buried in public cemeteries are subject to exhumation after six years. The exhumed remains are then either cremated or re-interred in an urn cemetery.

The Urban Council operates one public funeral parlour in Kowloon, which provides free services for 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.

The Regional Council manages three public crematoria - at Kwai Chung, Fu Shan and Wo Hop Shek. The first two are used for the cremation of dead bodies, and the third solely for cremation of exhumed skeletal remains. Niches are provided at the columbaria in these three areas. The department also manages six public cemeteries, including the Wo Hop Shek Cemetery, the biggest public cemetery in use in Hong Kong, and oversees nine private cemeteries in the Regional Council area. The public cemetery at Mui Wo, named Lai Chi Yuen Cemetery was opened for public use in the last quarter of 1988.

Auxiliary Medical Service

Formed in 1950, the Auxiliary Medical Service is a medical civil defence organisation with volunteer members trained and equipped to provide an essential service to the public, especially in times of emergency. With the current establishment of 5 835 volunteers who come from all walks of life, it has about 1 500 professionals comprising doctors, nurses, pharmacists, dispensers, radiographers and paramedical personnel working either in government or in private practice.

With its corps of professionals and trained auxiliaries, the primary task of the AMS is to augment the medical and health services in emergency situations such as those which follow a major disaster when full mobilisation will be required. In such situations, emergency medical resources are 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.

      Its uniformed and disciplined members are trained in ambulance manning techniques, and helps to reinforce the regular ambulance services of Hong Kong. In addition, it has mobile first aid parties to work in conjunction with rescue forces. As part of the operational logistics, its emergency supplies are stockpiled at various storerooms, clinics and hospitals. These supplies are dispersed over some 50 stores in both the urban and rural areas.

The AMS has a fleet of eight ambulances and six motor cycle ambulances equipped with rescue and resuscitation kits. The vehicles are fully operational for emergency services. On Sundays and Public Holidays, they are deployed to country parks for stand-by duty.

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In helping to deal with the influx of Vietnamese boat people, the AMS deployed its emergency resources to man medical centres in detention camps and reception centres to provide round-the-clock medical coverage.

Besides their emergency roles and functions, all members of the AMS take part in activities designed to render service to the community. During weekends and public holidays, members work with the regular staff of the ambulance service. They also provide first aid coverage at public functions, staff methadone treatment centres and provide lifeguard services on public beaches and at swimming pools.

The AMS also provides first aid training for government servants. Since 1972, 23 368 civil servants have successfully completed the basic first aid courses. AMS first aid certificate holders are officially recognised as qualified first aiders, and its full-time training staff are also involved in educating the public in major safety campaigns in various activities.

       It will be better equipped to raise its operational standard on completion of the building of a headquarters and training centre at Ho Man Tin and a sub-unit headquarters at Mui Wo. Work on the Ho Man Tin training centre began in November 1988 and is expected to be completed by 1991.

11

Social Welfare

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    MORE benefits for people on public assistance were among the improvements introduced in the social security and social welfare programmes during the year.

To enable these and other projects to be carried out, the government increased spending in this area of activity by more than 25 per cent, to a total of $3,607 million for the 1988-9 fiscal year.

Some of the greater public benefits were a ten-per cent rise in the rates of public assistance, the introduction of a 'higher disability allowance', which is twice the rate of the normal disability allowance, for disabled persons aged 60 and above who require constant attendance and the extension of old-age allowance to those aged 68-9.

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 Rehabilitation 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.

     As for the care of the elderly population, efforts were made during the year to improve the planning ratio of care-and-attention home places for them and to step up the provision of such places. To monitor and to improve the service of private elderly homes, a Registration Office of Private Elderly Homes was set up in the department.

In the area of services for offenders, efforts have been concentrated on the improvement of training programmes in the department's correctional institutions for juvenile offenders, including the recruitment of qualified teachers to run all academic classes, devising a new set of text and material specially adapted to suit the needs and interests of the residents; re-structuring of objectives and programme content of its prevocational workshops with a view to equipping its trainees with practical and marketable trade skills for the purpose

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of apprenticeship or employment on their leaving the institutions. It is intended that these renewed efforts will boost interest in learning and pave the way for return to normal schools through the Secondary School Places Allocation System or help those looking for employment to gain recognition from relevant industry or trade authorities.

Attention was given to reviewing the provision of the Protection of Women and Juveniles Ordinance, with particular reference to the protection of the child's well being. Proposals for amendments to the ordinance were formulated and a number of concerned bodies were being consulted. The Working Group on Child Abuse, comprising representatives from various government departments and voluntary agencies, was re-convened to follow-up the recommendations arising from the Multi-Disciplinary Conference on Child Abuse held in Hong Kong in December 1987.

Work continued in preparing layout plans and fitting-out requirements for home- for-the-aged cum care-and-attention units in new public housing estates. 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, 16 new day nurseries, three family-services centres, three homes/hostels for the aged, one care-and-attention home, one day-care, two multi-service and nine social centres for the elderly and 22 children centres, youth centres and combined children-and- youth centres were established. 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 1988-9 financial year - including Social Welfare Department recurrent expenditure and subventions to voluntary welfare agencies - is $3,607 million, an increase of more than 25 per cent over the previous provisions.

Community Chest

The Community Chest, which organises and co-ordinates fund-raising activities for its member agencies, raised $55 million in 1987-8, compared with $42 million in 1986-7.

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. They 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. Eligibility for assistance is governed by three basic criteria. These criteria are length of residence in Hong Kong, level of income and assets and availability for work. 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. Any 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.

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A package of improvements to the scheme was introduced in January. Major changes include an improved sliding scale of basic allowance for families, a long-term supplement at a higher rate for families with five or more members, an allowance in the form of disregarded earnings for able-bodied recipients in regular employment and a meal allowance for students attending full-day school and taking meals away from home.

      The rates of assistance were increased by 10 per cent in April to keep up with the cost of living. The current monthly basic allowance is $560 for a single person, $420 for each of the first two eligible members of a family, $410 for each of the next two eligible members and $400 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 supplement may also be given. A monthly old-age supplement of $280 is given to those aged 60 to 69 and $320 to those aged 70 and over who are not receiving a disability supplement or a Special Needs Allowance. A disability supplement of $280 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 $710 for a single person, $1,420 for a family with two to four members or $2,130 for a family with five or more members 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 durable goods. In addition, specific supplements are given to certain categories of clients to meet other special needs. To encourage self-help, an individual's earnings up to $420 per month are disregarded in the calculation of entitlement for assistance.

      At the end of 1988, the number of public assistance cases was 64 600, compared with 63 180 in 1987. Expenditure on public assistance in the 1987-8 financial year amounted to $706 million, an increase of 4.1 per cent over the previous year.

The Special Needs Allowance Scheme provides some degree of financial assistance in the form of flat-rate allowances to the severely disabled and the elderly. Any person, regardless of age and financial means, who is severely disabled and has resided continuously in Hong Kong for at least one year immediately before claiming the allowance is eligible for a disability allowance. To be eligible for an old-age allowance, a person must have resided continuously in Hong Kong for at least five years prior to attaining the qualifying age.

On April 1, a 'higher disability allowance', which is twice the rate of the disability allowance, was introduced to help those severely disabled persons aged 60 and above who require constant attention from others in their daily life but are not receiving such care in a government or subvented institution. The current monthly rate of the disability allowance is $560 and that of the higher disability allowance is $1,120.

Old-age allowance is non-means-tested for those aged 70 and above who are entitled to a higher rate of $320 per month as from April 1. From September 1, old-age allowance was extended to those aged 68 to 69. The qualifying age will be further lowered by phases to 65 in 1991. A lower monthly rate of $280 is payable to those aged 68-69, subject to a declaration that their income and assets do not exceed the prescribed levels.

The number of people receiving disability and old-age allowance at the end of the year was 361 500, compared with 305 490 at the end of 1987. Expenditure on special needs allowance in 1987-8 financial year was $1,002.8 million, an increase of 3.9 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. The scheme,

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which is non-means-tested and non-contributory, is administered by the Criminal Injuries Compensation Board and the Law Enforcement Injuries Compensation Board. Total payments in 1988 amounted to $5.9 million, compared with $5.1 million in 1987.

       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, without regard to the means of the family or who was at fault in causing the accident. For a person 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, but not for damage to property. The scheme does not affect the applicant's right to claim legal damages or compensation from other sources. Persons who receive damages or other compensation for the same accident are required to repay the money received from the scheme, but the repayment shall not exceed the amount of damages or compensation. During the year, 6 420 applications were received and 5 670 were approved for assistance with payments amounting to $42.6 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 5 480 registered victims on 140 occasions. The Social Welfare Department also provided hot meals to Vietnamese Refugees staying in Hong Kong temporarily.

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 380 cases.

Social Security Appeal Board

The Social Security Appeal Board is an independent body which considers appeals from individuals against decisions by the Social Welfare Department concerning public assistance, special needs allowances and traffic accident victims assistance payments. It heard 68 appeals during the year. Of these, nine were related to public assistance, 58 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, 1987, in three magistracies - Central, Kwun Tong and Tsuen

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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. A full review was carried out at the end of the year to determine the future of the scheme.

      In April 1987, a Young Offenders Assessment Panel was set up jointly by the Social Welfare Department and the Correctional Services Department. The panel, comprising professional staff from the two departments, provides magistrates with a co-ordinated view on the most appropriate programme of rehabilitation for convicted young offenders aged between 14 and 25. This represents an improvement in the arrangement of dealing with young offenders and after a review of the functions of the panel during the year, plans were made to extend the service of the panel.

      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 youth in need of statutory care and protection. The establishment of Pui Chi Boys' Home in 1984 has helped to alleviate overcrowding in the probation section of the Begonia Road Boys' Home by catering for a younger age group of under 14. 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 has recruited qualified teachers to run all academic classes and efforts are being made to improve the curricula and facilities for academic teaching and pre-vocational training. A new set of teaching material is being designed to suit the needs and interests of the trainees. Plans to improve residential facilities include the construction of a new girls' home in Tuen Mun and reprovisioning the Castle Peak Boys Home and Begonia Road Boys' Home in Sha Tin and Ngau Tau Kok.

      The Social Welfare Department also operates an after-care unit for boys discharged from reformatory schools by supervising and supporting them while they remain in community as law-abiding members. Besides the work carried out by the Social Welfare Department, 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 pro- vision 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 30 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.

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      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 accommodation 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 has a capacity of 40 and 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.

      The department has continued its efforts, in co-operation with other government departments, to tackle the problem of street sleeping. Four regional outreaching teams are operated by the department which focus on the unmotivated and difficult cases requiring assistance, while 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. In response to the recommendations of an inter- departmental co-ordinating committee on street sleepers set up under the auspices of the Health and Welfare Branch, and with the support and assistance of the department, a voluntary agency has opened a hostel in Yau Ma Tei as a pilot scheme designed to provide more permanent accommodation for street-sleepers and other homeless persons on a 24-hour basis.

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 384 new applications for adoption; 331 adoptions cases were handled and 271 local adoption orders were granted. 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 1988, the total number of foster care places was 180.

      A steering committee comprising representatives from the department and the voluntary sector was formed during the year to oversee implementation of the recommendations of the Working Group on the development of residential child care 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 29 426 places in day child care centres and 738 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 8 700 children were receiving fee assistance at the end of the year.

A hotline service is operated to deal with public enquiries concerning the services of the department and to provide immediate telephone counselling or advice where necessary.

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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 1988 theme of the annual publicity campaign 'Love and Care Help Build up a Happy Family', was aimed at promoting better communication and understanding among family members. 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 13 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.

Social services are provided to patients and their families by medical social workers stationed in 103 medical social service units in government hospitals and clinics. Upon the enactment of the Mental Health (Amendment) Bill 1988 in June, additional posts have been created to strengthen psychiatric medical social service units to take up additional duties arising from the provisions in the bill.

Care of the Elderly

'Care in the Community' remains the guiding principle in the implementation and planning of services for elderly persons 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 to help old people to live independently. 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 four outdoor recreational pool buses, 50 home help teams, 99 social centres for the elderly, 14 multi-service centres for the elderly and five day-care centres. Elderly people with housing needs may be eligible for compassionate rehousing, and priority allocation of public housing is also available for elderly people and families with elderly members or relatives. The department also provides two sheltered housing schemes for elderly people capable of living independently. These two schemes are located in 103 flats in two separate private housing developments, providing a total capacity of 595 residential places.

Residential facilities are 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 7 405 places in homes and hostels for the elderly and 1816 places in care-and-attention homes. More homes for the elderly with a provision of care-and-attention units are being planned in public housing estates, and a number of purpose-built care-and-attention homes are also being planned.

      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 has reviewed various policy issues and provisions relating to services for the elderly.

     A Registration Office of Private Homes for the Elderly has been set up to implement the Voluntary Registration Scheme of private homes for the elderly and to monitor the services of private elderly homes.

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

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members of society by fostering the development of their personality, character, 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. Apart from providing group work activities in the community centres, the department also promotes youth activities and encourages the establishment of self-programming youth groups and other voluntary youth groups, at the district level. 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. The Best Opportunities for Youth Scheme Award is organised to give recognition to outstanding projects.

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 1988, three children's centres, two youth centres and 17 combined children-and-youth centres were opened. At the end of the year, there were 175 children's centres and 180 youth centres in operation - with 121 being combined children and youth centres.

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. In 1988, there were 20 outreaching social work teams serving young people in priority areas with high incidence of juvenile crime, large youth population and high population density. 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.

      Uniformed organisations provide young people with opportunities for self-training in the development of character and leadership, community services, indoor and outdoor recreation. There are seven subvented uniformed organisations which cater for different target groups of young people and have different emphases on their programme content. In 1988, there were 80 000 members of these organisations. The Duke of Edinburgh's Award Scheme, which encourages and promotes the development of character and leadership among young people, has a membership of 40 000.

Rehabilitation of the Disabled

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 fully their physical, mental and social capabilities. These services are co-ordinated by the Commissioner for Rehabilitation, who also conducts regular reviews of the Rehabilitation Programme Plan, which projects the requirements for and identifies the shortfalls of rehabilitation services for the next 10 years. The Medical and Health Department is responsible for providing medical rehabilitation services. 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

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in special schools. The Technical Education and Industrial Training Department is responsible for co-ordinating vocational training for disabled young people and adults. The Labour Department is responsible for job placements for the deaf, the blind, the physically disabled, the mentally handicapped and discharged mental patients. The Transport Department subvents a Rehabus service operated by the Hong Kong Society for Reha- bilitation for disabled persons who cannot use public transport.

     Direct services provided for the disabled by the Social Welfare Department include counselling, compassionate rehousing, financial assistance, and day and residential care. The department also operates a child care centre providing an integrated programme for disabled children, a composite club for the handicapped, residential homes and hostels, day activity centres and sheltered workshops. The services provided by subvented welfare agencies include pre-school care, education and training programmes, integrated pro- grammes in child care centres, special child care centres, home help service, day activity centres, sheltered workshops, home-based training programmes, commercial-hired vehicle service, activity centre and half-way 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 1 248 day activity places and 3 015 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 1 030 places in homes for mentally handicapped adults, 273 places in homes for the physically handicapped adults, and 398 places in homes for the blind. For pre-school disabled children, subvented agencies and Social Welfare Department provided 604 places for mildly disabled children in integrated programmes in 91 child care centres, 672 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 20 social centres and two sports associations. Further efforts were made to improve after-care and rehabilitation services for dis- charged mental patients. By the end of the year, 695 places were provided in half-way houses and 110 places in three activity centres for discharged mental patients. The Com- mittee on Public Education in Rehabilitation continued its efforts to foster a more positive public attitude towards mental illness.

     During the year the Social Welfare Department introduced two computerised systems: the Co-ordinated Referral System for Disabled Pre-schoolers and the Central Referral System for Disabled Adults, to expedite referral for services. Five new rehabilitation services, foster care for mildly mentally handicapped children, respite service for families with mentally handicapped persons, home-based training programme, commercial-hired vehicle service and activity centre for discharged mental patients, were started.

The Queen Elizabeth Foundation for the Mentally Handicapped was set up in August under the Queen Elizabeth Foundation for the Mentally Handicapped Ordinance. With an initial capital of $91 million, including $30 million from the sale of the gold coins to commemorate the Queen's visit in October 1986, $30 million from a matching contribution from the general revenue and $30 million from the Jockey Club, the foundation provides additional resources to complement the government's efforts under the Rehabilitation

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Programme Plan for the furtherance of the welfare, education and training of the mentally handicapped, and the promotion of their employment prospects.

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, 147 programmes, seminars and workshops were organised by the training section, compared with 149 in 1987. 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, 28 officers attended 23 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 conducting surveys. Eleven surveys were carried out during the year to obtain statistical information for planning, reviewing and monitoring various welfare services and social security schemes. The section is also responsible for the operation of the Social Welfare Manpower Planning System, developed jointly by the department and the Hong Kong Council of Social Service. The system contains information on individual social work personnel and on the demand and supply of trained social workers to facilitiate the overall manpower planning in the welfare sector. The first report on the system was issued in June. The section also runs seven other data systems, including the Standardised Law and Order Statistical System and the Preliminary Integrated Law and Order Statistical System on offenders put under the charge of the department; the Street Sleepers Registry; the Planned Welfare Projects Registry; and three central referral systems for placement to institutions for the elderly, the disabled adults and disabled pre-schoolers.

      The Evaluation Section of the department is responsible for monitoring and assessing services provided by the subvented welfare agencies. For this purpose, departmental staff in the district make regular visits to subvented agencies which are also required to submit service statistics to the department at specified intervals. Where appropriate, findings are submitted to the Subventions and Lotteries Fund Advisory Committee which advises on subvention allocations. During the year, the department conducted eight in-depth evaluations of pilot projects and service programmes operated by individual agencies.

Community Building

A number of government departments and voluntary organisations contribute towards the 'community building' programme.

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     This programme co-ordinated by the Community Building Policy Committee, serves to foster among the people a sense of belonging, mutual care and civic responsibility as 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, solving community problems, promoting social stability and improving the quality of life in general.

     The City and New Territories Administration and the Social Welfare Department are the two departments principally responsible for implementing 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. Community centres, run by the City and New Territories Administration, are provided throughout the territory to serve as a base for community building work.

     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.

Central Committee on Youth

The Central Committee on Youth was set up in mid-1986 by the government with the main task of examining whether there was a need for a youth policy in Hong Kong. In April 1988, the committee issued a Report on Youth Policy for public consultation. More than 130 organisations, boards and committees were invited to comment on the recommendations of the committee and its final recommendations will be submitted to the government in early 1989.

The committee also carries out research work on youth matters and activities. During the year, the committee compiled a 'statistical youth profile' and conducted a number of surveys on youth matters. It also launched several promotional programmes to increase public awareness of youth services and activities.

Committee on the Promotion of Civic Education

In 1986 the government set up the Committee on the Promotion of Civic Education to increase community participation in the promotion of civic awareness outside the school system.

      Made up largely of non-government members, the committee advises the government and community organisations on the objectives and scopes of civic education. It encourages, through sponsorship, community effort in organising civic education activities among different age groups.

     During the year, the committee sponsored 21 projects with an allocation of $620,000. Together with RTHK, the committee launched a special project recruiting 500 youths in the summer to provide voluntary services to the community, as part of the efforts to promote the civic education slogan 'Care for Your Community. Work for Your Community'.

     Other promotional activities include the organisation of seminars and surveys and the production of publicity materials. The work of the committee has received a great deal of support from district organisations, in particular district boards.

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Housing

Q

THE Housing Authority was re-organised from April 1, 1988 to enable it to implement the approved Long Term Housing Strategy in the most effective manner. Since then, the Housing Authority has been chaired by a non-official and given the task of co-ordinating its housing production with that of the private sector to meet public needs. It has also been given the financial flexibility to channel its resources to its priorities.

Under the Long Term Housing Strategy, it was estimated that 1 085 000 new flats would have to be built throughout the territory between 1985 and 2001 and that about 56 per cent of these flats (607 600) would be built under the Housing Authority's programmes. During the year, the Housing Authority produced 32 200 rental units, and offered for sale 15 437 units under the Home Ownership Scheme (HOS) and Private Sector Participa- tion Scheme (PSPS). The demand for assisted home purchase was so great that these flats were, on average, 13 times over-subscribed.

To increase the opportunities for assisted home purchase, a new Home Purchase Loan Scheme (HPLS), with a quota of 2 500 for 1988-9, was introduced to offer sitting and prospective tenants an alternative of interest free loans of $70,000 to buy private sector flats. The private residential property market remained buoyant in 1988, with production reaching 37 700 units, compared with 32 470 in 1987.

       Under the Long Term Housing Strategy, it was recognised that most of the Marks IV to VI and the Former Government Low Cost Housing Estates (comprising 408 blocks) were expensive to maintain in instances where the facilities and environment fell short of current standards, and should be redeveloped. A Comprehensive Redevelopment Programme, scheduled for completion by 2001, was drawn up to integrate the on-going redevelopment programmes with the proposals under the strategy.

Apart from the work of the Housing Authority, the Hong Kong Housing Society continued to supplement the provision of public housing through its rental and rural public housing projects, its urban renewal scheme and the newly introduced flats-for-sale scheme. Public housing remained one of the government's major commitments. During the year, $7,900 million, or 13 per cent, of the government's Consolidated Annual Expenditure was devoted to the development and maintenance of subsidised public housing.

       Some 2.8 million people, or 50 per cent of the population, are benefiting from subsidised public housing through accommodation in rental or home ownership public housing or by the purchase of private property with assistance from the Home Purchase Loan Scheme.

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 has undergone a re-organisation (which took effect on April 1, 1988) in order to implement effectively and

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efficiently the Long Term Housing Strategy. The aim of the strategy is to provide adequate housing for every family in Hong Kong before the turn of the century. It is geared towards optimising resources in both the public housing and private sectors to meet the demand for rental housing, and the growing aspiration for home ownership.

     The role of the authority has expanded, following the re-organisation. It advises the Governor on all public housing policy matters and, through its executive arm (the Housing Department), plans and builds public housing estates, Home Ownership Scheme courts and temporary housing areas for various categories of people as determined by the authority with the approval of the Governor. It also manages public housing estates, Home Ownership Scheme courts, temporary housing areas, cottage areas, transit centres, flatted factories and the ancillary commercial facilities throughout the territory, and administers the Private Sector Participation Scheme and the Home Purchase Loan Scheme. On behalf of the government, the authority clears land, prevents and controls squatting, and plans and co-ordinates improvements to squatter areas.

The authority meets quarterly to review the work of nine standing committees on building, commercial properties, development, establishment and finance, home owner- ship, management, operations, complaints and tenancy appeals. In addition, there is a special committee responsible for overseeing the clearance of the Kowloon Walled City.

Prior to April 1, 1988, the authority was chaired by the then Secretary for Housing and comprised 19 non-official and seven official members. Following the re-organisation, the chairmanship has been assumed by a non-official member. The authority now comprises 20 non-official members, including the chairman, and four official members. All members are appointed by the Governor. There are also 23 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 authority is responsible for its own finance and management. Following the authority's re-organisation, new financial arrangements with the government came into effect on April 1. Under these revised arrangements, the government will have a capital structure in the authority comprising permanent government capital, contributions to domestic housing and non-domestic equity. The new arrangements will enable the government to continue to provide the authority with the funds required to meet the housing programmes as set out in the Long Term Housing Strategy. For its part, the authority will continue to pursue financial efficiency in a manner consistent with providing accommodation at affordable and realistic rents and prices.

The authority's accounts for 1987-8 were prepared on the basis of the old financial arrangements agreed upon with the government in 1976. On March 31, 1988, the government's contribution stood at $38,288.9 million, which included, among other subsidies, $33,575.3 million for free land and $2,952.3 million for interest foregone. On the same date, the authority had an outstanding loan of $13,488.8 million with the government which was provided on concessionary terms for financing construction programmes.

In the 1987-8 financial year, recurrent expenditure on the authority's domestic rental properties - covering mostly management and maintenance costs totalled $2,656.4 million, while income from domestic rents was $2,632.2 million, resulting in a deficit of $24.2 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

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improvements. The authority was able to offset this deficit from the income derived from its commercial properties which, in the same period, generated $1,337.9 million against an expenditure of $691.1 million. Any surplus funds left are used to help finance the public housing construction programmes.

The authority spent $3,740.8 million on its capital programmes, of which $2,193.3 million (58.6 per cent) was financed by the authority, while the balance of $1,547.5 million (41.4 per cent) was funded by the government through loans on concessionary terms. In addition, the authority, acting as the government's agent, spent $703.6 million on the construction of flats for sale under the Home Ownership Scheme.

Construction

The Housing Authority produced 41 000 flats in 1988, comprising rental, Home Ownership Scheme and Private Sector Participation Scheme units - an all time high.

This exceptional output was partly due to additional units required this year to satisfy the demand arising from the redevelopment of the old estates, and partly due to the roll-over from last year, when most contractors experienced difficulty in meeting contract dates due to labour shortages. Overall, the authority is committed to producing 230 000 flats in the five-year development period from 1985 to 1990. This housing stock will comprise 160 000 public rental flats, 64 000 Home Ownership and Private Sector Participation Scheme flats and 6 000 flats earmarked for possible transfer from rental housing to Home Ownership Scheme. This is in line with the government's Long Term Housing Strategy, which also envisages the production of a further 215 000 flats and 135 000 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-seven building contracts, with a total value of $4,600 million, were let in 1988 and nearly all of these contracts have specified the use of large panel formwork construc- tion systems. Since its introduction in 1987, this programme has been expanded rapidly and its use has succeeded in upgrading the quality of workmanship while also being widely accepted by contractors. It also helps to encourage more mechanisation and gradually to relieve the industry from its current labour-intensive operations. To further this aim, the authority has this year developed three new residential block designs which, with a greater degree of standardisation, will facilitate the growing use of large panel formwork construc- tion systems.

The new designs are also intended to meet the demand from households affected by the redevelopment of old estates and will also allow greater flexibility of planning and allocation. The first units from this initiative will be completed in 1991. The Computer Aided Drafting and Design System (CADD), which the authority acquired two years ago, has proven to be a very versatile tool in developing these new designs. The Central Project Monitoring System (CPMS), which operates on the same computer mainframe as the CADD, has been refined to further streamline the monitoring of production and pro- gramme data for all construction projects.

Urban Housing

On Hong Kong Island, work is continuing on the very large site-formation at Shau Kei Wan East, with Stage I being due for completion in late 1990 and Stage II about one year later. When completed, this site, together with the adjacent one at Shau Kei Wan West, will provide a total of 10 370 rental flats. Kellett Bay (Wah Kwai Estate) Phase I is now under construction and the site formation for Phase II is almost completed, with commencement

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of building works expected early next year. Together, the two phases will provide 3 060 rental and 1 400 Home Ownership flats.

      Phases I and II of Siu Sai Wan are progressing on schedule and, when completed in 1989, will provide 4 090 rental flats. A further 1 600 rental, 660 home ownership, 1 220 flats earmarked for transfer to HOS, and 3 290 PSPS flats, will by 1993 make this a truly comprehensive housing development containing all of the authority's new flat types. The year also saw the completion of Yue On Court (1 960 HOS flats) at Ap Lei Chau and Chai Wan Phase I (2 340 rental flats) on Hong Kong Island.

     It was a memorable year for housing developments in central Kowloon with the completion of some 3 530 flats in Chuk Yuen Phases V and VI and another 3 850 flats in Wang Tau Hom and Tung Tau, which completed the major part of the redevelopment of these two estates. Also in the area, work began on Fung Tak Estate Phases I and II, at Diamond Hill North, which will provide around 3 880 flats by 1991.

      In western Kowloon, work was completed on the Sham Shui Po Reclamation site, providing 1900 rental flats on the former harbour area and, in east Kowloon, the site formation for further rental and HOS phases to Lam Tin Estate continued with completion proposed for late 1990. When formed, the complete site will be developed to provide 5 290 rental and 1 400 HOS flats.

Housing in New Towns, Rural Townships and Outlying Islands

In Sha Tin, Yiu On Estate Phases I and II (Stage 1) were completed providing 1 550 rental flats. Still under construction as part of the same overall development are Phase II (Stage II) and Kam Hay Court HOS Phase III which, when complete, will add a further 1 840 rental and 1 050 home ownership flats to the development. Other projects planned for the future in Areas 75, 90, 100, 103 and 108 of Ma On Shan, will, by 1995, have added nearly 11 000 rental, 5 250 home ownership and 6 510 PSPS flats to the housing stock of that area.

      The developments in north Tsing Yi Island progressed on schedule with Stage I of Cheung On Estate Phase II (2 020 rental flats) being completed and Stage II (1 890 rental flats) being due for completion in early 1989. Cheung Fat Estate, which is also due for completion in early 1989 will, when finished, provide 2 550 rental flats, with a further 820 flats being earmarked for transfer to HOS. The Cheung Fat Shopping Centre, one of the largest so far built by the authority, will be completed in early 1989. It contains an integral indoor recreation centre as well as a twin mini-cinema. The final phase of Ching Tai Court HOS was handed over during the year, providing a further 1 540 home ownership flats within this comprehensive development of north Tsing Yi. The nearby Cheung Hang Estate Phases I and II were under construction (2 860 flats), while the site-formation for Phase III will be completed in 1990. Also handed over during the year was Phase II of Tsing Yi Estate, providing 1 600 rental flats.

      In the Tuen Mun area, 2 650 rental flats were completed at Leung King Estate Phase I, and construction of more rental flats was underway in Phase III of the same estate (3 920 flats) and also Phases IV and V of Tin King Estate (3 800 flats) and Kin Sang Phases I and II (3 980 flats). Two-thousand-one-hundred HOS flats were under construction at San Wai Court while the three stages of site formation at Tuen Mun Area 14 were made ready for development in three phases, each consisting of 1 400 home ownership flats to be completed in 1993. A total of 2 210 PSPS flats were under construction in Tuen Mun Area 5, to be followed in 1992 by a further 5 000 flats to be built on the recently completed site formation at So Kwun Wat.

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Fanling area projects under construction were at Tin Ping Phase II and III (3 250 rental flats), Wah Ming Phases I and II (5 340 rental flats) and site formation work was either underway or recently completed in areas 6, 7, 18, 39 and 46. In Tai Po, the construction of Tai Wo Estate Phases I and II was being completed (5 530 rental flats), while the work on Phases III and IV was progressing towards a projected completion date in 1989. Site formation works at Wan Tau Tong Phase I were completed during the year, and those for Phase II will be completed next year. The eventual development at Wan Tau Tong will provide 3 400 rental flats with a further 1 224 being earmarked for transfer to HOS. Work also commenced on all four phases of Tai Po Area 8, an estate which, when completed in 1991, will provide 5 790 rental flats with a further 2 040 earmarked for HOS.

In Yuen Long, Phase II of Long Ping Estate was completed (3 160 rental flats) and site formation works at Tin Yiu and Tin Shui in Areas 5 and 16 were well advanced. These two sites will provide, during 1992-3, a staggering 17 100 rental flats with a further 2 450 being earmarked for transfer to HOS.

Work at Sai Kung/Junk Bay was progressing on schedule with contracts on Po Lam Phase III (940 rental flats), Tsui Lam Phase II (2 490 rental flats), Ying Ming Court Phase IV HOS (700 flats), King Ming Court Phase III HOS (10 310 flats), and Area 4 PSPS (1 850 flats), all being completed during the year. Construction also began on King Lam Phases II and III and a PSPS project at Junk Bay Area 30/33 - all for completion in 1990. A total of 440 flats at Ngan Wan Estate (Mui Wo), on Lantau Island, were completed during the year and further sites for rural housing projects have been identified at Lung Tin (Lantau), and on Cheung Chau and Peng Chau.

Redevelopment

Between 1954 and 1964, 12 Mark I and Mark II estates, comprising 240 blocks, were constructed to house victims of natural disasters and squatters displaced by development clearances. These estates provided only basic accommodation with community and social facilities which are not up to the present standard. To improve the living environment of some 84 000 families in these estates, a redevelopment programme was launched in 1972.

In 1983, the government decided to step up the redevelopment programme, so that by 1990-1 the living conditions of all the remaining Mark I/II estates tenants could be improved. During 1988, 15 old blocks were evacuated to make way for new buildings, leaving 69 Mark I/II blocks to be redeveloped by 1990-1.

The extended redevelopment programme involving the clearance of 26 sub-standard blocks in 11 middle-aged estates was started in 1985. The programme has been progressing very smoothly, with about 80 per cent of the affected 15 100 families already rehoused. The year saw the successful evacuation of seven blocks, with the remaining 16 blocks to be totally redeveloped in 1989.

       The new housing strategy, endorsed by the Executive Council in 1987, envisaged the need to extend the redevelopment programme from Mark I/II estates to all Mark III-VI and former government low cost housing estates, to improve the living environment in these estates. The first five-year rolling programme, involving 225 blocks accommodating 56 000 families, was drawn up and made public in June 1988. Tenants whose blocks are due for re- development are formally notified of all the details 18 to 24 months before the clearance dates.

Maintenance

As the stock of Housing Authority flats has increased, so too has the diversity and complexity of work carried out by the authority's maintenance division. In all, 4 300

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buildings require maintenance - including 1 500 housing blocks, numerous shopping centres, schools, community facilities, multi-storey carparks, pedestrian walkways and footbridges. In the 1987-8 financial year 95 major contracts, with a total value of $822 million, were let for maintenance works.

     With the emphasis on planned maintenance, buildings are inspected and problems dealt with before they get out of hand. Maintenance policy is closely linked to the redevelopment programme, and repair and improvement programmes are geared to the condition and the life expectancy of each building. Over the past two years a major condition survey was conducted during which 440 000 flats were inspected. Sophisticated diagnostic tests were carried out in many buildings, including tests to determine the extent of steel corrosion in concrete. The development of planned and preventive maintenance strategies has led to the use of dedicated term contracts for individual estates. This programme involves 107 estates, an estimated expenditure of about $1.9 billion over a six-year period, and includes structural, roofing, plumbing and drainage work.

The upgrading of building services installations in the older estates continued with some $40 million being spent on improvement work during the year. The major improvement programmes included the re-wiring and reinforcement of electrical installations, installa- tion of communal TV/FM aerial systems, provision of towngas supply, addition of lifts, and the complete overhaul of water supply systems. The division also embarked on a fire services installation improvement programme to provide a more efficient fire-fighting capability within buildings.

Routine maintenance of building services installations was carried out at a cost of around $95 million in 1987-8. This involved the servicing of over 3 800 lifts and 50 escalators, 3 000 pumps, 1 000 cubicle switchboards, 970 communal TV/FM aerial systems, as well as numerous outdoor lighting and fire service installations, central air-conditioning and sewage treatment plants.

     In addition, improvements in energy management resulted in savings in excess of $6 million for the year, and new energy-saving measures were explored with a view to further reducing electricity costs.

Home Ownership Scheme

To meet the community's growing aspirations, the government established the Home Ownership Scheme in the late 1970s to help lower-middle income families and public housing tenants to become home owners by providing flats for sale at prices below market value.

Before April 1, 1988, the Housing Authority acted on the government's behalf in administering the HOS, using government funds. With the re-organisation of the Housing Authority on that date, the responsibility for the scheme has been taken over by the authority.

      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 income 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 99 573 flats, including 30 140 produced under the complementary PSPS, have been sold to eligible families. About 44 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, 3 500 flats have been

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sold to prospective public housing tenants who were, in return, required to forego 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 higher priority than private sector applicants 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.

      The Housing Authority also ensures the provision of adequate mortgage funding from financial institutions for the purchase of HOS and PSPS flats. In return for the authority's indemnity for an institution's loss in case of default, purchasers are able to enjoy favourable mortgage terms provided by over 50 financial institutions. Public sector priority status purchasers are able to borrow up to 95 per cent of the purchase price and private sector purchasers may borrow up to 90 per cent of the purchase price, with repayment periods of up to 20 years.

Implementation of the Long Term Housing Strategy has required an increase in production of HOS/PSPS flats from the previous level of 10 000 flats a year to around 15 000 flats a year for the period 1988 to 1990. Of these, about 25 per cent of the annual production will be upgraded flats in blocks originally intended for rental housing estates, thus providing a wider choice of flat sizes, standards, locations and prices for applicants.

During 1988, a total of 15 437 flats were offered for sale, starting with Phase 10A in April, when applications were invited for 5 048 flats in two HOS estates and two PSPS estates. This included 816 flats in Stage I of Po Nga Court, Tai Po, a rental block transferred to HOS from the rental housing programme.

In August, a further 5 110 flats were put up for sale, attracting 83 700 applications, because of the very good locations of the two PSPS estates included in the sale. These were Tsui Chuk Garden on the fringe of urban Kowloon and Grandway Garden in Sha Tin.

      Finally, in December, applications were invited for 5 279 flats in one PSPS and three HOS estates. This included a further 2 849 flats in upgraded rental blocks.

      Flat prices and sizes varied widely throughout the year, with prices ranging from $202,400 for a 48-square-metre flat at San Wai Court, Tuen Mun to $536,700 for a large flat of 61 square metres at Tsui Chuk Garden, Chuk Yuen.

Home Purchase Loan Scheme

The Home Purchase Loan Scheme, which is administered by the Housing Authority, forms an integral part of the government's Long Term Housing Strategy. The purpose of the scheme is to promote home purchase by assisting lower-middle income families to purchase flats of their own in the private sector. Families who meet the criteria for public sector priority status to purchase HOS/PSPS flats are offered the alternative of interest-free loans, repayable over up to 20 years, to help overcome the problems of initial financing faced by many families wishing to buy their own homes.

      For 1988-9 a quota of 2 500 loans of $70,000 was established. 32 financial institutions participated by linking their mortgage loans to the authority's loans under the scheme. Applications from eligible households were invited during June and July, and 2 500 applications were received which, coincidentally, exactly matched the quota for the year. Applications received subsequently were put on a waiting list to replace any applicants who withdrew from the scheme.

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The Housing Authority owns and manages 580 000 rental flats in 129 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, 24 000 new flats and 6 000 vacated flats were let to the various categories of eligible applicants. The biggest share went to waiting list applicants (53 per cent), followed by tenants involved in the redevelopment of the old Mark I and II blocks and in the extended redevelopment programme (16 per cent), and families affected by develop- ment clearances (14 per cent). Junior civil servants, victims of fires 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.

     The public housing waiting list and allocation of rental flats have been computerised, with information on nearly 3 000 000 applicants and tenants being stored in the Housing Applications and Tenancies Management Information System (HATMIS). The system enables housing allocation and duplication checks to be carried out effectively and produces useful statistical information.

     During the year, 16 000 flats, mainly in Tuen Mun, Sha Tin, Tsuen Wan and Junk Bay 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 residence in Hong Kong. The income limits range from $4,200 for a family of two to $8,800 for a family of 10 or more. The number of 'live' applications at the end of the year stood at 144 000. In addition, there were 21 000 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, 5 300 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, 3 800 families have benefited from this scheme. In 1986, the authority introduced a Sheltered Housing Scheme with a warden service for the able-bodied elderly. In 1988, the scheme's second sheltered housing project was opened at Tai Wo Estate in Tai Po, where 138 units were allocated to applicants attaining 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 made possible by 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 at present stand at $22.8 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.

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       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 700 premises in estates are let for the provision of welfare and community services. They are charged at a concessionary rent of $15 per square metre per month, exclusive of rates. In addition, offices are also let to District Board and OMELCO members, Urban and Regional Councillors at full market rents.

Management

Upon re-organisation of the Housing Authority in April, the new chairman began making regular goodwill visits to various housing estates and HOS courts, meeting representatives of the community. In addition, members of the Housing Authority and Management Committee, accompanied by senior officers of the department, visited estates to enhance their understanding of management activities, and also met members of mutual aid committees for informal exchanges of views on the management of the estates. At estate level, housing managers also maintained periodic meetings with mutual aid committee office-bearers on management matters.

       Since the implementation of the Housing Subsidy Policy in April 1988 41 000 house- holds with 23 or more years of residence in housing estates were required to declare their household incomes. Twenty-one per cent of households with incomes exceeding the subsidy income limit, which is twice the amount for waiting list applicants, had to pay double net rents. Another batch of 62 000 households with 19 to 22 years of residence in housing estates were notified in April, to declare their family incomes for the purpose of im- plementing the housing subsidy policy. Those with household incomes exceeding twice the waiting list limits will be required to pay double net rents in April 1989.

The first sheltered housing run by the department was opened in November 1987 at Heng On Estate, Ma On Shan, to house 145 able-bodied elderly persons aged 60 years and over. A warden service is provided. It is planned to incorporate these facilities in 14 more estates over the next five years.

During the year, agency management was further extended to four Home Ownership Scheme courts, making a total of six courts under the management of private property management agents. A further scheme is being tried in two new courts where the agents will be expected to assume the management role before the buildings are taken over. Under the agency management scheme, the Housing Authority remains ultimately responsible for the management standards and level of management fees.

       Under the Housing (Traffic) By-laws which empower the Housing Authority to impose charges for impounding and removing vehicles which are illegally parked in housing estates, the roads in 117 estates, nine factories and 37 HOS courts are now under the authority's control.

       A three-year contract, effective from November 1987, was awarded to a private management company to manage carparks in 28 selected estates as a pilot scheme. The performance of the company will be evaluated and reviewed later in the year before a decision is taken on whether to extend the scheme to other estates.

       Staff of the Estate Management Branch have been required to work irregular hours to keep hawking activities within housing estates under control. Apart from the efforts of the

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Major Operation Unit, which cleared 900 illegal hawkers in the estates, the staff at estate level have also undertaken 8 400 cases of seizure and 1 800 cases of prosecution to deter illegal hawking in estates.

Letting of Commercial Properties

The Housing Authority manages 1.16 million square metres of commercial space, including shops, market stalls, banks and restaurants, held under some 29 000 separate tenancies and producing a total rental income of $1,266 million during 1987-8.

      The stock includes 7 044 'graded' shop tenancies in former resettlement estates. These shops were let initially at very low rents and current rents are, in most cases, less than one-third of current market levels despite moderate biennial increases since 1976. Rents for other commercial premises are fixed at market levels, in keeping with the authority's policy not to subsidise commercial operators.

     As part of the re-organisation of the authority, a new Commercial Properties Commit- tee was constituted to oversee all aspects of Housing Authority commercial properties management. Under the auspices of the committee, emphasis on research and design was maintained during the year to ensure new commercial centres are best suited to the needs of both tenants and local residents, and to upgrade existing centres where necessary. Promotional activities were held in 56 estates to sustain and enhance the competitiveness of the authority's existing commercial facilities. Shops and market stalls continued to be let mainly by rental tendering, although an increased number of premises were let by negotiation which has brought more well-known retailers into estates.

The arrangements by which a rent review is conducted every six months to ensure that tenants affected by the Extended Redevelopment Programme are not being asked to pay rent in excess of market value, has not been extended to cover tenants affected by the Compre- hensive Redevelopment Programme. Tenants required to vacate their premises to facilitate redevelopment receive an ex-gratia payment and, where possible, reprovisioning in alterna- tive premises through restricted tender. A three-month rent-free period is then granted.

Temporary Housing

Temporary Housing Areas (THAs) continued to play an important role in providing places for people made homeless by natural disasters or displaced by development clearances, but who are not immediately eligible for permanent housing.

During the year, 14 000 people mostly affected by development clearances were allocated units in THAS, but at the same time 23 000 people moved out mainly to permanent public housing through the general waiting list, trawling, or clearances of THAS.

Temporary housing spaces for 16 000 people were completed in the year, against a loss of 7 000, mainly due to the development of existing sites. While THAs with 22 000 person spaces were under construction, there was still an acute shortage of sites for THA development in the urban areas.

      At the end of the year, there were 70 THAs throughout the territory housing 116 000 people from 40 000 families.

     Residents of THAs have priority in the purchase of HOS flats or may be granted an interest free loan of $70,000 to buy a flat in the private sector under the newly-introduced Home Purchase Loan Scheme.

Transit Centres

At the end of the year, there were eight transit centres with a capacity of 1 608 person spaces providing emergency accommodation for those rendered homeless by fires, typhoons, or

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other natural disasters. These people will be eventually rehoused in permanent or temporary housing, according to their eligibility.

Cottage Areas

There were seven remaining cottage areas scattered throughout the territory, providing accommodation for 10 400 people. The largest, the Rennie's Mill Village Area at Junk Bay, houses 5 600 people:

Squatter Control

A total of 10 000 new structures or extensions to existing structures were demolished during the year on undeveloped government land and leased agricultural land. More than half of these structures or extensions were demolished while they were being built. This was achieved by means of daily patrols by teams comprising a housing assistant and two to six workmen equipped with demolition tools. In addition, squatter control staff also assisted the Environmental Protection Department in implementing the Livestock Waste Control Scheme by demolishing livestock-related structures in banned areas.

      The squatter population decreased from 408 000 to 377 000 over the year as a result of clearances, natural disasters and rehousing through various channels. As a further step in preventing the growth of the population, those squatters rehoused through the waiting list or purchase of flats under the Home Ownership Scheme or Home Purchase Loan Scheme must surrender their vacated huts for demolition or freezing action.

Improvement to Squatter Areas

The Squatter Area Improvement Programme is aimed at safety and at providing basic services in squatter areas not yet due for clearance and redevelopment for a minimum of three or four years. This programme was initially intended to last for five years from its inception in 1983. However, as it has been very well received, it is being extended for another two years to conclude in about 1989-90. When the whole programme is completed, the benefits will have reached 120 000 squatters, mainly in the urban area and Tsuen Wan. During the year, 13 projects were completed, bringing the total to 64 since 1983. In addition, 203 street lights were installed in 17 squatter areas not included in the improve- ment programme. The Housing Department assumes the responsibility for management and maintenance of services provided under the programme.

Squatter Clearance

During the year, 320 hectares of land were cleared for development, resulting in 14 500 people being allocated permanent housing and 13 500 temporary housing. Some 1 100 industrial, commercial and agricultural undertakings affected by clearances were given ex-gratia allowances. In addition, 3 500 people rendered homeless as a result of fires and landslips were provided with permanent or temporary housing.

Kowloon Walled City Clearance

The Walled City covers an area of 2.7 hectares and encompasses some 30 000 people and 930 commercial undertakings. Since the announcement by the government on January 14, 1987, of the clearance of the Walled City, good progress has been made. The clearance is being undertaken in four phases by the Special Duties Office.

      Phase I is in an advanced stage and about 8 000 people affected in that phase will move out by mid-1989. The whole clearance programme is expected to be completed in mid-1991.

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     After the clearance, the site will be developed by the Urban Council into a public park with related community facilities. Construction work for this is expected to begin in early 1992.

     At the end of the year, 7000 residents had been rehoused and the operators of 255 commercial concerns had accepted cash compensation totalling $24,700,000.

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.

     Legislative amendments are being prepared to amend the Multi-Storey Buildings (Owners Incorporation) Ordinance to make it easier to form owners' corporations and to improve their functioning. Such corporations act in the interests of individual owners regarding their rights, powers, duties and liabilities in relation to those parts of a build- ing 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.

     To involve the public in developing policies on building management, a new Advisory Committee on Private Building Management has been formed. This committee consists of a majority of non-official members and advises the government on measures to improve the management of private buildings.

     Separately, a government inter-departmental working group is examining ways to resolve the problems associated with existing Deeds of Mutual Covenant, many of which fail to protect adequately the interests of individual flat owners.

     So far, ten Building Management Co-ordination Teams have been set up 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 through 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 objective, recommended in 1981 by a Committee of Review and endorsed by the govern- ment, 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.

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      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 November 1988 when the legislation was amended to provide for permitted rents to be 39 times (previously 35 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 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

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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

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THE primary objectives of the Hong Kong 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 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 seven departments in the Lands and Works group. These are the Architectural Services, Buildings and Lands, Civil Engineering Services, Electrical and Mechanical Services, Highways, Territory Development and Water Supplies Departments. From November 1, 1988, the policy responsibility for environmental protection and pollution control was transferred from the Health and Welfare Branch to the Lands and Works Branch. The Secretary for Lands and Works is the Chairman of the Town Planning Board and the Development Progress Committee, which is responsible, among other things, for considering and approving detailed planning briefs and planning layouts for development areas in accordance with standards laid down by the Land Development Policy Committee. The Land Development Policy Committee is chaired by the Chief Secretary, and is responsible for overseeing all aspects of the physical develop- ment of the territory, and for approving, in principle, all major proposals affecting the development or planned use of land.

Public Works and Development

To cope with Hong Kong's future development, the government continues to invest heavily in capital works. In 1988-9, funds allocated for capital works amounted to $6,759 million, about 12 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 22 per cent of the provision was for building items and eight per cent for waterworks. Of the total investment in capital works for 1988-9, 44 per cent was for projects in new towns and new urban development areas. In addition $2,025 million. was allocated for acquisition of land for public works projects, including the clearance of Phase I of the Kowloon Walled City.

Momentum in new town development was also maintained in 1988 with the decision, in principle, that a further phase of Junk Bay New Town development should proceed to bring the design population of the new town to about 440 000. A detailed feasibility study is expected to be completed in late 1989. Junk Bay will also be the location of Hong Kong's third industrial estate.

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Forward Planning Since the beginning of the 1970's Hong Kong has relied for the greater part of its urban expansion, including the provision of land for industry, on its new town programme. At present eight new towns are in various stages of construction in the New Territories, resulting in a gradual decentralisation of the population from the crowded urban areas. About 1.9 million people, or 33.9 per cent of the population, are now living in the new towns. By 1997, this figure is expected to increase to about 40 per cent.

      In 1983, it was concluded after extensive strategic studies that the most economic area for further expansion beyond the new towns would be on new reclamations in the harbour. It was also recognised that the port of Hong Kong, where many of the more centralised facilities had been redeveloped for other uses in the 1970's, would require further expansion in the Western Harbour.

      In 1986 and 1987 it became clear that three major problems needed further -- and urgent - attention:

firstly, that both port and airport facilities were approaching saturation much faster than expected in the earlier strategic studies;

secondly, the higher environmental standards of the new towns showed up the poor environmental quality of large parts of the metropolitan areas, and,

thirdly, the environmental quality and minimal provision of services in the rural areas had become a source of increasing dissatisfaction to its residents.

This gave rise to three studies, the Port and Airport Development Strategy study, the Metroplan study and the Rural Planning and Improvement Strategy study which are described in the following three paragraphs.

The Port and Airport Development Strategy (PADS) study, which is concerned with the phased provision of new port, airport and related infrastructure facilities, started in March 1988. Good progress was made during the year on background research, planning and engineering studies, and a number of initial options for the port and airport were considered. The PADS final report is expected by mid-1989, when the number of options will have been reduced to three, one for each of three possible airport locations: Kai Tak, Chek Lap Kok or East Lantau/Western Harbour. The proposals for siting Container Terminals 8 and 9 will be announced in early 1989 in advance of the completion of the study.

The Metroplan study will provide a framework for the more comprehensive restructur- ing of the existing and planned urban areas around Victoria Harbour. 'Metroplan - the Aims' (the first consultative document identifying the broad goals and specific objectives of the study) was issued in April 1988 and much positive comment was received. Further public consultations will be conducted during the course of the study. Metroplan is expected to be completed in late 1989, in conjunction with the PADS Study Report and the feasibility studies of major reclamation proposals for the harbour at Central and Wan Chai, Green Island and West Kowloon.

The Rural Planning and Improvement Strategy proposal is aimed at improving living conditions and the general environment of the New Territories outside the new towns. This study covers the essential infrastructure for rural development, and also the planning and land administration strategy for its implementation.

      Essential to all these studies will be the establishment of machinery for implementation. For instance, the Metroplan will achieve much of the environment improvement sought through the newly-formed Land Development Corporation which was established in January 1988 to undertake, encourage, promote and facilitate urban renewal in the older

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urban areas. To complement the activities of the LDC, a special team was set up in the Buildings and Lands Department to co-ordinate urban renewal projects, to prepare briefs for guiding redevelopment and to assess the redevelopment schemes proposed by the corporation.

Government's planning and development machinery for the rural areas will also probably require reorganisation to meet the demands for Rural Improvement and Planning Strategy. But perhaps more important is the review of the 1939 Town Planning Ordinance or updating Hong Kong's town planning legislation to cope with modern planning needs including those of the rural areas. The aim is to finalise proposals for new legislation in 1989.

Water

Discussion with the Guangdong Authority on the supply of water to Hong Kong beyond 1994-5 started in late 1988. Agreement was also reached during the year to increase the reliable yield of water supply for Hong Kong to 99 per cent from 1989-90 to 1994-5. This requires the purchase of an additional 40 million cubic metres of water annually.

Professional Registration

     Legislation to provide for professional registration of architects, engineers, surveyors and planners is being prepared and is expected to be introduced into the Legislative Council in mid-1989.

Land Administration

The Land Administration Office of the Buildings and Lands Department co-ordinates all aspects of land administration throughout the territory. In addition to its headquarters, the department has 14 District Lands Offices: three on Hong Kong Island, two in Kowloon and nine in the New Territories. District Lands Officers are responsible for most aspects of land administration and land disposal, while the headquarters formulates territory-wide policy and gives guidance 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 deduction 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.

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 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 provided on concessionary terms. Land is also granted by private treaty, at nominal or concessionary 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.

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      Most government land available for private sector commercial, industrial or residen- tial development is sold by public auction or tender. 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 tenders restricted to holders of Land Exchange Entitlements (Letter A/B).

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 direct 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.

Where resumption of land in the New Territories arises, 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. For resumption of old schedule lots in the Urban Area, a system of ex-gratia payments also applies.

The need for development has continued to grow. During 1988, 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 costs involved was about $1,000 million. These projects included the southern access road to Nim Wan Controlled Tip in Tuen Mun, the Stage I works of Ting Kok Road Upgrading in Tai Po and the Tate's Cairn Tunnel Approaches in Sha Tin.

In the urban areas of Hong Kong Island and Kowloon, about $977 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 the Ap Lei Chau North Reclamation, Tate's Cairn Tunnel and Approaches in Lung Cheung Road/Hammer Hill Road Grade Separated Interchange, Ma Tau Wai Road flyover, and the Kowloon Walled City Clearance.

An amendment to the Roads (Works, Use and Compensation) Ordinance has recently be made to facilitate work on the heavy private streets resumption programme.

Land Office

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.

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      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, 355 576 instruments were registered at the Land Office, compared with 336 347 in 1987. Detailed statistics are at Appendix 34. At the end of the year, the card index of property owners contained the names of 659 447 owners, an increase of 58 823 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 1990.

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 1988 included a complex land exchange involving the relocation of existing oil depots at Ap Lei Chau and Kwun Tong to a site on Tsing Yi Island, the decommissioning of a power station on Ap Lei Chau and the grant of development rights for commercial and residential purposes in respect of the two sites released in Kwun Tong and Ap Lei Chau totalling 24.3 hectares. Over 17 000 flat units will eventually be provided by these proposed developments.

       A site of 31.5 hectares in Kwai Chung, Kowloon was sold by public tender in April for the construction of the Territory's Container Terminal No. 7.

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A sale by private treaty to the Housing Authority comprising a site of 2.14 hectares at Junk Bay for a Home Ownership Scheme was completed in January. The development will provide about 1 750 flats. Another sale by private treaty comprising a site of 4.7 hectares above the future Lam Tin MTR station for commercial and residential use was completed in August. During the year one site was sold under the Private Sector Participation Scheme (PSPS). The site comprising 2.45 hectares in Junk Bay was sold by public tender in January and on completion of development will provide a total of about 2 450 flats.

In the New Territories important Letter A/B tenders included a 1.58 hectare site in Kwai Chung for commercial residential purposes and a 1.1 hectare site in Fanling for a similar use. These tenders were restricted to holders of Land Exchange Entitlements (Letter A/B).

Town Planning

     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. To accommodate the growing population and economy, it is necessary to plan the use of the limited land resource very carefully to ensure that it is put to the most suitable use and that a good living and working environment for the present and future population is provided.

During the year, a comprehensive land utilisation survey covering the whole territory was carried out. For the built-up area, residential uses accounted for a large proportion while government/institution/community and open space uses also constituted a major use. However, a large part of the total land area is still covered with country parks, woodlands, grass or scrub land. The table at Appendix 35 shows the distribution of different types of land uses in the territory.

Territorial Development Strategy

The Territorial Development Strategy outlines a long-term land-use and transportation 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. During 1988 further updating of the TDS and review of an outline works programme to guide major long-term development projects continued to take into account the preliminary findings of major on-going studies including the Metroplan study, the Port and Airport Development Strategy study and the Second Comprehensive Transport study.

Sub-Regional Planning and Rural Planning

     In line with the Territorial Development Strategy proposals, detailed sub-regional planning statements (SRPS) and district plans are prepared to provide guidance for more detailed land use planning and development control. The New Territories Rural Planning and Improvement Strategy is being moulded in the light of the SRPS. Moreover, at a sub-regional level, various site search exercises for major facilities were conducted to identify the best locations for major facilities to minimise land use incompatibilities and adverse environmental impact.

Planning Standards and Studies

The 'Hong Kong Planning Standards and Guidelines' are formulated for the reservation and provision of land for various uses, for community, recreational and commercial facilities, for the density on different types of residential developments and factors

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pertaining to environmental, locational and site requirements which need to be considered in the preparation of town plans and planning briefs. The document is constantly kept under review to take account of changes in government policies, demographic characteris- tics and social and economic trends. Any changes to the document must be approved by the Land Development Policy Committee. Standards and guidelines reviewed during the year were related to children's and youth centres, community centre facilities and the provision of parking, loading/unloading facilities within residential developments.

Surveys in land and floor uses covering the whole territory were carried out or updated to provide the basic input in preparation of statutory and departmental plans. Land use surveys were completed for Yau Yat Cheun, Tsuen Wan West, Kwai Chung, Junk Bay, Lai Chi Kok, Sham Shui Po and Shek Kip Mei. Special studies covering such topics as the allocation standard for industrial floor space, open space development on reservoir decks and underneath flyovers, hotel development, the application of balanced development concept in the new towns in Hong Kong, and cycle parking facilities, were also carried out during the year. An assessment of the urban living conditions was completed as an input to the Metroplan study. Regular studies such as forecast of future land supply and land requirement were carried out to monitor the situation of the supply and requirement of various land use in the territory over the next ten years.

District Planning

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.

The Town Planning Ordinance provides for the preparation of statutory town plans, normally called outline zoning plans, under the direction of the Town Planning Board. These plans show areas zoned for residential, commercial, industrial, open space, govern- ment/institution/community or other specified purposes. By indicating the future land use pattern, they provide a guide to public and private investment. Once a statutory plan is exhibited for public inspection, it has statutory effect. Under the Buildings Ordinance, the Building Authority may refuse to give approval to any plans of building works which would contravene any draft or approved plan prepared under the Town Planning Ordinance.

In 1988, the Town Planning Board exhibited 18 statutory plans including two new plans covering Tai Tam --Shek O and Stanley and 16 amendment plans for various parts of the main urban areas and new towns. During the exhibitions of these plans, 196 public objections were received. These objections were duly considered by the Town Planning Board and, to meet some of them, further amendments were made to some of the plans.

At the end of the year, the main urban areas were largely 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. Eight of these plans were approved by the Governor in Council during the year.

The Town Planning Ordinance also provides for the preparation of a schedule of notes to be attached to each statutory plan. This schedule shows the land use which are permitted in a particular zone and those 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 to meet changing needs. Should an application for planning permission be refused, the applicant may, under the provisions of the ordinance, apply to the Board for a review of its decision. During the year, the Town Planning Board

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considered 248 applications for planning permission and 42 applications for review, as compared with 209 and 26 respectively in 1987.

Some planning applications involve relatively large-scale comprehensive redevelopment schemes with significant impact on the districts in which they are located. During the year, 10 such schemes were considered by the Town Planning Board, including the redevelopment of a tram depot in Wan Chai, the redevelopment of a bus depot in North Point, the redevelopment of a cotton mill in Tuen Mun and an ex-oil depot in Tsuen Wan. 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 details. Examples of such plans prepared during the year included layout plans for Sai Tso Wan and Cha Kwo Ling in Kwun Tong, Shek Wu Hui and On Lok Tsuen in Fanling and Sheung Shui.

Review of Town Planning Ordinance

The Town Planning Ordinance, enacted in 1939, is based primarily on the English planning legislation of 1932. While some amendments to the ordinance have been made over these years, the essence of the legislation remains basically unchanged. The existing ordinance is therefore found to be inadequate in some respects to cope with the changing socio- economic and political conditions.

Following an Executive Council decision to revise the ordinance, an Advisory Group was formed in early 1988 to embark on an overall review of the current planning legislation. The review covers all related aspects including the coverage of planning jurisdiction, protection of environment, public involvement, planning permission, enforcement, com- pensation, appeal, and conservation of historic buildings and trees.

Planning Information

The Central Information and Technical Administration Unit of the Town Planning Office provides a common channel through which planning information 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 for distribution to the public. Briefings, lectures and seminars were arranged to explain to the district boards, local residents associations and educational institutions on general town planning in Hong Kong or specific planning issues. A total of 3 700 enquiries from members of the public were handled by or through the arrangement of this unit, representing a 21 per cent increase compared with 3 050 enquiries in 1987. Persons seeking planning advice and planning information included professionals, property owners, developers, journalists and students.

New Towns and Rural Townships

Since 1972, comprehensive new town development has taken place in many parts of the New Territories to meet a 10-year housing programme to provide proper living conditions for 1.8 million people. This target has been substantially achieved and the new town development programme has since been extended into the 1990s. Provided with a full range of social, educational and recreational facilities, the seven new towns created at Tsuen Wan,

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      Sha Tin, Tuen Mun, Tai Po, Fanling, Yuen Long and Junk Bay, have to date accommo- dated nearly two million people. Major land formation works for the latest new town at Tin Shui Wai have also started which will have a population of 140 000. On completion of the new town programme by the end of the 1990s, a population of 3.5 million can be accommodated in the new towns.

To ensure proper co-ordination of the planning and implementation of development works 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. It works closely with other government departments such as the Housing Department for the implementation of the public housing programme, and the City and New Territories Administration, Urban Services Department and Regional Services Department in fostering the growth of new well-balanced communities.

       The private sector also plays a major role in the provision of private housing develop- ments and facilities within the new towns and rural township.

Sha Tin

Since the inception of the new town development programme in 1973, the population in Sha Tin New Town has grown from 30 000 to 500 000. The population is expected to reach 700 000, by the mid-1990s, about 44 per cent of whom will be in public housing, 17 per cent in Home Ownership and Private Sector Participation Schemes and the remainder in private housing.

       With the increasing daily commuting needs of the town's residents to other areas, every effort is made to improve the external transport links. Construction of the Route 5 road tunnel linking Sha Tin with Tsuen Wan, is underway and is expected to be completed in early 1990. Construction of the Tate's Cairn Tunnel by a private consortium also began during the year. It will provide an additional traffic link to East Kowloon by late 1991. Sai Sha Road, the road link between Ma On Shan and Sai Kung was completed in 1988.

      In Ma On Shan, engineering contracts for further reclamation, land formation and provision of infrastructure are underway. Detailed land use planning proposals for the new development areas are being finalised.

       To alleviate the water pollution problem in the Shing Mun River and Tolo Harbour, design started for the marine disposal of sludges from the Sha Tin Water Treatment and Sewage Treatment Works as well as the process modification of the Sha Tin Sewage Treatment Works to increase nutrient removal.

Tsuen Wan

Since the post-war years Tsuen Wan New Town, which includes Kwai Chung, Tsuen Wan and Tsing Yi, has expanded rapidly into a busy township housing almost 700 000 people. Completion of the major developments in the early 1990s will increase the population to 800 000 and create job opportunities for 400 000 workers in the industrial sector.

      The development of Tsing Yi Island has been dramatic and work on the large housing estates in the north-eastern part of the island, which will provide homes for 43 000 people, is well advanced. The Ching Tai Court Home Ownership Scheme completed at the end of 1988 will house a further 5 500 people. In addition, site formation in the southern half of the island for land-intensive port-related industries was completed.

       Kwai Chung contains the world's busiest container terminal, which is under further extension by reclamation. Container Terminals 6 and 7 when completed in late 1989 and mid-1991 will provide additional areas of 29 hectares and 31 hectares respectively. To meet

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growing traffic demands, the Tsing Tsuen Bridge, the second bridge connecting Tsing Yi Island to the mainland and the longest in the territory, was completed in late 1987. Also, Route 5 (Tsuen Wan section) and construction works along the busy Kwai Chung Road, including two flyovers at the junction of Kwai Chung Road/Castle Peak Road, are well underway. Further major highways projects in the pipeline include the outstanding sections of New Container Port Road, the widening of the southern part Kwai Chung Road and the provision of a flyover along Texaco Road.

To meet the recreational needs of the expanding population, work on the Kwai Chung Park at Gin Drinker's Bay is well underway. Detailed study has also started on the development of Shing Mun Valley into a district open space.

Redevelopment of some of the older public housing estates, namely the Tai Wo Hau, Kwai Fong and Kwai Hing Estate in Kwai Chung is underway to provide improved living conditions and environment for the residents. Upon completion there will be a total of 11 300 rental flats for about 45 000 people, together with 1 800 Home Ownership Scheme flats for another 6 500.

Tuen Mun

The population in Tuen Mun has already risen to about 300 000 and the development of land which is in the pipeline will raise the population to over 500 000 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 1988 land reclaimed from the sea amounted to about 29 hectares for residential and industrial development. In this core of the town, eight public housing estates have been built and are occupied by some 180 000 people. Another three housing estates under construction at present will accommodate 60 000 people. In addition, seven Home Ownership and Private Sector Participation Schemes have provided improved home for 50 000 people and five more schemes are due to be implemented in the coming years.

In the town centre, the auditorium and the magistracy building were put into use and a large department store was opened. The present town park is also being expanded.

A comprehensive recreation area is being developed at the Butterfly Beach and a promenade on the east side of the nullah.

The migration of mostly younger households into the new town has led to an abnormally high level of demand for school facilities. The school building programme has been advanced and five primary schools and seven secondary schools are under construction to meet the demand.

      The existing industrial areas are largely developed, accommodating around 1700 companies and providing jobs for more than 33 000 workers.

      Stage I of the Tuen Mun-Yuen Long Light Rail Transit System was commissioned in September 1988. At the southern end of the system is the transport interchange at the Tuen Mun Pierhead, where there are also terminal facilities for buses, taxis, public light buses, and a hoverferry service to Central District on Hong Kong Island.

In the low-density residential areas along the coast to the southeast of the town, work is proceeding on a marina which will comprise residential buildings, shops, hotel and recreational facilities, including berths for 300 pleasure crafts.

Tai Po

Tai Po New Town is located at the north-western extremity of Tolo Harbour, about 20 kilometres north of Kowloon. Good transportation links are provided by the Tolo

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      Highway and electrified Kowloon-Canton Railway. The existing railway station is at the southern part of Tai Po Town centre. In order to provide better service to the residents in north-western Tai Po, a second railway station at the Tai Wo Estate is under construction and will be opened in early 1989.

       Historically, Tai Po served as a market town for its rural hinterland, but a rapid build-up in population in recent years has over-shadowed this traditional role. The present population is about 160 000 and this will grow to about 290 000 in the late 1990s. About 175 000 people will be housed in six public housing estates, all of which will include an element of home ownership. It is expected that over 60 per cent of the private residential population will be housed in high density areas in the rapidly developing new town centre on reclaimed land and in the old town centre. The balance of the population will be housed in medium to low density development in Tai Po Kau and other peripheral areas of the new town.

The first planned industrial estate - Tai Po Industrial Estate, for relatively high technology industrial development, helps to broaden Hong Kong's industrial base. Upon full development together with other industrial areas, about 33 000 industrial job opportunities will be provided.

       The scenic setting of Tai Po has a strong influence on the provision of recreation facilities for regional needs. One of the major cycleway routes along Tolo Highway linking Sha Tin was opened in July 1986. Another one alongside Ting Kok Road leading to Plover Cove Country Park will be completed in 1990.

Fanling/Sheung Shui

Fanling New Town encompasses the market towns of Luen Wo Hui, Shek Wu Hui, and the old villages of Fanling and Sheung Shui. It is the most northerly of all the new towns and is only about four kilometres away from Shenzhen, China on the other side of the border. With the completion of Fanling Bypass and the electrification of the Kowloon-Canton Railway this new town is well linked to the urban areas. Convenient connection to Yuen Long and the north-western New Territories will be provided with the completion of the Kwu Tung to Au Tau section of the New Territories Circular Road by early 1991.

Development in the new town is progressing rapidly. The present population is about 110 000 but is projected to reach 240 000 by the end of next decade. There are two existing public housing estates in the new town. Work on three public housing estates is in progress while the planning for another estate is underway. Equal emphasis has been put on private development in the new town and several prime sites adjacent to the two railway stations are being planned for private residential/commercial development.

       Improvements in roads and drains and river training in the On Lok Tsuen industrial area have led to an increasing interest shown by private developers in the development/redeve- lopment of the area which is the main source of industrial employment for the new town residents. Plans are in hand for the existing retail and commercial 'core' at Shek Wu Hui and Luen Wo Hui to be redeveloped.

       To meet the recreational needs of local residents, work is currently underway on a landscaped town park.

      At Sha Tau Kok, a small township with a population of about 2 500 right at the border with China, work is in progress to upgrade and improve the living conditions including services and environment of the town. Projects already completed include Phase I of a rural public housing estate and a new primary school.

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Yuen Long, Tin Shui Wai and the North-western New Territories

A considerable amount of development has taken place in Yuen Long since the early 1970s. The town is still growing and more facilities will be provided in the coming years.

      Emphasis during the year was placed on improving traffic circulation within the town in anticipation of the introduction of the Light Rail Transit System from Tuen Mun to a transport terminus in Yuen Long. A flyover at the northern bypass eastern junction and two bridges across the western nullah were completed and traffic management measures at several junctions were implemented.

Work began on construction of the Yuen Long town park, with extensive areas of woodland, an ornamental lake, a viewing tower, football pitches and other features.

      The scheme to reduce the smell and visual impact of the Yuen Long nullahs has advanced to the detailed design stage and an improvement to the environment is expected by 1991.

      The latest new town at Tin Shui Wai will be built on the 488-hectare government landholding. Initial development will be confined to the southern half of the landholding and preliminary works such as the construction of an access road from Castle Peak Road and the diversion of River Tai were completed.

      A major site formation contract is underway for the new town. The material for filling is obtained from the seabed in Deep Bay by dredging and then pumping through pipelines to the site. To prevent flooding in the surrounding low-lying areas, flood protection works are being implemented in a number of villages. Design and construction of the infrastructure of the new town will be carried out in phases with a view to occupation of the Tin Yiu Estate, the first public housing estate in Tin Shui Wai, by 1992.

      The north-western New Territories in general and the Tuen Mun-Yuen Long Corridor in particular will grow in prominence and considerable developments will take place in the future. The design of a major sewerage and sewage disposal project in the northwestern New Territories has started. This scheme to cost about $700 million, will cater for develop- ments in the Yuen Long peripheral areas, Tuen Mun-Yuen Long corridor, Tin Shui Wai New Town and Au Tau, for a population of about 600 000.

In the Tuen Mun-Yuen Long corridor, construction work commenced on the first stage of a commercial/residential development at Hung Shui Kiu.

Junk Bay and Sai Kung

A feasibility study was commissioned at the end of the year to examine the implications of additional development of the Junk Bay New Town. The Outline Development Plan of the new town was revised to increase the population capacity of the new town from 325 000 to 440 000 and to incorporate the development of the proposed third Industrial Estate.

      Population intake to the new town began in March 1988. The Po Lam and Tsui Lam public housing estates were the first two to be occupied. Three Home Ownership estates, temporary housing area and four schools were also completed. Extensive land formation works continued during the year and about seven hectares of land were formed up to final level. Roadworks, including the approaches to the Junk Bay Tunnel and the internal road network of the new town, are under construction. Internal works of the Junk Bay Tunnel, such as construction of linings and road pavements and the installation of electrical and mechanical services are also well underway. Discussions are being held with the Mass Transit Railway Corporation to develop a programme for extension of the MTR to Junk Bay.

Plans were prepared for the Sai Kung hinterland, giving priority to recreational develop- ment and to concentrate urban type development within selected development areas.

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Design plans for the University of Science and Technology were fianlised for the construc- tion work to proceed in 1989 and with the first of three phases to be completed in 1991.

At Sai Kung Town, layout plans were drawn up for development of the essential community and recreational facilities to serve the township and the hinterland. Preparation work for reclamation at Sai Kung Tuk was carried out to provide land for development of a rural public housing estate. The sewage treatment plant for the town was completed and commissioned.

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 throughout the year in both planning and construction to upgrade the living environment and to improve general facilities for the increasing number of visitors to the islands. Among the projects completed were a rural public housing estate at Mui Wo for 1 600 people, a cemetery in the same district, and a local open space in Tai O and the formation of 0.25 hectare of land at Peng Chau for use as an open space.

Urban Development Areas

Five development areas at Aldrich Bay, Hung Hom Bay, West Kowloon, Central and Wan Chai and Green Island, all involving reclamations in Victoria Harbour, were either being studied or under construction to meet forecast development needs in the 1990s and beyond. 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 is progressing as scheduled and will be completed in 1992-3. About eight hectares of land have already been reclaimed with material from public dumping and site formation works.

      The Aldrich Bay Reclamation will produce about 17 hectares of land. The first phase of work involving reprovisioning of the typhoon shelter is being carried out in conjunction with site formation work at Shau Kei Wan foothills.

In-house planning and engineering feasibility studies for the West Kowloon Reclamation continued and consultants have been commissioned to undertake a transportation study. The consultancy feasbility study on the Central and Wan Chai Reclamation study is well advanced. Consultants have also been commissioned to investigate the feasibility of the Green Island Reclamation.

      The effects of these proposed reclamations on the hydraulics and water quality in the harbour are being assessed by model studies.

Urban Renewal

Following the enactment of the Land Development Corporation Ordinance 1987, the Land Development Corporation (LDC) was established in January 1988. It is charged with the task of initiating and facilitating urban renewal through negotiation for the surrender of existing property and assembly of land for comprehensive development in areas where satisfactory development has been inhibited by factors such as multiple ownership of properties, small size and irregular shape of sites and obsolete street layout. To facilitate the processing of LDC's urban renewal proposals which the government has recognised as a high priority, a Co-ordinating Urban Renewal Team was set up in April 1988 within the Buildings and Lands Department's Town Planning Office as the main contact point and overall co-ordinator between LDC and government for LDC projects.

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      Since the establishment of LDC, the government has received submissions from LDC for development of 16 sites which largely fall within Mong Kok, Yau Ma Tei, Wan Chai, Sheung Wan and Central. During the year, the Town Planning Board endorsed five planning briefs prepared by the Town Planning Office to facilitiate LDC in its preparation of development schemes of a larger scale. The board also granted planning permission for LDC to undertake five relatively small development projects. In planning for urban renewal with a co-ordinated strategy, consultants appointed by LDC have carried out a series of studies on urban redevelopment opportunities for some of the older built-up districts and the Town Planning Office has actively participated in monitoring and assessing the consultancy work.

Urban environmental improvement schemes particularly with regard to the provision of open space, continued to be given impetus in 1988. About $28 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 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 risk, traffic considerations and environmental nuisance, a total of 14 streets were selected for resumption.

      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, properties at Sai Ying Pun, Sheung Wan and Yau Ma Tei were resumed and cleared by the end of the year, at a cost of $100 million.

Private Building

Private sector building continued at an active pace and there was a boost in the demand for property following the lowering of bank interest rates in the early part of this financial year. Among the private building works is the Whampoa Gardens, which is a medium-size residential/commercial redevelopment. The concept behind this scheme is to build a garden city by careful landscaping. The eye-catching feature will be in the form of a 'ship', which is being constructed in recollection of the dry dock which formerly stood on the site. The 'ship' will include high class restaurants, two cinemas and two floors of department stores, and sporting facilities with an indoor swimming pool and a roller rink.

The current Hong Kong hotel building boom includes several major hotel/office development projects, such as the Hong Kong/China Ferry Terminal complex consisting of five office towers, one hotel block and one hotel/office block over a five-storey podium. The nearly-completed Sun Plaza Hotel in Kowloon and the Ramada Inn in Wan Chai, together with proposed extensive expansion to the Peninsula Hotel and Miramar Hotel, will provide further accommodation for Hong Kong's tourism surge.

Other major redevelopment works underway include the 38-storey Chartered Bank and the 25-storey Hang Seng Bank, both of which are in the Central District.

      During the year, 666 proposals for private development were submitted for approval to the Buildings Ordinance Office, compared with 734 in 1987. Occupation permits issued for completed buildings numbered 525, providing a total usable floor area of 2 929 105.5 square metres. This represented an increase of 11.4 per cent above the previous year.

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The total amount expended on private building works excluding the cost of land was $12,566 million, an increase of 23 per cent.

As well as administering the statutory provisions for the design, planning and construc- tion of new buildings, the Building Ordinance Office deals with dangerous buildings and unauthorised building works. The Building Authority issued 1 572 orders requiring the removal of unauthorised building works last year. Since March 1988 a new system of priorities for the better control of unauthorised building work was formed. Unauthorised work constituting an imminent danger to life or property are classified as high priority and may be recommended for demolition or other remedial action, while those in the low priority group, no enforcement action will be taken for the time being.

Additionally, the Building Ordinance Office will embark upon large scale clearance of unauthorised building works on a district-by-district basis. There will be wide consultation with District Boards and Environmental Improvement Committees before any clearance programme is implemented to ensure its success.

During the year, the Control and Enforcement Division made 13 723 inspections and issued 1 572 orders for the removal of unauthorised works, while receiving 8 240 complaints. With regard to the maintenance of dilapidated private building, the Building Authority closed 31 dangerous buildings, served 35 orders requiring the demolition or repair of dangerous buildings and served 729 orders requiring repairs to defective concrete. It also served nine orders requiring remedial works to dangerous slopes.

Public Building

The Architectural Services Department provides architectural and associated services and advice to government departments, the British Forces in Hong Kong and the Urban and Regional Councils.

      During 1987-8 the department completed 136 building contracts under various pro- grammes, at a total cost, including minor works, of $2,237 million.

In addition, the Maintenance Branch of the department spent $468 million in providing routine maintenance and minor alteration work to about 6 500 government, Urban and Regional Councils and British Forces buildings and property. The branch was also involved in providing emergency places for the influx of Vietnamese boat people at a cost of $130 million.

The overall expenditure of $2,705 million shows and increase of 12.3 per cent over the 1986-7 expenditure of $2,408 million.

The Subvented Projects Division of the Architectural Services Department advises all departments providing subvention to private organisations for building, repair and main- tenance works. Most of the subventions are provided by the Education, the Medical and Health, and the Social Welfare departments, and by the University and Polytechnic Grants Committee. In mid-1988 the work included vetting and advice on a total of 451 capital pro- jects and over 300 school repair projects, with approved estimates exceeding $5,200 million. Tendering on all types of projects continued to be very active and remained reasonably competitive. For the 12-month period to March 1988, tender prices increased by about 24 per cent while over the same period labour costs rose by 26 per cent and basic materials costs rose by 25 per cent. The sharp increase in labour and material costs reflected the significant demand for new construction. The rise in tender prices during the year was in line with labour and material cost increases.

      Construction of the 49-storey office block Wanchai Tower 2 Government Office building continued. Its first phase of 27 storeys is scheduled for completion in mid-1989.

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During the year, work also continued on the Kennedy Town wholesale market, which will provide 62 000 square metres of market space in phases for food wholesale facilities. Phase I is programmed to be completed in 1991.

      In addition to the active development programme of the Regional Council projects in the new towns, work on the permanent Regional Council Chambers and the Regional Services Department Headquarters building began after a suitable site was located in Sha Tin. Piling work for the project is underway, and work on the superstructure will begin in mid-1989, for completion in late 1990.

In the urban areas, two multi-purpose Urban Council complexes were completed during the year. The Quarry Bay complex consists of an indoor games hall, a district library, offices, market and a cooked food centre while the New Western Complex provides a 523-seat theatre auditorium, exhibition and lecture rooms, an indoor games hall, market and a cooked food centre. The Choi Hung Road Playground Redevelopment Stage II was also completed, providing recreational and market facilities for the San Po Kong and Wong Tai Sin areas. Other major cultural projects started during the year included the Museum of Science and Technology in Tsim Sha Tsui East.

Work on the Hong Kong Cultural Centre on the Tsim Sha Tsui waterfront is now entering its final stages and the building is expected to be completed in early 1989 and to be opened to the public in November.

      The new extension to the Hong Kong International Airport Passenger Terminal was completed during the year. To meet the demand for parking space, the carpark next to the terminal is being extended to incorporate two more floors, and work on this began in late 1988.

Several projects for the British Forces and disciplined services were also completed during the year. These included Tamar Naval Workshop, new fire stations in Junk Bay, Lamma Island, Shek Kong, Pok Fu Lam, Tai Po, Ambulance Depots in Yuen Long, Tuen Mun and Junk Bay, the new Border Crossing Point at Lok Ma Chau, the Royal Hong Kong Police Museum, Reception and Closed Centres in Tuen Mun. Construction of Phase I of the new Police Headquarters is also in progress with completion scheduled in late 1989. The expansion of Hong Kong's medical facilities continued. Tuen Mun Hospital is now entering the final commissioning stages. Work began on the Pamela Youde Hospital, formerly named as Eastern District Hospital, and is due for completion in 1992. The second and third phases of the extension of Queen Mary Hospital are progressing, and the entire improvement and extension programme is due for completion on schedule in 1992. Work on the superstructure of the 700-bed Sha Tin Convalescent and Infirmary Hospital started in May 1988, and extension work on Tang Shiu Kin Hospital and improvement work on Tsan Yuk Hospital continued during the year, and are expected to be completed in 1990 and 1991 respectively.

Survey and Mapping

The Survey and Mapping Office (SMO) is responsible for defining and recording land boundaries of all existing and new land developments, providing and maintaining the territory-wide survey control system, mapping the territory at various scales for land administration, engineering and government purposes, managing land information and preserving the territory's land records.

Horizontal and vertical control networks covering the whole territory, known as geodetic control systems, have been established and maintained to a high degree of accuracy. These networks provide the necessary origin and control points for the production of cadastral

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(property boundary) surveys, topographical mapping surveys, engineering surveys and all other land survey related activities.

      Cadastral surveys in the urban areas are an ongoing requirement. Most of the work is in the definition of leasehold property boundaries, and 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 lot boundaries for redevelopment purposes, and the maintenance of the land records - a graphical record of all leasehold and government land boundaries in the territory.

      Three computing units in Hong Kong, Kowloon and Tai Po, each equipped with a microcomputer and a pen plotter, are being fully utilised to process survey calculations and to plot survey plans. All District Survey Offices are linked with these computing sections for direct and fast data transfer.

      A wide range of mapping coverage is maintained by the SMO and the pace of development throughout the territory calls for almost continuous revision. The most comprehensive series is the large-scale (1:1 000), basic topographical series (3 000 sheets) smaller scale coverage starts at 1:5 000 (160 sheets) followed by coloured maps at scales 1:20 000 (16 sheets), 1:50 000 (two sheets), down to single sheet coverage at 1:100 000 and 1:200 000. Two monochrome street map series at 1:10 000 and 1:15 000 of the urban areas of Hong Kong, Kowloon and parts of the New Territories are produced for specialised usage and as a base for the very popular new guide book 'Hong Kong Guide - Streets and Places'. Demand for leisure maps, the Countryside Series and the Tourist Guide, remains strong, prompting the replacement of existing countryside maps by new maps to accom- modate more comprehensive information. The pilot sheet to be replaced is the New Territories West and is being split into 'New Territories Central' (available early 1989) and 'New Territories Northwest' (available late 1989).

      The wide range of cartographic services provided to other government departments include the front and end-paper maps for the Hong Kong Annual Report, the geological map series, base maps for weather forecasting service, airport related plans, aeronautical charts for the Aeronautical Information Publication (AIP), electoral boundary maps, country park 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. Regarded as a specialist in the reprographic field, 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 quarry operations, environmental studies and for mapping generally. Processing and production of photogrammetric data continues to be carried out by the Survey and Mapping Office Photogrammetric Unit. New air survey techniques using high resolution, large format photography from a specially built helicopter rig have been pioneered for surveys of difficult sites and dangerous slopes. Results have been promising and significant cost savings have identified.

      Tender evaluation work on a computerised Land Information System is in progress. Conversion of the large scale mapping, land parcel boundaries, land use and zoning data will begin by mid-1989. The new system will modernise land information management and will be a powerful tool for decision making in land administration. When fully set up, the new system will be able to serve as a core system for other government departments and

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public utility companies by providing them with the up-to-date territory-wide basic land data and a unique geographical reference system thereby facilitating the integration of various land-related information systems and the expeditious exchange of data among users. The complete system is expected to be in full operation by end of 1992, although some district units will be operative before that date.

Water Supplies

Full supply was maintained throughout the year. At the beginning of 1988, there were 350 million cubic metres of water in storage, compared with 352 million cubic metres at the start of 1987. The combined storage of Hong Kong's largest reservoirs, High Island and Plover Cove, was 293 million cubic metres. Rainfall for the year was 1 685 millimetres compared with the average of 2 225 millimetres. Water piped from China during the year totalled 515 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 13 milligrams per litre while at Plover Cove the salinity varied from 43 milligrams per litre at the beginning of the year to 71 milligrams per litre at the end of the year.

      A peak consumption of 2.49 million cubic metres per day was experienced, compared with the 1987 peak of 2.35 million cubic metres per day. The average daily consumption throughout the year was 2.21 million cubic metres, an increase of 7.3 per cent over the 1987 average of 2.06 million cubic metres. The consumption of potable water totalled 808 million cubic metres compared with 750 million cubic metres. In addition, 110 million cubic metres of salt water for flushing was supplied, compared with 108 million cubic metres.

      Planning studies for the improvement of fresh water supplies to areas in southern Junk Bay hinterland, Sham Tseng, Tsing Lung Tau, Repulse Bay and Stanley, were completed in 1988. Major studies in hand included the increase in water treatment capacity of the territory by providing a new treatment works at Ma On Shan and extending the ones at Sheung Shui, and the formulation of a new supply scheme for reception and distribution of additional water from China beyond 1994.

During the year, construction works continued on additional water transfer facilities and for systems augmenting supplies to Kowloon East and Hong Kong Island East. The Tai Po Tau/Ngau Tam Mei aqueduct was completed which enables water to be transferred from Tai Po Tau to the western part of the New Territories. The Harbour Island Pumping Station and the Tolo Channel aqueduct were also completed which will supply water from Plover Cove Reservoir to the Pak Kong Treatment Works now under construction. Work on the eastern cross harbour main from Cha Kwo Ling in Kowloon to Hong Kong Island commenced during the year and is scheduled to be completed in mid-1989.

To improve the water supply system, design and construction of installations continued at Shau Kei Wan, Sai Wan Ho, Wan Chai, Chai Wan, Central and Western, Repulse Bay, Stanley, Chung Hom Kok, Shek O, Ho Man Tin and Kowloon East areas. The treatment works at Red Hill was uprated. In the New Territories, works to provide water supplies to new towns were carried out in phase with development. Major works in progress are construction of the Au Tau Treatment Works and the Lung Chung Road Centralised Workshop and design of a new supply system for Tin Shui Wai Stage I Development.

      Satisfactory progress was made in improving the supply system on the outlying islands. Construction of a treatment works and a service reservoir at Cheung Sha on Lantau Island, and the laying of a submarine pipeline from the mainland to Ma Wan were near completion. Improvement works on water supply to Cheung Chau and Ping Chau continued.

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       The distribution system was extended and enlarged to meet urban and rural demands in the territory. Expansion of the distribution network to supply remote villages in New Territories continued. Salt water for flushing was supplied to most areas on Hong Kong Island and Kowloon peninsula as well as to Tsuen Wan, Kwai Chung, Tsing Yi and Tuen Mun in the New Territories.

      Several mechanical and electrical installations were commissioned during the year. These included the Harbour Island Pumping Station, Harcourt Road Pumping Station, Sai Ying Pun Pumping Station and Chai Wan North Pumping Station and four village-supply pumphouses. The pumping stations at Garden Road, Mount Parker Road and Stanley Mound were uprated to improve supply to these areas. A Supervisory Control and Data Acquisition (SCADA) system was commissioned to monitor and control major installa- tions in the system of water supply from China. Studies for the provision of Regional Monitoring Centres and further SCADA systems continued.

      A new consumer enquiry centre was opened in Shau Kei Wan, joining the existing centres 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.

       The operational functions of Water Supplies Department were successfully regionalised Planning of new offices and depot facilities for the four Mainland regions continued during the year. Construction of the new office for Hong Kong and Islands Region is underway.

Port Works

Several major projects were completed by the Port Works Division of the Civil Engineering Services Department (CESD). These included a slipway and seawall at Tai Lam Chung for a Marine Police Base, an extension to the existing ferry pier at Cheung Chau, an intake culvert for Cha Kwo Ling Saltwater Pumping Station, and some 950 metres of seawall and reclamation at Telegraph Bay for residential and general development. In addition dredging work was carried out at the Ap Lei Chau East Reclamation to provide marine access to boatyard sites, at the China Ferry Terminal in Tsim Sha Tsui, and also in the Northern Fairway of the harbour. Port works projects in progress include three piers and a seawater pumphouse for the Western Wholesale Market, 1 100 metres of breakwater for a new typhoon shelter at Shau Kei Wan, phase one of the reclamation at Ap Lei Chau North, reclamation behind Kwai Chung Container Terminal No. 6 to provide a backup area for the Container Port and at Hung Hom Bay involving approximately 800 metres of seawall and construction of two ferry piers.

Geotechnical Control

An important function of the Geotechnical Control Office (GCO) of the Civil Engineering Services Department is to exercise control over the geotechnical aspects of public and private building and civil engineering works in the interest of public safety. They made checks on 4 586 design proposals in 1988. Landslip preventive work was also carried out requiring the expenditure of $68 million under the Landslip Preventive Measures Programme. Staff responded to calls for advice relating to 154 landslips and related incidents. Advice was also given to government departments on geotechnical aspects of 229 capital works projects.

        The existence of cavities in marble bedrock in the north-western New Territories could pose problems for some building works in the area. As part of the Hong Kong Geological Survey, the GCO has initiated a major geological mapping project aimed at locating marble bedrock. The first of a series of 1:5 000 scale geological maps was produced in July 1988, for the Yuen Long town area.

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      The GCO also published, during 1988, an engineering guide on Rock and Soil Descriptions, seven regional Geotechnical Area Study Reports and the 1:20 000 geological map and explanatory memoir covering the north-western New Territories.

Construction Materials

During 1988, Hong Kong's construction industry consumed almost 19 million tonnes of aggregates, crushed rock fines and sand, of which about 35 per cent was imported from China. The bulk of internal production comes from five contract quarries, supervised by the GCO.

      Following on from a geological survey of the marine areas, the GCO is now investigating the seabed to locate major deposits of sand and gravel suitable for use as filling material for land reclamation, and for aggregates. Potential sources of fill of about 100 million cubic metres in volume have already been located.

During the year, some 300 000 tests were performed on construction material at Government's Public Works Laboratories operated by the GCO. The materials tested ranged from soil and rock to reinforcing steel, concrete, timber, aggregates and bituminous products. An important step forward during the year was the accreditation of the Public Works Laboratories under the Hong Kong Laboratory Accreditation Scheme (HOKLAS) for tests on concrete and concrete reinforcing steel.

Flood Control

In recent years, there has been much private development in the low-lying areas of the New Territories where frequent flooding due to heavy rains was previously of minor conse- quence. The increased significance of flooding has become a matter of public concern, and in response a Flood Control Unit was set up in the Civil Engineering Services Department in November 1987. The aim of the unit is to co-ordinate government departments' efforts to prevent flooding in the territory. In the past year, the unit identified over 130 flood-prone blackspots and organised the government's efforts to provide short term measures to alle- viate the situation. A major review was undertaken on the role of government in land drain- age and flood control. Consultants were appointed to undertake a territorial land drainage and flood control strategy study which will examine, among other things, various engineer- ing and legislative options to minimise losses through flooding to an acceptable level.

In parallel with this the Territory Development Department has commissioned a study to examine and recommend measures to protect the flood-prone villages in the north-western New Territories. About 200 villages are being examined and out of these 130 are expected to require some form of flood protection, either taken individually or in groups, in the next

few years.

Electricity

Electricity supply is currently provided by two commercial companies - the Hongkong Electric Company Limited (HEC), which supplies Hong Kong Island and the neighbouring islands of Ap Lei Chau and Lamma, and China Light and Power Company Limited (CLP), which supplies the whole of Kowloon and the New Territories, including Lantau and a number of outlying islands.

The two supply 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 each company to submit to the government for approval a Financial Plan setting out the financial consequences over a period of at least five years of the companies' planned activities, including the forecast tariff levels.

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       The government's arrangments for monitoring the operations of the power companies were reviewed by a firm of independent professional consultants in 1983. The consultancy report, published in March 1985, confirmed that the monitoring arrangements in the past had been adequate and appropriate. Nevertheless, the consultants also 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 Serv- ices was set up to develop the recommendations. The working party's report was sub- mitted to the Executive Council and the consultants' recommendations have since been implemented.

       In Kowloon and the New Territories, electricity is supplied by CLP's three affiliated generating companies - Peninsula Electric Power Company Limited (PEPCO), Kowloon Electricity Supply Company Limited (KESCO) and Castle Peak Power Company Limited (CAPCO). CLP has a 40 per cent stake in each of these affiliated companies, with the remaining 60 per cent being owned by Exxon.

       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. The generating facilities include Tsing Yi 'A' (720 MW) and Tsing Yi 'B' (800 MW) which are owned by PEPCO; Hok Un (264 MW) and Castle Peak 'A' (1 640 MW) which are owned by KESCO; and the Castle Peak 'B' (2 031 MW) which is owned by CAPCO. The total installed capacity at the end of 1988 was 5 455 MW.

       The Castle Peak 'B' station is not yet fully completed. Work is in progress to add another 677 MW dual coal/oil fired units to it to bring the total generating capacity to 2 708 MW. When the 'B' station becomes fully operational in early 1990 it will, together with the adjacent 'A' station, make the Castle Peak Power Station complex the largest of its kind 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.

       To serve its consumers, CLP has more than 150 primary and over 5 176 secondary substations in its transmission and distribution network. An extra high voltage trans- mission system at 400 kV to transmit power from the Castle Peak power stations to the various load centres was recently completed. This 400 kV network comprises two transmission rings. One ring, a primary ring encircling the New Territories, consists of 90 kilometres of double-circuit overhead lines and four extra high voltage substations at Lei Muk Shue, Tze Wan Shan, Tai Po and Yuen Long. The other ring consists of 22 kilometres of cable circuits linking the major sub-stations at Tze Wan Shan, Tai Wan and Lai Chi Kok.

      In HEC's supply areas, electricity is supplied from the Ap Lei Chau Power Station and Lamma Power Station with a combined installed capacity of 2 005 MW at the end of 1988. The Ap Lei Chau Power Station, with an installed capacity of 500 MW, is made up of four 125 MW oil-fired generating units. The Lamma Power Station, at this stage, consists of three 250 MW and two 350 MW dual coal/oil fired units and one gas turbine of 55 MW. There are plans to add a further 350 MW unit to Lamma in the early 1990's.

       HEC's transmission system operates 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 supplies are transmitted and distributed by underground or 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.

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The transmission systems of CLP and HEC are interconnected 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 interconnection, 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 interconnected with that of Guangdong General Power Company of China and about four million units of electricity are transmitted to Guangdong Province each day. This interconnection results in better utilisation of the company's generating plant during periods of low demand. Also, CLP has signed a contract with the China Merchants Steam Navigation Company Limited for the supply of electricity for a period of ten years to the industrial zone of She Kou and the adjacent Che Wan area, both in Guangdong Province. The arrangement, which affords She Kou a reliable electricity supply without subsidy from Hong Kong consumers, is illustrative of the close co-operation on energy matters which has developed on both 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 generated from the station will be purchased by CLP to meet part of the longer term demand for electricity in its area of supply.

Main electricity statistics and sales figures are at Appendix 36.

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. During 1988, manufactured Towngas and SNG accounted for 61 per cent of the total gas sold and LPG for about 39 per cent.

Two gas works, one at Ma Tau Kok and the other in the Tai Po Industrial Estate produce Towngas. Both use naphtha as a feedstock and currently have output capacities of 3.6 and 2.8 million cubic metres per day respectively. The calorific value of the gas produced is 17.3 MJ per cubic metre with a specific gravity of 0.56. Towngas is distributed through an integrated distribution system to some 560 000 customers for cooking and heating purposes. The mains network extends to the urban areas of Hong Kong Island, including Aberdeen, Repulse Bay, Stanley and Ap Lei Chau, Kowloon and many new towns in the New Territories including Sha Tin, Tai Po, and Tsing Yi Island. The company is currently constructing a 92 km network of transmission pipeline of 600 mm diameter in the New Territories. The new transmission line is designed to operate at elevated pressure and will provide an additional 0.3 million cubic metres of 'line pack' storage capacity.

      Substitute natural gas is produced for piped distribution by HKCG at temporary plants in Yuen Long and Tuen Mun specifically operated for those two new town areas in the New Territories. The gas, which is produced from an LPG/air mix, has a calorific value of 51.8 MJ/m3 and a specific gravity of 1.37. It is expected that the plants will be decommissioned in 1991-2 when the high pressure transmission pipeline reaches the Yuen Long and Tuen Mun Areas.

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LPG distributed in Hong Kong consists of a butane (75 per cent)/propane (25 per cent) mix with a calorific value 49.6 MJ/kg and an approximate specific gravity of 2. About 70 per cent of total sales is distributed to consumers, via a dealer network, in portable cyclinders. The remaining (30 per cent) is in the form of piped gas supplies from bulk LPG storage and vaporiser installations which are located in, or adjacent to the developments being supplied. Since 1982 when the government introduced a piped gas policy in order to discourage the further growth of the gas cylinder market, the percentage of customers using total cylinders has fallen from around 71 per cent to 43 per cent in 1988. Currently there are about 800 000 LPG customers of whom 27 per cent are using piped supplies.

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Transport

THE major objectives of Hong Kong's transport policy are to maintain the mobility of passengers and freight, both within the territory and through its port and airport, and to ensure that future demands for transport infrastructure and services are met.

The transport systems are stretched by the fast-growing economy, the rapid increase in international traffic by sea and air, and by traffic from across the border. The efficient operation of these systems involves a never-ending cycle of forecasting, planning and constructing new capacity. In addition, much reliance is placed on the private sector to provide and operate transport facilities, both existing and new.

During 1988, the government spent $2.1 billion on building roads and highways. And forecasts indicate that demands on transport infrastructure and service will continue to grow rapidly in the years ahead.

Some important links in the road system are also being built by the private sector, most notable being the Tate's Cairn Tunnel, work on which began in mid-1988 and which will be Hong Kong's longest tunnel when it opens in 1991, and the Eastern Harbour Crossing to be opened in 1989.

The new light rail system constructed by the Kowloon-Canton Railway Corpora- tion began service during the year. The system opened to passenger traffic in the north-western New Territories in September. And during the year, the Peak Tramway funicular railway celebrated its 100th year of operation. Also during the year Hong Kong achieved the highest throughput of containers of any port in the world. A contract to construct and operate a further new container terminal (Terminal 7) was awarded.

Comprehensive Study

The Second Comprehensive Transport Study, which began in late 1986, is nearing completion. It will recommend a transport investment programme for road and rail, and will set out proposals for meeting the demand for internal movement up to the year 2001. The proposals will be presented for public discussion in a Green Paper to be published in 1989. Among the issues to be raised is that of road congestion, which is slowing the movement of passengers and goods.

      Major planning studies are also in progress to forecast the demand for external transport infrastructure, and to develop strategies to meet those demands. A consultancy study which began in mid-October 1987 is looking into the capacity for development at Hong Kong International Airport.

The Port and Airport Development Strategy study, which started in late 1987, is examining options for the development of a new airport and additional port facilities to cater for international traffic well into the 21st century.

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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. The Secretary for Transport is assisted by the Transport Advisory Committee (TAC), which advises the Governor in Council on major transport policies and issues. The TAC has 19 appointed members, including the chairman and six government officials. The Secretary for Transport also chairs the Transport Policy Co-ordinating Committee which oversees the co-ordination and implementation of policies and projects.

      The execution of transport policies and measures is carried out by the Transport Department and the Highways Department.

      The Commissioner for Transport heads the Transport Department, which regulates internal road and waterborne public transport. On these matters, the commissioner is advised by the Standing Conference on Road Use and the Standing Committee on Waterborne Transport.

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The department has also established a Prosecutions Unit, which took over from the Traffic Police all prosecutions involving buses, driving offence points, breach of tunnel regulations and vehicle safety equipment.

      A Transport Tribunal, set up under the Road Traffic Ordinance, and chaired by a non-government member, provides 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.

The Director of Highways heads the Highways Department, which is responsible for designing and building all highways and roads, and for their repair and maintenance.

Planning

A forecast of transport needs up to the year 2001 and the formulation of an implementation programme of strategic transport facilities to meet this need, is being examined in the context of the Second Comprehensive Transport Study.

      Meanwhile, other sub-regional studies continued. The Western District Transport Study and the North-west Kowloon Traffic Study were completed during the year. The Central and Wan Chai Reclamation Study, the West Kowloon Reclamation Transport Study and the Green Island Reclamation Study will continue into 1989.

       Work on the Preliminary Engineering Feasibility Study of Route 'X', now re-named as Route 3 for the section linking the northwestern New Territories with western Kowloon was completed in June 1988. Several alignment options have been identified and a second stage feasibility study has begun to select the optimum alignments.

      Other on-going studies were improvements to the road network in the Mid-Levels, north-western Kowloon and Tsim Sha Tsui, design for the hillside escalator link between Central and Mid-Levels, the Yuen Long Southern Bypass, Au Tau Bypass, the Yuen Long-Tuen Mun Eastern Corridor, the Hiram's Highway Improvement Stage I, the Kwun Tong By-pass Phase III.

Cross Border Traffic

      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 8 500 per day in December 1987 to 9 700 per day in December 1988. Traffic at the Sha Tau Kok crossing increased from 1 100 vehicles per day in December 1987 to 3 400 per day in

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December 1988. Goods vehicles accounted for 98 and 85 per cent of traffic respectively at the two crossing points, reflecting the rapid growth in trading and industrial links with China. At the end of the year, 21 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 open in mid-1989 and the second by the end of 1990. This will increase the capacity at the three border crossing points to about 56 000 vehicles per day, compared with 16 000 per day at present.

      The Kowloon-Canton Railway also plays an important role in the freight and passenger traffic between Hong Kong and China. Some 1.7 million tonnes of freight (1987: 1.9 million tonnes) and two million head of livestock (1987: 2.1 million) were brought into Hong Kong by rail. Exports to China by rail accounted for 484 000 tonnes, a significant increase over the 374 795 tonnes carried in 1987. Conditions for cross border rail passengers were greatly improved by the new terminal building at Lo Wu which was opened in early 1987. Cross border passenger traffic on the KCR increased from 25.4 million in 1987 to 29.5 million in 1988. A further extension of the terminal is 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 3.2 million passengers (2.8 million in 1987). The new China ferry terminal in Canton Road was opened on October 31, 1988, providing 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. Some 46 projects are under construction and another 70 are being actively planned by the Highways Department. Expenditure on highway projects was about $1,650 million, while another $350 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 353 863 registered vehicles and only 1 435 kilometres of roads - 392 on Hong Kong Island, 371 in Kowloon and 672 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 road builders. Already, there are four major road tunnels, over 590 flyovers and bridges, 338 footbridges and 183 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 Lok Ma Chau Border Control Point in the northern New Territories, and passing through three tunnels - Aberdeen, Cross Harbour and Lion Rock. On Hong Kong 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 Gloucester Road, Harcourt Road and Connaught Road to Kennedy Town in the west. Route 2 runs from Kowloon Bay Reclamation Area, through the Airport Tunnel, onto East and West Kowloon Corridors, Tsuen Wan Road, Tuen Mun Road and Yuen Long Northern Bypass to the junction of Castle Peak Road and Lok Ma Chau Border Link Road. Route 4 runs along the base of the foothills separating Kowloon from the New Territories and connects Kwun Tong and Lai Chi Kok.

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       Two other new strategic routes are under construction. Route 5, a seven-kilometre long dual two-lane trunk road connecting Sha Tin with Tsuen Wan, is being constructed at a cost of about $1.3 billion. When completed in 1989, it will form part of the New Territories Circular Road System. Various major sections of Route 6 which include the Eastern Harbour Crossing, Kwun Tong Bypass, Tate's Cairn Tunnel and Road T6 are either under construction or at an advanced planning stage. This route, expected to be completed in late 1991, will greatly ease the traffic congestion in the Lion Rock Tunnel.

Another future strategic route, Route 3, which will provide a direct link between north-western New Territories and Hong Kong Island via Tai Lam Tunnel, Tsing Yi, West Kowloon Trunk Road and Western Harbour Crossing, is under investigation by consultants.

Improvements to Major Road Network

A dual two-lane free-flow facility along Connaught Road from Harcourt Road to Hill Road (Route 7) is being constructed at a cost of $350 million, with completion expected in early 1990. 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 roadworks. The final stage of the Island Eastern Corridor (Route 8) from Shau Kei Wan to Chai Wan, is being constructed at a cost $1.7 billion and is due to be completed in late 1989.

       In Kowloon, Route 2 will be improved by the completion of the improvements to the Gascoigne Road Flyover in mid-1990. Route 1 is being improved by the reconstruction of the Princess Margaret Road Flyover to provide two lanes in each direction. Reconstruction will be completed in mid-1989. The Kwun Tong Bypass Phase I which forms part of Route 6 is under construction involving 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. Completion of Phases II and III of the Bypass will tie in with the opening of the Tate's Cairn Tunnel. The total cost of the Bypass is about $1.8 billion.

In the New Territories, the remaining sections of the New Territories Circular Road from Pak Shek Au to Au Tau are being constructed in stages and will be completed in 1991. A principal road link with China at Lok Ma Chau, connecting the New Territories Circular Road by a grade-separated interchange, will be largely completed in early 1989.

       In the north-western New Territories, 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. The Yuen Long Southern Bypass project costs $180 million, comprising the construction of a three kilometres long two-way trunk road to bypass Yuen Long town to the south. Construction is planned to start in mid-1989 for completion in late 1991. The Yuen Long-Tuen Mun Eastern Corridor involves a dual two-lane trunk road along the eastern side of Castle Peak Road to connect with the proposed Yuen Long Southern Bypass. Construction will start in 1989 for completion in 1992.

Other Road Projects

Other road projects completed in 1988 include the provision of grade-separated vehicular and pedestrian access facilities to the Wan Chai reclamation area and the Tonnochy Road Flyover on Hong Kong Island; the flyover from Cheung Sha Wan Road to Boundary Street in Kowloon; Lam Kam Road flyover; a link road from Ma On Shan to Nai Chung and the improvement of Man Kam To Road in the New Territories.

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      Under construction are the access road for Ma Chai Hang and Chuk Yuen, Princess Margaret Road Flyover improvement, 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, Tai Po Road improvement and the reconstruction of Kwun Tong Road.

Tunnels

The Lion Rock Tunnel, which links Kowloon to Sha Tin and the north-eastern New Territories opened in 1967 with a single tube. A second tube was added in 1978. Traffic in this tunnel increased to 102 000 vehicles a day by the end of 1988, and during peak hours traffic volume reached the tunnel capacity, causing increasing delays, particularly in the morning rush hour. Various traffic management measures have been introduced, including tidal flow and signal-controlled merging measures. Other traffic management measures will be introduced in 1989.

The Aberdeen Tunnel, opened in 1982, links the north and south sides of Hong Kong Island. The average daily traffic is 45 000 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 47 000 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 116 000 vehicles using it each day in 1988, it became the world's busiest four-lane facility. The government had conducted a traffic study in mid-1988 which resulted in traffic management schemes being effected at both approaches of the tunnel to ease the growing congestion.

      Construction work is being carried out on three new tunnels. The Eastern Harbour Crossing, a commercial venture undertaken by the New Hong Kong Tunnel Company, 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. This tunnel will begin operation in the third quarter of 1989. 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 Tunnels from Kwun Tong to Junk Bay New Town, both due for completion in 1990. Construction work also started on the Tate's Cairn Tunnel, linking Diamond Hill in Kowloon to Sha Tin in the New Territories. The consortium responsible for this project expects work to be completed in late 1991.

Traffic Management and Control

About 800 sets of traffic signals were in operation in the territory, including 260 sets in Kowloon under centralised computer control. Work on the expansion of the Kowloon Area Traffic Control System to Kwun Tong and Wong Tai Sin continued and should be commissioned in mid-1989. By that time, about 320 sets of traffic signals in Kowloon will be under computer control. In 1988, the CCTV system forming part of the Kowloon Area Traffic Control System was also expanded from 10 to 25 out-station camera locations.

     A new computer system was commissioned for the Hong Kong Island Final Area Traffic Control System at the end of 1988. It controls about 170 sets of traffic light signals on the north shore of the Island from Kennedy Town to Shau Kei Wan. A traffic responsive system called SCOOT was installed in parts of the Causeway Bay and Central areas, a performance assessment of which will be carried out in 1989.

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During the year, 12 multi-storey carparks, including the new Shau Kei Wan Car Park which began operation in April, provided 7489 parking spaces. These carparks are managed by a private company, while four open-air carparks comprising 520 car and lorry parking spaces and 24 motorcycle spaces are operated by the Transport Department. Other off-street public parking is provided by the Civil Aviation Department at Hong Kong International Airport and by the Kowloon-Canton Railway Corporation at railway stations. The private sector also operated multi-storey and open-air carparks in commercial buildings, housing estates and open-air lots providing over 50 000 parking spaces. 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 14 200 metered spaces throughout the territory, most of which operate between 8 a.m. and midnight from Monday to Saturday at varying rates. 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.

Licensing

The number of new private cars registered rose from 19 870 in 1987 to 24 177 in 1988, an increase of 21.7 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 145 612 in December 1987 to 160 478 in December 1988, a growth of 10.2 per cent.

      There was an increase in the number of goods vehicles - from 102 082 in December 1987 to 114 610 in December 1988.

Light goods vehicles grew significantly to 91 158 or 11.76 per cent in 1988 compared with 1987.

       At the end of 1988, the total number of licensed vehicles in all classes was 316 305, an increase of 9.3 per cent over the previous year.

      The number of new learner drivers rose from 5 800 per month in 1987 to 6 100 per month in 1988, representing a 5.7 per cent increase.

      Since the introduction of the Driving Offence Points System in 1984, a total of 3 610 drivers have been disqualified, 51 417 have been served with warning notices and 244 676 have incurred penalty 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, for annual re-licensing inspections of all public service vehicles, older goods vehicles and vehicles licensed to carry dangerous goods. And the department seconded its vehicle examiners to three regional police vehicle detention pounds to inspect vehicles involved in accidents or suspected to be defective. Airport vehicles were inspected at the airport, while franchised buses were examined at the company depots.

Goods vehicles, special-purpose vehicles and trailers manufactured before 1978 are required to be inspected before relicensing. Annual inspection of these vehicles will be introduced in 1991, upon the completion of the new Vehicle Examination Centre at Kowloon Bay.

      From April, all private cars manufactured before 1982 were required to be examined at one of the 17 designated car-testing centres. A total of 67 900 cars were examined during the year under the scheme, compared with 52 079 in 1987.

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     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 for serious defects found during unscheduled inspections remained at a low level.

Road Safety

    Traffic accidents involving injury increased by two per cent in 1988. During the year, there were 16 300 accidents, of which 4 300 were serious and 270 fatal. This compares with 16 030 in the previous year (4 580 serious, 270 fatal). In-depth investigations using computerised records were carried out at 145 traffic accident blacksites and prevention measures were recommended at 110 locations. Remedial measures, when implemented, have been shown to reduce accidents by 28 per cent on average.

Road safety campaigns continued to play an important role in the reduction of traffic accidents. The major themes of the 1988 campaigns were adult pedestrian safety, partic- ularly the elderly, and promoting road safety for drivers, especially light goods vehicle drivers and those with less than two years' driving experience. Apart from using posters, television announcements and leaflets, four issues of a 'Road Safety Quarterly' were pro- duced and given a wide distribution. Television programmes were also broadcast.

     A 'Code of Practice for the Loading of Vehicles' was published and widely publicised in September 1988. The code, available in both languages, advises the trade on safer loading practices and has been distributed to goods vehicle operators and drivers.

     By the end of 1988, the Road Safety Association of Hong Kong operated 225 School Road Safety Patrols, and school staff patrols were operated at 183 schools, all with the objective of ensuring the safety of school children. The Road Safety Council, an advisory body, continued to co-ordinate all road safety matters in the territory.

Public Transport

    Efforts to improve personal mobility through expansion and improvement of public transport services continued throughout the year.

Mass Transit Railway

Construction of the Eastern Harbour Crossing, which incorporates a Mass Transit Railway link between Kwun Tong in Kowloon and Quarry Bay on Hong Kong Island continued. The feasibility of a rail link between the north-western New Territories and the urban area and an extension to Junk Bay were being examined in the Second Comprehen- sive Transport Study.

The MTR system now comprises three lines, 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 three-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 1.9 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 2.23 million passengers was carried on December 24, 1988.

To ease the overcrowding along the Nathan Road Corridor in the morning rush hours, a surcharge was levied on journeys between congested stations between 8.00 a.m. and 8.45

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a.m. At the same time, an 'Early Bird' monthly pass was introduced to encourage passengers to travel before 7.45 a.m.

      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.

Kowloon-Canton Railway

The delivery of the 25 sets of three-car electric multiple units ordered by the Kowloon- Canton Railway Corporation (KCRC) in 1985 was completed in July 1988, increasing the corporations rolling stock to 255 cars, which was a growth of 45 per cent in carrying capacity over 1987.

The average daily passenger journeys rose from 368 700 in 1987 to 422 000 in 1988. A total of 902 300 cross border passengers passed through Lo Wu Station in 1988. A new record was set up on April 30, 1988 when 583 000 passengers were carried by the railway.

The number of trains run on weekdays increased from 466 in 1987 to 474 in 1988, and the regular operating hours were 5.45 a.m. to 12.44 a.m. Meanwhile, four through trains were run in each direction each day between Kowloon and Guangzhou, increasing to five during busy periods. With the completion of double-tracking between Shenzhen and Guangzhou, the through train journey was reduced from three hours to two-and-a half hours.

A new station, at Tai Wo, north of Tai Po Market and serving a public housing estate, is scheduled for completion by early 1989. With the opening of this station, the number of KCR stations will be increased to 13.

The KCRC also operates three feeder bus routes serving Sha Tin and Tai Po Market stations. KCR passengers can ride on these bus routes free of charge.

Light Rail Transit

Phase One of the KCRC's Light Rail Transit (LRT) system operating between Tuen Mun and Yuen Long was opened to passenger service in September 1988. Its 23-kilometre double track network provides five LRT routes with 41 stops, supplemented by 10 bus routes, forming the core internal transport system of the north-western New Territories. The system operates between 5.30 a.m. and 12.30 a.m. every day.

The LRT adopts an innovative 'Open' fare system, the first of its kind in Hong Kong. There are no turnstiles or gates at stops to slow down boarding and alighting. Passengers can ride on the system by either holding a valid monthly pass or purchasing a single-ride ticket from the vending machine at stops.

The LRT uses a zonal integrated fare structure. LRT monthly pass holders and single-ride passengers can enjoy free transfer to the LRT feeder buses.

Another six regional extensions comprising nine kilometres of double track serving Tin Shui Wai, Long Ping Estate, Sam Shing Estate and north-eastern Tuen Mun will be progressively opened from 1991.

Buses

     The standard and level of bus services continue to improve through effective planning and better monitoring. There are three franchised bus companies in Hong Kong, carrying 3.8 million passengers a day on a network of 309 regular routes.

The Kowloon Motor Bus Company (1933) Limited (KMB) operated 218 bus routes in Kowloon and the New Territories in addition to 18 cross-harbour routes jointly operated with the China Motor Bus Company Limited (CMB).

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     KMB also operates three cross-harbour services of its own, including two air-con- ditioned coach services to and from the airport. At the end of 1988, the company had a fleet of 2 770 registered vehicles, comprising 2 667 double-deckers, 35 single-deckers and 29 coaches and 39 small coaches. Most of the expansion of bus services operated by KMB took place in the new towns in the New Territories, including three new express services with three inter-new-town services and eight external services to Kowloon. The company also operated four routes within the New Territories using air-conditioned 24-seat small coaches. KMB also continued to experiment with an air-conditioned double-deck bus.

     During the year, KMB carried 1082 million passengers and operated 216 million vehicle-kilometres, which represented a decrease of 0.5 per cent and a decrease of 2.4 per cent respectively from the previous year. In June 1988 the company's franchise was extended to August 31, 1997.

     The China Motor Bus Company Limited operates 81 routes on Hong Kong Island and Ap Lei Chau, and 18 cross-harbour routes jointly with KMB. At the end of 1988, its fleet comprised 1 006 double deckers and two single deckers. These vehicles carried 318 million passengers and travelled 53 million vehicle-kilometres during the year.

An application for a two-year extension of the existing CMB franchise, from September 1, 1991 to August 31, 1993, is to be considered by the Executive Council early in 1989.

On Lautau Island, the New Lantao Bus Company (1973) Limited (NLB) operates seven regular and two recreational routes with a fleet of 60 buses, 13 of which were double- deckers. In 1988, NLB vehicles carried an average of 7 400 passengers every weekday, but recreational demand boosted this figure to 18 400 on Sundays and public holidays. During the year NLB's franchise was extended to March 31, 1995.

     Franchised bus services were supplemented by a fleet of 3 026 non-franchised public buses operated on a contract-hire basis, as well as 144 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 vehicles since May 1976. In February 1988, the Governor in Council approved an increase in the PLB maximum seating capacity to 16. The necessary legislative amendments took effect in December 1988. Some PLBs are used on scheduled services (green minibus services) and others on non-scheduled services (red PLB services).

     In 1988, there were 3 075 red PLBs carrying about 960 000 passengers daily, whereas there were 180 green minibus routes utilising 1 275 PLBs in operation throughout the territory, with about 619 000 passengers being carried daily. Concessionary fares for handicapped passengers, elderly persons and students are offered on some green minibus routes. Approval was given to some green minibuses in the New Territories to carry goods for hire and reward. A fleet of 2 448 private light buses was maintained by schools, private residential developments and commercial enterprises for their own needs.

Residential Coach Services

    Residential coach services were introduced in 1982 to cater for the transport needs of the more isolated residential areas that have no direct access to franchised bus services. These services are authorised under passenger service licences and must operate in accordance with approved schedules of service with routes, timetables and stopping places clearly specified. A licence is usually valid for one year, and may be renewed, depending on the continued need for the service.

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Police Force recruits on parade

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image

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due to copyright restrictions. To view the image, please

contact library staff for a printed copy of the copyright work.

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At the end of the year, there were 25 residential coach routes in operation - five on Hong Kong Island and 20 in the New Territories. Some 7.67 million passengers were carried in 1988, representing a 19.5 per cent increase over the previous year.

Trams

The electric tramway on the north shore of Hong Kong Island dates from 1904. The current system comprises over 13 kilometres of double track between Kennedy Town and Shau Kei Wan and nearly three kilometres of single track around Happy Valley, which together support six overlapping services. The 163 trams comprise the only all-double-deck fleet in the world. At the end of the year, over 40 per cent of the fleet had either been refurbished or replaced. Tramway patronage continued to rise, averaging 360 000 passengers daily during 1988.

      The Peak Tramways Company Limited celebrated its centenary in 1988. It operates the funicular railway between Garden Road in Central and Victoria Gap, 397 metres above sea level. There are four intermediate stops, and the line is inclined throughout with gradients as steep as one-in-two. The service is predominantly used by sightseers, but it also serves Peak district commuters. In 1988 an average of 7 647 passengers were carried daily.

During the year the company placed a contract to modernise completely the funicular railway. This is expected to be completed by August 1989.

Aerial Ropeway

     An aerial ropeway operates at Ocean Park in the Southern District of Hong Kong Island, carrying visitors between the park's lowland and headland sites, employing 246 six-seat cabins with a total capacity of 1 476 passengers. During the year the ropeway carried an average of 3 380 passengers a day.

Ferries

Despite the introduction of the cross-harbour tunnel bus services and the Mass Transit Railway, waterborne transport is still significant for cross-harbour movement and remains essential to commuters and recreational traffic to and from the outlying islands. The majority of ferry travel is catered for by two franchised company operators - the Hongkong and Yaumati Ferry Company Limited (HYF) and the 'Star' Ferry Company Limited.

      The Star Ferry operated 12 vessels across the harbour from Edinburgh Place and Wan Chai on Hong Kong Island to Tsim Sha Tsui and Hung Hom in Kowloon. During the year the company carried 42 million passengers on its three routes. A new route the Tsim Sha Tsui to Wan Chai service, started in April 1988.

HYF operated 26 ferry services, including 12 cross-harbour vehicular and/or passenger services, eight outlying district services four 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. In 1988 HYF carried 65 million passengers and 5.5 million vehicles, compared with 75 million and 4.8 million respectively in 1987. During the year, HYF was permitted to operate a new franchised service between Central and Tsim Sha Tsui East (which was already operating on a trial basis) and weekend excursion services from Kowloon Point to Mui Wo and Cheung Chau. In addition, 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 129 'kaitos' were deployed by 105 operators. Both types of services are controlled by licences issued by the Transport Department under the Ferry Services Ordinance.

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Hong Kong is served by three types of taxis: Hong Kong and Kowloon taxis which may operate anywhere throughout the territories but primarily 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.

      At the end of 1988, there were in operation 14 337 urban taxis, 2 421 New Territories taxis and 40 Lantau taxis carrying 1 080 000, 135 000 and 700 daily passengers respectively. A comprehensive review of taxi policy was carried out in mid-1988. The level of taxi service is constantly monitored.

Port Development and Shipping Services

The port of Hong Kong, the leading container port in the world in terms of throughput, continued to meet efficiently the demands of an increasing number of ship arrivals as well as the 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 4 900 hectares and varies in width from 1.2 to 9.6 kilometres.

      Port facilities are fully used and continuously being modernised. 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 1988, some 17 090 ocean-going vessels and 94 930 river-trade vessels called at Hong Kong and loaded and discharged more than 81 million tonnes of cargo. This included 55 million tonnes of general goods from ocean-going vessels, of which 50 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 1988, 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 four million TEUS (20-foot equivalent units) in 1988. The container terminals at Kwai Chung provide seven berths with more than 2 650 metres of quay backed by about 128 hectares of cargo handling area. This area includes container yards and container freight stations, all operated by private companies. Up to seven '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. 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,

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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.

      During 1988 the Hong Kong Government appointed a multi-disciplinary team of international consultants to carry out a Port and Airport Development Strategy Study (PADS). The main purpose of the study is to provide a long-term strategy to ensure that the port and airport facilities provided for Hong Kong by the year 2011 are in line with the demands of both air and shipping traffic. The second purpose is to address the more short-term demands for these facilities and to ensure that the facilities which are most urgently needed are planned in such a way that the long term strategy is not compromised. The study is expected to be completed by the end of 1989.

      While Hong Kong already ranks as the leading container port in the world in terms of throughput, further expansion of the Kwai Chung Container Port is taking place. Work on the reclamation of 29 hectares of additional land for the provision of Terminal 6 began in 1987 and progessed well during 1988 with the first berth becoming operational in May. The second and the third berths are due to be completed in early and mid-1989 respectively.

      As a further phase of the expansion programme, the government, following a tender exercise, awarded in 1988 the development rights to one of the terminal operators to reclaim an additional 31.5 hectares of land for the provision of a three-berth Terminal 7. Work on this new terminal began during the year and the whole project is expected to be completed by the end of 1991.

       During the year, 12 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, and the Macau Ferry Terminal in Sham Shui Po in Kowloon.

About 3.2 million passengers travelling between Hong Kong and over 22 destinations in China, representing an increase of 14.3 per cent over 1987, passed through the temporary terminals at Tai Kok Tsui and Central during much of the year and then through the new China Ferry Terminal in Tsim Sha Tsui which became operational in October 1988, replacing the two temporary terminals. A mixture of dynamically-supported ferries and conventional ferries operate on these routes.

      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 cyclone, 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 Anchor- age, 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 applies to all vessels over 5000 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 1 000 gross

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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.

     The implementation phase of a Vessel Traffic System to reduce navigational risks in Hong Kong waters began 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 Macau Ferry Terminal.

     Marine Department launches patrol the main harbour area and its approaches. They are in continuous radio contact with the Port Communications Centre, thereby enabling them to respond to any emergency and fulfil the executive functions of the duty officer in the Port 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 in the region.

     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 sophistic- ated patrol craft and pleasure vessels.

Hong Kong is a prominent centre for shipowning, ship financing and ship management activities. Most local shipowners and connected businesses are represented by the Hong Kong Shipowners Association, whose members control a significant percentage of the world's tonnage. At the end of 1988, the association members' fleet stood at 1219 ocean-going vessels totalling 57 million deadweight tons or 16 million gross registered tons,

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some 16 per cent of which is registered with the Port of Hong Kong. The association is either a member of or works closely with all significant international maritime bodies to contribute and share in major developments concerning merchant shipping worldwide. Its membership exceeds 150 local companies which employ over 20 000 persons.

      Hong Kong is a British port of registry and the total tonnage of shipping registered in the territory stood at 7.4 million gross registered tons last year. The regulatory administration of ships registered in Hong Kong is the responsibility of the Shipping Division of the Marine Department, that is, in respect of maritime control, safety standards and interna- tional certification to facilitate the worldwide operation of Hong Kong registered shipping. Statutory surveys of vessels intended for Hong Kong register are undertaken worldwide by surveyors of the division under various international conventions. The division also provides a plan approval and survey service locally, and surveyors are made available to United Kingdom and 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 fast passenger boats (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. These, too, 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 convention is generally regarded as the most important of all international treaties relating to mari- time safety.

      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.

      Ships registered in Hong Kong at present adopt, in all key aspects, the same standards of construction, safety, manning and merchant shipping legislation as those registered in the United Kingdom. As a British port of registry, Hong Kong has relied almost entirely on the Department of Transport of the United Kingdom for the determination of shipping policy in respect of Hong Kong and for the formulation and implementation of international conventions, including those drawn up by the International Maritime Organisation. In the administration of Hong Kong registered ships, the Marine Department has relied largely on the extension of United Kingdom legislation to Hong Kong.

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 which can continue to exist under British

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administration until 1997, and under the government of the Hong Kong Special Admini- strative Region thereafter.

The Sino-British Joint Liaison Group agreed in 1986 on the general principles to be adopted for establishing a modified register of shipping for Hong Kong. A steering group with representatives from the Hong Kong Government and relevant sectors of the local shipping industry was formed in March 1987 to consider and advise on detailed proposals for the establishment of the new shipping register in accordance with the agreed principles. Two main committees set up under the steering group have made good progress in developing the details of the legal and administrative aspects of the register, training and certification of seafarers, and technical standards.

     The Technical Policy Division of the Marine Department provides research and sup- port on technical issues to the steering group, committees and their working groups and it is envisaged that the new Hong Kong register of shiping will be set up in late 1990.

     Hong Kong is also an important centre for the recruiting of seafarers. The Seamen's Recruiting Office and the Mercantile Marine Office register and supervise the employment of about 6 500 active seafarers on board some 650 ships of many flags. Considerable attention has been given to provide more comprehensive training for Hong Kong seafarers and, in this respect, the new permanent Seamen's Training Centre at Tai Lam Chung in the New Territories 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 inter- national and local 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.

Civil Aviation

The Civil Aviation Department is responsible for all aspects of Civil Aviation in Hong Kong apart from the licensing of Hong Kong airlines for scheduled air services which falls to the Air Transport Licensing Authority, an independent statutory body.

The department consists of six divisions dealing with air traffic control, aviation safety, technical and planning matters, international relations governing air services, management of Hong Kong International Airport and airport development studies. The department is also provided with accounting services to control revenue and expenditure, and with office management services for staff establishment, personnel matters and welfare. In July, responsibilities for air services negotiations were progressively transferred to the Economic Services Branch. Negotiations for air services agreements will henceforth be undertaken by officers of the branch, while the department continues to deal with the operational and economic regulation of air services.

     Hong Kong's single-runway airport is the product of a continuous programme of modification and development to meet the rapid growth in air traffic and the introduction of new aircraft. A full range of facilities is available, including aircraft engineering, in-flight catering and the largest single air freight complex in the world.

     Passenger throughput and cargo traffic increased substantially in 1988. There were 15.3 million passengers, which represented an increase of 21 per cent over the total of 12.7 million in the previous year. General cargo, including manufactured goods imported,

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exported and re-exported by air, totalled 694 000 tonnes as compared with 611 000 tonnes in 1987. The value of airborne goods totalled $208,786 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 28 per cent and re-exports by air about 16 per cent in value terms. The United States was the major market for exports and re-exports by air, accounting for 44 per cent and 21 per cent respectively.

      An increase of 18 per cent in aircraft movements was recorded, bringing the annual total to 87 000. More than 80 per cent of the aircraft calling at Hong Kong were wide-bodied.

The year saw the introduction of scheduled air services to Hong Kong by Lauda Air. This raised the number of scheduled airlines serving Hong Kong to 38, which together operated about 720 direct round trip services weekly between Hong Kong and some 70 other cities. In addition, an average of 210 non-scheduled flights were operated each week. Throughout 1988, Cathay Pacific Airways continued to increase the frequency and capacity of its services to major cities. To cope with this increase, it acquired four L1011 and one B747-300, thereby increasing the number of such aircraft to 14 and six respectively. Cathay Pacific Airways also operates eight B747-200 and two B747 freighters, giving a fleet of 30 aircraft at the end of 1988.

      Hong Kong Dragon Airlines limited commenced scheduled services to Kagoshima in May and Utapao in July. The airline continued to operate scheduled services to Phuket and non-scheduled services to a number of cities in Asia, mostly in China with its three B737 aircraft. In October the Company acquired its fourth aircraft by lease from a British operator. The scheduled services to Chiangmai were suspended in July.

Transcorp Airways (Hong Kong) Limited ceased trading on October 25.

AHK Air Hong Kong obtained an Air Operator's Certificate from the Civil Aviation Department in January and began non-scheduled cargo services from Hong Kong to Kathmandu and London with a B707 freighter in February. During the year, the airline operated non-scheduled cargo services between Hong Kong and a number of points world wide, the major points being Dhaka, Bangkok, Singapore and Sydney.

The Hong Kong/Switzerland Air Services Agreement, the second in a series of air services agreements which Hong Kong aims to conclude with other governments in the coming years, was signed in Hong Kong on January 26. The third agreement, the Hong Kong/Canada Air Services Agreement, was signed in Hong Kong on June 24 and entered into force. These agreements have been specifically designed with the relevant provisions of the Sino-British Joint Declaration on the future of Hong Kong in mind.

Following the implementation of the second stage of the relevant provisions of the Civil Aviation (Aircraft Noise) Ordinance on November 1, all subsonic jet aircraft that do not meet international noise standards are now prohibited from landing and taking off in Hong Kong.

      At Hong Kong International Airport, progress was made on a number of on-going projects, and new works programmes were launched.

      The Stage V extension of the Passenger Terminal Building which increased the capacity of the Passenger Terminal by almost half, was completed in December, in time to cope with the phenomenal 20 per cent growth in passenger throughput. The design capacity of the Stage IV terminal was 12 million per annum, already exceeded in 1987.

The 22-month-long project to provide paved shoulders along the full length of the runway to overcome problems of erosion of the grass areas adjacent to the runway by jet efflux, was completed at the end of March, enabling normal hours of runway operation to be resumed.

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Testing of the advanced computerised radar data processing and display system to enhance the efficiency of the Hong Kong air traffic control system is in progress. A set of new air traffic control simulator systems was installed to meet new functional requirements. Passenger loading bridges were replaced at three passenger terminal aircraft parking positions.

     In September, work began on an extension to the Passenger Aircraft Parking Apron. When completed in October 1989, the facility will have room for two B747 jets or up to six smaller aircraft.

A replacement flight information display system, capable of displaying flight information in both Chinese and English, was commissioned in December.

The computerised passenger processing system was brought into operation at the airport by the Immigration Department on August 1.

     To meet the forecast demand for air cargo handling facilities at Hong Kong Interna- tional Airport, a second air cargo terminal is being planned, for operation in April 1991.

     The consultancy study on the capacity and development potential of the airport pro- gressed on schedule during the year. This 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.

Another major study, the Alternative Replacement Airport Sites Study, was commis- sioned in April with the objectives of identifying a suitable replacement airport location in the Western Harbour area, and of preparing an airport layout plan and preliminary cost estimates.

     Consultancy work also began in May to review and update the 1982 master plan for the Chek Lap Kok replacement airport.

     Results of these studies and the findings of the Port and Airport Development Strategy Consultancy study conducted by the Lands and Works Branch will be made available towards the end of 1989, and will assist the government in deciding on the need, timing and location of a replacement airport.

The airport ground noise consultancy study was completed in May, and recommenda- tions on measures to deal with the matter were being evaluated to determine the priority of implementation.

On August 31, a Trident aircraft of the Civil Aviation Administration of China, flight CA 301 from Guangzhou, while landing on Runway 31 from the southeast, swerved off the east side and fell into the water in Kowloon Bay. In the rescue operation immediately launched by airport emergency units, 83 of the 89 persons on board were rescued, although some were injured in the accident and one of them died later in hospital. However, all the six crew members trapped in the submerged nose section of the fractured fuselage drowned. This was the first fatal accident occurring at Hong Kong International Airport in 20 years. An investigation into the accident was held soon after.

During 1988, the Air Transport Licensing Authority granted one licence to Cathay Pacific Airways and three licences to Hong Kong Dragon Airlines. Taken together with those granted in previous years, this meant that, at December 31, Cathay Pacific Airways held licences to operate scheduled services to 50 cities in 26 countries, and Hong Kong Dragon Airlines was licensed to serve 43 cities in eight countries.

15

Public Order

Е

AMONG the Hong Kong Government's priorities are the fight against crime and the maintenance of public order. This is reflected in the work of the Fight Crime Committee under the chairmanship of the Chief Secretary, which continued to provide advice and recommendations on areas of public concern and for the maintenance of law and order.

Operationally the Royal Hong Kong Police Force is responsible for crime prevention and for detecting crime.

In anti-narcotics operations the police frequently team up with and liaise closely with the Customs and Excise Department. The latter also maintains links with overseas customs authorities, and plays a major part in combatting smuggling and enforcing the Copyright Ordinance.

       The Independent Commission Against Corruption enforces the Prevention of Bribery Ordinance and educates the community on the evils of corruption.

The Correctional Services Department administers the penal system and runs correc- tional and rehabilitative programmes. The department also manages closed centres for Vietnamese refugees and boat people.

       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 provide advice on measures to combat crime. Issues considered by the committee and its sub-committees included tougher measures to counter organised crime, a scheme for renunciation of triad membership, rehabilitation and guidance for young offenders and regulation of the security industry.

       The committee acted on the recommendations in the discussion document entitled 'Options for Changes in the Law and in the Administration of the Law to Counter the Triad Problem'. This led to the enactment in July of legislation providing a legal framework for a scheme in which people could renounce their triad membership before an independent tribunal, and thereby gain immunity from prosecution for certain triad membership-related offences.

       An amendment to the Gambling Ordinance provides for heavier penalties on people running illegal gambling operations. Public consultation on legislative control of nuisances associated with prostitution indicated general support for the proposal and draft legislation was being prepared.

The Fight Crime Committee also endorsed a proposal to set up special inter-departmental task forces to investigate organised crime syndicates. An extensive publicity campaign against triads and shoptheft and emphasising home security was launched. There was also a campaign to publicise the Triad Renunciation Scheme.

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A number of administrative and legislative measures were taken to reduce triad influence in areas where government departments can exercise a certain amount of control, notably in fish marketing and in abattoirs.

The Fight Crime Committee was still very much concerned about juvenile crime and considered ways of reducing young people's involvement in crime. Towards this end, it also introduced measures aimed at discouraging young people from shoptheft. The Young Offender Assessment Panel continued to offer advice to courts on the training and sentencing of convicted juveniles and young people, and also arranged a series of rehabilitative courses at the Hong Kong Outward Bound School for inmates of Correc- tional Services Department and Social Welfare Department institutions.

Progress with the setting up of the Integrated Law and Order Statistical System continued smoothly throughout 1988. By integrating information on offences and offenders kept by the Police Force, the Correctional Services and Social Welfare Departments and the Judiciary, the system will make it possible to gather comprehensive data on the criminal justice system and on recidivism. A mini-computer system is being developed and the system will be implemented in early 1989.

With advice from the Security Association, preliminary draft legislation is being drawn up to replace the Watchmen Ordinance and to provide a framework for the regulation of the industry as a whole. Amendments to the Summary Offences Ordinance and the Police Force Ordinance were enacted to provide better control over faulty burglar alarms, thereby saving police manpower and reducing noise nuisance.

     The 19 District Fight Crime Committees continued to play a very important role in the fight against crime in the districts. They helped foster community awareness of the need to prevent crime and community participation to combat crime. A large number of fight crime activities were organised by these committees which helped publicise the anti-triad, anti-shoptheft and home security themes. The joint Fight Crime Committee/District Fight Crime Committees Conference held in October gave the 19 district committees and the central committee an opportunity to exchange views on anti-crime measures and to suggest ways of further developing the campaign against crime.

Police Force

To meet the increasing and diverse responsibilities placed upon it, the Royal Hong Kong Police Force continued to expand and develop.

With the ten-year modernisation programme almost complete, the Marine Police fleet of 64 major launches and 83 smaller craft has become one of the largest in the world. These resources were put fully to the test during the year to cope with a major influx of Viet- namese boat people entering the territory.

On land, preparation continued for the split of the Kowloon Region into two regions by 1991 with the creation of new posts and the modification and extension of the existing Kowloon Regional Command and Control Centre, in anticipation of the Enhanced Computer Assisted Command and Control System.

     The present anti-illegal immigration duties undertaken by the army at the border will be taken over by the Police Tactical Unit in phases from late 1990. For this additional commitment, two companies of men were recruited during the year and extra instruct- ors were provided at the Police Training School. More staff will be required in the next two years.

In May the Commissioner of Police visited China to discuss counterfeiting, narcotics, illegal immigration and other operational matters. The visit was the seventh of a continuing

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series of liaison meetings between the Royal Hong Kong Police and the Public Security Bureau in China.

During the year the Police Force was responsible for crowd control and security for a number of important visitors. In September the Princess Royal visited Hong Kong as patron of the Save the Children Fund. In May Mrs Corazon Aquino, President of the Philippines, visited the territory and attended mass at St Margaret's Church, Happy Valley. The first company of women police were among the police units deployed on that occasion.

Juvenile Crime

The involvement of juveniles in crime continued to be a subject of concern within the Police Force and among the public. In addition to ongoing efforts by the Fight Crime Committee, a Police Working Party on Juvenile Crime was established in February to identify and implement ways to counter juvenile crime.

In early 1988 there was an alarming increase in the theft of cars, with some 140 cars of the same make and model having been stolen throughout Hong Kong. A task force formed to deal with this crime arrested and prosecuted a number of the culprits, and also recovered some stolen vehicles. After the arrests, there was a significant decrease in the number of similar cases reported.

Crime

In 1988, 79 859 crimes were reported, compared with 81 928 in 1987. There were 5 705 robberies, compared with 5 461, and 10 749 burglary incidents (involving 12 084 premises), compared with 10 601 incidents (involving 11 587 premises) in 1987. The overall detection rate was 46.5 per cent, against 46.7 per cent in the previous year.

      A total of 37 915 people were arrested and prosecuted, compared with 37 561 in 1987. Adults prosecuted totalled 34 181 and juveniles (under 16 years) numbered 3 734, compared with 34 301 and 3 260, respectively, in 1987.

Organised and Serious Crime

The Organised and Serious Crimes Group continued its operations against triad societies and organised crime syndicates. In one case, the head of Hong Kong's largest triad society and nine of its most prominent personalities were convicted of triad-related offences and sentenced to heavy terms in prison.

There were 196 robberies involving the use of genuine or imitation firearms, representing an increase of 49 cases against the year before. Altogether 57 genuine firearms were seized and 32 persons were arrested and charged with various related offences. Robberies against goldsmith, jewellery and watch shops increased, a total of 53 such cases being recorded, accounting for the loss of property valued at $65 million.

Commercial Crime

The investigation of groups involved in local and international 'long firm' fraud cases was a major feature of the Commercial Crime Bureau's work over the past year. Spurious and falsely-documented shipments of Indonesian plywood and the increasing misuse of locally-issued credit cards overseas were other areas of concern, enquiry and prosecution.

      Constant surveillance of personalities engaged in counterfeiting and forgery enabled officers of the Bureau's Counterfeit and Forgery Division to neutralise a significant number of well-organised groups producing counterfeit banknotes, negotiable instruments, airline

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tickets and immigration documents. Of particular note was an investigation early in the year where the head of a forgery syndicate together with his technical expert were arrested and master negatives for the production of banknotes, travellers cheques and immigration documents were recovered.

Narcotics

Record seizures of heroin were made in Hong Kong during the past 12 months. Despite this, the price and purity of drugs at street level remained relatively stable due to ample supply of opiates from the Golden Triangle. An eighth successive bumper opium crop resulted in widespread trafficking throughout Southeast Asia to North America, Australia and Europe.

Major success was achieved against international organised groups of heroin traffickers originating from Hong Kong. As a result of sustained investigative work and close co- operation with overseas law enforcement agencies, many syndicate heads, together with a number of their assistants in Hong Kong and overseas, were arrested and large quantities of heroin were seized.

Drafting of the new legislation against money laundering in Hong Kong, which will enable sequestration of the assets of drugs traffickers in Hong Kong, was at an advanced stage.

     Some 941.6 kilograms of opiate drugs including heroin base, No. 3 heroin, No. 4 heroin and opium were seized, compared with 737.05 kilograms in 1987. There were 11 577 prosecutions for narcotics offences, compared with 11 252 in the previous year.

Bomb Reports

During the year, 2 084 incidents relating to bombs and explosives were reported. These comprised 3 homemade explosive devices, 2044 unexploded World War II military ordnance (mainly shells and aircraft bombs), and 37 cases involving the seizure of explosives, and reports which were made with good intentions but which were found to involve innocuous objects. In addition, 219 hoax reports were received and dealt with by either bomb disposal or general duty officers.

Crime Prevention

Legislation with the aim of reducing the environmental impact of intruder alarm systems which were the subject of repeated false alarms, was still under consideration by the government.

     During the year, the Intruder Alarm Inspection Unit of the Crime Prevention Bureau examined 68 installations and assisted owners by offering technical advice. The unit also visited 39 scenes of crime where alarms had been circumvented.

The Hong Kong Government, in consultation with the Security Association of Hong Kong, continued to make progress in its examination of the feasibility of legislation governing various aspects of the security industry.

The Crime Prevention Bureau continued to offer a wide range of services to the community in all areas of crime prevention, with emphasis on the prevention of juvenile involvement in crime, particularly shop theft.

Crime Information

The Police Operational Nominal Index Computer System, which is maintained and operated by the Criminal Records Bureau, handled some 10 100 enquiries each day, proving its continued effectiveness.

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      The Identification Bureau continued to provide services in relation to fingerprint technology and forensic photography, assisting other formations of the police in the investigation and detection of crime. During 1988 staff of the Scenes of Crime Section and the Advanced Technology Unit of the bureau attended 26 662 crime scenes to examine fingerprints, resulting in 708 persons being identified in connection with 805 cases.

      The main fingerprint collection section contains 626 277 sets of fingerprints. During the year, 76 541 arrest fingerprints were processed and, from these, 36 079 people were identified as having previous convictions. The section also carried out searches on 67 357 sets of fingerprints for vetting purposes.

The Certificate of No Criminal Conviction Section received 40 448 applications for certificates.

The Photographic Section produced 401 384 black and white photographs and 495 591 colour slides and photographs.

Ballistics and Firearms Identification

Officers of the Ballistics and Firearms Identification Bureau handled 235 cases in 1988, compared with 198 in 1987. In these cases 20 commercially manufactured firearms were seized or found, together with 17 homemade or converted firearms.

The bureau is now using a microprocessor-operated index to compose the physical characteristics of weapons used in crimes. The index allows information from fired bullets and cartridge cases from crime scenes to be stored and subsequently retrieved under different categories.

Interpol

The International Criminal Police Organisation, more commonly known as Interpol, was established in 1914, and has police forces from 146 countries as members.

The Hong Kong Interpol Bureau works closely with police forces overseas as well as various government departments and consulates and commissions in Hong Kong. The bureau has a small investigation unit which deals with minor enquiries on behalf of other member countries and initial requests for extradition.

Two officers from the Hong Kong Police are seconded to the Interpol General Secretariat in Saint Cloud, Paris and close contact is maintained with them.

Public Order

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 public functions and carrying out anti-crime, anti-illegal immigration duties and Vietnamese escort duties.

      During the year 1870 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.

The new $11-million fleet of Saxon armoured personnel carriers was delivered during the year to replace the ageing Saracens. The seven new vehicles equipped with radio com- munications and public address systems were put into service at the Police Tactical Unit.

Illegal Immigration

Illegal immigration continued to be one of the most serious problems facing the security forces. Each day, some 785 police officers were deployed to counter all forms of illegal

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immigration, including detecting and apprehending those who managed to reach the urban area. In 1988, some 13 278 illegal immigrants from China were arrested while attempting to enter Hong Kong. A further 7 709, who had evaded the security forces, were later arrested.

      The first five months of 1988 saw a steady rise in numbers, with an average of 68 illegal immigrants intercepted daily, an increase of 25 per cent over the same period in 1987. In May 1988, the government introduced a new policy whereby sizeable groups found working in construction sites, restaurants, factories and farms were prosecuted for illegally remaining here.

There has since been a big drop in arrests. The daily average of arrests for June was 47 and July was 32, while the daily average for the year fell to 57. These figures compare with a daily average of 81 for June and 49 for July 1987.

      Police action against illegal immigration was maintained, with emphasis on detecting people illegally employed in Hong Kong. A total of 50 persons were prosecuted for assisting illegal immigrants to enter or remain in Hong Kong.

The use of forged Hong Kong Identity Cards remained low, with only 0.03 per cent of illegal immigrants found in possession of such cards compared with 0.04 per cent in 1987.

The new-style identity card, issued in July 1987, has proved difficult to forge and the computerised checking procedures make it possible to identify people who use lost or stolen cards. There were 948 such cases during 1988.

Vietnamese Influx

The problem of the Vietnamese influx continued throughout 1988. As in previous years, most left Vietnam for economic reasons to seek resettlement overseas.

      From June 16, all Vietnamese boat people were treated as illegal immigrants unless determined to be refugees under the 1951 UN Convention.

Upon implementation of the policy, all Vietnamese boat people found in Hong Kong waters were warned of the policy and informed that they were free to leave. However, if they elected to stay and were later classified as illegal immigrants they would be detained pending repatriation to Vietnam.

      The steady arrival of Vietnamese boat people required a major commitment of resources by the police. These resources were primarily deployed in maintaining an effective maritime screen by the Marine Police, but were also used to provide escorts and to deal with incidents which occurred in the various accommodation centres. During the latter part of the year the police were additionally called upon to open and manage Erskine Camp, a newly-created closed centre for Vietnamese illegal immigrants.

      A total of 7 997 Vietnamese refugees, 10 449 Vietnamese boat people and, 942 Ex-China Vietnamese illegal immigrants arrived during 1988.

      On December 31, the total number of these people stood at 26 601, of which 24 114 were kept in closed centres and 2 487 in open camps. Resettlement accounted for 2 772 and 621 births were recorded.

Traffic

     Traffic accidents causing personal injury increased by 1.8 per cent over the previous year. The number of vehicles and their road usage both increased, highlighting yet again the need for positive traffic control and enforcement together with increased effort in the field of road safety education.

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      Road safety campaigns were held throughout the year and emphasis was placed on improving the road sense of adult pedestrians, including those over 60 years of age, and young and inexperienced cyclists and drivers. The Road Safety Exhibition Centre at the Police Traffic Headquarters in United Centre, Queensway, the improved Road Safety Town at Sau Mau Ping, and the Road Safety Mobile Centre were regularly attended by schools and other organisations.

      On December 31, provisional figures for accidents causing personal injury showed there were 282 fatalities and 16 051 cases of injury.

Community and Media Relations

The Fight Crime Campaign continued to encourage public vigilance against crime, with the 1988 effort targeted at three major areas of concern the menace of triads, shoptheft and home security.

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On the strength of the first territory-wide anti-triad publicity efforts made in 1987, the 1988 campaign was intensified, to increase public awareness of the triad menace. Special attention was paid to encouraging young people to report any attempts to recruit them into triad societies. Appeals were also made to their parents and teachers to report triad activities.

       To curb the rising trend in shoptheft, an anti-shoptheft campaign was organised throughout the year. It culminated in a special publicity drive in November and an 'anti-shoptheft day' with thousands of young people participating.

      Among the activities organised to reduce juvenile crime, the '1988 Help the Police Fight Youth Crime Competition' was most notable and attracted thousands of young participants. Five winners were chosen as Hong Kong's youth ambassadors on an 18-day visit to Canada in July.

       The Neighbourhood Watch Scheme, which encourages families to take an active interest in each other's security by forming small groups within their buildings, held its fifth and sixth phases during the year. A total of 29 056 households in 131 buildings throughout the territory took part in the two phases and set up 2 818 watch units.

      In view of the growth in juvenile crime, the Commissioner of Police decided in May to reintroduce the School Liaison Officer Scheme. The aim of the scheme is to establish good relations between the police and schools and to promote an understanding of the role of the police and a respect for law and order among school children.

       Another means of encouraging public support in the fight against crime is the Good Citizen Award Scheme in which cash awards and certificates are given to people who have courageously assisted the police to foil crime or arrest criminals. During the year, 52 people received the Good Citizen Award totalling $81,500 and one other person was presented with the coveted Good Citizen of the Year Award, which was introduced in 1984 for outstanding efforts, with cash awards amounting to $10,000.

       Junior Police Call (JPC) -- one of the largest police-youth organisations in the world - continued to grow. About 3 000 youngsters applied to join each month. As well as pro- viding healthy recreational pursuits for its young members, the movement is involved in community service with members taking 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 sports festival, the JPC Mini-Olympics, comprising a swimming gala, basketball tournaments, football tournaments and athletic meets was launched during the

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year. In addition, the seventh JPC Summer Youth Camp for over 700 residential campers and 800 day campers was held at the YMCA Youth Village at Wu Kwai Sha in August.

Four regular television programmes are jointly produced by the Police Public Relations Branch and Radio Television Hong Kong. The 15-minute weekly 'Police 15', which offers simple crime prevention advice as well as asks for witnesses to crimes to come forward, is presented on both Chinese channels.

The 12-year old programme is still enjoy a strong audience rating. Its counterpart, 'Police Report', is a weekly five-minute programme shown on the two English channels. The third weekly 15-minute programme is a youth slot primarily for the benefit of members of the 'Junior Police Call', but serves also as an informative youth programme. The fourth programme, 'Crimewatch', has been telecast for over two years. Unsolved major crimes are reconstructed, and filmed for presentation while viewers are encouraged to help solve crimes through the use of telephone hotlines.

Training

The workload of the Police Training School increased considerably during the year as a result of the additional intake of officers to meet Police Force expansion. Recruit inspectors continue to undergo a 36-week course and recruit constables begin their career with a 22-week course. These courses cover criminal law, social studies, police and court pro- cedures, drill and musketry, first aid and, for overseas inspectors, an eight-week course in colloquial Cantonese. Recruit traffic wardens undergo a six-week course covering traffic legislation and procedures. The wide range of specialist and continuation training courses for uniform-branch officers continued.

The Stage V Building Development programme to expand facilities at the Police Train- ing School was finished during the year with the completion and handing over of an eight-storey teaching block and swimming pool.

      The Detective Training School of the Force Training Wing continued to hold 12-week Standard Criminal Investigation Course (SCIC), while increasing its range of specialist training courses. The SCIC is designed primarily for uniform-branch officers upon transfer to criminal investigation duties.

     All officers undergoing SCIC training receive instruction in disaster victim identification techniques, and while on the course form the Disaster Victim Identification Unit which would be deployed in the event of a major civil disaster. In September, the unit was activated during an air crash involving an international airliner.

      Other than the standard courses, continuation training as well as advanced and specialist courses were held to meet the needs of officers with various duties.

Command courses for senior inspectors, chief inspectors and superintendents continued to be a feature of police training policy, with emphasis placed on management techniques and personnel matters.

Police Cadet School

During its 15 years of operation, the Police Cadet School has trained 3 828 cadets. Of this number, 3 545 joined the Police Force, 44 entered the Fire Services, 75 joined the Customs and Excise Department and 57 joined the Correctional Services Department.

      A decision was taken earlier in the year to close the school because of the expected decrease in the number of suitable Form III school leavers in the future, due to the higher education standards, and the ability of the police force to recruit sufficient officers at Form V level and above for direct entry. The school will be closed in two phases - Dodwell's

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Ridge Camp in March 1989 and Fan Gardens in March 1990. The final intake of cadets was held in March 1988.

Complaints Against Police Office

The Complaints Against Police Office (CAPO) investigates all complaints from the public concerning the conduct and behaviour of members of the Police Force - including civilian staff and auxiliary police officers. The investigation of all complaints against police is monitored by the Police Complaints Committee.

      The decrease in complaints recorded in 1987 continued in 1988 with 3 230 complaints registered. This represents a decrease of 16.5 per cent from the 3 870 complaints received in 1987. A total of 93 police officers were disciplined and 41 charged with offences resulting from complaints. The rate of substantiated complaints was 3.4 per cent against 5.8 per cent classified as false. Complaints of assault, neglect of duty and conduct/manner made up the majority of the complaints, being 71.2 per cent of the total.

      In addition to investigating complaints, CAPO has a preventive role and is responsible for educating the force on complaint trends and how they can be prevented. Throughout the year, lectures on complaint prevention continued to be organised for junior police officers with the aim of improving public relations and reducing situations of conflict with members of the public.

Planning and Development

Construction of Phase One of the new Police Headquarters Complex, a six-storey podium designed to accommodate specialist units, continued on schedule and is expected to be completed in July 1989. Planning for Phase Two, a multi-storey tower block for the Crime Wing and Special Branch, is well advanced and construction is scheduled for completion in mid-1992.

      During the year three major projects were completed: Siu Lek Yuen Divisional Police Station, the re-modelling of the Kowloon Regional Command and Control Centre and the Sha Tau Kok Police Post.

      Major construction work began on three further projects: Stage I of the Police Tactical Unit at Fanling, Hung Hom Divisional Police Station, and additional facilities at the Tai Lam Chung Marine Base, with work on the new Territories Regional Headquarters at Tai Po due for completion in 1989.

Communications

     Design work for the new Integrated Communications System was completed in February and the system will be implemented with the Command and Control II project. It will replace the existing radio communication system and extend the portable and land mobile communication services to areas currently without adequate communication. Invitations to tender for the supply, installation and commissioning of the system were offered in May and the contract was signed in December. Planned completion of the first segment of the system is mid-1990.

      With the advent of the Integrated Communications System project, a series of studies leading to the formulation of a communications maintenance philosophy for both land and marine regions has been conducted in line with the Police Force's development strategy. The necessary manpower resources and logistical support are being acquired to enable the development of an infrastructure to cope with the continuing needs of the force.

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The structure of the Information Technology Branch was strengthened in April with the transfer of analyst programmer grade staff from the Government Data Processing Agency to the Police Force. An additional post of assistant data processing manager was created in July to provide professional guidance to the rapidly-expanding formation.

     An Information Technology Strategy has been developed and approved by the newly- created Force Information Strategy Committee and the Government Computer Commit- tee, providing a blueprint for future development.

A computer system was being developed for the Criminal Intelligence Bureau to provide for fast and easy retrieval of criminal data and complex intelligence analysis. The system will be in full operation in July 1989.

Financial approval was given for a computer-assisted fingerprint identification system to be developed to improve the identification capability of the Identification Bureau. The project will become operational in early 1990.

Two similar microcomputer systems to assist the Transport Branch and the Complaints Against Police Office were implemented in early 1988. The Transport Branch Management Information System is a management aid for controlling the use of vehicles. The CAPO index and statistics computer system was developed for the maintenance and analysis of statistics. Seventy microcomputer systems and 152 word processors were provided to various formations. From April the Information Technology Branch assumed financial account- ability for all computer-related expenditure and will continue to monitor the provision of computer-related consumables and accessories, and the purchase of information technology equipment for the Police Force.

Licensing and Societies Registration

The number of applications for licences, permits, registrations and other dispensations for which the Commissioner of Police is the authority continued to increase steadily. During the year 21 278 applications for registration as watchmen, 200 applications for the grant of an arms licence and 11 540 other applications were received.

     A total of 333 applications for registration or exemption from registration were received by the Registrar of Societies. During the year, it was found that many societies had dissolved themselves without notifying the Registrar or had become defunct. Notwith- standing these cancellations there remained 4 399 registered societies and 707 societies exempted from registration at year-end.

The Police Force investigates applications made to the Commissioner of Television and Entertainment Licensing and the Urban and Regional Councils for various licences issued by them and also supervises the premises so licensed. In this category there were 3 023 liquor licensed premises, 842 amusement games centres, as well as public dance halls, table tennis saloons, skating rinks, billiard saloons and mah jong or tin kau schools.

      Work continued throughout the year, jointly with representatives of the trade, on legislation to replace the existing controls on watchmen with new ones on various aspects of the security industry. Minor amendments were enacted to the procedures in the Societies and Massage Establishments Ordinances and some fees were increased to reflect revised costs.

Police Dogs

     Police dogs are trained at the Police Dog Unit at Yuen Long in the New Territories and are used for such duties as general patrol, tracking and detecting dangerous drugs. Compre- hensive courses are organised to train new handlers to ensure high standards of performance.

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       By the end of 1988, the unit had 83 dogs, dispersed throughout the territory. Most of the dogs are German Shepherds, and some are Labradors.

Personnel

At the end of the year, the force establishment totalled 27 367 disciplined posts, an increase of 741 over the corresponding figure in 1987. In addition, there are 5 953 civilians, representing about 18 per cent of the overall establishment.

       There were 12 615 applications to join the Police Force as constables. The number of constables appointed during the year was 2 220, 11.2 per cent of them being women. A total of 229 persons were appointed as police inspectors during the year, of whom 98 were direct entry local appointees, 78 were direct entry overseas appointees and 53 were junior police officers appointed through the 'potential officer' selection scheme.

       Recruitment targets for the year had been set at a high level for future expansion and to make up for depletion through other means. The scheduled intake of both inspectors and constables was fully met.

Promotion prospects in the force remained excellent at all levels. Thirty-six gazetted officers were promoted to senior superintendent and above, 31 chief inspectors to superintendent, 69 senior inspectors to chief inspector, 123 sergeants to station sergeant and 430 constables to sergeant. In addition, 14 exceptionally experienced station sergeants were promoted to the rank of inspector.

Exchange Scheme

The third round of the superintendent of police exchange scheme between Hong Kong and the United Kingdom began during the year. Three officers were seconded to Hong Kong from British police forces for a period of two years to undertake full operational duties as divisional commanders. Similarly, three Hong Kong superintendents were seconded to three British police forces. The objective of the exchange scheme is to further the development and experience of selected local officers and for the force to benefit from the experience of officers seconded to Hong Kong. It is intended to increase the number of exchanges in 1989.

Welfare

      The Welfare Branch has expanded its work more rapidly in recent years and now provides a comprehensive range of welfare, sporting, recreational, catering, psychological and retire- ment services for all members of the force and their families.

During the year, social work staff made 4 842 casework visits to officers and their families and conducted 4 538 casework interviews in the four regional welfare offices and three sub-offices. Family Life Education programmes were organised to promote stress aware- ness, parental skills, and marital enrichment among officers and their families. A total of 3 886 children of both regular and auxiliary police officers were awarded bursaries from the Police Children's Education Trust and the Police Education and Welfare Trust to assist them in their education.

The Police Sports and Recreation Club at Boundary Street, the Police Officers' Club at Causeway Bay, and the Force Holiday Homes and Recreation Centres enjoyed high turnouts through most of the year, with their resources being particularly stretched at public holidays. The highlight of the Police Force's sporting calendar was in October, when 18 of its leading sportsmen participated in the International Law Enforcement Olympics held in Sydney, Australia. The team competed in nine sports and won 25 medals.

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New Police Museum During the year, the Police Museum was relocated from a commercial building in Wan Chai, to the former Wan Chai Gap Police Station. With a total area of 560 square meters, the museum has been expanded and modernised. It now includes four exhibition galleries: the Orientation Gallery, the Narcotics Gallery, the Triad Societies Gallery and the Current Exhibition Gallery, and is open to members of the public.

Royal Hong Kong Auxiliary Police Force

The Royal Hong Kong Auxiliary Police Force is manned entirely by volunteers from all walks of life. Its current strength is 5 055, about 10 per cent being women. The force assists the regular police force in day-to-day constabulary duties and provides additional manpower when needed for such emergencies as major disasters or public disorder. In 1988 the force was called upon to provide daily guard duties at the refugee camps for Vietnamese boat people.

The average daily turnout of auxiliaries for constabulary duties was 700.

Police Complaints Committee

The Police Complaints Committee is an independent monitoring group appointed per- sonally 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.

     During the year, the committee examined in detail 3 428 complaint cases. Apart from ensuring that the CAPO investigations were carried out in a thorough and impartial manner, the committee also made recommendations for improvements or changes to police practices, procedures and instructions arising from the vetting of these complaints cases with a view to both 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 2 741. 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 1988, a total revenue of $3,799 million was collected on dutiable commodities, compared with some $3,646 million in 1987.

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.

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During the year, 144 kilograms of opiate drugs and cannabis were seized, including 35 kilograms of No. 4 heroin, 42 kilograms of No. 3 heroin, one kilograms of heroin base, 56 kilograms of opium, and 10 kilograms of cannabis. In addition, 277 tablets of assorted synthetic dangerous drugs, mainly methaqualone, were seized. A total of 1 780 persons were charged with drug offences. As a result of information passed to overseas enforcement agencies, 37.4 kilograms of dangerous drugs were seized and 28 persons arrested outside Hong Kong.

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 1988, the service detected 153 smuggling cases under the Import and Export Ordinance and arrested 171, persons with $17.2 million worth of goods seized. Of these cases, 75 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 cigarettes, clothing and electrical goods.

Intellectual Property Rights Protection

The service is responsible for protecting the copyright of literary, dramatic and musical works. Illicit copying of motion pictures and television programmes and unauthorised photocopying of books remains a problem. In 1988, the Copyright Division made 56 copyright investigations, which resulted in 100 persons being charged. The problem of pirated sound recordings has been contained. In addition, as an offshoot of the division's activities in this field, 2 210 obscene and indecent articles were seized and 10 persons charged with offences under the Control of Obscene and Indecent Articles Ordinance.

The department investigates 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 Customs Investiga- tion Bureau and the Trading Standards Investigation Bureau made 777 investigations, resulting in 733 persons being charged with offences under the Trade Descriptions Ordinance and the Copyright Ordinance. The retail of counterfeit goods such as watches, sports goods and leatherwares which at one time flourished in hawker areas, has been largely eradicated or driven underground. Fines totalled $6.58 million and prison sentences up to 154 months were imposed.

In a series of operations in the latter part of 1988, the Golden Shopping Arcade, Sham Shui Po, a notorious market for pirated computer wares, was raided for copyright infringements. This resulted in the arrest of 97 persons and the seizure of 110 208 pirated manuals and 203 633 infringing diskettes valued at $15.2 million. These operations, made possible as a result of improved co-operation on the part of copyright owners, were remarkably successful and were of great help in the fight to wipe out the malpractices.

Independent Commission Against Corruption

The Independent Commission Against Corruption (ICAC) continued its three-pronged attack on corruption in Hong Kong.

       In recent years, the commission's efforts have been focused increasingly on the private sector, in response to the rise in the number of corruption reports concerning that sector.

The ICAC is independent of the Civil Service, and the Commissioner is directly responsible to the Governor. But there are a number of ways in which the Commission is

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subject to external advice and monitoring. The Advisory Committee on Corruption, whose members include leading citizens and senior government officials, provides guidance on policy matters affecting the commission's activities and organisation. Each of the three functional departments of the commission, responsible for investigation, corruption prevention and community relations, is also guided by an advisory body with members drawn from various sectors of the community. 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 13 such complaints received during the year were thoroughly investigated.

The ICAC conducted its seventh mass survey on attitudes and perceptions of the general public towards corruption and towards the commission. Over 1 000 respondents, sampled from a wide spectrum of the Hong Kong public, were interviewed. The report on the findings of the survey was completed by the end of the year.

     Compared with findings of past surveys, the 1988 findings on respondents' perception of corruption in government supported the trend that the government is continuing to be progressively less corrupt. Corruption in business was considered to be more widespread than in government, with over half of the respondents perceiving the use of illegal commissions as prevalent. Nearly all respondents knew of the commission and about 90 per cent of them thought its performance was good.

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.

During the year, the department received 2 253 reports of corruption. Of these 750 were by members of the public in person, 814 by telephone and 480 by letter, and 209 were from government departments. Of all the reports, 66 per cent were made by persons prepared to identify themselves.

The District Board elections held in March generated 81 complaints under the Corrupt and Illegal Practices Ordinance.

Large-scale commercial fraud facilitated by corruption demanded the deployment of large teams of investigators, many of whom were required to travel extensively to investigate and to bring to justice offenders who had left Hong Kong. To facilitate such investigations, the commission has maintained extensive liaison and co-operation with law enforcement agencies elsewhere.

     A total of 404 persons were prosecuted for corruption-related offences and 306 prosecutions were completed with 234 convictions; 155 persons were officially cautioned. At the end of the year 97 cases were awaiting trial and 582 investigations were in progress.

On the advice of the Operations Review Committee, reports concerning 293 serving or former government servants were referred to the heads of departments and to the Secretary for the Civil Service 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 in public bodies, and recommends changes as it sees necessary. Free advice is also available to private organisations or individuals on request.

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       During the year the department conducted 75 detailed examinations of specific areas of activity in government departments and public bodies, covering policy, law, instructions, methods of operation and management. The total number of such studies since 1975 has been 1 289. Reviewing the effectiveness of previous studies and monitoring the implementa- tion of corruption prevention measures continued also to be an important aspect of the department's work.

The department was represented on 42 departmental and inter-departmental working groups and committees. The corruption prevention groups established at directorate level in government departments continued to provide a co-ordinated approach to corruption prevention studies.

The department organised training programmes for supervisors in the government, public bodies and the private sector. The programmes covered the concepts of supervisory accountability, management's role in preventing corruption, delegation of responsibility and authority, and general advice on other ways to discourage corruption.

The department's Advisory Services Group, which gives confidential and free advice to the private sector on corruption prevention measures, was in contact with 158 organisations. Advice, either written or oral, was designed to meet clients' specific needs. Since it started in 1985, the group has provided advice to 342 private sector organisations. To enable the group to serve the private sector better, a survey of the attitudes and needs of large business firms concerning corruption prevention was started in September.

The department continued to take part in management seminars organised by the Shenzhen University for managers and executives in China. At these seminars, the department used case studies demonstrating management weaknesses which could lead to corruption.

Community Relations

The Community Relations Department is responsible for educating the public on the evils of corruption, harnessing public support in the fight against corruption, and, in the long term, seeking to promote proper social values and a greater sense of civic responsibility in the community. The department operates through two divisions, the Liaison Division and the Media and Education Division.

The department carried out its direct liaison with all sectors of the community mainly through the eight ICAC Regional Offices and three sub-offices. During the year 16 044 liaison activities and 147 special programmes were held, involving a total of 335 079 citizens. The main thrust of this work was to explain the spirit and provisions of the Prevention of Bribery Ordinance to people in the private and the public sectors, and to encourage them to take positive action against corruption.

The department accorded high priority to liaison with young people. To promote the positive aspects of life among them, it organised a territory-wide programme on the theme 'Towards a Fuller Life'. A total of 26 600 people took part in various activities of the programme, which included a concert featuring international and local artists, a write-in and radio programme and a seminar camp for working women.

On the completion of a set of moral education teaching materials for primary schools entitled 'My Rights, My Responsibilities' and a set of radio plays entitled 'Between You and Me', the department held ten presentations to introduce the packages to 1 400 headmasters and teachers.

To help schools make the best use of assemblies and home periods to promote moral education, the department created a package suitable for use in Form 1 to Form 7. In

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addition, a programme was held for 700 students of colleges of education and universities to design their own moral education projects which were subsequently displayed at an exhibition. Following the success of the 'Towards A Fuller Life' television series last year, a second series was produced for 12-month telecast beginning in July. Also from July, a series of 52 episodes of the 'Money Isn't Everything' television programme was re-run. Both series are aimed at encouraging balanced social values, particularly among young people.

On the advertising front, the department launched a television campaign in April to persuade senior management of business organisations to adopt preventive measures against corruption. More advertisements for this campaign were being prepared towards the end of the year. The department was also producing a television advertisement for the ICAC hotline for reporting corruption.

The independent production of a 13-part television drama series based on the commis- sion's successful investigations was nearing completion by the end of the year.

Government Laboratory

The Forensic Science Division of the Government Laboratory has continued to play its part in supplying sophisticated and diverse scientific support to law enforcement agencies in Hong Kong.

     Exhibits from all manner of criminal activities were examined including homicide, rape, commercial fraud, traffic accident reconstruction, poisoning and drug offences.

Complex and sophisticated analytical techniques play an increasing role in the provision of forensic technical support, and the Argon Laser installed in 1987 has proved invalu- able for certain fingerprint and document examinations, as well as for enhancing other techniques for trace analysis. This instrument has now been supplemented with a portable high-energy light source for on-site crime scene examinations.

      Further advancements have been made in the discrimination of textile fibres which provides vital contact trace evidence in serious crimes, and the efficiency of this work has been enhanced by the acquisition of a second comparison microscope. A specialised fourier-transform infra-red spectrophotometer for drug analysis has allowed continuing progress in the effort to increase analytical output without sacrificing accuracy or sensitivity. To the same end, technical improvements introduced in analytical toxicology have allowed this section to cope with a doubling of its workload over the past two years.

Laboratory expertise in the field of accident reconstruction continued to provide the Police Traffic Division with valuable support in the investigation of major traffic accidents and laboratory expertise in tachograph interpretation has become established.

Document examination is time-consuming and workload remains heavy, but much developmental work has been, and will continue to be, undertaken in Chinese handwriting, further establishing the laboratory as a leading authority in this field.

     No matter how sophisticated the Forensic Laboratory, the quality of its output depends on the quality of the exhibits submitted. In this respect forensic staff have continued to lecture extensively at law enforcement training courses and forensic staff also attended over 600 crime scenes during the year.

Correctional Services

The Correctional Services Department administers a wide range of programmes for adult offenders, young offenders, drug addicts and mentally ill offenders. Broadly, three categories of service are provided - custodial, aftercare and industries. In addition, the department manages closed centres and detention centres for Vietnamese boat people.

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      At the end of 1988 the department operated 20 correctional institutions, three halfway houses, a staff training institute, an escort unit, three closed centres and four detention centres for Vietnamese refugees and boat people. Policy and administrative support is provided from its headquarters. There were 6 690 staff looking after 11 314 inmates and 17 724 Vietnamese refugees boat people.

Male Offenders

Prisoners are assigned to an institution according to their security rating, which takes into account, among other things, the risk they pose to the community, and whether or not they are first offenders.

There are 12 prisons for adult male prisoners including:

⚫ four of maximum security: Stanley Prison, Shek Pik Prison, Siu Lam Psychiatric

Centre and Lai Chi Kok Reception Centre;

three of medium security: Ma Po Ping Prison, Tung Tau Correctional Institution and Victoria Prison; and

five of minimum security: Tai Lam Correctional Institution, Pik Uk Prison, Tong Fuk Centre, Ma Hang Prison, and Nei Kwu Chau Correctional Institution, which was added in November 1988.

       Stanley Prison and Shek Pik Prison house prisoners serving long sentences or 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 which has separate sections for male civil debtors. Victoria Prison also houses illegal immigrants pending repatriation to China and a special section at Ma Hang Prison has been set aside for geriatric prisoners. All convicted prisoners who are medically fit are required by law to work.

Young Male Offenders

The Correctional Services Department operates four correctional programmes for young male offenders under the Prisons, Training Centres, Drug Addiction Treatment Centres and Detention Centres Ordinances.

       The maximum security Pik Uk Correctional Institution, operates as a reception centre, a training centre as well as a prison for young offenders under 25 years of age, who are also detained in this institution for pre-sentence reports on their suitability for admission to the department's young offender programmes.

      Lai Sun Correctional Institution on Hei Ling Chau accommodates young prisoners aged between 14 and 20.

      Cape Collinson Correctional Institution houses those between the ages of 14 and 17 and Lai King Training Centre houses those between 18 and 20 years, who have been sentenced to the training centre programme.

      A very effective detention centre programme is carried out at the medium security Sha Tsui Detention Centre. There are two sections, one for young offenders aged between 14 and 20 and the other for young adults aged between 21 and 24. The detention centre programme emphasises strict discipline, strenuous training, hard work and a vigorous routine.

       Young male offenders released under supervision from the detention or training centres or under the Pre-release Employment Scheme are placed in Phoenix House. Residents in this halfway house must go out to work or attend full-time school in the daytime. Young offenders identified as having special needs who have been discharged from a training centre or detention centre are required to stay in the house for up to three months before they are permitted to live at home or in other places while continuing under aftercare supervision.

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Female Offenders Adult females serve their sentences at Tai Lam Centre for Women in the New Territories. The institution also has a remand section and a drug addiction treatment section. Most of the 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 held at Tai Tam Gap Correctional Institution. There are sections for training centre inmates, drug addiction treatment centre inmates, young prisoners and remands.

     Bauhinia House serves as a halfway house for girls released under supervision from the training centre or under the Pre-release Employment Scheme.

Drug Addiction Treatment

    Drug addicts found guilty of an offence punishable by imprisonment may be sentenced under the Drug Addiction Treatment Centres Ordinance to a drug addiction treatment centre. They can be detained for two to 12 months, depending on their progress. In-centre treatment is followed by 12-month statutory aftercare supervision.

     Male addicts are housed and treated at Hei Ling Chau Addiction Treatment Centre. Female adult addicts receive treatment at Tai Lam Centre for Women and the young ones at Tai Tam Gap Correctional Institution.

     The drug addiction treatment programme aims to detoxify, restore physical health and, through the application of therapeutic and rehabilitative treatment, wean addicts from their dependence on drugs. There is also intensive follow-up aftercare supervision during which time supervisees may be recalled for further treatment should supervision conditions be contravened.

     Assistance is also given to Addiction Treatment Centre inmates with post-release employment and accommodation. Temporary accommodation is available at New Life House, a halfway house for those who are in need of such support immediately following release.

Young Offender Assessment Panel

The Young Offender Assessment Panel comprising staff from the Social Welfare and Correctional Services Departments was established in April 1987 to provide magistrates with a co-ordinated view on the most appropriate programme for a particular young offender. At present the service is confined to Central and North Kowloon Magistracies and the Juvenile Courts. An overall review and assessment of the functions of the panel has been carried out and its future will be decided by the Central Fight Crime Committee.

Education and Vocational Training

Offenders under the age of 21 attend educational and vocational training classes conducted by qualified teachers. Textbooks specially written by these teachers are used to provide inmates with more suitable and practical learning material which match their maturity in personality growth and development.

Adult offenders attend evening classes on a voluntary basis run by part-time lecturers from the Adult Education Section of the Education Department. Self-study packages and external correspondence courses are also available for those who are interested.

     Both young and adult offenders are encouraged to take part in public examinations organised by the City and Guilds of London Institute, Pitman Examinations Institute,

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London Chamber of Commerce and Industry, and the Hong Kong Examinations Autho- rity. From 1988, inmates were accorded 'school candidate status' for the Hong Kong Certificate of Education Examinations.

Medical Services

All institutions have their own medical units providing basic treatment, health and dental care, including radiodiagnostic and pathological examinations as well as prophylactic inoculations. Inmates requiring specialist treatment are either referred to a visiting consultant or transferred to a public hospital.

Siu Lam Psychiatric Centre and the psychiatric observation unit at Lai Chi Kok Reception Centre treat prisoners with mental health problems, and offer psychiatric con- sultations and assessments for inmates referred by other institutions and the courts.

Ante-natal and post-natal care is provided within institutions for women but babies are normally delivered in public government hospitals.

Psychological Services

     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 on request to assist the courts in their sentencing and the department in assessing an offender's suitability for particular 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 and the centres for Vietnamese boat people, either fortnightly or monthly, depending on the type of institution. They investigate complaints, inspect diets and report on living and working conditions. They may also advise the Commissioner of Correctional Services on the employment of prisoners and work opportunities after release.

After-care Services

After-care plays an important role in an inmate's re-integration into the community after release and helps them to lead an industrious and law-abiding life. This service is currently available to inmates from training, detention and drug addiction treatment centres, young prisoners and prisoners released under the Release Under Supervision and Pre-release Employment Schemes.

      The after-care programme begins immediately after admission into an institution. Each inmate is interviewed by an aftercare officer who then proceeds to establish a sound relationship with the inmate and his family.

Inmates are further 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 including the finding of suitable accommodation, a job or school placement.

      After-care officers contact supervisees regularly after release, providing them with appropriate assistance and guidance, and ensuring that supervision requirements are strictly complied with. A breach of supervision conditions can result in a recall for a further period of training.

      The success of the programmes is measured by the percentage of supervisees who complete supervision without reconviction and, where applicable, remain drug free. At the

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end of 1988, the success rates were 94.3 per cent for the detention centre, 66.2 per cent for male training centre inmates, 93.3 per cent for female training centre inmates, 86.9 per cent for young male prisoners and 87.9 per cent for young female prisoners.

Release Under Supervision

The Release Under Supervision Scheme and Pre-release Employment Scheme came into operation in July 1988. 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 the department's aftercare officers. Under the Pre-release Employ- ment 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 and then work and live in a designated hostel under the supervision of aftercare officers for the rest of their sentence. Prisoners serving life sentence are not eligible to apply. Prisoners who breach supervision condition are liable to be recalled to serve the remainder of the sentence. Up to the end of 1988, 141 applications for the Release Under Supervision Scheme and 247 for the Pre-release Employment Scheme were received. So far only four prisoners were released by the Governor under the Release Under Supervision Scheme and 14 under the Pre-release Employment Scheme upon the advice of the Release Under Supervision Board.

Correctional Services Industries

    Correctional Services Industries aim to keep prisoners gainfully employed, thereby reducing the risk of unrest through boredom and lack of constructive activities. They also save government money by providing products and services to government departments and subvented organisations at reasonable prices.

Prisoners are paid for their work and earnings can be used to make purchases from the canteen. But more importantly, industrial production helps prisoners to acquire the habit of doing useful work.

     There are 18 different trades including garment making and laundry services which employ the largest number of prisoners. Other major trades are: silk-screening, printing, envelope making, book-binding, shoe-making, fibreglass, metal work, leather work, precast concrete, and carpentry. The use of computers in Correctional Services Industries Head- quarters and in major production centres further improved production control, material management and management information systems. The total commercial value of goods and services provided for the year was estimated to be $178 million, an increase of 10.7 per cent over the previous year.

Closed Centres

The Correctional Services Department has been responsible for closed centres for Vietnamese refugees since their establishment in July 1982. With the new screening policy for Vietnamese boat people (those without refugee status) taking effect from June 16, Hei Ling Chau and Chi Ma Wan Closed Centres were turned into detention centres. The refugees from those centres were transferred to new closed centres at Sham Shui Po and Tuen Mun. Another new detention centre is being built at Whitehead, Sha Tin for the boat people.

      Under the new policy, the Vietnamese boat people in detention centres are screened by immigration officers to determine their status. Those screened in to be refugees are to be transferred to closed centres, while those who are screened out will remain in the detention centres as illegal immigrants pending repatriation to Vietnam.

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Voluntary agencies operating in conjunction with the United Nations High Commissioner for Refugees continue to provide services to refugees in closed centres. The department is working closely with the UNHCR and Security Branch on the gradual liberalisation of the closed centres. Services such as educational classes and work programmes for Vietnamese boat people and illegal immigrants in detention centres are provided by the Correctional Services Department.

Staff Training

The department's Staff Training Institute provides training for both new and serving officers. All recruit assistant officers and officers go through a 26-weeks orientation training programme, followed by a further five-weeks training prior to completion of probation. 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 their professional knowledge, prepare them for promotion and equip selected officers for duties in specialised fields such as counselling, aftercare, nursing, psychological services and physical education. Weekly in-service training is also conducted within institutions to cater for the needs of individual institutions.

Society for the Rehabilitation of Offenders

The Society for the Rehabilitation of Offenders, Hong Kong, is a voluntary organisation. Founded in 1957 as the Hong Kong Discharged Prisoners' Aid Society, it provides care and supervision for ex-offenders who are given non-custodial sentences and persons released from prisons. Services provided include casework, group work, counselling, hostel accom- modation, employment guidance, recreational activities and care for those who have a history of mental illness.

Fire Services

During the year, the Fire Services Department answered and handled 21 495 fire calls, 13 642 special service calls, and 300 693 emergency and 119 909 non-emergency ambulance calls. Fire caused 22 deaths, and injured 620 people, including 34 firemen. A total of 2 041 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, two new fire stations and one ambulance depot were commissioned in 1988. These were Junk Bay Fire Station, Tai Po East Fire Station and Junk Bay Ambulance Depot. Yuen Long Fire Station and Yuen Long Ambulance Depot were reprovisioned to improve services in Yuen Long area and a four-storey rescue-training centre was also provided in the New Territories. There are now 58 fire stations, 23 ambulance depots-stations and five fireboat stations in the territory. A 160-unit rank-and-file married quarters was completed and occupied during the year and planning was in hand for the provision of about 1 400 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

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in the abatement of fire hazards. The Fire Protection Bureau plays an important role in educating the public on fire prevention. Publicity campaigns were launched during the year to increase the community's awareness of fire safety, resulting in requests from kaifong associations, rural committees, schools and community groups for more fire prevention lectures-exhibitions and demonstrations. The 8 649 fire-hazard complaints received from members of the public indicated the level of public concern about fire hazards and a growing awareness of the services provided by the department. Direct prosecution for obstruction to means of escape and indiscriminate blocking of fire exits in multi-storey buildings began from the beginning of the year.

Fire Services personnel made 73 165 inspections of all types of premises and issued abatement notices or summonses where fire hazards were found.

     There were 1 207 prosecutions in 1988 for non-compliance with abatement notices and for summonses, resulting in fines amounting to about $3.5 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 8 389 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 1 951 in all ranks of uniformed staff, and 147 civilian employees. The service operates 228 ambulances from 23 ambulance depots or stations throughout the territory and from many fire stations. During the year, 300 693 emergency calls and 119 909 non-emergency calls, involving 524 045 people, were handled - representing an average of 1 152.3 calls every 24 hours. This was an increase of 4.9 per cent in the number of calls compared with the total for 1987. Facilities on ambulance are constantly reviewed and all ambulances are equipped with analgesic apparatus, piped oxygen, inflatable splints, special stretchers and incubator- carrying capability.

To provide swift and quality ambulance services to the public, an expansion programme to increase both the personnel and fleet by 10 per cent annually was well under way.

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. In 1988, 41 new or replacement appliances and vehicles of various kinds were put into service. The six mini-appliances purchased in 1986 and 1987 specially for outlying islands proved to be successful. The department is constantly evaluating new products from different parts of the world to see if they could be used here.

To maintain its fleet of fire appliances and rescue equipment, the department operates four workshops - one on Hong Kong Island, two in Kowloon and one in the New Territories.

Communications

Installation of the Second Generation Mobilising System began in the middle of the year and is expected to be completed in 1990. Costing more than $90 million, this new computer-based system will monitor the location and status of fire engines and ambulances at all times. When an emergency occurs, the system will recommend which fire stations and appliances to alert, and will display the position and readiness of vehicles already on the

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road. The time taken to handle incoming emergency calls and despatch the fire appliances will thus be cut to well under one minute in most cases.

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 Fire Services Communication Centre in Kowloon by instructors from the centre.

During the year, 366 recruits 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. Some 390 people attended these courses during the year. The Driving Training School conducted courses for 1 326 officers and other ranks.

Establishment and Recruitment

The uniformed establishment of the Fire Services Department at the end of 1988 totalled 6795. The number of civilian staff employed by the department increased to 684. Recruitment exercises were held, resulting in the appointment of 49 officers and 189 firemen and 174 ambulancemen. Standards are high and on average only about five per cent of all applicants are accepted for appointment.

Immigration Department

Apart from facilitating travel and administering civil registrations, the Immigration Department also plays an important role in maintaining law and order in Hong Kong.

Immigration Control

     Through examination at various control points and vetting of visa applications, undesirable persons including international criminals, swindlers, members of quasi-religious sects, terrorists, doubtful visitors and other persona non grata are detected and refused entry into Hong Kong. In 1988, 42 615 such travellers and persons not in possession of proper documentation were refused permission to land, and 1 539 applicants were refused issue of visas.

Detection of Forged Travel Documents

     Continued efforts are made to guard against the use of forged travel documents and identity cards by illegal immigrants and travellers. The security features of Hong Kong travel documents and identity cards have been continuously refined to make them difficult to forge. Special operations are mounted against forgers and syndicates while intelligence on forgery is collected and quickly disseminated.

      Frequent contacts are also made with other local and overseas law enforcement agencies and consulates. During the year, a total of 1 154 forged travel documents were detected. In April 1988, a major operation netted 55 forged travel documents, 36 forged seals and other forgery equipment. In the operation, six persons were arrested and charged.

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Interception of Wanted Persons During the year, 59 216 persons were intercepted at immigration control points and immigration and registration of persons offices. Of these, 662 were wanted in connection with murder cases, 900 were suspected robbers, 23 563 were involved in the trafficking of dangerous drugs and 33 455 were related to other criminal offences. In addition, 43 known or suspected terrorists were identified on their arrival and prevented from entering Hong Kong.

Illegal Immigration

    Frequent checks are conducted at suspicious locations, including construction sites, factories, restaurants and other places of employment. Illegal immigrants so arrested are prosecuted and sentenced to imprisonment before they are repatriated to their place of origin. With the aid of the Identity Card Information System, round the clock record checks are provided to enable law enforcement officers to verify the authenticity of identity cards in field operations.

In 1988, a total of 21 001 illegal immigrants were apprehended and repatriated. Employers of illegal immigrants were also prosecuted and fined but in serious cases, custodial sentences were imposed. As a result, the number of illegal immigrants dropped significantly in the latter half of the year.

Investigation and Prosecution of Immigration Offences

    During the year, a total of 6 532 charges were laid against persons who had committed various immigration offences. Apart from illegal immigration, these offences include illegally remaining, breach of condition of stay, making false statements or representations, conspiracy in the use and supply of forged documents.

Deportation and Removal

Immigration Department is responsible for the application, issue, and execution of deporta- tion and removal orders. During the year, 4 422 persons who were convicted of possessing or trafficking in dangerous drugs, deception, theft and other criminal offences were con- sidered for deportation and subsequently 61 were deported from Hong Kong. In addition, 2 440 persons were removed from Hong Kong under removal orders. These included 2 063 illegal immigrants and 377 persons who had breached their condition of stay.

Civil Aid Services

The Civil Aid Services (CAS) is an auxiliary emergency measures organisation which supports other regular government services in emergencies. It is financed by government and has an establishment of 3 724 adult uniformed and disciplined volunteers, 3 030 cadets and 116 permanent staff.

Role and Responsibilities

    The tasks of the service are numerous and far-reaching, with a heavy emphasis on coping with natural disasters and performing civic duties. The volunteers are trained to: perform duties during tropical cyclones and when landslips and flooding occur, search and rescue persons trapped in collapsed buildings, fight forest fires and patrol country parks, manage refugee camps, combat oil pollution at sea, assist the police in crowd control, perform first aid, casulty handling and evacuation, and carry out mountain rescue operations. On any weekend or public holiday it is normal for over 400 volunteers to be on duty.

crowded accommodation for Vietnamese boat people

Oni

helping new arrivals to disembark

A

-

GMUN

a chartee for boat people to earn

Money and keep busy

awaiting a decision on their future

NG

all set for integration into a school

· outside the camp

R

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Civic Duties

253

The service is also very heavily committed to perform civic duties in normal times. During the year, adult volunteers helped to organise and provide crowd control, communication and marshalling services in charity fund-raising walks, government campaigns, charity drives and at other public functions.

Vietnamese Boat People

The CAS has gained considerable experience in managing refugee camps since the Vietnamese refugees first arrived in 1975. With the sudden increase of Vietnamese boat people into Hong Kong from April 1988 it was necessary to mobilise volunteers to assist in setting up, managing and administering new refugee centres. The CAS had direct responsibility for managing three centres at the Green Island Reception Centre, Harbour Reception Centre, and at the Argyle Camp IV Detention Centre. It also assisted in setting up the refugee centres in the San Yick Closed Centre and Erskine Camp Detention Centre, deploying 160 volunteers per day to manage the centres.

Service Training

Service training is divided into centralised courses and unit training in a wide variety of subjects, including counter disaster, first aid, fire fighting and conventional rescue.

      Overseas training was organised for both permanent staff and volunteer officers. During the year, two officers were sent to the Australian Counter Disaster College in Victoria, and one officer to the Asian Institute of Technology in Bangkok, for disaster management training and two officers to the United Kingdom for advanced mountain-rescue training.

Training Facilities

The CAS has two main training centres and two training camps. The two training centres located on Hong Kong Island and in Kowloon, have rescue ranges with simulated smoke rooms and facilities for rescue from confined spaces, towers for practising rescue from height 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 facilities include a swimming pool, a jogging track, a rope initiative course, a soccer field, camping sites and a

rescue range areas.

      A new camp is being developed at Tai Tan, Sai Kung to provide training facilities for persons wishing to take part in all forms of waterborne activities, and will be ready by March 1989.

Cadet Corps

The Cadet Corps is organised into 28 units of boys and two units of girls located throughout the territory.

Cadets enter at the age of 12 to 14, and undergo a series of training courses, including training in basic mechanical and electrical engineering, carpentry and fibre-glassing, printing and book binding as well as photography and interior design. Training is also given in countryside preservation, fire fighting, first aid, crowd control psychology, road safety, rock climbing, orienteering, expeditions and trekking.

      The cadets are also encouraged to take part in the Duke of Edinburgh Award Scheme and during the year three cadets qualified for Gold Awards, 17 for Silver Awards and 90 for Bronze Awards.

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Royal Hong Kong Auxiliary Air Force

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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 ten aircraft: two twin-engined Beech Super King Airs, a Britten-Norman Islander, four Slingsby Firefly trainers and three Aerospatiale Dauphin twin-engined helicopters. With an establishment of 127 permanent staff and 171 volunteers comprising aircrew, engineers and administra- tive staff, the RHKAAF can operate round-the-clock for seven days a week during an emergency. A total of about 3 090 hours were flown during the year.

     The RHKAAF responded to 220 requests for emergency medical evacuation and rescues. 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. One hundred search-and-rescue operations were carried out, involving both helicopters and fixed-wing aircraft. During the dry season, the Dauphins assisted in over 65 fire-fighting operations and dropped over 960 tonnes of water on bush and forest fires in areas inaccessible to conventional fire-fighting appliances.

     The Police Force and the Correctional Services made frequent use of helicopters for training and operational purposes. Helicopter flights are routinely provided to transport engineering staff to hilltops to carry out maintenance and repair work at communications repeater stations. During the year, about 6 000 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 Super King Airs 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 Fireflys and Islander provided pilot training for the squadron's own volunteers and student air traffic controllers.

16

Travel and Tourism

U

      HONG KONG'S out-bound travel business is carried out by some 1 000 travel agents who are licensed by the Registrar of Travel Agents under the Travel Agents Ordinance enacted in August 1985.

       The Travel Agents (Amendment) Ordinance 1988, which provides the statutory frame- work for the self-regulation of the out-bound travel industry, was enacted in July. With this enactment, a travel agent must be a member of the Travel Industry Council of Hong Kong in order to be licensed.

      The council, as the approved representative of travel agents and tour operators in Hong Kong, also admits association members. They comprise the Hong Kong Association of Travel Agents Limited, the Federation of Hong Kong Travellers Limited, the International Chinese Tourist Association Limited, the Society of IATA Passenger Agents Limited, the Hong Kong Taiwan Tourist Operators Association Limited and the Hong Kong Associa- tion of China Travel Organisers Limited.

Tourism

Some 5.5 million visitors came to Hong Kong in 1988, an increase of 24 per cent over 1987. As a result, the tourism industry earned an estimated $34 billion during the year, an increase of 33 per cent over the 1987 figure.

      The visitors came primarily from Japan (22 per cent), Taiwan (20 per cent), the USA and Canada (16 per cent), Southeast Asia (14 per cent), Western Europe (14 per cent) and Australia and New Zealand (five per cent). The relaxation of out-bound travel restrictions in Taiwan was reflected by a growth of 210 per cent in visitor arrivals from that country.

Hong Kong Tourist Association

The Hong Kong Tourist Association (HKTA) is a statutory body set up in 1957 to develop Hong Kong's tourism industry. It furthers the development of Hong Kong as a tourist destination, promotes the improvement of facilities for visitors, markets Hong Kong's visitor attractions overseas and advises the government on matters relating to tourism. The aims amount to optimising the returns on investment in developing the tourism product.

In December 1988, the association had 1 716 members, comprising airlines, hotels, travel agents, tour operators, cruise carriers and retail, restaurant and other visitor service establishments.

The Chairman of the HKTA and the Members of its Board of Management are appointed by the Governor. The HKTA receives an annual subvention from the govern- ment to assist it in furthering its objectives. It also derives funds from membership dues, sale of publications and souvenirs and from tours.

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     The HKTA's headquarters are in Jardine House (formerly Connaught Centre) in Central, on Hong Kong Island. In 1988, the Information and Gift Centre at its head- quarters, and similar centres at the Star Ferry Concourse in Kowloon and the ground floor of the Royal Garden Hotel in Tsim Sha Tsui East, as well as an HKTA information counter at the Hong Kong International Airport, assisted 1.38 million visitors. The association also runs 'hotline' telephone services in both English and Japanese, and these together handled 44 956 enquiries during the year. The association monitors all calls to provide further insight into visitors' interests and spending patterns. In 1988, the HKTA distributed 6.84 million pieces of literature in six languages for visitors upon arrival.

     The HKTA's marketing strategies are designed to attract higher-yield visitors to Hong Kong, with emphasis on increasing the amount spent in the territory and encouraging visitors to return.

Overseas marketing of Hong Kong as a tourist destination is carried out primarily by the 13 overseas offices of the HKTA, located in Tokyo, Osaka, Chicago, New York, San Francisco, Los Angeles, Sydney, Wellington, Singapore, London, Frankfurt, Paris and Rome. The association also has an agreement with Hong Kong-based Cathay Pacific Airways whereby the airline acts as its information agent in an additional 44 cities around the world.

     Co-operative advertising overseas, with airlines, wholesaling tour operators and hotels, is an important activity.

The HKTA arranged familiarisation trips for 1 341 travel agents and briefed a further 1 801 visiting travel trade personnel, with the aim of encouraging them to include Hong Kong in their innovative tour itineraries. It also organised and co-ordinated the Hong Kong tourism industry's participation in 22 major overseas trade promotions, such as the World Travel Market in London in November-December. In addition, it assisted 978 overseas media representatives with their reports about Hong Kong.

The association continued to publish research and surveys on tourism potential and industry performance, and to conduct its 'Visitors Survey', which monitors changes in the basic demographics of all visitors, their activities, spending patterns and their attitudes towards Hong Kong's tourism facilities.

     Major research publications which the HKTA produces include: 'A Statistical Review of Tourism', 'Report on Tourism Receipts', 'Visitor Arrival Statistics', 'Visitor Profile Report', 'Hotel Room Occupancy Report', 'Hotel Supply Situation', 'Hotel Industry Report', 'Revenue and Expenditure of the Hotel Industry' and 'Airlines Statistics'.

      The HKTA continued to promote Hong Kong as a year-round travel destination, marketing its unique blend of East and West and variety of attractions. Hong Kong's Dragon Boat Festival - International Races, organised by the HKTA in June for the 13th consecutive year, received wide international coverage through a special Visnews television clip which was picked up and screened around the world. A record number of 24 overseas teams took part in the 1988 festival and international races, and the 'Row for Charity' races raised a record $1,025,000 for the Community Chest.

      The month-long 'Hong Kong Food Festival' organised by the association was held from August 14 to September 14. Once again the 'World of Flavours' food bazaar on board a floating restaurant in Aberdeen was a highlight, attracting an average of 1 500 people per day. A special feature of the '1988 Hong Kong Food Festival' was a new 'Peasant's Banquet' tour, which gave visitors the chance to see more of life in the New Territories. During the festival, the HKTA also organised a 'Marriage of Hong Kong's Chinese Cuisine with Western Wine' media event.

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       Nearly half of all visitors to Hong Kong take at least one organised tour during their stay. The association's 'Gourmet Dining in Hong Kong' programme was run on an on-going basis for the first time in 1988, enabling visitors and residents alike to sample top culinary award-winning dishes. Visitors were also able to enjoy the HKTA's 'Yum Sing - Night on the Town' tour, created for the first food festival and now available all year-round. In 1988 it was one of the association's most popular tours.

       Other tours run by the HKTA in 1988 were the 'Come Horseracing' tour, 'The Land Between' tour of the New Territories and the 'Sports and Recreation' tour, which enables visitors to use the facilities of the Clearwater Bay Country Club.

       With the opening of the Hong Kong Convention and Exhibition Centre in November, the HKTA's Convention and Incentive Travel Bureau stepped up its promotion of Hong Kong as the ideal meetings site in Asia. This valuable business has grown from 15 international events recorded in 1976 to 480 in 1988. Incentive travel has also increased from less than 200 groups in 1982 to 460 in 1988.

The HKTA emphasises the importance of training in the service industries to main- tain Hong Kong's high reputation in this area. It continued its 'Effective Selling Skills' certificate programme for staff in the retail trade and also produced a new training film in Cantonese for restaurant staff.

To encourage greater courtesy among staff in the industry, it launched the 'Hong Kong Cares' Courtesy Awards for the Most Outstanding Dining Establishments. Some 10 000 forms were received from visitors and the top 20 establishments chosen. These establishments then nominated a representative to compete for the 'Hong Kong Cares' Courtesy Awards for restaurant service staff.

       For the 21st year, the HKTA ran the Student Ambassador Programme whereby 100 students going overseas to study in tertiary institutions take part in a month-long programme comprising lectures, tours and special visits designed to increase their aware- ness of various aspects of Hong Kong and to enable them to talk knowledgeably and accurately about their home.

       Nine new hotels opened in 1988, bringing the total number of rooms in Hong Kong to 24 500. This reflects the confidence that the private developer is placing in the future of Hong Kong's tourism industry.

17

The Armed Services

軍團 團

圓清甜

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.

     Hong Kong also has its own locally enlisted regiment of part-time volunteer soldiers, the Royal Hong Kong Regiment (The Volunteers).

     The Royal Navy, the British Army and the Royal Air Force are all represented in the garrison. During the year, the permanent garrison comprised three 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 squadron with eight Scout helicopters and a Royal Air Force squadron with eight Wessex helicopters. A Royal Marine Raiding Squadron, which had been present since 1980 as a reinforcement for anti-illegal immigration operations, and two Patrol Craft were with- drawn in July 1988, as the Royal Hong Kong Marine Police Force developed and improved its own capability to carry out anti-illegal immigration tasks.

     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 in preventing illegal immigra- tion by land and sea. The Armed Services also provided assistance in handling the influx of Vietnamese refugees and boat people during the spring and summer months.

     Throughout the year, continued emphasis on training for internal security operations and on 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 Volun- teers) - helped improve proficiency in such operations.

Hong Kong contributes towards the costs of maintaining the garrison in accordance with the Defence Costs Agreement between the Hong Kong and United Kingdom governments.

Royal Navy

The Royal Navy, based at HMS Tamar in Central District, continued to patrol the waters of Hong Kong. Its force of patrol craft acts in close support of the Royal Hong Kong Police Force in deterring and apprehending illegal immigrants from China and Vietnam, and in 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 Royal Navy vessels operating within the Square Boundary and in adjacent international waters. He has responsibility for all Royal Navy forces deployed on search and rescue

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operations in the South China Sea and works closely with the Director of Marine and the Director of Civil Aviation. The naval base of HMS Tamar maintains the Royal Naval and Army craft based in the territory and provides Hong Kong's only recompression chamber for use in diving emergencies. 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 administers the naval staff in Singapore, where the Royal Navy maintains berths and an oil fuel depot.

The Hong Kong Squadron now consists of three 'Peacock' Class Patrol Craft: HM Ships Plover, Peacock and Starling; this follows the withdrawal in July of the other two ships of the Squadron, HM Ships Swallow and Swift. The 'Peacock' Class, built by Hall Russell Limited, Aberdeen, Scotland have been specially designed for patrol duties in Hong Kong waters, including search and rescue in the China Sea, and have the ability to stay at sea during typhoons. They are constructed of steel and aluminium 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. High definition radar and direction finding equipment are fitted to give accurate navigation through confined Hong Kong waters. Satellite navigation and long range radio aids give the ships distant sea capability. A comprehensive communications fit enables the ships not only to talk to boarding parties and shore authorities but also to send messages to any part of the world. Boarding tasks are usually achieved by using a rigid inflatable Avon Searider or a Fast Pursuit Craft. Following the disbandment of the Royal Marine Raiding Squadron, these small high-speed craft are crewed by Royal Marines who are on the complement of each of the three remaining patrol craft.

During the last year ships of the Squadron, while on ocean navigation training, have visited Brunei, Singapore, Thailand, Indonesia and the Philippines, and taken the oppor- tunity to exercise with foreign navies. Ships of the Australian, French and United States navies have in their turn visited Hong Kong. August 1988 saw the visit of a Royal Naval Task Group headed by Admiral Woodhead flying his flag in HMS Ark Royal during the Far Eastern phase of their deployment from United Kingdom for the Australian Bi-Centennial Celebrations.

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. Naval control of shipping is exercised in a major international worldwide exercise once a year.

The strength of the Royal Navy is about 600, supported by about 65 locally employed civilians. The patrol craft are jointly manned by Hong Kong Chinese ratings and United Kingdom naval personnel. Altogether about 340 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. A successful bid for an abseiling world record was made on July 24 by members of the Royal Marine Raiding

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Squadron when they abseiled from the 58th floor (196 metres) of the Hopewell Centre. This not only won the team an entry in the Guiness Book of Records but also raised over $500,000 for a local kidney patients charity.

The Army

The Army provides the majority 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 British Forces by the Commander 48 Gurkha Infantry Brigade, while logistic units are commanded by the Commander Support Troops.

The 1st Battalion the Duke of Edinburgh's Royal Regiment (Berkshire and Wiltshire) replaced the 1st Battalion Coldstream Guards in February as the United Kingdom resident battalion. The 1st and 2nd Battalions the King Edward VII's Own Gurkha Rifles were resident in Hong Kong throughout the year while the 7th Duke of Edinburgh's Own Gurkha Rifles replaced the 10th Princess Mary's Own Gurkha Rifles in November.

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 about 1 270 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 continues to play 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 be a regular part of army life. The army have also provided logistic support to the Hong Kong Government, assisting with the movement and administration of the influx of Vietnamese boat people.

Owing to limited space and the unsuitability of much of Hong Kong's terrain for training, a series of overseas exercises is mounted to maintain high standards of military skills. As a contribution to stability in the region, part of the garrison participated in a Five Power Defence Agreement exercise in New Zealand. A major exercise was mounted in Brunei in August to assist the Royal Brunei Armed Forces in training for joint operations. Units of 48 Gurkha Infantry Brigade also played host to visiting detachments from the Australian Army, the New Zealand Army, the United States Army and the Royal Brunei Armed Forces.

The high standard of shooting of Hong Kong-based units was demonstrated at the 1988 Regular Skill at Arms Meeting held at Bisley, England. The Queen's Gurkha Signals won the Series B Major Units Championship, which included winning a record seven matches in their league. Sergeant Krishna Gurung, Queen's Gurkha Signals, won first place in the Army sub-machine gun championship. The Defence Animal Support Unit won the pistol match again this year and the Brigade of Gurkhas won the prestigious Methuen Cup.

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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, through which the Commander Royal Air Force exercises responsibility for the air space in the Sek Kong sector. Advisory control service outside Hong Kong International Airport is also provided. Movement of military personnel and cargo by air from Hong Kong International Airport is controlled by the RAF Airport Unit based at Kai Tak, and includes the handling of over 200 RAF transport aircrafts movements a year. An 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. Roles include troop deployment, logistic air support, casualty evac- uation, search and rescue, air observation and fire fighting. Wessex aircraft contribute to military and police anti-illegal immigrant operations, sometimes using a 65-million candlepower 'Nightsun' searchlight to illuminate sea or land areas.

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 pro- vides 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. No. 28 (AC) Squadron regularly provides training and support to the police, including the tactical deployment of personnel on operations and rapid reinforcement in emergency. It has also assisted in a number of community projects, including 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 Air Scouts and members of the 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 recon- naissance, anti-illegal immigration operations and assistance to other government depart- ments 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 97 per cent are Chinese.

       The regiment is composed of four reconnaissance squadrons, a home guard squadron and a headquarters squadron.

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      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.

      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.

      In July the regiment took responsibility for the administration of over 2 000 Vietnamese boat people detained on passenger ferries moored in Victoria Harbour. This was a short-term commitment to assist the hard-pressed voluntary agencies.

      During the year, selected volunteers were sent for training in the United Kingdom. All officer cadets are trained at the Royal Military Academy, Sandhurst.

18

Communications and The Media

潘勿舖

葉麗

      GIVEN the freedom to investigate, report and analyse current events without fear or favour, Hong Kong's print and electronic news media provide wide coverage and lively comment of local and international events, so that citizens and visitors alike, are kept informed.

      Locally, from among the wide and varied news coverage in 1988, perhaps the greatest prominence was given to a few events seen as having both an immediate and a future impact on the people and the territory. These included discussions on the Draft Basic Law, the problem of the increasingly large numbers of Vietnamese boat people arriving, the emigration of 'middle class' people overseas, and the elections to the Legislative Council.

The news media also play a significant role in the territory's precautionary measures against sudden climatic threats, and react to alert, inform and advise the public in the event of approaching typhoons or rainstorms which might pose danger.

      The availability in Hong Kong of the latest in telecommunications technology helps to ensure that up-to-the-minute information is provided, and also attracts international news media representatives to establish their regional bases here.

      Ninety or so news agencies, newspapers with international coverage and readerships and overseas broadcasting corporations have established offices in Hong Kong. Furthermore, regional publications produced here have flourished, reflecting the territory's enhanced position as a financial, industrial, trading and communications centre.

      Among Hong Kong's own media catering to the people 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. To keep abreast of the latest technology, the government is considering proposals from corporations, both local and international, for the establishment of a cable television network in Hong Kong. Selection of the successful applicant to run it will likely be made known by August 1989.

      Rapid advances and innovations in the communications field have prompted the Hong Kong Government to expand its information services. In keeping with the trend towards more 'open' government, it now produces and contributes to 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-

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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 oversees 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.

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.

     The basic public telecommunication services are provided by two franchised 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 estab- lishment 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 being conducted 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.

The Post Office also provides advisory and planning services for the communication requirements of government departments and subvented institutes, and co-ordinates and regulates the use of radio communication sites. Major systems planned in 1988 include a new territory-wide VHF/FM broadcasting system for Hong Kong, a radio network for the Auxiliary Medical Services, and the provision of a new Fire Services mobilis- ing system.

The Post Office provides technical advice and support to the Broadcasting Authority on the formulation of broadcasting policies and legislation. It also monitors the technical performance of broadcast services and investigates complaints concerning reception quality.

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.

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The internal telephone service is provided by the Hong Kong Telephone Company Limited. With an estimated 2.9 million telephones served by more than 2.2 million lines, the territory has a density of around 52 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 more advanced data communication facilities.

       The network helped with the introduction of 'cashless shopping', enabling the electronic transfer of funds 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 190 overseas destinations as well as to over 6 000 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 satellites over the Indian Ocean and the Pacific Ocean.

New submarine cables and radio links are put into service from time to time, further improving Hong Kong's facilities for communication with other territories.

To meet the high demand for telecommunications between Hong Kong and Guangzhou, the Hong Kong-Guangzhou optical fibre cable system was brought into service in October 1988. The digital system with an ultimate capacity of 46 080 telephone circuits has been initially equipped with 6 510 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 450 000 pagers are now in use.

During the year, the Hong Kong Government, pursuing its policy of allowing greater competition in telecommunications, approved in principle the setting up of a second local public telecommunications network in addition to the existing local public telephone network, owned and operated by the Hong Kong Telephone Company. Apart from carrying cable television, the second network will be permitted to carry non-franchised local telecommunications services, including local data and facsimile. Proposals for operating the network licence were invited internationally in September 1988 as part of an invitation for cable television proposals. The second network should be in operation in the early 1990s.

Postal Services

Hong Kong has a reliable and efficient postal service. Despite large increases in the volume of letters handled in recent years, the Post Office has continued to achieve its target of delivering most local mail within 24 hours of posting. Two mail deliveries are made on each weekday in the urban and industrial areas, and one delivery elsewhere.

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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.

This year, 747.9 million letters and parcels - a daily average of two million were handled, an increase of 12 per cent over the 1987 figure. About 6 278 tonnes of letter mail and 4 367 tonnes of parcels were despatched by air, an overall increase of 14 per cent.

The Speedpost service continued to grow rapidly, and is now available to 57 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, 2 295 301 items were handled, an increase of 29 per cent over 1987. Postfax, a joint public facsimile service of the Post Office and Cable and Wireless (Hong Kong) Limited, offers high-speed facsimile transmission of high-quality black and white reproductions of documents, hand-written materials, drawings and personal messages up to A4 size. The Postfax service is now available to 75 countries, including all the major countries trading with Hong Kong. Items can be posted at 32 acceptance offices, and will be ready for delivery overseas within a few hours.

Shau Kei Wan Post Office was reprovisioned in larger premises to provide for improved and increased facilities to cope with rising postal demand in that district. Sheung Wan Post Office, Wo Che Street Post Office and Chang Sha Street Post Office were relocated to make way for redevelopment projects. In addition, three post offices were opened, during the year, bringing the total number of post offices in the territory to 106.

      The Post Office issued six sets of special stamps in 1988. The first issue, comprising four stamps and a souvenir sheet, was released in January to mark the Year of the Dragon, the third in the current Lunar New Year series. The second issue, depicting birds of Hong Kong, was released in April. Post cards of enlarged versions of the four stamps were also issued.

      Another set of four stamps featuring trees commonly found in Hong Kong was released in June. The fourth issue, comprising four stamps, a souvenir sheet and a prestige stamp booklet was released in August to commemorate the centenary of the Peak Tramway. A single stamp was issued in September to commemorate the centenary of the Catholic Cathedral.

      The last issue was a set of charity stamps released in November. These were the first charity stamps in the philatelic history of Hong Kong. Each stamp bore, in addition to the postage, a donation element for raising funds for the Community Chest of Hong Kong.

In connection with the increases in postage rates on September 1, 1988, two definitive stamps of $1.40 and $1.80 denominated values were released. A new pictorial aerogramme bearing a postage of $1.40 was also issued in conjunction with the increases in airmail rates. In order to speed up the processing of letter mail items which are now handled manually, a $109-million contract was awarded on May 2, 1988 for the provision and installation of a mechanised letter sorting system (MLSS). The new system, comprising Optical Character Recognition Machines (OCR), Video Coding Machines (VCM) and Letter Sorting Machines (LSM) will be installed in the mail processing centres of the General Post Office and the International Mail Centre as well as in eight other large district mail delivery offices in the territory.

The OCR system, which can electronically scan the last four lines of an address, will be designed to read addresses typed or machine-printed in Roman type, thus avoiding the

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need for a post code system in Hong Kong. Letters bearing addresses which cannot be read by the OCR equipment will be delivered to video coding desks where operators will read the address and type the relevant abbreviated address codes on the envelopes. Thereafter all subsequent sorting processes can be done automatically by letter sorting machines. The new equipment is expected to be in use in 1990. When it is fully operational, it will process 90 per cent of the total letter mail traffic.

The Press

Hong Kong's flourishing free press consists of 67 newspapers and 614 periodicals, which have a high readership. The registered newspapers include 41 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 newspaper proprietors. It is empowered to act in matters affecting the interests of its members. The Hong Kong Journalists Association, founded in 1968, is the only territory-wide trade union for local journalists. It seeks to recommend better training, pay and conditions in journalism, and advises its members in the event of disputes with employers. As an active member of the International Federation of Journalists, it also plays a significant role in the international press freedom movement, particularly in the Asia-Pacific region. 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 continues to play an important role in providing up-grading courses for working journalists in Hong Kong.

       With an allocation of $250,000 as course subsidy from the Vocational Training Council, the board in 1988 conducted eight training courses, most of which proved to be very popular, especially among young journalists with less than three years of working experience.

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