Hong Kong Yearbook - Annual Report for the Year 1989

HONG KONG

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Edition 14 1990

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書館

NG KONG PUBLIC LIBRAR

市政局公共圖書館 UCPL

3 3288 02251107 7

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REST

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1 MAY 1990

Acc. No. 939189

Class.

951-25

Author

How

HKCr

HONG KONG 1990

Editor:

David Roberts,

Government Information Services

Designer:

Magdy Yiu,

Government Information Services

Photography: Augustine K. C. Chu

and other staff photographers, Government Information Services

Photograph of the Chief Secretary at the port and airport development press conference by courtesy of Sing Pao Newspapers and Publications Limited

Statistical Sources:

Census and Statistics Department

The Editor acknowledges all contributors and sources

Copyright reserved

Code No.: F30019000E0 (ISBN 962-02-0080-2)

Price: HK$45.00 US$9.00 UK £6.50

Cover: Kai Tak International Airport, one of Asia's busiest, will be replaced in the 1990s by the new airport at Chek Lap Kok, off the north coast of Lantau Island. Frontispiece: One of the large-scale rallies held in May, in support of the pro-democracy movement in China, gathers around the old Supreme Court, now the Legislative Council Building.

CONTENTS

Chapter

CALENDAR OF EVENTS IN 1989

Page.

1

123

A VISION OF THE FUTURE

4

CONSTITUTION AND ADMINISTRATION

23

THE LEGAL SYSTEM

41

4

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

49

5

THE ECONOMY

53

6

FINANCIAL AND MONETARY AFFAIRS

67

7

INDUSTRY AND TRADE

78

8

EMPLOYMENT

99

9

PRIMARY PRODUCTION

111

10

EDUCATION

117

11

HEALTH

147

12

SOCIAL WELFARE

165

13

HOUSING

176

14

LAND, PUBLIC WORKS AND UTILITIES

191

15

TRANSPORT

216

16

PUBLIC ORDER

236

17

TRAVEL AND TOURISM

267

18

THE ARMED SERVICES

271

19

COMMUNICATIONS AND THE MEDIA

274

20

RELIGION AND CUSTOM

290

21

RECREATION AND THE ARTS

295

22

23

24

THE ENVIRONMENT

POPULATION AND IMMIGRATION

HISTORY

APPENDICES

321

344

352

361

INDEX

425

Frontispiece

Events

Royal Visit

Transport

Industry

Youth

Culture

Religion

ILLUSTRATIONS

Vietnamese Boat People

Shopping

International Venue

END-PAPER MAPS

Front:

The Territory of Hong Kong

Back:

Hong Kong Port and Airport Development Strategy

Between pages

4-5

28-29

60-61

92-93

124-125

172-173

204-205

236-237

268-269

300-301

APPENDICES

1

2-5

6

Appendix

UNITS OF MEASUREMENT

CONSTITUTION AND ADMINISTRATION

OVERSEAS REPRESENTATION

Page

364

367

372

7-11

THE ECONOMY

376

12-14

FINANCIAL AND MONETARY AFFAIRS

385

15-16

INDUSTRY AND TRADE

389

17-20

EMPLOYMENT

394

21-23

PRIMARY PRODUCTION

399

24-27

EDUCATION

401

28-31

HEALTH

403

32

SOCIAL WELFARE

406

33

HOUSING

410

34-36

LAND, PUBLIC WORKS AND UTILITIES

411

37-38

TRANSPORT

414

39-42

PUBLIC ORDER

417

43

COMMUNICATIONS AND THE MEDIA

422

44

RECREATION AND THE ARTS

423

45

THE ENVIRONMENT

423

46

HISTORY

424

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 1989

7.1.89

11.1.89

13.1.89

27.1.89

17.2.89

19.2.89

24.2.89

28.2.89

1.3.89

2.3.89

9.3.89

The Minister of State with special responsibility for Hong Kong, Lord Glenarthur, arrives for a five-day visit, during which he announces that Britain has embarked on a new initiative to resettle another 1 000 Vietnamese Refugees from Hong Kong.

Section 27 of the Public Order Ordinance regarding false news is repealed after widespread public concern regarding its possible use for repression of freedom of expression in the media.

A consultancy study recommends a $2.4 billion package of improvements and expansion for Kai Tak International Airport.

Retired High Court judge, Arthur Garcia, is appointed the first Commissioner for Administrative Complaints.

Environmental protection takes a further step forward with the implementation of the Noise Control (General) Regulations and the Noise Control (Appeal Board) Regulations.

Governor Sir David Wilson flies to London for regular consultations with United Kingdom Ministers and officials.

The Drug Trafficking (Recovery of Proceeds) Bill, which aims at confiscating the proceeds of drug trafficking and countering drug money laundering, is published.

Chinese Vice Foreign Minister Zhou Nan visits Hong Kong at the invitation of the Governor.

Financial Secretary Sir Piers Jacobs presents the budget in the Legislative Council, outlining proposals including a reduction in salaries tax, from 15.5 to 15.0 per cent and the introduction of separate taxation for married

women.

The first group of 75 Vietnamese boat people voluntarily returns to Vietnam.

The Urban and Regional Councils' elections are held.

2

CALENDAR OF EVENTS IN 1989

10.3.89

14.3.89

21.3.89

11.4.89

12.4.89

18.4.89

2.5.89

12.5.89

18.5.89

31.5.89

4.6.89

7.6.88

13.6.89

19.6.89

2.7.89

Secretary for Security Geoffrey Barnes returns from a three-day meeting on Vietnamese boat people in Kuala Lumpur.

The Sino-British Joint Liaison Group begins its 12th round of meetings in Beijing.

The Governor leaves for London to attend the House of Commons' Foreign Affairs Committee hearings.

The government announces its intention to award a second commercial radio broadcasting licence in early 1990.

A Central Policy Unit is set up to provide government with a source of alternative thinking and wider perspectives on major policy issues. The House of Commons' Foreign Affairs Committee commences hearings in Hong Kong, during which the Chief Secretary Sir David Ford asks for more flexible application of the British Nationality Act.

A consultative document on the future status of foreign lawyers and foreign law firms is published.

The government announces its decision to allow importation of 3 000 skilled foreign workers.

A second group of 68 Vietnamese boat people voluntarily returns to Vietnam.

The first of a series of mass rallies takes place, in support of the students' democratic movement in China.

A Green Paper on transport policy in the next decade is tabled in the Legislative Council, with proposals for major road and rail projects costing an estimated $29 billion.

Over a million Hong Kong people hold massive rallies to express their sorrow at the tragic events in Beijing.

The Governor departs for London to give evidence at the Commons' Foreign Affairs Committee hearing on June 12.

The Governor arrives at the Geneva Vietnamese refugee conference where he emphasises that only mandatory repatriation could really solve the boat people problem.

An OMELCO delegation leaves for London to press for the right of abode for Hong Kong people.

Foreign Secretary Sir Geoffrey Howe arrives for a three-day visit, during which he says that Britain cannot give the right of abode in the United Kingdom to the 3.25 million British Dependent Territory citizens in Hong Kong.

CALENDAR OF EVENTS IN 1989

26.7.89

5.8.89

17.9.89

21.9.89

27.9.89

11.10.89

15.10.89

31.10.89

7.11.89

8.11.89

29.11.89

1.12.89

5.12.89

11.12.89

12.12.89

21.12.89

29.12.89

A prime site at Garden Road is sold for $2.7 billion, boosting confidence in the future of the property market.

The Mass Transit Railway opens its new Eastern Harbour Crossing line between Quarry Bay and Kowloon.

The new Minister of State with special responsibility for Hong Kong, Francis Maude, arrives for a three-day visit.

The new Eastern Harbour Crossing opens to road traffic, four months ahead of schedule. Construction costs of the road and rail tunnel total about $3.4 billion.

The 13th Joint Liaison Group meeting begins in London.

The Governor delivers his annual policy speech in which he announces a massive port and airport development project, costing $127 billion. The Governor arrives in the United States for an eight-day visit, during which he meets members of the new administration.

Consultation on the second draft of the Basic Law ends.

The Prince and Princess of Wales arrive for a four-day visit, in which their programme includes the official opening of the new Cultural Centre and the Exhibition and Convention Centre.

The foundation stone for the new University of Science and Technology is laid by the Prince of Wales.

China Motor Bus drivers stage a four-hour strike over disagreement about the newly-proposed pension scheme.

Li Kwan-ha becomes the first local officer appointed as Commissioner of Police.

The 14th round of Joint Liaison Group meetings begins in Hong Kong. A meeting of the Basic Law Drafting Committee opened in Guangzhou. It was announced at the end of the meeting that members had agreed the number of directly-elected members in the first SAR legislature should not exceed 30 per cent.

The first mandatory repatriation to Hanoi of 51 Vietnamese boat people screened out as economic migrants.

The British Government announces that 225 000 people or 50 000 heads of households in Hong Kong will be granted full British passports.

A third crossing point between Hong Kong and China opened for traffic at Lok Ma Chau.

3

1

A VISION OF THE FUTURE

Annual Address by the Governor, Sir David Wilson, KCMG, to the Legislative Council on October 11, 1989

4

  SINCE I last addressed the Council at the beginning of a new session, we have been through difficult times together. We have all been forcefully reminded how vulnerable Hong Kong is to developments which occur outside our borders over which we have no control.

In May and June, confidence in Hong Kong was badly shaken by the tragic events in China. People became more nervous about their future. Investors have shown signs of being more cautious in assessing the territory's prospects. So we have a new challenge to meet and new problems to overcome. But this is not the first crisis that Hong Kong has had to confront. When we have faced difficulties in the past we have emerged with new confidence and strength. Already there are ample signs that Hong Kong is showing its usual resilience; that we are facing up to our problems and finding solutions to them.

Hong Kong Today

The Effect of Events in China

The tragic events in China had a traumatic effect on Hong Kong: an effect made all the more direct by the impact of television. Much has been written and said about those events, both at the time and since. I do not intend to add to it now. The important point for us is that what happened in China created increased concern about the arrangements for Hong Kong's future. A mark of this was the significant increase in applications for emigration and the widespread demands for the right of abode in the United Kingdom. We have also seen intensified discussion about the right pace of progress towards a directly-elected legislature and calls for the early introduction of a Bill of Rights. And the draft Basic Law has come under renewed scrutiny.

   Despite this uncertainty and worry on the political front, our economy showed itself to be robust. Once again, we have been reminded how much our survival depends on the resilience of our businessmen and our workforce. The tourist industry was affected, largely because of the wholesale cancellation of tours to China. But our manufacturing sector was relatively unscathed; and economic links with China, especially with Guangdong Province, have remained strong. Our newly re-organised financial institutions weathered the crisis and emerged with their reputations enhanced. Our linked exchange rate system proved its worth at a testing time.

The overall economic effect on Hong Kong of the events in China will probably be a slight check to the rate of our economic expansion. The Financial Secretary's earlier estimate was that our GDP would grow by six per cent this year, compared to seven per cent in 1988. This forecast has now been adjusted slightly downwards. But, even with this

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#

KONG

A VISION OF THE FUTURE

slightly lower forecast, Hong Kong should still enjoy a healthy level of growth by world standards.

      On July 1, 1997, Hong Kong will become a Special Administrative Region of the People's Republic of China. That is a fact that we must face, and face in a clear-headed way. Hong Kong is linked to China but, in another important sense, separate from it. That will continue to be the case in the future, under the concept of 'one country, two systems?. We have our own laws and freedoms which we cherish. They must not be eroded. Equally, we should use them with a sense of responsibility and self-restraint. For many years our community has recognised the importance of not becoming directly involved in China's often complicated domestic politics. At the same time, given both the economic and political realities, there is every reason to expand our already close economic links with the mainland. We can strengthen the basis of our special future political status by the contribution that we make to the modernisation of the Chinese economy and by the access to world markets, advanced technology and expertise that we can provide for China.

The Chinese Government has given repeated assurances that its policy towards Hong Kong has not changed. It has also stressed that economic reform and openness to the outside world remain fundamental priorities. Both of these are important and welcome messages for Hong Kong. We for our part have made it clear to the Chinese Government that action is needed to restore confidence in the arrangements for Hong Kong's future. We need to restore mutual trust as the necessary cornerstone for the unprecedented political experiment that will begin in 1997, the foundations for which must be laid securely in the next eight years.

Emigration

In the meantime, it is clear that more Hong Kong people now feel a need to hedge their bets or seek insurance policies overseas. The government predicted earlier this year that 42 000 people would leave Hong Kong in 1989. This estimate remains valid. But emigration levels are likely to be higher in the next few years. As always, precisely how many will leave depends not only on events here and in China but also on the immigration policies of the countries that people wish to go to.

I have said many times that the government will never prevent people from leaving Hong Kong. I repeat that now. I fully understand the dilemma that many families face in deciding whether to go or to stay, but I cannot pretend that I like seeing so many skilled and talented people leaving Hong Kong. Not only does Hong Kong need them, but I am also well aware that many of them do not really want to go. We all know of families who would prefer to stay in Hong Kong but who have been uprooted and even separated for long periods. I hope that many of them will return to Hong Kong and contribute to its future once they have obtained the security they are seeking.

No matter how many people emigrate, the bulk of the population of Hong Kong - by then some six million people - will still be here in 1997 and afterwards. These are the people for whom we must build a future. They are Hong Kong's future. Many of them will step readily into the gaps left by emigrants. Others will need more time, training or experience before they can do so. But, with an expanding and ever more sophisticated economy, it may prove difficult to fill all the gaps from within Hong Kong. Increased levels of emigra- tion will almost certainly mean that we will need to import more skills and experience from outside the territory, at least until our efforts to develop our own resources take effect.

The first potential source of these skills is of course our former residents, the people who already know Hong Kong. The government is already recruiting from the ethnic Chinese

5

A VISION OF THE FUTURE

6

communities in the United States, Canada and Australia. Many companies in the private sector are doing the same. But we do not only welcome those who have left and who wish to return. We also welcome anyone who wants to come and help us build the future of this territory, if they have the skills and experience that we need. Hong Kong is a city in which people of all nationalities can play a part. We must be ready, if the need arises, to find replacements for our home-grown talent in the international market-place. And we must ensure that our immigration policies are flexible enough to permit this.

Relations with the United Kingdom

Another feature of the past year has been the evolution of our relationship with the United Kingdom. Contrary to some popular myths, this government has for many years been left essentially free to get on with the job of running Hong Kong by itself. We have sole responsibility for our internal affairs, such as education, social welfare and medical services. For the past 20 years or so, we have made all our own policy decisions in other important areas such as the economy, trade and finance.

As a result, we have developed some interests which are separate from those of the United Kingdom. Sometimes we have found ourselves on opposite sides of the negotiating table. In the past year or two, for instance, we have had to negotiate about the relative shares of costs incurred by the British Garrison in Hong Kong and we have had discussions about the part the United Kingdom plays in resettling Vietnamese refugees from Hong Kong. When this happens, you can be sure that your government argues hard on Hong Kong's behalf.

We have also put forward a clear Hong Kong case on the nationality issue. I have said that I fully understand and sympathise with the widespread hope in Hong Kong that Britain would grant the right of abode in the United Kingdom to all Hong Kong British nationals. I have also said that, in my view, such a move, if it were possible, would have á very positive effect on confidence in Hong Kong, and that the number who would actually leave would be small.

   The British Government has said that it does not believe it is possible to grant the right of abode in Britain to all Hong Kong British nationals. Instead it has promised a scheme under which the right of abode in the UK will be granted to some people in Hong Kong in a way designed to encourage them to stay in the territory. We have been assured that work is going ahead as fast as it can on such a scheme. I hope that the details will be announced as soon as possible. To have the effect we all want on maintaining Hong Kong's economic growth and social stability, the scheme will need to cover three important points. It will need to be as generous as possible; it will need to minimise divisiveness, so far as possible; and it will need to ensure that those covered can acquire the right of abode in the UK without having to leave Hong Kong.

I very much hope that the scheme, when it is announced, will help to provide greater confidence and stability in our community. Meanwhile it cannot be right to say that we want either everything or nothing: a scheme that provides something must be better than no scheme at all.

Vietnamese Boat People

Another problem which has been much on the minds of all of us this year is the continuing inflow of boat people from Vietnam. Since my address to this Council last October, some 34 000 Vietnamese have arrived in this small and crowded territory. This is the highest

A VISION OF THE FUTURE

number in any year since 1979. The strain on our resources, and on our patience and compassion, has been enormous. But we have coped. We have housed, fed and cared for all those who have come. We have turned no-one away. This is something of which we can all be proud.

Many people outside Hong Kong do not seem to realise what a burden the continuing flow from Vietnam creates for us. I myself am only too conscious that it has severely strained the tolerance of our community. I sympathise with those who argue that we have now done enough. It is not by choice that the government spends increasing amounts of public funds, and uses increasing amounts of scarce land, on housing and looking after a seemingly endless stream of arrivals from Vietnam.

      Those who come here do not seek a home in Hong Kong. Their goal is elsewhere: in particular, the United States. But they have little prospect of ever getting there, or anywhere else. Over 80 per cent of the Vietnamese now arriving in Hong Kong do not meet United States resettlement criteria.

During the past year, the government has strongly and consistently argued that the only solution to this human tragedy is that those who are defined as refugees must be resettled overseas, and those who do not meet these criteria must go back to Vietnam. This is a view which is shared by a number of voluntary agencies which have worked most closely with the Vietnamese, including Oxfam, Save the Children Fund and the British Refugee Council. Hong Kong has taken the lead in introducing a screening policy as a first step towards putting this solution into effect. Our lead has been followed elsewhere in South-east Asia and now, most recently, by Japan.

The Geneva Conference in June endorsed our policy of screening and agreed on principles for the repatriation of non-refugees. But it did not take the essential next step of endorsing the repatriation of all those screened out as non-refugees. In effect it asked us to make further efforts to encourage these people to return home voluntarily. We have tried this and will continue to do so. The more people who return home voluntarily to Vietnam the better. But the number of people willing to volunteer is limited. Since November last year, only 264 Vietnamese have actually returned to their homeland. Further groups are due to go soon. But voluntary repatriation alone is clearly not the answer.

      At the international conference in June, I warned that if proper arrangements were not made to return home those found not to be refugees, Hong Kong could not continue indefinitely to play its part by providing first asylum. But we must not deceive ourselves into thinking that abandoning this principle is an easy, or cost free, option. We would have to face the hard choice of what to do if future arrivals sank their boats when they were refused permission to land here. Would we, as a community, be willing to let people drown? Surely not. We would also have to face an international outcry which would put at risk our prospects for resettling the 13 000 refugees now in Hong Kong, and which would also affect international attitudes towards Hong Kong in other areas, such as trade, where we have important interests.

I remain convinced that the policy we have adopted is the right one, and that it will eventually bear fruit. At the steering committee meeting in Geneva, we made very strongly the point that screening and repatriation are inseparable. It is only by introducing a scheme for orderly return that we will solve the problem of disorderly arrivals. The thousands that are being screened out as non-refugees must go back to their homes in Vietnam. It is only by finding a way to return non-refugees home that we can do anything for those who are genuine refugees. We are determined to put in place satisfactory arrangements for both resettlement and repatriation. In the meantime, I call upon all members of our community

7

A VISION OF THE FUTURE

8

to have patience, and to remember that the Vietnamese are fellow human beings. Many Hong Kong families, after all, know what it is like to uproot themselves from their homes and seek a better future elsewhere.

The Civil Service

The continuing influx of Vietnamese has imposed a great strain on the civil service as a whole, and not only the Correctional Services Department, the police and the garrison who have borne the main brunt. I doubt if many members of our community realise how many departments are involved in one way or another in receiving the arrivals, processing them, feeding them, looking after them and building, operating and guarding centres for them. Many civil servants have been working long hours in difficult circumstances and under great pressure for much of the past two years. They get little recognition for this, and a great deal of criticism, both in Hong Kong and overseas. They deserve better.

But this is by no means the only strain on our civil servants. They have for many years played the leading role in the government of Hong Kong. Inevitably this role has changed as our system of representative government has developed. Civil servants have had to adapt to this change at a time when, like the rest of the community, they have their own personal worries about the future. As a community we take our civil service for granted. But, from my personal experience of the workings of other governments, I can say without qualification that Hong Kong is well served. During the rapid constitutional changes that will take place in the next decade, we will depend on the civil service for continuity and stability. So now, more than ever, we must ensure that it remains as stable and efficient as it has always been.

Hong Kong's Place in the World

Hong Kong is now the world's 11th largest trading economy. In the past, as the territory developed, we were somewhat hesitant about involving ourselves in international affairs. But, within the limits of our autonomy, we have now begun to play a role in the world that reflects Hong Kong's economic importance. It is right that we should do so.

Hong Kong as a Regional Centre

The Asia-Pacific region contains the fastest-growing economies in the world. Ours is one of them. Sixty per cent of our total trade is now with Asia and Australasia and we play an important role in building up trade within the region. Goods going through Hong Kong from one part of the region to another, not counting China, have grown by 45 per cent in the past year.

Our financial services sector has also become increasingly important in regional terms. Because of the time difference, business can be done here when London and New York are closed. We now have 135 overseas incorporated banks in Hong Kong. Eleven of these were given new licences this year. Twelve overseas securities companies and commodities trading companies have also set up business here this year.

   Hong Kong has many advantages as a regional base - its location; good communica- tions; an efficient and apolitical administration; an impartial system of justice; a well- educated and efficient workforce, and all the conveniences of a modern city. Add to this the magnificent new Convention and Exhibition Centre - the largest in Asia - and one can see how Hong Kong is increasingly becoming a major regional centre for trade, finance and communications. So it is not surprising that many companies have chosen to base their regional offices here. For example, 10 of our overseas incorporated banks operate

A VISION OF THE FUTURE

     as regional headquarters. So do many other international companies. We welcome this. Indeed we hope that others will follow suit.

Hong Kong: the Gateway to China

I have already referred to Hong Kong's role as a gateway to China. Statistics can be dull; but in this area they are startling and revealing. Our re-exports increased by 51 per cent in value in the single year 1987 to 1988. Almost a half of these originated in China and over one-third went to China. China has used Hong Kong as a gateway for its exports for many years. But it is only relatively recently that we have played such an important role as a channel for its imports. Our Asia-Pacific neighbours have been especially quick to see Hong Kong's potential in this area. For example, in 1988 about one quarter of all Japanese exports to China were routed through Hong Kong.

Hong Kong also plays a key role in foreign investment in China. Up to 1988, some 70 per cent of all such investment was by companies incorporated or registered in Hong Kong. Not all of these were Hong Kong companies. Many were foreign ones which had chosen to use Hong Kong as their base for this investment; and why not? We are not only on China's doorstep. We also have unrivalled expertise in dealing with Chinese officials and enterprises, particularly in Guangdong Province, and the full range of back-up services that an investor needs.

For many years to come, China will continue to be an important market for foreign exporters and investors and Hong Kong will continue to be the best means of access to it. By playing an intermediary role, we can also continue to be of benefit to China. We can provide investment, foreign exchange and expertise to help the Chinese economy continue to expand and develop.

Participation in International Organisations

Hong Kong naturally wishes to play an active role in international organisations that help to shape the world we live in and that deal with issues that affect our own interests. In doing this, we have devoted most effort to economic and trade matters. Hong Kong became a separate contracting party to the General Agreement on Tariffs and Trade (GATT) in April 1986. We play our part in it vigorously and responsibly. Hong Kong officials serve as chairmen or members of a range of GATT bodies and dispute-settlement panels. Our role as a major trading economy; our determination to uphold the principles of free trade, and our willingness to act as a link between developed and developing nations have also enabled us to play a significant role in the important Uruguay round of multilateral trade negotiations.

Apart from the GATT, Hong Kong also takes part in some 40 international organisations at government level. We have made good progress in the Joint Liaison Group in making sure that Hong Kong will continue to be represented in these international organisations after 1997. In addition, Hong Kong is also represented by private individuals or community bodies in hundreds of non-governmental organisations in the business, sporting and cultural fields. Our voice is now being heard more often and to better effect.

Hong Kong's Image in the World

For many years, Hong Kong's international image was that of a producer of cheap, low quality goods. We fought very hard to overcome that image, with considerable success. People began to see Hong Kong for what it is a bustling, modern city of successful entrepreneurs.

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But images are often created by events beyond our control. When the name of Hong Kong is mentioned nowadays, far too many people probably think either of 1997 or of Vietnamese boat people. We must do what we can to project a more balanced and more positive image of this exciting city. We must emphasise the progress we have made, in every field from the economy to housing. We must draw attention to the attractions of Hong Kong today, for its own people and for those from overseas. We must, above all, tell the world what we are doing ourselves to build for our future.

   This is not just a job for the government. All of us can act as ambassadors for Hong Kong. The Trade Development Council, the Hong Kong Tourist Association and our Chambers of Commerce play an important part in making Hong Kong's attractions known to a wider audience. This message has particular force when it comes from foreign businessmen who themselves live and work in Hong Kong. Many have been willing to help in this way. I welcome their efforts. We also want to draw on their experience to involve them more in the life of our community. As part of this, I have approved the setting up of an International Business Committee, to be chaired by the Chief Secretary, on which all the main overseas Chambers of Commerce will be represented. This will provide a valuable means of tapping the talents of overseas businessmen for the benefit of the whole community.

Building for the Future: Political

In the next decade, Hong Kong faces a period of unprecedented political and constitutional change. We must manage this without endangering our stability. We must continue steadily to develop our own institutions in which our community has confidence.

The Development of Representative Government

During the past few years there has been vigorous debate in Hong Kong about how quickly we should develop our system of representative government. Your government has always believed that political development should be based on the widest possible support in the community. We have indeed sometimes been criticised by those who would like to go faster than this principle allows.

This year a number of models for the future composition of this Council have been put forward. One of these was the result of lengthy discussion by the non-official Members of this Council and the Executive Council. These models have stimulated a great deal of debate in the community. This is a good thing. The issues involved are vital for the future of Hong Kong. Out of this debate I hope that a broadly-held Hong Kong view will emerge. This would help the drafters of the Basic Law, when they meet later this year and early in 1990, to carry out the important task of formulating the structure of Hong Kong's political system in and after 1997. The government would also wish to respond positively to such a view when we take decisions on what further changes should be made to the composition of this Council in 1991.

   Before taking these decisions, we will consider all aspects of the composition of this Council: the number of official and appointed members, whether there should be a further increase in the number of members elected by functional constituencies and the number of directly-elected seats. We shall have in mind the widely-held view in the community that there should be a somewhat faster rate of development in 1991 than previously envisaged; and also the fact that by 1995 all members of the Council will be elected by one means or another. We must prepare for that situation well in advance.

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The Basic Law

    The second draft of the Basic Law was published in February. It was generally seen as a considerable improvement on its predecessor. Careful note had clearly been taken of points made in Hong Kong during the consultation period in 1988. Recent events in China have re-focused public attention on some parts of the Basic Law. I have already referred to the various models that have been put forward with regard to the composition of the legislature. Another area which has been the subject of much debate is the relationship between the central authorities and the SAR Government. I hope that the people of Hong Kong will use this final period of consultation to put forward their views on the draft of a document which will be of great importance to their future.

The Chinese Government have made it clear that they intend to publish the Basic Law next spring. Its contents will have a significant impact on how people, both locally and overseas, view the future of Hong Kong. A Basic Law that meets the main points of concern in Hong Kong can go a long way to restoring confidence in the future of the territory. I therefore urge the Basic Law drafters to be receptive to the views expressed on the draft in Hong Kong during the current consultation period and to take them carefully into account. There is a great deal at stake.

Bill of Rights

In Hong Kong we have always taken for granted the basic social and political freedoms that we enjoy. These are backed up by many different provisions of statutory and common law. In addition, the International Covenants on Civil and Political Rights and on Economic, Social and Cultural Rights have been extended to Hong Kong since 1976, and their continued application beyond 1997 is guaranteed in the Joint Declaration.

It is clear that there is now strong support in the community for these freedoms to be entrenched through the enactment of a Bill of Rights. The government has been considering what form such a bill might take. We propose that it should give effect in local law to the relevant provisions of the International Covenant on Civil and Political Rights. This means that if anyone believes that their civil or political rights, as defined in the covenant, have been violated, they will be able to seek redress in the courts. We aim to publish a White Bill for public consultation by the end of this year and to introduce draft legislation into this Council by July 1990. Within this timescale there will not be time for a comprehensive review of all our existing laws to remove any areas of doubt about their full compatibility with the Bill of Rights. To avoid any unnecessary uncertainties the draft bill will provide for a limited period after its enactment during which existing laws cannot be challenged against the standard of the new bill.

The provisions of the other international covenant, the Covenant on Economic, Social and Cultural Rights, are different in nature. They are in the form of objectives to be achieved progressively and, generally speaking, are not rights which individuals could easily enforce in the courts. For these reasons they are not well suited for inclusion in a Bill of Rights designed to give people the right of direct action in the courts. We are of course fully committed to the objectives of the covenant and seek to implement them through our existing legislation and policies.

The Joint Liaison Group

Much of the detailed work on implementing the Joint Declaration takes place in the Joint Liaison Group (JLG). The achievements of the JLG during the past four years have contributed significantly to the maintenance of confidence in Hong Kong. They have been possible only because of the close contacts and co-operation between the two sides. Inevit-

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  ably, these contacts were temporarily suspended in June. The group has recently resumed its activities and will now meet again in December. I hope that it will then, as previously, produce a steady stream of solid work. Much still remains to be done before 1997.

   The confidentiality of proceedings in the JLG has often led to misunderstandings in Hong Kong about its role and activities. From time to time it has been suggested that the British and Chinese Governments take decisions in the JLG in which Hong Kong plays no part. I can assure you that this is not the case. Two members of the Hong Kong administration sit as members of the British side of the JLG and many more attend its meetings. All subjects on the agenda of JLG meetings are thoroughly discussed beforehand between the British and Hong Kong Governments. And the Executive Council is kept fully informed of all proceedings and is consulted on all major issues of policy. Hong Kong makes a full contribution to the work of the JLG. We will continue to do so.

Building for the Future: Social

In the final analysis, the future of Hong Kong rests with its people. Your government attaches a great deal of importance to ensuring that Hong Kong remains an attractive place to live in, with social services that meet the needs of our society. We do not intend to provide a western-style welfare state. To do so risks encouraging a mentality of dependency that is alien to the Hong Kong way of life. Instead, we concentrate much of our efforts, and of our available resources, on the young people of Hong Kong, who represent our future, and on those who cannot fend for themselves.

Education

During the past 20 years, as Hong Kong has prospered, the demand and need for better education has grown with enormous speed. In our community, the first goal that parents set themselves, as their living standards improve, is to give their children the best possible educational opportunities. In the 1960s, most parents were keen simply to provide some sort of schooling for their children. In 1971, the government was able to provide free primary education for all. In the 1970s expectations increased; and in 1979 free, compulsory education was extended to include secondary forms one to three.

   The ambition of ordinary families today is that their children should do well enough in examinations to be able to go on to some kind of post-secondary education. At the same time, the development of our economy means that we need an increasing number of young people trained beyond secondary school level. It is clear that we are not at present able to meet the full extent of this demand. As many Hong Kong students now go abroad for tertiary education as stay in Hong Kong. Another factor is emigration. We must now plan on the assumption that we will lose a proportion of our future graduates abroad.

The government therefore proposes to upgrade substantially the targets that we set ourselves only last year. These would have meant that in the year 1995, for example, there would be first-year, first-degree places for nearly 13 per cent of the relevant age group, compared with about seven per cent now. This was an ambitious target. But it is now clear that we must be even more ambitious. I have asked the University and Polytechnic Grants Committee (UPGC) to increase the planned provision of first-year, first-degree places from about 7 000 next year to about 15 000 in 1995. That means places for over 18 per cent of the relevant age group. This will not be at the expense of sub-degree places. These will be maintained at the previous planning level of 5 000.

This increase would give a total of 67 000 tertiary places in 1995. That would provide places for nearly 25 per cent of the relevant age group, compared with under 14 per cent

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now. The UPGC is now working out how to meet these new targets. Among other things, we will probably have to bring forward plans for expanding our existing universities and increase the percentage of degree places offered at our polytechnics.

At the school level, there has been a great deal of concern in the community that the introduction of mass education has been at the expense of standards. There is some truth in this. In future we shall aim to concentrate on improving quality rather than giving top priority to increasing numbers. Major measures over the next few years which have already been announced include providing Secondary 7 classes in all types of secondary school and bringing in 'A' level examinations in Chinese. In my address to this Council last year, I mentioned the desirability of working towards whole-day schooling for all primary classes. This remains our long-term objective. But, given our other educational priorities, resource constraints and demographic trends, we need to be realistic about how quickly we can achieve it. Our first priority will therefore be a phased programme of converting senior primary classes to whole-day operation.

We are an international trading centre where the ability to use language well is a key ingredient of success. One important objective of our school system must therefore be to improve the standards of both English and Chinese. The government has already taken several significant initiatives. These have included sending large numbers of local teachers overseas for immersion courses in the English language and introducing a scheme to enable schools to employ expatriate teachers of English. But these measures are not enough. We need urgently to devise a strategy that will deal with the difficult problems of the medium of instruction and the quality of language teaching. The Education Department will soon publish for public consultation the report of a working group which has looked into these issues. After members of the public have had an opportunity to comment, proposals will be put to the Board of Education and the Education Commission early next year.

In Hong Kong, private secondary schools have generally not had the resources to compete with the public sector. This has meant a lack of variety and flexibility in the educational system. Good private schools can give special emphasis to specific areas such as languages or art. They also provide for the possibility of greater choice within the educational system. The government believes it important to increase parental choice by encouraging the development of a healthy private school sector in Hong Kong. To help achieve this, we will introduce a new Direct Subsidy Scheme. Schools which meet certain criteria will be eligible to join the scheme, and will receive government assistance at a rate which will depend on their fee income, with more going to those which charge less. They will, at the same time, be able to retain a great deal of freedom in deciding on curriculum, fees, management and the selection of pupils. The government will phase out bought places in private schools by the end of the 1990s. In the meantime, we will improve the standards of these schools so that, when the time comes, they will have a good chance of joining the new subsidy scheme.

We agree with the Education Commission that pre-primary education must be seen as a desirable rather than an essential part of our education system. But we see a clear need to improve standards of teaching in kindergartens. We therefore propose to improve the basic training course for kindergarten teachers and introduce a new fee remission scheme. This will replace the existing scheme of fee assistance and allow additional help to be given to less well-off parents who have children in kindergartens.

      In laying down broad programmes for improvements to our educational system we must not overlook the special difficulties that individual schools face. Some for instance have severe problems of noise. We have already sound-proofed and air-conditioned 37 schools

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affected by aircraft. This year, we are starting a new programme that will cover a total of 117 aided and government schools affected by unacceptable levels of traffic noise. We aim to complete it during the early 1990s.

   Education is expensive and heavily subsidised by the community. The proposals I have outlined, especially for the further expansion of the tertiary sector, inevitably mean that some other sectors will, for the time being, have to take a lower priority. In practical terms, this means slower progress in some other areas which, however desirable in themselves, have to take their place in the queue. Decisions on the right allocation of public money are never easy. But I hope that the community as a whole will agree that the proposals I have outlined are the right mix for meeting our more pressing needs within the resources available.

   Some 80 per cent of those who will make up Hong Kong's workforce in the year 2000 have already completed their education. So the provision of training for those already at work is also an important priority. Many potentially useful technologies are not yet being applied in our industries. The government proposes to establish a training fund to encour- age employers to give managers the opportunity to learn about these new technologies. This fund will include contributions from various sources, including the private sector. It will provide loans to cover the cost of local extension training and overseas working attachments. I hope employers will make good use of it.

Medical and Health Services

  The medical and health field is another area where, in the past, we concentrated on meeting basic needs. We achieved remarkable successes. Life expectancy in Hong Kong for both men and women is now higher than in many advanced countries, including the United States and the United Kingdom. Our infant mortality rates are lower than in either. Now we should raise our sights. Our new priority must be to improve the quality of service. Our public health service is heavily subsidised, and our professional medical staff are dedicated and hard-working. But our hospitals are overcrowded, and there are long queues at our clinics. We do not always provide our community with the range of services that they need. In important areas like mental health and geriatric care, our standards fall below our aspirations.

   The lesson of public health services all over the world is that increased expenditure does not necessarily translate into higher standards. What is really important is the way the money is used and how well the facilities are managed. It makes no sense to have some publicly-funded hospitals overflowing and others with spare capacity. Or to have hospitals where there are camp beds in some wards and empty beds in others. The Hospital Authority, which we aim to establish by April next year, will be well placed to ensure that the money we spend on our public hospitals - $5 billion this year is used in the most effective way. By bringing government and subvented hospitals together within a single integrated system, the authority will be able to make sure that the best possible use is made of the facilities that each hospital can offer. Quality of management will be particularly important because of the size of the hospital service. By the end of next year, the authority will be responsible for more than 22 000 beds, including almost 1 000 in the first two phases of the new Tuen Mun Hospital and the Queen Mary Hospital extension.

   Two other current projects should help to improve the quality of our medical services. First, a working party has been set up to review our primary health care services, and in particular to consider which of these is best carried out by the government and which by the private sector. It will report by the end of 1990. Second, the government has decided to

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establish a Hong Kong Academy of Medicine. This will be a statutory body with authority to set standards in post-graduate medical education; to decide the content and length of training courses, and to accredit those who have passed the required examinations. Hong Kong will then have its own system for ensuring that doctors are properly trained and locally qualified in the various clinical specialities.

Social Welfare

     Since the publication of the 1979 White Paper on Social Welfare, we have made good progress in developing our policies and services to meet the needs and expectations of our community. We have a comprehensive safety net to make sure that no-one in our community need fall below basic living standards. We have a wide range of services from day care centres to residential homes.

      It is now time to take stock of the progress we have made and to make sure that our policies and standards continue to meet the needs of Hong Kong into the 1990s and beyond. I have, therefore, asked the Secretary for Health and Welfare to launch a review of our social welfare services in conjunction with the subvented sector. The government will then in the second half of next year publish a White Paper setting out our proposals on the way ahead. In the meantime, additional funds will be available this year to reduce case loads in family service centres and social security field units operated by the Social Welfare Department.

One problem that we face is a shortage of trained social workers. A good many professional staff have emigrated. To fill the gaps, a number of measures are already being taken, for example substantially increasing the intake of social work students into our tertiary institutions. But, in planning improvements to our services, we must take care not to place impossible burdens on our existing staff, both in the government and subvented sectors. They already have very heavy workloads.

      Separately, we will continue to develop our rehabilitation services with the aim, where possible, of integrating the disabled into the community. The objective will be to steadily improve the quality of services while, at the same time, extending them to cover more of those in need. Particular emphasis is now being placed on employment for disabled people so that they can, to the greatest extent possible, earn their own living. Funds will be made available to provide additional teachers in schools for the disabled so as to expand the curriculum and include career counselling and civic education. In April 1990, we will also be extending the higher rate of disability allowance to those aged 15 and under who require constant care and attention. This will go some way to recognising the additional financial burdens faced by the parents of these young people.

Youth

One quarter of our population is under the age of 25. These young people will provide our future leadership and workforce. To help us meet their needs and respond to their aspirations, the government proposes to set up early next year a Commission on Youth. This will be chaired by a non-official and will include senior government officials and a wide range of other members from the community, including young people. The commission's terms of reference will be to advise the government on how best to implement our objectives for the development of youth services. We believe that we should develop what will amount to a charter for youth which will give our young people the best pos- sible educational opportunities; promote physical and mental fitness; give young people

URBAN COUNCIL PUBLIC LIBRARIES!

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  opportunities to gain international experience and thereby broaden their outlook on life; improve their civic awareness and encourage them to participate in community affairs, and promote youth leadership training.

   In the years ahead, I hope to see progress in another area: sports. Already some Hong Kong sportsmen and women are beginning to make their presence felt in international competitions. But so far our achievements in sport lag behind those in other areas. It is time we made an effort to raise our standards. A major step forward will be the creation of a Sports Development Board. Its Executive Director has already been appointed. So have the members of the Provisional Board. Its first priority will be to work out a territory-wide strategy for sport. The aim will be to get the right balance between the twin goals of excellence and mass participation.

Housing

The availability of good, reasonably-priced housing is a key factor in creating the stable yet dynamic society we want to see in Hong Kong. Our record of providing subsidised housing stands comparison with anywhere else in the world. The Housing Authority now manages 723 000 flats and is the landlord for 47 per cent of our population. In the last financial year, it completed over 50 000 flats, a record for a single year. This year, it is likely to set a new record yet again, with an estimated production of 53 000 flats. These are remarkable figures by any standard. They will be achieved without any sacrifice to the quality of accommodation and environment provided.

   In every community, ordinary families dream of owning their own home. Communities are healthier and more stable when home ownership is widespread. Helping Hong Kong families to become home owners is an important part of the Long Term Housing Strategy. At present, only 15 per cent of our stock of public housing is owned by the family living in it. But this figure is set to increase. This year, one-third of the new Housing Authority flats will be for sale rather than for rent. The authority has also decided recently to increase the scope of its Home Purchase Loan Scheme so that more of its tenants will receive larger interest-free loans to buy flats in the private sector. It is considering another bold initiative: the feasibility of selling some of its newer flats to the families who are now renting them. At present, 41 per cent of Hong Kong families own their homes. As a result of the authority's imaginative ideas, we can expect the number to rise steadily during the years ahead.

   The Housing Authority aims to produce 527 000 public housing flats for rental and sale between now and the year 2001. This is an ambitious target. The government will do its best to find the new land required and to provide the necessary infrastructure. Our planners and engineers are hard at work already. Maintaining our housing programme will remain an important priority for the government.

The Environment

Last October, I spoke at some length about the various pollution problems that we face and our determination to tackle them. A White Paper on Pollution, published in June, set out in detail proposals for a comprehensive programme of action over the next 10 years. We have already begun to implement these. The Planning, Environment and Lands Branch, which recently came into being, will give a fresh impetus to our efforts to improve the environment.

I would like to emphasise the importance that I personally, and the government as a whole, attach to dealing with the problem of pollution. It is not just a matter of keeping

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Hong Kong clean, important though that is. Pollution can, and often does, cause damage to our health and to that of our children. We must bring it under control. The fact that we propose to spend at least $20 billion in the next decade shows how important this objective is. Much of this money will be spent on the complete overhaul of our sewerage system and the construction of three massive landfill sites and associated refuse transfer stations.

       Money alone cannot solve our pollution problems. Nor can the government alone. Each individual member of this community has a vital contribution to make in creating an environment that is safe and pleasant. Until recently, far too many of us in Hong Kong were unaware of the threats to our environment. We placed far too little importance on protecting it. This attitude is already changing. It must change further. The government has given a lead. But the community must also play its part.

      On July 19, during the debate on the White Paper, several Members of this Council stressed the need to improve environmental education. The government has taken this advice to heart. This year, apart from pushing ahead vigorously with the 100 separate initiatives in the White Paper, we will give greater emphasis to environmental education. We must make everyone aware of the impact that pollution has on our community; we must make everyone recognise the importance of doing something about it, and we must make everyone realise that they have a part to play in making Hong Kong a cleaner and greener place.

Building for the Future: Physical Infrastructure

In the next few years, we will also need to put a great deal of effort into building up the physical infrastructure needed for a modern city which is not only home to almost six million people but also an important regional and international centre. In doing this, we will take account both of the requirements of Hong Kong itself and of those areas of Southern China with which we now have such close economic links.

The Airport

Last October, I said that a range of studies was being carried out to devise a strategy for the long term development of our port and airport. These have now been completed. They show that there is a clear case on economic grounds for building a new airport as soon as possible.

After an exhaustive study of the various options, the government has decided to build a new Hong Kong International Airport at Chek Lap Kok. It will be a two-runway airport built to the most exacting modern standards and able to operate 24 hours a day. When completed, it will be able to handle 80 million passengers a year over three times the maximum capacity of Kai Tak. Our aim will be to open the first of the two runways by the early part of 1997.

       Building the airport itself, enormous though that project will be, is only part of the story. We have to make sure that people can get to it easily and quickly. To do this we plan to build a high-speed rail system and a six-lane highway which will join North Lantau to Tsing Yi Island and go from there along the new West Kowloon Reclamation to a Western Harbour Crossing and then to Hong Kong Island. We will also have to provide all the facilities needed for servicing a new airport. This means building a new town for at least 150 000 people, plus industrial and commercial facilities, in the Tung Chung valley.

      Building the new airport, and the road and rail links associated with it, will be the largest project ever undertaken in Hong Kong. It will require an immense amount of effort from both the public and the private sector. To have the new airport in operation in early 1997

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means setting to work as soon as possible. The planning, construction and ultimately the management of it will be put in the hands of a new Airport Authority. Early next year, I will be appointing members of a Provisional Authority which will do the preliminary work before the authority itself is set up.

Once the first runway of the new airport is open we can close Kai Tak, which is likely to be operating at full capacity by 1996. Besides the need for a modern airport to meet Hong Kong's requirements in the 21st century, closing Kai Tak will bring its own benefits. The whole of the area now used by the airport will be available for redevelopment. We will be able to lift height restrictions in parts of Kowloon. And the problem of excessive aircraft noise, which now affects some 350 000 people, will be eliminated.

The Port

The new airport will be a dramatic symbol of our determination to create an infrastructure to the highest international standards. We propose to transform our port in an equally dramatic way. The major projects we are planning will create what amounts to a completely new port on the western side of the territory. The need to create this additional capacity comes from our sustained economic growth in recent years. The port now handles 80 million tonnes of cargo a year, an increase of almost 90 per cent in the past five years. Further substantial growth is expected. The point has now been reached where our existing facilities are coming under severe strain.

   In planning for the expansion of our port we have looked ahead to 2006. By that time we will need:

to increase our container throughput by five times;

- additional land for lorry parking and container storage;

-on-shore facilities to replace the unloading which is now done in the harbour itself;

- space to cater for larger numbers of river trade vessels; and

- space for the various industrial activities which a modern port requires.

Our first priority is to build the next container terminal, Terminal 8. This will go on reclaimed land at Stonecutters Island. We plan to make the site available for development in 1991, so that the first berth can be in operation by mid-1993. Terminal 9 and its support facilities will be built on reclaimed land at the south east of Tsing Yi Island. At that point, there will be little room for further development in the area of the present container port. We then plan to move the focus of the port westward. One area for development will be North Lantau, making use of the road facilities being built for the new airport. Another will be the coastal strip west of Tuen Mun. Two more major developments will be the construction of a large breakwater between Lantau and Lamma to increase the amount of sheltered anchorage in the western harbour; and the dredging of a new shipping channel to the west of Lamma.

   All this development work in the port means that we must make sure that we co-ordinate the needs and interests of all its many different users. To do this, we propose to set up a Port Development Board, which will give advice on the detailed planning and management of the port as we carry out the plans for expansion I have outlined.

Financing the Development of the Port and Airport

The ambitious programme of works I have described will give Hong Kong a new modern airport and a larger port, plus all the necessary transport links and supporting industrial and commercial facilities. The cost will be some $127 billion at current prices over the period up to 2006. This is an enormous financial commitment. But, after very careful

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     study, the government is convinced that this commitment is one we can afford. Indeed we believe that we cannot afford not to make it. We must make sure that Hong Kong continues to have the facilities to meet the needs of our growing economy. We must also be realistic, and make sure that we phase the construction of these new projects in a way that does not place too great a strain on our economy.

      We have already seen how successful the private sector has been in developing our container port and in building our cross-harbour tunnels. The government believes that many of the individual projects connected with the new airport, and the expansion of the port, will be commercially viable. I am sure there will be many local and international developers who will be keen to co-operate with us in these enormous and exciting projects that are so important to Hong Kong's future.

The plans we have for building a new airport and developing the port will create new opportunities for the construction industry. But they will also make huge demands on its resources. It may well be necessary to consider exceptional arrangements to ensure that we have an adequate supply of labour so that they are completed on time and without causing unacceptable inflationary pressures.

Land Resources

The new airport and the massive expansion of our port will transform Hong Kong's development potential. Large new areas in the western part of the territory, particularly Lantau Island, will be opened up for industrial and commercial use. These activities are now concentrated in a fairly narrow band on both sides of the harbour. But in future it will be possible to escape the restrictions and congestion imposed by the existing urban areas and to plan further development on the basis of large-scale modern port and airport facilities coming into being in the western part of the territory. This will provide a new and very welcome opportunity to bring about a great improvement in working and living conditions for the community as a whole.

Looking at the details, the new airport at Chek Lap Kok, and the bridges and roads that go with it, will open up for potential development the whole of Lantau's northern coastline. This can be achieved without damage to the outstanding recreational facilities on the hills and southern coast of the island. Expanding the port westwards will make available further land, mainly for industrial use, west of Tuen Mun.

The port and airport developments also mean that the West Kowloon reclamation will need to be completed in the mid-1990s to provide the necessary transport links to the urban area. This reclamation will provide a major source of land in the urban area for commercial and residential development. More badly needed land will be provided by the Central and Wan Chai reclamation, where sites will start to be available during 1993. Looking further ahead, we have the possibility of reclaiming the channel between Green Island and Hong Kong Island and the immense opportunities provided by the removal of the airport from Kai Tak. These urban reclamations will give us the opportunity to replan our older urban areas, as envisaged in the Metroplan. In doing this, an important point will be to make sure the planning of land use is properly co-ordinated with the provision of new transport facilities.

Transport

I have already referred to the new road and rail links which will be needed for new port and airport developments. Preliminary planning and feasibility studies for many of these projects have either begun or will soon start. In the meantime, the government is

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  continuing to develop our transport infrastructure in other areas. The railway section of the Eastern Harbour Crossing opened in August, and the road section in September, four months ahead of schedule. This magnificent achievement by the private sector has brought some much-needed relief both to the Cross-Harbour Tunnel and the Mass Transit Railway (MTR) Nathan Road corridor. Other major projects to improve our transport links are on schedule. Route 5 between Sha Tin and Tsuen Wan will open early next year, followed by the tunnel linking Junk Bay (or, as it will be called in future, Tseung Kwan O) to Kwun Tong and the final stages of the New Territories Circular Road. In 1991, the Tate's Cairn Tunnel (already well advanced) and the Kwun Tong Bypass will be completed, to bring comfort and greatly-improved transport connections for the travel-weary inhabitants of Sha Tin and the New Territories.

   The Green Paper on Transport Policy published in May gave details of a large number of other road and rail projects which will be launched during the next 10 years. I will not go into all the details. They include a new Western Harbour Crossing; the Hung Hom Bypass; the upgrading of major east-west links in the Kowloon peninsula; Route 7 from the Western Harbour Crossing to Aberdeen, and Route 16 from Sha Tin to West Kowloon. And early next year, a development study will begin of the various rail proposals in the Green Paper.

   A transport policy is not simply a matter of building more roads and railways. The Green Paper also set out strategies for improving and expanding public transport and for managing the use of roads to make it possible to keep both people and goods moving. Road use management is never popular. But we have to be realistic. Hong Kong is a small, densely-crowded territory with only limited space for new roads and railways. We cannot cope with the same levels of private vehicle ownership that are found in other prosperous communities without the city grinding to a halt. The goods vehicle fleet has to be used efficiently to minimise its impact on congestion and the environment. Most of our population travel by public transport. We must do what we can to ensure that they remain willing and able to do so. When all the comments on the Green Paper have been absorbed, the important question of how to do this will be tackled in a transport White Paper to be published early next year.

Technology

  Making full use of modern technology is another important priority for an increasingly sophisticated economy like ours. Indeed, we have done a great deal through adopting advanced technology. Our banking and financial services have achieved standards of excellence second to none. Our telecommunications industry is already highly advanced, and the construction of a second network will create new opportunities for competition. The Mass Transit Railway Corporation and Kowloon Canton Railway Corporation have been notable for introducing the best available transport technology.

   Other sectors of the economy, in particular the manufacturing industry, are exploring what they need to do to remain technologically competitive in world markets. The government recognises the importance of these efforts. As part of our overall strategy to upgrade the economy, we plan to establish a new Hong Kong Technology Centre. This will provide facilities for new and small high technology companies to share certain common services until they are ready to set up on their own. To emphasise the contribution which we hope our growing academic community can make to our technological progress, we are considering locating the centre close to the City Polytechnic as well as to the new Hong Kong Productivity Council Building.

A VISION OF THE FUTURE

A Vision of the Future

My aim has been to show clearly how, despite the shocks we have experienced during the year, your government is continuing to plan for the long-term future of Hong Kong. We have a clear vision of what we are trying to achieve. It is a vision that I hope will sustain Hong Kong during the present period of uncertainty and give us all confidence in our ability to overcome whatever problems confront us.

       As a community we tend to take for granted what we have achieved. But we have only to look back 10 years to see just how much has been done. Hong Kong in 1979 was a very different place. Let me take a few examples:

- our relations with China were still very limited. Our domestic exports to the mainland were only worth $600 million (compared to $38 billion last year). We had only recently opened air links in December 1978, and direct train services from Guangzhou restarted only on April 4;

- there was no universal franchise at any level. Only about 32 000 people had the right to vote in Urban Council elections. The only District Boards (those in the New Territories) were wholly appointed;

- only that year, junior secondary education was for the first time made free and

compulsory for children below the age of 15;

- the first section of the MTR (from Shek Kip Mei to Kwun Tong) had just opened on

September 30;

we had 2.2 million tourists, about 40 per cent of the figure last year;

- we had no bank building higher than 20 stories, no Exchange Square (but four Stock Exchanges), no Academy for the Performing Arts, no Tsim Sha Tsui East, no Aberdeen Tunnel and no airport tunnel.

      Let us now use our imagination to look ahead slightly more than 10 years. In the year 2000, Hong Kong will be a Special Administrative Region (SAR) of the People's Republic of China. It will have a wholly-elected legislature. The Chief Executive, and all the most senior government officials, will be Hong Kong Chinese. They will exercise a high degree of autonomy in the administration of Hong Kong. The SAR will be a leading regional and international commercial and financial centre in which foreign nationals will play an important part, and it will be playing a full role in a wide variety of international organisations.

       Physically, Hong Kong will have changed almost beyond recognition. It will take about 25 minutes to travel by rail from central Kowloon to the new airport at Chek Lap Kok. On the way, you will go along the new West Kowloon reclamation and pass new port facilities at Stonecutters Island and Tsing Yi. Alternatively, you could travel from Central to the Chinese border via the new Western Harbour Crossing, Tsing Yi, the Route 3 tunnel to Yuen Long and the Lok Ma Chau bridge. Redevelopment will be beginning on the present site of Kai Tak airport. Our Convention and Exhibition Centre, by then doubled in size, will be some 300 metres inland. So will Exchange Square. The central business district will have expanded greatly onto a new reclamation with a variety of new civic, cultural and commercial buildings and with a continuous walkway beside the harbour linking open park areas.

Striking social changes will also have taken place. Our ambitious housing programme means that about half our households will be living in subsidised housing, almost 40 per cent of them in flats which they own themselves. Our revised educational targets mean that as many as 20 per cent of our 19-year olds may be studying in Hong Kong for first degrees and another seven per cent for other tertiary level qualifications. Our strategy for fighting

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A VISION OF THE FUTURE

pollution means that we will have significantly improved our environment, including the air that we breathe, and we will have completely overhauled our sewerage system. The establishment of our Hospital Authority will have led to more efficient management, and greatly reduced overcrowding, in our public hospitals. There will be 20 000 places in old people's homes, and a further 6 000 places in sheltered housing provided by the Housing Authority. Ninety per cent of all homes will have access to up to 20 television channels. Forty six per cent of the population will be living in the New Territories. And so on.

Conclusion

The plans that I have outlined today demonstrate your government's commitment to the future of Hong Kong. They are a major investment for our future prosperity. They will be very expensive. We can afford them. But only if we are prepared to exercise prudence and restraint in other areas of public expenditure. It will be more necessary than ever to assess our priorities carefully. In particular, we must keep a tight control on the growth of the civil service.

   The amount of money we are proposing to spend on building for Hong Kong's future may seem daunting. But it represents a necessary investment in human resources and in our physical infrastructure. By pressing ahead with such ambitious programmes despite the special pressures which our community has so recently faced, the government is demonstrating its commitment to Hong Kong's future. To carry out these programmes, we will need all our enterprise, resourcefulness and efficiency. We will have to accept that we can achieve our goals only by continuing to give priority to the overall growth of our

economy.

   It has been a difficult year for Hong Kong. But we have had difficult years before. We have survived them. We have emerged from them stronger and more confident in our own ability. We must have confidence in ourselves. Without this, we cannot expect other people to have confidence in us. Your government will continue to face resolutely the challenges that lie ahead. To do so, we need the support of Members of this Council and of the whole community. We need more than that. We need leadership from within the community. In 1997, Hong Kong will be run by Hong Kong people. They must have confidence in themselves, and in the leaders they choose, if they are to enjoy the stability and progress, for themselves and their families, for which this whole community works so hard.

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CONSTITUTION AND ADMINISTRATION

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 respon- sibility to provide public health, cultural and recreational services in the areas for which they are responsible. In addition, 19 District Boards cover the territory. They advise on the implementation of policies at district level and provide an effective forum for public consultation.

In 1987, the government published a Green Paper which sought the views of the community on whether the system of representative government should be further developed and, if so, in what manner. The White Paper, published in February 1988, charted the course of political development up to 1991 and contained a number of major decisions in relation to elections to the Legislative Council (including, in particular, the introduction for the first time 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 links between the three tiers of representative government, and various practical electoral arrangements.

      Since publication of the White Paper, public opinion has changed and there is now a widely-held view in the community that there should be a somewhat faster rate of political development in 1991 than previously envisaged and, in particular, that the number of directly-elected seats in the Legislative Council should be increased. The government is currently reviewing the decisions of the 1988 White Paper on the composition of the Legislative Council. A number of models for the future composition of the Legislative Council prior to and beyond 1997 have been put forward and they have stimulated a great deal of debate in the community. When it takes decisions on what further changes should be made to the composition of the Legislative Council in 1991, the government would wish to respond positively to a broadly-held Hong Kong view which emerges during the course of the public debate.

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CONSTITUTION AND ADMINISTRATION

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 policy. The present Governor, Sir David Wilson, assumed office on April 9, 1987, and is the 27th incumbent.

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 determine the way in which these constitutional arrangements are applied. For instance, although from the constitutional instruments described above Her Majesty's government would appear to exercise substantial control over the way in which Hong Kong is run, in practice the territory largely controls its own affairs and determines its own policies. Similarly the Governor, by convention, rarely exercises the full extent of his powers: Hong Kong is governed by consent and through consultation with the community.

The Letters Patent create the office of Governor and Commander-in-Chief of Hong Kong and require him to observe 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 to act against its advice (a right not exercised in recent times). 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.

24

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 November 30, 1989, there are 10 appointed members, including one official member. Appointed members hold office for fixed periods.

The Executive Council plays a role somewhat similar to that fulfilled by the Cabinet in a Westminster-style system. The council normally meets once a week, in camera, and its proceedings are confidential; although many of its decisions are made public. The Governor is required by the Royal Instructions to consult the council on all important matters of policy. Subject to certain procedures being followed, the Royal Instructions

CONSTITUTION AND ADMINISTRATION

     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. However, there is no instance in recent times of the Governor having done this. In practice, decisions are arrived at by consensus rather than by division. The depth of experience and the range of community interests represented by council members means that they are able to subject government policy to a rigorous examination before implementation. In this way potential problems can be identified and ironed-out, and legislation to enact policy tailored to reflect public aspirations and concerns before introduction to the legislature. The Governor in Council, that is the Governor acting in consultation with the Executive Council, is Hong Kong's central and most important executive authority.

In addition to policy matters, the Governor in Council decides appeals, petitions and objections under those ordinances which confer a statutory right of appeal. The council also considers all principal legislation before it is introduced into the Legislative Council, and is responsible for making subsidiary legislation 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. 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 one to four district boards. 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 or 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

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26

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 April 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 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 pro- visions 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 26 members of the Legislative Council, one of whom is the chairman, plus the Secretary for the Civil Service and the Secretary for the Treasury, 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 24 members of the Legislative Council, the Financial Secretary (Chairman), and the Secretary for Planning, Environment and Lands and the Secretary for 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 commencement of projects and changes to the scope and estimates of items in the programme.

CONSTITUTION AND ADMINISTRATION

Public Accounts Committee

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

The Director of Audit submits two reports to the Governor as President of the Legislative Council during the course of the year: the first, tabled in April, relates to value-for-money audits; the second, tabled in November, relates to the audit of govern- ment's annual statements of account and also value-for-money audits. Following the tabling of the report, the committee holds public hearings and controlling officers for different heads of public expenditure give evidence. The committee's reports based on these hearings are laid on the table of the Legislative Council within three months of the laying of the Director of Audit's report to which it relates. The government's response to the committee's reports is contained in the government minute, which describes the measures taken to give effect to the committee's recommendations or reasons why these recommendations cannot be accepted. The government minute is also laid on the table of the Legislative Council within three months of the laying of the Public Accounts Committee's reports each year.

Select Committees

The Legislative Council may appoint select committees to consider matters or bills in depth. The purpose is to enable small groups of members to examine complex problems, usually by the taking of evidence, and to report their findings and recommendations to the council. In the last three years, however, no select committee has been formed.

OMELCO

OMELCO stands for Office of the Members (other than official members) of the Executive and Legislative Councils. It is situated in the Legislative Council Building at Jackson Road, Hong Kong.

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.

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 and district boards, as well as representations received from members of the community. Important issues which require the attention and endorsement of all members are discussed

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28

  at fortnightly in-house meetings. There are 16 standing panels formed by members, which regularly monitor the policy and progress of work in different areas of activity. These include: community and New Territories affairs; constitutional development; culture, recreation and sports (recreation and culture since October 1989); economic services and public utilities; education; environmental affairs; finance, taxation and monetary affairs; health services; housing; lands and works; manpower; public service; security; trade and industry; transport, and welfare services. Besides meeting among themselves, panel mem- bers hold sessions with senior government officials and interest groups to hear their views.

   In addition to these standing panels, a number of special groups were set up in 1989 after the June 4 events in China, with the aim of ensuring a safe and secure future for the people of Hong Kong and of boosting confidence in the territory. These include the Working Group on Nationality whose task is to urge Britain to restore to British subjects in Hong Kong the right of abode in the United Kingdom, the steering group to promote and strengthen Hong Kong as an international city, and the specialist group to study the second draft of the Basic Law with particular reference to the Sino-British Joint Declaration.

   In addition, members serve on more than 300 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 frequent visits to government departments and places of public concern, such as Vietnamese refugee centres. They obtain the latest information on development plans and the problems people face, and it is as a result of these contacts 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 representatives on government policy, appeals and complaints. Following the establishment of an ombudsman, formally known as the Commissioner for Adminis- trative Complaints, in February 1989, complaints against government departments alleging maladministration may be referred, if the complainant so requests, by a non-official member of the Legislative Council to the Commissioner for action.

Urban Council

The Urban Council is a 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 for a wide range of municipal functions. These functions include street cleansing, refuse collection, control of environmental hygiene, and ensuring the hygienic handling and preparation of food in restaurants, shops, abattoirs and other places. The Urban Council is also the authority for the control of hawkers and street-traders, although some of this devolves on the police as the council does not have the manpower or finance to shoulder the whole burden. An inter-departmental working party reviewing hawker control mea- sures has made some progress in resolving some of the major issues, and it is hoped that it will report to the government in the next few months.

   Within the urban area, the council also provides and manages all public recreation and sporting facilities such as swimming pools, parks, playgrounds, indoor and outdoor stadia, tennis courts, football grounds, squash courts and basketball courts, and promotes a large number of sports at district level. The council manages museums, public libraries and several major cultural venues and multi-purpose facilities, including the City Hall, Queen Elizabeth Stadium and the Hong Kong Coliseum. It is currently involved in the

прис

r

Previous page: Their Royal Highnesses the Prince and Princess of Wales were greeted with a traditional Chinese lion dance at the beginning of their three-day visit in November.

Above: The Prince pauses to chat with schoolchildren on his trip round the Tuen Mun District Festival. Overleaf: An exotic welcome for the Princess at HMS Tamar, where she visited the families of Service personnel.

NA

Left: Taking centre stage and all the limelight, the Royal couple opened the Hong Kong Cultural Centre beside Victoria Harbour.

Below: On the opposite side of the harbour, the Royal couple opened the Hong Kong Convention and Exhibition Centre.

Overleaf: Taking a special interest in Hong Kong's cultural heritage, the Prince visited the Tang Ching Lok Ancestral Hall in Kam Tin in the New Territories.

吉旦

Y

CONSTITUTION AND ADMINISTRATION

construction of a major Museum of Science and Technology, the superstructure of which is well underway. A new Museum of Art is also under construction. The Hong Kong Cultural Centre, which was opened in November 1989, contains a new 2 100-seat concert hall, a grand theatre seating 1 700 suitable for various kinds of performances and a studio theatre accommodating about 500 persons. The council promotes cultural performances and runs a comprehensive programme of public entertainment throughout the urban areas. The council consists of 40 members, 15 elected from district constituencies, 15 appointed by the Governor and 10 representative members from the urban district boards. The size of the Urban Council was increased from 30 to 40 members in 1989 with the addition of 10 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 11 select committees and 19 working groups or sub- committees.

The Liquor Licensing Board and the Libraries Select Committee as well as the Keep Hong Kong Clean Committee have also opened their meetings to the public.

The council's chief executive is the Director of Urban Services, who controls the operations of the Urban Services Department with a staff of 17 700. The director is charged with carrying out the council's policies and implementing its decisions.

      The council is financially autonomous and during 1989-90 it spent about $3,000 million on council-controlled activities and projects. The council is financed by a share of the rates which forms the main part 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 variety of matters. Although the majority of matters raised lie outside the council's jurisdiction, councillors are often able to assist and obtain redress for the public, where appropriate, from the various government departments and public bodies.

Regional Council

The Regional Council is the statutory municipal authority for the New Territories where more than two million people live. Like the Urban Council, the Regional Council is responsible for all matters concerning environmental hygiene, public health, sanitation, liquor licensing and the provision of recreational and cultural facilities and services within its jurisdiction.

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 12 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 Chair- man and Vice-Chairman of the council are elected by members among themselves.

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

      The council is financially autonomous. Its main source of revenue comes from rates collected in the council area which in 1988-9 provided about 86 per cent of the total revenue, with the remainder being fees and charges and interest on deposits. In 1988-9, total revenue amounted to $1,658.1 million while total recurrent and non-recurrent expenditure amounted to $1,041.6 million. Effective from April 1, 1988, the government started to provide the council a total grant of $820.8 million in three equal annual

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30

instalments of $273.6 million. The grant is to enable the council to carry out its own capital works programme in accordance to its own timetable.

   The 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, environmental hygiene, and recreation and culture, while the district committees deal with and monitor the provision of services and advise on the management of 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 council, its select com- mittees, district committees, as well as the liquor licensing board, are open to the public.

The Regional Council maintains close liaison with the district boards in its 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 council, thus providing an opportunity for the views of district representatives to be taken into account in the planning and pro- vision of services and facilities.

   The council elects a member to the Legislative Council. In addition, it is represented on a number of organisations whose work is closely related to that of the council. These organisations include the Central Committee on Youth, the Council for the Performing Arts, the Council for Recreation and Sports, the Hong Kong Arts Centre, the Chung Ying Theatre and the Antiquities Advisory Board.

District Administration

District boards are statutory bodies established since 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, 141 appointed and 27 ex-officio 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.

-

   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 development of representative government, education reforms, youth policy and 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 1989-90, $54.5 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

CONSTITUTION AND ADMINISTRATION

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 a 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 committee 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 17.4 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 declarations, and 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 throughout the territory in the early 1970s 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 125 area committees and 4 323 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

The Urban Council and the Regional Council are closely linked to the district boards. Each district board in the urban area has a representative member on the Urban Council. In addition to a similar arrangement between the Regional Council and the district boards in the New Territories, members of the latter 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.

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

      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

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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 geo- graphical 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 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 1989, the electoral roll carried 1 597 567 names, representing 43.6 per cent of an estimated total potential electorate of 3.66 million. Of these electors, 1 013 759 are entitled to vote at Urban Council elections and at district board elections in the Urban Council area. The remaining 583 808 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 the 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. There are altogether 264 elected district board members, 15 elected Urban Councillors and 12 elected Regional Councillors.

   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.

   At the Urban Council elections held on March 9, 1989, 30 candidates stood for election in the 15 constituencies. Four were elected unopposed and the remaining 26 candidates contested the other 11 seats. Of the 747 005 electors in the contested constituencies, 105 826 cast their votes, giving a turnout of 14.2 per cent. The Regional Council elections were held concurrently with the Urban Council elections. A total of 23 candidates were nominated in the 12 constituencies. Three were elected unopposed and the other 20 candidates contested the remaining nine seats. Of the 464 104 electors in the contested constituencies, 107 526 cast their votes, giving a turnout of 23.2 per cent.

Electoral System for the Legislative Council

The system for indirect election to the Legislative Council, first introduced in 1985, 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, accountancy, medical, health care, legal, teaching, and engineering and associated professions sectors, return a total of 14 members.

The franchise for Legislative Council elections is prescribed as follows: for the electoral college, an elector must be a member of the Urban Council, the Regional Council or a 32 district board making up the respective special constituencies and district board constit-

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uencies; 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. 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 1989, the number of electors registered in the electoral college and the functional constituencies stands at 465 and 58 222 respectively, as compared to the corresponding potential electorate of 467 and 104 466 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 constit- uencies and functional constituencies.

Planning for direct elections to the Legislative Council to be held in 1991 is now in hand. Details of the conduct of the elections are under active consideration.

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 interested groups in the community, the best possible advice on which to base decisions. Thus advisory bodies of one kind or another are found in nearly all government depart- ments 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 Endangered Species Advisory Board); statutory bodies which give advice to the govern- ment (such as the Board of Education); non-statutory bodies which give advice to a head of department (such as the Labour Advisory Board); 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 5 100 members of the public are appointed to serve on a total of 437 boards and committees, and some serve on more than one of these advisory bodies. These mem- bers 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 encourage an inflow of new ideas through a reasonable turnover of membership.

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34

The Administration

Role of the Chief Secretary

The Chief Secretary advises the Governor on matters of policy, and is principally respon- sible for its implementation. He is 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 and Legislative Councils and 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 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, Monetary Affairs, Trade and Industry, Works and Economic Services Branches of the Government Secretariat.

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

  The Central Policy Unit (CPU) was established in April 1989. Although the CPU forms part of the Government Secretariat it is not a policy branch with responsibility for a defined programme area of its own. Its role is to undertake in-depth examinations of complex policy issues, to analyse options, and to recommend solutions. These issues are assigned to it by the Governor, Chief Secretary and Financial Secretary and are specified on a case-by-case basis. They are mostly issues of a long-term, strategic nature, or issues which cut across, or fall between, the boundaries of several policy branches of government departments. The CPU is not expected to be involved in the vast majority of policy issues which clearly should be dealt with by one or another of the policy branches.

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. The structure of the Government Secretariat was re-organised in 1989 in order to rationalise and redistribute the portfolios of policy secretaries. The object is to achieve a reasonable balance between their workloads, reflect more closely the main policy objectives

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     of the government and to improve the policy formulation and resource management generally. Following the re-organisation, there are currently 13 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.

The policy branches whose secretaries report directly to the Chief Secretary are: City and New Territories Administration, Education and Manpower, Health and Welfare, Municipal Services, Security, Transport, Constitutional Affairs, Recreation and Culture, and Planning, Environmental and Lands. The Civil Service Branch, a resource branch, and the General Duties Branch 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, Trade and Industry, and Works. The Finance Branch, a resource branch, is also responsible to the Financial Secretary. The head of the Finance Branch is the Secretary for the Treasury (previously known as the Deputy Financial Secretary).

      With certain exceptions, the heads of government departments are responsible to the branch secretaries for the direction of their departments and the efficient implementation of approved government policy. The exceptions are such bodies as the Audit Department and the Independent Commission Against Corruption, whose independence is safeguarded by their director and commissioner, respectively, reporting directly to the Governor; the Judiciary, which is the responsibility of the Chief Justice, and the Legal Department, which is the responsibility of the Attorney General. There are currently 60 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 Community Affairs; Constitutional Affairs; Lands, Works, Transport, Housing and Environmental Protection; Public Services, and Social Services Policy groups. 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

The Commissioner for Administrative Complaints is an independent authority established under the Commissioner for Administrative Complaints Ordinance to provide, for ordinary citizens, 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 commissioner has jurisdiction over all government departments except the Royal Hong Kong Police Force and the Independent Commission Against Corruption. However, he is an ex-officio member of both the Police Complaints Committee and the Independent Commission Against Corruption Complaints Committee, which oversee investigations into complaints made against members of the Royal Hong Kong Police Force and the Independent Commission Against Corruption.

       The establishment of the commissioner is designed to supplement and strengthen existing channels for the redress of grievances, but not to replace them.

      The commissioner's office became operational on March 1, 1989, and began receiving complaints from that date. As required by law, the commissioner submitted his first Annual Report to the Governor at the end of June 1989. The report was tabled in the Legislative Council on July 19, 1989, and received considerable media coverage.

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36

Between the period March 1 to December 31, 1989, a total of 162 complaints were received by the office. Of these, 110 cases were completed. 73 of the total complaints received were found to be wholly or partly within the commissioner's jurisdiction and were investigated. In 42 cases the complaints were found to be justified to some extent. Recommendations for remedial action were made in 50 instances and accepted by departments in all cases. During the same period, a total of 205 enquiries were also received, some of which could lead to formal complaints being lodged to the office at a later date.

In September 1989, a staffing review of the office was carried out to determine both the staffing levels and the method of filling the posts in the longer term. Subject to funds being available, the review recommendations, if approved, are expected to be implemented by mid-1990.

Office of the Director of Audit

The necessity for an audit presence was recognised in the very early days of Hong Kong and the Audit Department is in fact one of the oldest departments, an Auditor-General having been first appointed in 1844, only three years after the cession of the territory.

   Presently, the audit of the accounts of the Hong Kong Government is carried out under the terms of the Audit Ordinance enacted in 1971, which provides for the appointment, security of tenure, duties and powers of the Director of Audit, for the submission of annual statements by the Director of Accounting Services, for the examination and audit of those statements by the Director of Audit, and for the submission of his report thereon to the Governor as President of the Legislative Council. Certain specific duties relating to the examination, audit, reporting and certification of the government's accounts, are prescribed in the ordinance and wide powers are given to the director regarding his access to books, documents and records, and the explanations which he may require: Moreover, as in the performance of his duties and the exercise of his powers the director is not subject to the direction or control of any other person or authority, considerable discretion is given to him in the conduct of his inquiries and he is free to report publicly as he sees fit. Therefore, the director functions independently of the Administration.

The audit of all the government's accounts is carried out by the Director of Audit and his staff. 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, as well as reviewing the financial aspect of the operations of the multifarious government-subvented organisations working in Hong Kong.

Government auditing practised in Hong Kong falls into two main categories, respectively termed 'regularity' audit and 'value-for-money' audit. The regularity audit, which is intended to provide an overall assurance of the general accuracy and propriety of the government's financial and accounting transactions, is carried out by means of selective test checks and reviews designed to indicate possible areas of weakness. The audit is designed to ensure as far as reasonably possible that the accounts are accurate and correct, although, with the considerable volume and variety of government revenue and expenditure, it cannot hope to disclose every accounting error or financial irregularity. Value-for-money audit is carried out according to guidelines tabled in the Legislative Council by the chairman of the Public Accounts Committee on November 19, 1986. The audit is intended to ascertain that prudence and economy have been exercised in the management of public funds and that good value has been obtained for expenditure

CONSTITUTION AND ADMINISTRATION

which has been incurred. This involves going beyond the normal accounting records. In line with contemporary developments in both government and commercial auditing elsewhere, it is also becoming increasingly relevant to ascertain whether efficient and economical practices are being followed in pursuing prescribed goals and whether these goals are being achieved.

The Director of Audit's report, after it has been submitted to the Governor as the President of the Legislative Council and laid before the Council, is considered by the Public Accounts Committee. Since 1988, in response to a recommendation made by the Public Accounts Committee, the director submits two reports a year. In 1989, the first report was submitted on April 6, covering the results of value-for-money audits completed, and the second report was submitted on October 27, covering the audit certification of the government's accounts for the preceding financial year as well as the results of value- for-money audits completed.

      The director's reports on the accounts of other public bodies are submitted to the relevant authority in accordance with the legislation governing the operation of these bodies.

Foreign Relations

The Role of the British Government

Because of Hong Kong's status as a dependent territory, the Secretary of State for Foreign and Commonwealth Affairs is constitutionally responsible to the British Parliament for the actions of the Hong Kong Government and he has authority to give directions to the Governor of Hong Kong. In practice, however, such formal directions have not been issued in living memory, and Hong Kong conducts its affairs with a high degree of autonomy in all domestic matters.

      The relationship between London and Hong Kong is also essentially one of co-operation. For example, one important task regularly undertaken by the Foreign and Commonwealth Office is to ensure that Hong Kong's interests and views (which are not always identical with those of the United Kingdom) are properly considered within the British government machinery, particularly when new policies are being formulated by other Whitehall departments.

      Hong Kong's foreign relations are constitutionally the direct responsibility of the British Government. Thus the British Government is internationally responsible for ensuring that the Hong Kong Government fulfils its obligations under the many international conventions 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, and full autonomy regarding trade matters. It is a contracting party to the General Agreement on Tariffs and Trade in its own right.

The Role of the Political Adviser

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 Dec- laration. 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

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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.

Public Service

The Public Service provides the staff for all government departments and other units of the Administration. With Hong Kong's centralised form of government, the Public Service operates a wide range of services which in many countries would be administered by other public authorities. These include medical services, public works and utilities, urban cleansing and public health, education, fire services and the police force. The departments in charge of these areas - namely, the Hospital Services Department and Department of Health (with an establishment of 22 520 and 5 302 respectively), the Lands and Works group of departments (23 900), the Municipal Services group of departments (27 693), the Education Department (6 841), the Fire Services Department (7 563), and the Royal Hong Kong Police Force (33 604) account for 64 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 1988-9 was increased by three per cent over the previous financial year. At April 1, 1989, the total strength of the service was 186 642, over 98 per cent of this number being local officers. It is structured into some 436 grades or job categories in administrative, professional, technical and manual fields, with 1 197 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, train- ing 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 four 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 committee published its 10th report in June 1989. The government accepted the main recommendations of the report concerning the grouping of departments, the ranking of individual posts and conditions of service, but deferred a decision on proposals for a restructuring of the directorate pay scale.

   The Standing Committee on Judicial Salaries and Conditions of Service advises on matters affecting judicial officers. In November 1988, the government implemented the committee's recommendation to establish a separate pay scale for judicial officers.

Arising from the report of an independent review committee, a Standing Committee on Disciplined Services Salaries and Conditions of Service was appointed in February 1989 to advise on the salaries and conditions of service of the disciplined services.

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The Standing Commission on Civil Service Salaries and Conditions of Service advises on matters affecting all other public servants. The commission is currently conducting an overall review of the salary structure of non-directorate staff, excluding members of the disciplined services.

The government fully recognises the value of good staff relations in the Public Service. Apart from providing a wide range of welfare and recreational facilities to staff, much effort is devoted to the promotion of effective staff consultation. The formal consultative machinery comprises two service-wide central consultative councils (the Senior Civil Service Council and the Model Scale 1 Staff Consultative Council), a Police Force Council for members of the Police Force, and departmental consultative committees for staff in all other departments. Outside these councils and committees, individual members of the Public Service or staff associations have ready access to their heads of department or grade as well as the Civil Service Branch. The Standing Commission on Civil Service Salaries and Conditions of Service submitted a report to the Governor in February 1989 which contained recommendations on how the consultative machinery in the Civil Service could be further improved.

      Continued efforts were made in 1989 to increase productivity and to improve the quality of service to the public. To this end, value-for-money studies and work improvement studies were carried out in various departments. These studies brought about not only improvements in the quality of service, but also more effective deployment of staff and 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 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.

Civil Service Training

The government attaches great importance to the training of civil servants in a bid to increase efficiency and effectiveness and to help them meet new challenges. Induction and refresher training is provided by many departments to equip staff with the skills to carry out their duties properly. To meet common departmental needs, 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 institutes. As the central training agency, it 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 management development programmes and a number of short workshops and seminars each year. Participation by private sector executives is encouraged.

Language

The official languages of Hong Kong are English and Chinese. They are used with equal status in all manner of communications between the government and the public. Major

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government reports and publications of public interest are available in both languages. Cantonese (the Guangzhou dialect) is commonly spoken by the majority of the local Chinese population while interest in learning to speak Putonghua (Mandarin) is gaining momentum as closer ties with China are being developed. Simultaneous interpretation is provided at meetings of the Legislative Council, Urban Council, Regional Council, District Boards and other government boards and committees where English and Cantonese are used. A Bilingual Laws Advisory Committee was set up in October 1988 and the first bilingual legislation enacted in April 1989.

3

THE LEGAL SYSTEM

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 Distress for Rent Act of 1689.

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 Tokyo Convention Act 1967 (Overseas Territories) Order 1968 is an Order in Council implementing in Hong Kong a treaty to which the United Kingdom is a party.

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 Government formulating drafting instructions for the Drafting Division of the Attorney General's Chambers. The instructions are prepared after consultation with the relevant

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42

government departments and, if appropriate, with interested public groups, as to the policy to adopt. After a bill has been drafted, it is submitted to the Governor in Council for approval to submit it to the Legislative Council. If the bill is passed by vote of the Legislative Council, the Governor is empowered to enact by giving his assent to it and it is passed into law.

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 annually.

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. The first piece of bilingual new legislation was enacted on April 13, 1989. Thereafter, all new prinicipal legislation is to be enacted bilingually. On the translation of existing laws, a committee known as the Bilingual Laws Advisory Committee was set up by government in October 1988 to advise on the publication of Chinese texts of existing ordinances. The committee examines the Chinese texts prepared by the Law Drafting Division of the Attorney General's Chambers and recommends the Governor in Council to declare these texts an authentic version of the laws. Some 520 public ordinances will have to be translated in the years to come.

Bill of Rights

In Hong Kong the basic social and political freedoms that people enjoy have always been taken for granted. These are backed up by many different provisions of statutory and common law. In addition, the International Covenants on Civil and Political Rights and on Economic, Social and Cultural Rights have been extended to Hong Kong since 1976. And their continued application beyond 1997 is guaranteed in the Joint Declaration.

In view of the strong support in the community for these freedoms to be embodied in a Bill of Rights, the government has been considering what form such a bill might take. A draft bill will be published for public consultation early in 1990. The government's intention is that the bill should give effect in local law to the relevant provisions of the International Covenant on Civil and Political Rights, as applied to Hong Kong. This means that if anyone believes that their civil or political rights, as defined in the covenant, have been violated they will be able to seek redress in the courts. The current plan is to introduce draft legislation into the Legislative Council by July 1990. Within this timescale there will not be time for a comprehensive review of all the existing laws to remove any areas of doubt about their full compatibility with the Bill of Rights. To avoid any unnecessary uncertainties the draft bill provides for a limited period after its enactment during which existing laws cannot be challenged against the standard of the new bill.

The provisions of the other International Covenant, on Economic, Social and Cultural Rights, are different in nature. They are in the form of objectives to be achieved pro- gressively and, generally speaking, are not rights which individuals could easily enforce

THE LEGAL SYSTEM

in the courts. For these reasons they are not well suited for inclusion in a Bill of Rights designed to give people the right of direct action in the courts. The government is fully committed to the objectives of the covenant and seeks to implement them through existing legislation and policies.

Judiciary

The Chief Justice is head of the Judiciary. He is assisted in his administrative duties by the Registrar, two Deputy Registrars and four Assistant Registrars of the Supreme Court.

The Judiciary operates on the principle, fundamental to the common law system, of complete independence from the executive and legislative branches of government. This applies equally whether a dispute is between the government and an individual, or whether it involves only private citizens or corporate bodies.

      The most senior court in Hong Kong is the Supreme Court, comprising the Court of Appeal and the High Court. Sitting in the Supreme Court in addition to the Chief Justice are nine Justices of Appeal and 20 High Court Judges. The Registrar, Deputy Registrars and Assistant Registrars also have jurisdiction as Masters of the Supreme Court in civil trials in the High Court. The jurisdiction of the High Court is unlimited in both civil and criminal matters, and the Court of Appeal is the highest court in Hong Kong. The Court of Appeal hears both civil and criminal appeals from the High Court and from the District Court. Further appeal lies to the Judicial Committee of the Privy Council in London; however this is infrequent as leave to appeal is granted only on stringent conditions of public interest.

High Court Judges usually sit alone when trying civil matters, although there is a rarely-used provision for jury trials in certain cases including defamation. For criminal trials they sit with a jury of seven, or nine on special direction of the judge. The issue of guilt is determined by the jury, which must have a majority of at least five to two, except with charges attracting a death sentence when unanimity is required.

The District Court has both civil and criminal jurisdiction. Its civil jurisdiction is limited to disputes of a value up to $120,000, and its criminal jurisdiction up to seven years' imprisonment. Its judges sit without a jury and may try the more serious cases, save principally for murder, manslaughter and rape, which are reserved to the High Court. There are 32 Judges of the District Court; the majority sit in a large central court, with three smaller courts serving the outlying districts of the territory.

The Magistrates' Courts try annually some 90 per cent of all the cases heard in the territory. There are 60 professional magistrates sitting in 10 magistracies, two of which are on Hong Kong Island, four in Kowloon and four in the New Territories.

Magistrates have a purely criminal jurisdiction covering a wide range of offences. Professional magistrates are generally restricted in sentence to two years' imprisonment and $10,000 fine, however a number of statutes allow increased sentences. Professional magistrates also try cases in the Juvenile Court, which has jurisdiction in charges against children and young persons up to 16 years, except in cases involving homicide.

In addition to the professional magistrates, there are 10 special magistrates who are not legally qualified. They handle routine cases, such as littering and minor traffic offences, and their powers of sentence are limited to fining up to $20,000. They are all Cantonese speaking and conduct their cases in that language.

In addition to the principal courts of civil and criminal jurisdiction, there are five specialised tribunals. The Coroner's Court handles enquiries into unusual circumstances causing death; the Small Claims Tribunal hears civil claims up to a limit of $15,000; the

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THE LEGAL SYSTEM

44

  Labour Tribunal hears individual civil claims arising from contracts of employment, and the Lands Tribunal has jurisdiction in matters of rating and valuation and in assessing compensation when land is resumed by government or reduced in value by development. Finally, the Obscene Articles Tribunal has jurisdiction to determine whether or not an article is obscene and to classify it into statutory categories of acceptability or otherwise.

   The Small Claims and Labour Tribunals provide the public with inexpensive recourse to litigation, as their proceedings are informally conducted and professional representation is not permitted.

The Official language of the court is English in the Court of Appeal, the High Court and the District Court; in the other courts and tribunals the court may use Chinese. Whichever language is used, a party or witness in any court in Hong Kong may use Chinese or English or any other language permitted by the court.

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 Operations Review and Complaints Committee of the Independent Commission Against Corruption.

   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 responsible for the drafting of all legislation and for the conduct of all prosecutions.

   The Attorney General's Chambers are divided into five divisions, 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, which includes the Law Reform Commission Secretariat. The International Law Division is headed by the Law Officer (International Law) and deals with all external legal matters arising out of the Sino-British Joint Declaration.

During the past year a new unit has been established in the Attorney General's Chambers to speed up the localisation of United Kingdom legislation which now applies to Hong Kong. In conjunction with the General Duties Branch and the International Law and Civil Divisions of the Attorney General's Chambers, the new unit will study all United Kingdom laws which apply to Hong Kong and consult with policy branches on whether the law in question will be needed in future. Where appropriate, instructions will be prepared for local legislation to reproduce that law in a form in which it can

THE LEGAL SYSTEM

     survive after 1997. The target date for completion of the localisation of laws programme is 1994.

Legislation has already been enacted to localise laws in the fields of admiralty juris- diction, marine pollution and international financial organisations.

The past year also saw the making of the Hong Kong (Legislative Powers) Order 1989 under the Hong Kong Act 1985. The order facilitates localisation of laws required to give effect to international agreements which apply to Hong Kong.

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.

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, Control of Exemption Clauses 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, Coroners, and Competence and Compellability of Spouses in criminal proceedings.

It is considering Evidence in Civil Actions, Breach of Confidence Actions, Wills and Intestate Succession, Bail, Interest on Debt and Damages, 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 (Establishment) 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

45

THE LEGAL SYSTEM

46

  Marks Ordinance and the Registration of Patents Ordinance. The Insurance Division provides prudential supervision, under the provisions of the Insurance Companies Ordin- ance, 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 Insurance Advisory Committee and the Standing Committee on Company Law Reform, and represents the Financial Secre- tary 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. Legal aid is provided by the government through two organisations. The Legal Aid Department administers highly sophisticated and extensive legal aid schemes for legal representation in both civil and criminal cases heard in District Courts and the High Court. Such aid is available to any person in Hong Kong, resident or non-resident, who satisfies the Director of Legal Aid on financial eligibility and justification for legal action. 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 heard in the Magistrates' Courts and Juvenile Courts of Hong Kong.

Civil Legal Aid

  The financial limits in both civil and criminal cases undertaken by the Legal Aid Department are the same. At present, persons who have a disposable monthly income of not more than $2,200, and a disposable capital of not more $15,000, are financially eligible. Disposable income and capital are arrived at after 'allowances', including rent, have been deducted from actual earnings and capital of applicants. Legal aid is provided either free or on payment of a contribution, depending on the amount of the disposable income and capital. In addition to financial eligibility, the applicant must satisfy the Director of Legal Aid in civil cases that he has a reasonable chance of succeeding in the litigation for which he seeks aid and in recovering the judgement debt thereafter. Legal aid is available for a wide range of civil proceedings in the District Courts, High Court, Court of Appeal and appeals to the Judicial Committee of the Privy Council in London. Traffic accident claims, landlord and tenant disputes, claims in respect of industrial accidents and employees compensation, immigration matters, breach of contract, professional negligence and every branch of family law are included in the civil aid scheme. Other cases such as admiralty, bankruptcy and companies winding-up proceedings are also undertaken, the majority of which deal among other things with employees' wages and severance pay. 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 1989-90 was $47 million in civil cases. In 1989, 15 205 applications were received and 4 607 granted. A sum of $159 million was recovered for the aided clients in these cases. If a legally-aided person in civil litigation is successful and legal costs are recovered in the proceedings, any contribution he may have paid may be refunded to him. In unsuccessful litigation, the liability for costs of a legally-aided person is limited to the amount of contribution, if any, paid by him.

   There is a spiralling divorce rate in Hong Kong and an independent counselling agency is provided by the Hong Kong Catholic Marriage Advisory Council whereby applicants

THE LEGAL SYSTEM

for legal aid in matrimonial cases may have counselling with a view to reconciliation or conciliation. This scheme, funded by the Royal Hong Kong Jockey Club, is in operation in the Legal Aid Department's Kowloon branch office.

In October 1984, the Supplementary Legal Aid Scheme was established to provide legal assistance to those persons whose resources exceeded the financial limits under the existing civil aid scheme, but were not sufficient to meet the high costs of conducting litigation on a private basis. This scheme is available for claims in the High Court and for certain claims in the District Court for damages for death and personal injuries.

      In place of the limit of financial eligibility under the existing civil aid criteria, the supplementary scheme enables an applicant with a gross monthly income not exceeding $15,000 and disposable assets not exceeding $100,000 to apply. A successful litigant under the supplementary scheme pays back a proportion of the damages he recovers into the scheme's fund to assist litigants in future litigation. 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 percentage deducted from damages ranges from 10 per cent to 12.5 per cent depending on the amount recovered and on whether the case is settled prior to the trial of the action.

The total estimated expenditure in 1989-90 was $2 million. During 1989, 131 applica- tions were received of which 64 were granted.

Legal Aid in Criminal Cases

     Legal aid as provided by the Legal Aid Department is also available for criminal proceedings in the District Courts, High Court, Court of Appeal and the Judicial Committee of the Privy Council, for representation at proceedings in the Magistrates' Courts where the prosecution is seeking committal of a defendant to the High Court for trial and for assistance in preparing petitions for clemency to the Governor in Council. The majority of accused persons in proceedings in these courts are legally-aided.

      For High Court criminal trials, legal aid is invariably given, subject to financial eligibility, because of the costs involved, the severity of the charge and the gravity of possible sentence. Legal aid can also be given to conduct pleas in mitigation of sentence. For appeals against conviction for murder, irrespective of whether there are grounds of appeal, the granting of legal aid is mandatory so as to ensure that all relevant matters are placed before the court by the appellant's legal representative. For all other criminal appeals, including appeals from the decisions of 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, by a committee of review.

The total estimated expenditure for 1989-90 was $37 million in criminal cases. During 1989, 4785 applications were received for legal aid in criminal cases and a total of 2 926 were granted.

      If a person is granted legal aid in a civil case, 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 also has various sections specialising in enforcement of judgements for damages and legal costs, application for the grant of letters of administration in fatal cases and preparation of

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THE LEGAL SYSTEM

itemised Bills of Costs, all of which provide a support service for cases assigned to private practitioners and in-house lawyers.

The department has its headquarters at Queensway Government Offices on Hong Kong Island and a branch office in Kowloon. The establishment comprises 380 persons of whom 54 are professional lawyers and 119 are law clerks who are para-legal personnel. Training for law clerks is provided by the professional officers. From time to time, officers at all levels attend job-related training courses provided by the Civil Service Training Division. The department also participates in the training programme for articled clerks whose articles are with members of the other legal service departments.

Legal Advice and Duty Lawyer Schemes

The Law Society Legal Advice and Duty Lawyer Schemes administered by the Law Society with the full support of the Bar Association comprise three schemes providing free legal representation, legal advice and legal information for people in Hong Kong. The day to day operation of the schemes is overseen by a management and administration committee, the members of which are representatives nominated by both the Law Society and the Bar Association. The committee meets once a month. The government funds the entire operation of the schemes and the subvention in 1989-90 was over $22 million.

   The Duty Lawyer Scheme provides free legal representation to those charged with one of nine specified offences and are brought before the magistrates' courts. The nine specified offences 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 weapons. In addition, the Duty Lawyer service is available to all juvenile offenders, whether they are appearing before a Juvenile or Magistrates' Court, except those charged with extremely minor offences. There are 526 remunerated lawyers (barristers and solicitors) on the Duty Lawyer Panel. In 1989, 15 570 defendants facing 19 616 charges received preliminary advice and representation at trial.

The Legal Advice Scheme provides free advice to people who cannot afford to consult private lawyers. The scheme operates eight advice centres at Sha Tin, Tsuen Wan, Wan Chai, Eastern, Yau Ma Tei, Kwun Tong, Mong Kok and Wong Tai Sin District Offices. Each centre opens once a week in the evening. Members of the public can make appointments to see the volunteer lawyers through one of the 120 referral agencies which include all District Offices, Caritas Services Centres and many other volunteer agencies. Generally, clients can see a lawyer within 14 days. However, in genuinely urgent cases, early appointments can be arranged. There are 343 lawyers (barristers and solicitors) on the Advice Lawyer Panel. Some 3 500 people are advised each year.

The Tel-law Scheme was introduced in March 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 65 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. Tapes are added when a new subject is identified as being of interest to the public. During the year, Tel-law handled 48 269 calls.

4

IMPLEMENTATION

OF THE SINO-BRITISH JOINT DECLARATION:

THE events which occurred in China in the middle of the year inevitably disrupted the work of the Sino-British Joint Liaison Group (JLG) and the Sino-British Land Commission. The 13th meeting of the JLG originally scheduled for July was postponed. Normal business between the two JLG offices in Hong Kong and in the Land Commission was also temporarily suspended to allow time for reflection by both sides.

      Following a meeting between the then British Foreign Secretary, Mr John Major and the Chinese Foreign Minister, Mr Qian Qichen in Paris at the end of July, it was agreed that the 13th meeting of the JLG should be held in September. The September meeting established the basis for a return to productive work. Resumption of the Land Commission meeting followed in December. Both governments reaffirmed their full commitment to the successful implementation of the Joint Declaration. The British Government also reaffirmed its commitment to administer Hong Kong effectively until 1997.

Meanwhile, the deadline for the solicitation of opinions on the second draft of the Basic Law published in February was extended until the end of October to give Hong Kong people more time to forward their views to the Basic Law Consultative Committee.

The Sino-British Joint Liaison Group

The Sino-British Joint Liaison Group 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 taken Hong Kong as its principal base since July 1, 1988. Both sides have established their offices here and their respective senior representatives are now resident in Hong Kong. This has facilitated closer liaison which has led to more rapid progress on many issues. The JLG will, nevertheless, continue to hold plenary sessions at least once every year in Beijing and London, as well as in Hong Kong.

      Despite the temporary disruption to the work of the JLG, three meetings were held during the year and progress was made in a number of important areas. The two sides continue to work closely together to find solutions which are in the best overall interests of Hong Kong and its future.

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IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

50

Defence and Public Order

The two sides continued discussions on the implementation of the Joint Declaration in respect of defence and the maintenance of public order. These discussions included the practical arrangements for the transfer of defence responsibilities in 1997.

Court of Final Appeal

The Joint Declaration provides for the establishment of a court of final appeal in the Hong Kong Special Administrative Region (HKSAR). During 1989, the two sides continued their discussions on the establishment of a court of this nature in Hong Kong before 1997.

Localisation of Laws

A large number of United Kingdom enactments currently apply to Hong Kong. These will cease to have legal effect in Hong Kong after 1997. It will, therefore, be necessary to 'localise' them before 1997, that is, 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 for consultation on the localisation of United Kingdom enactments, since when considerable progress has been made. The first piece of localised legislation, the Supreme Court (Amendment) Ordinance dealing with Admiralty jurisdiction in respect of civil proceedings, was enacted in February 1989. Four sets of Merchant Shipping (Safety) Regulations were localised in May 1989 and two bills relating to merchant shipping were introduced into the Legislative Council in June 1989.

Air Service Agreements

In 1988, Hong Kong signed new Air Service Agreements (ASA), separate from those of the United Kingdom, with Switzerland and with Canada. An ASA with Brunei was signed and entered into force on January 9, 1989, and negotiations with a number of other aviation partners are at an advanced stage.

Sub-group on International Rights and Obligations

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

   The considerable number of treaties and international obligations relevant to Hong Kong which the sub-group will have to examine individually indicates 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 1989, expert exchanges in the sub-group led to agreement between the two sides at the JLG on Hong Kong's continued participation after 1997 in the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC) and the International Development Association (IDA). It was agreed that after 1997, Hong Kong would continue its present participation in these organisations, and that the IBRD, the IFC and the IDA could conduct operations in Hong Kong or in Hong Kong dollars in accordance with their relevant articles of agreement when the need arose. The JLG has now reached agreement on Hong Kong's continued participation in a total of 24 international organisations.

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

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 composed of three officials on each side and meetings are held in Hong Kong.

During 1989, the Land Commission held two formal meetings. Agreement was reached at the meeting held in March on the 1989-90 Land Disposal Programme to make available about 78 hectares of land during the financial year. In addition, the commission agreed that a further five hectares of land could be released for commercial, residential and industrial development in the course of the year, if there was a demand for it.

       Under the terms of paragraph 6 of Annex III to the Joint Declaration, premium income obtained by the Hong Kong Government from land transactions is, after deduction of the cost of land production, to be shared equally between the Hong Kong Government and the future Hong Kong Special Administrative Region Government. The average cost of land production is adjusted by the commission annually, and for the 1989-90 financial year the agreed figure was $2,390 per square metre. The Hong Kong Government's share of premium income is put into the Capital Works Reserve Fund for financing public works and land development. The future SAR Government's share 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 from the Hong Kong Government. Over $16,485 million, representing the future SAR Government's share of premium income for the period May 27, 1985 to September 30, 1989, has been transferred to the fund.

The Basic Law

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 these policies will remain unchanged for 50 years. The Chinese Government appointed in 1985 the Basic Law Drafting Committee (BLDC), which comprises both mainland and Hong Kong members, to undertake the drafting of the document. The Basic Law Consultative Committee (BLCC), consisting exclusively of Hong Kong members of broad repre- sentation, was also established to canvass the views of Hong Kong people on the draft Basic Law.

      The first complete draft of the Basic Law was published in April 1988, followed by a five-month consultation exercise conducted by the BLCC. Many of the views expressed during the consultation exercise were reflected in a revised draft, which the BLDC submitted in February 1989 to the Standing Committee of the NPC. The Standing Committee then endorsed the 'Basic Law for the Hong Kong Special Administrative Region of the People's Republic of China (Draft)' for further consultation.

       Consultation on the second draft of the Basic Law was originally scheduled to last until July. As in the first consultation round, a delegation of mainland BLDC members visited Hong Kong in April to receive public opinions on the draft at first hand.

       The work of both the BLDC and BLCC was, however, interrupted by the events in China early in June. Consultation on the second draft was not resumed until late July, when the consultation period was extended by three months to the end of October.

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IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

  In December, the five BLDC Special Groups met again to discuss how the second draft should be revised in the light of the outcome of the second consultation exercise. It was agreed that the Special Group on Political Systems would meet again in January 1990. The BLDC will meet in plenary session, in February 1990, to consider the final draft. This will then be submitted to the NPC, which is expected to promulgate the Basic Law in the spring of 1990.

5

THE ECONOMY

THE growth rate of the Hong Kong economy slowed down further in 1989. This was brought about partly by reduced overseas demand for Hong Kong's products and partly by the economy adjusting itself to capacity constraints following several years of rapid growth.

      The year-on-year growth rate of domestic exports showed a marked deceleration during the year, from an increase of four per cent in real terms in the first half to a decline of three per cent in real terms in the second half. The corresponding growth rate for 1988 as a whole was nine per cent. The year-on-year growth rate of re-exports also moderated, with increases in real terms of 29 per cent in the first half and 11 per cent in the second half. The increase for 1988 as a whole was 46 per cent. Domestic demand, including consumption and investment, was sluggish in the latter part of the year. Reflecting these developments, the gross domestic product (GDP) grew by only 2.5 per cent in real terms in 1989, compared with increases of 14 per cent in 1987 and seven per cent in 1988.

Repercussions of the events in China in mid-1989 reinforced the cyclical downturn of the economy. While certain sectors like property and tourism suffered more than others, the economy at large weathered the short-term impact well. There was little disruption in manufacturing and trading activities, including outward processing arrangements across the border.

As the economy was still operating close to capacity, the labour market remained generally tight. The seasonally-adjusted unemployment rate and the underemployment rate stayed at a low level throughout the year, moving between 1.3 and 1.4 per cent and 0.6 and 0.8 per cent respectively. The employment situation varied between major sectors. While employment in the manufacturing sector declined, employment in the service sectors generally increased.

       Labour incomes were boosted by the sustained demand for labour. Earnings in the manufacturing sector and in most service sectors increased significantly, both in money terms and in real terms. However, as economic activity continued to slow down, the pressure of demand for labour tended to ease. The number of vacancies in most sectors, such as manufacturing, building and construction, wholesale/retail and import/export trades, and restaurants and hotels, declined in the latter part of 1989 compared with a year earlier.

The Consumer Price Index (A), as one of the major indicators of inflation, averaged 10.1 per cent higher in 1989 compared with a year earlier. The corresponding rate of increase in this Index was 5.5 per cent in 1987 and 7.5 per cent in 1988. However, the rate of inflation had shown a tendency to ease towards the end of the year, in line with the moderation in economic growth.

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THE ECONOMY

54

Structure and Development of the Economy

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

The externally-oriented nature of the economy can be seen from the fact that in 1989 the total value of visible trade (comprising domestic exports, re-exports and imports) amounted to 231 per cent of the GDP. If the value of imports and exports of services is also included, this ratio becomes 263 per cent. Between 1979 and 1989, Hong Kong's domestic exports grew at an average annual rate of about nine per cent in real terms, which was roughly twice the growth rate of world trade. The corresponding average annual increase was 25 per cent for re-exports and 14 per cent for imports. With a gross value of $1,136 billion in overall visible trade in 1989, 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, mining and quarrying) is small in terms of its contributions to employment and to the GDP.

Within secondary production (comprising manufacturing; the supply of electricity, gas and water; and construction), manufacturing accounts for the largest share in terms of both the GDP and 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 around 22 per cent during the period 1985 to 1987, before decreasing to 20 per cent in 1988. 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 1988.

The contribution of the tertiary services sectors as a whole (comprising the wholesale, retail and import/export trades, restaurants and hotels; transport, storage and commu- nications; finance, insurance, real estate and business services; and community, social and personal services) to the GDP increased from 60 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 67 per cent in 1988.

The tertiary services sectors are highly diversified. The contribution of the wholesale, retail and import/export trades, restaurants and hotels to the GDP varied between 19 and 21 per cent in 1970 to 1983, before rising to 25 per cent in 1988. The contribution of the transport, storage and communication sector to the GDP was stable at around seven to eight per cent, before rising to nine in 1987 and 1988. The contribution of the finance, insurance, real estate and business services sector to the GDP experienced considerable fluctuation, however. It rose 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. The contribution of this sector to the GDP then rose steadily, to 19 per cent in 1988.

With regard to employment, the most notable change since the early 1970s is that, whereas the manufacturing sector still takes up 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 31 per cent in 1989. On the other hand, the share of the tertiary

THE ECONOMY

service sectors as a whole in total employment increased from 41 per cent in 1971 to 47 per cent in 1981, and further to 58 per cent in 1989.

The Manufacturing Sector

Although Hong Kong's domestic exports are still concentrated in a number of major product groups, there has been considerable upgrading of quality and diversification of items within these groups. The pressure of protectionism and growing competition from other economies have resulted in local manufacturers intensifying their efforts to diversify, not only in respect of products but also of markets. It is estimated that about 80 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 a large number of small establishments providing an extensive local sub-contracting system has greatly facilitated the necessary shifts in production and has helped to increase the flexibility of the economy. Moreover, increasing use has been made of the outward processing facilities in 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 build- ings. 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 being plastics and electronics. The textiles and clothing industries remain prominent, however. Other developing industries include fabricated metal products, electrical appliances, watches, clocks, toys, jewellery, printing and publishing.

      During the period 1973 to 1987, value of net output by the manufacturing sector grew at an average annual rate of 17 per cent, while manufacturing employment grew at a rate of only two per cent. Thus, a significant secular improvement in labour productivity was apparent, even though part of the increase in the value of net output was absorbed by increases in prices.

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 17 per cent in 1987, 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 1987, their shares in the net output of manufacturing increased from 20 per cent to 24 per cent, from nine per cent to 15 per cent, and from one per cent to three per cent respectively, while their shares in manufacturing employment increased from 26 per cent to 29 per cent, from 11 per cent to 14 per cent, and from one per cent to three per cent respectively.

Domestic exports in 1989 consisted principally of wearing apparel and clothing accessories (32 per cent of the total value), electronics (25 per cent), watches and clocks (seven per cent), textiles (seven per cent), plastic products (four per cent), metal products (three per cent) and electrical household appliances (two per cent). In terms of share in the total value of domestic exports, the most significant change over the past 10 years has been the decline in the relative importance of clothing, from 36 per cent in 1979 to 32 per cent in 1989. This decline was offset by increases in the relative importance of such commo- dities as telecommunications and sound recording and reproducing equipment, electrical machinery and appliances, and office machines and automatic data processing equipment. The combined share of these three commodity groups in the total value of domestic exports rose from 16 per cent in 1979 to 22 per cent in 1989.

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56

   Market diversification is the combined result of the initiatives taken by local manu- facturers 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. Gradually, the share of domestic exports going to such countries as the Federal Republic of Germany, Japan, Canada and Australia, and to the 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 into other new markets, including countries in the Middle East, Eastern Europe, Latin America and Africa.

The Service Sectors

Over the past decades, the rapid growth in external trade has not only enabled Hong Kong to build up a strong manufacturing base, it has also provided the underlying conditions for the service sectors to flourish. Of particular note was the rapid growth and development in finance and business services, including banking, insurance, real estate, and a wide range of other professional supports.

The prominence of entrepôt trade re-emerged in the late 1970s as China adopted open-door economic policies to facilitate its modernisation drive. Hong Kong, as a strategic gateway to China, was well positioned to take advantage of these opportunities. Trading and other economic links between Hong Kong and China thus increased rapidly.

   Over the years, Hong Kong has developed an efficient wholesale and retail network to cater for the growing consumption needs of a more affluent population. Supermarkets, large department stores and modern shopping centres have become increasingly popular. The rapid growth in tourism since the 1970s has reinforced this development. Restaurants and hotels have also experienced a substantial increase in their volume of business. Furthermore, with increased household incomes, there was a growing demand for services of a better quality to meet the rising standard of living. Thus services in the community, social and recreational fields have also grown substantially.

   Given its strategic location in relation to China and the Asia-Pacific region as a whole, as well as between the East and the West, and given its excellent communications network, efficient infrastructure and well-established services, Hong Kong has developed into the hub for trade, finance and business services in the region.

   Between 1979 and 1989, exports of services rose at an average annual rate of nine per cent in real terms, while imports of services had a corresponding increase of 12 per cent. The major components of Hong Kong's invisible trade are shipping, civil aviation, tourism and various financial services.

Increasing Economic Links between Hong Kong and China

  China's adoption of open-door economic policies since 1979, in support of its modernisation 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.

   China has been Hong Kong's largest trading partner since 1985. In 1989, the total value of merchanise trade between Hong Kong and China amounted to $343 billion, repre- senting an increase of 19 per cent over 1988. This growth rate was, however, significantly lower than the average annual increase of 39 per cent between 1978 and 1988. A setback in outward processing activities across the border, which was caused partly by supply bottlenecks in China and partly by slow growth in overseas demand, and the intensifica-

THE ECONOMY

     tion of China's austerity measures, have contributed to a slackening in Hong Kong's exports to China. Despite this slow-down, China remained the largest market for Hong Kong's re-exports and the second largest market for Hong Kong's domestic exports. About 50 per cent of Hong Kong's total exports to China was related to outward processing trade. China was also the largest supplier of goods to Hong Kong, although a predominant proportion of these goods were re-exported. In 1989, China accounted for 30 per cent of Hong Kong's overall external trade (19 per cent of its domestic exports, 30 per cent of its re-exports, and 35 per cent of its imports). Reciprocally, Hong Kong overtook Japan to become China's largest trading partner in 1987. In 1988, Hong Kong accounted for 29 per cent of China's overall external trade (38 per cent of its exports and 22 per cent of its imports).

In entrepôt trade, China has been the largest re-exports market for Hong Kong since 1980. It has also long been the largest source of goods re-exported through Hong Kong. In 1989, 81 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 have also increased rapidly since the adoption of open-door policies in China. These included tourism and travel services, transport services, financial services, and professional and other business services.

Hong Kong has been providing a convenient gateway to China for business and tourism. In 1989, about 15 million trips to China were made by Hong Kong residents, and another 1 million trips to China were made by foreign visitors through Hong Kong. These were, however, eight per cent and 16 per cent respectively lower than in 1988, mainly because of the impact of the events in China in mid-1989.

      Given the slow-down in trade and in passenger movements, the rapid growth in transport services between Hong Kong and China since 1979 decelerated in 1989. On cargo transport, the volume of inward cargo from China showed little change, while China-bound cargo increased by nine per cent, in the first three quarters of 1989, compared with the same period in 1988. The corresponding increase in tonnage terms between 1979 and 1988 averaged about 11 per cent and 49 per cent per annum. Part of these cargo movements were transhipments. Most of the cargo was transported by water, although an increasing proportion was carried by road. With passenger traffic, there was an eight per cent decline in 1989 over 1988. The corresponding increase between 1979 and 1988 averaged 21 per cent per annum. An increasing proportion of the passenger trips were made by air in recent years.

Hong Kong's direct investment in China has been concentrated in light manufacturing industries such as electronics, plastics, textiles and wearing apparel. Investment in hotels and tourist-related facilities and in infrastructure has also been undertaken. Most investment is in joint ventures of various forms with China enterprises. Hong Kong is the most important source of external investment in China, accounting for about 70 per cent of the realised total. Moreover, many Hong Kong manufacturers have established compen- sation trade and outward processing arrangements with Chinese entities, located mainly in the Pearl River Delta region and the Shenzhen Special Economic Zone.

      China's investment in Hong Kong has increased greatly in recent years and has diversified into practically all major economic sectors. Besides the traditional banking, trade, and trade-related activities like transportation and warehousing, new areas of invest- ment include manufacturing, property development, infrastructural projects, supermarkets and hotels.

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58

The Economy in 1989

The growth rate of the economy continued to decelerate in 1989. While re-exports rose less rapidly, domestic exports showed a decline in real terms in the second half of 1989, over a year earlier. In the domestic sector, consumption and investment demand slackened in line with the consolidation in economic activity.

Events in China in June have also affected economic growth. The stock and property markets and tourist-related sectors were particularly hard-hit immediately after the events early in June. Since then, some recovery has been evident, although the pace of im- provement varied. The manufacturing and trading sectors had not been disrupted to any significant degree. On the whole, the economy weathered the short-term impact well.

Despite the slow-down in activity, the economy was still facing capacity constraints. The labour market remained generally tight throughout 1989 and the rate of inflation was relatively high. The vacancies situation in most sectors improved in the latter part of the year, while consumer price inflation showed a tendency to ease.

Preliminary estimates show that the growth rate in real terms of the GDP was only 2.5 per cent in 1989, following increases of 14 per cent in 1987 and seven per cent in 1988. Over the past five years, the GDP rose at an average annual rate of seven per cent in real terms, a highly satisfactory performance by world standards.

External Trade

In 1989, the value of domestic exports grew by three per cent over 1988. After allowing for an estimated three per cent increase in prices, domestic exports showed virtually zero growth in real terms. This represents a marked slow-down when compared with an increase of 11 per cent in value terms, or nine per cent in real terms, recorded in 1988. On a year-on-year comparison, domestic exports rose by six per cent and two per cent respec- tively, in real terms, in the first and second quarters, but fell by one per cent and four per cent respectively, in real terms, in the third and fourth quarters. This slow-down was largely attributable to a slackening in demand for Hong Kong's products in overseas markets. It was also affected by reduced price competitiveness due to the appreciation of the Hong Kong dollar, in line with the US dollar, against the currencies of many major markets during 1989.

Domestic exports to the various major markets showed a mixed performance in 1989. On a year-on-year comparison, domestic exports to Japan grew significantly, by about 16 per cent in real terms. The growth rate in real terms of domestic exports to China, as Hong Kong's second largest market, decelerated sharply from 27 per cent in the first half of 1989 to about one per cent in the second half. This was attributable partly to the intensification of China's austerity programme since June and partly to a setback in outward processing activities across the border. Domestic exports to the United States, the Federal Republic of Germany and the United Kingdom declined by about four per cent, four per cent and nine per cent respectively in real terms. Although the United States remained the largest market for Hong Kong's domestic exports, its share fell to 32 per cent in 1989, from 37 per cent in 1987 and 33 per cent in 1988. This reflects, in part, the continuous efforts of local manufacturers and exporters to diversify their markets.

In terms of major product categories, domestic exports of clothing and textiles grew in real terms by about four per cent and seven per cent respectively in 1989. Their shares in the total value of domestic exports in 1989 were 32 per cent and seven per cent respectively. Domestic exports of electronic components also increased, by about 22 per cent in real terms. While domestic exports of watches and clocks showed zero growth, significant

THE ECONOMY

     declines were recorded in domestic exports of radios (by about 41 per cent in real terms) and domestic electrical appliances (by about 26 per cent). Domestic exports of metal manufactures also decreased by about 12 per cent in real terms.

      At 26 per cent in value terms, or about 29 per cent in real terms, the growth rate of re-exports in 1989 was still substantial, although much lower than the increase of 51 per cent in value terms, or 46 per cent in real terms, recorded in 1988. A large proportion of the re-exports were related to conventional entrepôt trade with China in particular and with the Asia-Pacific region generally.

      China remained the largest source of, as well as the largest market for, Hong Kong's re-exports. The value of re-exports of China origin continued to grow rapidly in 1989, while the value of re-exports to China showed much slower growth during the year. Meanwhile, the value of re-exports not related to China also grew significantly. Besides China, the other major re-export markets were the United States, Japan, Taiwan, the Republic of Korea and the Federal Republic of Germany. The major suppliers of Hong Kong's re-exports, apart from China, were Japan, Taiwan, the United States and the Republic of Korea.

Analysed by end-use categories, Hong Kong's re-exports comprised mostly raw materials and semi-manufactures, and consumer goods, which represented 35 per cent and 48 per cent respectively of the total value of re-exports in 1989. Re-exports of footwear, textile fabrics, electrical machinery and appliances, clothing and radios showed more rapid increases than those of other commodity items.

Imports grew by 13 per cent in money terms or by about nine per cent in real terms in 1989, compared with corresponding increases of 32 per cent and 27 per cent in 1988. The major sources of Hong Kong's imports were China, Japan, Taiwan, the United States, the Republic of Korea and Singapore. A large part of this growth was attributable to the surge in re-export trade. As regards retained imports, there was virtually no increase in real terms in 1989. Retained imports of fuels, foodstuffs, and of raw materials and semi-manufactures grew by about 14 per cent, six per cent and five per cent respectively in real terms over 1988. However, reflecting a slackening in domestic demand, retained imports of consumer goods and capital goods fell by about 12 per cent and two per cent in real terms, respectively.

      As the value of total exports (domestic exports plus re-exports) was larger than that of imports, a visible trade surplus of $7,728 million, equivalent to 1.4 per cent of the total value of imports, was recorded in 1989. If an estimate of the imports of gold for industrial and commercial use is included, the surplus would have been $5,271 million. This compares with a deficit of $5,729 million (or a deficit of $8,105 million after a similar adjustment for gold imports) recorded in 1988. As the prices of imports increased at a slower rate than those of total exports in 1989, there was a small improvement in the terms of trade.

Domestic Demand

As the pace of economic growth moderated further, the growth rate in real terms of domestic demand slowed down from seven per cent in 1988 to one per cent in 1989. Private consumption expenditure grew by three per cent in real terms in 1989, having increased by six per cent in 1988, while government consumption expenditure grew by nine per cent in real terms, having increased by five per cent in 1988. Investment demand, measured in terms of gross domestic fixed capital formation, grew by only one per cent in real terms in 1989, slower than the corresponding increase of six per cent in 1988. Among its main components, expenditure on building and construction grew by five per cent in real terms in 1989, having increased by one per cent in 1988. Expenditure on plant, machinery and

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60

equipment grew by 1.5 per cent in real terms, compared with an increase of 15 per cent in the preceding year. Public sector expenditures on these two components recorded relatively faster growth than the corresponding private sector expenditures in 1989.

The Labour Market

Conditions in the labour market remained generally tight throughout 1989, with the unemployment and underemployment rates staying at very low levels. In the fourth quarter, the seasonally adjusted unemployment rate was 1.3 per cent and the under- employment rate was 0.8 per cent. The corresponding figures in the fourth quarter of 1988 were 1.3 per cent and 0.7 per cent.

Between September 1988 and September 1989, manufacturing employment decreased by five per cent to 803 000, while employment in the service sectors as a whole increased by eight per cent to 1 366 000. Thus labour resources continued to shift from manufacturing to services in 1989. Among the various service sectors, employment in water transport, air transport and services allied to transport rose by 13 per cent; that in the wholesale, retail and import/export trades by nine per cent; that in finance, insurance, real estate and business services by eight per cent, and that in restaurants and hotels by eight per cent in September 1989, over a year earlier. Employment on building and construction (including civil engineering) sites decreased by eight per cent over the same period. For the building and construction industry as a whole, employment (covering both site workers and non-site workers) decreased by two per cent. In line with the moderation in economic growth, vacancies in manufacturing decreased by 20 per cent from September 1988 to 44 000 in September 1989, and those in the service sectors as a whole by four per cent to 53 700.

Despite the decrease in manufacturing employment, local manufacturing output, as measured by the index of industrial production, was two per cent higher in the first three quarters of 1989 than in the same period in 1988. The increase in 1988 over 1987 was six per cent. At least part of these increases in output were derived from a general improvement in labour productivity, given the substantial investment in plant and machinery over the past few years. Relocation of the more labour-intensive production processes across the border has also helped to increase labour productivity in the local manufacturing sector.

Labour incomes were boosted by the sustained demand for manpower. Comparing September 1989 with September 1988, earnings in the manufacturing sector and in most service sectors, in terms of payroll per person engaged, showed significant gains in money terms and in real terms. Among the various sectors, earnings in the manufacturing sector were higher by 16 per cent in money terms or six per cent in real terms; those in financial institutions by 21 per cent in money terms or 10 per cent in real terms; those in restaurants and hotels by 13 per cent in money terms or three per cent in real terms; those in transport, storage and communications by 16 per cent in money terms or six per cent in real terms, and those in the wholesale, retail and import/export trades by 19 per cent in money terms or eight per cent in real terms. In the building and construction sector, wage rates continued to increase substantially in 1989, by an average of 23 per cent in money terms or 11 per cent in real terms, over a year earlier.

The Property Market

Continuing the trend in 1988, demand for most types of property remained strong and trading was active in the first few months of 1989. There were, however, signs of consoli- dation in the property market given the rapid increases in property prices and rentals

*AX

ES

Hong Kong's forward-looking Port and Airport Development Strategy includes the construction of a new International Airport and extensive new port facilities. Previous page: The single runway at Kai Tak International Airport, seen from the east. By 1997, Kai Tak will be replaced by a new airport at Chek Lap Kok, off the north coast of Lantau Island.

Below: Kwai Chung Container Port, in Victoria Harbour, has helped to establish Hong Kong as the world leader in terms of container throughput. More terminals are planned, to provide more capacity.

Right: The serenity of the north shore of Lantau island (right) is soon to be overtaken by 20th century development. The small island of Chek Lap Kok (centre) is the site chosen for Hong Kong's new International Airport. In the far distance (from left to right) are the Tsuen Wan/Kwai Chung complex, Kowloon peninsula and Hong Kong Island.

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.

}

35

i

Opposite: A new dual two-lane underpass, at the junction of Connaught Road and Pedder Street, enhances the free flow of traffic in Central.

Below: The Eastern Harbour Crossing, a vital new road and rail link between Hong Kong Island and eastern Kowloon, opened in September 1989. Shown here is the road complex at Quarry Bay on the Hong Kong side.

Below: The old, familiar green Peak Trams made their last haul up Victoria Peak this year. They were replaced during an extensive renovation of the century-old system.

Right: In elegant burgandy and gold livery, the new Peak Tram cars are bigger, faster and more comfortable than their predecessors.

Last page of colour section: As popular as ever, Hong Kong's picture-postcard trams are still going strong after 85 years. Replicas of the early models are on hire for tours and private parties.

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7

AT&T

KINCHING TRAMWAYS LIMITED

PRIVATE HRE

123

Established

in 1904

THE ECONOMY

     in recent years and the successive rises in mortgage rates since the latter part of 1988. The events in China in the middle of 1989 reinforced the consolidation. Immediately after these events, transactions were few and prices were reported to have fallen by an average of 15 to 20 per cent. Since late July there had been signs of revival, although the pace of recovery differed between sub-sectors. Support had largely re-emerged from end-users of small to medium-sized residential flats, and to some extent also from buyers of luxury flats. The demand for shopping space weakened in the latter part of the year, affected by a slackening in the tourist industry and in local consumption expenditure. As regards office space, the leasing market was generally stable in the latter part of the year, although prices had probably eased marginally. The demand for industrial premises remained moderate.

Developers became more cautious and selective in their investment after early June. Although land prices had softened compared with the levels that were attained earlier in the year, response to some of the more recent government land auctions was reasonably satisfactory, indicating that many developers maintained an optimistic outlook for the property market.

Inflation

The rate of consumer price inflation, as measured by the Consumer Price Index (A), averaged 10.1 per cent in 1989. This was the highest rate of increase since 1983, when it was 9.9 per cent. The corresponding rates of increase were 5.5 per cent in 1987 and 7.5 per cent in 1988. With the economy operating close to capacity, the inflationary pressures during the year were largely domestically generated. However, in the latter part of 1989, the inflation rate showed a tendency to ease, in line with the moderation in economic growth.

      Among the various component items of the CPI(A), those commodities which do not have direct substitutes from outside sources or which possess a substantial wage and rental component, such as foodstuffs (mainly meals bought away from home), transport and vehicles and various types of services showed the fastest increases in prices in 1989 over 1988. For these three components the rates of increase were 12.3 per cent, 12.1 per cent and 11.4 per cent respectively. Together they accounted for 75 per cent of the overall increase in the CPI(A).

Economic Policy and Public Finances 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 considers that, except where social considerations are over-riding, the allocation of resources in the economy is best left to market forces with minimal government intervention in the private sector.

       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 an incentive for workers to work and for entrepreneurs to invest. Both workers and entrepreneurs are highly motivated, given that all individuals have an equal opportunity to better their lot. The primary role of the government is to provide the necessary infrastructure and a sound legal and administrative framework conducive to economic growth and prosperity.

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THE ECONOMY

Structure of Government Accounts

  In accounting terms, the public sector is taken to include the Hong Kong Government itself, the Housing Authority and Urban and Regional Councils. Government grants and subventions 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 and Kowloon-Canton Railway Corporations, 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 Capital Works Reserve, Development Loan, Lotteries, Mass Transit, and Student Loan Funds.

   The Capital Works Reserve Fund finances the Public Works Programme, land acqui- sitions, capital subventions, and major systems and equipment. On May 27, 1985, when the Sino-British Joint Declaration came into effect, the fund was restructured to enable the premium income obtained from land transactions 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 premiums and transfers from the General Revenue Account.

The Development Loan Fund is used mainly to finance social and economic develop- ments. Its income is derived from interest payments, capital repayments and transfers from the General Revenue Account.

   The Lotteries Fund is used to finance 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 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 ex- penditure. The first is that the rate of growth of public sector expenditure should over a period be close to that of 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 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,

62 capital spending, and the rate of growth of the Civil Service.

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THE ECONOMY

      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, to obtain progressively better value for money. The main emphasis of this programme is on ensuring that expenditure priorities are set at key points in the planning process, on focusing 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 line managers in departments, who are best placed to seek improvements.

Public Sector Expenditure

Consolidated public sector expenditure in 1988-9 was $64.8 billion. The government itself accounted for $53.4 billion, excluding contributions to other public sector bodies. The growth rate of consolidated public sector expenditure over the preceding year was 21 per cent in money terms, or 7.7 per cent in real terms.

      The growth rate of consolidated public sector expenditure is compared with the rate of economic growth at Appendix 9. Consolidated public sector expenditure has been around 15 to 16 per cent of the gross domestic product since 1984-5.

      Total government revenue in 1988-9 was $72.6 billion. The consolidated surplus of $18.8 billion, comprising $16.8 billion on the General Revenue Account and $2 billion in the other funds. The surplus reflected higher than anticipated yields from profits tax and stamp duty. Details of revenue by source and of expenditure by component for 1988-9 and the original estimates for 1989-90 are at Appendix 8. An analysis of expenditure by function is at Appendix 10.

      Some $18.5 billion (28 per cent) of consolidated public sector expenditure in 1988-9 was of a capital nature. There was no additional borrowing in 1988-9. The balance of the government's outstanding borrowings at the end of the year was $1 billion. This was repaid in full in 1989-90.

      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 payments to be made to subvented organisations and estimates of 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 twenty 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

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64

Urban Council area (Hong Kong, Kowloon and New Kowloon) and in the Regional 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 council to finance 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 authority is provided with land on concessionary terms for the construction of rental housing. 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 Department 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 1988-9, $4,173 million was collected in duties, compared with $3,389 million in 1987-8.

   Specific duty rates on alcoholic liquors range from $1.45 a litre on cider and perry to $52 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 $50 a kilogram on Chinese-prepared tobacco to $190 per 1 000 cigarettes. On motor and aircraft fuels the duty is $2.75 a litre, and on diesel oil for road vehicles it is $1.37 a litre. Duty is levied on methyl alcohol at a rate of $4.90 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-manufactured products.

   Rates are a tax on the occupation of landed property. They are charged at a percentage of the rateable value of property, which is an estimate of the annual rent at which the property might reasonably be expected to let. The percentage charge is fixed annually by the Legislative Council. For 1989-90, the charge is six per cent.

In the Urban Council area, part of the rates charged is paid to the Urban Council, the remainder being credited to the General Revenue Account. All revenue from rates in the New Territories is paid to the Regional Council. In 1988-9 the total net revenue from rates amounted to $4,812 million, while the number of assessments increased from 0.97 million to over 1 million.

The current lists of rateable values, based on rental values as at October 1, 1986, came into force on April 1, 1988. With the commitment to conducting revaluations on three-year cycles, work has commenced on preparing new valuation lists which are scheduled to take effect on April 1, 1991. In between general revaluations, the lists are regularly updated as new premises are built and as existing premises are altered or demolished.

   Rates are payable quarterly, in advance. Exemptions are few, although the government generally provides financial assistance towards payment of rates to non-profit-making educational, charitable and welfare organisations if their premises are being run in accord- ance with approved guidelines. No refund of rates is allowed for vacant domestic properties but half the rates paid may be refunded in the case of unoccupied non-domestic properties.

THE ECONOMY

      The Inland Revenue Department is responsible for the collection of betting duty, entertainments 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 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 three separate and distinct sources of income, namely business profits, salaries, and income from property.

Profits tax is charged only on net profits arising in Hong Kong, or derived from a trade, profession or business carried on in Hong Kong. Profits of unincorporated businesses are currently taxed at 15 per cent and profits of corporations are taxed at 16.5 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 subsequently 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 per cent of their total income. As from April 1, 1990, a system of separate taxation for married couples will come into operation and will apply to final assessments for 1989-90 and thereafter. Under this system, married couples will be separately assessed for salaries tax. However, where either spouse has allowances that exceed his or her income, or when separate assessments result in an increase in salaries tax payable by the couple, they may elect to be assessed jointly.

The owner of land or buildings in Hong Kong is charged property tax at the standard rate of 15 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.

       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

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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 $630. 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.

Science and Technology

As Hong Kong's industry, economy and society become more complex and sophisticated, there is a need to pay greater 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 up to date with rapid technological changes and that the best advice is obtained in this area, a Committee on Science and Technology has been appointed by the Governor. Its purpose is to seek out and develop new scientific and technological ideas which are of direct relevance or potential long-term benefit to Hong Kong. The committee's members are from the academic and business sectors as well as from government departments whose work involves a significant scientific and techno- logical content. Sub-committees and working groups enable it to draw from a wide range of expertise in science and technology.

The main emphasis of the committee's work has been on information technology and biotechnology. It has advised the government on the adoption of electronic data interchange (EDI) for trading purposes. It is commissioning consultancy studies on Hong Kong's need for supercomputing facilities and on the potential for a biotechnology industry in the territory. The committee plans to stage an International Technology Exchange Fair to strengthen Hong Kong's image in science and technology. The commit- tee is also concerned with the safe use of technology and is working towards instituting a voluntary code of practice for the manufacture and safe use of lasers in Hong Kong.

6

FINANCIAL AND MONETARY AFFAIRS

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

Financial Institutions

Since 1981, deposit-taking institutions in Hong Kong have been classified into three separate groups: 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 10 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 1989, there were 165 licensed banks in Hong Kong, 31 of which were locally incorporated. They maintained a total of 1 542 offices in Hong Kong. In addition, there were 158 representative offices of foreign banks. The total deposit liabilities of all the licensed banks to customers at the end of the year was $938 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. 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

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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 1989, there were 36 licensed deposit-taking companies, and their total deposit liabilities to customers was $37 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, are more than 50 per cent owned by banks in Hong Kong or elsewhere. Registered deposit-taking companies are required to have a minimum paid-up capital of $25 million. They 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 1989, there were 202 registered deposit-taking companies, and their total deposit liabilities to customers was $33 billion.

   Following a review of this three-tier system, in consultation with the industry, it has been decided that a number of changes will be introduced to overcome the problems identified and further the development of the system. To give effect to these changes, the Banking (Amendment) (No. 2) Bill 1989 was introduced into the Legislative Council in July for First Reading and Commencement of Second Reading debate.

Upon the enactment of the amendment ordinance, which is expected to be in January 1990, the existing categories of licensed deposit-taking company and registered deposit- taking company will be replaced by the categories of restricted licence bank and deposit- taking company respectively. The licensed banks' category will remain essentially unchanged. Restricted licence banks will have a greater scope in the use of business descriptions than the category of licensed deposit-taking companies which they will replace. They will be able to use the word 'bank' in describing their business in promotional literature and advertisements but this must be qualified by adjectives such as 'restricted', 'merchant', or 'investment'. To avoid confusion with licensed banks, descriptions such as 'retail' or 'commercial' will not be allowed. Overseas banks seeking authorisation as restricted licence banks may operate in branch or subsidiary form. If in branch form, they may use their registered name even if it includes the word 'bank' or a derivative, but in this case it must be qualified prominently by the words 'restricted licence bank' in immediate conjunction.

   To reflect the additional status and privileges of the restricted licence banks and inflation over the period since the establishment of the existing minimum capital requirement for licensed deposit-taking companies in 1981, the present minimum paid-up capital of $75 million for licensed deposit-taking companies will be increased to $100 million for restricted licence banks. The licensed deposit-taking companies, which will be deemed to be restricted licence banks upon the enactment of the amendment ordinance, will be provided with a grace period from March 10, 1989 (on which the minimum capital requirement for registered deposit-taking companies was raised from $10 million to the existing level of $25 million), in which to comply with the new standard. Consequent upon this, the minimum capital requirement for licensed banks will be increased from $100 million to $150 million to reflect the higher capital requirement appropriate to licensed banks.

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

Dealers in securities, investment advisers, commodity dealers and commodity-trading advisers and their representatives are required to be registered with the Securities and

FINANCIAL AND MONETARY AFFAIRS

      Futures Commission. To obtain registration, they must comply with the requirements (including the 'fit and proper test') stipulated in the Securities Ordinance, the Commodities Trading Ordinance and the Securities and Futures Commission Ordinance. At the end of 1989, there were 7 568 registered persons. Of the 230 registered corporate securities dealers, 132 were from overseas. Of the 102 commodities dealers, 37 were from overseas.

Only members of the Stock Exchange of Hong Kong Limited are permitted to trade on the Stock Exchange. At the end of 1989, the exchange had 711 corporate and individual members. Only shareholders who have applied for and been granted membership of the Hong Kong Futures Exchange Limited can trade on the Futures Exchange. At the end of 1989, the Futures Exchange had 87 members.

Under the Insurance Companies Ordinance, insurance companies are authorised by the Insurance Authority to transact business in Hong Kong. At the end of 1989, there were 273 authorised insurance companies. Of these, 147 were overseas companies from 27 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. With a total gross turnover of around US$49 billion per business day, Hong Kong is among the largest markets in Asia, along with Tokyo and Singapore. The major currencies traded on the local market against the US dollar as the reference currency include Deutschemark, Yen, the Hong Kong dollar, Sterling and Swiss franc. As a market in foreign exchange, Hong Kong is favoured by its time zone location, by its large volume of trade and 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 telecom- munications system.

       Equally well-established and active is the interbank money market, in which wholesale Hong Kong dollar deposits and foreign currency deposits (mainly in US dollars) are traded both between deposit-taking institutions in Hong Kong, and between local and overseas institutions. This market is mainly for short-term money - from maturities ranging from overnight to six months for Hong Kong dollars and to 12 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 1989, interbank liabilities accounted for 39 per cent of the total Hong Kong dollar liabilities of the banking sector; the corresponding share for foreign currency interbank liabilities was 77 per cent.

The capital market is an important source of finance for corporate borrowers. The two main types of negotiable debt instrument traded in the market are certificates of deposit issued by authorised institutions and commercial paper issued by other private sector companies. This market experienced a rapid expansion in the mid-1980s, gaining momentum from the global trend of securitisation of debt, the importation of innovative financial products (particularly interest rate swaps), and declines in interest rates during most of that period. Although the market has been less active recently, the more relaxed attitude taken by the government towards the issue of Hong Kong dollar-denominated debt instruments by non-residents and the abolition of interest tax with effect from the

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year of assessment commencing April 1, 1989, are expected to help improve turnover in this market.

The stock market constitutes another important source of capital for local enterprises, attracting interest from both local and overseas investors. At the end of 1989, 298 public companies, with a total market capitalisation of $605 billion, were listed on the Hong Kong Stock Exchange. This made it the fourth-largest stock market in Asia, after Japan, Taiwan and South Korea. The average daily turnover in 1989 was $1,216 million.

The Hong Kong Futures Exchange offers contracts in sugar, soyabeans, gold and Hang Seng Index futures. A new contract in interest rate futures is being developed.

The Stock Exchange and Futures Exchange are making special efforts to establish themselves as effective self-regulatory organisations, the front-line regulators in a two-tier regulatory regime as recommended by the Securities Review Committee.

The Stock Exchange introduced new domestic listing rules in December 1989 to improve the regulation of listing activities and the supervision of listed companies in the discharge of their continuing duties to shareholders. The Hong Kong Securities Clearing Company was formed in May 1989 to implement and operate the proposed central clearing system for securities transactions.

   Following the reconstitution of the Stock Exchange in 1988, the Futures Exchange has also successfully reconstituted itself in accordance with the Securities Review Committee recommendations. A more broadly-based and representative Board was formed in June 1989. The Hong Kong Clearing Corporation, a wholly-owned subsidiary of the exchange, took over and strengthened the clearing and guaranteeing functions in March 1989.

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 approximately 1.2 troy ounces) and quoted in Hong Kong dollars. After allowing for exchange rate fluctuations, prices follow closely those of the major markets in London, Zurich and New York.

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

Regulation of the Financial Sector

The authority for the prudential supervision of banks, and deposit-taking companies, collectively called authorised institutions, is vested in the Commissioner of Banking. His authority is derived from the present Banking Ordinance which was introduced in March 1986, replacing earlier Banking and Deposit-taking Companies Ordinances. 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 worldwide supervision of banking groups based in Hong Kong, are accepted and practised.

FINANCIAL AND MONETARY AFFAIRS

       The Securities and Futures Commission, which was established in May 1989 in res- ponse to the difficulties encountered in Hong Kong's financial markets at the time of the October 1987 world stock market crash, exercises prudential supervision of the securities, financial investment and commodities futures industry in Hong Kong. It administers the Securities and Futures Commission Ordinance, the Securities Ordinance, the Protection of Investors Ordinance, the Commodities Trading Ordinance and the Securities (Disclosure of Interests) Ordinance.

      The Securities Ordinance and the Stock Exchanges (Unification) Ordinance, together with the Securities and Futures Commission Ordinance, provide a frámework within which dealings in securities are conducted and the Stock Exchange operates, enabling trading in securities to be regulated. They require the registration of dealers, dealing partnerships, investment advisers and other intermediaries and provide for the investigation of suspected malpractice and the maintenance of a compensation fund to compensate clients of de- faulting 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 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 commission for authorisation. The ordinance was amended in July 1989 and the procedures for authorising advertisements in respect of commercial paper and certificate of deposits issues were streamlined.

      The Commodities Trading Ordinance, together with the Securities and Futures Commis- sion 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 registration of dealers and their representatives and 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). Conducting insurance business in or from Hong Kong is restricted to author- ised companies, to Lloyd's, and to certain underwriters approved by the Governor in Council. All new applications for authorisation are subject to careful scrutiny by the Insurance Authority to ensure that only insurers of good repute who meet all the criteria of the ordinance are admitted. The ordinance stipulates minimum share capital and solvency requirements for all authorised insurers and requires them to submit financial statements and other relevant information to the authority on an annual basis. It provides that any person who is not considered by the authority to be a fit and proper person to be associated with an authorised insurance company cannot acquire a position of influence in relation to such company. It also empowers the authority to intervene in the conduct of the business of insurance companies in certain circumstances. Where the authority has cause for 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 winding-up the company involved.

      Proposals for introducing self-regulatory measures to strengthen discipline in the insurance market have been formulated by the insurance industry, in consultation with the

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government. Certain of these proposals are likely to be put into effect in 1990 and will benefit Hong Kong as a developing international insurance centre.

The Securities and Futures Commission

The enactment of the Securities and Futures Commission Ordinance on April 13, 1989, represents a first, important phase in the overhaul of securities legislation in Hong Kong. It also represents completion of the implementation of some of the major recommendations made by the Securities Review Committee in May 1988, following the stock market crash in October 1987.

   The ordinance transfers the functions of the former Securities Commission, the Commodities Trading Commission and the Office of the Commissioner for Securities and Commodities Trading to the new Securities and Futures Commission, upon its establish- ment on May 1, 1989. It provides a general regulatory framework for the Securities and Futures Commission, leaving the details to be provided by regulations, administrative procedures and guidelines now being developed by the commission in full consultation with the market and the government where appropriate.

The commission was established as an autonomous statutory body outside the civil service for the regulation of the securities, futures and financial investment industry. It is charged with the responsibility to ensure market integrity and protection of investors at a reasonable cost and at a level which is broadly comparable to that in other international financial centres, having regard to Hong Kong's own circumstances and needs.

The commission is governed by 10 directors, divided equally between executive and non-executive directors, the chairman being an executive director and having a casting vote. The non-executive directors provide independent advice to the commission's manage- ment and are actively involved in policy formation. The Governor appoints and has power to dismiss the chairman and directors. He is able to give policy directions to the commission and the Financial Secretary may require it to provide information relating to its activities.

It seeks advice on policy matters from its advisory committee, members of which are appointed by the Governor and are broadly representative of the market and relevant professions. Certain decisions of the commission are subject to appeal to the Securities and Futures Board of Appeal, which is also appointed by the Governor. These decisions relate to applications for, or suspension or revocation of, registration of persons, and to the intervention of registered persons' business.

Each year the commission is required to present to the Financial Secretary a report and audited statement of accounts, which are laid before the Legislative Council. Its annual budget must be approved by the Governor and the Director of Audit is able to examine its books.

The commission is funded largely by the market, but partly by the government. Excluding start-up costs, the annual budget of the commission is estimated at about $140 million at 1989 prices. Market contributions are in the form of fees and charges for specific services and activities performed by the commission on a broad cost-recovery basis and a statutory levy on transactions recorded on the Stock and Futures Exchanges. The total government contribution towards the commission in 1988-9 amounted to $220 million in the form of a start-up grant, an annually recurrent subvention and an interest-free advance.

   The commission plays a prominent role in the implementation of other recommenda- tions of the Securities Review Committee in conjunction with the government and the two

FINANCIAL AND MONETARY AFFAIRS

exchanges. It is taking a lead in the second phase of a review of securities legislation in an attempt to remove loopholes and consolidate similar provisions in relevant ordinances. The statutory listing rules have been revised to cater for the changing needs of the market. New applicants for registration as intermediaries in the securities and futures markets are now subject to more vigorous 'fit and proper' tests.

Hong Kong as an International Financial Centre

The favourable geographical position of Hong Kong, which provides a bridge in the time gap between North America and Europe, together with the economic links with China and 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.

The foreign banks in Hong Kong tend to be the premier banks in their countries of incorporation and this is illustrated by the fact that 76 of the top 100 banks in the world in 1989 had operations in the territory. 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 100 countries. The financial markets, particularly in foreign exchange and gold, form an integral part of the corresponding global markets. Moreover, Hong Kong serves as an important centre for the intermediation of international flows of savings and investment, particularly through the syndication of loans and international fund management. International investors play a significant and increasing role in Hong Kong, and Hong Kong's investment overseas is also believed to be considerable.

The Financial Scene

In 1989, the local financial scene was characterised by the following features. Firstly, the exchange rate of the Hong Kong dollar against the US dollar stayed close to the linked rate of HK$7.80 to US$1 throughout the year. Secondly, the uptrend in local interest rates, which began in 1988 and continued into the first quarter of 1989, was reversed in April, in line with movements in US dollar interest rates. Thirdly, the growth rate of Hong Kong dollar money supply showed some deceleration during the year, as did that of domestic loans and advances, against the background of a slow-down in overall economic growth.

      During 1989, the market exchange rate of the Hong Kong dollar against the US dollar moved within a narrow range of HK$7.774 and HK$7.815 to US$1. At the end of the year, it closed at HK$7.807 This remarkable stability in the exchange rate, maintained even in late May and early June when the unrest in China caused tremendous volatility in the Hong Kong stock and Hang Seng Index futures markets, was clear evidence of the confidence people have in the linked exchange rate system, and the government's resolve and ability to maintain the linked rate at HK$7.80. This exchange rate stability has been underpinned by the accounting arrangements implemented in July 1988, which enable the government more effectively to influence the level of interbank liquidity.

Because of the link, the overall exchange value of the Hong Kong dollar shared a common trend with that of the US dollar. The effective exchange rate index of the Hong Kong dollar rose from 100.6 at the end of 1988 to a high of 106.2 in mid-June 1989, when the US dollar strengthened in the light of improved US trade figures and the sub- stantial premium of US dollar interest rates over German and Japanese rates. However, as the US dollar subsequently weakened against other major currencies, the effective exchange

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  rate index fell to 102.9 on December 15. On December 16, the Renminbi was devalued by 21.21 per cent against the Hong Kong dollar (as well as other major currencies). Consequently, the effective exchange rate index closed the year at 109.3, 8.6 per cent higher than 1988.

Deposit rates administered by the Hong Kong Association of Banks were changed six times during the year, comprising three upward adjustments in the first quarter and three downward adjustments thereafter. At the end of 1989, the savings deposits rate was 5.25

    per cent and the three-month and 12-month deposit rates were 6.5 per cent and 7.5 per cent respectively, while the best lending rate stood at 10 per cent. The respective rates at the end of 1988 were also 5.25 per cent, 6.5 per cent, 7.5 per cent and 10 per cent.

Total deposits with authorised institutions in Hong Kong grew by 19 per cent during 1989, compared with 20 per cent in 1988. Analysed by currencies, Hong Kong dollar deposits rose by 12 per cent while foreign currency deposits increased by 24 per cent. Of the latter, the respective growth rates for US$ and non-US$ foreign currency deposits were 22 per cent and 27 per cent. The broadest definition of the money supply, HK$M3, grew by 15 per cent in 1989, compared with a growth rate of 19 per cent in 1988. This was broadly in line with the increase in nominal gross domestic product, estimated at 14 per cent.

   Loans for use in Hong Kong (including those to finance trade) grew by 25 per cent in 1989, following an increase of 30 per cent in 1988. However, reflecting the deceleration in economic growth, these loans increased less rapidly in the second half than in the first half of the year. At the end of 1989, domestic loans accounted for 52 per cent of the total amount of loans and advances outstanding.

In the capital market, the most notable development was the six-year Hong Kong dollar-denominated bond launched by the World Bank in May. This was the first Hong Kong dollar paper issued by a supra-national borrower in Hong Kong since the public announcement by the government of its more relaxed attitude towards Hong Kong dollar borrowings by non-residents. The bonds carry a nominal value of HK$500 million and will mature in May 1995. The six-year maturity is in line with recent World Bank bond issues, the bulk of which have a maturity of five to seven years. The bonds were well received by both domestic and international investors. Since mid-June, they have been listed on the Hong Kong Stock Exchange. At the end of December 1989, the six-year bond was bid at 103.8, implying a yield to maturity of 9.2 per cent.

The market for fixed-rate negotiable certificates of deposit remained relatively quiet, notwithstanding the easing in local interest rates since April. For 1989 as a whole, there were altogether 52 issues of negotiable certificates of deposit reported to the Securities and Futures Commission. Of the 45 issues which were denominated in Hong Kong dollars, 35 were on fixed-rate terms. At the end of 1989, the total value of negotiable certificates of deposit outstanding amounted to $34 billion, roughly the same as at end-1988.

As with major overseas stock markets, stock prices on the Hong Kong stock exchange were generally on an uptrend in the first five months of 1989. From a figure of 2 687 at the end of December 1988, the Hang Seng Index rose almost continuously to 3 310 on May 15, its highest level since October 1987. Political events in China then sent the index down to 2 094 early in June. As the political situation in China became clearer, the index gradually climbed to 2 844 on October 10. The resilience of the local economy after the events in June, the declines in local interest rates and the good performance of major bourses overseas supported this recovery. However, following a substantial fall in the US stock market on October 13, the Hang Seng Index dropped by 181 points (or 6.5 per cent) on October 16, to 2 602. But, along with the quick recovery in overseas markets, the Hang

FINANCIAL AND MONETARY AFFAIRS

Seng Index rebounded and ended the year at 2 837. For 1989 as a whole, the turnover was $299 billion, as compared to $200 billion in 1988.

Events in China caused several companies to defer plans to raise funds through the issue of shares. Total funds raised on the stock market for 1989 as a whole, at $8.5 billion, was thus lower than the $17.0 billion in 1988. During the year, there were seven new share issues amounting to $1.1 billion. Also 18 companies raised $4.6 billion through rights issues and 32 companies raised $2.8 billion through private placements.

The Hang Seng Index futures market experienced the same degree of volatility as the stock market. Turnover amounted to 235 979 contracts, compared with 140 155 in 1988. Trading in commodity futures remained moderate in 1989. Turnover in soyabean, sugar and gold futures amounted to 154 696 lots (30 000 kg each), 143 989 lots (112 000 lb each) and 1 172 lots (100 troy ounces each) respectively.

The price of loco-London gold fluctuated between US$358 and US$410 a troy ounce during the year, while the gold price on the Chinese Gold and Silver Exchange Society ranged between $3,335 and $3,805 per tael. Turnover on the latter exchange totalled 51 million taels in 1989, compared with 59 million taels in 1988.

Monetary Policy

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

      Unlike most major economies, Hong Kong has no central bank. Most of the functions which might be performed by one - such as prudential supervision of financial institutions, managing official foreign exchange reserves, undertaking certain types of market opera- tions, holding the backing to the note issue and providing central banking services to the government - are carried out by different government offices under the Monetary Affairs Branch of the Government Secretariat.

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 notes, are issued and redeemed against payments in US dollars at a fixed exchange rate of HK$7.80 = US$1. In practice, therefore, any increase in note circulation is matched by a US dollar payment to the Exchange Fund, and any 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 rate of the Hong Kong dollar continues to be determined by forces of supply and demand. However, the interplay 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 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

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

To enable the government, through the use of the Exchange Fund, to exercise more effective influence over liquidity and interest rates in the interbank market and thus to assist it better to maintain exchange rate stability within the framework of the linked exchange rate system, new accounting arrangements were entered into in mid-July 1988 between the Exchange Fund and The Hongkong and Shanghai Banking Corporation Limited (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 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 interest to the Exchange Fund. The fund uses the account, at its discretion, to effect settlement of its Hong Kong dollar transactions with HSBC or with other banks.

Consequent upon these accounting arrangements, the Exchange Fund effectively became 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 fund is now able to reduce the supply of Hong Kong dollars and hence raise interest rates in the interbank market, thereby offsetting a weakening of the exchange rate of the Hong Kong dollar against the US dollar. Similarly, it may also increase interbank liquidity and lower interest rates by taking such actions in the opposite direction, thereby offsetting a strengthening of the exchange rate.

As well as these accounting arrangements between the fund and HSBC, the Treasury maintains a Hong Kong dollar account with the 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 debt certificates, the Exchange Fund has an additional tool to affect interbank liquidity.

Under the new accounting arrangements, the government could also influence monetary conditions in the interbank market through its buying or selling of Hong Kong dollar financial assets of acceptable quality. Although in other financial centres these are usually in the form of debt instruments issued by the government, there is no such instrument available in Hong Kong. In the latter part of 1988, the Monetary Affairs Branch initiated a study which concluded that a programme of issue of short-term government bills should be developed in Hong Kong, both for monetary policy reasons and for further development of the local capital market. This was announced by the Financial Secretary in his Budget Speech in March 1989. In consultation with the Hong Kong Capital Markets Association and other interested parties, a detailed examination was subsequently made of the technical and system requirements for the issue of such short-term government paper (to be called

FINANCIAL AND MONETARY AFFAIRS

     Exchange Fund Bills). The first weekly tranche of Exchange Fund Bills worth $200-$300 million was expected to be launched early in 1990.

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 fund has held the backing to the note issue. In 1976, its role 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, being transferred to the fund. In both cases, the transfer was made against the issue by the 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 redeemed.

The 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 fund, against the issue of interest-bearing debt certificates. Thus, the bulk of the government's financial assets are now held in the 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 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 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 gilt-edge securities, 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 Limited (formerly The Hongkong and Shanghai Banking Corporation) and the Standard Chartered Bank, against holdings of certificates of indebtedness issued by the fund.

These non-interest-bearing liabilities of the 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 fund bears the costs of maintaining the note issue (apart from the proportion of the costs relating to the fiduciary issue), and the net profits of the note issue accrue to the fund. Coins of $5, $2, $1, 50 cents, 20 cents and 10 cents denominations, and currency notes of one-cent denomination, are issued by the government. The total currency in circulation at the end of 1989, with details of its composition, is shown at Appendix 13.

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SLACKENING demand in some of Hong Kong's major markets, notably the United States, slowed growth in domestic exports (up three per cent in 1989), but Hong Kong's rapid development as a service and sourcing centre for the region was evidenced by a 25.8 per cent growth in re-exports.

   The manufacturing sector still has a vital role to play in Hong Kong's growth. The value of manufactured exports rose by three per cent to $224,104 million during the year, dem- onstrating that Hong Kong's economy remains basically sound and that its manufactured products remain as competitive as ever in major overseas markets.

   The ingredients of Hong Kong's success as a leading manufacturing centre are well known: a versatile and industrious workforce; an aggressive and innovative managerial class; a simple tax structure and low taxation rate; efficient transport facilities; a fine har- bour and good international communications, and the government's firm commitment to free trade and free enterprise.

   In 1989, manufacturing remained the largest economic sector in terms of employment, employing 811 800 persons or 30 per cent of total employment. It also accounted for 20.4 per cent of the gross domestic product.

   It is estimated that up to 90 per cent of Hong Kong's manufacturing output is eventually exported. The lack of natural resources and the limited supply of land for industrial use have generally constrained diversification into capital and land-intensive industries. Light manufacturing industries, producing mainly consumer goods, predominate. Textiles, clothing, electronics, watches and clocks, and plastics are the major industries. These industries together accounted for 66 per cent of Hong Kong's total manufacturing employment and 71 per cent of total domestic exports in 1989.

Clothing

Hong Kong has been either the world's largest or second largest exporter of clothing since 1973, and the clothing industry is the largest export-earner in the manufacturing sector. Domestic exports of clothing in 1989 amounted to $71,874 million, or 32 per cent of Hong Kong's total domestic exports. Clothing is also the largest manufacturing industry of Hong Kong, employing 274 379 persons or 34 per cent of total manufacturing employment.

   Clothing exports to many developed countries are subject to quota restraint. The cloth- ing industry has responded by moving up-market to increase the value-added content of its products and explore new markets. Computer-aided design and computer-aided manu- facturing technology in pattern grading, marker making and automatic cutting are increasingly being used in the clothing industry, resulting in higher productivity.

INDUSTRY AND TRADE

Textiles

The textiles industry employed 73 857 persons, or nine per cent of total manufacturing employment, and exported $16,814 million worth of goods in 1989.

With some 414 000 spindles and 16 000 looms, the spinning and weaving sectors produce mainly cotton yarn and fabrics for local and overseas markets. Modern machinery, in- cluding open-end rotor spinning machines and shuttleless looms, is widely used. In 1989, output of yarns and fabrics of various fibres and blends totalled 229 million kilograms and 836 million square metres respectively. Most of this was used locally..

      The knitting sector exported 83 million kilograms of knitted fabrics in 1989 - of which 21 per cent consisted of man-made fibres or blended cotton man-made fibres, and 74 per cent of cotton - compared with 66 million kilograms in 1988. A large quantity of knitted fabric of all fibres was also used by local clothing manufacturers. In recent years the knit- ting sector has invested heavily in modern machinery, including flat-bed and circular knit- ting machines, which is often used in conjunction with computer-aided design equipment.

      The textiles-finishing sector provides valuable support to the spinning, weaving and knitting sectors. Finishing processes include bleaching, dyeing, yarn texturising, multi- colour rolling, rotary and screen printing, sanforising, stone-wash, acid-wash, permanent press, polymerising, shearing, napping, glazing and schreinering. Hong Kong's bleaching, dyeing, printing and finishing factories are able to meet about 70 per cent of the local clothing industry's requirements for textile fabrics.

Electronics

The electronics industry is the second largest export-earner. Domestic exports of electronics products were valued at $55,818 million in 1989, an increase of 0.46 per cent over 1988. The industry employed 99 455 persons, accounting for 12 per cent of total manufacturing employment.

Hong Kong's electronics industry is well known for its adaptability to changes in external demand, which enables it to move rapidly into the production of many fashion products invented elsewhere. The industry produces a wide range of high-quality products and components, including compact disc players, radios, cassette recorders, hi-fi systems, television sets, calculators, electronic watches and clocks, electronic toys and games, multi-function telephones and cellular telephones, modems, photocopying machines, micro-computers and computer peripherals, computer-aided design and testing equipment, switching power supplies, printed circuit boards, liquid crystal displays, quartz crystals, semi-conductor devices and facsimile machines.

Watches and Clocks

     Hong Kong is the world's largest exporter of watches, and is also an important clock producer. Domestic exports of watches and clocks were valued at $17,075 million in 1989, compared with $17,346 million in 1988. The industry employed 30 091 persons and produced mainly electronic watches and clocks. As watches and clocks have become fashion items, local manufacturers are paying more attention to attractive designs and better quality models. Some larger manufacturers are investing in associated research and development.

Plastics

The plastics industry produces mainly toys and household products, which together accounted for 44 per cent of the industry's exports in 1989. Other items produced include

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travel goods and handbags, footwear and flowers, packaging materials and plastic parts, and components for electronic and electrical products. Domestic exports of plastic products amounted to $9,911 million in 1989, compared with $11,847 million in 1988. The plastics industry employed 63 557 persons or eight per cent of total manufacturing employment.

Other Industries

Other important light industries produce metal products, electrical appliances, jewellery, photographic and optical goods, travel goods and handbags.

   The manufacture of industrial machinery provides support to many other local manu- facturing industries and, at the same time, contributes to Hong Kong's export trade. Of particular importance are blow-moulding, injection-moulding and extrusion machines; metal-processing machinery such as power presses, lathes, shapers, drilling machines and polishing machines; printing presses; textile knitting and warping machines, and electro- plating equipment. About 75 per cent of industrial machinery produced in Hong Kong is sold for local use.

   Hong Kong has also proved its ability to produce sophisticated parts and components and other semi-manufactures of high quality. This development is beneficial to its manu- facturing industries as the quality of finished products depends heavily on the capability of the linkage industries that service them.

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 ex- tensive 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 prom- inent industrialists, government officials and representatives from the tertiary education sector and other trade and industry organisations.

Industry Policies

The government's industrial policies aim at maintaining an infrastructure which enables manufacturing businesses to function efficiently, and providing services which enable in- dustry to become more competitive through productivity growth, quality improvement and product innovation. The government encourages technology transfer through an inward investment promotion programme.

Industry Department

The Industry Department is responsible for the implementation of the government's in- dustrial policies. It aims at improving the competitiveness of Hong Kong's manufacturing industries by providing developmental and infrastructural support and promoting inward investment where this introduces new or improved products, designs, processes and management techniques into Hong Kong.

The department carries out techno-economic and market research studies on the major industries, and smaller-scale studies of other selected industries, to enable the government

INDUSTRY AND TRADE

to assess where its support is needed. It also monitors the adequacy of Hong Kong's infra- structure, particularly the availability of land and trained manpower.

An increasingly-important part of the department's work is to promote the wider appli- cation of quality assurance in the manufacturing sector. Its Standards and Calibration Laboratory, which has been accredited by the National Measurement Accreditation Service (NAMAS) of the United Kingdom, acts as the repository of Hong Kong's official measurement standards and provides a calibration service to manufacturers to enable them to meet measurement standards required for their products. The laboratory presently has measurement capabilities for a wide range of electrical frequencies, temperature and mechanical measurements and has begun to extend its coverage to include force, pressure, humidity and volume standards.

The department will implement a quality improvement programme early in 1990. The programme provides for the strengthening of the existing range of quality support services, the development of a quality management accreditation scheme and a campaign to raise the level of quality awareness among manufacturers. Preparations for the quality- awareness campaign were made during the year and a new Quality Assurance Unit was set within the Quality Services Division to advise on technical aspects of the campaign and to plan and implement the quality management accreditation scheme, for which a Hong Kong Quality Assurance Agency will be established with a government subvention.

up

        The Product Standards Information Bureau advises manufacturers on national and in- ternational documented standards, product regulations and legislation in Hong Kong's major overseas markets. To improve the storage and retrieval of product standards information, a computer-based system linked to overseas data bases has recently been developed.

The department also operates the Hong Kong Laboratory Accreditation Scheme (HOKLAS), to upgrade the standard of testing and management of Hong Kong laboratories. HOKLAS identifies and accredits competent testing laboratories. The scheme continued to expand its scope of accreditation activities to include chemical testing in 1989 and, by the end of the year, had accredited 20 laboratories in various fields of testing. In March 1989, HOKLAS concluded a mutual recognition agreement with NAMAS, whereby Hong Kong exports accompanied by HOKLAS-endorsed test certificates would be accepted in the United Kingdom without further testing. Goods accompanied by NAMAS-endorsed certificates would be similarly accepted in Hong Kong.

A number of industrial support initiatives were pursued during the year. A Clothing Technology Demonstration Centre was established by the Hong Kong Productivity Council and the Clothing Industry Training Authority to demonstrate modern production systems to clothing manufacturers. Arrangements were made for the Hong Kong Design Innovation Company, which was set up with public funds in 1985, to form a partnership with the Hong Kong Productivity Council to deliver a more integrated product design and innovation service to manufacturers. On the advice of the Industry Development Board, the government commissioned consultants to undertake a planning study for the establishment of a technology centre in Hong Kong to encourage the growth of technology-based firms.

On March 23, 1989, a technical co-operation agreement was signed between the governments of Hong Kong and Japan, which will improve Hong Kong's capability in high-precision sheet metal processing. Japan will contribute equipment to the Precision Tooling Training Centre of the Vocational Training Council (VTC) and provide in- structors to train council staff in tool design, die manufacture and machine operation. The

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  VTC will, in turn, be able to increase its output of technicians and craftsmen skilled in the design and manufacture of the tools and dies needed to produce the high-precision components increasingly sought by manufacturing industries.

   Progress was also made with a wider scheme of training in new technologies. A working party, led by the department, developed proposals for a loan scheme to enable technol- ogists to be trained locally or overseas in the practical application of the latest industrial technologies. The scheme will be administered by the Vocational Training Council and will begin in 1990.

Additional land and accommodation was made available for industry. The government put up for sale by auction or tender 15 pieces of industrial land with a total area of 44 442 square metres, and 864 000 square metres of flatted factory space were completed by private developers. To assist those industries needing access to deep-water frontage, con- sultants have been appointed to study the feasibility of developing a site at Tuen Mun West. The study will be completed early in 1990.

   In April 1989, a permanent industrial extension service was launched by the department to publicise the range of industrial support services available in Hong Kong and to en- courage manufacturers to use them. A total of 285 manufacturers were visited during the period April 1989 to December 1989, resulting in 134 referrals being made to a variety of agencies and government departments.

   A new award scheme, The Governor's Award for Industry, was introduced by the department in 1989, in co-operation with the Federation of Hong Kong Industries and the Chinese Manufacturers' Association. The scheme aims to encourage industrial upgrading by recognising achievements in various aspects of industrial performance. In June 1989, the first awards were presented for consumer product design and machinery and equipment design. The scheme will be expanded in 1990 to cover productivity and good quality management.

   Through the Hong Kong economic and trade offices in New York, San Francisco, Tokyo, London and Brussels, and its own 'One-Stop' unit in Hong Kong, the Inward Investment Division of the department assisted overseas investors in setting up manufac- turing businesses in the territory. At the end of 1988, total overseas investment amounted to $26,172 million, compared with $21,122 million in the preceding year.

   Many of these investments are from world leaders in their respective fields and have contributed significantly to upgrading the level of technology and expertise of the local manufacturing sector. More than half the projects completed during the year were of a technology level comparable with or superior to that of the best Hong Kong companies. Notable examples included the assembly of portable oscilloscopes and the production of press tools for multilayer laminates.

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 450 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 10 operational divisions: Computer Services, Electronics Services, Engineering Services, Metals Development,

INDUSTRY AND TRADE

     Textiles and Apparel, Industrial Consultancy, Training, Environmental Management, Information Services and Administration.

      Its facilities include five training centres (in the 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.

      In 1989, significant progress was made in implementing a programme of new and ex- panded productivity-enhancement services endorsed by the Industry Development Board. A surface mount technology laboratory, a radio frequency and digital communication laboratory and a photo-chemical machining laboratory commenced operation. A sheet- metal-working laboratory will be completed soon.

       There was sustained demand for the consultancy and technical support services from both local and overseas companies. In 1989, the council completed 944 consultancy proj- ects, including feasibility studies, production management, new plant projects, personnel recruitment, marketing and technical assistance.

      The council organised over 500 training programmes for 13 600 participants, covering management and supervisory techniques, advanced programming and electronic data processing, and a range of technology programmes for various industries. There was an increased demand for in-plant courses and some 100 programmes were organised to meet the specific training needs of individual companies.

      The council also ran exhibitions on computer-aided design, manufacture and testing, computer software and linkage industry. 12 overseas study missions and visits were organised for local industrialists to gain first-hand information on the latest technology in various areas, including clothing manufacture, mechatronics, die and mould, plastics, metal working, electroplating and on such management techniques as quality-control circles, Just-In-Time and total quality control.

      Construction went ahead for a special purpose headquarters building for the council at Kowloon Tong. The building is expected to be completed late in 1990.

The council is the government's agent for all matters concerning the Asian Productivity Organisation (APO). During the year, under the sponsorship of the APO, the council held two seminars on management information systems for the clothing industry and pollution in metropolitan areas.

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, with only three hectares left along the seafront, an area reserved for high-technology industries. The Yuen Long Industrial Estate provides 67 hectares of industrial land, of which more than half has already been sold or allocated to manufacturers. Apart from being fully serviced with roads, drains and sewers, electricity and water, the estates have good transport links to the urban area, the container terminal at Kwai Chung and the Hong Kong International Air- port. The corporation's estates have been planned to provide a high-quality environment for modern industrial projects. In order to protect this environment the corporation

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maintains close liaison with the Environmental Protection Department to make sure that environmental rules are followed when companies plan their plant and machinery and draw up their building plans.

   Feasibility studies have been completed for the development of a third industrial estate of about 90 hectares in Tseung Kwan O new town.

Leases of land on the industrial estates are sold by the corporation to applicants at premiums based on cost. By the end of 1989, applications from 117 companies had been approved and sites provided on the two estates.

   Besides providing sites to industrialists for the construction of purpose-built factory buildings, the corporation also provides pre-built factory premises for those who wish to begin production with the minimum of delay.

External Trade

Hong Kong is among the top twelve traders in the world. Overall, its trade is normally in balance and in 1989 it showed a small surplus. Its largest trading partner is China, followed by the United States and Japan. Its external trade was generally buoyant in 1989. Total merchandise trade amounted to $1,133,291 million, an increase of 14 per cent over 1988. Imports rose by 13 per cent to $562,781 million and re-exports by 26 per cent to $346,405 million while domestic exports increased by three per cent to $224,104 million. Domestic exports and re-exports together, valued at $570,509 million, registered an in- crease of 16 per cent. Appendices 15 and 16 provide summary statistics of external trade.

Imports

Hong Kong is almost entirely dependent on imported resources to meet the needs of its population of 5.81 million and its diverse industries. In 1989, imports of raw materials and semi-manufactured goods totalled $230,455 million, representing 41 per cent of total im- ports. The principal items imported were fabrics of man-made fibres ($21,419 million); transistors, diodes, semi-conductors and integrated circuits ($27,205 million); plastic moulding materials ($18,620 million); iron and steel ($11,900 million); woven cotton fabrics ($11,494 million), and watch and clock movements, cases and parts ($12,160 million).

   Consumer goods, valued at $201,482 million, constituted 36 per cent of total imports. The major consumer goods imported were: clothing ($44,998 million); radios, television receivers, gramophones, records, amplifiers and tape recorders ($24,813 million); baby carriages, toys, games and sporting goods ($13,738 million); diamonds ($12,898 million); watches ($9,779 million); travel goods, handbags and similar containers ($10,156 million) and footwear ($8,103 million).

   Imports of capital goods amounted to $84,394 million, or 15 per cent of total imports. Imported capital goods consisted mainly of electrical machinery ($14,222 million), trans- port equipment ($7,698 million), office machines ($7,849 million), electronic components and parts of computers ($6,176 million) as well as textile machinery ($4,012 million).

   Imports of foodstuffs were valued at $33,969 million, representing six per cent of total imports. The principal imported food items were fish and fish preparations ($7,398 million), fruit ($4,726 million), meat and meat preparations ($4,047 million) and vegetables ($3,887 million).

Mineral fuels, lubricants and related materials, worth some $12,481 million were im- ported in 1989, representing two per cent of total imports.

   China and Japan were the two principal suppliers of imports in 1989, providing 35 per cent and 17 per cent respectively of the total. China alone supplied 37 per cent of Hong

INDUSTRY AND TRADE

Kong's imported foodstuffs. Taiwan ranked third, providing nine per cent, 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 $71,874 million or 32 per cent of the total. Exports of miscellaneous manufactured articles consisting mainly of plastic toys and dolls, jewellery, goldsmiths' and silversmiths' wares and plastic articles, were valued at $27,867 million, representing 12 per cent of domestic exports. Photographic apparatus, equipment, supplies and optical goods, watches and clocks were valued at $19,602 million (nine per cent of the total). Electrical machinery, apparatus and appliances consisting mainly of household-type appliances, transistors and diodes amounted to $17,888 million or eight per cent of the total. Domestic exports of textiles valued at $16,814 million, contributed another eight per cent to the total. Other important exports included telecommunications and sound recording and reproducing apparatus and equipment (seven per cent) as well as office machines and automatic data- processing equipment (seven per cent).

The direction and level of Hong Kong's export trade is much influenced by economic conditions and commercial policies in major overseas markets. In 1989, 52 per cent of all domestic exports went to the United States and the European Economic Community (EEC). The largest market was the United States ($72,162 million or 32 per cent of the total), China ($43,272 million or 19 per cent), the Federal Republic of Germany ($15,689 million or seven per cent) and the United Kingdom ($14,638 million or seven per cent). Domestic exports to Japan and Canada increased to $13,028 million and $6,299 million res- pectively, with Japan representing six per cent and Canada three per cent of total domestic exports. Other important markets were Singapore, the Netherlands, Australia and Taiwan.

Re-exports

      Re-exports showed a very significant increase in 1989, accounting for 61 per cent of the combined total of domestic exports and re-exports. Principal commodities re-exported were: textiles ($42,529 million); miscellaneous manufactured articles ($42,359 million); clothing ($37,281 million); electrical machinery, apparatus and appliances ($33,550 mil- lion); telecommunications and sound recording and reproducing apparatus and equipment ($27,552 million) as well as photographic apparatus, equipment, supplies, and optical goods, watches and clocks ($13,485 million). The main origins of these re-exports were China, Japan, the United States, Taiwan and the Republic of Korea. Largest re-export markets were China, the United States, Japan, Taiwan and the Republic of Korea.

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-General 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.

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   Hong Kong maintains 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 sytem, and issues certificates of origin where required. Other government-approved certificate-issuing organisations are the Hong Kong General Chamber of Commerce, the Indian Chamber of Commerce, the Federation of Hong Kong Industries, the Chinese Manufacturers' Asso- ciation of Hong Kong, and the Chinese General Chamber of Commerce.

External Commercial Relations

  Hong Kong possesses full autonomy in the conduct of its external commercial relations. The Governor has been formally entrusted with executive authority to conduct external relations on behalf of Hong Kong, namely to conclude and implement trade agreements, whether bilateral or multilateral, with states, regions and international organisations and to conduct all other aspects of external commercial relations. Hong Kong is a separate contracting party to 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. GATT 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.

   The Hong Kong Government pursues a free trade policy. Hong Kong is one of the best examples of GATT principles in action and the success of the policy is evidenced by the steady rise in the value and sophistication of Hong Kong's exports in recent years. Within the context of this free trade policy Hong Kong's commercial relations are designed to ensure that Hong Kong's trading rights in overseas markets are protected and that its international obligations are fulfilled. The most important of these rights and obligations are contained in the GATT and the MFA.

GATT

  On April 23, 1986, Hong Kong became the 91st contracting party to the General Agree- ment on Tariffs and Trade (GATT). Hitherto, Hong Kong had already been participating in GATT activities from within the United Kingdom delegation and the United Kingdom spokesman for Hong Kong was invariably a Hong Kong Government official. The arrangement enabled Hong Kong to take positions that were different from those of the European Economic Community (EEC), and, by implication, the United Kingdom. With effect from April 23, 1986, the Head of the Hong Kong Government Office in Geneva was appointed as the Permanent Representative of Hong Kong to the GATT.

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

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      Hong Kong is an active participant in the GATT Uruguay Round of multilateral trade negotiations which began in 1986 and is scheduled to conclude by the end of 1990. Hong Kong's complete adherence to the GATT principles of free trade gives it added credibility and influence in the negotiations which aim to strengthen the GATT and further liberalise world trade. Hong Kong was closely associated with many of the key decisions taken during a ministerial review of progress held in Montreal in December 1988 and completed in Geneva in April 1989. Significant differences among the governments participating in the Uruguay Round negotiations were overcome during the review and a framework for discussions up to completion of the Round was agreed upon, paving the way for substan- tive negotiations for the remainder of the Round.

Hong Kong co-sponsored proposals in the Uruguay Round talks during the year. In particular, it introduced initiatives to improve and strengthen the multilateral rules governing anti-dumping actions and country of origin regulations which, it was felt, in their present form could be used to obstruct legitimate trade. Hong Kong played an im- portant role in the discussion on bringing trade in services within the disciplines of a multi- lateral system. To raise awareness among service sector companies in Hong Kong, the Trade Department and Trade Development Council jointly organised a seminar in October 1989 at which Hong Kong's interest in negotiations on trade in services was more clearly identified. Hong Kong also worked closely with exporters of textiles and garments under the International Textiles and Clothing Bureau to press for bringing world trade in textiles and clothing back under the disciplines of the GATT and for phasing-out the MFA.

Textiles

Bilateral agreements negotiated under the MFA govern Hong Kong's textiles exports to Austria, Canada, the EEC, Finland, Norway, Sweden and the United States.

Consultations held in Vienna in November 1989 resulted in a new three-year Hong Kong/Austria Textiles Agreement (February 1, 1990 to January 31, 1993). The agreement represents a substantial improvement over the current one in terms of product coverage and growth rates. The number of categories under restraint has been reduced from five to four and export authorisation categories from 14 to eight.

      Two rounds of consultations between Hong Kong and the EEC were held in 1989 to address problems arising from changes of product definitions upon adoption of the Harmonised System by the EEC. Agreement was reached on adjustments to the quota levels of six categories of textile products restrained under the agreement. Consultations were also held with the United States to review implementation of the new US textiles category structure adopted in conformity with the Harmonised System and a clearer understanding of classification practices was established.

Non-textiles Issues

Anti-dumping actions against Hong Kong companies emerged in 1988 as a signifi- cant phenomenon. Few cases had been brought against Hong Kong in the past; not surprisingly, since in Hong Kong's highly competitive trading environment it is difficult to see how companies could afford to operate at a loss or sell at less than normal value. However, during the period December 1987 to March 1989, eight anti-dumping actions were initiated in the EEC against Hong Kong companies. Of these, only one case (against Hong Kong exports of mobile cellular radio-telephones) was terminated without imposi- tion of any anti-dumping duties. Definitive anti-dumping duties, as high as 22 per cent for some companies, were imposed as from June 23, 1989, in respect of video cassette

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  tapes. Cases against small-screen colour televisions, tungsten ores, photo albums, audio tapes, silicon metal and denim fabric were still under investigation.

   In October 1989, the United States authorities initiated an investigation in response to a petition from US knitwear manufacturers alleging that Hong Kong man-made fibre sweaters were being dumped in the United States.

   In all these cases the Hong Kong Government worked closely with the industries alleged to have been dumping to ensure that each was given a fair chance to present its case fully and accurately to the investigating authorities and to see that the principles and provisions of the GATT Anti-dumping Code were adhered to.

   Hong Kong made a detailed submission to the EEC Commission in June on the EEC's 1990 Generalised System of Preferences (GSP) and a further submission in September on the EEC's review of its GSP scheme (1991-2000). The EEC decided to exclude 39 Hong Kong products from GSP benefits in 1990.

Participation in International Organisations

The Pacific Economic Co-operation Conference (PECC) is a non-governmental organ- isation set up in 1980 to develop closer co-operation in regional trade and economic policy issues. Conferences are held regularly with member countries taking turns to host. Participation in PECC takes the 'tripartite' format whereby delegations consist of senior government officials, business leaders and academics, all attending in their personal capacity. Although it is not a member of the organisation, Hong Kong attended the PECC VII meeting held in Auckland in November 1989 as an observer.

The Organisation for Economic Co-operation and Development (OECD), a 24-country organisation established in 1961, initiated a dialogue with Asian economies in January 1989 by organising an informal seminar to exchange views on national policies and inter- national co-operation in sustaining the development of the global economy. Hong Kong participated in the seminar and has shown interest in taking part in further dialogue with the OECD. Hong Kong attended the OECD symposium on structural adjustment of the Asia-Pacific economies and the OECD informal consultation on export credits in October and November 1989, respectively, and has expressed interest in participating in all four proposed OECD workshops with Asian economies to be held in 1990.

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-General 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 which 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 com- mercial relations, such as its participation in the GATT and in the negotiation of the Multi- Fibre Arrangement. The fifth division is responsible for the textiles export control system,

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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 and Brussels, and Hong Kong Economic and Trade Offices in 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.

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 com- mercial 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 closely monitor economic and trade developments, pro- posed legislation, and other matters in the United States of America and Canada that might affect Hong Kong's economic interest in general and bilateral trade with these two countries in particular. The 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 undertake industrial promotion activity, advising firms in the host countries about opportunities for investing in Hong Kong industries. All overseas offices, except Geneva, act as a point of direct contact between Hong Kong and the host country, and the local media and organisations with an interest in Hong Kong. They 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 supervises 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 Internation 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.

Customs and Excise Department

The Trade Controls Branch, one of the four component branches of the Customs and Excise Department, is responsible for the enforcement of the law relating to trade controls. The work of the other branches of the department is described in Chapter 16 (Public Order).

      The Trade Inspection and Verification Bureau, of the Trade Controls Branch, is respon- sible for the inspection of factories and consignments in connection with certificates of

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origin, textile quota controls, import and export licences and the verification of trade declarations and manifests. Its Trade Investigation Bureau and Trading Standards Investigation Bureau are responsible for the investigation of licensing and origin fraud, consumer protection, weights and measures control and the control of reserved com- modities.

The re-organisation of the Customs and Excise Department last year provided the opportunity for the restructuring of the Trade Controls Branch. As a result, its overall enforcement ability and staff resources in particular were more effectively deployed, result- ing in a large rise in the number of textile consignment checks and a significant increase in the number of cases of origin and textile fraud that were detected.

Greater emphasis is being placed on the enforcement of consumer protection legislation, particularly the new Weights and Measures Ordinance which came into effect on January 1, 1989.

Government Supplies Department

The Government Supplies Department 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. It also gives advice on purchasing and supply matters, and seconds staff to other departments to ensure a professional 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 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 department's 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 countries and some 4 000 registered suppliers.

In 1988-9, the department placed orders to a total value of $2,402 million including the purchase of aircraft from the United States for use by the Royal Hong Kong Auxiliary Air Force at a contract value of $423 million.

Hong Kong Trade Development Council

The Hong Kong Trade Development Council (HKTDC) is a statutory body responsible for promoting and developing Hong Kong's overseas trade and publicising the oppor- tunities and advantages of Hong Kong as a trading partner.

The chairman is appointed by the Governor and the 18 other members include representatives of major trade associations, leading businessmen and industrialists, and two senior government officials.

The council was established in 1966 and has built up a network of 29 offices throughout the world, in addition to the head office in Hong Kong, local branch offices in Tsuen Wan and Kwun Tong and a trade enquiries office in the Ocean Centre. In 1989, offices were opened in Singapore, and the council moved its head office to the Office Tower of the Hong Kong Convention and Exhibition Centre.

  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

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overseas representatives and consultants can put traders in touch with any of the 40 000 Hong Kong manufacturers and exporters registered in the Trade Enquiries Service computer. Furthermore, local businessmen can find markets for their goods through 130 000 overseas importers and buyers registered with the council.

In 1989, the computerised Trade Enquiries Service of the council processed more than 230 000 overseas and local trade enquiries. The Research Department continued to publish special market surveys and detailed product reports, identifying opportunities in overseas markets for Hong Kong exports.

      Council staff carried out an extensive trade promotion programme in 1989, 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 SONIMAG in Barcelona, IGEDO in Dusseldorf, CeBIT in Hanover, MIDO in Milan and the Swiss Industries Fair in Basle.

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 over 400 inward missions from more than 35 countries.

       In Hong Kong, the council staged Hong Kong Fashion Week, Hong Kong International Toys and Games Fair, Hong Kong International Electronics Fair, Hong Kong Inter- national Jewellery Show, Hong Kong International Watch and Clock Fair and Hong Kong International Gifts and Houseware Fair. It also participated in the Leather International Fair, World Unit Pack Expo, Hong Kong Industrial Trade Fair and Hong Kong Jewellery and Watch Fair.

      In a series of successful store promotions, the HKTDC joined forces with Ahelens in Stockholm, Hertie in Munich, Meitetsu in Nagoya and Pacific Sogo in Taipei, plus a number of stores in Toronto's Mississauga Square I.

The council produces eight 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 Hong Kong Trader, a bimonthly newspaper (sent airmail) giving news and views of the territory. In October, Hong Kong Collection, a Japanese-language quarterly featuring general products, was introduced. 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 12th plenary session of the Hong Kong-Japan/ Japan-Hong Kong Business Co-operation Committee was held in Hong Kong in March. The 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.

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The Hong Kong Convention and Exhibition Centre was officially opened on November 9 by Their Royal Highnesses The Prince and Princess of Wales, although it had begun functioning some months earlier. During its first year of operation the centre hosted 571 conventions, exhibitions, seminars and other corporate gatherings.

Hong Kong Export Credit Insurance Corporation

The Hong Kong Export Credit Insurance Corporation (ECIC) is a statutory corporation established in 1966 to provide insurance protection to exporters against the risk of monet- ary loss arising from non-payment by their overseas buyers for goods exported and services rendered on credit which are not normally covered by commercial insurers. The maximum percentage of indemnity against country and buyer risks is 90 per cent.

   The corporation's paid-up capital of $20 million is provided by the government, which guarantees the payment of all moneys due by the corporation. The maximum contingent liability arising from its insurance and guarantees operations which may be assumed by the corporation is $6,000 million. The corporation is autonomous in its day-to-day operations and is run on a commercial basis. In the conduct of its business, the corporation is assisted by a 12-member Advisory Board comprising prominent members of the private business sector and representatives from the government.

   It insures domestic exports and re-exports transacted on all kinds of short-term credits and payment methods including documents against payment, documents against accept- ance and open account up to a maximum credit period of 180 days. Shipments from third countries direct to overseas buyers may be covered. Cover is also available to protect the exporters against buyers' insolvency during the manufacturing stage, against non-payment due to war and civil disturbance, or against confiscation and non-repatriation of raw materials, work-in-progress and finished products where goods are manufactured outside Hong Kong. For exports of capital goods and services sold on medium or long-term credits, the corporation can provide tailor-made insurance policies.

The corporation is a member of the International Union of Credit and Investment In- surers (the Berne Union) and has regular access to confidential and updated economic and market information on all major trading countries.

   Being a professional credit manager itself, the corporation conducts assessments on credibility of overseas buyers and gives advice on credit-risks monitoring and debt collec- tion. These services have proved invaluable to exporters who lack resources to have effective credit management systems.

   The corporation has a computerised databank containing information on over 60 000 overseas buyers. This enables it to deal speedily with policyholders' enquiries and helps ex- porters to determine the extent of credit which they may prudently trade with these buyers.

   In 1989, the corporation insured a total of $11,468 million in goods and services, an in- crease of 12 per cent over 1988, and earned a total premium income of $68 million. Against this, 81 claims totalling $27 million were paid.

Other Trade and Industrial Organisations

  Hong Kong has a number of major trade and industrial organisations which provide services to their members and represent their views to the government, either of their own accord or in response to government consultation.

   The Hong Kong General Chamber of Commerce is the oldest internationally-recognised trade association in Hong Kong. Established in 1861, it now has a membership of some 2 700 companies representing all branches of commerce and industry, including exporters

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Previous page: Heavy industry, such as this Junk Bay (Tseung Kwan O) steel foundry, provides essential support to other local industries and the export trade.

The clamour of the construction site is never far away as more high-rise structures crowd the skyline.

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Radio paging services are extremely popular in Hong Kong, which probably has the world's highest per capita rate of subscriptions for pagers.

Below: Paging equipment being manufactured at a Kwun Tong factory.

Right: Operations centre for a busy paging service.

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Below: Computerised design plays a part in fashion courses at the Polytechnic.

Right: The Trade Development Council promotes local

designers' creations at the new Convention and Exhibition Centre during Hong Kong Fashion Week.

Overleaf: A recent arrival in Hong Kong's line-up of luxury hotels, the Grand Hyatt boasts a splendid 1930s-style lobby with marble pillars and burnished gold and silver in the high, domed ceiling.

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 worke

INDUSTRY AND TRADE

     and importers, a wide section of the manufacturing industry, transport, utilities, banking insurance and commercial and professional services. The chamber was formed to promote trade and industry, to act as a focus of local business opinion and to make that opinion known when necessary. It organises trade and industrial investment promotion groups, goodwill missions, and handles trade enquiries. It receives official and trade del- egations as well as individual businessmen from overseas, and extends to them appropriate assistance. It is authorised by the government to issue certificates of origin. Although an independent organisation, the chamber is represented on a variety of official advisory committees and other local organisations. It is a member of the International Chamber of Commerce.

      The Chinese Manufacturers' Association of Hong Kong (CMA), established in 1934, is a non-profit-making chamber of commerce and industry. It has a membership of over 3 600 industrial and trade establishments, and is authorised by the government to issue certificates of origin. It also handles trade enquiries, organises missions, fairs and ex- hibitions, and is active in encouraging product development and quality improvement. The CMA Testing and Certification Laboratories provide technical back-up services, including product testing, certification, inspection and technical consultancy services. The CMA also operates two prevocational schools to provide technical education and training for more than 2200 students. Since 1964, it has awarded scholarships annually to outstanding students studying in universities, polytechnics and technical institutes through the CMA and Donors' Scholarships Scheme. In 1989, it ran the award competition in the machinery and equipment design category of the newly-introduced Governor's Award for Industry, to emphasise the importance of machinery and equipment design in Hong Kong's industrial development.

      The Federation of Hong Kong Industries is a statutory body, established by the govern- ment in 1960 to promote and protect the interests of Hong Kong's manufacturing industry. It offers a wide range of services, covering certificates of origin, the Hong Kong Quality Mark Scheme, a custom-built multi-risks insurance policy, consultancy work on quality assurance, trade enquiries, and economic and market research.

      In 1989, the federation ran the award competition in the consumer product design category in the newly-introduced Governor's Award for Industry, attracting nearly 300 entries, and organised the Hong Kong Young Designer of the Year Award Competition in recognition of outstanding achievements by local designers. The second Young Industrialist Awards of Hong Kong were presented in June 1989 in honour of seven young industrialists for their professional endeavors and commitment to the manufacturing industry.

      With a membership spanning all industrial sectors, the federation services the Hong Kong Toys Council, Chemical and Pharmaceutical Industries Council, Transport Services Council, Hong Kong Electronics Industry Council, Hong Kong Plastics Industry Council and the Mould and Die Council.

Established in 1900, the Chinese General Chamber of Commerce is an association of local Chinese firms, businessmen and professionals. It has a membership of more than 6 000, representing a wide spectrum of business as well as industry. It provides a variety of services including certification of origin, organisation of seminars, exhibitions, trade missions and other trade promotional activities. It maintains close links with trade organisations in China and, since 1957, has been authorised by the Chinese Export Com- modities Fair authorities to issue invitations on their behalf to local Chinese firms. It has been operating courses for senior government officials to China since 1982. These courses

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 are designed to enable the participants to better understand the various aspects of Hong Kong's economy.

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 facili- tation work has shifted from paper to the transmission of trade data by electronic means. More recently, in conjunction with the Hong Kong General Chamber of Commerce, it was instrumental in establishing the Hong Kong Article Numbering Association Limited, which is the recognised Hong Kong authority for the issue of bar codes for product identification.

The Hong Kong Management Association was established in 1960 with the aim of im- proving the effectiveness and efficiency of management in Hong Kong. It runs management 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 a statutory body responsible for protecting and promoting the interests of consumers of goods and services. Its chairman, vice-chairman and 20 other members the number was increased from 15 during the year - are all appointed by the Governor from various walks of life, representing a considerable diversity of consumer interests.

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Established in 1974, the council provides a comprehensive consumer protection service including consumer representation and legislation, advice and complaints, research and testing, and information and publications. It maintains close co-operation with the government through the Trade and Industry Branch and is represented on many com- mittees dealing with a wide range of consumer issues and concerns.

The year began with the council inquiring into a proposed significant increase of motor vehicle insurance premiums, following a public outcry. The study resulted in recommendations for the monitoring of the insurance industry in respect of its pricing mechanism and other related matters.

A thorough review of the functions of the council was carried out in the light of rising consumer expectations and the changing needs of society. A major area of the review was to investigate the adequacy of the existing mechanism of controls over public utilities and transport companies. A report with recommendations to expand the council's scope of functions was submitted to the government at the end of the year.

Marked progress was made in the area of consumer product safety. A government working group, with representation from the council, has been studying the international safety standards of toys and children's products with a view to adopting the relevant standards for use in Hong Kong. The proposed legislation to expand control on domestic pesticides is at an advanced stage. The Electricity Bill, which aims to delineate clearly the responsibilities of the government, the power companies, the electrical appliance trade and electricity consumers, will also enforce safety regulations on electrical products. The amended Money Changers' Ordinance came into operation and the Control of Exemption Clause Ordinance was enacted.

The council regularly conducts research into a diverse range of goods and services to assist consumers in their purchasing decisions and to alert them to potential hazards to

INDUSTRY AND TRADE

their health and safety. In the field of comparative product testing, the council's work was enhanced by taking part in international joint tests. Such tests provided both substantial financial savings and suitable laboratory facilities which might not exist in Hong Kong. Extensive use was made of surveys to tap the experiences of users, particularly in evalua- ting services. This regular flow of information was published in the council's Chinese- language monthly magazine Choice, which maintained a high circulation of some 45 000 per issue. An annual English version entitled Choice Buying Guide was published for the second year with continued success.

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      The educational publicity campaign on 'Consumers' Right to Know', launched in 1988, continued to gain momentum in arousing the awareness of the public consumers and traders alike - to this basic right of consumers. Continuous efforts in consumer education have increasingly prompted schools and community groups to organise projects of con- sumer interest.

      The council operates 16 Consumer Advice Centres throughout the territory and during the year, dealt with 9 473 complaints and 97 354 enquiries for consumer advice. Publicity sanction was imposed on seven shops which were subjects of frequent consumer complaints for dishonest business practices. Most shops named by the council were retailers of house- hold electrical appliances.

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 importation, exportation and possession of endangered species of an- imals and plants, including parts and derivatives, are 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 commercial trade in highly-endangered species is strictly forbidden.

      Ivory, reptile skins imported for the leather trade and wild American ginseng roots imported for medicinal purposes, are major commodities in trade in endangered species.

In June, a number of overseas countries, including the United States, Japan, the United Kingdom and some European Community countries, announced a ban on ivory imports as a result of increasing worldwide concern over the continued decline of the African elephant population in the producing countries, due to widespread poaching. As these countries represent Hong Kong's major ivory export markets, the ban had an adverse effect on the local ivory trade.

      As a party to CITES, the Hong Kong government has the responsibility for taking posi- tive action in conserving the African elephant. After consulting the trade and the workers, the government announced in June that it supported the ban on the trade of new ivory. It pointed out, however, that there was still a demand for ivory products in the world market and this should best be met by the existing legal stocks rather than by killing more elephants. For the sake of conservation, and in order to be fair to those legal traders, the government strived to convince the international community that trade in existing stocks of legally-held ivory should be allowed to continue under close supervision.

      To fulfil this aim, the government strengthened its already strict control by introducing such additional measures as thorough registration of all existing ivory stocks in the

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territory, a moratorium on imports of raw ivory from all sources until further notice, setting up a special task force to investigate and suppress any illegal trade of ivory and extending the licensing control of export of raw ivory to include worked ivory as well as the possession of ivory for commercial purposes.

In addition, government representatives participated in the CITES African Elephant Working Group meeting in July and the CITES biennial conference in October, to present Hong Kong's case.

   The CITES conference decided that the African elephant should be uplisted from Appendix II to Appendix I, which means all international trade in elephants, their parts or ivory, is prohibited. The conference rejected the proposal to allow trade in existing ivory stocks despite arguments put forward by Hong Kong that the continued trade of the territory's legal, finite and strictly-controlled ivory stocks would not pose a threat to the survival of the elephants in Africa and that an indiscriminate trade ban would be unfair to traders who have acquired stocks in strict compliance with the CITES requirements.

   The Animals and Plants (Protection of Endangered Species) Ordinance was amended during the year to extend its prohibition against trade in rhinoceros products including medicines claimed to contain its ingredients, to increase the maximum fines by five-fold and to introduce additional provisions to enhance enforcement.

   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 checking at entry points, markets, shops and restaurants, as well as inspection of licenced shipments. The Trade Department is authorised to issue certificates for the export of 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 1989, there were 350 seizures and 240 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, 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, man- agement 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.

   During the year, the committee continued to direct its activities towards the metrication of the retail trade sector. A publicity campaign was mounted to encourage the use of metric units in the sale of frozen meat products by means of television announcements and the distribution of posters and conversion cards to retail outlets.

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. Every mark, even if already registered in the United Kingdom or

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     any other country, must satisfy all the requirements of the Trade Marks Ordinance before it may be accepted for registration. During 1989, 10 255 applications were received and 4 235, including many made in previous years, were accepted and allowed to be advertised. A total of 4 060 marks were registered in 1989, compared with 4 360 in 1988. The principal countries of origin were: United States of America, 955; Hong Kong, 933; Japan, 394; United Kingdom, 338; France, 274; West Germany, 231; Italy, 185; Switzerland, 137; Taiwan 81, and the Netherlands, 78. The total number of marks on the register at December 31, 1989, was 54 255.

      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.

      During the year, 1 030 patents were registered in this way, compared with 1 070 in 1988. 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 com- mencement 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 com- panies 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 largely based 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. 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 various Companies (Amendment) Ordinances between February 20, 1987 and July 21, 1989.

      On incorporation, a company pays a registration fee of $600 plus $6 for every $1,000 of nominal capital. In 1989, 31 674 new companies were incorporated, 1 200 more than in 1988. The nominal capital of new companies registered totalled $3,371 million. Of the new companies, 113 had a nominal share capital of $5 million or more. During the year, 8 401 companies increased their nominal capital by amounts totalling $27,406 million on which fees were paid at the same rate of $6 per $1,000. At the end of 1989, there were 242 709 local companies on the register, compared with 213 515 in 1988.

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

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A registration fee of $500 and some incidental filing fees are payable in such cases. During the year, 266 of these companies were registered and 150 ceased to operate. At the end of the year, 2 464 companies were registered from 65 countries, including 605 from the United States, 350 from the United Kingdom and 286 from Japan.

The 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, and was amended in July 1988, anyone wishing to carry on business as a money lender must apply to a Licensing Court for a licence.

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, 496 applications were received and 473 licences were granted. At the end of 1989, there were 468 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. Agreement for 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 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.

During the year, there were 224 petitions in bankruptcy and 224 petitions for the compulsory winding-up of companies. The court made 177 receiving orders and 158 winding-up orders. As in past years, the Official Receiver was appointed trustee or liqui- dator in most cases. The assets realised by the Official Receiver during 1989 amounted to $351 million.

Official Trustee, Official Solicitor and Judicial Trustee

The Registrar General also exercises the powers and performs the duties conferred or im- posed 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 14 trusts amounted to $2.13 million. The Official Solicitor agreed to act in four cases.

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HONG KONG's labour market continued to be very tight during the year due to a high level of economic activity. The problem of the brain drain, due to emigration of professionals and experienced personnel, continued to cause concern. Employers were adopting new approaches to tackle the problem of staff recruitment and retention. A limited scheme was approved by the government to import skilled foreign labour to help ease the tight labour situation. Higher wages were offered to workers, particularly in the construction industry and service sectors.

Unemployment for the third quarter of 1989 was at a low of 1.4 per cent, and underemployment was 0.6 per cent.

      The average wage rates for all employees, including workers or wage earners and salaried employees up to the supervisory level, increased by 13.4 per cent in money terms between September 1988 and September 1989, while those for workers (or wage earners) increased by 11.7 per cent over the same period. After allowing for rises in consumer prices, wage rates for all employees increased in real terms by 2.9 per cent and those for workers increased by 1.4 per cent. The overall average daily wage rate for workers in September 1989 was $167, being $201 for males and $144 for females. While the increase of wage rates in real terms was small, the increase of average earnings was more significant. For example, between September 1988 and September 1989, average earnings for employees in the manufacturing sector, in terms of payroll per person engaged, rose by 16.1 per cent in money terms, or by 5.5 per cent in real terms.

      Hong Kong's dynamic workforce totals 2.8 million, of which 64 per cent are males and 36 per cent females, as recorded by the July-September 1989 General Household Survey. Of the total workforce, 29.7 per cent are engaged in manufacturing, 25.1 per cent in wholesale and retail trades, restaurants and hotels, 18.3 per cent in community, social and personal services, 9.5 per cent in transport, storage and communications, 8.4 per cent in construction, and 7.4 per cent in the financing, insurance, real estate and business services.

      A survey of Employment, Vacancies and Payroll in the Manufacturing Sector conducted in September showed that 802 983 people were engaged in 49 926 establishments. The survey covered working proprietors and partners, employees receiving pay and unpaid family workers affiliated to business organisations, but excluded out-workers. Some 353 101 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 manufacturing establishments and of the number of people engaged in them are given at Appendices 17 and 18.

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Labour Legislation

To provide better standards of safety, health and welfare for the workforce, 10 items of labour legislation were enacted in 1989. This brings the total number of items of labour legislation enacted in the last 10 years to 139 under the broad 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 enacted during the year included amendments to the Protection of Wages on Insolvency Ordinance which extended its coverage to severance payments, and amend- ments to the Factories and Industrial Undertakings Ordinance which imposed general responsibilities on employers and employees in respect of work safety at industrial undertakings and construction sites.

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 1989, Hong Kong has applied a total of 47 conven- tions, of which 29 were in full and 18 with modification. This compares favourably with other member nations in the region.

There has been an increase in the number of prosecutions under the various ordinances and regulations administered by the Labour Department. During the year, 4 120 cases were heard in the courts with total fines of $15,274,925 imposed on offenders.

Wages and Conditions of Work

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.

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 continued expansion of the service sector of the economy. After allowing for rises in consumer prices, the wage rates for all employees and workers increased in real terms by 1.8 per cent and 1.2 per cent respectively between September 1988 and September 1989.

In September, 75 per cent of manual workers engaged in manufacturing industries received daily wage rates, including fringe benefits, of $129 or more, and 25 per cent received $191 or more. The overall average daily wage rate was $163.

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, attendance bonuses, free medical treatment and free or subsidised transport. Many employees also enjoy a year-end bonus of one month's pay or more under their em- ployment contract, usually paid just before the Lunar New Year. In recent years, an increasing number of employers have introduced provident fund schemes to provide 100 improved long-term security for their employees.

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The Employment of Children Regulations, made under the Employment Ordinance, prohibit the employment of children under 15 in any industrial undertakings. Children who have attained the age of 13 may be employed in non-industrial establishments, subject to stringent conditions which aim at ensuring a minimum of nine years education and protecting their health, safety and welfare.

      Under the Women and Young Persons (Industry) Regulations, young persons aged 15 to 17 and women are permitted to work eight hours a day and six days a week in industry. By agreement between the employer and employees, their working hours 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.

In industry, 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. The Commissioner for Labour may, under special circumstances, increase the hours of overtime employment allowed for an industrial undertaking. As a general rule, overtime employment 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 usually not allowed to work after 11 pm and before 6 am, while persons under the age of 18 are prohibited from working between 7 pm and 7 am. 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 them from working underground and provide that, except with the written permission of the Commissioner for Labour, no person shall employ any female person of whatever age or any male person under 16 years of age in a dangerous trade.

      In 1989, the Labour Inspectorate of the Women and Young Persons Division made 219 217 day and night inspections of both industrial and non-industrial establishments and conducted four special campaigns against the employment of children and illegal immigrants, covering 11 128 establishments. During the year, 159 cases of child em- ployment involving 159 children were brought before the courts.

      In addition, a special team of labour inspectors is responsible for monitoring employers' compliance with the provisions of the Employment Ordinance concerning rest days, statutory holidays, annual paid leave, sickness allowance, maternity leave pay and the keeping and maintenance of records relating to statutory benefits.

From July 1, a general enquiry telephone service has been set up to provide information for the public in the form of pre-recorded tapes in both English and Chinese. The tapes cover 26 topics under the Employment Ordinance, Protection of Wages on Insolvency Ordinance, Employees' Compensation Ordinance and matters relating to the employment of foreign domestic helpers.

Controls on Illegal Employment

Employers are prohibited, under the Immigration Ordinance, 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.

The Immigration Ordinance was amended in July to empower labour inspectors and senior labour inspectors of the Labour Department to seize and remove records of em- ployees as evidence and to require production of records by notice in writing served on an employer.

Long Service Payment

Since January 1986, employers have been 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, the employee is entitled to severance payment.

In 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 the families of eligible employees who die in service.

Trade Unions

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

During the year, 19 new unions were registered. At the end of the year, there were 481 unions, comprising 439 employees' unions with about 416 400 members, 29 employers' associations with some 2900 members, and 13 mixed organisations of employees and employers with about 18 300 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 173 900 members. The affiliated unions are concentrated in shipyards, textile mills, transport, public utilities and the printing and construction industries.

   The Hong Kong and Kowloon Trades Union Council has 70 affiliated unions with a membership of about 17 800. These unions are mainly in the catering and building trades.

   The remaining 288 employees' unions have a total membership of about 224 700, mostly drawn from the public service and the teaching profession.

Labour Administration and Services

The Labour Department has an establishment of 1611. 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 admin- istering legislation on explosives, prospecting, quarrying and mining.

During the year, the Staff Training and Development Division organised three induction courses for 51 new recruits and 24 in-service training programmes for 931 serving officers. A total of 47 officers were sent overseas for training or duty visits with a view to improving the quality of the department's services to the public or preparing for new areas of service.

Labour Relations

In 1989, the Labour Relations Service of the Labour Department conciliated in 130 trade disputes which led to seven work stoppages, with a loss of 3 270 working days. These compared with 2 345 working days lost in eight work stoppages in 1988. The service also dealt with 15 206 claims for wages in lieu of notice, wages in arrears, annual leave pay, holiday pay, end-of-year payment, severance payment, long-service payment and others.

The Labour Relations Ordinance provides the 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. To promote good labour-management relations, a committee on labour relations was set up in 1986 by the Labour Advisory Board.

      To sustain the momentum generated from Labour Relations '88 which was a large-scale promotional programme held between November and December 1988, a Hong Kong Labour Relations Conference was held at the Hong Kong Convention and Exhibition Centre in October 1989. The event attracted 900 participants from local trade unions, business, professional and academic circles. The main theme of the conference was Business Management and Industrial Relations in 1990's - New Challenges and Opportunities. Leading speakers from various industries and trades dealt with the subject from the economic, socio-political, technological and legislative points of view.

The Labour Relations Service's promotion unit endeavours to promote harmonious labour-management relations in the private sector through a variety of activities. In 1989, these included 305 visits to individual establishments in major economic sectors, em- ployers' associations and employees' trade unions, two symposia on effective utilisation of human resources, 49 seminars on labour relations, 11 exhibitions, 349 talks delivered to various establishments and organisations, the publication of a quarterly newsletter and a series of information leaflets and pamphlets on a wide range of labour legislation and labour relations matters. The unit also organised 31 certificate courses, one of which was jointly organised with an employers' association, and 19 staff relations management courses for supervisors.

      To meet the increasing demands at district level, an establishment of four officers with supporting staff was created during the year to liaise with district boards and their committees and individual establishments in the districts. Promotional activities mounted at district level in 1989 ranged from audio-visual shows to training courses and seminars. An expanded schedule of district promotional activities is expected to be launched early next year.

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Protection of Wages on Insolvency Fund

Employees of insolvent employers can apply to the Protection of Wages on Insolvency Fund for ex-gratia payment in respect of severance payment under the Employment Ordinance, up to the limit of $4,000 per applicant. The fund also covers four months' arrears of wages, up to $8,000, and seven days' wages in lieu of notice, up to $2,000.

During the year, 3 489 applications were received and payments totalling $8.32 million were made involving 2 482 applications.

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 em- ployees and employers, with a minimum of formality. The tribunal deals with claims of right, wherever possible in the language of the parties.

   In 1989, the tribunal heard 3 689 cases involving employees as claimants, and a further 596 cases which were initiated by employers. More than $31 million was awarded by the presiding officers. Of the cases dealt with by the tribunal, 93 per cent were referred by the Labour Relations Service after unsuccessful conciliation attempts.

Finding Employment

The Employment Services Division of the the Labour Department consists of the Local Employment Service, the Central Recruitment Unit and the Higher Education Employ- ment Service.

The Local Employment Service provides free placement services to help employers recruit staff and job-seekers to find suitable employment. It operates from 15 offices which are linked by a facsimile system for the rapid exchange of vacancy information. The Central Recruitment Unit is a central agency for the recruitment of non-pensionable staff, such as artisans, motor drivers and workmen in all government departments. The unit also provides employment services to some private companies with territory-wide recruitment needs. During the year, 23 899 people were placed in employment, including 5 899 who found jobs in the public service. To help alleviate the labour shortage, the Local Em- ployment Service organised four mobile exhibitions and a 'job bazaar' during the year. The bazaar aimed to help participating employers publicise their job opportunities and conduct on-the-spot recruitment to meet urgent staffing needs. In addition, publicity efforts through the mass media were intensified to encourage more people to use the free employment services.

   The Higher Education Employment Service provides free employment assistance to job-seekers who possess university, post-secondary or professional qualifications. It has computerised its operation to provide job-matching and produce promotional materials. Vacancy information on job opportunities is disseminated regularly to universities abroad for the information of Hong Kong overseas students. During the year, 148 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 for the physically disabled, mentally retarded and ex-mentally ill persons seeking open employment. The division operates from three offices in Hong Kong, Kowloon and the New Territories. During the year, the division launched a series of activities to publicise its work and to promote the employability of the disabled. A ceremony was held in September to give recognition to those employers who took on the largest number of

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disabled employees or made special efforts to facilitate the employment of the disabled in the preceding 12 months. A seven-day exhibition on Employment Opportunities of the Disabled was organised in November to show the public the working potential of disabled persons, and the training facilities and technical aids available to them. Some 1 032 disabled persons were placed in employment in 1989.

      The placement of socially-maladjusted job-seekers is the responsibility of the Employ- ment Service of the Hong Kong Council of Social Service.

Careers Guidance

The Careers Advisory Service of the Labour Department, previously known as the Youth Employment Advisory Service, provides careers information and guidance to young people to help them choose a career best suited to their interests, talents and abilities. In 1989, the service delivered 488 careers talks in 183 schools and five voluntary agencies covering an audience of 86 625. In collaboration with the Vocational Training Council the service also organised a series of regional careers projects. Through the sixth Work Orientation Programme launched in May, arrangements were made for some 1 300 students from 49 schools to visit various establishments in the private and public sectors to gain a better insight into the world of work. In addition, more than 124 500 students from 252 schools participated in the Careers Quiz.

      The 18th annual Careers Exhibition, co-sponsored by the Regional Council, was held in December at Sha Tin Town Hall. Altogether, 23 exhibitors from commerce, industry, the services, professional bodies and the government took part in the 10-day exhibition which attracted more than 85 000 visitors.

To promote careers education, the service organises annually a one-year, part-time certificate course for careers teachers in conjunction with the Education Department and the University of Hong Kong. In addition, a seminar was held in July to provide a forum for careers teachers to update their knowledge and exchange views on careers guidance.

      The service also produces various publications including careers pamphlets, occupation leaflets and a monthly careers newsletter which are distributed free of charge to schools, youth centres and interested persons.

With the introduction of a new careers information centre at Sha Tin in February 1989, the service now operates four such centres. Each is equipped with a reference library, an audio-visual unit and an enquiry service providing information on employment and training opportunities. In 1989, the centres recorded a total of 26 440 visitors.

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 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, 11 409 professionals and other persons having technical expertise or administrative and managerial skills from over 30 countries were admitted for employment.

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Due to the general shortage of skilled labour in the local market, a special scheme allowing employers to recruit skilled workers from outside Hong Kong was introduced in May 1989. This scheme provided for the importation of 3 000 workers at technician, craftsman and supervisory levels on contracts not exceeding two years.

Subsequently, 641 applications involving 8 479 workers were received. After vetting, 2 323 workers were found eligible for entry. The majority of them were in the construction and manufacturing fields.

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 can 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. In 1989, there were 57 971 foreign domestic helpers in Hong Kong, compared with 45 154 in 1988, representing an increase of 28.4 per cent. Of these, 52 868 are citizens of the Philippines.

Attestation of Employment Contracts for Foreign Domestic Helpers For the purpose of controlling and protecting the employment conditions of foreign domestic helpers in Hong Kong, the Foreign Domestic Helpers Service of the Labour Department attested to 44 111 employment contracts for foreign domestic helpers in 1989.

It also handles conciliation of disputes arising from the employment of foreign domestic helpers. During the year, 629 claims, 1 011 consultations and 46 158 enquiries relating to their employment were handled.

Employment Agencies

The Employment Agencies Administration of the Labour Department is responsible for administering Part XII of the Employment Ordinance and the Employment Agency Regulations in controlling the licensing and operation of employment agencies in Hong Kong. In 1989, 498 licences were issued to agencies dealing with local employment and 119 licences to those handling employment outside Hong Kong.

Employment Outside Hong Kong

The External Employment Service is responsible for enforcing the Contracts for Em- ployment Outside Hong Kong Ordinance which controls employment contracts entered into in Hong Kong between employers and manual workers proceeding to work outside the territory. Under the ordinance, such contracts must be attested by the Commissioner for Labour before the workers depart from Hong Kong. An employer or his agent who fails to comply with the provisions of this ordinance is liable on conviction to a fine of $50,000. During the year, the service attested 200 fresh contracts under the ordinance.

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 environ- ment. The inspectorate also investigates industrial accidents and dangerous occurrences.

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      The Factories and Industrial Undertakings (Amendment) Ordinance 1989 was enacted on December 15, 1989. It imposes a general responsibility on employers and employees with regard to safety and health at work and introduces custodial sentences for serious breaches of industrial safety and health regulations.

      A working group was formed by the department to study the safe handling and storage of freight containers on land. The findings and recommendations are being studied.

The Factory Inspectorate Division pays particular attention to safety in high risk areas on construction sites. From April to October, four special enforcement campaigns were conducted, during which factory inspectors visited 781 construction sites throughout the territory. The campaigns resulted in 417 summonses being issued.

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 and special safety courses were also arranged for potential summer job-seekers before the school holidays commenced. As in the past, the centre gave talks on safety management to business students in post-secondary institutions. Starting in 1989, centre staff delivered talks to medical and engineering students of the University of Hong Kong. In colla- boration with the Hong Kong Polytechnic, the centre continued to organise two evening 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. Furthermore, the department continued to assist the Construction Industry Training Authority to run training courses for safety officers and safety supervisors.

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 management 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 principle and the technical aspects of self-regulation. The unit also assisted in organising seminars, safety training courses and other activities. In July, a three-day residential seminar on Self-Regulatory Approaches in Labour Inspection was organised for the second consecutive year jointly with the Asian and Pacific Project for Labour Administration of the International Labour Organisation.

The Factory Inspectorate, in conjunction with the Information Services Department, continued its publicity programme for the promotion of industrial safety through the mass media and other means. A campaign to promote protection of the eyes was organised during the period from July to November jointly with the Hong Kong Federation of Societies for Prevention of Blindness. A large-scale conference on industrial safety management for managers, unionists, supervisors and workers' representatives was held in November, with an audience of over 500.

In April, a new committee on Industrial Safety and Health was established under the Labour Advisory Board to advise the Commissioner for Labour on industrial safety and health legislation.

      The title of the Boilers and Pressure Receivers Ordinance was changed to the Boilers and Pressure Vessels Ordinance in December 1988. The Commissioner for Labour has been appointed as the Boilers and Pressure Vessels Authority under the ordinance.

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

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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 pressure equipment through spot checks to ensure compliance with statutory requirements and carries out investigations into accidents involving pressure equipment.

   Under the Gasholders Examination Ordinance, the division approves the design of gasholders and carries out inspections during fabrication and repairs, and subsequently conducts annual inspections.

   In collaboration with the Haking Wong Technical Institute, the division organises comprehensive training courses for attendants operating electrically-heated boilers. Special courses are conducted, in conjunction with the Vocational Training Council, for training handicapped persons as operators of small electrically-heated boilers. Short training courses are also organised for persons intending to obtain a provisional certificate of competency.

   The division provides technical assistance to the Fire Services Department concerning the safety of storage and handling of Category 2 dangerous goods, and to the Electrical and Mechanical Services Department on the design of gasholders and the implementation of statutory controls on boilers and pressure vessels.

Occupational Health and Hygiene

  The Occupational Health Division of the Labour Department 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. It provides an advisory service to the government and the public on matters concerning the health of workers and the hygiene of the workplace and complements the Factory Inspectorate Division in supervising health standards and practices in industry.

   The division took part in a number of seminars in 1989 and arranged several exhibitions to promote occupational health. It 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 alert employers and employees to occupational hazards in the workplace.

A major 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 a number of epidemiological studies on health and hygiene conditions have been completed. These included solvent hazards in printing, silica hazards in the quarrying industry, cutting fluid hazards in the metal manufacturing industry and the health effects of the use of moulding powder associated with the metal-casting process. Programmes to monitor various chemicals, dusts and other occupational health hazards were also carried out.

The division also carries out medical examinations of personnel exposed to ionising radiation, users of compressed-air breathing apparatus, and government employees work- ing in compressed air or engaged in diving or 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 division's laboratory carries out analytical tests on biological samples collected from workers and other environmental samples taken during site visits.

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Occupational Safety and Health Council

The Occupational Safety and Health Council, established by statute in 1988, is financed primarily by a levy on employees' compensation premiums. It consists of a chairman, a vice-chairman and 18 members, all of whom are appointed by the Governor. Its membership is drawn from employers and employees, academic and professional fields, and from the government.

The council aims to promote a safer and healthier working environment through programmed activities for education and training, promotion of the use of modern technology, dissemination of technical knowledge, provision of consultancy services, and encouragement of co-operation and communication among government and non- government bodies having such common goals.

Under the council are five functional committees and seven industry-based safety and health committees. The five functional committees deal with publicity, staffing, finance, research and general matters. The seven industry-based committees cover the construction, textiles, plastics, shipbuilding and shiprepairing, metalware, electronics and catering industries. The council plans to establish more such committees in future to help promote higher standards of safety and health at work in specific industries and trades.

The council and its committees are serviced by its own staff which has an establishment of 14. Since inception, it has organised a series of promotional activities including a logo design competition, an occupational safety and health quiz, exhibitions, a six-week radio programme and other industrial-oriented programmes. Six indicator boards with industrial accident statistics have been erected at various locations. A well-stocked library with publications on occupational safety and health and data-based information is situated in the council office. This library and other training facilities are open to the public.

Employees' Compensation

The Labour Department administers the Employees' Compensation Ordinance and the Pneumoconiosis (Compensation) Ordinance. The department ensures that injured em- ployees and dependants of deceased employees covered by the Employees' Compensation Ordinance obtain compensation from their employers 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 Com- pensation Fund which is financed by a levy imposed on the construction and quarry industries.

Under the two-tier Employees' Compensation Assessment Board system, employees with work-related injuries which are likely to result in permanent incapacity are assessed by the boards at eight major hospitals in Hong Kong. In 1989, Ordinary Assessment Boards convened 549 sessions and completed assessment of 18 135 cases referred to them by the Commissioner for Labour and 1 149 review cases. Special Assessment Boards convened five sessions and completed assessment of three cases referred to them by the Ordinary Assessment Boards and two review cases.

From January 1, 1989, the authority of the Commissioner for Labour to assess compensation payable in cases with loss of earning capacity has been extended to those where such loss is assessed at not more than five per cent.

Following a review of the compensation level under the Employees' Compensation Ordinance and the Pneumoconiosis (Compensation) Ordinance, the level of compensation

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will be increased by about 23 per cent with effect from January 1, 1990, to take into account the changes in wage levels since the last review in 1988.

A plan is in hand to establish an Employees' Compensation Assistance Scheme. Under the scheme, assistance will be given to victims of accidents occurring since January 1, 1984, when insurance was made compulsory. The scheme covers employees who are unable to receive statutory compensation or damages at Common Law due to them as a result of defaulting employers or insolvent insurers. It also covers those employers who fail to receive indemnity due to the insolvency of their insurers.

In 1989, 146 cases were awarded compensation amounting to $12,983,071 from the Pneumoconiosis Compensation Scheme. The Pneumoconiosis Compensation Fund Board allotted $1.5 million for financing six research and educational programmes to prevent pneumoconiosis.

Labour Advisory Board

The Labour Advisory Board is appointed by the Governor to advise the Commissioner for Labour on matters affecting labour, including legislation and conventions, and recom- mendations 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 and six representing employees. Of the employers' representatives, five are nominated by five major employer associations and one appointed ad personam by the government. Five of the employees' representatives are elected by registered employees' trade unions and one appointed ad personam by the government. 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.

9

PRIMARY PRODUCTION

EVERY day in Hong Kong, people consume about 1 000 tonnes of rice, 1 100 tonnes of vegetables, 10 000 pigs, 500 head of cattle, 320 tonnes of poultry, 450 tonnes of fish and 1 300 tonnes of fruit. Much of this is imported, but Hong Kong farmers, working on a very small agricultural base, satisfy some of the demand by producing mainly high-value foods to cater to the local preference for fresh, rather than frozen or chilled, foods.

Only about eight 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.

In terms of quantity, local farmers produce about 34 per cent of fresh vegetables, 37 per cent of live poultry, 18 per cent of live pigs, and 13 per cent of freshwater fish. The fishing fleet of some 4 900 vessels supplies about 79 per cent of all live and fresh marine fish eaten.

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.

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.

      Foodstuffs account for about 8.1 per cent of Hong Kong's imports from China. Local production, which complements rather than competes with imports, is aimed at main- taining some degree of self-sufficiency with respect to highly-perishable foodstuffs.

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.

Common crops are vegetables and flowers although a small quantity of fruit and other yield crops is also grown. Rice production has given way to intensive vegetable production and has become insignificant. The area of land under vegetables and flowers was about 2230 hectares in 1989. The value of crop production was about $486 million. Vegetable and flower production accounted for about 74 per cent and 23 per cent of the total value and stood at $359 million and $112 million respectively.

      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 mushrooms are 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 commer- cial nurseries. Peach blossom and ornamental citrus are grown specially for the Lunar New Year.

   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 in 1989 amounted to $380 million. However, the production of local pigs is expected to decline in the long run as a result of the implementation of the Livestock Waste Control Scheme by the government.

The production value of poultry, including chickens, ducks, pigeons and quails, amounted to $745 million. Local chicken production was about 15 million birds, repre- senting 39 per cent of total consumption.

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

Fishing Industry

Marine fish constitute one of Hong Kong's most important primary products. In 1989, total production from the two major sectors of marine capture and culture fisheries was estimated at about 245 950 tonnes with a wholesale value of $2.425 million. The figures represented increases of three per cent in weight and three in value compared with 1988. The marine capture sector was more important by far in weight terms, contributing 96 per cent towards total production while the remaining four per cent came from the culture

sectors.

The Hong Kong fishing fleet comprises about 4900 vessels of which 4300 are mechanised. It is manned by some 23 400 fishermen and plays a vital role in marine cap- ture fisheries, exploiting over 150 species of commercially important food fish and supplying over 55 per cent of all marine produce consumed locally. In terms of landed weight, golden thread, lizard-fishes, bigeyes, croakers, yellow belly, and squid are the most important.

The fleet employs trawling, lining, gill-netting and purse-seining as the major types of fishing methods. About 60 per cent of the vessels are between 10 and 34 metres in length comprising mainly trawlers, liners, and gill netters that operate offshore over a wide sector of the continental shelf extending between the Gulf of Tonkin and the East China Sea. The remaining 40 per cent of the vessels are less than 10 metres long, consisting primarily of small gill netters, hand liners, and purse seiners which operate in shallow coastal waters.

Trawling is the most important type of fishing, accounting for 76 per cent or 181 000 tonnes of marine fish landed in 1989. The total landed catch of live and fresh marine fish available for local consumption amounted to 94 650 tonnes with an estimated wholesale value of $958 million.

Pond fish farming is one of the most important culture activities. Fish ponds under active cultivation and covering 1 380 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 5 780 tonnes, or 13 per cent of the local consumption of freshwater fish.

PRIMARY PRODUCTION

      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 required to be conducted at sites within these zones under licences issued by the Director of Agriculture and Fisheries. By year-end, 1 780 licences had been issued. Live marine fish supplied by this activity amounted to 3 019 tonnes valued at $182 million.

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 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 on modern methods of animal production. It also supplies good quality seeds and breeding stocks of pigs and poultry.

A wide spectrum of studies on marine resources, aquaculture, and the environmental impact of development activities on fisheries is conducted with a view to developing and promoting the local fishery industry. In marine resources, emphasis is placed on optimising production from currently exploited fisheries resources and exploring the develop- ment potential of under-exploited or hitherto unexploited new resources. In this context, the department is actively examining the feasibility of using a new trapping technique to exploit the new crustacean resource on the edge and slope of the continental shelf of the South China Sea at depths between 300 to 1 000 metres. The initial results are encouraging.

      Aquaculture studies are concerned with the development of more efficient culture systems and improved husbandry techniques to increase productivity of the marine and pond fish culture sectors. In addition, efforts are also channelled into developing effective measures against fish diseases with a view to reducing mortality and hence cost- effectively increasing production. Hydrographic investigations are designed to supply en- vironmental information for an assortment of biological programmes. Studies of the marine environment are conducted to assess the impact of pollution, including red tides, on fisheries, particularly mariculture, in order to 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.

      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

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 of different sectors within the primary industries is studied to establish and update productivity standards and to identify areas for improvement.

Agricultural Development

Owing to the shortage and rising costs of farm labour and land in Hong Kong, the main development in the agricultural industry in recent years has been the introduction of labour-saving devices and intensive production practices. 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.

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.

Exotic and improved local breeds of pigs and chickens are readily accepted by livestock farmers due to their superior performances. Sporadic outbreaks of Foot-and-Mouth Disease in pigs and Newcastle Disease in poultry still occur but are kept under control by vaccination.

  Loans are available to the agricultural industry through three main funds: the Kadoorie Agricultural Aid Loan Fund, the J. E. Joseph Trust Fund and the Vegetable Marketing Organisation Loan Fund. These loan funds are administered by the Agriculture and Fisheries Department. By December 31, 1989, loans issued since the inception of these three funds had reached a total of $271.7 million. Of this, $264.2 million has been repaid.

  There were 70 co-operative societies and two federations among the farming commu- nity with a total membership of some 11 936 farmers. These societies help to promote agriculture and 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.

  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. Technical assistance, agricultural loans and related services are made available to farmers to promote better farming results. Visits were also arranged for farmers to see government experimental farms and farming projects.

Fisheries Development

 Fisheries development work involves modernising fishing craft and introducing more efficient fishing gear and navigational aids. A free advisory service on fishing vessel hull design, fishing methods and fishing equipment is available to fishermen while tests and demonstrations are conducted to assess the suitability of new fishing gear and methods. Training classes in navigation, engineering radiotelephony, proper use of ancillary equipment such as radar and weather facsimile, and seminars on safety on board fishing vessels at sea are regularly organised in the main fishing ports.

PRIMARY PRODUCTION

      Following the introduction of steel-hulled fishing vessels in May, the department has been providing a new advisory service to assist local fishermen interested in building these new and more efficient fishing vessels. In addition, new training programmes have been formulated in conjunction with the Marine Department to train and qualify fishermen to operate steel hull fishing vessels as masters and engineers.

      Education is provided for the children of fishermen at 10 schools run by the Fish Marketing Organisation. At the end of 1989, more than 1 500 children were attending these schools. A further nine were attending other schools on scholarships, grants and loans 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 each of the main fishing centres in order to provide a link with fishermen.

      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 1989, the fund capital was $19 million.

      The Agriculture and Fisheries Department administers another revolving loan fund, financed by the Co-operative for American Relief Everywhere (CARE).

      By December 31, loans issued since the inception of these four funds totalled $201 million of which $172 million has been repaid.

      At the end of the year, 2 087 fishermen were members of co-operative societies and there were 67 societies and four federations supported by fisherfolk.

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, 31 per cent of the total quantity of locally-produced vegetables, and 70 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, 60 135 tonnes of local vegetables valued at $158 million were sold through the organisation.

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URBAN COUNCIL PUBLIC LIBRARIES

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  The Fish Marketing Organisation operates under the Marine Fish (Marketing) Ordinance, 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 1989, the wholesale fish markets handled 74 400 tonnes of marine fish, crustacea and molluscs which were sold for $617 million. This included 4 100 tonnes of imported marine fish sold through these markets.

  The wholesale marketing of imported vegetables, fruit, poultry, eggs, freshwater fish and crustacea takes place at various wholesale markets located in different parts of Hong Kong Island, Kowloon and the New Territories. Facilities provided in some of these markets have already become dilapidated, congested and unable to cope with the increasing throughput.

  Marketing activities have spilled onto areas adjacent to these markets, causing obstruction, traffic congestion and environmental problems. To improve the situation, a long-term programme has been devised to replace the outdated markets by establishing large modern wholesale market complexes on Hong Kong Island and in Kowloon to centralise the wholesale marketing of fresh foodstuffs. Work on the Hong Kong complex is progressing satisfactorily while plans for the Kowloon complex are still at an early stage. In the interim, the government has established a number of temporary wholesale markets - at Western District on Hong Kong Island for fruit and poultry, at North District in the New Territories for agricultural products and at Cheung Sha Wan in Kowloon for imported vegetables, freshwater fish and poultry. Plans are well in hand to construct a temporary combined wholesale market on the Cheung Sha Wan Reclamation to replace the three existing temporary markets in the area.

Mining

The Mines Division of the Labour Department enforces legislation and safety regulations relating to mining, quarrying and explosives. It processes mining and prospecting applications and inspects mining and prospecting areas, stone quarries, blasting sites and explosives stores. At the end of 1989, one mining lease for the extraction of feldspar and kaolin was in operation. Details of the mining leases 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 Tate's Cairn Tunnel project and the stone quarries were the largest users of explosives in 1989 when the overall consumption of explosives in the territory increased by 21 per cent. Total consumption was 5 063 tonnes.

  Storage space was provided for the imported fireworks for the Lunar New Year fireworks display in February and the Tuen Mun District Festival in November. The division continued to provide transit storage facilities for explosives imported from the United States for use by offshore oil well drilling companies in the South China Sea.

10

EDUCATION

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

The Education Commission was established in April 1984, following the recommendations made by a visiting panel of educational experts in November 1982. Its overall objective is to provide the Governor with advice on the development of the educational system, in the light of the needs of the community.

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

       The commission is composed of 15 members. Twelve 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 on the issues before the commission. The ex-officio members 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 Secretary for the Treasury and the Director of Education.

       The commission sets out its recommendations in reports which are normally published for public consultation. In 1989, the government accepted the major recommendations in the commission's third report which dealt with the structure of tertiary education and the future of private schools.

      The commission is now working on its fourth report which will deal with curricular and behavioural problems in primary schools and junior secondary classes. The commission expects to publish this report in the first half of 1990. The report will also contain an introductory chapter, explaining the commission's educational philosophy and setting out its programme of work for the 1990's.

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

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279 of the Laws of Hong Kong. Although the board is an advisory body without executive functions, it plays a key role in formulating and planning education policy for the school sector.

The 18 board members comprise 16 non-officials (including the chairman), who are experienced educators and prominent members of the community. The two official members are the Director of Education (vice-chairman) and the Deputy Secretary for Education and Manpower. The board is serviced by the Education Department.

University and Polytechnic Grants Committee

The University and Polytechnic Grants Committee (UPGC) is appointed by the Governor to advise the government on the development of, and funding requirements for, higher education in Hong Kong and to administer government grants for the tertiary institutions.

The committee was established in 1965, with the title of the University Grants Commit- tee, to advise the government on the development and financial needs of the universities. The present title was adopted in 1972, to reflect the inclusion of the first polytechnic within the purview of the committee. 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.

At present, the UPGC is assisted by four sub-committees. The research sub-committee determines the disbursement of funds from grants earmarked for research activities. The University of Science and Technology sub-committee advises on the development of the new university, which will be funded by the UPGC from 1991. The sub-committee on Revision and Expansion provides advice on the implementation of the revised structure of tertiary education, arising from the government's consideration of the Education Commission Report No. 3; and the further expansion of tertiary education, as announced by the Governor in his Opening Address to the Legislative Council, which will result in an increase in the number of first year, first degree places planned from nearly 10 510 to about 15 000 in 1994-5. The Lingnan College sub-committee has been set up to consider the possible upgrading and development of Lingnan College.

The development of academic plans for the UPGC-funded institutions follows a triennial cycle, which begins almost three years prior to the commencement of each triennium. The recurrent grants for the institutions are determined on the basis of formal Academic Development Proposals which are considered by the UPGC. Capital grants are approved annually, to finance the institutions' building programmes to keep pace with planned academic developments.

In addition to monitoring the academic development and funding of the institutions, the UPGC is responsible for providing advice to the government and the Education Commission on a wide variety of issues pertaining to tertiary education. During the year, the committee was consulted on such subjects as the future structure and further expansion of tertiary education; manpower planning; the level of research funding for the 1991-4 triennium; the future development of postgraduate medical education and training; the feasibility of developing a Hong Kong Technology Centre; the Hong Kong Open Learning Institute, and the establishment of the proposed Hong Kong Council for Academic Accreditation.

The UPGC is an advisory committee, with membership comprising distinguished over- seas academics, eminent Hong Kong-based academics and prominent local professionals

EDUCATION

and industrialists. There is no government representation, but the committee is serviced by a secretariat staffed by civil servants.

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

The training boards and general committees assess the future manpower needs of the economic sectors and recommend measures to meet these 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 1989, manpower surveys were conducted in the following 11 sectors: advertising; public relations and publishing; building and civil engineering; clothing; electrical; electronic data processing; hotel and catering; insurance; jewellery; plastics; textiles, and transport and physical distribution. The training boards and general com- mittees also continued to prepare or update 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 supervision of education in Hong Kong at kindergarten, primary and secondary levels. He also supervises institutions registered under the Post Secondary Colleges Ordinance.

He directly controls all government schools, the Colleges of Education (including the Hong Kong Technical Teachers' College) and the 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. All schools are regularly inspected by the Education Department. Schools which receive financial assistance from the government under 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.

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In addition to these duties of supervision and control, the department plays a major role in educational planning and development, to ensure that approved policy objectives are achieved. 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, im- plementation of the school building programme, the allocation of school places, and educational research.

There are 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. These officers also attend District Board meetings to assist in discussions on educational matters.

Expenditure

The annual estimate of expenditure for educational services in the financial year beginning in April 1989 provided for $1,335 million in capital expenditure for educational projects and $11,714 million in recurrent expenditure, representing 16.6 per cent of the total budget.

Kindergartens

Pre-school education for the 3-to-5 age group is provided in privately-run kindergartens. In September 1989, 201 750 children were enrolled in 791 kindergartens, of which an increasing number are run on a non-profit-making basis. Such kindergartens are eligible for rent and rates rebates, and may be allocated premises in public housing estates.

In October, the government announced measures, based on advice in the Education Commission's Report No. 2, for improving the standard of kindergarten education. The most important measures were for the department to encourage operators to meet targets for standards of staffing and to pay staff according to a recommended salary scale, for teacher training courses to be made more accessible, and for the fee assistance scheme for needy parents to be simplified and taken over by the Education Department from the Social Welfare Department. In November, a working group including non-official members was appointed by the Secretary for Education and Manpower to monitor the improvements already approved and to consider possible further measures.

Officers of the department inspect kindergartens and offer professional advice to school managers, teachers, parents and the public. For basic professional training, a two-year, part-time day-release course leading to qualified kindergarten teacher status and a 12-week, part-time evening course leading to qualified assistant kindergarten teacher status are conducted by the Grantham College of Education. An identical 12-week, part-time day-release course is operated by the kindergarten section of the Advisory Inspectorate of the department. Additional training centres are being planned in convenient locations.

The department's kindergarten section also organises seminars, workshops and exhibitions to help heads and teachers raise their professional standards. During the year a series of curriculum development materials was produced to help teachers in planning educational activities. A booklet, Guidelines for Physical Play, in both Chinese and English, was compiled for issue to schools in 1990.

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

EDUCATION

may be remitted in cases of hardship. Some parents continue to send their children to the 82 private schools, although places are available in the public sector.

In September, primary school enrolment totalled 534 450 and enrolment in primary-level evening schools for adults totalled 1 686. During the year, 13 new schools were completed, providing 24 000 primary places. All these schools were located in the developing new towns to cater for the needs of their growing populations.

Most primary schools operate on a bisessional basis, with children attending either a morning or an afternoon session. In October, the government announced its intention to convert all Primary 5 and 6 classes to whole-day operation.

      The Primary One Admission Scheme was introduced in 1983 to monitor admission to Primary 1 in government and aided schools. Of the 78 837 children who took part this year, 46 237 or 58.6 per cent were allocated 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 secondary school places in the public sector through the Secondary School Places Allocation (SSPA) System. Allocation is based on the results of internal school assessments, scaled by a centrally-administered Academic Aptitude Test, and on parental choice. During the year, 84 607 Primary 6 students participated in the SSPA and were allocated places in the public sector. Half were allocated to the school of their first choice. This year, an additional twenty pairs of primary and secondary schools joined the Nominated Schools System, under which a secondary school may reserve 25 per cent of its places for students from one or more nominated primary schools.

Secondary Education

In 1978, free education was extended to the junior secondary level. The policy target is to provide, by 1991, subsidised places on senior secondary courses leading to the Hong Kong Certificate of Education examination for about 85 per cent of the 15-year-old population. Places for a further 10 per cent of the age group are to be provided on full-time craft courses in technical institutes. One third of the students on subsidised senior secondary courses will be able to proceed to a subsidised sixth form place.

To meet these targets new secondary schools are built and places are bought from private schools. During the year, 16 new secondary schools were completed, providing 18 520 places. Another 51 schools will be completed between 1990 and 1994 to meet the increasing demand and to reprovision schools from areas of surplus to areas of shortfall. A new standard design of school building, providing additional teaching space, was introduced in 1989.

To supplement the supply of government and aided secondary school places, the government buys Secondary 1 to 3 places from those private schools which have a satisfactory standard, and plans to buy Secondary 4 and 5 places from September 1990. In 1989, 57 539 places were bought from 39 schools. In October, the government announc- ed that, following advice in the Education Commission's Report No. 3, a direct subsidy scheme (DSS) would be introduced in 1991, under which any secondary school meeting specified standards could receive a public subsidy for each student enrolled, but would be free to set its own curriculum, entrance requirements and fee levels, with minimum govern- ment control. It was also announced that the bought place scheme (BPS) would come to an end in the year 2000, and that schools in the BPS would be helped before then to raise their standards to those required of a DSS school. A Private Schools Review Committee was appointed in November to advise on the implementation of these changes.

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The Junior Secondary Education Assessment (JSEA) System allocates suitable Secondary 3 leavers to subsidised Secondary 4 places and to full-time craft courses. Of the 78 790 students who participated this year, 66 291 or 84.1 per cent were allocated places. Of those allocated Secondary 4 places, 83.6 per cent were able to continue studying in their own schools.

There are three main types of secondary school in Hong Kong: grammar schools, technical schools and prevocational schools.

In 1989, there were 382 grammar schools with a total enrolment of 397 602. These offer a five-year secondary course in a broad range of academic, cultural and practical subjects leading to the Hong Kong Certificate of Education Examination (HKCEE). Most offer, in addition, a two-year sixth form course leading to the Hong Kong Advanced Level examination (HKALE), although a few offer a one-year sixth form leading to the Hong Kong Higher Level examination, or do not have any sixth form.

There were 22 technical schools with a total enrolment of 21 713. These prepare students for the HKCEE with emphasis on technical and commercial subjects. Qualified can- didates can continue their studies in the sixth form or in technical institutes.

   There were 21 prevocational schools with a total enrolment of 17 113. These offer an alternative form of secondary education suited to students with an aptitude for practical and technical subjects. They provide a solid foundation of general knowledge and a broad introduction to technical and practical education upon which future vocational training may be based. The curriculum in Secondary 1 to 3 is made up of about 40 per cent technical and practical subjects and 60 per cent general subjects. The technical and practical content is reduced to about 30 per cent in Secondary 4 and 5. Students completing Secondary 3 in a prevocational school may enter approved apprenticeship schemes or continue their studies to Secondary 5 and subsequently take the HKCEE. Qualified candidates can continue their studies in polytechnics or technical institutes. Beginning in 1992, some prevocational schools will provide sixth form classes, to prepare suitable students for technical or other studies in the polytechnics, universities or other tertiary institutions.

   In October, the report of a working group on sixth form education was released. The working group, comprising principals from all types of secondary schools, representatives of tertiary institutions and the Hong Kong Examinations Authority (HKEA) and government officials, was set up to advise the Secretary for Education and Manpower on the implementation of the new policy on the sixth form which was announced in 1988. Major changes were recommended to take effect in 1992: the abolition of the Higher Level examination, the introduction of Advanced Level subjects in the medium of Chinese, the adoption of a uniform two-year sixth form course in all types of secondary school and the introduction of new courses leading to an Advanced Supplementary examination. By year's end planning for the changes was well under way.

Special Education

  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. Altogether, 14 928 special places for handicapped children were provided in 1989.

   There were 71 special schools providing 9 023 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 those with

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learning difficulties. There were 892 residential places provided in boarding sections of 16 special schools. In addition, there were 399 special education classes in ordinary schools providing 5905 places for the partially sighted, the partially hearing, and students with learning difficulties.

A programme to provide remedial support for mildly-handicapped children integrated in non-profit-making kindergartens was implemented in 1988 and extended to 11 kin- dergartens in 1989.

Intensive remedial services were provided by the Special Education Section of the Education Department for students with learning difficulties and adjustment problems in ordinary classes. These services included remedial support outside school hours in resource teaching centres and adjustment units, a peripatetic teaching service in ordinary schools during or outside school hours, and advisory service 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 students were screened under the Combined Screening Programme with screen- ing tests for hearing and vision. The programme also provided checklists and guides for teachers to detect children with speech problems and learning difficulties. Students requiring further assessment were given audiological, speech, psychological or educational assessments 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. The government also operated a laboratory to provide ear moulds to students with impaired hearing.

      The Centralised Braille Production Centre, established late in 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.

The two-year in-service courses of training for teachers of children with special educa- tional needs continued to be 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 3 961 students. It operates a four-year diploma programme without government financial assistance. However, the students are eligible to apply for loans which are admin- istered by the department. The maximum amount was $9,400 in 1989-90.

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      Lingnan College, registered in October 1978, has three faculties Arts, Business and Social Science - with eight departments and a general education division which provides 12 study programmes. The total enrolment in the various courses is 1088. Following an institutional review by the Council for National Academic Awards, an integrated three-year Honours Diploma course was introduced in September 1988. This has attracted greater government financial assistance. Financial assistance is also available to students on the integrated three-year course. In 1989-90 the maximum level for grants was revised to $4,300, and for loans to $5,100.

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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 9 124 students, and now occupies two additional sites: the Faculty of Medicine is situated in Pok Fu Lam, adjacent to its teaching hospital, Queen Mary Hospital, and the Faculty of Dentistry, 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, Bachelor of Medicine and Bachelor of Surgery degrees, which last for five years, and the Bachelor of Science in Quantity Surveying and the Bachelor of Science in Speech and Hearing Sciences, both lasting for four years. All courses, apart from some in the Department of Chinese, are taught and examined in English. A total of 18 998 candidates competed for 1 999 first-year places in the university's 1989 admission exercise.

The university offers three kinds of higher degree, two of which, the Master of Philo- sophy and the Doctor of Philosophy, are awarded on the basis of original research. Another Master's degree is obtainable by coursework. In 1989, higher degree enrolment constituted about 17 per cent of total student registration. A number of postgraduate diploma and certificate courses are also offered.

Research at the university is active and ongoing, with almost every member of the academic staff engaged in research of some nature. Financial resources for the support of research are provided by the government, private benefactions and private companies. The government, through the University and Polytechnic Grants Committee, has allocated a total of $13.16 million earmarked research grant to support a variety of research projects. Other research activities, undertaken in co-operation with the commercial and industrial sectors of the community, and collaborative research and exchange at an international level, are encouraged and supported as far as possible.

  The university has a number of specialist centres, many of which undertake inter- disciplinary studies. The Institute of Molecular Biology, the first of its kind in Hong Kong, started operation early in 1989 with the objective of providing the territory with the necessary basic and back-up research for its own biotechnology industry. The Swire Marine Laboratory at Cape d'Aguilar on Hong Kong Island, due to be opened formally in November 1990, will become the first centre in the South China Sea region providing facilities for studies in marine biology, particularly in the context of environmental problems in this part of the world. Other research centres include the Centre of Asian Studies, which serves as a focal point for research on China, Hong Kong, East Asia and South-east Asia; the Centre of Urban Studies and Urban Planning; the Kadoorie Agricultural Research Centre, and the Social Sciences Research Centre.

  Close links are maintained with universities abroad, through individuals and de- partments, as well as through the Association of Commonwealth Universities and the Association of South-east Asian Institutes of Higher Learning. Academic staff are recruited by international advertisements.

  Degrees awarded by the University are recognised internationally, and for the professional disciplines, specialists from major bodies in the United Kingdom and other

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Previous page: Playtime for these happy Maryknoll schoolgirls, amid bauhinias and azaleas.

Below and right: Hong Kong's beaches provide recreation and relaxation for all ages during the hot summer months.

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Both pages: Having fun - and high fashion - at a colourful Girl Guides' May fair, one of many events enjoyed by youngsters throughout Hong Kong.

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Going for the big one! Young baseball enthusiasts hold their own League competitions. Overleaf: Singers in the Hong Kong Children's Choir rehearse for the première of the Cantata "Prologue to the 21st Century" at the newly-opened Cultural Centre.

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countries are invited regularly to review and advise on academic developments. Quali- fications for graduates have become prerequisites for admission to professional practice in fields such as architecture, dentistry, engineering, law, medicine, psychology, social work, quantity surveying and urban planning.

New academic developments are undertaken in close consultation with the University and Polytechnic Grants Committee, as well as 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. One example is the new part-time Master of Science programme in Environmental Management, introduced in the 1989- 90 academic year, which adopted a multi-disciplinary approach in training the much- demanded personnel in environmental protection.

To keep pace with academic developments and increasing student numbers, the uni- versity is undergoing substantial physical redevelopment. The K K Leung Building, a 20-storey academic building on the main estate, came into use in 1989 and an extension to the main library is due for completion in 1990-1.

Accommodation is currently provided by the university for about 25 per cent of its undergraduate students. There are seven residential halls and two non-residential halls. Planning is in hand to build two additional 400-place halls of residence, plus a 150-place hall for 'on-call' clinical students. A number of postgraduate students and academic visitors to the university can be accommodated at the Robert Black College on the main estate. There are three student amenities centres providing 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 900 000 volumes, is one of the best equipped in South-east 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 1 500 courses to some further 35 000 students each year through its Department of Extra-Mural Studies. While the department teaches a considerable number of courses in a wide range of disciplines, a major thrust of its programmes is in the development of degree, postgraduate and professional courses. Most of the students attend courses at the end of the working day mainly on university premises either in the Extra-Mural Studies Town Centre in Central District, or at the university campus.

Graduate Teachers

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

       In the University of Hong Kong, more than 800 students were enrolled in the Post- graduate Certificate in Education programme, both full-time and part-time, in 1988-9. For further professional and academic development of teachers, the faculty offers Advanced Diploma and MEd programmes by coursework and dissertation in a variety of curriculum

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areas. The Advanced Diploma electives offered were Curriculum Studies, Early Childhood Education, Special Educational Needs, and Education and National Development, and in the MEd, the electives were Educational Administration, Educational Evaluation and Language Teaching. Partly as a result 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 (MPhil and PhD) in education continued to rise. There were 17 enrolments in 1988-9, and the faculty intends to increase the number of places available for study at this level in the next few years.

As well as its regular formal teaching programme, the Faculty of Education provides a wide range of In-service Teacher Education Programme courses of varying length, aiming to cater for a wide diversity of needs in the education community. Sixty-four courses were taken by 1 150 students in 1988-9.

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 north-west 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 1989-90, the university offered full-time undergraduate students 33 major subjects and 36 minor subjects through its 49 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. An intercalated degree

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programme in medical sciences has been introduced in 1989-90 to give those medical students who have an affinity for medical research the opportunity to develop that interest. The university emphasises bilingualism. Students have to be proficient in both Chinese and English on admission, and both languages are used in teaching.

At postgraduate level, there are 57 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, Mathematics and Statistics, Music, Physical Education, Primary Education and Social Work and Master's degrees in Translation, Chinese Language Literature, Business Administration and Social Work as well as professional diplomas in both Education and Social Work are offered to working adults.

Expansion in the fields of Education, Architecture, Medicine, Electronics and Computer Science is expected in the coming years. Plans are also in hand to establish engineering studies in the near future. In 1989-90, an Integrative Engineering Programme encom- passing Computer Engineering, Electronic Engineering and Information Engineering was launched.

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. The Hong Kong Institute of Biotechnology was established in 1988 on the university campus to promote biotechnology research and the development of a biotechnology industry in Hong Kong. The university also took over the management of the Universities Service Centre in 1988-9. Established since 1963, the centre has provided office accommodation and professional assistance to several generations of international scholars who came to Hong Kong to carry out research on contemporary China. It has built up an extensive library of over 400 newspapers and 1000 journals and magazines published in China.

Competition for university places is intense. Of the 25 000 candidates who sat the various public examinations held in 1989, approximately 1 650 were admitted to first year studies. Enrolment as of September 1989 totalled 8 436, comprising 6 214 full-time and 763 part- time undergraduate students and 490 full-time and 969 part-time postgraduate students. Almost all students are local, and about half of them are given hostel places.

In 1988-9, the Department of Extramural Studies offered more than 1 710 courses with a total enrolment of 53 300. In addition to general courses and those leading to the award of diplomas and certificates, the department provided correspondence courses, courses on radio and television and self-learning courses packaged in the form of audio tapes, programmed texts and resource materials. Apart from running courses in China, the department collaborates with universities and institutions of higher learning in Canada and Australia in offering joint courses in a variety of subjects and at different levels. The distance education programme has expanded rapidly with the support of Radio Television Hong Kong. Cable television, which will come into operation next year, will be harnessed to further develop distance education.

With an increasing rate of growth in the number of students and new programmes, an extensive development proposal has been planned for the university's physical plants. Unfortunately, owing to shortage of labour and material and high inflation which badly

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hit the construction industry during the year, the commissioning of several construction projects has been delayed, such as the Lady Shaw Building, the new Shaw College's initial buildings of two 300-bed hostels and an amenities building complex, an administration and education building and a block of staff quarters. The Leung Kau Kui Building (teaching facilities) at central campus and the extension to the Fong Shu Chuen Chinese Language Centre at Chung Chi campus have commenced with sub-structure work at site whereas others are at tendering stage such as the Phase I redevelopment of the Teaching Buildings Complex of Chung Chi College and the extension to the Elisabeth Luce Moore Library at Chung Chi campus. Other capital projects covering teaching, amenities, sports and domestic facilities at various stages of active planning and design include the Hong Kong Institute of Biotechnology, several new academic buildings for engineering studies, archi- tectural studies and other disciplines, an extension to the university main library, further hostels for Chung Chi and Shaw colleges, a new telecommunication system and a variety of engineering services and redevelopment programmes.

   The library system consists of the University Library, the Medical Library, and three branch libraries in the colleges. The total collection in 1989 was 1 000 900 volumes.

   The university participates in the affairs of regional and international associations of universities, and has from time to time launched co-operative projects with foreign. governments and individual institutions. It is a member of the Association of Common- wealth Universities, International Association of Universities, and the Association of South-east 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.

Hong Kong University of Science and Technology

  Following the establishment of the Hong Kong University of Science and Technology, good progress has been made with site formation for the campus and the recruitment of staff worldwide. The main contract for the academic building was awarded in August for completion in June 1991, in time for the scheduled intake of students in October that year. Of the 38 posts at the head of department and professor levels, 18 have accepted offer of appointment as at September 1989.

   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, excellent recreational facilities, 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

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and Structural Engineering, Mechanical Engineering and Chemical Engineering. Post- graduate programmes will be determined mainly by the needs of the community and 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 modules and a limited number of speciality electives. It is intended that the school should 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 entrepreneurship 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 1989-90, there were 8 040 full-time, 1870 sandwich, 1 450 mixed-mode, 3 450 part-time day release and 11 260 part-time evening students. There were also 720 students enrolled on a distance learning course. In mid-1989, the polytechnic had a total staff of 2 561, comprising 912 teaching, 263 senior administrative and 1 386 technical, clerical and ancillary staff.

The polytechnic has 25 teaching units grouped under seven divisions. These are the Division of Applied Science and Textiles (Departments of Applied Biology and Chem- ical Technology, Applied Physics, and Institute of Textiles and Clothing); the Division of Business and Management Studies (Departments of Accountancy, Business Studies, Management Studies and Hospitality Management); the Division of Communication (Departments of Chinese, Translation and Interpretation, English and Swire School of Design); the Division of Construction and Land Use (Departments of Building and Surveying, Building Services Engineering, Civil and Structural Engineering and Centre of Land and Engineering Surveying); the Division of Engineering (Departments of Electrical Engineering, Electronic Engineering, Manufacturing Engineering, Mechanical and Marine Engineering, and Department of Nautical Studies); the Division of Health and Social Studies (Departments of Applied Social Studies, Diagnostic Sciences, Health Sciences and Department of Rehabilitation Sciences), and the Division of Mathematical and Computing Studies (Departments of Computing Studies and Mathematical Studies).

A wide range of courses is offered to meet the demands of commerce, industry and the community. For 1989-90, 183 courses were 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 Bachelor's degree, associateship, professional diploma, higher diploma, diploma, post-registration

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diploma, post-registration certificate, endorsement certificate, higher certificate, certificate and certificate of proficiency.

   Degree courses offered in the 1989-90 academic year include: BA(Hons) in Account- ancy; BA(Hons) in Business Studies; BA in Clothing Studies; BA(Hons) in Computing Studies; BA in Design; BA in Hospitality Management; BA in Language and Commu- nication; BA(Hons) in Textile and Clothing Marketing; BA(Hons) in Translation and Chinese; BEng(Hons) in Building Services Engineering; BEng(Hons) in Civil Engineer- ing; 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 in Building Surveying, BSc in Quantity Surveying; BSc in Land Management; BSc(Hons) in Combined Studies in Mathematics and Science, and Bachelor of Social Work (Hons). The BEng(Hons) course in Electronic Engineering was offered in both the sandwich mode and mixed-mode, while the Bachelor of Social Work (Hons) course was offered in both the full-time mode and mixed-mode.

   In 1989-90 academic year, the polytechnic offered, for the first time, five mixed-mode postgraduate courses leading to the awards of Master's degrees in Information Systems, Postgraduate Diplomas in Information Technology, Management Studies, Mental Health and in Precision Engineering respectively.

   The polytechnic continued to register candidates for the Degree of Master of Philosophy by research. Commencing 1989-90, the polytechnic also registered candidates for the Degree of Doctor of Philosophy. Holders of an appropriate Master's degree may apply for direct registration for the degree of PhD. The period of registration for research degree candidates is normally two years on a full-time or three years on a part-time basis.

   In response to the training and retraining demands of business, industry and the pro- fessions, the polytechnic offers a range of self-financing programmes of professional and continuing education courses some of which lead to academic awards. "Tailor-made' courses were commissioned by over 40 private and public sector organisations for their employees in 1988-9. In all 11 358 students enrolled in 301 continuing education courses in 1988-9.

   Through the Student Affairs Unit, the polytechnic offered to its full-time students a good range of extra-curricular education programmes which can be taken on a voluntary basis. These included structured programmes on physical education; inter-personal and communication skills; understanding of man-society and man-environment relationships; arts and culture, and introduction to the basic sciences.

   The polytechnic's staff members offer their services to the community through con- sultancy and other industrial liaison activities. A Business and Technology Centre was established to integrate and provide new support services for the benefits of local industry and commerce. Liaison and exchange with outside institutions in China and overseas continued to thrive on various consultancy and collaborative research projects.

   The polytechnic took further steps to strengthen the development and co-ordination of research activities through the appointment of several Readers within the institution. The total research grant in 1988-9 was $9.8 million, which was used to support 66 new research projects and 52 on-going projects.

   The polytechnic also gave high priority to staff development. The funding of staff development programmes in 1988-9 increased by 6.6 per cent over the previous year.

   Each year, the polytechnic receives donations in the form of grants, equipment, scho- larships and bursaries for students from organisations, firms, professional associations and individuals. In 1988-9, donations of $1.88 million were received from the private sector.

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       The polytechnic library has seating capacity for over 1900 readers, as well as special facilities for disabled persons. Its collection has grown to 550 000 items and over 9 000 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 integrated software.

       Situated on a nine-hectare campus which is partly on reclaimed land in Hung Hom, Kowloon, the Hong Kong Polytechnic is still in the midst of an extensive building develop- ment programme which was planned to be completed in the early 1990s.

The Phase IIIA project which was completed in April 1989 houses the directorate and most of the polytechnic's administrative departments as well as teaching and staff accommodation. The project also incorporates the polytechnic's Main Entrance develop- ment and a 250-seat Studio Theatre.

       Construction of the Phase IIIB project, which began in April 1988, will provide additional specialist and general teaching accommodation, research space, staff offices, administrative facilities, additional student and staff dining facilities (including a new and enhanced staff club), and a new sports hall. This project is scheduled for completion in mid-1990.

       A new major development, the Industrial Centre redevelopment/Phase IVA project, will shortly be underway. When completed in 1991-2, this will provide expanded industrial training facilities for students of both the Hong Kong Polytechnic and the City Polytechnic of Hong Kong, plus some additional teaching and research space.

City Polytechnic of Hong Kong

For the City Polytechnic of Hong Kong, 1989 was a significant year. Vacating the temporary campus in Mong Kok it moved to its permanent campus, a 12-hectare site in Kowloon Tong. The move, Phase I, has given the polytechnic 64 000 square metres of net floor area. Planning commenced for Phase 2, which is scheduled for completion by 1992 with a net building area of 32 000 square metres. Tat Chee Yuen, the 110-unit senior staff quarters adjacent to the campus, was completed at a cost of $102 million. Architects and consultants were appointed for another senior staff quarters project in Cornwall Street, scheduled to be ready in 1993.

Occupation of the modern, purpose-built campus has enabled the polytechnic to increase its student intake to 4 100. Competition for entry remained extremely keen and the polytechnic, through a joint admission scheme run in conjunction with the Hong Kong Polytechnic, received about 49 000 applications for places on 64 courses in various modes of attendance. At the end of the year the total student population reached about 8 800, about 4 800 being on full-time and sandwich mode courses. During the year, the polytechnic agreed to join the introduction of the Joint Admissions Scheme initiated by the University of Hong Kong and the Chinese University of Hong Kong, which is due to be introduced from 1990-91 for full-time and sandwich first degree courses, the normal entry requirements for which are A-level. A number of new courses were mounted, notably the Master of Business Administration and Master of Science in Electronic Systems Design. In June, the polytechnic submitted to the University and Polytechnic Grants Committee the Statement of Intent for the 1991-4 triennium outlining a list of new courses, new modes of attendance in existing courses, and new options and streams. The Department of Lan- guages was re-organised into two separate Departments - English and Applied Linguistics respectively.

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   The founding director, Dr David Johns, left at the end of July to become Vice- Chancellor of the University of Bradford in the United Kingdom. Professor Cheng Yiu-chung, former Professor of Electronic Engineering and Dean of the Faculty of Engineering at the University of Hong Kong, took up the directorship of the polytechnic in August.

   In a major move towards forging closer and mutually-beneficial links with industry, commerce and the professions, the polytechnic launched an Institute for Research and Consultancy in July. The institute will promote consultancy links between the polytechnic staff and local industries and foster departmental and inter-departmental research through self-finance and sponsorship. It will provide encouragement and recognition for such efforts by forming research units, groups and centres in collaboration with particular firms.

A Centre for Environmental Technology for Industry was also formally established. The centre, the first of its kind in Hong Kong, is operated jointly with the Hong Kong Pro- ductivity Council, providing advice on ways to control pollutants emitted from factories and demonstrating treatment and recovery systems for industrial waste.

During the year, the polytechnic received a total allocation of $5.29 million from the earmarked research grants administered by the University and Polytechnic Grants Committee, to support a variety of research activities.

In November, the polytechnic conferred academic awards on its fourth group of gra- duates. The 1 353 graduates included 126 postgraduate diplomates, 370 bachelors, 215 professional diplomates, 486 higher diplomates, 26 higher certificate awardees and 130 diplomates. By the year's end, the vast majority of the graduates had found employment.

   After two years of planning, an alumni association was incorporated as a limited company under the Companies Ordinance, in the name of the 'The City Polytechnic of Hong Kong Alumni Association'.

Hong Kong Baptist College

Founded in 1956 and fully funded by the government since 1983, the Hong Kong Baptist College succeeded in 1989 in upgrading all its former Honours Diploma programmes to Honours Degree courses, and at the same time started a postgraduate programme in the Science Faculty leading to the award of Master of Philosophy (MPhil) through research work. Beginning in 1989-90, the college admitted students only to degree and higher degree courses, as the phasing out of the remaining Honours Diploma programmes continued to move towards its scheduled completion by 1991.

   The year 1989 also saw the first batch of graduates from the two courses of BSc(Hons) in Combined Sciences and BSW in Social Work, which were the first courses successfully accredited by the UK Council for National Academic Awards (CNAA) in 1986. Includ- ing these two courses, the college currently offers a total of eight degree courses, of which the remaining six are: BBA(Hons) in Business Administration, BSocSc(Hons) in Communication, BA(Hons) with majors in Chinese, English, Geography, History, Religious Studies, and Sociology; BSocSc(Hons) in China Studies; BA(Hons) in Music, and BSc(Hons) in Computing Studies. The last three were the newest additions accredited by the CNAA and offered for the first time in September 1989.

   The college is 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.

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      All the college's degree courses are carefully planned to meet the needs of the community and are academically accredited by the CNAA. They all share the common objective of educating 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 prepara- tion. Emphasis is also placed on the development of communication skills. New degree courses in the areas of Translation, Humanities, Systems Science, and Human Resources Management are now being planned, for introduction by 1990-91. For academic qual- ity assurance, external examiners from home and abroad are appointed to each course.

       Teaching and research in the college are organised around its three faculties and one school, which includes 22 departments altogether. They are the Faculty of Arts (Departments of Chinese Language and Literature, English Language and Literature, Music and Fine Arts, Religion and Philosophy, Language Centre); Faculty of Science (Departments of Biology, Chemistry, Computing Studies, Mathematics, Physics); Faculty of Social Sciences (Departments of Communication, Education Studies, Geography, History, Social Work, Sociology), and School of Business (Departments of Accountancy, Administrative Information Management, Economics, Finance, Human Resources Man- agement, Marketing). All full-time undergraduate courses of the college require three years of study, and students are admitted on the results of the Hong Kong Advanced Level (HKAL) examination. In 1989-90, 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 2 943, with a breakdown of: Arts 476, Business 845, Science 649, and Social Sciences 973. While 100 per cent of the first-year students were on degree courses, the number of students on degree courses for all years constituted 84 per cent of the total enrolment. Additionally, there were 12 students enrolled in the MPhil programme; 65 students enrolled in a special full-time two-year course preparing them to sit for the HKAL examination in music, and 467 taking part-time 'conversion courses' which provide opportunities for past honours diplomates of the college to upgrade their qualification to that of a Bachelor's Degree. The teaching staff strength stood at 224, with the majority of them holding higher degrees from overseas institutions. Senior academic and administrative staff are recruited through international advertisement.

       Apart from the full-time regular student body, the college catered for some further 40 000 students through the 400 part-time courses offered by its Division of Continuing Education. These courses cover a broad range of cultural, vocational and professional interests to meet the demands for education from people in employment, and are held in the evening using the campus and off-campus centres.

       The college's main library has a unique integrated computer system covering all the major library services. The collection of books increased to 222 000 during the year. There is also a branch library which holds a special collection of research materials on contemporary China between 1949 and 1976. Research activities have continued to grow significantly. In addition to research grants obtained from the University and Polytechnic Grants Committee through open bidding, the support allocated by the college in the current year was more than double that of the previous year. There were also increases in academic exchanges with institutions overseas and in China.

       With the opening for use of two more new buildings and a sports centre, the entire campus redevelopment project on the Waterloo Road site nears completion. One of the new buildings houses the Science Faculty and its specialist facilities, while the other

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provides accommodation for the Business School and central administration. The final stage of the redevelopment project - refurbishment of the first group of buildings on campus - has already started and is scheduled for completion in 1990.

During the year, approval was obtained from the government to expand the college's enrolment beyond 3 000 students, starting in the 1991-4 triennium and using a neigh- bouring site, at Renfrew Road, currently being used as a temporary campus.

Provisional Hong Kong Council for Academic Accreditation

Following the government's decision that Hong Kong should have its own academic accreditation agency to ensure that the standards of non-university degree courses were comparable with those of internationally-recognised degrees, the Provisional Hong Kong Council for Academic Accreditation (PHKCAA) was set up in November 1987 to prepare for the establishment of an independent Hong Kong Council for Academic Accreditation (HKCAA).

   In April, the provisional council completed its task and submitted its final report to the Governor. In the course of its work, it has established criteria and developed the procedures and administrative systems which the HKCAA will follow. The PHKCAA has also prepared a handbook setting out the principles and methodology of external evaluation in accordance with the HKCAA's objective of disseminating information on good accreditation practices.

   A carefully-selected specialist register of academics and non-academics, both locally and overseas, has been established. These specialists have the expertise to form the backbone of panels responsible for validation and revalidation of degree courses. To date the register comprises over 400 experts.

   Links have been established with some 40 overseas accrediting bodies. This will help to ensure the international standing of the council itself and of the institutions whose courses it validates.

The HKCAA will be formally established as a statutory body early in 1990. It will meet twice a year and will comprise no more than 21 members appointed by the Governor. Members will include overseas and local academics, as well as non-academics drawn from Hong Kong's industrial, commercial and professional sectors. The council will be serviced by a permanent secretariat headed by an executive director who will also be a member of the council.

    The council's initial role will be to validate and revalidate individual courses. The HKCAA will be the academic authority on degree standards in Hong Kong and will provide information and advice on academic quality assurance.

Open Education

The Open Learning Institute of Hong Kong (OLI) was formally established in June as the seventh degree-granting institution in Hong Kong, following an active period of planning and the enactment of legislation. This was followed by a visit from the UK National Council for Academic Awards (CNAA) to help establish the academic standard of the institute and its programmes.

Enrolment of students commenced in August and the public response turned out to be overwhelming. Over 200 000 application forms were distributed and 60 000 actually applied for entry. Consistent with the concept of open access, the applicants were selected on a random basis after the OLI provided careful counselling on the nature and the vigorous demands of studying open learning courses. In September, about 4 000 students

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were enrolled on various foundation courses leading to degree awards. The OLI was firmly committed to expanding its capacity to offer high-quality academic programmes to satisfy the public demand for higher education.

       The institute 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 for personal development. It offers courses through three Schools: the School of Science and Technology, School of Business and Administration, and School of Arts and Social Sciences. It adopts a multi-media approach to instruction. Apart from printed text supplemented by audio-visual materials, it provides extensive tutorial support through its temporary headquarters at Hennessy Centre and another regional study centre. It will move to its permanent headquarters at Argyle Centre Tower II in April 1990.

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 which will begin to accrue upon the student's graduation. During the year 7999 students received loans totalling $75.1 million and 6 493 of these students also received grants, totalling $38.3 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 this particular scheme, grants are made on the basis of need to full-time students who are attending first degree or Higher 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 United Kingdom and Hong Kong governments, each applicant's grant will be proportionately reduced, with the balance made up by an interest-free loan provided solely by the Hong Kong Government. During the year, grants totalling £4 million and loans totalling $18 million were paid to 125 institutions on behalf of 1 621 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 are recognised as having 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 1989-90 academic year, a total of eight undergraduate and postgraduate scholarships were awarded.

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Sir Edward Youde Memorial Fund

The Sir Edward Youde Memorial Fund was brought into being on April 1, 1987, to centralise the management of public donations received in memory of the late Governor Sir Edward Youde who passed away in service in December 1986.

The assets of the fund stood at over $87 million on March 31, 1989. The fund is managed by the Board of Trustees consisting of Lady Youde, three prominent members of community appointed by the Governor and the Secretary for Home Affairs.

In accordance with Lady Youde's wishes, it has been provided in the Sir Edward Youde Memorial Fund Ordinance 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 comprising Lady Youde, five prominent members of the community and the Secretary for Education and Man- power. For the 1989-90 academic year, the council awarded fellowships and scholarships to nine students to finance their postgraduate or undergraduate studies overseas. Four of these students pursue studies in the United Kingdom, four in the United States and one in China. For local studies, 38 fellowships were awarded to postgraduate research students and 70 scholarships to undergraduate, diploma and certificate students. These awards. were made on the nominations of the heads of the institutions followed by interviews by the council. During the year, five students who excelled in local public examinations, six disabled students in tertiary institutions, and 560 senior secondary students nominated by the heads of the schools also received awards from the fund.

The value of all awards made for the 1989-90 academic year was about $3.4 million.

Technical Education

  Eight technical institutes are operated by the Vocational Training Council and they provide a total of 338 courses at craft and technician levels with full-time, block-release, part-time day-release and part-time evening attendance. A large number of short courses are also offered and these are mainly designed to update the knowledge and skills of people in employment.

The main disciplines covered by the institutes include: applied science, environmental studies, chemical technology, food technology, clothing, commercial studies, accountancy, computing studies, construction, design, electrical engineering, electronic engineering, general studies, child care, hairdressing, hotel-keeping and tourism studies, industrial technology, marine engineering and fabrication, mechanical engineering, motor vehicle engineering, printing and textiles. Most technician-level courses have been validated by the United Kingdom Business and Technician Education Council (BTEC) and students attending these courses are able to register for the BTEC awards.

The demand for places on most courses remained high. Enrolments for the 1989-90 academic year totalled 11 900 full-time, 14 800 part-time day and 28 800 part-time even- ing students. A number of new courses were offered including: Diploma in Marketing, Diploma in Purchasing and Stores Supervision, Diploma in Mechanical Engineering (Computer Aided Engineering), Diploma in Computing Studies (Technical Applications), Certificate in Retail Supervision, Introduction to Metal Works Craft Studies for Cons- truction Industry, and Introduction to Clothing Manufacture. In September 1989, the number of full-time teaching staff in the technical institutes was about 850 and there were some 750 supporting staff and 2 200 part-time lecturers.

   Each technical institute has on average 75 computer work-stations comprising terminals linked to medium-scale computers and microcomputers. In addition, computer-aided

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design and drafting facilities have been installed in the technical institutes. These enable the study of computer appreciation and application to be included in most courses.

       The annual employment survey of graduates from full-time courses again showed that they had little difficulty in finding employment in their respective disciplines after com- pletion of their studies.

      To meet the increasing demand for study places, additional accommodation and facil- ities were provided in the new annexes of the Kwai Chung, Kwun Tong and Morrison Hill Technical Institutes.

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 1989, the Vocational Training Council operated 16 training centres for training manpower for the automobile, banking, electrical, electronic data processing, electronics, gas, hotel, insurance, jewellery, machine shop and metal working, plastics, precision tooling, printing, shipping, textile and welding industries. Together, 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 1989, 90 engineering firms took part in the scheme and provided 240 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. The scheme ended in March 1989 and a total of 32 engineers have received overseas training.

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, trainers and business executives.

      Technicians and craftsmen in the industrial sectors and supervisory and clerical personnel in the commerical sectors are effectively trained through apprenticeship schemes and traineeship schemes. To upgrade or update the workforce, 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.

      Four training boards: the automobile; electrical; machine shop and metal working, and printing started a voluntary trade test scheme for specific trades in their sectors. Trades

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for which tests were offered included vehicle mechanic, electrician, mechanical fitter and typesetter. Serving workers in these trades were invited to apply for the tests and the response was good, with the number of applicants for the electrician trade far exceeding the planned test capacity.

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 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. The new Construction Industry Training Centre in Aberdeen became operational in September 1989 and there are now three training centres for construction trades and two 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 Department 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 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 1989 totalled 5 400, of which 900 were for non- designated trades. These contracts covered 4 720 craft apprentices and 680 technician apprentices. By the end of the year, 10 280 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 sub- vents 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 main- stream technical education.

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In addition to this training the department also provides three main support services for disabled trainees in the skills centres and in the technical institutes.

      First, the Vocational Assessment Section assesses a disabled person's potential and provides guidance in the selection of a suitable vocational training course. The assessments are based on internationally-recognised test batteries, in addition to work samples which are designed to meet local industrial requirements. The main vocational assessment pro- grammes offered are a five-day one for all mildly mentally-disabled school leavers and an eight-week one for the more complex assessment cases.

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 workers or trainees. 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 academic counselling to disabled students in the technical institutes.

The department's annual employment survey of disabled trainees completing full-time courses in technical institutes and skills centres showed that over 85 per cent of these leavers either obtained open employment or entered mainstream technical education.

The construction work for the new Tuen Mun Skills Centre for the Disabled is on schedule. The centre, which will open in September 1990 and cater for all categories of disabled persons, will provide 300 training places, of which 150 are residential.

Teacher Preparation

Four Colleges of Education - Grantham, Northcote, 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 department.

The three general colleges of education conduct initial full-time teacher education courses lasting two years for students with HKALE qualifications, and three years for students with HKCEE qualifications. 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 lasting seven or eight weeks are offered to teachers in primary and secondary schools, and part-time courses of 12 weeks to serving assistant kindergarten teachers.

The Hong Kong Technical Teachers' College 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 technical or commercial subjects. The college also offers in-service courses for teachers and lecturers in the technical institutes as well as a variety of short courses for instructors working with the handicapped, and for supervisors and instructors employed in industry.

       All four colleges also offer a one-year full-time Advanced Course of Teacher Education in cultural, practical and technical subjects.

       There were 1054 students in the three-year full-time course, 1 199 students in the two-year full-time course, 92 students in the Advanced Course of Teacher Education and a total of 2 222 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 who are enrolled in full-time courses at the four colleges.

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   Basic training courses in educational management for heads and senior teachers of schools in the public sector were provided by the department's Training Unit. Various seminars, short courses, induction and basic training courses were also offered for pro- fessional officers and new recruits of the department.

Adult Education

The department's Adult Education Section provides formal and non-formal education in the evening through a number of courses and activities, and assists voluntary organisations through a subvention scheme.

Formal courses cover remedial education, second chance education and education for personal development at levels ranging from primary to post-secondary. Some courses are jointly operated with other government departments. Various teachers' courses provide opportunities for serving teachers to refresh their knowledge and skills in a variety of cultural subjects. Over 20 000 people enrolled on formal courses during the year.

Non-formal education courses cover a variety of cultural, social, recreational and educational activities to stimulate social awareness, cultivate creativity and develop individual talents and skills. Nineteen Adult Education and Recreation Centres operate in various administrative districts. Numerous activities are organised with other government departments and organisations. Over 30 000 people participated in these courses and activities.

   Subvented courses run by voluntary agencies supplement and complement those operated by the department. In 1989-90, government subsidies were granted to 296 projects operated by 62 organisations.

Language in Education

To improve the quality of Chinese teaching, an additional graduate teacher of Chinese was provided to every public-sector secondary school with 18 classes or more with effect from September 1989. Smaller schools were given enhanced provision for teaching Chinese in September 1986.

   To encourage secondary schools to increase the use of Chinese as the language of instruction, additional teachers of English and other resources have been provided since September 1988 to secondary schools which made greater use of Chinese, so as to avert any consequential drop in the standard of English due to reduced exposure. In 1989, a further 25 schools increased their use of Chinese as the medium of instruction.

   The Expatriate English Language Teacher pilot scheme came to an end in mid-1989. The final evaluation revealed that the scheme had had a significant effect in several areas of English language learning. At year's end, planning was in progress for a more permanent scheme to help secondary schools recruit expatriate English language teachers. Mean- while, to maintain continuity, 11 aided schools in the pilot scheme, and eight government schools which had vacancies for English teachers, recruited 33 expatriate teachers for up to two years.

   The Chinese Textbooks Committee (CTC) continued its work in support of the policy of encouraging schools to adopt Chinese as the medium of instruction. Phase 1 of an incentive award scheme encouraged the production of 59 sets of Chinese textbooks for 14 general subjects at secondary level by September 1989. Phase 2 was aimed at producing Chinese textbooks for eight practical and technical subjects at secondary level for use by September 1991. $3.6 million has been awarded to participating publishers to produce quality text- books with editorial assistance provided by the department.

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In preparation for the first Chinese-medium Hong Kong Advanced Level Examination in 1992, the government accepted, in June 1989, the CTC's recommendation for a review of Chinese-medium reference materials available on the market with a view to assessing their suitability for the courses. The review was completed in November 1989 and 214 Chinese-medium reference books were found suitable.

The report of a departmental working group to review language improvement mea- sures was issued for public consultation in October 1989. The report contained propo- sals for strengthening language skills in English, Chinese (Cantonese) and Putonghua.

Institute of Language in Education

The Institute was founded in September 1982 as a 'centre of excellence' for 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 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.

       Over 1 000 teachers attended courses at the institute during the year. The fifth volume of the institute's professional journal (ILEJ), two teachers' guides and two seminar books 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 continued to focus on aspects of Cantonese pronunciation and the application of computer-assisted language learning in secondary schools. It also conducted research into the role of classroom observation, the value of language enrichment projects, and factors affecting project work. Two exhibitions of teacher-produced language learning and teaching materials were mounted.

Education Research

The Educational Research Establishment (ERE) of the department is mainly concerned with test development and programme evaluation.

       In the year under review, the ERE constructed test papers for the three basic subjects of Chinese, English and Mathematics at Primary 1 and 2 levels, thereby completing the current series of the Hong Kong Attainment Tests (HKAT) from Primary 1 to Secondary 3. The HKAT was used by schools to assess students' attainment in the respective subjects for streaming and grouping purposes as well as for the implementation of guidance and remedial teaching. It also enabled the department to monitor changes in overall standards in the three subjects across levels and years.

       The ERE conducted research into various aspects of education and educational programmes, including a study of the continuity of curriculum and teaching practices between different levels of education, an evaluation of the Expatriate English Language Teachers' Modified Scheme, norming and validation of the Aptitude Test for Secondary 3 students and a project on Chinese extensive reading at upper primary levels.

Advisory Inspectorate

The main function of the department's Advisory Inspectorate is to monitor and improve the quality of teaching. This involves regular school inspections to advise on curriculum

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  matters, teaching methods and the utilisation of resources. In-service training courses, seminars and workshops for teachers are offered, aimed at improving the quality of teaching. In addition, the inspectorate is responsible for curriculum development as well as evaluation of textbooks and instructional materials. To support curriculum development in schools, the inspectorate publishes reference materials in the form of syllabuses, curriculum guidelines, handbooks, newsletters and bulletins; operates teaching and resource centres for various subjects as well as a field study centre, and provides a number of supporting services such as audio-visual aids, educational television, and the school library service. It is also involved in developing and monitoring civic, sex and moral education in schools.

   The Curriculum Development Council (CDC) and its co-ordinating committees and subject committees continued to advise on curriculum innovations at pre-primary, primary, secondary and sixth form levels as well as on special education. The school curriculum at different levels of education was reviewed with the aim of formulating new curriculum guides for the reference of schools. The CDC also studied a number of curriculum issues, such as strengthening literacy and numeracy in primary schools and strengthening the social awareness and language proficiency of students in secondary schools. Handbooks for 12 subjects with technical terms in English and Chinese were prepared to facilitate the adoption of Chinese as the medium of instruction at sixth form level. Curriculum research projects initiated by the CDC were undertaken by the Educational Research Establishment and the Advisory Inspectorate. With continuous support of the CDC and the inspectorate, 251 primary schools have adopted a child- centred and less formal teaching method known as the Activity Approach.

   The school-based Curriculum Project Scheme, launched in September 1988, provides grants for development of curriculum projects catering for the specific needs of students in individual schools. Under the scheme, 35 curriculum projects were completed in 1989 and 58 were being undertaken by educationalists including teachers, school heads and lecturers at the colleges of education and the school/faculty of education of the universities.

Technical and Commercial Education

  Technical and commercial education continued to expand. Prevocational schools were restructured in the year to offer more senior classes. New and revised syllabuses such as Light Metalwork and Finishing, and Metalwork were completed. Chinese textbooks for Technical Drawing, Metalwork, Electrical Studies, Electronics and Electricity, Bookkeeping and Office Practice were being compiled under Phase II of the Incentive Award Scheme.

   The Technical Teaching Centre continued to provide supporting courses for serving technical teachers. A teaching centre for commercial subjects was being planned, to open in 1990.

With the continued support of the Hong Kong Federation of Industries and the Chinese Gold and Silver Exchange Society, the Hong Kong Young Designer of the Year Award and the Commercial Subjects Projects competitions were held to encourage students to explore the world of design, and to experience technical and commercial studies as an integral part of general education in the overall curriculum.

Computer Education

Computer Studies is available as a HKCEE subject to students in Secondary 4 and 5. Following the completion of a pilot project, plans were drawn up to extend the subject to students in Secondary 1 to 3 of any interested school.

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      Beginning in 1989, handicapped children were given the chance to learn through computers. Eighteen special schools were selected to take part in the Computer Education in Special Schools Project. The project aimed to provide students in special schools with the same opportunity of accessing microelectronic technology in education as their counterparts in ordinary schools. Besides using computers to learn, they were also expected to use part of the equipment provided as communication and rehabilitation aids. More special schools are expected to join the project next year.

Physical Education

The Physical Education Section continued to play an important role in advising physical education teachers and organising refresher courses and seminars for them.

      The new Curriculum Development Council Secondary Syllabus for Physical Education was introduced to schools, and video tapes and teaching materials relating to the sylla- bus were prepared. The inclusion of this subject in the HKCEE was approved by the Hong Kong Examinations Authority and the examination syllabus was implemented in September.

       The section continued to administer the annual Summer Youth Programme for Schools. With funds totalling $3 million, including a donation of $1,416,800 from the Royal Hong Kong Jockey Club, the Summer Youth Programme attracted 320 000 students and teachers in 3 000 events.

      During the year the government announced that a statutory body, the Hong Kong Sports Development Board, would be established on April 1, 1990. Its role would be, inter alia, to strengthen the development of sports in education.

Music Education

Efforts during the year to promote Chinese Music resulted in greater interest amongst students in learning to play Chinese instruments. Contemporary Music was featured in the in-service training courses/seminars organised for music teachers in primary and secondary schools.

Five sets of music textbooks in Chinese were published for junior secondary classes. Curriculum projects on 'Adaptation of the Kodaly Choral Method' in primary and secondary schools were successfully carried out through the School-based Curriculum Project Scheme. Supplements to the English-Chinese Glossary of Terms Commonly Used in the Teaching of Music in Secondary Schools and A List of Reference and Resource Materials for Music in Secondary Schools were published.

      The Education Department continued to provide students with opportunities for the further study of music through its Centralised Scheme of Music Training, which offered courses leading to the HKCEE and HKALE in Music.

Teaching and Resource Centres

The Advisory Inspectorate operates seven teaching centres concerned with the teaching of Chinese, English, Mathematics, Science, Social Subjects, Cultural Crafts and Technical Subjects; and six resource centres covering Civic Education, Religious/Ethical/Moral Education, Sex Education, Health Education, Activity Approach and Kindergarten. A Field Studies Centre is open to Secondary 6 and 7 students and teachers.

       The Visual Education Section's Audio Visual Resources Library provides a wide range of audio-visual aids on free loan to schools. Its Media Production Services Unit is open to help teachers produce their own teaching aids.

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The Hong Kong Teachers' Centre

The Hong Kong Teachers' Centre was officially opened in June. The aim of this multi- purpose centre is to promote continuous professional development and a greater sense of unity and professionalism among teachers. An Advisory Management Committee was formed with wide representation from teacher organisations and individual teachers in schools. The committee, together with its standing committee, working groups and sub- committees, successfully organised the first series of professional development activities for teachers.

School Library Services

School library services expanded with the employment of more school librarians in secondary schools. In the school year 1988-9, 345 schools were provided with either one full-time or one half-time school librarian. Library grants were increased. A large-scale curriculum project, the 1989 Reading Award Scheme for Secondary 1 to 3, attracted 26 000 students from 190 schools. In primary schools, the class library scheme continued to operate smoothly and a Reading Award Scheme for Primary 5 and 6 was planned. A number of training courses were organised for school librarians, including a computer-

awareness course.

Community Youth Club

The Community Youth Club (CYC) was first established in 1977, as part of the Education Department's effort to build a strong community spirit among schoolchildren 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. Its aims are summed up in its motto: 'Learn, be concerned and serve'. 270 000 students from 1000 primary and secondary schools took part in its activities. Nineteen district committees co-ordinate 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 scheme. This year, a team of 37 members visited Malaysia and Singapore during the summer.

Educational Television

Educational television (ETV) programmes, produced jointly by the department's Educa- tional Television Section and Radio Television Hong Kong, provide a useful audio-visual supplement to classroom teaching. Viewing of ETV programmes has become a normal part of school life in Hong Kong. In the 1988-9 academic year, 350 000 primary and 260 000 secondary school students watched ETV programmes.

Programmes are transmitted to schools through the two local commercial television stations. Programme contents are drawn from the syllabuses used in primary and secondary schools. Programmes for secondary schools cover Chinese Language, English Language, Mathematics, Social Studies and Science at the Secondary 1 to 3 level, while those for primary schools cover the same five subjects and Health Education at Primary 3 to 6 levels. As support materials to these programmes, teachers are provided with suggestions for preparation and follow-up activities, while students are provided with exercise and activity sheets.

EDUCATION

      Apart from syllabus-based programmes, special programmes on curriculum-related topics are produced from time to time for broadcasting to schools. In 1988-9, special programmes on Anti-shoptheft, Safety Precautions in Physical Education, Viral Hepatitis, and a special series of three programmes on Computer Literacy were produced.

      Television 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 March 1989, $1.8 million was spent on this equipment.

Hong Kong Examinations Authority

The Hong Kong Examinations Authority, an independent statutory body, has admin- istered the HKCEE since 1978, the HKHLE since 1979, and the HKALE since 1980. In 1989, a total of 139 978 candidates entered for the HKCEE, 5425 for the HKHLE, and 19 502 for the HKALE. Near the end of the year, it started work on translating HKALE syllabuses into Chinese, in preparation for Chinese-medium examinations in 1992. It also began work on developing syllabuses for new Advanced Supplementary examinations.

      The authority 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 liaises with the Education Department concerning the admission of students from Hong Kong to institutions in the United Kingdom. It also works 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 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 edu- cation authorities, the British Council, welfare organisations and, in the case of trainee nurses, with medical authorities. It gave advice to on-course students who sought assistance regarding academic and personal welfare problems, and 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.

Altogether 4 539 students went to Britain during the calendar year 1989, 5096 to Canada, 4 855 to the United States and 4 678 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 between Hong Kong and United Kingdom.

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   English-language teaching is the major programme of the council in Hong Kong and over 28 000 Hong Kong residents attended courses at the English Language Centre in 1988-90. In addition, a summer school for 5 800 secondary school students was held. Language improvement courses were provided for 225 primary English teachers.

Specially-tailored English courses were run at a number of Hong Kong's major business organisations, and, in conjunction with RTHK, the council provided radio courses for schools and for business-letter writing. Teacher training courses were run during the year, including one Royal Society of Arts diploma and two Royal Society of Arts certificate courses for teaching English as a foreign language.

   The council also works with the Hong Kong University and the Chinese University in the promotion and teaching of English. It sponsors conferences, workshops and seminars in the teaching of English and also jointly sponsors scholarships for top students, business executives and journalists.

   Visits to Hong Kong were arranged for specialists in such diverse areas as education, textiles, law, medicine and computer architecture. The council sent representatives of various professions to Britain for courses and familiarisation visits and eight Fellowships were awarded, three to prominent young theatre professionals in subjects such as choreography and directing. Three awards were made to handicapped students who will be studying computer networking and special education.

   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. Notable events were a British Film Week, the Charlie Chaplin Centenary touring exhibition, a retrospective of Chaplin films, and Hitchcock: the British Profile.

   The council's library represents all aspects of British life and culture, although the emphasis is on English-language teaching and teacher training. There is also a film and video library covering a wide range of topics. During the year, the library has been re-organised and major work undertaken to complete a retrospective reclassification of stock, giving members the benefit of a comprehensive new microfilm catalogue with subject listings. Library membership is open to all Hong Kong residents.

The promotion of British education is undertaken by the Education Counselling and Promotion Service of the British Council. The service gave advice and assistance to 10 300 students seeking admission to British institutions of higher and further education in 1988-9. Three missions from British universities, polytechnics and colleges involving some 85 institutions visited Hong Kong during the year and individual visits were made by 99 institutions.

The council organised the British Education Exhibition in November and more than 130 universities, polytechnics, colleges, examination bodies and other educational organisations participated.

11

HEALTH

ON April 1, 1989, the Medical and Health Department was re-organised into the Depart- ment of Health and the Hospital Services Department. The two departments work together to provide a balanced programme of preventive, promotive, curative and rehabilitative services.

       The Department of Health provides a wide range of services to promote health and prevent diseases. These include personal health services like out-patient clinics, family health and family planning, health education and community health, non-regionalised health services like chest health and tuberculosis, social hygiene, child assessment, dental health, occupational health, disease surveillance, public health and special health services like preventive programmes on AIDS and hepatitis, environmental health, port health, radiation health, drug addiction treatment, as well as various paramedical services. Through collaboration with the private sector and teaching institutions, the department strives to provide a comprehensive range of primary health care services to the local community.

       The Hospital Services Department is responsible for carrying out government policies on hospital services and advising the government, through the Health and Welfare Branch, on the operational implications of these policies. The department operates a range of regional, district and convalescent hospitals, supporting specialist clinics and other facilities, including community nursing, day centres and rehabilitation services. A multi-disciplinary approach in medical rehabilitation is undertaken which includes the provision of occupa- tional therapy, physiotherapy, prosthetic service, psychological services, speech therapy and community care in medical rehabilitation centres, day hospitals, out-patient clinics and polyclinics.

      In 1987, the government decided to establish a statutory Hospital Authority to oversee the delivery of public hospital services in Hong Kong. A Provisional Hospital Authority was set up in October 1988 under the chairmanship of Sir S. Y. Chung to make preparations for the formation of the Hospital Authority, which is expected to be established in 1990.

The two departments are embarking on an extensive development programme which includes the construction of at least three additional major acute public hospitals in Chai Wan, East Kowloon and North District and 16 additional clinics and polyclinics. Development of rehabilitation services is also an integral part of the overall planning of the development programme.

       For the 1989-90 financial year, the allocation of funds to the government medical and health services amounts to $3,939 million. In addition, subventions totalling $1,629

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  million were provided for non-government medical institutions or organisations. Capital expenditure on new hospitals and other buildings, including equipment and furniture, was about $984 million, including $402 million for the subvented sector.

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, promotive 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 mainly attributed to the provision of comprehensive family health care and neo-natal care facilities as well as improvements in environmental and socio-economic conditions.

The incidence of AIDS (Acquired Immune Deficiency Syndrome) has increased. During 1989, 16 cases were reported, bringing the total number on record to 32, of which 17 have died.

   In the absence of effective vaccines or cure, health education and publicity remain the only effective tools for the prevention and control of AIDS. The Committee on Education and Publicity on AIDS has the task of co-ordinating education and publicity to ensure that the AIDS prevention messages get across in an effective manner. Activities are directed towards three main target groups - the general public, the high-risk groups and the health- care professionals. Different channels are employed, including the mass media, health talks and special programmes for specific groups.

The AIDS Counselling and Health Education Service continues to provide counselling and medical consultation for persons who are at risk of contracting AIDS. Health talks are also arranged for various groups like students, prison inmates and intravenous drug abusers. Members of the public may use a special telephone hotline to obtain advice in confidence. Blood tests may be arranged under conditions of complete anonymity.

The Surveillance Programme, which was started in 1985, is maintained to provide baseline information on the prevalence of infection by AIDS virus among the various groups of individuals at risk, like sexually promiscuous people, multi-transfused patients and intravenous drug abusers.

   Mass screening of all donated blood for antibodies to AIDS virus has been carried out by the Hong Kong Red Cross Blood Transfusion Service since 1985. This ensures the safety of blood used in transfusion and prevents the possible transmission of AIDS through blood transfusion.

   Among the general population three local isolated cholera cases were reported in 1989. Epidemiological investigations did not reveal any further spread of the disease. Close surveillance and intensified health education and environmental measures were conducted. There was, however, an outbreak of cholera in August 1989 among the Vietnamese boat people detained on Tai A Chau, when 21 cases were reported. The outbreak was contained and there was no spread of the disease to the general population.

During the year, 745 malaria cases were reported. The great majority of them were imported cases coming from Vietnam and China. In order to detect cases early and to prevent their spread to the local community, effective surveillance systems, meticulous vector control measures and intensified health educational activities were effected. The

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co-ordination of various departments in the prevention and control programmes was achieved by the Inter-departmental Co-ordinating Committee on Malaria Control.

       Tuberculosis remains a disease of public health importance in Hong Kong. In spite of continued diligence and a dynamic programme in the fight against the disease, there were 6 704 notifications during the year, representing a notification rate of 116 per 100 000. The local BCG immunisation scheme effectively covers some 99 per cent of the newborn. Booster doses are given to primary school children and to new immigrant children after an initial Mantoux test. 403 deaths resulting from tuberculosis were recorded in 1989, representing a death rate of 6.99 per 100 000. Corresponding figures recorded in 1988 were 388 and 6.83 respectively.

       Immunisation programmes against common childhood infections are carried out in schools as well as at Maternal and Child Health Centres. Primary 1 and 6 schoolchildren receive booster vaccination against diphtheria, tetanus and poliomyelitis. In addition, girls in Primary 6 are given rubella vaccination. The coverage is consistently over 98 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 to women attending Maternal and Child Health Centres.

       In order to combat the hepatitis B infection, which is one of the major public health problems in Hong Kong, the Department of Health has formulated and implemented cost-effective preventive and control measures. The Hepatitis B Vaccination Programme was first introduced in 1984 for health-care workers and babies born to carrier mothers. It was extended in November 1988 to cover all newborn babies. The programme is well accepted by the community and the coverage rate is over 98 per cent for the first dose. Health education and screening of donated blood are also important preventive measures.

       All babies born in Hong Kong are being covered in the Combined Neonatal Screen- ing Programme for congenital hypothyroidism and glucose-6-phosphate-dehydrogenase deficiency. The programme was first introduced in 1983. It facilitates early diagnosis and treatment of these conditions which may lead to disability. Parents of children identified through the screening programme are advised on the treatment and management needs of their children.

Rabies Control

      Rabies control is carried out by the Agriculture and Fisheries Department. Hong Kong regained its rabies-free status in July 1989 following a period of two years in which no case of indigenously acquired rabies in man or animal had occurred. Notwithstanding the situation, strict control measures remained in force throughout the year, and these included import control and quarantine of imported animals, compulsory licensing and inoculation of dogs against the disease, intensive apprehension and elimination of stray dogs, thorough observation of biter animals for rabies infection and close surveillance of the closed areas at the border.

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Hospitals and Development Programmes There are three types of hospitals in Hong Kong - government, government-assisted and private - with a total of 25 059 beds, representing 4.3 beds per thousand population. Provision of hospital services at nominal cost is made universally accessible to the people of Hong Kong. In 1989, more than 653 000 patients were treated at 14 government and 20 government-assisted hospitals.

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    Cases of acute illness and accident casualties are taken to the accident and emergency departments, which are usually attached to major hospitals. Such emergency treatment is provided free of charge. In 1989, there were 1 165 000 attendances in the public sector, averaging 3 193 attendances per day.

During the year, the demand for hospital services remained high, as reflected by the consistently large number of attendances at out-patient and specialist clinics, accident and emergency departments, and the number of hospital admissions.

Work on the Hospital Services Department's development programme has been progressing satisfactorily. Construction work on a major government acute hospital, the 1 600-bed Tuen Mun Hospital, was completed in 1989. The hospital will be opened in five phases and is expected to be fully operational in 1992, providing a comprehensive range of medical services for the west New Territories region. On Hong Kong Island, construction work is continuing on the 1600-bed Pamela Youde Hospital in Chai Wan, which is scheduled to be completed in 1992.

The development programme includes plans for the construction of a 1 000-bed hospital in East Kowloon and a 1 300-bed hospital in North District. There is also a preliminary plan to provide a 600-bed acute hospital in Junk Bay New Town (Tseung Kwan O).

Work on Stage II of the extension to Queen Mary Hospital was completed in 1989. There will be a total net addition of 513 beds, with new psychiatric and paediatric facilities, upon completion of the whole extension project by 1994.

Extensive redevelopment of the Ruttonjee Sanatorium in Wan Chai from an institution for chest and tuberculosis patients into a general acute hospital with 614 beds is expected to be completed in early 1990.

Other important projects which are well underway include the construction of the Sha Tin Infirmary and the Sha Tin Cheshire Home, the expansion of the Queen Elizabeth Hospital in Yau Ma Tei, the Yan Chai Hospital in Tsuen Wan and the Tung Wah Eastern Hospital in Causeway Bay.

Projects in the pipeline include further extensions to the United Christian Hospital and Pok Oi Hospital, and the reprovisioning of the Haven of Hope Hospital. The Alice Ho Miu Ling Nethersole Hospital will be expanded and reprovisioned in Tai Po.

There is an increasing emphasis on the provision of infirmary beds. An additional 2 845 beds are to be provided in projects such as the Sha Tin Infirmary, Tsuen Wan and Tai Po Convalescent and Infirmary Hospitals and the Wong Chuk Hang Complex for the Elderly.

Clinics

General out-patient services form a vital part of the health care system. The government now operates 54 public general out-patient 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 demand for out-patient services. The total attendance figure at government out-patient clinics was 15 million, four per cent less than in the previous year. The medical development programme includes 16 additional clinic and polyclinic projects throughout the territory.

   Mobile dispensaries and floating clinics provide the necessary 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, 93 clinics operated by charity organisations were registered under the Medical Clinics Ordinance. At the same time, 182 were registered as exempted

HEALTH

clinics. Registered medical practitioners in the Estate Doctors' Association set up clinics in housing estates to provide a low-cost service for local residents. Private medical practi- tioners continued to see the majority of out-patients.

Family Health

The Family Health Services of the Department of Health operate 45 maternal and child health centres, providing a comprehensive health programme for women of child-bearing age and children aged up to five years. Ante-natal and post-natal medical consultation as well as family planning service are offered to women. Immunisation programmes are carried out against tuberculosis, diphtheria, whooping cough, tetanus, poliomyelitis, measles and viral hepatitis B. During the year, over 90 per cent of newborn babies attended the maternal and child health centres.

Under the Comprehensive Observation Scheme, children are assessed at different ages for detection of early developmental abnormalities. If necessary, they are referred for specialist clinics or to child assessment centres for further examination.

At present, there are three child assessment centres. The multi-disciplinary approach adopted there ensures early rehabilitation for the child. Five more centres have been included in the Department of Health's development programme.

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 ex- pectant 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 35 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 Serv- ice Board. Participation is voluntary and all children from Primary 1 to Form 3 of the participating schools can join the scheme by paying a token fee of $10 a year. The general response to the scheme is good and as at November 1, 1989, more than 360 000 children from 1 090 schools have taken part - representing about 46 per cent of the eligible school population - and about 520 general medical practitioners have enlisted. Starting from November 1, 1989, each child has to pay $10 for each consultation made at the chosen medical practitioner's office. The government contributes $120 a year for each pupil enrolled and also bears the administrative cost.

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      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 regular inspections of schools to advise on matters concerning the health of children and organise health education activities and immunisation campaigns.

Port Health

The Port Health Service is the control authority to prevent the introduction of quaran- tinable diseases into Hong Kong via air, land, rail or sea, and to enforce the measures

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stipulated under the Quarantine and Prevention of Disease Ordinance and the Inter- national Health Regulations.

   A 24-hour health clearance service is provided for all incoming vessels, including those ferrying refugees, and radio pratiques are granted to ships. The service provides vaccination facilities and issues international vaccination certificates. It also inspects and supervises the eradication of rats from ships on international 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 transmits medical advice to vessels at sea.

The food catering service for international airlines is kept under close surveillance by the health staff to ensure that the food and water supplied to flight kitchens is clean and safe.

   The service regularly exchanges epidemiological information with the World Health Organisation in Geneva and its Western Pacific Regional Office in Manila, as well as with neighbouring countries.

Review of Primary Health Care

In August 1989 the government set up a working party to conduct a comprehensive review of Hong Kong's primary health care services. The working party will review the provision of the general out-patient service, maternal and child health care including family plan- ning, the school medical service, health education and immunisation and other forms of prevention against disease. It will examine the respective roles of the government and the private sector in the provision of primary health care to the community and will suggest arrangements to strengthen the co-ordination between the out-patient clinics and the hospitals. The recommendations of the working party are expected to be available by the end of 1990.

Dental Services

The School Dental Care Service aims at promoting dental health among schoolchildren. Services provided include regular dental examination, treatment and oral health education. Since 1987, the programme has been extended to all primary school children. In 1989, 390 752 took part in the service, representing 73 per cent of the primary school population.

An Oral Health Education Unit has been established by the Department of Health to organise oral health education activities for the community.

   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.

Services for the Mentally Ill and Mentally Handicapped

Medical services for the mentally ill include treatment in hospitals, out-patient clinics and day hospitals. The Mental Health Service of the Hospital Services Department, in conjunc- tion with other local academic and voluntary bodies, provides a comprehensive psychiatric service for the territory as a whole.

   Currently 3 527 beds are provided in psychiatric hospitals, and 608 beds in psychiatric units of general hospitals. In line with the universal trend for the latter type of provision, 2 115 additional beds are being planned for the mentally ill in various hospitals.

   Psychiatric patients are treated, as far as possible, in the community. In 1988, domiciliary occupational therapy became an integral part of the mental health services.

HEALTH

Apart from attending out-patient clinics or day hospitals, patients may be visited at home by specially-trained community psychiatric nurses. The Community Psychiatric Nursing Service aims to provide continuity in after-care treatment programmes for discharged mental patients, to assist them in social readjustment and to educate the patients and their families in mental health. There are now seven 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 treatment are cared for at the 200-bed Siu Lam Hospital and at the 300-bed unit in the Caritas Medical Centre. A further 704 beds in this category have been included in the Medical Development Programme to meet the continuing need.

Special Services

The Pathology Service provides both clinical and public health laboratory services for government hospitals and clinics, and a consultant service for the subvented sector. It also administers hospital mortuaries and blood banks.

The Forensic Pathology Service with its fully-established forensic laboratory works closely with the Royal Hong Kong Police Force on the medical aspects of criminology and other medico-legal work. It also performs investigations in all homicides and coroner's cases. The public mortuaries are under the administration of the service.

The Virus Unit is the central laboratory for the diagnosis and surveillance of viral infections including AIDS. It provides laboratory support for the screening, assessment and guidance of vaccination programmes against viral diseases. Moreover, its Institute of Immunology undertakes the monitoring and quality control of biological products, including vaccines for use in the local health services.

A Central Neonatal Screening Laboratory was established in 1984. Its main function is to co-ordinate the laboratory activities of the territory-wide neonatal screening programme on congenital hypothyroidism and glucose-6-phosphate-dehydrogenase deficiency.

The Institute of Radiology and Oncology comprises two major divisions, the Diagnos- tic Radiology Division and the Radiotherapy and Oncology Division. The Diagnostic Radiology Division provides a diagnostic organ-imaging service. The Radiotherapy and Oncology Division provides comprehensive radiotherapy programmes and a chemotherapy service for cancer patients. The division also operates a cancer registry covering the whole territory.

During 1989, regular visits were made by the staff of the Radiation Health Unit to medical, commercial and industrial premises to inspect the working conditions of radiation workers. The unit also issues radiation licences to the proprietors in accordance with the Radiation Ordinance and Regulations. It assisted in the Background Radiation Moni- toring Programme organised by the Royal Observatory to establish an accurate baseline of the background radiation levels in Hong Kong.

The Pharmaceutical Service of the Department of Health is made up of two divisions, with a total establishment of 250, including 27 pharmacists. The first division provides pharmaceutical service to all government 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. Action is taken against the illegal sale and distribution of pharmaceutical products and medicines, and

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in 1989, there were 37 prosecutions. In the Hospital Services Department, there are 56 pharmacists to look after the pharmaceutical needs of government hospitals.

Community Nursing Service

The Community Nursing Service provides domiciliary and rehabilitation nursing care and treatment for the sick, the elderly infirm and the disabled, in their own homes.

   Jointly operated by eight agencies, including the Hospital Services Department, the service functions from a network of 48 hospital stations and satellite centres. During the year, 11 600 patients were served and more than 226 300 home visits were made.

Health Education

The Central Health Education Unit of the Department of Health is responsible for organising, co-ordinating and promoting health education activities. In 1989, the unit was actively involved in a number of campaigns, including those on AIDS education and publicity, notably the second World AIDS Day, home safety, organ donation, anti- malaria, immunisation and eye care.

The theme of the major health education campaign for 1989 was 'Let's Talk Health'. An exhibition was organised in November in City Hall and attracted a large audience.

   The 10th Young Health Leaders' Training Course was organised during June 1989. It consisted of lectures, games and slide-shows on health-related subjects, to help the students learn health and leadership skills. Two hundred and fifty health leaders from 45 secondary schools graduated from this course, to promote health education at home, in school and among friends.

Other activities for youths included anti-smoking, adolescent health and sex educa- tion workshops at the audio-visual centres. Voluntary agencies and schools may also borrow film, videos and slides from the unit free of charge for their own health education activities.

   The increased community concern for health is reflected 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. An increasing number of people visited the various centres of the unit to obtain health information on various health topics.

Close liaison is maintained with the media, medical professionals, and other govern- ment departments and non-governmental organisations for the smooth implementation of various campaigns and activities. The unit participates in many television and radio programmes and press interviews. It provides advice and counselling to voluntary agencies and bodies concerning their health education activities.

Collaboration with medical bodies and various units in the department has resulted in the increased production of useful health education materials for the public.

Council on Smoking and Health

The Council on Smoking and Health is a statutory body established in 1987 to acquire and disseminate information on the health hazards of using tobacco products and to advise government on matters related to tobacco and health. During the year, the council carried out publicity and community events to discourage smoking, especially among the young population. Between April and June 1989 the government sought the opinion of the public on a package of measures recommended by the council to further restrict the use, sale and advertising of tobacco products. The results of the public consultation exercise are used in the formulation of future government policy on smoking and health.

HEALTH

Medical Charges

      Medical charges remained low, reflecting a substantial subsidy from public funds despite the adjustment in August 1989 to take account of increases in costs. Patients in the general wards of government hospitals are charged $29 a day and the fee covers everything from meals, medicine and laboratóry 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 higher maintenance and treatment charges.

       The charge for consultation at general out-patient clinics is $15, while that for specialist clinics is $22. Charges for physiotherapy, occupational therapy and child assessment are $22. Attendance at geriatric or psychiatric day centres and home visits by community nurses cost $24. These fees may also be waived if warranted.

       The charge for injections and dressings in general out-patient clinics is $6, while charges for visits to family planning clinics and methadone clinics remain at $1.

        Free medical services continue to be offered at maternal and child health centres, tuber- culosis and chest clinics, social hygiene clinics and accident and emergency departments.

Training of Medical and 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 medical student intake at the University of Hong Kong remained at 150 in 1989. During the same year, the Chinese University of Hong Kong took in its ninth group of 131 students.

       Under the licentiate scheme of the Hong Kong Medical Council, 31 externally-trained doctors passed the local licentiate examination in 1989. After satisfactory completion of an externship programme in public hospitals, they will become registered medical practitioners.

In 1989, the government decided to establish a statutory Hong Kong Academy of Medicine, which would be responsible for organising and supervising post-graduate and continuing medical education in Hong Kong. The purpose of the academy is to enhance clinical competence and thereby improve medical services. The academy will set standards, define the content and duration of training courses and accredit specialist qualifications. It would have as its main objective the advancement and promotion of the science and practice of medicine. A preparatory committee was set up at the end of 1989 to make preparations for the formation of the academy.

The Prince Philip Dental Hospital produced 54 dentists in 1989. The training of dental therapists is provided at the Tang Shiu Kin Dental Therapists Training School.

The basic training for general nurses is conducted at government, government-assisted and private hospitals. There are now nine training schools for student nurses and 11 for pupil nurses with an average annual intake capacity of about 1 170 and 540 respectively. An additional student nurse training school and one more pupil nurse training school are planned over the next decade. The annual intake capacity is to be increased from 1 170 to 1 420 for general student nurses and from 540 to 670 for general pupil nurses.

The training of psychiatric student nurses is conducted at Kwai Chung Hospital and Castle Peak Hospital, and training of psychiatric pupil nurses at Castle Peak Hospital. The average intake capacity for psychiatric student nurses is 170 and for pupil nurses 80. Three more training schools for psychiatric nurses have been planned for the next decade to meet the rising demand for nursing care in the Mental Health Service.

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   The need for continuing training and education for nurses is recognised. The post-basic school of the Nursing 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 medical, nursing, para-medical and para-dental staff. The Chai Wan Technical Institute of the Technical Education and Industrial Training Department pro- vides training for dispensers which is complemented by in-service departmental training. There is also in-service training for prosthetists, mould laboratory technicians and thera- peutic radiographers in the respective units of the government institutions.

Government Laboratory

The Government Laboratory offers comprehensive and impartial scientific advice and analytical services to government departments and public institutions. It undertakes analytical, advisory, and investigative work in chemistry and related sciences.

   One of the functions of the laboratory is to examine food samples for the presence of residues of pesticides, hormones, animal drugs, and other potentially-hazardous chemicals. The monitoring of nitrosamines and radioactive contaminants in food commenced in 1989. These services are carried out under the Public Health and Municipal Services Ordinance.

Close surveillance of pharmaceutical products for use in government hospitals and clinics is maintained to ensure that only medicines of acceptable quality are supplied to the public. Chemical tests for conformity to specified standards are also conducted on medicines intended for sale over-the-counter. Preparations of Chinese herbal medicines are analysed to detect possible adulteration with Western synthetic drugs and heavy metals.

   During the year, chemical analysis of air, water and waste samples continued to be one of the main activities of the laboratory. The demand for asbestos identification, and for asbestos fibre counting in final air tests at the completion of asbestos-stripping operations, increased substantially last year and continues to increase.

   The laboratory carries out tests on the identification and classification of dangerous goods. A 24-hour emergency service is also provided to cater for incidents involving chemical spills and chemical hazards.

   Wines and spirits are routinely monitored for the presence of methyl alcohol and other contaminants in addition to determining their alcohol contents for duty assessment purposes. Other dutiable commodities, including tobacco, non-alcoholic beverages, beer, and cosmetic products, are examined for the assessment of duties while cigarettes continue to be analysed for their tar and nicotine contents.

Narcotics

  Drug abuse is a multi-faceted problem 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, particularly young people, from experimenting with drugs so as to eradicate drug abuse in the community.

   The exact number of addicts is not known. However, the government's computerised Central Registry of Drug Abuse and other linked indicators show that at the end of 1989

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the size of the known and active addict population was about 42 000, which was 0.9 per cent of the population aged 11 and above.

       Data collected by the registry, based on 413 000 reports on 62 000 persons, indicate that 90 per cent are male and 10 per cent female. As for age distribution, 70 per cent were over 30 as at the end of 1989, 25 per cent were in the 21 to 30 bracket and five per cent were under 21. The principal drug of abuse is heroin, which was used by 91 per cent of the persons reported to the registry in 1989. 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.

Overall Strategy and Co-ordination

The government's overall strategy consists of four main elements: law enforcement, treat- ment and rehabilitation, preventive education and publicity, and international co-opera- tion. 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 Department of Health, the Correctional Services Department and a number of voluntary agencies, the largest being the Society for the Aid and Rehabilitation of Drug Abusers (SARDA) which is subvented by the government. Preventive education and publicity rests mainly with the Narcotics Division of the Government Secretariat, working closely with the Information Services Department, Radio Television Hong Kong and government district offices. International co-operation is the responsibility of all.

The work undertaken in each of these four areas is inter-related. Effective law enforcement curtails the supply of illicit drugs and pushes up their prices, thus inducing addicts to seek ways of ridding themselves of their drug habit through treatment. These addicts 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. 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 12 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 passed into law in July 1989 and came into effect on September 1, 1989. The ordinance empowers the courts to confiscate drug traffickers' assets and counters the laundering of drug money. A person who helps drug traffickers retain or otherwise benefit from their proceeds may be prosecuted. The legislation shows the government's readiness to respond positively to the international call for legislative measures to confiscate the proceeds of drug traffickers and to counter money laundering, as embodied in the 1988 UN Convention Against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances.

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   The Police Force and the Customs and Excise Department seized some 400 kilograms of No. 3 heroin and 600 kilograms of No. 4 heroin during the year. This included a single seizure of 420 kilograms of No. 4 heroin in Sai Kung in September 1989, the largest haul in Hong Kong, and the second largest in the world. The seizure of 450 kilograms of cannabis during the year was the highest since 1971. As a result of joint operations with overseas law enforcement agencies, a number of international drug trafficking syndicates were neutralised with substantial quantities of dangerous drugs seized and a number of ring- leaders arrested locally and abroad. During the year, police and customs action resulted in over 10 000 prosecutions for drug offences.

Treatment and Rehabilitation

The voluntary methadone treatment programme operated by the Department of Health provides both maintenance and detoxification for out-patients. Methadone maintenance is designed to prevent an addict's return to heroin or other illicit drugs, while the detoxification programme aims to eliminate dependence on any drug. The programme has proved to be very effective in serving both the addicts and the community. There are 25 methadone clinics.

   The largest voluntary in-patient treatment programme is run by SARDA. The society operates three in-patient treatment centres, one for men on the island of Shek Kwu Chau with a capacity for 500 patients, and the others for women at Sha Tin. Linked to these centres are three intake units, 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, one for males on the island of Hei Ling Chau and the other for females in Tai Lam Chung. The former has capacity for 938 and the latter 80. These treatment programmes range from two to 12 months, the actual period being determined by the inmate's progress and the likelihood of continued abstinence from drugs following release. All persons discharged are given one year of statutory after-care.

   In 1989, the two voluntary treatment programmes and the Correctional Services Department's compulsory treatment programme admitted 12 500 addicts. On average, 13 000 addicts and ex-addicts were receiving some form of treatment, rehabilitation and after-care every day.

The pilot counselling centre, PS 33, set up in Tsim Sha Tsui in April 1988 to provide counselling and telephone advice for psychotropic substance abusers, handled 100 cases and 1 200 telephone enquiries since its inception. PS 33 is operated by the Hong Kong Christian Service with financial support from the Lotteries Fund.

Preventive Education and Publicity

The government and the community continued their efforts in anti-narcotics preventive education and publicity. The main thrust of the publicity campaign in 1989 was to warn the younger generation about the injurious effects of using psychotropic substances, particularly cannabis, and to involve parents.

Five district campaigns were held to encourage community involvement through carnivals, variety shows, camps, exhibitions, and visits to drug treatment centres. Beach pop concerts were held at Butterfly and Shek O beaches in August.

The major event of the year was the Road To A Happy Life programme held in October. This comprised a series of anti-drug events including a family camp at Lei Yue Mun Park

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Holiday Village, a training camp for youth leaders at Sai Kung Outdoor Recreation Centre, exhibitions at popular venues, a drama competition, a long-distance run and a model car race.

       The school talks team in the Narcotics Division gave a total of 140 drug education talks to 58 700 students in 100 secondary schools and technical institutes throughout the territory. The division also organised a territory-wide seminar involving schoolteachers and student counsellors in October. To enhance the school talks, a new slide show with synchronised voice-over and background music was introduced in September.

Drug education was also provided for Vietnamese refugees and boat people.

For the ninth 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 seven groups of these young people. The 60-member ACAN Youth Volunteer Group, established in 1981 to train and encourage young volunteers to play an active part in anti-narcotics work, took part in district campaigns and organised a number of community involvement projects.

       To keep in touch with the current trends and thinking of youngsters, the ACAN Youth Advisory Group comprising a cross-section of young people was set up in December 1988 to give advice on educational publicity materials and activities.

       The ACAN Drug Abuse Telephone Enquiry Service received 1959 enquiries, the majority seeking information on treatment facilities.

To assess the extent of public awareness of anti-drugs publicity programmes a survey covering some 2 000 households was conducted in mid-1989. The survey results are being processed and analysed.

International Action

Externally, Hong Kong continued to play an active and important part internationally 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 South-east Asia, Europe and North America. Hong Kong took part in 15 regional and international meetings and seminars concerned with anti-drug policies, law enforcement, treatment and rehabilitation, and preventive education. In 1989, Hong Kong contributed $131,000 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. Drug seizures overseas were particularly high, especially in the United States and Australia, requiring extensive co- operation of Hong Kong law enforcement officers with their overseas counterparts.

The techniques and methods employed in Hong Kong have made it an important venue for training anti-narcotics personnel from overseas. During the year, 137 people from 13 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.

Environmental Hygiene

The work of the Urban Services Department and the Regional Services Department includes street cleansing, collection and removal of refuse and nightsoil, cleansing of 159

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gullies, management of public toilets and bathhouses, pest control and services for the dead.

In the urban areas, a regular workforce of about 5 022 is employed in cleansing duties. The cleansing force operates a fleet of 328 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 2 900 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.

   The Urban Council continued to implement its policy of contracting-out selective cleansing services to private contractors to reduce the involvement of direct departmental labour and to enhance cost-effectiveness.

   By the end of the year the Urban Services Department had contracted-out cleansing services for the Shau Kei Wan squatter area, all urban cargo working areas and almost all public toilets and bathhouses in Hong Kong and Kowloon. These contracts were supervised by departmental staff and the results have been highly satisfactory.

   Two similar cleansing contracts, undertaken on a self-help basis by local residents of Ma Hang Village at Stanley and Telegraph Bay Village in the Southern District, were working well.

   To help improve the hygiene condition of the environment, the Regional Services Department introduced rectangular-shaped plastic bins to replace traditional metal drum containers at refuse collection points in the Regional Council area. They eliminate much of the nuisance attributable to the older models and are more pleasant in appearance. Launched in September 1988, the scheme has been successfully implemented to cover private estates in the built-up areas of Tuen Mun, Yuen Long, Tsuen Wan, Kwai Tsing and parts of Sai Kung. Public housing estates in these districts, which joined the scheme in April 1989, should be completing their conversion to the new bins in 1990.

Regular cleansing duties in the council area are carried out by a work force of 3 552 and a specialised fleet of 217 vehicles. The waste-collection services collected 555 260 tonnes of refuse and junk during 1989-90, about 8.1 per cent higher than the previous year.

   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, water, roads, schools, homes, squatter areas and villages as well as the countryside, with emphasis on community involvement, education and publicity. Enforcement of the law, however, remained the major weapon in the war against littering. During the year 28 595 people were fined $7.1 million for littering offences in the Urban Council area. In the Regional Council area, 10 332 people were fined $2.1 million.

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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

HEALTH

      work closely with the staff of the Department of Health in the investigation and control of food-poisoning outbreaks and infectious diseases.

To facilitate more effective action against illegal food business operators, the Public Health and Municipal Services Ordinance was revised to enable the Urban Services Department to physically close down premises being operated as illegal food establish- ments. Since the coming into effect of the revised law on October 1, 1988, 485 illegal food premises had ceased operations voluntarily and another eight were closed by the depart- ment subject to Court Orders.

For the prevention of vector-borne diseases, pest control staff continued with the integrated programmes to control rodents, mosquitoes, flies and other public health pests. Measures taken included environmental improvement, health education, eradication of breeding places, use of pesticides and law enforcement. The Pest Control Advisory Section of the Municipal Services Branch provided technical support.

Environmental Health Education

The Health Education Unit of the Municipal Services Branch focused on promoting good hygienic practices and educating the public on preventive measures against environmental health problems. The highlights of a series of health education programmes in 1989 included the staging of a Building Sanitation Exhibition in the territory's two major civic centres, the Hong Kong City Hall and the Sha Tin Town Hall, during the Live Clean and Stay Healthy Campaign, and the launching of a territory-wide Keep the Toilet Clean drive. The aim of the latter campaign was to arouse public awareness on the proper use and maintenance of both public and communal toilets. The unit also organised activities for supervisory personnel of the food trade in a food hygiene campaign on the theme Better Hygiene, Safer Food and for schoolchildren in the Inter-Schools Health Education Speech and Song Contests.

Other subjects covered by major territory-wide programmes included the prevention of nuisances caused by air-conditioners and the prevention of mosquito breeding and rodent infestations. Besides conducting health talks and seminars to various sectors of the public like food handlers, building management personnel and schoolchildren, the unit also provided out-reaching broadcasting services, a health education resource centre and a telephone hotline for consultation by the public.

Food

      The health inspectorate, backed by medical consultancy, controls the food for sale, both imported and locally produced. Assisted by a scientific advisory arm and supported by laboratory resources, the inspectorate ensures that the consumer is able to buy good wholesome food, unadulterated, uncontaminated, properly labelled, and of nutritious quality.

       In March, the harvesting and sale of shellfish from certain parts of the local waters was temporarily banned in the wake of reports of contamination by 'red tide' toxins. The public was advised through the mass media not to eat shellfish until the situation cleared. In early April, the ban was lifted after successive samples of shellfish collected from the previously affected waters were given a clean bill of health by laboratory testing. The November 1988 outbreak of mass chemical food-poisoning which the health inspectorate traced to pesticide-tainted vegetables from across the border led to the introduction of a quick screening field test for pesticide residues. Complementary to regular laboratory analysis, this field test was performed on imported vegetables at their point of entry into Hong

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  Kong. Food commodities, especially those from Europe, continue 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. Parallel to this is the increasing demand for services for health certification of foods for export and re-export to foreign countries and territories.

The review of food legislation has been an on-going exercise to keep abreast with international developments in food standards. During the year, the Imported Meat and Poultry Regulations were amended to impose control on imported game and to provide for upgraded control on imported meat and poultry, the Food Adulteration (Artificial Sweeteners) Regulations were updated to harmonise with the World Health Organisation's recommendations on the acceptance of artificial sweeteners, and the Milk (Regional Council) By-laws and Milk (Urban Council) By-laws were amended to improve control on the transportation of milk and milk beverages.

   Externally, Hong Kong maintains close ties with the Food and Agriculture Organisation of the United Nations, the World Health Organisation and other international authorita- tive bodies on food science and technology. As the bulk of the local food supply comes from the mainland, Hong Kong has been working hand in hand with the Chinese authorities towards promoting food safety.

Markets

The Urban Council operates 60 retail markets in urban areas. A total of 9 102 stalls are provided in these markets offering a choice of commodities ranging from fresh food to household items and a wide range of clothing.

   Where feasible, old and outdated markets have been replaced by multi-purpose com- plexes with new markets and cooked food centres accommodated on the lower floors. On the upper floors, these complexes provide a variety of amenities for indoor sports activities, educational, cultural and recreational pursuits. There are 13 such multi-purpose complexes in the Urban Council areas.

   New markets with cooked food centres are purpose-built, upon establishing demand and a role for them in the District Plan. They have been built to meet consumer demand in the areas in which they are situated rather than meeting hawker resiting commitments. This approach, together with other improvements in design, has been adopted in planning and building in order to provide more viable markets and a better environment for stall-holders and the buying public.

   The Regional Council is responsible for the management of public markets in its region. There are 46 public markets with a total of 4956 market stalls and 386 cooked food stalls under its management. Three new markets, located at Plover Cove Road in Tai Po, Hop Yick Road in Yuen Long and Cheung Chau Market in Cheung Chau, will be commissioned in 1990, providing an additional 978 market stalls.

Hawkers

The Urban Council is responsible for the licensing of street hawkers in the urban areas and its general duties teams enforce hawker control legislation. By end-December 1989, there were 15 201 hawker licences issued, 2 057 less than in 1988. The continued efforts of the council to move on-street hawkers into newly-completed markets was a significant factor in this reduction. In April, for example, some 600 licensed hawkers were resited and re- ordered in conjunction with the commissioning of the Fa Yuen Street Market. There has

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been a significant decline in the number of unlicensed hawkers, due mainly to intensified enforcement action by the general duties teams against illegal hawkers, together with the relatively attractive employment prospects available in the commercial and industrial sectors.

Following the recommendations of the Urban Council's Working Party on Hawker and Related Policies, efforts have been made to relax the issue of hawker licences. As a first step, the council began issuing licences in early 1988 to fixed-pitch newspaper hawkers. The issue of other classes of licences will depend largely on the availability of suitable sites identified to be viable and publicly acceptable.

Having completed the computerisation of all hawker particulars in April 1988, the council completed a further project on the computerisation of hawker conviction records in February 1989. The purpose of such records is to assist the Courts in determining appropriate levels of fines in respect of hawker offences. This system is running smoothly.

       The management and control of hawkers in the Regional Council area is the res- ponsibility of the council. In 1989, there were 2 848 licensed hawkers in the council area, a drop of 109 compared with 1988. There were an estimated 1 855 unlicensed hawkers.

Through the deployment of general duties teams, 759 men in all, the Regional Services Department maintains control over the hawker situation. Although there are illegal hawk- ing blackspots in the new towns, the problem is generally contained, and the number of licensed hawkers is gradually declining as more of them are given sites in new markets.

The council has a firm policy of not issuing any new hawker licenses, 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 63 per cent of local demand for fresh meat. During the year, 2 067 000 pigs, 113 000 cattle and 12 000 goats were slaughtered in the abattoirs.

In 1987, the council decided in principle that the two abattoirs should be privatised on the condition that the council would continue to undertake a meat inspection service after privatisation. The Urban Services Department held a series of negotiations during the year with an interested company and some progress has been made. Meanwhile, a package of redundancy terms has been proposed to the affected abattoir staff for their consideration.

       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 1244 600 pigs, 56 000 head of cattle and 8000 goats during the year. The slaughter- house 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 3 900 pigs and 240 cattle. In addition, a small slaughterhouse is being constructed for Cheung Chau.

All animals slaughtered in these abattoirs and slaughterhouses were inspected by qualified health inspectors of the Urban Services and 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 66 per cent of the dead were cremated. Human remains

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buried in public cemeteries are subject to exhumation after six years. The exhumed remains are then either cremated or re-interred in an urn cemetery.

   The Urban Council operates one public funeral parlour in Kowloon which provides free funeral services for the needy. Two service halls at the Hung Hom Public Funeral Parlour are provided free of charge for public use as 'farewell pavilions'. 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 council 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 Services

  The role of the Auxiliary Medical Services (AMS) is to augment the services of the Department of Health, Hospital Services Department and Fire Services Department in times of natural disaster, civil disturbance, or other emergencies. In such situations, AMS resources would provide properly-trained personnel together with the necessary medical supplies and equipment for resuscitation and treatment for the injured on the spot, to convey casualties to hospitals, and to render nursing care to patients at acute and convalescent hospitals.

   AMS is a medical civil defence organisation, funded by the government since 1950. By statutory requirement, the Director of Health is the Commissioner of the Auxiliary Medical Services and is responsible to the Governor for the efficient operation of the unit. Assisting him is a number of Deputy and Assistant Commissioners appointed in a voluntary capacity.

Volunteer members of AMS come from all walks of life and include doctors, nurses and paramedical personnel, in government or in private practice. Members undergo different categories of training including first-aid, footdrill, casualty handling, nursing, life saving, manning of ambulances, practical ward training, leadership development and management courses. The current establishment is 5 835 volunteers.

   AMS also provides supplementary medical services to government agencies and departments for ambulance manning, life-guard duties, methadone centre clinical services and first-aid coverage. A total deployment of more than 729 800 man-hours was recorded for the report period.

   AMS volunteers have devoted much of their time and knowledge to the manning of the camps and detention centres coping with the influx of Vietnamese boat people. AMS services have been fully stretched to provide 13 first-aid and medical posts in 11 of the

centres.

   One of the responsibilities of AMS is to provide first-aid training for government servants, and in 1989 it trained 3 598 civil servants who successfully completed the basic first-aid courses.

District offices have now been set up by AMS in Kwun Tong and Ap Lei Chau to enhance operational efficiency and to provide local training facilities. Departmental headquarters and a training centre are being built at Ho Man Tin and should be completed by early 1991.

12

SOCIAL WELFARE

IN support of the drive to provide more and better welfare services, the government increased spending on social welfare in 1989-90 by about 14 per cent, to $4,108 million.

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 Effort (1977), Social Welfare into the 1980s (1979), and Primary Education and Pre-primary Services (1981).

The government is advised on social welfare policy by two groups - the Social Welfare Advisory Committee, covering the whole 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.

In the provision of welfare services, the Social Welfare Department maintains a close working partnership with the subvented welfare agencies, most of whom are affiliated to the Hong Kong Council of Social Service.

In October 1989, the Governor announced a review of social welfare services, to be conducted in conjunction with the subvented welfare sector. A White Paper would be published in the second half of 1990, setting out proposals for the further development of these services into the 1990s and beyond. To conduct. the review, a working party was set up at the beginning of 1990, comprising officials and non-officials - particularly from the subvented welfare sector. To assist the working party in formulating its proposals, the public were invited to submit their views.

Apart from expanding existing services to meet the demand for various social rehabilitation services, emphasis has been placed on finding new methods to improve employment opportunities for the disabled and additional resources for improvement of quality of services.

Anticipating the introduction of legislation to control residential homes for the elderly, a two-year experimental Bought Place Scheme was implemented in October this year. A grant of $30.6 million from the Lotteries Fund made it possible to buy up to 500 places in private homes for the elderly in order to help these homes to raise their service standard and to increase the supply of such places.

To encourage elderly persons to continue living in the community for as long as possible, a new form of community support service, Respite Care for the Elderly, was introduced during the year. This programme enables family members to have short-term relief from the constant burden of their caring duties. In addition, efforts were made to provide a continuum of residential services in residential institutions to minimise the need to transfer frail elderly persons from one establishment to another, which might be stressful for them.

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   In the area of services for offenders, qualified teachers have been employed to run academic classes in the department's correctional institutions. To provide continuity in trade training for residents of the correctional institutions, links with the Vocational Training Council have been strengthened. A growing number of discharged trainees go on to vocational courses managed by the Council and the Department of Technical Education and Industrial Training.

Continued 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 have been consulted. Representatives from the government and volun- tary agencies came together in various forums such as the reconvened Working Group on Child Abuse. Its recommendations focused on measures to help overcome the problems of child neglect and abuse.

The Housing Department is entrusted with the fitting-out work for welfare premises in Public Housing Estates under a rolling programme. The number of services with standard layout plans covered by this programme will be increased to six, including day nurseries, children and youth centres, social centres, hostels for the elderly and half-way houses for discharged mental patients. Work continued on preparing layout plans and fitting-out requirements for homes for the aged with care-and-attention units in new public housing

estates.

During the year, 10 new day nurseries, one family-services centre, two small group homes, one child custody service unit, three homes/hostels for the aged, one combined home, one care-and-attention home, two day-care, one multi-service and seven 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.

Community Chest

The Community Chest, which organises and co-ordinates fund-raising activities for its member agencies, raised $71 million in 1988-9, compared with $56 million in 1987-8.

Social Security

Social security is a major social welfare programme aimed at meeting the needs of those vulnerable groups in the community requiring financial assistance. The Public Assistance and Special Needs Allowance Schemes are the key elements in the entirely non- contributory social security system. They are supplemented by three other schemes: Criminal and Law Enforcement Injuries Compensation Scheme, Traffic Accident Victims Assistance Scheme and Emergency Relief. The social security programme provides an effective 'safety net' for those who need assistance.

The Public Assistance Scheme, which is means-tested, provides cash assistance to those in need. It is designed to raise the income of needy individuals and families to a level where essential requirements are met. Persons who have resided in Hong Kong for not less than one year may be eligible if they can prove that their income and other resources are below the prescribed levels. An able-bodied unemployed person aged 15 to 59 who is available for work is, in addition, required to register with the Labour Department for job placement in order to qualify for assistance. The Director of Social Welfare is vested with a discretionary power to waive the one-year residence requirement in cases of genuine hardship.

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       The rates of assistance were increased across the board by 11 per cent in April 1989 to keep pace with inflation. The current basic allowances are $620 for a single person, $465 for each of the first two eligible members of family, $455 for each of the next two eligible members and $445 for each additional eligible member. Separate allowances are paid to cover the cost of renting accommodation.

A monthly old-age supplement of $310 is given to those aged 60 to 69, and $355 to those aged 70 and over, who are not receiving a disability supplement or a special needs allow- ance under a separate scheme. A disability supplement of $310 per month is payable to those who are certified to be partially disabled with at least 50 per cent loss of earning capacity and who are not in receipt of an old-age supplement or a special needs allowance. Those who have received public assistance continuously for 12 months are given an annual long-term supplement to enable them to meet the cost of replacing household wares and durable goods: $790 for a single person; $1,580 for a family with two to four members; and $2,370 for a family with five or more members. In addition, special grants are given to certain categories of recipients to meet other needs in particular circumstances. To encourage self-help, an individual's monthly earnings of up to $465 may be disregarded in the calculation of assistance payable.

      At the end of 1989, the number of public assistance cases was 66 000, compared with 64 600 in 1988. The majority of recipients are elderly, disabled and single parent families. Expenditure on public assistance in the 1988-9 financial year amounted to $779.3 million, an increase of 10.4 per cent over the previous year.

The Special Needs Allowance Scheme provides flat-rate allowances for the severely disabled and the elderly. Any person, regardless of age and financial means, who is certified to be severely disabled and who has resided continuously in Hong Kong for at least one year immediately before application, 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.

      In 1988, a higher disability allowance was introduced at twice the rate of the disability allowance to help those severely disabled persons aged 60 and above who require constant attendance from others in their daily life but are not receiving such care in a government or subvented institution. On April 1, 1989, the age limit was lowered to 16 and will be further extended to cover all ages next year. The current monthly rate for the disability allowance is $620 and, for the higher disability allowance, $1,240.

Old-age allowance is non-means-tested for those aged 70 and above, and they are entitled to a current rate of $355 per month. For those below the age of 70, monthly payments are at a lower rate of $310, subject to a declaration that income and assets do not exceed the prescribed levels. The minimum qualifying age for an old-age allowance was lowered to 67 on April 1. This will be further lowered by phases to 65 in 1991.

       The number of people receiving disability and old-age allowances at the end of the year was 401 300, compared with 361 500 at the end of 1988. Expenditure on special needs allowances in the 1988-9 financial year was $1,374 million, an increase of 37 per cent over the previous year.

The Criminal and Law Enforcement Injuries Compensation Scheme provides financial assistance to persons who are injured in the course of crimes of violence or in helping to prevent crime in Hong Kong. It also extends compensation to those injured by law enforcement officers using weapons in the execution of their duty. Payments are made to their surviving dependant family members in the case of individuals killed in any one of these circumstances.

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On June 1, the payment rates were increased by 11 per cent to offset inflation.

   This scheme, operated on a non-means-tested and non-contributory basis, is ad- ministered by the Criminal Injuries Compensation Board and Law Enforcement Injuries Compensation Board. Both boards consist of unofficial members who are appointed by the Governor.

During the year, total payments amounted to $5.7 million, compared with $5.9 million in the preceding year.

The Traffic Accident Victims Assistance Scheme provides cash payments to victims of traffic accidents or, in the case of death, their dependants. It is a no-fault, non-means-tested scheme. For a person to be eligible, the traffic accident must be one as 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 the case of injury not causing death, the victim must have required no less than three days' sick leave supported by a medical certificate. Payments are not made for damage to property. The scheme does not affect the applicant's right to claim legal damages or compensation from other sources in respect of the same accident. In the case of a successful claim, the applicant is required to refund either the payment he has received from the scheme or the amount of damages or compensation received, whichever is the less.

In May, the Traffic Accident Victims (Assistance Fund) Ordinance was amended to extend the scheme to cover victims of all traffic accidents involving light rail vehicles operated by the North-west Railway. The ordinance was also amended to enable victims of accidents occurring on private roads to which public access is restricted to be eligible for assistance under the scheme, with effect from July 1, 1989.

The rates of assistance were revised upwards by 11 per cent in June 1989 to offset the rise in the cost of living.

   During the year, 6350 applications were received and 5870 were approved for assistance, with payments amounting to $48.0 million compared with $42.6 million in the previous year.

   Emergency relief is provided to victims of natural or other disasters in the form of 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 to relieve hardship arising from personal injury or death. The payment rates under this fund were also increased by 11 per cent in June. On October 1, 1989, emergency relief services were extended to the Island District and remote parts of the New Territories.

During the year, emergency relief was given to 3 310 registered victims on 170 occasions. The Social Welfare Department also assisted in providing hot meals to refugees and boat people from Vietnam.

To prevent abuse of the various schemes, a special team conducts in-depth investigation in cases of suspected fraud or difficulties encountered in recovery of overpayment. During the year, the team completed investigations into 344 cases.

Social Security Appeal Board

The Social Security Appeal Board is an independent body comprising unofficial members appointed by the Governor. It provides a system of redress for those who are not satisfied with the decisions made by the Social Welfare Department concerning public assistance, special needs allowances and traffic accident victims assistance payments. A total of 45

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appeals was heard by the board during the year. Of these, six were related to public assistance, 37 to special needs allowances, and two 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 are to put into effect the directions of the courts on the treatment of offenders through social work methods. The overall aim is to rehabilitate offenders through probation supervision, the Community Service Order Scheme, residential training for young offenders and after-care services.

The Community Service Order Scheme started in January 1987 and is another community-based treatment. Its aims are both punitive and rehabilitative. It requires an offender over the age of 14 and convicted of an offence punishable by imprisonment to perform unpaid work of benefit to the community and to receive counselling and guidance from a Probation Officer. A full review of the scheme conducted during the year has confirmed its effectiveness.

      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. Community participation in the rehabilitation of offenders has been promoted through the Volunteers Scheme for Probationers in which volunteers from many walks of life are selected to provide probationers with personal and moral support, as well as direct services.

      In April 1987, a Young Offenders Assessment Panel was set up jointly by the Social Welfare Department and the Correctional Services Department. The panel comprises professional staff from the two departments and provides magistrates with a co-ordinated view on the most appropriate programme of rehabilitation for convicted young offenders aged between 14 and 25. Following an overall review of the functions and services of the panel in 1988, active plans are being made to extend its services.

      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 are provided to assist juvenile offenders to return to the community as law-abiding citizens. The Begonia Road Boys' Home and Ma Tau Wai Girls' Home are combined remand-and-probation institutions for juvenile offenders and youths in need of statutory care and protection. The establishment of Pui Chi Boys' Home in 1984 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, in operation since February 1986, has contributed to improving 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 13 to 15 on admission, while the O Pui Shan Boys' Home is a similar institution for those aged under 13 on admission. Since April 1989, these two boys' homes have undertaken aftercare services to enhance the co-ordination and continuity of their treatment programmes. The Kwun Tong Hostel is a probation hostel for young men aged between 16 and 21.

      While a new girls' home is being built in Tuen Mun, plans are in hand to improve residential facilities, including the relocation of the Castle Peak Boys' Home and Begonia Road Boys' Home to Sha Tin and Ngau Chi Wan. Following a review of the educational programmes in these institutions, the department has recruited qualified teachers to run all academic teaching and pre-vocational training. New teaching material is being designed to suit the needs and interests of the trainees. These new arrangements have brought about

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improvements although there have been problems in the recruitment and retention of teachers.

   In addition to the work carried out by the Social Welfare Department, several subvented 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 subvented welfare agencies provide a variety of family and child care services with the objective of preserving and strengthening the family unit through helping individuals and families to solve their problems or to avoid them altogether.

The department operates a network of 31 family services centres and the subvented welfare sector operates a further 23 such centres. The major services provided in family services centres include: family casework and counselling; referrals for schooling, housing, employment and financial assistance; and care and protection of children and young people aged under 21.

   After the setting up of the Wai On Home For Women in 1987, a second refuge for women, Harmony House, was opened. These two homes together provide short-term accommodation for 80 women and children who may be victims of domestic violence as well as for young girls at risk.

   The department has continued its efforts, in co-operation with other government departments, to tackle the problem of street sleeping. 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 a grant of $2.3 million from the Hong Kong Jockey Club Charities (Limited), planning was put in hand to establish a second urban hostel for the homeless, including street sleepers, as part of a pilot scheme designed to provide more permanent accommodation for the homeless in the urban area. A temporary shelter and a day relief centre were established to provide temporary accommodation and relief services for street sleepers.

   The department provides child care services through 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 Protection Services Unit caters for abused children. The Adoption Unit is responsible for local and overseas adoption of orphans, abandoned babies and children freed for adoption, while the Central Foster Care Unit promotes foster care services in Hong Kong. Furthermore, the Child Custody Services Unit was set up in October 1989 to carry out statutory duties in respect of supervision or care arising from custody and guardianship matters handled in Family Courts or the High Court.

   Child care centres are available 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 30 013 places in day child care centres and 733 places in residential child care centres. Families with low incomes 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 8 200 children were receiving fee assistance at the end of the year. To meet the changing needs of families, new modes of child care services were being tried out. Meanwhile, reviews were conducted of the financing and provision of the day nursery and day creche services.

   Family life education aims to improve the quality of family life through the promotion of interpersonal relationships and social consciousness which may help to prevent family

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breakdowns and social problems. To commemorate the 10th Anniversary of the Inter- national Year of the Child, 'Responsible Parenthood and Child Care' was chosen as the theme for the 1989 Family Life Education Publicity Campaign. A wide variety of publicity media, including TV, radio, posters, booklets on good parenting and programmes such as seminars, exhibitions and carnivals, were organised throughout the second half of the year. In response to the central publicity campaign, promotional and educational activities have been organised by social workers at the district level. The central resource centre which provides the necessary audio-visual equipment and resource material in support of the service has been moved to the Southorn Centre in Wan Chai, with much improved facilities and easier accessibility to the users.

A study of the home help service was conducted to collect data on the demand for the service, which will form the basis of future expansion plans.

Medical Social Service

To assist patients and their families to deal with personal and family problems arising through illness, a medical social service is provided by social workers stationed in 103 medical social service units in government hospitals and clinics. With the implementation of the Mental Health (Amendment) Ordinance 1988, additional posts have been created to strengthen psychiatric medical social service units to take up the additional duties arising from the provisions in the ordinance.

Care of the Elderly

     The 1979 White Paper laid down 'Care in the Community and by the Community' as the guiding principle for the planning and development of services for the elderly. A wide range of community support services is provided to help families to look after their family members or to enable old people to live on their own in the community for as long as possible. Such community services include home help, canteen services, community education, day care, social and recreational activities. At the end of 1989, there were 52.5 home help teams, 106 social centres, 15 multi-service centres and seven day care centres. Thirty seven respite care places for the elderly were also available in homes for the elderly. Housing assistance, including compassionate rehousing and priority allocation of public housing, continues to be available for those eligible.

       Additional residential facilities were provided for those who, for health or other reasons, are unable to look after themselves and who have no relatives or friends to assist them. At the end of the year, there were 5969 places in hostels/homes (including 1 480 non- subvented and non-profit-making places) and 1980 places in care-and-attention homes. In addition, the government provided sheltered housing for 2 339 elderly people who are capable of living independently in private housing flats as well as in public housing estates. In order to encourage and assist private homes for the elderly to reach the standards required for registration under the Voluntary Registration Scheme, the Registration Office of Private Homes for the Elderly continued to give advice and assistance to these homes, including offering to buy places from them under the experimental Bought Place Scheme.

Services for Young People

Helping young people to become mature and responsible members of society is the main objective of this programme. A wide range of services has been designed for young people from six to 25 to foster the development of their personality, character, social aptitude,

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sense of civic responsibility, ability to use their leisure time constructively and to enable those with adjustment problems to direct their energies towards positive goals in society.

   At the district level, apart from providing group work activities in community centres, the department also promotes youth activities and encourages the establishment of self-programming and volunteer groups through its youth and community offices. The department has run the Opportunity for Youth Scheme since 1974. Every year, young people are helped with funds to implement a variety of community service projects to meet specific social needs. Awards are given for outstanding projects to recognise the contribution of the participants.

   Children and youth centres, operated mainly by subvented welfare agencies, serve as focal points for a variety of programmes and activities for the personal growth and social development of young people. In 1989, one youth centre and 23 combined children and youth centres were opened, making a total of 198 children centres, 204 youth centres and 144 combined children and youth centres.

   Outreach social work attempts to cater to groups of young people at risk who do not normally participate in organised youth activities. With the addition of two new teams in 1989, there are totally 22 outreaching social work teams serving in priority areas with large youth populations, high population densities and high juvenile crime rates. The review conducted during the year has pointed the direction for future development.

The school social work service is provided by social workers in secondary schools, and a guidance service for primary school students is provided by student guidance officers. These services help students with personal problems or problems in adjusting to school life. A comprehensive review of the service is underway.

   Uniformed organisations offer young people opportunities for training in the devel- opment of character and leadership, skills, community services, and indoor and outdoor recreation. There are seven subvented welfare organisations, with about 70 000 members, operating a wide range of activities with different emphasis in their programmes for different target groups of young people. The Duke of Edinburgh Award Scheme offers a comprehensive programme focusing on the development of the potential of young people, attracting a membership of 40 000.

Rehabilitation of the Disabled

The objective 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 the disabled people to fully develop 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 in rehabilitation services for the following 10 years.

The Hospital Services Department and the Department of Health are responsible for providing medical rehabilitation services. The Social Welfare Department is responsible for the planning and development of a wide range of social rehabilitation needs, either through direct service provision or subvention to welfare agencies. The Education Department is responsible for all aspects of the education and training of disabled children of school age and for boarding care and transport services in special schools. The Technical Education and Industrial Training Department 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

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Previous page: A magnificent 93-stop organ, largest in South-east Asia, dominates the Concert Hall at the new Cultural Centre.

The new Cultural Centre, on the Tsim Sha Tsui waterfront, was officially opened by the Prince and Princess of Wales on November 8.

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Both pages: Student dancers from New York, Rome, Manila, Sumatra, Taipei and Hong Kong performed in the International Festival of Dance Academies in July, probably the largest event

of its kind in South-east Asia.

Below: Learning the subtleties of Chinese painting.

Right: Works of art in terracotta are created today in much the same way as they were centuries ago.

Overleaf: The guzheng, an ancient Chinese instrument similar to

the Japanese koto, recaptures the gentle sounds of an earlier age.

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for discharged mental patients. The Transport Department subvents a Rehabus service operated by the Hong Kong Society for Rehabilitation for disabled persons who cannot use public transport.

       By the end of the year, the Social Welfare Department and subvented welfare agencies had provided a total of 604 integrated programme places, 795 special child care centre places (including 54 residential special child care centre places) and 695 early education and training centre places for pre-school disabled children. As for disabled adults, there were 1 298 day activity centre places to provide day care, daily living skills and work training for the mentally handicapped, 3 175 sheltered workshop places to provide work or employment for the disabled who are unable to compete in the open job market, and 1 706 hostel places for those 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. In addition, 200 long stay care home places, 757 half-way house places and 110 activity centre places were provided for discharged mental patients and 21 social and recreational centres were provided for all categories of disabled persons.

During the year, the Social Welfare Department introduced a pilot supported- employment scheme for the disabled through setting up a mobile crew comprising several disabled persons supervised by one non-handicapped person to take up contracted cleaning jobs. The aim is to create and explore more open employment opportunities for disabled persons.

In order to improve the quality of services, two central support services were established to provide all rehabilitation day centres and hostels with professional back-up from clinical psychologists, occupational therapists and physiotherapists. Other improvements made include the staffing provisions of day activity centres, hostels for disabled persons and special child care centres which admit autistic children and children with autistic features.

The Queen Elizabeth Foundation for the Mentally Handicapped was set up in August 1988. Its purpose is to further the welfare, education and training of the mentally handi- capped and to promote their employment prospects. The management and uses of the Foundation Fund are determined by a council consisting of prominent members of the community appointed by the Governor. In the first quarter of the year, the foundation made grants of over $1.9 million to nine voluntary organisations and two government departments. The fund stood at over $90 million on March 31, 1989.

Staff Development

Training of professional social workers is provided by the two universities, two polytechnics and two post-secondary colleges. The Social Welfare Department and the subvented welfare agencies assist in the provision of practical work placements for social work students from these training institutions.

The Social Welfare Department provides various types of in-service training programmes through its Lady Trench Training Centre. These include basic social work training for non-professional grade staff, staff development programmes, and induction training and orientation courses for both departmental staff and social workers employed in the subvented welfare sector. To enhance the competence of social workers in handling the more complex and complicated social problems, local and overseas professionals were commissioned to conduct specialised or advanced training programmes in such demanding areas as mental health, family and child abuse services.

During the year, 185 programmes, seminars and workshops were organised by the training section, compared with 147 in 1988. The Training Section also operates a child

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care centre for 100 children aged between two and six which serves as a demonstration nursery for trainees in child care work.

   To equip staff with updated and specialised skills in the various fields of professional practice, the department sponsors experienced staff to attend advanced training courses and international conferences. During the year, 91 officers attended 30 such courses and conferences. The Social Work Training Fund and other scholarships also contribute towards promoting basic and advanced social work training for local practitioners.

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Research and Evaluation

The Research and Statistics Section provides a support service to the department by preparing estimates, conducting surveys, and developing and maintaining data systems. Eleven surveys were carried out during the year. In conjunction with the Hong Kong Council of Social Service, the section is responsible for the operation of the Social Welfare Manpower Planning System. This system collates information on individual social work personnel and on the demand for and supply of trained social workers in order to facilitate overall manpower planning in the welfare sector. The section also runs six other data systems, these being the Integrated Law and Order Statistical System on offenders under the charge of the department, the Street Sleepers Registry, the Planned Welfare Projects Registry, and three central referral systems for placement in 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. Departmental staff make regular visits to these agencies which are, in turn, required to submit service statistics at specified intervals. Where appropriate, findings are submitted to the Subventions and Lotteries Fund Advisory Committee which advises on the allocation of subventions and Lotteries Fund Grants. During the year, the department conducted 10 in-depth evaluations of pilot projects and service programmes operated by subvented welfare agencies.

Community Building

A number of government departments and voluntary organisations contribute towards the community building programme.

   This programme, co-ordinated by the Community Building Policy Committee, serves to foster among the people of Hong Kong 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, the formation of citizens' organisations and the 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.

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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 and more than 130 organisations, boards and committees commented on its recommendations.

The committee's final recommendations were considered by the government in mid- 1989. It was decided that a Commission on Youth with members appointed by the Governor would be set up in early 1990 to advise the government on matters pertaining to youth, promote better co-operation among those involved in providing youth services, undertake research on young people and serve as a contact point for youth exchanges with overseas organisations.

      To promote public awareness of the importance of young people, the committee launched a Youth Festival in December 1989. About 100 organisations participated in the festival, the theme of which emphasised young people's commitment towards building a better community. More than 80 events were staged in various districts during the month-long festival.

Committee on the Promotion of Civic Education

In 1986 the government set up the Committee on the Promotion of Civic Education to encourage all sectors of the community to actively promote civic awareness and responsibility.

      Made up largely of non-government members, the committee advises the government and community organisations on the objectives and scope of civic education. It en- courages, through sponsorship, community effort in organising civic education activities among different age groups.

       During the year, the committee sponsored 26 projects with an allocation of $760,000. A Civic Education Resource Centre was set up on the advice of the committee to provide updated reference materials for organisers of relevant activities.

      A new theme song carrying the message 'Hong Kong's Future is Right in Your Hands' was produced and shown on television. Other promotional activities launched by the committee included a seminar on the Spirit of Rule of Law and a number of outdoor projects to encourage people's participation in political and community affairs. The work of the committee has received a great deal of support from district organisations, in particular district boards.

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CLOSE to one million new flats will be built in the next 10 years in order to fulfil the government's aim of providing affordable housing for all those who need it.

   Towards this goal, the Housing Authority, which is the delivery agent for the government, will be producing close to 60 per cent of the new flats required and offering them to the public through the various rental and home ownership schemes, with the Housing Department providing the construction, administrative and management services. The remaining 40 per cent of the flats are expected to be built by the private sector.

   The government provides the capital financing and the land for the authority to im- plement the housing programme as set out in the recently-adopted Long Term Housing Strategy.

Since the public housing programme began in 1953, more than 2.8 million people, or close to half the population, are now living in public housing. Although most of these people are living in rental premises, in some 135 estates, there is a growing number who are buying their own flats under the Home Ownership Scheme (HOS) and Private Sector Participation Scheme (PSPS) and the more recent Home Purchase Loan Scheme (HPLS) also operated by the authority.

   During the year, the authority produced 54 000 new flats, comprising 34 000 rental units and 20 000 HOS and PSPS units, which were so much in demand that they were heavily oversubscribed. At the same time, it raised the amount of loan under the HPLS from an original $70,000 to $110,000, so as to increase the opportunities for assisted home purchase, and granted 1 200 loans under this scheme.

   On average, rents for the authority's flats account for about seven per cent of tenants' income, while the home ownership scheme flats are offered for sale at about 30 per cent below the market rate.

While it is building new flats to increasingly higher standards and better designs, the authority is also redeveloping its older housing estates in line with its policy of improving residential living conditions to meet the higher aspirations of the tenants. It is also in- troducing innovative measures which will enhance construction efficiency and quality.

   In all, the authority had about 150 000 flats under various stages of construction during the year, and spent some $6 billion on development and maintenance of its public housing projects.

In the next five years, it will be spending about $30 billion on new construction work. Apart from the work of the authority, the Hong Kong Housing Society continued to supplement the provision of public housing through its rental and rural public housing projects, urban renewal scheme and flats-for-sale scheme.

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      In the private housing sector production remained high, with output reaching 37 655 units.

Housing Authority

Established under the Housing Ordinance, the Hong Kong Housing Authority is a statutory body responsible for co-ordinating all aspects of public housing.

      This role has been expanded to enable it to implement the Long Term Housing Strategy effectively and efficiently.

      The authority advises the Governor on all 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 every three months to review the work of its eight standing committees which have delegated powers to deal with matters concerning establishment and finance, building, management and operations, home ownership, development, com- mercial properties, complaints and tenancy appeals. It also meets whenever there are important issues which require special attention.

In addition to the eight standing committees, the special committee on Clearance of Kowloon Walled City, an ad hoc committee established in January 1987, continues to perform its functions. In 1989, two ad hoc committees, the committee on Sale of Flats to Sitting Tenants and the committee on Domestic Rent Policy and Allocation Standards, were established in June and August respectively.

The authority has been chaired by a non-official member since April 1, 1988. It now comprises 20 non-official members, including the chairman, and four official members. All members are appointed by the Governor. There are also 35 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. Under its new financial arrangements with the government which came into effect on April 1, 1988, the government will 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 rents and prices.

On March 31, 1989, the government's capital investments and contribution to housing stood at about $65 billion, which comprised permanent capital of $16.4 billion, con- tribution to domestic housing of $41.4 billion and non-domestic equity of $7.2 billion.

      In the 1988-9 financial year, recurrent expenditure on the authority's domestic rental properties, covering mostly management and maintenance costs, totalled $3,694.6 million, while income from domestic rents was $3,081.5 million, resulting in a deficit of $613.1

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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 improvements. The authority was partly able to offset this deficit from the income derived from its commercial properties which, in the same period, generated a surplus of $297.6 million after paying the interest on permanent government capital and 50 per cent dividends to the government.

   The authority spent $5,787.8 million on its capital programmes, of which $2,922.2 million (50.5 per cent) was financed by the authority, while the balance of $2,865.6 million (49.5 per cent) came from the government through the transfer of the closing balance as at March 31, 1989 of the Home Ownership Fund and supplementary capital injection.

Construction

The Housing Authority achieved yet another record, completing over 54 000 flats in 1989, well above the all time high record of 41 000 flats in 1988.

Despite the exceptional output, the shortage of skilled labour continued to be a serious problem affecting the progress of work on most of the building sites, so much so that the authority's ability to meet its future commitments under the Long Term Housing Strategy may be adversely affected in terms of both quantity and quality. However, the authority has introduced several positive measures to counteract the problem.

   One measure will require the production off-site of some of the major components for the three new residential block designs, the Harmony blocks, which were developed last year. This will help reduce the need for skilled labour on-site and will also require tight quality control to be exercised in the manufacturing process.

   Tenders for the first Harmony blocks were invited in October 1989. Arrangements for the bulk purchase of the building components were being finalised and selection of the suppliers will be made in 1990.

   To further the aim of achieving good, consistent construction quality against a reasonable and realistic specification for a fair price, the authority intends to set up its own List of Building Contractors. It is believed that a group of contractors dedicated to the authority's work will complement the design and construction philosophy of the Harmony range, as it will optimise the benefits to be gained from standardisation, while contractors and their workforces quickly become familiar with the buildings. Applications for inclusion in the list were invited at the end of 1989, and it is hoped that a tentative list will be published early in 1990.

Efforts have also been made by the authority to help the construction industry to attract more workers to join and remain in the trade. Suggestions put forward by the authority to improve the safety standards and working conditions on-site were examined by the Hong Kong Construction Association. It is also hoped that the setting up of the authority's List of Building Contractors will quicken the pace in this direction.

   Overall, the authority remains firmly committed to producing 230 000 flats in the first five-year development period from 1985 to 1990, and 215 000 flats and 135 000 flats in the second and third five-year development periods. During the year, 19 building contracts, with a total value of $3,530 million, were awarded. With the present rate of production and the normal seven-year lead time required before new flats can be let or sold, more new housing sites will be urgently needed to meet the projected demand in 1996 and after. This is a matter of great concern to the authority. No effort has been spared by the authority and the government departments concerned in resolving this problem, and hopefully by 1990 the requisite new sites will be determined for inclusion in the authority's housing programme.

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Urban Housing

      On Hong Kong Island, site formation works at both Shau Kei Wan East and West progressed steadily. The two stages of the Shau Kei Wan East site formation will be due for completion in late 1990 and 1991 respectively. The Shau Kei Wan West site formation will be completed in 1992. Building works at both of these sites, when completed, will provide 7168 rental and 3 648 rental/HOS flats. Wah Kwai Estate at Kellett Bay, which will provide 3 264 rental and 1 402 HOS flats between late 1990 and early 1992, is now in its building construction stage.

At Siu Sai Wan Phase 1, some 1710 rental and 660 HOS flats were receiving their finishing touches. The remaining 594 rental flats will be completed in April 1990. By the end of the year, 716 rental flats in Siu Sai Wan Phase 2 will have been completed. Another 1074 rental flats of this phase will soon be completed within the next few months. The building contract for Siu Sai Wan Phase 3 will begin in early 1990 to produce 2017 rental and 1 216 rental/HOS flats in 1993.

       In Kowloon several phases of the Kowloon Central Redevelopment have been completed. Wang Tau Hom Phase 5 and Lower Wong Tai Sin Phase 7 provide 1 008 and 1938 rental flats respectively. The redevelopment of Lei Cheng Uk Phase 2 involving the oldest Mark I-II blocks has also been completed, producing 1 750 rental flats. New blocks in two supplementary housing sites identified for the Extended Redevelopment Programme, Shun Tin Phase 4 and Nam Cheong Estate, were completed during the year, providing a total of about 3 000 rental flats. The redevelopment of Tsui Ping Estate Phase 4 at Kwun Tong is nearing completion, with 1 190 rental flats in its first stage completed in late 1989. For the HOS, 700 flats in King Lai Court at Ngau Chi Wan were completed by the end of this year.

Construction of all three phases of Fung Tak Estate at Diamond Hill is on schedule and will provide 5 752 rental flats upon completion in 1991 and 1992. Further east at Lam Tin, the main part of the site formation for the Lam Tin South Estates has been completed and building work is in hand. In all, the Lam Tin South Estates, when completed, will provide 4 389 rental, 1 824 rental/HOS and 1 400 HOS flats.

Housing in New Towns, Rural Townships and Outlying Islands

In Sha Tin, Phase 1 of Kwong Yuen Estate has been completed with an output of 1 556 flats. Also completed are the 612 and 350 HOS flats at the nearby Kwong Lam Court and Hong Lam Court respectively. Further north in Ma On Shan, the building works at Area 103 are progressing satisfactorily, to provide 3 500 rental flats in 1991. Other housing projects planned in Ma On Shan Areas 90, 100, 103 and 108 will provide 8 562 rental, 5 515 HOS and 4 950 PSPS flats.

       The remaining portion of Cheung Fat Estate, and the whole of Tsing Yi Estate Phase 2 situated at the northern part of Tsing Yi Island, were completed this year, thus adding 1 596 rental flats to the housing stock. Cheung Hang Estate, which will provide 2 856 flats, is still under construction. In Tsuen Wan, the redevelopment of Tai Wo Hau Phase 3 with 2 032 flats has been completed. Building works for Phase 4 will soon follow. Over the next few years, the redevelopment of a number of estates in Kwai Chung will begin as part of the Comprehensive Redevelopment Programme. The formation of a supplementary site at Shek Yam East will be put in hand by the department in early 1990 and will provide land for 2 043 rental flats.

In the Tuen Mun area, Kin Sang Estate Phase I and part of Tin King Estate Phase 4 were completed, providing 2 652 and 970 rental flats. Construction of the remaining flats in

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Tin King Estate is still underway. For the Home Ownership Scheme, 2 100 flats at San Wai Court of Tuen Mun Area 1 were completed by the end of 1989. Piling work began on the Tuen Mun Area 14 Phase 1 HOS. The other two phases will be started in 1990. The three phases will contribute 4 200 HOS flats by 1993. As for the PSPS, the Affluence Garden at Tuen Mun Area 5, which has 2 208 flats, was completed in 1989. Two more PSPS projects, one at So Kwun Wat and the other at Tuen Mun Area 45, will provide 5 000 and 3 000 flats in 1994 and in 1995.

   The four phases of Tai Wo Estate at Tai Po were completed. Of the total number of flats produced, 6 389 are rental units and 2 448 are for sale under the HOS. Projects under construction at Tai Po include Wan Tau Tong and Tai Po Area 8. The former will provide 3 520 rental flats, 700 HOS flats, and a further 1 224 flats earmarked for transfer to HOS, while the latter will provide 5 792 rental flats and 2 040 flats earmarked for HOS. These two projects will be completed in 1991 and 1992. North of Tai Po, the project completed in Fanling this year includes Tai Ping Estate (1 429 rental flats). Site formation at Fanling Areas 18, 39A, 46 and 47B is ongoing. Building construction at Tin Ping Phase 3 (714 rental flats) and Wah Ming Phases 1 and 2 (5 340 rental flats) are scheduled for completion in 1990.

Site formation for Tin Yiu and Tin Shui Estates at Tin Shui Wai was completed. Building work was due to begin on Tin Yiu Phase 1, while the piling work for other phases of this estate was well in hand. Progress at Tin Shui Estate is generally on schedule. The building contracts of all four phases will begin in 1990. Tin Yiu and Tin Shui Estates, when completed in 1992-3, will provide a total of 16 422 rental flats and 3 040 flats earmarked for transfer to HOS.

Projects at Junk Bay are also progressing satisfactorily with contracts on Po Lam Phase 3 (2 568 rental flats), Ying Ming Court (1 750 HOS flats), and Tsui Lam Phase 2 (816 rental flats) completed during the year. Construction of 1 605 rental flats at King Lam Phase 1 is nearing completion, and is progressing on Phases 2, 3 and 4. A total of 5 160 rental flats will be provided by these four phases. The Fu Ning Garden PSPS project, providing 2 450 flats, is scheduled for completion in 1990.

For the outlying islands, the proposed rural public housing projects at Cheung Chau and Peng Chau are still in their planning stages. Piling work for Lung Tin Phase 2 at Tai O, Lantau, will begin early in 1990.

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. A redevelopment programme was launched in 1972 to improve the living environment of some 84 000 families in these estates.

   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 1989, 14 old blocks were evacuated to make way for new buildings, leaving 58 Mark I-II blocks to be redeveloped by 1990-1.

The rehousing work of the extended redevelopment programme which was started in 1985 was completed in 1989. The programme involved the clearance of 26 sub-standard blocks in 11 middle-aged estates and all 15 100 affected families were rehoused.

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The Long Term 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-IV and former government low-cost housing estates, to improve the living environment in these estates. The current five-year rolling redevelopment programme for 1989-90 to 1993-4, involving 253 blocks accommodating 69 000 families, was made public in May 1989. The affected tenants will be formally notified 18 to 24 months before the clear- ance dates.

Maintenance

With 146 rental estates and 56 HOS courts under its care, comprising some 4 500 buildings and structures, and about half of them over 15 years of age, the Housing Authority carried out a major review of its maintenance policies and strengthened the planning process to improve its services to tenants and owners.

In carrying out work on the buildings, which range from blocks of flats, shopping centres and offices to multi-storey carparks and community facilities, it spent some $1,200 million during the year.

Greater emphasis has been placed on communication with tenants, so that whenever a comprehensive repair contract is undertaken, mutual aid committees, housing management and maintenance staff and contractors meet to consider the proposals and work progress. For information, two booklets were produced on What You Should Know About Asbestos, and What You Should Know About Strengthening and Repairs, as well as a video on repair proposals.

As a result of extensive surveys and structural investigations, some reinforced-concrete buildings, which are particularly vulnerable to deterioration, were found to have sub- standard concrete and required strengthening. The repairs carried out ranged from minor patching to very extensive works.

The six-year comprehensive repair programme launched in 1987 to ensure that existing buildings remain serviceable, gathered momentum during the year with contracts worth $182 million being let, covering 74 buildings. Good progress was made, with 1 500 flats being repaired each month. Some 300 000 concrete spalling repair operations were under- taken, totalling 65 000 square metres. To minimise inconvenience to tenants, new repair materials, techniques and improved working procedures were introduced, thereby reducing the time spent on each flat.

Since 1984, the authority has ceased using materials containing asbestos in the construc- tion of buildings and has had an established policy for control of asbestos materials already present in buildings. The removal of such materials presents particular difficulties in occupied buildings. Whenever possible, in these circumstances, materials are sealed in place, and where removal is necessary, specialist contractors are engaged and strict measures are taken to monitor the air. On this basis some 44 000 balcony panels were sealed during the year. The cost of the abatement work totalled $18 million and the cost of air monitoring $7.5 million.

      A programme for the electrical rewiring of almost all estates constructed prior to 1973 was completed at a cost of $215 million. The programme upgraded the capacity of supply installations so as to allow unrestricted use of electrical appliances such as air- conditioners, thereby benefiting some 153 000 homes. A programme was completed for providing communal aerials to 204 000 homes.

Regular servicing is carried out to ensure that the 4 000 lifts in public housing estates are reliable, and in addition, a modernisation programme has been started to replace 53 lifts in

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four estates. In the next five years, an average of 50 lifts will be replaced each year, and in the five years after that, replacement work will be stepped up to 100 lifts each year.

   As the estates get older, the age pattern of residents changes, creating the need for new facilities to be provided. So far 43 nurseries, youth centres and accommodation for the elderly and disabled have been added and 19 are being constructed. Forty-one classrooms were added to 23 primary and secondary schools at a cost of $17.5 million.

Improvement work was carried out at eight commercial shopping centres. In the middle-aged estates and those not included in the redevelopment programme, where the environment and facilities have started to fall behind, measures have been taken to improve the quality of life.

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 admin- istering the HOS, using government funds. With the re-organisation of the authority on that date, it took over the responsibility for the scheme.

Private sector applicants for HOS flats may not own domestic property and are subject to a household income limit of $10,000 per month. These restrictions, however, do not apply to public rental estate tenants. The income restriction is also not applicable to res- idents of Temporary Housing Areas and cottage areas managed by the authority, house- holds displaced by clearance of squatter areas for development, natural disaster victims and junior civil servants.

Since the scheme started in 1978, a total of 119 000 flats, including 39 000 produced under the complementary PSPS, have been sold to eligible families. About 45 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, 7 500 flats have been 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 families who are in greater need of public housing, public housing tenants are accorded higher priority than private sector applicants in select- ing 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 authority 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 up to 90 per cent, 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 17 500 flats a year for the period 1989 to 1994. Of these, about 27 per cent of 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.

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During 1989, a total of 16 777 flats were sold, starting in January with 5 278 flats in Phase 10C. Applications were invited for a further 5 865 flats in Phase 11A in April 1989 and over 108 000 applications were received, a record since the scheme began.

In August another 5 634 flats were put up for sale, attracting about 60 000 applications, despite the uncertain state of the property market in mid-1989. Finally, in December, applications were invited for 5 867 flats in one PSPS and five HOS estates. This included 4 275 flats in upgraded blocks transferred to HOS from the rental housing programme.

The prices and sizes of flats sold covered a wide spectrum, with prices ranging from $177,600 for a 36-square metre flat at On Shing Court, Sheung Shui, to $593,500 for a large flat of 60 square metres at King Lai Court, Ngau Chi Wan.

Home Purchase Loan Scheme

The Home Purchase Loan Scheme, administered by the Housing Authority, forms an in- tegral 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. Eligible applicants are offered interest-free loans, repayable up to 20 years, to help overcome the problems of initial financing faced by many families wishing to buy their own homes.

      After one year, the authority carried out a review of the scheme, and this resulted in a number of changes. The more significant of these were the extension of eligibility to families in the private sector in addition to existing applications from sitting or prospective tenants in public sector housing, an increase of the loan from $70,000 to $110,000 and relaxation of the restriction on the age of property to be purchased from five years to

10 years.

For budgetary purposes, a quota of 6 000 loans was set aside for 1989-90. During the year, a more flexible approach was adopted regarding the application period in that applications remained open until further notice in the light of general response. A total of 10 000 applications were received, of which 5 500 (55 per cent) were from public hous- ing applicants, and 4 500 (45 per cent) from the private sector. Altogether, 6 000 applicants were found eligible. A total of 2 500 loans were granted. As a result, 650 loan recipients had served notice-to-quit, their public housing units being recovered for re-allocation to other families.

Allocation

The Housing Authority owns and manages 621 000 rental flats in 135 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, 41 600 new flats and 8 000 vacated flats were let to the various categories of eligible applicants. The biggest share went to Waiting List applicants (32 per cent), followed by tenants involved in the redevelopment of the old Mark I and II blocks and in the comprehensive redevelopment programme (26 per cent), and families affected by development clearances (15 per cent). Junior civil servants, victims of fires and natural disasters, occupants of huts and other structures in dangerous locations, compassionate cases recommended by the Social Welfare Department, families affected by Kowloon Walled City clearance and applicants from Temporary Housing Areas took up the rest of the flats.

       The Public Housing Waiting List and allocation of rental flats have been computerised, with information on nearly three million applicants and tenants being stored in the Hous- ing Applications and Tenancies Management Information System. The system enables

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housing allocation and duplication checks to be carried out effectively and produces useful statistical information.

During the year, 15 800 flats, mainly in Tuen Mun, Sha Tin, Tsuen Wan, Junk Bay and Tai Po, 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 through the authority's Waiting List were con- sidered in the order of registration and in accordance with the choice of districts in- dicated 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 $4,400 for a family of two to $9,400 for a family of 10 or more. The number of 'live' applications at the end of the year stood at 135 000. In addition, there were 25 000 applications on the Single Persons Waiting List which was established in January 1985. The income limit for single persons is $3,000.

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, 6 300 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, 4 400 families have benefited from this scheme. In 1986, the authority introduced a sheltered housing scheme with a warden service for able-bodied elderly people. In 1989, 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

With the help of heavy government subsidies in the form of free land and low-interest loans, rents for domestic premises in public housing estates have been maintained at low levels, despite increasing operating and maintenance costs.

   On the recommendation of the Domestic Rent Policy Review Committee in December 1986, domestic rents for new public housing estates are set so as not to exceed a median rent/income ratio of 15 per cent. Rents at present stand at $24.2 per square metre for the newest urban estates, but are adjusted downwards for others of lower estate values. These rent levels represent about one-third of current market rents.

   Rents are reviewed on a biennial basis and adjusted to take account of increases in rates, maintenance and other costs, estate values in terms of location, facilities and services provided, as well as tenants' ability to pay. On average, public housing tenants are paying seven per cent of their income as rent. Owing to the very low rents in old estates where maintenance and improvement costs are high, there is an overall deficit in the Housing Authority's estate working account for domestic properties.

   Some 780 premises in estates and HOS courts are let for the provision of welfare and community services. They are charged at a concessionary rent of $19 per square metre per month, exclusive of rates. In addition, offices are let at full market rents to District Board and OMELCO members, and Urban and Regional Councillors.

Management

As an integral part of the management process, the Chairman of the Housing Authority regularly pays goodwill visits to housing estates and HOS courts, meeting community

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representatives. Such visits are also made by members of the authority and the Management and Operations Committees, accompanied by senior officers of the depart- ment, to meet members of mutual aid committees and residents' associations for in- formal exchanges of views on the management of the estates and HOS courts. At estate level, the housing manager also holds meetings with mutual aid committee and resident association officer-bearers.

Under the existing housing subsidy policy, tenants who have lived in public housing estates for 10 years or more and whose household incomes exceed the subsidy income limit which is twice the Waiting List income limit are required to pay double net rent. In the first year of implementation of the policy, 21 per cent of the 41 000 affected households with 23 or more years of residence in public housing estates had to pay double net rent. In the second year of implementation, 26 per cent of the 62 000 affected households with 19 to 22 years' residence in public housing estates were required to pay double net rent.

       The current year involves 62 000 households with 14 to 18 years of residence in public housing estates. In addition, 25 000 households who were exempted from payment of double net rent two years ago because their household incomes were below the sub- sidy income limit, are also due for review of their incomes. If their household incomes are found to exceed the subsidy income limit, they will be required to pay double net rent in April 1990.

       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 persons aged 60 years and over. The next three projects at Tai Wo Estate, Tai Po; Kwong Yuen Estate, Sha Tin, and Cheung Fat Estate, Tsing Yi, were due for completion during the year. Similar facilities will be incorporated in 17 more estates over the next five years.

With six HOS courts already under the care of private property management agents, a further scheme is being tried in five new courts where the agents will be expected to as- sume the management role as soon as the buildings are taken over. Under the agency management scheme, the authority remains ultimately responsible for the management standards.

       Under the Housing (Traffic) By-laws, the authority is empowered to impose charges for impounding and removing vehicles illegally parked in housing estates. The roads in 122 rental estates, nine factories, 38 HOS courts and 25 THAs 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 authority conducts half-yearly reviews of the scheme.

       Staff of the Housing Management Branch have been required to work irregular hours to keep hawking activities within housing estates under control. The efforts of the Major Operations Unit resulted in 130 arrests and seizures and clearance of 480 illegal hawkers in the estates during the year. Staff at estate level carried out 9 200 cases of seizures and 1 470 prosecutions to deter illegal hawking.

Letting of Commercial Properties

The Housing Authority manages 1.22 million square metres of commercial space, including shops, market stalls, banks, restaurants and flatted factory units, as well as a new stock of 60 000 square metres completed in 1989.

       All these spaces are held under some 27 500 separate tenancies. Rental income, including carpark charges collected during 1988-9, amounted to $1,401 million.

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The stock includes 6 673 'graded' shop tenancies in former resettlement estates. These shops were initially let 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.

   Under the Commercial Properties Committee, research and design were emphasised to ensure that new shopping centres are best suited to the needs of both tenants and local residents, and existing centres were upgraded where necessary. Promotional activities were held in more than 60 centres to sustain and enhance their competitiveness. Shops and market stalls continued to be let mainly by rental tender, although increasing num- bers of premises were let by negotiation to well-known retailers, including a Japanese department-store chain in Lok Fu Centre II. The letting of an entire market to one single operator was concluded as an experimental scheme during the year. Similar letting arrangements may be applied to other selected new markets in future.

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, have been extended to cover tenants affected by the Comprehensive Redevelopment Programme. Tenants required to vacate their premises to facilitate redevelopment receive an ex-gratia payment and, where possible, reprovisioning in alternative 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, 12 000 people, mostly affected by development clearances, were allocated units in THAS, but at the same time 30 000 people moved out mainly to per- manent public housing through the general Waiting List or clearances of THAs.

Temporary housing spaces for 18 000 people were completed in the year, against a loss of 13 000, mainly due to the development of existing sites. While THAs with 16 000 person spaces were under construction, there was still an acute shortage of sites for THA develop- ment in the urban areas.

At the end of the year, there were 74 THAs throughout the territory housing 110 000 people from 38 000 families.

Residents of THAs have priority in the purchase of HOS flats or may be granted an interest-free loan of $110,000 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 10 transit centres with a capacity of 2 100 person-spaces providing emergency accommodation for those rendered homeless by fires, typhoons, or other natural disasters. These people will eventually be rehoused in permanent or tempo- rary 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.

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Squatter Control

Daily patrols and hut-to-hut checks have been effective in keeping squatting activities under strict control.)

      Each squatter patrol team consists of a housing assistant supported by workmen equipped with demolition tools. During the year 7 100 new unauthorised structures or extensions to existing structures were demolished on government land and leased agri- cultural land.

       The squatter population was reduced from 376 000 to 330 000 and domestic structures from 118 000 to 110 000 as a result of clearances, natural disasters and rehousing through various channels.

Improvements to Squatter Areas

The comprehensive Squatter Area Improvement Programme is aimed at safety and providing basic services in squatter areas not yet due for clearance and redevelopment for a minimum of three to four years.

      In the first five years this programme was enforced in large and densely-populated settlements in the urban area and Tsuen Wan. However, for the past two years, it has been extended to smaller and less densely-populated areas. Where required, a separate street lighting programme is carried out.

       During the year, 11 comprehensive projects were completed and another five were under construction. In addition, 203 street lights were installed in 14 squatter areas not required for comprehensive improvements.

      When the improvement programme is completed in 1990, some 120 000 persons will have benefited from it. The cost of the whole programme amounts to $182 million.

Clearance

During the year, 420 hectares of land were cleared for development. This resulted in 27 000 people being given permanent housing and 11 000 temporary housing. Some 1 500 in- dustrial, commercial and agricultural undertakings affected by clearances were awarded ex-gratia allowances. A total of 3 000 people who became homeless as a result of fires and landslips were provided with permanent or temporary accommodation.

Kowloon Walled City Clearance

The Kowloon Walled City covers 2.7 hectares and encompasses some 30 000 people and 930 commercial undertakings. Since January 14, 1987, when the government announced its decision to clear the Walled City, good progress has been made. The clearance is being undertaken in four phases by the Special Duties Office.

Phases I and II have been completed and 13 000 people have moved to new homes. The whole clearance programme is expected to be completed in mid-1992. After the clearance, the site will be developed by the Urban Council into a public park with related community facilities. Construction work on this is expected to begin late in 1992.

       At the end of 1989, 14 500 residents had been rehoused and the operators of 296 commercial undertakings had accepted cash compensation totalling $86 million.

Management of Private Residential Buildings in Multiple Ownership

Privately owned buildings constitute more than half the territory's housing stock and accommodate about half the population. Most of these buildings are high-rise blocks

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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 dete- riorated.

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.

Draft legislation to amend the Multi-Storey Buildings (Owners' Incorporation) Ordin- ance is being prepared to make it easier to form owners' corporations, to improve their functioning, and to define more clearly the powers and responsibilities of the corpora- tions' management committees. Such corporations act in the interests of individual owners regarding their rights, powers, duties and liabilities in relation to those parts of a building held in common ownership. Although the existence of an owners' corporation does not guarantee good management of a building, it has been found from experience that manage- ment 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, an Advisory Committee on Private Building Management was established in November 1988. This committee consists of a majority of non-official members and advises the government on measures to improve the management of private buildings.

Separately, the government is concerned about the problems associated with existing Deeds of Mutual Covenant, many of which fail to protect adequately the interests of individual flat owners. The public was consulted from February to May 1989 on proposals to remedy unfair clauses in the covenant. Measures to remove the unfairness are being formulated having regard to the views of the public and in consultation with the Advisory Committee on Private Building Management.

So far, 12 Building Management Co-ordination Teams have been set up to offer advice to owners' corporations, mutual aid committees and other building management bodies, at 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 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.

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

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     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 1989 when the legislation was amended to provide for permitted rents to be 43 times (previously 39 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 compensation 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. 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 65 per cent of the prevailing market rent, the permitted increase will be an amount necessary to bring the current rent up to 65 per cent of

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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.

14

LAND, PUBLIC WORKS AND UTILITIES

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 strategies and to ensure co-ordinated development in infra- structure and buildings.

On September 1, 1989, the Lands and Works Branch was re-organised into two separate policy branches - the Planning, Environment and Lands Branch and the Works Branch - each headed by a Secretary. The aim was to improve the institutional framework to ensure the integration of the planning and environmental functions as well as to devote greater attention to the formulation of works policies and the implementation of the public works programme.

Both Secretaries are members of the Land Development Policy Committee, which is chaired by the Chief Secretary, and is responsible for overseeing all aspects of the physical development of the territory and for approving, in principle, all major proposals affecting the development or planned use of land. The Secretary for Planning, Environment and Lands is the Chairman of the Development Progress Committee, which is responsible for monitoring the general progress of the physical development of the territory as well as considering and approving detailed planning briefs, layouts and development plans. He is also Chairman of the Town Planning Board.

In addition to his policy functions, the Secretary for Planning, Environment and Lands oversees the operation of the Environmental Protection Department and the Buildings and Lands Department. He also oversees the new Planning Department, created in January 1990. The Planning Department is organised into two main streams dealing respectively with territorial and district planning matters.

The Secretary for Works oversees the operation of the seven works departments, namely Architectural Services, Civil Engineering Services, Drainage Services, Electrical and Mechanical Services, Highways, Territory Development and Water Supplies Departments. The Drainage Services Department, being established in stages since July 1989, is responsible for the planning, construction, operation and maintenance of all drainage infrastructure in the territory.

Land Disposal

All land in Hong Kong is held by the government which sells or grants leasehold interests. Such grants and leases are now made in accordance with the terms set out in Annex III to the Sino-British Joint Declaration. The total amount of new land to be granted is limited to

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  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 shared equally, after deduction of the average cost of land production, 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.

Public Works and Development

To cope with Hong Kong's future development, the government continues to invest heavily in capital works. In 1989-90, funds allocated for capital works amounted to $9,877 million, representing about 14 per cent of government's total approved expenditure for the period. About 58 per cent of the provision was for civil engineering, environmental protection and highways projects. About 35 per cent of the provision was for building items and eight per cent for waterworks. Of the total investment in capital works for 1989-90, 42 per cent was for projects in new towns and new urban development areas. In addition $2,955 million was allocated for acquisition of land for public works projects.

Forward Planning

  Since the beginning of the 1970's Hong Kong has relied on its new town programmes for the greater part of its urban expansion, including the provision of land for industry. At present, eight new towns are in various stages of construction in the New Territories, resulting in a gradual decentralisation of population from the crowded urban areas. About 2.0 million people, or 35 per cent of the population, are now living in the new towns. By 1998, this figure is expected to increase to about 42 per cent.

In 1983, it was concluded after extensive strategic studies that the optimal areas 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:

first, that both port and airport facilities were approaching saturation much faster than expected in the earlier strategic studies;

• second, the higher environmental standards of the new towns showed up the poor environmental quality of large parts of the metropolitan areas; and,

third, 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.

   The Port and Airport Development Strategy study, which is concerned with the phased provision of new port, airport and related infrastructure facilities, started in March 1988. Work on this important study was brought to a conclusive stage in mid-1989 resulting, in July, in a submission to the Executive Council of three optional strategies. A final decision by the council was made in October in favour of a strategy that provides for the de- velopment of a replacement airport at Chek Lap Kok located on the northern coast of Lantau Island. The aim is to commission the first runway by early-1997. The strategy also

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provides for the development of Container Terminals 8 and 9 on reclamation at Stone- cutters Island and south-east Tsing Yi Island respectively. Further long-term port develop- ment is planned for North Lantau and at Tuen Mun West. Associated with all these projects are major new highways and an airport passenger rail link.

      (Details of the Port and Airport Development Strategy are illustrated in the end-paper map at the end of this Report).

The Metroplan study will provide a framework for the more comprehensive re- structuring of urban areas around Victoria Harbour through redevelopment and the creation of new sites by reclamation and the terracing of hill slopes. This study has reached an advanced stage involving the formulation of nine initial options which, through a careful and complex process of evaluation, have been reduced to one 'hybrid' plan that takes account of the relocation of the airport to Chek Lap Kok. In parallel with this work, a second booklet comprising a digest on the initial options has been produced for public consultation. Also, a Landscape Strategy for the Urban Fringe and Coastal Areas has been produced as a guide for detailed planning. The final phase of work on Metroplan will involve the formulation of more specific land use transport proposals and various devel- opment guidelines. This work will take account of the results emerging from feasibility studies for major reclamation projects at Central/Wan Chai, West Kowloon and Green Island. The aim is to complete Metroplan by April 1990.

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. Policy guidelines were approved by the Executive Council in March 1989 and the next steps are to produce sub-regional planning statements, detailed layout plans and rural development works programmes.

Water

To cope with Hong Kong's future demand for water, the government has completed a conceptual plan for increasing the China water reception and distribution facilities in Hong Kong. When completed, the expanded system will be able to receive 1 100 million cubic metres of China water per year which will be sufficient to meet the anticipated water demand in the early 2000's.

Professional Registration

Legislation to provide for professional registration of architects and engineers was introduced into the Legislative Council in July 1989. Similar bills for surveyors and planners are expected to be introduced in 1990.

Land Administration and Supply

The Land Administration Office of the Buildings and Lands Department co-ordinates all aspects of land administration throughout the territory.

The first priority in land supply is to make sufficient land available 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 nil or nominal premium, to non-profit-making

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charitable institutions which operate schools, hospitals, social welfare and other com- munity services in accordance with the government's policy objectives.

   Most government land available for private sector commercial, industrial or residential development is sold by public auction or tender. Regular auctions are held and a provisional land sales forecast is published at regular intervals. In the New Territories, however, where much of the land required for development has to be acquired by the government, a high proportion is disposed of by tenders restricted to holders of Land Exchange Entitlements (Letters A/B). Since 1983, when Letters A/B were last issued, the amount of entitlements outstanding has decreased from $36 million to $11 million.

   Leases for certain special purposes, which are affected by particular site requirements or other factors which are inappropriate for disposal by public auctions, are also offered for sale by public tender. Special purposes include capital-intensive industries which intro- duce new technology and cannot be adequately accommodated in more conventional multi-storey flatted factory buildings. These 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 the implementation of 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 Com- pensation) Ordinance. These ordinances provide for the payment of compensation based on the value of the property at the date of acquisition. If agreement cannot be reached on the amount payable, either party can refer the claim to the Lands Tribunal for adjudication.

Where land is acquired in the New Territories, a system of ex-gratia payments applies, with enhanced rates for land situated within the new town development areas and progressively lower rates for land situated outside these areas. In the case of building land, an ex-gratia payment is offered in addition to the statutory compensation. A system of ex-gratia payments also applies in the case of old scheduled lots acquired in the urban area.

   The need for development has continued to grow. During 1989, about 1.2 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 were about $1.8 billion. These projects included the Yuen Long-Tuen Mun Eastern Corridor and Yuen Long West Link; the West New Territories Landfill - Initial Phase in Tuen Mun; the formation and servicing of the North District Hospital site at Fanling; and the North West New Territories Development - Sewage Treatment Plant (Stage I) effluent tunnel/outfall, also at Tuen Mun.

   In the urban areas of Hong Kong Island and Kowloon, about $1.1 billion 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 Tate's Cairn Tunnel and Approaches; the Choi Ha Road Southern Extension; the Kwun Tong By-Pass Phase II; the Wyndham Street and Connaught Road improvements; and the Kowloon Walled City Clearance.

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.

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Registration is effected by means of a memorial containing the essential particulars of the instrument which are then placed on a register card relating to the particular piece of land. Register cards are kept also in respect of individual premises such as residential flats, shops and commercial and industrial premises. The register cards provide a complete picture of the title to each property from the grant of the government lease and are available for search by the public in photostat form on payment of a small fee. The memorials and a complete copy of each registered instrument are kept and are available for search in microfilm form by the public, again on payment of a fee.

The 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, 350 393 instruments were registered at the Land Office, compared with 355 576 in 1988. Detailed statistics are at Appendix 34. At the end of the year, the card index of property owners contained the names of 709 485 owners, an increase of 50 038 over the previous year.

Work on the computerisation of 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 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 the drafting, completion and registration of conditions of sale, the 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

Notable land transactions in 1989 included the grant of a 58.7 hectare site in Sai Kung for the new Hong Kong University of Science and Technology, and the grant of a site of 5.65 hectares in Tai Po for the relocation of the Nethersole Hospital. Prompted by environmental considerations, a significant land exchange was completed which will enable Mobil oil depot opposite Mayfair Gardens in Tsing Yi to be relocated on a site in the south-west of the island.

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The strong growth of the economy during 1988 fuelled demand for prime commercial space in the urban area resulting in rentals and land values continuing their upward climb, particularly in the early part of 1989. There was keen interest at an auction in January for a commercial site of 7 230 square metres adjacent to the Hong Kong Exhibition Centre in Wan Chai, now a well-established business district. Inland Lot 8888, the last major site currently available in Central, was offered for tender in May. The exercise attracted bids from five major developers. Although the closing date for tenders followed closely upon events in China in early June, the tender result was looked upon as a positive indication of confidence in the future of Hong Kong. This confidence was further demonstrated in subsequent land auctions.

   Another interesting site put up for sale by tender was on the Peak, adjacent to the Peak Tram Terminal. The site is to be redeveloped in a way that enhances its importance as a city landmark. It will include residential, commercial and community facilities.

At Tsing Yi 1.93 hectares of land were granted to the Hong Kong Housing Society which upon completion will provide some 1 800 residential flats.

   Three sites with a total area of 3.79 hectares were sold under the Private Sector Participation Scheme and are expected to provide about 3 700 flats.

Eleven sites were granted to the Hong Kong Housing Authority for the development of Home Ownership Schemes. These included a 2.25-hectare site in Wang Tau Hom, a 2.48-hectare site in Lam Tin and a 1.69-hectare site in Tseung Kwan O.

In the New Territories, a 1.277-hectare site in Fanling and a 2.729-hectare site in Sha Tin were offered by tender restricted to holders of Land Exchange Entitlements (Letters A/B). Both sites were for commercial/residential use.

Town Planning

Hong Kong's land area is about 1 074 square kilometres. About 80 per cent of the territory consists of hilly land which is too steep for economical 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 needs of the growing population and the economy, the use of the limited land resources must be planned very carefully to ensure that it is both effective and provides a good living and working environment. The table at Appendix 35 shows the current distribution of land uses in the territory.

Territorial Development Strategy

The Territorial Development Strategy provides general direction for the long-term development of Hong Kong to cater for the target population and associated socio- economic activities, and to produce the highest-quality environment within resource and time constraints. During 1989, further updating of the strategy and review of an outline works programme to provide a guide to major long-term development projects con- tinued and took into account the findings of major on-going studies including Metroplan, the Port and Airport Development Strategy study, and the Second Comprehensive Trans- port study.

Sub-Regional Planning and Rural Planning

In line with the Territorial Development Strategy, detailed sub-regional planning state- ments and district plans are prepared to provide guidance for more detailed land use planning and development control. Resulting from the Rural Planning and Improvement

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Strategy, the non-metropolitan sub-regional planning statements are being reviewed, priority being given to those for the north-western and south-western New Territories. In addition, site search exercises were conducted to identify the most suitable locations for major facilities.

Planning Standards and Studies

The Hong Kong Planning Standards and Guidelines provides a basis for the designation of land for various uses, such as community, recreational, commercial and industrial facilities, the density of different types of residential developments and environmental, locational and site requirements, all of which need to be considered in the preparation of town plans and planning briefs. The document is constantly under review to take account of changes in government policies, demographic characteristics and social and economic trends. Changes to the standards and guidelines are approved by the Land Development Policy Committee. Reviewed during the year were sections related to children's and youth centres, community centres, cooked food centres, markets, refuse-collection points, sports complexes, and parking and loading/unloading facilities for various types of development.

Surveys on land and floor uses covering the whole territory are carried out or updated to provide basic input for the preparation of statutory and departmental plans. Land use surveys were completed for Happy Valley, Tai Tam, Sheung Wan, Ho Man Tin, Cheung Sha Wan, Lei Cheng Uk, Pak Tin, Ngau Chi Wan, Wang Tau Hom, Sau Mau Ping, Lei Yue Mun and Ma Yau Tong. Studies were conducted on special topics such as the planning implications of relaxing airport height restrictions, industrial activities in Tuen Mun, industrial buildings constructed with special requirements, alternative approaches to assessing industrial floorspace requirements, industrial land use in Quarry Bay, open space in private housing estates, and cycle-parking facilities. Regular studies, such as the forecast of future land supply and land requirements, are also carried out to provide information for planning and development of the territory. Other studies completed or in progress include retail facilities in private residential estates, occupation ratios for public and private housing, the Tertiary Planning Unit/Street Block system, and office automation.

Design and Layout

The Design and Layout Unit of the Town Planning Office provides urban design services and advice for the preparation of outline development plans, layout plans and planning applications which require special design and landscaping treatment.

District Planning

At the district level, two types of plans are prepared, statutory and departmental. Their purposes are to control land use, building volume and development characteristics on in- dividual sites to meet the demands of the territory's growing population and to ensure, as far as possible, adequate provision of required community facilities and public utility services.

       The Town Planning Ordinance provides for the preparation of statutory town plans, known as outline zoning plans, by the Town Planning Board, with the aim of promot- ing the health, safety, convenience and general welfare of the community. These plans show areas designated for residential, commercial, industrial, open space, government/ institution/community or other specified purposes. They provide a framework for the development and use of land and serve as a guide for public and private investment.

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They have statutory effect once exhibited for public inspection, and any plans relating to building works submitted under the Buildings Ordinance may be disapproved by the Building Authority if they contravene a statutory outline zoning plan.

   In 1989, the Town Planning Board exhibited 12 statutory outline zoning plans, including one new plan covering Tsuen Wan West and 11 amendment plans for various districts in the territory. During the exhibition of these plans, a total of 101 public objections were received by the board and amendments to some of the plans were made to meet these objections.

At the end of the year, 45 statutory outline zoning plans covered the main urban area as well as Tsuen Wan, Tsuen Wan West, Kwai Chung, Tsing Yi Island, Sha Tin, Tai Po, Tuen Mun, Fanling-Sheung Shui, South Lantau Coast and Ma Wan. Eighteen of them have been approved by the Governor in Council.

   Attached to and forming part of each plan is a schedule of notes setting out the land uses which are permitted as of right in particular zones or which may be permitted with or without conditions on application to the Town Planning Board. The system of application for planning permission allows greater flexibility in land use planning to meet community needs. The ordinance also provides an applicant whose application is refused by the Town Planning Board with the right to request the board to review its decision. During the year, the board considered 282 applications for planning permission and 33 applications for review, as compared with 248 and 42 respectively in 1988.

   An area may be designated a 'Comprehensive Development Area' or a 'Comprehensive Redevelopment Area' on a statutory outline zoning plan. This is intended to promote development or redevelopment in a comprehensive manner, often including the provision of a range of related community facilities and open space. Developments within these areas must have planning permission from the Town Planning Board and applications for planning permission should be in the form of a master layout plan. During the year, five applications for approval of master layout plans were considered by the board.

   Outline development and layout plans are used administratively within the government to guide development. While both are prepared within the framework of the sub-regional planning statements and statutory outline zoning plans, layout plans are usually of local significance and apply to newly-formed land or to areas requiring comprehensive re- development. 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 development proposals and the disposition of sites in greater detail.

Review of Town Planning Ordinance

The Town Planning Ordinance now in force was enacted in 1939. Although amendments have been made to the ordinance over the years, the essence of the legislation remains basically unchanged. The ordinance is now considered to be inadequate to cope with today's rapidly changing socio-economic and political conditions.

   An advisory group set up in 1988 has made recommendations for new planning legislation. These are being studied by the Planning, Environment and Lands Branch with a view to putting forward proposals for new legislation in 1990.

Planning Information

The Central Information Unit of the Town Planning Office provides a channel through which planning information is released to the public. The unit promotes public under- standing of town planning and development in Hong Kong by issuing pamphlets,

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reports and other publications. A revised edition of the booklet Town Planning in Hong Kong was published in January 1989 and is on sale to the public. Briefings, lectures and seminars were arranged to explain to district boards, local residents' associations, educa- tional institutions and other organisations, the concept and process of town planning in Hong Kong and also specific planning issues.

      As the community becomes more concerned about the living and working environ- ment, planning information is increasingly sought. Altogether, 3 700 enquiries from members of the public were handled by or through the unit in the year. Those seeking planning information included professionals, property owners, developers, journalists, academics and students. The unit has also briefed 33 delegates and 257 visitors from overseas on town planning in Hong Kong.

New Towns and Rural Townships

The initial 10-year housing programme aimed to provide proper living conditions for 1.8 million people. To meet this objective, new town development programmes were drawn up in 1974 to co-ordinate planning and construction activities for the provision of land, infrastructure and a full range of social, educational and recreational facilities in the New Territories. Since then, the programmes have been substantially increased and extended into the 1990s. The present population design capacity of the eight new towns at Sha Tin, Tai Po, Fanling, Yuen Long, Tin Shui Wai, Tuen Mun, Tsuen Wan and Tseung Kwan O and rural townships is 3.5 million. At present, more than two million people are living in the new towns.

      The New Territories Development Department was created in 1973 to plan and implement the new town development programmes. Since 1986, the department has extended its role to cover further development in the urban areas and its title has been changed to Territory Development Department.

      The department is constituted on a multi-disciplinary basis and includes professional officers with expertise in civil engineering, town planning, architecture and landscap- ing. They work closely with the Housing Department, the City and New Territories Administration, Urban Services Department, Regional Services Department and other government departments to ensure that development objectives are met economically, efficiently and in accordance with the development programmes.

In addition to participation by other works departments and consultants, the private sector has also been actively taking part in the development of comprehensive housing schemes within the new towns and rural townships.

Tsuen Wan and Kwai Tsing

With the recent completion of Tsuen Wan Bay reclamation off Yeung Uk Road, Tsuen Wan New Town - including Kwai Chung and Tsing Yi - has expanded to cover an area of 3 300 hectares and to house 700 000 people. When all major developments are completed in the mid-1990s, it will have a population of about 720 000 with 290 000 job opportunities in the manufacturing industry.

Since the opening of Tsing Tsuen Bridge to provide an alternative route between Tsing Yi Island and the mainland in late 1987, developments on the island have progressed at a faster pace. The Cheung On and Cheung Fat public housing estates in the north-eastern part of Tsing Yi Island have been completed, providing homes for 43 000 people. The Cheung Hang public housing estate and a private residential housing development, now under construction, will accommodate another 21 000 people. Two other housing estates,

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constructed under the Housing Authority's Private Sector Participation Scheme and by the Housing Society, will be built in Tsing Yi Town Centre providing accommodation for a further 9 000 people.

The construction of Container Terminal 6 is substantially complete and most of the facilities are in operation. Container Terminal 7, scheduled to be completed in 1990, will provide an additional 31 hectares of land for the world's busiest container port.

Several major highway projects, to improve the busy Kwai Chung Road linking Kwai Chung with Kowloon, have been progressing satisfactorily. An additional road link off Kwai Chung Road to the Container Port is under construction to cope with additional traffic resulting from continuing port expansion. The Tsuen Wan section of Route 5, linking Tsuen Wan with Sha Tin, is due to be completed early in 1990. Road improvement schemes on Texaco Road and Kwan Mun Hau Street have commenced to alleviate traffic congestion in Tsuen Wan district.

The basic services to Kwai Chung Park at Gin Drinker's Bay have been completed and the construction of a garden, a miniature golf course and playgrounds will proceed. The completion of Tso Kung Tam outdoor recreation centre has provided further recreational facilities including swimming pools, tennis courts and a jogging trail, in addition to dormitories for overnight campers.

The newly-reclaimed land off Yeung Uk Road is being planned for modern commercial/ residential developments which will revitalise Tsuen Wan town centre. Plans are also being drawn up to implement environmental improvements to, and expansion of, the existing villages to the north of Tsuen Wan.

Sha Tin

The development of Sha Tin began in 1973. The population has since grown from 30 000 to 530 000 and is expected to reach 700 000 by the end of the century, when about 60 per cent of the population will live in some form of government-subsidised public housing. The new town has reached a relatively advanced stage of development and most of the works carried out during 1989 were intended to complete or enhance its infrastructure and provide community facilities.

The increasing population in Sha Tin, Tai Po and North districts continued to cause traffic congestion on Sha Tin's external transport links although much effort has been made to improve the road system. The situation will improve when Route 5, a road tunnel from Sha Tin to Tsuen Wan and West Kowloon, is completed early in 1990. Work has also started on the Sha Tin approaches to Tate's Cairn Tunnel which will provide a road link to East Kowloon by mid-1991.

In the newly-developing areas in Ma On Shan, work has started on the construction of roads and drains to meet the target of accommodating another 200 000 people by the end of the century.

Modification to the Sha Tin Sewage Treatment Works is in hand to further improve the quality of effluent and the water quality of Tolo Harbour. In addition to various other community facilities, work has also started on a 3.6-hectare district open space which will include the territory's first full-size grassed public baseball pitch.

Tuen Mun

Tuen Mun is being developed mainly on land reclaimed from Castle Peak Bay and on platforms formed in the valley between Castle Peak and the Tai Lam hills. In 1989, about 11 hectares were reclaimed for residential and industrial development.

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      The present population of Tuen Mun is about 336 000, including about 247 000 people in nine public housing estates and seven Home Ownership, Middle Income Housing and Private Sector Participation Schemes. Three new rental housing estates are under con- struction and will be completed by late 1990. Over the next five years, seven more Home Ownership and Private Sector Participation Schemes will be constructed. Together, they will provide homes for some 105 000 people, bringing the population to over 500 000 by the mid-1990s.

A regional hospital providing 1 606 beds has been completed. It will be opened in five stages commencing from early 1990.

In the town centre a library, a post office and a garden have been built near the existing government offices. Expansion of the adjacent town park is approaching completion. At Butterfly Beach a comprehensive recreation area and promenade are substantially complete.

      Along the coast to the south east of the town, a marina is being built. This development consists of residential buildings, hotels, shops and recreational facilities and includes berths for 300 boats.

Existing industrial areas provide floorspace for about 2 100 companies and jobs for about 36 000 workers, mainly in plastics, garments, metal, electronics and textiles. Over 60 per cent of the workers employed in these factories reside in Tuen Mun.

The backbone of the transport service, both within the town and to Yuen Long, is the Light Rail Transit System. Extension work is in progress with the construction of reserves for three regional links in Tuen Mun. This started in May 1988 and is scheduled for completion in the latter half of 1990.

Tai Po

Tai Po New Town is situated at the north-western end of Tolo Harbour, about 20 kilometres north of Kowloon. It is well served by the Tolo Highway and two railway stations at Tai Po Market and the new Tai Wo Station which opened in May 1989.

The present population is about 179 000 and is expected to reach 270 000 by the end of the 1990s, with 175 000 in the public housing sector. Tai Wo Estate was partly completed in 1989 and has started to take in residents. Two more public housing estates and home ' ownership schemes are under construction.

      Community facilities to match the increasing population of the new town have kept pace with development and about 40 hectares of land was formed and serviced for various uses in 1989.

Tai Po Industrial Estate, which is planned for industries with relatively high technology, will broaden Hong Kong's industrial base. The estate, with a total area of 70 hectares upon full development, together with other industrial areas in Tai Po, will offer about 29 000 job opportunities. By the end of 1989, about 95 per cent of land in the estate was leased.

The development of recreation facilities in Tai Po is aimed at satisfying both local and regional demand and is enhanced by the area's particularly attractive scenic setting. The strategy for recreational provision is based on the idea of linking important facilities to each other. This will be achieved by the provision of a comprehensive system of cycleways and footpaths and an extensive network of parkland. The existing cycleway linking Tai Po and Sha Tin along Tolo Highway is extremely popular during holidays. Another major cycleway along Ting Kok Road leading to Tai Mei Tuk will be completed in 1990.

Modification to the Tai Po Sewage Treatment Works is in hand to further improve the quality of effluent and the water quality of Tolo Harbour.

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Fanling/Sheung Shui

Despite the fact that Fanling/Sheung Shui New Town is the most northerly of all the new towns and is only about four kilometres from China, it is well linked to the urban areas and other parts of the territory by the railway and the New Territories Circular Road.

The new town is now under rapid development. The present popula. on is about 125 000 and is expected to reach 235 000 by the end of the 1990s. Engineering works are in progress in several areas and about 35 hectares of land were formed and serviced for various uses in 1989.

During the year, Tin Ping Estate Phase 2, Tai Ping Estate and a Private Sector Participation Scheme were completed to accommodate a population of 22 000. The private housing sector has begun to pick up momentum with several commercial/residential developments adjacent to the Fanling and Sheung Shui railway stations now under construction.

On Lok Tsuen is the major industrial area of the new town and the main source of industrial employment for residents. Development in this industrial area is progressing rapidly with 12 industrial buildings completed during 1989. To keep pace with population growth, planning is in hand to provide additional industrial land in the new town.

At Sha Tau Kok, a small township with a population of about 3 700 adjacent to the border with China, work is in progress to upgrade and improve the services, community facilities and environment. Projects completed during the year include Phases II and III of a rural public housing estate for 1 400 persons, a community hall and some open spaces.

Yuen Long, Tin Shui Wai and the North-western New Territories

Yuen Long town has continued to grow since the start of its development in the early 1970s. In 1989, the population of the town stood at 95 000 and is expected to grow to 137 000 by the end of the 1990s.

The Light Rail Transit System between Tuen Mun and Yuen Long became operational in Autumn 1988 and measures to improve traffic flow in Yuen Long were completed shortly thereafter.

   A scheme to reduce the smell and visual impact of the Yuen Long nullahs is about to start, with completion scheduled for 1991.

Yuen Long town park is beginning to take shape since its construction commenced in late 1988. When completed in 1990, the town park will feature extensive areas of woodland, an ornamental lake, a pagoda, an aviary and football pitches.

Yuen Long Industrial Estate provides 67 hectares of serviced industrial land. About 40 per cent of the land has been leased.

   Reclamation is underway for Tin Shui Wai new town using material dredged from the seabed in Deep Bay, and the southern half of the reclamation is almost complete. Construction of infrastructure and the two public housing estates in Tin Shui Wai commenced during the year. The two estates are scheduled for completion by stages from 1992 to 1993 to accommodate some 60 000 people. By the end of 1997, the population is expected to reach about 137 000.

A new road is being built to connect Yuen Long and the south-eastern end of Tin Shui Wai.

Flood protection works for a number of villages in the surrounding low-lying areas of Tin Shui Wai are complete and in operation. A comprehensive village flood protection study for nearly 200 villages in the north-western New Territories has been completed and an implementation programme is now being drawn up.

LAND, PUBLIC WORKS AND UTILITIES

To cope with development in Yuen Long Town, Tin Shui Wai and the Tuen Mun-Yuen Long Corridor, construction of the North West New Territories Sewage Treatment and Disposal Scheme began in the year. The treated effluent will be conveyed through a nine- kilometre tunnel underneath Castle Peak and a 2.6-kilometre submarine outfall pipe for dispersion into the sea at Urmston Road.

      In the Tuen Mun-Yuen Long Corridor, construction work commenced on the first stage of a commercial/residential development at Hung Shui Kiu. This development will provide accommodation for about 5 200 persons with the first population intake in 1993.

Tseung Kwan O (Junk Bay New Town) and Sai Kung

The name of Junk Bay was changed in 1989 to Tseung Kwan O, to accord with the Chinese name - literally meaning 'General's Bay'.

The new township of Tseung Kwan O, when fully developed, will provide homes for over 400 000 by the turn of the century. Phases 1 and 2 of the project, which are already underway, will provide homes for 300 000 people.

In the latest planning, the new town proper will be developed mainly for commercial, residential and community uses with industrial development at the fringes. The develop- ment of a third industrial estate in the territory at the south-eastern coast of the new town will provide 70 hectares of serviced industrial land.

About 220 hectares of land has been formed so far. Much of this has been used for public housing and government facilities, but some will be planned for private residential development. Two public rental housing estates and three home ownership schemes have been occupied. Another public rental housing estate and three home ownership schemes are under construction. Population of the new town had reached 60 000 by the end of the year.

      The civil and building works for the Tseung Kwan O Road Tunnel have been completed and works on its electrical and mechanical installations are in progress. The tunnel is scheduled to be opened at the end of 1990. The Junk Bay Road/Sau Mau Ping Road interchange at the end of the western portal of the tunnel was opened to traffic early in the year.

To the north east of the new town, construction of the northern access to the University of Science and Technology has commenced. A sewage tunnel from the university to the new town sewage system is also under construction.

      At Sai Kung Town, a sewage treatment plant has been commissioned and tested. Reclamation of Sai Kung Creek for a rural public housing estate is about to commence. Planning is in hand for the development of further community and recreational facilities to serve the township and its hinterland.

Islands District

A number of projects to upgrade the living environment and improve general facilities for the rural population and the increasing number of visitors were completed during the year. Particular attention was paid to community and recreational facilities. A reclamation project at the western coast of Cheung Chau, producing sites mainly for community facilities, has been completed and a land formation project for similar use has started in Mui Wo. Drainage improvement works are underway at Tai O.

       Population intake to the Ngan Wan Rural Public Housing in Mui Wo continued during the year. Preparatory work for the construction of Lung Tin Phase 2 Rural Public Housing in Tai O is in hand.

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A study on the development of four Recreational Priority Areas in Chi Ma Wan, Pui O, Cheung Sha and Tong Fuk on South Lantau has been completed. A study on improvement to existing roads and drains in Cheung Chau Old Town was also commissioned during the year.

Urban Development Areas

Six development areas at Aldrich Bay, Siu Sai Wan, Hung Hom Bay, West Kowloon, Central/Wan Chai and Green Island, all involving reclamations in Victoria Harbour, are either being studied or under construction to meet forecast development needs in the 1990s and beyond.

The Aldrich Bay Reclamation will produce about 18 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 the Shau Kei Wan foothills.

The Siu Sai Wan Development will include about 55 hectares of land for industrial, residential, commercial, public housing, government/institution/community and other uses. About 14 hectares of land has been formed.

The reclamation of 36 hectares of land at Hung Hom Bay is due for completion in 1993, 14 hectares of which has already been reclaimed. Residential, office, hotel, open space, transport interchange facilities and marginal expansion of the Kowloon-Canton Railway freight yard are being considered for the whole area.

The West Kowloon Reclamation feasibility study is in progress. The reclamation will form about 330 hectares of land to be completed in phases by 2002 for commercial, con- tainer back-up, residential and transport uses.

The consultancy feasibility study on the Central and Wan Chai reclamation was com- pleted. There will be strong emphasis on the provision of land for commercial and open space uses and for building a trunk road linking the Island Eastern Corridor with Central. The consultancy feasibility study for the Green Island reclamation is well advanced.

The long-term effects of the various proposed reclamations on the hydraulic and water quality in the harbour is being assessed by model studies.

Urban Renewal

The Land Development Corporation (LDC), established in January 1988, is charged with the task of initiating and facilitating urban renewal through negotiating 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. A co- ordinating urban renewal team in the Town Planning Office of the Buildings and Lands Department acts as the main contact point and overall co-ordinator between the LDC and government for LDC projects.

To ensure that urban renewal will be carried out in a co-ordinated manner, the LDC commissioned consultancy studies to identify urban improvement and redevelopment opportunities in the older urban districts. As a result of these studies, redevelopment strategies for the Mong Kok, Yau Ma Tei, Wan Chai, Central and Western districts were formulated. To implement these strategies, comprehensive redevelopment studies for areas within the districts were completed.

  During the year, the LDC entered into a number of initial agreements with selected joint-development partners for eight development/redevelopment projects in various older

IN

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First page of colour section: A Sunday service in progress in the St. John's Anglican Cathedral, one of the oldest of the remaining Western-style buildings in Hong Kong.

Left and immediately below: Followers of Islam congregate in

the cool, marble elegance of the Kowloon Mosque, a gleaming- white landmark in Nathan Road.

Bottom, right: For Hong Kong's Sikh community, the Sikh Temple in Wan Chai provides a tranquil centre for religious and

cultural activities.

Left: The giant, 11-storey high bronze Buddha, overshadowing the Po Lin Monastery on Lantau Island, was completed in October 1989.

Below: Po Lin monks and dignitaries celebrate as the final bronze panel is placed in position on the giant Buddha.

Below and right: With heads freshly shaved, newly-ordained monks worship at the Min Fat Buddhist Monastery in Tuen Mun.

Overleaf: The Taoist god, Lui Tze, is honoured in many ways and on many different occasions. Here an offering is being made at Ching Chung Koon, the Taoist temple in Tuen Mun.

:

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LAND, PUBLIC WORKS AND UTILITIES

urban areas, such as Mong Kok, Yau Ma Tei, Sheung Wan, Wan Chai and the fringe of the Central District. Two redevelopment schemes with site areas ranging from 0.4 to 1.2 hectares were submitted to the Town Planning Board for approval. These schemes will entail the amalgamation of small building lots and under-utilised land for compre- hensive redevelopment to produce a better environment, rationalise land use, improve the community facilities and provide open space. The Town Planning Office prepared planning briefs for each of these schemes. A proposal for the complete renovation of Western Market was submitted by the LDC and agreed in principle by the Town Planning Board.

Environmental improvement schemes were also carried out in the year on sites zoned for open space, government, institutional and community uses in the urban area. About $50 million was spent on the acquisition of private properties for the implementation of these schemes. Considerable efforts were made to assemble project sites already acquired in the Western, Wan Chai and Yau Ma Tei districts.

       Hong Kong Housing Society continued to implement urban renewal schemes. Properties at Sai Ying Pun, Sheung Wan and Yau Ma Tei were acquired and cleared in 1989 at a cost of about $45 million. Good progress was made on schemes at Lower Lascar Row/Lok Ku Road in Sheung Wan and the 'Six Streets' area of Yau Ma Tei. In the 1988-9 financial year, about 450 residential flats were produced in Housing Society schemes.

Acquisition of private streets by the government, to improve control and environmental conditions, is supported by district boards and the general public. There are about 300 'problem' streets in the territory and priority has been given to the acquisition of those where there are safety, traffic, or environmental hazards. Twenty-five streets were selected for acquisition in the year.

Private Building

A towering structure was added to the metropolitan skyline with completion of the angular 70-storey Bank of China building. Nearby, the new Standard Chartered Bank building now rises in a series of terraces above Central, completing a trio of unique banking edifices. On the Wan Chai waterfront, the new Hong Kong Convention and Exhibition Centre is a prime example of how commercial development, in this case hotels, offices and service apartments, can support the provision of a much-needed community facility.

      With the continuing increase in the number of visitors to the territory, budget hotels have mushroomed in off-centre localities, including the industrial heartland.

      At Kwun Tong, Ap Lei Chau and Tsing Yi, the problems caused by the close proximity of massive oil-storage depots to residential areas will soon be resolved with the redevelop- ment of some of these depot sites for more compatible uses.

Given the pressure on Hong Kong's limited land area, greater use of underground space is being considered. A consultant has examined six cavern schemes covering different uses, including bulk storage facilities, warehousing, container-trade back-up facilities, a commercial complex, oil and dangerous goods storage, refuse transfer and a sewage treatment plant. A government group is currently studying the schemes and the associated problems and will draw up a code of practice for the development and use of underground

caverns.

Construction of the Hong Kong University of Science and Technology on a 58.7-hectare site at Sai Kung is well underway. The new university will comprise three schools (Engineering, Science and Business Management) and a general Education Centre for the humanities and social sciences.

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Fewer new building proposals were received during the year. This not only reflects the limited availability of land for development but could also be interpreted as a tendency to slow down building development projects at a time of uncertainty after the events in China. The number of occupation permits issued for completed buildings decreased steadily, numbering 510 compared with 542 in 1988. The amount of usable floor area provided reached 3 620 782 square metres and the total expanded cost of new building works was $16,244 million.

   It is now becoming more widely known that the Buildings Ordinance Office is also involved in controlling works in completed buildings. In overcrowded urban conditions, it is not easy to deal with the perennial problem of unauthorised building works. However, increased publicity has heightened awareness that swift enforcement action will be taken against unauthorised works which are a danger to life or property. Apart from having to remove the works, offenders can be taken to court and may be subjected to heavy fines.

The Buildings Ordinance Office is also tackling the problem of deterioration in the older generation of high-rise and reinforced-concrete buildings. Poor maintenance over the years means that the risk of some of these buildings becoming dangerous is increasing. To ensure that any potentially-dangerous situations are detected, enhanced planned surveys of private sector buildings were commenced in the Buildings Ordinance Office in October 1989. This important development will systematically examine building problems on a district-by- district basis. Using powers available in the Buildings Ordinance, comprehensive clearance programmes will be established which will require the demolition of unauthorised building works, eliminate danger arising from deteriorating structural elements, remove dangerous advertising signs and effect the repair of defective drainage systems.

Public Building

The Architectural Services Department undertakes building projects under the Public Works Programme and the building programmes of the Urban and Regional Councils and the British Forces.

   During 1988-9 the department completed 107 building contracts under various programmes at a total cost, including minor works, of $2,522 million. In addition to this the Maintenance Branch of the department spent $636 million in providing routine maintenance and minor alteration work to about 6 600 government, Urban and Regional Councils' and British Forces' buildings and property. The branch was also involved in providing emergency accommodation for the increasing numbers of Vietnamese boat people at a cost of $300 million. The overall expenditure of $3,158 million shows an increase of 16 per cent over 1987-8 expenditure of $2,705 million.

   Tendering on all types of projects continued to be very active and competitive. During the 12-month period to March 1989, tender prices increased by about 13 per cent, while over the same period labour and basic materials costs rose by 26 per cent and 10 per cent respectively, reflecting the high level of activity and shortage of labour in the construction industry.

The Subvented Projects Division of the Architectural Services Department advises departments providing subvention to private organisations for building, repair and maintenance works. These include subventions provided by the Education, Health, Hospital Services, Technical Education and Industrial Training, and Social Welfare de- partments and the University and Polytechnic Grants Committee. The total government capital commitment for these projects in the Capital Works Reserve Fund is over $7,400 million, with expenditure exceeding $1,000 million during the year. The Lotteries Fund also

LAND, PUBLIC WORKS AND UTILITIES

committed $452 million to subvented projects. These figures do not include private donations or funding. Advice is also given on the provision of government accommodation in private developments. Examples include joint-venture housing, office accommodation and transport interchanges. During the year, some 164 projects were handled with a combined value of over $4,000 million.

       The number of projects carried out for the Urban Council continued to increase, with the completion of sports grounds at Hammer Hill and Kowloon Tsai. Both provide covered spectator stands, grass football pitches and all-weather running tracks. Multi- functional complexes, providing cooked food facilities, markets and indoor games halls, were completed at Chun Sing, Kwun Chung and Java Road. Air-conditioning was pro- vided at the Kwun Chung games hall as an improvement to the standard provision. A major event for the Urban Council was the completion of the Hong Kong Cultural Centre at Tsim Sha Tsui. The complex was handed over in the middle of the year for a series of commissioning concerts, and was officially opened on November 8. The new centre provides concert and theatre facilities of international standards.

Construction of the new Regional Council Chamber and Regional Services Department headquarters superstructure in Sha Tin commenced in April. The project is due to be completed in early 1991.

Medical facilities continued to be expanded with the completion of the 1 650-bed Tuen Mun Hospital, serving Tuen Mun and the western region of the New Territories. Work on the Pamela Youde Hospital in Chai Wan continued during the year and work on the associated Nurses' Training School and staff quarters is due to start in early 1990, with the entire complex scheduled for completion in 1992. The improvement work at Queen Mary Hospital continued, with the main phase of Stage II being completed during the second half of the year. Work progressed on the 700-bed Sha Tin Convalescent and Infirmary Hospital, due to be completed by the end of 1990. Convalescent hospitals in Tai Po and Tsuen Wan are at design stage. The Pamela Youde Child Assessment Centre and School Dental Clinic was brought into operation at the end of the year and public clinics are under construction in Yuen Long, Tseung Kwan O and Ap Lei Chau.

The government continues to construct office buildings for its own use. The first phase of Wan Chai Tower II, comprising the lower 27 floors, was completed for occupation near the end of the year, with the remainder of the 49-storey building due to be finished in mid-1990. Work also commenced on the identical Tower III on an adjacent site which will be completed in 1992. Work commenced on the Tsuen Wan Central Library and government office complex, while work continued on the Eastern Magistracy and offices and the 11-storey government office on the podium of Mong Kok Station, due for completion in 1990 and 1991 respectively.

Several projects were completed for the disciplined services including the New Territories Regional Police Headquarters, the Kowloon Regional Command and Control Centre and the new border crossing point at Lok Ma Chau. Five sub-divisional fire stations and two ambulance depots were commissioned at various locations in the territory. Works are still in progress on Phase 1 of the new depot for the Police Tactical Unit in Fanling and Phase 1 of the redevelopment of Police Headquarters, both due for completion in 1990. In addition, three district police headquarters, three divisional police stations, two marine police bases and 844 departmental quarters for disciplined services personnel are under construction for completion in 1990 and beyond.

During the year, the last phase of the provision of air-conditioning to multi-purpose halls in existing community centres was completed. A total of 44 existing centres are now

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fully air-conditioned, enabling social activities attracting large numbers of people to be held throughout the year and providing improved conditions for users. Fourteen aided and two government schools affected by aircraft and traffic noise received noise abatement treatment at a cost of $26.5 million. This programme will continue in 1990, with a further $39.3 million allocated to 30 schools affected by traffic noise.

In recent years, the Antiquities Section of the Maintenance Branch of Architectural Services Department has become increasingly involved in advising on and restoring some of the historically-important buildings in Hong Kong. A total of $10 million was spent during the year on 33 different historic buildings ranging from the second century Han Dynasty Tomb at Lei Cheng Uk to the 1916 Kowloon-Canton Railway Clock Tower in Tsim Sha Tsui. Two major projects were completed, the first being the restoration of Tai Fu Tai near San Tin. This house was built in 1866 for a prosperous Imperial Government official named Man Chung-luen, and had fallen into total disrepair. It was gazetted as an Historic Monument in 1986. Another major project was the Chai Wan Folk Museum which opened to the public in October. Work involved the restoration of an 18th century Hakka farmhouse, Law Uk, and the construction of an adjacent museum block in similar style. The farmhouse, in traditional two-hall style with adjoining wings in grey Canton bricks with clay tile roofs, is considered to be the finest 18th century Chinese dwelling house remaining on Hong Kong Island.

Survey and Mapping

The Survey and Mapping Office 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.

Geodetic control systems, which are horizontal and vertical control networks covering the whole territory, have been established and maintained to a high degree of accuracy. These systems provide the necessary origin and control points for cadastral (property boundary), topographical mapping, engineering and other surveys.

Cadastral surveying is an important function of the office. It serves both the public and the government by defining property boundaries. In the New Territories the work has been extended from the new towns to include, for example, village house lots, for which an increasing number of boundary surveys are being carried out. Other tasks include the re-establishment of private lot boundaries, on payment of a fee, for redevelopment purposes. The office maintains a comprehensive graphical record of all leasehold and government land boundaries in the territory. However, improvements to the land records are required, especially in areas first surveyed before World War II, and a Land Survey Ordinance is now being drafted to help address these problems.

The wide range of mapping coverage maintained by the office has always provided an important support service in the administration, planning and development of Hong Kong. The most definitive series of maps and the foundation of all other mapping 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), and 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 in Hong Kong, Kowloon and parts of the New Territories are produced for special uses and as a base for the popular guide book Hong Kong Guide - Streets and Places. Demand for leisure maps, in the form of

LAND, PUBLIC WORKS AND UTILITIES

the Countryside Series (six sheets) and the Tourist Guide, remains strong and the design and contents are continually under review to make subsequent editions more attractive to users.

Extensive cartographic and reprographic services are provided for other government departments. These include full-colour mapping for the geological series, base maps for weather forecasting, aeronautical charts, electoral boundary maps, pollution control plans and photo-reproduction and plan copying of all types by the Reprographic Unit. The unit also provides essential back-up for in-house map production and other cartographic activities.

Installation of a computerised Land Information System at a capital cost of $24 million began at the Land Information Centre of the Survey and Mapping Office in late 1989. Conversion of large-scale mapping, land parcel boundaries, land use and zoning data will begin in early 1990. The new system will speed up the updating, processing and retrieval of land data and automate the production of basic survey sheets and cadastral plans. In view of its land information and data analysis capability, the land information system will be a powerful tool to assist decision-making in land administration and town planning. When the system is fully established, it will provide basic land information and a unique geographic reference system to both the public and private sectors in Hong Kong. As more users introduce their own compatible systems, an integrated network can be expected to grow. The system should be in operation for the first urban district in mid-1990 and the whole project completed by mid-1993.

      The Photogrammetric Survey Section (with the Air Survey Unit operating from Royal Hong Kong Auxiliary Air Force aircraft) continues to provide aerial photographs and photogrammetric mapping for engineering design work, volumetric calculations for quarry and controlled tipping operations, environmental studies and specific development proj- ects. The Air Survey Unit is also on call for quick-response photography to assist in the investigation of flooding, air crashes and other emergency situations.

Water Supplies

Full supply was maintained throughout the year. At the beginning of 1989, there were 230 million cubic metres of water in storage, compared with 350 million cubic metres at the start of 1988. The combined storage of Hong Kong's largest reservoirs, High Island and Plover Cove, was 173 million cubic metres. Rainfall for the year was 1945 millimetres compared with the average of 2 225 millimetres. Water piped from China during the year totalled 610 million cubic metres. The salinity of water at High Island remained at about 21 milligrams per litre while at Plover Cove it varied from 71 milligrams per litre at the beginning of the year to 51 milligrams per litre at the end of the year.

      A peak consumption of 2.63 million cubic metres per day was experienced, compared with the 1988 peak of 2.49 million cubic metres per day. The average daily consumption throughout the year was 2.32 million cubic metres, an increase of 5.0 per cent over the 1988 average of 2.21 million cubic metres. The consumption of potable water totalled 845 million cubic metres compared with 808 million cubic metres in 1988. In addition, 112 million cubic metres of salt water for flushing was supplied, compared with 110 million cubic metres in 1988.

The Lok On Pai Desalter was not operated and remained in a mothballed state. With reliable resources available from China and in view of the improved water storage situation it was decided to dispose of the desalting plant.

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Planning studies were completed for the improvement of fresh water supplies to the mid-levels of Hong Kong Island Central, areas in Kowloon West and Cha Kwo Ling and for the increase of water treatment capacity at Ma On Shan and Sheung Shui. Major studies in hand include the increase in water treatment capacity for the western urban areas of Kowloon and Hong Kong Island by providing a new treatment works at Pak Ngau Shek, Tai Po, and the improvement of system capacity in meeting the demand generated from the developments in Ap Lei Chau, Kowloon East and Tseung Kwan O.

   A China Water Supply Branch was established in February to undertake planning, design and construction of the reception and distribution system for the additional water supply from China beyond 1994-5. Agreement on this with the Chinese Authority in December ensures adequate supplies for Hong Kong's expanding needs well beyond the year 2000, to a maximum supply of 1 100 million cubic metres per year.

During the year, commissioning of the eastern cross-harbour main and Stage 1 of Pak Kong Treatment Works and the associated transfer system marked a significant step forward in supplying water to Tseung Kwan O New Town, Kowloon East and Hong Kong Island East. The new treatment works and service reservoir at Cheung Sha on Lantau Island were put into service. The submarine pipeline from the mainland to Ma Wan was also completed.

   Major construction works in progress were the Au Tau Treatment Works and Lung Cheung Road Central Workshop. The latter, which has been scheduled for completion in early 1990, will accommodate all the facilities presently provided at Bullock Lane and Argyle Street workshops, Yau Tong meter workshop and the temporary electric motor workshop at Lok On Pai. Major design works in progress included a new treatment works at Sham Tseng, extensions of Yau Kom Tau Treatment Works and Sheung Shui Treatment Works. Design of additional service reservoirs and pumping stations at Tuen Mun, Ma On Shan and Tseung Kwan O continued.

   The distribution system was continuously extended and enlarged to meet urban and rural demands in the territory. Expansion of the distribution network to supply remote villages in the New Territories continued. Salt water for flushing was supplied to most areas on Hong Kong Island and in the Kowloon peninsula, as well as Tsuen Wan, Kwai Chung, Tsing Yi and Tuen Mun in the New Territories. Design works are in hand for imple- menting flushing supply systems in Sha Tin, Ma On Shan and Tai Po.

   Several mechanical and electrical installations were commissioned during the year. These included Cha Kwo Ling Salt Water Pumping Station, Siu Lek Yuen Pumping Station, New Sai Wan Pumping Station and seven village supply pumphouses. The pumping plants at Au Tau Raw Water Pumping Station, Cheung Chau Pumping Station and Brick Hill Salt Water Pumping Station were uprated to improve water supply to the areas. The Supervisory Control and Data Acquisition system for monitoring water distribution systems on Hong Kong Island (Central and Western Districts) and Lantau Island were commissioned.

A new consumer enquiry centre was opened in Shau Kei Wan, joining the existing centres in Causeway Bay, Stanley, Mong Kok, Kwun Tong, Sai Kung, Sha Tin, Tai Po and Tsuen Wan. The network continued to prove useful and plans are in hand to provide similar centres in the regional depots throughout the territory.

   Satisfactory progress was made in the construction of the regional office for Hong Kong and Islands Region. Planning of new offices and depot facilities for the other four Mainland Regions was completed. Works are in hand to construct the regional office in San Po Kong for Mainland South East Region.

LAND, PUBLIC WORKS AND UTILITIES

Port Works

One of the major responsibilities of the Civil Engineering Office of the Civil Engineer- ing Services Department is to implement and maintain engineering works within Hong Kong waters.

      Projects in progress included reclamation adjacent to Kwai Chung Container Terminals No. 6 and No. 7 to provide land for container port operation, dredging works for deepening the approach channel to Container Terminal No. 7, reclamation of Hung Hom Bay to provide for general urban development and possibly for expansion of the Kowloon-Canton Railway goods yard, construction of 1 100 metres of breakwater for a new typhoon shelter at Shau Kei Wan, construction of piers and a seawater pumphouse for the Western Wholesale Market, and reclamations at Ap Lei Chau North, Siu Sai Wan and Lai Chi Kok Bay.

      Major projects completed in 1989 included the sand replenishment of Repulse Bay Beach and South Bay Beach, and the reclamation at Sam Ka Tsuen.

Geotechnical Control

The Geotechnical Control Office of the Civil Engineering Services Department was established after the landslip disasters of the 1970's, and the control of geotechnical aspects of construction works in the interest of public safety continues to be its foremost duty. Checks were made on 5 453 design proposals in 1989. Landslip preventive work was also carried out on 28 slopes, requiring the expenditure of $77 million in the Landslip Preventive Measures Programme.

       In addition, the office designed and is undertaking work for improvement of the stability and reduction of environmental hazards of the old sanitary landfill at Sai Tso Wan. This work to improve stability and control landfill gas migration is the first of its kind in Hong Kong.

       The presence of cavernous marble beneath sites in the north-western New Territories has posed problems for development. To ensure safe development of buildings in the area, new legislation was enacted in November 1989 to empower the Building Authority with additional geotechnical controls. Resulting from studies in this area, four 1:5 000 scale geological maps were published for the areas around Yuen Long.

       The Geotechnical Control Office operates the Landslip Warning System and a 24-hour emergency service to provide advice on landslips. Staff responded to calls for advice on 606 landslips and related incidents. Advice was also given to government departments on geotechnical aspects of 182 capital works projects. The Geotechnical Information Unit received more than 1 000 enquiries during the year.

       The Hong Kong Geological Survey continues to publish 1:20 000 scale geological maps and memoirs. During 1989, geological maps for San Tin, Yuen Long, and Clear Water Bay were published, together with a geological memoir for the Western New Territories. New geological maps at a scale of 1:20 000 are now available for more than 50 per cent of the territory.

      Three new guidance documents were published during 1989, consisting of two Model Specifications, for Prestressed Ground Anchors and Reinforced Fill Structures, and a Review of Design Methods for Excavation. With the publication in September of the Geotechnical Area Studies Programme Report for the Territory of Hong Kong, the release of the results of the regional 1:20 000 scale terrain classification was completed. The office also completed a study of the potential use of underground space in the form of man-made rock caverns, the results of which are being published.

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Construction Materials

 During 1989, Hong Kong's construction industry consumed some 19 million tonnes of crushed rock aggregates and natural sand, of which about 45 per cent was imported from China. The bulk of internal production comes from seven contract quarries, supervised by the Geotechnical Control Office. During the year the first steps were taken to implement new landscape restoration policies at urban quarries.

Construction of the new Public Works Central Laboratory at Kowloon Bay was completed and the facility will be commissioned in 1990. The government's eight exist- ing public works laboratories carried out some 320 000 tests on construction materials including soil and rock, concrete, reinforcing steel, timber, aggregates and bituminous products.

  The office is engaged in marine investigations for the preparation of an inventory of marine sand and gravel for use in reclamation and building works. Potential sources of fill of about 100 million cubic metres in volume have already been located. The future demand for fill materials for reclamation is expected to be very large, and in mid-1989 the Fill Management Committee was created, to manage and co-ordinate the use of fill resources for future development within the territory. The major tasks are to identify the demand for fill materials for all government, quasi-government and major private projects, to identify sources of land and marine-based fill to meet future needs and to decide on reservation, allocation and utilisation of fill resources in relation to development priorities.

Flood Control

Responsibility for flood control has been transferred to the Director of Drainage Services, supported by the new Drainage Services Department. The Flood Control Unit, set up in 1987 within the Civil Engineering Services Department to co-ordinate various flood-loss minimisation measures, has been restructured as part of the Special Projects Division of the Drainage Services Department. During the past year, with the help of experience gained from typhoons and rainstorms, the extent of the flood-prone areas, mainly located in the north-western and northern parts of the New Territories, has been identified.

  In response to growing public concern on flooding in flood-prone areas, government's efforts have been co-ordinated to effect improvement and remedial measures. These include the short-term measures of desilting natural drainage paths and clearance of refuse and vegetation, medium-term measures of local drainage improvement, and the longer- term measures of regional land drainage projects implemented under the Public Works Programme.

  In conjunction with these measures, the Special Projects Division also conducted exten- sive publicity and public education programmes on flood preparedness and on other precautionary measures which the local community could adopt to limit the extent of flooding. In particular, the public has been urged to avoid interfering with watercourses by indiscriminate disposal of refuse and animal waste, and uncontrolled filling over or near such watercourses.

In order to seek a long-term solution to the problem of flooding, a consultancy has been commissioned to conduct a study on territorial land drainage and flood control strategy with a view to recommending master drainage plans and a comprehensive approach to flood-loss minimisation suitable for local conditions. The findings of the study will be 212 available early in 1990.

LAND, PUBLIC WORKS AND UTILITIES

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 listed on the Hong Kong Stock Exchange 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.

The government's arrangements for monitoring the operations of the power companies were reviewed by a firm of independent 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 im- proved. A special working party responsible to the Secretary for Economic Services was set up to develop the recommendations. The working party's report was submitted to the Executive Council and 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 1989 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 South-east 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 155 primary and over 5 616 secondary substations in its transmission and distribution network. An extra high voltage transmis- sion system at 400 kV to transmit power from the Castle Peak 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 kilo- metres of cable circuits linking the major substations at Tze Wan Shan, Tai Wan and Lai Chi Kok.

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  For the HEC, during the year, two of the four 125 MW oil-fired generating units at the Ap Lei Chau Power Station have been transferred to Lamma Power Station to be driven by gas turbines, while the remaining two units have been decommissioned and will be transferred to Lamma Power Station in mid-1990. At the end of 1989, all generating units at the Ap Lei Chau Power Station have been decommissioned and electricity in HEC's supply areas is completely supplied from the Lamma Power Station which consists of three 250 MW and two 350 MW dual coal/oil-fired units, four 125 MW and one 55 MW gas turbines, making a total installed capacity of 2 005 MW. There are plans to add a further 350 MW unit to Lamma in the early 90'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.

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 three 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 10 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 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 is widely used throughout the territory for domestic, commercial and industrial purposes. Two main types of fuel gas are available: Towngas, distributed by Hong Kong and China Gas Company Limited (HKCG); and Liquefied Petroleum Gas (LPG), supplied by major oil companies based in Hong Kong, namely Shell, Mobil, Esso, Caltex, Hong Kong Oil, China Resources and British Petroleum. Towngas is mainly a manufactured gas, but also includes some substitute natural gas (SNG). The constituents of LPG are butane and propane mixed in approximate proportions of 75 and 25 per cent respectively.

LAND, PUBLIC WORKS AND UTILITIES

The total number of gas customers in Hong Kong is estimated to be in the order of 1.56 million. In 1989, Towngas accounted for 42 per cent of the total gas sold and LPG for 58 per cent.

       HKCG manufactures Towngas at two works, one located at Ma Tau Kok and the other in the Tai Po Industrial Estate. Both use naphtha as a feedstock. They currently have output capacities of 3.6 and 2.8 million cubic metres per day respectively. The calorific value of the manufactured gas is 17.3 MJ/m3 with a specific gravity of 0.56.

       Towngas is distributed through an integrated distribution system to some 652 thousand 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 and Tai Po, and Tsing Yi Island. HKCG 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.

      SNG is distributed by HKCG under the Towngas trademark from temporary plants located in Yuen Long and Tuen Mun specifically operated to serve these 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.

       LPG is imported into Hong Kong. It has a calorific value 49.6 MJ/kg and an approximate specific gravity of 2. About 65 per cent of total sales is distributed to customers, via a dealer network, in portable cylinders. The remaining 35 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.

       Currently there are about 293 LPG dealers operating within the territory. Additionally, 23 LPG site operators manage 250 bulk storage installations under government licensing arrangements. Altogether there are 912 thousand LPG customers.

       In 1982 the government introduced a piped gas policy in order to discourage further growth in the use of gas cylinders in the domestic market. The percentage of domestic consumers using cylinders has fallen to some 38 per cent in 1989.

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HONG KONG's transport policy over the last 10 years has been guided by three main principles: to improve the road system; to expand and improve public transport, and to make more economic use of the roads.

The Second Comprehensive Transport Study has projected the growth in transport demand up to 2001, and has appraised transport infrastructure and policy proposals for dealing with the problems that will be confronted in meeting this demand. The forecasts in the study have formed the basis of the Green Paper on Transport Policy in which pro- posals have been presented for public comment. Consultation on the Green Paper is now complete and a White Paper taking into account public views will be published early in 1990. The basic principles of transport policy have been reaffirmed, but continuing strong economic growth has placed more emphasis on the need to expand transport infrastructure and public transport services, and efficient management of the use of the road network.

The decisions to relocate Hong Kong's International Airport at Chek Lap Kok on western Lantau Island by 1997 and to build additional port facilities in the Western Harbour will have major implications on the transport system in the 1990's and detail- ed planning and implementation studies to integrate the new facilities have already commenced.

Meanwhile progress has continued on the construction of new transport infrastructure. The Eastern Harbour Crossing, comprising road and rail links, was opened to traffic in August and September 1989 respectively. The new Shing Mun and Junk Bay tunnels will be opened in 1990 whereas the Tate's Cairn Tunnel, a private sector project which is aimed to bring relief to congestion in the Lion Rock corridor, will be opened in 1991.

   Other measures are being taken to improve the capacity and safety of the existing road network with the aim of reducing traffic congestion. These include a continuous programme of district and sub-regional planning studies to identify practical improvement measures and a new Area Traffic Control System, linking 170 sets of traffic signals on Hong Kong Island, to improve traffic flow.

Comprehensive Transport Study and Green Paper on Transport Policy

The Second Comprehensive Transport Study was commissioned in 1986 to project the growth in transport demand up to 2001, and to appraise the transport infrastructure and policy proposals for dealing with the various problems that will confront Hong Kong over this period. The study is the start of a continuing planning process. Its computerised planning model will be updated regularly to take account of changes in economic development and planning assumptions up to and beyond 2001. The study has projected

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      significant increases in the vehicle fleet and travel demand between 1986 and 2001 which would outgrow significantly the 37 per cent increase in road capacity by the turn of the century. It identifies new road and railway programmes to cope with the expand- ing demand.

      On the basis of these findings, the Green Paper sets out a proposed strategy to meet the transport challenges up to 2001: improving the transport infrastructure; expanding and improving public transport, and managing the demand for road use. The White Paper to be published in early 1990 will set out government's broad transport strategy and policy intentions for the next decade, taking fully into account public views and the Port and Airport Development Strategy.

Transport Infrastructure

The proposed major road development programmes for the next decade include: North Lantau Expressway and Lantau Fixed Crossing to provide a direct expressway link to the replacement airport at Chek Lap Kok; Route 3 to provide a third harbour crossing and major north-south road link connecting the border with the existing container port and the urban area; the Hung Hom bypass and the Kai Tak connector to provide new east-west road links in Kowloon; Route 16 to provide a new expressway connecting Sha Tin and West Kowloon, and Route 7 and Central-Wan Chai bypass to provide a continuous expressway along the northern and western shores of Hong Kong Island. The recom- mended railway projects are the Airport Railway, an extension of the Mass Transit Railway to Junk Bay, and a rail link connecting north-western New Territories and Tsuen Wan. The total costs of the recommended new highway and rail projects are estimated at $37 billion and $18 billion respectively at 1989 prices.

Public Transport

The objective is to ensure the development of a balanced, safe, economic and efficient network. The major elements include the flexible application of the inter-modal co- ordination policy, making greater use of the efficient mass carriers and improving the quality of public transport services.

Managing Road Use

A package of measures proposed in the management of road use to maintain an acceptable level of mobility for passengers and goods includes introducing modern traffic-management measures and minimising traffic disruptions caused by defective vehicles, traffic accidents, road maintenance and utility works, priority given to the more efficient and essential road users, effective management of travel demands and identifying opportunities for adjusting land use to reduce pressure on the transport system.

Administration

The Transport Branch of the Government Secretariat, headed by the Secretary for Transport, is responsible for the overall policy formulation and the direction and co- ordination of all transport matters. In discharging this responsibility, the secretary is assist- ed on major issues by the Transport Advisory Committee, which advises the Governor in Council on major transport policies and issues. The committee has 18 appointed members, including the chairman and six government members. The secretary also chairs the Transport Policy Co-ordinating Committee which oversees the co-ordination and implementation of policies and projects.

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  The responsibility for the execution of transport policies and measures rests with the Transport Department and the Highways Department.

  The Commissioner for Transport, who heads the Transport Department, is the administering authority for the Road Traffic Ordinance and other legislation regulating public transport operations other than railways. His responsibilities cover road traffic management, including government road tunnels, carparks and metered parking spaces, and the regulation of internal road and waterborne public transport. On these matters, he is advised by the Standing Conference on Road Use and the Standing Committee on Waterborne Transport. He is also the authority for the licensing of drivers, and the registration, licensing and inspection of vehicles.

  The prosecutions unit of the department handles all prosecutions involving safety defects found on buses, disqualification under the Driving Offence Points System and breaches of vehicle safety regulations in government tunnels. The total number of prosecutions conducted by the department in respect of buses and other vehicles was 20, the number of cases for which disqualification was sought under the Driving Offence Points System was 2 050 and 210 prosecutions were conducted in respect of breach of tunnel and other regulations.

  A Transport Tribunal, chaired by an unofficial member and set up under the Road Traffic Ordinance, provides the public with a channel 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

 Transport planning is conducted at two levels, territory-wide and regional. At the territory-wide level, strategic planning looks at the provision of new infrastructure to move people from one region of the territory to another. The Second Comprehensive Transport Study has identified a series of strategic new projects which are now under planning.

At the same time, regional and district planning looks at improvements to road links. within respective areas. Several sub-regional and district traffic studies were completed during the year including traffic studies for north-west Kowloon and Tai Po Road and improvements to the Mid-levels east-west road corridor. Currently underway is the Central Kowloon Traffic Study. Other studies with traffic and transport content completed during the year include the Central and Wan Chai Reclamation Feasibility Study, the Green Island Reclamation Feasibility Study and the West Kowloon Reclamation Transport Study.

Cross Border Traffic

Traffic volume 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 10 000 per day in December 1988 to 10 900 per day in December 1989. Traffic at the Sha Tau Kok crossing increased from 1 700 vehicles per day in December 1988 to 1 810 per day in December 1989. Goods vehicles accounted for 81 and 86 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, 22 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 were substantially improved by the

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opening of the first bridge of the Lok Ma Chau crossing in December 1989 which provides a direct link into the New Territories Circular Road. The second bridge of the crossing will open in 1991. This will increase the processing capacity at the three border crossing points to about 28 000 vehicles per day.

      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 (1988: 1.7 million tonnes) and two million head of livestock (1988: 2.1 million) were brought into Hong Kong by rail. Exports to China by rail accounted for 458 000 tonnes, a slight decrease from the 484 000 tonnes carried in 1988. Conditions for cross border rail passengers were greatly improved by the new terminal building at Lo Wu which was opened in 1987. Cross border passenger traffic on the railway was 26.4 million in 1989. A further extension of the terminal is being planned to cope with the anticipated future growth in traffic.

       In 1989, ferry services between Hong Kong and China, handled by eight operators, carried 3.04 million passengers (3.2 million in 1988). The new China ferry terminal in Canton Road was opened on November 8, 1988, providing much-improved facilities and sufficient capacity to meet demand beyond the turn of the century.

Road Network

Hong Kong's roads have one of the highest vehicle densities in the world. At the end of 1989, there were 345 397 licenced vehicles and about 1 465 kilometres of roads

402 on Hong Kong Island, 376 in Kowloon and 687 in the New Territories. This high vehicle density, combined with the difficult terrain and the dense building development, imposes a constant challenge to transport planners. There are five major road tunnels, over 630 flyovers and bridges, 371 footbridges and 202 subways to keep vehicles and people on the move.

To cope with the ever-increasing transport demands, the Highways Department has embarked on an extensive construction programme, with about 50 road projects under construction and a similar number being actively planned at any one time.

Expenditure on highway projects was about $2,060 million, representing a 25 per cent increase compared with 1988, while another $513 million was spent on improving and maintaining existing roads.

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, 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.

       Another two new strategic routes are under construction. Route 5, a seven-kilometre two-way trunk road connecting Sha Tin with Tsuen Wan, is being constructed at a cost of about $1.3 billion. When completed in 1990, it will form part of the New Territories

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 Circular Road system. Various major sections of Route 6 including the Eastern Harbour Crossing, Kwun Tong Bypass, Tate's Cairn Tunnel and Road T6 linking Tate's Cairn Tunnel to the Tolo Highway are either completed or at an advanced construction stage. This route, expected to be completed in mid-1991, will greatly ease the traffic congestion in the Lion Rock Tunnel. The total cost of the Kwun Tong Bypass is $1.82 billion and for Tate's Cairn Tunnel, $2.65 billion.

  Route 3, another future strategic route which will provide a direct link between the north-western New Territories and Hong Kong Island via Tai Lam Tunnel, Tsing Yi, West Kowloon Expressway and Western Harbour Crossing is under investigation by consultants. A second stage feasibility study to select the alignment of the section of Route 3 from the north-western New Territories to West Kowloon has been completed. A feasibility study for the Western Harbour Crossing also commenced in November 1989.

Improvements to Major Road Networks

On Hong Kong Island, a major project (Route 7) to provide a two-way free-flow facility along Connaught Road from Harcourt Road to Hill Road including the construction of two flyovers at Harcourt Road and Rumsey Street, an underpass at Pedder Street, widening of Connaught Road West and several footbridges were substantially completed in December 1989. The final stage of the Island Eastern Corridor (Route 8) from Shau Kei Wan to Chai Wan was also opened to traffic in October.

In Kowloon, Route 2 will be improved upon completion of work on the Gascoigne Road Flyover in mid-1990. Route 1 has been improved by the completion of the Princess Margaret Road Flyover reconstruction in mid-1989.

  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, which will connect the New Territories Circular Road by a grade-separated interchange, was completed in December.

  A Tuen Mun to Yuen Long Eastern Corridor and a Yuen Long Southern Bypass have been planned in the north-western New Territories, to provide an eastern continuation of Route 2. The Yuen Long Southern Bypass project will cost $290 million, comprising the construction of a three-kilometre, two-way trunk road to bypass Yuen Long town to the south. Construction is due to start in 1991 for completion in 1993. The Yuen Long-Tuen Mun Eastern Corridor project is a two-way trunk road along the eastern side of Castle Peak Road to connect with the proposed Yuen Long Southern Bypass. Construction will start in 1990 for completion in mid-1993.

Environmental Impact of Road Construction

The environmental impact of new roads is carefully considered at the planning stage by the Highways Department. Where practical, such measures as landscaping works, artificial contouring of surrounding hillsides and the installation of noise barriers are considered. The pre-cast decorative concrete panels applied to the retaining wall of the Gascoigne Road Flyover project and the enclosed-type noise barrier for the section of the future Tate's Cairn Tunnel approach roads near Richland Gardens in Kowloon Bay are two good examples of such measures.

Complaints on Road Openings

 Besides serving as carriageways for 'vehicles and pedestrians, Hong Kong's highways also provide space for utility companies to lay pipes and cables for their services to the public.

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To cope with the demand generated by the pace of development in Hong Kong, utility companies often have to open up the carriageways to maintain their services by the renewal, repair, and enlargement of pipes, cables and ducts. On average 85 new road openings are started every working day. These are co-ordinated and controlled by the Highways Department through a permit system, requiring the work to be done to certain standards and in a limited period of time. In order to co-ordinate these works and to minimise disruption, the department holds monthly meetings with the utility companies, police and the Transport Department through a Road Opening Co-ordinating Committee consisting of officials from the companies and the department.

Tunnels

The Lion Rock Tunnel, which links Kowloon to Sha Tin and the north-eastern New Territories, opened in 1967 with a single tube. Traffic volume was then about 6 200 per day. A second tube was added in 1978. Traffic in this tunnel increased to 102 000 vehicles a day by the end of 1989, and during peak hours traffic volume exceeds the tunnel's design capacity, particularly in the morning rush hour. Various traffic management measures have been introduced in peak periods, including tidal flow, signal-controlled merging and some restrictions on access by goods vehicles. These measures have improved traffic conditions, but longer term relief will be afforded by the opening of Shing Mun Tunnel early in 1990 and the Tate's Cairn Tunnel in 1991.

      The Aberdeen Tunnel, opened in 1982, links the north and south sides of Hong Kong Island. The average daily traffic is 48 200 vehicles.

      The toll-free Airport Tunnel provides direct road access from the central area of Kowloon to Hong Kong International Airport, and crosses underneath the airport runway to Kwun Tong. Since the tunnel opened in June 1982, the volume of traffic using it has been increasing steadily and now averages about 44 700 vehicles per day.

      The Cross-Harbour Tunnel, opened in 1972, runs beneath the harbour between Hong Kong Island and Kowloon. An average of 116 800 vehicles used the tunnel each day in 1989. It is one of the world's busiest four-lane facilities. Traffic congestion at the approaches of the tunnel eased in the latter part of the year with the opening of the Eastern Harbour Crossing.

      The Eastern Harbour Crossing, the second cross-harbour tunnel, opened to road traffic on September 21, 1989 four months ahead of schedule. This tunnel links Quarry Bay on Hong Kong Island and Cha Kwo Ling in Kowloon by means of an immersed twin-tube incorporating both road and rail links. By the end of 1989, traffic in this tunnel averaged about 22 700 vehicles per day which represents about 16 per cent of the total daily traffic using the two cross-harbour tunnels.

Traffic Management and Control

At the end of the year there were about 840 sets of traffic signals in operation in the territory, of which 320 were under the control of the Kowloon area traffic system and 170 sets were under the control of the Hong Kong Island area traffic control system.

       With the expansion to Kwun Tong and Wong Tai Sin completed in September 1989, the Kowloon system now covers the whole Kowloon peninsula and the traffic monitoring closed-circuit television covers the road network west of the airport and Kowloon City. The system has been in operation for 13 years, and planning is in hand to replace it in 1993. A consultancy study was commissioned in September 1989 for the investigation and design of the replacement system.

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  The Hong Kong system came into full operation in September 1989 at a total project cost of about $65 million. It controls 170 sets of traffic light signals on the northern shore of the Island from Kennedy Town to Shau Kei Wan. Experiments were carried out with the traffic responsive system called Split Cycle and Offset Optimisation Technique (SCOOT) in parts of Causeway Bay and Central area. Work was also in progress on the im- plementation of the Hong Kong Island Closed Circuit Television System for operation by 1992.

The introduction of computerised traffic control systems to the new towns has also been considered by the Transport Department, and a feasibility study for a new system in Tsuen Wan was commissioned during the year.

Parking

Government has constructed 14 multi-storey carparks. The new Tin Hau and Sheung Fung Street Carparks began operation in August and September respectively, bringing the total capacity to 8 200 parking spaces. These carparks are operated by a private company under a management contract. 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 operates 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 14 200 metered spaces throughout the territory, most of which operate between 8 am and midnight from Monday to Saturday at varying rates. In Causeway Bay, Happy Valley, Western, Tsim Sha Tsui and the Peak, where parking demand is high, meter operation has been extended to include Sundays and public holidays to facilitate a better turnover of parking spaces.

Government now encourages the private sector to construct and run public carparks and identification of sites for underground carparks has started.

Licensing

The number of new private cars registered rose from 24 177 in 1988 to 28 097 in 1989, an increase of 16.2 per cent. In 1982, when the total number of licensed private cars was about 190 000, restraint measures were introduced by substantial increases in private car licence fees and first registration tax. Despite this, and the introduction in 1986 of the compulsory private car inspection for six-year-old cars, the total number of licensed cars in December 1989 was 180 184, a growth of 12.2 per cent from the December 1988 total of 160 579.

The total number of goods vehicles in December 1989 was 123 329 as compared with the December 1988 total of 114 330, an increase of 7.9 per cent. Included in this total were 97 605 light goods vehicles which grew 7.3 per cent compared with 1988. These vehicles are increasingly being used as private passenger-carrying vehicles, and further measures are being considered to control their growth and use.

   At the end of 1989, the total number of licensed vehicles in all classes was 345 397, an increase of 9.2 per cent over the previous year.

The number of new learner-drivers dropped from 6 100 per month in 1988 to 5 733 per month in 1989.

Since the introduction of the Driving Offence Points System in 1984, 5 753 drivers have been disqualified, 73 053 have been served with warning notices and 291 263 have incurred penalty points for committing offences scheduled under the Road Traffic (Driving-offence Points) Ordinance. The figures for 1989 were 2 125, 21 783 and 45 498 respectively.

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Vehicle Examination

The Transport Department operates four vehicle examination centres to conduct annual re-licensing inspections of all public service vehicles, goods vehicles over 10 years old and vehicles used to carry dangerous goods. Pre-registration and type approval inspections for new goods vehicles and public service vehicles and pre-registration inspections of second-hand imported vehicles of all types are also carried out. The construction of a new computerised inspection centre commenced during 1989 and is expected to be operational in late 1990. This new centre will enable inspection capacity to be increased threefold and enable the department to meet its policy objective of annual inspection of all goods vehicles and trailers.

      The annual testing of private cars at 17 designated car testing centres expanded to encompass all cars manufactured before 1983. 78 600 such cars were inspected in 1989 compared to 71 000 in the previous year.

      Airport service vehicles are inspected within the airport precincts, while franchised buses are checked at their company depots. The high standard of franchised bus maintenance continued throughout the year, and few prosecutions for serious defects were found to be necessary.

A review of vehicle examination activities was conducted to assess whether privatisation of routine inspections could be extended to more categories of vehicles during the next few years. This would free some resources to improve and streamline the performance of the fundamental tasks of providing better controls and support to the automotive trade in Hong Kong.

Road Safety

     Traffic accidents involving injuries decreased by one per cent in 1989. During the year, there were 16 200 accidents, of which 4 112 were serious and 323 fatal. This compares with 16 320 in the previous year (4 290 serious, 290 fatal). In-depth investigations using computerised records were carried out at 152 traffic accident blackspots in order to iden- tify accident causes. Remedial measures were recommended at 124 of these locations. Typically, such measures have been shown to reduce accidents by 28 per cent on average. Accident records were searched to identify sites with unusually large numbers of skidding accidents or accidents during hours of darkness. Seven sites were identified for skid resistant surfacing and nine sites for lighting improvements.

Road safety campaigns continued to play an important role in the reduction of traffic accidents. The major themes of the 1989 campaigns were adult pedestrian safety, particularly the elderly, and promoting road safety for drivers, especially light goods vehicle drivers and those with less than two years' driving experience. Four issues of a Road Safety Quarterly were produced. A series of radio and TV announcements and a TV road safety programme were broadcast.

       The Road Traffic Ordinance and its subsidiary regulations have been amended to extend the traffic control and safety provisions of the ordinance to private roads. From July, drivers, motor vehicles, traffic signs and road markings on private roads were required to comply with the ordinance and subsidiary regulations. A Code of Practice for Private Roads was issued as a guide to estate managers.

      At the end of 1989, the Road Safety Association of Hong Kong operated 216 School Road Safety Patrols and school staff patrols were operated at 207 schools. The Road Safety Council, an advisory body, continued to co-ordinate all road safety matters in the territory.

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Public Transport

Hong Kong's public transport system is notable for its variety of systems and operators and its intensity of service. A network of rail, ferry, bus and other road services extends to almost every part of the territory.

Railways

There are five rail systems, including a heavily-utilised underground metro, a busy suburban railway, a modern light railway, a traditional street tramway and a newly- renovated mountainside funicular. The year saw a number of important improvements to these systems.

Mass Transit Railway

The Mass Transit Railway Corporation (MTRC) operates a three-line metro system comprising 43 route-kilometres with 38 stations served by 671 cars formed into eight-car trains. Trains run at two-minute intervals in the morning peak period on the Tsuen Wan line and on the Kwun Tong line to the west of Kwun Tong. Headways in the evening peak are 2.5 minutes on these lines, while on the Island line 2.5 minute headways are maintained throughout the morning and evening peaks.

  In early August the MTRC opened its Eastern Harbour Crossing extension between Kwun Tong and Quarry Bay, together with a new station at Lam Tin. This extension provides a second railway link beneath the harbour, and has brought much-needed relief to the Nathan Road rail corridor, which had previously been carrying up to 86 000 passengers an hour during the morning peak in the southbound direction between Yau Ma Tei and Jordan stations. Total patronage continued to increase, and by the end of the year the MTRC was carrying 1.97 million passengers a day. In relation to the length of the system this meant that it was the busiest underground railway in the world.

The success of the MTRC depends heavily on interchange arrangements between lines and connections with other modes. There are six stations which offer interchanges between lines, while 67 dedicated feeder bus and green minibus routes help to bring passengers to the railway. Multi-storey car parks are also provided adjacent to the stations at Kwai Fong, Tsuen Wan, Sheung Wan, Tin Hau and Central.

Kowloon-Canton Railway

The Kowloon-Canton Railway (British Section) was opened in 1910 and was double- tracked and electrified in the early 1980s. Formerly a government department, it was vested in the Kowloon-Canton Railway Corporation (KCRC) in February 1983.

  Although the 34-kilometre railway caters for through freight trains to and from China and for four daily passenger trains each way between Kowloon and Guangzhou, it principally provides a suburban service to the new towns of the north-eastern New Territories. This traffic has grown substantially throughout the period since the first electric trains were introduced in 1982, and by the end of the year the KCRC was handling 500 000 passenger journeys daily. Peak period average headways range from five minutes at the northern end of the line to every three minutes south of Sha Tin. Passenger traffic is carried in a fleet of 85 three-car, multiple-unit trains which are now assembled in formations of up to 12 cars. A new station was opened at Tai Wo in May, bringing the number of stations to 13. To cope with rising passenger demand a programme of improvements to other stations continued during the year, providing for platform awning extensions, and additional automatic gates and money-changing machines.

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Domestic train fares were increased by an average of seven per cent from May 1, 1989 and the ordinary adult fare now ranges from $2.00 to $6.00, according to distance travelled. Train patronage is helped by interchanges with other operators. The busiest station is at Kowloon Tong, where connection is made with the MTRC and numerous feeder bus routes. Feeder buses and green minibuses also serve most other stations, and during the year the KCRC introduced increases in the number of its own free feeder bus routes.

      Further improvements are planned for the KCRC in the near future. During the year reconstruction of the Ho Tung Lau workshops began, which, when completed in 1993 will provide better maintenance facilities and accommodation for additional trains. Nine six-car trains will enter service in 1990-1 and another seven will be delivered in 1991-2.

Light Rail Transit

In addition to its main line, the KCRC owns and operates the 23-kilometre Light Rail Transit (LRT) system in the north-western New Territories which commenced operation in September 1988. Initial services comprised five routes with a sixth route introduced in June 1989. There are 41 stops and traffic is handled by 70 light rail cars operated either singly or in pairs. By the end of the year 226 700 boardings a day were handled on the LRT and on its feeder bus services, which are also operated by the KCRC within a transit service area extending from Tuen Mun to Yuen Long. Unusually for Hong Kong, an 'open' fare system is employed, with zonal fares providing free transfers from one route to another and to and from feeder buses.

      The LRT system is constructed largely on roadside reserves, although there is some tramway-style street running. Unfamiliarity with rail operation in and alongside the roads led to a number of accidents during running trials and shortly after the 1988 opening. Consequently a number of measures have been put into effect to improve and make the public more alert to the system.

The system will be further extended by three links in Tuen Mun to be completed at the end of 1991.

Tramways

Electric trams have operated on Hong Kong Island since 1904. Today, Hongkong Tramways operates six overlapping services over 13 kilometres of double track between Kennedy Town and Shau Kei Wan and along almost three kilometres of single line around Happy Valley. The 163 trams comprise the only all-double-deck tram fleet in the world. During the year a rebodying programme continued, and by the year's end over half the fleet had been rebodied or refurbished. Tramway patronage fell slightly during the year to 349 500 boardings daily, and fares remained unchanged since 1983 at 60 cents per adult trip. In March, the depot at Sharp Street was closed, being replaced by a new stabling depot at Sai Wan Ho and also the new Whitty Street depot and the workshops in Sai Ying Pun.

Funicular

Hong Kong's other 'tramway' is actually a cable-hauled funicular railway operated from Garden Road in Central to Victoria Gap by the Peak Tramways Company. The 1.4-kilometre line began operation in 1888 and climbs 373 metres on gradients as steep as one-in-two. The service caters largely for sightseers but also serves Peak district commuters.

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The year saw major modernisation work on the funicular, and the line was closed for six weeks in the summer. The modernised line was re-opened in early August with a new haulage system, semi-automatic operation and two new twin-set tramcars built in Switzerland. The new equipment offers more capacity and a faster ride, resulting in increased ridership from an average of 7 156 passengers a day before modernisation to 10 800 daily since re-opening.

Road Passenger Transport

Despite the growth of rail services, road passenger transport still accounted for two- thirds of all public transport journeys. Of the journeys made by road, over half were on franchised buses, with the remainder being handled variously by non-franchised buses, green minibuses, public light buses and taxis.

Franchised Buses

The standard and capacity of franchised bus services continued to improve through effective planning and co-ordination. There are three franchised bus companies which together carried 3.5 million passenger boardings a day on a network of 340 regular routes.

The largest bus operator is the Kowloon Motor Bus Company (KMB), which ran 227 bus routes in Kowloon and the New Territories in addition to 21 cross-harbour routes operated jointly with the China Motor Bus Company (CMB) and one cross-harbour route of its own. KMB also operates 'Airbus' services to and from the airport, comprising two routes to Hong Kong Island and one within Kowloon.

The KMB fleet at the end of the year comprised 2 849 registered vehicles, including 2 729 double-deck buses, 31 single-deckers, 26 full-size coaches and 63 small coaches. As well as further expanding its fleet of air-conditioned small coaches the company continued to experiment with an air-conditioned double-deck bus, and during the year an order was placed for 20 air-conditioned double-deckers. Expansion of the network continued, much of this being in the new towns of the New Territories. During the year three new express services, six intra-new-town services and nine routes to Kowloon were introduced. In 1989 the company carried 975 million passengers and operated 201 million vehicle-kilometres, compared with 1081 million passengers and 215 million vehicle-kilometres the previous year. The company's franchise extends until August 31, 1997. KMB's fare increase of 19 per cent was introduced in January 1989.

Bus services on Hong Kong Island are provided by the China Motor Bus Company, which operates 84 island routes and, jointly with KMB, 21 cross-harbour routes. At the end of 1989 CMB's fleet comprised 1 004 double-deckers and two single-deckers. These vehicles carried 299 million passengers and travelled 50 million vehicle-kilometres during the year compared with 317 million and 53 million respectively in 1988. The company continued to expand its fleet of three-axle double-deckers during the year, 44 were added and 42 more were under construction or on order. In January 1989, the company's franchise was extended until August 31, 1993. The fares were increased by an average 20 per cent in July 1989.

  The New Lantao Bus Company (NLB) operates seven regular and two recreational routes on Lantau Island. NLB's fleet comprised 56 buses at the end of the year, of which 13 were double-deckers. During the year the company carried 8 200 passengers on an average weekday, but on Sundays and public holidays recreational travel raised average ridership to 20 000. During the year the company called for tenders to construct a new depot at Mui Wo and it hopes to complete this in 1990.

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Minibuses

Hong Kong's minibuses are licensed to carry a maximum of 16 seated passengers. There were 6 750 minibuses in 1989. Of these, 4 350 were public light buses (PLB), and 2 400 private light buses. The PLBs are authorised to carry passengers at separate fares. The private light buses are only authorised to carry group passengers and the collection of fares is not permitted.

The operation of PLBS is regulated by a passenger service licence. Those in green livery provide services according to official schedules. In 1989, there were 1 295 of them operat- ing on 170 approved routes, each with fixed fares and time-tables. They carried 695 000 passengers a day. Red PLBs operate without a schedule. They do not have fixed routes, timetables and fares. In 1989, there were about 3 046 red PLBs which carried 1 065 000 passengers daily.

In line with government policy to convert more PLBs to operate on scheduled routes, 14 new scheduled routes have been identified in 1989. A new green minibus selection exercise would be conducted in 1990 for competitive bidding by minibus operators.

Taxis

The quota governing the maximum number of taxis that may be licensed in the urban area and the New Territories was increased following a review of the operation of the trade and demand for taxis in 1989. At the end of 1989, there were 14 600 urban taxis, 2 738 New Territories taxis, and 40 Lantau taxis, carrying an average of 1 045 700, 175 500 and 1 100 daily passengers respectively.

       During the year, new licences were issued for 200 urban taxis and for 100 in the New Territories.

In 1989, fare increases ranging from 11 per cent to 20 per cent were approved on all three types of taxis. The operating boundary of New Territories taxis was relaxed so that they could serve Ma On Shan new town.

Non-franchised Bus Operators

      Residents' services were introduced in 1982 to meet the transport needs of relatively isolated residential areas without adequate access to franchised bus services. Residents' organisations may request a non-franchised bus operator to apply for such a service, which is then vetted and authorised under the operator's passenger service licence. Residents' services must operate in accordance with approved schedules of service, which also specify the routeing, timetable, stopping place, and, in some cases, the fares. Most of these services operate during peak hours. A licence is normally valid for one year and may be renewed if there is a continuing need for the service.

At the end of the year, there were 25 residents' services carrying 28 000 passenger trips a day. Vehicles used on these services varied from small 24-seat coaches to double-deck buses; during the year double-deck air-conditioned coaches were introduced on routes from a housing development in Sha Tin and an innovation was introduced by serving breakfast on board.

       Apart from the scheduled residents' services, non-franchised buses and light buses operate to serve the needs of factory employees, tourists and schoolchildren on a contract hire basis. At the end of December 1989, the licensed fleet of non-franchised buses totalled 2 600 vehicles, of which 18 were double-deckers.

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Ferries

 Ferry services are still an important way of crossing the harbour, and essential for regular and recreational trips to and from Hong Kong's outlying islands. The majority of ferry travel is provided by two franchised operators - the Hongkong and Yaumati Ferry Company Limited (HYF) and the Star Ferry Company Limited.

  The Star Ferry Company operated 14 vessels across the harbour and, during the year, it carried 40 million passengers on its four routes. An 11 per cent fare increase was approved, effective from July 2, 1989.

  In 1989, the parent company of HYF was re-named Hong Kong Ferry (Holdings) Company Limited. HYF owned 76 vessels and operated 26 ferry services, including passenger and/or vehicular services across the harbour, services to outlying islands, and vehicular charter services to Lantau. They carried 199 700 passengers and 13 800 vehicles daily. An average 19.5 per cent fare increase was approved in November 1989.

  In 1989, the patronage of the company's cross-harbour ferry services continued to be eroded by new cross-harbour bus routes and the Mass Transit Railway. With the extension of the MTR Kwun Tong line across the harbour to Quarry Bay in August 1989 and the addition of new cross-harbour bus routes via the Eastern Harbour Crossing in September, there was further competition for cross-harbour travel. The further development of HYF's inner harbour ferry services has been examined by the Transport Department.

  In addition to franchised ferry routes, nine minor ferry services were operated to or between outlying islands by six licensed operators. These were supplemented by kaitos, or local village ferry services, which were licensed to serve remote, coastal settlements. During the year, 123 kaitos were operated by 103 operators.

Port Development and Shipping Services

The port of Hong Kong has a sheltered, natural deep-water harbour and is navigable throughout the year. It is Hong Kong's most important natural resource.

Today Hong Kong is one of the world's busiest ports. Vessels of all shapes and sizes criss-cross the crowded harbour. During 1989 a total of 228 500 ships and craft used the waters of the port. This equates to one arrival or departure every 2.3 minutes. Ocean-going ships from more than 200 lines, flying the flags of 70 countries, trade between Hong Kong and world ports.

  In addition to administering the port, the Marine Department is responsible for all aspects of Hong Kong's maritime affairs. The department employs 1 636 staff. In global terms, costs are fully recovered by fees and charges and the annual revenue and ex- penditure in 1989 was about $800 million.

There has been a trend by many governments to disengage from direct delivery of services to the public. The Hong Kong Government has always taken the view that it should not generally undertake activities which can be done commercially and thus more appropriately by the private sector. In many ways Hong Kong leads the world in this respect and the port is a good example.

  The Marine Department is therefore not a Port Authority in the accepted sense, and many of the port facilities are privately owned and operated. The principal purpose of the department in relation to the port is to ensure that conditions exist for ships to enter port, work their cargoes and leave as quickly and safely as possible. The department must also consider overall port planning and development and reconcile as far as possible the often conflicting interests of terminal operators, port users and land interests.

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       The Director of Marine is the Pilotage Authority and is advised by the Pilotage Advisory Committee. The Pilotage Authority has widespread powers regarding the operations and dues charged by the pilots, although the pilots themselves operate in the form of a private company. Tugs are also privately owned and operated.

The decision was taken in 1981 to proceed with a phased programme of compulsory pilotage. In 1985 this was applied to vessels of 10 000 tons plus. In 1987 this was further extended to vessels of 5 000 tons plus. The final phase is expected to come into effect sometime in 1990, when all ships of a certain gross registered tonnage, yet to be specified, will be required to engage the services of a Hong Kong-licensed pilot when navigating in the pilotage area.

Co-operation and consultation with the shipping industry has always been an important factor in Hong Kong's success. The Port Committee advises the Director of Marine on port policy. The Port Operations Committee is concerned with the everyday operation of the port. The Container Terminal (Land Use) Committee deals with all land-related issues relevant to container terminals. These committees are attended by a cross-section of ship- ping, government, commercial and port interests.

In 1989, some 18 900 ocean-going vessels and 93 600 river-trade vessels called at Hong Kong and loaded and discharged more than 86 million tonnes of cargo. This included 62 million tonnes of general goods from ocean-going vessels, of which 50 per cent was containerised cargo.

A variety of harbour craft play a significant role in the efficient running of the port. During the year over 1 700 lighters and 400 motor cargo boats transported cargo to and from ocean-going ships moored at the anchorages and harbour buoys in mid-stream in the harbour, and private or public cargo working areas ashore. Floating heavy-lift cranes of up to 350 tonnes lifting capacity provided cranage service to handle heavy cargo with weights exceeding the capacity of ships' gear. Tugs were available round the clock to assist berth- ing and unberthing operations. Waterboats and fuel-oil barges provide replenishment if necessary to prepare the ships for voyages ahead. Transportation of ships' agents, crew, stevedores and repair gangs to and from ships in the harbour and service for delivery of provisions are available from various public landings around the harbour.

The Marine Department provides a free service for collecting daily domestic refuse from ships. At a nominal charge, the department's contractor also provides a service to collect and dispose of trade refuse from ships.

The port of Hong Kong handled 4.44 million TEUS (20-foot equivalent units) in 1989. Expansion at Kwai Chung container port continued apace with Terminal 6 being completed in May providing a 24-berth terminal on 29 hectares. Meanwhile work on Terminal 7 was also proceeding ahead of schedule with the first berth becoming operational late in 1989 and completion due in 1990. This will provide another three berths on a land area of 31.5 hectares.

With the success of an 18.6-hectare multi-storey container freight station and godown constructed on Terminal 3, other operators are also progressing with similar expansion plans. These multi-storey facilities maximise land use.

Public cargo handling facilities administered by the Marine Department are provided at Wan Chai, Western District, Sheung Wan, Yau Ma Tei, Kowloon Bay, Kwun Tong, Sham Shui Po, Cha Kwo Ling, Chai Wan, Tsuen Wan, Rambler Channel, Tuen Mun and Ap Lei Chau. Lighters, motor cargo boats and river trade coasters use these areas to receive and deliver cargo to and from lorries or to bridge the sea-land interface. Public cargo handling facilities are in great demand and are highly utilised. Waiting time at the areas

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 substantiated the government's policy of provision of additional public cargo working areas throughout the territory to maintain and improve swift and efficient internal cargo movement.

  Other wharves and terminals provided and operated by private enterprise are capable of accommodating vessels up to 30.5 metres in length with draughts up to 16.5 metres.

  During 1989 the government appointed a multi-disciplinary team of international con- sultants to carry out a Port and Airport Development Strategy Study (PADS). The main purpose of the study was to provide a long-term strategy to ensure that the port and air- port facilities provided for Hong Kong by the year 2011 are in line with the demands of both air and shipping traffic. The second purpose was to address the more short-term demand for additional container terminals and to ensure that they are planned so that they do not compromise the long-term strategy.

  As Hong Kong's existing port and airport are close to maximum capacity the PADS study recommended major port development, in hitherto unused parts of Hong Kong. The proposals make provision for the establishment of facilities to handle growth in break-bulk cargo, in addition to containerised cargo.

  (Details of the Port and Airport Development Strategy are illustrated in the end-paper map at the end of this Report.)

  The China Ferry Terminal at Tsim Sha Tsui was opened in early November 1988 and most China services now operate from there. Following public demand, a limited number of services to Macau started operating from the China Ferry Terminal in the spring and after a slow start, are gaining in popularity. Passenger throughput from June onwards declined and for the year ending December 31, 1989, was about 10 per cent less than expected.

  At the Macau Ferry Terminal in Central, passenger growth remained steady at five per cent per annum. A service to Shekou, China, has operated successfully from Central during the year. It is intended that more services to China will operate from the Macau Ferry Terminal in the coming months.

  During the year, 12.6 million passengers were carried between Hong Kong and Macau and 2.9 million between Hong Kong and China, by dynamically-supported ferries and conventional ferries operating from Central, Tsim Sha Tsui and Sham Shui Po.

  The Marine Department provides and maintains 75 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 are special typhoon moorings to which vessels may remain secured during cyclones, so improving 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 An- chorage, these services are available only between 6 am and 6 pm 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.

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 implementation phase of the Hong Kong Vessel Traffic System (VTS), which commenced in January 1989, was completed late in 1989. Upon completion, the VTS, whose purpose is to improve the safety of and expedite navigation within the waters

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of Hong Kong, was put into a preliminary voluntary participation mode intended to last for a period of 12 months, by which time participation will be mandatory in accordance with new legislation which will augment existing provisions. The VTS replaced and took over the functions of the Port Communications Centre, including its control functions.

      The department's launches patrol the main harbour area and its approaches. They are in continuous radio contact with the Vessel Traffic Centre, thereby enabling them to respond to any emergency and fulfil the executive functions of the duty officer in the 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 emergency communications 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 in the form of vessels, aircraft (both fixed and rotary wing), and additional assistance can be obtained from the Rescue Co-ordination Centre 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 sophis- ticated 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 1989, the association members' fleet stood at 1330 ocean-going vessels totalling 64.5 million deadweight tons or 35.9 million gross registered tons, some 10 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 stands at 175 local companies which employ over 20 000 persons. The association has undertaken a major role in preparation for the new autonomous Hong Kong Register of Shipping.

      The regulatory control, safety standards and international certification of ships registered in Hong Kong is the responsibility of the Shipping Divison of the Marine Department.

      Hong Kong remains a British port of registry, with a total fleet of 6.4 million gross registered tons on the register last year. Statutory surveys for these vessels are undertaken worldwide by surveyors of the Shipping Division for the issue of certificates in accordance with the requirements of international conventions relating to maritime safety and pollution prevention as promulgated by the International Maritime Organisation and International Labour Organisation. The division also provides a similar service to United Kingdom and foreign ships visiting Hong Kong.

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  A plan-approval and survey service is also provided for local shipping, including one of the world's largest fleets of high-technology fast passenger boats (dynamically-supported craft comprising jetfoils, hydrofoils, side-wall hovercraft and jetcats). With minor exceptions, vessels plying within the waters of Hong Kong need to be licensed under the Shipping and Port Control Ordinance and these too are inspected and issued with certificates. A major review of the procedures and requirements for local craft was under- taken during the year, which will be developed into a rationalised approach to the safety and control of the many disparate types of craft operating in Hong Kong.

  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 international 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 conventions.

  A current major concern of the government and Hong Kong shipowners is the falling recruitment of Hong Kong seafarers. This is being examined by many sectors of the local shipping community to safeguard the future of the shipping industry.

  As an important centre for the recruiting of seafarers, the Marine Department Seamen's Recruiting Office and the Mercantile Marine Office register and supervise the employment of about 5 000 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 permanent Seamen's Training Centre at Tai Lam Chung in the New Territories 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.

  As a British port of registry ships registered in Hong Kong presently adopt the same standards in key areas of construction, safety and manning as those registered in the United Kingdom. This is generally accomplished by the extension of the United Kingdom legislation to Hong Kong. Until now, Hong Kong has relied on the United Kingdom Department of Transport to determine shipping policy and for the formulation and implementation of international conventions including those drawn up by the Inter- national Maritime Organisation.

Reliance on the United Kingdom for shipping administration cannot continue beyond 1997 and the Sino-British Joint Declaration provides for the future Hong Kong Special Administrative Region to maintain a shipping register under its own legislation. It is therefore necessary to reform the existing legal and administrative systems concerning registration and shipping, to ensure that Hong Kong has its own register.

  The general principles for the new Hong Kong shipping register were agreed in 1986 by the Sino-British Joint Liaison Group. A Steering Group, with representatives from the government and all sectors of the local shipping industry, was formed in March 1987 to advise on detailed proposals for the establishment of the new shipping register and detailed proposals on legal and administrative aspects of the register, technical standards, and training and certification of seafarers have been submitted to the Hong Kong Government. Drafting the legislation for the new shipping register has begun and the register is expected to open as planned in the latter part of 1990.

  The Marine Department Technical Policy Division is responsible for the development of technical standards and legislation relating to the establishment and administration of the new Hong Kong shipping register. This includes computerisation of the register and the development of technical policy necessary to ensure that the standards of the relevant

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international conventions are translated into legislation and applied to Hong Kong ships. The Technical Policy Division also provides representation for Hong Kong at technical conferences on matters including maritime safety, pollution and manning, in association with representatives invited from Hong Kong Shipowners' Association.

The enactment of the United States' Tax Reform Act 1986 on foreign shipping has posed problems for both the existing and future Hong Kong shipping register as well as for a large number of Hong Kong shipowners. The Act imposes tax on all foreign shipowners whose ships trade with the United States. To overcome these problems, the Hong Kong Government has entered into an agreement with the United States for reciprocal tax exemption on shipping income. The agreement was signed in August 1989 and will take effect retrospectively from January 1987.

Civil Aviation

At the opening session of the Legislative Council in October, the Governor announced the government's intention to proceed with plans to develop a replacement airport at Chek Lap Kok off the north coast of Lantau Island, in concert with plans for future port and urban development. The target date for the opening of the new airport is June 1997.

This announcement followed consideration of the results of a number of consultancies and studies which were completed during 1989. The findings of the Kai Tak Development Potential Consultancy indicated that even with a large-scale expansion scheme the existing airport would not be able to meet forecast air traffic demand much beyond the mid-1990's. Further studies were commissioned to establish the preferred site for a replacement airport. The Alternative Replacement Airport Sites (ARAS) Consultancy established that a two-runway airport could feasibly be developed on a reclaimed artificial island in the Western Harbour area of Hong Kong west of Lamma Island. However the Chek Lap Kok Master Plan Review Consultancy confirmed the findings of earlier studies which proposed Chek Lap Kok as the preferred location for a replacement airport for Hong Kong.

      (Details of the Port and Airport Development Strategy are illustrated in the end-paper map at the end of this Report.)

      At the Hong Kong International Airport, which is administered by the Civil Aviation Department, a number of new works projects were launched to cope with the forecast demand in traffic.

To enable the airport to accommodate projected growth the government has accepted in principle the recommendations of a consultancy study on the capacity and development potential of Kai Tak Airport. The consultants recommended a comprehensive package of improvements and the introduction of 'demand management'. As a result a phased implementation programme was initiated to provide a broad range of expanded facilities to handle up to 24 million passengers a year.

To meet the forecast requirement for aircraft parking positions, work commenced in September 1989 on an extension to the cargo and long-term aircraft parking facilities. The first phase, which is expected to be completed in September 1990, will provide three additional B747 parking positions. Meanwhile, work on the extension of the passenger aircraft parking apron was completed in September 1989, providing additional parking spaces for two B747 jets or up to six smaller aircraft.

      Work commenced in November to construct a further two floors on the existing multi-storey carpark. This would provide an additional 500 car parking spaces by mid-1991.

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  An advanced computerised radar data processing and display system to enhance the efficiency of the Hong Kong air-traffic control services was commissioned in April. A set of new air-traffic control simulators to match the new system was brought into use in October.

  A second air cargo terminal has been under construction by the Hong Kong Air Cargo Terminals Limited (HACTL) during 1989. With its completion scheduled for the middle of 1991, it will more than double the existing air cargo-handling capacity of about 720 000 annual tonnes.

In June 1989, Common Use Terminal Equipment (CUTE) for passenger check-in was fully installed in the passenger terminal. The introduction of CUTE has improved check-in processing and provided flexibility in check-in counter utilisation.

  Improved passenger facilities were provided with the opening of a new restaurant and snack bars, together with other retail facilities in the Stage V extension to the passenger terminal.

In November, a 'Disabled Aircraft Recovery System' was delivered. It comprises a series of sophisticated, self-powered trailers which will significantly enhance the ability of the Civil Aviation Department to speedily remove an aircraft disabled on the runway.

  Planning work continued on major long-term improvements to the passenger terminal building. Work is expected to commence in April 1990 and will include refurbishing of the air-conditioning, check-in desks and the departure baggage system.

The latest version of the B747, the 400 series, arrived at the Hong Kong International Airport in March. The aircraft is notable by its wingspan of 211 feet, an increase of 16 feet over the standard B747.

On May 21, after the passage of Typhoon 'Brenda', all air traffic records were broken when the arrival of the previous day's diverted and rescheduled flights, added to the normal scheduled traffic, generated 385 aircraft movements and 60 853 passengers in an 18-hour period.

Passenger throughput and cargo traffic continued to grow in 1989. There were 16.2 million passengers, representing an increase of six per cent over the total of 15.3 million in the previous year. General cargo, including manufactured goods imported, exported and re-exported by air, totalled 730 000 tonnes compared with 694 000 tonnes in 1988. The value of airborne goods totalled $234,196 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 29 per cent and re-exports by air about 16 per cent in value terms. The United States remained the major market for exports and re-exports by air, accounting for 42 per cent and 20 per cent respectively.

An increase of 8.4 per cent in aircraft movements was recorded, bringing the annual total to 94 300. More than 80 per cent of the aircraft calling at Hong Kong were wide- bodied types.

The year saw the re-introduction by Air Niugini of scheduled air services between Port Moresby and Hong Kong in March, the takeover of British Caledonian Airways' services to Hong Kong by British Airways at the end of March, and the takeover of Flying Tigers in August by Federal Express.

Throughout 1989, Cathay Pacific Airways (CPA) continued to develop its frequency and capacity to major cities, commencing scheduled services to Manchester in October. To cope with the increasing scale of its operations, CPA acquired three L1011s, two B747-400s and one B747 freighter. By the end of 1989, its fleet comprised 17 L1011s, eight B747-200s, six B747-300s, two B747-400s and three B747 freighters.

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Hong Kong Dragon Airlines (HDA) commenced scheduled services to Dhaka and Kathmandu in February. The airline continued to operate scheduled services to Phuket, Utapao and Kagoshima and non-scheduled passenger services to a number of cities in Asia. In May the company acquired its fourth B737.

      Air Hong Kong (AHK) acquired a second B707 freighter and continued to operate non-scheduled cargo services between Hong Kong and a number of destinations, includ- ing Bangkok, Singapore, Melbourne and Sydney. In November, the airline commenced a scheduled all-cargo service to Manchester.

The Hong Kong/Brunei Air Services Agreement, the fourth in a series of air services agreements which Hong Kong aims to conclude in the coming years, was signed in Hong Kong on January 9, and entered into force.

      Subsidiary legislation was made under the Civil Aviation (Aircraft Noise) Ordinance for the control of noise emitted by aircraft engines and aircraft movements at night. The new legislation came into force in November.

      In 1989, the Air Transport Licensing Authority granted a total of 10 licences to Hong Kong airlines: four to Cathay Pacific Airways, two to Hong Kong Dragon Airlines and four to Air Hong Kong. Together with those granted in previous years, this meant that, at December 31, Cathay Pacific Airways held licences to operate scheduled services to 57 cities in 29 countries, Hong Kong Dragon Airlines was licensed to serve 48 cities in eight countries and Air Hong Kong was licensed to operate scheduled all-cargo services to 15 cities in 11 countries.

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HIGH priority is given by the Hong Kong Government to 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 provides advice and recommenda- tions 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 detection, and the maintenance of public order.

  In anti-narcotics operations the police maintain close liaison 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 promotes greater community awareness of the evils of corruption.

  The Correctional Services Department administers the penal system and runs cor- rectional and rehabilitative programmes. The department manages closed centres and detention 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, continues to work efficiently on fire protection, fire fighting and rescue work, and ambulance service.

Fight Crime Committee

In 1989, the Fight Crime Committee continued to reflect the high priority given by the government to the fight against crime. The committee and its sub-committees gave advice on a wide range of issues, such as tougher measures to counter organised crime, corporal punishment, approaches to juvenile crime and young offenders, and regulation of the security industry.

  The committee continued to follow up on the action required arising from the recommendations in the discussion document Options for the Changes in the Law and in the Administration of the Law to Counter the Triad Problem. The Triad Renunciation Scheme was formally launched on December 8, 1988, and it has produced a positive response from potential renouncers. From the inception of the scheme up to the end of 1989, a total of 2 467 enquiries and 644 applications were received, and a total of 150 genuine triad mem- bers had successfully renounced their triad membership. The administration of the Triad Renunciation Tribunal will be streamlined so that applications can be processed faster and further publicity will be arranged to attract additional triad renouncers.

  Amendments to the Gambling Ordinance were put before the Legislative Council to provide for heavier penalties on people running illegal gambling operations. Amendments

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First page of colour section and left: Some of the thousands of Vietnamese boat people who arrived during the year in crowded Hong Kong.

Below: Whitehead Detention Centre, at Sha Tin, was constructed specially to house some of the influx.

To help with the overflow of Vietnamese boat people, a tented camp occupies the RAF runway at Sek Kong.

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Both pages: Facilities available to the boat people include medical clinics and dental

services, language courses and their own kitchens.

Overleaf: Faced with the slow rate of resettlement overseas and the protracted stay in Hong Kong camps, some boat people choose to return to Vietnam.

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to the Crimes Ordinance were also put before the Legislative Council to provide for legislative control on nuisances associated with prostitution. The introduction of organised crime legislation is being examined to combat organised crime syndicates more effectively.

The committee endorsed the proposal to abolish judicial corporal punishment in Hong Kong. Action is being taken to repeal all legislation giving the courts power to give sentences of corporal punishment. Extensive publicity was launched against triad and juvenile crime and on home security.

The problem of juvenile crime continued to receive the close attention of the committee. The Young Offender Assessment Panel continued to give advice to the courts on the correctional programmes most likely to reform convicted juveniles and young people. During the year, three rehabilitative courses at the Outward Bound School were arrang- ed for inmates of Correctional Services Department and Social Welfare Department institutions.

      The development of the Integrated Law and Order Statistical System progressed smoothly in 1989. By integrating information on offences and offenders kept by the Police Force, the Judiciary, the Correctional Services and Social Welfare Departments, the system will provide comprehensive data on the criminal justice system and on recidivism. A mini- computer system was installed and computer programmes have been developed. Data collection, input and processing started early in 1989. Statistics on reported crimes and arrests are now available, while data on other aspects of the criminal justice system will be produced by phases starting from early 1990.

      With advice from the Security Association, draft legislation is being prepared 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 were enacted to provide better control over faulty burglar alarms, thereby saving police manpower and reducing noise nuisance.

The District Fight Crime Committees continued to play a vital role in the fight against crime at district level. They monitored the state of crime and law enforcement in the districts and helped foster community awareness of the need to prevent crime and community participation to combat crime. They also organised a large number of fight crime activities to complement the central government publicity campaigns and continued to maintain close links with the central committee.

Police Force

The year was a particularly eventful one for the Royal Hong Kong Police Force, the dominant features being the massive public demonstrations and processions in the wake of student pro-democracy events in China and escalating problems related to the ongoing Vietnamese boat people (VBP) issue.

Following the events on the mainland, the months of May and June saw processions and demonstrations on an unprecedented scale throughout the territory. The focal points of most of these processions and demonstrations were the New China News Agency (NCNA) building in Happy Valley and Government House. Mass rallies were held at Victoria Park, Chater Garden, the racecourse in Happy Valley and a number of other locations in Kowloon and the New Territories.

      Although these public processions caused major traffic problems and considerable inconvenience to the public at large, they were generally well organised and, as a result of assistance from the police who deployed in large numbers to assist with crowd and traffic control, did not significantly affect public order.

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   One ugly incident did occur during a slow-drive protest along Nathan Road, when gangs of youths and known bad characters attempted to dominate an otherwise peaceful protest. The situation deteriorated into a minor disturbance in which the Police Tactical Unit used tear smoke to disperse crowds. Thirty-eight people were arrested for a variety of offences and 14 were subsequently charged.

   The continued influx of Vietnamese boat people (VBP) required a major commitment of resources by the police. In addition to providing an effective Marine Police screen, under- taking escorts for VBP movements and dealing with incidents in the various detention centres, the Police Force was called upon to run a number of the camps and now manage or guard four detention centres requiring a daily deployment of 643 officers.

   One of the most serious disturbances involving VBP occurred in August on Tai A Chau which was introduced as a forward reception centre at the end of May. This resulted in police evacuating the island temporarily when an angry mob of some 1 000 Vietnamese attacked about 50 unarmed police officers resulting in 23 injuries to police personnel. Two Police Tactical Unit companies and other Marine Police elements regained control of the island the following day in a swiftly-mounted air and sea operation.

   A tented VBP detention centre at Sek Kong, also managed by the police, was another scene of violent fighting between North and South Vietnamese on several occasions.

   With regard to illegal immigration from China, the policy changes introduced by the Hong Kong Government in mid-1988 had a deterrent effect and the number of illegals intercepted by security forces during 1989 decreased. Action against illegal immigration was maintained with greater emphasis being placed on the employment of illegal im- migrants by local employers.

   In November, the force was heavily committed to security arrangements, and crowd and traffic control for the visit to Hong Kong by Their Royal Highnesses Prince Charles and Princess Diana.

   In December, Deputy Commissioner of Police Mr Li Kwan-ha became the first Chinese officer appointed to head the force following the departure on retirement of Mr Raymon Anning.

Crime

  The overall crime rate increased by 3.3 per cent in 1989, with 81 808 cases reported to police compared with 79 184 the previous year. Due to revision of the counting rules, the 1988 figures for reported crime (79 859) and overall detection (46.5 per cent) have been amended. Violent crime continued to rise and a total of 17 721 cases were recorded, an increase of 12.7 per cent over 1988. There were 6 480 crimes committed by juveniles, a rise of 734 cases compared with the previous year.

The overall detection rate was 47.9 per cent, against 46.9 per cent in 1988.

   A total of 43 684 people were arrested for criminal acts, an increase of 2 090 persons over 1988. Of the total number of persons arrested, 40 772 were prosecuted and the remainder were cautioned and discharged under the Superintendent Discretion Scheme (SDS).

Organised and Serious Crime

The Organised and Serious Crimes Group continued its operations against armed robbery gangs, triad societies and organised crime syndicates. During the year, five armed robbery gangs were arrested resulting in the seizure of 11 firearms, one hand grenade and the recovery of stolen jewellery valued at $3.4 million. Another investigation into a robbery of 238 valuable antiques was successful with the arrest of five persons and the recovery of stolen

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property valued at $13.4 million, which included the Tang Dynasty Horse. Two syndicates specialising in the theft of high-valued cars were arrested and 14 Mercedes Benz valued at $5 million were recovered from Malaysia, Singapore, Thailand and Hong Kong.

      There were 40 crimes involving the use of genuine firearms, representing an increase of 16 cases against the previous year. Cases involving pistol-like objects numbered 238, well up on the previous year's 179 cases. Altogether 69 genuine firearms were seized, against 51 seized in 1988.

      Robberies and attempted robberies against goldsmiths, watchshops and jewellers increas- ed and a total of 72 cases were recorded, which accounted for a property loss of $69 million.

Commercial Crime

During 1989 emphasis was given by the Commercial Crime Bureau to the investigation of fraud within the financial and manufacturing sectors. Documentary fraud and dishonoured cheque cases featured prominently, while a number of successful prosecutions were ob- tained for misuse of locally-issued credit cards.

      Continued action by the bureau's Counterfeit and Forgery Division resulted in the neutralisation of a syndicate involved in the use of forged passports to support illegal entry into Canada by residents of the People's Republic of China.

       A further three groups, involved in the production of banknotes, credit cards and gold coins, were also identified and neutralised. The seizure of master negatives used to produce forged Standard Chartered Bank $1,000 banknotes, the arrest of two major figures connected to the production of high quality counterfeit credit cards, and the neutralisation of a gang responsible for producing counterfeit renminbi, together with United States currency, provided a successful end to the year.

Narcotics

A ninth successive bumper opium crop harvested in the Golden Triangle resulted in a worldwide glut of heroin. Although significant seizures were made throughout the year, the abundance of heroin available in the region led to steadily declining prices and purity.

       No. 4 heroin became the exclusive starting material for the manufacture of the most commonly-consumed No. 3 heroin. This occurred due to an increase in the production of No. 4 heroin in the Golden Triangle for worldwide consumption and a resulting decline in the production of the less-refined heroin base, previously used as a starting material.

Major successes were achieved against highly-organised international trafficking groups, due primarily to long-term investigations and an increased level of liaison and co-operation with overseas law enforcement agencies. Several large and sophisticated syndicates were neutralised and significant quantities of heroin seized in a number of countries, including Australia, Canada, China and the United States.

       In September, officers of the Narcotics Bureau made a single case seizure of 420 kilo- grams of highly-refined heroin, known as No. 4 heroin, which is the largest single seizure ever made in the territory.

In July 1989, the Drug Trafficking (Recovery of Proceeds) Ordinance was passed into law. This legislation provides new powers for the tracing, freezing and confiscation of assets of convicted drug traffickers. It enables law enforcement agencies to interrupt the cycling of drug money both locally and on the international front.

       Some 1 191 kilograms of opiate drugs including No. 3 and No. 4 heroin were seized compared with 879 kilograms in 1988. There were 9 608 prosecutions for narcotics offences compared with 11 560 in the previous year.

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Crime Prevention

The Crime Prevention Bureau continued to expand the range of services it offers to the community in response to all types of prevalent crime. Particular emphasis was given to the fields of architectural liaison and juvenile-related crime, including shop theft.

In January, the bureau launched 'Robotcop' (a computerised robot) and during the year 89 presentations were given in schools, shopping arcades and at police station open-days throughout the territory, resulting in considerable public interest.

In September, well-publicised new procedures were introduced throughout Hong Kong governing the manner in which police would respond on a priority basis to intruder alarms, and legislation to reduce the environmental impact of audible alarms was also proposed. Officers of the Intruder Alarm Inspection Unit of the bureau attended 31 scenes of crime where alarm systems had been attacked and the unit also conducted examinations of systems producing an unacceptable level of false signals.

The subject of legislation governing various fields of security industry activity was pursued by the Hong Kong Government in consultation with the Police Force and the Security Association of Hong Kong, with the aim of providing users of security equipment or services with safeguards.

The bureau continues to promote public awareness of crime and of the counter-measures available. This is carried out in a variety of ways, including campaigns, displays, seminars and site inspections of premises at risk. In this regard the bureau works in close liaison with the Police Public Relations Branch and the Information Services Department in addition to District Fight Crime Committees and a wide variety of private organisations, to mount effective publicity programmes.

Crime Information

The Police Operational Nominal Index Computer System, which is maintained and operated by the Criminal Records Bureau, continued to provide invaluable back-up to police front-line formations and handled some 8 858 enquiries each day.

The Identification Bureau continued to play an important role in crime investigation and detection by providing services to the force in relation to fingerprint technology and forensic photography.

Funging of the introduction of a computer-assisted fingerprint identification system was approved by the Finance Branch. The system will lead to the more speedy identification of offenders from fingerprints left at scenes of crime. The first phase of the project involves the conversion of 180 000 scenes of crime fingerprint records to the computer system which is anticipated to be operational by mid-1990.

During the year, staff of the Scenes of Crime Section of the bureau attended 26 993 crime scenes to examine fingerprints. Staff of the Advanced Technology Unit of the bureau handled 356 cases, using advanced chemical methods and laser technology to detect fingerprints which would not otherwise have been discovered. Identification of a total of 785 persons in connection with 834 cases resulted.

The Main Fingerprint Collection holds the fingerprints of 666 467 persons who have been convicted of criminal offences in Hong Kong. In 1989, 82 974 arrested persons' fingerprints were checked, resulting in 34 230 persons being identified as having previous convictions. Searches were also carried out on 81 013 sets of fingerprints for vetting

purposes.

The Certificate of No Criminal Conviction Section processed a total of 57 339 applications during the year.

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      The field of forensic photography also entered a new era through the introduction of high-speed automatic film processing and printing facilities. The Photographic Section of the bureau produced 162 259 monochrome photographs and 809 175 colour prints and slides in 1989.

Ballistics and Firearms Identification

     Officers of the Ballistics and Firearms Identification Bureau handled 296 cases compared with 235 cases in 1988. Altogether, 93 commercially-manufactured firearms were seized as well as 20 home-made firearms, a disturbing increase over the 20 commercial weapons and 17 home-made weapons seized in 1988.

      The microprocessor-operated indices in use in the bureau are being expanded and now cover various aspects of firearms technical investigative techniques. Indices in use and under preparation include an outstanding shooting crimes index, case information retrieval index, a rifling characteristics file and an indexing method for the filing and recovery of abstracts from technical publications.

Interpol

The International Criminal Police Organisation, or Interpol, was established in 1914 and has police forces from 147 countries as members.

      The Hong Kong Interpol Bureau, which was formed in September 1960, works closely with police forces throughout the world as well as with various government departments and with consulates and commissions in Hong Kong. The bureau has a small investigation unit which undertakes minor enquiries on behalf of other member countries. Requests for extradition are also processed by the bureau.

       Two officers from the Hong Kong police are permanently seconded in rotation to the Interpol General Secretariat in Lyons, France, and close liaison is maintained with the secretariat through them.

Public Order

There was one isolated outbreak of public disorder in June. This was limited to the Mong Kok area of Kowloon and was quickly brought under control.

       During May and June, large numbers of officers were deployed to police a series of massive public processions, meetings and concerts organised in connection with the pro- democracy movement in China and subsequent events in Beijing. Police resources to cover these demonstrations were tightly stretched but it is not without significance that, apart from the Mong Kok incident, throughout this very tense period there was no disorder and no crimes were reported arising from the demonstrations.

Officers of the Police Tactical Unit (PTU) were deployed for regional duties guarding and escorting Vietnamese boat people and to deal with outbreaks of violence in the detention centres.

Despite the many calls on the PTU throughout the year, training continued in accordance with the force programme. A total of 1 700 officers from the rank of constable to superintendent received training in internal security tactics and crowd control at the PTU base in the New Territories.

Routine training with PTU staff and district internal security units continued through the year. In addition a series of short refresher courses were run for officers of the district internal security companies.

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Illegal Immigration from China

In 1989, combatting illegal immigration remained a priority for the security forces. Resources devoted to this problem included an average of 756 police officers each day and the regular tasking of military and immigration officers. During the year a total of 5 452 illegal immigrants from China were arrested as they attempted to enter Hong Kong. In addition 10 389 who had actually made their way into the territory were subsequently located and arrested.

The surge of illegal immigration which occurred in the spring of 1988 was not repeated this year and the arrest rate averaged 1 320 per month as compared to 1 749 in 1988 and 2 225 in 1987. Although these figures are encouraging, political and economic events have, in the past, led to sudden and dramatic increases in illegal immigration and the police must remain constantly alert to the possibility of a new influx.

The introduction of new identity cards in 1987, which are more difficult to forge and easy to check, has greatly assisted in maintaining the pressure on those illegal immigrants who do evade capture on entry and all identity cards will be of the new type by the end of 1991.

The widening of the criteria for criminal prosecution of illegal immigration offences coupled with the imposition of custodial sentences in some areas has restricted the opportunities for illegal immigrants to find employment. This has reduced the attraction of Hong Kong for the would-be illegal immigrant.

Vietnamese Influx

The influx of Vietnamese boat people (VBP), which had prompted special measures to be taken in 1988, continued to pose problems in 1989. Monthly arrival rates of over 9 000 in both May and June were especially worrying. The vast majority of Vietnamese were from the North and had left for economic rather than political reasons.

   Since June 1988, all VBP have been held in detention centres pending a screening process to determine their status in accordance with the 1951 United Nations Convention. All VBP arriving in the territory are advised of this policy and informed that they are free to leave. However, if they elect to stay they are warned that if classified as economic migrants they will be detained pending repatriation to Vietnam.

   A total of 34 116 VBP and 231 ex-China Vietnamese illegal immigrants arrived during 1989.

On December 31, the total number of Vietnamese stood at 56 045 of which 7 092 were kept in open camps, 4 930 in closed centres and 44 023 in detention centres. Resettlement accounted for 4 754 and 1 665 births were recorded.

Marine Police

With its 10-year expansion plan now complete the Marine Police initiated a programme to replace the older vessels in its fleet of some 150 craft. A major feature was a worldwide market survey to identify a suitable vessel to replace Police Launches No. 1 and 2 which have been in service since 1963, and 1971-vintage Vosper 78-foot patrol launches.

The year brought challenges in dealing with an increasing number of boat people from Vietnam. It tested the Marine Police to the limit in terms of manpower, launches and equipment and also involved personnel having to guard VBP at temporary detention centres located at Stonecutters Island and Tai A Chau.

Traffic

The number of licensed vehicles and the resulting traffic density in terms of vehicles per kilometre of road increased over the previous year by 9.2 per cent and 6.5 per cent

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respectively, highlighting yet again the need for positive traffic control together with increased effort in the field of road safety education.

       Road safety campaigns mounted throughout the year put emphasis on improving the road sense of adult pedestrians, and young inexperienced cyclists and drivers. The Road Safety Exhibition Centre at Police Traffic Headquarters in United Centre, Queensway, the Road Safety Town at Sau Mau Ping, the newly-opened Sha Tin Road Safety Park, and the Road Safety Mobile Centre were all regularly visited by schools and similar organ- isations. Another Road Safety Town on Hong Kong Island is expected to be ready by early 1990.

A sponsored road safety campaign, known as the 'Constable Care' Road Safety Programme, aimed at children aged 8-12, was launched in the 1988-9 school year and generated considerable interest.

During 1989, there were 15 932 traffic accidents causing personal injury, a decrease of 2.4 per cent against the previous year. Provisional figures show that there were 337 fatalities and 20 886 casualties.

Community Relations

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For the second consecutive year, the Fight Crime Campaign focused on two areas which were of continuing concern the triad menace and home security - and, additionally, reintroduced the subject of juvenile crime.

Aiming to break down public resistance in reporting all aspects of triad activity, the anti-triad campaign was an extension of last year's effort. Apart from encouraging young people to report triad activities, parents and guardians were reminded of their respon- sibilities for ensuring that young persons under their control were positively supervised. Television and radio were extensively used throughout the campaign and a new Television Announcement of Public Interest (TV API) was produced.

The Neighbourhood Watch Scheme, which encourages families to take an active interest in each other's security by forming groups within buildings, entered its seventh phase. A total of 107 022 households in 572 buildings took part in this phase setting up 10 379 watch units.

Hooliganism and shoptheft were the subjects particularly emphasised in the anti- juvenile crime campaign. So far as hooliganism is concerned the campaign set out to dissuade juveniles from becoming involved in crime while at the same time reminding parents of the importance of proper parental care and control. Although the level of shop- theft dropped considerably in 1988 compared with 1987, this campaign was continued into 1989. While basically directed at juveniles, it also carried a message for adults. Both themes were promoted through police liaison with schools, police TV programmes, Junior Police Call (JPC) activities, TV specials and a new handout booklet.

Public support in the fight against crime continued to be recognised under the Good Citizen Award and Good Citizen of the Year Award Schemes in which cash awards and certificates are given to people who have courageously assisted the police to thwart crime or arrest criminals. During the year 114 people received the Good Citizen Award, making a total of $218,000 in awards, and another two people were awarded a total of $20,000 as Good Citizens of the Year.

The public continued to make full use of the police hotline to pass on crime information and 475 arrests were made as a direct result of their telephone calls.

The claim of the Junior Police Call to be the largest police-youth organisation in the world was further substantiated when the 500 000th member to join since its inception

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in 1974 was handed a membership card by the Commissioner of Police during the 15th anniversary celebrations.

JPC provides its members with healthy recreational pursuits as well as involving them in a wide variety of community services. To commemorate the outstanding performance of JPC members in community service, an award scheme, sponsored by a leading bank, is held annually to select the best member, leader, council and school club.

The Mini-Olympics, an annual JPC sports festival, encourages healthy competition in swimming, basketball, football, table-tennis and athletics, and the eighth JPC Summer Youth Camp was again held at the YMCA Youth Village at Wu Kwai Sha in August with 700 residential campers and 800 day campers taking part. The camp formed part of the 1989 Summer Youth Programme and the theme was 'Fight Youth Crime'.

Four regular television programmes jointly produced by the Police Public Relations Branch and Radio Television Hong Kong continued to enjoy good audience ratings.

Crime Watch, a monthly TV programme presented on the Chinese channels on both TV stations, features reconstructions of unsolved crimes and seeks assistance from the public through the use of telephone hotlines. Police 15, a 15-minute programme, and Police Report, a 5-minute programme, are aired respectively on the Chinese and English channels every week. Both programmes offer simple crime prevention advice as well as appealing for witnesses to crime to come forward. The fourth programme, a 15-minute weekly programme, is a youth slot primarily for the benefit of JPC members but at the same time serving as an informative youth programme. The Voice of JPC, a 30-minute Chinese weekly radio programme, also disseminates messages about fighting crime and civic education.

Training

Recruit inspectors continue to undergo a 36-week course while the recruit constables' initial course lasts 24 weeks. These courses cover criminal law, social studies, police and court procedures, drill and musketry, first aid, life-saving skills, self-defence, and, for overseas inspectors, an eight-week course in colloquiai 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 throughout the year.

The Detective Training School also continued to hold 12-week Standard Criminal Investigation Courses (SCIC) for inspectors, NCOs and constables. These courses were attended by a small number of officers from the Immigration Department, Customs and Excise Department, Macau and the Seychelles.

All officers undergoing SCIC training receive specialist 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 disaster.

Other than the standard courses, continuation training, as well as advanced and specialist training courses, were held to meet the demands of crime formation officers or senior uniform branch officers who have crime units under their command. A pilot course was also run for officers who may be required to deal with victims of sexual assault or child abuse.

  Junior, intermediate and senior command courses continued to provide management training and decision-making skills for inspectors, chief inspectors and superintendents.

Specialist courses were also arranged with outside educational institutions to cater for specific job-related training needs, such as catering, outdoor activities, radar, navigation,

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fire-fighting and first-aid. In addition, computer and commercial crime courses were arranged for the Management Services Wing and Commercial Crime Bureau.

       The Police Scholarship Scheme continued to provide opportunities for selected in- spectorate officers to obtain degrees and sponsored officers also attend part-time diploma courses at the Hong Kong Polytechnic and City Polytechnic. Officers attended command and development and specialist training courses in the United Kingdom, Canada, the United States, New Zealand and Malaysia.

       The Civil Service Training Division continued to run English, Cantonese and Mandarin language courses for the force. Last year saw the introduction of Vietnamese language training.

Police Cadet School

During its 16 years of operation, 4 196 cadets have graduated from the Police Cadet School. Of this number, 3 891 joined the Police Force, 44 the Fire Services, 76 the Customs and Excise Service and 58 the Correctional Services Department.

        In accordance with a decision taken in 1988 to close the Police Cadet School because of an anticipated decreasing number of suitable Form III school leavers, the Dodwell's Ridge Camp ceased operating during the year and Fan Gardens will close in late March 1990.

Complaints Against Police

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 and 1988 reversed slightly in 1989 when 3 234 complaints were lodged. This represents an increase of 0.5 per cent from the 3 219 complaints received in 1988. A total of 32 police officers were disciplined and six charged with offences resulting from complaints. The rate of substantiated complaints was 3.2 per cent against 1.3 per cent classified as false. Complaints of assault, neglect of duty and conduct/manner made up the majority of the complaints, being 74.5 per cent of the total.

At the beginning of 1989 a system of informal resolution with limited application was introduced by CAPO for a trial period. Following evaluation it is hoped to extend the scheme on a phased basis to the force as a whole.

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 and seminars 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 I of the new Police Headquarters, a six-storey building designed to accommodate specialist units, was completed in December 1989. Planning for Phase II, a 32-storey tower block, is well advanced. The New Territories Regional Headquarters at Tai Po was also completed during the year.

Construction of Phase I of the new Police Tactical Unit Headquarters at Fanling was substantially completed and construction of Phase II commenced.

Major construction work began on five other projects: Ma On Shan District Head- quarters and Divisional Police Station; Tai Hing Divisional Police Station at Tuen Mun;

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Tsuen Wan District Headquarters and Tsuen Wan West Divisional Police Station; Junk Bay District Headquarters and Divisional Police Station; and Waterfront Divisional Police Station.

   Work continued on the expansion of the Tai Lam Chung Marine Base which is scheduled for completion early in 1990.

Communications

The contract for the new Integrated Communications System was awarded in December 1988 and installation of equipment on the hilltop transmitter and receiver sites commenced during 1989. The system will replace certain existing radio networks and extend the portable and land mobile communication service to areas currently without adequate coverage. The first phase is scheduled for completion by September 1990.

The system also provides for the replacement of the present telephone exchange equipment with modern digital switches. At the end of the year, seven exchanges had been replaced.

Information Technology

In line with the approved Information Technology Strategy, the Information Technology Branch continued to grow with the creation of 34 additional staff posts and a com- mensurate expansion of office accommodation.

The Enhanced Computer Assisted Command and Control System project is now showing tangible signs of progress. The new Regional Command and Control Centre (RCCC) in Kowloon was completed in time to permit the delivery of the computers and associated equipment in October 1989.

   The year saw the conclusion of the design contract for the new RCCCs and the Kowloon site is now equipped with the specially-designed consoles and lighting system. The special-to-project computer terminals were also delivered to Kowloon and these provide facilities for the operators unsurpassed anywhere. Building and fitting-out work is con- tinuing at the new RCCCs in the other land regions.

   Financial approval was given for the replacement of the Police Operational Nominal Index Computer System, the development of the Major Incident Investigation and Disaster Support System, and the pilot study on the feasibility of the Station Information Com- munal System.

   Work on the Computer-Assisted Fingerprint Identification System continued. The project underwent its final stages of contract negotiations in late-1989. It will become operational in 1990.

   The Criminal Intelligence Computer System has been in full operation since May 1989. It provides fast and easy retrieval of criminal data and facilitates complex intelligence analysis.

Twenty additional microcomputers with word processing functions were provided to various formations during the year.

Transport

  During the year, 96 vehicles were added to the force's transport fleet, which now totals 2 117 vehicles. In line with a vehicle standardisation policy, Landrovers and Ford Transit vans are being replaced by the Leyland Sherpa.

   The Police Driving School will be relocated in the near future from Kai Tak to a site in Sau Mau Ping to make way for further expansion of the airport's facilities.

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Licensing and Societies Registration

The number of applications for licences, permits and registrations, for which the Commissioner of Police is the authority, continued to increase steadily. By the end of the year 20 193 applications for registration as watchmen, 201 applications for the granting of arms licences and 500 other applications had been received.

       A total of 306 applications for registration or exemption from registration were received by the Registrar of Societies. At end-1989 there were 4 505 registered and 752 exempted societies.

The police view applications for a number of licences issued by the Commissioner of Television and Entertainment Licensing and the Urban and Regional Councils. The premises so licensed are visited and inspected by the police. Under this category, there were 3 090 liquor-licensed premises, and a total of 930 amusement game centres, public dance halls, table-tennis saloons, skating rinks, billiard saloons and mahjong or tin kau schools.

       Efforts have been made to ensure that the fees for licences and permits fully reflect the actual costs involved in the licensing system. This will be a continuing exercise.

Police Dog Unit

      Police dogs are currently trained at Yuen Long in the New Territories. A variety of basic and advanced courses are run following which the dogs are deployed territory-wide. Duties include general patrol, tracking and drug detection.

       In 1989 the unit had 82 dogs on strength. However, this figure is expected to increase as part of the force's phased expansion programme to meet the demands of border patrol and explosive detection duties following the withdrawal of the British Army Garrison prior to 1997.

Personnel

At the end of the year, the force establishment totalled 26 980 disciplined posts, a decrease of 230 against the corresponding figure in 1988. In addition, there are 5 362 civilians repre- senting 19.8 per cent of the overall establishment.

During 1989, 6 324 applicants applied to join the force as constables. The number of constables appointed was 1 237 and of these 21 per cent were women. A total of 202 were appointed as police inspectors, of whom 62 were direct entry local appointees, 67 were direct entry overseas appointees and 73 were junior police officers appointed through the 'potential officer' selection scheme.

The recruitment targets for 1989 remained at a high level to cater for the continued expansion of the force and to compensate for the projected increase in wastage. The scheduled intake targets for the year experienced a shortfall of 1 073 for constables and 41 for inspectors.

Promotions

Promotion prospects in the force remained excellent. 21 gazetted officers were promoted to senior superintendent and above, 30 chief inspectors to superintendent, 87 senior inspectors to chief inspector, 146 sergeants to station sergeant and 580 constables to sergeant. In addition, 17 exceptionally-experienced station sergeants were advanced to the rank of inspector.

Exchange Scheme

The year saw the commencement of the fourth round of the Superintendent of Police Exchange Scheme between Hong Kong and the United Kingdom. Under the scheme,

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  officers are seconded to Hong Kong from British police forces for a period of two years where they undertake full operational duties as divisional commanders. Similarly, super- intendents from Hong Kong are seconded to the three participating United Kingdom forces. The scheme has proved to be of great value in terms of experience for those involved, to such an extent that it has been increased in frequency to an annual exercise. This means that at any one time there are twelve officers involved.

Consultation

The Police Force Council, the Commissioner's principal consultative forum, had a particularly busy year dealing with issues arising from the final report of the Review Committee on Disciplined Services Pay and Conditions of Service and the run-up to 1997, in addition to conducting normal council business.

   Personnel Branch has an ongoing responsibility for liaising with the Police Sub- Committee of the Standing Committee on Disciplined Services Salaries and Conditions of Service and its secretariat.

   During the year several submissions were made in respect of allowances payable to the force, pensions, medical examinations and various other subjects. A job evaluation exercise commenced early in August covering, initially, the gazetted ranks. Several on-the-job visits were arranged for members of both the police sub-committee and the full standing committee, to provide members with a better understanding of the nature of police work.

Welfare

The welfare organisation within the force was initiated by the inclusion of a welfare fund under the Police Force Ordinance in 1948. An early development, some three years later, was the establishment of a number of primary schools for police children. Other areas covered in those early years were the promotion of force sporting activities and spon- sorship of police children's education.

   In 1967, two trusts for police children were established with voluntary donations from members of the public and the Royal Hong Kong Jockey Club. Funds from these trusts are regularly committed to assist in the education of police children.

   The range of services provided by the Welfare Branch has expanded more rapidly in recent years and the branch now provides a wide range of services including personnel welfare, catering, sports and recreation, psychological consultation and assistance on retirement for all members of the force and their families.

During the year, social work staff made 5 566 casework visits and conducted 4 572 casework interviews in the four regional welfare offices and three sub-offices. A series of two Family Life Education programmes was organised to promote safety in the home, skills in financial management and parental skills for officers and their families. A total of 3 657 children of 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 at various stages of their education.

   The Police Sports and Recreation Club at Boundary Street and the Police Officers' Club at Causeway Bay experienced very high attendance rates throughout the year, and their resources were particularly stretched at public holidays and on other festive occasions.

   Highlight of the sporting calendar came in July when 33 of the force's leading sportsmen participated in the 3rd World Police and Fire Games held in Vancouver, Canada. The team competed in nine sports and achieved impressive results winning 21 medals.

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      A psychological counselling service has been provided for all force members and their families. Mental health and stress management programmes have been run to help officers to cope with the high stress and demands of police environment. Force psychologists are also involved in teaching officers various psychological skills relevant to their daily operations.

      Resettlement programmes are also organised by the force and resettlement officers are available to police and civilian officers of all ranks who have reached the age of 52. Assistance is given to retired officers and civilians in obtaining further employment upon leaving the force.

Police Museum

The Police Museum, open to members of the public since November 1988, has become a popular visiting spot especially during the weekends. With a total area of 560 square metres it is housed in the former Wan Chai Gap Police Station and includes four exhibition galleries: the Orientation Gallery, the Narcotics Gallery, the Triad Societies Gallery and the Current Exhibition Gallery.

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 5 385, of whom about 11 per cent are women officers. The role of the force is to assist the regular police in day-to-day constabulary duties and to provide additional manpower when needed for such emergencies as major disasters or public disorder.

      During 1989, the force was called upon to provide 72 personnel each day for guard duties at refugee camps set up to house the large influx of Vietnamese boat people. Additionally, all auxiliary police formations shared the burden with their regular counterparts for crowd control duties for the emotionally-charged processions in Hong Kong during May and June in the wake of the student uprising in China.

      Throughout the year, the average daily turnout of auxiliaries for normal constabulary duty was 777 officers.

Police Complaints Committee

The Police Complaints Committee, set up in 1986 to replace the former UMELCO Police Group, is an independent group appointed by the Governor. Its main function is to monitor and review the investigation by the Complaints Against the Police Office (CAPO) of the Royal Hong Kong Police Force, of complaints made against the police by the public. The chairman and two vice-chairmen of the committee are drawn from the Office of Members of the Executive and Legislative Councils (OMELCO). Committee members include eight Justices of the Peace, the Attorney General or his representative and the Commissioner for Administrative Complaints.

During the year, the committee endorsed 2 675 complaint cases, after being satisfied that each case had been thoroughly and impartially investigated by the CAPO. The committee also proposed a number of changes to police practices, procedures and instructions arising from the reviewing of these complaint cases, with a view to improving the effectiveness of the complaint system and assisting the Commissioner of Police in minimising public complaints against the police.

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Customs and Excise Department

During the year, a major re-organisation of the Customs and Excise Department was carried out. The objectives were to give the department the right organisation to deal with challenges in the 1990's, to change the partially-geographical organisation to a more functional one to make senior officers more accountable for their decisions, to put more resources into intelligence gathering and analysis, and to provide operational commanders with the best information available through the development of risk management techniques.

As a result, the department is now organised into four major branches - the Head- quarters Branch, the Operations Branch, the Investigation Branch and the Trade Controls Branch, with the addition of a Civil Secretariat.

Revenue Protection

Several innovations to simplify control procedures under the Dutiable Commodities Ordinance were introduced during the year. These included changing the tobacco duty system from a weight basis to a unitary basis; the adoption of a specific duty rate for beer to replace the system based on the degree of original gravity of the wort - which is a solution obtained by infusion from malt, fermented to form beer; the abolition of licensing requirements for the sale of duty-paid cigarettes, alcoholic liquors, motor spirit and motor diesel oil, and abolition of the permit requirements for the import and export of composite products containing dutiable commodities.

Anti-Narcotics Operations

The department continued to co-operate closely with the police, overseas customs authorities and other law enforcement agencies in the prevention and suppression of illicit trafficking in narcotics and other dangerous drugs.

   During the year, 635 kilograms of opiate drugs and cannabis were seized, including 132 kilograms of heroin, 104 kilograms of opium and 399 kilograms of cannabis. A total of 1 089 persons were charged with drug offences.

   There was a significant upsurge in the quantity of cannabis smuggled into Hong Kong. In March 1989, a record seizure of 291 kilograms of herbal cannabis was made from two consignments of containerised cargo, and in August another consignment of 76 kilograms was seized.

A total of nine drug smugglers with high-grade heroin were intercepted at the airport prior to departure for North America and Europe. As a result of joint operations with overseas law enforcement agencies, eight persons were arrested abroad with a total seizure of 15 kilograms of No. 4 heroin valued at $76 million.

Drug Trafficking (Recovery of Proceeds)

On September 1, 1989, the Drug Trafficking (Recovery of Proceeds) Ordinance was enacted. The ordinance provides for the tracing, confiscation and recovery of the proceeds of drug trafficking, and for a new offence of assisting drug traffickers to retain these proceeds. Enforcement of the ordinance is the joint responsibility of the department and the police. A new unit, comprising customs investigators and professional accountants, was established to carry out the investigation and prosecution work.

Anti-Smuggling Operations

Following the re-organisation of the department and the abolition of the regional management structure, anti-smuggling operations became the joint responsibility of the

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four commands in the operations branch. These are divided into the Ship Search and Cargo, Airport, Marine and Land Enforcement, and the Control Points commands. A task force has been established also to provide operational support to the operations branch as a whole.

      In 1989, the department detected 201 smuggling cases under the Import and Export Ordinance and arrested 266 persons with $67 million worth of goods seized. Smuggling activities between Hong Kong and China increased during the year, smuggled goods seized being mainly cigarettes and video-cassette recorders.

Intellectual Property Rights Protection

The department continued to play an active role in the protection of intellectual property rights. During the year 112 persons were charged under the Copyright Ordinance and 768 persons were charged under the Trade Descriptions Ordinance. The total value of pirated and counterfeit goods seized amounted to $131 million.

Significant headway was made in containing the problem of computer software piracy. Due to increased enforcement activities, sales of pirated computer software and manuals in a particularly notorious area in Sham Shui Po have been greatly curtailed.

Music and book piracy, which was effectively suppressed during the past few years, showed no sign of revival but there were indications that pirated video cassettes were becoming a greater problem.

During the year, the department seized a total of 34.5 million cigarettes, in three separate consignments, all of which bore forged trademarks.

Customs Co-operation Council (CCC)

The Customs Co-operation Council, of which Hong Kong is a separate member, was established to improve and harmonise international customs operations and thus facilitate international trade.

      During the year, the department continued to participate in the council's Permanent Technical Committee, the Enforcement Committee and regional liaison meetings.

A CCC regional liaison office has been established in Hong Kong since December 1987. The office, which is managed by the department, is a central body for the co-ordination of customs intelligence on drug-related matters within the Economic and Social Commission for Asia and the Pacific region.

Ozone Layer Protection

On July 1, 1989, the Ozone Layer Protection Bill became law. The new ordinance gives effect to Hong Kong's international obligations under the 1985 Vienna Convention for the Protection of the Ozone Layer and the 1987 Montreal Protocol on substances that deplete the ozone layer. The responsibility of the department under the ordinance is to control the importation and exportation of substances that deplete the ozone layer, and of products containing or made with these substances.

Ivory Trade in Hong Kong

To fulfil its obligations under the Convention on International Trade in Endangered Species (CITES), Hong Kong imposed a moratorium on the import of raw ivory on June 16, 1989, pending a decision of the Conference of the Parties to CITES. A special task force was established in the department to enforce this.

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Independent Commission Against Corruption

The Independent Commission Against Corruption (ICAC) fights corruption on three fronts: investigation, prevention and education.

International inter-agency co-operation is essential if effective action is to be taken against corruption which crosses all forms of borders and boundaries. This was evidenced during the year when officers from England, the United States, Australia, China, Egypt, Mexico, Swaziland and Tanzania visited the commission. In November, the Commissioner and heads of the ICAC's three departments delivered key speeches at the Fourth Inter- national Anti-Corruption Conference which was held in Sydney.

The ICAC is independent of the Civil Service and the commissioner is directly responsible to the Governor. But there are certain ways in which the commission is 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. Each of the three functional departments of the commission - Operations, 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 are handled by the ICAC Complaints Committee comprising five members of the Executive and Legislative Councils and a law officer. A total of 16 such complaints received during the year were thoroughly investigated.

Operations

The Operations Department is the investigative arm of the commission. It receives and investigates reports of suspected offences under the Prevention of Bribery Ordinance, the ICAC Ordinance and the Corrupt and Illegal Practices Ordinance.

Of the 2 423 corruption reports received by the department in 1989, 866 were made by members of the public who personally visited the commission's offices, 931 by telephone, 435 by letter and 191 from government departments. While a number of reports were made anonymously, 68 per cent of those making reports identified themselves.

Investigations into these reports resulted in 187 convictions and 139 people being cautioned. At the end of the year 114 cases were awaiting trial and 877 investigations were still in progress.

Separate elections were held in Hong Kong for the Legislative, Urban and Regional Councils, and the District Boards during the 12-month period ending in March 1989. These elections generated 126 complaints to the ICAC and resulted in 16 people, including five District Board members, being prosecuted. Another 63 people were cautioned for minor infringements of the Corrupt and Illegal Practices Ordinance. As a result of the experience gained, the commission submitted to the Secretary for Constitutional Affairs a report calling for legal and procedural amendments before the next round of elections in 1991.

Five task force teams continued their investigations into suspected complex commercial corruption cases. The cases concerned alleged criminality involving many hundreds of millions of dollars, requiring worldwide enquiries and extradition proceedings.

Apart from reporting their suspicions and fears of corruption, the public has come to regard the Operations Department as a conduit for general grievances and as a source of assistance. In 1989, the department received 996 reports which were not corruption- related and of these 694 were referred to other government departments for action.

To avoid protracted legal arguments over the admissibility of suspects' statements, the department embarked on a year-long experiment of videotaping interviews of suspects with

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a specially-equipped room in March. The results of the experiment, the first in Hong Kong, are encouraging so far.

The department is also in the process of computerising its data and this is expected to be fully operational in 1992.

Corruption Prevention

The Corruption Prevention Department reviews procedures which could be conducive to corruption in government departments and in public bodies, and recommends changes where necessary. Free confidential advice is also available to private organisations or individuals on request.

During the year, the department conducted 65 detailed examinations of specific activities of government departments and public bodies, covering policy, law, procedures and management controls. Problems identified ranged from those which caught the inter- national spotlight to those which were confined to a small voluntary welfare agency.

The studies conducted could be broadly classified into two categories, people-related and work-related. Major studies under the first category included those on Vietnamese boat people, narcotics and the Judiciary. With the large number of Vietnamese boat people in Hong Kong and the need to establish whether they were genuine refugees or not, the department advised on safeguards against abuses of the screening system. It also work- ed closely with the Correctional Services Department on procedures to ensure the safe- keeping of property belonging to boat people. On the worldwide problem of narcotics, the department worked closely with the Customs and Excise Department to ensure that procedures for checking imports for the presence of any narcotics were as secure as possible. As a result of detailed studies and liaison with the Judiciary, additional senior posts were created to help strengthen the day-to-day administrative support services for the courts. With the co-operation of the legal professional bodies to prevent touting, the public at large were provided with greater publicity about court procedures and how to obtain legal representation.

The second category of studies ranged from work-oriented projects to financial control systems. Work projects covered subjects like control of building development, supervision of construction works, building of New Territories small houses, control of unauthorised structures, and approval of water supply. The finance-related studies examined systems such as the operations of the government central tender board, the control of subventions granted to both large and small social welfare agencies, and ex-gratia payments under the Kowloon Walled City clearance scheme and under the waste control scheme. Relatively smaller financial systems which affect the daily life of the public were not overlooked and the procedures for collecting bus fares and controlling admission to the Ocean Park were also examined.

The department had been closely involved in a number of environmental protection programmes that gathered momentum during the year. A major concern was that there should be a reasonable legislative framework to enable enforcement officers to operate effectively with minimum opportunities for corrupt approaches. Where compensation was payable to people affected by these programmes, the department worked closely with the government to ensure that only those genuinely affected were paid.

In response to an increasing number of requests for assistance from the private sector, the department's Advisory Services Group organised corruption prevention seminars for management, and studied areas of concern to companies, covering such matters as purchasing and stock control. The group also assisted companies to draw up guidelines for

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their employees and provided advice, written or verbal, on ethical business practices and points of law.

The department took part in a number of discussions and seminars with Chinese officials and business cadres, both in China and in Hong Kong. Case studies were used to demonstrate management weaknesses which could lead to corruption. These contacts in turn provided the department with some first-hand knowledge on business practices and corruption law in China, enabling it to better advise Hong Kong businessmen on corruption-related matters when doing business in China.

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.

A new strategy was adopted by the department to enhance the effectiveness of its liaison programme. The main features included placing greater emphasis on publicity-oriented programmes designed to reach the largest possible number of targets, setting up task force teams dedicated to plan and co-ordinate liaison efforts with the private sector, and encouraging the public to initiate and organise activities to spread anti-corruption messages among themselves or to the wider community.

A total of 16 800 liaison activities and 204 special liaison programmes were conducted by the commission's 11 local offices in 1989, reaching some 432 300 people broadly categorised as civil servants, public and private sector employees, young people, and the general public. Against the background of a continual rise in corruption reports concerning the private sector in the past few years, the department maintained its momentum in liaising with those trades and industries with a high incidence of reported corruption. The task force teams made considerable headway in explaining the spirit and provisions of the Prevention of Bribery Ordinance and in appealing for positive action against corruption.

In order to enhance the involvement of different sectors of the community to actively promote the theme of anti-corruption, a Community Participation Programme was im- plemented. More than 40 organisations from business and social service sectors as well as local communities initiated anti-corruption publicity programmes with subsidies from the ICAC.

The Towards a Fuller Life territory-wide programme continued to be a popular major event. The programme promoted the positive aspects of life through a series of activities culminating in a musical show telecast at prime time to capture the maximum viewership. Music records and cassettes on songs with the theme of a fuller life were also produced for distribution to youth organisations, educational institutes and public libraries.

Encouraging young people to be fair and honest in their dealings with others is a good basis for anti-corruption education. Teaching materials produced by the department assist teachers to discuss moral issues with their students through lively and imaginative activities. These teaching materials had been in use for a number of years. To achieve a broader and more effective usage of ICAC material in schools, the department launched a new, three-year promotion strategy. This involved visits by ICAC officers to primary and secondary schools throughout the territory to introduce the range of available materials, their rationale, content and methodology. Other supportive measures included production

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of newly-designed materials in large quantities, the publishing of an ICAC periodical for schools and better use of market surveys to ascertain user needs.

      To further educate the public against the evils of corruption and promote better understanding of the work of the ICAC, the department produced a 13-episode televi- sion drama series. Entitled Vanguard, each episode contained a separate story adapted from completed ICAC investigations. This was the fifth drama series produced by the department and was telecast in a weekday prime-time slot. It was rated among the top 10 programmes on television, showing that a substantial publicity impact had been achieved.

      On the advertising front, the department continued to emphasise the importance of corruption prevention in the commercial and industrial sectors. This was done mainly through television advertising. For further publicity, the department started a direct mail campaign aimed at small factories and companies. The reporting of corruption was also encouraged through an ICAC hotline promotion campaign.

Government Laboratory

The Forensic Science Division of the Government Laboratory provides scientific and technical support to those government departments enforcing law and order. The laboratory handled more than 80 000 samples in 1989, collected from a wide spectrum of criminal activities including homicides, sexual assaults, poisoning and drugs, forgeries and fatal accidents.

       Armed with sophisticated instruments like the scanning electron microscope and the Argon-ion Laser, and with special expertise in different activities such as arson in- vestigations and blood spatter examinations, the laboratory played a vital supportive role in the fight against crime. The growing significance of forensic evidence has resulted in a constantly-increasing demand for the service and, to cope with the heavier workload, modern instrumentation as well as advanced methodology are utilised.

Recent developments in molecular biology have led to another profound and powerful technique of personal individualisation: DNA profiling. The laboratory and the two universities in Hong Kong jointly started to explore the application of this technique to the local population in the latter part of 1989 and its routine introduction into forensic casework is expected in 1990.

Document experts of the laboratory have continued to face a heavy workload from commercial fraud, forgery and counterfeiting. Their achievements over the past few years in the development work in Chinese handwriting comparison were recognised by the award of the P. W. Allan medallion by the Forensic Science Society in the United Kingdom for excellence in handwriting research.

Laboratory expertise in road accident reconstruction had been called upon frequently by the police Traffic Division both in accident investigation and in the training of specialist police officers. The laboratory has been appointed as the examination authority in Hong Kong for the City and Guilds Institute, London, for traffic accident reconstruction.

       During the year, laboratory staff attended over 600 crime scenes for evidence collection and scene examination and lectured extensively to all client departments in their law en- forcement training courses.

Correctional Services

The Correctional Services Department administers a wide range of programmes for adults, young offenders, drug addicts and the criminally insane. Broadly, three categories

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  of service are provided - custodial, after-care and industries. In addition, the department manages closed centres and detention centres for Vietnamese boat people.

   At the end of 1989 the department was managing 19 correctional institutions, three halfway houses, a staff training institute, an escort unit, two closed centres and seven detention centres for Vietnamese refugees and boat people. Policy guidance and admin- istrative support is provided from its headquarters. There were 6 544 staff looking after 11 455 inmates, 33 974 Vietnamese refugees and boat people, and 3743 persons under after-care supervision.

   During the year, there was a significant increase in the number of Vietnamese boat people and Chinese illegal immigrant workers in custody. This imposed strains upon existing accommodation, staffing and other resources. Long-term planning to meet the shortfall in accommodation includes the proposed construction of a new prison in the New Territories.

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 11 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

four of minimum security: Tai Lam Correctional Institution, Pik Uk Prison, Tong Fuk Centre and Ma Hang Prison.

   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 hearings are detained at Lai Chi Kok Reception Centre which also has a separate section for male civil debtors. Victoria Prison houses illegal immigrants pending repatria- tion 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 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, training centre and 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 depart- ment's young offender programmes.

   Cape Collinson Correctional Institution houses those between the ages of 14 and 17, and Lai King Training Centre, those between 18 and 20 years who have been sentenced to the training centre programme.

Lai Sun Correctional Institution on Hei Ling Chau accommodates young prisoners aged between 14 and 20. To cope with the increased penal population, a portion of Sha Tsui Detention Centre was gazetted in April 1989 to accommodate young prisoners between 14 and 20 years of age.

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       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 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 after-care supervision.

Female Offenders

        Adult females serve their sentences in the New Territories at Tai Lam Centre for Women. The institution also has sections for remand prisoners and those undergoing drug addiction treatment. Most of the women are employed in an industrial laundry which provides services to government departments and public hospitals.

       Female offenders under 21 years of age are held at Tai Lam Gap Correctional Institu- tion. There are separate 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 months' statutory after-care supervision.

       Male addicts are treated at Hei Ling Chau Addiction Treatment Centre. Female adult addicts receive treatment at Tai Lam Centre for Women and the young 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 after-care 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. The panel has proved to be effective in handling young offenders under the age of 25.

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Education and Vocational Training

Offenders under the age of 21 attend educational and vocational training classes conducted by qualified teachers. Textbooks compiled by the department are used to provide inmates with more suitable and practical learning material matching their maturity in personality growth and development.

   Adult offenders attend evening classes on a voluntary basis run by part-time teachers from the Adult Education Section of the Education Department. Self-study packages and external correspondence courses are also available for those 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, London Chamber of Commerce and Industry, and the Hong Kong Examinations Authority. Inmates also sit for the Hong Kong Certificate of Education examinations as school candidates.

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 con- sultant or transferred to public hospitals.

Siu Lam Psychiatric Centre and the psychiatric observation unit at Lai Chi Kok Reception Centre treat prisoners with mental health problems and offer psychiatric consultations and assessments for inmates referred by other institutions and the courts.

Ante-natal and post-natal care is provided within institutions for female inmates but babies are normally delivered in public 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 undertaken to improve treatment programmes and reduce recidivism.

Visiting Justices

Justices of the Peace appointed by the Governor visit penal 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 inmates' re-integration into the community after release and helps them to lead industrious and law-abiding lives. This service is currently available to inmates from training, detention and drug addiction treatment centres, young prisoners, and adult prisoners released under the Release Under Supervision and Pre- release Employment Schemes.

After-care begins immediately following admission into an institution. Each inmate is interviewed by an after-care officer who then proceeds to establish a sound relationship with the inmate and his family.

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      Inmates are further assisted, through individual and group counselling, to gain more insight into problems arising from their social inadequacies. They are helped to become better prepared to cope with 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 may result in recall for further 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 end of 1989, the success rates were 94.2 per cent for the detention centre inmates, 66.2 per cent for male training centre inmates, 93.2 per cent for female training centre inmates, 86.4 per cent for young male prisoners and 88.9 per cent for young female prisoners, 70.4 per cent for male drug addiction treatment centre inmates and 76.7 per cent for female drug addiction treatment centre inmates.

Release Under Supervision

The Release Under Supervision and Pre-release Employment Schemes have been in operation since 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 after-care officers. Under the Pre-release Employment Scheme, prisoners who are serving a sentence of two years or more, and are within six months of completing their sentence, may apply for release. If their applications are successful they then work and live in a designated hostel under the supervision of after-care officers for the balance of their sentences. Prisoners who breach supervision conditions may be recalled to serve the remainder of their sentences. Up to the end of 1989, there were 171 applications for the Release Under Supervision Scheme and 322 for the Pre-release Employment Scheme. So far only nine prisoners were released by the Governor under the Release Under Supervision Scheme and 32 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. The industries also save public revenue 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.

      The industries run a number of trades, the largest being laundry and garment making. Other major trades include silk-screening, printing, envelope-making, bookbinding, shoe-making, fibreglass-work, metal-work, leather-work, precast concrete and carpentry. The commercial value of goods and services provided for the year is estimated to be $210.1 million.

Closed Centres and Detention Centres

The Correctional Services Department has been responsible for the management of closed centres for Vietnamese refugees since the establishment of the first centre in July 1982.

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During the year, the department administered three closed centres at Sham Shui Po and Tuen Mun. With the introduction of the screening policy for Vietnamese boat people on June 16, 1988, the department has managed seven detention centres at Chi Ma Wan, Hei Ling Chau, Nei Kwu Chau, Cape Collinson, Sham Shui Po, Green Island and Whitehead.

Under the screening policy, the boat people in detention centres are interviewed by immigration officers to determine their status. Those deemed to be refugees are transferred to closed centres, while the others remain in the detention centres as illegal immigrants pending repatriation to Vietnam.

Voluntary agencies operating in conjunction with the United Nations High Com- missioner for Refugees (UNHCR) 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-week orientation training programme, followed by a further five weeks of 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, after-care, nursing, psychological services and physical education. Weekly in-service training is carried out 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 as well as care for those who have a history of mental illness.

Fire Services

During the year, the Fire Services Department responded to 23 138 fire calls, 15 154 special service calls, 235 955 emergency and 192 004 non-emergency ambulance calls. Fires caused 48 deaths, and injured 620 people, including 39 firemen. A total of 2 330 persons were rescued and hundreds of others were led to safety by Fire Services personnel.

Buildings and Quarters

In line with government policy to provide an emergency response to all areas within minimum set times according to the category of risk, one new fire station and two ambulance depots were commissioned in 1989. These were Kotewall Fire Station, Tsuen Wan Ambulance Depot and Wong Tai Sin Ambulance Depot. Cheung Chau Fire Station and Ap Lei Chau Fire Station were reprovisioned to improve services on Cheung Chau Island as well as Ap Lei Chau. There are now 58 fire stations, 25 ambulance depots/ stations and five fireboat stations in the territory. Forty-two rank-and-file married quarters

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were purchased 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 formulating and enforcing fire-safety regulations. It also advises and assists all sections of the community with regard to fire protection measures generally and in the abatement of fire hazards. Besides updating and reviewing existing fire-safety legislation and codes of practice, the Fire Protection Bureau plays an important role in educating the public on fire prevention. In addition to the annual publicity campaigns, a total of 388 lectures/talks were given during 1989 to a total audience of 11 770 from different sectors of the community. Furthermore, exhibitions and demonstra- tions were held during the year to further educate the public on fire-safety aspects. The 7 996 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 prosecutions on obstruction to means of escape and indiscriminate blocking of fire exits in multi-storey buildings amounted to 305 convictions in 1989 with total fines of $0.9 million.

       Fire Services personnel made 66 910 inspections of all types of premises and issued 6 703 abatement notices for the removal of fire hazards in 1989. There were 850 prose- cutions during the year for non-compliance with abatement notices and for summonses, resulting in fines amounting to about $2.5 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 8 070 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 2 043 in all ranks of uniformed staff, and 154 civilian employees. The service operates 235 ambulances and ambulance-aid motorcycles from 25 ambulance depots or stations throughout the territory and from many fire stations. During the year, 235 955 emergency calls and 192 004 non-emergency calls were handled, involving 536 300 people and representing an average of 1 173 calls every 24 hours. This was an increase of 1.5 per cent in the number of calls compared with the total for 1988. Facilities on ambulances 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 high-quality ambulance services to the public, an expansion programme to increase both the personnel and fleet by five per cent annually is 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 1989, some 120 new or replacement appliances and vehicles of various kinds were put into service. The nine mini-appliances purchased 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 in Hong Kong.

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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. A new workshop in Kowloon Bay is under construction and is expected to become operational early in 1990.

Communications

Installation of the Second Generation Mobilising System is progressing smoothly in the Fire Services Headquarters Building and is expected to come into operation 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 road. The time taken to handle incoming emergency calls and despatch the fire appliances will thus be cut to well under 60 seconds in most cases.

In order to improve the coverage of the present fire services radio system, the installation of three additional hilltop radio repeaters at Castle Peak, Shek Uk Shan and Pottinger Peak is underway. The cost for this project is around $2.8 million. These three radio repeaters will be in use early in 1990.

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 three 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, 363 recruits completed initial training. The school also conducted basic courses on fire fighting and on the use of breathing apparatus for government departments and private organisations. Some 563 people attended these courses during the year. A total of 331 ambulance personnel completed refresher courses at Cheung Sha Wan Ambulance Depot. Fire protection courses were conducted at Fire Services Headquarters for 35 senior station officers and station officers. The Driving Training School conducted courses for 955 officers and other ranks.

Establishment and Recruitment

The uniformed establishment of the department at the end of 1989 totalled 7 020. The number of civilian staff of the department increased to 705. Recruitment exercises were held, resulting in the appointment of 25 officers, 252 firemen, eight ambulance officers and 196 ambulancemen. Standards are high and on average only about 10 per cent of all applicants are accepted for appointment.

Immigration Department

The Immigration Department plays an important role in maintaining law and order in Hong Kong.

Immigration Control

Through examination at control points and vetting of visa applications, undesirable persons including international criminals, terrorists and other persona non grata are 262 detected and refused entry into Hong Kong. In 1989, 42 793 such travellers and persons

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not in possession of proper documentation were refused permission to land and 1733 applicants were refused visas.

Detection of Forged Travel Documents

      Continuous efforts are required 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 refined to make them difficult to forge. Intelligence on forgery is collected and quickly disseminated, and special operations are mounted against forgery syndicates.

Frequent contacts are made with other local and overseas law enforcement agencies and consulates. During the year, a total of 1 183 forged travel documents were detected, representing an increase of 2.51 per cent, compared with 1 154 in 1988.

Interception of Wanted Persons

During the year, 68 218 persons were intercepted at immigration control points and immigration and registration of persons offices. Of these, 553 were wanted in connection with murder cases, 1 723 were suspected robbers, 31 301 were involved in the trafficking of dangerous drugs and 33 612 were involved in other criminal offences. In addition, 76 known or suspected terrorists were identified at points of entry.

Illegal Immigration

Frequent checks are conducted at suspicious locations, including construction sites, factories, restaurants and other places of employment. Illegal immigrants 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 enable law enforcement officers to verify the authenticity of identity cards.

       In 1989, a total of 17 611 illegal immigrants were apprehended and repatriated. Em- ployers of illegal immigrants were also prosecuted and fined and, in serious cases, custodial sentences were imposed.

       However, the number of impersonation cases where illegal immigrants resort to the use of an identity card belonging to another person in order to remain in Hong Kong has increased considerably in recent years. In 1989, 433 such cases were detected. To combat this growing problem, the Registration of Persons Ordinance and Regulations were amended during the year to raise the penalty on illegal transfer of identity cards and on the illegal use of another person's identity card. Under the amended law, possession of an identity card belonging to another person without reasonable excuse was also made an offence. This is to deter racketeers from selling other people's identity cards to illegal immigrants.

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 included illegally remaining, breach of condition of stay, making false statements or representations, and conspiracy in the use and supply of forged documents.

Deportation and Removal

The Immigration Department is responsible for the application, issue and execution of deportation and removal orders. During the year, 5 254 persons who were convicted of

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 possessing or trafficking in dangerous drugs, deception, theft and other criminal offences were considered for deportation and subsequently 138 were deported from Hong Kong. In addition, 3 956 persons were removed from Hong Kong under removal orders. These included 3 724 illegal immigrants and 232 persons who had breached their condition of stay.

Civil Aid Services

The Civil Aid Services (CAS) is an auxiliary emergency measures organisation whose main role is to support other regular government services in any emergency situation. It is financed by government and has an establishment of 3 725 uniformed and disciplined adult volunteers, 3 232 cadets and 123 permanent staff.

Role and Responsibilities

With heavy emphasis on coping with natural disaster and performing civic duties, the tasks of the service are numerous and far-reaching. The volunteers are trained to perform counter-disaster duties during tropical cyclones, when landslips and flooding occur, to search for and rescue persons trapped in collapsed buildings, to fight forest fires and to patrol country parks, to manage refugee camps, to combat oil pollution at sea, assist the police in crowd control and incident management and to perform first-aid, casualty handling and evacuation, and to carry out difficult mountain rescue operations. On any weekend or public holiday it is normal for over 500 volunteers to be on duty. The Tactical Force is on a 90-minute call out throughout the year.

Civic Duties

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

With the continual influx of Vietnamese boat people into Hong Kong from April 1988, it was necessary to rapidly mobilise CAS volunteers to assist in setting up new refugee centres and to manage them initially until handing over to other services. Under CAS management were the Harbour Reception Centre and the Argyle Street Detection Centre. The two centres had a population of over 3 700 Vietnamese.

  The setting up of new centres in a very short space of time required a great deal of expertise by permanent staff and volunteers. The centres required complete reprovisioning of accommodation, security fencing, toilets, showers, electricity and water supplies. It was very pleasing to record the CAS was able to meet all these demands.

  The effect on personnel working in these centres was physically and psychologically exhausting. Duties were performed under very hot, humid, unpleasant and difficult conditions. A great deal of control and patience was exercised by all personnel.

Service Training

Service training is divided into centralised courses and unit training, both of which are designed to promote and maintain the operational efficiency of the service. The centralised courses in 1989-90 comprised a wide variety of subjects. Besides normal counter-disaster courses, first-aid, fire-fighting and conventional rescue instruction was given, the aim being

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to train adult volunteers in disaster control and management during large-scale emer- gencies and at civic functions.

Overseas training was organised for both permanent staff and volunteer officers. In 1989-90 two officers were sent to the Australian Counter Disaster College in Victoria for disaster-management 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 rebuilt 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 rescue range areas.

The new camp at Tai Tan, Sai Kung, is to provide training facilities for anyone wishing to take part in all forms of waterborne activities. The camp, after being completed in April 1989 with basic facilities, will be further developed to include a hard court for parades, camping areas and a swimming training pool. These projects are planned for completion in 1990-91.

Cadet Corps

The Cadet Corps is organised into 30 units located throughout the territory. From mid-1987, 220 females were enrolled in the corps. Cadets enter at the age of 12 to 14 and then undertake a series of training courses. Tuition includes training in basic mechanical and electrical engineering, carpentry and fibreglassing, printing and bookbinding as well as training in photography and interior design. The cadets are trained in countryside preservation, first-aid, crowd-control psychology, road safety, rock climbing, orienteering, expeditions and trekking. They are encouraged to participate in the Duke of Edinburgh Award Scheme and in 1989, eight cadets qualified for Silver Awards and 60 for Bronze Awards. At 18, the cadets leave the corps and may join the Adult Services.

Royal Hong Kong Auxiliary Air Force

The Royal Hong Kong Auxiliary Air Force, based at Hong Kong International Airport, provides a variety of flying services for the government. It operates a fleet of 10 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 140 permanent staff and 165 volunteers comprising aircrew, engineers and admin- istrative staff, the RHKAAF can operate round-the-clock for seven days a week during an emergency. A total of about 3 650 hours have been flown during the year.

      In 1989, 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. Sixty search and rescue operations were carried out, involving both helicopters and fixed-wing aircraft. During the dry season, the Dauphins assisted in over 92 fire-fighting operations and dropped over 1 725 tonnes of water on bush and forest fires in areas inaccessible to conventional fire-fighting appliances.

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The Police Force and the Correctional Services made frequent use of helicopters for training and operational purposes. Helicopter flights were routinely provided to transport engineering staff to hilltops to carry out maintenance and repair work at communications repeater stations. During the year, about 7 600 government officers were flown to various areas in the course of their duties. Flying services were also provided to give official over- seas visitors 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 surveys, photography and map-making. The Fireflys and Islander provided pilot training for the squadron's own volunteers and student air-traffic controllers.

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TRAVEL AND TOURISM

HONG KONG'S out-bound travel business is carried out by some 1000 travel agents who are licensed by the Registrar of Travel Agents, under the Travel Agents Ordinance. The ordinance provides the statutory framework for self-regulation of the out-bound travel industry. In order to be licensed, a travel agent must be a member of the Travel Industry Council of Hong Kong.

The council is an approved representative of travel agents and tour operators in Hong Kong. It comprises six association members, namely, 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 Association of China Travel Organisers Limited. The council regulates member travel agents by means of a number of codes of practice and occasional directives. Members who breach the rules of self-regulation risk losing their council membership, and their licence to operate.

Out-bound travellers on tours are covered by a scheme that offers a high degree of protection. Licensed travel agents are obliged to contribute one per cent of their out-bound tour fares to the Travel Industry Council Reserve Fund, which was established in 1988. If a licensed travel agent should collapse, travellers may claim compensation from this fund for up to 70 per cent of tour fares paid, by producing receipts marked to indicate payment of the one per cent levy.

During 1989, no major travel agents collapsed. The Reserve Fund collected $29,222,423 in 1989, and the total collected so far is $38,342,804. The Reserve Fund paid out $3,608,721 in compensation in 1989, and has paid out $8,484,624 in total since its inception.

Tourism

Some 5.4 million visitors came to Hong Kong in 1989, a decrease of 4.1 per cent over 1988. As a result, the tourism industry earned an estimated $36,000 million during the year, an increase of 10 per cent over the 1988 figure.

The visitors came primarily from Japan (21.9 per cent), Taiwan (21.1 per cent), the USA and Canada (14.5 per cent), South-east Asia (13.3 per cent), Western Europe (13.3 per cent), Australia and New Zealand (5.6 per cent) and South Korea (3.1 per cent).

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, which today is the territory's third-largest earner of foreign

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exchange. It furthers the development of the territory as a travel destination, promotes the improvement of facilities for visitors, markets Hong Kong's visitor attractions overseas and advises the government on matters relating to tourism. These aims amount to op- timising the returns on investment in developing the tourism product.

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, the sale of publications and souvenirs, and from tours.

In December 1989, the association had 1 782 members, comprising airlines, hotels, travel agents, tour operators, retail, restaurant and other visitor service establishments.

   The HKTA's head office is on the 35th floor of Jardine House in Central District on Hong Kong Island. In 1989, the Information and Gift Centre was relocated from the head office to the basement of the same building. That centre, along with similar centres at the Star Ferry Concourse in Kowloon and on 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 1.36 million visitors. The association also operates hotline telephone services in both English and Japanese, and set up in 1989 a new Mandarin- speaking hotline in recognition of the growing importance of the Taiwanese market. Together, these hotlines handled 46 700 enquiries from visitors during the year. The association monitors the calls to provide further insight into visitors' interests and spending patterns. The information service operated by the association now offers assistance for visitors in eight languages, including Korean. In 1989, the HKTA distributed 8.01 million pieces of literature in six languages to visitors upon arrival.

The HKTA's marketing strategies are designed to attract higher-yield visitors to Hong Kong and to encourage visitors to stay longer in the territory. The emphasis is on increasing the amount of money spent in the territory and encouraging visitors to return. A major marketing campaign overseas was implemented in the second half of the year, with the theme 'Stay an Extra Day in Hong Kong'.

The HKTA issued regular statements overseas to assure potential visitors to Hong Kong that the territory was a dynamic and attractive tourist destination. In addition, the association worked closely with the Hong Kong Hotels Association and initiated in 1989 a special 'Six Nights for the Price of Four' summer package for 37 of the territory's hotels.

Overseas marketing of Hong Kong as a travel destination is carried out primarily through 15 overseas offices of the HKTA, located in Auckland, Barcelona, Chicago, Frankfurt, London, Los Angeles, New York, Osaka, Paris, Rome, San Francisco, Singapore, Sydney, Tokyo and Toronto. The association also has an agreement with Hong Kong-based Cathay Pacific Airways whereby the airline acts as its information agent in an additional 42 cities around the world.

The HKTA arranged familiarisation trips for 2 000 travel agents and briefed a further 1 140 visiting travel trade personnel in 1989, with the aim of encouraging them to include Hong Kong in their tour itineraries. It also organised and co-ordinated the Hong Kong tourism industry's participation in 19 major overseas trade promotions, such as the World Travel Market in London in November-December. In addition, it assisted 1 000 overseas media representatives with their reports about Hong Kong.

In 1989, the association continued to promote Hong Kong as a year-round travel destination, marketing its unique blend of East and West and wide variety of attrac- tions. The 'Hong Kong Dragon Boat Festival - International Races 1989', organised by the HKTA in June for the 14th consecutive year, received wide international cover-

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Previous page: City of contrasts, with traditional double-decker trams shuttling past the modern shopfronts of Pacific Place, in Queensway.

Built to resemble a luxury liner, this commercial complex at Whampoa Garden, on the site of the old Whampoa Docks, houses a department store, swimming pool, restaurants, cinemas and, on the top deck, a children's play area.

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Below: The lure of shopping in Hong Kong attracts millions of tourists every year.

Right: The night market in Temple Street offers bargains of all descriptions and is a favourite haunt for tourists and local people.

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Left: Car shows are part of the programme of attractive events staged in the atrium of the Landmark building in Central. Below: Fashion takes to the catwalk at the Pacific Place shopping plaza.

Overleaf: Modern design and pleasant surroundings set the tone for shopping in this public housing estate at Sha Tin.

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TRAVEL AND TOURISM

     age through a special Visnews television clip which was picked up and screened around the world. A total of 22 overseas teams took part in the 1989 international races, and the 'Row for Charity' races raised a record HK$1,050,000 for the Community Chest of Hong Kong.

The '1989 Hong Kong Food Festival' organised by the HKTA, was held from August 13 to September 13. The festival's highlights included four Special Interest Tours which were especially created: the 'Morning Tea and Tai Chi Tour', the 'Gourmet-Guided Market Visit and Cooking Class Tour', the 'New Territories Culinary Experience Tour' and the 'Country Banquet Tour'. An exhibition entitled 'Rice - More than A Simple Grain' was staged during the Food Festival period in three shopping complexes in Hong Kong. The Hong Kong Food Festival culinary awards were presented for the second time and a panel of 11 internationally-renowned authorities on food were flown in especially to judge the practical classes. A public exhibition of Chinese and Western display-class entries was open to the public. In addition, some 30 hotels and 50 independent restaurants organised special culinary-related events during the month, while the celebrations in Lan Kwai Fong in Central were extended to become the 'Fourth Lan Kwai Fong Street Festival', lasting a week.

      In October, the first 'Hong Kong Waiters' Race' was organised, with the Hong Kong Hotels Association, to encourage greater camaraderie among the waiting staff of the industry. The event attracted 272 participants from 46 hotels and restaurants, running in six different race categories. A large portion of the participation fee was donated to the Hong Kong Polytechnic to establish a travel scholarship for hospitality management students.

      In 1989, a new Special Interest Tour called the 'Housing Tour and Home Visit', was launched for groups of visitors who wish to see more of the lifestyle of Hong Kong's people. The tour included a visit to the Government Home Ownership Scheme's model flats, a slide show about public housing estates in Hong Kong, a visit to 'dry' and 'wet' markets and an estate commercial centre, a visit to a local family and a social service organisation, a dim sum lunch, and a visit to the popular Wong Tai Sin Temple. A new 'Yau Ma Tei Walk' guide was published in 1989.

      Another tour introduced in 1989 by the association is the 'Heritage Tour'. This gives visitors the opportunity to visit four traditional, historical monuments in the New Territories.

Other tours run in 1989 were 'The Land Between' tour of the New Territories, the 'Come Horseracing' tour and the 'Sports and Recreation' tour, which enabled visitors to use the facilities of the Clearwater Bay Golf and Country Club, and special Festival tours, such as the Yuen Siu Festival, the Tin Hau Festival and the Cheung Chau Bun Festival.

      With the completion of the Convention and Exhibition Centre, the Cultural Centre and many new hotels, Hong Kong is much better equipped to host conferences and exhibitions. The association's Convention and Incentive Travel Bureau stepped up promotion in this area and business has grown from 15 international events in 1976 to 500 in 1989. Incentive travel has also increased from less than 200 groups in 1982 to 480 in 1989. Conferences and incentive travel are high-yield business as these visitors stay twice as long and spend three times as much as the average visitor.

      The HKTA continued to emphasise the importance of training in the service industries to maintain Hong Kong's high reputation in this area. Its Industry Training Department continued the Effective Selling Skills certificate programme for staff in the retail trade, as well as courses designed specifically for tour co-ordinators and restaurant service staff

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and certificate programmes in customer service. To enhance the high standards of professionalism among Hong Kong's tour co-ordinators, the '1989 Hong Kong Tour Co-ordinator of the Year' campaign was organised from May to July, during which more than 6 000 nominations were received from visitors. From these, the top 20 tour co-ordinators were selected and the Grand Award winner and five winners of an Award for Outstanding Performance were chosen.

   To encourage greater courtesy among front-line staff in the industry, the HKTA continued its programme of 'Hong Kong Cares' courtesy awards. The major courtesy programme for 1989 was the industry-wide 'Hong Kong Cares' Travel Industry Courtesy Campaign, launched in October. Additional programmes earlier in the year concentrated on retail assistants and establishments, with more than 3 300 nomination forms received from visitors during the promotion period. The top 20 nominees chosen were interviewed by a panel of judges who then chose the winner of the Grand Courtesy Award and two winners of a Courtesy Award of Excellence. The top 20 retail establishments which received the highest number of nominations received the 'Hong Kong Cares' Award for the Most Outstanding Retail Establishment.

   For the 22nd year, the association organised the Student Ambassador Programme whereby 100 students who are going overseas to further their studies in tertiary institutions take part in a month-long programme comprising lectures, tours and special visits designed to increase their awareness of various aspects of Hong Kong and enable them to talk confidently and accurately about their home.

   The association continued to publish regular reports on the performance of the industry, 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', 'Hong Kong Hotel Industry Report' and 'Airline Statistics'.

   In 1989, five new hotels opened, bringing the total number of rooms in Hong Kong to 27 269. This reflects the continuing confidence that the private developer is placing in the future of Hong Kong's tourism industry.

18

THE ARMED SERVICES

THE Armed Services based in Hong Kong form a multinational Garrison, 38 per cent Hong Kong Chinese, 43 per cent Gurkhas and 19 per cent British servicemen and women.

In addition Hong Kong has its own locally-enlisted regiment of part-time soldiers, the Royal Hong Kong Regiment (The Volunteers).

The Commander British Forces is in overall command of the Royal Navy, Army and Royal Air Force elements which make up the garrison. The garrison consists of three Royal Navy patrol craft, an infantry brigade of one United Kingdom and three Gurkha battalions, and support troops which include one regiment each of Gurkha engineers, signals and transport, and an Army Air Corps squadron equipped with Scout helicopters. The Royal Air Force provides medium-lift air support with a squadron of Wessex helicopters. Among the supporting units there is an Army Maritime Troop with three landing craft (RCLs) which have become well known to residents of outlying islands as the transporters of everything from men to earth-moving equipment.

      The role of the garrison is to demonstrate sovereignty and safeguard the conditions which have helped Hong Kong to flourish, thus underlining the United Kingdom's stated commitment to the territory.

      A significant part of the garrison's work is devoted to preventing illegal immigration by land or sea. The Royal Navy patrols Hong Kong waters, and every infantryman can expect to spend one day in four on the land border throughout his tour. For two weeks every year the Volunteers also take on border duties.

Military resources are available to assist in the event of natural disasters or other tragedies. The garrison automatically comes to a higher state of alert whenever a typhoon threatens the territory. Emergency communications are set up and troops are placed on standby for tasks such as clearing landslips or assisting in the rescue of civilians trapped by floods. The RAF's Wessex helicopters are especially useful in this role. A wide range of stores and equipment is always on hand for disaster relief.

      Royal Navy patrol craft are manned and engines kept running throughout the storm so that the vessels are ready to respond instantly to calls for assistance.

      For smaller-scale emergencies, the Royal Navy operates Hong Kong's only recom- pression chamber to treat divers who have surfaced too quickly. The Navy also has its own clearance diving team which can assist the Police and the Fire Services Department in underwater tasks.

       RAF helicopters are a familiar sight during the dry season, especially in country parks where they are used to fight fires and rescue injured trekkers in addition to their primary role of moving troops or Royal Hong Kong Police on training exercises.

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