Hong Kong Yearbook - Annual Report for the Year 1991

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GKONG PUBLIC LIBRARI

With the compliments of

HONG KONG

·GOVERNMENT INFORMATION SETTIOES

THE METRO AREA

RG/IC R

C: Commercial

C/R: Commercial/residential

R: Residential

: Industrial

G/IC: Government, institution

& community

P: Port facilities

T: Tourist related facilities

C/R

SCALE 1:300,000

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44116

90068

ANJO

بیبر

HONG KONG 1992

A REVIEW OF 1991

市政局公共圖書館 UCPL

3 3288 00680894 5

1600

URBAN COM

TUONO LIBRARIES

1100485

Acc. No.

Class

Author

HK951-25

HON

HONG KONG 1992

Editor:

David Roberts,

Government Information Services

Designer:

Sarah Lee,

Government Information Services

Photography: Augustine K. C. Chu,

Special

Stone Chiang, Daniel Wong and other staff photographers, Government Information Services

Photographs of RHKAAF aircraft courtesy of the Royal Hong Kong Auxiliary Air Force

Photograph of Mr Victor Fung courtesy of the Hong Kong Trade Development Council

Contributor: D. K. Lewis (Chapter 1)

Statistical

Sources:

Census and Statistics Department

The Editor acknowledges all contributors and sources

Copyright reserved

Code No.: F30019200E0 (ISBN 962-02-0111-6)

Price: HK$48.00

US$15.00

UK £11.50

Cover: Aerial view north-westwards across the Hong Kong Island foreshore and Victoria Harbour towards western Kowloon and the north of Lantau Island, the setting for Hong Kong's ambitious new port and airport developments.

Frontispiece: The shape of things to come ... an impression of the remodelled coastlines of Victoria Harbour after the reclamation and development proposed in the Metroplan.

Inset: Reclamation areas envisaged in the Metroplan.

0012

CONTENTS

Chapter

Page

CALENDAR OF EVENTS IN 1991

1

1

A COMPLETELY NEW PORT

5

2

CONSTITUTION AND ADMINISTRATION

17

3

THE LEGAL SYSTEM

37

4

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

46

5

THE ECONOMY

50

6

FINANCIAL AND MONETARY AFFAIRS

65

7

INDUSTRY AND TRADE

79

8

EMPLOYMENT

105

9

PRIMARY PRODUCTION

117

10

EDUCATION

123

11

HEALTH

145

12

SOCIAL WELFARE

166

13

HOUSING

179

14

LAND, PUBLIC WORKS AND UTILITIES

192

15

TRANSPORT

224

16

PUBLIC ORDER

246

17

TRAVEL AND TOURISM

278

18

THE ARMED SERVICES

282

19

COMMUNICATIONS AND THE MEDIA

286

20

RELIGION AND CUSTOM

303

21

RECREATION, SPORTS AND THE ARTS

309

22

THE ENVIRONMENT

339

23

POPULATION AND IMMIGRATION

364

24

HISTORY

372

APPENDICES

381

INDEX

453

URBAN COUNCIL PUBLIC LIBRARIES REFERENCE LIBRARY

ILLUSTRATIONS

Between pages

Frontispiece

Events

Hong Kong's High-Flyers

Industry

Children

Health and Welfare

New Towns, New Territories

Agriculture and Fisheries

Disciplined Services

Heritage

4-5, 28-29

60-61

92-93

140-141

172-173

204-205

236-237

268-269

316-317

END-PAPER MAPS

Front:

The Territory of Hong Kong

Back:

Hong Kong Population, with Focus on New Towns

APPENDICES

1

2-5

6

Appendix

UNITS OF MEASUREMENT

CONSTITUTION AND ADMINISTRATION

OVERSEAS REPRESENTATION

Page

384

389

394

7-11

THE ECONOMY

399

12-14

FINANCIAL AND MONETARY AFFAIRS

409

15-16

INDUSTRY AND TRADE

414

17-20

EMPLOYMENT

419

21-23

PRIMARY PRODUCTION

425

24-27

EDUCATION

427

28-31

HEALTH

429

22 323

32

SOCIAL WELFARE

432

HOUSING

437

34-36 LAND, PUBLIC WORKS AND UTILITIES

438

37-38

TRANSPORT

441

39-42

PUBLIC ORDER

444

43

COMMUNICATIONS AND THE MEDIA

449

44

RECREATION, SPORTS AND THE ARTS

450

45

THE ENVIRONMENT

451

46

HISTORY

452

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 1991

16.1.91

21.1.91

23.1.91

24.1.91

31.1.91

18.2.91

22.2.91

28.2.91

3.3.91

4.3.91

5.3.91

Hong Kong Fashion Week opens at the Convention and Exhibition Centre, attracting leading fashion experts from around the world. Governor Sir David Wilson leaves for Beijing for discussions on the new airport with Chinese Premier Li Peng and other officials.

The Town Planning (Amendment) Bill 1991, aimed at preventing further degradation of the environment in rural areas, is passed by the Legislative Council.

APEX'91, an international airport, port and transportation development exhibition and conference, opens in Hong Kong.

Chief Secretary Sir David Ford heads a Hong Kong delegation to promote the territory at a World Economic Forum meeting at Davos in Switzerland.

A group of Hong Kong officials headed by Political Adviser William Ehrman visits Zhongshan for the 11th annual border review with Guangdong officials.

The Office of the Exchange Fund is set up.

Hong Kong signs a new Air Service Agreement with New Zealand.

More than 65 000 applications are received as the deadline for the British Nationality Selection Scheme expires.

More than 424 000 people (32.5 per cent of electors) turn out to vote in the District Board elections.

Hong Kong signs a new Air Service Agreement with Malaysia.

Lu Ping, Director of the Hong Kong and Macau Affairs Office of China's State Council, commences a three-day visit to Hong Kong.

Two hundred Gurkha soldiers from the Gurkha Transport Regiment in Hong Kong are among British forces commended for their services in the Gulf War.

1

2

CALENDAR OF EVENTS IN 1991

6.3.91

7.3.91

12.3.91

13.3.91

15.3.91

8.4.91

15.4.91

18.4.91

20.4.91

24.4.91

5.5.91

9.5.91

23.5.91

24.5.91

8.6.91

11.6.91

20.6.91

26.6.91

Financial Secretary Sir Piers Jacobs presents the 1991-2 Budget in the Legislative Council.

The Governor leaves for a visit to London, the Netherlands and Germany. In Hanover, he opens the trade fair CeBIT'91, in which Hong Kong is the prime partner and the focus for the 1991 event.

The 18th meeting of the Sino-British Joint Liaison Group begins in Beijing.

A White Paper, 'Social Welfare into the 1990's and Beyond' is tabled in the Legislative Council.

Fieldwork gets underway for a full-scale population census.

British Foreign Secretary Douglas Hurd arrives in Hong Kong after visiting Beijing.

Hong Kong's first satellite television service, STAR TV, begins broadcasting to the Asian region.

The Governor opens Hong Kong's new Science Museum.

The Financial Secretary leaves for Vancouver to attend on Asian Development Bank annual meeting.

The Government publishes for public consultation a report by a working party on primary health care.

More than 393 000 voters (23 per cent of electors) cast their ballots in the Municipal Council elections.

The Governor starts a six-day official visit to Australia for discussions with the then Prime Minister Bob Hawke, senior ministers and leading businessmen.

Hong Kong Park, a new 10-hectare 'green lung' in Central, is officially opened to the public.

Canadian Prime Minister Brian Mulroney visits Hong Kong for the launching of the 'Festival of Canada in Hong Kong'.

The Hong Kong Bill of Rights Ordinance comes into effect,

The Sino-British Joint Liaison Group begins its 19th meeting in Hong Kong.

The Governor leaves for a seven-day visit to London for discussions with British Prime Minister John Major and other senior officials.

A Hong Kong delegation headed by Financial Secretary (Designate) Hamish Macleod attends the Europe/Asia Conference 1991 in Vienna, which focuses on the investment and trade opportunities in Asia and Europe.

CALENDAR OF EVENTS IN 1991

1.7.91

8.7.91

22.7.91

25.7.91

27.7.91

10.8.91

3.9.91

4.9.91

6.9.91

9.9.91

12.9.91

15.9.91

24.9.91

10.10.91

11.10.91

The Governor officially opens the Tate's Cairn Tunnel, which is the longest road tunnel in Hong Kong, providing a direct link between Sha Tin and Eastern Kowloon.

The operations of the Bank of Credit and Commerce Hong Kong are suspended.

The Minister of State with Responsibility for Hong Kong, Lord Caithness, arrives in Hong Kong for a seven-day visit.

Metro Broadcast Corporation Limited, the second commercial radio station to be licensed, commences broadcasting.

The Governor holds talks in Shenzhen with Director of the Hong Kong and Macau Affairs Office, Lu Ping, focusing mainly on the new airport project.

A charity concert, held at Happy Valley race track for China's flood victims, attracts an audience of more than 80 000 and raises over $100 million.

The 3rd International Abilympics, hosted by Hong Kong, attracts over 2 000 participants from 80 countries.

The Sino-British Memorandum of Understanding on Hong Kong's new airport and related projects is signed in Beijing by Prime Minister John Major and Premier Li Peng.

Prime Minister John Major arrives from Beijing for a two-day visit accompanied by Foreign Secretary Douglas Hurd.

Hong Kong signs a new Air Service Agreement with Brazil.

The Chief Secretary leaves for a week-long visit to Japan to introduce Hong Kong's new airport project to Japanese bankers and financiers.

Elections are held for the 21 functional constituency seats of the Legislative Council.

More than 750 000 people (39 per cent of electors) cast their votes for 18 geographical constituency seats in Hong Kong's first direct elections to the Legislative Council.

The 20th round of Sino-British Joint Liaison Group talks begins in London.

The Governor opens the University of Science and Technology, Hong Kong's third university with an initial intake of 700 students.

The Governor leaves for a week's visit to London for discussions with the Foreign Secretary and other ministers and officials.

3

CALENDAR OF EVENTS IN 1991

13.10.91

28.10.91

29.10.91

9.11.91

12.11.91

15.11.91

18.11.91

22.11.91

29.11.91

1.12.91

2.12.91

3.12.91

6.12.91

9.12.91

10.12.91

29.12.91

31.12.91

4

Financial Secretary Hamish Macleod leaves for Bangkok to attend the 46th annual meetings of the Boards of Governors of the World Bank and the International Monetary Fund.

Formal agreement is announced between the Governments of the United Kingdom and Vietnam on an Orderly Return Programme to repatriate Vietnamese illegal immigrants in Hong Kong.

The Duke of Edinburgh arrives for an international forum on his Award Scheme. Prince Edward, an Award holder, also attends the forum.

The first group of 59 Vietnamese illegal immigrants is repatriated under the Orderly Return Programme.

The Airport Consultative Committee, appointed by the Governor to provide a forum for community views, holds its first meeting in Hong Kong.

Lady Wilson opens the new Museum of Art, adjoining the Cultural Centre.

The Governor starts a six-day visit to Singapore and New Zealand to promote investment and trade.

The first Government Bonds are launched, the proceeds of which will help finance infrastructural developments.

Provisional agreement is reached for the Hong Kong Chinese Bank to take over the business of the Bank of Credit and Commerce Hong Kong. The government embarks on the first phase of the Kowloon Walled City clearance operation, to make way for a public park.

The new Hospital Authority takes over the management of all public hospitals in Hong Kong.

The Duke and Duchess of Kent arrive for an eight-day official visit. The 21st Meeting of the Sino-British Joint Liaison Group begins in Hong Kong.

Lord Caithness arrives in Hong Kong from Beijing.

'Polmet '91', an exhibition and conference on pollution in the metropolitan and urban environment, is opened by the Duke of Kent. The second group of 28 Vietnamese illegal immigrants is repatriated under the Orderly Return Programme.

Hong Kong suffers its coldest day for 16 years, with temperatures plummeting to 4.7 degrees Celsius and as low as minus 3 degrees on high ground.

The Governor is honoured with a life peerage in the Queen's New Year's Honours List, and it is announced in London that he will retire in 1992.

Below: Prince Philip admires calligraphy by a participant in the Duke of Edinburgh Award Scheme during his visit in October.

Overleaf: In Beijing, on September 3, Prime Minister John Major and Premier Li Peng signed the Sino-British Memorandum of Understanding on Hong Kong's new airport and related projects.

X

共圖

蒞胗 香

香江

1.

C

1

1.0!

It's

CeBIT

ANNOVER MESSE

CeBIT '91

Prime Minister John Major tried out the simultaneous interpretation facilities at the Hong Kong City Polytechnic during his visit in September.

Above: The Governor, Sir David Wilson, opened the trade fair CeBit '91 in Hanover in March.

Left: The Governor had talks with former Singaporean Prime Minister Lee Kuan Yew in Singapore in November.

THE HOND KON, UNIVERSITIES SCIENCE AND TECHNOLOGY

OPENE

, CEREMONY. 10 mOCTOBER 1991

111

40

H

Opposite page: The Governor officially opened Hong Kong's new University of Science and Technology, on its spectacular campus (below)

at Clearwater Bay in the New Territories.

171

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.

Left: A helicopter of the Royal Hong Kong Auxiliary Air Force taking part in a search and rescue training operation. Below: RHKAAF Super King Airs in formation over Central with Victoria Peak in the background.

门】

皇家香港燏助空筆

ROYAL HONG KONG

ALMILIARY WR FORCE

1

A COMPLETELY NEW PORT

NOT long ago an author renowned for her descriptions of the great cities of the world sought to sum up the impressions conveyed by Victoria Harbour and its immediate surroundings. In Hong Kong-Xianggang (published in 1988) Jan Morris wrote that, for her, the harbour was 'the most thrilling of all metropolitan prospects - the finest sight in Asia'. In the same book, much of which is devoted to depicting human activity in and around the harbour, she referred briefly and in passing to 'visionary plans to create another container terminal on an artificial island off Lantau'.

-

      She was wide of the mark. Even as she wrote, these plans had advanced far from the visionary stage. Barely a year after the book came out the Governor of Hong Kong, Sir David Wilson, announced the government's decision to 'create what amounts to a completely new port on the western side of the territory', in concert with the construction of a new international airport in the same area.

The phrases just quoted illustrate how difficult (if not impossible) it is for any observer, however perceptive, to present a picture of Hong Kong and an account of its development that do not quickly become dated in some vital aspect or another. In this place, almost overnight it seems, vision rapidly turns into blueprint and study becomes strategy.

In portraying the harbour as something inseparable from the creative and productive energies of the people, Miss Morris said things that seem timelessly true, wise and apposite; and her book will no doubt be read with enjoyment and advantage for many years to come. Yet the fact remains that the harbour on which she focussed, the strip of water between Hong Kong Island and Kowloon, is already beginning to become known as the Old Harbour.

     What Hong Kong has set its hand to, the greatest undertaking that can be imagined for a harbour-city, is the formation of a new haven and a new port. The new haven or anchorage will be four times larger than the Old (Victoria) Harbour. More importantly, the new container terminals to be built on Lantau will, with other facilities developed elsewhere, quadruple Hong Kong's present cargo capacity.

      The words 'power' and 'muscle' are perhaps equally applicable, and convey better the essence of modern port activities: the lifting of large volumes of goods quickly from shore to ship and from ship to shore. By massing new lifting muscle in the west, Hong Kong will become a four times more powerful port over the next twenty years.

The importance of this undertaking can hardly be overstated. The harbour is the chief physical asset of the territory; and the prosperity of the territory and its standing in the

A COMPLETELY NEW PORT

6

world will depend in the future, as now and in the past, on how shrewdly and far-sightedly this asset is exploited.

Hong Kong's eminence as a financial, communications and manufacturing centre is rooted in its pre-eminence as a port, presently one of the two busiest in the world. Its prime clients are the world's shippers, traders and manufacturers. If their needs are correctly anticipated and efficiently met, the city will thrive. If they are not, it will decline.

The Grand Design

As Hong Kong entered the second half of the 1980s, those concerned with its future territorial development had to take account of two certain prospects.

The first certainty was that over the closing decade of this century and the opening decade of the next one, the volume of cargo that the port would have to handle would increase substantially. No figure could then be set on the likely rate of growth, but the trends clearly pointed well beyond a level at which the privately operated container port at Kwai Chung, even with new terminals added to it, could cope with the demand.

The second certainty was that an equally pressing increase in air traffic would exceed the capacity of Kai Tak Airport, already under strain, by the mid-1990s. The desirability of a new airport was hardly in doubt. But where, when and how to build it (and whence the funding would come) were then unanswerable questions. There was also a more central and overriding concern: how to avoid a costly and perilous divergence of effort as answers and solutions were sought for the port and the airport respectively.

   This last concern led to the birth of the process-cum-operation now known familiarly as 'PADS' - yesterday's investigation, today's Grand Design. The initials stand of course for the Port and Airport Development Strategy; but in effect the PADS acronym carried a second 'S' (for Studies) up till the day when the government made its final decision on the options which the planners were charged with devising.

   Work on the PADS studies began in mid-1987 and in March 1988 the overall brief for the teams engaged on them was spelled out. Their task was to produce recommended strategic options that would:

- meet the forecast port and air traffic growth in Hong Kong up to the year 2011;

- ensure that all new port, airport, associated industrial and residential facilities, transport links and other infrastructure would be incrementally provided according to an integrated and cohesive plan;

form the heart of future major government development programmes to enhance and sustain the stability and prosperity of the territory.

-

The magnitude of PADS and its ramifications over many fields the environment, housing, labour deployment, land transportation and geology as well as the more obvious areas of economics, finance, civil engineering and town planning - are such as to constitute a whole field of study in itself; many learned volumes could (and doubtless will) be written on the subject. The PADS studies had to update and collate the findings of many previous surveys, some of them extremely wide-ranging, carried out over the previous fifteen or so years. The study teams comprised members of at least a dozen professional disciplines; and included, significantly, many specialists co-opted from the private sector.

   The immediate task before them was to refine and harden two sets of demand forecasts. But never far from their thinking was an awareness of two factors: one, that both government and non-government resources would need to be exploited to the maximum;

A COMPLETELY NEW PORT

     and two, that the end-object of their labours was the production of facilities which not only would meet Hong Kong's needs but would also square with, and further, the economic development of South China.

By mid-1989 PADS had assembled the forecasts and strategic options, which were then presented to government. The estimate of the likely growth in port cargoes allowed for the possibility that traffic could increase by a factor of between five and six; subsequent analysis arrived at a factor of four as a more dependable figure for planning purposes - meaning a four-fold rise from the 71 million tonnes handled in 1988 to a foreseeable total of some 250 million tonnes in 2011. In the same period, air passenger traffic was projected to grow by a factor of more than three, from 15 million passengers annually to around 50 million.

The options for catering for these increases were narrowed down to three Recommended Strategies, laid out in map form as well as textually, for the government to choose from. All three strategies provided for new container terminals on Lantau, but their con- figuration varied according to the location of the airport.

Under Strategy A a new airport would be built in the western harbour approaches, between the outlying islands of Lamma and Cheung Chau. Strategy B placed a new airport on the far side of Lantau, on a reclamation taking in the island of Chek Lap Kok. Strategy C, manifestly a worst-case or fall-back scenario, envisaged the retention of the airport at Kai Tak, with the implicit limitation that further passenger demand would have to be artificially constrained.

So many schemes, private as well as public, hung on the final decision ('We're waiting on PADS' was an expression repeatedly heard in construction circles) that rumours about both the options and the outcome rose to a high level of intensity during the third quarter of 1989. Speculation was ended on October 19 when the Governor told a packed meeting of the Legislative Council that Strategy B, placing the new airport on Chek Lap Kok, had been adopted.

      The total cost of the port and airport works and associated infrastructure, he said, would be about $127 billion (at 1989 prices) over the period up to 2006. This was 'an enormous financial commitment'; but it was one that 'we cannot afford not to make.' Port development will account for about 40 per cent of the total, the airport for about 30 per cent. Something like half the capital for the combined undertakings will come from the private sector.

The Grand Design was now in place. Summarising its port components, Sir David emphasised that the first priority was to reinforce and expand the Kwai Chung container port, to the north west of Kowloon, by constructing Terminals 8 and 9 on either side of it, on reclamations at Stonecutters Island and Tsing Yi Island respectively. 'We then plan to move the focus of the port westward,' he said, indicating the intention to build further terminals in north-east Lantau, with reclamations based on the Tsing Chau Tsai peninsula.

     This move will be made possible by a massive bridge-and-highway project, known as the Lantau Fixed Crossing, which will connect the new airport by road with Kowloon. The objective is that the first of the airport's two runways will come into operation, if possible, in mid-1997.

     The Fixed Crossing is today still commonly envisaged solely as a conduit for the airport. But it will in fact become a no less essential conduit for container lorries going to and from the new port. And the 1 400-metre span of its main suspension bridge will serve as an

7

8

A COMPLETELY NEW PORT

emblem, writ in steel, of what PADS was all about - the concerting of marine and aviation developments.

At the same time as the airport/harbour bridge is taking shape, another massive structure will be emerging to view in waters well to the south. A breakwater to protect the container terminals will extend from Cheung Chau to a point off Lamma Island. Simultaneously, dredging operations between the end of the breakwater and the west coast of Lamma will be creating a new shipping channel; for container ships it will become the main road of the future into and out of Hong Kong harbour.

A shift of focus indeed. Lantau, the territory's largest insular component, will no longer fit the category of an 'outlying island'. Its extensive country park in the south will be preserved, as green and as inviting as now for recreational activities. But a large portion of the northern coast will be developed into industrial and residential areas, including two new townships to house airport and other workers.

Likewise, the north-eastern corner of Lantau, the Tsing Chau Tsai peninsula, will be enlarged and reshaped into one of the busiest industrial complexes of Hong Kong. Around the new terminals, as they come on stream, port back-up and industrial areas will steadily grow - supportive tissue, if you like, for the new muscle in their midst.

These changes, that will transform the appearance of a large part of the territory (and keep its mappers hard at work for the next two or three decades), can be seen primarily as a response to the challenge of dramatically increasing demand. But, to round out the Grand Design and to explore its implications further, it is worth making a brief excursion back in time - to pre-PADS days.

The Thrust to the West

In the early 1970s the then Director of Public Works, the late James Robson, would from time to time brief distinguished visitors to Hong Kong on the pattern of the territory's development - past, present and prospective.

Typical of these briefings was a session which took place in mid-1973. It did not last long, perhaps a little over half an hour, but it was a memorable presentation, in tone at once conversational and forceful: a digest of history and changing topography, all of it related to the harbour.

The speaker used three visual aids in succession. The first was Victoria Harbour itself, most of it then visible from his 20th floor office. Leading his visitor to the window, he pointed out that early governors of Hong Kong, enjoying a similar view from Government House, could gauge the state of the economy by counting the vessels in the harbour. (Nowadays they can't; towering bank buildings block the view, and the container ships and bulk carriers would anyway be out of sight.)

A lot of ground was covered fast. The subjects ranged from the location in 1841 of the house of the harbour-master (the first public administrator to be appointed) to the advent of deep-draught steamships, which enhanced the utility and value of what was the only first-class deepwater harbour between Singapore and Shanghai. The sketch moved forward into the 20th century to take in, among other things, the impact of the worldwide slump in the 1930s and successive aviation developments which led to the construction, in the 1950s, of Kai Tak's runway-in-the-sea.

Robson then turned to a map of the territory covering most of one wall and pointed to the area north-west of Kowloon which is today's Tsuen Wan/Kwai Chung/Tsing Yi

A COMPLETELY NEW PORT

conurbation. 'Over the last twenty years,' he said, 'various things - particularly a massive influx of people, the growth of large-scale manufacturing and, not least, the con- tainerisation of cargoes - have been steadily pushing development to the west, along the harbour. This area, Tsuen Wan, is a good example of the results.

'Here we have the factory town of Tsuen Wan itself, transformed from a fishing village. There's public housing forging ahead in it and around it. And now, alongside, a container port has got going at Kwai Chung.'

      Lastly, he unrolled a map labelled 'Colony Outline Plan', remarking that since it was a confidential document, 'we'll only take a quick look at it - just long enough to show you that we're studying development options much further westward.' And he indicated marks on the map, representing possible projects of the future, on Lantau and elsewhere.

     'Make no mistake,' he concluded, rolling up the map. The thrust to the west will continue.'

     This exposition, recollected today, poses some interesting questions. For example, if the westward movement and its continuation were so evident then, is it not an exaggeration to regard the PADS design as embodying a 'completely new port'? Will it not be just part of a continuum, an extension of existing facilities?

The short answer is no. Container port developments up to around 1997 - meaning the new terminals at Stonecutters Island and Tsing Yi - will certainly extend the Kwai Chung port. But the post-1997 projects for Lantau are different. They will amount to what a senior town planner, measuring his words carefully, has termed a 'quantum leap'. The leap will be spatial and temporal: into a large, roughly basin-shaped area of sea and sur- rounding land capable of manifold development far into the 21st century.

     Another question that may come to mind is: if the advantages of large-scale de- velopments in the west were so apparent in 1973, why was a PADS-like scheme not launched and adopted much earlier?

Out of many convincing explanations, there is space here to select just one. The simplest of answers is that while Hong Kong's collective energies often seem boundless, its resources are not. During the 1970s and 1980s its planning and construction efforts were centred on two prodigious undertakings: the construction of the Mass Transit Railway and the development in the New Territories of new towns which now provide homes for more than two million people.

The railway and the public housing programmes in the new towns were mega-projects with a common aim: to make daily life easier and more worthwhile for people who had lived and laboured arduously for too long. These were schemes that could not wait. During the intensive periods of construction - five years for the MTR, more than ten in the case of the New Territories Development Programme - they claimed, and were given, top priority.

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     The two undertakings can be likened respectively - in scale, cost and duration building a new airport and developing a new port. The MTR had a target date for completion of its Initial System which it met ahead of schedule in 1979. Similarly there is a target date, 1997, for completing the first-stage projects of the Chek Lap Kok airport.

     The parallel between the new towns and the new port is also close. The New Territories Development Programme was phased, with adjustments from time to time, over an initial fifteen-year period. The port works envisaged under PADS will be phased over a similar period, with variable timing.

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A COMPLETELY NEW PORT

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Yet there is an important difference. Whereas the rephasing of New Territories De- velopment was largely due to financial constraints (such as those arising, for example, from the worldwide recession of the mid-1970s), the timing of port projects will depend primarily on the demand building up for the new facilities. In short, it's a 'demand-led' scheme.

To return to the question of whether the bound to the west that we now see activated by PADS was unduly delayed. One can argue convincingly that it was not; and one can argue with equal conviction that an earlier rush into the finalising of port-and-airport plans, while at the same time attending to huge ongoing re-housing and other commitments, could well have been disastrous.

It must be emphasised, further, that a steady if undramatic thrust of development to the west never ceased in the later 1970s and throughout the 1980s, though it attracted relatively little public attention. Construction under way or completed included new public housing on Tsing Yi and land reclamation and urban renewal in Western District on Hong Kong Island - not forgetting a large new town still being expanded at Tuen Mun.

The same directional tilt was apparent in large-scale planning exercises preceding PADS. One such was Metroplan, which in the late-1980s began to publish the options for urban development along both shores of the harbour. Among the prospects outlined were a western harbour crossing and a reclamation that would turn Green Island into a part of Kennedy Town.

Finally, it's relevant to point out that the early and mid-1980s were the years when an intensive industrial effort - spread over many fields, including notably the service indus- tries produced the conspicuous increases of demand which necessitated PADS and without which there would have been no raison d'etre for the studies. This surge was reflected in the total tonnage handled by the port. It rose from 21.0 million tonnes in 1980 to 63 million tonnes in 1987.

All in all, 1988 may not have been a bad year to begin to pull the plans and surveys together. Before a quantum leap, as before any other kind of leap, it is as well to begin gathering oneself at the right moment. That moment had come.

New Muscle, where it's Needed

Let us now move forward a little in time, if only in imagination. On an airliner about to land in Hong Kong in, say, 1999, passengers could well hear the pilot address them on the following lines: 'Ladies and gentlemen, we are now completing our descent to Chek Lap Kok airport on the island of Lantau. Shortly you will see the island ahead.

'As we approach, you will notice the new harbour breakwater with ships at moorings beyond it. And in the distance, before the hills of Lantau get in the way as we land, you may catch a glimpse of container ships entering port and a large suspension bridge close by. That's the bridge you'll be crossing on your way downtown.'

Our imaginary pilot will have given an excellent summary of the main features of the western harbour scene - except for one mistake. It's true that a number of stationary cargo ships, maybe as many as fifty at times, will be visible in the new haven once the new breakwater is in place, so filling the southerly gap in a protective ring of hills and mountains. But these ships will not be at moorings. They will be at anchor; and very few, if any, of them will be loading or unloading freight.

The sheltered area afforded by the breakwater will be used as an anchorage and will enhance the safety of vessels during typhoons. But the main function of this

A COMPLETELY NEW PORT

breakwater will be to provide protection from south-westerly seas for the new port facilities on Lantau.

     The concept of a spacious haven with ships in it but no lighters at work on them may be puzzling at first. But it becomes clearer if we remember that the fourfold increase in demand that the port development programme has to meet over the next twenty years will essentially be a demand for additional container-handling capacity, not for increased buoyage, lighterage and related waterfront facilities. Not surprisingly, it is at container terminals that containers are most speedily and efficiently handled. Lighterage means dispersed muscle; in the container age the muscle has to be concentrated.

     In 1991, a total of 104 million tonnes of cargo was handled in the harbour, of which about 50 per cent was containerised. By 2006 this percentage could well have increased to around 60. Conversely, the trade in conventional cargo has remained relatively static. Mid-stream cargo work will continue, since existing practices of trade in south-east Asia, with vessels serving less sophisticated ports, will have to be catered for. But what is now a proportional decline in conventional handling will in due course become an absolute decline. Some shipping specialists, peering far ahead, envisage a day when the sight of a barge working in or near the heart of a modern harbour will be as rare as is the sight of a horse and cart making goods deliveries in Piccadilly Circus or Times Square.

      That day is of course still far off. There are 75 mooring buoys in Victoria Harbour and, under PADS, there are no plans to increase them. Nor are there plans to reduce them. For many years to come the Old Harbour will be the same impressively busy scene as it is today - 'order in chaos' Jan Morris called it, relishing the bustle of lighters and other harbour craft criss-crossing the water.

Over at the opposite end of the territory, beyond the new town of Tuen Mun, a brand-new port for Pearl River freight traffic will be developed below the westerly slopes of Castle Peak. This port will be a modern replacement for the existing riverine facilities at quays in Kowloon and elswhere. A main reason for establishing a river trade terminal in Tuen Mun will be to divert such traffic from the Ma Wan Channel, which is narrow and angular and has strong tidal flows.

     Interestingly, the Castle Peak river port will revive a long dormant line of South China trading activity in this area. It will be not far from the site of an ancient harbour, long ago silted up, where a thousand years ago foreign vessels gathered to do trade with China. A monument to the importance of that trade is a splendid Buddhist monastery on the hills which can trace its origins back to the days of the old entrepôt.

     All harbours - ancient and modern, and whatever their methods of operation - need roads to serve them. The road construction schemes which will underpin container port developments over the next twenty years add up to a formidable mega-project in their own right.

      We have already highlighted the Lantau Fixed Crossing which will be linked with a new six-lane highway along western Kowloon. Two more examples must suffice: Route 3, which will serve as a short cut traversing the hills between Tsing Yi and the new town of Yuen Long to the north, will be part of a new road artery into China; and before the end of the century the new Western Harbour Crossing tunnel will link the Lantau port/airport developments with Hong Kong Island by means of an expressway.

      Lastly we come to land, meaning the new land which will have to be created not just for the terminals themselves but for the industrial and back-up areas around them. Again, all

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A COMPLETELY NEW PORT

harbours are land-hungry; buoy-and-lighter operations require handling areas for cargo, and these tend to straggle along the shore- sometimes uneconomically. Container ports require blocks of land, where the back-up activities can, like the 'muscle' of the terminals, be concentrated.

Hong Kong's paucity of land is proverbial. Six million people live in an area one-third the size of Rhode Island in New England, much of it so hilly or mountainous as to preclude building. From the foundation of the territory up till today the main solution to the problem has been reclamation. Indeed, Hong Kong has become known as 'the place where they slice the tops off hills and dump them in the sea and build on them.' The process continues and, so far as one can visualise, will never end.

   For the new port, a total of 1 200 hectares will have to be formed by the year 2006, an increase of 1.2 per cent on the present territorial total. About 250 million tonnes of earth, rock and sea-bed sand must be moved. Even more reclamation will be necessary when the present PADS projects are completed in 2011.

   To sea-bed sand 'marine-sourced fill,' as the technical jargon has it - a tale of resourcefulness in research is attached. After some disastrous landslips following rain- storms in the early and mid-1970s, Hong Kong recruited a cadre of geotechnical en- gineers, later reinforced by geologists, to ensure that such catastrophes would not recur. In due course these specialists, getting together off-duty to talk shop, formed the marine studies group of the Geological Society of Hong Kong.

It was one of the smallest, and often the least formal, of learned groups. It was also one of the most productive. The contributors to its proceedings included consultant engineers working for the container-terminal companies.

   Research centred on the marine implications of a territory-wide geological survey, which seemed to suggest the existence of sizeable deposits of sand and gravel on the sea-bed in various locations. By 1988, test bores and sampling had confirmed the presence of a rich new material resource, capable of compaction for land-fill purposes.

The implications were far-reaching, technically and economically. To form new land in the sea, Hong Kong would no longer have to resort to 'cutting the tops off hills' to anything like the extent this was necessary previously; the bulk of the fill would come from the far easier, quicker and cheaper method of dredging.

   Some technical and economic experts would go so far as to say that, without the exploitation of this new-found resource, PADS in its present form and time-scale would be inconceivable. Certainly it will contribute signally to a process of development which will amount scenically to a transformation. If we return to our imaginary airline pilot, bringing his plane down into Hong Kong in 1999, it is not far-fetched to hear him saying: 'Ladies and gentlemen, we're landing on a reshaped island.'

Guangdong on the Move

A comprehensive survey of the Grand Design and its port works elements would have to focus, in some depth and successively, on several economic perspectives. Examples would be: Hong Kong's own economic strategies for the 21st century; the momentum of economic development throughout what is called the Asia Pacific rim; and the notable economic advances in the sub-regions of East and South-east Asia, from Korea in the north to the Indonesian archipelago in the south.

A COMPLETELY NEW PORT

All these subject areas are important. But more pertinent than any of them is the South China setting. The full significance of the port-creation process can only be clearly perceived in the China context.

     For a summary of the setting we can usefully turn to three quotations, all from talks given to audiences far from Hong Kong.

There has been, and there will be, huge development in Hong Kong's economic relationship with the Mainland of China, for whom we are the major entrepôt, the best deepwater port, the busiest airport and the major source of outside investment and processing skills.

The Pearl River delta and the coastal provinces of China, with Hong Kong as their hub, are going to be a key area of growth, in China and Asia, over the next 20-30 years. We see ourselves as the service base for a rapidly-developing South China industrial heartland. And we see ourselves at the centre of a network of international commercial links which have tremendous opportunities for growth. In short, we see Hong Kong as the leading trade and financial centre in the region.

     The speaker, in all three instances, was the Governor - addressing audiences in New York, Paris and Rome in the last two years. Sir David, it may be objected, is a biased depicter of a broad and wide-ranging scene. Let us narrow the focus to Guangdong Province, of which Hong Kong is a geographical part, and look at what has been happening there.

     In recent years something akin to an economic miracle has been taking place in the province, which has a population of about 65 million. Gross Domestic Product has grown by an average of 12 per cent a year since 1979, making the province a front-runner as a manufacturer and exporter. In 1990, it sold about US$10.6 billion worth of goods overseas, more than any other province, representing 21 per cent of China's national total.

To this growth Hong Kong has contributed significantly. It now accounts for more than 70 per cent of foreign investment in the province. Hong Kong investors employ three million people there, four times the size of Hong Kong's own manufacturing workforce.

     Guangdong's planners, like Hong Kong's, have not been idle. They have a port development programme of their own, with which the PADS staffs are fairly familiar for they have had to take these projects into account. Correspondingly, planning and other professionals in Guangdong are conversant with Hong Kong's port development plans and their implications.

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This can hardly be otherwise, since information about the respective plans has for a long time been shared at meetings - sometimes between individuals, sometimes between groups - that have taken place at various levels, formal and informal. But before iden- tifying the new ports which are being developed up-river, between here and Guangzhou, we must take another brief look back at the past.

Economically, the most unnatural period in Hong Kong's history (excluding the wartime occupation by Japan, from 1941 to 1945) was the 1950s and 1960s. From the foundation of Hong Kong in 1841 the China trade was the nucleus of all business activity in the territory, and the harbour both existed and developed as the entrepôt for China. Then, in 1951, came the United Nations embargo, resulting from the Korean War, that proscribed the importation into China of a wide range of 'strategic' materials.

     Entrepôt activity was not utterly extinguished. Regional shipments and transhipments increased and some of the China trade went underground, though how much was smuggled

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from Hong Kong, in a traffic which it was impossible to suppress totally, remains unquantifiable. At all events the embargo was a blow which, if not deadly, was certainly crippling.

Hong Kong's remarkable response to this crisis was the development of a manufacturing capacity which helped to raise the economy to its present high international rating, Number 10 in the world. This recourse undoubtedly saved the situation, but the 1960s were nevertheless a worrying decade. Acrimonious non-relations persisted between the United States and China; and Hong Kong was not spared the side-blasts of what amounted to ideological frenzy in the People's Republic. Thus it came as a great relief to the community when in 1971, with the fever of the Cultural Revolution abating, Washington and Beijing began to replace acrimony with dialogue. Entrepôt could now revive.

Such was the background when, in 1973, a team of Hong Kong government engineers (led by Jim Robson, as Director of Public Works) accepted an invitation to visit their counterparts in Guangzhou. It was a friendly and successful visit, which was reciprocated. (In Hong Kong the guests from Guangzhou were intrigued and appreciative members of the audience at a public performance of a light opera rich in political satire, "The Mikado.')

In both cities, the subject of discussion was water supplies. In Guangdong, the Hong Kong group had the chance to observe how the flow of a major river had been diverted and led back upstream and over a mountain, enabling its water to be piped into the Hong Kong system. In Hong Kong, the Chinese engineers visited High Island, where the territory's largest reservoir was then being carved out of the sea.

If the main topic was water, it was not the only one. In fact both sides went to pains to demonstrate and explain other infrastructural features and schemes. A contact had been made and a dialogue begun, out of which personal friendships grew.

   As China reopened its economy to the outside world throughout the 1970s and 1980s - a policy to which the leadership in Beijing has repeatedly reconfirmed its commitment - so such contacts multiplied and extended over a wide field of activities. Hong Kong planners have observed with interest the development of schemes to expand the ports of Shekou, Huangpu and Zhuhai Shi in the Pearl River delta and estuary. They see these developments as complementary to, rather than directly competitive with, the enlargement of Hong Kong's deepwater capacity.

China, it should be added, is already taking an active part in the implementation of Hong Kong's port development strategy. The consortium which made a successful bid to build and operate Terminal 8 includes two Chinese state-owned companies.

Thus, our retrospective glance reveals that an essential part of the background to the development of the Grand Design consists of eighteen years of technical and professional contacts and consultations with China.

Making It Work

Despite the gratifying discovery of submarine sand deposits, Hong Kong remains generally poor in natural resources. The truism that the harbour and the people are the territory's two main assets holds good today and will be no less valid tomorrow. A fine new port will be as effective as the people who man and operate it.

In recent times, the community has become more fully aware of the debt owed to the workforce of the 1950s and 1960s, particularly those who toiled at looms and other machines in the early years of manufacturing. In the 1970s new labour legislation, new

A COMPLETELY NEW PORT

schools, new hospitals and, above all, a massive new programme of public housing amounted to recognition that it was high time for the fruits of the 'Hong Kong miracle' to be shared out more widely among those who had laboured to bring it about.

      The traditional stevedores' jobs have been carried out in Hong Kong by a labour force which has excelled in the fast movement of cargo to and from lighters. Their efficiency and availability to work round the clock, if required, have contributed notably to Hong Kong's high reputation as a quick turn-round port. Damage rates are low and pilferage in minimal.

Most of the old wooden motor cargo boats have been replaced by large steel lighters which have been purpose-built to handle containers. These changes in cargo activities have meant that workers have had to adapt, and this they have done very successfully.

     If the new Lantau bridge can be seen as a monument of what concerted planning can achieve, the outer breakwater could perhaps fittingly be dedicated to the memory of past generations of workers who kept the port going and thriving and who have thus laid the basis for the expansion now under way.

     The operation of a container port requires new skills. It is a great credit to the companies and consortia running today's terminals that their training programmes have produced technicians and operatives of a high calibre, many of them men formerly engaged in the older types of work. And the container companies deserve praise for far more than that. When the first berths were being built in the late 1960s, it was 'risk capital' that got those projects going - the then expectable profits from them being far from a sure thing. It was an enterprise in which faith, determination and courage played no small part.

     The development of Hong Kong harbour has always been a joint process between the private sector and government - usually with the former setting the pace and the latter, in response, providing the infrastructure. In effect it's a partnership, as the funding of the PADS projects will illustrate; as much as 80 per cent may well come from the private sector.

An emphasis on partnership, in more than one context, was conspicuous in the speech given by the Governor in October when he opened the 1991-2 session of the Legislative Council. Partnership with China was a major part of his theme, particularly apposite at a time when Chinese involvement and investment in the port and airport strategy look likely to be stepped up considerably.

     As we have seen, collaborative links have been forged over many years. The reinforcement of them will be vital to port development and port operations.

Lastly, we come to the public administration of the harbour, the government's role as harbour-master. In addition to a highly-skilled workforce and a forceful contribution from private business, the highest standard of administration will be essential if the new infrastructure is to work effectively. As in the past, the prosperity of the harbour and the city will depend on those intent on making things work.

2011- and Beyond

If we examine the more spacious area in which port developments are now beginning, it is clear that the completion of the projects envisaged up to the year 2011 will not be the end of the story. There is room, as demand continues, for yet further terminals to be built and for new industrial and residential areas to be developed. Though PADS is now primarily a strategy, the studies from which the design emerged are being constantly updated. From them, new projects will emerge.

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REFERENCE LIBRARY

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A COMPLETELY NEW PORT

   This prospect brings home the fact that, as harbour-cities go, Hong Kong is still a very young one. So too is Singapore, which like Hong Kong derives great advantage from its location in a fast-developing region.

With Singapore, Hong Kong pursues a friendly rivalry, the two cities jostling for the lead position as the world's busiest container port. After they had both overtaken New York and Rotterdam in the world ratings, Hong Kong was in the lead for three years. Now Singapore is just ahead. We can expect the positions to change yet again, for they result from relatively small shifts in trading patterns.

   In assessing Hong Kong's durability as an entrepôt, it is worth bearing in mind that the greatest harbour cities, especially those so placed as to be gateways to vast continental hinterlands, can enjoy very long runs indeed. A good example is the city that many people still think of as Constantinople - today's Istanbul, the Byzantium of ancient history - which now has 2 500 years of harbour development (and quite a few changes of sovereignty) under its belt. Founded originally as a small colony, it's an old, old city today; but one still capable of stirring itself and displaying a trick or two, like throwing bridges across the Bosporus.

   The geographical location in the Eastern Mediterranean which proved so valuable to Constantinople in its most glorious era (which lasted about half a millenium) was remarkably similar in its essentials to the geographical advantages which Hong Kong enjoys today in the Western Pacific. This historical parallel may be an unsure basis for a prediction. But it does indicate the sort of time-scale that one has to take into account.

   So much for distant prospects. The next fifty years are a sufficient span, for within it the 'completely new port' will become fully and unmistakably identifiable as just that. And at some point in this period we should not be surprised if a much-travelled visitor looks around what will then be a whole new harbour in the west and declares it to be 'the finest sight in Asia.'

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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.

There are now direct elections on the basis of universal franchise at all the three tiers of Hong Kong's representative government: two thirds of District Board members at district level, 36 per cent of all Municipal Council members, and 30 per cent of Legislative Council members are returned through direct elections.

      The first direct election to the Legislative Council was held on September 15, 1991, returning 18 members from nine geographical constituencies. The new Legislative Council, which has a majority of elected members returned from functional and geographical constituencies, will provide a firm foundation on which to base further development of the democratic system.

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 the Executive Council and may preside at meetings of 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.

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CONSTITUTION AND ADMINISTRATION

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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 Legislative Councils, and the Governor's powers in respect of legislation, disposal of land, the appointment of judges and public officers, pardons, and the tenure of office of Supreme Court and District Court judges.

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

Central Government

Executive Council

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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 1, 1991, there were 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 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

CONSTITUTION AND ADMINISTRATION

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 determines 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 President of the Legislative Council is the Governor. For the first time in the history of the council, the Governor has appointed a Deputy President from among the 60 members of the council, the composition of which is as follows: three ex-officio members, namely the Chief Secretary, the Financial Secretary and the Attorney General, 18 appointed members and 39 elected members.

The appointed members are appointed by the Governor with the approval of the Secretary of State. Elected members are elected separately by functional constituencies and by geographical constituencies.

There are 15 functional constituencies returning a total of 21 members to the Legislative Council. Each functional constituency represents an occupational or professional group: commercial; industrial; finance and financial services; labour; social services; medical and health care; teaching; legal; engineering, architectural, surveying and planning; account- ancy; real estate and construction; tourism; Urban Council; Regional Council, and rural. Of these the commercial; industrial; finance and financial services; labour; medical and health care and engineering, architectural, surveying and planning functional con- stituencies return two Legislative Council members each while the other nine return one member each.

There are nine geographical constituencies, each of which returns two members to the council. They follow closely the district board boundaries and are: Hong Kong Island East, Hong Kong Island West, Kowloon East, Kowloon Central, Kowloon West, NT North, NT East, NT West and NT South.

Elections are normally held at four-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 Cantonese and English, and simultaneous interpretation is provided.

Legislation is enacted in the form of bills, which go through three readings and a committee stage. Most business, including bills, is transacted by way of motions, which are

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decided by the majority of votes. If a clear majority either for or against any motion is not apparent from a voice vote or if a member challenges the statement of the President that he thinks the Ayes or the Noes have it by claiming a division, the President may order the council or the committee to proceed to a division. 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 debate on 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 supple- mentary 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 and 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 and all members other than ex-officio members. It scrutinises public expenditure, both at special meetings held in March at which members examine the draft Estimates of Expenditure, and at regular meetings held throughout the year to consider requests which entail changes to the provisions agreed by the Legislative Council in the estimates each year, or to note financial implications of new policies. Both the special and regular meetings are held in public. The Finance Committee has two sub-committees: the Establishment Sub-Committee and the Public Works Sub-Committee.

The Establishment Sub-Committee consists of 27 members of the Legislative Council, one of whom is the chairman. The Secretary for the Civil Service and the Secretary for the Treasury are in attendance. 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 34 members of the Legislative Council and the Financial Secretary (Chairman). Secretary for Planning, Environment and Lands, Secretary for Works, heads of all works departments and Environmental Protection Department and a representative from the Finance Branch are in attendance at all meetings to provide technical advice. The sub-committee examines the priority and reviews the progress of capital works projects in the Public Works Programme, and makes recom- mendations to the Finance Committee on the upgrading of projects to Category A of the programme which indicates their readiness for commencement, and on changes to the scope and approved estimates of projects already in that category.

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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 ex-officio 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 govern- ment's annual statements of account prepared by the Director of Accounting Services, on any matters relating to the performance of the 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 guide- lines 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 has 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 submit 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 government'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 report based on these hearings is 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 com- mittee'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 recom- mendations 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 report.

Committee on Members' Interests

The Committee on Members' Interests, established by resolution of the Legislative Council in 1991, is a Standing Committee consisting of a chairman and six members. It examines the arrangements for the compilation, maintenance and accessibility of the Register of Members' Interests, considers matters pertaining to the declaration of interests by members and matters of ethics in relation to the conduct of members in their capacity as such, and it makes recommendations on matters relating to members' interests. Sittings of the committee are held in public unless the chairman otherwise orders in accordance with any decision of the committee.

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 five years, however, no select committee has been formed.

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OMELCO

OMELCO stands for Office of the (non-government) Members of the Executive and Legislative Councils.

Members play a significant role in the administration of Hong Kong. They advise on formulation of and change to government policy; consider complaints from members of the public, and monitor the effectiveness of public administration. Members of the Legislative Council also scrutinise, process and enact legislation, as well as control public expenditure.

   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 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; recreation and culture; 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 members 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 also set up. In 1991, the focus of attention of the Special Working Group on Nationality was the implementation of the British Nationality Scheme while the Steering Group to Strengthen and Promote Hong Kong as an International City continued its efforts in boosting confidence in the territory and maintaining regular contact with overseas communities in Hong Kong.

Non-government members of the Legislative Council also formed a number of ad hoc groups to study issues which concern the Hong Kong community at large including the Hong Kong Bill of Rights Bill, electoral provisions, decriminalisation of homosexual acts, town planning, and financial arrangements for the new airport and related projects.

   Members 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 the detention centre for Vietnamese migrants in Tai A Chau. 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.

   Members are serviced by the OMELCO Secretariat, independent of the Administration. A separate office was set up in London to assist members in establishing and developing closer links with officials, Members of Parliament, peers, organisations and individuals with an interest in Hong Kong, as well as the British media. The office also advises OMELCO members on issues of interest in the United Kingdom.

   OMELCO is a channel through which the public may express grievances. Members deal with public representatives on government policy, appeals and complaints. Complaints against government departments alleging maladministration may be referred, if the complainant so requests, to the Commissioner for Administrative Complaints by a non-government member of the Legislative Council for action.

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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. 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.

      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 new Hong Kong Park with an area of 10 hectares was opened in May 1991. This project cost in excess of $300 million and was funded jointly by the council and the Royal Hong Kong Jockey Club.

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. A major Science Museum and a new Museum of Art were opened in April and November 1991 respectively. The Hong Kong Cultural Centre, opened in November 1989, contains a 2 100-seat concert hall, a theatre seating 1700 and a studio theatre accommodating about 500 persons. Despite the new facilities, the City Hall Concert Hall and Theatre continue to be heavily booked. The council promotes cultural performances and runs a comprehensive programme of public entertainment throughout the urban area.

      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. It meets in public once a month when it passes by-laws and 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 12 select committees and 17 working groups or sub-committees.

      As from November 1, 1991, all the council's Select Committees as well as the Keep Hong Kong Clean Committee have opened their meetings to the public.

      The council's chief executive is the Director of Urban Services, who controls the operations of the Urban Services Department with a staff of 16 300. The director is charged with carrying out the council's policies and implementing its decisions.

The council is financially autonomous and during 1990-91 spent about $3,499 million on council-controlled activities and projects. It 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 area where councillors deal with and answer complaints from the public on a wide 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.

      The council receives numerous mayors, lord mayors and other state, provincial and city dignitaries from many countries each year. During 1991, these included the Lord Mayor of

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  London, the Mayor of Rotterdam, the Governor of Montana and 44 mayors and vice mayors from a number of Chinese cities.

Regional Council

The Regional Council is the statutory municipal authority for the New Territories where some 2.4 million people live. It is responsible for all matters concerning environmental hygiene, public health, sanitation, liquor licensing and the provision of recreation, sports and cultural facilities and services within its jurisdiction.

The Regional Council consists of 36 members. Twelve 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 chairman 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 about 10 000.

   The council is financially autonomous. Its main source of revenue comes from rates collected in the council area which in 1990-91 provided about 68 per cent of total revenue, with the remainder being fees and charges, investment income and government grant. A grant of $273.6 million received in 1990-91 was the third and final of three equal annual instalments of a total grant of $820.8 million payable by government effective from 1988-9 to enable the council to fund its own capital works programme. In 1990-91, total revenue amounted to $2,169.2 million while total expenditure amounted to $1,759.4 million.

The council meets monthly to deal with policy issues, formal motions and members' ques- tions on its activities. It 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 committees, district committees, as well as the Liquor Licensing Board, are open to the public.

   The Regional Council maintains close liaison with the district boards in the New Territories and 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 provision 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 Council for the Performing Arts, the Sports Development Board, the Hong Kong Arts Centre, the Chung Ying Theatre, the Antiquities Advisory Board, the Hong Kong Ballet and the Hygiene Services Advisory Committee.

District Administration

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

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      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 (1991-4), there are altogether 274 elected and 140 appointed members.

      The last district board general election was held on March 3, 1991. A total of 472 candidates were nominated for the 274 elected seats. Eighty-one candidates in 65 constituencies were returned unopposed. The election in one constituency was counter- manded following the death of a candidate in that constituency leaving 191 seats to be contested by 386 candidates on election day. Of the 1.3 million registered voters in constituencies where the seats were contested, 424 023 (32.5 per cent) turned out to vote, compared with the 30.3 per cent turnout rate for the last election in 1988.

      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 district level. In addition, they are often invited to give views on important territory-wide issues, such as review of the Town Planning Ordinance, public housing policy and the reform on primary health care. Where funds are available, they undertake minor environmental improvement projects and help organise and sponsor activities to promote community involvement in the districts. In 1991-2, $56.9 million was provided, with the assistance of the two Municipal Councils, for these purposes.

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

      The 20 Public Enquiry Service Centres throughout the territory provide a wide range of free services to members of the public, including answering general enquiries on govern- ment services, distributing government forms and information materials, administering oaths and declarations for private use, referring cases under the Meet-the-Public Scheme, Free Legal Advice Scheme and Rent Officer Scheme. To strengthen the public enquiry service and enable members of the public to make enquiries without having to travel to a public enquiry centre, a Central Telephone Enquiry Centre was set up at the City and New Territories Administration with effect from April 1, 1991.

      In each district there is a district management committee, chaired by the district officer, comprising 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.

Area Committees and Mutual Aid Committees have become an important component of the district administration scheme. They were set up in the early 1970s throughout the territory in support of the Keep Hong Kong Clean Campaign and Fight Violent Crime Campaign. Each area committee serves a population of about 40 000 to 50 000, and members are appointed from a wide spectrum of the community. Mutual aid committees

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  are building-based resident organisations established to improve the security, cleanliness and general management of multi-storey buildings. At present, there are over 120 area committees and 4 200 mutual aid committees. They provide an extensive and effective network of communication between the government and the people at the local grass- root 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.

   The Urban Council and the Regional Council, which cover much the same fields in their respective areas, have, during the year, held liaison meetings and have also instituted joint ventures such as the Keep Hong Kong Clean Campaign. The annual Flower Show is also a responsibility of both councils and is held in each council's area in alternate years.

Starting from the 1991-2 Legislative Council session, the two municipal councils as well as the Heung Yee Kuk become functional constituencies, each returning one member to the Legislative Council.

  Electoral System for the Urban Council, Regional Council and District Boards Elections to the Urban Council, Regional Council and district boards are on a geographical constituency basis and through a broad franchise. Practically everyone who is 21 years of age or over and who is a Hong Kong permanent resident, or has been resident in Hong Kong for the preceding seven years, is eligible to apply for registration as an elector in the constituency in which he lives. An applicant should be ordinarily resident in Hong Kong at the time of application. As from 1991, registration is conducted between April and June although applications for registration can be made at any time of the year.

The 1991 electoral roll carried 1916 925 names, representing 51.9 per cent of an estimated potential electorate of 3.69 million. Of these electors, 1 150 460 are entitled to vote at the Urban Council elections and also at the district board elections in the Urban Council area. The remaining 766 465 are entitled to vote at Regional Council elections and at the district board elections in the Regional Council area.

There are 210 constituencies for district board elections, comprising 108 in the 10 districts in the Urban Council area and 102 in the nine districts in the Regional Council area. The total number of elected district board members comes to 274.

   For Urban Council elections, the number of constituencies remains at 15, 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

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number of district board constituencies in the Regional Council area. There are altogether 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. Election is by simple majority.

At the District Board elections held on March 3, 1991, 467 candidates stood for election to the 274 seats in the 210 constituencies. Eighty one were elected unopposed. Of the 1 305 714 electors in the contested constituencies, 423 923 cast their votes, giving a turnout of 32.5 per cent.

At the Urban Council elections held on May 5, 1991, 37 candidates stood for election to the 15 constituencies. One was elected unopposed. Of the 1028 541 electors in the contested constituencies, 215 869 cast their votes, giving a turnout of 21 per cent. The Regional Council elections were held concurrently with the Urban Council elections. A total of 24 candidates were nominated in the 12 constituencies. One was elected unopposed. Of the 675 782 electors in the contested constituencies, 177 895 cast their votes, giving a turnout of 26.3 per cent.

Electoral System for the Legislative Council

There were major changes in the electoral system for the Legislative Council in 1991. The 10 district board constituencies in the electoral college were abolished and replaced by a new system for direct elections to return 18 members from nine double-seat geographical constituencies. The number of functional constituency seats was increased from 14 to 21, including one seat for each of the two municipal councils which were formerly special constituencies in the electoral college. The other new functional constituencies cover the financial services, tourism, real estate and construction, architectural and associated professions and rural sectors.

The franchise for Legislative Council elections is as follows: for geographical con- stituencies, an elector must be an individual having the same qualifications and sharing the same electoral roll as for the direct elections to the District Boards and the municipal councils; for functional constituencies, an elector could be either a corporate or an individual of the major economic, social and professional sectors. An individual elector is also required to be registered as an elector for the direct elections. A corporate elector must appoint an authorised representative to vote on its behalf. No individual elector or authorised representative may be registered in more than one functional constituency. However, if eligible, an individual may be registered as an elector in one functional constituency and serve as an authorised representative for a corporate elector in another functional constituency.

      For 1991, the electoral roll for functional constituencies carried 69 825 entries, compared to the registered electorate of 61 052 in 1990.

The qualifications for candidature are simple: a candidate for a geographical con- stituency should have the same qualifications as the candidate for the District Board and municipal council elections, that is, being a registered elector under the Electoral Provisions Ordinance and having been resident in Hong Kong for 10 or more years preceding nomination. For a functional constituency, a candidate must have in addition a

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  substantial connection with the relevant functional constituency. Apart from the municipal council functional constituencies, each nomination requires 10 subscribers. Only five subscribers are required for the municipal council constituencies because of the limited size of their electorate. A preferential elimination voting system is adopted for all functional constituencies.

   Two sets of elections were held in September 1991. On September 12, 40 candidates stood for election to the 21 functional constituency seats. Twelve were elected unopposed. Of the 48 755 electors in the contested functional constituencies, 22 918 cast their votes, giving a turnout of 47 per cent.

   In the geographical constituency elections held on September 15, 54 candidates received nomination for the 18 seats. All constituencies were contested, and 750 467 electors out of a total of 1 916 925 cast their votes, giving a turnout of 39.1 per cent.

Advisory Committees

The network of government boards and committees is a distinctive feature of the system of government which seeks to obtain, through consultation with interested groups in the community, the best possible advice on which to base decisions. Thus advisory bodies of one kind or another are found in nearly all government departments and quasi-government bodies. In general, advisory bodies may be divided into five categories: statutory bodies which give advice to a head of department (such as the Endangered Species Advisory Board); statutory bodies which give advice to the government (such as the Board of Education); non-statutory bodies which give advice to a head of department (such as the 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 5 500 members of the public are appointed to serve on a total of 451 boards and committees, and some serve on more than one of these advisory bodies. These members are appointed in view of their specialist knowledge or expertise, or their record or interest in contributing to community service. 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, the composition and effectiveness of these bodies are regularly monitored. Where appropriate, the government broadens the cross-section of representation and encourages an inflow of new ideas through a reasonable turnover of membership.

The Administration

Role of the Chief Secretary

  The Chief Secretary advises the Governor on matters of policy, and is principally responsible for its implementation. He is 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 exercises direction primarily as head of the Government Secretariat, the central organisation comprising the secretaries of the policy branches and resource branches and their staff. Since 1902, when the office of the Lieutenant-Governor lapsed, the Chief Secretary (or his predecessor, the Colonial Secretary) has deputised for the Governor

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Their Royal Highnesses the Duke and Duchess of Kent paid an official visit in December and, during a busy programme, the Duke visited a Wong Tai Sin public housing estate (above) and the Duchess devoted time to the elderly (left).

Election fever gripped Hong Kong in the autumn when 39 per cent of electors turned out to vote in Hong Kong's first direct elections to the Legislative Council.

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.

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Hong Kong hosted the 3rd International Abilympics

in August, bringing together some 2 000 participants from over 80 countries and providing a grand finale to the United Nations 'Decade of Disabled Persons'. Above: One of the highlights was the world's longest dancing dragon, nearly one kilometre from head to tail.

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Below: A light-hearted moment for Canadian Prime Minister Brian Mulroney and

the Governor at the launching ceremony of the Festival of Canada in Hong Kong

in May.

Left: One of the Festival events staged at Happy Valley.

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Above: The newly-completed Museum of Art (on the

right of the picture) adjoins the Cultural Centre, completing the Tsim Sha Tsui cultural complex on the waterfront.

Left: Lady Wilson viewed some of the exhibits after officially opening the Museum in November.

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during his absence. He is the Senior Official Member of the Executive and Legislative Councils and Chairman of the Finance Committee.

Role of Financial Secretary

The Financial Secretary is responsible for the fiscal and economic policies of the Hong Kong Government. He is an ex-officio member of both the Executive and Legislative Councils. He is, in addition, a member of the Finance Committee of the Legislative Council and chairman of the Public Works Sub-Committee of the Finance Committee. As the government official 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, Economic Services, and Works 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 ex-officio 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 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 or government departments.

      The Central Policy Unit is not involved in the day-to-day development of policy nor its implementation.

The 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 being to achieve a reasonable balance between their workloads, reflect more closely the main policy objectives of the government and to improve the policy formulation and resource management generally. There are currently 12 policy branches, and two resource branches concerned with finance and the Public Service.

      The policy branches whose secretaries report directly to the Chief Secretary are: City and New Territories Administration (headed by the Secretary for Home Affairs); Constitu- tional Affairs; Education and Manpower; Health and Welfare; Planning, Environment and Lands; Recreation and Culture; Security, and Transport. The Civil Service Branch, a

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resource branch, also comes 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 68 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, eight policy groups which bring together branch secretaries in related programme areas. The seven which are chaired by the Chief Secretary are: Community Affairs; Constitutional Affairs; Lands, Works, Transport, Housing and Environmental Protection; Public Service; Social Services; Legal and Security, and Public Relations. The Legal Affairs Policy group is chaired by the Attorney General.

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 came into operation in March 1989. As required by law, a complaint lodged with the commissioner has to be referred to him by a member of the Legislative Council other than an official member with the complainant's agreement to such a referral.

On December 1, 1991, the commissioner's jurisdiction was extended to cover the Hospital Authority which took over the management of all public hospitals from the Hospital Services Department from the same date.

Between January 1 and December 31, 1991, a total of 198 complaints were received by the office. Together with 52 cases carried over from the previous year, there were in all 250 cases for disposal. During the year, 196 cases were completed. Of these, 152 were investigated, and 24 (15.8 per cent) were found to be substantiated in whole and 44 (28.9 per cent) in part. In 84 cases (55.3 per cent), the complaints were found to be

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unsubstantiated. During the same period, 811 enquiries were also received, some of which could lead to formal complaints being lodged to the office at a later date. Compared with 1990, both the number of complaints and the number of enquiries made to the office have increased. Such increases indicate that there has been a growth of public awareness in the existence of the office, something which is important in the development of the Ombudsman system in Hong Kong.

In the cases received during the year, the areas which have attracted substantial numbers of complaints related to delay, error or wrong decision and negligence or omissions. Other common areas of complaint related to rudeness, ineffective control, disparity in treatment or unfairness and faulty procedures. In terms of complaints by department, the Housing Department, the Building and Lands Department and the Hospital Services Department have received most complaints, followed by the City and New Territories Administration, the Immigration Department, the Government Secretariat, the Inland Revenue Depart- ment, the Transport Department and the Legal Aid Department. These departments have a lot of contact with members of the public and are naturally more vulnerable to complaints.

       To cope with the increasing caseload of the office, and to enable a more even internal distribution of workload, the office has been re-organised as from August 1, 1991, by the setting up of two new sections, namely, an Administration and Screening Section and an Investigation Section. Not only will the re-organisation help improve the office efficiency, but it will also bring about an annual saving of approximately $400,000 in terms of salary alone.

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 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 the latter's report thereon to the Governor as President of the Legislative Council. Certain specific duties relating to the examination, audit, reporting and certifica- tion 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 in Hong Kong.

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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 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 President of Legislative Council and laid before the council, is considered by the Public Accounts Committee. In 1991, the audit report was tabled on November 20, 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.

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The Role of 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 Constitutional Affairs Branch, is closely involved in the work of implementing the Joint Declaration. In addition, the Political Adviser's office continues to offer advice, and, in some cases, to co-ordinate action on many other matters, notably in promoting the wide range of contacts between Hong Kong Government departments and their counterparts in Guangdong Province, particularly in the Shenzhen Special Economic Zone.

Close and effective cross-border co-operation has developed in such diverse areas as immigration, crime, smuggling, transport, environment, 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 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 public works and utilities, public health, education, fire services and the police force. The departments in charge of these areas, namely, the Lands and Works group of departments (23 621 posts), the Municipal Services group of departments (27919), the Education Department (6988), Fire Services Department (7 836), and the Royal Hong Kong Police Force (33 226) account for 50 per cent of the establishment of the whole Public Service. As at July 1, 1991, the total strength of the service was 191 027 or about 6.8 per cent of Hong Kong's work force. Over 98 per cent are local officers. The service is structured into some 440 grades or job categories in the administrative, professional, technical and manual fields, with about 1 200 ranks or job levels.

Overall 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 appointments, pay and conditions of service, staff management, manpower planning, training and discipline. It is also the focal point for consultation with the principal staff associations. The branch was re-organised in June 1991 with a view to enhancing communication with departments. Under the new structure, five departmental divisions were set up, each responsible for the full range of personnel management matters of a group of departments. In addition to the departmental divisions, there are three functional divisions dealing with service-wide issues such as manpower planning, training, staff relations and pensions.

Recruitment and promotion 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.

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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 Standing Committee on Judicial Salaries and Conditions of Service advises on matters affecting judicial officers. The Standing Committee on Disciplined Services Salaries and Conditions of Service advises on the salaries and conditions of service of the disciplined services. Since its establishment in February 1989, the committee has considered 85 submissions from the disciplined services and the Administration.

The Standing Commission on Civil Service Salaries and Conditions of Service advises on matters affecting all other civil servants. Between March 1989 and December 1990, the commission conducted an overall review of the salary structure of all 342 non-directorate civilian grades. The government has accepted the commission's recommendations on the principles and practices governing civil service pay and on the salary structure of indi- vidual grades.

A civil service housing package, which comprises a Home Financing Scheme, an Accommodation Allowance Scheme and an improved Home Purchase Scheme, was introduced in October 1990. The objective of the housing package is to make more effective use of the resources provided for civil service housing benefits and to encourage home ownership among public servants. Over 17 000 officers have joined the housing schemes.

The government fully recognises the value of promoting effective staff consultation. There are at present four central consultative councils, namely, the Senior Civil Service Council, the Model Scale 1 Staff Consultative Council, the Police Force Council and the Disciplined Services Consultative Council. Departmental consultative committees also constitute a very important part of the consultative machinery. In addition, individual members of the public service or staff associations have ready access to their heads of department or grade as well as to the Civil Service Branch. The frequency of publication of the Civil Service Newsletter has also been increased as a further measure to disseminate, on a more regular basis, information on new developments in the civil service.

Continued efforts were made in 1991 to improve productivity and the quality of manage- ment. Further value-for-money studies and work improvement studies were carried out in various departments. At the same time, departments were given greater control in more aspects of financial and personnel management. They now have greater authority in matters such as appointments and promotions, leave and passage, and professional training. Possibilities of further devolution are being examined on a continuing basis. Reforms in the way public services are delivered continued under the Public Sector Reform initiative. During the year, the responsibility for apprenticeship and training and vocational training for the disabled, hitherto provided by the Technical Education and Industrial Training Department, was transferred to the Vocational Training Council. Also, the Hospital Authority formally took over from the government the delivery of hospital services in December. The application of modern information technology and office automation were also effective means of achieving high efficiency and productivity. These efforts brought about not only improve- ments in the quality of service but also significant savings in resources.

The quality of service is 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.

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      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 public servants in order 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 effectively. Where the need arises, staff are also sponsored on overseas training courses or attachments so that they can keep abreast of the latest developments in their specialised fields. To meet common departmental needs, the Civil Service Training Centre conducts a wide range of management, language and computer courses, and co-ordinates the management training undertaken by public servants at local and overseas institutes. As the central training agency, it also provides advice and assistance to departments.

An important component of the training and development offered to senior public servants is the well established three-month programme run by the Senior Staff Course Centre. The centre emphasises 'learning from doing' and participants undertake almost 100 significant projects with policy implications each year. Study tours to other countries in the region provide valuable broadening experience and foster much goodwill with host governments. Interchange of experience with invited private sector participants has also proved to be a beneficial feature of the programme.

Government Records Service

The Government Records Service is responsible for the broad management of govern- ment records including provision of records services and advice to branches and departments.

       The Records Management Office and the Public Records Office in the Govern- ment Records Service are responsible for carrying out two different but related pro- grammes to take care of the management needs of government records; a record management programme to handle records at their current and non-current stages and an archives administration programme to look after the preservation and use of permanent records.

      The record is the basic unit of administration and its appropriate management will have a significant impact on the efficiency of government affairs. It is the responsibility of the Records Management Office to oversee and develop a comprehensive system concerned with everything that happens to records from their productive 'life' as a means of accomplishing the government agency's functions to their 'death' or destruction as non-current records when all useful purposes have been served. The system will fulfil the government's aim to have fewer records to store, better records to use and more economical record management costs to finance.

      In September 1990, the government launched a pilot scheme to initiate records man- agement programmes in five departments: Buildings and Lands Department; Housing Department; Immigration Department; Inland Revenue Department, and Social Welfare Department. The programmes have now extended to all government departments.

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   The Public Records Office is one of the largest local sources of information for historical and other studies relating to Hong Kong. It constitutes the memory of the government for reference to legal, administrative and financial precedent.

Language

The official languages of Hong Kong are English and Chinese. The Official Languages Ordinance enacted in 1974 provides that both languages possess equal status and enjoy equality of use for the purposes of communication between the government or any public officer and members of the public. Correspondence in Chinese is replied to by government departments either in Chinese or in English accompanied by a Chinese version. Major reports and publications of public interest issued by the government are available in both languages. 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 Chinese are used. A Bilingual Laws Advisory Committee was set up in October 1988 to advise the Governor in Council, among other things, on the authentication of Chinese texts of existing laws which are being translated. Since April 1989, all new principal legislation has been enacted in both English and Chinese. Cantonese (the Guangzhou dialect) is the most commonly-spoken language among the local Chinese community while Putonghua (Mandarin) has gained popularity as closer ties with China are being developed. English continues to be used not only by the expatriate community but also by a wide cross-section of the local community in commercial, financial and professional circles.

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THE law of Hong Kong generally follows that of England and Wales. The Application of English Law Ordinance was passed in 1966 to declare the extent to which English law applies 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. 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, United Kingdom 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 is expressly recited 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 Outer Space Act 1986 (Hong Kong) Order 1990 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 will possess a comprehensive body of law which owes its authority to the Legislature of Hong Kong, it is necessary to replace such United Kingdom legislation by local legislation on the same topics. A legislative programme has been adopted to achieve this. The Hong Kong Act 1985 provides for the Hong Kong legislature 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.

      A further order was made in 1989 conferring similar powers to enact legislation to give effect to international agreements which are applicable to Hong Kong.

      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. 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.

      The process of enactment of 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. After consultation with relevant government departments and, if appropriate, with interested public groups, drafting instructions are prepared for the Drafting Division of the Attorney General's Chambers. After a bill has

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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 it by giving his assent.

   Until 1989, the laws of Hong Kong were published in a 32-volume compilation known as the Laws of Hong Kong. This was updated annually. A new loose-leaf edition of the Laws of Hong Kong is in the course of preparation. The new edition will be based upon the 1989 revised edition as amended by laws taking effect since and will be updated continuously. In addition, all new laws are published in the Hong Kong Government Gazette.

Hong Kong law has evolved in much the same way as the common law of England. English common law and rules of equity are applied in conjunction with local ordinances, and English or United Kingdom Acts where applicable. The Hong Kong courts apply a doctrine of binding precedent similar to that used 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 held by the Hong Kong Court of Appeal in 1973 that any relevant decision of the Privy Council is binding on the Hong Kong courts.

   The Attorney General's Chambers has assumed responsibility for drafting new legislation in both Chinese and English, and translating existing legislation into Chinese. Both the Chinese and English texts will be authentic versions of the laws to which the courts can look for the purpose of interpreting and applying the law. The first piece of bilingual new legislation was enacted on April 13, 1989. Since then, all new principal legislation has been enacted bilingually. Concerning 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 Chinese texts prepared by the Law Drafting Division of the Attorney General's Chambers. If it approves, it recommends the Governor in Council to declare these texts an authentic version of the laws. Some 520 ordinances remain to be translated or authenticated.

Bill of Rights

  In Hong Kong, the basic social and political freedoms that people enjoy have always been taken for granted. Since 1976, the International Covenant on Civil and Political Rights (ICCPR) and Economic, Social and Cultural Rights (ICESCR) have been extended to Hong Kong. The Joint Declaration guarantees that the provisions of the two covenants as applied to Hong Kong shall remain in force after 1997.

   Until recently, the provisions of the ICCPR, like those of the ICESCR, were implemented in Hong Kong through a combination of common law, legislation and administrative measures. In view of the strong support in the community for the basic civil and political rights to be embodied in a justiciable Bill of Rights, the Hong Kong Bill of Rights Ordinance which gave effect in local law to the relevant provisions of the ICCPR as applied to Hong Kong was enacted on June 6, 1991. This means that if anyone believes that their civil or political rights, as defined in the covenant, have been violated or are threatened to be violated, they are able to seek redress in the courts. The ordinance came into operation on June 8, 1991. It binds the government and all public authorities. Six ordinances have been exempted from the operation of the Bill of Rights for one year to avoid disruption of operations in vital areas in the event of findings by the court that provisions of any of these laws are inconsistent with the Bill of Rights and therefore

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repealed. The exempted ordinances are: the Immigration Ordinance, the Societies Ordinance, the Crimes Ordinance, the Prevention of Bribery Ordinance, the Independent Commission Against Corruption Ordinance and the Police Force Ordinance. The Legislative Council may extend the period of the exemption for a further year in respect of any or all of these ordinances.

      To complement the protection afforded by the Bill of Rights, the Letters Patent for Hong Kong have been amended so as to ensure that no law can be made in Hong Kong that restricts the rights and freedoms enjoyed in Hong Kong in a manner which is inconsistent with the ICCPR as applied to Hong Kong. The amendment came into operation on the same day as the Bill of Rights.

Judiciary

The Chief Justice of Hong Kong is head of the Judiciary. He is assisted in his administrative duties by the Registrar, seven Deputy Registrars and one Assistant Registrar of the Supreme Court. The Assistant Registrar is designated Chief Magistrate.

      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 and Deputy 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.

      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 31 Judges of the District Court.

      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.

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In addition to the professional magistrates, there are 11 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 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. He is chairman of the Law Reform Commission of Hong Kong and a member of both the Judicial Services Commission and Operations Review and Complaints Committees 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, decision-making and 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 and he is responsible for the drafting of all legislation and for the conduct of all prosecutions.

The Attorney General's Chambers has six divisions, five of which are 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, who is responsible for giving legal advice in civil matters and conducting all civil litigation involving the Crown. The Prosecutions Division is headed by the Crown Prosecutor who has the conduct of criminal proceedings. The Crown Prosecutor is commonly known as the Director of Public Prosecutions. 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 Legal Policy Division which includes the Law Reform Commission Secretariat. He also has responsibilities for counsel who advise the Urban and Regional Councils. The

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     International Law Division is headed by the Law Officer (International Law) who deals with all external legal matters arising out of the Sino-British Joint Declaration. The Chambers Manager heads the Administration Division and deals with all administrative matters concerning the Attorney General's Chambers.

A Localisation of Laws Unit has been established in the Attorney General's Chambers to co-ordinate and speed up work in the localisation of United Kingdom legislation which now applies to Hong Kong. In conjunction with the Constitutional Affairs Branch and the International Law and Civil Divisions of Attorney General's Chambers, the unit studies all United Kingdom laws which apply to Hong Kong and consults policy branches on whether the law in question will be needed in future. Where appropriate, drafting instructions are prepared with a view to local legislation being enacted which will reproduce that law in a form which can survive after 1997. Legislation has already been enacted to localise laws in the fields of admiralty jurisdiction, marine pollution and merchant shipping.

      The Attorney General is responsible for all prosecutions in Hong Kong. It is his responsibility to decide whether or not a prosecution should be instituted in any particular case, and to conduct and control the proceedings. Most minor prosecutions heard before magistrates 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, however, 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 upon serious offences which it is proposed to pursue 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.

Since its establishment in 1980, the commission has published 19 reports covering subjects as diverse as Commercial Arbitration, Homosexuality, Bail, and Competence and Compellability of Spouses in Criminal Proceedings. The recommendations in seven of those reports have been implemented by the government either in whole or in part and others are still under consideration.

      The commission is currently considering references on Evidence in Civil Action, Arrest and Detention, Copyright, Fraud, Privacy, Codification of the Criminal Law, Illegitimacy, Grounds for Divorce, and Guardianship and Custody.

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 and Official Receiver and previously included the functions and duties of Official Trustee, Judicial Trustee and Official Solicitor until August 1, 1991, when they were transferred to the Director of Legal Aid.

      The Registrar General's Department is divided into three 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

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in all its land transactions. The Companies Division comprises the Companies Registry and the Money Lenders Registry. The Companies Registry administers the provisions of the Companies Ordinance, while the Money Lenders Registry regulates money lenders under the Money Lenders Ordinance. 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 Standing Committee on Company Law Reform, and represents the Financial Secretary as an ex-officio member of the Council of the Hong Kong Society of Accountants.

Director of Intellectual Property

The Director of Intellectual Property was established on July 2, 1990, as a statutory office by the Director of Intellectual Property (Establishment) Ordinance, to take over from the Registrar General the statutory offices of Registrar of Trade Marks and Registrar of Patents. The Intellectual Property Department includes the Trade Marks and Patents Registries which provide and administer a system of trade mark and patents registration and protection under the provisions of the Trade Marks Ordinance and Registration of Patents Ordinance. In addition, the department is responsible for other forms of intellectual property protection and will serve as a focal point for further development of Hong Kong's intellectual property regime.

Legal Aid

Hong Kong has developed over the years a very comprehensive system of legal aid funded by the government through two organisations: the Legal Aid Department and Legal Advice and Duty Lawyer Scheme administered by the Law Society and the Bar Association. The Legal Aid Department administers highly sophisticated and extensive schemes for legal representation in both civil and criminal cases heard in the District Court, the High Court and the Court of Appeal. Legal aid is available to eligible persons in Hong Kong, resident or non-resident, either free of charge or depending on their financial circumstances, upon payment of a graduated contribution if they satisfy the Director of Legal Aid on financial eligibility and justification for legal action.

Training of law clerks is provided by the department's own professional officers. From time to time officers at all levels attend job-related training courses provided by the Civil Service Training Centre. The department also participates in the training programmes for its own articled clerks and those from the Legal Department.

The Official Solicitor

The Official Solicitor Ordinance 1991 became effective on August 1, 1991. The Director of Legal Aid was appointed the first Official Solicitor and a separate office with a senior lawyer and support staff was established to represent persons under legal disability in court proceedings in Hong Kong. It is a rationalisation of the previous practice under which the duties were undertaken by various Government Departments.

Civil Legal Aid

The financial limits in both civil and criminal cases remain the same, namely a person who has a disposable monthly income not exceeding $2,200, and a disposable capital of not exceeding $15,000, is financially eligible. Disposable income and capital are arrived at

THE LEGAL SYSTEM

after allowances, including rent, have been deducted from actual earnings and assets. In addition to financial eligibility, the applicant must satisfy the Director of Legal Aid in civil cases that he has a reasonable chance of succeeding in the litigation for which he seeks legal representation and in recovering the judgement debt thereafter. Legal aid is available for a wide range of civil proceedings in the District Court, High Court, Court of Appeal and appeals to the Judicial Committee of the Privy Council in London.

Traffic and industrial accident claims, employees' compensation, landlord and tenant disputes, immigration matters, breach of contract, professional negligence and every branch of family law are covered under the civil legal aid scheme. Other cases such as Admiralty proceedings for seamen's wages, bankruptcy and companies winding-up litigation for employees' wages and severance pay are also undertaken. 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 1991-2 was $63 million in civil cases. In 1991, 18 029 applications were received and 5 429 applications granted legal aid. A sum of $176 million was recovered for the aided persons. 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 progressive rise in the divorce rate in Hong Kong and an independent counselling agency, the Hong Kong Catholic Marriage Advisory Council provides counselling service to legal aid applicants in matrimonial cases with a view to conciliation or reconciliation. This scheme, funded by the Royal Hong Kong Jockey Club, is in operation in the Legal Aid Department's Kowloon Branch Office.

     A Supplementary Legal Aid Scheme, established since October 1984, provides legal assistance to those persons whose resources exceed the financial limits under the ordinary legal aid scheme but are not sufficient to meet the high costs of conducting litigation on a private basis. This scheme was initially funded with an interest-bearing loan from the Government Lotteries Fund and is administered by the Director of Legal Aid. It is available for claims in the High Court and certain claims in the District Court for damages for death and personal injuries. The supplementary scheme enables an applicant with a gross monthly income not exceeding $15,000 and disposable capital 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 other litigants in future litigation. The percentage deducted from damages ranges from 10 per cent to 12.5 per cent depending on the amount recovered and the stage at which the litigation is concluded. The total estimated expenditure of the scheme in 1991-2 was $7 million. During the year, 177 applications were received of which 139 applications were granted legal aid.

      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. full-time lawyers. The department maintains its own civil litigation division undertaking personal injuries, family law and workers' and seamen's 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 assessment and preparation of itemised bills of costs, all of which provide a legal support service for cases assigned to private practitioners and in-house lawyers.

43

THE LEGAL SYSTEM

44

Legal Aid in Criminal Cases

  Legal aid provided by the Legal Aid Department is also available for criminal proceedings in the District Court, High Court, Court of Appeal, and the Judicial Committee of the Privy Council in London and representation at proceedings in the Magistrates' Court where the prosecution is seeking committal of a defendant to the High Court for trial. The department also provides assistance in preparing petition for clemency to the Governor in Council.

   Because of the legal costs involved, the severity of the charge and gravity of the possible sentence, legal aid is invariably given for District Court and High Court criminal trials subject to financial eligibility. 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 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' Court, the District Court, and the High Court, 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 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 appeals to the Judicial Committee of the Privy Council, by a committee of review.

   The total estimated expenditure for 1991-2 was $77 million in criminal cases. During the year, 4 220 applications were received and a total of 2 360 applications were granted legal aid.

   The Legal Aid Department has a criminal litigation division which handles the processing of applications for legal aid in criminal cases, assignment and monitoring of cases assigned to outside solicitors and counsels. The full-time lawyers in this division also conduct, as instructing solicitors in-house, litigation of criminal trials and appeals, and perform statutory requirement of assessing the fees payable to outside solicitors and counsels.

Legal Advice and Duty Lawyer Schemes

The Legal Advice and Duty Lawyer Schemes are jointly administered by the Law Society and the Bar Association. They comprise three programmes 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, members of which are nominated by 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 1991-2 was over $26 million.

   Until June 1991, the Duty Lawyer Scheme provided free legal representation to defendants charged with one of nine 'scheduled' offences in the Magistrates' Courts. Upon the enactment of the Bill of Rights Ordinance in June 1991, the scheme was expanded to offer free legal representation to all defendants in the Magistrates' Courts who fall within certain criteria (such as those in jeopardy of losing their liberty or those unable to follow the proceedings because of mental or linguistic disability). There are approximately 600 remunerated lawyers (barristers and solicitors) on the Duty Lawyer roster. In 1991, 16 662 defendants facing charges received preliminary advice and representation at trial.

   The Legal Advice Scheme provides free advice without means testing at five advice centres at Sha Tin, Tsuen Wan, Wan Chai, Yau Tsim and Kwun Tong. Each centre

THE LEGAL SYSTEM

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 approximately 350 lawyers (barristers, solicitors, government lawyers and in-house lawyers) on the Advice Lawyer Panel. Some 2 775 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 60 tapes available. The main purpose of the service is to provide basic information on the legal aspects of everyday problems, and to encourage people who have such problems to use the Legal Advice Scheme. The tapes 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 over 41 906 calls.

45

4

IMPLEMENTATION

OF THE SINO-BRITISH

JOINT

DECLARATION

46

DISCUSSIONS On the implementation of the Sino-British Joint Declaration on the Question of Hong Kong continued. Progress has been made in the work of both the Sino-British Joint Liaison Group (JLG) and the Sino-British Land Commission.

The Sino-British Joint Liaison Group

The 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, never- theless, continue to hold plenary sessions at least once every year in Beijing, London and Hong Kong.

   During the year, four plenary sessions were held and expert talks on a number of items also took place. Progress in several important areas has been made.

Defence and Public Order

  Both in the JLG itself and in talks at expert level between JLG meetings, discussions on the implementation of the Joint Declaration in respect of defence and the maintenance of public order were carried out. Information and views on a wide range of practical matters relating to this issue were exchanged. Such exchanges are necessary for developing understanding between the two sides to pave the way for a smooth transfer of defence responsibilities from Britain to China 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. During 1991, the two sides continued their

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

discussions on arrangements for setting up the court in Hong Kong before 1997. At the 20th meeting of the JLG in September 1991, the two sides reached principled agreement on the establishment of the Court of Final Appeal. Draft legislation and a package of arrangements for establishing the court are being considered.

-

Localisation of Laws

As explained in Chapter 3 under the heading 'Law in Hong Kong', a large number of United Kingdom laws currently apply to Hong Kong. These laws will cease to have effect in Hong Kong after June 30, 1997. It will, therefore, be necessary to 'localise' them then, that is, replace them by legislation enacted in Hong Kong which will survive that date. 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 legislation, since when good progress has been made. As at December 31, 1991, five localising ordinances have been enacted and 31 sets of localising regulations have been made.

Air Service Agreements

Hong Kong concluded three Air Service Agreements (ASAs) with foreign countries in 1991 - with New Zealand in February, with Malaysia in March and with Brazil in September. The former two are under the ASA separation programme, whereby provisions involving Hong Kong under United Kingdom ASAs are separated into discrete Hong Kong ASAS. The Hong Kong/Brazil ASA is a new agreement. These bring to eight the number of ASAS concluded so far by Hong Kong. The other five ASAS are with the Netherlands, Switzerland, Canada, Brunei and France. 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 continued application after 1997 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 applying to Hong Kong, which the sub-group will have to examine individually, indicates that its work will take a number of years to complete and the two sides have reached agreement in the JLG on Hong Kong's continued participation in 26 international organisations. The sub-group has made good progress. It has also been discussing the continued application after 1997 of multilateral treaties currently applying to Hong Kong and has so far reached agreement on the continued application to Hong Kong after 1997 of a number of treaties on customs conservation and health.

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.

47

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

48

During 1991, the Land Commission held three formal meetings. The two sides agreed to make available, during the 1991-2 financial year, a total of about 93.4 hectares of land, of which 5.9 hectares of residential land was released during the latter part of the year to meet the continuing strong demand in the property market.

   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 1991-2 financial year the agreed figure was $3,330 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 $25,010 million, representing the future SAR Government's share of premium income for the period May 27, 1985 to September 30, 1991, has been transferred to the fund.

The Basic Law

The Joint Declaration provides that the basic policies of the People's Republic of China regarding Hong Kong will be stipulated in a Basic Law of the Hong Kong Special Administrative Region (HKSAR) by the Chinese National People's Congress (NPC). After deliberation and consultation extending over five years, the Basic Law was promulgated in April 1990 by the NPC, together with the designs for the flag and emblem of the HKSAR. The Basic Law will be the constitutional document for the HKSAR. It ensures that the HKSAR will enjoy a high degree of autonomy, and guarantees the continuation of the existing systems and way of life.

The drafting of the Basic Law was undertaken by the Basic Law Drafting Committee (BLDC), appointed by the Chinese Government in 1985 and comprising both mainland and Hong Kong members. The Basic Law Consultative Committee (BLCC) of exclusive Hong Kong membership was tasked with canvassing views on the document in Hong Kong.

The first draft of the Basic Law was published in April 1988 for a five-month consultation exercise conducted by the BLCC. The second draft, reflecting many of the views expressed during the first consultation period, was published in February 1989. Consultation on the second draft ended in October 1989.

The five Special Groups of the BLDC met in December 1989 to draw up the final draft in the light of the outcome of the second consultation round. The final draft was endorsed by the BLDC in its last plenary session in February 1990 and submitted to the NPC for enactment in April 1990.

Adaptation of Laws

Article 8 of the Basic Law, which reflects paragraph 7 of Annex I to the Joint Declaration, provides that after the establishment of the HKSAR, the laws previously in force in Hong Kong shall be maintained, except for any that contravene the Basic Law, and subject to any amendment by the legislature of the HKSAR. The laws of Hong Kong therefore need

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

to be reviewed and if necessary amended to ensure their compatibility with the Basic Law, so that they can continue to be in force in the HKSAR from July 1, 1997. Agreement on principles for consultation relating to the adaptation of laws was reached at the 17th meeting of the JLG held in December 1990 and work on the review has begun.

49

5

THE ECONOMY

50

FOLLOWING the revival in the latter part of 1990, the Hong Kong economy continued to grow steadily in 1991. The quick ending of the Gulf war early in 1991 cleared some of the uncertainties in the global economy. The renewal of China's Most Favoured Nation status in the United States was another welcome development for Hong Kong. The conclusion in July of the Sino-British Memorandum of Understanding on the implementation of the new airport and related projects further boosted local business confidence.

In the external sector, domestic exports registered a modest increase in the first half, but slackened in the second half of 1991. The generally sluggish performance of domestic exports should, however, be viewed against the substantial increase in re-exports throughout 1991. Many of these re-exports were products of outward processing arrangements made between Hong Kong companies and manufacturing entities in China. In the domestic sector, demand strengthened further in 1991 and this was particularly so for investment spending. Reflecting these developments, the gross domestic product (GDP) grew by 3.9 per cent in real terms in 1991, with increases of 3.9 per cent in the first half and four per cent in the second half. The corresponding growth rate in 1990 was three per cent.

After some easing in the first half of 1991, the labour market tightened again in the second half as the economy continued to grow steadily. In line with the development of Hong Kong into a more service-oriented economy, labour resources continued to shift from manufacturing to services. Reflecting this, employment in the manufacturing sector decreased, while employment in the service sectors showed a further increase in 1991. Average earnings in various major sectors, as measured by payroll per person engaged, showed further significant increases in money terms in 1991, albeit at a more moderate rate than in 1990.

  The rate of consumer price inflation was still high during 1991. There was, however, a gradual moderation of the inflationary pressures since April. The package of counter- inflation measures adopted by the government in May helped to dampen inflationary expectations in the economy. A temporary increase in the prices of some essential foodstuffs lifted consumer price inflation in July and August, but as these prices stabilised the trend of moderation continued. On a year-on-year comparison, the Consumer Price Index (A) rose by 12.5 per cent in the first half and 11.6 per cent in the second half of 1991. For 1991 as a whole, the Index was on average 12 per cent higher than in 1990. The corresponding rate of increase was 10.1 per cent in 1989 and 9.8 per cent in 1990.

Statistical data are given at Appendices 7-11.

THE ECONOMY

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 1991 the total value of visible trade (comprising domestic exports, re-exports and imports) amounted to 244 per cent of the GDP. If the value of imports and exports of services is also included, this ratio becomes 261 per cent. Between 1981 and 1991, Hong Kong's domestic exports grew at an average annual rate of seven per cent in real terms, which was roughly twice the growth rate of world trade. The corresponding average annual increase was 23 per cent for re-exports and 14 per cent for imports. With a gross value of $1,545 billion in overall visible trade in 1991, 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 both the GDP and employment.

Within secondary production (comprising manufacturing; the supply of electricity, gas, and water; and construction), manufacturing still 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 then increased to 23 per cent in 1983 and to 24 per cent in 1984, before stabilising at around 22 per cent during the period 1985 to 1987. However, it fell to 20 per cent in 1988, 19 per cent in 1989, and further to about 17 per cent in 1990, reflecting partly the slow-down in domestic exports and partly the continued expansion of the service sectors. 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, settled at about five per cent during the period 1984 to 1989 before rising again to about six per cent in 1990.

The contribution of the tertiary service sectors as a whole (comprising the wholesale, retail and import/export trades; restaurants and hotels; transport, storage and com- munications; 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 steadily to 69 per cent in 1990.

      With regard to employment, the most notable change since the early 1970s is that, whereas the manufacturing sector still takes up a significant 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 28 per cent in 1991. On the other hand, the share of the tertiary service sectors as a whole in total employment increased from 41 per cent in 1971 to 47 per cent in 1981, and further to 63 per cent in 1991.

The Manufacturing Sector

Although Hong Kong's domestic exports are still concentrated in a number of major product groups, there has been continuous upgrading of quality and diversification of 51

52

THE ECONOMY

items within these groups. The pressure of protectionism and growing competition from other economies have resulted in local manufacturers intensifying their efforts to diversify, in respect not only of products but also markets. A significant proportion 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 manufacturing sector. Moreover, increasing use has been made of the outward processing facilities in China for handling the relatively labour-intensive production processes. Because of the limited amount of usable land, Hong Kong's manufacturing industries are mostly those which can operate successfully in multi-storey factory buildings. This, in practice, implies concentration in the production of light manufactures.

Over the past 30 years, many industries have emerged and grown, the most notable being plastics and electronics. The textiles and clothing industries, however, remain prominent. Other developing industries include fabricated metal products, electrical appliances, watches and clocks, toys, jewellery, and printing and publishing.

Of particular note is the significant upgrading in labour productivity within the manufacturing sector over the years. During the period 1973 to 1989, the value of net output by the manufacturing sector grew at an average annual rate of 16 per cent, while manufacturing employment grew at an average annual rate of only one per cent. Even after taking into account the effect of price increases on the output value, a significant secular improvement in labour productivity was evident.

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 16 per cent in 1989, while its share in manufacturing employment fell from 21 per cent to 15 per cent. Offsetting this decline was the expansion of the clothing, electrical appliances and electronics, and watches and clocks industries. Between 1973 and 1989, their shares in the net output of manufacturing increased from 20 per cent to 21 per cent, from nine per cent to 15 per cent, and from one per cent to four per cent respectively, while their shares in manufacturing employment increased from 26 per cent to 29 per cent, from 11 per cent to 13 per cent, and from one per cent to three per cent respectively.

Domestic exports in 1991 consisted principally of wearing apparel and clothing ac- cessories (33 per cent of the total value), electronics (25 per cent), textiles (eight per cent), watches and clocks (seven per cent), plastic products (three per cent), metal products (three per cent), and electrical household appliances (one per cent). In terms of the share in the total value of domestic exports, the most significant change over the past decade was the decline in the relative importance of clothing, from 35 per cent in 1981 to 33 per cent in 1991. This decline was offset by increases in the relative importance of such commodities as telecommunications and sound recording and reproducing equipment, electrical machinery and appliances, and office machines and data processing equipment. The combined share of these three commodity groups in the total value of domestic exports rose from 18 per cent in 1981 to 23 per cent in 1991.

   Market diversification over the years has been the combined result of initiatives taken by local manufacturers and exporters, and promotion efforts supported by the government.

THE ECONOMY

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 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, while the relative importance of the United States, though still Hong Kong's largest market, has declined. Moreover, 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 and diversify. 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 services.

The significance of entrepôt trade re-emerged in the late 1970s as China embarked on its open-door economic policies to facilitate its modernisation programmes. Rapid economic growth in the Asia-Pacific region over the past decade provided an added stimulus. Hong Kong, helped by its strategic location and well-established transport and communications network, was in a favourable position to take advantage of these opportunities. Trading and other economic links between Hong Kong and the region generally, and China in particular, 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. This development was reinforced by the rapid growth in tourism. Restaurants and hotels have also experienced a substantial increase in business. Furthermore, with higher house- hold incomes, there has always been 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.

Analysed by sectors, 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 24 per cent in 1990. The contribution of transport, storage and com- munications to the GDP was stable at around seven to eight per cent, before rising to nine per cent in 1987 to 1990. The contribution of finance, insurance, real estate and business services to the GDP experienced considerable fluctuations, 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 21 per cent in 1990.

Within the service sectors, the most notable increase in employment was in the wholesale, retail and import/export trades, restaurants and hotels sector, with its share in the total employed workforce rising from 16 per cent in 1971 to 19 per cent in 1981 and further to 23 per cent in 1991. This was followed by finance, insurance, real estate and business services, with its employment share rising from three per cent in 1971 to five per cent in 1981 and further to eleven per cent in 1991.

53

THE ECONOMY

54

54

Between 1981 and 1991, exports of services rose at an average annual rate of nine per cent in real terms, while imports of services were higher by 11 per cent. The major components of Hong Kong's trade in services are shipping, civil aviation, tourism and various financial services. The shares of transportation services in total exports and total imports of services were 46 per cent and 34 per cent respectively in 1990. Travel services accounted for 37 per cent of the total value of exports of services and 46 per cent of the total value of imports of services. The corresponding shares for financial and banking services were five per cent and three per cent respectively.

Increasing Economic Links between Hong Kong and China

Since the adoption of open-door policies by China in late 1978, Hong Kong's economic relations with China have undergone rapid growth and development.

Hong Kong and China are now each other's largest trading partner. In 1991, the total value of visible trade between Hong Kong and China amounted to $501 billion, representing an increase of 27 per cent over 1990. This rapid growth reflected partly a more liberal approach to imports adopted by the Chinese government and partly the continuous growth in outward processing trade. However, the growth rate in 1991 was significantly lower than the average annual increase of 35 per cent between 1978 and 1990.

Apart from being the second largest market for Hong Kong's domestic exports (accounting for 24 per cent of the total in 1991), China is particularly important in Hong Kong's re-export trade. China is the largest market for, as well as the largest supplier of, Hong Kong's re-exports. More than 80 per cent of the goods re-exported through Hong Kong are destined for, or originated from, China.

In addition to trading in goods, Hong Kong also serves as an important services centre for China generally and South China in particular, including the provision of in- frastructural facilities such as the port and airport, and institutional support such as financial and related business services. This is evidenced, among other things, by the increasing importance of Hong Kong as a centre for entrepôt, transhipment and other supporting activities involving China.

Hong Kong has always been a convenient gateway to China for business and tourism. In 1991, 19 million trips to China were made by Hong Kong residents, and another 1.4 million trips to China were made by foreign visitors through Hong Kong. These represented increases of 14 per cent and 12 per cent respectively over 1990.

Besides visible and invisible trade, Hong Kong is also the most important source of external investment in China, accounting for about two-thirds of the total. While Hong Kong's direct investment in China has been concentrated in light manufacturing industries, investment in hotels and tourist-related facilities and in infrastructure has also been undertaken. As can be expected, Guangdong occupies a highly important position in this respect. It has been estimated that, in the Guangdong Province, around three million people are working for Hong Kong companies either through joint ventures or in tasks commissioned by Hong Kong companies in the form of outward processing arrangements and compensation trade. Thus, besides constituting an important source of demand for goods and services produced in Hong Kong, China is also very important as a source of supply of goods and productive capacity to Hong Kong.

On the other hand, China has also invested heavily in Hong Kong, particularly since 1978. Its investment in Hong Kong ranges from traditional activities like banking,

THE ECONOMY

import/export, wholesale/retail, and transportation and warehousing, to newer areas like property development, financial services, manufacturing and infrastructural projects.

      Increasing financial links between Hong Kong and China are reflected by the rapid growth in financial transactions with China. While the Bank of China Group is the second-largest banking group in Hong Kong, after the Hongkong Bank Group, the latter group is the best-represented foreign bank in China, followed by the Standard Chartered Bank.

      Hong Kong is a major funding centre for China. Most of China's fund-raising activities in Hong Kong have taken the form of syndicated loans. Although in some cases Hong Kong is not the direct source of funds, it serves as a window through which China can have access to external borrowing. These loans are mostly for financing China's own economic development, but some of them are used by PRC-interest companies in Hong Kong to finance their investment activities in Hong Kong or abroad. In addition to syndicated loans, PRC-interest banks and other enterprises have been making greater use of negotiable certificates of deposit (from banks only), bonds, commercial paper, and share issuance (through shell companies acquired for the purpose) to raise funds.

The prospects for further development of economic links between Hong Kong and China continue to be good, given the firm foundation established over the years and the continuation of open-door policies and economic reforms in China.

The Economy in 1991

Following the revival in the latter part of 1990, the economy continued to grow steadily in 1991. Re-exports remained robust throughout the year, but domestic exports recorded virtually no growth. Locally, investment activity showed a marked improvement over the course of the year. Consumption spending also registered a fair increase.

      Consumer price inflation was still high during 1991. There was, however, a gradual moderation of the inflationary pressures since April. For the year as a whole, the rate of increase in the Consumer Price Index (A) averaged 12 per cent. The GDP deflator, as a broad measure of overall inflation in the economy, rose less rapidly than the consumer price indices, by 9.6 per cent in 1991 over 1990.

      According to the preliminary estimate, the growth rate in real terms of the GDP was 3.9 per cent in 1991, with increases of 3.9 per cent in the first half and four per cent in the second half. In 1989 and 1990, the GDP grew by 2.8 per cent and three per cent respectively in real terms.

External Trade

In 1991, the value of domestic exports was two per cent higher than in 1990. After discounting for an estimated two per cent increase in price, there was virtually no growth in real terms. This compared with an increase of one per cent in value terms or a decrease of less than one per cent in real terms in 1990. On a year-on-year comparison, domestic exports grew by two per cent in real terms in the first half of 1991, but decreased by one per cent in the second half. The moderate performance of domestic exports should, however, be viewed against the marked increase in re-exports throughout the year. Many of these re-exports were products of outward processing arrangements made between Hong Kong companies and manufacturing entities in China.

55

THE ECONOMY

56

   Domestic exports to the various major markets showed a mixed performance in 1991. Compared with 1990, domestic exports to China rose significantly, by 14 per cent in real terms. Over 70 per cent of these domestic exports were related to outward processing arrangements commissioned by Hong Kong companies. While domestic exports to Germany showed some increase, by about four per cent in real terms, those to the United Kingdom showed little change. Domestic exports to Japan and the United States continued to decline, both by about seven per cent in real terms. There was, however, a moderate recovery in domestic exports to the United States in the fourth quarter, recording an increase of about three per cent in real terms over a year earlier. Although the United States was still the largest market for Hong Kong's domestic exports, its share fell to 27 per cent in 1991, from 32 per cent in 1989 and 29 per cent in 1990.

   Analysed by major product categories, domestic exports of textiles grew by one per cent in real terms in 1991 while those of clothing fell by two per cent. Their shares in the total value of domestic exports in 1991 were eight per cent and 33 per cent respectively. In 1991, domestic exports of electronic components recorded the fastest growth (by 23 per cent in real terms), followed by metal manufactures (by eight per cent). On the other hand, domestic exports of radios, watches and clocks, and electrical appliances fell, by 18 per cent, 12

per cent and seven per cent respectively in real terms.

In 1991, re-exports showed a remarkable growth over 1990, by 29 per cent in value terms or about 26 per cent in real terms. This compared with an increase of 20 per cent in value terms, or 16 per cent in real terms, recorded in 1990.

   China remained the largest source of, as well as the largest market for, Hong Kong's re-exports. Supported by the expansion of outward processing activities across the border, re-exports involving China in both directions continued to rise rapidly in 1991. Meanwhile, re-exports not related to China showed some increase. The other major re-export markets were the United States, Germany, Japan, Taiwan and the United Kingdom. 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 consumer goods, and raw materials and semi-manufactures, which represented 54 per cent and 30 per cent respectively of the total value of re-exports in 1991. Re-exports of footwear, clothing, telecommunications and sound recording and reproducing equipment, textile fabrics, and electrical machinery and appliances showed faster increases than re-exports of other commodity items.

Imports grew rapidly, by 21 per cent in value terms or by about 19 per cent in real terms in 1991, compared with corresponding increases of 14 per cent and 11 per cent in 1990. The major sources of Hong Kong's imports were China, Japan, Taiwan, the United States, the Republic of Korea and Singapore. Most of the growth in imports was attributable to the continued surge in re-export trade. To a lesser extent, this was also supported by imports retained for local use.

   Retained imports increased by about 13 per cent in real terms in 1991. Among the various end-use categories, retained imports of capital goods recorded the fastest growth, by about 20 per cent in real terms. Within this category, retained imports of industrial machinery for manufacturing use registered an even sharper increase, by about 26 per cent in real terms. Retained imports of foodstuffs, fuels, and raw materials and semi- manufactures increased by about eight per cent, four per cent and two per cent respectively

THE ECONOMY

in real terms in 1991 over 1990. In line with the pick-up in consumer spending during the year, retained imports of consumer goods rose by about nine per cent in real terms.

As the value of total exports (domestic exports plus re-exports) was smaller than that of imports, a visible trade deficit of $13,096 million, equivalent to 1.7 per cent of the total value of imports, was recorded in 1991. If an estimate of the imports of gold for industrial and commercial use was included, the deficit would have been $16,156 million. This compared with a deficit of $2,656 million (or $5,326 million after a similar adjustment for gold imports) recorded in 1990. As the prices of total exports rose at a faster rate than those of total imports in 1991, the terms of trade showed a small improvement.

Domestic Demand

     Domestic demand rose by eight per cent in real terms in 1991, following a six per cent growth in 1990. Private consumption expenditure grew by six per cent in real terms in 1991, with increases of six per cent in the first half and seven per cent in the second half. This followed a growth rate of five per cent in 1990. Government consumption expenditure grew by seven per cent in real terms in 1991. The corresponding growth rate in 1990 was six per cent. Investment demand, measured in terms of gross domestic fixed capital formation, grew by 10 per cent in real terms in 1991, having increased by eight per cent in 1990. Among its major components, expenditure on building and construction rose by only one per cent in real terms in 1991, while expenditure on plant and machinery was substantially higher by 18 per cent in real terms.

The Labour Market

The labour market eased in the first half of 1991. It then tightened again in the second half, as the economy continued to grow steadily. In the fourth quarter, the seasonally adjusted unemployment rate was 1.8 per cent, 0.3 of a percentage point lower than in the third quarter, although 0.4 of a percentage point higher than in the same quarter of 1990. The underemployment rate was 1.6 per cent, 0.1 of a percentage point higher than in the third quarter, but 0.8 of a percentage point higher than in the same quarter of 1990.

      Between September 1990 and September 1991, manufacturing employment decreased by 10 per cent to 650 000, while employment in the service sectors as a whole increased by six per cent to 1 560 000. Labour resources thus continued to shift from manufacturing to services. Among the various service sectors, employment in the wholesale, retail and import/export trades increased by nine per cent; that in finance, insurance, real estate and business services by six per cent; that in restaurants and hotels by five per cent, and that in water transport, air transport and services allied to transport by four per cent in September 1991 over a year earlier. Employment on building and construction (including civil engineering) sites decreased by 10 per cent. However, for the building and construction industry as a whole, employment (covering both site workers and non-site workers) still showed an increase of one per cent. Vacancies in the manufacturing sector declined markedly, by 36 per cent from September 1990 to 23 300 in September 1991. Vacancies in the service sectors as a whole also fell, by four per cent to 49 100.

      Local manufacturing output, as measured by the index of industrial production, increased by one per cent in the first three quarters of 1991 over the same period in 1990. This compared with a decrease of one per cent in 1990 over 1989. The attainment of this level of performance, notwithstanding the significant reduction in manufacturing employment,

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58

showed that labour productivity in the manufacturing sector had risen significantly. This was attributable partly to the marked increase in investment in plant and machinery and partly to the relocation of the more labour-intensive production processes to China.

Comparing September 1991 with September 1990, average earnings in all sectors, in terms of payroll per person engaged, continued to show significant increases in money terms. However, the rates of increase for some of the major sectors were less rapid than in the preceding year. Of the various service sectors, average earnings in restaurants and hotels and in the wholesale, retail and import/export trades increased by 13 per cent and 12 per cent respectively in money terms, with both sectors showing an increase of one per cent in real terms. In transport, storage and communications, while average earnings increased by 12 per cent in money terms, there was virtually no change in real terms. In finance, insurance, real estate and business services, average earnings increased by eight per cent in money terms, but decreased by three per cent in real terms. Earnings in the manufacturing sector, which increased by 10 per cent in money terms, showed a decrease of one per cent in real terms. The rate of increase in construction wages was less rapid than in 1990. Between September 1990 and September 1991, construction wage rates rose by 11 per cent in money terms, but fell by one per cent in real terms.

The Property Market

The performance of the property market varied among sub-sectors. In the residential property market, there was a strong underlying demand for small to medium-sized flats. Flat prices surged immediately after the ending of the Gulf war. The market gathered further strength in July with another upsurge in flat prices, following the announcement of the Sino-British Memorandum of Understanding on the implementation of the new airport and related projects. Apart from the support from end-users, speculative interests were also apparent, particularly in respect of pre-completion sales of flats in the major new developments. Demand for large residential flats also improved. The market for shopping space generally held steady. The market for office space was still dampened by over-supply. Both prices and rentals remained soft. However, there was a revival in activity in the sales market, towards the end of the year, given some shift in investment interest from residential property to office space. The market for industrial premises was still relatively quiet. Flatted factory space in the newer industrial areas nevertheless faced a greater demand than in other areas.

The favourable response to the various government land auctions conducted in 1991 was generally in line with market expectations. Developers were more inclined to invest in residential sites. Nevertheless, interest in industrial sites also improved.

Inflation

The rate of inflation at the consumer level, as measured by the Consumer Price Index (A), rose by an average of 12 per cent in 1991. This compared with an increase of 9.8 per cent in 1990. The inflation rate accelerated during the first four months of the year to a peak of 13.9 per cent in April, but showed a gradual easing thereafter. The package of counter-inflation measures adopted by the government in late May helped to dampen inflationary expectations in the economy. A temporary upsurge in the prices of certain essential foodstuffs led to a pick-up in the inflation rate in July and August. But as these prices stabilised, the trend of moderation in inflation continued. In December 1991, the inflation rate was 10.3 per cent.

THE ECONOMY

      Among the various components of the CPI(A), the prices of alcoholic drinks and tobacco, services, transport and vehicles, housing and foodstuffs recorded faster increases than the others. For these five components, the rates of increase were 44 per cent, 14 per cent, 13 per cent, 13 per cent and 11 per cent respectively in 1991 over 1990. Taken together, they accounted for 90 per cent of the overall increase in the CPI(A).

Relatively more moderate increases were recorded in the prices of fuel and light, clothing and footwear, durable goods and miscellaneous goods, which rose by an average of six per cent, seven per cent, four per cent and eight per cent respectively in 1991 over 1990.

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 size and open nature, the economy is vulnerable to external factors, and government actions designed to offset unfavourable external influences are of limited effectiveness. Moreover, the government considers that, except where social considerations are over-riding, the allocation of resources in the economy is best left to market forces rather than done through government involvement.

      This basically free-enterprise, market-disciplined system has contributed to Hong Kong's economic success. A relatively simple tax structure with low tax rates provides good incentive for workers to work and for entrepreneurs to invest. Both workers and entrepreneurs are highly motivated. 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.

Measures to Curb Inflation and Property Speculation

In recognition of public concern over the high rate of inflation, the government announced a package of counter-inflation measures in May 1991. These measures included (a) freezing a number of planned increases in government fees and charges for the rest of the financial year; (b) removing the one-dollar taxi fuel surcharge; (c) reducing by half the earlier increase in tobacco duty; (d) raising local interest rates by one percentage point (local interest rates were lowered subsequently following an easing in US dollar interest rates); (e) asking banks to continue to exercise vigilance in mortgage lending; (ƒ) asking the Housing Authority to consider its forthcoming revisions in public housing rentals with due regard to the impact on local inflation (Housing Authority subsequently announced that there would be no rent increases for the rest of the year), and (g) considering the admission of more imported workers to alleviate constraints on labour resources. In addition, the government re-asserted its policy of restraining the growth in public expenditure and in the size of the civil service. These measures had some effect in dampening the inflationary pressures.

      In a move to curb property speculation, which had intensified since the early part of the year, the government announced on August 7 a package of measures to regulate the sale of uncompleted flats. These included (a) raising the minimum initial deposit with developers and the forfeiture amount; (b) requiring balloting of registration numbers; (c) allowing only one registration per person during the sale; (d) limiting purchase to one flat per registered person, and (e) requiring developers to announce the total number of flats being offered for sale and the number of flats being reserved by them for private allocation when they

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advertise the sale. These measures helped to improve discipline in the course of sale and make it more costly and difficult for speculators to acquire a significant number of flat entitlements. In addition, the government would seek to increase the supply of land for residential property development in the future. The Sino-British Land Commission had agreed that an additional 5.9 hectares of land for private residential use be included in the Land Disposal Programme for 1991-2.

Further measures to curb property speculation were announced early in November. These included (a) requiring stamp duty to be paid on completion of each sale and purchase agreement, rather than on completion of property assignment, except for flats purchased under the Home Ownership Scheme; (b) restricting the private allocation of uncompleted flats to not more than half the flats for which consent for pre-completion sale is given; (c) imposing restrictions on the timing of resale of privately allocated uncompleted flats; (d) requiring disclosure of information on all intermediary sales of uncompleted flats; (e) requiring deposits for the purchase of uncompleted flats to be made in bank drafts and not in cheques, and (ƒ) increasing the role of the Consumer Council in overseeing matters relating to the property market.

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-private 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. Four other funds exist mainly to finance capital investment and expenditure and to make loans. They are the Capital Works Reserve Fund, Capital Investment Fund, Loan Fund and Lotteries Fund.

  The Capital Works Reserve Fund finances the Public Works Programme, land acquisitions, capital subventions, and major systems and equipment items. 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 premia and transfers from the General Revenue Account.

The Capital Investment Fund is used to finance the government's capital investments in public bodies which are not part of the government structure itself, such as equity injection in the Mass Transit Railway Corporation and capital investment in the Hong Kong Housing Authority. Its income is derived mainly from interest and dividends on investments, disposal of investments, repayments of loans, and transfers from the General Revenue Account.

The Loan Fund is used to finance schemes of government loans such as student loans and housing loans. Transfers are made from the General Revenue Account to enable the fund to meet its commitments. The other main sources of income are interest and dividends on loans and investments and loan repayments.

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

      Representative of Hong Kong's "high-flyers", at the crest of the new wave of business leaders, administrators and entrepreneurs, is Patsy Chang, a director of the Po Leung Kuk, one of Hong Kong's largest charitable organisations.

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Victor Fung, Chairman of the Hong Kong Trade Development Council.

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James Tien, Managing Director of Manhattan Garments Limited.

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Opposite page: Ann Chiang, Executive Director of Chen Hsong Holdings Limited

and (below) one of their plastics machinery products.

KAI YIN LO

Kin-Yin Lo, designer in jewellery and precious stones, has built an international business with her creations.

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Sun Hung Kai Properties Limited Chairman, Walter Kwok.

Below: Richard Li, Deputy Chairman of the

Hutch Vision Group, which launched Hong Kong's

first satellite TV station.

Left: Satellite discs mushrooming around town.

SATELLITE CONTROL 2

THE ECONOMY

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.

      The most important principle underlying the government's management of public expenditure is that the growth rate of public expenditure should over a period be close to that of gross domestic product.

      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.

Public Expenditure

     Public expenditure in 1990-91 was $95.2 billion. The government itself accounted for $79.1 billion excluding grants to the Regional Council, and equity injections in the Mass Transit Railway Corporation, the Housing Authority, the Provisional Airport Authority and other bodies. The growth rate over the preceding year was 16.2 per cent in nominal terms or 2.3 per cent in real terms. Some $26.7 billion or 28 per cent of the public expenditure in 1990-91 was of a capital nature. An analysis of expenditure by function is at Appendix 8.

The growth rate of public expenditure is compared with the rate of economic growth at Appendix 9. Public expenditure has been around 15 to 17 per cent of the gross domestic product since 1987-8. It is estimated that this will rise to about 19 per cent in 1991-2.

      Total government revenue in 1990-91 was $89.5 billion and the consolidated cash surplus was $4 billion. Details of revenue by source and of expenditure by component for 1990-91 and 1991-2 (estimate) are at Appendix 10.

      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 five years (1974-5, 1982-3, 1983-4, 1984-5 and 1990-91) in the past 20 years, the General Revenue Account has shown a surplus of income over expenditure at the end of each year. The accumulated net surpluses on the General Revenue Account form the government's fiscal reserves. These secure the government's contingent liabilities and ensure that it is able to cope with any short-term fluctuations in expenditure relative to revenue.

The Urban Council and Regional Council, which operate through the Urban Services Department and Regional Services Department respectively, are financially autonomous. They draw up their own budgets and expenditure priorities. The expenditures of the two councils are financed mainly from a fixed percentage of the rates from property in the Urban Council area (Hong Kong, Kowloon and New Kowloon) and in the Regional Council area (New Territories). Additonal income derives from fees and charges for the services the councils provide.

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   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 public 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 1990-91, $5,729 million was collected in duties, compared with $4,628 million in 1989-90.

   Specific duty rates on alcoholic liquors range from $1.84 a litre on cider and perry to $66 a litre on brandy. In addition, duty is payable at the rate of 35 per cent of the value of spirits, champagne and sparkling wines, and 20 per cent of the value of still wines. On tobacco, duty rates range from $120 a kilogram on Chinese-prepared tobacco to $620 a kilogram on cigars, while that on cigarettes is $480 per 1 000 pieces. On motor fuels, the duty rate is $3.72 a litre for unleaded petrol and $4.17 for leaded petrol; and on diesel oil for road vehicles, it is $1.87 a litre. Duty is levied on methyl alcohol at a rate of $6.20 a litre, and on non-alcoholic beverages at $60 a hectolitre. On cosmetics, duty shall be payable at the rate of 30 per cent of the normal price of the cosmetics.

More details on Revenue from Duties are at Appendix 11.

Rates are one of Hong Kong's indirect taxes and are levied on landed property at a percentage of its rateable value. The revenue obtained in this way helps finance the various public services provided by the government, the Urban Council and Regional Council.

Rateable value is an estimate of the annual rent at which a property might be expected to let as at a designated date, and general revaluations are conducted at intervals to keep rateable values up to date. The current lists of rateable values came into force on April 1, 1991 and reflect rental values at July 1, 1990.

The percentage charge is fixed annually by the Legislative Council in accordance with the financial requirements of the government, the Urban Council and the Regional Council. For 1991-2, the percentage charge has been fixed at 5.5 per cent. A rates relief mechanism is currently in place to cushion the effects on ratepayers of the increases in rateable values following the general revaluation which came into effect on April 1, 1991. The mechanism restricts the increases in rates payable in 1991-2 to 25 per cent of the amount paid for the same premises in 1990-91.

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 accordance with approved guidelines. No refunds of rates are allowed for vacant domestic properties, but half the rates paid may be refunded in the case of unoccupied non-domestic properties.

THE ECONOMY

In 1990-91, the number of assessments in the Valuation Lists at year-end stood at 1.13 million and the total net revenue from rates was $6,843 million.

      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 10.5 per cent or 17 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 $4 million and $4.5 million to a maximum of 18 per cent on estates valued in excess of $5 million. Estates valued at $4 million or less 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 the 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 method of payment are similar to the system for profits tax. Tax payable is calculated on a sliding scale which progresses from two per cent to 17 per cent on the first three segments of net income (that is, income after deduction of allowances) of $20,000 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. Earnings of husband and wife are reported and assessed separately. 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.

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Business registration fees, which form part of the revenue from fees and charges, are also collected by the Inland Revenue Department. Business registration is compulsory for companies incorporated in Hong Kong, overseas companies with a place of business in Hong Kong, and businesses operating in Hong Kong, except those run by charitable institutions and licensed hawkers. The annual registration fee is $900. 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 $250 payable to the Protection of Wages on Insolvency Fund is imposed on each business registration certificate issued to a business or its branch.

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, Hong Kong has maintained a three-tier system of deposit-taking institu- tions. Following legislation in January 1990, the categories of licensed and registered deposit-taking company have been replaced by restricted licence bank and deposit-taking company respectively. The changes were primarily designed to improve the status of licensed deposit-taking companies. The third category of authorised institution, that of licensed bank, has remained unchanged.

Restricted licence banks have a greater scope in the use of business descriptions than the licensed deposit-taking companies which they have replaced. They are 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 licence', 'merchant', or 'investment'. To avoid confusion with licensed banks, descriptions such as 'retail' or 'commercial' are not 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.

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 $150 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 over banks and offer some acceptable form of reciprocity to banks from Hong Kong.

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FINANCIAL AND MONETARY AFFAIRS

66

At the end of 1991, there were 163 licensed banks in Hong Kong, 30 of which were locally incorporated. They maintained a total of 1 409 offices in Hong Kong. In addition, there were 152 representative offices of foreign banks. The total deposit liabilities of all licensed banks to customers at the end of the year was $1,311 billion.

Only licensed banks may operate current or savings accounts. They may 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.

Restricted banking licences are granted at the discretion of the Financial Secretary. Companies are required to have a minimum issued and paid-up capital of $100 million, and to meet certain criteria regarding ownership, general standing and quality of management. If incorporated overseas, the applicants must also be subject to adequate supervision. Restricted licence banking may 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 1991, there were 53 restricted licence banks and their total deposit liability to customers was $40 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. 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 1991, there were 159 deposit-taking companies, and their total deposit liability to customers was $24 billion.

Apart from deposit-taking, conventional lending and foreign exchange dealing, 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 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 1991, there were 8 495 registered persons. Of the 279 registered corporate securities dealers, 143 were from overseas. Of the 96 commodities dealers, 36 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 1991, the Stock Exchange had 671 corporate and individual members. Only shareholders who have applied for and been granted mem- bership of the Hong Kong Futures Exchange Limited can trade on the Futures Exchange. At the end of 1991, the Futures Exchange had 80 members.

Under the Insurance Companies Ordinance, insurance companies are authorised by the Insurance Authority to transact business in Hong Kong. At the end of 1991, there were 240 authorised companies. Of these, 129 were overseas companies from 28 countries.

FINANCIAL AND MONETARY AFFAIRS

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 around the globe. With an average daily turnover of about US$49 billion early in 1989, Hong Kong is among the largest markets in Asia along with Tokyo and Singapore. Besides the Hong Kong dollar, most major currencies are actively traded in Hong Kong, including the US dollar, Deutschemark, Yen, Sterling, Swiss franc, Australian dollar and Canadian dollar. As a market in foreign exchange, Hong Kong is favoured by a host of factors such as a favourable time zone location, a large volume of trade and other external transactions, the presence of a large number of international banks with experience in foreign exchange transactions, the absence of exchange controls and a highly-advanced telecommunica- tions system.

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      Equally well-established and active is the interbank money market, in which wholesale Hong Kong dollar deposits and foreign currency deposits (mainly in US dollars) are traded both between authorised institutions in Hong Kong, and between local and overseas institutions. This market is mainly for short-term money - with maturities ranging from overnight to 12 months for both Hong Kong dollars and 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 relative size of the market, interbank liabilities accounted for 36 per cent of the total Hong Kong dollar liabilities of the banking sector at the end of 1991; the corresponding share for foreign currency interbank liabilities was 78 per cent.

      The launch of the Exchange Fund Bills Programme in March 1990 has invigorated the local capital markets. Commencing with the weekly issue of 91-day bills, the programme was expanded to include biweekly issues of 182-day bills in October 1990 and issues of 364-day bills every four weeks in February 1991. The bills are issued for the account of the Exchange Fund and are used as a monetary policy instrument. They are available in minimum denominations of HK$500,000 and are issued on a discount basis by tender. Tenders are open to recognised dealers selected from institutions authorised under the Banking Ordinance. To promote secondary market activity, twenty-two recognised dealers have been appointed as market makers which have undertaken to quote two-way yields during normal money market trading hours. At the end of 1991, outstanding issues of 91-day, 182-day and 364-day bills amounted to $7.8 billion, $3.4 billion and $2.8 billion respectively.

The Government Bond Programme launched in mid-November 1991 marked another significant development in the local capital markets. The proceeds of the bonds are credited to the Capital Works Reserve Fund and the Capital Investment Fund for the purposes of financing infrastructural developments. The market structure of the bond programme is similar to that of the Exchange Fund Bills Programme. Both recognised dealers and market makers are appointed. The bonds are issued in paperless form and in denominations of $50,000. Initially, two-year bonds have been introduced to provide continuity in the maturity spectrum of the government debt market. Longer-term bonds may be issued later, having regard to the government's use of fund and the development of the bond programme. At the end of 1991, outstanding value of the bonds stood at $0.6 billion.

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The local capital markets are also a source of finance for corporate borrowers. The two main types of negotiable debt instruments traded in the market are certificates of deposit issued by authorised institutions and commercial paper issued by other organisations and companies. Although the majority of issuers are locally-based institutions, a number of non-resident institutions have also tapped funds from the local capital markets. A notable example is the four issues of Hong Kong dollar bonds launched by the World Bank in 1989, 1990 and 1991 and the US dollar bonds issued by the Asian Development Bank in November 1991.

The stock market provides another important source of capital for local enterprises. It attracts both local and overseas investors. At the end of 1991, 357 public companies, with a total market capitalisation of $949 billion were listed on the Hong Kong Stock Exchange. This has made it the third largest stock market in Asia, after the leaders, Japan and Taiwan.

The Hong Kong Futures Exchange offers futures contracts in sugar, soyabeans, gold, Hang Seng Index and Sub-Indices, and interbank interest rate. Trading in the new futures contracts based on each of the Hang Seng Sub-indices, namely Commerce and Industry, Properties, Finance and Utilities, commenced in the second half of the 1991. These contracts offer more flexibility and opportunities for investors in Hong Kong stock and futures.

The Chinese Gold and Silver Exchange Society operates one of the largest gold bullion markets in the world. Gold traded through the society is of 99 per cent fineness, weighted in taels (one tael equals approximately 1.2 troy ounces) and quoted in Hong Kong dollars. Prices follow closely those in the other major gold markets in London, Zurich and New York.

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

Regulation of the Financial Sector

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 impediments of a bureaucratic or fiscal nature.

The authority for the prudential supervision of banks, restricted licence banks and deposit-taking companies, collectively called authorised institutions, is vested in the Commissioner of Banking. His authority is derived from the Banking Ordinance which replaced earlier Banking and Deposit-taking Companies Ordinances in 1986. 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 has broadened its approach to supervision which has hitherto been reliant on on-site examinations. Examinations are still an integral part of the supervisory process, but are supplemented by off-site reviews and prudential meetings with

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authorised institutions. Off-site reviews involve the analysis of the regular statistical returns, and accounting and other management information supplied by institutions with a view to assessing their performance and compliance with the Banking Ordinance. Such reviews are followed by prudential interviews with institutions' senior management, at which the business, prospects and potential areas of concern of institutions are discussed. This broader approach to supervision is enhancing the office's ability to identify potential areas of concern which can be followed up by on-site examinations. 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.

The Securities and Futures Commission, which was established in May 1989 in response to the weakness 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, the Stock Exchanges Unification Ordinance, the Securities (Disclosure of Interests) Ordinance and the Securities (Insider Dealing) Ordinance.

       The Securities Ordinance and the Stock Exchanges Unification Ordinance, together with the Securities and Futures Commission Ordinance, provide a framework 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 defaulting brokers.

       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 Commodities Trading Ordinance, together with the Securities and Futures Commission 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.

       The Office of the Commissioner of Insurance exercises prudential supervision of the insurance industry in Hong Kong. It administers the Insurance Companies Ordinance which brings all classes of insurance business under a comprehensive system of regulation and control by the Commissioner of Insurance (Insurance Authority). Conducting insurance business in or from Hong Kong is restricted to authorised companies, to Lloyd's and to certain underwriters approved by the Governor in Council. All new applications for authorisation are subject to careful scrutiny by the Insurance Authority to ensure that only insurers of good repute who meet all the criteria of the ordinance are admitted. The ordinance stipulates minimum share capital and solvency requirements for all authorised

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 insurers and requires them to submit financial statements and other relevant information to the authority annually. 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.

  Self-regulatory measures to strengthen discipline in the insurance market have been formulated by the insurance industry after consultation with the government. The measures comprise the adoption by the insurance industry in 1989 of two Statements of Insurance Practice governing the writing of insurance contracts for long term and general insurance business, and the establishment in February 1990 of an Insurance Claims Complaints Bureau which provides an independent avenue for resolving claims disputes arising from personal insurance policies. Proposals for the self-regulation of insurance intermediaries (i.e. agents and brokers) are also under consideration. The self-regulatory system will benefit Hong Kong as a developing international insurance centre.

The Securities and Futures Commission

The Securities and Futures Commission (SFC) was established on May 1, 1989, following enactment of the Securities and Futures Commission Ordinance. The enactment of the ordinance represented a first, important phase in the overhaul of securities legislation in Hong Kong and the implementation of some of the major recommendations made by the Securities Review Committee in May 1988.

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 SFC. It provides a general regulatory framework for the securities and futures industries, leaving certain elements to be provided by regulations, administrative procedures and guidelines developed by the commission.

The SFC was established as an autonomous statutory body outside the civil service. It has 10 directors, half executive and half non-executive. The Governor appoints the directors and may give policy directions to the commission. Each year the commission must present the Financial Secretary with a report and an audited statement of its accounts, which are laid before the Legislative Council.

The SFC seeks advice on policy matters from its Advisory Committee, whose independent members are appointed by the Governor and are broadly representative of market participants and relevant professions. Decisions of the SFC relating to matters concerning the registration of persons and intervention in their business are subject to appeal to the Securities and Futures Appeals Panel which is also appointed by the Governor.

  The SFC is funded largely by the market and partly by the government. Market contribution is in the form of fees and charges for specific services and functions performed (on a cost recovery basis), plus a statutory levy on transactions recorded on the Stock and Futures Exchanges. The annual budget is estimated at about $180 million. As of December 31, 1991, the SFC had a total establishment of 237.

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The SFC has taken a lead in a comprehensive overhaul of securities and futures regulations. As part of this exercise, it issued revised versions of the Code on Unit Trusts and Mutual Funds and the Code on Takeovers and Mergers last year. The revised versions bring the codes into line with the increasingly sophisticated investment environment and incorporate a number of features designed to deal with situations which are unique to Hong Kong. A new Code on Investment-linked Assurance and Pooled Retirement Funds, designed to improve protection for investors of these funds within the framework of the Protection of Investor Ordinance, was issued early in 1991. The new Hong Kong Code on Share Repurchases, which provides guidelines for public companies which intend to purchase their own shares, was implemented in April 1991.

A major step forward for the Hong Kong equity market near the end of the year was implementation of a set of voluntary reforms of the constitution of the Stock Exchange which widen the composition of its governing council and restrict its ability to distribute dividends. The new council includes a larger number of representatives of listed companies, investors and other market users and is expected to facilitate the market development efforts of the Stock Exchange.

The SFC has been encouraging the development of more efficient equity trading systems and a greater variety of securities and futures products. The Hong Kong Securities Clearing Company, which is financed by the Stock Exchange and five banks, is introducing a new, automated book-entry central securities clearing and settlement system, which will improve settlement efficiency, enhance risk management capability, save money and increase trading capacity. New legislation to provide the statutory framework required to support and facilitate the operation of the central clearing system is now under preparation. The new system will commence operation early in 1992. The SFC also worked with the Futures Exchange in the development of four new Hang Seng Sub-index contracts during the year.

      The SFC and the Stock Exchange have taken steps to develop the necessary systems for introducing short-selling and stock borrowing and lending, and are working towards the introduction of new financial products such as traded options. The Stock Exchange is also examining the viability of listing PRC-based companies in Hong Kong, while maintaining adequate standards of investor protection.

      Two important components of the overhaul of Hong Kong's securities legislation are the Securities (Insider Dealing) Ordinance and the Securities (Disclosure of Interests) Ordinance. Both ordinances were brought into operation on September 1, 1991. The former provides much stiffer penalties for insider dealing than those previously applicable. The latter requires that company shareholders with 10 per cent or more of the voting shares of a listed company disclose their interests and dealings publicly and that directors and executives disclose certain dealings.

Hong Kong as an International Financial Centre

The favourable geographical position of Hong Kong, which provides a bridge in the time gap between North America and Europe, together with strong links with China and other economies in the South-east Asian region as well as excellent communications with the rest of the world, have helped Hong Kong to develop into an important international financial centre. The absence of any restrictions on capital flows in and out the territory has also contributed to this.

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Foreign banks in Hong Kong tend to be the premier banks in their countries of incorporation and this is illustrated by the fact that 83 of the top 100 banks in the world in 1991 have operations in the territory. In addition, many merchant banks or investment banks of world standing operate in Hong Kong. A substantial proportion of the transactions in the banking sector are international in nature: more than 60 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 investment overseas is also believed to be considerable.

The Financial Scene

Affected by problems in other parts of the Bank of Credit and Commerce group, the operation of the Bank of Credit and Commerce Hong Kong Limited was suspended by the Commissioner of Banking on July 8 in order to preserve the bank's assets and to ensure fairness to all depositors. The Registrar General was subsequently appointed Provisional Liquidator of BCCHK. To alleviate immediate hardship to depositors, government provided the Provisional Liquidator with an indemnity to enable him to make an initial distribution of 25 per cent of the net credit balances to creditors, including depositors, subject to an upper limit of $500,000 in respect of the distribution to any depositor or creditor.

In July and August, following the BCCHK incident, several banks were the subject of unfounded rumours but the situation normalised very quickly because all the affected banks were fully capable of meeting their obligations. Performing the role as lender of the last resort, the Exchange Fund provided liquidity support to some of the affected banks. For the banking system as a whole, the customer deposit base, in terms of both total deposits and Hong Kong dollar deposits, continued to show a substantial increase.

With the approval of the High Court, the Provisional Liquidator entered into a Provisional Agreement with The Hong Kong Chinese Bank (HKCB) on November 22 for the transfer of the assets and recorded liabilities of BCCHK and BCCI Finance International Limited to a new bank to be formed and owned as to not less than 51 per cent by HKCB. The agreement would be subject to a number of technical and other issues being resolved, including, among other things, the design of an appropriate scheme of arrangement which has to be approved by the High Court and depositors, the issue of a banking licence to the new entity and the enactment of legislation to transfer the assets and liabilities to the new bank.

  The primary monetary policy objective under the linked exchange rate system is to maintain a stable exchange rate between the Hong Kong dollar and the US dollar around the linked rate of 7.80. The pursuit of ancillary objectives, such as curbing inflation, is possible only within the confines of this overriding objective. Against rising inflationary pressures and expectations in the early part of 1991, local interest rates were increased in May as part of an anti-inflation package. Following a tightening of interbank liquidity and a one percentage point hike in deposit rates set by the Hong Kong Association of Banks (HKAB), the three-month Hong Kong dollar interbank interest rate firmed to around 8 per

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cent in late May and June, with the interest rate premium rising to 1.5 to 2 percentage points over the corresponding US dollar interest rates.

The market exchange rate of the Hong Kong dollar strengthened in response to the interest rate premium and briefly rose to a high of 7.714 on June 22. With a view to forestalling a further strengthening of the exchange rate and taking into account indications that the inflation rate had peaked in April, the level of interbank liquidity was increased back to the previous level in late June. This was followed by a one percentage point cut in HKAB deposit rates. In consequence, the interest rate gap began to close and the market exchange rate of the Hong Kong dollar moved back to a level closer to 7.80.

      The level of interbank liquidity was changed on three occasions during the second half of 1991. The operations were carried out to prevent a widening of the differential between the Hong Kong dollar and the US dollar interest rates, and hence to give support to the linked rate.

      The closing of the interest rate gap, coupled with some easing in the US interest rates, led to a decline in local interest rates during the second half of 1991. The three-month Hong Kong dollar interbank interest rates, for instance, fell from a high of 8.4 per cent in May to 4 per cent at the end of the year, as compared with 7.9 per cent at end-1990. During the year, deposit rates administered by HKAB were changed on six occasions. Apart from an increase in May, the others were downward adjustments.

With the reversal of the interest rate hike in late June, the market exchange rate of the Hong Kong dollar returned to a level closer to 7.80. It closed the year at HK$7.78 to US$1. Reflecting the movements of the US dollar against other major foreign currencies, the overall exchange value of the Hong Kong dollar, as measured by the effective exchange rate index, strengthened from 109.3 at end-1990 to 115.0 in mid-June, but eased back to 109.2 at the end of the year.

Hong Kong dollar deposits grew by 16.2 per cent during 1991, about the same as the growth rate of 15.4 per cent in 1990 and was broadly consistent with the growth in gross domestic product in money terms. On the other hand, the increase of foreign currency deposits slowed down to 8.3 per cent in 1991 from 27.7 per cent in 1990. The growth of offshore deposits booked in Hong Kong probably slackened during the year, largely reflecting the sharp deceleration in monetary expansion in the USA and Japan. Taken together, total customer deposits (in all currencies) grew by 11.6 per cent in 1991, compared to 22.2 per cent in 1990. The relative share of Hong Kong dollar deposits to total deposits rose to 44 per cent at end-1991, from 42.2 per cent at end-1990.

      Hong Kong dollar M1, M2 and M3 rose by 21.7 per cent, 17.9 per cent and 15.6 per cent respectively in 1991. The corresponding increases for total M1, M2 and M3 were 19.5 per cent, 13.3 per cent and 11.6 per cent.

Hong Kong dollar loans registered an increase of 19.2 per cent in 1991 while foreign currency loans increased by 28.6 per cent. Analysed by major categories, loans for use in Hong Kong (including those for trade financing) grew by 18.4 per cent. Contributing to this increase was the rapid growth in residential mortgage loans, of 35.4 per cent. Developments during the year were uneven, however. Reflecting measures announced by the government in November to cool down the overheated property market, the quarterly growth rate of these loans slowed down to 6.9 per cent during the fourth quarter, from an average of 8.6 per cent in the first three quarters. Loans for trade financing recorded a significant increase of 16.2 per cent during 1991, largely reflecting the pick up in trade

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activities. Loans to other major sectors, including wholesale and retail trades, building, construction, property development and investment, transport, manufacturing and financial concerns, all showed some increases during the year.

Turning to the financial markets, the government borrowing programme facilitated the further development of the local capital markets. The Exchange Fund Bills market was expanded in February to include 364-day bills, in addition to the 91-day bills and 182-day bills introduced in 1990. The various types of bills were well received by the market. Bill tenders were invariably several times oversubscribed, with yields at around 30 to 70 basis points below the corresponding Hong Kong interbank offered rate, depending on the maturity of the bills. Daily turnover of the bills in the secondary market averaged $5.7 billion, in the last quarter, or about 41 per cent of the total amount of bills outstanding, at $14.0 billion at end-1991. In mid-November, the Government Bond Programme was launched with the issue of two-year bonds. The first issue was oversubscribed by 4.4 times.

New issue activity in respect of other debt instruments also picked up in 1991, helped by the maturity of many previous issues and the decline in local interest rates in the second half of the year. A total of 97 new issues of negotiable certificates of deposit were launched during 1991, of which 86 were denominated in Hong Kong dollars. Of these 86 issues, 82 were arranged on fixed-rate terms and the remaining four on floating-rate terms. At the end of 1991, the outstanding value of Hong Kong dollar-denominated negotiable certificates of deposit amounted to $23.2 billion, compared with $28 billion at end-1990. Fifty-seven per cent of them were held outside the local banking sector.

  Of the six new issues of commercial paper and other debt instruments reported to the Securities and Futures Commission during 1991, four were denominated in Hong Kong dollars. Following three successful issues in 1989 and 1990, the World Bank launched a fourth issue of Hong Kong dollar bonds in September. The total issue size was $500 million. The Asian Development Bank also tapped the local capital markets for the first time with the placement of US dollar bonds in November.

In the local stock market, share prices were generally on an uptrend during the first four months of 1991, supported by an early settlement of the Gulf crisis. However, amid uncertainties over the airport talks and the US renewal of China's Most Favoured Nation status, local share prices eased somewhat in late May. Market sentiment improved again early in July with the announcement of the Sino-British Memorandum of Understanding regarding the new airport and related projects. The Hang Seng Index closed the year at a record high of 4 297. The gain in the Hang Seng Index during the year, of 42 per cent, was greater than those in many overseas stock markets. Daily turnover in the local stock market averaged $1.3 billion in 1991, compared with $1.2 billion in 1990.

The number of flotations increased markedly to 48 in 1991, raising a total of $5.4 billion. The more optimistic market sentiment as well as the reduction in the minimum requirements regarding issue capital and the length of track record by the Stock Exchange contributed to this increase. In addition to new share issues, funds were tapped through rights issues and open offers ($10 billion) and private placements ($2.8 billion).

The Hong Kong Futures Exchange launched futures contracts based on the four Hang Seng sub-indices (Commerce and Industry, Finance, Properties and Utilities) in the second half of 1991. Turnover in these contracts was moderate. Trading in Hang Seng Index futures was more active. Daily turnover averaged 2 006 contracts in 1991, compared with 951 contracts in the preceding year.

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Trading in commodity futures and interest rate futures remained rather modest. For the year as a whole, total turnover in soyabeans, sugar and gold futures amounted to 31 200 lots (30 000 kg each), 34 237 lots (112 000 lb each) and 992 lots (100 troy ounces each) respectively. Turnover in interest rate futures was 1 261 contracts.

The price of loco-London gold was generally on a downtrend during 1991, except for a brief rebound in the early part of January upon the start of military action in the Gulf. From a high of US$403 per troy ounce on January 16, the price of gold fell to a low of US$343 on September 13 before closing the year at US$353. The price of gold at the Chinese Gold and Silver Exchange Society showed similar movements and moved between $3,737 and $3,178 per tael during the year. Turnover totalled 31.3 million taels in 1991, compared with 47 million taels in 1990.

The number of unit trusts and mutual funds approved by the Securities and Futures Commission dropped to 854 at end-1991 from 936 at end-1990. This decline was partly due to the de-authorisation of some inactive funds and partly due to the merging of some sub-funds for greater operational efficiency.

      Following the conclusion of the Gulf war and in line with moves by the international community, Hong Kong lifted on March 15 the freeze on certain assets of Kuwait which was introduced on August 6, 1990. The restrictions on certain Iraqi assets are still in place in accordance with the Hong Kong (Control of Gold, Securities, Payments and Credits; Kuwait and Republic of Iraq) Order 1990.

Monetary Policy

Unlike most major economies, Hong Kong does not have a formal central bank or a monetary authority. Most of the functions which might be performed by one - such as monetary management, reserve management, development of financial markets and prudential supervision of financial institutions are carried out by different government offices within the Monetary Affairs Branch of the Government Secretariat. Bank note issue, management of the clearing house and the provision of retail banking services to government are the residual central banking functions performed by commercial banks.

To provide a well-defined structure for the conduct of monetary policy and the management of the Exchange Fund, the Office of the Exchange Fund was set up within the Monetary Affairs Branch in February 1991. The office is responsible for the development and execution of monetary policy; it also oversees the operation of both the money and foreign exchange markets and carries out money market operations, whenever there is a need to do so, to maintain stability in the market. The office manages the assets of the Exchange Fund. It is also responsible for the development of financial markets in Hong Kong. It runs the market for government debt.

=

There is a linked exchange rate system, which was introduced on October 17, 1983, after a period of much instability in the exchange rate of the Hong Kong dollar. In the system, 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

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exchange market, the exchange 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 the adoption of the linked rate system, the exchange rate is no longer a variable in the economy's adjustment process. Interest rates, the money supply and the level of economic activity over time adjust automatically to balance of payments pressures. If there is an outflow of money, caused for example by a tendency for the balance of payments to be in deficit, there will be a contraction in the money supply and higher interest rates. These will, on the one hand, induce an inflow of funds to offset the original outflow arising from the balance of payments deficit and, on the other hand, reduce domestic demand, restrain imports and enhance export competitiveness and thereby also contribute to restoring the external balance. Alternatively, if there is an inflow of money, caused for example by a tendency for the balance of payments to be in surplus, there will be an expansion in the money supply and lower interest rates. These will, on the one hand, induce outflow of funds and, on the other hand, increase domestic demand and imports, and erode export competitiveness, again restoring the external imbalance.

When there is a tendency for the Hong Kong dollar to weaken relative to the US dollar, Hong Kong dollar interest rates will rise relative to US dollar interest rates. They may rise to a level where the interest rate gap between the Hong Kong dollar and the US dollar is large enough to stem or reverse the outflow from the Hong Kong dollar. Similarly, when there is a tendency for the Hong Kong dollar to strengthen relative to the US dollar, Hong Kong dollar interest rates will fall relative to US dollar interest rates. They may fall to a level where the interest rate gap between the Hong Kong dollar and the US dollar is large enough to stem or reverse the inflow into the Hong Kong dollar. From the monetary policy point of view, it is sometimes desirable to expedite this adjustment process in order that the economy is not unduly disrupted by speculative flows of funds aimed at manipulating the value of the Hong Kong dollar. So that the interest rate gap is large enough to produce the corrective inflows or outflows, there should therefore ideally be no limit on how low or high interest rates can move.

The lower limit for interest rates was eliminated when the Hong Kong Association of Banks, after consultation with the Financial Secretary, introduced in January 1988 revised interest rate 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. The purpose of the revised rules was to deter persistent speculation on a revaluation of the Hong Kong dollar which emerged in late 1987 and continued early in 1988. 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.

The upper limit for interest rates was removed in July 1988 when the Money Lenders Ordinance was amended to exempt all institutions authorised under the Banking Ordinance from the restriction in the ordinance on lending money at an effective interest rate exceeding 60 per cent per annum.

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 to maintain exchange rate stability within the framework of the linked exchange rate system, Accounting Arrangements were entered into in mid-July 1988 between the

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     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 maintains a Hong Kong dollar account with the Exchange Fund. The government uses the account, at its discretion, to effect settlement of its Hong Kong dollar transactions with HSBC or with other banks. HSBC is required to ensure that the net clearing balance (NCB) of the rest of the banking system does not exceed its balance in the account and that the NCB is not in debit. Otherwise it will have to pay interest to the Exchange Fund.

Consequently, the Exchange Fund effectively became the ultimate provider of liquidity in the interbank market, a role which until mid-July 1988 was performed by 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 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 increase interbank liquidity and lower interest rates by taking action 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 these accounting arrangements, the government can also influence monetary conditions in the interbank market through its buying or selling of Hong Kong dollar financial assets of acceptable quality. For this purpose, the government has developed a programme for the issue of short-term paper for the account of the Exchange Fund (the so-called Exchange Fund bills). The bills are designed to complement the accounting arrangements by providing the Exchange Fund with an additional instrument for conducting money market operations.

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.

In 1976, the government began to transfer the fiscal reserves of its General Revenue Account (apart from the working balances) to the fund, against the issue of interest- bearing debt certificates. This arrangement was introduced for the safety, economy and advantage of these monies so as to avoid fiscal reserves having to bear the exchange risk arising from investments in foreign currency assets and to centralise the management of the government's financial assets. The fiscal reserves are not permanently appropriated for the

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use of the Exchange Fund. They are repaid to the General Revenue Account when they are required to be drawn from to meet the obligations of the general revenue.

Thus, the bulk of the government's financial assets are now with the fund, which holds its assets mainly in the form of bank deposits in certain foreign currencies and in Hong Kong dollars, and of marketable interest-bearing instruments in foreign currencies. The principal activity of the fund on a day-to-day basis is 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 and it intervenes when necessary in the local money market or foreign currency markets to maintain stability. The fund is managed by the Office of the Exchange Fund 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-edged 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 and 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. 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 1991, with details of its composition, is shown at Appendix 13.

INDUSTRY AND TRADE

HONG KONG's trade policy seeks to promote a free, open and stable multilateral trading system; to safeguard Hong Kong's rights and fulfil its obligations as a contracting party to the General Agreement on Tariffs and Trade (GATT) and a party to the Multi-Fibre Arrangement (MFA); within the context of the GATT, to secure, maintain and improve access for Hong Kong's exports and to ensure and maintain the integrity of all measures adopted by Hong Kong to meet its obligations under multilateral and bilateral trade or trade-related agreements.

The role of the government in the economic development process is one of facilitation. The government normally intervenes in the economy only in response to the pressure of economic and social needs. It neither protects nor subsidises manufacturers. It nevertheless recognises a responsibility to provide an acceptable industrial infrastructure, particularly in terms of industrial land and manpower for industry, and to make available services which enable industry to become more competitive through productivity growth, quality improvement and product innovation. It also encourages technology transfer through an inward investment promotion programme. Industrial policies are kept under review by the Trade and Industry Branch of the Government Secretariat, which acts on the advice of the Industry Development Board (IDB). Members of the board include prominent industrialists, government officials, representatives from the tertiary education sector, and representatives of the most important trade and industry organisations. In October, the Governor announced that the IDB would be subsumed into a new Industry and Technology Development Council, which would have a wider remit to advise the government on how industry should respond to technological developments so as to maintain its competitive edge. The council would also help the government to administer a fund which supports applied research and development work in private companies. Productivity, product innovation and quality improvement services are mainly provided by the Hong Kong Productivity Council and the Industry Department. The Industry Department also promotes inward investment in Hong Kong's manufacturing industries. Responsibility for providing an efficient infrastructure within which industry can operate successfully rests with a number of government departments and other organisations, but the responsibility for monitoring the adequacy of provision rests with the Industry Department.

On the external relations front, Hong Kong was admitted into the Asia Pacific Economic Co-operation (APEC) forum in November 1991. APEC is an inter-governmental economic

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forum inaugurated in 1989. The main objectives are to strengthen the multilateral trading system, to assess prospects for and obstacles to increased trade and investment flows within the Asia Pacific region and to identify a range of practical common economic interests. Apart from Hong Kong, current members include the United States, Canada, Australia, New Zealand, Japan, South Korea, China, Taiwan and the ASEAN countries. Hong Kong became a full member of the Pacific Economic Co-operation Conference (PECC) at its eighth General Meeting held in Singapore in May 1991. PECC is a non-governmental organisation seeking to develop closer co-operation on trade and economic policy issues.

In the industrial field, although total employment in manufacturing fell by 10 per cent in 1991 from the previous year's figure, the total value of Hong Kong's manufactured exports rose by two per cent, compared with an increase of only one per cent the previous year. Besides confirming its worldwide reputation as a manufacturer and exporter of manufactured consumer goods, Hong Kong also reinforced its growing role as a major service and sourcing centre for the Asian region. The value of the territory's re-exports grew by an impressive 29 per cent in 1991. Hong Kong's continuing success as a leading manufacturing and commercial centre is due to a simple tax structure and low tax rate, a versatile and industrious workforce, an aggressive and innovative managerial class, efficient transport facilities, a fine harbour, excellent international communications, and the government's firm commitment to free trade and free enterprise. These factors remained as important as ever during the year.

   Faced with increasing competition from low-cost economies in the region, rising labour costs at home, and demand in its major export markets for ever-higher standards of quality, Hong Kong's manufacturers can no longer compete in the territory's major export markets on price and speed of response alone. Manufacturers are moving decisively away from labour-intensive production into the manufacture of high-value-added products which can compete on quality. This restructuring is supported by the government, which is implementing a comprehensive quality improvement programme to develop the territory's existing quality infrastructure and to encourage the greater use of quality assurance in manufacturing through a Quality Awareness Campaign.

Science and Technology

The trend towards the manufacture of higher-quality products has been accompanied by an interest in the use of sophisticated technology in industry. The government's industrial policies and programmes are designed to support this process of technology upgrading.

   To keep abreast of the latest technological developments, the government in 1988 established the Committee on Science and Technology (CST). The committee has made detailed studies in a number of important areas and has tendered advice to government on various aspects of information technology, biotechnology, science and technology infrastructure, the promotion of science and technology, and technology safety.

   The Industry and Technology Development Council when established will take over from the CST.

Electronic Data Interchange

International trade is still conducted through paper transactions. Customs declarations, bills of lading, letters of credit: these are but some examples. Their processing costs a great

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     deal of time and money and can delay trading operations. Electronic data interchange, the computer to computer exchange of business information in a standard format, is one of the techniques being implemented by major ports overseas in an attempt to improve efficiency. It is rapidly becoming the preferred way of doing business for an increasing number of international organisations.

Electronic data interchange, in one guise or another, has been available to users in Hong Kong for nearly 10 years. Its use has been restricted mainly to users within the same industry. In recent years, however, more and more value added network service providers have started to offer commercial services in Hong Kong. As a result, the number of organisations using electronic data interchange is increasing.

At the same time, the government has been actively considering the use of electronic data interchange in its operations, particularly in the areas where the operations are part of the overall trade cycle. Examples are the lodgement of trade declarations and applications for import and export licences.

      In order to facilitate the quicker adoption of electronic data interchange, the United Nations Economic Commission for Europe has been developing a standard language for electronic trading, namely the United Nations Electronic Data Interchange for Administration, Commerce and Transport. North American and European countries have been actively involved in the development process and the participation of Asian countries is growing. The government is fully aware of the need for Hong Kong to be involved and has been keeping a close watch on developments. Hong Kong's participation will be considered at the appropriate time.

The Industrial Scene

     Hong Kong enjoys a worldwide reputation as a producer and exporter of manufactured consumer goods. Although the territory has a thriving construction industry and, as a major trading economy, has developed shipbuilding, ship repair and aircraft engineering industries, light manufacturing industries predominate. About 90 per cent of Hong Kong's manufactured products are exported, and clothing, electronic products, watches and clocks, textiles, and plastic products (particularly toys) have for many years accounted for the bulk of this output. The total value of Hong Kong's manufactured exports in 1991 was $231,045 million, and its major export markets were the United States (27.2 per cent), China (23.5 per cent), Germany (8.4 per cent), and the United Kingdom (5.9 per cent). In 1991, the territory was the world's second largest exporter by value of clothing and watches, and the third largest exporter of toys.

      Manufacturing developed on a large scale in Hong Kong in the 1950s. The territory's small size limited the amount of land which could be made available for industry and precluded the development of heavy or land-intensive industries: its manufacturing industries are therefore characterised by small-scale firms, mostly operating from premises in multi-storey buildings, and manufacturing light consumer goods for export.

      For many years, manufacturing was both the territory's largest employer and its most important economic sector, but lost this dominating position in the 1980s. Manufacturing employment fell from 904 709 in 1984 (41.7 per cent of total employment) to 654 662 (26.3 per cent) in 1991, and its contribution to GDP fell from 24.1 per cent in 1984 to 16.7 per cent in 1990. During these years manufacturers took advantage of China's open door policy to shift labour-intensive jobs into China to take advantage of lower land and labour

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costs. Manufacturing is now the territory's second largest employer, and makes the third largest contribution to GDP after financial and business services.

   There were 46 276 manufacturing establishments in Hong Kong in 1991, of which 39 868 employed fewer than 20 persons, and 43 886 fewer than 50 persons. The remaining 2 390 establishments nevertheless accounted for more than half Hong Kong's total manufacturing employment. Many smaller establishments are linked with larger factories through an efficient and flexible subcontracting network, which has enabled Hong Kong's manufacturing sector to respond swiftly to changes in external demand.

Clothing

The clothing industry is the largest employer and export-earner. In 1991, it employed 223 840 workers (34 per cent of total manufacturing employment), and earned $75,834 million in exports (33 per cent of Hong Kong's total domestic exports), making Hong Kong the world's second largest exporter by value of clothing after Italy. Hong Kong is one of the world's leading suppliers of clothing, and produces a wide variety of products, from simple accessories to expensive and high-quality fashion wear.

Electronics

The electronics industry (including the manufacture of electronic watches and clocks, and electronic toys) is the second largest employer and export-earner. In 1991, it employed 71 466 workers (11 per cent of total manufacturing employment), and earned $58,617 million in exports (25.4 per cent of total domestic exports). The industry produces a wide range of sophisticated finished products and components, including radio and television sets, calculators, wired and cordless telephones, modems, photocopying equipment, micro- computers, computer memory systems, dot matrix printers, talk-back toys, switching power supplies, multi-layer printed circuit boards, electronic modules, liquid crystal displays, quartz crystals and semiconductor devices, and surface-mounted devices.

Textiles

The textiles industry is the third largest export-earner. In 1991, it employed 62 438 workers (10 per cent of total manufacturing employment), and earned $17,630 million in exports (7.6 per cent of total domestic exports). Besides manufacturing for export, the spinning, weaving and knitting sectors of the textiles industry also produce yarns and fabrics of various fibres and blends (mostly cotton) for the local clothing industry, and finishing services for locally-produced clothing are provided by the bleaching, dyeing, printing and finishing sectors.

Watches and Clocks

The watches and clocks industry is the fourth largest export-earner (7.2 per cent of total domestic exports). In 1991, it employed 23 935 workers (four per cent of total manufacturing employment), and earned $16,727 million in exports. Hong Kong has been the world's largest exporter of complete watches by quantity since 1978, and is the world's second largest exporter by value (after Switzerland). Besides complete electrical and mechanical watches and clocks, the industry also produces high quality components and accessories. In 1987, the world's first water watch was manufactured in Hong Kong.

INDUSTRY AND TRADE

Plastics

     The plastic products industry is the fifth largest export-earner. In 1991, the industry employed 41 522 workers (six per cent of total manufacturing employment), and earned $7,027 million in exports (three per cent of total domestic exports). Plastic household articles and plastic toys together accounted for 40 per cent of domestic exports of plastic products. Other major export items included travel goods, handbags, footwear and plastic flowers.

Toys

Hong Kong's toy industry has an international reputation, but its various segments are classified under the plastics, electronics, metal products and other industries in official publications. Considered as a separate industry, however, the toy industry employed 18 836 persons in 1991, and earned $4,098 million in exports, making Hong Kong the world's third largest exporter of toys by value, after Taiwan and South Korea. The manufacture of plastic toys accounted for 75 per cent of employment in the toy industry and 55 per cent of its exports.

Other Industries

     Other important light manufacturing industries include metal products, printing, food and beverages, jewellery, industrial machinery, household electrical appliances, and photographic and optical goods. The development of the metal products and industrial machinery industries has enabled Hong Kong to produce sophisticated parts and components and other semi-manufactures of high quality. This has benefitted the manufacturing sector in general, as the quality of finished products depends heavily on the capability of the linkage industries which 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. Hong Kong's aircraft engineering industry has a high international reputation and provides extensive maintenance and repair services. Facilities are available for the complete overhaul of airframes and engines for many types of aircraft.

Overseas Investment in Manufacturing

As at end-1990, there were 545 manufacturing companies in Hong Kong with overseas investment. The total value of direct overseas investment was $30,933 million, and the 545 companies concerned employed 90 262 workers (12.6 per cent of total manufacturing employment) and accounted for 20 per cent of Hong Kong's total domestic exports. The main sources of investment were Japan (32 per cent), the United States (31 per cent), China (11 per cent), and the United Kingdom (seven per cent). Nearly three-fifths of this investment was concentrated in four industries: electronics (30 per cent), electrical products (11 per cent), textiles and clothing (11 per cent), and chemical products (eight per cent).

Industry Department

One of the main tasks of the Industry Department is to carry out regular studies of Hong Kong's main manufacturing industries, to enable the government to identify constraints on their efficiency and assess where its support is needed. It also conducts annual surveys to establish the value of overseas investment in Hong Kong's manufacturing industries, and to assess the investment climate in the manufacturing sector.

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  In recent years a number of large multinational chemical companies have shown interest in investing in Hong Kong. In January 1991, the Industry Department commissioned a study on the development potential of the chemical processing industry in Hong Kong, aimed at identifying the infrastructure which would be needed to enable the industry to grow. The study was completed in November.

  Studies were also conducted on the plastics, textiles and clothing industries, and on the pace of industrial automation in Hong Kong. Also, in view of Hong Kong's growing importance as a regional centre, the department conducted a survey to identify the number of Asia-Pacific regional headquarters in Hong Kong.

  The department provides information on available industrial support services to manufacturers through its Industrial Extension Service (IES), and encourages them to upgrade their operations by making use of these services. In 1991, a total of 308 factory visits were made by engineers of the IES, and 91 referrals were made to organisations. which could help to solve the problems encountered by the companies concerned.

  Another major responsibility of the Industry Department is to monitor the adequacy of Hong Kong's infrastructure, particularly the availability of land and trained manpower. Industrial land is normally sold by public auction or tender, but can also be sold on special terms, either by tender or by private treaty, to accommodate industries which are land and capital intensive, or use advanced technology, and whose presence is considered to be economically desirable. Two such industrial estates, developed and managed by the Hong Kong Industrial Estates Corporation, have been built in Tai Po and Yuen Long to accommodate manufacturing processes which employ advanced technology and which cannot be carried out efficiently in ordinary multi-storey buildings.

Additional land and accommodation was made available for industry during the year. The government put up for sale by auction or tender 10 pieces of industrial land with a total area of 43 279 square metres, and about 521 000 square metres of flatted factory space were completed by private developers. A construction contract was signed by the Hong Kong Industrial Estates Corporation in August 1991 for land formation and infrastructure for a third industrial estate at Tseung Kwan O, at a value of $507 million. The first sites for sale in this new estate should be available early in 1994.

  Regarding manpower training for industry, technical education and industrial training is available in eight technical institutes and two industrial training centres run by the Vocational Training Council, and in two training centres run by the Clothing Industry Training Authority. Technological training at higher levels is provided in Hong Kong's two polytechnics and two universities. A third university, the Hong Kong University of Science and Technology, opened in October, and its courses will be particularly relevant as far as the needs of industry are concerned.

  During the year, a decision was taken to establish a New Technology Training Scheme, under which financial assistance is given to employers to train, either locally or overseas, their technologists and managers in new technologies strategically important for industrial and economic development. The scheme is to be administered by the Vocational Training Council, but the Industry Department and the Hong Kong Productivity Council are also involved, and will provide a placement assistance service.

  The government has released a $250 million grant and committed another $188 million as a low-interest loan to meet the initial costs of developing a technology centre in Hong Kong to encourage the growth of technology-based firms. The centre, to be called the

INDUSTRY AND TRADE

     Hong Kong Industrial Technology Centre, will be established as a statutory corporation, and will provide accommodation and services for established and fledgling technology- based companies. During the year the Provisional Hong Kong Industrial Technology Centre Company Limited, an interim body pending the establishment of a statutory corporation, began work on planning and developing the technology centre, which is intended to become fully operational in 1993.

During the year the Industry Department was actively involved in a number of environmental measures outlined in the 1989 White Paper on pollution in Hong Kong. Topics covered included the standards set in the Technical Memorandum under the Water Pollution Control Ordinance for effluent discharges into foul sewers, storm water drains, and inland and coastal waters; proposed controls under the Waste Disposal Ordinance on the handling and disposal of chemical wastes; and proposals for recovering the capital and operating costs of a Chemical Waste Treatment Centre. The department liaised closely with concerned industrial organisations to keep them fully aware of the government's proposals and to take their views into account when commenting on the implications of the proposals for Hong Kong's manufacturing sector.

The Director-General of Industry is also the Director of Oil Supplies, and the department began planning immediately after Iraq's invasion of Kuwait in 1990 to prepare for possible oil supply shortages. In the event, oil rationing or other controls were not necessary, as Hong Kong's oil supply was not seriously affected by the crisis.

      The department is also responsible for promoting inward investment in Hong Kong's manufacturing industries. It provides information and assistance to potential overseas investors in Hong Kong and through overseas Industrial Promotion Units based in Tokyo, San Francisco, New York, Brussels and London.

Much of the recent manufacturing investment has been from multinationals at the forefront of technological development, and this has helped to raise technology and skill levels in the local manufacturing sector. Two projects in particular, one involving the manufacture of semi-processed plastic pellets and the other the recycling of paper, were good examples of the introduction of state-of-the-art technology into Hong Kong.

      In recent years an increasingly important part of the Industry Department's work has been to promote wider application of quality assurance in the manufacturing sector. The department has therefore developed a range of services to assist manufacturers to improve the quality of their products. The Standards and Calibration Laboratory, accredited by the National Measurement Accreditation Service (NAMAS) of the United Kingdom, holds Hong Kong's official standards of measurement, and provides a calibration service to manufacturers to enable them to meet measurement standards required for their products. The laboratory has measurement capabilities for a wide range of electrical, temperature, mechanical, pressure, volume and humidity measurements. A new laboratory is being built to provide a force calibration service for the construction industry.

      The department's Product Standards Information Bureau provides advice to manufac- turers on both national and international standards affecting their products. To improve the storage and retrieval of product standards information, a computer-based linked to overseas databases has been established.

      The department also operates the Hong Kong Laboratory Accreditation Scheme (HOKLAS), designed to improve the standard of testing and management in Hong Kong's laboratories. HOKLAS identifies and accredits competent testing laboratories, and has so

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far accredited 38 laboratories in various fields of testing. A number of important mutual recognition agreements have been concluded with overseas laboratory accreditation schemes, including the National Measurement Accreditation Service of the United Kingdom, the National Association of Testing Authorities of Australia, and the American Association for Laboratory Accreditation. In 1991, an agreement was signed with the Testing Laboratory Registration Council of New Zealand. Under such agreements, Hong Kong products may not be required to undergo further testing in these countries if they have already been tested in Hong Kong.

  Since March 1990, the department has been running a Quality Awareness Campaign, whose basic message, disseminated through quality management seminars and workshops, and through a range of promotional literature, is that investment in quality is profitable. The campaign is part of a wider quality improvement programme aimed at encouraging more manufacturers to adopt quality assurance in their companies. The other components of the programme include strengthening the department's existing range of quality services and developing a quality management certification scheme.

Under the certification scheme, government recognition is conferred on companies which adopt quality management systems conforming to the international standard ISO 9 000. An independent subvented organisation, the Hong Kong Quality Assurance Agency, was established in 1990 to audit factories for the award of certificates.

The Governor's Award for Industry, established in 1989, rewards and recognises outstanding achievements in industrial competitiveness. Awards are made in four different categories, and different organisations are responsible for arranging annual competitions in each of these categories. The Federation of Hong Kong Industries is responsible for the consumer product design category; the Chinese Manufacturers' Association for machinery and equipment design; the Hong Kong Productivity Council for productivity, and the Industry Department for quality.

Hong Kong Productivity Council

The Hong Kong Productivity Council (HKPC) was established by statute in 1967 to promote 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 22 members appointed by the Governor. Its membership is drawn from the management, labour, academic and professional fields and from appropriate government branches and departments.

The HKPC has about 500 staff members with expertise in a wide range of disciplines. It provides a variety of training programmes, industrial and management consultancies and technical support services, using resources available in its 11 operational divisions: Computer Services, Electronics Services, Engineering Services, Chemical and Metallurgy, Manufacturing Engineering, Textiles and Apparel, Industrial Consultancy, Training, Environmental Management, Information Services, and Development and Administration.

The HKPC moved to a new headquarters in Kowloon Tong in February 1991. The new HKPC building places all the HKPC's operations under a single roof and contains a display area, an auditorium, a technical reference library, electronics data processing facilities, a computer-aided design service centre, a surface mount technology laboratory, a radio frequency and digital communication laboratory, photo-chemical machining, metal

INDUSTRY AND TRADE

finishing and industrial chemistry laboratories, an environmental management laboratory, sheet metal processing, precision machining and die casting laboratories.

      There was sustained demand during the year for HKPC's consultancy and technical support services. The council undertook 1050 consultancy projects, including feasibility studies, production management, new plant projects, environmental management, quality management, product design and development, and industrial automation services.

The HKPC organised 570 training courses for 13 883 participants, covering management and supervisory techniques, advanced programming and electronic data processing, and a range of technology programmes for various industries. In-plant courses continued to be popular and 39 programmes were organised during the year to meet the specific training needs of individual companies.

      Seven overseas study missions were organised during the year for local industrialists to gain first-hand information on the latest technology in various areas, including flexible manufacturing, hot metal-working, mechatronics, quality control circles, advanced plastic-processing and mould-making, plastic and sheet metal stamping, electronic component and precious-metal plating.

In line with its long-term policy to corporatise and eventually privatise industry support activities, HKPC established in 1990 three wholly-owned subsidiary limited liability companies, to be responsible respectively for industrial design, the provision of heat treatment services, and the demonstration of advanced clothing manufacturing technologies.

HKPC is the government's agent for all matters concerning the Asian Productivity Organisation (APO). During the year, under the sponsorship of the APO, HKPC held two seminars on CAD/CAM technology for plastic and mould-making industries, and die-casting and metal finishing.

Hong Kong Industrial Estates Corporation

The Hong Kong Industrial Estates Corporation (HKIEC) is responsible for managing two industrial estates at Tai Po and Yuen Long, which accommodate land and capital intensive industries with a relatively high level of technology. Tenants must either be industries which cannot be housed in ordinary multi-storey industrial buildings, or be capable of providing specialist supporting services for the manufacturing sector. The industrial estates are fully serviced with roads, drains, sewers, electricity and water. Companies on the estates design and construct their own factory premises to meet their specific requirements. They are required to adopt appropriate environmental protection measures to meet current standards.

      There are nearly 100 factories operating in the Tai Po and Yuen Long Industrial Estates now and more are being built. On the Tai Po Estate, which has 71 hectares of industrial land in total, only 2.3 hectares of land remain to be leased. The Yuen Long Estate has 67 hectares of land in total, of which 28 hectares are still available for leasing. The land premia are $1,500 per square metre for Tai Po and $1,350 for Yuen Long.

Construction of a third industrial estate at Tseung Kwan O began in mid-August 1991 and 18 hectares of fully-serviced sites will available early in 1994. Upon completion of the whole estate by 1995, a total of 68 hectares will be provided. The new industrial estate is only three kilometres from the Tseung Kwan O New Town, and tenants will therefore have access to a ready supply of manpower.

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The corporation's estates are held under leases from the Hong Kong Government. In accordance with the Sino-British Joint Declaration, the leases have been extended from 1997 to 2047. The corporation is now extending the term of the sub-leases to over 110 companies on the two estates case by case. All new sub-leases are granted up to 2047. This should enable investors to plan up to the middle of the next century with certainty.

External Trade

Hong Kong is among the top 11 traders in the world. Overall, its trade is normally in balance and in 1991 it showed a deficit. Its largest trading partner is China, followed by the United States and Japan. Its external trade was generally buoyant in 1991. Total merchandise trade amounted to $1,544,868 million, an increase of 20 per cent over 1990. Imports rose by 21 per cent to $778,982 million and re-exports by 29 per cent to $534,841 million while domestic exports increased by two per cent to $231,045 million. Domestic exports and re-exports together, valued at $765,886 million, registered an increase of 20 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 5.82 million and its diverse industries. In 1991, imports of consumer goods, valued at $304,668 million, constituted 39 per cent of total imports. The major consumer goods imported were: clothing ($68,218 million); radios, television receivers, gramophones, records, amplifiers and tape recorders ($38,105 million); baby carriages, toys, games and sporting goods ($22,410 million), footwear ($20,768 million) and travel goods, handbags and similar containers ($15,280 million).

  Imports of raw materials and semi-manufactured goods totalled $297,276 million, representing 38 per cent of total imports. The principal items imported were transistors, diodes, semi-conductors and integrated circuits ($35,122 million); fabrics of man-made fibres ($32,860 million); plastic moulding materials ($26,419 million); watch and clock movements, cases and parts ($14,761 million); iron and steel ($14,293 million) and woven cotton fabrics ($13,599 million).

Imports of capital goods amounted to $120,465 million or 15 per cent of total imports. Imported capital goods consisted mainly of electrical machinery ($20,745 million), transport equipment ($12,344 million), office machines ($12,067 million), electronic components and parts of computers ($10,570 million) as well as parts for electric power machinery ($5,594 million).

Imports of foodstuffs were valued at $41,271 million, representing five per cent of total imports. The principal imported food items were fish and fish preparations ($9,259 million), fruit ($5,999 million), meat and meat preparations ($5,036 million) and vegetables ($4,325 million).

Mineral fuels, lubricants and related materials, worth some $15,302 million were imported in 1991, representing two per cent of total imports.

China and Japan were principal suppliers of imports, providing 38 per cent and 16 per cent respectively of the total. China alone supplied 34 per cent of Hong Kong's imported foodstuffs. Taiwan ranked third, providing 10 per cent, followed by the United States, the Republic of Korea, Singapore, Germany and the United Kingdom.

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Exports

Clothing remained the largest component of domestic exports, valued at $75,834 million or 33 per cent of the total. Exports of miscellaneous manufactured articles consisting mainly of jewellery, goldsmiths' and silversmiths' wares, plastic toys and dolls, and plastic articles were valued at $24,318 million, representing 11 per cent of domestic exports. Electrical machinery, apparatus and appliances mainly of household-type appliances, transistors and diodes amounted to $19,380 million or eight per cent of the total. Photographic apparatus, equipment, supplies and optical goods, watches and clocks were valued at $19,077 million (eight per cent of the total). Domestic exports of office machines and automatic data- processing equipment valued at $18,292 million, contributed another eight per cent to the total. Other important exports included textiles (eight per cent) as well as telecommuni- cations and sound recording and reproducing apparatus and 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 1991, 48 per cent of all domestic exports went to the United States and the European Economic Community. The largest market was the United States ($62,870 million or 27 per cent of the total), China ($54,404 million or 24 per cent), Germany ($19,318 million or eight per cent) and the United Kingdom ($13,706 million or six per cent). Domestic exports to Japan and Singapore increased to $11,666 million and $8,794 million respectively. Other important markets were Taiwan, the Netherlands, Canada and France.

Re-exports

Re-exports showed a very significant increase in 1991, accounting for 70 per cent of the combined total of domestic exports and re-exports. Principal commodities re-exported were: miscellaneous manufactured articles ($71,128 million); clothing ($63,700 million); textiles ($58,533 million); telecommunications and sound recording and reproducing apparatus and equipment ($45,079 million) electrical machinery, apparatus and appliances ($43,469 million) as well as footwear ($23,502 million). The main origins of these re-exports were China, Japan, the United States and the Republic of Korea. Largest re-export markets were China, the United States, Germany, Japan and Taiwan.

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 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, while 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, which pursues a free trade policy, is one of the best examples of GATT principles in action. 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

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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 its international obligations are fulfilled. The most important of these rights and obligations are contained in the GATT and the MFA.

GATT

Hong Kong is the world's 11th largest trading entity in terms of the value of its merchandise trade. Given the externally-oriented and open nature of its economy, Hong Kong contributes to, and relies on, the healthy functioning of the multilateral trading system. Hong Kong has, therefore, always been a staunch supporter of the GATT and the free trade principles it espouses. Hong Kong participated in the activities of GATT for many years as a British dependent territory before becoming a separate contracting party to the GATT in 1986. This status, which underlines Hong Kong's autonomy in the conduct of its external commercial relations, will extend beyond 1997.

During the year, Hong Kong continued to participate actively and constructively in the extended GATT Uruguay Round of multilateral trade negotiations.

Hong Kong worked closely with other exporters of textiles and clothing in the International Textiles and Clothing Bureau to press for the phasing out of MFA restrictions and the integration of the textiles sector into the GATT. Hong Kong played a full role in forging consensus on the extension of the MFA, thereby helping to bridge the gap between the expiry of the MFA and the implementation of a Uruguay Round agreement.

Textiles

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

The bilateral textiles agreements with the United States and Canada expired on December 31, 1991. Consultations in July led to the conclusion of a new four-year Hong Kong/United States Textiles Agreement covering the period 1992 to 1995. The new agreement is in essence a roll-over of the last bilateral agreement with some changes. In August 1991, Hong Kong also reached agreement with Canada on a two-year extension of the Hong Kong/Canada textiles agreement. The terms and conditions of the new agreement, covering 1992 and 1993, are identical to those in the previous agreement.

The bilateral textiles agreement with Finland expired in December 1991. Consultations in May resulted in a new two-year Hong Kong/Finland Textiles Agreement covering 1992 and 1993 with respectable improvements in growth and product coverage. The number of categories under restraint was cut from five to four.

  In line with its liberalisation policy, the Swedish Government abolished all restrictions on textiles imports from August 1, 1991 and terminated all its textiles agreements with its trading partners, including Hong Kong, from that date. As a result, exports of textiles to Sweden after July 31, 1991, do not have to be licensed against quotas.

Two rounds of consultations were held between Hong Kong and the EEC in 1991. The first was to address the adjustment of textiles quotas for exports to the Federal Republic of Germany to take account of the unification of Germany with effect from October 3, 1990. The second concerned the extension of the current bilateral textiles agreement with the

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EEC (January 1, 1987, to December 31, 1991) for one more year up to December 31, 1992, on the same conditions.

Non-textiles Issues

In 1991, no new anti-dumping proceedings were initiated by the EEC against Hong Kong companies. The EEC announced the termination of the provisional anti-dumping duty in respect of audio cassette tapes in May 1991, and the imposition of definitive anti-dumping duties ranging from 2.1 per cent to 4.8 per cent in respect of small screen colour television receivers in July.

The EEC has now completed its investigations on all eight anti-dumping proceedings initiated against Hong Kong between December 1987 and March 1989. The cases concerning cellular mobile radio telephones, denim cloth, photo albums, silicon metal, tungsten ores and audio cassette tapes were terminated without imposition of any anti-dumping duties. Definitive anti-dumping duties were imposed on video cassette tapes and small screen colour television receivers.

In September 1990, the United States authorities decided that man-made fibre sweaters from Hong Kong were being sold in the United States at less than fair value and that such imports materially injured the United States industry. In the same month, the United States Department of Commerce issued an anti-dumping duty order imposing, in most cases, an additional duty of 5.86 per cent on imports of man-made fibre sweaters from Hong Kong.

Having considered the case in detail, Hong Kong took the view that the anti- dumping duty imposed was not in conformity with the relevant provisions of the GATT Anti-dumping Code. The Hong Kong Government, therefore, requested consultations with the United States. Consultations took place in May 1991 in Washington D.C. but failed to achieve a mutually agreed solution. The Hong Kong Government subsequently referred the matter to the GATT Committee on Anti-dumping Practices.

In December 1990, Turkey initiated an anti-dumping investigation regarding imports of certain woven cotton fabrics originating in Hong Kong.

In May 1990, the Mexican Ministry of Commerce and Industrial Development initiated an investigation in response to a petition from Mexican manufacturers alleging that Hong Kong denim was being dumped in Mexico. A final resolution was published in September 1991 imposing a compensatory duty of US$1.00 per standard kilogram of denim imported from Hong Kong. Hong Kong will continue to pursue this case with the Mexican authorities.

In May 1991, the Mexican authorities initiated another anti-dumping investigation against Hong Kong (along with China and the United States) regarding tableware and kitchenware of ceramic, porcelain or china. These products were said to originate in China.

In all these cases the Hong Kong Government has worked closely with the industries alleged to have dumped 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.

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

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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 of different geographical areas. Their work includes the conduct of trade negotiations and the implementation of textiles 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 its major markets. One of these divisions has, in addition, responsibility for economic co-operation with the Asia-Pacific region and also the computerisation of the department's licensing systems and the introduction of electronic data interchange. The fourth division deals with the multilateral aspects of Hong Kong's external commercial 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, common services, origin certification, the import and export licensing of commodities other than textiles, and a rice control scheme.

Hong Kong Representation 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. (Address details are at Appendix 6.) These offices are administered by the Trade and Industry Branch of the Government Secretariat. They work closely, on a day-to-day basis, with departments and organisations concerned to represent Hong Kong's economic and commercial interests overseas and to promote goodwill for Hong Kong. The offices also monitor and collect information on international developments which may affect Hong Kong and provide information on Hong Kong affairs and developments to its trading partners and the overseas communities.

The Geneva Office represents Hong Kong as a contracting party to the General Agreement on Tariffs and Trade (GATT). The office participates in the regular activities of the GATT as well as in the ongoing multilateral trade negotiations (generally known as the Uruguay Round) which were launched in September 1986. The Brussels Office represents and promotes Hong Kong's economic, commercial and public relations interests to the European Commission and the member states of the European Community (other than the United Kingdom) and to Switzerland. Hong Kong's commercial relations with the United Kingdom, Austria and the Nordic countries (Finland, Sweden and Norway) are handled through the London Office. The London Office is also responsible for monitoring the economic and political developments in the United Kingdom of interest to Hong Kong, for promoting Hong Kong's interests, enhancing understanding of Hong Kong affairs and advancing Hong Kong's image in the United Kingdom. In this connection, the office maintains close liaison with the business and commercial sectors, politicians and the media in the United Kingdom. The Washington, New York and San Francisco offices closely monitor economic and trade developments, proposed legislation and other matters in the United States of America and Canada that might affect Hong Kong's economic interests in general and bilateral trade with these two countries in particular. The Tokyo Office

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Hong Kong industry is moving into the manufacture of higher-quality, higher-value products.

Above: Surveying instruments being calibrated. Left: Optical prisms are prepared for coating.

Below: An eye-catching display at the Hong Kong International Clock and Watch Exhibition and (bottom) watches receiving a final electronic check-over. Opposite page: Jewellery pieces get a careful polish.

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Left: Colour matching for yarn dyeing at a textile factory and (below) programming a circular knitting machine.

Opposite page: On the cat-walk at Hong Kong's Fashion Week, organised annually by the HK Trade Development Council.

Hong Kong's thriving printing industry handles newspapers and periodicals, quality books and general jobbing work, for domestic consumption and growing export demand.

Below: Computerised plate-making and (bottom) sampling the end-product at the Hong Kong International Book Fair. Opposite page: Delivering the goods.

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Printed circuit boards being positioned and mounted on an automated assembly line.

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conducts similar activities in Japan, looking after Hong Kong's commercial, economic and public relations interests, and in view of the growing relationship between Hong Kong and Japan, its representation has been strengthened by the establishment of a senior directorate officer to head the office in October 1991.

       With the exception of Geneva, all offices 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 such developments. (See also the section on Hong Kong's Image Overseas in Chapter 19.) The Brussels, London, New York, San Francisco and Tokyo offices also contain Industrial Promotion Units which promote direct investment in manufacturing. The efforts of these offices in Europe were strengthened by the appointment of a directorate officer in mid-1991 to supervise and oversee all investment promotional activities, following similar co-ordination of the work of the Industrial Promotion Units in North America under a directorate level officer early in 1990. The Washington, New York and San Francisco offices also assist with the recruitment in the United States and Canada of administrative officers for Hong Kong. The London Office acts as a point of contact for Hong Kong Chinese communities (including Hong Kong students) in the United Kingdom and provides advisory services and assistance to them as appropriate. It also undertakes recruitment in the United Kingdom of civil servants on behalf of government departments in Hong Kong. The Marine Adviser based in London is Hong Kong's permanent representative to the international organisations. He acts as a focus in London for all technical, legal and general maritime matters pertaining to Hong Kong, particularly the autonomous Hong Kong Shipping Register which came into operation on December 3, 1990.

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 opportunities and advantages of Hong Kong as a trading partner.

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

       The council was established in 1966. Headquartered in the Hong Kong Convention and Exhibition Centre, it has set up a branch office in Kwun Tong and three Datashops in Tsuen Wan, Mong Kok and Central. The council has built up a network of 33 offices throughout the world. A new office was opened in Budapest in 1991.

       All offices of the HKTDC handle trade enquiries, provide up-to-date trade and economic information and offer advice to businessmen interested in developing trade with Hong Kong. The overseas representatives and consultants put traders in touch with any of the 48 000 Hong Kong manufacturers and exporters registered in the Trade Enquiries Service computer. Local businessmen can also find markets for their goods through 177 000 overseas importers and buyers registered with the council.

      The computerised Trade Enquiries Service of the council handled more than 271 000 overseas and local trade enquiries in 1991. The Research Department continued to publish

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special market surveys and detailed product reports which specify opportunities in overseas markets for Hong Kong exports.

   In 1991, the council organised more than 240 major international projects. Notable examples included the Winter Consumer Electronics Show in Las Vegas, the Summer Consumer Electronics Show in Chicago, the American International Toy Fair in New York, the International Housewares Exposition in Chicago and the New York International Gift Fair, all held in the United States. The council also participated in many fairs in Europe such as the International Toy Fair in Nuremburg, Frankfurt International Autumn Fair, Hanover Industry Fair, CeBIT in Hanover, MIDO in Milan and the Swiss Industries Fair in Basle.

A number of Hong Kong business groups visited the United States, Europe, China, the Middle East and Japan under the suspices of the council to establish and enhance trade contacts. As a reciprocal gesture, the council received more than 400 inward missions from all over the world in 1991.

   In Hong Kong, the council staged Hong Kong Fashion Week, Hong Kong International Toys and Games Fair, Hong Kong International Electronics Fair, Hong Kong International Jewellery Show, Hong Kong International Watch and Clock Fair, Hong Kong International Gifts and Houseware Fair, Hong Kong Premium Show, Hong Kong Showcase, Hong Kong International Book Fair, Food Expo, Leisure and Sports Expo and International Audio and Visual Show, as well as some two dozen seminars.

   The council, one of Hong Kong's biggest publishers of trade publications, started its 25th year in publishing. Its publications included Hong Kong Enterprise, a monthly general products magazine; the bi-annuals Hong Kong Toys, published each January to coincide with the Hong Kong Toys and Games Fair, the prize-winning Hong Kong Apparel which alternates with Hong Kong Garments and Accessories, Hong Kong Jewellery Biannual, Hong Kong Watches and Clocks, Hong Kong Household and Hong Kong Gifts and Premiums; the quarterlies, Hong Kong Electronics and Hong Kong Collection (in Japanese) as well as Hong Kong Trader, a monthly newspaper (sent airmail and distributed on planes). A guidebook, Hong Kong For The Business Visitor, is published in eight languages (English, Chinese, French, German, Italian, Spanish, Dutch and Japanese).

   The council's Overseas Associations Section administers the Hong Kong/United States Economic Co-operation Committee and the Hong Kong - Japan Business Co-operation Committee. It also monitors the activities of overseas associations in the Netherlands, the United Kingdom, Italy, Finland, Denmark, Belgium, France and Australia.

   A new Yuen Long Exhibition Services Centre was opened in March 1991, which provides facilities for local trade fairs organised by the HKTDC, as well as special designs and contracting services for other fairs. These facilities are provided in order to promote the exhibition service industry in Hong Kong and to provide support to the private exhibition organisers.

   The HKTDC Design Gallery, located in Hong Kong Convention and Exhibition Centre, also opened this year with the objective of promoting Hong Kong product design, developing Hong Kong brands and enhancing design awareness and knowledge. The Design Gallery includes a databank, the first of its kind in Hong Kong, and a design library. The council instituted TDC-link, an upgraded on-line trade information system, and more than a thousand subscribers had signed on by October 1991.

INDUSTRY AND TRADE

The Hong Kong Export Credit Insurance Corporation

The Hong Kong Export Credit Insurance Corporation (ECIC), a government-owned but operationally autonomous corporation that provides insurance to protect exporters against bad debts overseas, enjoyed substantial business growth in 1991. The primary factors stimulating this growth were strengthened marketing, improved awareness of the value of ECIC services, and recessionary conditions in major export markets that led more shippers to seek the corporation's protection.

      During 1990-91, the ECIC wrote total insured business of $13,827 million and took in premiums amounting to $81 million, increases over 1988/1990 of 18 per cent and 17 per cent respectively. It paid out $18 million in claims, leaving $29 million as its surplus in the year 1990-91. The corporation worked hard in 1991 to further improve its services to exporters and manufacturers and to respond to changing circumstances locally and abroad. It signed up many new policyholders with growth potential who will improve the corporation's spread of risk.

The ECIC makes a practice of staying close to exporters and manufacturers so it is in touch with their needs. It holds seminars for banks, trade associations and individual exporters in their offices if they wish. It works continually to improve its services emphasising speed and cost control. During the year, the ECIC tried out its new computerised system whereby, if no unfavourable information is spotted, credit limit applications on buyers in developed markets can usually be approved within 24 hours. This enables underwriters to put more time into studying large risks.

New data communication links were installed during the year giving the ECIC direct access to databases of credit information agencies overseas. Furthermore, senior executives travel abroad to seek information on political and economic developments and to maintain personal contacts that can be called on when policyholders' needs so require. The commissioner regularly attends meetings of the Berne Union, the world organisation that links all major export credit insurers.

      On claims and recoveries, the corporation worked during the year to develop a more pragmatic and balanced approach to claims examination and recovery action. It stressed side-by-side support for policyholders with problems and further developed contacts with debt-collecting agencies abroad.

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 $7,500 million. It is autonomous in its day-to-day operations and is run on a commercial basis. It is assisted by a 12-member Advisory Board comprising prominent members of the private business sector and representatives from the government.

      The ECIC's activities fall into three main categories. The most tangible is the protection provided by the corporation to indemnify policyholders up to 90 per cent of their losses. Besides domestic exports and re-exports, shipments from third countries direct to overseas buyers are also covered. Protection is provided to exporters against buyers' insolvency during manufacturing, 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.

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The second main function is to provide credit advisory services for its policyholders. On request by a policyholder, the ECIC will investigate the prospective buyer's creditworthiness, the market trading environment and the terms of payment of the proposed trade and advise the policyholder on a credit limit in respect of the over- seas buyer.

Third, when a policyholder experiences payment problems, the ECIC provides a risk management service. A policyholder is advised on possible courses of action either to prevent or minimise any loss.

Other Trade and Industrial Organisations

  A number of associations have been established in Hong Kong to represent the interests of industry and commerce. Among the larger, older, and more influential associations are the Federation of Hong Kong Industries, the Chinese Manufacturers' Association, the Hong Kong General Chamber of Commerce, and the Chinese General Chamber of Commerce. Other important organisations include the Hong Kong Trade Facilitation Council, the Hong Kong Management Association, the Hong Kong Exporters' Association, the American Chamber of Commerce, the Indian Chamber of Commerce, and the Hong Kong Japanese Chamber of Commerce and Industry.

   The Federation of Hong Kong Industries is a statutory body, established by the government 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 research.

   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. It also runs an annual Young Industrialist Award competition and is responsible for organising the consumer product design award category of the Governor's Award for Industry.

   The Chinese Manufacturers' Association of Hong Kong (CMA), established in 1934, is a non-profit-making chamber of commerce and industry. It is also a member of the International Chamber of Commerce. With a membership of over 3 600 industrial and trade establishments, the CMA is authorised by the government to issue certificates of origin. It also handles trade enquiries, organises missions, fairs and exhibitions, 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 organises various seminars and training courses. The CMA is represented on a number of major advisory boards and committees, including the Hong Kong Trade Development Council and the Industry Development Board. It also operates two prevocational schools to provide technical education and training for more than 2 200 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.

   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 over 3 000 companies representing all branches of commerce and industry. The chamber

INDUSTRY AND TRADE

     organises trade and industrial investment promotion groups and goodwill missions, and handles trade enquiries. It receives official and trade delegations 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 and sponsors the Hong Kong Committee of the Pacific Basin Economic Council. The Hong Kong Coalition of Service Industries is an autonomous organisation within the chamber.

Established in 1990, the Chinese General Chamber of Commerce is an association of local Chinese firms, businessmen and professionals. It has a membership of over 6 000, representing a wide spectrum of trade 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 Hong Kong and China. Since 1957, it has been authorised by the Chinese Export Commodities Fair authorities to issue invitations on their behalf to local Chinese firms. It has been operating courses for senior government officials of China since 1982. These courses are designed to enable participants to better understand the various aspects of Hong Kong's economy.

The Hong Kong Management Association was established in 1960 with the aim of improving the effectiveness and efficiency of management in Hong Kong. It runs 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.

      The Hong Kong Exporters' Association was formed in 1955. It has a membership of 300 export and manufacturing companies. Its members together account for about one third of Hong Kong's total domestic exports. The association's objectives are to protect and promote the interests of its members; to disseminate trade information, and to act as a representative body to voice members' concerns and to assist in solving any trade problems which they may encounter.

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. First, they help Hong Kong to fulfil its international obligations to restrain exports of textiles products, and to monitor the flow of these products into Hong Kong. There is, therefore, 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, safety or security grounds, exports and imports of a few non-textiles products such as strategic commodities, reserved commodities, pharmaceuticals, agricultural pesticides and ozone-depleting substances.

      Together with other measures to curb smuggling by high-powered speedboats, the government enacted the Export (Prescribed Articles) Regulations 1991 in February. Under these regulations exports of television sets, video cassette recorders and video cassette players on a vessel of less than 250 gross tons are subject to export licensing control. In addition, licensing control on the transit through Hong Kong of certain munitions

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and items for use relating to nuclear, chemical and biological weapons was introduced in August.

Hong Kong maintains a certification of origin system which enables the origin of goods which Hong Kong exports to be established, in order to meet the requirements of importing authorities. The Trade Department administers this system and issues certificates of origin where required. Other certificate-issuing organisations which have government approval are the Hong Kong General Chamber of Commerce, the Indian Chamber of Commerce, the Federation of Hong Kong Industries, the Chinese Manufacturers' Association of Hong Kong and the Chinese General Chamber of Commerce.

Participation in International Organisations

Being an integral part of the Asian-Pacific economy and an important regional services centre, Hong Kong has a role to play and a contribution to make in regional economic co-operation. Hong Kong's economic links with the region have been expanding. In 1991, some 62 per cent of Hong Kong's total external trade was accounted for by intra- regional trade.

A Hong Kong delegation led by the Secretary for Trade and Industry attended the 3rd APEC Ministerial Meeting held on November 12-14 in Seoul at which Hong Kong's admission was formalised.

The Hong Kong Committee for Pacific Economic Co-operation (HKCPEC) was set up in March 1990 with the objective of advising on Hong Kong's participation in, and co-ordinating the territory's input to, the Pacific Economic Co-operation Conference (PECC). In keeping with the tripartite formula of the PECC, the committee comprises government officials, business leaders and academics. The Trade Department provides the secretariat for the committee.

Since its formation, HKCPEC has taken an active part in the PECC process and the new membership status, which Hong Kong attained in May 1991, has enabled the committee to participate more fully in PECC activities. Hong Kong participated actively in the 5th PECC Trade Policy Forum held in Kuala Lumpur in August. Hong Kong also took part in the Human Resource Development Task Force Meeting and the Pacific Economic Outlook - Structural Issue Part Meeting in Osaka in September. In October, a delegation attended a workshop on Science and Technology Industrial Parks held in Shanghai.

   During the year, Hong Kong continued to play an active part in the informal dialogue initiated by the Organisation for Economic Co-operation and Development (OECD) with the dynamic Asian Economies (Hong Kong, Singapore, South Korea, Taiwan, Thailand and Malaysia). Hong Kong participated in all six workshops held for this purpose between February and June in Paris, Singapore, Seoul and Helsinki. The topics discussed covered trade, securities markets, macroeconomic policy, global interdependence, the integration of Central and Eastern Europe, and long-term perspectives on the world economy.

Customs and Excise Department

The Trade Controls Branch of the Customs and Excise Department is responsible for the enforcement of Hong Kong's trade controls legislation relating to origin certification, import and export licensing of textiles and strategic commodities, verification and assessment of trade declarations. It also enforces consumer protection legislation and a reserved commodities control scheme.

INDUSTRY AND TRADE

The branch works closely with the Trade Department in the enforcement of the origin certification and licensing control of textiles and strategic commodities. These enforcement activities are undertaken to uphold the integrity of the control systems and to fulfil Hong Kong's obligations under international trade agreements.

During the year, the branch continued to maintain a high level of enforcement actions which resulted in successful prosecutions of dishonest traders violating the trade controls legislation. It also co-operated with overseas authorities in combating customs-type commercial frauds.

      In the field of consumer protection, the branch conducted frequent spot-checks on weighing and measuring equipment used by traders and investigated complaints related to short weights or measures. Surprise inspections of gold and jewellery shops were carried out in order to ensure that the content of gold or platinum was correctly marked.

      In addition, further progress has been made with preparations for the introduction of safety controls on toys and children's products in 1992.

Trade in Endangered Species

In Hong Kong, the importation, exportation and possession of endangered species of animals 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. Commercial trade in highly-endangered species is prohibited and trade in less-endangered species is subject to strict licensing requirements.

The ordinance is administered by the Agriculture and Fisheries Department and 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 endangered species shipments. All suspected offences are thoroughly investigated and prosecutions follow if there is evidence of a breach of the ordinance. During 1991, there were 292 seizures and 153 prosecutions under the ordinance.

Government Supplies Department

The Government Supplies Department is the Government's central organisation for procurement and distribution of supplies required by 55 government departments and nine agencies.

      Since 1979, the department has represented the Hong Kong Government as an entity in the Agreement on Government Procurement of the General Agreement on Tariffs and Trade. Under the agreement, except for special requirements, all purchases exceeding Special Drawing Rights 130 000 (HK$1,338,000 in 1991) are widely advertised and open to competitive bidding. All purchases, ranging from simple office sundries to complex computer systems, 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 purchased from over 40 countries and some 4 000 registered local and overseas suppliers.

      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. It also seconds supplies staff to other departments to ensure a professional approach to acquisition and maintenance of supply.

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   In 1990-91, the department placed orders to a total value of HK$2,449 million. The top major sources of supply were the United States, United Kingdom, China and Japan. Major items of purchase included computer systems, pharmaceuticals and fire-fighting equipment.

Trade Marks and Patents

The Intellectual Property Department was set up on July 2, 1990, to take over the Trade Marks and Patents Registries. The department also provides a focal point for the development of Hong Kong's intellectual property protection regime. The Trade Marks Registry 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, Intellectual Property Department. Every mark, even if already registered in the United Kingdom or any other country, must satisfy the requirements of the Trade Marks Ordinance before it may be accepted for registration. During 1991, 9 900 applications were received and 6 062, including many applications made in previous years, were accepted and allowed to be advertised. A total of 4 340 marks were registered in 1991, compared with 4 020 in 1990. The principal places of origin were:

United States

Hong Kong

Japan

France

United Kingdom

1 062

745

557

309

294

Italy Germany Switzerland Taiwan

The Netherlands

The total number of marks on the register at December 31, 1991, was 59 699.

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   In May 1991, the Trade Marks (Amendment) Ordinance was enacted. The ordinance expands the trade marks law in Hong Kong to allow for the registration of marks for use in connection with services. The new legislation is expected to come into operation in March 1992.

   Unlike the Trade Marks Registry, the Patents Registry which also forms part of the Intellectual Property Department is not a registry of original registration. It registers patents that have been granted in the United Kingdom and European Patents (UK). The Registration of Patents Ordinance provides that any grantee of a United Kingdom Patent or European Patent (UK) may, within five years from the date of its grant, apply to have the patent registered in Hong Kong.

A total of 1 079 patents were registered in Hong Kong during the year, compared with 1 095 in 1990. Registration of a United Kingdom Patent or European Patent (UK) in Hong Kong confers on the grantee the same privileges and rights as if the patent had been granted in the United Kingdom with an extension to Hong Kong. The privileges and rights run from the commencement of the term of the patent in the United Kingdom, and continue for as long as the patent remains in force there.

Companies Registry

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

INDUSTRY AND TRADE

Local companies are incorporated under the Companies Ordinance, which is similar to, but in some aspects quite different to, the United Kingdom Companies Acts. 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, which were fully implemented in 1991, included the Companies (Amendment) (No. 5) Ordinance 1990 and the Companies (Amendment) Ordinance 1991. The former, which came into force on March 1, 1991, has considerably streamlined the process for the incorporation of new companies - which now stands at seven working days - with particular reference to the selection of company names. The latter, which came into force on September 1, 1991, permits companies to purchase their own shares in certain circumstances, and introduces statutory provisions on what profits are distributable.

      During the year, several initiatives to improve the registry's operational efficiency were implemented. These included centralising and improving office accommodation and layout, a computerised public search system for company names and an interim computerised index indicating companies which have changed their registered addresses. In addition, a number of administrative and legislative proposals are being processed to improve further the registry's efficiency, including increased computerisation, streamlining the registration of charges, and relaxing the statutory requirements regarding dormant companies.

      On incorporation, a company pays a registration fee of $1,000 plus $6 for every $1,000 of nominal capital. In 1991, 43 975 new companies were incorporated 17 828 more than in 1990. The nominal capital of new companies registered totalled $4,097 million. Of the new companies, 131 had a nominal share capital of $5 million or more. During the year, 9 388 companies increased their nominal capital by amounts totalling $28,599 million on which fees were paid at the same rate of $6 per $1,000. At the end of 1991, there were 304 538 local companies on the register, compared with 265 452 in 1990.

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

A registration fee of $500 and some incidental filing fees are payable in such cases. During the year, 402 of these companies were registered and 209 ceased to operate. At the end of the year, 2 828 companies were registered from 69 countries, including 635 from the United States 354 from the United Kingdom and 299 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. The ordinance does not affect bankers and deposit- taking companies authorised under the Banking Ordinance.

      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, 508 applications

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  were received and 493 licences were granted. At the end of 1991, there were 491 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 of personal bankrupts and companies ordered to be compulsorily wound up by the court.

Once a Receiving Order is made against the property of a personal bankrupt, or a Winding-up Order by the court is made against a company, then the Registrar General, who is also the Official Receiver, becomes the interim receiver or provisional liquidator respectively. In estates where the assets realised are less then $200,000, the Official Receiver applies to the court for a summary procedure order and is appointed as trustee or liquidator. In other cases a meeting of creditors in bankruptcy, or of creditors and con- tributories in compulsory liquidations, is held to decide whether the Official Receiver or another person from the private sector be appointed as trustee or liquidator. If a debtor makes a proposal for a composition in satisfaction of his debts or a proposal for a scheme of arrangement of his affairs, he will not be adjudged bankrupt if the proposal is accepted by his creditors and the court. As in past years, the Official Receiver was appointed trustee or liquidator in most cases.

   During the year the court made 283 Receiving Orders and 346 Winding-up Orders, which is an increase of 27 per cent over the previous year. The assets realised by the Official Receiver during 1991 amounted to $237 million and $91.7 million in dividends were paid to creditors in 242 insolvency cases.

Official Trustee, Judicial Trustee and Official Solicitor

The Registrar General also exercised the powers and performed the duties conferred or imposed upon the Official Trustee, the Judicial Trustee and the Official Solicitor up to July 31, 1991. These functions were transferred to the Legal Aid Department with effect from August 1, 1991. The Registrar General as the outgoing Official Trustee and Official Solicitor transferred $1.1 million and $0.38 million respectively to the Director of Legal Aid.

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 are all appointed by the Governor from various walks of life, representing a considerable diversity of consumer interests.

   Established in 1974, the council provides a comprehensive consumer protection service including consumer representation and legislation, advice and complaints, research and

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testing, and information and publications. It maintains close co-operation with the government through the Trade and Industry Branch and is represented on many committees dealing with a wide range of consumer issues and concerns.

The year saw Hong Kong at the forefront of the international consumer movement as the council co-organised and hosted the 13th World Congress of the International Organisation of Consumer Unions (IOCU). The week-long congress, on the theme Consumer Power in the Nineties, drew some 500 consumer leaders from 60 nations. The Consumer Council of Hong Kong was re-elected as a council member of the world body and appointed as the co-chair of its Product Testing Committee.

      The council's efforts in protecting the interests of genuine home buyers was strengthened considerably with the introduction of new control measures in the sale of uncompleted residential units. A major breakthrough was seen in the adoption by property developers of an orderly and equitable balloting system replacing the previous queueing method which often drew unruly crowds - and speculators or their 'agents' - to the sales offices. Equally significant are measures to restrict the common practice of developers reserving a number of units for sale to private purchasers. Such pre-emptive selling coupled with the queueing method are largely to blame for fuelling speculation and inflation in the property market. Another consumer protection measure now requires developers to provide full and accurate information in their sales brochures.

      In the wake of the bank runs apparently triggered off by the collapse of the Bank of Credit and Commerce International, the council initiated a study and concluded that a bank deposit insurance scheme should be introduced to safeguard the interests of small depositors in the event of bank failure. Continuing its vigilance on oil prices in the aftermath of the Gulf War, the council monitored any price adjustments by oil companies. With the introduction of unleaded petrol in April, this monitoring role was expanded to ensure that the price differentials contributed solely to the recovery of installation costs in the conversion rather than additional profits to oil companies and to advise motorists on the smooth conversion of their vehicles to the use of unleaded petrol.

      Other areas of interest were the pricing mechanism of motor insurance premiums and the practices of banks and finance companies in determining the insurable value for fire cover of mortgaged homes or property. Such council studies led to recommendations for improvement in the interests of consumers. The council also submitted detailed recommendations for strengthening the monitoring of the existing self-regulatory system of the outbound travel industry and on the need to safeguard against possible monopoly by carpark operators.

      The council's concern over the future development of public utilities and public transport services became all the more acute with the impending renewal of many of their service agreements. The council sought to expand its scope to cover these essential public services and to enhance consumer representation and consultation in monitoring them.

      Other highlights of the year included the launching of the council's new bi-annual education publicity campaign on the theme Consumers' Right to Redress. A new series of 30-second publicity films was produced for television channels to educate consumers about their legal rights under the Control of Exemption Clauses Ordinance and a new teaching kit on the subject of Labelling and Packaging was introduced. The council's monthly magazine CHOICE was revamped, further broadening its appeal to consumers. A second CHOICE supplement on the topic of 'Medical Therapy' was published.

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   An additional Consumer Advice Centre, situated in the heart of the tourists' shopping area in Kowloon was opened, bringing the total number of advice centres to 16.

   During the year, the council received 9 500 complaints and 133 000 enquiries for advice and information on a diverse range of goods and services. Publicity sanction was imposed on three shops which were subjects of repeated consumer complaints for dishonest business practices. The shops named were a beauty service centre and two electrical appliance shops.

A steady increase in the funding of test and survey projects boosted the quantity and quality of the council's research activities, with an increasing focus on environ- mental issues.

Metrication

The government's metrication policy is to promote and facilitate the progressive adoption of the International System of Units (SI) in Hong Kong. The Metrication Ordinance, enacted in 1976, provides for the eventual replacement of non-metric units by SI units in all legislation in Hong Kong. Government departments are now using metric units exclusively. A Metrication Committee, consisting of representatives of industry, commerce, management and consumer affairs, and government officials is the focal point of liaison for all matters concerning metrication. It advises and encourages the commercial and industrial sectors in the development and implementation of their metrication programmes.

   During the year, the committee continued to direct its efforts towards the retail trade. A publicity campaign was launched to encourage the use of metric units in public markets. Concurrent with the campaign, weighing scales with triple calibrations (metric, imperial and Chinese units) were provided for use by members of the public to familiarise them with metric units. Publicity materials and metric conversion tables were distributed to members of the public.

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COMPENSATING for the lack of natural resources, Hong Kong's best asset is its people. A stable and motivated workforce is essential to Hong Kong's economic growth. As of September, Hong Kong had a workforce of 2.8 million, of whom 63 per cent were male and 37 per cent female. Of this workforce, 26.5 per cent were engaged in wholesale and retail trades, restaurants and hotels, 9.7 per cent in transport, storage and communications, 8.3 per cent in construction, 8.4 per cent in financing, insurance, real estate and business services, and 26.4 per cent in manufacturing. According to the survey of Employment, Vacancies and Payroll in the Manufacturing Sector conducted in September, 654 662 people were engaged in 46 276 establishments, including some 286 278 people in the textile and wearing apparel sectors, which are the largest employers in the manufacturing industry, with the electronics and fabricated metal products industries being the next two largest employers.

      Details of the distribution of manufacturing establishments and of the number of people engaged in them are at Appendices 17 and 18.

      Unemployment for the third quarter of 1991 was 2.1 per cent, and underemployment 1.5 per cent. Compared with similar figures in 1990, this showed a slight increase. However, despite this, Hong Kong's labour market remained tight during the year as a result of economic activities continuing at a relatively high level albeit with signs of easing off at times.

      New approaches were being adopted by employers to tackle the problem of staff recruitment and retention. Higher wages were offered, particularly in the construction industry and service sector, while a limited number of foreign workers were allowed to be brought in under the Importation of Labour Scheme to help relieve labour shortages in the worst hit trades. The new airport construction project announced during the year is likely to contribute further to the tight labour supply situation in the construction industry and further importation of labour will be required when the airport construction project takes off.

      The brain drain problem resulting from emigration in recent years continued to cause concern. To ensure that the lost stock of professionals and experienced personnel could be replenished, the government together with the Hong Kong Institute of Personnel Manage- ment and The Hongkong and Shanghai Banking Corporation established a joint venture company in July to attract qualified manpower from overseas countries, including former Hong Kong residents, to come to Hong Kong to work.

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Wages

Wage rates are calculated on a time basis, either 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 sector are piece-rated or daily- rated. Industrial workers in skilled trades or in technical, supervisory, clerical and secre- tarial capacities are usually monthly-rated. Workers in the non-manufacturing sectors are usually monthly-rated.

The average wage rates for all employees, including wage earners and salaried employees up to the supervisory level, increased by 10.6 per cent in money terms, or decreased by 0.8 per cent in real terms between September 1990 and September 1991. The average earnings for persons engaged in the manufacturing sector rose by 10.5 per cent in money terms, but decreased by 1.1 per cent in real terms during the same period.

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 decreased in real terms by 1.2 per cent between September 1990 and September 1991.

   In September, 75 per cent of manual workers in the manufacturing sector received a daily wage, including fringe benefits, of $158 or more, and 25 per cent received $240 or more. The overall average daily wage was 204.

Employee Benefits

  The Employment Ordinance provides for benefits including statutory holidays, annual leave, rest days, maternity leave, sickness allowance, severance payment, long service payment and other entitlements for employees. In addition to these statutory provisions, some employers also provide employees with various types of fringe benefits such as subsidised meals or food allowances, good attendance bonuses, free medical or subsidised treatment and free or subsidised transport. Many employees also enjoy a year-end bonus of one month's pay or more under their employment contracts, usually paid just before the Lunar New Year.

   While there is no central provident fund in Hong Kong, the government has encouraged employers to establish their own provident fund scheme for staff and in recent years, an increasing number of employers have done so to provide improved long-term security for their employees. Up to the end of 1991, a total of 11 275 private provident fund schemes had been registered with the Inland Revenue Department.

   Since 1986, employers have been required under the Employment Ordinance to make long service payment to their employees who have worked continuously for a specified number of years, ranging from five to 10, and who are dismissed other than by way of summary dismissal or redundancy. The amount of long service payment is calculated at the rate of two-thirds of a month's wages for each year of service, but the rate is reduced if the employee is aged below 40. The long service payment scheme was improved in July 1988 by extending its coverage to eligible employees who resign on grounds of ill-health or who retire at the age of 65 or above after at least 10 years' service. Long service payment is also payable to the families of eligible employees who die in service.

   The Employment (Amendment) (Long Service Payment) Ordinance 1991, which came into effect on November 29, 1991, further improved the entitlement of employees to long

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service payment. Employees who have completed five years' service but less than the qualifying length of service appropriate to their age under the old provisions are now eligible for the payment. The difference in the rates of long service payment based on age has also been removed.

Labour Conditions

Children under 15 years of age are prohibited by the Employment of Children Regulations from undertaking employment in any industrial undertaking. Children aged 13 and 14 may be employed in non-industrial establishments subject to stringent conditions which aim to ensure a minimum of nine years' education and to protect their safety, health and welfare.

      Under the Women and Young Persons (Industry) Regulations, persons aged between 15 and 17, and women, are permitted to work eight hours a day and six days a week in industry. However, by agreement between the employer and the women and young persons concerned, their daily working hours may be extended to 10 provided that the total number of hours worked, excluding overtime, in a fortnight does not exceed 96. Women and young persons must be given a break of at least 30 minutes after five hours' continuous work.

In industry, overtime employment of a female worker 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 female workers in an industrial undertaking.

      The regulations also prohibit women and young persons from working underground or, with the exception of young males aged 16 and 17, in dangerous trades.

The enforcement of these regulations is carried out by the Labour Inspectorate of the Labour Department. In 1991, labour inspectors made 220 828 day and night inspections to places of employment and conducted eight special campaigns to 26 969 establishments against the employment of children. During the year, 92 cases of child employment were brought before the courts.

      Three special teams of labour inspectors are responsible for monitoring employers' compliance with the provisions of the Employment Ordinance concerning rest days, paid holidays and annual leave, sickness allowance and maternity protection in respect of local workers. Two other special teams of labour inspectors monitor employers' compliance with these provisions and contractual terms of employment for workers employed under the various Importation of Labour Schemes. In 1991, the teams made 5 723 inspections to enforce provisions of the Employment Ordinance for both local and imported workers and contractual terms of employment for imported workers.

Control of Illegal Employment

     Employers are prohibited, under the Immigration Ordinance, from employing persons with no valid proof of identity. The Immigration Ordinance also requires all employees at workplaces to produce proof of identity for inspection and employers to maintain records of their employees. These requirements are intended to stop the flow of illegal immigrants into Hong Kong. The Labour Inspectorate is empowered by the ordinance to enter places of employment and inspect records for employees and employees' proof of identity.

      During the year, 409 employees failed to produce valid proof of identity for inspection by labour inspectors. All of them were referred to the Immigration Department or the

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  Police for further investigation. Subsequently, 73 of these employees were confirmed to be illegal immigrants or persons not allowed to take up employment in Hong Kong.

Labour Legislation

The government's policy is to achieve a level of safety, health and welfare for employees in Hong Kong broadly equivalent to those provided in Hong Kong's neighbouring countries at a similar stage of economic development. These objectives have been achieved through legislative enactments which totalled 121 in the past 10 years.

During 1991, 13 pieces of new legislation were enacted. The more significant items include the Employees' Compensation Assistance Ordinance which established a scheme for the payment for employees' compensation and damages to injured employees or their dependants in cases where the employers or insurers concerned have defaulted, and an amend- ment to the Protection of Wages on Insolvency Ordinance which increased an employee's entitlement to severance payments under the Protection of Wages on Insolvency Fund.

   The Commissioner for Labour is the principal adviser to the government on labour affairs and initiates proposals for new labour legislation or amendments to existing legislation. The legislative proposals are then forwarded to the Education and Manpower Branch of the Government Secretariat for policy approval prior to preparation of draft bills by the Attorney General's Chambers.

During the year, there were 3 993 prosecutions for breaches of ordinances and regula- tions administered by the Labour Department. Fines totalling $15,542,240 were imposed.

Labour Advisory Board

  Playing an active role in the formulation of labour policies and legislation is the Labour Advisory Board. Established in 1927, the board has 12 members, six representing em- ployers and six representing employees with the Commissioner for Labour or his deputy as the ex-officio chairman. Of the employers' representatives, five are nominated by five major employer associations and one appointed ad personam. Five of the employees' representatives are elected by registered employees' trade unions and one appointed ad personam. All 12 members are appointed by the Governor.

   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 to serve on these committees. The process of consultation through the Labour Advisory Board ensures that the views of the industries concerned, employers and the employees would be sufficiently canvassed in the formulation of labour policies to provide a progressive yet balanced programme of labour legislation for the benefit of all concerned.

International Labour Conventions

International labour conventions adopted by the International Labour Organisation set standards on matters relating to basic human rights, employment, social policy, labour administration, labour relations, conditions of work and social security. The Commissioner for Labour ensures that Hong Kong's obligations under the international labour con- vention are observed. As a dependent territory of the United Kingdom, Hong Kong

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observes international labour conventions which have been applied to it through declara- tions by the United Kingdom Government after full consultation with the Hong Kong Government.

International labour conventions provide a framework upon which labour legislation in Hong Kong has been modelled. Hong Kong now has a comprehensive body of labour law governing the conditions of employment, safety and health and employees' compensation. As at December, Hong Kong applied 47 conventions, of which 29 were applied in full and 18 with modification. This compares favourably with most members of the International Labour Organisation in the region.

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, a trade union becomes a corporate body and enjoys immunity from certain civil suits.

During the year, 21 new unions were registered. At the end of the year, there were 511 unions, comprising 469 employees' unions, 28 employers' associations and 14 mixed organisations of employees and employers, and their total memberships were about 469 700, 2 900 and 16 300 respectively.

The majority of employees' unions are affiliated to one of the six local societies registered under the Societies Ordinance - the Hong Kong Federation of Trade Unions, the Hong Kong and Kowloon Trades Union Council, the Hong Kong Confederation of Trade Unions, the Joint Organisation of Unions, Hong Kong, the Hong Kong Trade Union Education Centre, and the Federation of Hong Kong and Kowloon Labour Unions. The Hong Kong Federation of Trade Unions has 84 affiliated unions with about 176 100 members. The Hong Kong and Kowloon Trades Union Council has 69 affiliated unions with a membership of about 30 600. The Hong Kong Confederation of Trade Unions, which was registered in February 1990, has 22 affiliated unions with about 78 500 members. The Joint Organisation of Unions, Hong Kong has 19 affiliated unions with a membership of about 12 200. The Hong Kong Trade Union Education Centre has 14 affiliated unions with about 63 100 members. The Federation of Hong Kong and Kowloon Labour Unions has 19 affiliated unions with a membership of about 24 200. The remaining 242 employees' unions have a total membership of about 85 000.

Labour Administration and Services

The Labour Department has an establishment of 1 400. It has 41 branch offices throughout the territory to serve employers and employees on a local basis. Headed by the Commis- sioner for Labour, the department is responsible for formulation of new proposals for labour legislation, ensuring Hong Kong's observance of international labour conventions, enforcement of legislation regulating employment conditions, promoting good labour relations, providing assistance to job seekers and to employees injured at work and persons suffering from occupational diseases in obtaining compensation, and protecting the safety and health of workers.

Labour Relations

In 1991, the Labour Relations Service of the Labour Department conciliated in 169 trade disputes (each involving 20 or more workers) which involved five work stoppages, with a

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loss of 202 working days. The service also dealt with 16 510 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 to settle trade disputes that cannot be resolved through ordinary conciliation.

The Labour Relations Service's Promotion Unit endeavours to promote harmonious labour-management relations in the private sector through a variety of activities such as promotional visits to individual establishments in major economic sectors, employers' associations and employees' trade unions; organising training courses, seminars, con- ferences and exhibitions; and publishing newsletters, information leaflets and pamphlets on a wide range of labour legislation and labour relations matters.

   The Hong Kong Labour Relations Conference, which attracted an attendance of over 600, was held at the Hong Kong Convention and Exhibition Centre on November 4, 1991. The conference provided a forum for employers, senior managers, trade union leaders and academics to share their knowledge of and experiences in enlightened personnel practices.

   Two industry-wide tripartite committees comprising representatives from employers' associations, trade unions and government have been set up in the catering and construction industries. These tripartite committees provide meeting points for the relevant parties to discuss labour relations matters of mutual concern.

   To meet the increasing demand at district level, district promotional activities were expanded during the year. Promotional activities took a variety of forms including visits to establishments, talks and seminars on labour legislation and personnel practices, audio- visual shows, training courses and exhibitions.

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 disputes between employees and employers.

   In 1991, the tribunal heard 4 964 cases involving employees as claimants, and a further 543 cases initiated by employers. More than $41 million was awarded by the presiding officers. Of these cases, 94 per cent were referred by the Labour Relations Service after unsuccessful conciliation attempts.

Protection of Wages on Insolvency Fund

  Employees who are owed wages by their insolvent employers may apply to the Protection of Wages on Insolvency Fund for ex-gratia payment. The fund covers wages not exceeding $8,000 for services rendered during a period of four months preceding the date of application. It also covers seven days' wages in lieu of notice, up to $2,000. With effect from June 7, 1991, severance payment coverage was improved to cover an applicant's entitlement up to $8,000 (which is the priority claim limit in a winding-up or bankruptcy) plus 50 per cent of his entitlement in excess of $8,000. To meet the additional expenditure arising from this improved coverage, the annual levy imposed on business registration certificates to finance the operation of the fund was increased from $100 to $250.

During the year, the fund received 7719 applications and paid out a total of $33.20 million to 4 799 applicants.

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Finding Employment

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

The Local Employment Service provides free placement services to help employers recruit staff and job-seekers to find suitable employment. It operates from 12 offices which are linked by a facsimile system for the rapid exchange of vacancy information. It also provides co-ordinated services to private companies with territory-wide recruitment needs. The Central Recruitment Unit is an agency for the recruitment of non-pensionable staff in all government departments, such as workmen and watchmen. In 1991, to help alleviate labour shortage, the Local Employment Service intensified its publicity efforts through the mass media and organised special exhibitions to encourage more people to use the free employment service.

The Higher Education Employment Service provides free employment assistance to job-seekers who possess post-secondary, university or professional qualifications. It has computerised its operation to provide job-matching and produce promotional materials. Vacancy information is disseminated regularly to universities abroad for the benefit of Hong Kong students overseas. Seminars are also organised to advise job-seekers on job-hunting techniques and employment opportunities.

      The Selective Placement Division aims to help disabled persons integrate into the com- munity by providing a free employment counselling and placement service for the physically disabled, mentally retarded and ex-mentally ill persons seeking open employment.

      The 3rd International Abilympics was held in Hong Kong in August under the sponsorship of the International Abilympic Federation, Rehabilitation International and the International Labour Office. The Selective Placement Division took part in the four- day Professional Exhibition which featured the latest rehabilitation aids and technology.

      The division also launched various activities to promote its work and the employability of the disabled. These included an awards ceremony in August and a seven-day exhibition in November. At the ceremony, awards were given to employers who engaged the largest number of disabled employees or who made special efforts to facilitate the employment of the disabled in the preceding 12 months. Disabled employees with outstanding performance were also commended. The exhibition publicised the working potential of disabled persons as well as the training facilities and technical aids available to them.

Careers Guidance

The Careers Advisory Service of the Labour Department is responsible for promoting careers education in Hong Kong. It provides careers information and guidance to help young people choose a career best suited to their interests, talents and abilities. Its activities include giving careers talks and organising careers expositions, quizzes, regional careers projects, and group visits to commercial and industrial establishments to enable students to gain a better insight of the world of work.

The service also complements careers services by providing training for careers teachers. Every year it organises a seminar on careers education in conjunction with the Education Department and the Hong Kong Association of Careers Masters and Guidance Masters. An annual certificate course for careers teachers is also run jointly with the Education Department and the University of Hong Kong.

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   To promote careers education, the service produces written and audio-visual resource materials including careers pamphlets, job sheets, newsletters, slide presentations and films. These materials are available to the public for reading and viewing free of charge.

   The service operates four careers information centres, each equipped with a reference library, an audio-visual unit with sound-on-slides, cassette tapes and videos, and an enquiry service on employment and training opportunities. In 1991, the centres received 24 632 visitors and handled 35 171 enquiries.

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, 12 867 professionals and other persons with technical expertise or administrative and managerial skills from over 35 countries were admitted for em- ployment.

   To meet the persistent shortage of labour in the local market, it was decided in May 1990 to allow local employers to recruit from outside Hong Kong 2 700 skilled workers at the technician, craftsman and supervisory levels, 10 000 semi-skilled workers at the experienced operative level and 2 000 construction workers to facilitate the construction of the new airport and related projects.

As a result, 4 524 applications involving 57 558 workers were received. After vetting, 12 389 workers were found eligible for entry.

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 who is willing to undertake the helper's maintenance in Hong Kong and repatriation to his or her country of origin. The demand for foreign domestic helpers has increased steadily. In 1991, there were 84 619 foreign domestic helpers, representing an increase of 20.3 per cent when compared with 70 335 in 1990. About 89.4 per cent of these domestic helpers 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 66 645 employment contracts in 1991.

   Frequently consulted by the public on application procedures for the employment of foreign domestic helpers and interpretation on the terms of employment contracts, the service handled 39 699 telephone enquiries, 1 293 written enquiries and 1 481 consultations in person in 1991. It also conducted 908 conciliation meetings between foreign domestic helpers and their employers.

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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. The service issued 825 licences in 1991.

Employment Outside Hong Kong

The External Employment Service is responsible for enforcing the Contracts for Employment Outside Hong Kong Ordinance. Under the ordinance, all such contracts must be attested by the Commissioner for Labour before a manual worker leaves Hong Kong. During the year, the service attested 143 new contracts.

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, building and engineering construction sites and other industrial undertakings. Advice and assistance are given to managements on various safety and health aspects, including the adoption of safe working practices and the layout of new factories to achieve a better working environment. The inspectorate also investigates industrial accidents and dangerous occurrences.

       The Factories and Industrial Undertakings (Amendment) Ordinance 1990, which came into force on December 1, 1991, extends the ordinance's coverage to the catering industry so as to protect the health and safety of employees in restaurants and other catering establishments.

      During the year, the Safety Programme Promotion Unit helped industry develop a system of self-regulation for the promotion of in-plant safety and health. The unit assisted managements and workers to assess the hazards at work and to develop and improve their in-plant safety and health programmes. Guidance materials were published regularly to explain the principles and technical aspects of self-regulation. The unit also assisted in organising seminars, safety training courses and other activities. A two-day Symposium on Safety and Health Management including training workshops for trainers was organised jointly with the Regional Office for Asia and the Pacific of the International Labour Organisation in March.

The Factory Inspectorate placed emphasis on regulatory activities in construction sites and high-risk areas of factories. Special enforcement campaigns were launched in the year to promote machinery safety, chemical safety, fire prevention and, in particular, con- struction safety which included the operation of cranes and other lifting appliances and lifting gear. During these campaigns, 24 682 factories and 1 181 construction sites were inspected, and 1 393 summonses taken out.

      Between June and July, a special exercise was also mounted to advise employers and workers on the safe use of solvents in the printing industry.

      Throughout the year, the Factory Inspectorate's Industrial Safety Training Centre conducted courses and organised talks for workers, supervisors and managers from various industries. Special talks for students were arranged with the Education Department and the Vocational Training Council as part of the summer job safety promotion activities. The centre also gave talks on safety management to medical and engineering students of the

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University of Hong Kong and students in post-secondary institutions. In collaboration with the Hong Kong Polytechnic, the centre continued to organise two evening courses leading to the award of a Post-experience Certificate in Industrial Safety, and one evening course leading to the award of a Post-experience Certificate in Advanced Industrial Safety. The Factory Inspectorate also assisted the Construction Industry Training Authority in running training courses for safety officers.

The inspectorate, in conjunction with the Information Services Department, continued its publicity programme for the promotion of industrial safety and health through the mass media and other means. A large-scale symposium on safety and health management in the construction industry was held in November. An industrial safety exhibition was held in January to publicise employers' and employees' general duties for safety and health at work. To assist in the publicity and promotional work, the inspectorate also published guidance materials and produced pictorial leaflets.

   In the second half of the year, a Housing Authority Site Safety Campaign was organised jointly with the Housing Department, Hong Kong Construction Association Limited and Hong Kong Construction Industry Employees General Union to promote safety and health on construction sites of the Hong Kong Housing Authority.

   The Pressure Equipment Division of the Labour Department administers the Boilers and Pressure Vessels Ordinance and the Gasholders Examination Ordinance to ensure the safe use and operation of all equipment covered by the two ordinances.

   The Boilers and Pressure Vessels Ordinance stipulates that boilers including thermal oil heaters, steam receivers, steam containers, air receivers and pressurised cement tanks mounted on trucks or trailers must be approved and registered with the division and must be examined periodically by qualified engineers. The division monitors the operation of pressure equipment through spot checks to ensure compliance with statutory requirements and investigates accidents involving pressure equipment.

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

Occupational Health and Hygiene

The Occupational Health Division of the Labour Department maintains and improves the physical and mental well-being of workers and protects them against health hazards arising from employment. It provides an advisory service to 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.

   During the year, the division took part in a number of seminars and exhibitions to promote occupational health. It 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. Programmes to monitor various chemicals, dusts and other occupational health hazards were also carried out.

EMPLOYMENT

      The division carries out medical examinations of personnel exposed to ionising radiation, users of compressed-air breathing apparatus, and government employees working 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, which is a member of the Hong Kong Laboratory Ac- creditation Scheme, continued to carry out analytical tests on biological samples collected from workers and on other environmental samples taken during site visits.

Occupational Safety and Health Council

The Occupation Safety and Health Council, established by statute in 1988, comprises 20 members appointed by the Governor and drawn from employers and employees, academic and professional fields, and the government. It is financed by a levy on all employees' compensation insurance premiums.

      The council aims to promote a safer and healthier working environment through 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 there are five functional committees which deal with publicity, staffing, finance, research and general matters, and eight industry-based committees covering the construction, textiles, plastics, shipbuilding and shiprepairing, metalware, electronics, catering, transport and physical distribution industries.

During the year, the council organised a variety of promotional and publicity activities and events. A major event was the Occupational Safety and Health Week staged between October 26 and November 1. Other activities included training courses for safety and health supervisors, certificate of competence programmes on ionising radiation protection and safe handling of asbestos. It also produced safety and health literature, codes of practice and guidebooks, Green Cross (the council's bi-monthly magazine), safety advice pamphlets, bulletins for individual industries and posters. The council's library, housing a collection of safety and health journals and technical reference books, is open for public use. The council's occupational safety and health employees' participation scheme offers financial assistance to employees' organisations running safety and health activities. During the year, 16 employees' organisations received financial subsidy under the scheme.

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 Compensa- tion Fund which is financed by a levy imposed on the construction and quarry industries.

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   Under the two-tier Employees' Compensation Assessment Board system, employees with work-related injuries which are likely to result in permanent incapacity are assessed by the boards at nine major hospitals in Hong Kong. In 1991, Ordinary Assessment Boards convened 522 sessions and completed assessment of 16 853 cases referred to them by the Commissioner for Labour and 1 426 review cases. No Special Assessment Boards were convened during the year.

   A review of the compensation levels under the Employees' Compensation Ordinance and the Pneumoconiosis (Compensation) Ordinance was carried out during the year. Taking into account changes in wage levels since the last revision in 1990, the levels of compensation were increased by about 28 per cent with effect from January 1, 1992.

   The Employees' Compensation Assistance Ordinance was enacted in May, establishing the Employees' Compensation Assistance Fund to make payments of statutory com- pensation and damages at common law due to an injured employee or his dependants when an employer defaults or an insurer becomes insolvent. The fund also covers claims from employers, in respect of employees' compensation and common law damages covered by an insurance policy, who fail to get indemnity because their insurers have become insolvent. The fund is financed by a levy on all employees' compensation insurance premiums.

   In 1991, nine pneumoconiosis cases were awarded compensation amounting to $1,034,364. When compared with 1990, the amount of compensation payment has dropped. This was due to the temporary suspension of assessment by the Pneumoconiosis Medical Board pending the outcome of a judicial decision on an appeal case involving the principles of assessment adopted by the board. The Pneumoconiosis Compensation Fund Board allocated $2 million to finance research, educational and publicity programmes to enhance awareness of pneumoconiosis and to promote prevention of the disease.

Telephone Enquiry Service

  In 1991, the staff of the General Enquiry Telephone Service handled 69 843 public enquiries on the Employment Ordinance and its subsidiary regulations, Protection of Wages on Insolvency Ordinance, Employees' Compensation Ordinance and matters relating to the employment of foreign domestic helpers. Where appropriate, pre-recorded tapes in either Chinese or English were used to supplement the information given.

9

PRIMARY PRODUCTION

EVERY day in Hong Kong, people consume about 940 tonnes of rice, 1020 tonnes of vegetables, 8 490 pigs, 430 head of cattle, 290 tonnes of poultry, 520 tonnes of fish and 1 390 tonnes of fruit. 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.

Most of Hong Kong's food supplies are imported and China alone supplies about 5.3 per cent of Hong Kong's total requirements. Local production enables Hong Kong to maintain some degree of self-sufficiency and helps to stabilise the price and supply of fresh produce. In terms of quantity, local farmers and fishermen produce about 28 per cent of fresh vegetables, 32 per cent of live poultry, 10 per cent of live pigs, 13 per cent of freshwater fish and 70 per cent of all live and fresh marine fish consumed. Local produce is highly regarded in the marketplace for its freshness and quality and so tends to fetch higher prices.

      While local agricultural and fisheries production plays an important role in supplying Hong Kong with fresh food, the government, as with other sectors of the economy, does not give direct subsidies to the primary industries or seek to protect them from the free operation of market forces. It does, however, provide infrastructural and technical support services to facilitate their development.

      The Agriculture and Fisheries Department is the co-ordinator and main provider of these services, the purpose of which is to help the primary industries to increase their productivity and efficiency and take advantage of new market opportunities. The depart- ment studies the business efficiency of different sectors of the industries to establish and update productivity standards and identify areas for improvement.

Local production statistics are given at Appendix 22.

Agricultural Industry

In Hong Kong, only about eight per cent of the total land area is suitable for farming, so local agriculture is directed towards the production of high quality fresh foodstuffs through intensive land use.

      The most common crops are vegetables and flowers although a small quantity of fruit and other high-yield field crops is also grown. The area of land under vegetable and flower cultivation was about 1 980 hectares in 1991. The value of crop production was about $435 million.

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The main vegetable crops are white cabbage, flowering cabbage and lettuce. They are grown throughout the year, with peak production in the cooler months. Some exotic temperate vegetables including tomatoes, sweet corn and celery are also grown. Straw mushrooms are produced using industrial cotton waste as the growing medium.

   Common types of flowers such as gladioli, chrysanthemums and ginger lilies are grown throughout the year. A wide range of ornamental plants is produced in the various commercial 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 imported breeds. The value of locally-produced pigs in 1991 amounted to $259 million and that of poultry, including chickens, ducks, pigeons and quails, amounted to $633 million. Local production of pigs and poultry is declining as the industry adjusts to the progressive implementation of environmental pollution controls under the Livestock Waste Control Scheme.

Agricultural Development

The Agriculture and Fisheries Department conducts investigations and applied research into modern methods of crop and livestock production and the control and prevention of plant and animal diseases. One of the more important fields of study is pest management without the use of toxic pesticides. New farming techniques, particularly those requiring less labour, are evaluated and promoted if found suitable for development under local conditions. Experiments are conducted with a view to improving quality and yield. Good quality seeds and breeding stocks of pigs and poultry are produced and made available for commercial propagation.

To help farmers comply with the Livestock Waste Control Scheme, the department has introduced the rearing of pigs on sawdust litter, an innovative non-polluting and cost-effective pig husbandry technique. The simple technique involves using a special bedding material comprising sawdust and bacterial products in the pig shed to decompose the pig manure in situ. Studies have also been conducted on the recycling of spent sawdust litter for horticultural and landscaping use. Results so far indicate that sawdust litter is readily usable as a good soil conditioner. The first international symposium on the pig-on-litter method and other waste treatment and recycling methods was held in Hong Kong between May 13 and 17, 1991 and was attended by more than 80 overseas and local delegates.

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. Vocational training and seminars on special topics of interest and importance are conducted.

   Technical assistance is made available to farmers, who are also frequently advised about the proper handling and safe use of pesticides. Visits are arranged for farmers to see government experimental farms and farming projects.

   Low-interest loans administered by the department are available to the agricultural industry from the Kadoorie Agricultural Aid Loan Fund, the J.E. Joseph Trust Fund and the Vegetable Marketing Organisation Loan Fund. By December 31, 1991, loans issued since the inception of these three funds had reached $286 million, with $280 million having been repaid.

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There are 66 co-operative societies and two federations among the farming community with a total membership of some 11 675 farmers. These societies help to promote agriculture and the Director of Agriculture and Fisheries acts as their registrar. His powers and duties relate to such matters as the registration of co-operative societies and their by- laws, the auditing of accounts, inspection and enquiry, and general supervision of operations.

An agricultural land rehabilitation scheme aimed at bringing fallow arable land back to efficient cultivation is being implemented by the department. Infrastructural improvements in irrigation, drainage and farm road access are being effected and a package of assistance including advance payment of rent, soil improvement and marketing facilities offered. The results of a pilot scheme at Cheung Po in Yuen Long and Hok Tau in Fanling have been satisfactory. Plans are in hand to extend this scheme to other areas.

Fishing Industry

Marine fish constitute one of Hong Kong's most important primary products. In 1991, total production from marine capture and culture fisheries was estimated at about 222 500 tonnes with a wholesale value of $2,250 million. This represented decreases of two per cent in weight and five per cent in value compared with 1990. In weight terms, marine capture contributed 96 per cent towards total production while the remainder came from culture operations.

The Hong Kong fishing fleet, manned by 21 000 fishermen, comprises some 4 500 vessels of which 4 200 are mechanised. It plays a vital role in primary production, catching over 150 species of commercially important food fish and supplying over 50 per cent of all marine produce consumed locally. Golden thread, bigeyes, lizard-fishes, squid, melon seed, conger pike eels, croakers, hairtail, scads and yellow belly are the most important species landed.

Major fishing methods include trawling, lining, gill-netting and purse-seining. About 60 per cent of the vessels are between 10 and 34 metres in length comprising mainly trawlers, liners and gill netters that operate on the continental shelf of the South China Sea 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 gill netters, hand liners and purse seiners which operate in shallow coastal waters.

Trawling accounted for 75 per cent or 160 000 tonnes of marine fish landed in 1991. The total landed catch of live and fresh marine fish available for local consumption amounted to 85 000 tonnes with an estimated wholesale value of $950 million.

Marine fish culture is practised within 28 designated fish culture zones, most of which are to be found around the coast of the eastern New Territories. Fish culture licences are issued by the Agriculture and Fisheries Department. At the year-end, there were 1 702 licensed mariculturists. Young fish are reared in cages suspended from buoyed rafts. Grouper, seabream and snapper are the most common culture species. In 1991, this sector supplied 3 400 tonnes of live marine fish valued at $198 million.

Freshwater fish are also cultured. Fish ponds covering 1 300 hectares are located in the New Territories, mostly around Yuen Long. Several different species of carp are cultured in the same pond, each with a different food requirement to maximise utilisation of the nutrients introduced. The land area devoted to fish ponds has gradually declined because of increasing urbanisation of the New Territories. During the year, pond culture yielded 5 900 tonnes, or 13 per cent of the local consumption of freshwater fish.

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The Agriculture and Fisheries Department conducts a wide spectrum of studies on marine resources, aquaculture and the environmental impact of development activities on fisheries, to assist the development of the local fishery industry.

   Marine resource studies emphasise optimising production from currently exploited fisheries resources and exploring the potential of under-developed resources. During the year, the department conducted a joint fishing trip with fishermen to demonstrate the recently-introduced baited trapping technique for cost-effective harvesting of new prawn resources located in the South China Sea at depths between 500 and 1 000 metres. In July, Hong Kong hosted the 7th session of the Committee for the Development and Management of Fisheries in the South China Sea. The session was attended by delegates from five countries and explored the most effective means of fisheries development in the South China Sea region.

   Aquaculture studies are directed towards the development of more efficient culture systems and improved husbandry techniques to increase productivity and minimise impact on the environment. The feasibility of open sea cage culture is being explored with a view to introducing marine fish culture to more exposed coastal waters. Marine environment studies are conducted to assess the impact of pollution and red tides on fisheries, particularly mariculture operations, to help the industry minimise production losses.

   Fisheries development work includes 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 studies are conducted to assess the suitability of new fishing gear and methods for local application. Training classes in navigation, engineering, radiotelephony, use of ancillary equipment such as radar and weather facsimile, and seminars on safety on board fishing vessels at sea are organised regularly at major fishing ports.

   The department also advises local fishermen interested in building steel-hulled fishing vessels and organises sea-fishing endorsement courses to train and qualify them to operate these vessels. In 1991, one such training course was conducted, training 15 fishermen.

   The department administers four loan funds servicing the fishing fleet. The Fisheries Development Loan Fund with a capital of $7 million provides long-term capital for the development of improved vessels, gear and equipment. The World Refugee Year Loan Fund, the Fish Marketing Organisation Loan Fund and the Co-operative for American Relief Everywhere Loan Fund with total capital of $25.55 million at the end of 1991, are revolving funds which provide shorter-term financing for recurrent expenses for fishermen. By December 31, loans issued since the inception of these four funds totalled $224 million, with $202 million having been repaid.

At the end of the year, 2 081 fishermen were members of co-operative societies and there were 64 societies and four federations supported by fisherfolk.

   Close contact with the fishing community is maintained by liaison with producer associations and fishermen's co-operative societies through eight Fish Marketing Organi- sation liaison offices at the major fishing ports.

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

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     Marketing Organisations. This year, 52 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). It seeks to maximise returns to farmers by minimising marketing costs. 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. Surpluses are ploughed back in the development of marketing services and the farming industries. It provides ancillary services such as the acquisition and sale of agricultural supplies to farmers and the awarding of secondary and tertiary education scholarships to their children. It also monitors and checks pesticide residue levels in both the imported and locally-produced vegetables handled by the organisation, to safeguard public health. During the year, 53 800 tonnes of local vegetables valued at $121 million were sold through the organisation.

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 import and export of marine fish. The organisation operates seven wholesale fish markets. Revenue comes from a commission on the proceeds of sales. Surplus earnings are channelled back into the industry in the form of services such as low-interest loans to fishermen, improvements to the markets, financial support for schools for fishermen's children, and scholarships for secondary and tertiary education.

       In 1991, the wholesale fish markets handled 76 000 tonnes of marine fish, crustacea and molluscs which were sold for $680 million. This included 4 500 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 Agriculture and Fisheries Department 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. In July 1991, construction work for phase I of the wholesale market complex on Hong Kong Island was completed and the fruit, freshwater fish and egg markets were subsequently relocated to the complex which became fully operational by the end of the year. Construction work for phase II which includes a poultry market and a vegetable market also started in the year and is expected to be completed by March 1994. Steady progress was also made in the planning of the Kowloon complex which is to be built on the new West Kowloon Reclamation. The complex would also be constructed in two phases with completion dates for phases I and II in early 1994 and 1996 respectively. Pending the eventual completion of the complexes, the

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department continues to operate a number of temporary wholesale markets - at Western District on Hong Kong Island for 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.

Mining

The Mines Division of the Civil Engineering Department enforces legislation and safety regulations relating to mining, quarrying and explosives. It processes mining and pro- specting applications and inspects mining and prospecting areas, stone quarries, blasting sites and explosives stores.

   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 two government explosives depots which provide bulk storage facilities for imported as well as locally-manufactured explosives.

Site formation projects including the new airport at Chek Lap Kok, advanced works and housing development projects, together with the West Kowloon Reclamation borrow area and stone quarries, were the largest users of explosives in 1991.

Sewerage and electric cable tunnel construction also used explosives, albeit in smaller quantities. There was an increasing interest in 1991 in the use of explosives for seismic surveys. The subsurface geological profiles obtained were used in the site selection for a new power station and in site investigations for underground construction projects such as caverns and tunnels. The overall consumption of explosives in the territory increased by 37 per cent in 1991. Total consumption was 5 790 tonnes.

Storage space was provided for imported fireworks for the Lunar New Year fireworks display in February. The division continued to provide transit storage facilities for explosives and temporary storage for confiscated fireworks awaiting destruction.

10

EDUCATION

THE Community attaches a very high value to education, both as a key to personal advancement and as a major factor in social stability and economic development. This is reflected not only in the public resources allocated to education no other programme of activity takes a larger share of the government budget; it is evident too in the contribution made by many thousands of individuals as sponsors or managers of schools, and as members of the advisory bodies, executive authorities, and governing bodies of educational institutions.

      The mid-1990s will see the culmination of a massive programme of expansion in educational opportunity, which began with the introduction of universal primary education in 1971. Only at the tertiary level does demand still outstrip opportunity; at the school level, targets of provision are now almost fully achieved. Present strategy is therefore based on two premises: that tertiary-level places should be greatly increased; while at the school level the focus should shift from increasing the quantity to assuring the quality of education.

The Structure of the Education System

Formal educational opportunity encompasses kindergartens, primary schools, secondary schools (including technical and prevocational schools), technical institutes, and tertiary- level institutions. The great majority of places from primary school upwards are provided either free or at highly-subsidised rates in the public sector. All kindergarten provision is in the private sector, and other areas with strong private support include international schools and schools providing language, computer, and business courses.

      All children are required by law to be in full-time education between the ages of six and 15. The core of the education system is thus formed by the primary and secondary schools. However, there is a large demand for formal education both before and after universal education.

Pre-school education begins for most children in a kindergarten, at the age of three. Primary school begins at the age of six, and lasts for six years. At about 12, children progress to a three-year course of junior secondary education in a grammar, prevocational or technical school. After Secondary 3, most stay on for a two-year senior secondary course leading to the first public examination, the Hong Kong Certificate of Education (HKCEE). Others join a full-time craft course of vocational training; while a small number choose to leave formal education at this point.

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   Following HKCEE, opportunities for progression include a two-year sixth form course leading to the Hong Kong Advanced Level examination; two or three-year vocational courses leading to a certificate or diploma; and a three-year course of teacher training. After A-levels, students may gain a place on a degree or diploma course, or on a course of teacher training normally lasting two years. Those leaving full-time education at the end of the senior secondary or sixth form course have opportunities for part-time study or vocational training all the way up to degree level.

Although most educational provision is in the public sector, the government directly manages only a small proportion of primary and secondary schools; most are operated by non-profit-making voluntary organisations which receive public funds under a code of aid. Tertiary institutions are autonomous statutory bodies receiving public funds through the University and Polytechnic Grants Committee (UPGC). A comprehensive system of technical education and vocational training is provided, with public funds, through the statutory Vocational Training Council (VTC).

The Legislative Framework

Any institution offering education to 20 or more pupils in a day must operate in accordance with statutory requirements. The operation of schools (including kindergartens, primary and secondary schools, and commercial colleges) is governed by the Education Ordinance, which provides for the registration of schools, managers and teachers, and for attendance by children between the ages of six and 15. The subsidiary Education Regulations cover a wide range of matters including health and safety provisions, matters relating to fees and charges, and the qualifications of teachers.

   The Post Secondary Colleges Ordinance covers institutions offering post-secondary courses but outside the tertiary sector. The VTC Ordinance covers technical institutes and industrial training centres. Two bodies with an important quality control role, the Hong Kong Examinations Authority (HKEA) and the Hong Kong Council for Academic Accreditation (HKCAA), have been established under their own Ordinances. The Education Scholarships Fund Ordinance provides for the administration of the large number of scholarships donated by generous members of the public.

The Director of Education is responsible for supervising education at kindergarten, primary and secondary level. He also supervises institutions registered under the Post Secondary Colleges Ordinance. He directly controls all government schools, the four colleges of education and the Institute of Language in Education (ILE).

The main responsibilities of the Education Department relate to the planning and provision of school places; the allocation of pupils to places; support for curriculum development; professional training for non-graduate teachers; in-service language educa- tion for teachers; the setting of academic targets and related assessments; the monitoring of teaching standards, and the administration of funding to public sector schools and to those private institutions in receipt of public funds. The department also plays an important role in policy development and review.

   The following figures give some idea of the size and importance of the education system. About 1210 000 students, or 21 per cent of the total population, were in full-time education during the year. They attended 1 900 institutions, and were taught by 54 000 teachers supported by a large number of support staff. There were 155 106 candidates for the local public examinations, with a further 232 180 candidate entries for 18 overseas

EDUCATION

examinations. The total public budget for education in 1991-2 was $20,400 million. An unknown, but certainly very large, additional amount was spent privately on education.

Community Participation

Members of the community play an important part in the planning, development and management of the education system at all levels, sitting on advisory bodies such as the Education Commission, Board of Education, Curriculum Development Council, UPGC, and Research Grants Council; on executive bodies like the VTC, HKEA and HKCAA; on management committees of schools, and on the governing bodies of tertiary institutions.

The Education Commission

The Education Commission is the highest advisory body on education. It advises the government on the development of the education system in the light of community needs. Its terms of reference are to define overall 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 education at all levels, and to initiate educational research.

       The commission has 14 members of whom 12, including the chairman, are appointed from outside the government to bring a wide range of personal and professional experience to bear on the issues under review. They include the chairmen of the Board of Education, UPGC and VTC. The two government members are the Secretary for Education and Manpower, who is vice-chairman, and the Director of Education.

      During the year, the commission worked on its fifth report, dealing with the teaching profession. Issues examined included teacher education, the future of the colleges of education and the ILE, and their relationship with the tertiary institutions.

The Board of Education

The Board is a statutory body appointed to advise the Governor on education. Its focus is on the implementation of approved policies and the need for new or modified policies at the school level. Its membership includes the chairmen of other advisory and executive bodies concerned with the school system: the Curriculum Development Council, the HKEA, the Private Schools Review Committee, and advisory committees on School Guidance and Support Services, School Administration and Finance, and School Allocation Systems. Other members have experience in kindergartens, special schools, school administration, vocational training, tertiary education, business and the pro- fessions. Two government officials sit on the board: the Director of Education as vice- chairman, and the Deputy Secretary for Education and Manpower.

The Curriculum Development Council

Reviews of the curriculum are co-ordinated by the CDC, supported by the department's advisory inspectorate. Curriculum guides, which provide broad guidance for developing subject syllabuses in compatible directions, are being prepared for each level. Syllabuses at primary and secondary levels have been consolidated, while syllabus development progressed well for the sixth form, which from 1992 will comprise a standard two-year course with a broader range of subjects. Syllabuses for 16 Advanced and Advanced Supplementary subjects were developed by the year's end.

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   The CDC conducts research on curricular issues such as civic and environmental education, the development of school-based curricula and the feasibility of introducing new subjects. During the year, four research projects made good progress, and the possibility of introducing Travel and Tourism and Science for Non-science Students was considered.

In its Report No. 4, the Education Commission recommended setting up a new Curriculum Development Institute, and planning for this proceeded during the year.

The University & Polytechnic Grants Committee

The UPGC is appointed by the Governor to advise on the development and funding of higher education and to administer government grants for the tertiary institutions. Its members, all prominent in their field, comprise 10 academics from overseas, three local academics, and five local professional and business people. No government official sits on the committee, but it is served by a secretariat staffed by civil servants.

   Since the UPGC's establishment as the University Grants Committee in 1965, full-time equivalent student numbers have increased tenfold, from 4 100 in two universities to almost 42 000 in seven institutions. These (in order of age as a tertiary institution) are the University of Hong Kong, the Chinese University of Hong Kong, the Hong Kong Polytechnic, the Hong Kong Baptist College, the City Polytechnic of Hong Kong, the Hong Kong University of Science and Technology, and Lingnan College.

During the year, the UPGC developed firm plans for implementing the government's ambitious tertiary expansion initiative, announced in October 1989, which aims to double first-year first degree places by 1995. The University of Science and Technology admitted its first batch of students. Lingnan College was accredited as a degree-granting institution, and introduced degree programmes. Plans for new degree courses and expansion of existing courses at the other institutions proceeded smoothly. The UPGC continued to monitor progress towards a revised structure of tertiary education, with a normative three-year first degree course following Secondary 7. The new Joint University and Polytechnic Admissions System was implemented for the first time. This made the selection and allocation of places easier for individuals and the institutions.

Achieving the expansion targets will require an annual 10 per cent growth in the tertiary sector. This is high both in absolute terms and by comparison with what has ever been achieved elsewhere. Retaining and recruiting academic staff of the right calibre will be a crucial factor in successfully achieving the expansion. To help train local students for future careers in Hong Kong's tertiary sector, the UPGC's strategy provides for an increase in research places from about 900 in 1990-91 to over 2 000 in 1994-5.

The Research Grants Council

The RGC was established on January 1, 1991, on the recommendation of the UPGC, to take over the UPGC's role of advising the government on research funding in the tertiary institutions. Its members are six locally based academics, four overseas academics, and three local professionals and industrialists. Grant applications are considered by three specialist panels comprising mostly local academics, covering physical sciences and engineering, biology and medicine, and humanities and social sciences. An independent network of academic referees provides impartial advice. In 1991-2 the RGC disbursed $100 million in earmarked grants for academic research projects, and obtained agreement in principle from the government for an increase in research funding over the next few years.

EDUCATION

The Vocational Training Council

      Established under the Vocational Training Council Ordinance and funded by a subvention from the government, the VTC is responsible for advising the Governor on measures to ensure a comprehensive system of technical education and industrial training suited to the developing needs of Hong Kong, and for administering technical institutes and industrial training centres. (Two industry sectors, construction and clothing, operate training centres funded by levies under separate statutory authorities.) Most of the VTC's 22 members are prominent industrialists and academics. Three government officials, the Secretary for Economic Services, Director of Education, and the Commissioner for Labour, are also appointed to the council.

On August 1, the VTC took over from the government responsibility for skills training for the disabled and administration of the statutory apprenticeship scheme. This followed a government decision to place all activities relating to vocational and industrial training under one executive agency, and to encourage those civil servants working in the Department of Technical Education and Industrial Training to transfer to the VTC. While the department has been retained to accommodate staff who opted to remain civil servants, all its substantive functions are now vested in the council.

To ensure that the council's advice and operations meet the needs of industry and the service sector, the government has appointed, on the council's advice, 20 training boards and seven general committees with members representing those who use the graduates of VTC training courses. Each training board is responsible for training in one sector of the economy, such as electronics, textiles or insurance; while general committees are concerned with training relevant to several sectors, such as precision tooling, translation and the training of technologists.

       During the year, the VTC began to prepare for the transfer of 6 750 sub-degree places from polytechnics to the council, as part of the government's plans for tertiary expansion. Building work started on a new technical college on Tsing Yi Island and on a new industrial training complex at Pok Fu Lam, and alteration and upgrading work began at the existing technical institutes.

The Hong Kong Examinations Authority

The HKEA was established in 1977 as an independent statutory body, with membership drawn from the teaching profession, tertiary institutions and members of the business community. It is self-funding and non-profit-making. The authority's main role is to operate local public examinations. It also offers proficiency tests, aimed at adults, in Putonghua and in English Language Speaking Skills, and in 1990 began offering basic proficiency tests for school-leavers in English language, Chinese language and mathematics.

       On behalf of overseas examining bodies the HKEA conducts a large number of examinations leading to academic, professional or practical qualifications.

       In 1991, a total of 135 912 candidates entered for the HKCEE, 2 649 for the Higher Level examination, and 16 545 for the A-Level examination. The basic proficiency tests attracted 7 555 candidates. A total of 231 300 candidates sat for overseas examinations, 66 300 of them for the London Chamber of Commerce and Industry, 42 800 for the Associated Board of the Royal Schools of Music, and 33 200 for TOEFL (Test of English as a Foreign Language).

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  During the year, preparations continued for introducing bilingual A-Level examinations in 1992 (they are currently offered in English only), and for new Advanced Supplementary examinations to be offered for the first time in 1994. The last Higher Levels will be held in 1992.

The Hong Kong Council for Academic Accreditation

The HKCAA was established by Ordinance in June 1990 to conduct academic accreditation for the non-university degree granting institutions, to ensure that the degrees they award meet internationally-recognised standards. The council has 22 members including experts in higher education accreditation, local and overseas academics and local industrialists and business people. It employs a small permanent secretariat.

  During its first year of work three institutions and 29 courses were reviewed. In July, an international conference was hosted on the theme of Quality Assurance in Higher Educa- tion. Over 100 participants from more than 20 countries attended. One important outcome was a decision to establish an international network of similar agencies. The HKCAA will provide initial administrative support, and produce a bulletin to inform member agencies of the latest developments in systems of evaluation and quality assurance.

  Other work during the year included seminars and workshops on credit unit systems, accreditation principles and practices, the role of the course leader, and the use of statistics in performance assessment. Discussions on credit transfer were held with the tertiary institutions, and advice was provided to enquirers on the status of tertiary qualifications, both local and foreign.

School Management Committees

 Under the Education Ordinance, each school is managed by its own management committee, which employs the staff and is responsible for the proper education of the pupils and the operation of the school. One of the managers must be registered as the supervisor, whose main role is to be the point of contact between the management committee and the department.

  Each aided primary or secondary school is operated, under a Letter of Agreement, by its sponsoring body, which contributes the full cost of furnishing and equipping the premises, and nominates the first supervisor of the school. In September 1991, a total of 923 schools were in the care of 255 sponsoring bodies, with between one and 74 schools operated by any one body.

Governing Bodies of Tertiary Institutions

Each degree-granting institution is a statutory body governed by its own Board of Governors or Council. Apart from staff representatives and the head of the institution, a majority of members are drawn from the community. Some institutions are required by their ordinances to include on the governing body members experienced in commerce and industry. In practice, all governing bodies include a number of prominent business people and industrialists, to ensure that the institution is accountable to the community and that its services are relevant to Hong Kong's needs.

Funding of Education

Approved public spending on education in the 1991-2 financial year, at HK$20,400 million, represented 84 per cent of the government's total recurrent expenditure and 16 per

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cent of capital expenditure. Public funds cover about 90 per cent of the capital cost of an aided primary or secondary school and virtually the full cost of tertiary institution campuses; the entire recurrent cost of providing tuition from Primary 1 to Secondary 3; and about 85 per cent of the recurrent cost from Secondary 4 up to degree level.

Non-profit-making kindergartens are eligible for rent and rates rebates, and parents of kindergarten pupils may apply for assistance towards fees. Private primary schools and pupils receive no public funding, on the grounds that there are sufficient places in the public sector; but private secondary schools receive public funds under two schemes. Under the Direct Subsidy Scheme, any private secondary school meeting a specified standard may receive a recurrent subsidy related to the cost of an aided school place and the fee charged by the school; while secondary schools in the Bought Place Scheme, from which the government buys places to make up shortfalls in government and aided schools, are being given financial assistance to raise their standards.

The site for an aided school is granted to the sponsor by private treaty at a nominal premium, except where it lies within a Housing Authority estate, in which case the school operates under a tenancy agreement between the sponsor and the authority. It is possible that international schools meeting specified criteria may also be granted land at a nominal premium.

Student Finance

To ensure that no child is deterred by financial constraints from pursuing education, several schemes of assistance are available. These are administered by the Student Financial Assistance Agency.

Student Travel Subsidy

Students aged between 12 and 25, who have not yet completed a first degree, can apply for a means-tested subsidy to meet part of their travelling expenses between home and school. During the year, 160 475 students received assistance totalling $117 million.

Textbook Assistance

Primary or junior secondary students who need help to meet the cost of textbooks and stationery may apply for a grant. During the year 102 961 students received a total of $28.8 million.

Fee Remission

The policy on fee levels beyond Secondary 3 aims to balance the benefit to the community and the benefit to the individual of the higher level of education. The Fee Remission Scheme enables needy students to progress beyond Secondary 3 without placing an undue financial burden on parents, by relieving them of half or all the standard school fee. During the year 38 113 students benefitted under the scheme.

Local Student Finance Scheme

Full-time students in local tertiary institutions are eligible, on the basis of evident need, for grants to cover faculty expenses, tuition fees and student union dues, and for loans to meet their living expenses. During the year, 12 740 students received loans totalling $147.8 million. Of these, 10 113 also received grants totalling $77.6 million.

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UK-HK Joint Funding Scheme

  Under the joint funding arrangement between the governments of the United Kingdom and Hong Kong, grants are available on the basis of need to full-time students attending first degree or higher diploma courses in the United Kingdom, to meet the difference between fees charged to home students and those charged to overseas students. During the year grants of £4.4 million and loans of $28.8 million were paid to 1 782 students.

UK-HK Scholarships

These scholarships are aimed at providing educational opportunities at tertiary level in the United Kingdom for outstanding students from Hong Kong. The scholarship fund comprises £250,000, contributed equally by the United Kingdom Government and the Royal Hong Kong Jockey Club on behalf of the Hong Kong Government. Twelve scholarships were awarded in 1991.

Sir Edward Youde Memorial Fund

The Fund was established in April 1987 to manage public donations made in memory of the late Governor, Sir Edward Youde, who passed away in service in December 1986. Its aim is to promote education and learning among Hong Kong people, and to encourage research. In the 1991-2 academic year a total of $6.1 million was disbursed. Thirteen students were awarded fellowships and scholarships for postgraduate or undergraduate study overseas. Locally, 42 postgraduate research students were awarded fellowships, while 83 undergraduate, diploma and certificate students received scholarships. Five students excelling in public examinations, 15 disabled students in tertiary institutions. and secondary/post secondary schools, and 600 senior secondary students who were nominated by school heads also received awards from the fund.

   In addition to these funds, a large number of scholarships for school students have been endowed by private benefactors. These are administered by the department under the Education Scholarships Fund Ordinance. Certain other charitable trust funds also provide scholarships.

Schools and Kindergartens Kindergartens

In September 1991, 193 658 children in the three to five year age group were enrolled in 767 kindergartens. All kindergartens are privately operated, an increasing number on a non-profit-making basis which renders them eligible for rent and rates rebates. They may also be allocated premises in public housing estates. Most kindergartens operate two half-day sessions, but the number of whole-day places is increasing.

   A new fee remission scheme was introduced in August 1990 for needy parents with children in kindergartens. Assistance available ranges from 25 to 100 per cent of the weighted average of fees charged by non-profit-making kindergartens. Revisions to the scheme in August 1991 enabled considerably more parents to receive assistance.

   Professional advice to kindergarten managers, teachers, parents and the public is given by the department. It produces curriculum development materials and runs basic training courses, seminars, workshops and exhibitions to help kindergarten heads and teachers develop their professional standards. The department publishes guidelines to help teachers organise the curriculum and learning activities.

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       To address concerns of kindergartens and parents on the transition from kindergarten to primary school, the department is conducting research on the continuity of curriculum and teaching practice at different levels of education.

Primary Schools

Primary schooling, beginning at the age of six and lasting six years, has been provided free in all government schools and in nearly all aided schools since 1971. Although enough places are available in the public sector, about 10 per cent of parents prefer to send their children to private primary schools. Admission to Primary 1 in the public sector is processed through a central allocation system, administered by the department. This has helped to eliminate pressure on children caused by intense competition for entry to popular schools.

      In September 1991, 515 938 children were enrolled in 662 primary schools. Eight new school buildings were completed during the year to provide for the growing population in the new towns.

       Most primary school buildings accommodate two half-day sessions, a system adopted in the 1950s to meet demand from an increasing school population in a situation of severe space constraints. During the year the Education Commission, in the light of public views on its Report No. 4, recommended that whole-day schooling should be phased in as resources permit. Because a large number of new school buildings will be needed, it is likely to take many years to implement the recommendation in full.

      The primary curriculum aims to provide a broad, balanced and general education appropriate to the age group and the local environment. While the core curriculum (Chinese, English, mathematics, social studies, science, health education, music, physical education and art and craft) is followed by all primary schools, other learning programmes may be offered on a cross-curricular basis or as separate optional subjects. A syllabus for each core subject is prepared by the Curriculum Development Council, and is regularly revised and updated to meet changing educational and community needs. Awareness of the benefits of the activity approach, a more child-centered teaching method, is growing, and it is now used in 261 schools.

      A standard primary school consists of 24 classrooms and two special rooms. A new design was introduced in 1990 to provide more accommodation needed as a result of various changes in education policy. This provides 30 classrooms, four special rooms and three remedial teaching rooms, accommodating 60 classes in two half-day sessions. It can be converted into a secondary school, if necessary, by adding a special room block. The standard class size is 40 pupils where conventional teaching methods are used, and 35 for activity approach classes.

       All teaching posts in primary schools are in non-graduate ranks. The pupil:teacher ratio is about 27:1, and the staffing ratio is 1.2 teachers per class. This allows for remedial teaching to help slow-learning pupils. Additional teachers may be provided so the school can operate revised resource classes for pupils in need of special educational help.

       Chinese is the language of instruction in most primary schools, with English taught as a second language. In many schools Putonghua is taught as either a timetabled subject or an after-school activity. A few schools use English as the language of instruction. The Education Commission in its Report No. 4 proposed enhancing English language activities in Primary 5 and 6, by measures such as educational television programmes and the

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 development of self-access language packages. Work proceeded during the year on preparations for implementing these recommendations.

  Standardised Hong Kong Attainment Tests in the three basic subjects of Chinese, English and Mathematics are distributed to all primary schools and given at the end of the school year to pupils at all levels. The tests help schools to assess pupil performance and diagnose areas of strength and weakness in these subjects, so that appropriate guidance, counselling and remedial teaching can be provided. Test results also help the department monitor standards in these subjects across years and levels.

  The class library scheme provides supplementary reading materials for pupils to support classroom learning, promote a more exploratory approach to learning, develop the habit of leisure reading, and pave the way for effective use of the library in secondary school. A Reading Award Scheme is organised annually for Primary 5 and 6 students, and a booklet containing the winning book reports is issued to all schools. In 1991, 38 000 students from 203 primary schools joined the scheme.

  At the end of the primary course, pupils are allocated to government or aided secondary schools, or to private schools with bought places. The Secondary School Places Allocation System is based on internal school assessments, scaled by a centrally administered academic aptitude test, and on parental choice. For allocation purposes the territory is divided into 19 school nets. This year, 84 251 pupils took part in the allocation, of whom 73 482 (87.2 per cent) found places in government and aided grammar schools, 5 889 (7 per cent) in prevocational schools, and 4 880 (5.8 per cent) in private schools in the Bought Place Scheme.

Secondary Schools

In 1978, universal free education was extended to junior secondary classes. The policy for senior secondary education, leading to the HKCEE, is to provide by 1992 subsidised Secondary 4 places for about 85 per cent of the 15-year-old population. Places for a further 10 per cent will be provided on full-time craft courses of vocational training. The target for sixth form education is to provide one public sector Secondary 6 place for every three public sector Secondary 4 places two years earlier.

  In 1991, there were 42 government, 324 aided and 76 private secondary schools. To meet the policy targets new secondary schools are built and places are bought from private schools. During the year, 12 new schools opened, providing 13 920 places. Another 41 schools will be completed between 1992 and 1996 to meet demand and to reprovision schools from areas where there are surplus places to areas with a shortfall. In 1990, for the first time, places at senior secondary level were bought from private schools in the Bought Place Scheme (BPS), which will be extended to the sixth form in 1992.

  In March, the government unveiled the School Management Initiative, a scheme to give public sector schools more decision making power in return for more formal procedures for planning, implementing and evaluating their activities. In September, 21 aided secondary schools joined the first phase of the scheme and began to modify their management procedures in preparation for changing to a new funding system in September 1992. An advisory committee was appointed to advise the director on implementation of the scheme. The members have a wide range of education and management expertise, and provide a channel for developing and disseminating ideas.

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Following recommendations of the Education Commission in its Report No. 3, the Direct Subsidy Scheme (DSS) was introduced in 1991 to encourage a strong private school sector subsidised by the government, and improve the quality and diversity of education. Under the scheme private secondary schools meeting specified standards can receive a public subsidy for each student enrolled. They are free to decide their own curriculum, and to set entrance requirements and fee levels. In September, nine schools were admitted to the scheme.

As part of the same policy package the BPS will end in the year 2000. Schools in the scheme will be helped before then to raise their standards as far as possible to those of the aided sector, so that if they wish they may apply for the DSS. In September 1990, 20 private schools entered into contracts with the government which specified various areas to be improved in the school, including whole day operation, class structure, teacher qualifications and school facilities. The contracts will expire in August 2001, unless terminated earlier by either party.

The Junior Secondary Education Assessment system allocates eligible students to subsidised Secondary 4 places. Introduced in 1981, it was revised in 1988 to remove the need for students to sit a public scaling test. Instead, as many eligible students as possible are enabled to progress within the same school, while the remainder are allocated centrally, according to parental choice, to other schools with vacant places. Eligibility is based on the student's performance in internal school assessments. As an alternative, students may choose to attend a post-Secondary 3 craft course of vocational training. During the year, 75 068 Secondary 3 leavers made use of the system, of whom 63 923 (85.2 per cent) were offered Secondary 4 places in the public sector and 5 494 (7.3 per cent) were admitted to craft courses.

       A new scheme was introduced in September to ensure that all sixth form places were filled, and to encourage schools to give priority to their own students before admitting those from other schools. A total of 19 200 places were filled, an increase of 3 937 on the

previous year.

      There are three types of secondary school: grammar, technical and prevocational. In 1991, there were 397 grammar schools with an enrolment of 395 401. They offer a broad 5-year course of academic, cultural and practical subjects leading to the HKCEE. Most offer also a two-year sixth form course leading to the Hong Kong A-Level examination.

The 22 technical schools had an enrolment of 21 959. These prepare students for the HKCEE with an emphasis on technical and commercial subjects. Qualified candidates can continue their studies in the sixth form or in technical institutes.

       The 23 prevocational schools had an enrolment of 18 979. In these schools, students with an aptitude for practical and technical subjects' are given a solid foundation of general knowledge and an introduction to technical and practical education on which future vocational training can be based. Students completing Secondary 3 in a prevocational school may enter approved apprenticeship schemes with an exemption from the first year of craft training, or may continue to the senior secondary course and the HKCEE. Qualified candidates can then continue their studies in polytechnics or technical institutes. In 1992, some prevocational schools will begin to offer sixth form classes.

The aim of the junior secondary curriculum in grammar and technical schools is to provide a well-balanced and basic education suitable for all students at this level, whether or not they continue formal education beyond the age of 15. The common core of studies,

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together with the common core curriculum at primary level, provides an integrated course for the nine years of universal education. The senior secondary curriculum, which aims to prepare students for education beyond Secondary 5 as well as the world of work, offers a diverse range of subjects from which schools and students select according to the needs and interests of the individual, school tradition, and the facilities available.

  Teaching syllabuses at the secondary level are prepared by the Curriculum Development Council. At the senior secondary and sixth form levels, teaching syllabuses are co- ordinated with examination syllabuses prepared by the HKEA. All syllabuses are kept under constant review and revised as necessary to meet the changing needs of society. During the year, teaching syllabuses for Chinese history, biology, chemistry, religious studies (Christianity) and commerce at the senior secondary level were revised, while new syllabuses for 15 advanced supplementary and two A-Level subjects were produced.

  Two important subjects introduced in the past few years are Putonghua and computer studies. During the year Putonghua was offered as an optional subject to junior secondary students in 162 schools. Computer studies as an HKCEE subject is available in 361 schools, and a computer literacy course for junior secondary students is taught in 150 schools.

Civic and moral education are promoted by a cross-curricular approach making use of all learning opportunities provided by the formal and informal curriculum and the ethos of the school. Environmental education is promoted through relevant subjects such as social studies and science in primary schools, and social studies, integrated science, economics and public affairs, geography, biology, physics and chemistry in secondary schools, making use of themes and topics on the environment set out in the syllabuses for these subjects. Extra-curricular activities also contribute to civic, moral and environmental education.

Sex education is integrated into such subjects as health education, social studies, religious/ethical education and biology rather than being treated as a separate subject in the curriculum. This enables students to understand sex as part of overall personal and social well-being, and not as something isolated from other aspects of behaviour. Resource materials on AIDS education have been issued to schools.

  The school-based curriculum project scheme, introduced in September 1988, encourages teachers and other education professionals to develop projects to suit the different abilities and needs of students and complement or supplement the centrally-designed curriculum. Participants are given production expenses, and awards are granted on satisfactory completion of the projects. In 1990-91 the scheme involved 43 schools, and 54 projects were completed.

  The school library service promotes good reading habits, cultivates the ability to study independently, and supports teaching and learning in schools. All public sector secondary schools may appoint a teacher librarian. The annual Reading Award Scheme for secondary students this year attracted 32 000 participants from 209 schools. A booklet containing the winning book reports was sent to all schools for students' reference. A newsletter for school libraries is published half-yearly.

Chinese and English are both used as mediums of instruction in secondary schools. Some schools use Chinese, some use English, while others use both languages. Long-standing problems relating to the language medium were addressed by the Education Commission in its Report No. 4, which proposed a framework for grouping students according to language ability. The aim is to ensure that all students can learn effectively by having a

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good command of the language of instruction, and at the same time to meet the need of the community for people competent in English, the international language, as well as Chinese.

      Objective target-related assessments will be designed to determine the most appropriate medium of instruction for each student. These will provide language ability information to help parents and students select the most suitable type of school and inform secondary teachers of the student's language profile. Working committees have been set up to develop the framework and implement related recommendations.

Target-related assessments are also to be developed for mathematics. The assessments in English, Chinese and mathematics will eventually supersede the standardised Hong Kong Attainment Tests, which now help schools to assess the achievement of students at each year level from Primary 1 to Secondary 3.

Three public examinations assess achievement at senior secondary and sixth form levels. The HKCEE is taken by Secondary 5 leavers. Students completing a one-year sixth form course sit the Higher Level examination, which provides an entry route to the Chinese University of Hong Kong. This will be held for the last time in 1992, after which all sixth form courses will last for two years. The two year sixth form course culminates in the A-Level examination, an entry route to all tertiary institutions.

In government and aided secondary schools the staffing ratio is 1.3 teachers per class in Secondary 1 to 5, and two teachers per class in the sixth form. Additional teachers are provided for split-class teaching in language, domestic science, woodwork, metalwork, computer studies, art and design, and music. The pupil:teacher ratio is about 20:1. Seventy per cent of secondary teaching posts are in graduate ranks. The class structure of a standard secondary school gives six classes each in Secondary 1 to 3, four classes each in Secondary 4 and 5 and two classes in each sixth form year, but a number of schools have a symmetrical '5555522' structure. The standard class size is 40 up to Secondary 5, and 30 in the sixth form.

A new standard design for secondary schools was introduced in 1990 to provide additional accommodation and better teaching facilities. The new design includes 26 classrooms, 14 special rooms and three remedial teaching rooms for operating a standard class structure of 30 classes.

Following a recommendation in the Education Commission's Report No. 4 corporal punishment in schools, previously permitted in the case of male pupils, was abolished. This removed a potential conflict with the newly enacted Bill of Rights.

Extra-curricular Activities

     Extra-curricular activities are an integral part of the curriculum, complementing and enriching formal learning in the classroom. They are usually conducted outside school hours, within or outside the school premises, under the supervision of teachers.

      The department provides professional guidance and advice to teachers through in-service training programmes and school inspections, and subsidises certain activities. Many inter-school programmes and activities are organised or co-ordinated by the department. They include the Community Youth Club, the Duke of Edinburgh's Award Scheme, the Sister Schools Scheme, the Schools Drama Festival and sports and recreational activities.

      The Community Youth Club was established in 1977 to help build a strong community spirit among students through organised activities. Its motto is Learn, Be Concerned and Serve. During the year there were about 30 000 members from 1011 primary and

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secondary schools. Up to June 1991, 35 460 members had gained awards under the CYC Merit Award Scheme. During the summer holiday, 19 outstanding primary school members visited Singapore, and 24 secondary school members visited the USA.

   Of the 20 operating authorities of the Duke of Edinburgh's Award Scheme in Hong Kong the Education Department's is the largest, with 27 500 members from 183 participating schools. Over 148 training courses and functions at bronze, silver and gold levels were organised during the year.

   The Sister Schools Scheme started in 1981 under the auspices of Lions Club International District 303. Ordinary and special schools are matched to promote social interaction and friendship among students. In 1991, 42 special schools and 50 ordinary schools were made sister schools, and about 20 000 pupils took part in activities sponsored by the scheme.

The successful launch of a school drama project in 1990 led to the development of a territory-wide School Drama Festival in 1991 to encourage primary and secondary schools to present plays in either Chinese or English. A School Drama Council was formed in April, with members from various government departments and theatre groups interested in school drama. The 27th Schools Dance Festival in January attracted 2 342 students from 152 primary schools, while 879 students from 79 primary school participated in the School Dance Winners' Performances in April.

   Sport in schools is promoted mainly through the Schools Sports Council, which during the year organised Jing Ying competitions in table tennis and badminton to identify talented young players at an early stage. Interport competitions were held in swimming, athletics, basketball, table tennis and badminton. These competitions, held annually between Hong Kong, Macau, Fuzhou and Guangdong, are highlights of the school sports scene.

   Pupils from 222 primary schools took part in the 1991 Summer Youth Programme for Schools, sponsored by the Royal Hong Kong Jockey Club. Total expenditure amounted to $2.1 million. About 4 700 primary pupils took part in the Learn-to-Swim Scheme, and over 18 000 students from 153 schools attended outdoor education camps subsidised by the department.

Special Education

The main policy objective of special education is to integrate the disabled into the community through the co-ordinated efforts of the government and voluntary agencies.

   Early identification is an important preventive measure. Screening and assessment services identify special educational needs among school age children so that appropriate follow-up and remedial treatment can be given before the problems develop into educational handicaps. Under the combined screening programme, all Primary 1 pupils are given hearing and eyesight tests. Teachers are provided with checklists and guides to help them detect children with speech problems and learning difficulties. Children requiring further assessments are given audiological, speech, psychological or educational as- sessments at the Special Education Services Centres, or are referred for ophthalmic advice.

   Children identified as having special educational needs are as far as possible integrated into ordinary schools. They are placed in special schools only when their handicaps are such that they cannot benefit from the ordinary school programme. There are altogether 62 special schools (including a hospital school) for the blind, deaf, physically handicapped,

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mentally handicapped, maladjusted and socially deprived, and for children with learning difficulties. Sixteen schools provide residential places. Apart from teachers, special schools are staffed by specialists such as educational psychologists, therapists and social workers.

      Special education classes in ordinary schools cater for partially-sighted or partially- hearing children and children with learning difficulties. Intensive remedial services are provided for children integrated into ordinary classes. These include an advisory service to schools on remedial support available outside school hours, and a peripatetic teaching service during or outside school hours.

In general, special schools and classes follow the ordinary school curriculum, with adaptations or special syllabuses where appropriate to cater for the varied learning needs of the children. Special attention is given to daily living skills. Special schools also offer a range of extra-curricular activities to enrich the practical life experiences of day and residential pupils.

The Special Education Co-ordinating Committee, with members from relevant departments and schools, has been set up under the Curriculum Development Council to advise on special educational needs.

      During the year planning continued in response to recommendations in the Education Commission's Report No. 4 for additional attention to special education for the gifted and for improved services for less able pupils.

International Schools

Several international schools serve expatriate families, whose presence is important in sustaining Hong Kong's role as an international business centre. Schools meeting certain conditions on size, entry policy and non-profit status may receive help from the government in the form of land grants at nominal premium and reimbursement of rates. Some are also supported by their own governments or local national communities.

The demand for places in this sector has grown rapidly in recent years, and the trend is likely to be sustained as the Port and Airport Development Strategy moves ahead. During the year, the United States and Canadian communities responded to an initiative by the government by opening two new primary schools: one, with 220 places, is run by the Hong Kong International School, which offers a US-based curriculum; the other, run by the Canadian International School Foundation, has 240 places, welcomed especially by Hong Kong emigrants returning from Canada. The Singapore community also opened a school, aiming to enrol 600 pupils within the next five years.

The English Schools Foundation (ESF) provides a UK-based curriculum leading to the General Certificate of Secondary Education (GCSE) and GCE A-Level, for children of any nationality with first-language ability in English. It runs nine junior and five secondary schools, and a special education centre for children with learning difficulties. A new secondary school is being built on Hong Kong Island; meanwhile, to meet the heavy demand for places it began operating in temporary premises in September. The ESF receives a grant from the government based on the grants paid to local aided schools. Additional costs are met from parental fees.

      Other international schools offer curricula from Germany and Switzerland (the German-Swiss International School) and France (the French International School). The Chinese International School offers a bilingual Mandarin and English curriculum. Some communities, such as the Japanese and the Indonesians, are served by their own schools.

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  Four international secondary schools were among the first participants in the Direct Subsidy Scheme, under which they receive recurrent grants from the Hong Kong Government.

Teacher Education

Four colleges of education offer pre-service professional training for non-graduate teachers in primary and secondary schools, as well as courses for serving primary, secondary and kindergarten teachers. Full time pre-service courses last for three years for those with HKCEE qualifications, and two years for those with two A-Levels. In October 1991, 2 452 trainees were enrolled in full-time courses and 2 439 in part-time or short courses. The colleges also offer refresher training courses for serving primary and secondary school teachers.

  The University of Hong Kong and the Chinese University of Hong Kong offer postgraduate certificate of education courses for graduates who are, or who wish to become, teachers. They also offer short courses for teachers covering areas like curriculum innovation, resource development, educational psychology, student guidance and counsel- ling, professional development of teachers, and educational administration.

  The Institute of Language in Education (ILE) was set up in 1982 as a centre of excellence for training and research in all matters relating to language learning and teaching. It offers full-time in-service courses of language education for graduate and non-graduate primary and secondary teachers of Chinese and English; part-time courses and seminars to prepare teachers of Putonghua, and part-time courses on the use of Chinese in teaching specific subjects. During the year 624 teachers attended full-time courses, and 937 attended part-time courses. 108 course participants attended the summer immersion programme in the UK. The ILE's annual international conference in December on the theme of Achieving and Maintaining Quality in Language Teaching and Language Learning attracted 348 participants, with over 104 papers delivered.

In April, the British Council and the Hongkong Bank Language Development Fund donated funds to enable pre-service teacher trainees to attend a six-week summer immersion course in the UK to strengthen their English language skills and give them experience of living in a native-speaker environment. One hundred trainees taking English as an elective subject joined the course.

The four colleges and the ILE are run directly by the Education Department. The future of teacher education, including the future status of training institutions, was one of the matters considered during the year by the Education Commission, in preparation for its Report No. 5.

Support Services

Teaching and learning in the schools is backed up by a wide range of services, mostly provided or supported by the Education Department.

In December, consultants delivered the results of a three-month study to define the information needs of the school education programme, and to develop appropriate management information systems which would lead to greater efficiency in the department and schools.

The Advisory Inspectorate advises schools on curriculum, teaching methods and educational resources, and offers short courses, seminars and workshops for teachers. Its

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teaching and resource centres help to promote the quality of education by offering resources and advice to kindergarten, primary and secondary teachers in the areas of Chinese; English; maths; science; social and cultural subjects; computer education; technical subjects; civic education; religious, ethical and moral education; sex education; the activity approach, and kindergarten teaching.

Guidance services in primary schools are offered by the department's student guidance officers, who give personal and educational guidance, organise preventive programmes for pupils, and investigate drop-out cases to enforce compulsory education. Secondary schools designate certain teachers as guidance teachers. They are supported by school social workers employed by voluntary agencies, and by the Social Welfare Department. At both primary and secondary levels, educational psychologists offer professional services on a referral basis. During the year planning work continued in response to recommendations in the Education Commission's Report No. 4 for enhancing guidance and counselling services.

Educational television is transmitted to schools through the two local commercial television stations. Programmes are produced jointly by the department and Radio Television Hong Kong. During the year syllabus-based programmes for students in Primary 3 to Secondary 3 covered the subjects of Chinese, English, maths, social studies, science, and health education.

The Hong Kong Teachers' Centre was established in 1989 to promote professional development and a greater sense of unity and professionalism among teachers. It functions under an advisory management committee with wide representation from schools, teacher organisations and educational bodies, and is staffed by the department. During the year, about 600 activities involving over 40 000 participants were hosted or organised, including three conferences with international participation. The centre maintains a professional library and publishes news bulletins.

The department's Educational Research Establishment (ERE) conducts research, develops tests and monitors educational standards. In 1991, the ERE conducted research into the continuity of curriculum and teaching practices between the various levels of education, effects of the change of medium of instruction in secondary schools, and curriculum patterns and subject streaming at secondary level. It participated in the international literacy study project of the International Association for the Evaluation of Educational Achievement. Test papers were devised for Series 4 of the Hong Kong Attainment Tests (Primary) in the three basic subjects of Chinese, English and Mathematics at Primary 5 level. Work is in progress to construct tests for the same series at Primary 6 level.

      The department operates 19 district education offices to help with the administration of schools within the district, advise and assist schools, teachers, parents and students, and act as a channel of communication between them and the department. Officers attend district board meetings to assist in discussions on educational matters.

The department's Careers and Guidance Services Section gives advice and information on educational establishments overseas. During the year, 4 395 students went to study in Britain, 4 655 to Canada, 5 899 to the USA, and 3 988 to Australia. Exhibitions promoting overseas education were staged by British, Canadian and Australian organisations.

      The Students Division of the Hong Kong Government Office in London promotes the interests of Hong Kong students and monitors developments in education in the UK. It

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keeps in close touch with institutions, official and unofficial bodies concerned with the welfare of overseas students, and societies of Hong Kong students in colleges. It liaises with the Student Financial Assistance Agency to administer the UK-HK Joint Funding Scheme.

Technical Education and Industrial Training

A comprehensive system of technical education and industrial training offers school leavers an alternative to further academic study, and helps to prepare them for specific careers. Publicly funded technical education is provided through the Vocational Training Council (VTC), which operates eight technical institutes. The VTC also provides industrial training for 18 industrial and service sectors, while two other training authorities operate levy-funded training schemes for the clothing and construction industries.

  The manpower needs of each economic sector are identified by regular manpower surveys, produced under the auspices of VTC training boards and general committees. During the year, 11 sectors were surveyed. Based on survey findings, proposals are formulated for new or modifed training courses. Other measures adopted by the VTC and its boards and committees to help employers meet their needs include assistance with in-house staff training schemes and the preparation of job specifications, trade test guidelines, training curricula and glossaries of common technical terms.

Technical Education

Technical education is provided by the VTC's technical institutes, whose 15 disciplines cover applied science, clothing, commercial studies, computing studies, construction, design, electrical and electronic engineering, general studies, hotel keeping and tourism, industrial technology, marine engineering and fabrication, mechanical engineering, motor vehicle engineering, printing, and textiles.

Courses leading to a recognised qualification are offered at two levels with several modes of attendance. Courses for craft apprentices, usually Secondary 3 leavers, are offered on a block release or part-time day release basis. At technician level full-time day, part-time day and part-time evening courses are offered, mostly for Secondary 5 leavers. Most technician courses are validated by the UK Business and Technician Education Council. Students completing them may register for BTEC awards.

  In September 1991, the institutes offered 340 courses taught by 874 full-time teaching staff and about 800 supporting staff. Evening courses were delivered by 2 240 part-time lecturers. Enrolment in the 1990-91 academic year totalled 12 300 full-time, 15 600 part-time day and 29 600 part-time evening students. Eighteen thousand serving employees attended 320 short courses to upgrade their knowledge and skills.

In July, 6 400 full-time, 5 400 part-time day and 10 100 evening students graduated from the institutes. The employment of graduates from full-time courses was surveyed during the year. Once again findings showed that graduates had little difficulty in finding jobs, and that for most of them the work was relevant to the training they had received.

Industrial Training

The VTC's 18 industrial training centres provide basic training or skills upgrading for industrial craftsmen and technicians, and for clerical and supervisory personnel in the service sector. In 1991, over 30 000 trainees attended full-time or part-time courses. Trade tests for serving employees were offered in several trades, including vehicle mechanic,

ONG

Hong Kong youngsters are provided with many opportunities to have fun and enjoy life.

T

Below and opposite page: Great interest and involvement generated by the

World Boys and Girls Art Exhibition in February.

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ht

EALTIM

1:

STALL

MALL

Opposite page: Painting a better environment,

on the environmentalists' 'Green Bus'.

Left and below: Playing 'Dragon Boats' at Stanley Beach, pedalling at Tai Po.

Below: Archery and astronomy in the New Territories.

Opposite page: The hi-tech playground in the newly-opened Hong Kong Park.

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One of several scenic ponds in the Hong Kong Park.

EDUCATION

electrician, mechanical fitter, and mould and die maker. Training boards in conjunction with educational and training institutions organised subsidised training courses to upgrade or update serving employees.

The Engineering Graduate Training Scheme, administered by the VTC, helps engineer- ing students and graduates complete the professional training which will gain them recognition by the Hong Kong Institution of Engineers or other professional bodies. In 1991, 60 engineering firms took part in the scheme, which provided 260 training places.

      The VTC's Management Development Centre does not itself provide training courses, but conducts research and development projects and promotes management training. The centre's projects include work with owner managers and various entrepreneurial firms, development of learning materials, and activities with management trainers and business executives.

Two statutory authorities operate industrial training schemes in two important sectors. The Clothing Industry Training Authority operates two training centres funded by a levy on the export value of clothing and footwear. In 1991, 8 200 trainees attended courses. The Construction Industry Training Authority operates three training centres funded by a levy on the value of construction works exceeding $1 million. During the year, 3 500 trainees attended courses.

Training in New Technologies

The Precision Tooling Training Centre houses a precision sheet metal processing unit, set up in 1990 with financial and expert technical help from the Japan International Co-operation Agency under an agreement between the governments of Hong Kong and Japan. The unit plays an important part in the transfer of precision sheet metal technology to local industries.

Plans are in hand to establish a New Technology Training Scheme. This will provide matching grants from a special fund to help industrial employees acquire skills in new technologies of benefit to Hong Kong industry.

Apprenticeship Schemes

The Apprenticeship Ordinance governs the training of craftsmen and technicians in 42 designated trades. Anyone aged between 14 and 18 who is employed in such a trade and has not completed an apprenticeship must enter into a contract with the employer. This must be registered with the Director of Apprenticeship, who is the executive director of the VTC. Contracts in respect of other trades, or for apprentices aged over 18, may be registered voluntarily. An apprenticeship normally lasts three to four years, but qualifications earned before the apprenticeship starts, such as completion of junior secondary education in a prevocational school, may lead to exemption from the first year of the apprenticeship.

The Office of the Director of Appenticeship advises and helps the employers of apprentices. Inspectors visit workplaces where apprentices are employed, to ensure that training schemes are properly implemented, help to resolve disputes arising from registered contracts, and ensure that apprentices receive the required technical education on courses at the polytechnics or technical institutes. In 1991, 4 700 contracts were registered. Of these, 920 were in non-designated trades. The contracts covered 4 060 craft apprentices, and 640 technician apprentices. By the year's end 9 700 apprentices were being trained.

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Vocational Training for the Disabled

  Six skills centres, three run by the VTC and three by voluntary agencies, prepare disabled people for open employment or mainstream technical education and industrial training. The centres have a capacity of 980 places, of which 390 are residential.

   The VTC also provides support services. The vocational assessment service assesses individual potential and helps in selecting a suitable training course. Internationally recognised test batteries are used, as well as work samples designed to meet local industrial needs. All mildly mentally retarded school leavers attend a one-week programme. An 8-week programme assesses more complex cases.

   The Technical Aids and Resource Centre designs and makes technical aids for disabled trainees, students and workers, to enhance their training, employment prospects and productivity. Audio-visual training packages are also produced.

   The inspectorate unit advises skills centres on administration, curriculum, training methods and standards. It also provides guidance and counselling to disabled students in technical institutes and industrial training centres. The unit works closely with the Labour Department's selective employment service to ensure that training matches the demand for skills in the workplace. The annual employment survey of disabled students and trainees completing full-time courses in technical institutes and skills centres showed that over 85 per cent either found open employment, or were enrolled in mainstream technical education courses.

Tertiary Education

  Ten years ago less than five per cent of the 17-20 age group could receive tertiary education in Hong Kong. By 1991, this figure had increased to 18 per cent, and expansion plans announced by the government in 1989 will see a further rise to 25 per cent by 1994-5. This will include places on the first year of a first degree course for five out of every six matriculants, and help to supply the graduate manpower Hong Kong needs to sustain its economic growth.

   Degrees up to PhD level awarded by Hong Kong institutions are recognised by most institutions of higher learning around the world. Academic standards are guaranteed by the appointment of external examiners from prominent overseas universities and colleges. Degrees awarded by non-university institutions are also subject to external validation by the Hong Kong Council for Academic Acceditation.

The Tertiary Institutions

The oldest tertiary institution is the University of Hong Kong, founded in 1911. Its 7 979 full-time and 1909 part-time students are enrolled in nine faculties: arts, architecture, dentistry, education, engineering, law, medicine, science and social sciences.

   The Chinese University of Hong Kong was established in 1963 by bringing together three colleges: New Asia College, founded in 1949; Chung Chi College (1951) and United College (1956). A fourth college, Shaw College, was founded in 1986. The university has 7881 full-time and 2368 part-time students in seven faculties: arts, business administration, education, engineering, medicine, science and social science.

   Hong Kong Polytechnic, established in 1972, offers postgraduate, first degree and sub-degree courses in six divisions: applied science and textiles; business and information systems; communication; construction and land use; engineering, and health and social

EDUCATION

      studies. Concurrent work and study are encouraged by providing part-time and sandwich courses, and the polytechnic has close links with industry, commerce and the community in general. Enrolment in October was 10 935 on full-time and sandwich courses and 16 005 on part-time courses.

      Hong Kong Baptist College was founded in 1956 by the Baptist Convention of Hong Kong. Since 1983 it has been incorporated under its own Ordinance and fully funded by the government. In 1986 it became a degree-granting institution. It has 3 490 full-time and 1294 part-time students in five faculties and schools: arts, business, communication, science and social sciences.

      The City Polytechnic of Hong Kong, founded in 1984, has 7040 full-time, 5 540 part-time and 336 sandwich course students. The three faculties of business, humanities and social sciences, and science and technology offer first degree courses, and master's degrees by research or teaching. Diploma and higher diploma courses are offered by the College of Higher Vocational Studies, with divisions of commerce, humanities and social sciences, and technology.

       The Hong Kong University of Science and Technology was incorporated in 1988 and admitted its first 831 students in October 1991. Three schools - science, engineering, and business and management offer first and advanced degrees. The fourth school, hu- manities and social science, offers advanced degrees and provides general education to all undergraduates.

      The Open Learning Institute of Hong Kong (OLI) was established in 1989 as the seventh degree-granting institution. It is funded initially by a government subvention, with the aim of becoming self-financing by 1993-4. The OLI provides distance learning courses for adults who missed the chance of continuing beyond the secondary level, and for working people who want to obtain a further qualification or study for personal development. It operates an open access policy. By April 1991, about 16 500 students were actively pursuing their studies. Degree programmes are offered in three schools: science and technology, business and administration, and arts and social sciences.

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      Lingnan College was founded in 1967 to continue the tradition of Lingnan University, founded in Canton in 1888. In July 1991, the college began to receive funding through the UPGC. It has three faculties - arts, business and social sciences - and a general education division. In October, enrolment was 1 354 full-time students, of whom 161 were pursuing honours degree studies, and 1 193 were honours diploma students. Enrolment is planned to increase to 1 800 by 1994, when the college is expected to be relocated to a new campus.

       Each institution publishes detailed information about admission criteria, courses, staff and other matters in its annual report, calendar and prospectus.

(Appendix 24 gives additional data about these institutions.)

Post-secondary Colleges

Shue Yan College, registered in 1976 under the Post Secondary Colleges Ordinance, operates a four-year diploma programme. Its faculties of arts, social science and business include 13 departments, offering day and evening courses to 3 373 students. The college receives no public funding, but its students may apply for government grants and loans.

Adult Education

Many formal and informal opportunities are available for adults to study in their spare time, either for personal development or to update knowledge and skills relevant to their

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  work. There are numerous private schools offering language, business and computer courses. The British Council, Alliance Francaise, Goethe Institut and Japanese Consulate all offer language courses.

All tertiary institutions except the University of Science and Technology and Lingnan College operate extra-mural departments or divisions of continuing education. These offer an enormous variety of courses, some at degree level, in such areas as languages and translation, business management, and professional development for teachers, social workers and others.

   The Education Department provides formal courses of remedial and second chance education for adults at primary and secondary level, courses of personal development at post-secondary level, and courses for serving teachers to upgrade their knowledge and skills in cultural subjects. Less formal activities including hobby and fitness classes are provided in adult education and recreation centres run by the department. During the year government subventions supported 328 adult education projects organised by 66 voluntary agencies.

The British Council

  The aims of the British Council in Hong Kong are to promote an understanding of Britain, its language, its education and its culture and to encourage the interchange of persons and the development of educational and cultural links between Hong Kong and the UK.

   English language teaching is the major programme of the council in Hong Kong and over 32 600 Hong Kong residents attended courses at the English Language Centre in 1990-91. In addition, a summer school was held for 6 200 secondary school students.

   Specially-tailored English courses were run at a number of Hong Kong's major business organisations, and, in conjunction with Radio Television Hong Kong, 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 three Royal Society of Arts Certificate courses for Teaching English as a Foreign Language.

The council also works with the Hong Kong University, the Chinese University and the Institute of Language in Education, 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.

With additional resources in 1990-91, the council established a new Educational Exchanges Unit which arranged over 40 new higher education links with the six major higher education institutions in Hong Kong, in the fields of manufacturing engineering, industrial design, computing, medicine, public and social administration, and pure and applied sciences. These links resulted in visits in both directions for joint research and curriculum development, including the setting up of new undergraduate, masters and postgraduate professional courses in subjects such as nursing, pharmacy and law.

   The council's library and information services are open to all adult residents of Hong Kong and cover all aspects of British life and culture with an emphasis on English literature and teaching the English language. The collections include books, magazines, newspapers, video tapes, audio tapes and music on CD.

   The Education Counselling Service provides free and impartial advice to students on education opportunities available in Britain. In 1990-91, 30 000 students used the service for information about studying in British universities, polytechnics and colleges.

11

HEALTH

WITH the publication of the report of the Working Party on Primary Health Care and the transfer of management and control of public hospitals to the Hospital Authority, Hong Kong is poised for major reforms to further improve the quality of its medical and health services.

      The Department of Health is the health authority and adviser to the government on all matters related to health. It operates 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, territory-wide health services like tuberculosis and chest health, social hygiene, child assessment, dental health, occupational health, disease surveillance, public health and special preventive programmes, environmental health, port health, radiation health, drug addiction treatment, pharma- ceutical services and hygiene 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 community.

      Since December 1, 1991, the Hospital Authority has taken over the management and control of all public hospitals. It is an independent statutory body established for integrating government and government-assisted hospitals with a view to improving the quality and efficiency of public hospital services by optimising the use of resources, facilitating hospital management reforms and enhancing community participation. It operates a range of regional, district and convalescent hospitals, specialist out-patient clinics and day hospitals, providing a comprehensive range of medical treatment and rehabilitation services to patients. Starting early in 1992, the Hospital Authority will introduce, in phases, management reforms in public hospitals.

      Government remains responsible for the policy and funding of public hospital services. It is committed to the principle that no person should be prevented, through lack of means, from obtaining adequate medical treatment.

      The Department of Health, the Hospital Authority (and, prior to the transfer of its operational responsibilities to the Hospital Authority, the Hospital Services Department) continued to make progress on an extensive development programme which included the planning of additional public hospitals as well as additional general out-patient clinics and specialist out-patient services. The Tuen Mun Hospital opened in March 1990, with services being introduced in five phases to provide 1 600 beds for the West New Terri- tories region.

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   For the 1991-2 financial year, the allocation of funds to government medical and health services amounts to $5,905 million. In addition, subventions totalling $2,698 million were provided for non-government medical institutions and organisations. Capital expenditure on new hospitals and other buildings, including equipment and furniture, was about $1,974 million, including $485 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, the comprehensive range of 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 remained below seven per 1 000 live births and the average life expectancy is 80 for females and 75 for males.

The leading causes of death today are cancer, heart disease and cerebrovascular diseases. The low infant mortality rate is attributed mainly to the provision of comprehensive family health care and neo-natal care facilities as well as improvements in environmental and socio-economic conditions and the health infrastructure.

(Statistics are given in Appendices 28 and 29.)

The incidence of AIDS (Acquired Immune Deficiency Syndrome) has slightly increased. During 1991, 15 cases were reported, bringing the total number on record from 44 to 59, of which 39 have died.

The Advisory Council on AIDS, founded in 1990, remains the main organisation to organise and co-ordinate the territory's various AIDS-related activities. Under the council, the Committee on Education and Publicity on AIDS (CEPAIDS) continues to work towards promoting greater involvement of the community in AIDS education, sustaining awareness of the disease among members of the public, co-ordinating the training of intermediaries to provide education and counselling, promoting respect for the con- fidentiality of and preventing discrimination against HIV-infected individuals, evaluating the effectiveness of the programmes and co-ordinating activities for special target groups such as students, youth, workers, drug abusers and sexually-active persons. To achieve these objectives, seven working groups were formed under CEPAIDS, each responsible for a specific area of the work.

   At the same time, the Scientific Working Group, also under the council, is concerned with the technical aspects of the preventive programmes. The Working Group con- centrated in 1991 on the production of comprehensive guidelines for the prevention of transmission of HIV in health care settings, initiation of Unlinked Anonymous HIV Surveillance Programmes on different groups of the population, assessment of the standard of HIV antibody tests being performed by the private laboratories, a survey on the pattern of venereal diseases encountered by venereologists in the private sector and other studies and scientific research projects.

   In recognition of the fact that successful prevention and control programmes must rely on close collaboration between government and non-government sectors, the Hong Kong AIDS Foundation was incorporated in May 1991 as a non-governmental organisation to supplement and complement government's efforts. The scope of activities to be undertaken by the foundation includes research, health promotion and education, publicity and counselling services. In particular, it would mobilise public support and open up avenues for community participation.

HEALTH

       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 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 started in 1985, provides 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 since 1985 by the Hong Kong Red Cross Blood Transfusion Service. This ensures the safety of blood used in transfusion and prevents the possible transmission of AIDS through this route.

Concerning cholera, there were five cases including two imported ones among the general population. Prompt control measures were instituted and there was no spread to the local community.

In the early part of the year, there was an upsurge of viral hepatitis cases, particularly hepatitis A, consistent with the seasonal pattern. Detailed epidemiological investigations did not reveal any common source of infection.

Tuberculosis remains a disease of public health importance in Hong Kong. There were 6283 notifications during the year, representing a notification rate of 109 per 100 000. There is continued diligence and a dynamic programme against this disease. 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. A total of 410 deaths resulting from tuberculosis was recorded in 1991, representing a death rate of 7.12 per 100 000. Corresponding figures recorded in 1990 were 382 and 6.70 respectively.

Immunisation programmes against common childhood infections are carried out at maternal and child health centres as well as in schools. 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.

In order to combat hepatitis B infection, 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 for the first dose at birth is over 99 per cent. Health education is also an important preventive measure.

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.

Since 1990, the Department of Health has introduced the mumps, measles and rubella (MMR) vaccine for infants when one year old. The coverage rate is over 80 per cent. Apart from providing additional protection against mumps, the introduction of MMR vaccine will enhance the rubella vaccination programme and help to prevent the disabling condition of congenital rubella syndrome. Children in Hong Kong are therefore being

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protected from nine common childhood infectious diseases namely, tuberculosis, diphtheria, pertussis, poliomyelitis, tetanus, hepatitis B, measles, mumps and rubella.

   All babies born in Hong Kong are being covered in the Combined Neonatal Screening Programme for congenital hypothyroidism and glucose-6-phosphate-dehydrogenase de- ficiency. 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 during which no case of indigenously acquired rabies in human or animal had occurred. Notwithstanding the situation, strict control measures remained in force throughout the year: these included import control and quarantine of imported animals; compulsory licensing and inoculation of dogs against the disease; apprehension and elimination of stray dogs; thorough observation of biter animals for rabies infection, and close surveillance of the closed areas at the border.

Hospitals and Development Programmes

Hospitals in Hong Kong provide a total of 25 277 beds, representing 4.4 beds per thousand population. They provide services at low-cost which are easily accessible to the people of Hong Kong. In 1991, more than 646 000 patients were treated at the 35 public hospitals. There were 9 576 807 attendances in the specialist clinics.

Cases of acute illness and accident casualties are taken to the accident and emergency departments, which are attached to major hospitals. Such emergency treatment is provided free of charge. In 1991, there were 1 114 000 attendances in the public sector, averaging 3 052 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. In addition, both departments provided medical care to Vietnamese illegal immigrants. In 1991, there were 13 500 attendances at accident and emergency departments by the Vietnamese, and 11 100 admissions with a total of 71 700 bed days occupied.

   Work on the hospital development programme has been progressing satisfactorily with the opening of Sha Tin Cheshire Home and Sha Tin Infirmary and Convalescent Hospital and the completion of Argyle Street Ophthalmic Centre. Construction work is continuing on the 1 600-bed Pamela Youde Hospital in Chai Wan, which is scheduled for completion in 1992.

   At Queen Mary Hospital, construction of the Phase II extension block has been completed and the new blocks have begun admitting patients. The first government lithotripter unit commenced operation in mid-1991. There will be a total net addition of 480 beds upon completion of the whole extension project by 1994.

   Services are being introduced in phases in Tuen Mun Hospital. Of its full complement of 1 600 beds, 770 were opened as at end-1991 with the provision of accident and emergency services extended to 12 hours per day.

HEALTH

       Other important projects which are well underway include improvement and extension of the Queen Elizabeth Hospital in Yau Ma Tei and the Yan Chai Hospital in Tsuen Wan.

       Projects in the pipeline include further extensions to the United Christian Hospital, the relocation of Nethersole Hospital to Tai Po, and the construction of an additional 1 760 infirmary beds in projects such as Tai Po Infirmary and Convalescent Hospitals.

Clinics

General out-patient services form a vital part of the health care system. The government now operates 66 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. Total attendance at government out-patient clinics was 21 million. The medical development programme includes 13 additional clinic and polyclinic projects throughout the territory.

Mobile dispensaries and floating clinics provide the necessary medical services to the more remote areas of the New Territories and outlying islands. 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, 152 were registered as exempted clinics. Registered medical practitioners of the Estate Doctors' Association set up clinics in housing estates to provide a low-cost service for residents. Private medical practitioners continued to attend to 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 services are offered to women. Immunisation programmes are carried out against tuberculosis, diphtheria, whooping cough, tetanus, poliomyelitis, measles, mumps, rubella and viral hepatitis B. During the year, about 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 the detection of early developmental abnormalities. If necessary, they are referred to specialist clinics or to child assessment centres for further examination.

       At present, there are five child assessment centres (four government centres and one government-assisted centre). These centres adopt a multi-disciplinary approach which ensures early rehabilitation for the child. Three 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 at centres, health education for expectant mothers is extended to government hospitals, with emphasis on the promotion of breast- feeding. A telephone service is available to answer enquiries from the public.

       The government-subvented Family Planning Association of Hong Kong runs 26 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.

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School Health

The School Medical Service Scheme is operated by an independent School Medical Service 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 $15 a year. As at December 31, 1991, more than 351 300 children from 1 117 schools have participated - representing about 46 per cent of the eligible school population - and about 460 general medical practitioners have enlisted. Starting from November 1, 1991, each child has to pay $13 for each consultation made at the chosen medical practitioner's office. The government contributes $105 a year for each pupil enrolled and it 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 quarantinable diseases into Hong Kong via air, land, rail or sea and to enforce the measures stipulated under the Quarantine and Prevention of Disease Ordinance and the International Health Regulations.

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. During the year, a total of 19 515 ships were health cleared, 629 Deratting Exemption Certificates issued, and 20 292 Vietnamese illegal immigrant arrivals were health screened.

   The food catering service for international airlines is kept under close surveillance by health staff to ensure that the food and water supplied to flight kitchens is clean and safe. The hygiene and sanitation of the airport is also under the strict scrutiny of health staff.

   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

The Working Party on Primary Health Care, tasked to review and make recommendations on the delivery of primary health care services in Hong Kong, submitted its report to the Governor in December 1990. Altogether there were 102 recommendations. Some proposed improvements to existing services, whereas others required a major revamping of existing services or initiated a new approach. The report was open for public consultation between May and July 1991 and attracted much response and feedback from the community.

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.

HEALTH

Since 1987, the programme has been extended to all primary school children. In 1991, 404 570 participated, representing 75 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 emergency treatment for the public at a number of district dental clinics. Dental treatment is also provided for inmates of penal institutions and patients in public hospitals.

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, in conjunction with local academic and non-government bodies, provides a comprehensive psychiatric service for the territory as a whole. Great emphasis is placed on continuity of care and integrating rehabilitation with medical treatment.

      At the end of 1991, 3 484 beds were provided in psychiatric hospitals, and 680 beds in psychiatric units of general hospitals. In line with the universal trend for the latter type of provision, 1 740 additional beds are being planned for the mentally ill in various hospitals.

      Psychiatric patients are treated, as far as possible, in the community. The Community Work and Aftercare Units of the psychiatric hospitals provide multi-disciplinary assistance to patients discharged from these hospitals. Domiciliary occupational therapy and com- munity psychiatric nursing services in particular aim to provide treatment programmes and continuity of care for discharged mental patients in their home setting, thereby assisting them in social readjustment and educating patients as well as their families in mental health. There are now seven Community Psychiatric Nursing Centres and four more are planned. The various other complementary rehabilitative services include day centres, halfway houses, long-stay care homes, vocational training, selective placement and social clubs offered by various government departments and non-government organisations.

       Severely mentally handicapped persons requiring intensive nursing care and rehabili- tation services are cared for in Tuen Mun Hospital with 200 beds and Caritas Medical Centre with 300 beds. In order to meet the great demand in this area, a further 400 beds are planned in this category.

Special Services

The Pathology Service provides both clinical and public health laboratory services for government clinics and public hospitals, and a consultancy 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 coroners' 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.

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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 three major divisions, the Diagnostic Radiology Division, the Radiotherapy and Oncology Division and the Medical Physics Division. The Diagnostic Radiology Division provides a comprehensive diagnostic organ-imaging service. The Radiotherapy and Oncology Division provides comprehensive radiotherapy programmes and a chemotherapy service for cancer patients. It also operates a cancer registry covering the whole territory. The Medical Physics Division provides radiation physics, clinical physics and radiation protection services. It also looks after the procurement and contract maintenance of radiological and related equipment.

   Regular visits are 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 assists in the Background Radiation Monitoring Pro- gramme organised by the Royal Observatory to establish an accurate baseline of the back- ground radiation levels in Hong Kong.

The Pharmaceutical Service of the Department of Health is made up of two divisions, with a total establishment of 316, including 29 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 in 1991 there were 66 prosecutions. In the Hospital Services Department, there were 51 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 to the sick, the elderly infirm and the disabled in their own homes.

Jointly operated by eight agencies, including the government, the service functioned from a network of seven hospital stations and 42 satellite centres. During the year, 14 970 patients were served and more than 249 250 home visits were made.

Health Education

The Central Health Education Unit of the Department of Health is responsible for the planning, organisation, co-ordination and promotion of health education activities. In 1991, the unit was actively involved in a number of campaigns including those on environmental health, prevention of communicable diseases such as viral hepatitis and malaria, organ donation, diabetes, child health, heart health, cancer, elderly health, anti-smoking, food hygiene and AIDS.

   The theme of the major health education campaign for 1991 was Self-care. A series of programmes including workshops, a 24-hour pre-recorded telephone information service, design competitions for students, health columns and media interviews were arranged. An exhibition was held at the City Hall in October.

   Three training courses on health education were held for 38 primary and 76 secondary school teachers in June and July. These were joint ventures with Education Department.

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The 12th Young Health Leaders' Training Course was held in July. It consisted of lectures, games, group discussions and audio-visual shows and aimed to train secondary school students in health education and leadership skills. The Oral Health Education Unit and the AIDS Counselling and Health Education Service of the Department of Health assisted in the organisation of this project in which 256 students from 54 schools participated.

Other activities included health talks and workshops for schools, voluntary agencies and clients of out-patient clinics. Health education materials like pamphlets, posters, booklets, cassettes, slides and video tapes, and exhibits were produced and were available for free-loan. Advice and counselling was provided for organisations interested in promoting health education.

      Close liaison was maintained with medical professionals, other government departments, non-government organisations and the media for the smooth implementation of health education campaigns. The Central Health Education Unit participated in television and radio programmes and press interviews.

The Central Health Education Unit and AIDS Counselling and Health Education Service of the department worked in close collaboration with government and non- government organisations in the promotion of education on AIDS among various groups of the community.

      Increased community concern for health was reflected by the popularity of the various health education programmes offered.

Smoking and Health

To protect members of the public from the health hazards of smoking, government's anti-smoking policy was reviewed during the year. This has resulted in a package of proposals to further limit tobacco advertising, prohibit smoking in public places, restrict the tar content in cigarettes and convey stronger health warnings to the public. Proposed amendments to the Smoking (Public Health) Ordinance to implement these measures have been submitted to the Legislative Council for consideration.

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 conducted publicity campaigns with particular emphasis on discouraging young people from smoking. A large-scale Youth Project with the aim of promoting a happy and healthy lifestyle among young people without addiction to smoking was launched during the year.

Traditional Chinese Medicine

     In August 1989, the Secretary for Health and Welfare appointed a working party to look into the use and practice of traditional Chinese medicine in Hong Kong. The working party's terms of reference have been formulated having regard to the government's policy of respecting the practice of traditional Chinese medicine. During the year, the working party commissioned surveys and consulted widely on the present practice of the principal forms of traditional Chinese medicine in Hong Kong and the forms of training given to practitioners. In May 1990, a Professional Consultative Committee comprising members of the working party and members engaged in the trade and practice of traditional Chinese medicine was formed to strengthen communication and to facilitate exchange of views. The

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working party will identify whether there is any abuse of traditional Chinese medicine which poses a risk to health and will advise on measures that should be taken to promote the good practice of traditional Chinese medicine.

Medical Charges

The government is committed to a policy of ensuring that no-one is deprived of adequate medical treatment through lack of funds. Medical charges remain low, reflecting a substantial subsidy from public funds. Patients in the general wards of government hospitals are charged $34 a day and the fee covers everything from meals, medicine and investigation tests, to surgery or any other treatment required. The charge may be reduced or waived in cases of hardship certified by a medical social worker. A limited number of private beds are provided at major public hospitals with higher maintenance and treatment charges.

The charge for consultation at general out-patient clinics is $18, while that for specialist clinics is $28. Charges for physiotherapy, occupational therapy and child assessment are $28. Attendance at geriatric or psychiatric day centres and home visits by community nurses cost $27. These fees may also be waived if warranted.

The charge for injections and dressings in general out-patient clinics is $7, while charges for visits to family planning clinics and methadone clinics remain at $1. These levels of charges reflect and require very substantial subsidies from public funds.

Free medical services continued to be offered at maternal and child health centres, tuberculosis and chest clinics, social hygiene clinics, and accident and emergency departments.

Training of 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 conferred degrees which are recognised by the General Medical Council of Great Britain. The medical student intake at the University of Hong Kong increased to 157 in 1991. During the year, the Chinese University of Hong Kong took in its 11th group of 146 students.

Under the licentiate scheme of the Hong Kong Medical Council, 37 externally-trained doctors passed the local licentiate examination in 1991. 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 to 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 contents 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 in March 1990 and has been making preparations to establish the academy in 1992.

Training in dentistry is available at the Universtiy of Hong Kong which produced the seventh batch of 60 graduates in January 1991. The training of dental therapists is provided at the Tang Shiu Kin Dental Therapists Training School.

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       The basic training for general nurses is conducted at public and private hospitals. There are now nine schools for training students to be registered nurses and 11 for training pupils to be enrolled nurses with an average annual intake capacity of about 1300 and 630 respectively. An additional student nurse training school and one more pupil nurse training school are planned to be provided over the next decade. The annual intake capacity is to be increased from 1 300 to 1 430 for general student nurses and from 630 to 760 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 160 and for pupil nurses is 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.

       The need for continuing training and education for nurses is recognised. The post-basic school for the Nursing Training Unit provides post-registration courses in midwifery, health nursing and community nursing on a regular basis while clinical specialty nursing courses are conducted to meet the proliferation of specialty services in hospitals. Both part-time and full-time degree courses in Nursing are now being offered by the Chinese University of Hong Kong and the Hong Kong Polytechnic.

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. Training for speech therapists is provided by the University of Hong Kong. The Chai Wan Technical Institute of the Technical Education and Industrial Training Department provides training for dispensers which is complemented by in-service departmental training. There is also in-service training for prosthetists, mould laboratory technicians and therapeutic radiographers in the respective units of the government institutions. Where local training is not yet available, government training scholarship programmes are offered for supply of audiologists, audiological technicians, orthoptists and chiropodists. There are opportunities for overseas training in specialised areas for medical, nursing, para-medical and para-dental staff.

Government Laboratory

The Government Laboratory provides a wide range of primarily chemical testing services to other government departments and public institutions.

The laboratory has a statutory responsibility for the testing of food products for compliance with Regulations under the Public Health and Municipal Services Ordinance. Foods are regularly tested for additives, toxic residues and other contaminants.

Pharmaceutical products dispensed for public use in government hospitals and clinics, and those intended for sale locally, are tested to ensure that they are of accept- able standard. Herbal medicines are checked for the presence of synthetic drugs and toxic metals.

Scientific work undertaken for consumer protection included the testing of cigarettes for tar and nicotine yields, the testing for toxic and carcinogenic substances in toiletries, product testing in relation to suspected forgeries, the testing of gold and platinum articles for fineness, and the verification of products and equipment for compliance with the Weights and Measures Ordinance.

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   Testing of air, water and waste samples for pollutants, undertaken mainly on behalf of the Environmental Protection Department, continued to be carried out during the year. In addition, the laboratory has recently taken up the microbiological testing of sewage discharges.

Measurements of industrial emissions and the monitoring of workplace atmospheres for hazardous chemicals were carried out. The analysis of asbestos continued to be an important area of interest.

   Analytical and advisory services were provided in relation to the storage, carriage, and the classification of dangerous goods. In addition, a 24-hour service was provided to assist the on-site emergency services at scenes of incidents involving hazardous chemicals, or toxic gases in confined spaces.

   Other aspects of work included the examination of dutiable commodities for tax assessment purposes, the provision of advisory services in relation to the enforcement of the Dutiable Commodities Ordinance, the testing of government purchases for conformity with approved specifications, and the provision of a urinary testing service for the methadone treatment programme for treatment of drug abusers.

   To carry out this wide range of work, the Government Laboratory is equipped with much of the latest and advanced analytical equipment. Much of the routine analytical work is carried out using automated equipment.

Drug Abuse and Trafficking

The government's policy is to stop the illicit trafficking of 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 from the community.

   The exact number of addicts is not known. However, the government's computerised Central Registry of Drug Abuse and other linked indicators suggest that at the end of 1991 there were about 41 000 'active' addicts, which was 0.8 per cent of the population aged 11 and above.

Data collected by the registry, based on 469 000 reports on 67 000 persons, indicate that 90 per cent of drug abusers are male and 10 per cent female. Sixty-nine per cent of the 'active' addicts were over 30 years old at the end of 1991, 25 per cent were in the 21 to 30 bracket and six per cent were aged under 21. The most common drug of abuse is heroin, which was used by 94 per cent of the persons reported to the registry in 1991. In the case of young persons, the common drugs of abuse included heroin, cannabis and certain cough medicines.

   The results of the survey conducted at the end of 1990 on the non-medical use of psychotropic substances among students of secondary schools and technical institutes revealed that 2.1 per cent of the students in Chinese-speaking schools and 5.3 per cent of the students in international schools had abused psychotropic substances. The abuse rates for students enrolled in the full-time and part-time day courses of technical institutes were 2.5 per cent and 6.0 per cent respectively. The survey indicated that a greater proportion of students had abused psychotropic substances in 1990 than 1987. However, it also revealed that a vast majority of students surveyed disapproved of the non-medical use of drugs, and that most of the students had already stopped abusing the substances at the time of the survey.

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Overall Strategy and Co-ordination

The government has a comprehensive anti-drugs programme which has achieved considerable success. The programme adopts a four-pronged approach, namely law enforcement, treatment and rehabilitation, preventive education and publicity, and international co-operation. Effective law enforcement induces addicts to seek treatment voluntarily as a result of short supply of drugs. Treatment and rehabilitation are undertaken by government and a number of voluntary agencies which offer a wide range of facilities to meet the different needs of drug abusers from varying backgrounds. The effectiveness of these treatment programmes reduces the demand for illicit drugs. At the same time, the government places great emphasis on preventive education and publicity to heighten public awareness of the drug problem and to promote the advantages of a drug-free lifestyle. Co-operation at the international level, through exchange of information and experience and joint action against illicit trafficking, enhances the effectiveness of efforts in these three areas.

      These efforts are co-ordinated by the Action Committee Against Narcotics (ACAN), a non-statutory body which includes both non-official and government members. The committee is the government's advisory body on all anti-drugs policies and actions undertaken by government and non-government agencies. It is serviced by the Narcotics Division, which is headed by the Commissioner for Narcotics.

Legislation and Law Enforcement

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The Police Force and the Customs and Excise Department seized some 23 kilograms of No. 3 heroin, 87 kilograms of No. 4 heroin, 162 kilograms of cannabis, 72 kilograms of methylamphetamine (or 'Ice') and 9 kilograms of cocaine during the year. These included the three largest seizures of drugs ever made 5 kilograms of cocaine and 40 kilograms of methylamphetamine in August and 30 kilograms of cannabis resin in September. Following joint operations with overseas law enforcement agencies, a number of international drug trafficking syndicates were neutralised with substantial quantities of dangerous drugs seized and ringleaders arrested locally and abroad. In 1991, police and customs action resulted in about 7 800 arrests for drug offences.

      In view of the increasing number of young persons abusing psychotropic substances, all benzodiazepines which are liable to abuse were included in the First Schedule to the Dangerous Drugs Ordinance to subject them to stricter controls.

      During the year, bilateral agreements had been concluded with 10 foreign jurisdictions with a view to enhancing international co-operation, particularly as regards the tracing and confiscation of the proceeds of drug trafficking.

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 reduce or eliminate an addict's reliance on heroin or other opiate drugs, while the detoxification programme aims to eliminate dependence on any drug. The programme has proved to be very effective in serving both addicts and the community. There are 25 methadone clinics.

      The largest voluntary in-patient treatment programme is run by the Society for the Aid and Rehabilitation of Drug Abusers (SARDA) which operates an in-patient treatment

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centre for up to 380 men on the island of Shek Kwu Chau, and one for up to 40 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, counselling and detoxification services, urine analysis and post-discharge medical care.

A compulsory in-patient treatment programme is operated by the Correctional Services Department under the Drug Addiction Treatment Centres Ordinance. The department runs two addiction treatment centres, one for up to 704 males on the island of Hei Ling Chau and the other for 100 females at Tai Lam Chung. These treatment programmes range from 2 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 1991, the two voluntary treatment programmes and the Correctional Services Department's compulsory treatment programme admitted 13 300 addicts. On average, 14 500 addicts and ex-addicts were receiving some form of treatment, rehabilitation or after-care every day.

The counselling centre, PS33, set up in Tsim Sha Tsui in April 1988 to provide counselling and telephone advice for psychotropic substance abusers, handled 107 cases and 1 200 telephone and drop-in enquiries during the year. PS33 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 promoting anti-drug preventive education and publicity. Main themes of the publicity campaign in 1991 were similar to those for 1990 to encourage people to adopt a healthy lifestyle and say 'no' to all drugs.

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Six district campaigns were held involving the community through carnivals, variety shows, concerts, competitions and exhibitions.

The Narcotics Division's school talks team gave 203 drug education talks to 78 000 students in 114 secondary schools and technical institutes throughout the territory. Talks were also organised for juvenile offenders at the boys' and girls' homes operated by the Social Welfare Department.

Drug education was provided for Vietnamese illegal immigrants, including audio/visual items and printed materials in Vietnamese.

A new drug education teaching kit, comprising two videos, follow-up exercises and lesson plans, was produced for distribution to all secondary schools, voluntary agencies and other interested parties. A guidebook outlining the medical and legal consequences of drug abuse was compiled as a reference for parents, teachers and social workers.

To mark the beginning of the United Nations Decade Against Drug Abuse (1991-2000), a large-scale exhibition was held in Sha Tin New Town Plaza in June. A total of 200 000 copies of a special souvenir postal cover were distributed to the public and the slogan Say NO to Drugs was applied as a post mark on all mails in June and July.

For the 11th 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-drugs projects. The 78-member ACAN Youth Volunteer Group took part in district campaigns and organised a number of community involvement

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      projects. The ACAN Youth Advisory Group, comprising a cross-section of young people, continued to give advice on educational and publicity materials and activities.

       The ACAN Drug Abuse Telephone Enquiry Service received 1710 enquiries, the majority seeking information on treatment facilities.

International Action

      Hong Kong continued to play an active international role, maintaining close links with the United Nations, inter-governmental agencies such as Interpol and the Customs Co- operation Council, as well as with individual governments. Hong Kong took part in 25 regional and international meetings and seminars concerned with anti-drug policies, law enforcement, treatment and rehabilitation, and preventive education.

The techniques and methods employed in Hong Kong have made it an important venue for training anti-drugs personnel from overseas. During the year, 231 people from 16 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-drugs work.

Environmental Hygiene

The Urban Services Department and the Regional Services Department, working under the Urban Council and Regional Council, are responsible for street cleaning, collection and removal of nightsoil, cleansing of gullies, management of public toilets and bathhouses, pest control and services for the dead.

A regular workforce of about 8 535 is employed in cleansing duties, employing a fleet of 564 specialised vehicles which include refuse collection vehicles, street washers, mechanical sweepers, nightsoil collectors and gully emptiers.

Streets are swept, either manually or mechanically, from four to eight times a day for busy thoroughfares to once every second day for village lanes. Streets and lanes are also hosed down where local conditions warrant. Hawker areas and refuse collection points are washed regularly.

       About 4 755 tonnes of refuse and junk are collected daily, including 90 tonnes removed by a contractual barging service from outlying islands for disposal at sites on the mainland. The Regional Council operates a daily junk collection service in public housing estates in rapidly-developing areas of the New Territories. A nightsoil collection service is also provided daily in those areas without a water-borne sewage and disposal system. These services are free.

       There are 1033 refuse collection points and 1 557 bin sites in the territory. Under an improvement plan, existing rural refuse collection points are being upgraded and more attractive rectangular-shaped rubbish bins are replacing the cylindrical metal ones at refuse collection points, in government buildings and in housing developments.

       The two departments are continuing to contract-out some of their cleansing services to private contractors to reduce the involvement of direct departmental labour and to enhance cost-effectiveness. In the urban areas, contracts cover 306 public toilets and 41 bathhouses, and two squatter villages. In the New Territories, cleansing services have been contracted-out for some years in Luen Wo Hui and Shek Wu Hui in North District.

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Contracts have also been awarded for village cleansing in Ap Chau in Sha Tau Kok and Tai Long Wan Tsuen on Lantau. Cleansing services for parts of Tai Po, Tsuen Wan and Yuen Long were contracted-out in July 1991. Removal of animal carcases has similarly been assigned to private contractors in four New Territories districts. The performance of private contractors has been found to be highly satisfactory and contracting-out will be extended to other suitable localities in the future.

  During the year, the Keep Hong Kong Clean campaign, co-ordinated by a joint Urban Council-Regional Council Steering Committee, launched a seven-phase clean-up pro- gramme. This covered the environment, water, roads, schools, homes, squatter areas and villages, as well as the countryside. The campaign focused on community involvement, education and publicity through television and posters. Special emphasis was placed on penalising litter offenders, since enforcement of the law remained a major weapon against litterbugs. During the year, 46 439 people were fined a total of $13.0 million for littering offences.

  To encourage greater public involvement and achieve wider media publicity, the two councils engaged a public relations firm and an advertising agency to organise community activities and generate new ideas for a campaign strategy. The Dragon of Cleanliness, a positive role model introduced in 1990, has been developed into a family of five members with the addition of a Beach Dragon, a Country Dragon and boy and girl Kid Dragon characters. To give fresh impetus to the campaign, a new slogan has been coined - Take the Lead to Keep Hong Kong Clean.

  To evaluate the effectiveness of the campaign since its introduction 20 years ago, the Steering Committee appointed a research company to survey and analyse public awareness. The survey indicates that the campaign has been successful and the findings will be used to formulate future strategies.

Controls

To maintain and improve standards of hygiene, staff of the two departments regularly inspect licensed and permitted premises, common parts of buildings, squatter areas, construction sites and undeveloped land throughout the territory, to enforce the Public Health and Municipal Services Ordinance and its subsidiary legislation. They also respond to complaints about poor sanitation and vermin infestation, and work closely with the Department of Health in the investigation and control of food-poisoning outbreaks and infectious diseases.

  To better utilise manpower and resources, the Urban Services Department introduced a Selective Inspection System for the inspection of licensed food premises. Under this system, food business establishments are graded according to past performance. The frequency of inspection for each establishment is then determined in accordance with its grading.

  To protect public health, the Urban Council has adopted a review system to identify food business establishments which pose fire, health or environmental risks, and to require them to comply with current standards before their licences or permits can be renewed. To deter offenders, the council has also introduced a Demerit Points System, under which the accumulation of 15 points for convictions within a 12-month period forms the basis for suspension or cancellation of a food business licence or permit.

In the Regional Council area, the Regional Services Department continues to exercise strict control over unlicensed food premises which fail to apply for a licence or which have

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not complied with the specified requirements. Since 1987, the prosecution of offenders has increased in frequency from monthly to weekly. This has had the effect of dramatically reducing the number of unlicensed food businesses to 75 in December 1991, compared with some 600 five years ago.

For the prevention of vector-borne diseases, pest control staff of the Urban Services Department and Regional Services Department continued with integrated programmes to control rodents, mosquitoes, flies and other public health pests. Measures taken included environmental improvement, eradication of breeding places, health education and law enforcement. Special surveillance was maintained to prevent outbreaks of malaria in Vietnamese migrants detention centres. Technical support is provided by the Pest Control Advisory Section of the Department of Health.

Environmental Health Education

      An important role of the Health Education Unit of the Department of Health is to promote environmental health and food hygiene through education on a territory-wide basis. Under the auspices of the two Municipal Councils, the unit launched a number of educational campaigns in 1991, of which the most notable was the 1991 Food Hygiene Campaign. This campaign, which aimed at promoting the adoption of proper hygienic practices in order to minimise the chance of food poisoning and other intestinal diseases, was highlighted by a series of food hygiene seminars on the subject Food Safety is in Your Hands, organised for members of the food trade and school-teachers.

To arouse schoolchildren's interest in public health, the unit also organised activities for schools jointly with the Education Department. These included the 1991 Inter-Secondary School Health Education Project Exhibition Competition and the 1991 Inter-Primary School Health Education Painting Competition.

In addition, publicity campaigns directed at the prevention of rodent infestation and nuisances caused by mosquitoes and dripping air-conditioners were staged during the year. Apart from talks, broadcasting and hotline services provided by the unit, health messages were disseminated through the mass media. Public health materials including posters and leaflets were also distributed to the general public at the unit's resource centre.

Food

The health inspectorate, backed by hygiene consultancy, controls food for sale, both imported and locally produced. Supported by laboratory resources and assisted by a scientific advisory arm, the inspectorate ensures that the consumer is able to buy good wholesome food, unadulterated, uncontaminated, properly described and of nutritious quality.

Food samples are taken regularly for chemical analyses, bacteriological examinations and toxicity tests to ascertain their fitness for human consumption. For the purpose of sampling for laboratory testing, food items are prioritised according to the nature of the food and the risks that they may pose to the consumer. Complementary to regular laboratory analyses, field tests for pesticide residues are performed on imported vegetables at the points of entry into Hong Kong, including Lo Wu, Man Kam To and the airport. Owing to the fast development of transportation across the border, planning is underway to introduce another border checkpoint at Lok Ma Chau.

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   The growing number of food establishments and the quantities and variety 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.

The review of food legislation has been an on-going exercise with a view to ensuring that laws made are consistent with international standards, guidelines and recommendations based on scientific evidence. This is important in order to provide a high standard of public health protection and, at the same time, facilitate international trade in foods.

   On the international scene, Hong Kong maintains close ties with the World Health Organisation, the Food and Agriculture Organisation of the United Nations and other international authoritative bodies on foods. As the bulk of the local food supply comes from China, Hong Kong has been working closely with the Chinese authorities towards promoting food safety and better food hygiene. Regular meetings are held with officials from the Guangdong and Shenzhen Commodities Inspection Bureaux. The subjects for discussion included preventing pesticide-tainted vegetables and uninspected pork carcases from being exported into Hong Kong.

Markets

The Urban Council operated 60 retail markets in the urban areas during the year. A total of 9 447 stalls offering a choice of commodities ranging from fresh food to household items were provided in these markets.

   Old and outdated markets have been replaced gradually by multi-purpose complexes with new markets and cooked food centres accommodated on the lower floors. On the upper floors, these complexes provide a variety of facilities for indoor sports activities, cultural and recreational pursuits. There are 14 such multi-purpose complexes managed by the Urban Council.

    New markets with cooked food centres are built to meet consumer demand in the areas where they are situated and not just to meet hawker resiting commitments as was the case in the past. This approach, together with improvements in design, has been adopted in planning and building more pleasant and viable markets both for stall-holders and

customers.

   A pilot scheme of contracting-out cleansing was introduced in the Po On Road Market. The scheme was successful and cost-effective, and will be extended to more markets.

The Kimberley Street Market in Yau Tsim District marked a new era in terms of market design. The market is in a modern hotel building with air-conditioning and relatively large market stalls, offering a wide range of food commodities for tourists and the public in a hygienic and comfortable shopping environment.

   The Regional Council is responsible for the management of public markets within its region. In 1991, a new market with 240 stalls and 16 cooked food stalls was completed and commissioned on Cheung Chau Island. This brought the number of markets managed by the council to 46, providing a total of 5 308 goods stalls and 378 cooked food stalls. A new market with 34 stalls is under construction at Mui Wo, Lantau.

Following a recommendation by the council's Working Group on Design of Markets in the Regional Council area, a market complex in Shek Wu Hui will be provided with air-conditioning under a pilot scheme. Work on the market will start early in 1992 and is expected to be completed by 1994-5. Other recommendations aimed at improving the

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environment and management of markets will also be taken into consideration in the planning and design of Regional Council markets in future.

Hawkers

The Urban Council is responsible for the licensing of street hawkers in the urban areas. By the end of December 1991, there were 13 600 hawker licences, 500 less than in 1990. The decrease was partly due to efforts by the council to move on-street hawkers into newly-completed markets. The completion of the Wan Chai Temporary Market and the Shek Tong Tsui Market in 1991 made it possible to resite 180 on-street licensed hawkers trading in the vicinity. Moreover, steady progress is being made in a scheme introduced at the beginning of 1990 for itinerant hawkers to surrender their licences, on a voluntary basis, in exchange for an ex-gratia payment, a fixed-pitch hawker licence or a market mini-stall tenancy. By the end of 1991, 1 300 licences were returned under this scheme.

       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 to a limited extent. About 212 fixed-pitch newspaper hawker licences have been issued. The issue of other classes of licences will depend on the availability of viable and publicly acceptable sites. However, the council has a firm policy of not issuing any new hawker licences to itinerant hawkers, whose trading activities are causing serious obstruction to pedestrians and vehicular traffic in highly built-up urban areas.

       Through the deployment of the General Duties Teams, which have an establishment of 1900, the Urban Services Department enforces hawker legislation and maintains control of illegal hawker activities. During the year, there were 90 000 court convictions on hawker offences.

The Regional Council is responsible for the management of hawkers within its region. To contain problems associated with street trading, the council has a firm policy of not issuing new hawker licences and of gradually resiting licensed hawkers off-street. However, fixed-pitch hawker licences for the sale of newspapers are still issued subject to availability of suitable sites. In 1991, there were 2 058 licensed hawkers, a reduction of 555 compared with 1990. Most of these former hawkers have been resited into new markets.

Through the deployment of general duties teams, the Regional Services Department maintains control over illegal hawking. As new towns develop and the population in the council area continues to increase, hawker blackspots are growing in number. There were an estimated 1 640 unlicensed hawkers at the end of the year. After a review on the work of the general duties teams, the department is restructuring the teams to strengthen their capability to make arrests and to form special squads to reinforce district-based operations. In 1991, there were 18 445 court convictions against hawking offences in the Regional Council area.

Abattoirs

There are two abattoirs in the urban areas one at Kennedy Town on Hong Kong Island and the other at Cheung Sha Wan in Kowloon.

Following its decision to privatise the slaughtering services of the two abattoirs in two phases, the Urban Council leased out Kennedy Town Abattoir to a licensed private operator in November 1990, with meat inspection service remaining a council respon- sibility. The second phase will involve the closure of Cheung Sha Wan Abattoir upon the

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completion of a replacement private slaughterhouse in Sheung Shui. Negotiations with the prospective operator regarding the terms of a land grant are in progress.

   During the year, 1 950 000 pigs, 102 000 cattle and 9 000 goats were slaughtered in these two abattoirs, which together met about 63 per cent of the local demand for fresh meat.

Animal slaughtering services in the Regional Council area are provided by two licensed private slaughterhouses in Kwai Chung and Yuen Long. They handled a total of 1 099 893 pigs, 54 221 cattle and 6 150 goats during the year. The slaughterhouse at Kwai Chung, which can slaughter up to 3 000 pigs a day, also helps to meet demand in Kowloon. A small slaughterhouse with a throughput capacity of 100 pigs a day was completed by the council this year on Cheung Chau Island. This slaughterhouse, leased out for private operation, will also serve the nearby islands. To meet long-term demand, a site at Sheung Shui has been reserved for the construction of a private slaughterhouse with maximum throughput of 3 900 pigs and 240 cattle.

All animals slaughtered in these slaughterhouses are inspected by qualified health inspectors of the Urban Services and Regional Services Departments.

Cemeteries and Crematoria

It is government policy to encourage cremation rather than burial for the disposal of the dead. During the year, over 70 per cent of the dead were cremated in the territory. Human remains buried in public cemeteries are subject to exhumation after six years when the exhumed remains are either cremated or re-interred in an urn cemetery.

The Urban Council operates one public funeral parlour in Kowloon to provide free funeral services for the needy. Two service halls at the parlour are provided free of charge for public use.

In Urban Council areas, there are five public cemeteries, two public crematoria and 18 private cemeteries. There are also two war cemeteries under the management of the Commonwealth War Graves Commission.

   The Regional Council manages four public crematoria at Kwai Chung, Fu Shan, Cheung Chau and Wo Hop Shek. The first two crematoria are used for the cremation of dead bodies and exhumed skeletal remains. In 1991, 9 063 bodies and 6931 skeletal cremations were handled.

Columbaria are provided at Kwai Chung, Fu Shan, Cheung Chau, Wo Hop Shek, Lamma and Peng Chau for the deposit of cremated ashes. Up to December 1991, the council provided and managed 34 604 niches.

In the Regional Council area, there are six public cemeteries, at Wo Hop Shek, Tai O, Cheung Chau, Mui Wo and Sandy Ridge. They comprise a total 60 272 coffin grave sites and 185 482 urn grave sites. The council also oversees nine private cemeteries and six private crematoria.

Auxiliary Medical Services

The Auxiliary Medical Services (AMS) was formed in 1950 as one of units in the Essential Services Corps. It is a government medical civil defence organisation with a current establishment of 89 permanent staff and 5 835 volunteers. By statutory requirement, the Director of Health is the Commissioner of the AMS and is responsible to the Governor for the efficient operation of the unit. People from all walks of life including physicians, nurses, paramedical personnel, civil servants and laymen in the private sector volunteer to serve.

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With the exception of medical and nursing professionals, they all receive comprehensive training courses ranging from first-aid, squad drill, basic ambulance aid and practical ambulance manning, casualty evacuation, home nursing, clinical and hospital ward attachment and life saving, to leadership training and management development.

       The main role of the AMS is to augment the regular services of the Department of Health, Hospital Services Department and Fire Services Department in times of natural disasters and emergencies such as typhoons, rainstorms or landslides, aircraft crashes, large-scale fires, major epidemics, civil disturbance, influx of illegal immigrants.

      During emergency mobilisation situations, AMS members would be deployed and supplied with the necessary medical resources to provide immediate first-aid treatment for the injured at the disaster scene, to convey casualties to hospitals, to render nursing care to patients at both acute and convalescent hospitals and to work in collaboration with other rescue forces.

       During normal times, AMS is also committed to provide supplementary medical services to government departments and outside agencies for ambulance manning, life-guard duties, clinical services in methadone centres and refugee camps, and first-aid coverage at country parks, cycling tracks, school activities and major public functions such as fireworks displays, Community Chest walks, charity shows, local festivals and sports meetings. The AMS continued to assist in the manning of 25 methadone clinics and provide round-the-clock clinical manning at 10 sick-bays in seven Vietnamese Illegal Immigrants Centres in 1991. More than 583 856 man-hours were committed for regular and emergency services in the year.

The provision of first-aid training to civil servants is another responsibility of AMS. A total of 3 563 government trainees completed the basic certificate course and qualified as first-aiders in 1991.

An English version of the Emergency Care Handbook is being prepared, to follow up the successful Chinese edition which was published in late 1990.

       The new administration and operational headquarters in Ho Man Tin were officially opened by the Governor in December. The new building provides the AMS with a full range of special facilities such as a multi-purpose hall, an exhibition lobby, lecture rooms, simulated nursing wards, an operational control and duty room, operational bulk storage and a parade ground.

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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), Primary Education and Pre-primary Services (1981), and Social Welfare into the 1990s and Beyond (1991).

The government is advised on social welfare policy by two committees 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 non-officials as chairmen.

In the provision of welfare services, the Social Welfare Department maintains a close working partnership with non-governmental organisations, most of which are affiliated to the Hong Kong Council of Social Service. More details about the Hong Kong Council of Social Service are given at Appendix 32A.

To ensure that social welfare policies continue to meet the needs of Hong Kong into the 1990s, the Governor announced in October 1989 a review of social welfare services, to be conducted in conjunction with the subvented welfare sector. A working party was sub- sequently set up under the chairmanship of the Secretary for Health and Welfare. It was charged with reviewing the various programme areas in the social welfare field and with drafting a White Paper to set out proposals for the way forward. The review covered those services which fall within the policy purview of the Secretary for Health and Welfare, excluding rehabilitation services which have been developed under a separate White Paper and are subject to a different consultative network.

The White Paper on Social Welfare into the 1990s and Beyond was published in March 1991. The Paper explains the various demographic, socio-economic and political factors which have a bearing on the future provision of welfare services. It describes the overall philosophy of social welfare and lays down government's policy intentions and strategies for developing and improving the various services for the family, children and youth, the elderly, and for developing social security and support services in the 1990s and beyond.

Continuing its drive to provide more and better welfare services to meet the changing needs of the community, the government increased spending on social welfare in 1991-2 by 16

per cent to $5,760 million.

   At the end of 1991, the standard cost subvention system was extended to a total of 24 services.

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      To cope with increasing demand arising from the growth of the elderly population, the planning standard for care-and-attention places has been revised from a ratio of 8 to 11 places per 1000 elderly persons. Similarly, the planning ratio of social centres for the elderly is revised to one centre for every 3 000 elderly persons, and of multi-service centres and day care centres to one centre per administrative district, with a proviso of establishing additional centres on the ratio of one centre for around 25 000 elderly persons.

      To expedite provision of care-and-attention places for the elderly, efforts have been made to establish such units in homes for the aged in public housing estates, in addition to erecting purpose-built care-and-attention homes. This is in line with the concept of providing a spectrum of services in the same home to minimise the need to transfer elderly persons already in care to other homes when their health condition deteriorates.

In the area of services for young offenders, the syllabi of the pre-vocational classes of the department's correctional institutions have been improved and a growing number of discharged trainees go on to vocational courses managed by the Vocational Training Council, Construction Industry Training Authority and Clothing Industry Training Authority. Subsequent to employing qualified teachers to run academic classes in the institutions, 19 residents joined the Secondary School Places Allocation System and were allocated places in 1991.

Proposals for amendments to the Protection of Women and Juveniles Ordinance were concluded. These proposals would effect improvements by removing obsolete provisions and making significant changes in a number of areas for better protection of the child's well-being. Arising from widespread public concern over tragedies involving young children left unattended at home, a new publicity campaign on this subject was launched in April. Legislation to prohibit parents from leaving children unattended at home was reviewed and a three-month public consultation exercise on the issue was carried out from October to December.

      As a further improvement to the Public Assistance Scheme within the social security system, a Child Supplement was introduced in November payable to children of public assistance households to meet their special needs for healthy development.

During the year, 13 new day nurseries, one new foster care unit, three new small group homes for children, two hostels for the elderly, one home for the aged, three care- and-attention homes for the elderly, seven homes-cum-care-and-attention units, three work units, and 11 children and youth centres were established.

Community Chest

The Community Chest, which organises and co-ordinates fund-raising activities for its member agencies, raised $113 million in 1990-91, compared with $88.2 million in 1989-90. More details about the Community Chest are given at Appendix 32B.

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

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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 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 provide documentary proof 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 discretionary power to waive the one-year residence requirement in cases of genuine hardship.

The rates of assistance were increased across the board by nine per cent in April 1991 to keep pace with inflation. The current monthly basic allowances are $745 for a single person, $560 for each of the first two eligible members of family, $550 for each of the next two eligible members and $540 for each additional eligible member. Separate allowances are paid to cover the cost of accommodation.

A monthly old-age supplement of $373 is given to those aged 60 to 69, and $425 to those aged 70 and over, who are not receiving a disability supplement or a special needs allowance under a separate scheme. A disability supplement of $373 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: $950 for a single person; $1,900 for a family with two to four members; and $2,850 for a family with five or more members. In addition, special grants are given, where necessary, to meet other needs in particular circumstances. To encourage self-help, an individual's monthly earnings of up to $560 may be disregarded in the calculation of assistance payable.

In November, a Child Supplement was introduced as an additional allowance payable to children of public assistance recipients up to their 15th birthday and to those aged 15 to 18 in full-time education and not receiving educational grants. This supplement is meant to meet the special needs of children for their healthy development. Payment is made at a flat-rate of $185 per month.

At the end of 1991, the number of public assistance cases was 71 294, compared with 68 500 in 1990. The majority of recipients are the elderly, the disabled and single parent families. Expenditure on public assistance during the year amounted to $1,079.9 million, representing an increase of 16.1 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.

The rates of allowances were revised upwards by nine per cent in April 1991 due to the rise in the cost of living.

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      A higher disability allowance, which is twice the normal rate, is payable to those severely disabled persons who require constant attendance from others in their daily life but are not receiving such care in a government or subvented institution. The current monthly rate for the disability allowance is $745 and, for the higher disability allowance, $1,490.

       Old-age allowance is non-means-tested for those aged 70 and above, and they are entitled to a current rate of $425 per month. For those below the age of 70, monthly payments are at a lower rate of $343, 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 65 on April 1.

      The number of people receiving disability and old-age allowances at the end of the year was 471 803, compared with 444 400 at the end of 1990. Expenditure on special needs allowances during the year was $2,450.6 million, representing an increase of 18.8 per cent over the previous year.

      The Criminal and Law Enforcement Injuries Compensation Scheme provides cash assistance to people who are injured in 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 duties. Payments are made to their surviving dependent family members in the case of persons killed in any one of these circumstances.

This scheme, which is non-means-tested, is administered by the Criminal Injuries Compensation Board and the Law Enforcement Injuries Compensation Board. Both boards consist of the same chairman and members who are appointed by the Governor, from outside the civil service.

      With effect from April 1, improvements were made to the scheme by extending the Criminal Injuries Compensation Board's discretionary power to increase injury grant, interim maintenance grant and disability grant payable by up to 100 per cent to victims of rape on compassionate grounds and also to increase the total awards payable by up to 100 per cent to a victim who, subsequent to the event giving rise to a claim, has made exemplary efforts in the face of personal embarrassment, inconvenience or danger, to assist the police in the arrest of an offender or suspected offender.

      During the year, total payments amounted to $7.6 million, compared with $6.6 million in the preceding year.

The Traffic Accident Victims Assistance Scheme provides cash payments to victims of traffic accidents or their dependants on a non-means-tested and no fault basis. It is administered by the Director of Social Welfare in consultation with an advisory committee. 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 date of the accident. For a non-fatal case, the victim must have required at least three days sick leave supported by a medical certificate.

      An applicant's right to claim legal damages or compensation from other sources in respect of the same accident is not affected by the scheme. In 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.

Under the scheme, payments are disbursed from the Traffic Accident Victims Assistance Fund which is a statutory fund financed by levies on vehicles and driving licences and from general revenue. Payments cover personal injury and death but not damage to property.

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   To replenish the Traffic Accident Victims Assistance Fund, the annual levies on vehicles and driving licences were increased by 60 per cent from $30 to $48 and from $10 to $16 respectively with effect from April 1.

During the year, 5 660 applications were received and 5 135 were approved for assistance, with payments amounting to $55.5 million compared with $52.0 million in 1990.

   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 the Criminal Injuries Compensation Scheme, the Traffic Accident Victims Assistance Scheme and the Emergency Relief Fund are revised regularly in line with the increase in the average manufacturing workers' wages and with inflation. In April, the rate of burial grant was increased and the maximum eligibility period for payment of injury grant and interim maintenance grant was extended from three months to six months in order to provide greater assistance to those eligible under these three schemes.

During the year, emergency relief was given to 1 538 registered victims on 94 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 investigates cases of suspected fraud or difficulties encountered in recovery of overpayment. During the year, the team completed investigations into 143 cases.

Social Security Appeal Board

The Social Security Appeal Board is an independent body comprising non-official members appointed by the Governor. It considers appeals from individuals against decisions by the Social Welfare Department concerning public assistance, special needs allowance and traffic accident victims assistance payments. During the year, 111 appeals were heard by the board. Of these, six were related to public assistance, 105 to special needs allowance and none to traffic accident victims assistance.

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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 Orders Scheme, residential training for young offenders and after-care services.

   Probation service is provided in eleven probation offices which serve 10 magistracies, the District Courts and the High Courts. Probation officers make inquiries into the home surroundings of offenders as the court may direct. They also supervise the offenders in complying with the requirements of the probation order. Probation applies to offenders of all age groups from seven years onwards. It allows offenders to remain in the community under supervision and subject to prescribed rules set by the courts. The probation officers work closely with the probationers' families with a family-oriented approach. To promote

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community involvement in the rehabilitation of offenders, volunteers are recruited to befriend probationers and residents of homes and assist them in activities that do not require professional skills and knowledge.

The Community Service Orders Scheme is community-based treatment with punitive and rehabilitative aims. 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. The scheme has been successfully implemented at three magistracies and will be extended to the remaining seven magistracies once resources are available.

The Young Offender Assessment Panel, run jointly by the Social Welfare Department and the Correctional Services Department, provides magistrates with a co-ordinated view on the most appropriate programme of rehabilitation for convicted young offenders aged between 14 and 25.

      The Social Welfare Department operates seven residential institutions with a total capacity of 636 places, 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 Wei Girls' Home consist each of a remand home and a probation institution for juvenile offenders and youths in need of statutory care and protection. The Pui Yin Juvenile Home is a remand home for boys and girls. The Pui Chi Boys' Home provides residential training for juvenile offenders and youths in need of statutory care and protection. The Castle Peak Boys' Home is a reformatory school for boys aged 14 1/2 to under 16 on admission, while the O Pui Shan Boys' Home is a similar institution for those aged under 14 1/2 on admission. The Kwun Tong Hostel is a probation hostel for young men aged between 16 and 21.

Plans are in hand to improve the residential and training facilities, including the conversion of a youth centre and hostel into a probation home for girls, building a new workshop block at O Pui Shan Boys' Home and the relocation of the Castle Peak Boys' Home and Begonia Road Boys' Home to Sha Tin and Ngau Chi Wan respectively. The qualified teachers recruited to run academic teaching classes have designed new teaching materials to suit the needs and interests of the trainees. The new arrangements have brought about 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 non-governmental organisations also provide hostel, employment, casework and volunteer services to help ex-offenders and young people with behavioural problems to reintegrate into the community.

Family Welfare

The Social Welfare Department and a number of non-governmental welfare agencies provide a variety of family and child care services with the overall objective of preserving and strengthening the family as a unit through helping individuals and families to solve their problems or to avoid them altogether.

      The department operates a network of 30 family services centres and the subvented welfare sector operates 23 such centres. The major services provided in family services

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centres include: family casework and counselling; care and protection of children and young people aged under 21, and referrals for schooling, housing, employment and financial assistance.

The Wai On Home, run by the Social Welfare Department and Harmony House, run by the non-governmental sector, together provide short-term accommodation with 80 places for women and children who may be victims of domestic violence, and for young girls at risk.

  The department continues its efforts to tackle the problem of street sleeping. It has set up outreaching teams dedicated to helping street sleepers. It also assists non-governmental welfare organisations to run temporary shelters, urban hostels and day relief service for street sleepers. The department is identifying suitable premises to set up more urban hostels for the homeless.

  The department provides a wide range of child welfare services. 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. The Central Foster Care Unit promotes foster care services in Hong Kong. Furthermore, the Child Custody Service Unit carries out statutory duties in respect of supervision or care arising from custody and guardianship matters handled in Family Courts or the High Court. The Chuk Yuen Children's Reception Centre and the Sha Kok Children's Home provide for the temporary care of children aged up to eight.

  In addition to the work carried out by the Social Welfare Department, subvented welfare agencies also provide residential child care services in children's homes, homes and hostels for boys and girls, foster care and small group homes.

Child care centres are available for children under the age of six. Such centres must comply with the standards laid down in the Child Care Centres Ordinance and Regulations. They are subject to registration and inspection. At the end of the year, there were 33 066 places in day child care centres and 629 places in residential child care centres. New modes of child care services are being tried out as experimental projects to meet the changing needs of families. Families with low incomes and with social need for children to attend a child care centre may apply to the Social Welfare Department for assistance in meeting nursery fees. A total of 8 047 children were receiving fee assistance at the end of the year. In October 1991, there was an improvement to the salary scale of child care workers.

  Home help service, subvented by the government and operated by non-governmental organisations, provides meal services, personal care and household work service to those who need it. At the end of the year, there were 64 home help teams.

  Family aide service, as a complement to casework service, is provided by four family services centres of the department and non-governmental organisations to develop clients' home management skills and child care techniques and to help families attain self-reliance.

  The department operates a hotline service, answering enquiries and providing pro- fessional advice to the public on social welfare matters.

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 breakdowns and social problems. There are 59 family life education workers providing a wide range of family life education programmes in the territory. The 1990-91 Family Life Education Publicity Campaign continued its main theme Responsible Parenthood with

Recently-completed extension blocks at Queen Mary Hospital in Pok Fu Lam provide much-needed additional beds.

Below: Recreational equipment brightens the scene in the new playroom in the Paediatric Ward at Queen Mary Hospital.

Opposite page: Sophisticated angiographic resources provide instant viewing of the vascular system, at Princess Margaret Hospital in West Kowloon.

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Opposite page: The bright and colourful Lam Woo Day Nursery at Fu Heng Estate, Tai Po.

Below: A rapt young audience at the Hang Fa Chuen Children and Youth Centre.

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Above and left: The Tai Tung Pui Care and Attention

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emphasis on the reciprocal roles and responsibilities of adolescents in the family as well as parental roles in the growth and development of adolescents. A wide variety of publicity media, including television, radio, posters, booklets on good parenting, music training courses, a lyric writing competition and a singing contest were organised. In support of the centralised publicity campaign, promotional and educational activities were organised by social workers at the district level. The Family Life Education Resource Centre plays a significant role in supporting social workers in promotional and educational work by providing audio-visual equipment and resource materials.

Medical Social Service

The Social Welfare Department continues to provide medical service in government hospitals and clinics to help patients and their families deal with the many personal and family problems arising from illness and disability.

Care of the Elderly

The recently published White Paper - 'Social Welfare into the 1990s and Beyond' - 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 look after their elderly members and to enable old people to live with dignity in the community for as long as possible. Such community services include home help, day care, social and recreational activities, canteen services, community education, as well as respite care. At the end of 1991, there were 64 home help teams, 166 social centres, 17 multi-service centres, 10 day care centres and 13 respite care places. Financial assistance, which includes public assistance and special needs allowance and housing assistance comprising compassionate rehousing and priority allocation of public housing, continues to be available for those eligible. To provide timely services to the elderly at risk, two outreaching teams as pilot projects were launched in April 1991.

       Residential facilities are 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 1991, there were 2 046 hostel places, 7 508 home places and 3 704 care-and-atten- tion places.

       In addition, sheltered housing is provided in private housing flats as well as in public housing estates for 3 131 elderly people who are capable of living independently.

      The Registration Office of Private Homes for the Elderly continues to provide advice and assistance to private homes for the elderly to reach an acceptable service standard. Higher service standards are encouraged through the Voluntary Registration Scheme and through an offer to buy places from registered homes under the Bought Place Scheme.

      To provide a regulatory framework and a set of uniform standards for all homes for old people, legislation on residential care homes is being drafted.

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 is designed for young people aged

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from 6 to 24 to foster the development of their personality, character, social aptitude, 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 district level, apart from providing group work activities in community centres, the department promotes and co-ordinates youth programmes and encourages the es- tablishment of self-programming and volunteer groups through its youth offices. Since 1974, the department has been running the Opportunity for Youth Scheme. 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 contributions of 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 1991, 11 combined children and youth centres were opened, making a total of 207 units of children centres and 211 units of youth centres.

Outreaching social work attempts to cater to groups of young people at risk who do not normally participate in organised youth activities. In 1991, there were totally 24 out- reaching social work teams serving in priority areas with large youth populations, high population density and high juvenile crime rates.

School social work service, provided by social workers in secondary schools, helps students with personal behavioural or family-related problems in adjusting to school life. It will be improved by phases to attain a manning ratio of one school social worker for every 2 000 students.

Uniformed organisations offer young people opportunities to join organised activities with progressive training programmes to help them develop character and leadership so that they can eventually become responsible, self-reliant and caring members of the community. There are eight subvented welfare organisations, with over 79 000 members operating a wide range of activities with different emphasis for different target groups of young people. The Duke of Edinburgh's Award Scheme offers a comprehensive programme focusing on development of the potential of young people, attracting a membership of 38 000 through its 20 operating authorities.

Rehabilitation of the Disabled

The objective of Hong Kong's rehabilitation services is to integrate the disabled into the community. Services provided by government departments and non-governmental organisations aim to enable 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 requirement for and identifies the shortfall in rehabilitation services for the following 10 years. A Working Party on Rehabilitation Policies and Services, chaired by the Secretary for Health and Welfare, is preparing a Green Paper on Rehabilitation. This should be published for public consultation early in 1992.

The Department of Health is responsible for preventing disabilities by promoting health education and improving immunisation programmes against various communicable diseases, and providing screening services for early identification of disabilities. The 174 Hospital Authority is responsible for providing medical rehabilitation services. The Social

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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 non-governmental organisations. 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 Labour Department is responsible for job placements for the hearing and visually impaired, the physically and mentally handicapped and for discharged mental patients. The Transport Department subvents a Rehabus service for disabled persons who cannot use public transport. The Vocational Training Council is responsible for co-ordinating vocational training for disabled young people and adults.

      By the end of the year, the Social Welfare Department and non-governmental or- ganisations provided a total of 670 integrated programme places, 987 special child care centre places (including 54 residential places) and 845 early education and training centre places for pre-school disabled children. For disabled adults, there were 1 698 day activity centre places which provide day care, daily living skills and work training for the mentally handicapped, 3 983 sheltered workshop places to provide employment for disabled persons who were unable to compete in the open job market, and 1957 hostel places for those disabled persons who can neither live independently nor 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, 797 halfway 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.

      The supported employment scheme introduced by the Social Welfare Department will continue to provide employment opportunities for disabled persons. The pilot mobile cleansing services crew, first set up by the Social Welfare Department, was transferred to St James' Settlement in December for further development. Other service models are being developed by the department.

       To improve the quality of services, two central support services operate to provide all rehabilitation day centres and hostels with professional back-up from clinical psychologists, occupational therapists and physiotherapists. Other new services introduced include the respite service which provides short-term relief to families with mentally handicapped persons, and the fifth home-based training team which was an interim measure to help train mentally handicapped persons awaiting placement.

      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 handicapped and to promote their employment prospects. The management and use of the foundation's funds are determined by a council consisting of prominent members of the community appointed by the Governor. During the year, the foundation allocated $3.9 million in the form of grants or sponsorships to 30 non-governmental organisations and four government departments, enabling them to undertake projects for the benefit of mentally handicapped persons. The fund stood at $102 million on March 31, 1991.

      Hong Kong hosted the 3rd International Abilympics from August 10 to 14, 1991. More than 2 000 participants from over 80 countries and territories took part in a wide range of activities, skill contests, performances and exhibitions which were designed to achieve 'Equality through Participation' by bringing together people with and without disabilities from all walks of life. This major event, which marked the closing of the United Nations Decade of Disabled Persons was a resounding success.

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Staff Development

  Training of professional social workers is provided by the universities, polytechnics and post-secondary colleges. The Social Welfare Department and non-governmental organisations assist in the provision of practical work placements for social work students from these institutions. The department, through its Lady Trench Training Centre, provides various types of in-service training programmes such as orientation courses for newly-recruited staff, basic social work training for non-professional grade staff, induction training for staff transferred to a new service area and staff development programmes to provide knowledge and skills in helping staff handle the increasingly complicated social problems.

   During the year, the Training Centre organised 184 programmes, seminars and workshops for 5 574 participants, compared with 172 in 1990. It also operates a child care centre for 113 children aged between two and six years which serves as a training ground for child care centre workers.

   To equip staff with updated and specialised skills in the various fields of professional practice, the department sponsors experienced staff to attend advanced local and overseas training courses and international conferences. During the year, 193 staff attended 41 such courses and conferences.

   The Social Work Training Fund continues to provide financial assistance for individuals to pursue social work training in Hong Kong or overseas. In 1991, a total of 67 applicants were awarded either full or partial grants. It also provides funding support for other purposes, such as financing overseas experts to provide training and consultation, and the printing of resource training materials for social workers in Hong Kong.

Research and Statistics

The Research and Statistics Section provides a support service to the department by preparing estimates, conducting surveys, and developing and maintaining data systems. Seven 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 nine other data systems, these being the Integrated Law and Order Statistical System on offenders under the charge of the department, Street Sleepers Registry, Planned Welfare Projects Registry, Child Protection Registry, and five central referral systems for placement in institutions for the elderly, the disabled pre-schoolers, mentally retarded physically handicapped adults, discharged mental patients, and aged blind.

Subvention and Evaluation

Financial assistance is given to enable 160 non-governmental organisations to provide social welfare services in accordance with government policies. Financial assistance for capital and special expenditure is usually provided through the Lotteries Fund.

The Evaluation Unit of the department is responsible for monitoring and assessing services provided by subvented non-governmental organisations. For this purpose, departmental staff make regular visits to the agencies which are in turn required to submit service statistics at specified intervals. Where appropriate, findings are submitted to the

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Subventions and Lotteries Fund Advisory Committee which advises on the allocation of subventions and Lotteries Fund grants to agencies providing social welfare and rehabilitation services. During the year, the department conducted nine in-depth evaluations of experimental projects and services operated by non-governmental organisations.

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 the 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 and non-governmental organisations, are provided to serve as a base for community building work.

      The Social Welfare Department is responsible for various aspects of group and community work aimed at promoting the development of individuals and groups and at fostering a sense of community responsibility.

Commission on Youth

The Commission on Youth was established in February 1990, with members appointed by the Governor. The main objectives were to advise the Governor on matters pertaining to youth, to initiate research, to promote co-operation and co-ordination in the provision of youth services and to serve as a focal liaison point with other international youth organisations for exchange programmes.

      The first task was to study in depth the impact of Hong Kong's future on the development of young people and to recommend to government how Hong Kong's youth should be better equipped to adapt to political, social and economic changes in the years ahead. To facilitate this study, the commission conducted an opinion survey in January 1991 on the attitudes and expectations of youth towards their future and a seminar was organised in September to obtain views of interested parties on the findings of the survey. Appreciating the significant influence of the mass media on the thinking and behaviour of today's youth, the commission initiated another study to assess the role of the mass media in influencing youth and in promoting youth development.

      As required by the government, the commission is developing a Charter for Youth containing important objectives and principles covering the protection, nurture and

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promotion of young people's interests and stating the roles and responsibilities of all concerned in promoting youth affairs.

   The commission has started to build up a liaison network with youth organisations and youth-related organisations to facilitate its work in helping Hong Kong to meet the needs of young people and respond to their aspirations.

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 encour- ages, through sponsorship, community effort in organising civic education activities among different age groups.

   The committee sponsored 32 projects in 1991 with an allocation of over $990,000. In view of the elections to the three-tier political structure of Hong Kong in 1991, especially the direct elections to the Legislative Council for the first time in history, an exhibition entitled How Much Do You Know About LegCo was held to encourage greater under- standing of the work of the Legislative Council.

   Other promotional activities launched by the committee included four seminars and a number of projects to encourage people's participation in political and community affairs. The work of the committee has received strong support from district organisations, in particular district boards.

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      FIRM plans have been made to ensure that, by the turn of the century, all Hong Kong people who need homes should be adequately housed.

       The Housing Authority is the official organisation responsible for public housing and for advising the government on all matters relating to housing in the territory. Nearly 3 000 000 people already live in homes provided by the authority.

       They live in some 645 000 flats in 146 rental estates, in addition to 144 000 self-owned premises in 95 estates also produced by the authority. Temporary housing is provided for people mainly cleared from the few remaining squatter areas, or victims of disasters, until permanent homes for them are available.

       Under the Long Term Housing Strategy formulated in 1986 and being carried out by the authority, about 1 150 000 new flats, both public and privately built, were forecast to be needed to house everyone adequately by the year 2001. Nearly 500 000 flats have since been built; of the remainder, about 400 000 will be produced by the authority, while the rest are expected to be built by the private sector. The work of housing is never finished and the authority, it is envisaged, will need to continue to build homes for the people beyond 2001 to meet continuing demand.

      The government provides capital assistance and land for the authority to implement the housing strategy. In the next five years, $41 billion will be spent on new construction work by the Housing Authority.

       During the year, the authority completed a review of the domestic rent policy and allocation standards and formulated a new strategy to increase the supply of flats for small households.

      Rents charged remain comparatively low, whether they are for the newest urban estates or the newest New Territories estates. Both are heavily subsidised compared with market value.

       The authority has also offered a selection of rental blocks for sale to sitting tenants at a discount, formed an ad hoc committee to review the housing subsidy policy and made more flexible a Home Purchase Loan Scheme.

Apart from the work of the authority, the Housing Society continues to supplement the provision of public housing through its rental and rural public housing projects, urban renewal scheme and flats-for-sale scheme.

       Public housing continues to be built at a high rate and there are at present as many as 130 000 flats being built at any one time in the various locations in the territory.

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The authority also builds many other premises in its self-contained housing estates for commercial use, such as shops, restaurants, banks, and carparks, and for other services operated by government offices and welfare organisations.

Details of housing and persons accommodated are given at Appendix 33.

Housing Authority

The Housing Authority, which evolved from a number of bodies, was established on April 1, 1973, under the Housing Ordinance.

   It was re-organised on April 1, 1988 and given a separate financial identity and autonomy, together with sufficient flexibility to deal with the priorities under the govern- ment's Long Term Housing Strategy.

   It advises the Governor on all housing policy matters and through its executive arm, the Housing Department, plans and builds public housing estates, either for rent or ownership, and temporary housing areas.

   The authority also manages public housing estates, ownership courts, temporary housing 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. It acts as the government's agent to clear land, prevent and control squatting, and maintain improvements to squatter areas.

The authority is made up of members appointed by the Governor for a two-year term. It is chaired by a non-official and supported by 20 other non-official members and four official members whose responsibilities have a bearing on housing matters. There are also 30 committee members who sit on one or more of the various committees which deal with particular housing issues. Many of the members of the authority and the committees also serve the Hong Kong 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 in community service and professional knowledge in certain areas of activity, and are able to apply a broad and critical perspective in determining public housing policies.

In April 1991, the authority held its first annual open meeting to provide an opportunity for the public and the news media to see the full Housing Authority at work. From September, all regular full meetings were open to them.

Apart from the eight standing committees, the special committee on clearance of Kowloon Walled City, established in January 1987, also continued its work.

   Four other ad hoc committees have completed or are about to complete their tasks of examining the housing needs of the 'sandwich class', to review the contribution of the private housing sector, to review domestic rent policy and allocation of standards and to examine the possibility of selling suitable public rental flats to sitting tenants.

The authority is responsible for its own finance and management and will continue to provide homes at affordable rents and prices to the people. Under an arrangement which came into effect in April 1988, the government continues to ensure the availability of funds required for the housing programmes as set out in the Long Term Housing Strategy.

On March 31, 1991, the government's capital investment and contribution to housing stood at about $99.7 billion, which comprised permanent capital of $24.3 billion, contribution to domestic housing of $66.1 billion and non-domestic equity of $9.3 billion.

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       In the 1990-91 financial year, recurrent expenditure on the authority's domestic rental properties, covering mostly management and maintenance costs, totalled $4,922.2 million, while income from domestic rents was $4,229.8 million, resulting in a deficit of $692.4 million. This deficit was mainly because the low rents in old estates were insufficient to cover management expenses and the high cost of maintenance and improvements.

       The authority was able to partly offset this deficit from income derived from its non-domestic properties which, over the same period, generated a surplus of $436.4 million after charging amortisation and paying interest on permanent government capital and 50 per cent dividends to government.

       The authority spent $7,642.4 million on its capital programmes, of which $5,638.7 million (73.8 per cent) was financed by the authority, while the balance of $2,003.7 million (26.2 per cent) came from the government through supplementary injection of capital.

Construction

      During the year, the authority produced 40 400 flats - 23 600 for rent and 16 800 for sale, in addition to commercial premises.

       With the decrease in workload in the private sector and the easing of the labour shortage, tender prices were very competitive.

      The first period of the Long Term Housing Strategy was completed in March and both the private and public sectors met the production targets.

       Progress in building works has steadily reduced the waiting list for public rental housing, so that the backlog is expected to be cleared by 1996-7.

       However, to meet increasing demand, the construction programme in the coming years will be geared to producing a steadily-increasing proportion of flats for sale under the home ownership schemes.

       Meanwhile, the first of the new Harmony range of blocks is expected to be completed in 1992. Quality assurance plans are taking shape with the completion of two consultancy studies - one aimed at advising building contractors how to establish quality management systems within their companies, and one to assist the authority's Construction Branch on its own quality systems.

       Other quality initiatives included selecting contractors based on the new performance assessment scoring system, and the use of an increasing number of quality assured components. In a further move to upgrade the standard of rental housing, aluminium windows were specified in new contracts, and the first contracts calling for precast facade panels were tendered.

       Research and development are being carried out on a number of projects which will ensure public housing satisfies the needs of Hong Kong in the coming decade. These include measures to meet the increasing demand for single and small household accom- modation, more hygienic methods of refuse collection and the provision of higher standard welfare facilities.

Urban Housing

      On Hong Kong Island, Stage II site formation at Shau Kei Wan East Estate has been completed and building contracts for a number of phases of Yiu Tung Estate have been awarded.

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The Shau Kei Wan West site formation will be completed in 1992. Building works at both these sites will provide 7 168 rental and 3 648 rental/HOS flats.

In Chai Wan, Fung Wah Estate with an output of 608 HOS and 1 218 rental flats was completed early in 1991. Wah Kwai Estate Phase 2 at Kellett Bay, which provides 1 428 rental flats has been substantially completed, and Phase 3 of this estate has yielded 1 402 HOS flats.

Building works for Ma Hang Village Redevelopment Phase 1 in Stanley is underway and will provide 600 rental and 360 rental/HOS flats in 1993. The Siu Sai Wan Phase 3 building project, which aims to provide 2008 rental and 1216 rental/HOS flats, is under construction.

In Kowloon, 3 062 rental and 816 rental/HOS flats in Tak Tin Estate Phases 3 and 4 at Lam Tin have been completed. A further 4 347 flats in Tak Tin Estate Phase 1 and Kwong Tin Estate Phase 3 will be completed in the next two years.

Next to Lam Tin, the 1 407 rental flats at Tsui Ping Estate Phase 7 have also been completed and taken over by new tenants.

Fung Tak Estate Phases 1 and 2 at Diamond Hill North, which provide 3 266 rental and 612 rental/HOS flats have been completed. The third phase of this project, with its 1870 rental flats, is near completion, and will be ready for intake early in 1992.

Redevelopment projects at Lower Wong Tai Sin Estate Phase 10 providing 384 rental flats and Tung Tau Estate Phase 6 providing 1 152 rental flats, have also been completed. At Chuk Yuen, 816 rental/HOS flats in the last phase of development have been com- pleted, and the 434 flats in a nearby PSPS project, Tsui Chuk Garden, were handed over to the flat owners.

Also completed were Phases 6 and 8 of Wang Tau Hom Estate, which produced 1 280 rental flats and 130 HOS flats respectively. Further south in Lok Fu Estate, the new Lok Fu Shopping Centre II was opened to augment the existing shopping centre. A district open space close to this Shopping Centre was also completed, providing the much needed recreation facilities to the estate residents.

Housing in New Towns, Rural Townships and Outlying Islands

In Tsuen Wan, redevelopment of Kwai Fong Estate Phase 2B and Kwai Hing Estate Phase 1 has produced 522 and 763 rental flats. Adjacent to the Lai King MTR Station, 560 HOS flats were completed. On the Tsing Yi island, 840 PSPS flats at Serene Garden were ready for occupation. The building works of On Yam Estate Phase 1 at Kwai Chung Area 9H are progressing steadily and the building contracts for Phases 2 and 3 have just been awarded. Building works have started on the Shek Lei Estate Phases 2 and 3 and 2001 rental flats will be available in 1994.

In Ma On Shan, HOS development at Area 103 has been completed, providing 3 500 new flats for buyers. Another 4 500 PSPS flats are being built in the same area. Fu Fai Garden, contributing 520 PSPS flats in Area 100, is nearly completed.

Difficulties in planning and design of housing development at Ma On Shan Area 90 have been resolved and the project is now proceeding on a revised schedule.

In Tuen Mun, a total of 1 224 rental/HOS flats have been completed in the last phase of development at Kin Sang Estate. The HOS development at Tuen Mun Area 14, with 4 200 flats and scheduled for completion by early 1994, will be the last major housing project in this new town.

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      Turning to Tai Po, the Fu Heng Estate at Tai Po Area 8 with a total of 5 768 rental and 2 040 HOS flats has been completed. For the Wan Tau Tong Estate at Tai Po Area 6, 1870 rental flats together with 1224 rental/HOS flats have been handed over to the tenants/purchasers. The remaining 816 rental and 816 rental/HOS flats will all be completed in 1991.

      In Yuen Long area, the public housing development in the Tin Shui Wai new town is beginning to take shape. The first rental blocks in Tin Yiu Estate Phase 1 at Tin Shui Wai Area 5 will be completed early in 1992. New tenants will then begin to fill the 1 632 new flats. Construction of other phases of Tin Shui Wai public housing development is now proceeding according to schedule.

      In Tseung Kwan O, 1 523 rental flats in King Lam Phase 4 have been completed. Construction of Hau Tak Estate, with a total of 4 054 rental and 1 216 rental/HOS flats, is scheduled for completion in 1993.

      Under the PSPS programme, 2 300 new flats at On Ning Garden were completed early in the year.

Redevelopment

     Redevelopment of the older estates to bring them up to current standards is an integral part of public housing development.

      During the year, the authority completed a rehousing programme in which half a million people were moved from old estates into new premises in an improved living environment.

      In the programme involving redevelopment of the estates built in the late 1950s as an emergency measure for victims of squatter fires and natural disasters, a total of 240 blocks in 12 estates were demolished to make way for new buildings, or in some cases, converted into self-contained flats.

      With the completion of this rehousing programme, begun in 1972, the authority has embarked on another phase of redevelopment which will include the remainder of the old estates and former low-cost housing estates.

In the five years from 1992, some 199 blocks housing 65 000 families will be redeveloped.

Rent Policy for Public Housing

Despite increasing operating and maintenance costs, rents for domestic premises in public housing estates have been maintained at low levels. This has been possible as a result of government subsidies in the form of free land and low interest rates.

      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 $36.6 per square metre for the newest urban estates, and $27.6 for the newest New Territories estates. These levels are about one-third to one-fourth of existing market rents.

On average, public housing tenants pay seven per cent of their income on rent.

      Rents are reviewed every two years and adjusted to take account of rate increases, maintenance and other costs, estate values in terms of location, facilities and services provided, and also the tenants' ability to pay.

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.

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With regard to living space, the authority is seeking public views on a proposal which will allow tenants to choose either the existing minimum allocation of 5.5 square metres per person at the 15 per cent median income ratio or a new minimum allocation of 7 square metres at 18.5 per cent of income ratio.

Maintenance

During the year, the authority spent about $940 million on maintenance and improvement works for 143 rental estates and 62 Home Ownership Scheme courts with a total of 1 524 domestic blocks, and other properties such as temporary housing areas and communal facilities.

Organisational changes were carried out with greater emphasis being placed on regionally-based maintenance operations and closer links with tenants. The results of the changes were encouraging, particularly in respect of budgetary control, resources alloca- tion and time for response to tenants.

  To facilitate planning on the long-term maintenance and improvement programmes for the entire housing stock, a comprehensive condition survey system was developed to examine the conditions and maintenance needs of each building, where elements would be inspected at predetermined intervals. In addition, a pilot study was commissioned for a new maintenance concept of Reliability Centered Maintenance. In this study various maintenance activities will be examined in relation to the functions of the elements or equipment, with a view to reducing overall maintenance costs and the possibility of failure.

  In continued efforts to improve living standards, large-scale improvement programmes in older estates progressed steadily. During the year, a total of $95 million in reinforcement and rewiring works was carried out, modernisation and replacement works to 53 lifts were completed and similar works on another 52 lifts were in progress.

  To cope with the demand for single-person flats arising from clearance and redevelopment, the authority began a single-person flats conversion programme under which domestic flats are divided into two or three single-person units with shared or self- contained facilities. Some 2 500 single-person flats were produced during the year.

  To meet current expectations of shoppers and retailers, a substantial improvement and upgrading scheme was implemented in a number of estate shopping and commercial centres. This will sustain their competitiveness with adjacent private developments.

  The improvement strategy included re-planning of circulation routes, upgrading of finishes, improvement of facilities, additional signage and better lighting. Priority for major improvement was given to shopping centres that were 10 to 15 years old, and those facing commercial competition nearby.

Home Ownership Scheme

The Home Ownership Scheme (HOS) was established in the late 1970s to provide flats for sale at prices below market value to lower-middle-income families and public housing tenants.

  Private sector applicants for these flats may not own domestic property and are subject to a household income limit of $14,000 per month. These restrictions, however, do not apply to public housing tenants, residents of temporary housing areas and cottage areas managed by the authority, households displaced by clearance of squatter areas for development, natural disaster victims and junior civil servants.

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      Since the scheme started in 1978, a total of 153 000 flats, including 48 500 produced under the complementary Private Sector Participation Scheme have been sold to eligible families. About 50 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, 10 000 flats have been sold to prospective public housing tenants, who were then required to forego their rights to rental accommodation.

       As an encouragement, public housing tenants are accorded higher priority than private sector applicants in selecting HOS flats. This incentive is also extended to prospective tenants, so that more rental flats will be available for applicants in greater need.

       In return for the authority's indemnity against loss in case of default, purchasers are able to enjoy favourable mortgage terms provided by 50 financial institutions, for the purchase of the HOS and PSPS flats. The guarantee enables purchasers to borrow between 90 and 95 per cent of the flat price, with repayment periods of up to 20 years.

      With the introduction of the housing strategy, the production of ownership flats will increase from 10 000 flats a year to around 16 000 flats a year from 1991 to 1996. Of these, about 25 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.

      During 1991, a total of 17 392 flats were sold, starting in January with 5 210 flats in Phase 12C. Applications were invited for a further 6 010 flats in Phase 13A in April, and nearly 60 000 applications were received.

       In August another 5 484 flats were put up for sale, and in December more flats were offered.

       The prices of flats sold ranged from $228,800 for a flat of 36 square metres (saleable floor area) at Shiu Hin Court, Tuen Mun, to $1,102,700 for a large flat of 60 square metres at Hong Pak Court, Lam Tin.

Home Purchase Loan Scheme

As an integral part of the housing programme, the Home Purchase Loan Scheme assists lower-middle-income families to buy flats of their own in the private sector. Eligible applicants are offered an interest-free loan of $130,000 over 20 years, to help towards the purchase at downpayment or completion stage. Public housing tenants may also use the loan for refinancing.

      In April, the authority revised the HOS income limit to $14,000, and applied this also to the Home Purchase Loan Scheme. The authority also introduced a new option whereby eligible applicants who choose not to take the $130,000 interest-free loan, are given a monthly mortgage contribution of $2,000 for 36 months, which is not repayable.

      Applications were accepted throughout the year. Since the implementation of the scheme in 1988, a total of 21 650 applications were received, of which 12 700 (59 per cent) were from public housing applicants and 8 950 from the private sector (41 per cent). Altogether 13 800 applicants were found eligible. A total of 7 450 loans were granted.

As a result, 4 200 public housing units were recovered for allocation to other families.

Allocation

The Housing Authority owns and manages some 645 000 rental flats of different sizes, amenities and rent levels in 146 housing estates.

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   During the year, 38 000 new flats and 14 000 vacated flats were let to the various categories of eligible applicants. The biggest share went to Waiting List applicants (38 per cent), followed by tenants affected by the redevelopment of the older blocks and in the comprehensive redevelopment programme (29 per cent), and families affected by development clearance (13 per cent).

The remainder of the flats went to 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, those families affected by the Kowloon Walled City clearance and applicants from temporary housing areas.

The Public Housing Waiting List and allocation of rental flats have been computerised, and information on nearly three million applicants and tenants has been stored in the Housing Applications and Tenancies Management Information System. The system enables housing allocation and duplication checks to be carried out effectively and produces useful statistical information.

During the year, 20 000 flats, mainly in Tuen Mun, Tseung Kwan O, Tai Po and Fanling, were allocated to successful Waiting List applicants. Waiting time varied from four years for estates in Tseung Kwan O to one year for those in Tuen Mun.

Applicants for public rental housing through the Waiting List were considered in the order of registration and in accordance with the choice of districts indicated by applicants. Accommodation was offered to those who, on investigation, were found eligible in respect of their family income and residence in Hong Kong. The income limits range from $5,100 for a family of two to $13,100 for a family of 10 or more. The number of 'live' applications at the end of the year stood at 131 400. In addition, there were 28 300 applications on the Single Persons Waiting List established in January 1985. The income limit for single persons is $3,200.

A priority scheme is provided 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, 7 000 flats have been allocated to this category.

   There is also an incentive scheme by which families with elderly persons are allocated housing two years ahead of their normal waiting time. So far, 6 200 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 1991, several sheltered housing projects were open at Tak Tin Estate in Kowloon Central, Cheung Hang Estate in Tsing Yi, Tin King Estate in Tuen Mun, Fu Heng Estate in Tai Po, Wah Ming Estate in Fanling and King Lam Estate in Tseung Kwan O for 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.

Sitting Tenants

An ad hoc committee was set up by the Housing Authority to study the feasibility of a sales scheme by which public rental flats were offered for sale to eligible sitting tenants. A three-month public consultation exercise was conducted early in the year and the scheme was generally welcomed by the public.

   After approval from the Executive Council and Land Commission was obtained, the scheme was implemented in August. A total of 6 897 tenants from 11 selected blocks in

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     seven estates were invited to apply for the scheme. The sale price was fixed at a 45 per cent discount from its market value.

Management

The chairman and members of the authority regularly visit the rental estates and ownership courts to meet community representatives and to discuss housing matters with them. Similar visits are also made by the authority's management and operations committee, accompanied by senior officers of the housing management branch and representatives of residents' association office bearers as well as district board members.

Housing Subsidy Policy

To reduce housing subsidies to tenants who are able to meet their own housing needs, the authority implemented a Housing Subsidy Policy in 1987.

      Under this policy, tenants who have lived in public housing for 10 or more years and whose incomes exceed the Subsidy Income Limit (twice the Waiting List Income Limit) are required to pay double net rent.

       About 219 000 households have been affected by the subsidy policy. Of these, 55 700 (25 per cent) are required to pay double net rent, and 163 300 (75 per cent) are allowed to continue paying the existing rent.

      In the current year, 40 300 households whose tenancies began between April 1979 and April 1981 are affected by the policy. The status of some 54 600 households who were allowed to continue paying their existing rents two years ago will be reviewed; if their household incomes are found to exceed the subsidy limit, they will be required to pay double rent from April 1992.

      The smooth implementation of this policy in the past four years reflects its acceptance by the public, and reaffirms the authority's social objective of providing housing to those in greatest need. Nevertheless, the policy is being reviewed by an ad hoc committee to determine whether improvements might be made.

Agency Management Scheme

Under an agency management scheme, 22 Home Ownership Estates are being managed by private property management agents appointed and supervised by the authority.

      The scheme aims to provide more flexibility and to encourage greater participation by owners in the everyday management of their own properties, with the authority remaining ultimately responsible for management standards and policy.

Car Parking and Hawker Control

Illegal car parking and hawking are among the management problems in the estates.

      Roads in 132 rental estates, nine factory estates, 40 HOS courts and 26 temporary housing areas are under the control of the authority, which is empowered to impose charges for impounding, removing and storing vehicles illegally parked in housing estates.

      In 1990, a three-year contract was signed privatising the management of carparks and restricted roads in 28 selected rental estates covering 7 800 parking spaces. More carparks in other estates are being privatised.

      To deal with illegal hawking, staff are required to work irregular hours. As a result of their efforts, there were 18 arrests, 10 777 seizures and 590 prosecutions in estates during the year.

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Welfare Services

By the end of the year, 873 welfare premises in Housing Authority estates and courts were let for welfare and community services at a concessionary rent of $19 per square metre per month. Non-domestic premises at less popular locations were also let to community organisations to run their services at a fair market rate.

Under another programme, the authority undertakes fitting-out works on some welfare projects in various estates. Since 1984, 120 welfare projects have been fitted out.

An experimental project has begun in Choi Hung and So Uk estates to provide out- reaching services to elderly people. Officers visit the elderly persons to help them take part in various activities, and render other services.

Letting of Commercial Properties

The Housing Authority manages 1.27 million square metres of commercial space for shops, market stalls, banks, restaurants and flatted factory units, of which 48 000 square metres was completed in 1991.

The commercial space is let under some 30 500 separate tenancies. Rental income during the year amounted to $2,082 million.

The stock includes 17 660 flatted factory units in 17 flatted factories and 5 180 graded shops in the former resettlement estates. These shops were initially let at very low rents which, despite moderate biennial increases since 1976, remain at about one third of the market levels.

Rents for other commercial premises are fixed at market levels, in keeping with the policy not to subsidise commercial operators. During the year, 831 commercial premises were let by rental tendering while another 144 premises with a total floor area of 42 000 square metres were disposed of through letting by negotiation.

A more flexible approach is adopted for the letting of a number of commercial premises in public housing estates to large-space takers for the operation of stores, supermarket- cum-markets, single operator markets and food plazas. Greater freedom has been given to such tenants who are allowed to license part or the whole premises to their licensees to run the businesses.

The year saw full completion of Lok Fu Shopping Centre II as an extension from the existing Centre I, providing additional retail space of 14 280 square metres, accom- modating two mini-cinemas and the first Japanese department store in public housing estates. Already opened for business are a number of neighbourhood shopping centres including Wah Kwai, Tak Tin, Fung Tak, Kwai Hing, Kwong Yuen and Fu Heng where marketing efforts achieved satisfactory occupancy.

Under the Commercial Properties Committee, research and design were emphasised to ensure that new shopping centres are best suited to the needs of tenants and local residents, and existing centres were upgraded where necessary. Improvement works were carried out to upgrade eight shopping centres in 1991, and promotional activities were held in more than 70 centres.

Six-monthly reviews of the rents of tenants affected by the comprehensive redevelopment programme are carried out to ensure that such tenants are not being asked to pay rents in excess of market value. Tenants required to vacate their premises to facilitate redevelopment receive an ex-gratia payment. In some cases, alternative premises are offered through restricted tender and a three-month rent-free period is granted to the successful

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tenderer. As an alternative to reprovisioning, such commercial tenants can now choose to relinquish the opportunity for reprovisioning and opt for a lump sum payment of $24,000 to assist the relocation of their business.

Temporary Housing

Temporary Housing Areas (THAs) are provided for the homeless and people not yet eligible for permanent public housing who have been displaced by clearances, fires, natural disasters and other operations. At the end of the year, there were 72 000 persons living in 65 THAs.

      With the relaxation of rehousing policies, the demand for temporary housing has decreased. The Housing Authority does not plan to build any more new temporary housing areas. On the other hand, a five-year programme has been drawn up to clear an average of 16 000 people from THAS every year.

      Residents in THAS are rehoused in permanent public housing through clearance, trawling and the Waiting List. Further, they have priority in the purchase of HOS flats or are eligible for interest-free loans under the Home Purchase Loan Scheme. During the year, 21 000 people moved out through these means.

Transit Centres

Eight transit centres with a total capacity for some 1 300 persons are suitably located in the territory to provide free and emergency accommodation for people made homeless by fires and natural disasters before their eligibility for rehousing is established.

Cottage Areas

There are six cottage areas in the territory accommodating nearly 10 000 people.

Squatter Control

The 1982 squatter structure survey provides a baseline for control of new squatting on government land and private agricultural land. Squatter control is carried out in the form of daily patrols and regular hut-to-hut checks.

      New illegal structures demolished were mainly non-domestic, and over half of them were demolished by patrols before they were even completed for use.

Rehousing through clearance and the Waiting List has reduced the squatter population to 58 000 in the urban area and 230 000 in the New Territories.

Squatter Area Improvements

With the completion of the squatter area improvement programme the Housing Authority continues to undertake regular maintenance and repairs of the services and facilities built under this programme. It is also responsible for setting electricity charges for public lights in squatter areas.

Kowloon Walled City Clearance

     Since the government announced the decision in 1987 to clear the Walled City, the Special Duties Office has completed offers of rehousing and compensation to all 28 300 eligible residents and operators of some 900 commercial undertakings. Of these, 25 450 residents and 520 commercial undertakings have accepted the government's offer and moved out of the Walled City. Cash compensation amounting to $2.4 billion has been paid.

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The clearance has been undertaken in four phases with the last phase due to be cleared in June 1992. The buildings will then be demolished and the 2.7-hectare site developed into an Urban Council Park.

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.

  At present, statutory controls apply only to domestic premises in the private sector unless otherwise exempted. Tenants are afforded rent increase control and security of tenure. Unless a tenant voluntarily vacates the premises, a landlord must apply on certain specified grounds and obtain an order from the Lands Tribunal before he can recover possession.

  Heavy penalties are prescribed for harassment of a protected tenant with intent to induce him to leave. However, provisions exist to facilitate negotiations by which the parties may reach an agreement whereby the tenant surrenders his protected tenancy in exchange for a consideration.

  The Rating and Valuation Department publishes explanatory pamphlets to help people understand their position in relation to the legislation, and provides an advisory and mediatory service to deal with the many practical problems arising from rent controls. It also operates a scheme under which rent officers attend District Offices on designated days each week to deal with referred cases and answer enquiries on landlord and tenant matters.

The legislation is under constant review to improve its workings and to achieve the objective, recommended in 1981 by a Committee of Review and endorsed by the government, that as soon as circumstances permit, rent control should be phased out. To this end the government decided in 1991 to phase out controls on rents, by steps and without adverse social consequences, by the end of 1994. However, security of tenure will still be preserved.

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.

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  Part I previously applied to both domestic and business premises, but, as from July 1, 1984, it applies only to domestic premises. New or substantially-reconstructed buildings are excluded from Part I controls.

Rent increases under Part I are controlled by reference to the standard rents of the premises (i.e. the rent payable in respect of the unfurnished premises on or most recently before December 25, 1941). The rent lawfully chargeable under the ordinance is the permitted rent. Since November 1990, the permitted rent has been 48 times the standard rent. However, in no case is the permitted rent to exceed the prevailing market rent. The Commissioner of Rating and Valuation is empowered to certify the standard rent and the prevailing market rent.

There is provision in the legislation for the exclusion from control of premises for the purpose of redevelopment, and generally possession is subject to the payment of compensa-

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tion to the protected tenants. Jurisdiction under Part I is exercised by the Lands Tribunal, while technical functions are performed by the Commissioner of Rating and Valuation.

Post-war Premises

     Comprehensive rent control legislation affecting post-war domestic premises has been in force in one form or another since 1963 - apart from the period between 1966 and 1970 - and is now embodied as Part II of the Landlord and Tenant (Consolidation) Ordinance.

       Part II, which provides security of tenure and controls rent increases, now covers the majority of tenancies and sub-tenancies in post-war domestic premises completed or substantially rebuilt after August 16, 1945. It does not, however, apply to tenancies in buildings first certified for occupation after June 18, 1981, nor to new lettings created on or after June 10, 1983, nor to tenancies of premises having a rateable value of or above $30,000 as at June 10, 1983.

       Under Part II, landlords and tenants are free to agree on an increase in rent, but such agreements must be endorsed by the Commissioner of Rating and Valuation. Increases, except by agreement, are permitted only once every two years. Where an increase is not agreed, the landlord may apply to the commissioner for his certificate of what increase may be made to the current rent. 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 70 per cent of the prevailing market rent, the permitted increase will be an amount necessary to bring the current rent up to 70 per cent of the prevailing market rent. Both landlord and tenant are at liberty to apply to the commissioner for a review of his certificate and further to appeal to the Lands Tribunal against the commissioner's review.

       For domestic tenancies outside these controls, Part IV of the Landlord and Tenant (Consolidation) Ordinance provides a measure of security of tenure for a sitting tenant who wishes to renew his tenancy and who is prepared to pay the prevailing market rent on renewal. However, Part IV does not impose control on rents. Under these provisions, a new tenancy must be granted unless the landlord can satisfy the Lands Tribunal that he requires the premises for his own occupation or that he intends to rebuild the premises, or on one of the other grounds specified in the legislation. The parties are free to agree on the rent and terms for the new tenancy but, failing agreement, they can apply to the Lands Tribunal for a determination.

       The scheme under Part IV regulates the relationships of landlords and tenants for nearly all domestic tenancies not otherwise subject to the Part I or II controls. Moreover, there are provisions enabling tenancies to be transferred, under certain statutory conditions, from the ambit of Part II to Part IV.

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THE primary objectives of the government's lands and works policies are to ensure an adequate supply of land to meet the short-term and long-term needs of 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 infrastructure and buildings.

   Policy responsibility for land, public works and private development rests with two separate policy branches - the Planning, Environment and Lands Branch and the Works Branch, each headed by a Secretary. 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 giving broad approval to all major proposals affecting the development or planned use of land.

   The Secretary for Planning, Environment and Lands (SPEL) 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 Buildings and Lands Department, Environmental Protection Department, Planning Department and Drainage Services Department, as well as the Land Office of the Registrar General's Department and part of the work of the Territory Development Department, Civil Engineering Department, and Agriculture and Fisheries Department.

The Secretary for Works oversees and has policy responsibility for the works agency activities of the Architectural Services Department, Civil Engineering Department, Drainage Services Department, Electrical and Mechanical Services Department, Highways Depart- ment, Territory Development Department and Water Supplies Department.

Following the announcement of the massive port and airport development project, a New Airport Works Division (NAWD) was set up in April 1990 under the Secretary for Works to co-ordinate this development.

With the expansion of the co-ordination, monitoring and publicity functions of the NAWD, and in the light of the government's stated commitment to the implementation of the major infrastructure projects in the Port and Airport Development Strategy, there was an urgent need to strengthen the organisational structure and staffing of the NAWD to

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take on and to discharge fully and effectively the additional responsibilities. Subsequently, NAWD was upgraded to the New Airport Projects Co-ordination Office in February 1991.

Planning

Town planning seeks to bring about a good living and working environment for the present and future population of Hong Kong. Given the limited land resources, it is a great challenge to plan for the competing demands of housing, commerce, industry, transportation, utilities, as well as recreation, education, medical and health, and other community facilities.

This work is carried out by the Planning Department under policy directives from the Planning, Environment and Lands Branch of the Government Secretariat. The department comprises three functional units: the Territorial and Sub-Regional Planning Branch, the District Planning Branch, and the Ordinance Review and Technical Administration Division. The following are the major planning tasks undertaken by the department in 1991:

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Introduction of two interim Amendment Bills on the planning legislation and the release of a Consultative Document on the Comprehensive Review of the Town Planning Ordinance.

- Continuing review of the Territorial Development Strategy, the Sub-Regional Development Strategies and the Hong Kong Planning Standards and Guidelines and the release of the Metroplan Selected Strategy.

Follow-up work on the Rural Planning and Improvement Strategy and the Port and Airport Development Strategy.

- Forward planning for the districts and development control, and co-ordination of

various urban renewal efforts.

Review of Town Planning Ordinance

The Town Planning Ordinance was first enacted in 1939. Until recently, there had been no fundamental changes to the planning legislation for Hong Kong. In September 1987, the Executive Council ordered that an overall review of the ordinance should be undertaken with a view to introducing new legislation to replace the existing one.

      The comprehensive review of the ordinance was completed in mid-1991 and a Consultative Document was released in July 1991 for public comment. The document set out the various changes proposed to the existing ordinance except the questions of compensation and betterment which were referred to a Special Committee specifically set up to consider public submissions, examine the issues involved and make recommendations to the Governor on whether there would be a need to include provisions relating to compensation and betterment in the new planning legislation. The consultation period lasted until January 11, 1992. The government will take account of all the views collected in drawing up the new Planning Ordinance. It is envisaged that the drafting of the new Planning Bill will take another year.

       Meanwhile, two interim Amendment Bills were introduced in 1991. The Town Planning (Amendment) Ordinance 1991 was passed by the Legislative Council on January 23, 1991, and came into effect on January 25, 1991. In the main, it provides for the extension of the jurisdiction of the ordinance to cover the whole territory, the introduction of direct enforcement against unauthorised development in selected areas and the delegation of

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authority by the Town Planning Board. The Town Planning (Amendment) (No. 2) Ordinance 1991, provides for setting up an independent Appeal Board to take over the current functions of the Governor in Council in dealing with appeals against the decisions of the Town Planning Board on planning applications, was passed by the Legislative Council on July 17, 1991. The board came into operation on November 18, 1991.

Hong Kong Planning Standards and Guidelines

The Hong Kong Planning Standards and Guidelines (HKPSG) is a manual of criteria for determining the quantity, scale, location and site requirements of various land uses and facilities. This manual is applied to planning studies, preparation or revision of town plans and development control. The document is constantly under review to take account of changes in government policies and demographic characteristics as well as social and economic trends. Major revisions during the year included road standards and internal transport (including parking) facilities, density guidelines for public housing estates, new standard design school buildings, planning guidelines for rock cavern developments and petrol filling stations, and conservation of historic buildings and archaeological sites.

Since 1990, the distribution of HKPSG has been extended to the libraries of tertiary educational institutions, public libraries and other institutions. A summary of the standards and guidelines has been made available to the public. To further promote public awareness of planning and facilitate the use of these guidelines by non-government bodies in their own work, government has decided to publish the document for public reference. The first three chapters of the document are now available for sale at the Government Publications Sales Centre.

During the year, special planning studies related to the drawing up or revision of planning standards were conducted on the utilisation of car parking spaces in residential zone 2 and 3 areas, hierarchy and distribution of open spaces and recreation facilities, and electronic data processing centres.

Territorial Development Strategy

The Territorial Development Strategy (TDS) provides a broad long-term land use/ transport/environmental framework for the planning and development of the territory. It aims to facilitate the continued growth of the territory as a regional centre and international city. A comprehensive review of the strategy was commenced in 1990 to assess the implications of the proposed port and airport developments and the current policies on environment and transport. The changing role of the territory in the context of recent developments in the Pearl River Delta region is also being taken into consideration in the review. Major sectoral land use studies on industry, housing, office and business park, recreation, rural land, landscape/conservation and environment have also been undertaken as part of the review, with the assistance of consultants where necessary. Based on these studies, various options and broad patterns of future territorial development will be prepared, tested and refined. On completion of the review, the TDS will lay down the framework for infrastructure provision to satisfy long-term development needs, especially in the distribution of population, employment and economic activities. Sectoral land use policies for housing, industry, office, recreation and conservation will also be formulated to provide guidelines for future development. The current review of the TDS is expected to be completed in 1992-3.

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Sub-regional Development Strategies

The Sub-regional Development Strategies aim to translate the long-term broad-brush territorial goals into more specific planning objectives for the five sub-regions of Hong Kong (namely, Metroplan area, North East New Territories, South East New Territories, North West New Territories and South West New Territories). They serve as a bridge linking the Territorial Development Strategy and district plans. Since the decision on the replacement airport in Chek Lap Kok and port expansion in October 1989, the review of the Non-metropolitan Development Strategies (formerly known as Sub-regional Planning Statements) has commenced. Sectoral studies for the review of the North West New Territories (NWNT) Development Strategy have been carried out to examine the key issues of the sub-region. From the findings of these studies, and taking account of the long-term land use needs likely to be generated from the Port and Airport Development Strategy and the Rural Planning and Improvement Strategy, a number of initial development options have been generated. These options have been evaluated against a set of agreed criteria and the next step is to produce a preferred development option. Upon the completion of the review, which is scheduled for early 1992, the development strategy will provide a land use/transport/environment framework, with a target year of 2011, to provide inputs for the review of the Territorial Development Strategy and to guide future development in the NWNT.

       With the replacement airport at Chek Lap Kok and the provision of new port facilities in North East Lantau, the South West New Territories (SWNT) will be subject to tremendous development pressures. A major issue in the SWNT is the achievement of a balance between increasing demands for urban development, on the one hand, and the con- servation of the intrinsic natural beauty of the sub-region, on the other. A review of the SWNT Development Strategy is therefore being undertaken to produce an acceptable land use/transport/environment framework with a target year of 2011 for the sub-region. The study is scheduled for completion in mid-1992.

Metroplan

The Metroplan Study serves as a planning framework for comprehensive restructuring of the old urban areas around Victoria Harbour over the long-term to create a better urban environment. Redevelopment sites, reclamation and the terracing of hill slopes are identified as 'solution spaces' for the formulation of alternative Metroplan options.

       After more than three years of endeavour, the Metroplan Study has been completed. Subsequent to endorsement by the Executive Council, the Metroplan Selected Strategy was released to the public in November 1991. The strategy is designed to provide a framework within which both public and private sector agencies can formulate detailed plans and development programmes with the common aim of making the city a better place in which to live and work. To that end, it sets out a broad pattern of land use and proposes various guidelines with regard to the type, form and density of different kinds of development. The overall pattern of land use has been formulated within a network of principal highways and railways to provide safe and convenient movement of passengers and goods. The restructuring of the city takes particular account of new development opportunities that will be made available through the eventual relocation of the airport from Kai Tak.

      Proposals have also been made to indicate the general sequence of major engineering works and building development, recognising that the timing of such works is ultimately

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dependent on both public sector resource allocations and market forces. Metroplan is not a programme of public works. It is a framework which will guide the selection of projects and the priority given to them, so as to restructure and develop the city in a more cost-effective way. Metroplan will be applied on an administrative basis and will provide a guide for the formulation of statutory zoning plans and associated controls at district level.

District Planning

Most development projects are implemented in accordance with plans prepared at district level. There are two types of district plans, statutory and departmental. Their purposes are to regulate and guide various types of land use, the building volumes and development characteristics of individual sites to meet the demand of the territory's growing population, and to ensure that adequate provision is made for community facilities and public utility services.

  Statutory outline zoning plans (OZPs) for various districts of the main urban areas and new towns, as well as development permission area (DPA) plans for some parts of the rural areas in the New Territories, are prepared by the Town Planning Board (TPB) under the provisions of the Town Planning Ordinance. Once exhibited for public inspection under the Town Planning Ordinance, both the OZPs and DPA plans have statutory effect. The Building Authority is empowered to disapprove any plans of new building works submitted under the Buildings Ordinance if they contravene the OZPS or DPA plans.

  The main urban areas and new towns in the New Territories are now covered by a total of 48 OZPs. The OZPs indicate the proposed broad land use patterns and major road systems of particular districts and serve as development guides to public and private investments. In the year of 1991, eight OZPs were exhibited by the TPB.

Some parts of rural areas in the New Territories are covered by DPA plans prepared under the provisions of the Town Planning (Amendment) Ordinance 1991. The ordinance empowers the TPB to prepare plans to require planning permission for all development in the designated DPAs, unless otherwise exempted in the plans. These plans serve to provide guidance for planning and to facilitate development control within DPAs. It is intended that DPA plans will be replaced by OZPS in three years' time.

  Unless in conformity with the DPA plans or with the required planning permission, any development, other than an existing use, undertaken or continued on or after gazetting of the DPA plans, may be subject to enforcement proceedings under the ordinance. During the year, the Director of Planning served 33 warning letters/enforcement notices.

  Attached to and forming part of the OZPs and DPA plans are notes setting out the types of land use which are permitted as of right in particular zones or which may be permitted with or without conditions on application to the TPB. This permission system allows for greater flexibility in land use planning to meet community needs. The ordinance also allows an unsuccessful applicant the right to request the TPB to review its decision. During the year, the board considered 396 applications for planning permission and 47 for review, as compared with 266 and 39 respectively in 1990.

An area may be designated as a 'Comprehensive Development Area' on a statutory plan. This is intended to promote development in a comprehensive manner, often including the provision of a range of related community facilities and open space. Development proposals within these areas must have planning permission from the TPB and applica- tions for planning permission should include a master layout plan. During the year,

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     12 applications for approval of master layout plans in respect of comprehensive development areas were considered by the board, compared with 19 in 1990.

      The TPB has promulgated guidelines for application for various types of development in order to assist it to assess planning applications on a more consistent basis and to guide the public to submit planning applications. This year, a set of guidelines for development within the Green Belt zone was released, in addition to the nine sets of guidelines for other types of development released in previous years.

      Due to the increase in the number of statutory plans and planning applications processed by the TPB subsequent to the enactment of the Town Planning (Amendment) Ordinance 1991, the workload of the board has increased significantly. For better discharge of the functions of the board, the ordinance makes provision for it to delegate some of its powers and functions to committees appointed by the Governor. Two Planning Committees were set up in July 1991, one for the Metroplan area covering Hong Kong Island, Kowloon, and Tsuen Wan; and one for the rural areas and new towns in the New Territories.

During the year, the Planning Department commissioned consultants to undertake a survey on the characteristics of offices, showrooms, and research and development facilities currently established within existing industrial buildings. The findings of the survey will be used in revising existing planning guidelines and to formulate new ones for processing planning applications. The survey should be completed in 1992.

      Meanwhile, outline development and layout plans are also prepared at the district level. They are departmental plans prepared within the framework of the statutory OZPs to show the land use and road framework in greater detail. They also provide a guide for land for- mation, implementation of public work projects, and subsequent land sales and allocations.

      During the year, two major planning consultancy studies were commissioned for the urban area. The Comprehensive Review of Special Control Areas is intended to review comprehensively the existing Special Control Areas in Kowloon, New Kowloon and Hong Kong Island and to make recommendations on the roles and directions of these Special Control Areas. The Review of Building Density and Height Restrictions in Kowloon and New Kowloon is to examine comprehensively the planning, traffic, infrastructural and environmental implications of relaxing the airport height restrictions over Kowloon and New Kowloon and to recommend suitable development control guidelines and measures to prevent over-straining the existing and planned future infrastructural and community facilities that may possibly arise from additional development. The results of these studies are due in 1992.

Other than undertaking statutory planning work, the seven District Planning Offices of the Planning Department have also participated in forward planning which includes major reclamation and development projects, for example, the Central and Wan Chai, and West Kowloon Reclamations. The plan for Hung Hom Bay Reclamation is also being reviewed taking into account more recent development ideas. In addition, studies on the future development of Stanley and the redevelopment of government properties are in progress. In the New Territories, major forward planning studies cover North Lantau, the Lantau Port Peninsula, and the Western Harbour.

Rural Planning and Improvement Strategy

The Rural Planning and Improvement Strategy (RPIS) aims at improving the conditions and general environment of the rural areas in the New Territories outside the new towns,

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through the formulation of an adequate planning and administrative framework to guide development and the provision of essential infrastructure and amenities. The strategy was approved by the Executive Council in March 1989 as a basis for further planning, programming and implementation of relevant works programmes at a cost of about $4 billion.

  One of the major streams of follow-up work related to the RPIS is the revision and updating of the non-metropolitan Sub-regional Development Strategies. Other tasks include the monitoring and review of development management guidelines for the rural areas of the New Territories; undertaking studies and forward planning on sites for open storage uses and village expansion; and reviewing the rural upgrading concept in the context of the management of urban transition areas, rural activity areas, recreation priority areas and countryside conservation areas. Various options and institutional mechanisms for the development or redevelopment and management of these rural areas are being proposed in relation to statutory planning and other administrative controls. These studies/reviews also take into account the extent of urban or non-rural development pressures as well as future housing, industrial and port-related uses arising from the Long Term Housing Strategy, the Port and Airport Development Strategy and other major strategic studies in these areas.

At district level, RPIS activities include the preparation and processing of village and other layout plans to provide guidance for early implementation of village improvement schemes, infrastructural and other works under the RPIS programme. Relevant develop- ment works items are initially included in district-based RPIS programmes co-ordinated and monitored by the district Rural Development Working Groups.

  The overall policy and development management aspects of the RPIS are monitored by the RPIS Monitoring Group, while the Rural Development Steering Committee oversees and monitors progress on the implementation of the Rural Development Programmes.

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Land Administration

The Lands Administration Office of the Buildings and Lands Department co-ordinates all aspects of land administration throughout the territory.

  The office's main functions are to acquire sufficient land for the government's development programmes, to dispose of sufficient land to meet demand and to manage government land.

  Although most government land available for private sector development is sold by public auction or tender, land is made available at nominal premium to the Housing Authority for its public rental estates and to non-profit-making charitable institutions which operate schools, hospitals, social welfare and other community services.

A land sales programme is issued at the beginning of each year and updated regularly showing the details of public auctions and tenders which are normally held each month. Land in the New Territories is often sold by way of letter B tender, which means that only holders of letter B entitlements are able to bid. These land exchange entitlements were used in the past for the acquisition of land in the New Territories but have ceased being issued since 1983.

Land usage statistics are at Appendix 35.

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Land Acquisition

When private property is needed for the implementation of public works projects and cannot be acquired by negotiation, the use of compulsory powers becomes necessary. Property may then be acquired under either the Crown Lands Resumption Ordinance, the Land Acquisition (Possessory Title) Ordinance, the Mass Transit Railway (Land Resumption and Related Provisions) Ordinance or through the Roads (Works, Use and Compensation) Ordinance. These ordinances provide for payment of compensation based on the value of 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 being paid 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 available. A system of ex-gratia payments also applies in the case of old scheduled lots acquired in the urban area. Additionally, an ex-gratia allowance, known as a Home Purchase Allowance, is normally paid upon resumption of pre-war and post-war domestic units within the urban area.

During 1991, about 0.58 million square metres of private land was acquired in the New Territories to carry out various public works projects. The total land acquisition and clearance costs amounted to about $1.21 billion. These projects included land formation works for the replacement Airport at Chek Lap Kok; Ping Shan Development Stage I; North East New Territories Landfill site and associated projects, and the North West New Territories Development Yuen Long Southern Bypass.

      In the urban areas of Hong Kong Island and Kowloon, about $0.77 billion was paid during the year in compensation for land and buildings acquired for public works projects either under compulsory powers or by agreement. These projects included the Tate's Cairn Tunnel and Approaches, the Hillside Escalator Link between Central and Mid-Levels, and the Kowloon Walled City clearance.

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 not to exceed 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 and regularly does so. The land disposal limit this year is 81.285 hectares with a 5-hectares reserve. 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.

Land Sales

The property market was very buoyant in 1991 after the announcement of the agreement on the new airport. Very high prices were obtained for land sales with a price in excess of

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$1 billion being paid for a residential site in Fanling. However, the problem of speculation on resale of flats in new developments was becoming more evident. In view of the situation, the Lands Administration Office increased the amount of land it originally planned to sell in the land sales programme.

   Notable land transactions in 1991 included the grant of a 58.47-hectare site on the north west of Stonecutters Island for the construction of Container Terminal 8, the grant of a 1.35-hectare site for a further expansion of the Tai Po Industrial Estate and a 6-hectare site in Sha Tin for the construction of an educational institution.

   The first grants of land, in Mong Kok and Wan Chai districts, were made to the Land Development Corporation for the redevelopment of existing old buildings into new commercial/residential buildings with provision of markets, social services facilities and government offices in line with government's policy on urban renewal.

   Four sites in Kowloon, former government quarters sites with a total area of 1.68 hectares, were sold by auction for residential use. Many more such sites are expected to come on stream as the government rationalises its land holdings.

Two sites with a total area of 6.31 hectares were sold under the Private Participation Scheme, which will provide a total of 6 280 flats. Six sites were also granted to the Hong Kong Housing Authority for the development of Home Ownership Scheme projects. These included a 2.5-hectare site at Fanling and a 1.1-hectare site at Tin Shui Wai in the Yuen Long district. A further five hectares of land were granted to the Housing Authority for the implementation of its scheme to sell flats to sitting tenants.

In the New Territories, eight sites with a total area of 7.95 hectares were sold by tender restricted to holders of Land Exchange Entitlements (Letter A/B). These included a 1.95-hectare site in Tsuen Wan, a 1.79-hectare site in Fanling and a 1.72-hectare site at Ma On Shan in the Sha Tin district. All three sites were for commercial/residential use.

Land Registration

The Land Registration Ordinance provides for registration of all instruments affecting land in the Land Office, one of the two major sections of the Land Division of the Registrar General's Department. Registration is by means of a memorial form containing the essential particulars of the instrument which are then placed on a computerised (except in the New Territories District Land Registries) register relating to the particular piece of land or individual premises affected, such as residential flats, shops, and commercial and industrial premises. The registers provide a complete picture of the title to each property from the grant of the government lease. They are available for search by the public on payment of a small fee. The memorials and a complete copy of each registered instrument are kept and are also available for search in microfilm form by the public 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, unless they are registered within one month of execution, in which case priority relates back to the date of the instrument. For charging orders made by the court and pending court actions, priority runs from the day following the date of 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.

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Registration is therefore essential to the protection of title, but does not guarantee it. Approval in principle was given by the government to investigate the merits of changing the present system of land registration to one of title registration. A working party chaired by the Registrar General and comprising prominent members of the legal profession was set up and has made its report to government on the new title registration system.

The records of transactions affecting land on Hong Kong Island, Kowloon, New Kowloon and some of the urban areas of the New Territories are kept at the Land Office, Victoria. 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. Before any land transaction is completed a land search to ascertain property ownership should always be made. During the year, 3 168 942 such public land searches were made and 823 842 instruments registered throughout the territory, compared with 2 604 294 and 673 400 respectively in 1990. At the end of the year, there were 1 447 391 property owners, an increase of 127 120 over the previous year.

      The Conveyancing and Legal Advisory Section of the Land Division provides professional legal services 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, grants and exchanges of government lands, 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, the purchase and sale of government accommodation in private developments, mortgages to secure interest-free loans to private schools, the purchase of properties for government staff quarters and group housing schemes for the elderly. This section is also responsible for the processing of the Consent Applications which are governed by the rules of the Land Officer's Consent Scheme. During the year, 22 applications involving 11 754 units in the urban areas were approved and in the New Territories 48 applications involving 15 604 units were approved.

Land Registration statistics are at Appendix 34.

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.

Global Positioning Systems (GPS) are having a major impact on all forms of geodetic survey worldwide. A team of UK surveyors visited Hong Kong in 1991 and carried out a major survey to relate the Hong Kong co-ordinate system to the World Grid System (WG84) used by the GPS Satellites.

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Cadastral surveying is an important function of the office, serving the public and government by defining property boundaries. The office maintains a comprehensive graphical record of all leasehold and government land boundaries in the territory. Landowners may apply to re-establish private lot boundaries for redevelopment purposes for a fee. Legislation was introduced in 1991 to limit boundary surveys to authorised persons in order to protect the public, strengthen private sector practices and improve the cadastral survey system. Contracting out of some cadastral surveys covering small house lots in the New Territories continued in 1991.

  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 of 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 the Countryside Series (six sheets) and the Tourist Guide, has been strong and the design and contents are continually under review to make subsequent editions more attractive and informative to users.

Maps are obtainable from conveniently located outlets throughout the territory.

The Survey and Mapping Office provides extensive cartographic and reprographic services 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.

  The computerised land information system installed in the Survey and Mapping Office in 1989 has started producing mapping and information products. The Kowloon District Survey Office is the first district which has its large-scale maps in digital form with land information processed and plans produced by sophisticated computer equipment. Up-to- date mapping information is readily available to map users. Besides producing standard survey sheets at scale 1:1 000 containing full topographical features, the system can also produce plans according to the user's specifications including features to be shown, such as buildings, roads, contour lines; colours and symbols for different features; plan scale and plan size. Mapping information in digital form may also be supplied to users on magnetic media, and direct on-line access to the central mapping database is possible. Data conversion for the other districts in the territory continues and is scheduled to be completed by 1993.

  The Photogrammetric Survey Section provides aerial photographs and photogrammetric mapping as well as data and information for engineering design work, volumetric calculations for quarry and controlled tipping operations, environmental studies and town planning work. The Air Survey Unit is also on call for quick response photography in emergency operations such as storms, flooding and landslips.

  A consultancy study on the survey and mapping industry in Hong Kong was completed in April 1991. The recommendations directly affecting the Survey and Mapping Office are now being examined for implementation.

LAND, PUBLIC WORKS AND UTILITIES

Fill Management

Marine sand can be dredged quickly and economically and is the preferred source of material for major new land reclamation projects. Around 350 million cubic metres of marine sand will be required for new reclamations over the next 15 years. Over half this demand will occur between 1992 and 1994 during construction of the new airport and related developments. Large amounts of soft marine mud will be dredged from the sea bed prior to some of these reclamations. This is mainly to avoid unacceptable delays to project programmes due to settlement of the mud if it were left in place.

The territory's fill resources are managed by the Fill Management Committee (FMC) whose Secretariat is housed in the Geotechnical Engineering Office (GEO) of the Civil Engineering Department. During 1991, the FMC Secretariat completed the establishment of a comprehensive computerised database of all data on fill sources. This database provides the information on which the committee makes decisions on reservation, allocation and efficient utilisation of fill resources for all government and major private projects. During the year, the FMC also took over the management and programming of mud dumping from the Environmental Protection Department.

A major investigation of sea bed materials by the GEO is about to be completed. More than a dozen marine borrow areas have been investigated and these contain over 350 million cubic metres of sand suitable as fill material.

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, Tseung Kwan O and rural townships is 3.65 million. At the end of 1991, about 2.3 million people were housed in the new towns.

The New Territories Development Department was created in 1973 to plan and implement the new town development programmes. In 1986, the department extended its role to cover further development in the urban areas and its title was changed to Territory Development Department.

     The department is constituted on a multi-disciplinary basis and includes professional officers with expertise in civil engineering, architecture, landscaping and quantity sur- veying. They work closely with the Housing Department, Planning Department, City and New Territories Administration, Urban Services Department, Regional Services Depart- ment 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 been actively taking part in the development of comprehensive housing schemes within the new towns and rural townships.

Tsuen Wan and Kwai Chung

Tsuen Wan New Town extends over the areas of Tsuen Wan, Kwai Chung and Tsing Yi Island. Its total population is about 716 000, which represents a two per cent decrease when

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204

compared with the population of 1990. The thinning out of population in Tsuen Wan is in line with the planning intention of Metroplan.

The Kwai Chung Container Terminal is sited within the boundary of the new town. Development rights for Container Terminal 8 were awarded to a consortium of terminal operators in March 1991 with commencement of construction works later in the year. Upon completion in mid-1995, Container Terminal 8 will increase Hong Kong's container handling capacity by about 30 per cent. A feasibility study for Container Terminal 9 at south-east Tsing Yi has also been carried out.

  On Tsing Yi Island, the remaining reclamation at Tsing Yi Bay was completed, providing a site for a sports ground and swimming pool complex, construction of which is programmed to start in 1993. Traffic conditions along Kwai Chung Road corridor have been vastly improved with the completion and opening of the Kwai Chung Road flyover and the Castle Peak Road/Kwai Chung Road interchange. Major road improvement works to Kwai Chung Road south, Container Port Road, Texaco Road and Kwan Mun Hau Street have been progressing satisfactorily.

  The completion of Tak Wah Street Park Phase I and the district open space fronting the Riviera Garden have further enhanced the provision of recreational facilities in Tsuen Wan Town Centre. The forthcoming opening of Tso Kung Tam outdoor recreation centre will provide dormitories for overnight campers in addition to recreational facilities. The major community facilities completed in Tsing Yi during the year include a sub-divisional fire station, a community hall in Cheung Hang Estate and an indoor recreation centre in Tsing Yi Estate.

Sha Tin

The development of Sha Tin has reached a relatively advanced stage with much of the remaining works concentrated in Ma On Shan. Works carried out during 1991 aimed at complementing and enhancing the infrastructure and providing community facilities to cater for a population which will increase from the present 570 000 to around 700 000 upon full development by the end of the 1990s with 64 per cent of the population living in public housing.

Tate's Cairn Tunnel and the Sha Tin approaches were opened to traffic in June 1991 providing a road link between East Kowloon and the North East New Territories, while traffic congestion on Lion Rock Tunnel Road was further relieved.

In Ma On Shan, the final reclamation contract to provide 23 hectares of land commenced at the end of 1990 and construction of the future town centre progressed satisfactorily.

Regarding pollution control, facilities for the marine disposal of sludge collected from both the Sha Tin Sewage Treatment Works and Water Treatment Works have been completed, thereby significantly reducing pollution in Shing Mun River. Modification of the Sha Tin Sewage Treatment Works which aimed at improving the water quality in Tolo Harbour was completed at the end of 1991; a further improvement scheme by exporting the effluent to Kai Tak Nullah is being constructed.

To keep pace with the increased population, community projects completed in 1991 included a primary school, four secondary schools, a district police station and an urban clinic. Construction of another primary school, a neighbourhood community centre, a fire station with an ambulance depot-cum-training school, a public leisure pool and a district

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Previous page: A housing estate in Tai Po, one of the rapidly-growing new

towns.

Opposite page: Primary school children relax in Tai Po.

Below: Children's library at the Tai Hing public housing estate in Tuen Mun and an attractive garden in a Tseung Kwan O housing estate.

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Splashing out at a newly-opened swimming complex in Tai Po.

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LAND, PUBLIC WORKS AND UTILITIES

open space progressed satisfactorily. Construction of two district open spaces and a local open space started in 1991.

Tuen Mun

Tuen Mun is developed mainly on land reclaimed from Castle Peak Bay and on platforms formed in the valley between Castle Peak and the Tai Lam Hills. It is situated on the western side of the New Territories. In 1991, about eight hectares of land were reclaimed for residential and industrial development.

The present population is about 381 000, of which about 75 per cent live in public housing developments which include 11 public rental estates and 13 home ownership and private sector participation schemes. Within the next five years, three more home ownership and private sector participation schemes will be developed to accommodate a further 31 000 people. Together with some high-density private housing developments along the south-eastern coast, the new town will provide homes for about 500 000 people by the mid-1990s.

      In the provision of educational facilities, one prevocational school was completed by the end of 1991 while construction of two secondary schools were in progress and were scheduled to be completed by mid-1992. To meet the demand for medical services, the regional hospital providing 1 606 beds with staff quarters and the fifth nurses training school were completed. The first stage of the hospital was put into operation in Spring 1990 with the last stage scheduled to open in Spring 1992. One urban clinic is under construction and works will be completed in 1993.

      Other community facilities completed during the year included Tuen Mun Girls' Home and a sub-divisional fire station in south-western Tuen Mun.

      The marina along the south-east coast of the town is programmed for completion in mid-1992. This development consists of residential buildings, hotels, shops and recreational facilities, including berths for 300 boats. Five residential blocks were completed and occupied.

The main industries in Tuen Mun are light manufacturing such as plastics, garments, metal, electronics and textiles. The existing industrial areas provide floor space for about 2200 companies and jobs for about 40 000 people. Over 80 per cent of the workers employed in the factories live in the Tuen Mun and Yuen Long area.

       The backbone of the transport service, both within the town and from the town to Yuen Long, is the light rail transit system which is in the process of being extended. The formation of the reserve for three regional links namely, Pier Head to Yau Oi, Yau Oi to Sam Shing, and Town Centre to North East Tuen Mun was completed in late 1990. Track laying and associated works were in progress in 1991 and it is expected that they will be operational by early 1992.

Detailed planning of a 125-hectare site in the western part of Tuen Mun for the establishment of special industries and a terminal for the river trade with China progressed. A planning and engineering feasibility study of reclaiming an even larger area to the north of Tap Shek Kok in Tuen Mun West for both special industries and river trade terminal development started in late 1991 and was scheduled for completion in 1992.

Tai Po

Tai Po New Town is situated at the head of the north-western arm of Tolo Harbour, about 20 kilometres north of Kowloon. It is well served by the Tolo Highway and the electrified

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Kowloon-Canton Railway with two railway stations. Vehicular communication with Kowloon and Hong Kong Island has been further enhanced with the opening of the Tate's Cairn Tunnel.

   The population of Tai Po is about 208 000 at present and the projected population upon full development by the end of the 1990s is around 300 000. A total of four hectares of land was formed and serviced for various uses in 1991.

   The major cycle track along Ting Kok Road leading to Tai Mei Tuk was completed in mid-1991. This cycle track is segregated from vehicular traffic and provides a safe passage for the numerous cyclists who come to enjoy the attractive coastal scenery. The transport interchange at Tai Po Market railway station was also completed in 1991. This provides convenient transport facilities for people coming to Tai Po by train.

   Modification of the Tai Po Sewage Treatment Works, aimed at improving the water quality in Tolo Harbour, was completed in 1991.

   To serve the increasing population, community facilities completed in 1991 included three primary schools, three secondary schools, an indoor recreation centre, a swimming pool complex, a sports complex, a neighbourhood community centre and a local open space. Construction of another two primary schools, two secondary schools, a neigh- bourhood community centre and a district open space progressed satisfactorily.

Fanling/Sheung Shui

Despite the fact that Fanling/Sheung Shui is only four kilometres or so from China, it is well linked to the urban areas and other parts of the territory by the electrified Kowloon-Canton Railway and the New Territories Circular Road.

   The population of Fanling/Sheung Shui stood at 171 000 in 1991 and is expected to reach 250 000 by the end of the 1990s. Formation and servicing works in several areas progressed satisfactorily and a total of 24 hectares of land was produced for various uses in 1991. Internal transport facilities such as the Wo Hop Shek interchange and a major transport terminal for buses, mini-buses and taxis at the Fanling railway station forecourt were completed.

   Community facilities completed in 1991 included a primary school, a secondary school, a sports complex, a swimming pool complex and an indoor recreation centre, while two secondary schools and a market complex were under construction.

Developments progressed in On Lok Tsuen, the major industrial area.

   At Sha Tau Kok, a small township with a population of 4 000 on the border with China, further reclamation and roadworks, rural public housing and a promenade were completed in 1991.

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 1991, the population of the town stood at 133 000 and is expected to grow to 140 000 by the end of the 1990s.

Yuen Long Town Park was opened to the public in February 1991. The 30-metre high pagoda inside the park is now the landmark of Yuen Long town. In addition, 12 local open spaces were completed in 1991.

LAND, PUBLIC WORKS AND UTILITIES

Environmental improvement work for the Yuen Long nullahs made good progress and will be completed in mid-1992.

The first infrastructure contract in Tin Shui Wai was completed in September 1991 and four other infrastructure contracts were in hand. These contracts are to be completed in phases to provide access and services to private and public housing developments. The first phase of private housing was completed in late 1991 and the Tin Yiu Estate Phase I is expected to be completed in March 1992. After completion of private housing by the end of 1997, the new town population is expected to reach 135 000.

       The Long Tin Road, a new road linking Yuen Long to the south east of the new town, was opened in late 1991. Design work to upgrade and extend Hung Tin Road to join the Yuen Long-Tuen Mun Eastern Corridor is in progress.

       Flood protection works for four low-lying villages were substantially completed in the Tin Shui Wai hinterland. Similar schemes are being carried out at Ha Mei San Tsuen and Sheung Cheung Wai. Other flood protection schemes recommended by the North West New Territories Village Flood Protection Study are being implemented in conjunction with the Rural Planning and Improvement Strategy.

       To cope with the development in Yuen Long, Tin Shui Wai and the Tuen Mun-Yuen Long Corridor, construction of the North West New Territories Sewerage Scheme began in 1989. The main components of the scheme including a sewage treatment plant at San Wai, a 9-kilometre tunnel underneath Castle Peak and a 2.6-kilometre submarine outfall at Urmston Road are under construction and will be completed in December 1992.

       In the Tuen Mun-Yuen Long Corridor, construction of the infrastructure for a commercial/residential development at Hung Shui Kiu is in progress. A contract for developing a village area in Ping Shan, the first pilot scheme for village expansion areas in the Yuen Long district, was awarded in late 1991.

Tsuen Kwan O and Sai Kung

The development of Tseung Kwan O New Town began in 1983. The second major expansion of its development plan with a population capacity of 440 000 was adopted by government in 1991. Phases 1 and 2 of the project, which will provide homes for 325 000 people, continued to progress satisfactorily.

       About 267 hectares of land has been formed so far together with main drainage and the supporting engineering infrastructure. Some 40 per cent of the formed land has been used for public housing and government facilities. Three public rental estates, four home ownership schemes and three private sector participation schemes have been occupied. Another public rental estate is under construction together with the associated urban infrastructure. Two sites were sold for private residential and commercial development.

       Roads and main drainage works in Hang Hau are well underway, as is the reclamation at the north of the future Town Centre.

       The Tseung Kwan O Tunnel Road was opened to traffic in November 1990. The northern access to the University of Science and Technology is substantially complete.

       Works for the provision of land and services for the Tseung Kwan O Industrial Estate started in August 1991. Upon completion in 1995, 68 hectares of land will be available for industrial development. Reclamation of the south part of Siu Chik Sha also commenced in November 1991. A study will soon start to examine the feasibility of developing a site of 120 hectares for industries requiring access to deep water.

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At Sai Kung, a swimming pool and sports complex with recreational facilities was completed. To the north, seawall construction and reclamation is in progress and will be completed in 1992. Reclamation of Sai Kung Creek commenced in April 1991, which will provide land for a rural public housing estate.

Islands District

Projects to improve the living environment and facilities for residents and visitors to the Islands District progressed well during 1991.

Drainage improvement works in Tai O and reclamation to provide land for community facilities and other uses at Mui Wo were completed. Site formation for the first rural public housing estate on Peng Chau commenced in mid-1991 with the subsequent foundation and building works scheduled for commencement one year thereafter.

During the year, community facilities completed were an abattoir in Cheung Chau, a swimming pool and sports complex at Mui Wo and an indoor recreation centre and a columbarium in Peng Chau.

The study of the development of North Lantau to provide supporting communities in Tung Chung and Tai Ho for Chek Lap Kok Airport is in progress and due to be finished by early 1992. Construction work at Tung Chung is scheduled to commence in 1992 with a view to provide residential flats accommodating some 20 000 persons by the new airport's opening date.

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 in the feasibility study stage or under planning and 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 provision of a new typhoon shelter has just been completed, while reclamation of the old typhoon shelter is scheduled to start in 1992.

The Siu Sai Wan Development includes the formation of about 56 hectares of land for industrial, residential, public housing, government/institution/community and other uses. Land formation is substantially complete.

   Out of a total of 36 hectares of land to be formed at Hung Hom Bay, 19 hectares has been reclaimed with the remainder due for completion in 1994. Future uses for this reclamation will include residential, commercial, community facilities, open space, trans- port interchange facilities and an expansion of the Kowloon-Canton Railway freight yard. Two new ferry piers and a bus concourse have been constructed near Whampoa Garden and were opened in March 1991.

   Construction works for the reclamation and servicing of some 330 hectares of land in West Kowloon commenced in mid-1990. Two major reclamation contracts were awarded in mid-1991. Most of the reclamation is scheduled for completion in stages by the end of 1994, to enable the construction of strategic transport links which will serve the new airport at Chek Lap Kok.

Detailed design work on the initial phase of the Central and Wan Chai Reclamation is in progress. This work also includes specific investigations into urban design parameters, storm water drainage and north-south road links. The first phase will provide land for

LAND, PUBLIC WORKS AND UTILITIES

the Central terminus of the Airport Railway in addition to land for commercial and open space uses.

       The long-term effects of the various proposed reclamations on the hydraulic and water quality in the harbour will continue to be assessed by model studies.

Urban Renewal

Over the years, government and private developers have been involved in the re- development of the older urban districts where buildings have become obsolete and the provision of various infrastructural facilities is minimal. In the course of preparing the Metroplan, the older urban districts are seen as offering redevelopment opportunities for comprehensive urban renewal in order to create a more acceptable urban environment.

The Land Development Corporation (LDC) was established in January 1988 to encourage and speed up urban renewal. The Co-ordinating Urban Renewal Section of the Planning Department is the main contact point between the LDC and government, and is responsible for processing redevelopment proposals, making planning assessment for and seeking views of government departments on proposed LDC projects for the consideration of the Town Planning Board, preparing planning briefs for urban renewal schemes and identifying suitable areas for urban renewal.

Since the inception of the LDC, three development schemes in Hong Kong (Jubilee Street, Wing Lok Street, Queen Street) and two schemes in Kowloon (Argyle Street/ Shanghai Street, Shamchun Street) were approved by the Town Planning Board and subsequently gazetted under the Town Planning Ordinance.

Both the Jubilee Street and Wing Lok Street Schemes in Central District are to be redeveloped comprehensively with provisions for high quality office/commercial buildings, open space at prominent locations and associated government/institution/community facilities. The Jubilee Street Scheme was the first LDC development scheme approved by the Executive Council (in May 1991), to be followed by the Wing Lok Street Scheme. The Queen Street Scheme, which is located in Sheung Wan District and will make provisions of a purpose-designed social welfare building together with commercial and residential development, was gazetted in March 1991.

The redevelopment schemes in Argyle Street/Shanghai Street and Shamchun Street in Kowloon were approved by the Town Planning Board and gazetted in March and May 1991 respectively. The Argyle Street/Shanghai Street Scheme aims to redevelop the area into a commercial centre with a mixture of office, hotel, retail uses, and a landscaped local open space at the hub of Mong Kok. The Shamchun Street Scheme offers opportunities to redevelop the existing Mong Kok Market in situ together with a new area community centre, and to resettle the bird stall operators from the existing Hong Lok Street as they will be affected by the Argyle Street/Shanghai Street redevelopment scheme.

A number of smaller residential projects to accommodate occupants displaced by the redevelopment schemes are being undertaken by the LDC. These projects are located at Third Street and Li Chit Street on Hong Kong Island, and Soy Street in Kowloon. Another important project is the renovation of the Western Market, a red-brick structure built in 1906 in Edwardian style, and converting it into a Covent Garden type of bazaar. Opened in November this year, the renovated building provides new operation accom- modation for the traditional Chinese trades and crafts affected by the LDC schemes in Sheung Wan District.

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   The LDC has continued to commission consultancy studies to formulate area-specific renewal strategies and identify urban redevelopment opportunities. The consultancy studies on redevelopment opportunities in Shau Kei Wan and Centre Street have been completed and similar studies for Hung Hom and Tsuen Wan are in progress.

   The Hong Kong Housing Society has also contributed to the urban renewal process by undertaking a number of Urban Improvement Scheme (UIS) projects in the old urban areas. The major projects in progress are Phase II of the Six Streets development in Yau Ma Tei and the Hollywood Road/Shing Wong Street proposal in Sheung Wan. Planning of the UIS project at Ma Tau Kok is underway. The redevelopment of Yuk Ming Tower at Third Street, Lascar Court at Lok Ku Road and Phase I of the Six Streets project were completed in 1991 with a total of 669 flats available for rental and 998 flats for sale.

Port and Airport Development

New Airport

The Governor announced on July 4, 1991, that an agreement had been reached in the form of a Memorandum of Understanding between the British and Chinese Governments concerning the construction of the new airport in Hong Kong. The Memorandum was signed on September 3 by the British Prime Minister, Mr John Major, during his visit to China. The agreement indicates clear support from China for the Airport Core Projects and provides the certainty needed to proceed with the building of these projects. According to the memorandum, between now and June 30, 1997, the government will complete the following Airport Core Programme Projects to the maximum extent possible:

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The Airport (first runway and associated facilities)

North Lantau Expressway

West Kowloon Reclamation

West Kowloon Expressway

- Western Harbour Crossing

Route 3 (part)

Airport Railway

The part of the Central and Wan Chai Reclamation that relates to the Airport Railway

- Lantau Fixed Crossing (including rail portion and Route 3 interchange)

Tung Chung Development Phase I

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Port Development

The Port Development Strategy provides the framework for large-scale port development in the territory. Development of Container Terminal 8 on reclamation at Stonecutters Island is now underway. A feasibility study on the development of Container Terminal 9 on reclaimed land at south-east Tsing Yi has been completed.

In December 1990, the Port Progress Committee approved the carrying out of the first annual review. The Port Development Strategy Review was conducted in two phases by Planning Department assisted by seconded staff from local consultancy firms. The first phase of the review, which involved an in-depth updating of port demand forecasts and the translation of these forecasts into port facilities, was led by the Secretariat of the Port Development Board. The second phase was led by the Planning Department. It reviewed the direction and pattern of port development and the broad development phasing and

LAND, PUBLIC WORKS AND UTILITIES

programme of different port facilities, and an updated Port Development Plan and Programme was produced in December 1991.

Building Development - Private Sector

The decision to go ahead with the new airport project has stimulated building development in the private sector. The number of occupation permits issued for completed buildings was 439, compared with 419 in 1990. The amount of usable floor area provided was 3.9 million square metres and the total cost of new building works was $27,620 million.

      Expansion of the Kwai Chung Container Port continued with the completion of 440 000 square metres of floor space of container freight stations and distribution centres at Terminals 3, 4 and 5. Reclamation and construction works for Terminal 8, accommodating some 20 000 square metres, are due to commence early in 1992. Phase I of the Hong Kong University of Science and Technology is at an advanced stage of development while a major residential development has commenced at Tin Shui Wai comprising 58 tower blocks of flats providing accommodation for 69 000 people.

      The Buildings Ordinance Office had placed even greater emphasis on building safety in 1991. Work priorities were rationalised and a large proportion of resources were redeployed to grapple with the problem of dangers arising from older buildings. Publicity and civic education programmes were increased and intensified to increase public awareness of the responsibilities of building owners. In the enhanced planned survey exercise, all buildings in the urban and built-up areas had been inspected externally. Out of the 16 700 buildings identified to be in suspect condition, 4 209 had been surveyed resulting in the serving of 2 809 orders requiring repair works. Particular attention was given to pre-war buildings. By June 1991, all these buildings had been fully surveyed and they will be kept under regular surveillance in order to ensure that any identified risks to life and limb are dealt with expeditiously.

      Strenuous efforts to cope with the problem of unauthorised building works continued with block-by-block clearances of external 'appendages'. The initial operation involving 30 target buildings resulted in the serving of 3 815 removal orders, which were almost fully complied with voluntarily within a period of six months. As it had received a very positive response, the operation was being extended by the issue of advisory letters instead of serving removal orders.

In order to recover the administrative costs of processing plans for building devel- opment, statutory provisions were enacted early in 1991 for charging fees on the submission of plans. The system came into operation in late March and for the period of nine months since then, a total of $33.8 million in fees has been collected.

Building Development - Public Sector

     The Architectural Services Department undertakes building projects under the Public Works Programme and the building programmes of the Urban Council, Regional Council and the British Forces.

      During 1990-91, the department completed 88 building contracts under these pro- grammes. There were over 90 ongoing building contracts in the year and the total capital expenditure, including minor works, was $6,790 million. In addition, the Property Services Branch (formerly called the Maintenance Branch) of the department spent $1,089 million in providing routine maintenance and minor alteration works to over 6 000 government,

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  Urban Council, Regional Council and British Forces buildings. This branch was also involved in providing emergency accommodation to cater for the influx of Vietnamese illegal immigrants at a cost of $295 million. The department's overall expenditure of $7,879 million shows an increase of 21.8 per cent over the 1989-90 expenditure of $6,469 million.

   Tendering on all types of projects continued to be very active and competitive. During the 12-month period to March 1991, tender prices increased by about six per cent. Over the same period labour and basic material costs rose by 13 per cent and one per cent respectively.

   The provision of parks and recreational areas plays an important part in the construction programme for Urban Council. The completion of Hollywood Road Park and Morrison Hill Road Garden has augmented leisure facilities. Other parks commenced last year include Shek Kip Mei Park Phase III, Quarry Bay Park and Wan Chai Park. The Hong Kong Museum of Art, which has six exhibition galleries, was completed and opened in November 1991 and re-cladding of the Hong Kong Space Museum was completed by the end of 1991.

   Sports facilities continued to be expanded throughout the territory. The Mong Kok Stadium was redesigned and the old facilities are being renovated to make the venue suitable for both soccer and rugby matches at international standards. The improvement of the illumination level and quality of lighting to a standard suitable for direct television broadcasting, installation of a large digital electronic scoreboard and an automatic irrigation system for the pitch areas will be completed in 1992.

   The two major Urban Council projects completed last year were the Java Road Complex and USD Training School and District Library in Lai Chi Kok. The former building includes a market, a cooked food centre and an indoor games hall. The latter is a 13-storey building which provides classrooms, laboratories, lecture theatre/assembly hall and other facilities for the Urban Council's training of operational staff. A district library is also included in the building.

   The new Regional Council Chamber and Regional Services Department headquarters in Sha Tin were completed in July 1991. Construction works have commenced on a sports- ground, indoor recreation centre and swimming pool complex in Tin Shui Wai.

   Medical and Health projects represented a major part of the programme this year. The new 700-bed Sha Tin Convalescent and Infirmary Hospital and staff quarters have been completed. Extension work to Tang Shiu Kin Hospital and the final phase of Stage II extension of Queen Mary Hospital have also been finished. Residual improvement and upgrading works of Queen Mary Hospital are planned for completion in 1994.

   Work at the Pamela Youde Hospital in Chai Wan is progressing well, and works for the associated nurses training school and staff quarters commenced in May 1991. The entire complex is scheduled for completion in 1992. Other hospital projects under construction include extension and improvement works to Tsan Yuk Hospital and Queen Elizabeth Hospital which are progressing well and will be completed in 1991. The superstructure construction of Siu Lam Hospital extension commenced during the year and is due for completion in 1994. Detail designs are being prepared for two convalescent hospitals, one located in Tai Po and the other in Tsuen Wan.

   The Yuen Long Second Clinic and Clinic in Area 22, Tseung Kwan O were completed. Public clinics under construction, which will be completed in 1991, are Ap Lei Chau Clinic, an Urban Clinic in area 14D in Sha Tin and Tsing Yi Clinic.

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      The first phase of Wan Chai Tower III, comprising 37 floors to accommodate Inland Revenue Department, was completed at end-1991. The second phase, comprising 38th to 48th floors is under construction and is due to completion in September 1992. The total office area to be provided is 107 000 square metres.

      The government offices and ambulance depot at Ho Man Tin is 85 per cent completed and is scheduled for completion in September 1992, providing 22 300 square metres of office space. Main users are Fire Services Department, Highways Department and the Government Laboratory.

       The construction of Tsuen Wan central public library and government offices complex is progressing satisfactorily and anticipated to be completed at the end of 1992, providing 31 500 square metres of office space.

      The first phase of the Kennedy Town wholesale market, comprising fruit, fish and egg markets was completed in July 1991. The remaining phase, comprising poultry and vegetable markets, started the piling work and is programmed to be completed by early 1994.

      For the disciplined services, a number of projects were completed this year: three District Headquarter and Divisional Police Stations respectively located at Tsuen Wan, Ma On Shan and Tseung Kwan O with the latter station incorporating certain elements for the Kowloon East Regional Office; New Waterfront Divisional Police Station; East Sector Marine Police Base at Tui Min Hoi; Siu Lam Psychiatric Centre Phase II - Officers Mess and Married Quarters; sub-divisional Fire Stations at Sau Mau Ping and Pillar Point, a sub-divisional Fire Station and Ambulance Depot at Tin Shui Wai; RHKAAF Helicopter Hangar at Sek Kong; 120 Immigration Department quarters at Fanling, and the Auxiliary Medical Services Training Centre at Ho Man Tin.

       Projects under construction are: Firing Ranges at the Police Tactical Unit, Fanling; Tin Shui Wai Divisional Police Station; 288 Married Quarters for Junior Police Officers at Tsing Yi; alteration and improvement to Ping Shan Police Dog Headquarter Unit; 412 CSD Departmental Quarters at Butterfly Valley, Lai Chi Kok; sub-divisional Fire Station with Ambulance Depot and Training School at Area 93, Ma On Shan; a sub-divisional Fire Station at area 14B, Sha Tin, and a food control unit at Lok Ma Chau.

       For the social welfare programme, a combined hostel and sheltered workshop at Razor Hill with 100 dormitory places was completed in mid-year. Also completed was the Tuen Mun Girls' Home which can accommodate 120 girls. A Neighbourhood Community Centre in Sha Tin together with a Social Welfare Facility in the new town of Tin Shui Wai are nearing completion and it is anticipated that it will be ready for operation in mid-1992.

      The Special Education Programme which recently commenced will see the operation of its first school for physically handicapped children early in 1992. Three more schools for mentally handicapped children are also programmed to commence in 1992 and are scheduled for operation in late 1993.

      Government's continued commitment on education matters is reflected by the com- pletion of three primary schools and 11 secondary schools located in Ma On Shan, Tai Po, Yuen Long and Fanling. Another primary school and seven secondary schools are under construction; of these, one primary school and five secondary schools will be completed in 1992. Sixteen aided and three government schools affected by traffic noise received noise abatement treatment this year.

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   In parallel with planning of the new airport, improvement to the Kai Tak International Airport is still ongoing. Three of the five phases for the refurbishment of the existing passenger terminal building have been completed with upgrading of facilities, including the addition of internal and external escalators, fire services, air-conditioning installation and renovation of the VIP suites. The work will be completed in mid-1992. Three additional floors of office space and the new 'Commercially Important Persons Accommodation' has been completed and added to the existing terminal building. An extension of two and a half storeys to the carpark with the addition of 452 spaces was completed in July. The new aircraft recovery and salvage equipment depot was completed in August. Construction of the new Royal Hong Kong Auxillary Air Force building is in progress and will be completed by mid-1992. Work for the new Transfer Vehicle Dock 'G' started in October and is scheduled to be completed by October 1992. Modification work to the existing Transport Terminus, which is part of the Kai Tak Access Improvement Scheme, started in September and work will be completed by the end of 1992.

   As well as carrying out its own building contracts, the Subvented Projects Division of Architectural Services Department advises departments providing subvention to private organisations for building, repair and maintenance works. These include subventions provided by Education, Health, Hospital Services, Technical Education and Industrial Training, and Social Welfare Departments and the University and Polytechnic Grants Committee.

   The combined government commitments on subvented projects via the Capital Works Reserve Fund and the Lotteries Fund exceeds $12 billion and expenditure is expected to be in excess of $3 billion during the year. These sums exclude private funding. Advice is also given on the provision of government accommodation in private developments. Examples in this connection include joint-venture housing, office accommodation and transport interchanges.

Drainage Services

The Drainage Services Department is responsible for planning, designing, constructing, operating and maintaining the sewerage, sewage treatment and stormwater drainage infrastructures. The disposal of foul water, that is domestic sewage and trade and industrial effluent, is based on standards, strategies and programmes drawn up by the Environmental Protection Department. From a programme implementation point of view, projects can be divided into three categories: 'existing schemes' which are sewerage or sewage treatment projects which have been in the public works programme before the new strategy evolved and which are compatible with the new strategy for the treatment and disposal of sewage to satisfy new water quality standards; 'sewerage masterplan schemes' which are sewerage rehabilitation and improvement projects to ensure the proper collection of sewage in foul sewers, and the 'strategic sewage disposal scheme' which is a massive project to collect all the sewage from Chai Wan, Shau Kei Wan and areas in Kowloon between Tsuen Wan and Kwun Tong into a deep tunnel intercepting sewer system which will discharge, after treatment on Stonecutters Island, through a long sea outfall into the Dangan Channel.

   Making resolute progress towards completion by 1992 is the largest existing project, the North West Kowloon Sewage Treatment and Disposal Scheme. This scheme will collect, treat and discharge sewage from a population of 1.1 million in Sham Shui Po, Mong Kok

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      and Yau Ma Tei. All the construction contracts have been awarded and one has been completed. The second largest project in this category is the scheme to 'export' the sewage effluent from the Sha Tin and Tai Po sewage treatment works and discharge it into Victoria Harbour. The works comprise sewage pumping stations, rising mains and a sewer tunnel of 3.2-metre diameter and 7.5 kilometres in length under Tsz Wan Shan. This is the first government project in which a tunnel-boring machine was used. Construction will be completed by 1993. The biggest-ever sewage screening plant in Hong Kong which will serve a population of 1.2 million in the Tsuen Wan and Kwai Chung area will start construction at the end of the year for completion in April 1994. Construction of the Ha Tsuen sewage pumping station, the San Wai sewage treatment works, and the rising main between them, which together form part of the North West New Territories Sewerage Scheme, will be completed in 1992. The extension of Yuen Long sewage treatment works will also be completed in 1992.

      Under the sewerage masterplan scheme, five contracts have been awarded to improve the sewage disposal facilities in the Southern District of Hong Kong Island. In East Kowloon, design for sewerage improvement is nearing completion and construction will commence early in 1992.

Under the strategic sewage disposal scheme, detailed engineering feasibility studies have been progressing well and will be completed in 1992.

      With the commissioning of each additional item of infrastructure there is a consequential increased commitment in operations and maintenance. By the end of the year, territory- wide, some 1.15 million cubic metres per day of sewage were receiving grit removal and screening and another 300 000 cubic metres were receiving full biological treatment, and the 1 400 cubic metres-capacity purpose-designed vessel Sha Tin Prince commenced opera- tion in March 1991 for dumping at sea the sludges from both sewage treatment works and water treatment works at Sha Tin. Plans were made to carefully monitor the environmental effect of such dumping.

      Since the establishment of this department, the approach to operation and maintenance of the public drainage system has progressively shifted from crisis management to preventive maintenance; resources are being deployed to carry out regular inspection, cleansing, repair and minor improvement of the system, especially at identified drainage black spots. The results are promising and although the public drainage system is becoming larger and more complex with urbanisation, the number of drainage complaints, chokage and flooding show steadily declining trends. The department now maintains 2800 kilometres of watercourses, drains and sewers, increasing at the rate of 40 kilometres per year. Some 80 000 cubic metres of silt are removed from drains and watercourses each year to keep their pollution level low and keep them free-flowing.

Further to the initial territory-wide study carried out by consultants in 1989 to review rainfall, stream flow and flooding predictions, the government has commissioned a second study on flood control which is concentrating on North and North-west New Territories. This study aims to draw up basin management plans for the river basins in the North and North-west New Territories and examine in more detail what local flood mitigation measures can be taken. In addition, pamphlets giving advice on what to do and what not to do in a flooding situation are widely distributed through the District Offices to people living in flood-prone areas. An Emergency and Storm Damage Organisation has been set up to deal with emergency flooding cases.

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   Among structural measures which government has already put in hand are the construction of main drainage channels in the North-west New Territories flood plains and local works to protect low-lying villages which are difficult to drain. Construction of 6.5 kilometres of channels for the Tin Shui Wai hinterland has been completed and design is in hand for another 14 kilometres of channels in Yuen Long, Kam Tin and Ngau Tam Mei with a view to starting work on site in 1992. Two flood pumping stations together with other ancillary flood protection works were also completed at Tai O.

During the year the ground work for the creation of a new Land Drainage Ordinance was completed and it is expected that drafting of the ordinance will start shortly. The new ordinance will give the government much needed legal power to deal with the maintenance of natural streams in the New Territories. Comprehensive maintenance to ensure the efficient functioning of streams is an important part of the total effort to reduce the risk of flooding in the low-lying areas of the New Territories.

Geotechnical Control

The Geotechnical Engineering Office (GEO) of the Civil Engineering Department was established after the landslip disasters of the 1970s, and the control of geotechnical aspects of construction works in the interest of public safety continues to be one of its foremost duties. Checks were made on 6 007 design proposals in 1991. After the introduction of the prior approval system for reinforced fill structures in 1990, the first Endorsement Certificate was issued to a reinforced fill proprietary product and assessment of two other products is in progress.

   The GEO operates the Landslip Warning System and a 24-hour emergency service to provide advice on landslips.

Landslip preventive work was carried out on 47 slopes and stabilisation work was carried out on four networks of disused air-raid precaution tunnels, requiring the expenditure of $80 million in the Landslip Preventive Measures Programme. In addition, the office completed the design and construction of works to improve the stability and reduce the environmental hazards from an old sanitary landfill at Sai Tso Wan at a cost of $38 million. A site formation design for a Housing Department project at Ho Man Tin South with an estimated cost of about $69 million and the design of stabilisation works to the slopes of an old landfill borrow area at Fung Shing Street, Ngau Chi Wan with an estimated cost of $15 million were also completed.

The presence of cavitous marble beneath sites in the north-western New Territories and around Ma On Shan has posed problems for development. Geological mapping to identify the extent of the buried marble in these areas has been completed and 10 new 1:5 000 scale geological maps were published for the area around Yuen Long. New legislation, enacted in July 1990, to empower the Building Authority with additional geotechnical controls to ensure safe development in these areas has been utilised.

The Hong Kong Geological Survey of the GEO continues to publish 1:20 000 scale geological maps and memoirs for the land and marine areas of the territory. During 1991, new geological maps for Sheung Shui, Kat O Chau and Silver Mine Bay were published. Geological maps at 1:20 000 scale are now available for more than 80 per cent of the territory. Large scale 1:5 000 geological survey work was completed in the Ma On Shan district and is well underway in the development areas of North Lantau. Engineering geology studies are also in progress in North Lantau, with the aim of identifying any

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geotechnical constraints that could significantly affect the costs or timely implementation of the new airport and related projects.

The Geotechnical Information Unit (GIU), which houses the largest collection of data on ground conditions in Hong Kong, continues to serve as an important reference centre for geotechnical information in its much enlarged premises in the new Civil Engineering Building in Ho Man Tin. The GIU has served more than 2 400 users during the year.

The office's work on the use of underground space continued in 1991. Detailed feasibility studies for a government warehouse at Siu Sai Wan and for a refuse transfer station at Mount Davis were completed, the latter project being taken forward by the Environmental Protection Department for construction scheduled in 1993. Geoguide 4: Guide to Cavern Engineering and a Code of Practice on Fire Engineering for Caverns, which are aimed at providing guidance on design and construction of caverns, are being drafted. The office also continued to carry out preliminary engineering geological studies for cavern projects and arrangements were completed for including underground space in the government town planning system.

      The Marine Geotechnology Section provided advice and carried out research and development work on the marine geotechnical aspects of Port and Airport Development Strategy projects, notably on the properties of hydraulic fills.

A report on a review of earthquake data for the Hong Kong Region was published in August 1991 and a programme has been set up to disseminate technical data and research information through the publication of a series of reports. A review of Geoguide 1: Guide to Retaining Structure Design was completed and a comprehensively revised edition will be ready for issue in 1992. New guidance documents on piling, blasting and the use of filters are being prepared.

Considerable quantities of concrete are required each year by the construction industry. The stone processing industry in Hong Kong produces coarse and fine aggregates primarily to suit the needs of the ready-mixed concrete suppliers. In 1991, Hong Kong's total con- sumption of sand and aggregates exceeded 19 million tonnes, of which 17 million were used in concrete production. Around four million tonnes of cement were also consumed. This is equivalent to an annual consumption of almost two cubic metres of concrete per head of population. Around half the territory's demand for aggregates is met locally, the balance is imported from China. The local quarries are supervised by the GEO. Plans are advanced for the implementation of the new landscape rehabilitation policies at urban quarries. During 1991, the government closed its last remaining direct labour quarry at Mount Butler on Hong Kong Island. The government has now withdrawn totally from the pro- duction of processed stone and the manufacture of bituminous materials by direct labour.

The new purpose-built Public Works Central Laboratory at Kowloon Bay was officially opened by the Director of Civil Engineering in July 1991. The six Public Works Laboratories together employ over 150 staff, of whom 10 are professionals and 140 are of technical and clerical grades. Over 310 000 tests on various construction materials were carried out during 1991. The laboratories are accredited under the Hong Kong Laboratory Accreditation Scheme (HOKLAS) to carry out calibration services, as well as tests on such construction materials as concrete, steel, aggregates, cement and pulverised fuel ash. Among the innovative features to be found in the Central Laboratory are the soil triaxial testing systems which can be operated fully automatically, with all of the data being logged directly into a computer.

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   The office continues to upgrade the level of services available for land and marine ground investigations and geophysical surveys. Ground penetrating radar was among the new technologies examined during the year. A series of marine investigations was completed to enable an assessment to be made of the reserves of marine sand to be found in Hong Kong waters for use in planned reclamation works.

Water Supplies

Water from China

The supply of water from China is now the major single source of supply for Hong Kong and it is from this source that all future increases in demand will be met. This dates back to 1960 when a scheme was first formulated for receiving a piped supply of 22.7 million cubic metres a year. Today, the annual supply from China stipulated under the agreement has increased to 570 million cubic metres and this will continue to increase in stages to 660 million cubic metres by 1994-5. Apart from the fixed quantities of supply stipulated in the agreements, there are provisions to purchase additional supplies from China in years of low rainfall in Hong Kong. In 1991, the quantity of the additional supply was 140 million cubic metres. The concept of seeking a supply from China and steps taken by the Water Supplies Department of Hong Kong to realise such a goal have brought about radical changes to the history of water supplies in the territory.

   Following the agreement reached with the Chinese Authority in December 1989 to increase the China water supply to a maximum of 1 100 million cubic metres per year to cope with the anticipated water demands of Hong Kong beyond 1994 and into the turn of the next century, a conceptual plan was developed for the necessary works to receive and distribute the additional supply. The works will be implemented in stages with the Stage I works to be completed by end-1994. The Stage I works include some 22 kilometres of large-diameter delivery pipes, new pumping stations at Muk Wu, Tai Po Tau, Au Tau and Sai O and uprating of an existing pumping station at Tai Mei Tuk. Design work was in an advanced stage by the end of the year with a view to commencing construction by early 1992.

Water Works

  Full supply was maintained throughout the year. At the beginning of 1991, there were 179 million cubic metres of water in storage, compared with 243 million cubic metres at the start of 1990. The combined storage of Hong Kong's largest reservoirs, High Island and Plover Cove, was 137 million cubic metres. Rainfall for the year was 1639 millimetres compared with the average of 2 214 millimetres. Water piped from China during the year totalled 701 million cubic metres.

   A peak consumption of 2.76 million cubic metres per day was experienced, compared with the 1990 peak of 2.66 million cubic metres. The average daily consumption through- out the year was 2.42 million cubic metres, an increase of 1.3 per cent compared with the 1990 average of 2.39 million cubic metres. The consumption of potable water totalled 884 million cubic metres compared with 873 million cubic metres in 1990. In addition, 123 million cubic metres of salt water for flushing was supplied, compared with 119 million cubic metres in 1990.

   With reliable supplies available from China, it was decided by the Executive Council in July 1989 to dispose of the Lok On Pai Desalting Plant. The plant was sold by public

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tender. Dismantling and removal of the plant was completed during the year and the site, due to its convenient location in relation to the new airport, is proposed for use as a staging area for the construction of the new airport.

      Planning studies were completed during the year for the improvement of water supply to South-east Kowloon, Yuen Long and Sha Tin. These included the provision of salt water supplies to Sha Tin and Ma On Shan. Planning is in hand for major new treatment works at Pak Ngau Shek and Ngau Tam Mei. Further planning for the improvement of system capacity to meet the demand arising from new developments in West Kowloon, Tseung Kwan O, the metropolitan eastern, central and western areas of Hong Kong Island and the North-west New Territories is also in progress.

      A conceptual plan was finalised for works to be implemented in stages to supply water to the new airport and other developments in North Lantau associated with the Port and Airport Development Strategy. Consultants were engaged to undertake detailed investigation, design and supervision of the Stage I works with a view to achieving the target completion date of mid-1996 in order to phase-in with the commissioning of the new airport at Chek Lap Kok. Before completion of the permanent system, the water requirement of construction activities for the new airport and other infrastructural projects will be met by a temporary water supply system.

      Consultants have been appointed to carry out the investigation, design and construction of the Ma On Shan Treatment Works. Other major design works in progress included the extension to Sheung Shui Treatment Works and the flushing water supply system in Wan Chai, Siu Sai Wan, Sha Tin and Ma On Shan. Design of additional service reservoirs, pumping stations and water supply network at Tai Po, Tuen Mun, Yau Kom Tau, Tseung Kwan O, Ap Lei Chau and Repulse Bay continued. Design works for improvement of chlorine storage facilities in Sha Tin, Tsuen Wan and Tuen Mun Treatment Works were also in progress.

      Pak Kong Treatment Works Stage II, Au Tau Treatment Works Stage I and the sludge treatment and disposal facilities of the Sha Tin Treatment Works were completed and put into operation. Construction works for Sham Tseng Treatment Works and extension of Yau Kom Tau Treatment Works commenced.

The distribution system was extended and enlarged to meet urban and rural demands in the territory. Expansion of the distribution network to supply remote villages in the New Territories continued.

The number of consumer accounts continued to rise at a rate of about four per cent per annum. With a consumer account base of nearly 1.9 million in the territory, computer systems were widely employed to provide efficient enquiry services, handling applications for change of consumerships, and issuing water bills and deposit demand notes. Efforts to promote autopay service continued, and the number of consumer accounts using autopay for water charges reached 172 000 or about nine per cent of all the consumers.

A series of publicity campaigns on the concept of Save Water was mounted throughout the year. The public was reminded of its responsibility for arranging regular checks and maintenance for their plumbing installations and for prompt repair of any leaking water pipes. Attention was particularly drawn to the possible occurrence of underground or concealed leakage which could lead to waste of water and excessively high water bills. In view of the large number of enquiries on the calculation of domestic water charges, a publicity programme was launched to assist the public.

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Professional Registration

The Architects Registration Ordinance and the Engineers Registration Ordinance were enacted in 1990. The registration boards have been set up and there are now 875 Registered Architects and 850 Registered Professional Engineers.

   The Surveyors Registration Ordinance and the Planners Registration Ordinance were enacted in July 1991. Their registration boards are now being established and the registers will soon be open to applicants.

   Registration for all four professions requires, in addition to approved professional qualifi- cations, ordinary residence and at least one year's professional experience in Hong Kong.

Electricity

Electricity supply is currently provided by two commercial companies - the Hongkong Electric Company Limited (HEC), which supplies Hong Kong Island and the neighbouring islands of Ap Lei Chau and Lamma, and China Light and Power Company Limited (CLP), which supplies the whole of Kowloon and the New Territories, including Lantau and a number of outlying islands.

The two supply companies are investor-owned and do not operate on a franchise basis. The government monitors the financial arrangements of the companies through schemes of control. The schemes require each company to submit to the government for approval a Financial Plan setting out the financial consequences over a period of at least five years of the companies' planned activities, including the forecast tariff levels.

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' (2 708 MW) which is owned by CAPCO. The total installed capacity of CLP at the end of 1991 was 6 132 MW. In addition, a 300 MW gas turbine power station is under construction at Penny's Bay, Lantau for commissioning in 1992 to meet the expected load growth.

   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 159 primary and over 6440 secondary substations in its transmission and distribution network. An extra high voltage trans- mission system at 400 kV to transmit power from the Castle Peak Stations to the various load centres was completed in 1986. It comprises a double-circuit overhead line system encircling the New Territories, underground cables and seven extra high voltage substations. Construction and planning work for the addition of new extra high voltage substations and for reinforcement of the existing system are currently in progress.

For the HEC's supply areas, electricity is completely supplied from the Lamma Power Station. At the end of 1991, the total installed capacity at the Lamma Power Station was

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2 255 MW which consists of three 250 MW and two 350 MW dual coal/oil fired units, six 125 MW and one 55 MW gas turbines. There are plans to add a further 350 MW unit to Lamma in the early 1990s.

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 by submarine cables. The supply is 50 hertz, 200 volts single phase and 346 volts three phase. Supplies at high voltage are also made available to consumers.

The transmission systems of CLP and HEC are 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 requirement. The interconnection, commissioned in 1981, now has a capacity of 720 MVA.

      CLP's system is also interconnected with that of Guangdong General Power Company of China and electricity is exported to Guangdong Province each day. This interconnection results in better utilisation of the company's generating plant during periods of low demand. Also, in July 1985, CLP signed a contract with the China Merchants Steam Navigation Company Limited for the supply of electricity starting from late 1986 for a period of ten years to the industrial zone of She Kou and the adjacent Che Wan area, both in Guangdong Province. The arrangement, which affords She Kou a reliable electricity supply without subsidy from Hong Kong consumers, is illustrative of the close co- operation on energy matters which has developed on both sides of the border.

      On January 18, 1985, the Hong Kong Nuclear Investment Company (a wholly-owned subsidiary of CLP) and the Guangdong Nuclear Investment Company (wholly owned by the Chinese Ministry of Nuclear Industry) signed the Joint Venture Contract for the formation of the Guangdong Nuclear Power Joint Venture Company, to construct and operate a nuclear power station at Daya Bay in Guangdong Province.

      The Daya Bay Nuclear Power Station will comprise two 900 MW pressurised water reactors which are scheduled for commissioning in 1992 and 1993. About 70 per cent of the power from these station will be purchased by CLP to meet part of the longer-term demand for electricity in its area of supply.

The new Electricity Ordinance 1990 was enacted on March 23, 1990. It replaced the Old Electricity Supply Ordinance (Cap. 103), which was enacted in 1911 and which became out-of-date and deficient in a number of important areas. The principal objective of the new legislation is to enhance public safety in the use of electricity by providing a completely new framework for detailed regulatory arrangements in respect of electricity-related matters. To achieve this objective, the Electricity Ordinance 1990 has delineated the responsibilities of the government, the supply companies, electrical trade and electricity consumers. Under this ordinance, the following sets of subsidiary regulations were enacted in July 1990:

(a) Electricity (Registration) Regulations 1990;

(b) Electricity (Wiring) Regulations 1990;

(c) Electricity (Exemption) Regulations 1990;

(d) Electricity Supply (Amendment) Regulations 1990; and

(e) Electricity Supply (Special Areas) (Amendment) Regulations 1990.

An important feature of the new electricity legislation is the provision for a registration

system of electrical workers and contractors. To ensure in future electrical work will be 221

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carried out only by qualified personnel, electrical workers and contractors who possess the necessary qualifications and experience will have to be registered before they will be allowed to practise. The registration of electrical workers started on November 2, 1990, while registration of electrical contractors is planned to commence a year later. It is intended to register all qualified electrical workers and contractors in the industry before the middle of 1992 after which those major provisions of the new electricity legislation will become effective.

   In May 1990, the government decided that the electricity supply voltage in Hong Kong should be upgraded from 200 volts single phase or 346 volts three phase to 220 volts single phase or 380 volts three phase. A Supply Voltage Advisory Committee was then set up in February 1991 to advise on the implementation of voltage upgrading in the territory. The voltage upgrading is planned to be carried out in three phases and completed within seven years. Phase I conversion will cover existing installations inside government buildings and will be completed within about 18 months. Phase II conversion will cover existing installations in Housing Authority buildings and is estimated to take about two years to complete. Phase III conversion will cover remaining installations of the private sector buildings and this phase will take about three years to complete. Phase I implementation programme started on August 1990 and is progressing satisfactorily.

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 supplied as a manufactured gas, but for some customers substitute natural gas (SNG) is supplied under the Towngas trademark. The constituents of LPG are butane and propane mixed in approximate proportions of 75 and 25 per cent respectively.

   The total number of gas customers in Hong Kong is estimated to be in the order of 1.78 million. In 1991, Towngas accounted for 65 per cent of the total fuel gas sold in energy terms and LPG for 35 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. In order to meet the increasing demand for Towngas, HKCG has started the Phase II development at its gas production plant in Tai Po. This will double the capacity of the plant to 8.4 million cubic metres per day when completed in 1992.

Towngas is distributed through an integrated distribution system to about 834 000 customers for cooking and heating purposes. The main 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 90-kilometre network of 600-millimetre diameter transmission pipeline in the New Territories. The new transmission line is designed to operate at elevated pressure and will provide an additional 0.8 million cubic metres of 'line pack' storage capacity.

LAND, PUBLIC WORKS AND UTILITIES

      SNG is distributed by HKCG under the Towngas trademark from temporary plants located in Yuen Long and Tuen Mun specifically designed and operated to provide the gas requirements of these two new town areas in the New Territories. It is expected that the Yuen Long plant will be decommissioned early in 1992 when the gas supplies from Tai Po will be available in the area. The Tuen Mun plant will need to remain in situ until the new transmission pipeline connecting Tai Po to Tuen Mun has been completed.

      LPG is imported into Hong Kong by sea. About 64 per cent of total sales is distributed to customers, via dealer networks, in portable cylinders. The remaining 36 per cent is distributed through piped gas systems from bulk LPG storage and vaporiser installations which are located in or adjacent to the developments being supplied.

      Currently there are about 388 LPG dealers operating within the territory. Additionally, 23 LPG site operators manage 448 bulk storage installations under government-monitored arrangements. Altogether there are about 950 000 LPG customers.

      In 1982, the government introduced a piped gas policy to discourage further growth in the use of gas cylinders in domestic dwellings; and at the same time began a programme of encouraging the upgrading of sub-standard gas water heaters. The percentage of domestic dwellings using cylinders has fallen to less than 38 per cent in 1991; and the number of upgraded gas water heaters amounts to 53 000. Apart from suicide cases there were five fatalities arising from fuel gas incidents during 1991.

      As a further means of safeguarding the general public and gas consumers, the Gas Safety Ordinance was introduced on April 1, 1991. This ordinance and its associated regulations constitute a comprehensive package of safety legislation covering all aspects of fuel gas importation, manufacture, storage, transport, supply and use of gas. The Director of Electrical and Mechanical Services was appointed as the Gas Authority and a Gas Safety Advisory Committee was established for the purpose of advising the authority upon all relevant matters. By April 1, 1992, it will be necessary for all gas supply companies, gas installers and contractors to be registered with the Gas Authority. In addition, the administrative arrangements for controlling safety in the transportation of LPG in tankers and cylinder wagons will be completely transferred from the Dangerous Goods Ordinance to the Gas Authority by April 1992.

      The government and the fuel gas supply industry have adopted risk assessment techniques for the detailed examination of all appropriate potentially-hazardous gas installations. The risk assessments facilitate the taking of remedial measures where necessary, with the aim of ensuring that residents in the vicinity of these installations are not exposed to unacceptable risk levels.

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THE signing of the Memorandum of Understanding in Beijing between the Governments of China and the United Kingdom on matters related to Hong Kong's new airport projects has enabled detailed plans for construction to proceed. The airport core projects include road links and a railway which, as well as serving the airport, will provide a third line through Kowloon and across the harbour.

   While the longer term options for the development of the railway network are being assessed in a study which started at the end of the year, an extension to the light rail system in Tuen Mun was commissioned in November, to be followed by two more extensions early in 1992.

   Congestion on Hong Kong's roads continues to be contained by a combination of fiscal restraints, traffic management measures to improve the capacity of existing roads, and construction of new roads. In June, the Tate's Cairn Tunnel opened, which together with an extensive network of approach roads, provides a direct link from Sha Tin, through East Kowloon, to the Eastern Harbour Crossing.

The new link has substantially eased congestion at the Lion Rock Tunnel, which had become increasingly severe during the past few years. The development of the expressway encircling the New Territories continued in 1991 with the opening of a three-kilometre section near Yuen Long.

   The goods vehicle fleet has grown steadily in recent years, despite partial removal of concessionary licence fees. A study of the movement of freight by all modes in Hong Kong is now in progress, with a view to recommending management measures and incentives towards efficient operating practices and planning for freight transport in the territory.

   The policy of entrusting the management of transport services and infrastructure to the private sector continues to be pursued. In July, the management of the Aberdeen Tunnel was awarded to the Cross Harbour Tunnel Company Limited after competitive tendering. Management of the Kowloon Bay Motor Vehicle Examination Centre will be contracted out in 1992 and plans are in hand for other government transport services to be privatised in future.

   Despite the increasing role of railways as a major mass carrier in the public transport system, road-based public transport, including buses, public light buses and taxis, is still the major passenger carrier. Efforts continue to create a framework within which these services may better meet the rising expectations of commuters in terms of service quality. The proportion of air-conditioned buses continues to grow in response to demand. The 1990

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White Paper on Transport Policy recognised competition as an important incentive towards the improvement of quality in bus service, and in July, Citybus Limited became Hong Kong's fourth franchised bus company through a new bus route tendering scheme.

       While additional transport infrastructure and services will be introduced to support the new airport and port developments, continued emphasis will be placed on improving the efficiency and quality of services rendered by existing road and transport systems.

Administration

The Transport Branch of the Government Secretariat, headed by the Secretary for Transport, is responsible for overall policy formulation, direction and co-ordination of internal transport matters. The secretary is assisted by the Transport Advisory Committee, which advises the Governor in Council on major transport policies and issues. The committee has 17 appointed members, including the chairman and six government officials. The Secretary for Transport also chairs the Transport Policy Co-ordinating Committee which oversees the implementation of major internal transport policies.

       The Transport Department and the Highways Department are responsible for the execution of transport policies and measures, and the highways construction and maintenance programme.

      The Commissioner for Transport, the head of the Transport Department, is the authority for administering the Road Traffic Ordinance and legislation regulating public transport operations other than railways. His responsibilities cover strategic transport planning, road traffic management, government road tunnels, carparks and metered parking spaces, and the regulation of internal road and waterborne public transport. He is also the authority for the licensing of drivers and the registration, licensing and inspection of vehicles.

While the Police Force is the principal agency for enforcing traffic legislation and prosecuting offenders, the prosecution unit of the Transport Department also handles prosecutions involving safety defects found on buses, disqualifications under the Driving Offence Points System and breaches of vehicle safety regulations and government tunnel regulations. In 1991, the unit conducted 15 prosecutions in respect of buses and other vehicles, 3 245 cases for which disqualification was sought under the Driving Offence Points System and 127 prosecutions in respect of breach of tunnel and other regulations.

      A Transport Tribunal, set up under the Road Traffic Ordinance and chaired by a non-government official, provides the public with a channel of appeal against decisions made by the Commissioner for Transport in respect of registration and licensing of vehicles, issue of hire car permits and passenger service licences, and designation of car testing centres.

The Director of Highways heads the Highways Department, which is responsible for designing and building all highways, their repair and maintenance, and also for studying new railway networks.

Planning

The formulation of a territorial transport infrastructure strategy up to the year 2011, taking into account the port and airport projects, is being undertaken by updating the Second Comprehensive Transport Study. Detailed transport planning is also carried out at territorial and district levels to address transport and traffic problems. In the past year,

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  a number of studies to investigate the existing and future transport infrastructure requirements such as the Wan Chai District Traffic Study, the Central and Wan Chai Reclamation Development Study, and the Western Harbour Crossing Study were completed.

District and other traffic studies in progress include the Island East Traffic Study, North-west New Territories Open Storage Area Traffic Impact Study, Parking Demand Pilot Study and Industrial/Godown Traffic Generation Study and development studies in North-west New Territories, South-west New Territories, Tsuen Wan - Kwai Tsing and West Kowloon.

To map out the long-term strategy for railway development, a Railway Development Study was commissioned in late 1991. A Freight Transport Study is also in progress, the results of which will be used in the formulation of freight transport strategy. In addition, a Travel Characteristics Survey is scheduled for commencement by end-1991 to collect data on the movement of people in the territory, as an aid to future planning.

Works on the airport core programme projects are proceeding to ensure timely completion of the supporting infrastructure to meet the opening of the new airport. A study is planned for 1992 to map out the public transport services for the new airport and related developments. The traffic implications of the proposed port development are being examined by the North Lantau, Tuen Mun and Tseung Kwan O Port Development Studies.

Cross-border Traffic

There are three road crossing points between Hong Kong and China at Sha Tau Kok, Man Kam To and Lok Ma Chau. Total capacity of the three crossings is about 28 000 vehicles per day, allowing for immigration and customs requirements. A second bridge was completed at the Lok Ma Chau Crossing in late 1991, to facilitate the movement of cross-border traffic.

   Cross-border vehicular traffic increased by about 18 per cent during the year compared with 1990. The increase mainly occurred at Lok Ma Chau as the other two crossings were already operating at capacity. The average daily traffic figures at the three crossing points in 1991 were about 1 900, 9 700 and 4 300 at Sha Tau Kok, Man Kam To and Lok Ma Chau respectively. Goods vehicles accounted for 95 per cent of the traffic reflecting the rapid growth in trade and industrial links with China. At the end of the year, 21 companies operated tourist coach services across the border.

   The Kowloon-Canton Railway continued to play an important role in the freight and passenger traffic between Hong Kong and China. Some 3.21 million tonnes (revenue tonnes) of freight (1990: 3.35 million tonnes) and 1.8 million head of livestock (1990: two million) were brought into Hong Kong by rail. Exports to China by rail accounted for 1.06 million tonnes, a small decrease from the 1.11 million tonnes carried in 1990. Cross-border passenger traffic on the railway was 31 million in 1991 (1990: 30 million). A further extension of the terminal building at Lo Wu is being planned to cope with anticipated future growth in rail traffic.

   In 1991, ferry services between Hong Kong and China carried 4.2 million passengers (3.6 million in 1990). At the end of the year, there were 22 ferry routes between Hong Kong and China operated by seven companies. The China Ferry Terminal in Canton Road has sufficient capacity to meet demand beyond the turn of the century.

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The opening of the Shenzhen Airport provided a further impetus to the growth of cross-border traffic. Several operators have registered their interest in operating additional coach and ferry services between the airport and Hong Kong. The additional services are expected to utilise some of the spare capacity at Lok Ma Chau Crossing and the Hong Kong China Ferry Terminal.

Road Network

Hong Kong's roads have one of the highest vehicle densities in the world. At the end of 1991, there were 379 697 licenced vehicles and about 1 529 kilometres of roads - 414 on Hong Kong Island, 390 in Kowloon and 725 in the New Territories. This high vehicle density, combined with the difficult terrain and dense building development, poses a constant challenge to transport planning, road construction and maintenance. There are eight major road tunnels, over 699 flyovers and bridges, 409 footbridges and 226 subways to keep vehicles and people on the move.

To cope with ever-increasing transport demands, the Highways Department has embarked on an extensive construction programme, with about 40 road projects under construction and a similar number being actively planned at any one time.

Expenditure on highway projects was about $2,235 million, while another $548 million was spent on improving and maintaining existing roads.

Strategic Road Network

The spine of the strategic road network is Route 1, which runs from Aberdeen on the southern shore of Hong Kong Island and cuts through Kowloon peninsula to Lok Ma Chau Border Control Point in the northern New Territories. It passes through the Aberdeen, Cross-Harbour and Lion Rock Tunnels.

On Hong Kong Island, Route 8 runs along the northern shore from the Cross-Harbour Tunnel via the Island Eastern Corridor to Shau Kei Wan and Chai Wan in the east. Route 7 stretches westwards from the Cross-Harbour Tunnel along the northern shore, via Gloucester Road, Harcourt Road and Connaught Road to Hill Road at Kennedy Town.

On the mainland, Route 2 runs from the Kowloon Bay Reclamation, through the Airport Tunnel, via the 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 Lai Chi Kok with Kwun Tong and further with Tseung Kwan O through the Tseung Kwan O Tunnel. Route 5, another strategic road, is a seven-kilometre two-way trunk road connecting Sha Tin with Tsuen Wan via the Shing Mun Tunnels. It forms part of the New Territories Circular Road System.

The Eastern Harbour Crossing, which forms part of Route 6, opened in September 1989. The remaining sections of Route 6, including the Kwun Tong Bypass, Tate's Cairn Tunnel and Road T6 linking Tate's Cairn Tunnel to Tolo Highway were all completed in June.

Improvements to Major Road Networks

On Hong Kong Island, the major project Route 7 was completed early in 1990. Route 7 provides two-way free-flow 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.

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   The completion of the Shing Mun Tunnels and Tseung Kwan O Tunnel in 1990 has improved the transportation network between new towns and the urban area. The traffic congestion at the Lion Rock Tunnel has been relieved by the opening of Route 6 in June, which provides a direct link between the eastern part of Hong Kong Island, East Kowloon and Sha Tin.

   In the north New Territories, remaining sections of the New Territories Circular Road from Pak Shek Au to Au Tau are being constructed in stages. Phase III between Fairview Park and Mai Po was opened in August 1991 and the remaining Phase IV will be completed in mid-1992.

   The Tuen Mun to Yuen Long Eastern Corridor is under construction in the north-west New Territories to provide an eastern continuation of Route 2. This corridor is a two-way trunk road along the eastern side of Castle Peak Road to connect with the proposed Yuen Long Southern Bypass which will also start construction early in 1992. Construction of the Eastern Corridor commenced in May 1990 for completion in mid-1993.

To improve cross-border traffic and relieve the access roads to the north-west New Territories, the Country Park sector of Route 3 is under planning for completion by the late-1990s. It will be a dual three-lane carriageway connecting Ting Kau with Yuen Long.

New Airport Access

  The relocation of the airport to Chek Lap Kok will require additional road links to serve the new airport and its supporting community. The major highway projects for commuting airport traffic include the Western Harbour Crossing, West Kowloon Expressway, Tsing Yi sector of Route 3, Lantau Fixed Crossing and North Lantau Expressway.

   The Western Harbour Crossing will be a tunnel with dual three-lane capacity connecting the western end of Hong Kong Island with the West Kowloon Reclamation. It will help to relieve the existing cross-harbour tunnels which are forecast to reach planned capacity by the mid-1990s.

   The West Kowloon Expressway is the northern extension of the Western Harbour Crossing to Lai Chi Kok, forming an important part of Route 3. It will be a dual three-lane carriageway which will serve the West Kowloon Reclamation and will substantially relieve the local and distributor roads in central and west Kowloon. Connecting Kwai Chung with Ting Kau, the Tsing Yi sector of Route 3 will mainly be a dual three-lane carriageway with two additional lanes in Kwai Chung to cope with the high traffic volume.

   The Lantau Fixed Crossing comprises two crossings linking north-east Lantau to Ma Wan at Kap Shui Mun and from Ma Wan to Tsing Yi across Ma Wan Channel. The Tsing Ma Bridge, in the form of a suspension bridge with a span of about 1.4 kilometres, will be one of the longest of its kind in the world and a prominent landmark in Hong Kong. The North Lantau Expressway will be a 13.5-kilometre dual three-lane carriageway along the northern coast of Lantau linking the Lantau Fixed Crossing to the new airport at Chek Lap Kok.

   Augmenting the land access to the new airport, an airport railway will be designed and built to offer the maximum comfort and convenience to airport users. The 32-kilometre airport railway will run from Central to West Kowloon, Lai King, via Tsing Yi, across the Lantau Fixed Crossing, along North Lantau to the new airport. Dedicated trains will run an express service from the airport to special stations in the urban areas where travellers can change to other forms of transport. The railway will also provide a general public

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service, bringing relief to the Nathan Road corridor of the Mass Transit Railway, serving new developments on the West Kowloon Reclamation and providing a third cross-harbour rail link.

Environmental Impact of Road Construction

The environmental impact of new road projects is carefully appraised at the planning stage by the Highways Department. Where practical, measures such as landscaping works, artificial contouring of surrounding hillsides and installation of noise barriers are considered. 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 Tate's Cairn Tunnel approach roads near Richland Gardens in Kowloon Bay are two good examples.

Road Opening Works

Besides serving as carriageways for vehicles and pedestrians, the highways also provide space to install various utility services for the general public. To cope with the demand resulting from the rapid development in Hong Kong, utility companies often have to open up the carriageways and footways to maintain services by renewal, repair, and enlargement of pipes, cables and ducts. On average 140 new road openings are started every working day. These are co-ordinated and controlled by the Highways Department through a permit system, under which utility companies are required to carry out works to a required standard and in a limited period of time. In order to co-ordinate these works and to minimise disruption, the department holds monthly Road Opening Co-ordinating Committee meetings with the utility companies, police and the Transport Department.

Tunnels

The new Tate's Cairn Tunnel was opened to traffic on June 26, 1991, to provide an additional direct road link between the north-east New Territories and Kowloon. Privately designed, funded, built and operated, the tunnel measures four kilometres from portal to portal and is the longest tunnel in the territory. Charging tolls of between $4 and $8, it carried 57 000 vehicles a day at the end of 1991.

The Lion Rock Tunnel, which links Kowloon and Sha Tin, began single tube operation in 1967 with a second tube added in 1978. At a flat toll of $6 per vehicle, it is the most heavily-used government tunnel. Although the opening of the Shing Mun Tunnels in 1990 and Tate's Cairn Tunnel in 1991 provided considerable relief, the Lion Rock Tunnel was still used by 78 000 vehicles a day in the second half of 1991.

The Aberdeen Tunnel was opened in 1982. It links the north and south sides of Hong Kong Island, with a daily traffic volume of 5000 vehicles. The management of the Aberdeen Tunnel was contracted out to the private sector with effect from September 29, 1991.

2

The Shing Mun Tunnels, opened to traffic in 1990, link Sha Tin to Tsuen Wan. The average daily traffic, which has been increasing since opening, was 39 000 vehicles in 1991.

On March 6, 1991, the tolls for using both the Aberdeen Tunnel and Shing Mun Tunnels were increased from $3 to $5 per vehicle.

The Tseung Kwan O Tunnel was opened in late 1990. Linking Kowloon to Tseung Kwan O New Town, it was used by 12 500 vehicles daily, charging a $3 toll per vehicle.

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   The toll-free Airport Tunnel provides direct road access from Hung Hom to Hong Kong International Airport, and also crosses underneath the airport runway to Kowloon Bay. Opened in 1982, it was used by an average of 49 000 vehicles per day in 1991.

The Cross-Harbour Tunnel, opened in 1972, runs beneath the harbour between Causeway Bay on Hong Kong Island and Hung Hom in Kowloon. Used by an average of 120 000 vehicles each day in 1991, it is one of the world's busiest four-lane road facilities.

   The Eastern Harbour Crossing is the second cross-harbour road tunnel in Hong Kong. Opened in September 1989, it links Quarry Bay on Hong Kong Island and Cha Kwo Ling in Kowloon. In mid-1991, it was connected by elevated roads to the Kowloon portal of the Tate's Cairn Tunnel. The daily throughput at the Eastern Harbour Crossing has been increasing steadily. By the end of 1991, traffic in this tunnel averaged 60 000 vehicles per day.

Traffic Management and Control

  At the end of the year, there were about 930 signalised junctions in operation, of which 330 junctions were under the control of the Kowloon Area Traffic Control (ATC) System and 210 under the control of the Hong Kong ATC System.

   The Kowloon ATC System has been in operation for more than 14 years. Due to its limited capacity, it now controls only about 90 per cent of the signalised junctions in Kowloon. It needs to be replaced by an expanded and modern system in order to cope with increasing demand to control more junctions, and to implement more efficient traffic control methods. A contract for replacing the system was awarded in late 1991. The new system with responsive traffic control facilities is expected to be operational in 1995, controlling all the signalised junctions, numbering about 450, in the Kowloon peninsula.

The Kowloon ATC System is supplemented by a traffic monitoring closed-circuit television system. This system at present covers only the western, southern and northern parts of Kowloon. As part of the Kowloon ATC System replacement project, the television system needs to be expanded to east Kowloon and its coverage of other areas of Kowloon needs to be increased. This expansion is expected to start in 1992 for its completion to coincide with the commissioning of the new Kowloon ATC System.

At the end of 1991, there were about 260 signalised junctions in operation on Hong Kong Island. Of these, about 210 on the northern shore from Kennedy Town to Shau Kei Wan were operating under computer control of the Hong Kong ATC System. The expansion of the system to the Mid-levels area is scheduled for completion by the end of 1992.

Contracts were awarded at the end of 1991 for implementing a traffic monitoring Closed Circuit Television System (CCTV) for Hong Kong Island. Under this scheme 35 cameras are scheduled to be commissioned by the end of 1992.

   To extend ATC to the remaining parts of the territory, a contract for implementing it to Tsuen Wan New Town was awarded in 1991 together with the Kowloon ATC renewal contract. Under this scheme, about 100 signalised junctions in Tsuen Wan, Kwai Chung and Tsing Yi areas will come under ATC in mid-1993. Planning work is also continuing for installing a CCTV system for Tsuen Wan New Town and to extend ATC to Sha Tin.

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Parking

The government owns 14 multi-storey carparks which provide 8 200 parking spaces. They are operated and managed by a private company under a management contract. Off-street public parking is also provided by the Civil Aviation Department at Hong Kong International Airport and by the Kowloon-Canton Railway Corporation at some railway stations. The private sector also operates multi-storey and open-air public carparks in commercial buildings, housing estates and open-air lots providing over 50 000 parking spaces. On-street parking is usually metered and provided only at locations where traffic conditions permit. By the end of the year, there were 13 500 metered spaces throughout the territory, most of which operate between 8 am and midnight from Monday to Saturday. In Causeway Bay, Happy Valley, Western and Tsim Sha Tsui where parking demand is high, operation has been extended to include Sundays and public holidays to facilitate a better turnover of parking spaces.

Licensing

The number of new private cars registered increased from 28 926 in 1990 to 31 131 in 1991, an increase of 7.62 per cent. Despite the use of financial restraint measures, which include increasing the First Registration Tax of new private cars from a range of 80 per cent - 100 per cent to 90 per cent - 120 per cent of the cars' CIF costs on March 6, 1991, the total number of licensed cars in December 1991 was 212 017, a growth of 7.16 per cent over the figure in December 1990.

The total number of registered goods vehicles in December 1991 was 134 029, an increase of 3 984 or 3.06 per cent compared with the total of 130 045 in December 1990. Included in these were 103 167 light goods vehicles which grew by 0.94 per cent compared with 1990. Due to the increasing use of these vehicles as private passenger-carrying vehicles and their comparatively high accident involvement rate, restraint measures on the ownership and use of this class of vehicle were introduced in March 1991. The First Registration Tax and annual licensing fees of van-type light goods vehicles were increased. This has had the effect of reducing the number of light goods vehicles but slightly increasing the number of medium goods vehicles. By the end of December, the number of light goods vehicles stood at 89 629, a decrease of 2.44 per cent over the same period in 1990. Meanwhile, the number of medium goods vehicles increased by 9.74 per cent to 27 332 by end-1991.

       At the end of the year, the total number of licensed vehicles in all classes was 379 697, an increase of 4.45 per cent over 1990.

The number of new learner-drivers increased from 5 283 per month in 1990 to 5 946 per month in 1991.

       Since the introduction of the Driving Offence Points System in 1984, 12 151 drivers have been disqualified. A total of 162 866 warning notices have been served and 324 574 drivers have incurred penalty points for committing offences scheduled under the Road Traffic (Driving-offence Points) Ordinance. The figures for 1991 were 3 137, 66 049 and 15 644 respectively.

Vehicle Examination

In May 1991, the new Kowloon Bay Vehicle Examination Centre was commissioned. This modern, computerised centre has eight dual purpose lanes and two light vehicle lanes and is designed to provide a capacity of about 133 000 annual inspections a year. To help

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contain the size of the civil service, it was decided to contract out the operation of this centre to the private sector, and arrangements were made for contractors to be appointed by mid-1992. In the interim, the centre was partially opened, using staff deployed from other vehicle examination centres.

   To cope with these staff movements, So Kun Po Centre was temporarily closed in June and inspection activities in four other centres were rearranged.

   With effect from October 1, 1991, the age of goods vehicles and trailers, which were subject to annual inspection, was advanced from the former pre-1978 year of manufacture to pre-1983. Further advancement will be arranged in the coming years to achieve the policy objective of inspecting annually all over one-year-old goods vehicles and trailers.

   All private cars and light goods vehicles with gross vehicle weight not exceeding 1.9 tonnes and over six years old, have to be inspected and passed at one of the 17 designated car testing centres before relicensing. In 1991, 71 800 cars and 1710 light goods vehicles were inspected.

   Airport service vehicles are inspected within the airport restricted area. To cope with increasing demand, a new vehicle examination centre was constructed within Kai Tak Airport, and became operational in August 1991.

   The maintenance of franchised buses is monitored closely by the Bus Engineering Unit. Besides Certificate of Fitness and Certificate of Road Worthiness inspections, spot checks were conducted to enhance maintenance standards. For non-franchised buses, an additional inspection pit was under construction at the To Kwa Wan Centre to provide more capacity.

   As from January 1, 1992, all newly-registered private cars will have to comply with the new exhaust emission standards. To prepare for this introduction, the Transport Department started to take the new standards into account when giving type approval of imported private cars from May 1991.

   To reduce the number of vehicles emitting excessive exhaust smoke, the Environmental Protection Department has expanded the smoke testing programme to include certain private sector garages. The scheme became operational in late 1991.

To promote road safety, new legislation is underway to require school light buses to install warning devices to alert the driver if the emergency door is not properly closed, and to require goods vehicles to be fitted with a warning horn to alert pedestrians when vehicles are reversing.

Road Safety

  Traffic accidents involving injury decreased by one per cent in 1991. During the year there were 15 069 accidents, of which 3 514 were serious and 301 fatal. This compares with 15 255 in 1990 (3 576 serious, 314 fatal). In-depth investigations using computerised records were carried out at 101 traffic accident blackspots in order to identify accident causes. Remedial accident prevention measures were recommended at 70 of these locations. Remedial measures, when implemented, have been shown to reduce accidents con- siderably.

Accident statistics are at Appendix 39.

   Road Safety campaigns continued to play an important role in reducing traffic accidents. The major campaign themes in 1991 were adult pedestrian safety, particularly the elderly, and promoting road safety for drivers, especially light goods vehicle drivers and

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motorcyclists. Posters, television announcements and leaflets were produced and widely distributed. To effectively convey road safety messages to mass audiences, a series of radio and television road safety programmes were broadcast.

      The vehicle weighstation at Ma Liu Shui near the Tolo Highway operated satisfactorily in 1991. Enforcement action against overloaded goods vehicles was intensified and by end-1991, 4 180 prosecutions had been made.

The new microcomputer-based traffic accident data system operated satisfactorily in 1991. Accident records were updated daily. Accident statistics for traffic accident blackspot analysis and road safety strategy formulation were retrieved easily and conveniently.

      By the end of 1991, the Road Safety Association of Hong Kong operated 218 school road safety patrols and 374 school staff patrols operated at 577 schools, all with the objective of ensuring the safety of schoolchildren on their way to and from school. The Road Safety Council, an advisory body, continued to co-ordinate all road safety matters.

Public Transport

The Hong Kong public transport system is notable for its variety of modes 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 mass transit system, a busy suburban railway, a modern light railway, a traditional street tramway and the Peak funicular railway. During the year various improvements were made to these systems and patronage continued to increase generally.

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 every two and a quarter minutes on the Kwun Tong and Island lines. In the evening peak period trains run every two and a quarter minutes on the Tsuen Wan line and every two and a half minutes on the other two lines. A four-minute headway prevails on all three lines during the daytime off-peak period.

      Patronage increased slightly during the year, and by the year's end the railway was carrying 2.3 million passengers a day. In relation to the length of the system it is the busiest underground railway in the world. Adult fares range from $3 to $7.50 per trip.

      Following the signing of the Memorandum of Understanding between the Governments of China and the United Kingdom on matters relating to Hong Kong's new airport, the MTRC entered into negotiation with the Hong Kong Government on the terms governing the construction and operation of an airport railway. Apart from serving the airport, this new railway would help relieve the peak hour congestion along the present MTR Nathan Road Corridor.

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 1982.

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Although the 34-kilometre railway caters for freight trains to and from China and for four daily passenger through 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 1991 the railway handled about 537 000 passenger journeys daily. Peak period average headways range from five minutes at the northern end of the line to every 3.3 minutes between Sha Tin and Kowloon. Passenger traffic is carried in a fleet of 351 cars which are operated in units of 12. There are 13 stations along the railway. During the year, work began on the provision of new and replacement escalators at the Kowloon terminus.

   Freight is handled by about 12 trains each way daily, which hauled 3.21 million revenue tonnes of inbound freight and 1.06 million tonnes of outbound freight in 1991. There are five goods yards at Hung Hom, Ho Man Tin, Mong Kok, Sha Tin and Fo Tan, and a marshalling yard at Lo Wu. Freight trains are hauled by a fleet of 12 diesel locomotives.

Light Rail Transit

In addition to its main line, the KCRC owns and operates the 28-kilometre Light Rail Transit (LRT) system in the north-western New Territories which commenced operation in September 1988. An extension was opened on November 3, 1991, between Tuen Mun Ferry and Yau Oi Estate and this increased the number of stops served by the system to 45. Six services are provided on the network by a fleet of 70 cars which operate either singly or in pairs. By the end of the year, 268 000 boardings a day were handled on the LRT and on its feeder bus services, which are also operated by the KCRC within the Transit Service Area extending from Tuen Mun to Yuen Long. Unique to Hong Kong, an 'open' fare system is employed on the LRT, with zonal fares providing free transfers from one route to another within the zone and to and from feeder buses. Ordinary adult fares range from $2.4 to $3.5.

   Two more extensions are under construction in Tuen Mun and will be opened by February 1992, while a branch line to the new town of Tin Shui Wai is expected to open early in 1993. An additional 30 cars have been ordered for delivery commencing in the autumn of 1992. When the additional network extensions are finished the system's route length will be 30.4 kilometres.

Tramways

Electric trams have operated on Hong Kong Island since 1904. Today, Hong Kong Tramways operates six overlapping services over 13 kilometres of double track between Kennedy Town and Shau Kei Wan and along nearly three kilometres of single line around Happy Valley. The 163 trams comprise the only all-double-deck tram fleet in the world.

During 1991, the refurbishment of the tram fleet continued. By the end of the year,

                                       all the trams had been rebodied.

Compared with recent years, tramway patronage steadied during 1991, with an average of 337 660 boardings daily. Fares remained at $1 for adults and $0.5 for children.

Funicular

Hong Kong's other 'tramway' is actually a cable-hauled funicular railway operated by the Peak Tramways Company from Garden Road in Central to Victoria Gap. The

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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. Patronage of the line, which was fully modernised in 1989, averaged 8 580 passengers a day. One-way fares for adults and children are $10 and $4 respectively.

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 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. Until August there were three franchised bus operators, but in September a fourth franchised company began operation. Together these companies carried 3.4 million passenger boardings daily on a network of 412 regular routes.

       The largest bus operator is the Kowloon Motor Bus Company (KMB), which ran 249 bus routes in Kowloon and the New Territories in addition to 28 cross-harbour routes operated jointly with the China Motor Bus Company (CMB) and two cross-harbour routes 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 3 037 registered vehicles, including 2 803 double-deckers and 234 single-deckers of various types ranging from small 24 seaters to full-size coaches for airport and express duties. The company further expanded its air-conditioned fleet, and by the end of the year this included 231 single-deckers and 116 double-deckers which were together deployed on 55 routes. During the year 39 new routes were introduced, and 11 routes were withdrawn. In 1991, KMB carried 973 million passengers and operated 217 million vehicle-kilometres, compared with 966 million passengers and 195.3 million vehicle-kilometres in 1990. The Kowloon Motor Bus Company's franchise extends until August 31, 1997. Fares ranged from $1.4 to $15.

      A notable development during the year was the provision of seven new air-conditioned bus services variously from Kowloon, Ma On Shan, Tai Po and Tsing Yi to Central district on Hong Kong Island. These routes were designed to attract morning peak commuters who might otherwise have used and overloaded the busy section of the Mass Transit Railway along Nathan Road. The first of these routes began operation in May and was operated by KMB alone, but CMB was also participating in the operation when additional routes began from June onwards.

       Bus services on Hong Kong Island are provided by the China Motor Bus Company, which operated 94 Island routes and, jointly with KMB, 28 cross-harbour routes. At the end of 1991, the CMB's fleet comprised 1 000 double-deckers and 20 single-deckers. These vehicles carried 266 million passengers and travelled 52 million vehicle-kilometres during the year compared with 287 million and 51.7 million respectively in 1990. The company continued to improve its fleet during the year with the acquisition of 29 air-conditioned double-deckers and 16 air-conditioned single-deckers. The company's franchise extends until August 31, 1993. Fares ranged from $1.6 to $15.

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   The New Lantao Bus Company (NLB) operates seven regular and two recreational franchised routes on Lantau Island with a fleet of 50 single-deck and 15 double-deck buses. Most NLB services connect with the ferries at Mui Wo, and operational efficiency was improved in September by the opening of a new depot in Mui Wo to replace the former Pui O facility. The average weekday ridership on NLB in 1991 was 8 900 passengers, but recreational traffic on Sundays and public holidays swelled average patronage on these days to 20 663. Fares ranged from $1 to $17. A new arrangement was introduced in June to cater for recreational demand by the provision of a special service between Mui Wo and Po Lin Monastery at a return fare of $40, using air-conditioned coaches rented from another operator and transported to and from Lantau by ferry.

   The newest franchised bus operator is Citybus Limited. This company had been running non-franchised bus services since 1979. In August it was awarded a franchise for a route between Central (Macau Ferry) and MacDonnell Road. Public service began in September using nine buses on which a $4.50 fare was charged. This was the first franchised bus route awarded by competitive tender.

Minibuses

  Hong Kong's minibuses are licensed to carry a maximum of 16 seated passengers. There were 6900 minibuses in 1991. Of these, 4 350 were public light buses (PLB), and 2 550 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 separate fares is not permitted.

   The operation of PLBS is regulated by a passenger service licence. There are two types of PLBs. Those in green livery provide services according to official schedules. In 1991, there were 1 395 of them operating on 190 approved routes, each with fixed fares and timetables. They carried 687 000 passengers a day. Red PLBs operate without a schedule. They do not have fixed routes, timetables and fares. In 1991, there were about 2 955 red PLBs which carried 1 038 000 passengers daily.

   In line with government policy to convert more red PLBs to operate on scheduled routes, more new scheduled routes will be identified. In 1991, one green minibus selection exercise was conducted for competitive bidding by minibus operators.

Taxis

The quota governing the maximum number of taxis that may be licensed in the urban area, the New Territories and Lantau, was reviewed in late 1990. During the year, tenders were invited for the 200 new licences for urban taxis. At the end of 1991, there were 14 758 urban taxis, 2730 New Territories taxis, and 40 Lantau taxis, carrying an average of 1 065 900, 180 400 and 1 050 daily passengers respectively.

   The $1 temporary fuel supplement, which was introduced in December 1990 in the face of an upsurge in diesel prices during the Gulf War, was removed in mid-1991 when oil prices began to stabilise after the war.

   The operating boundary of New Territories taxis was revised in the year to enable them to ply between the north-east and north-west New Territories via the Shing Mun Tunnels.

Non-franchised Bus Operators

  Residents' services were introduced in 1982 to meet the transport needs of relatively isolated residential areas not well served by franchised bus services. Residents' organi-

Improved strains of chickens being developed at the Kadoorie Experimental Farm at Tai Po.

Opposite page: The Municipal Councils' Flower Show, held at Sha Tin in 1991.

Below: One of many flower farms in the New Territories.

Bottom: Gourds of all shapes and sizes in the Flower Show at Sha Tin.

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Opposite page and below: Cabbage and lettuce seedlings in greenhouses in the New Territories.

Bottom: Super sweet-corn, one of the increasingly-popular exotic vegetables being grown locally.

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Above: Fishing trawlers in Aberdeen's busy harbour.

Opposite page, top left: Bringing in the catch at Aberdeen Fish Market, top right: a new nature educational centre at Sai Kung, and bottom: fish farms near Tai Po, New Territories.

"And this little piggy..." Pig breeding at the Agriculture and Fisheries centre at Ta Kwu Ling, New Territories.

ད་ན་ ད་ ་ནས་ན༔་ ་་ག་་མེད་པ་ས་

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5

      sations may request a non-franchised bus operator to apply for such a service, which is then vetted and authorised under an operators' passenger service licence. Residents' services must operate in accordance with approved schedules of service, which also specify the routing, timetable, stopping places, 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 68 residents' services running 68 000 passenger trips a day. Vehicles used on these services ranged from small 18-seat coaches to double-deck buses. Twenty residents' services were introduced during the year providing bus services from various residential centres mainly in the New Territories and the southern part of Hong Kong Island.

      Apart from residents' services, non-franchised bus operators also serve the needs of factory employees, tourists and students on a group hire basis. At the end of 1991, the licensed fleet of non-franchised buses totalled 3 713 vehicles, of which 262 were double- deckers and mostly air-conditioned.

Ferries

Ferry services are still an important means of crossing the harbour and essential for travelling to Hong Kong's outlying islands. Ferry travel is largely provided by two franchised operators - Star Ferry Company Limited (SF) and Hong Kong and Yaumati Ferry Company Limited (HYF).

       SF operated 12 vessels across the harbour and, during the year, carried 36 million passengers on its three routes. Fares ranged from $1 to $1.50.

      HYF owned 74 licensed vessels and operated 25 ferry routes, including passenger and vehicular services across the harbour, services to the outlying islands and charter services. In 1991, the company carried 117 300 passengers and 7 000 vehicles daily. Cross-harbour passenger fares ranged from $2.8 to $3.8 and outlying islands fares from $4 to $18.

      Eight minor ferry services were operated by six licensed operators. These were supplemented by kaitos, or local village ferry services, which were licensed to serve remote coastal settlements. At the end of the year, 115 kaitos were in operation, run by 102 operators.

The Port of Hong Kong

Hong Kong is one of the busiest ports in the world in terms of container throughput, tonnage of shipping using its facilities, cargo handled and number of passengers carried. Ocean-going ships from more than 200 lines, flying the flags of 70 countries, trade between Hong Kong and ports around the world. Vessels of all descriptions ply the busy harbour daily. During 1991, there was one ship arrival or departure every 12 minutes.

      The Hong Kong Government has always taken the view that it generally should not undertake activities which can be done commercially, and often more efficiently, by the private sector. In many ways Hong Kong leads the world in this respect and the port is a good example. Many of the port facilities, such as the container terminals and dockyards, are privately owned and operated.

The port as a whole is administered by the Marine Department, which is responsible for all aspects of Hong Kong's maritime affairs. The principal function of the department in 237

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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 Director of Marine is the Pilotage Authority and is advised by the Pilotage Advisory Committee. The authority has wide powers to regulate and control the pilotage service although the pilots themselves operate as a private company. Tugs are also privately owned and operated. Ships over 5 000 gross registered tonnes are required to engage pilots to enter the port.

  Immigration and quarantine facilities for vessels calling at Hong Kong are available round the clock at the Western Quarantine Anchorage. At the Eastern Quarantine Anchorage, these services are available between 6 am and 6 pm daily and, in the case of the quarantine service, on request through the Vessel Traffic Centre of the Marine Department. These services, including advance clearance, may be applied for by radio.

  The Marine Department provides and maintains 71 mooring buoys within the port for ships to work their cargo in the stream. There are two classes of buoy suitable for vessels of up to 183 and 137 metres in length respectively. The majority of these are typhoon moorings to which vessels may remain secured during tropical storms, thus reducing operational costs.

  A variety of harbour craft play a significant role in the efficient running of the port. During the year over 2 100 lighters and 350 motorised cargo boats transported cargo to and from ocean-going ships moored at the anchorages and buoys in the harbour, and private or public cargo working areas ashore.

  In 1991, some 129 300 ocean-going vessels and river-trade vessels called at Hong Kong and loaded and discharged more than 104 million tonnes of cargo. This included 83 million tonnes of general goods from ocean-going vessels, of which 50 per cent was containerised cargo.

  The port handled 6.16 million TEUS (20-foot equivalent units) of containerised cargo in 1991. Expansion of container terminal facilities continued apace, with construction of Terminal 8 commencing at the end of the year. This terminal, with a capacity of 1.6 million TEUS, is to be formed by reclamation at the north-western part of Stonecutters Island. Its first berth is scheduled to come into operation in 1993. Planning for the construction of Terminal 9 is progressing well with the first berth required sometime in 1995.

  The port has served Hong Kong's needs well. But it will not be able to cope, in its present form, if the growth in traffic volume experienced over the past decade continues as anticipated. In view of this, plans are being drawn up to develop future container terminals and other marine facilities on Tsing Chau Tsai peninsula on Lantau Island over the next decade.

(Details of Port Development are given in Chapter 1 of this Report.)

  Consultation to reach consensus with the users and operators of port facilities has always been an important factor in Hong Kong's economic success. The private sector is fully represented on important committees which advise the government on port policy, port operations and land-related issues relevant to container terminals. The massive and diverse development of the port over the next decade will require a great deal of detailed consultation on all aspects of port planning and development, including land, marine and transport aspects. A Port Development Board was established in 1990 for this purpose. Membership of the board is drawn from a cross-section of shipping, government, commercial and port user interests.

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Shipping Services

Use of the passenger ferry terminals managed by the Marine Department is also on the increase. In 1991, the China Ferry Terminal in Tsim Sha Tsui and the Macau Ferry Terminal in Central handled a total of 17.9 million passengers on routes to China and Macau of which 13.7 million used the Macau service and 4.2 million the China services. This throughput represented an increase of 6.4 per cent over 1990.

      The implementation of the computer/radar Vessel Traffic System has been completed. This now plays a vital role in the monitoring of the movement of shipping in the waters of Hong Kong with the aims of enhancing safety and expediting navigation. Participation in the system is compulsory in that vessels are obliged to respond to the Vessel Traffic Centre of the Marine Department for information requested as well as to follow the advice or instructions that the centre may give.

      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, oil-pollution control vessels and marine police launches are also available to respond to emergencies in the harbour.

The full fleet of about 375 powered vessels maintained by the Marine Department is a highly visible part of the port. In addition to harbour patrol launches, fire boats and police vessels, the government has launches used for immigration, port health and customs clearance of international shipping and for the survey of international shipping. The fleet also comprises lighters, airport rescue craft, floating clinics and launches for transporting government staff. The department also maintains scavenging craft together with a contracted fleet of other craft who together collect and scavenge some 6 600 tonnes of refuse annually from ocean-going ships and the waters of Hong Kong.

      All government vessels are specially designed to meet their users' needs. The Marine Department designs and procures new vessels, maintains the whole fleet, and mans and operates about 70 general purpose vessels. In 1991, the government awarded a $300-million contract to an Australian shipbuilder for the construction of six police patrol/command launches.

      Bunkering facilities within the port are readily available to all vessels at commercial wharves and oil terminals, or from a large fleet of private 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 150 000 deadweight tonnes can be accom- modated. A large number of small shipyards are available to undertake repairs to small vessels and build and maintain sophisticated patrol craft and pleasure vessels.

      During the year, the government, including the Marine Department, Customs and Excise Department and the Marine Police introduced further measures to combat the increasing number of smuggling incidents involving pleasure vessels exporting goods to China. As a direct result of the measures taken, the number of such incidents was substantially reduced.

      Hong Kong's economic success has resulted in constant growth of the territory's international trade. This has led to the large increase in size and number of ships visiting the port, and the consequential demand for accurate and up-to-date hydrographic surveying and charting services. The government intends to establish its own hydrographic office to perform these functions in order to better satisfy the needs of port users.

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By international agreement, the Marine Department 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 is manned continuously and monitors the various emergency communications channels. A full search and rescue mission can be activated and run by fully-trained staff. Suitably equipped search and rescue vessels and aircraft are available and additional assistance can be obtained from other rescue co-ordination centres in the region. Radio communications equipment costing $20 million has been ordered for the centre to facilitate full implementation of the new Global Maritime Distress and Safety System by April 1992.

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 1991, the association members' fleet stood at 1 233 ocean-going vessels totalling 68.7 million deadweight tonnes or 38.1 million gross registered tonnage, of which 145 vessels representing 11.8 per cent of the gross registered tonnage were registered in 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.

  Statutory surveys of all Hong Kong-registered vessels are undertaken worldwide by Marine Department surveyors or authorised classification societies for the issue of certificates in accordance with international conventions relating to maritime safety, pollution prevention and crew accommodation promulgated by the International Maritime Organisation and the International Labour Organisation. United Kingdom and foreign ships visiting Hong Kong are also surveyed by Marine Department surveyors on request by their administrations.

During 1991, a total of 1069 ships visiting the port of Hong Kong were subject to inspection to enforce international conventions, namely the International Convention for the Safety of Life at Sea, the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers and the International Convention for the Prevention of Pollution from Ships. This represented about five per cent of the ocean-going ships (which exclude river-trade coastal ships) estimated to have visited Hong Kong during the same period. Of these, about 10 per cent required deficiencies to be made good before the ship could sail from Hong Kong.

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 catamarans). 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 the certification of local craft is under way with the intention of developing a rationalised approach to the safety and control of the many disparate types of craft operating in Hong Kong. A free inspection and advice service is operated to promote safe working practices in ship repairing, ship-breaking and cargo handling afloat.

  The Examination Section of the Marine Department conducts a wide range of examinations for persons requiring certificates of competency for service on vessels of all

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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 government and required by international conventions.

      A major concern of the government and Hong Kong shipowners is the falling recruitment of local seafarers. A committee, comprising representatives from the govern- ment, Hong Kong Shipowners' Association, Merchant Navy Training Board, training institutions and the seafarers' unions, has examined the problem of merchant navy officer recruitment and training. Concerted efforts have been made by the Marine Department and the Hong Kong Shipowners' Association to stimulate the recruitment of trainee officers and to enhance the image of seafaring careers. The department and the association have jointly participated in careers exhibitions, talks and seminars, a video on Make a Career at Sea has been produced and visits to the department have been arranged for groups of secondary school students and their career and guidance masters. By 1993, training courses currently offered by different educational institutes for seafarers will be provided centrally by the Vocational Training Council.

       The Marine Department's Seamen's Recruiting Office and the Mercantile Marine Office register and supervise the employment of about 3 200 active seafarers on board some 700 ships of many flags. Considerable attention has been given to providing more comprehensive training for Hong Kong seafarers and, in this respect, the Seamen's Training Centre at Tai Lam Chung in the New Territories provides training courses for new entrants and in-service training for seamen to comply with the requirements of the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978.

      (Details of International Movements of Vessels, Passengers and Cargo are given at Appendix 37.)

Hong Kong Shipping Register

The Hong Kong Shipping Register, which came into operation under local legislation in December 1990, reflects the government's commitment to the highest international standards of maritime safety without overlooking commercial realities. Its supporting legislation embodies internationally-based standards for vessel construction, equipment and manning and is consistent with Hong Kong's obligations under International Maritime Organisation and International Labour Organisation conventions, including those on safety of life at sea, training and certification of crew, and protection of the marine environment. The register had a total fleet amounting to 6.38 million gross registered tonnage at the end of 1991.

      Hong Kong is independently represented as an Associate Member of the International Maritime Organisation and, in accordance with the Joint Declaration, this status will continue after 1997.

Civil Aviation

The Gulf crisis caused a short disruption of air services to the Persian Gulf and a general rise in operating costs for airlines (higher fuel costs and insurance premia), resulting in a general increase in passenger fares and cargo rates of about seven per cent. However, the effect of the crisis on air services to and from Hong Kong in general was slight and temporary and the airlines soon resumed normal operations.

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   With the ending of the Gulf War, air traffic started to pick up in the latter half of the year, resulting in a moderate annual growth in passenger and cargo throughput at the Hong Kong International Airport at Kai Tak. A total of 19.2 million passengers passed through the terminal, an increase of 2.7 per cent over the total of 18.7 million in the previous year. A total of 852 000 tonnes of cargo, valued at $282,500 million, were handled, compared with 802 000 tonnes of air cargo valued at $259,864 million in 1990. Air transport continued to play an important role in Hong Kong's external trade. Of Hong Kong's total trade in imports, exports and re-exports, air transport took about 18 per cent, 30 per cent and 14 per cent in value terms respectively. The USA remained the major market for exports and re-exports by air, representing 36 per cent and 21 per cent respectively.

   In 1991, an increase of 3.7 per cent in aircraft movements was recorded, bringing the annual total to 109 700 of which 77 per cent were wide-bodied aircraft.

   (Details of International Movements of Aircraft, Passengers and Cargo, are given at Appendix 37).

   Since 1988, the Civil Aviation Department has embarked upon a programme of improvements at Kai Tak Airport to enable it to meet the expected passenger and cargo throughput until the commissioning of the new airport at Chek Lap Kok, currently scheduled for mid-1997. As a consequence of the continuing high growth rate of air traffic, the works programme has been 'fast-tracked' with the target completion date now brought forward to the end of 1993 instead of the original date of 1995.

   The refurbishment of the older part of the passenger terminal building started in 1990 and is expected to be completed by mid-1992. The work involves renewing building finishes, improving air-conditioning and refurbishing the check-in islands and departure baggage system. One important element of the work completed early in 1991 was the improvement to the public Arrivals Hall. The area was enlarged and the exit ramp widened, giving arriving air passengers more room, and enabling them to be more easily seen by greeters. The new facility was brought into use in time for Chinese New Year.

In order to streamline departure passenger processing, four Express Check-in Desks were provided for use by passengers with no check-in baggage. Work on the installation of an electronic Check-in Information Display System for each check-in position started in the middle of the year. The system, when fully commissioned in mid-1992, will further improve the flexibility of allocating check-in desks.

Despite the general world recession, air traffic at the Hong Kong International Airport continues to grow. The number of interline passengers transferring through Hong Kong increased significantly during 1991, particularly passengers from Taiwan transferring to flights to the People's Republic of China. In order to handle this traffic, a third Airline Passenger Transfer Desk was brought into operation.

During the year, several projects to increase aircraft parking capacity at the airport were completed. An airport depot was completed in October which houses aircraft recovery equipment and provides additional office and storage space for the Apron Control Section of the Civil Aviation Department; an additional taxiway bridge connecting the east apron and the main aircraft parking area was opened for use in November. Work is underway to provide four additional parking bays for B747-sized aircraft. They will be equipped with fixed ground power, refuelling facilities and floodlighting and all are expected to be completed by September 1992. Work has also begun to develop a further 11 parking bays for wide-bodied aircraft. These are due to be completed by the end of 1993.

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During the year, a number of schemes were launched to improve road access to the airport. These include road widening, realignment, additional slip-roads for discharging traffic into trunk roads, the introduction of new ramps to the multi-storey carpark, the provision of roundabouts at road junctions, traffic rearrangement and elimination of traffic-light junctions. These schemes will be completed in stages during 1992 and 1993. Modification work has started to provide longer kerbs for taxi and bus loading at the Transport Terminus to the west of the passenger terminal.

Improvements to air traffic control facilities also form a major part of the Kai Tak improvement programme. These include enhancement of the existing radar system, new navigational aids and air traffic control equipment, both on and off-airport. Work on Phase I, which covers the replacement of the precision approach radar and the instrument guidance system, has started and will be completed around mid-1992. A new computerised satellite-aided search and rescue system for detecting and locating transmissions from emergency radio beacons was commissioned during the year.

The capability of rescue and fire fighting at the airport received another boost during the year. The two vehicles for rapid-intervention were replaced by new vehicles with larger foam and water capacity and a much higher foam discharge rate. The two motorised inflatable rescue boats were also replaced. A new vehicle for fire fighting with a jackless hydraulic rescue platform was commissioned. It allows operation of the hydraulic platform while the vehicle is in motion, thus greatly enhancing response time to fire and rescue situations.

As air freight continues to grow at a high rate, the capacity of Terminal One of the Hong Kong Air Cargo Terminals Limited (HACTL) has reached its saturation point. However, the timely commissioning of HACTL Terminal Two in November 1991 has doubled the handling capacity to 1.4 million tonnes a year. This will allow ample room for sustained growth of air cargo in the coming years until the airport at Chek Lap Kok comes

on stream.

Hong Kong is home to three airlines. During the year, Cathay Pacific Airways (CPA), the largest of the three, commenced scheduled services to Johannesburg, Ho Chi Minh City and Hanoi. To cope with the increasing scale of its operations, CPA acquired five B747-400s. At the end of 1991, its fleet comprised 18 L1011s, eight B747-200s, six B747-300s, 10 B747-400s and three B747-200 freighters, making a total of 45 aircraft.

      Hong Kong Dragon Airlines (Dragonair) continues to operate scheduled services to six cities in China and four other cities in Asia with its five B737s and one L1011. The airline suspended its scheduled service to Utapao in Thailand in January and commenced a scheduled service to Tianjin in China in April. It also operates a number of non-scheduled passenger services to other cities in Asia, mostly in Japan and China.

Air Hong Kong (AHK), which provides all-cargo services, commenced scheduled flights to Nagoya, Brussels and Ho Chi Minh City to add to its scheduled services to Manchester. Non-scheduled cargo services continued between Hong Kong and a number of destinations in Asia, including Singapore, Kuala Lumpur, Bangkok and Kathmandu. To cope with the increasing scale of its operations, AHK supplemented its two B707F aircraft by two leased B747F aircraft during 1991.

       The year saw the introduction of scheduled air services to Hong Kong by Delta Airlines, Myanma Airways, Emirates Airlines and Continental Airlines and the suspension by Rosenbalm Aviation. The number of scheduled airlines serving Hong Kong increased to 46.

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 During the year, these airlines operated about 900 direct round trip services weekly between Hong Kong and some 80 other cities. In addition to the scheduled services, an average of 250 non-scheduled flights were operated by both scheduled and non-scheduled airlines each week.

  In accordance with the relevant provisions of the Sino-British Joint Declaration, the process of separating Hong Kong's Air Service Agreements from those of the United Kingdom continued. Three more agreements were signed during the year; the sixth Hong Kong Air Service Agreement, which was concluded between the Government of Hong Kong and Government of New Zealand, was signed in Hong Kong on February 22; the seventh agreement concluded by Hong Kong with the Government of Malaysia was signed in Kuala Lumpur on March 4, and the eighth agreement by Hong Kong and the Government of Brazil was signed on September 6.

  In 1991, the Air Transport Licensing Authority granted one licence to Cathay Pacific Airways. As at December 31, Cathay Pacific Airways held licences to operate scheduled services to 62 cities in 32 countries, Dragonair was licensed to serve 52 cities in 11 countries and Air Hong Kong was licensed to operate scheduled all-cargo services to 17 cities in 12 countries.

The Provisional Airport Authority

The Provisional Airport Authority (PAA) was established in April 1990 to oversee the planning, design and construction of a replacement airport at Chek Lap Kok. It is due to be replaced by the Airport Authority in 1992.

The airport will be located on a 1250-hectare 'airport island' off the northern shore of Lantau which will be formed primarily by levelling the islands of Chek Lap Kok and Lam Chau and by using the excavated materials and marine sand fill for reclamation. To prepare an advanced works area of about 30 hectares on Chek Lap Kok to facilitate the commencement of the main site preparation work, the authority awarded an advanced works contract in February 1991. The work will be completed early in 1992. Tenders for the main site preparation contract were invited in November 1991 with a view to awarding the contract in May 1992.

  It is planned to commission the airport in 1997, initially with one runway and the capacity to handle 35 million passengers and 1.5 million tonnes of cargo a year. A second runway and further terminal facilities will be phased into operation in accordance with air traffic demand and in a cost-effective manner.

In the longer term, the new airport is planned to meet a forecast demand of 87 million passengers and up to 9 million tonnes of cargo annually by 2040. Its two parallel runways 1 525 metres apart will have the potential of being operated independently of each other. Also, because of its location, the airport will be able to operate 24 hours a day without causing any noise pollution problems for Hong Kong residents.

  In July 1990, the PAA appointed consultants to develop a masterplan for the airport and this task was completed at the end of 1991. This work has involved developing engineering proposals for the formation of the airport site, establishing the length of the runways, the distance between them, the location and shape of the passenger terminal and concourses and the position of other major supporting facilities such as cargo terminals and aircraft maintenance and engineering facilities, and conducting a thorough environmental impact assessment of all these developments.

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The passenger terminal complex, located between the two runways at their eastern end, will be connected efficiently by road, rail and sea links to Hong Kong's urban areas. Passenger convenience will be maximised with an on-airport shuttle train conveying passengers between the processing terminals and the more distant aircraft gates. The authority invited tenders for the detailed design of the passenger terminal complex in November 1991 with a view to starting design work early in 1992.

The authority has also directed its consultants to investigate environmental issues in parallel with design and construction issues associated with the airport. A sea channel between the airport island and Lantau will be retained to ensure that acceptable water quality is maintained near the proposed Tung Chung New Town. The need to minimise noise levels both from construction and the eventual operation of the airport has been taken into account in the airport design. Well under 1 000 people will be affected by noise as a result of operations at Chek Lap Kok compared with the 350 000 people currently living within the critical noise level area associated with the existing airport at Kai Tak.

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THE Hong Kong Government gives high priority to the fight against crime and the maintenance of public order. The Fight Crime Committee, chaired by the Chief Secretary, provides valuable advice and puts forward recommendations on areas of public concern and on measures to improve the maintenance of law and order.

The Royal Hong Kong Police Force has operational responsibility for crime prevention and detection, the maintenance of public order and, since December 1990, has begun to resume responsibility for the detection of illegal immigrants on the border.

The Immigration Department, through its control of the entry and exit points and activities directed at discovering illegal immigrants, contributes significantly to the main- tenance of law and 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 combating 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. In September 1991, the department took over the management responsibilities of High Island Detention Centre from the Royal Hong Kong Police. The department now manages six detention centres for Vietnamese illegal immigrants.

The Fire Services Department gives advice on fire protection and provides fire-fighting and rescue services. It also operates the major ambulance service.

Fight Crime Committee

In 1991, the Fight Crime Committee continued to provide advice on measures to combat crime. Specific subjects considered included measures to counter organised crime and triads, crime involving juvenile and young offenders, statutory post-release supervision for adult offenders, regulation of the security industry and efforts to call upon public co-operation by reporting crime, preventing crime and proving crime.

   The committee continued to act on the recommendations contained in the discussion document Options for Changes in the Law and in the Administration of the Law to Counter the Triad Problem. The document recommended, among other things, that one-way viewers should be used for identification parades in certain cases in order to encourage

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      witnesses to come forward. In 1991, six such facilities were installed. The suggestion in the document for employment of task forces to tackle organised crime was put into practice with the setting up in February 1991 of a task force comprising officers from the Police Force, Customs and Excise and the British Navy to deal with smuggling. This, coupled with the introduction of anti-smuggling legislation, has helped to reduce smuggling activities significantly.

         The document also recommended the introduction of a scheme to assist non-active triad members to rehabilitate. The Triad Renunciation Scheme was launched on December 8, 1988, and suspended with effect from April 1, 1991. It was considered that a period of over two years was long enough for those who wished to relinquish their triad links to come forward. Under the scheme, a total of 1 197 applications were received of which 779 genuine triad members have successfully renounced their triad membership.

       The document suggested that a supervision scheme should be introduced to discourage certain categories of offenders from committing crimes again. The Fight Crime Committee supported this suggestion and has examined how such a statutory post-release supervision scheme could operate.

Subsequent to discussion at the Fight Crime Committee, the Organised Crime Bill 1991 was published as a White Bill in August, for a three-month public consultation exercise. The bill aims to deter organised criminal activity by heavy penalties, to facilitate effective prosecution and punishment of individuals who participate in such activity at all levels, and to destroy the power of criminal syndicates by confiscating their profits. Apart from specific comments on certain aspects of the bill, the public expressed general support for it. The bill is being revised to incorporate the public views expressed and is expected to be introduced into the Legislative Council in 1992.

       The committee has also discussed the Security and Guarding Services Bill. This aims at regulating the security industry through a licensing system to be run on two levels, namely, the licensing of persons who do security work (including watchmen) and the licensing of the security companies themselves. The bill is expected to be introduced into the Legislative Council in 1992.

The committee was concerned about the rise in crime involving juvenile and young offenders. A sub-committee of the Fight Crime Committee has decided to commission a research study to find out the social causes of crimes committed by offenders aged between 7 and 20, with a view to assisting the committee to consider ways to reduce the involvement of young people in crime. The Young Offenders Assessment Panel continued to provide advice to the courts on the rehabilitation programmes most likely to reform juveniles and young people. Two special Outward Bound courses were also arranged for inmates of Correctional Services Department and Social Welfare Department institutions.

       The Integrated Law and Order Statistical System, designed to provide comprehensive statistics supplied by the Police Force, the Judiciary, the Correctional Services and Social Welfare Departments on offences, offenders and sentences, has been fully implemented. Meanwhile, development of computer programmes for producing statistics for the study on recidivism is almost completed. In view of the increasing data processing needs of various different users, a preliminary plan for upgrading the computer system is being drawn up.

The District Fight Crime Committees continued to play an important role in the fight against crime. They monitored the crime situation in their districts and helped foster both

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community awareness of the need to prevent crime and community participation in combating crime.

   In January, in the face of a rising trend in the crime rate, the Fight Crime Committee, in conjunction with district committees, launched a special publicity drive. A wide variety of activities were organised in all 19 districts during the one-month campaign period. The culmination of the drive was a televised variety show.

   Members of all 19 District Fight Crime Committees participated in a gathering in October which provided an opportunity to reinforce the link between the central and district committees and to exchange views on crime-related matters.

Police Force

For the Royal Hong Kong Police Force, 1991 was a year of very active service. The year was characterised by an increase in violent crime and an upsurge in large-scale smuggling of stolen vehicles and unmanifested cargoes. The amounts of money involved in such crimes were significant.

The public was particularly concerned about the occurrence of a number of serious organised crimes, featuring the use by criminals of high-powered firearms. With the stepping up of police vigilance and enforcement actions, the situation was kept under control.

   The problem of vehicle theft for smuggling to the mainland continued to plague the territory in the early part of the year. The problem was as much a concern to Hong Kong as it was to China. In February, under the Governor's directive, an Anti-smuggling Task Force was formed to tackle the problem. The efforts of the task force subdued these once rampant activities. Subsequent meetings between the Commissioner of Police and Chinese officials resulted in the return of a number of stolen vehicles.

   The force continued to experience stress in its manpower. The resumption from the Army of responsibility in patrolling part of the land border between Man Kam To and Sha Tau Kok, and continued commitments at Vietnamese detention centres further strained the force's resources. The situation improved slightly when management of the High Island Detention Centre was handed over to the Correctional Services Department.

   During the year, the force continued with its development programmes to meet future needs. The acquisition of a number of most advanced computer systems, including an enhanced computer-assisted command and control system, a computer-assisted fingerprint identification system and a system to faciliate the fast and easy retrieval of criminal intelligence data, ensured that the force was among the most efficient in crime-fighting capabilities.

   Planning and development in respect of the force's structure, office accommodation, equipment and manpower continued in order to cope with new demands caused by population growth and the development of new towns and the new airport.

Crime

There were 88 659 crimes reported to the police in 1991, a marginal increase of 0.4 per cent compared with 88 300 recorded in 1990. The total number of crimes per population of 100 000 was 1 541, a drop of 0.5 per cent over 1990.

   Violent crime, a category which includes murder, wounding, serious assault, rape, indecent assault, kidnap, blackmail, criminal intimidation and robbery, continued to rise

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and 19 558 cases were recorded, accounting for 22.1 per cent of the total number of crimes and representing an increase of 3.9 per cent compared with 1990.

      Compared with 1990, there was a considerable rise in robberies (+1 109) and burglaries (+1 197); however, an appreciable decrease was recorded in offences relating to wounding and serious assault (−314) and theft from vehicles (-- 600).

In 1991, the detection rate for crimes was 45.2 per cent. A total of 44 059 persons were arrested for various criminal offences. The number of juvenile offenders (aged under 16) was 7 044 compared with 6 583 in 1990. There were 8 165 young person offenders (aged between 16 and 20), a drop of 141 over 1990. The most common crimes committed by juveniles were shop theft and robbery, and those by young persons were wounding and serious assault, miscellaneous theft and robbery.

Organised and Serious Crime

The number of incidents involving the use of genuine firearms in 1991 was 77, compared with 78 in the previous year. There were 511 cases involving the use of pistol-like objects, an increase of 147 over the preceding year.

      During the year, police operations against robbery gangs resulted in the seizure of 65 firearms. One notable case involved the recovery of nine handguns and a large quantity of ammunition.

Action against triads was stepped up in view of increased gang activities in late 1990 and 1991. At regional level, there were dedicated anti-triad units to deal with the problem. At Police Headquarters level, the 'Organised and Serious Crime Group' was redesignated the 'Organised Crime and Triad Group', to reflect more accurately its increasing commitment to anti-triad work.

In October 1990, police successfully raided premises in Sau Mau Ping where a triad initiation ceremony was being held. A total of 18 persons were arrested and subsequently convicted of various offences under the Societies Ordinance. In 1991, follow-up in- vestigations elicited sufficient evidence to lay charges against senior office bearers of the San Yee On triad group.

      The theft of luxury vehicles increased dramatically in the early part of 1991. However as a result of stepped-up enforcement action and the introduction of new anti-smuggling legislation, complemented by the close co-operation of the Chinese authorities, the situation was brought under control by mid-year and the number of such thefts plummetted. Many stolen vehicles were recovered.

Commercial Crime

During the year, the Commercial Crime Bureau maintained emphasis on the investigation of fraud in the financial and commercial sectors, in particular offences committed by company and bank officials. A number of successful prosecutions were achieved, and in one case some $147 million was involved. Pre-emptive action against international fraud remained one of the bureau's top priorities.

      The bureau enjoyed considerable success in the investigation and prosecution of a number of major cases of counterfeit and forgery. One of the cases involved an international syndicate engaged in handling forged bank drafts, some of which had a face value of US$10 million. In other operations, fake US banknotes and traveller's cheques with a face value exceeding US$7 million were seized.

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Narcotics

A significant increase was seen in the trafficking of methylamphetamine (or 'Ice' as it is more commonly known), through Hong Kong from China.

Some 183.94 kilograms of opiate drugs, comprising opium, and No. 3 and 4 heroin, were seized, compared with 265 kilograms in 1990. There were 7688 arrests for narcotics offences compared with 7 600 in the previous year.

   The Drug Trafficking (Recovery of Proceeds) Ordinance 1989, which provides for the restraint and confiscation of assets of convicted drug traffickers, took effect in September 1989, resulting in the freezing of $269,922,052 of drug-related assets. The Drug Trafficking (Recovery of Proceeds) (Designated Countries and Territories) Order 1991 allows countries which have entered into bilateral agreements with Hong Kong to use the powers of the ordinance in reciprocal confiscation. Designated countries include the USA, Canada, Australia and the United Kingdom.

Crime Prevention

The Crime Prevention Bureau continued to promote all aspects of crime prevention through publicity and advice to the community.

   Constructive liaison between the bureau and the insurance and motor vehicle industries resulted in the introduction of effective measures to curtail the disposal of stolen vehicles, reduce insurance fraud and increase public awareness of the need for vehicle protection.

Crime prevention education targetted at young people continued through the use of the 'Robotcop' (a computerised robot), which appeared in over 200 displays in schools, community youth centres, shopping arcades and exhibitions throughout the year. Publicity campaigns, seminars, exhibitions and inspection of premises at risk were on-going exercises.

Crime Information

The Enhanced Police Operational Nominal Index Computer System came into operation in March 1991. The system is operated and maintained by the Criminal Records Bureau and provides on-line information to operational police formations. During 1991, the system dealt with 2 553 094 enquiries.

The Identification Bureau continued to play an important role in crime investigation and detection by providing services to all units of the force in relation to fingerprint technology and forensic photography.

Computerisation of 182 000 scenes of crime fingerprint records was completed and the system became fully operational in May 1991. A total of 406 fingerprint identifications was achieved in 1991 by this system.

During the year, examination of finger, palm and sole print traces at 24 406 crime scenes resulted in 1 072 persons being identified as having connection with 1 158 cases.

The Main Fingerprint Collection has 753 726 sets of fingerprints of convicted persons. In 1991, 95 420 arrested persons' fingerprints were processed and 35 093 persons were identified as having previous convictions.

Ballistics and Firearms Identification

The Ballistics and Firearms Identification Bureau handled 344 cases in 1991 compared with 376 in 1990.

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      The year saw the first recorded use of a military-style assault rifle in crime. A total of 116 commercially-manufactured firearms and eight home-made and converted firearms was seized.

Interpol

The Hong Kong National Central Bureau of the International Criminal Police Organisation, more commonly known as Interpol, was established in September 1960 as a sub-bureau of the United Kingdom. The local bureau is one of the most active members in the South-east Asian region, dealing with approximately 7 500 enquiries each year.

      The bureau acts as a co-ordination centre for dealing with criminal information and associated inquiries between Hong Kong and the rest of the world and disseminates information on behalf of formations within the force to participating countries. An increasing number of extradition cases also come under the Charter of the bureau.

      Two officers are seconded to the Interpol General Secretariat in Lyons, France, and close liaison with the secretariat is maintained.

Public Order

The Police Tactical Unit (PTU) companies have again been heavily committed to assisting in anti-crime patrol and operation.

In December 1990, the Field Patrol Detachment (FPD) became operational. This unit employs Police Tactical Unit Companies on anti-illegal immigration duties along the border and will take over these duties entirely from the Army in 1992. In 1991, a total of 2210 officers in various ranks were trained in internal security measures and field patrol detachment tactics. Routine training of PTU officers and District Internal Security units continued throughout the year.

Illegal Immigration

During the year, a total of 24 089 illegal immigrants from China were intercepted. Of these, 7 841 illegal immigrants were arrested at the border.

      Political and economic reasons remained the main contributing factors to illegal immigration.

Following the arrests of a large number of illegal immigrant workers on construction sites, the Immigration (Amendment) Bill was enacted late in 1990. This new legislation substantially increases the maximum sentence for employing illegal immigrants to a fine of $250,000 and three years' imprisonment, and provides for the prosecution of site- contractors who fail to prevent illegal immigrants from being present on a construction site. The new law has caused a dramatic drop in the total number of illegal immigrants arrested on construction sites.

Vietnamese Illegal Immigrants

There was a marked increase in the number of Vietnamese arrivals in 1991. Most people left Vietnam for economic reasons and in the hope of resettlement overseas.

All Vietnamese illegal immigrants are held in detention centres to await a screening process to establish their refugee status in accordance with the 1951 UN Convention. Those classified as economic migrants are kept in detention centres pending repatriation to Vietnam. All Vietnamese illegal immigrants found in Hong Kong territorial waters are advised of this policy and informed that they are free to leave if they wish.

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A total of 20 207 Vietnamese illegal immigrants arrived in Hong Kong in 1991 compared with 6 598 in 1990.

Traffic

The number of licensed vehicles and the resulting traffic density, in terms of vehicles per kilometre of road space, increased over the previous year by 4.5 per cent and 3.6 per cent respectively. This highlighted, once again, the need for positive traffic control and increased effort in road safety education.

Road safety campaigns were mounted throughout the year to educate pedestrians and drivers. Emphasis was placed on pedestrians over 60 years of age, motor-cyclists and cyclists.

The Road Safety Exhibition Centre at Police Traffic Headquarters, Sau Mau Ping Road Safety Town, Sha Tin Road Safety Park, the newly-opened Pak Fuk Road Safety Town and the Road Safety Mobile Exhibition Centre were all regularly visited by schools and other organisations.

During 1991, there were 15 298 traffic accidents causing personal injury, an increase of 2.1 per cent against the previous year.

Marine Region

1991 has seen a decrease in the number of illegal immigrants (IIs) arriving from China by sea, as was with those attempting to enter Hong Kong by crossing the land border. The trend of using concealed compartments in vessels to smuggle IIs into the territory continued throughout the year, with perpetrators adopting often ingenious methods to conceal their human cargo. To counter the trend, the police are looking at high-tech methods of searching, including the use of heat-seeking equipment. The majority of IIs continue to be brought into Hong Kong by Chinese trading vessels, keeping marine police officers very busy.

the

With the disbandment of the Illegal Immigration Intelligence Bureau in March 1991, collation of intelligence/statistics pertaining to IIs is currently done by Operations Wing in Police Headquarters. Nevertheless Marine Region continues to play a vital operational role in combating illegal immigration from China. Marine Crime Headquarters investigate and, when appropriate, prosecute cases in which illegal immigrants from China are brought into the territory on sea-going vessels.

For the first three months of 1991, the region continued to deal with a very high level of smuggling activity from Hong Kong to China, involving motor vehicles (including stolen luxury models), video cassette recorders and other electrical goods. The use by smugglers of specially designed high-speed boats fitted with four or five outboard engines capable of speeds of 60-70 knots per hour, had made interception at sea difficult. There has, however, been a major breakthrough in combating the smugglers, following the formation of the Anti-Smuggling Task Force in February and the introduction of new legislation in April. The new law enabled more effective action to be taken against the smugglers ashore and also prohibited the construction and storage of speedboats designed specially for smuggling purposes.

There was a significant decline in the level of such activity since the introduction of the new legislation. Some $22.59 million worth of goods intended for smuggling were seized, and 1 006 persons were arrested. However, smugglers have adopted new tactics by using

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      speedboats which conform to licensing conditions, which means that smuggling will continue to be a problem in the foreseeable future.

      The Marine Region has a major role in all search and rescue operations within the territorial waters of Hong Kong. It responded to 181 incidents compared to 190 in 1990.

Bomb Disposal

During 1991, the Explosive Ordnance Disposal Unit attended a total of 107 calls, the nature of which varied from investigation into bomb explosions to disposal of explosive devices ranging from home-made bombs to vintage shells.

Community Relations

To encourage greater public support in the fight against crime, a special publicity drive was launched in January. The slogan adopted for the campaign was Join Forces Against Crime and the themes were to prevent, report and prove crime. A comprehensive publicity package, inclusive of a theme song, a series of television APIs (Announcements in the Public Interest) and posters, was produced.

      A booklet on crime prevention was published during the year to give advice on personal safety, home security and protection of one's property. The booklet was distributed to the public through the Crime Prevention Bureau and the Police Community Relations Offices.

       Regarding community involvement projects, the District Fight Crime Committees all rendered their support by organising activities for local residents.

Special recognition was given to individuals who had made a positive contribution towards the fight against crime, in the form of the Good Citizen Award and the Good Citizen of the Year Award. Jointly administered by the Royal Hong Kong Police and the Hong Kong General Chamber of Commerce, the two schemes were started in 1973 and 1984 respectively. In 1991, 86 people received the Good Citizen Award, and the Good Citizen of the Year Award went to two people.

      To advise the public of crime preventive measures and to appeal for their assistance for information to solve crimes, three television programmes were produced in conjunction with the Radio Television Hong Kong.

Crime Watch, a half-hour monthly programme, and Police Call, a 15-minute programme, were featured on the Chinese channels of both television stations. Police Report, a five-minute programme, was aired on the English channels. Reconstruction of unsolved crimes and a dramatised approach were featured in order to encourage spontaneous response from the public through the police hotline.

      During the year, the police hotline received 7 781 calls, resulting in 1 246 arrests. Both figures showed an increase over those of the previous years and indicated a growing level of public support.

       The Junior Police Call (JPC) is one of the largest youth organisations in Hong Kong and since its inception in 1974 over half a million young men and women have joined. Early in 1991, the 500th JPC School Club was formed in a secondary school in Sha Tin District, in the New Territories. At the end of 1991, the registered membership stood at 160 000, with an additional 14 000 leaders.

       JPC organises a wide range of recreational and educational activities which provide members with healthy outlets as well as ideas in helping the police to fight crime. JPC members are also actively involved in community service, assisting in flag-selling and

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fund-raising activities by local charitable organisations. The efforts and outstanding performance of JPC members are recognised through an award scheme.

Planning and Development

The year saw the completion of a record number of major new police facilities, including new district police stations at Tsuen Wan, Ma On Shan and Tseung Kwan O, a new waterfront divisional police station in Central District, two new marine bases at Ma Liu Shui near Sha Tin and at Sai Kung and a new Police Driving School at Fanling. The Tseung Kwan O Police Station is also the headquarters for the newly-established Kowloon East Region.

In the meantime, work continued on the Tin Shui Wai Police Station, new facilities for the Police Dog Unit at Ping Shan and two major new quarters projects for junior police officers at Tsing Yi and Fanling.

Planning continued on Phase II of the new Police Headquarters Complex. Construction will start early in 1992.

The construction of the new airport and its related infrastructure in north Lantau will require considerable enhancement of police resources. Planning is in hand to ensure that the police presence in the area keeps pace with demand, both in the future new town and at the airport itself.

Communications

The Enhanced Computer Assisted Command and Control System went live in Hong Kong Island Region in May and in New Territories Region in October 1991. The com- munications elements of the system comprised some 5 700 portables, 280 mobile radios, 160 base stations, 330 receivers, a microwave relay system, and an inter-connected command and control sub-system in each of the land regions and Marine Islands District.

In 1991, the telephone systems of 35 police stations were replaced with the Fixed Communication System. This has a direct dialing-in feature which is more efficient and obviates the need for operator service.

Information Technology

The Information Technology Branch continued to co-ordinate the planning, development and implementation of computer facilities for the Police Force within the framework of the approved Information Technology Strategy.

The year 1991 saw the completion of the first phase in the modernisation of Force Command and Control Systems, giving the force the most up-to-date facilities and equipment. Extensive use of computers demonstrates the force's intention to fully utilise the latest technology in combating crime and maintaining law and order.

During the year, the Finance Committee approved a commitment of $6.991 million for implementing the External Database Enquiry System. This will provide a link between the Enhanced Computer Assisted Command and Control System and the new Vehicle and Driver Licensing Data System maintained by the Transport Department.

  The Enhanced Police Operational Nominal Index Computer System and the Computer Assisted Fingerprint Identification System went live in March and May 1991 respectively. Phase II of the Criminal Intelligence Computer System, which is an extension of the current system to provide facilities to the Narcotics Bureau and the Commercial Crime Bureau is scheduled to start operation early in 1992.

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Operation of the Pilot Station Information Communal System and the Major Incident Investigation and Disaster System commenced in June and July 1991 respectively.

Thirty-one additional microcomputers and twenty-seven word processors were provided to various formations during the year.

Transport

Transport Branch is responsible for the procurement, distribution and maintenance of the force vehicle fleet and the recruitment, training and management of police drivers. To meet operational needs, some 60 vehicles were added to the fleet during the year giving a total of 2 257 vehicles including 767 motorcycles.

An automatic car-washing plant will be built in Police Headquarters and become operational early in 1992. If this plant proves cost-effective, similar plants will be introduced throughout the force.

Research

The Research Branch is responsible for examining current and proposed police tactics in order to achieve practical improvements. Additionally, it evaluates special police equipment requirements with the aim of ensuring the force has the most effective equipment to perform its duties.

Research projects completed in 1991 included: the identification of alternative shift patterns for uniform branch personnel to reduce the deleterious effects of shift work; a feasibility study on expanding the role of detective constables in the processing of crime reports; a review of valuable, bulky property storage facilities, and an examination of the documentation relating to the detention and movement of persons in police custody.

Inspection Services Wing

The Inspection Services Branch of the Inspection Services Wing has been fully committed to Management Resources Studies. The aim of the studies has been to critically examine existing resources, including accommodation, with a view to achieving the greatest cost-effectiveness without hampering operational efficiency. Up to the end of 1991, 23 studies have been completed. The studies have identified savings in manpower, capital and recurrent costs, and recommended certain structural changes towards maintaining the force's various roles and functions in the light of the government's austerity programme.

Licensing and Society Registration

During the year, 127 societies have been registered by the Registrar of Societies who has also exempted 79 from the requirement to be registered. Seventy-five societies were cancelled from registration and exemption. At the year end, 159 applications under the Societies Ordinance were processed.

An average of 2 087 people applied for registration as watchmen each month. At the end of the year, 13 576 watchmen were registered, with 1 005 of them licensed to carry arms.

Police Dog Unit

The Police Dog Unit breeds and trains dogs to fulfil a variety of roles including drug detection, tracking, general patrol and, more recently, explosives detection. On completion of training, patrol dogs are based at police stations throughout the territory and specialist

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dogs are deployed either from the unit's headquarters at Ping Shan or its operational base at the Airport Police Station.

  With the commencement of the phased resumption of border security by the police, dogs and handlers are deployed in support of the Police Field Patrol Detachment. The strength of the unit will be increased to cover this additional duty without reducing current watch and ward commitment on the streets.

Complaints Against Police

The Complaints Against Police Office 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.

In 1991, 3 158 complaints were received, 266 cases fewer or 7.8 per cent less than in 1990. Over 79.2 per cent of complaints in 1991 were made by persons either involved with or subjected to constabulary action. Complaints of assault, negligence of duty and conduct/manner made up the majority of the complaints, which represented 80.4 per cent of the total. Investigations into 3 333 cases were completed and 76 cases (2.3 per cent) were substantiated, 26 cases (0.8 per cent) were classified as false, and 2 410 cases (72.3 per cent) were either withdrawn or not pursuable. A total of 22 police officers were disciplined and five charged with offences resulting from complaints.

  The Complaints Against Police Office is also responsible for advising force members on how complaints can be avoided. 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.

Personnel

At December 31, 1991, the force establishment totalled 27 245 and 5 930 for disciplined and civilian staff respectively.

  During the year, 9 271 applications were received for the post of constable, with 1 246 applicants being appointed.

With regard to the recruitment of inspectors, 39 local candidates were appointed from 1 382 applicants, while 20 overseas officers were taken on strength during the same period. In addition, 51 junior police officers were promoted to inspectors.

This year saw some improvement in the recruitment of constables. Compared with 1990, the number of applications for the post of constable increased by 4 162, or 81.5 per cent, while the number appointed to the rank rose by 384, or 44.5 per cent.

Training

Training in the force is divided into four levels: basic (induction), in-service, promotion, and sponsored external training.

Basic training for inspectorate and constable recruits takes place at the Police Training School at Wong Chuk Hang, a modern 42-acre campus. The 36-week inspectors' and 24-week constables' initial courses cover similar subjects: criminal law, social studies, police and court procedure, drill and musketry, first-aid, life-saving skills, and self-defence. The inspectors' course also includes training on management and leadership. Additionally, expatriate officers have to undertake an eight-week colloquial Cantonese course.

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Promotion training is divided into two parts: that for sergeants and station sergeants at the Police Training School, and that for senior inspectors, chief inspectors and super- intendents in the form of management or command training. All courses take place as soon as possible after promotion and are intended to equip officers with management and decision-making skills required for their new ranks.

In-service training covers not only training to bring officers up-to-date with new legislation and procedures but also a number of specialist courses on traffic accident reconstruction, technical marine subjects and language courses in English, Putonghua and Vietnamese.

      A number of specialist courses covering subjects such as Marine Advanced Radar, Vehicle Construction and Maintenance, Catering, and Financial Investigation are provided by outside training institutions. In addition, officers who seek to enhance their job-related skills by attending various courses held by local educational establishments or through overseas correspondence courses are given financial support.

      Some officers were sent to the United Kingdom, Canada, the United States, New Zealand, Australia and Malaysia for management, specialist or technical training.

      At the Detective Training School, courses at basic and advanced levels were conducted to improve the standard of criminal investigation throughout the force.

Promotions

Promotion prospects in the force remain good. During the year, 28 gazetted officers were promoted to the rank of senior superintendent and above, 37 chief inspectors to superintendent, 71 senior inspectors to chief inspector, 117 sergeants to station sergeant and 380 constables to sergeant. In addition, 10 exceptionally experienced station sergeants advanced to the rank of inspector.

      In 1991, 427 officers retired from the force, nine officers were invalided, 67 resigned, 15 were compulsorily retired and 16 were either dismissed or had their service terminated.

Awards

Seven hundred and fifty-four officers were awarded the Colonial Police Long Service Medal after 18 years of continuous service; 496 officers were awarded the 1st Clasp to the Medal after 25 years' service and a further 158 officers were awarded the 2nd Clasp after 30 years' service. In addition, four officers were awarded the Queen's Police Medal for Distinguished Service (QPM), and three officers the Colonial Police Medal for Meritorious Service (CPM). Two officers received the Queen's commendation for Brave Conduct.

Welfare

The Force Welfare Branch provides a wide range of services including personal welfare, catering, sports and recreation, psychological consultation and assistance on retirement to all members of the force and their families.

The Police Children's Education Trust and the Police Education and Welfare Trust assist children of serving and retired police officers as well as deceased officers, with the award of bursaries at various levels of education.

      The policy of providing housing to all married police officers, including those in the ranks of inspector, senior inspector, chief inspector and superintendent will continue to be implemented progressively in the years ahead, subject to the availability of resources.

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Royal Hong Kong Auxiliary Police Force

Manned entirely by part-time volunteers from all walks of life, the Royal Hong Kong Auxiliary Police Force has a proud history dating back to 1914. The traditional role of the force is to provide the regular police with additional manpower for such emergencies as natural disasters or public disorder.

  Day to day, the Auxiliary Police are fully integrated with their regular counterparts and perform a wide variety of constabulary duties in the field of crime prevention, neighbourhood policing, traffic control, special duties and community relations. The Auxiliary Police also provide support in communication duties in police command and control centres.

  The present strength of the force is 5 749 personnel out of a total establishment of 5 741 in all ranks. Approximately 14 per cent are women officers.

  Throughout the year, the average daily turnout of auxiliaries for normal constabulary duty was 850 officers. Additionally, the force was called upon to provide 48 personnel each day for guard duties at various camps set up to house Vietnamese illegal immigrants.

Customs and Excise

The Customs and Excise Department is organised into five major branches - the Headquarters Branch, the Operations Branch, the Investigation Branch, the Trade Controls Branch and the Civil Secretariat. It has an establishment of 3 922 posts and is primarily responsible for the collection and protection of revenue payable under the Dutiable Commodities Ordinance, the suppression of illicit trafficking in narcotics, the prevention and detection of smuggling, and the protection of intellectual property protection legislation.

Revenue Protection

The department is responsible for collecting revenue on six groups of dutiable commodities in Hong Kong - alcoholic liquor, tobacco, hydrocarbon oil, methyl alcohol, non-alcoholic beverages and cosmetics. In 1991, revenue of $6,219 million was collected on these dutiable commodities, an increase of $822 million (or 15 per cent) as compared with $5,397 million in 1990.

Immediately after the tabling of the 1991 budget in March announcing drastic duty increases, among other things, on tobacco and hydrocarbon oil, there was an upsurge in the amount of duty-free cigarettes brought in from China by local residents making multiple trips each day across the land border. There were also increased cases of substantial amounts of diesel oil carried in enlarged fuel tanks by vehicles returning from China. For revenue protection, new control measures were imposed. Local residents were allowed to claim duty-free concessions for cigarettes only if they had spent more than 24 hours outside Hong Kong. Maximum limits were also set on the quantity of duty-exempted diesel oil that the respective class of vehicle could carry when arriving from China. Both measures proved to be effective in preventing a bigger revenue drain through exploitation of the duty-free concession.

Anti-narcotics Operations

The department continued to co-operate closely with the Royal Hong Kong Police Force, overseas customs authorities and other law enforcement agencies in the prevention and suppression of illicit trafficking in narcotics.

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During the year, 75 kilograms of heroin, 46 kilograms of opium and 58 kilograms of cannabis were seized. A total of 883 persons were charged with drug offences.

Drug Trafficking (Recovery of Proceeds)

The department and the police have joint responsibility for enforcing the Drug Trafficking (Recovery of Proceeds) Ordinance and the Designated Countries and Territories Order 1991 made under it.

On application from the department, the court issued 17 orders prohibiting dealing with realisable properties suspected to be proceeds of drug trafficking, including two orders issued at the request of one country. Some six cases were concluded by the department and the court ordered the confiscation of $595,308-worth of assets.

Anti-smuggling and Import and Export Controls

In 1991, the department detected 714 smuggling cases under the Import and Export Ordinance, arrested 1 202 persons and seized $157 million worth of goods.

Smuggling by sea between Hong Kong and China continued to be rampant early in 1991. Local fishing vessels, Chinese territory vesssels and high-powered speedboats were frequently used for this purpose. Smugglers operated mainly at night carrying to China large quantities of television sets, video cassette recorders, cigarettes, air-conditioners and stolen vehicles.

In February, an Anti-smuggling Task Force comprising personnel from the Customs, the Police and the Royal Navy was formed to deal specifically with the smuggling activities to and from China by the use of speedboats. Two legislative amendments were made in April to support the anti-smuggling operations. The Import and Export (Amendment) Ordinance 1991 made it an offence to construct, repair or service a speedboat intended to be used for smuggling. The Import and Export (Carriage of Articles) Regulations 1991 prohibited the carriage of television sets, video cassette recorders, video cassette players, refrigerators, air-conditioners, vehicles and vehicle parts by vessels of less than 250 tons without a licence. Since the setting up of the Task Force and the enactment of these legislative amendments, smuggling activities by high-powered speedboats have decreased significantly.

In order to tighten control of strategic commodities, the Import and Export (Amendment) (No. 2) Ordinance 1991 and the Import and Export (Strategic Commodities) (Amendment) Regulations 1991 came into effect in July 1991. They extended controls on the transit of certain strategic goods and other items suitable for use in connection with nuclear, chemical or biological weapons.

Enforcement of Intellectual Property Protection Legislation

The department investigates complaints alleging infringement of trade marks and copyright as well as false trade descriptions. It collaborates with overseas enforcement authorities and owners of trade marks and copyright in a concerted effort to combat counterfeiting and piracy.

       The level of copyright infringement activities remained relatively low in 1991. The piracy of computer software and video tapes was greatly reduced following the neutralisation of several large-scale illegal reproduction and distribution centres and the seizure of $3 million-worth of computer and video products.

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  In the suppression of the illicit trade in counterfeit goods, seizures amounting to $105 million were recorded in 1991. Great attention was paid to the eradication of local manufacturing and distribution centres as well as the detection of counterfeit goods in transit through Hong Kong. In particular, great efforts were made to eliminate retail outlets for counterfeit watches, leatherware, electrical and electronic items.

Customs Co-operation Council

The Customs Co-operation Council (CCC) of which Hong Kong is a member, was established to improve and harmonise international customs operations and facilitate international trade.

  The department has assisted the CCC to run a regional liaison office established in Hong Kong since December 1987. This is a central body, primarily for the co-ordination and dissemination of customs intelligence on drug-related matters within the Economic and Social Commission for Asia and the Pacific Region.

Endangered Species

Hong Kong is fully committed to the protection of endangered species as specified under the Convention on International Trade in Endangered Species of Wild Fauna and Flora. Specifically, the import or export of ivory in whatever form is now prohibited except under a licence or as personal effects up to a specified quantity. The department works closely with the Agriculture and Fisheries Department to enforce the licensing requirements and investigate offences in connection with the import and export of ivory as well as other endangered species of animals and plants.

Police Complaints Committee

 The main function of the Police Complaints Committee is to monitor and review investigation by the Complaints Against Police Office (CAPO) of the Royal Hong Kong Police Force of complaints made against the police by the public. Set up in 1986 to replace the former UMELCO Police Group, the committee is an independent body appointed by the Governor. The chairman and two vice-chairmen are normally 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 3 333 complaint cases, after being satisfied that each case had been thoroughly and impartially investigated by CAPO. Having reviewed these cases, the committee proposed a number of changes to police practices, procedures and instructions to improve the overall effectiveness of the complaint system and assist the Commissioner of Police in minimising public complaints against the police.

Independent Commission Against Corruption

The Independent Commission Against Corruption (ICAC) is independent of the Civil Service and its commissioner is directly responsible to the Governor. It fights corruption on three fronts: investigation, prevention and education. It carries out this work through three functional departments - Operations, Corruption Prevention and Community Relations.

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The ICAC received a total of 2 411 reports of corruption allegations in 1991, a marginal increase of 0.4 per cent over 1990. Of these reports, 224 were in respect of allegations of offences relevant to the elections to the district boards, municipal councils and the Legislative Council. There were no elections in 1990.

Over the past five years the total number of corruption reports has remained fairly steady within a range of 2 250 to 2 420 each year.

      Reports concerning the private sector were pursuing an upward trend until 1990 when the trend reversed to register a nine per cent decrease over the previous year. In 1991, there were 1369 reports in this area. Deducting the reports arising from the elections, the number was 1 145, representing a further decline of four per cent from 1 205 reports in 1990.

Reports against civil servants had also been on the decline until 1990 when they increased by about nine per cent over the previous year. In 1991, there were 978 reports made against civil servants, a decrease of 13 per cent from 1 126 in 1990.

For the franchised utilities and other public bodies, there were 64 reports in 1991, compared with 69 in 1990.

Apart from reporting suspicions and fears of corruption, some members of the public tend to regard the ICAC as a conduit for general grievances against various government departments. In 1991, the ICAC received 1069 non-corruption complaints. The commission referred 838 of these to the government departments concerned.

Operations

The Operations Department enforces three sets of laws: the Prevention of Bribery Ordinance and the ICAC Ordinance which deal with corruption offences in general, and the Corrupt and Illegal Practices Ordinance which prohibits election malpractices.

The department operates a report centre, together with a hotline, round the clock to receive complaints from the public. Complainants can also choose to give their complaints to any of the eight ICAC regional offices located throughout the territory.

Of the 2 411 corruption reports in 1991, 2018 were received from members of the public and the rest mainly from government departments and the ICAC's own sources. Of significance is the fact that most members of the public were willing to identify themselves: 67 per cent in 1991 as compared to 60 per cent in 1981 and 35 per cent in 1974 when the ICAC was established. The quality of reports was high: 1759 reports contained sufficient information for an investigation to be pursued. As a result, the Operations Department's case-load rose to its highest level since 1974. These indications show that the ICAC has been enjoying the strong and continuing support of the public in its fight against corruption.

The department's investigations resulted in 314 persons being prosecuted during the year; 110 were convicted while 86 were cautioned for minor offences. At the end of the year 174 cases were awaiting trial and 930 investigations were still in progress.

      The department received 231 complaints in connection with the elections to the Legislative Council, municipal councils and district boards in 1991. Many of the complaints were of a minor nature due to ignorance of the law or carelessness in handling campaign publicity materials. On the advice of the Attorney General, 55 persons were verbally warned for such minor offences, but four cases were serious enough to be prosecuted in court. By the end of the year, three persons had been convicted.

      In mid-1991, the Operations Department released a report on an experiment in the use of video and audio recordings for interviews with suspects. The experiment covered 657

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interviews on video tape and 1 566 on audio tape over a 21-month period. The results of the experiment confirmed the many advantages of machine recorded interviews as a reliable record for resolving disputes between defence and prosecution over the admissibility of the interviews as evidence, thus saving court time. Compared with the 12-month period before the experiment started in November 1988, evidence ruled admissible after voir dire or after challenge by the defence during the experiment rose to 58 per cent from 52 per cent. Guilty pleas have also increased proportionally.

  The report concluded that the experiment was a success in improving the quality of evidence placed before the courts and the ICAC has now adopted the system as part of its investigations. The report has been circulated to all interested parties in Hong Kong and abroad.

Corruption Prevention

The role of the Corruption Prevention Department, as prescribed by the ICAC Ordinance, is to examine the practices and procedures of government departments and public bodies and to advise how to reduce opportunities for corruption. The department must also respond to requests from private organisations and individuals for such services.

  In 1991, the department conducted 82 studies of specific activities within government departments and public bodies. Recommendations were made to plug corruption loopholes by way of improvements and changes in policy, law, procedure, management control and staffing.

Construction and land matters formed a major part of the department's work during the year. The procedures for letting and the administration of various government capital works and maintenance contracts were examined. Advice was provided to government organisations involved in the port and airport development scheme.

The structural safety of buildings and canopies was a matter of public concern and the Buildings Ordinance Office implemented a variety of measures to deal with the problem. The department closely monitored the situation and also reviewed procedures generally within the Buildings Ordinance Office. The Town Planning (Amendment) Ordinance 1991 fundamentally changed Hong Kong's planning legislation. The department studied the implementation of the new controls, such as surveys of land use, granting of planning permission and enforcement of planning regulations.

  In line with political developments in Hong Kong, the department worked with the Government Secretariat, the Executive and Legislative Councils, the municipal councils and district boards to standardise guidelines for declarations of conflicts of interests by members of the councils and boards. This assignment will be extended into other areas, in particular to the various advisory committees and boards in the government's consultative machinery.

  Following a court case which revealed an unsatisfactory situation within the School Medical Service, the department conducted a thorough review of the service. Other government studies included the licensing of strategic commodities import and export, a review of the Royal Hong Kong Police Commercial Crime Bureau, licensing of hotels and clubs, privatisation of landfills, privatisation of conveyancing of Home Ownership Scheme flats sales, and the monitoring and control of authorised insurance operators.

  Government's procurement activities have always been a subject of interest to the department. Purchasing procedures were studied for various government organisations,

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including the procurement of drugs by the Department of Health. On a service-wide basis, the department was involved in the revision of the government's stores regulations, an assignment which was nearing completion after years of consultation and deliberation.

In view of increasing emphasis attached to quality assurance by the manufacturing and public sectors, the department conducted a study of certification procedures of the Hong Kong Quality Assurance Agency.

The department's Advisory Services Group, which provides free and confidential advice to the private sector, responded to requests for assistance from 205 companies in 1991. In many cases, the assistance provided was to help them draw up ethical guidelines for employees and improve control measures for corruption prevention. The group assisted various trades in their attempts of self-regulation. One such example was the assistance given to the Life Underwriters Association in revising its code of ethics.

Community Relations

The Community Relations Department is responsible for educating the public against the evils of corruption and enlisting their support to fight the problem. In doing so, the department also aims to enhance the general level of social ethics and civic behaviour. It uses mass media and personal contact activities in different educational approaches for different target audiences.

       For the elections held during the year, the department mounted a multi-media campaign and a series of briefing sessions to advise candidates and voters against election malpractices. In addition, a hotline was set up to handle public enquiries. Special attention was paid to the first-ever direct election to the Legislative Council: each candidate was given a personal copy of an information kit which provided a digest of the main points of the law and their practical applications.

Having developed a broad base of liaison with the business community in recent years, the department embarked on a strategy in 1991 focusing on the role of the chief executives of medium and large-sized companies in taking the lead for corruption prevention within their working environment. As a start, emphasis was placed on the trading and manufacturing sectors which together employ about 1.1 million members of the local work force. Backed by promotional advertising in business newspapers and trade journals, specially-trained ICAC staff made personal visits to the chief executives to offer ready- made preventive packages which could be easily adapted for use in their companies. They could also choose to join a Business Community Participation Programme under which they would design their own preventive activities and would receive a small ICAC subsidy towards the cost of these activities.

       The department used the less labour-intensive method of direct mail to put the message across to the much larger number of small-sized firms. The trading and manufacturing sectors are a huge entity with over 120 000 establishments. The department will sustain its efforts to reach as many as possible over the next few years while making sure that preventive education for other sectors such as finance and building construction is also adequately maintained.

      For government organisations and public bodies, the department conducted talks and seminars for a total of 22 554 existing staff and new recruits. The objective was to inform them about the law and to enhance their awareness against bribery in the course of public duty.

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  On the mass media front, a series of television, radio and press advertisements was launched to motivate public support for the ICAC and to appeal for prompt reporting of corruption offences. Production of a television drama series based on actual ICAC cases was completed. Telecast is scheduled for early 1992. Past experience has shown that this type of television series is very effective in giving the public an insight into the ICAC's investigation work and increasing understanding of and faith in the organisation.

  The department's latest addition to its anti-corruption teaching materials for schools was a package entitled Two-Plus-You, designed for primary pupils. A special feature of the package was that it involved not only teachers but also parents in the discussion of personal values with the children. So far the department has provided about 86 per cent of primary schools and 89 per cent of secondary schools with materials designed for curricula concerning the corruption problem and moral education.

International Co-operation

Co-operation with overseas law enforcement agencies is an essential part of the ICAC's activities. In June, the commissioner led an ICAC delegation to visit the Guangdong Provincial People's Procuratorate for a general exchange of views and experience. Throughout the year, there were about 20 other visits by ICAC officers to give talks to various Chinese organisations on the work of the ICAC.

  In Hong Kong, the ICAC played host to 46 visitors from law enforcement agencies of various countries, including the United Kingdom, Australia and China. Among them was the Chief Procurator of the Shenzhen Special Economic Zone People's Procuratorate.

  On the investigation side, the Operations Department sent its officers overseas on more than 60 occasions for specific enquiries into various cases.

Checks and Balances

To minimise the possibility of any abuse of power, the ICAC is subject to a stringent system of checks and balances. At the policy level the ICAC is guided by an Advisory Committee on Corruption which reviews and advises the commissioner on all aspects of anti-corruption policy, strategy and legislation. It is chaired by a member of the Executive Council, and comprises six prominent citizens and three government officials.

  When an investigation is completed, decisions to prosecute are made independently by the Attorney General or his representatives. The courts alone decide on the guilt or innocence of the accused. If the Attorney General's decision is not to prosecute, then the results of the investigation are submitted for advice on what further action is necessary to the Operations Review Committee comprising four civic leaders appointed by the Governor and four senior officials.

  Members of the public can lodge formal complaints against ICAC officers to an ICAC Complaints Committee comprising eight members, among whom are five members of the Executive and Legislative Councils, the Attorney General and the Commissioner for Administrative Complaints. In addition, the Operations Department has an internal investigation group which monitors and investigates corruption and the criminal behaviour of any ICAC officer.

  Two other committees, the Citizens Advisory Committee on Community Relations and the Corruption Prevention Advisory Committee, review and advise on the work of the Community Relations Department and Corruption Prevention Department respectively.

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The Way Ahead

The ICAC, now in its 18th year of operation, has become part of the fabric of society. Corruption is no longer a way of life as it was in the 1970's. Given continued firm public support, the ICAC is confident that the problem will be kept under control in the years ahead.

Government Laboratory

The Forensic Science Division of the Government Laboratory forms an important link between law and order and judiciary services by providing scientific, analytical and consultancy services to the relevant government departments. During the year, it was actively engaged in the scientific investigation of such diverse crimes as armed robbery, homicide, arson, fatal traffic accidents, commercial fraud, manufacture and trafficking of narcotic drugs and possession of controlled pharmaceutical preparations.

      The division provides scientific evidence which can be instrumental in helping law enforcement agencies and the crown prosecutor decide whether or not to prosecute and, by giving expert opinion in respect of scientific evidence, either in the form of a statement or personally in the witness box, professional officers of the division assist the court in criminal trials at all levels. In addition, the division provides a twenty-four-hour scene-of-crime service to law enforcement agencies in Hong Kong. During the year, nearly 700 crime scenes were attended with scientific evidence collected at the scene of crime subsequently examined in the division's laboratory.

There continues to be escalating demand for expertise for an increasing variety of forensic problems, which ultimately require more stringent examination to satisfy modern court standards. A new DNA Profiling Section has been created to enhance the capability of the division and to provide more discriminating evidence in serious crime cases. The preliminary research to establish a local DNA profile database is nearly complete and it is expected that this powerful technique can soon be applied to casework. This will help relieve work related to conventional blood group analysis as well as contact trace examinations, such as fibre and glass transfer. As Hong Kong is one of the world's major financial centres, forgery and fraud cases continue to increase dramatically. During the year, there were several clandestine document factory cases related to illegal printing of travel documents and counterfeit banknotes, and manufacture of forged credit cards. Such examinations place high demands on the individual skills of the document specialists not only in the laboratory but also in the courtroom, where rigorous cross-examination tends to be the norm.

       Another area of the division's work concerns drugs and forensic toxicology which deals with definitive (statutory) evidence which is method intensive. The division recognises the advantages of automated analytical systems, such as easy sample preparation, high sample throughput, unattended overnight operation, accuracy and excellent reliability. Assay of heroin is now fully automated, generating a turnaround time for routine daily seizure cases of just five and a half working days. For the other drugs of abuse, items submitted to the laboratory continue to increase, particularly in seizures of methylamphetamine hydrochloride, the crystal form of which is commonly known as 'Ice'. With analytical results and statistical information provided from the division's laboratory, a new sentencing tariff has been handed down by the Court of Appeal to curb the rising trend in abuse of this stimulant.

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Immigration Department

 By controlling entry into Hong Kong, the Immigration Department plays an important role in maintaining law and order.

  Through examination at control points and vetting of visa applications, undesirable persons including international criminals, terrorists and other undesirables are detected and refused entry into Hong Kong. In 1991, 26 358 such travellers and persons not in possession of proper documentation were refused permission to land and 2 456 persons were refused visas.

Detection of Forged Travel Documents

 During the year, a total of 2 793 forged travel documents were detected, representing an increase of 70.6 per cent, compared with 1 637 in 1990.

  Sustained efforts are required to guard against the upsurge in the use of forged travel documents by illegal immigrants and travellers. Intelligence on forgery is collected and quickly disseminated. Frequent contacts are made with other local and overseas law enforcement agencies and consulates, and special operations are mounted against forgery syndicates.

  In a series of joint operations mounted with the Royal Hong Kong Police in January 1991, a major forgery syndicate and a forgery workshop were neutralised. Over 700 items were seized, including counterfeit machine-readable Hong Kong passports, forged and stolen Hong Kong identity cards, forged seals and dies, and printing equipment. Over 20 arrests were made during the operation.

Interception of Wanted Persons

 During the year, 93 907 persons were intercepted at immigration control points and immigration and registration of persons offices. Of these, 461 were wanted in connection with murder cases, 4 187 were suspected robbers, 52 217 were involved in the trafficking of dangerous drugs and 32 628 were involved in other criminal offences. In addition, 152 known or suspected terrorists were identified at points of entry.

Illegal Immigration

The availability of employment opportunities in Hong Kong continues to attract large. numbers of illegal immigrants to the territory. Frequent checks are conducted at target locations, including construction sites, factories, restaurants and other places of em- ployment. Illegal immigrants arrested at these places are prosecuted and sentenced to imprisonment before they are repatriated to their place of origin. Employers of illegal immigrants, including principal contractors in the construction industry, are also pro- secuted and fined and, in serious cases, custodial sentences are imposed.

  In 1991, a total of 33 667 illegal immigrants were apprehended and repatriated. This represents an increase (or decrease) of 10.83 per cent compared with 30 378 in 1990.

Investigation and Prosecution of Immigration Offences

 During the year, a total of 4 858 charges were laid against persons who had committed various immigration offences. Apart from illegal immigration, these offences included illegal remaining, breach of condition of stay, making false statements or representations, and conspiracy in the use and supply of forged documents.

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Deportation and Removal

The Immigration Department is responsible for the application, issue and execution of deportation and removal orders. During the year, 5 890 persons who were convicted of possessing or trafficking in dangerous drugs, deception, theft and other criminal offences were considered for deportation, and consequently 242 were deported from Hong Kong. In addition, 7 459 persons were removed from Hong Kong under removal orders. These included 7 179 illegal immigrants and 280 persons who had breached their condition of stay.

Fire Services

During the year, the Fire Services Department responded to 26 612 fire calls, 15 835 special service calls, 234 211 emergency and 185 566 non-emergency ambulance calls. Fire caused 35 deaths and injured 488 people, including 47 firemen. A total of 17 141 persons were rescued and hundreds of others were led to safety by Fire Services personnel.

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 a major publicity campaign, a total of 346 lectures/talks were given during 1991 to a total audience of 10 346 from different sectors of the community. Furthermore exhibitions and demonstrations were held during the year to educate the public on fire safety aspects. The 7513 fire hazard complaints received from members of the public were an indication of the level of public concern about fire hazards and 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 179 convictions in 1991 with total fines of $0.7 million.

      Fire Services personnel made 76 456 inspections of all types of premises and issued 4 339 abatement notices for the removal of fire hazards in 1991. There were 478 prosecutions during the year for non-compliance with abatement notices and for summonses, resulting in fines amounting to about $1.7 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 6 413 new building plans were processed during the year. The department is also responsible for carrying out research into matters associated with fire safety.

The Hotel and Guesthouse Accommodation Ordinance 1991 was enacted in May to provide for and improve the regulation, control and safety of hotel and guesthouse accommodation. After the enactment of this legislation, five fire protection officers were deployed to assist the licencing authority and the Hotel and Guesthouse Accommodation Authority, in the licencing processes on fire safety matters. Since the establishment of this office on June 1, 1991, total of 1 766 Certificates of Exemption were issued to existing establishments with conditions to their operators to upgrade the fire safety measures of these premises to current standards.

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Ambulance Services

The department operates the government ambulance service with a strength of 2 123 in all ranks of uniformed staff and 160 civilian employees. The service operates 273 ambulances and ambulance-aid motorcycles from 25 depots or stations throughout the territory and from many fire stations. During the year, 234 211 emergency calls and 185 566 non- emergency calls were handled, involving 525 746 people and representing an average of 1 150 calls every 24 hours. This was a decrease of 3.04 per cent in the number of calls compared with the total for 1990. Facilities on ambulances are constantly reviewed and all ambulances are equipped with analgesic apparatus, piped oxygen, inflatable splints, special stretchers and incubator-carrying capability.

  A batch of selected ambulance personnel was trained in the use of automatic advisory defibrillators to handle patients/casualties suffering from heart attacks. As a pilot scheme, all ambulance-aid motorcycles were equipped with a defibrillator to provide defibrillation service early in 1991.

  A radio/telephone patching system was installed in the Fire Services Control Centre to enable interactive communication between ambulances and major hospitals.

  In the continuous effort to ensure the effective use of ambulances, new guidelines on non-emergency ambulance transfers were introduced at end-1990 for private hospitals, homes for the aged, government and subvented hospitals. Over the year, these guidelines were constantly reviewed by the department in co-operation with the authorities. The implementation of the new administrative arrangements ensured that ambulance services for non-emergency cases were reasonably provided, and more cost-effective use of ambulance resources was thus achieved.

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 fast and efficient fire-fighting and rescue operations can be carried out. In 1991, 53 new or replacement appliances and vehicles of various kinds were put into service. The mini-ambulance purchased specially for outlying islands, with a complete vehicle body built by the Fire Services Workshop, proved to be successful. Two more mini-ambulances were purchased and are now serving in Peng Chau and Lamma Island.

  The department is constantly evaluating new products from different parts of the world to see if they can be used in Hong Kong.

  To maintain its fleet of fire appliances and rescue equipment, the department operates four workshops one on Hong Kong Island, two in Kowloon and one in the New

Territories.

Communications

Since May 1991, all emergency calls are handled by the Second Generation Mobilising System installed at the new Fire Services Communication Centre. Costing over $100 million, this new computer-based system monitors 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 monitor the position and readiness of vehicles already on the road. The time taken to handle incoming emergency calls and despatch the fire appliances is cut to well under 60 seconds in most cases.

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Below: Customs officers conducting an intensive search for contraband on board ship.

A Correctional Services officer counselling young inmates at the Sha Tsui Detention Centre.

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Staff Training

Initial training for all ranks except senior firemen (control) and senior firewomen (control) in the Mobilising and Communications stream are conducted at the Fire Services Training School at Pat Heung in the New Territories. The courses vary in content and range from 3 to 26 weeks in duration. During the year, 152 recruits comprising 68 firemen and 84 ambulancemen successfully completed their 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 871 people attended these courses during the year.

       To meet operational needs and career development purposes, 10 officers were sent abroad to attend various management and professional training courses. For in-service training, 122 principal firemen and senior firemen and 31 firemen attended operational command and advanced diving courses respectively. A total of 2 034 ambulance personnel also participated in various ambulance-aid refresher and proficiency courses as well as defibrillation training. The Driving Training School conducted appliance driving and operation courses for 2 179 officers and other ranks during the year.

Establishment and Recruitment

The establishment of uniformed members of the department at the end of 1991 totalled 7 125. The number of civilian staff of the department stood at 730. Continuous recruitment exercises were held throughout the year, resulting in the appointment of 53 station officers, eight ambulance officers, 33 senior firemen (control) and senior firewomen (control), 111 firemen and 72 ambulancemen. Standards are high and on average only eight per cent are accepted for appointment.

Buildings and Quarters

In line with the government policy to provide an emergency response to all areas within minimum set times according to the category of risk, the department continues to plan and build fire stations and ambulance depots at strategic locations to cope with developing Hong Kong. In 1991, Lam Tin Fire Station, Pillar Point Fire Station, Tin Shui Wai Fire Station, Tin Shui Wai Ambulance Depot and Tsim Tung Ambulance Depot were completed to improve services in these areas. There are now 61 fire stations, 27 ambulance depots/stations and five fireboat stations in the territory. Planning is in hand for the provision of about 980 additonal married quarters for firemen and ambulancemen.

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 of service are provided - custodial, after-care and industries. In addition, the department also manages detention centres for Vietnamese illegal immigrants.

       At the end of 1991, the department was managing 19 correctional institutions, three halfway houses, a staff training institute, an escort unit, a custodial ward in Queen Mary Hospital and six detention centres for the Vietnamese. Policy guidance and administrative support is provided from its headquarters. There were 7221 staff looking after 11 570 inmates, 34 291 Vietnamese illegal immigrants, and 3038 persons under after-care supervision.

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During the year, the number of Vietnamese illegal immigrants continued to increase but there was a slight decrease in the number of Chinese illegal immigrants in custody. However, illegal immigrants still made up 30 per cent of the penal population, imposing serious strains upon existing accommodation, staffing and other resources. To meet the shortfall in accommodation, additional beds had to be placed in dormitories and cells designed for one person.

Male Offenders

Prisoners are assigned to institutions 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 repatriation to China and a special section at Ma Hang Prison has been set aside for geriatric prisoners. All convicted prisoners who are medically fit are required by law to work. Adult prisoners released under the Pre-release Employment Scheme are provided with accommodation at Phoenix House, a halfway house for adult and young offenders.

Young Male Offenders

The department administers 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 is run as a reception centre and training centre as well as a prison for young offenders under 25 years of age, including those who are remanded for pre-sentence reports on their suitability for admission to the department'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 hold young prisoners between 14 and 20 years of age. Since early 1990, sections of Lai Sun Correctional Institution and Sha Tsui Detention Centre have been further utilised to accommodate adult prisoners, under a separate programme, in order to cope with the increasing number of illegal immigrant prisoners. During 1991, Lai Sun Correctional Institution continued to hold adult illegal

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immigrants but the section for adult illegal immigrant prisoners in Sha Tsui Detention Centre has ceased to operate due to a slight decrease in the number of these prisoners in custody.

       A very effective detention centre programme is carried out at the medium security Sha Tsui Detention Centre. There are two sections, one for young offenders aged between 14 and 20 and the other for young adults aged between 21 and 24. The detention centre programme emphasises strict discipline, strenuous training, hard work and a vigorous. routine.

       Young male offenders released under supervision from the detention or training centres or from prisons under the Pre-release Employment Scheme may also be placed in Phoenix House. Residents in this halfway house must go out to work or attend full-time school in the day time. Young offenders identified as having special needs on discharge 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 to be under after-care supervision.

Female Offenders

Adult females serve their sentences at Tai Lam Centre for Women which 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 Tam Gap Correctional Institution where separate sections are provided for training centre inmates, drug addiction treatment centre inmates, young prisoners and remands.

       Bauhinia House serves as a halfway house for women and girls released under supervision from the training centre or under the Pre-release Employment Scheme. Residents in this halfway house also go out to work during the day and return in the evening.

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 2 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 while 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 em- ployment and accommodation. Temporary accommodation is available at the New Life House, a halfway house for those who are in need of such support immediately following release.

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Young Offender Assessment Panel

The Young Offender Assessment Panel, comprising staff from the Correctional Services and Social Welfare Departments, was established in April 1987 to provide magistrates with recommendations on the most appropriate programmes of rehabilitation for young offenders between 14 and 25. The service provided by the panel is available to Juvenile Courts and certain magistracies.

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 recruited by the department. Self-study packages and external correspondence courses are also available for those who are interested in taking part.

   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 are permitted to sit for the Hong Kong Certificate of Education examinations as school candidates. Some adult offenders have also participated in degree courses offered by the local Open Learning Institute and other academic institutions. In addition, a direct referral system has also been established with the Vocational Training Council, the Construction Industry Training Authority and the Clothing Industry Training Centre to help young inmates further their training upon release.

Vocational training programmes have also been introduced for adult offenders at Ma Po Ping Prison, Tong Fuk Centre, Tai Lam Correctional Institution, Pik Uk Prison, Tung Tau Correctional Institution, and Tai Lam Centre for Women on a voluntary basis.

Medical Services

All institutions have their own medical units providing basic treatment, health and dental care, including radiodiagnostic and pathological examinations as well as prophylactic inoculations. Inmates requiring specialist treatment are either referred to a visiting consultant or transferred to public hospitals.

Siu Lam Psychiatric Centre continues to treat prisoners with mental health problems and offer psychiatric consultations and assessments for inmates referred by other institutions and the courts. In June 1991, a 150-bed extension was officially opened to ease the overcrowding of the centre. It also enabled the psychiatric observation unit at Lai Chi Kok Reception Centre to revert to its former use as a general medical ward.

Ante-natal and post-natal care is provided within institutions for female inmates but babies are normally delivered in public hospitals.

Psychological Services

  Clinical psychologists and specially-trained officers provide a wide range of counselling services for prisoners and inmates with emotional difficulties, behavioural or personality problems. Professional consultation is offered to the courts, relevant review boards and the management of institutions to facilitate their decision making with regard to the disposal,

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treatment and management of the offenders. Research projects are regularly undertaken in order to improve treatment programmes and to reduce recidivism.

Visiting Justices

Justices of the Peace appointed by the Governor visit penal institutions and the centres for Vietnamese migrants, 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 services are provided to inmates discharged from training, detention and drug addiction treatment centres, and to young prisoners and prisoners released under the Release Under Supervision and Pre-release Employment Schemes. The primary objective of after-care is to assist an inmate in his rehabilitation and re-integration into the community. The service also plays an essential role in enhancing the determination of an inmate in leading an industrious and law-abiding life upon discharge.

After-care commences immediately following the admission of an inmate into an institution. Each inmate is assigned to the care of an after-care officer who provide him with adequate support and guidance enabling him to the institutional programme. A sound relationship between the inmate, his family and the after-care officer is established to help the inmate overcome obstacles to rehabilitation.

Inmates are assisted, through individual and group counselling, to gain a better insight into problems arising from their social inadequacies. They are helped to become better prepared to cope with difficulties they may encounter upon release.

Regular contacts with the ex-inmates will be maintained during their statutory supervision period by the after-care officers, to ensure that the supervisees gradually settle down in the community and that the terms of the supervision orders are strictly complied with. Any breach of supervision conditions may result in the person being recalled for a further period of training or treatment.

The success of the after-care programmes is measured by the percentage of supervisees who complete supervision without reconviction and, where applicable, remain drug-free. At the end of 1991, the success rates were 94 per cent for detention centre inmates, 66 per cent for male training centre inmates, 93 per cent for female training centre inmates, 85 per cent for young male prisoners, 90 per cent for young female prisoners, 70 per cent for male drug addiction treatment centre inmates and 76 per cent for female drug addiction treatment centre inmates.

Release Under Supervision

With the enactment of the Prisoners (Release Under Supervision) Ordinance in October 1987, a Release Under Supervision Board was established to consider applications from serving prisoners to join either the Release Under Supervision or Pre-release Employment Schemes. Apart from those serving a life sentence and those subject to deportation upon release, 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 supervision for the remaining portion of their sentences. Under the Pre-release Employment Scheme, prisoners

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who are serving a sentence of two years or more, and are within six months of completing their sentence after taking into consideration remission, may apply for release. If their applications are successful, they then work and reside in a designated hostel under the supervision of after-care officers for the balance of their sentence. The aim of the scheme is to enable suitable, eligible and motivated prisoners to serve their sentence in an open environment under close supervision. Prisoners who breach supervision conditions may be recalled to serve the remainder of their sentence. Since the implementation of the two schemes in July 1988, a total of 213 applications for the Release Under Super- vision Scheme and 600 for the Pre-release Employment Scheme were received. Thirteen prisoners were released by the Governor under the Release Under Supervision Scheme and 75 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 and inmates gainfully employed, thereby reducing the risk of unrest through boredom and lack of constructive activities. The industries also help to reduce government expenditure by providing products and services to government departments and generate revenue through its business with the subvented organisations and private companies.

  Prisoners are paid for their work and they can make use of their earnings to purchase food extras and other canteen items approved by the management. More importantly, they acquire the habit of useful work through participation in industrial production, eventually helping them to find a job after release.

The industries run a number of trades, the largest being laundry and garment making. The other trades available include silkscreening, 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 $290 million.

Detention Centres

The award of automatic refugee status to Vietnamese people reaching Hong Kong discontinued following a change in policy on June 16, 1988. In May 1990, the department ceased to be responsible for managing closed centres for refugees, a task first undertaken in July 1982.

  The department now manages six centres for Vietnamese illegal immigrants. They include the detention centres at Chi Ma Wan, Hei Ling Chau, Nei Kwu Chau, Whitehead and High Island, and a reception centre at Green Island.

  Under the existing policy, Vietnamese people arriving in Hong Kong will be screened by immigration officers while being held in detention centres to determine their status. Those screened in as refugees are transferred to open centres, while those screened out will remain in the detention centres until arrangements can be made for their repatriation. Any person who has been screened out may appeal to a Refugee Status Review Board which has the power to overturn that decision.

  Voluntary agencies, co-ordinated by the United Nations High Commissioner for Refugees (UNHCR), continue to provide valuable services in detention centres, com- plementing those provided by the department.

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Staff Training

The department's Staff Training Institute provides training for both new and serving officers. All recruit officers and assistant officers go through an orientation training programme for a period of 23 weeks and 20 weeks respectively. The training syllabus includes the relevant laws of Hong Kong, foot-drill, self-defence, physical training, weaponry, anti-riot drill, first-aid, criminology, penology, basic psychology, social work and leadership training. Prior to completion of probation, officers and assistant officers are required to undergo further training in anti-riot techniques for eight weeks and seven weeks respectively.

Development training and job-oriented courses are provided throughout the year for serving officers to update their professional knowledge, to prepare 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, Hong Kong

      The Society for the Rehabilitation of Offenders, Hong Kong, is a voluntary organisation founded originally 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 accommodation, employment guidance, recreational activities and care for those who have a history of mental illness.

Civil Aid Services

The Civil Aid Services (CAS) is an auxiliary emergency relief organisation. Its main role is to support other regular government services in tackling emergency situations. The CAS is financed by government and has an establishment of 3 818 uniformed and disciplined adult volunteers, 3 232 cadets and 126 permanent staff.

Role and Responsibilities

With heavy emphasis on coping with natural disasters, the tasks of the CAS 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, to assist the police in crowd control and incident management and to perform first-aid, casualty handling and evacuation. They also carry out difficult mountain rescue operations. On any weekend or public holiday it is normal for over 500 volunteers to perform duty.

The CAS is also very heavily committed in the performance of civic duties in normal times. During the year, adult volunteers help to organise and provide crowd control, communications and marshalling services in charity fund-raising activities, government campaigns and at other public functions.

Vietnamese Illegal Immigrant Duties

The CAS permanent staff and volunteers are presently required to manage two Vietnamese Centres, namely the Kai Tak Vietnamese Boat People Departure/Detention Centre for

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Vietnamese refugees who have been accepted for resettlement, illegal immigrants who have volunteered for repatriation to Vietnam and other categories of Vietnamese; and the Argyle Street Detention Centre for those who arrived in Hong Kong on or after June 16, 1988 and are detained pending the screening process.

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 CAS. The centralised courses in 1991-2 embrace a wide variety of subjects. In addition to normal counter- disaster courses, first-aid, fire-fighting and conventional rescue instruction have been included, the aim being to train adult volunteers in disaster control and management during large-scale emergencies and at civic functions.

  Overseas training is organised for both permanent staff and volunteer officers. In 1991, two officers attended the Operational Disaster Management Course organised by the Australian Counter Disaster College, Melbourne. Other officers attended the State Emergency Services Directors' Conference in Melbourne and the Emergency Planning '91 International Conference in Lancaster, England.

Cadet Corps

The Cadet Corps is divided into three girl units, 23 boy units and six mixed units spread throughout the territory. Cadets enter at the age of 12 to 14 and undertake a series of training courses. Tuition includes training in basic mechanical and electrical engineering, carpentry and fibreglass moulding, printing and book-binding as well as training in photography and interior design. The cadets are also 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. In 1991, one cadet qualified for the Gold Award, 16 for Silver Awards and 60 for Bronze Awards. At the age of 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 (RHKAAF), based at Hong Kong International Airport, provides a variety of flying services for the government. It operates a fleet of 15 aircraft: two twin-engined Beech Super King Airs, a Britten-Norman Islander, four Slingsby Firefly trainers and eight Sikorsky helicopters. With an establishment of 214 permanent staff and 206 volunteers comprising aircrew, engineers and administrative staff, the RHKAAF can operate round-the-clock for seven days a week during an emergency. Over 4 270 hours were flown during the year.

In 1991, the RHKAAF responded to 340 requests for emergency medical evacuation and rescues. Some of these 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. A total of 125 search and rescue operations were carried out, involving helicopters and fixed-wing aircraft. On August 15, 1991, the RHKAAF carried out a major sea search and rescue operation, in conjunction with other rescue agencies, when an offshore oilfield barge sank in stormy conditions caused by Typhoon Fred. Members of the RHKAAF successfully rescued 35 survivors from the rough sea and airlifted them to safety.

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The joint rescue operation resulted in 173 of the 195 persons on board being rescued. During the dry season, the helicopters assisted in over 60 fire-fighting operations and dropped over 1370 tonnes of water on bush and forest fires in areas inaccessible to conventional fire-fighting appliances.

The Police Force and the Correctional Services made frequent use of helicopters for training and operational purposes. Helicopter flights were routinely provided to transport engineering staff to hilltops to carry out maintenance and repair work at communications repeater stations. During the year, about 7 910 government officers were flown to various areas in the course of their duties. Flying services were also provided to give official overseas visitors an overview of the territory. Helicopter flying services were provided daily to the police for border patrol duty since they began to take over border security duties from the military. Flying support of this nature will be progressively increased as the police take up full border duties by 1992.

      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 cadet pilots.

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HONG KONG's out-bound travel business is carried out by some 1 000 travel agents who are licensed by the Registrar of Travel Agents, under the Travel Agents Ordinance. 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 organisation of travel agents in Hong Kong. It comprises six association members: Hong Kong Association of Travel Agents Limited; Federation of Hong Kong Travellers Limited; International Chinese Tourist Association Limited; Society of IATA Passenger Agents Limited; Hong Kong Taiwan Tourist Operators Association Limited, and Hong Kong Association of China Travel Organisers Limited. The council regulates member travel agents by means 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. A one per cent levy is raised on all out-bound tour fares to make up 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.

In 1991, there were no cases of travel agent failure. The Reserve Fund increased by $33,360,395 in 1991, and had a balance of $79,962,349 at the end of the year. The fund has paid out $12,701,777 in compensation since its inception.

Tourism

  Tourism is one of Hong Kong's largest service industries and the territory's third largest earner of foreign exchange. More than six million visitors came to Hong Kong in 1991, an increase of 1.7 per cent over the previous year. Tourism earnings registered an increase of 1.8 per cent in 1991, reaching a total of $40 billion.

Hong Kong remains Asia's most popular travel destination. The biggest growth in visitors in recent years has been from neighbouring countries in the Asian region, notably Taiwan and Japan which accounted for 21.5 per cent and 20.9 per cent respectively in 1991, as well as South-east Asia (16.8 per cent) and South Korea (3.1 per cent). Visitors from the USA/Canada, Western Europe and Australia/New Zealand accounted for 13 per cent, 13.1 per cent and 4.6 per cent respectively.

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      The industry suffered a set-back with the outbreak of the Gulf War early in 1991, compounded by economic recession in parts of Europe, the USA, Canada and Australia. After falls in visitor arrivals for several months after the Gulf War, the figures gradually recovered and the total number of arrivals for the year was an all-time high.

Hong Kong Tourist Association

The HKTA was established by the Hong Kong Government in 1957 to develop the territory's tourism industry for the benefit of Hong Kong. The Association works to increase the number of visitors to Hong Kong; promotes the improvement of visitor facilities; secures overseas publicity for the territory's attractions; co-ordinates the activities of the tourism industry, and advises the government on matters relating to the industry.

The chairman and members of the Board of Management of the HKTA are appointed by the Governor. The association receives an annual subvention from the government to assist it in carrying out its work. It also derives funds from membership dues, the sale of publications and souvenirs, and from its own commercial tours.

       At the end of December 1991, the association had 1 833 members, comprising airlines, hotels, travel agents, tour operators, and retail, restaurant and other visitor service establishments.

        The association maintains two Information and Gift Centres: at the basement of Jardine House and at the Kowloon Star Ferry concourse, and an information counter at the International Airport at Kai Tak. Together, these centres assisted two million visitors in 1991. The Hong Kong Video Guide, with advice on transport, shopping, sightseeing, dining, culture and nightlife, and introducing HKTA visitor information services, was shown via the in-house video channels of member hotels. In addition, a 30-second video clip on HKTA services started showing on the Hong Kong Channel, a new hotel video service.

The HKTA also operates a multilingual telephone hotline service for visitors in Hong Kong, providing general information and shopping advice. Enquiries from 54 498 visitors were answered during the year. The information service of the HKTA is offered in nine languages. During 1991, the association distributed some eight million pieces of literature in 11 languages to visitors on arrival.

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       The marketing strategies of the association are designed to attract higher-yield visitors to Hong Kong and to encourage them to stay longer in the territory. The Hong Kong - Stay an Extra Day campaign is designed to broaden visitors' awareness of Hong Kong's varied attractions. This was reinforced by the launching early in 1991 of the Hong Kong a la Carte scheme. This rewards travellers booking a longer-than-average holiday in Hong Kong with special offers from retail outlets, restaurants, nightlife establishments.

       Overseas marketing of Hong Kong as a travel destination is undertaken primarily through 14 overseas offices located in Auckland, Barcelona, Chicago, Frankfurt, London, Los Angeles, New York, Osaka, Paris, Rome, Singapore, Sydney, Tokyo and Toronto. The association also has agreements with Cathay Pacific Airways whereby the airline acts as its information agent in an additional 42 cities around the world. Overseas promotional campaigns are also carried out in conjunction with other agencies such as the Hong Kong Hotels Association. Responding to the effect of the Gulf War, the association organised a series of 'no-frills' sales blitzes in March 1991 in cities in Taiwan, Japan, South Korea and some South-east Asian countries to enable members of the Hong Kong travel trade to promote business with their overseas contacts.

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   In 1991, the HKTA arranged familiarisation visits for 3 800 travel agents and briefed a further 900 visiting travel trade personnel to encourage them either to include Hong Kong in their itineraries or to extend the Hong Kong portion of their Far East packages. The association also organised and co-ordinated the Hong Kong tourism industry's partici- pation in 16 major overseas trade promotions, such as the World Travel Market in London and ITB in Berlin. In addition, it assisted 1200 overseas media representatives with their coverage of Hong Kong.

   The HKTA continued to promote Hong Kong as a year-round travel destination, marketing its unique blend of East and West and extensive range of attractions. The Hong Kong Dragon Boat Festival - International Races 1991 was organised in June for the 16th consecutive year and again received wide international coverage, firmly establishing it as the world championship of this sport. A total of 23 overseas and 127 local teams competed in the events in 1991 and the Row For Charity Race raised $1,225,000 for the Community Chest.

   Together with three overseas teams based in Chicago, London and Sydney, the HKTA's Convention and Incentive Travel Bureau pursued more convention and incentive travel business with promotions staged overseas and it organised the largest-ever Hong Kong delegations to such major industry events as the European Incentive, Business Travel and Meetings Exhibition in Geneva and the Incentive Travel and Meetings Executives Con- vention in Chicago.

   The convention and exhibition business has grown from 15 international events in 1976 to 500 in 1991. Incentive travel has also increased from less than 200 groups in 1982 to 550 in 1991. Conference and incentive travel is high-yield business as these visitors tend to stay twice as long and spend three times as much as the average leisure visitor.

   Locally, the association continues to operate a number of special interest tours for visitors. New tour products include a Lantau Island Explorer's Guide and three food-related tours introduced during the 1991 Hong Kong Food Festival. The HKTA also introduced special rates for families and senior citizens on several tours organised by the association to develop this market segment.

   The association continues to emphasise the importance of training in the service industries. The Industry Training Department runs Effective Selling Skills and Customer Service certificate programmes for staff in the retail trade, as well as courses designed specifically for tour co-ordinators and restaurant service staff. To encourage school-leavers to consider a career in the tourism industry, the association organises lectures under the Tourism Employees Preparatory Programme which provide a comprehensive introduction to the industry. A useful innovation in 1991 was the Job Bazaar, which enabled prospec- tive employers to introduce themselves to successful participants in the preparatory programme.

   The HKTA's on-going Hong Kong Cares courtesy campaign saw various innovations during the year. Commercials on the Chinese and English channels of local television stations were launched to promote courtesy and highlight the importance of the tourism industry to the territory's economic well-being.

   The association also organised Hong Kong Cares Courtesy Awards for taxi-drivers to promote courtesy among taxi-drivers and improve communication between drivers and passengers. During the campaign period, visitors from 30 countries nominated 750 taxi-drivers for their courtesy and integrity, and 10 finalists competed for the Grand Courtesy Award. To educate the community about the importance of the tourism industry,

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the HKTA also organised a roving exhibition, with the theme Tourism - the Multi-billion Dollar Business, at various urban population centres.

       For the 24th year, the HKTA organised the Student Ambassador Programme whereby 100 students heading overseas for their tertiary education took part in a month-long briefing programme to increase their awareness of various aspects of Hong Kong which would enable them to talk more knowledgeably about their home.

       The association continues to publish regular reports on the performance of Hong Kong's tourism industry and to conduct its Visitor Survey, which monitors changes in the basic demographics of all visitors, their activities, spending patterns and attitudes towards Hong Kong's tourism facilities.

      In 1991, six new hotels opened, bringing the total number of rooms available in Hong Kong to 31 163. This reflected the continuing confidence of hotel developers in the future of Hong Kong's tourism industry.

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THE Armed Services based in Hong Kong form a varied but well integrated garrison, with Gurkhas from Nepal making up half the numbers and the remainder divided almost equally between locally-recruited Hong Kong Chinese and service personnel from the United Kingdom. In addition, Hong Kong has its own locally-raised regiment of part-time soldiers the Royal Hong Kong Regiment (The Volunteers).

  The garrison is stationed in the territory primarily 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.

Commander British Forces

The Commander British Forces, with the rank of Major-General, is in overall command of the Royal Navy, Army and Royal Air Force elements based in Hong Kong.

The Garrison

 The garrison numbers about 11 000 men and women, comprising 8 500 military and some 2 500 civilian support staff.

  The Royal Navy has its headquarters in HMS Tamar in Central where three Peacock Class patrol vessels are based. They operate in support of the Marine Police and, at the same time, demonstrate British sovereignty in Hong Kong waters.

During the drive in 1991 to combat increasing smuggling activities, one of the Navy's tasks was to provide assistance to the government's anti-smuggling task force. The Fast Pursuit Craft were frequently successful in foiling smuggling attempts and recovering contraband. Another important role for the Navy was to deter and intercept illegal immigration by sea.

  The Peacock Class vessels were designed to operate in typhoon conditions, and this was put to the test in August when an offshore oilfield barge sank in stormy conditions caused by Typhoon Fred. Both HMS Plover and Peacock played their part in joint rescue operations in which 173 out of the 195 on board the barge were saved.

  The Army comprises the largest element of the garrison. Its main component is an infantry brigade with one United Kingdom battalion (currently the 1st Battalion, The Royal Regiment of Wales) and three Gurkha battalions supported by Gurkha engineer,

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signals and transport regiments. There is also an Army Air Corps squadron equipped with Scout helicopters, and an army maritime troop, part of the transport regiment, which operates three landing craft.

The Army's main role in recent years has been controlling illegal immigration on the land border with China. This task is gradually being reassumed by the Royal Hong Kong Police in three phases which began in December 1990 and are due to be completed in April 1992, although the Army will retain some responsibility for the border until later in

that year.

Because of this transfer of responsibility, the Gurkha element of the garrison is to be reduced from three to two infantry battalions later in 1992.

The Royal Air Force is based at Sek Kong where it operates a squadron of Wessex helicopters. It works in close co-operation with civil authorities on missions which include moving troops or police on training or operations; fighting fires, particularly in country parks and other remote areas; evacuating casualties and providing Search and Rescue facilities. Aircraft and crews from the squadron served with distinction in the oilfield barge incident, winching 24 survivors to safety.

Training and Operations

In 1991, troops from the garrison were required to operate outside Hong Kong's boundaries. More than 250 served in the Gulf conflict early in the year in an ambulance squadron formed from the Gurkha Transport Regiment. Later, a 130-strong composite transport squadron of Gurkhas and Chinese undertook a six-month tour with the United Nations force in Cyprus.

      The garrison prides itself as a well-trained and integrated fighting force and pays great attention to maintaining its military skills and standards. This involves a busy training programme throughout the year with combined exercises involving the three services and the Royal Hong Kong Regiment, as well as Five Power Defence Agreement exercises with the armed forces of Singapore, Malaysia, Australia and New Zealand.

      Hong Kong lacks suitable areas for realistic training with some of the weaponry with which British Forces are normally equipped, which means that some exercises are held overseas in order to maintain a high standard of military skills.

Vietnamese Illegal Immigrants

During 1991, the garrison continued to play its part in assisting the Hong Kong Government with logistical and technical support in dealing with the problems caused by the influx of Vietnamese. The western end of RAF Sek Kong continued to be used as a temporary camp, while the Lo Wu training camp was again made available to provide further accommodation. During the year, the Army's maritime troop moved more than 100 000 Vietnamese between locations. In the first six months, landing craft transferred more than 15 000, mostly to the new camp in Tai A Chau.

The Garrison and the Co