Hong Kong Yearbook - Annual Report for the Year 1992

HONG KONG1993

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Edition 17 1993

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44

Three views of a new town: Tai Po in 1952

Tai Po growing in 1972

Tai Po today

1

HONG KONG 1993

A REVIEW OF 1992

GRARIES

HONG KONG 1993

Hugh Witt,

Editor:

Government Information Services

Creative

Director:

Allan Cheung,

Government Information Services

Artist:

Liu Chiu-tsan,

Government Information Services

Photography: Stone Chiang, Augustine Chu,

Daniel Wong, David Ho and other staff photographers

Other photographs by arrangement

with International (Elite)

Divers Training Centre, World

Wide Fund for Nature (Hong Kong) and Reuter.

Special Contributor:

Burton Levin (Chapter 1)

Statistical Sources:

Census and Statistics Department

The editor acknowledges all contributors and sources

Copyright reserved

Code No.: F30019300E0 (ISBN 962-02-0125-6)

Price: HK$52.00

US$17.00 UK £16.00

Cover: Hong Kong Ballet Group in rehearsal for a 'Celebration Gala' at Queen Elizabeth Stadium, Wan Chai.

Frontispiece: Three views of the development of Tai Po New Town in the New Territories.

CONTENTS

Chapter

CALENDAR OF EVENTS IN 1992

Page

1

1

THE HONG KONG-CHINA PHENOMENON

5

2

CONSTITUTION AND ADMINISTRATION

11

3

THE LEGAL SYSTEM

29

4

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

37

5

THE ECONOMY

40

6

FINANCIAL AND MONETARY AFFAIRS

54

7

INDUSTRY AND TRADE

70

8

EMPLOYMENT

97

9

PRIMARY PRODUCTION

108

10

EDUCATION

114

11

HEALTH

137

12

SOCIAL WELFARE

156

13

HOUSING

168

14

LAND, PUBLIC WORKS AND UTILITIES

180

15

TRANSPORT

212

16

AIRPORT

233

17

PORT DEVELOPMENT

241

18

PUBLIC ORDER

246

19

TRAVEL AND TOURISM

281

20

THE ARMED SERVICES

286

21

COMMUNICATIONS AND THE MEDIA

290

22

RELIGION AND CUSTOM

308

23

RECREATION, SPORTS AND THE ARTS

314

24

THE ENVIRONMENT

350

25

POPULATION AND IMMIGRATION

381

26

HISTORY

388

APPENDICES

397

INDEX

470

ILLUSTRATIONS

Between pages

Frontispiece

New Governor

Events

International performers

4-5

28-29

60-61

Talents

92-93

Underwater

140-141

Cars in Hong Kong

172-173

Antiques

204-205

Birds

236-237

Industry

Airport facilities

268-269

316-317

END-PAPER MAPS

Front:

The Territory of Hong Kong

Back:

The Interdependence of Hong Kong and China

APPENDICES

1

2-5

Appendix

UNITS OF MEASUREMENT

CONSTITUTION AND ADMINISTRATION

Page

400

405

6

OVERSEAS REPRESENTATION

410

7-11

THE ECONOMY

415

12-14

FINANCIAL AND MONETARY AFFAIRS

425

15-16

INDUSTRY AND TRADE

430

17-20

EMPLOYMENT

435

21-23

PRIMARY PRODUCTION

441

24-27

EDUCATION

443

28-31

HEALTH

445

32

SOCIAL WELFARE

448

33

HOUSING

454

34-36

LAND, PUBLIC WORKS AND UTILITIES

455

37-38

TRANSPORT

458

39-42

PUBLIC ORDER

461

43

COMMUNICATIONS AND THE MEDIA

466

44

RECREATION, SPORTS AND THE ARTS

467

45

THE ENVIRONMENT

468

46

HISTORY

469

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 1992

5.1

9.1

24.1

30.1

31.1

14.2

18.2

20.2

24.2

26.2

4.3

17.3

Director of the Hong Kong and Macau Affairs Office of China's State Council Lu Ping visits Hong Kong.

Governor of Macau General Rocha Vieira visits Hong Kong at the invitation of Governor Sir David Wilson.

A two-day promotion of Hong Kong in London is concluded with the performance of 'Hong Kong Heartbeat' at the Barbican Centre, attended by the Princess of Wales.

First meeting of the Economic Advisory Committee which is set up to advise the Financial Secretary on strategic issues concerning the economy.

The Government announces the construction of Container Terminal No. 9 on Tsing Yi with work to start in 1993.

The Governor adopts his new title as Baron Wilson of Tillyorn of Finzean in the District of Kincardine in Deeside, Scotland, and of Fanling in Hong Kong.

The Government issues a public consultation paper on a bank deposit protection scheme.

A delegation from the Guangdong Provincial Bureau of Water Conservancy and Hydro-Power arrives for the third annual business meeting on water supply to Hong Kong.

The Government publishes the 1992-3 Draft Expenditure Proposals of over $121 billion.

The Governor visits Guangdong for two days to view economic development in the province.

Financial Secretary Hamish MacLeod presents the 1992-3 Budget in the Legislative Council (LegCo).

The Financial Secretary confirms a plan by the Hongkong and Shanghai Banking Corporation Holdings to merge with the United Kingdom's Midland Bank.

1

CALENDAR OF EVENTS IN 1992

18.3

20.3

3.4

15.4

23.4

24.4

26.4

29.4

8.5

12.5

15.5

18.5

24.5

2.6

2

The Industry and Technology Development Council holds its first meeting and discusses a $200 million scheme for applied research and development. The Health and Medical Development Advisory Committee is formed to replace the Medical Development Advisory Committee to reflect increased emphasis on primary health care.

Treasury Secretary Yeung Kai-yin leads a delegation to China at the invitation of the Chinese State Council's Hong Kong and Macau Affairs Office.

The Governor-in-Council authorises the reclamation of land at the Central waterfront to accommodate the Hong Kong terminus of the Airport Railway.

Secretary for Security Alistair Asprey announces the disbandment of the 1 000-strong Royal Hong Kong Regiment (The Volunteers) by September 1995.

Departure of the 100th flight organised by the United Nations High Commissioner for Refugees (UNHCR) under its voluntary repatriation programme for Vietnamese migrants.

Sham Shui Po District Board by-election held in the Pak Tin constituency.

The Governor visits the UK to brief British Government Officials and his successor, Mr Christopher Patten.

Director of the Chinese Foreign Ministry's Hong Kong and Macau Affairs Office Zhao Jihua begins a seven-day visit to Hong Kong.

The Government announces the granting of the Colvin House site for use as the British Consulate after 1997.

An intense rainstorm brought a deluge of 109.9 millimetres of rain in one hour, the highest ever recorded, and caused flooding and mudslips.

The British, Hong Kong and Vietnamese Governments sign an agreement on the repatriation of Vietnamese migrants who arrived in Hong Kong before October 29, 1991.

Provincial Governor of Guangdong Zhu Senlin arrives for a five-day visit.

Secretary for Home Affairs Michael Suen leads a delegation to China for five days at the invitation of the Hong Kong and Macau Affairs Office of the State Council.

New Foreign and Commonwealth Office

Office Minister with Special Responsibility for Hong Kong Alastair Goodlad visits Hong Kong.

The Government awards a $3.5 billion contract for the construction of the Tai Ho Section of the North Lantau Expressway, which will link up the new airport and the urban areas.

CALENDAR OF EVENTS IN 1992

7.6

23.6

24.6

26.6

1.7

3.7

9.7

10.7

21.7

26.7

29.7

20.8

30.8

8.9

14.9

26.9

5.10

7.10

8.10

The Governor visits China to bid farewell to Chinese officials.

The Education Commission Report No. 5 is released and makes recommendations on the status, training and workloads of teachers.

Political Adviser William Erhman and Shenzhen officials meet to review progress of an agreement to open up Shenzhen-Hong Kong links.

The Governor makes a farewell visit to Macau.

Clearance of residents of the Kowloon Walled City is completed.

Governor Lord Wilson retires and leaves Hong Kong for the UK with his family.

The Rt Hon Christopher Patten arrives and is sworn in as the 28th Governor of Hong Kong.

The Governor visits Mongkok, Sha Tin and Wong Tai Sin..

The 20 000th Vietnamese illegal immigrant returns home under the UNHCR voluntary repatriation programme.

Secretary of State for Foreign and Commonwealth Affairs Douglas Hurd arrives in Hong Kong for a three-day visit.

The Government announces its decision to introduce licences for the operation of local fixed communication networks to compete with the Hong Kong Telecommunication Company.

First meeting between the Governor and the Director of the New China. News Agency (Hong Kong Branch) Zhou Nan.

The New Territories West Legislative Council by-election is held in Tuen Mun and Yuen Long.

Hong Kong and Canada sign a Memorandum of Understanding on Environmental Collaboration, under which the two signatories agree to exchange information on environmental issues.

The Governor visits London to met with the Prime Minister and the Foreign and Commonwealth Secretary.

A five-city Festival Hong Kong '92 is launched in Canada.

A Regional Council by-election is held in Tuen Mun.

The Governor delivers his first policy address in LegCo and announces plans for constitutional development in the territory.

The Governor participates in a radio phone-in programme on RTHK, holds his first question time in LegCo and meets members of the public at the City Hall to answer questions on the policy address.

3

CALENDAR OF EVENTS IN 1992

9.10

11.10

13.10

16.10

The Governor meets members of the public at Sha Tin Town Hall to answer questions on the policy address.

A Tuen Mun District Board by-election is held.

The Governor meets members of the public at Tsuen Wan Town Hall to answer questions on the policy address.

The Governor meets members of the public at the Cultural Centre to answer questions on the policy address.

20.10

The Governor leaves for a four-day visit to Beijing.

28.10

Inaugural meeting of the Governor's Business Council.

29.10

The Governor pays his first official visit to Macau.

3.11

5.11

10.11

11.11

16.11

18.11

19.11

23.11

24.11

27.11

14.12

4

An agreement is initialled for an extension of the Hong Kong/European Community Textiles Agreement for one year until December 31, 1995.

The Prince of Wales arrives in Hong Kong for a four-day visit.

The Government announces the granting of development rights for Container Terminal No. 9 to three companies by private treaty.

Joseph Yam is appointed the first Chief Executive of the Hong Kong Monetary Authority.

The Governor leaves for Canada to attend the Festival Hong Kong '92 closing ceremony.

The Governor starts a five-day visit to London.

The Government awards a $1.64 billion contract for the design and construction of the Kap Shui Mun Bridge and Ma Wan Viaduct on the Lantau Fixed Crossing, linking the new airport with the urban areas.

Eight Chinese officials, led by Deputy Director of the Chinese Foreign Ministry's Hong Kong and Macau Office Wang Guisheng, start a three-day visit to Hong Kong.

An agreement on the encouragement and protection of investments is signed between Hong Kong and the Netherlands.

The Governor leaves for a four-day visit to Japan.

The Government announces that coins and bank notes of a new design will be issued from 1993.

The Finance Committee of LegCo approves $6.699 billion for site preparation for the new airport at Chek Lap Kok.

The third meeting of the Hong Kong-Guangdong Environmental Protection Liaison Group is held in Hong Kong from December 14 to 15.

       Above: Hong Kong's new Governor, the Right Honourable Christopher Patten, accompanied by his wife Lavender and daughters Laura (left) and Alice, arrived

at Hong Kong International Airport on July 9.

       Right: The Governor was greeted by well-wishers at Queen's Pier.

A PAUNI

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LC ME

C

CAD-CAM

ERVICE LTD.

Preceding Pages: Mr Patten plunged into a hectic round of "getting to know you" visits, including (top row, left to right) Mong Kok District in Kowloon, the David Trench Home for the Elderly and an estate flat in Upper Wong Tai Sin; (bottom row left to right) the control tower at Hong Kong International Airport, the cargo terminal at the airport and Tai Kok Tsui.

Top row, left to right: Mr Patten at Tseung Kwan O, at Tsuen Wan New Town and visiting the Kowloon-Canton Railway rolling stock maintenance centre.

Bottom row, left to right: The Governor at the maternity ward of Queen Elizabeth Hospital and on a visit to an Industrial Estate at Tai Po.

Above: Mr Patten in London with British Prime Minister Mr John Major.

Right (top): Mr Patten met Canadian Prime Minister Mr Brian Mulroney in Ottawa during Festival Hong Kong 92. (Bottom): Mr Patten called on Mr. Kiichi Miyazawa, Prime Minister of Japan, during a visit to Tokyo.

Following page: Mr Patten held four public meetings to explain his policies to the community. During them he invited questions from his audiences.

KONG

1

THE HONG KONG-CHINA PHENOMENON

:

WHEN asked to reflect upon the relationship between Hong Kong and southern China in 1993, my thoughts turn to a phenomenon unimaginable to the young of Hong Kong today. Well into the 1970s, one of the highlights of a tourist stay in Hong Kong was a visit to Man Kam To, then a sparsely populated outpost not far from Lo Wu. From a vantage point there, the visitor thrilled at the opportunity to peer into inscrutable, unreachable 'Red China'. What mysteries lay beyond that barbed wire fence? Few could imagine, and fewer had ventured beyond the border. To the visitor, the rare glimpse of a peasant or even a water buffalo or bird (crossing the fence at will) provided the basis for many a tale told to friends and family at home.

For nearly three decades, the curious had no choice but to settle for the vicarious thrill of such a fleeting look across the border. A relatively small number of people did have contact - like the amahs and construction workers who would return for Spring Festival, Ching Ming or Chung Yeung heavily laden with packages for family and friends. Private residents crossing the border did not number more than a few hundred thousand per year. For those who made the trip, the crossing of a few short kilometres was not a simple affair. It was not until 1979 that a nonstop train service between Hong Kong and Guangzhou was introduced, cutting what was previously an all-day ordeal (including an obligatory stop at Lo Wu and a walk over the railway bridge to the Chinese side), to under three hours. In 1978 1.3 million Hong Kong residents entered China while there were 24 800 visitor arrivals from the PRC to Hong Kong, including PRC nationals residing in the PRC and overseas. In 1990, by contrast, Hong Kong residents made over 16 million trips to China, while more than 370 000 People's Republic of China residents visited the territory.

       Official contact was limited to the customs officials checking shipments of choy sum, pigs, or chickens as they crossed the border, or those responsible for ensuring the flow of water to Hong Kong, so vital to a still rapidly growing population. From time to time, an accident at sea or (more frequently) illicit border crossings would bring the need for contact and co-operation among security officials, which promptly ended at the conclusion of the incident in question. A combination of China's self-imposed isolation and outside suspicion of the regime assured an absence of contact between higher-ranking Hong Kong officials and their counterparts to the north.

       In Guangdong, attempts were made to limit awareness of what lay across the banks of the Shenzhen River in Hong Kong. Official propaganda portrayed life in Hong Kong as a sad affair, with the common man oppressed by colonialist masters and capitalist exploiters.

5

THE HONG KONG-CHINA PHENOMENON

6

Despite this, word of the impressive economic gains that were transforming Hong Kong society and lifestyles spread steadily.

Trade was also a victim of this mutual hostility and suspicion. The imposition of a United Nations trade embargo following China's entry into the Korean war struck a serious blow to Hong Kong's traditional entrepôt role. The meagre level of trade that continued in those years was attributable to Hong Kong's need for food imports. With little arable land or natural resources, Hong Kong has long relied on the relative abundance in China.

Despite the decades of estrangement and a heavily guarded border, there was still a sizeable influx from China to Hong Kong throughout the period. Fleeing the chaos of the Cultural Revolution and attracted by economic opportunity in Hong Kong, illegal immigration into the territory continued well into the 1980s. This influx provided a valuable source of labour for an expanding Hong Kong industry. There are many who believe that the refugee mentality so common to Hong Kong has been a substantial contributor to the territory's economic dynamism over the years. Though accurate figures on immigration from Guangdong are hard to come by, best estimates are that the '60s and ''70s saw tens of thousands arriving every year. By mutual agreement, this flow was cut off almost entirely following 1978, though the legal daily limit of 75 is no doubt far from the true number, with many continuing to cross into Hong Kong illegally in search of economic gains.

Increased contact for ordinary Guangdong citizens with their Hong Kong relatives and compatriots began to grow in the mid to late seventies. Nearly all of the province has links to Hong Kong, and increased travel to the homeland brought closer personal ties and awareness of the outside world along with gifts of money, television sets, and other electronics.

With the death of Mao Zedong and the overthrow of the Gang of Four, Chinese leaders took stock of the destruction and widespread poverty that were the result of years of ideological excess. Realising the extent of China's backwardness and need for change, Deng Xiao Ping boldly proclaimed new policies designed to speed economic development and the country's re-entry into the world economy. The economic reforms and the opening of China's door to the outside world, embodied in the Third Plenum of the Eleventh Central Committee of the Chinese Communist Party in December 1978, provided the. framework for forward-looking policies which would uplift the Chinese people, forever change the country's pattern of isolation, and bring Hong Kong and China ever closer to each other. Over the past 14 years, what was once an impermeable barrier has become a two-way flow of people, capital, ideas, and indeed, increasing goodwill.

An end to collectivised agriculture, the encouragement of small-scale private enterprise, and the unleashing of entrepreneurial abilities brought a rapid improvement in living standards to the Chinese countryside. Greater economic incentives and a reduction in the bureaucratic and ideological obstacles in the way of economic development engendered a new spirit and hope that would transform Chinese society. Along with greater oppor- tunities for Chinese citizens, new policies also included the encouragement of foreign investment, which would serve to accelerate the development process through the introduction of capital, new technologies and modern management techniques.

In the ensuing years, as it became clear that China's new policies toward foreign investment were here to stay, Hong Kong's own economy was also expanding, and its

THE HONG KONG-CHINA PHENOMENON

manufacturers felt the pressures of rising land and labour costs affecting their com- petitiveness. The migration of the territory's manufacturing base across the border proceeded apace. Today, with some four-fifths of local manufacturers having transferred production to the mainland, Hong Kong is said to be responsible for more than 80 per cent of the foreign investment in Guangdong province. Some 60 000 Hong Kong people, now managing factories and other investments in southern China, are responsible for much of the cross-border traffic increase, while between three and four million workers in southern China are directly or indirectly employed by Hong Kong firms.

      With well earned pride, Hong Kong can share the credit for transforming what was a relationship of suspicion and ignorance on either side of the border to what is now emerging as perhaps the single greatest economic takeoff in world history. Hong Kong manufacturers have benefited enormously from the proximity of Guangdong. The cultural and linguistic similarities they share with China have enabled them to take full advantage of what can seem a somewhat daunting environment for other foreign investors. In initial forays into the Chinese market many foreigners have lacked the patience required to forge the relationships and trust considered so important by their Chinese joint venture partners or other counterparts. Sharing a cultural heritage and language despite their differences, Hong Kong investors have an understanding of how their mainland partners think, as well as what their counterparts might appreciate from them to make ventures successful. Modern technology, new manufacturing techniques, and different financial and managerial skills have added to the speed with which landscape and attitudes alike are changing.

This successful pattern is perhaps best illustrated by a concrete example.

      A prominent businessman of my acquaintance, managing director of a major toy manufacturing company, has long considered himself fortunate to call Hong Kong home, having come from China with his parents in 1950. Just two years old then, he grew up in Hong Kong feeling little personal identification with his native land. In 1976, he and a friend joined forces to go into business on their own. With the company's growth and rising production costs, a move into China clearly emerged as the only viable alternative for the firm to remain competitive. Ironically, having been born in China and raised in Hong Kong, his first return visit to China was not until his initial trip in search of industrial space and a new factory in 1984.

      With some 300 000 square feet of factory space and operations in eight Guangdong locations today, the company's success is clearly evident. Early negotiations over where and how to set up the first operation, however, were a test of patience and persistent negotiating skills, as the government offices, departments and officials with the authority to offer attractive investment terms had to be identified.

      In retrospect, the negotiating process for this first factory may have been faster had my friend opted to set up in Shenzhen or one of the other Special Economic Zones (SEZs) in Guangdong. With toy manufacturing a highly seasonal business, however, the more restrictive environment and higher costs of the SEZS were inappropriate to the company's needs. During the peak June-September buying period, it employs some 2 500 workers in its manufacturing and assembly operations. In Dongguan, the ability to negotiate directly with the local danwei (work unit) enables the firm to reduce or expand the labour force with relative ease. An agreement with the danwei also allows for payment of overtime directly to workers, an arrangement that provides important incentives to the work force. With the direct payment system the firm employs, practiced by some 70 per cent of Hong

7

THE HONG KONG-CHINA PHENOMENON

8

Kong companies in Guangdong today, motivation comes through direct incentive and recognition for work done.

  With few if any comparable toy firms remaining in Hong Kong, the savings to a firm like I have described from having its operation across the border are difficult to quantify. Between 70 and 80 per cent of the toy industry worldwide, and some 95 per cent of all plastic toys produced, are manufactured in China today. Alternative production sites cannot rival China when it comes to competitiveness in the toy industry.

As China's economic reforms have taken hold and outside investment has increased, better living standards and higher expectations are evident among officials and ordinary citizens alike. Small village officials are negotiating fewer outward processing plants and more joint ventures, which can give the Chinese side a greater economic stake in inward investment. People in the countryside, once looked down upon by their urban neighbours, are earning small fortunes through land leases and often substantial side businesses. People in the Special Economic Zones, often unwilling to take menial clerical jobs, opt instead for the more glamorous positions in hospitality and other boom industries. More and more, manufacturing workers in Guangdong factories are being hired from less prosperous inland provinces. The same trend is taking place in more technically-orientated positions. Many of the small, family-owned firms operating in Guangdong have had difficulty expanding in the past, since competing with larger firms for key management positions is difficult. With the lure of south China, however, an increasing number of firms are getting around the problem by hiring highly-qualified northern Chinese managers eager to hone their skills and gain experience in international business.

   Modernisation of cross-border transportation and communications facilities have helped to make this partnership possible. In contrast to the tortuous travel difficulties of the past, transport options to and from south China have now been expanded to include several non-stop trains each day to Guangzhou, ferry services to various points in the Pearl River Delta, hoverferries, and several daily flights to Bai Yun airport from Kai Tak. Today, Taiwanese businessmen crowd the flights to Xiamen, where special zones have been established to accommodate their investment projects. Travel and business within the region will receive a further boost in the near future with the inauguration of the superhighway linking Hong Kong to Guangzhou, expected to cut the time between the two cities to little more than one hour. Even with the existing road network, 20 153 freight trucks cross the border each day compared with 17 000 in January 1992 and there is great demand for expansion of opening hours at the various border checkpoints to accommodate the huge volume of goods moving in both directions. The three land border control points at Man Kam To, Sha Tau Kok and Lok Ma Chau are now open for a total of 41 hours daily, five and a half hours longer than in January 1992.

Added to the flow of foodstuffs crossing the border today is an enormous volume of textiles and light industrial items, raw materials, machinery, spare parts, and high- technology goods. Any recent traveller between Hong Kong and Shenzhen can attest to the changes that have come to the once sleepy border. By 1990, Hong Kong/China trade had exceeded HK$400 billion a fifty-fold increase in just over a dozen years. Hong Kong's domestic exports to China amounted to just two-tenths of one per cent of the territory's total exports in 1978. The percentage as of 1991 was some 24 per cent and in 1992 was 26 per cent. The volume of goods being transported today boggles the mind, and more often than not the traveller between Hong Kong and Guangzhou finds colossal

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THE HONG KONG-CHINA PHENOMENON

     traffic jams where a few years ago the water buffalo enjoyed virtual unimpeded access to the road.

      The 'open door policy', the introduction of Special Economic Zones, and the easing of foreign travel for ordinary Chinese, have meant changes not just in how the country will do business, but in the way people view their role in the world as well. Mainland citizens now visit Hong Kong in large numbers, not only on official business, but in holiday tour groups - unthinkable just a few years ago. For officials and private visitors alike, Hong Kong serves as a model in its internationalism, modernity, and as the paradigm of a highly successful Chinese society.

The growth of mainland investment in Hong Kong has come about for several reasons. While Chinese investment in a variety of goods and services in Hong Kong have been undertaken for sound business reasons, highly visible mainland involvement in the territory's economy also conveys to the world China's commitment to Hong Kong's future and to its role in the global economy. Several PRC companies, established in Hong Kong well before the signing of the Sino-British agreement, have long been household names. Expertise gained by employment in the early Hong Kong-based firms has been an important contributor to the modernisation process on the mainland. China Merchants' Steam Navigation, begun as a shipping firm and agent, later expanded into activities as diverse as trading, construction, tourism and hospitality. China Resources, registered as a Hong Kong company in 1983, was originally established in 1948 as the Ministry of Foreign Economic Relations and Trade's Hong Kong trading arm. China Travel Service, established in 1928, now handles most of China's tourist trade from Taiwan, as well that of visitors from around the world. CITIC, established in 1979, stood out among the early PRC firms for its vision and professionalism. It is now a major shareholder in flagship Hong Kong firms such as Cathay Pacific and Hong Kong Telecom. The Bank of China group, building on success in retail banking, expanded quickly into merchant banking, foreign exchange, bullion trading and loan syndication. The sleek and modern Bank of China Tower is a distinctive addition to Hong Kong's famous skyline.

      These large and prominent PRC firms are no longer alone as a myriad of mainland interests have joined them in Hong Kong since the late 1970s. All of China's 21 provinces and many municipalities now operate companies in Hong Kong, handling foreign trade, attracting inward investment, and seeking investment opportunities both in Hong Kong and abroad. Many mainland-invested firms have even taken advantage of the Open Door to re-invest in China, enjoying all the preferential terms granted foreign investors. With the wide variation of activities in which mainland firms are engaged, the value of their Hong Kong investments is not easy to quantify. An oft-quoted figure today is of US$10-15 billion, though many analysts believe China's investment in the territory may already well outpace that of Japan and the United States. Mainland property investments have received the most attention of late, with prime Central buildings going to PRC consortia.

      Looking beyond the economic sphere, the mainland presence in Hong Kong today is also clearly evident in the arts. The greater number and variety of musical performances, dance, drama, and exhibitions of painting and calligraphy now available to the public are a welcome reminder of Hong Kong's Chinese heritage in an otherwise business-minded and fast-paced society. An increase in the number of tea houses and other shops provide locals and tourists a welcome respite in a traditional Chinese atmosphere. One even hears more Mandarin on the street, as greater mobility allows mainlanders to visit Hong Kong in

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greater numbers and more Hong Kong people make an effort to learn Putonghua, in recognition of China's growing importance to the territory's future.

While influences from the north are growing, the converse is also true. The ties are clearly multiplying, with changes in the very social fabric on both sides of the border taking place as a result. Shanghai, as China's manufacturing, financial, and commercial centre, was long considered China's most cosmopolitan city, and the symbol of modernity and chic. While Shanghai is again on the rise, Hong Kong has taken its place as a model, particularly among youth on the mainland. The appeal of Hong Kong's food, music, fashion, and even dialect is influencing trends across China today. I have even been told the Cantonese accent, once considered vulgar and the object of derision, has grown in popularity in parts of the north.

Thus, after decades of separation, isolation, and distrust, the common culture shared by Hong Kong and China, with its history of 3 000 years, is again evolving in tandem on both sides of an increasingly symbolic border, despite still sizeable disparities in income. Television and other media, broadcast both locally and from Hong Kong, has brought a profusion of new ideas and material incentives to the counties of Guangdong and beyond. Mass media is greatly accelerating a process that is blurring the social and cultural differences separating Hong Kong from China.

These growing contacts have also encouraged a breakdown of the social and psy- chological barriers separating people. Materialism aside, these closer ties and a recogni- tion of shared values and heritage are helping to alleviate Hong Kong's concerns about the future on a very human level. While governments talk, people are getting on with things in true Hong Kong (and increasingly mainland) fashion. Hong Kong's relationship with China, which has often been a cause of great concern, is increasingly seen as the territory's greatest advantage. A better understanding of this relationship and its inherent opportunities is having a lubricating effect on the transition, despite the inevitable bumps in the road. At the same time, the overseas Chinese communities in countries elsewhere in the region keep a watchful eye, with Hong Kong such an indispensable link in their economic activity throughout Asia.

   Greater access and exposure to new ideas means subtle changes in thinking, in what may be seen by some as not just a period of transition, but of some confusion as well. New lifestyle patterns are emerging, as people move into cities and large portions of society become less agrarian in nature. Most clearly in the south, but further north to a growing degree, as people are acquiring more materialistic tastes, Chinese have increasingly come to resemble their counterparts in the industrialised world. Hong Kong has provided (and continues to provide) a neutral meeting point for China and the world in business, the arts, and in a broad sense, education. It is a place for cultural exchanges of many kinds, and for a sharing of views on limitless subjects. A contrast and a model for China's planners, it endures with a unique combination of East and West, modern and traditional. Offering China the best in technology, expertise and world markets, it does so with the familiarity and shared ancestry no other country or territory can match. While still playing its traditional role, that of China's window on the world, Hong Kong has helped its mother country find its own windows to the world.

Burton Levin

CONSTITUTION AND ADMINISTRATION

HONG KONG is administered by the Hong Kong Government, which is headed by the Governor. He is the representative of the Queen in Hong Kong. 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.

      Hong Kong operates a three-tier system of representative government. At the central level is the Legislative Council. There are two municipal councils: the Urban Council and the Regional Council, at the regional level. In addition, there are 19 District Boards at the district level which cover the whole territory.

There are direct elections on the basis of universal franchise at all the three tiers of representative government: two-thirds of District Board members, 38 per cent of Urban Council members, 33 per cent of Regional Council members, and 30 per cent of Legislative Council members, are returned through direct elections.

Constitution

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.

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, 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 on important policy matters, and his right to act against its advice (a right only exercised once in 1946). They also deal with the membership of, and election to, the Legislative Council, the nature of proceedings there, and the nature of legislation which may not be passed.

       There are various well-established practices which determine the way in which these constitutional arrangements are applied. Hong Kong is governed by consent and through

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consultation with the community. For instance, although from the constitutional instruments described above Her Majesty's Government would appear to have 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.

Role of the Governor

The Governor is appointed by the Queen and derives his authority from the Letters Patent. 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. He makes policy decisions on the advice of the Executive Council, and makes laws by and with the consent of the Legislative Council. As head of the government he presides at meetings of the Executive Council. The present Governor, the Rt Hon Christopher Patten, assumed office on July 9, 1992, and is the 28th incumbent.

Central Government

Executive Council

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The Executive Council comprises four ex-officio members - the Chief Secretary, the Commander British Forces, the Financial Secretary and the Attorney General - together with 12 other members including three members who are officials and appointed by the Governor with the approval of the Secretary of State. The council normally meets once a week, and its proceedings are confidential although many of its decisions are made public. (With effect from February 19, 1993 the Commander British Forces ceased to be an ex-officio member of the Executive Council).

   The Governor is required by the Royal Instructions to consult the council on all important matters of policy. The Governor in Council - the Governor acting after consulting the Executive Council - is Hong Kong's central and highest executive authority on policy matters. In practice, decisions are arrived at by consensus rather than by division. Members tender their advice on individual capacity, and the council is collectively responsible for the decisions made by the Governor in Council. Individual non-official members do not hold personal responsibility for given subjects or portfolios. This is a matter for the government.

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

  Starting from the session of the Legislative Council which began on October 9, 1991, the council has an elected majority. It consists of 60 members - three ex-officio members, namely the Chief Secretary, the Financial Secretary and the Attorney General; 18 appointed members, (including one appointed as the Deputy President of the council;) and 39 elected members. The appointed members are appointed by the Governor with the

CONSTITUTION AND ADMINISTRATION

approval of the Secretary of State. Among the elected members, 21 are elected by functional constituencies, each representing an economic or social sector, and 18 elected by direct elections in geographical constituencies which cover the whole territory. The Governor is the President of the Legislative Council. During his policy address to the Legislative Council in October 1992, the Governor announced that, as a move to enable the Legislative Council to manage its own affairs, he had decided to hand over as soon as practicable the Presidency to a member elected by all Legislative Councillors themselves.

The chief functions of the Legislative Council are to enact laws, control public expenditure and put questions to the government on matters of public interest. The government is responsible for initiating legislative and public funding proposals to the Legislative Council for consideration.

      Legislation is enacted in the form of bills. Most business, including bills, is transacted by way of motions, which are decided by the majority of votes. 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. 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.

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 policies 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 concerning the annual Appropriation Bill which takes place in April.

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

The council normally meets in public once a week. There is a House Committee which consists of all non-official members (excluding the Deputy President), which meets regularly in public, to discuss the council proceedings and make preparatory work for meetings of the full council.

Finance Committee

The Finance Committee of the Legislative Council consists of the Chief Secretary (Chairman), the Financial Secretary and all members other than the other 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, whose meetings are also held in public.

The Establishment Sub-Committee consists of 28 members of the Legislative Council, one of whom is the chairman. Representatives of the Secretary for the Civil Service and

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the Secretary for the Treasury are in attendance. It examines mainly the creation, redeployment and deletion of permanent and supernumerary posts remunerated from the directorate pay scales and changes to the structure of Civil Service ranks and grades (including pay scales, new grades and new ranks), and makes recommendations on them to the Finance Committee. It also reports to the Finance Committee on changes in departmental establishments and on the size and cost of the Civil Service.

The Public Works Sub-Committee consists of 32 members of the Legislative Council and the Financial Secretary (Chairman). The Secretary for Planning, Environment and Lands, the Secretary for Works, the heads of all works departments and the Environmental Protection Department and two representatives from the Finance Branch are in attendance at all meetings to provide technical advice. The sub-committee reviews the progress of capital works projects in the Public Works Programme, and makes recommendations to the Finance Committee in 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 government'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 guidelines were agreed between the committee and the Director of Audit and have been accepted by the government.

   The committee's prime concern is to see that public expenditure has not been incurred for purposes other than those for which the funds were granted, that full value 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 submits two reports to the Governor as President of the Legislative Council during the course of the year. The first, tabled in April, relates to value-for-money audits; the second, tabled in November, relates to the audit of the 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 committee's reports is contained in the government minute, which describes the measures taken to give effect to the committee's recommendations or reasons why these recommendations cannot be accepted. The government minute is also laid on the table of the Legislative Council within three months of the laying of the Public Accounts Committee's report.

CONSTITUTION AND ADMINISTRATION

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 and to report their findings and recommendations to the council. A Select Committee on Legislative Council Elections was appointed in January 1992 to review the arrangements for the 1991 Legislative Council elections and to report its recommendations on the arrangements for future Legislative Council elections. The Select Committee tabled its Report in the Legislative Council on July 8, 1992 and was subsequently dissolved.

OMELCO

OMELCO stands for Office of the (non-government) Members of the Executive and Legislative Councils. Until October 1992, there was cross membership on the two Councils and hence the need for a link between them. This link was provided by OMELCO.

Members of OMELCO 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 approve public expenditure.

Through their work, members are involved in the consideration of 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.

Non-government Members of the Legislative Council formed a number of ad hoc groups and working groups to study bills introduced into the Legislative Council and issues which concern the community at large, including the arrangements for the 1995 elections, financial arrangements for the new airport and related projects, occupational retirement schemes and protection of women and juveniles.

URBAN COUNCIL FUBLIC LIBRARIES

REFERENCE LEMARY

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   In September 1992, non-government members of the Legislative Council adopted a new committee structure for the Legislative Council. Under the new structure, the in-house meetings were replaced by the House Committee which comprises all members of the Legislative Council other than the President, the Deputy President and the ex-officio members. Bills Committees were formed to replace ad hoc groups. Bills are allocated to these committees for scrutiny by the House Committee. The House Committee and the Bills Committees normally hold their meetings in public and may call any person to appear before them and to give evidence or information.

Until October 1992, non-government members of the two councils were serviced by the OMELCO Secretariat which is independent of the Administration. Following the withdrawal of members of the Executive Council from OMELCO in October 1992, the OMELCO Secretariat continues to provide supporting services to members of the Legislative Council, pending review of the future status and functions of OMELCO Secretariat by Members.

   With effect from October 1992, the House Committee of the Legislative Council decided that the OMELCO standing panels would become panels of the Legislative Council and the OMELCO Complaints Division would become the Complaints Division of Members of the Legislative Council. A working group comprising 10 members was formed to discuss changes necessitated by the winding up of OMELCO, including the development of an appropriate supporting organisation which would give members financial and managerial autonomy in handling their affairs, the future of the OMELCO London Office, the future of the OMELCO redress system, and further development of the Legislative Council's committee system.

Urban Council

The Urban Council is a statutory council with responsibilities for the provision of municipal services to almost 3.28 million people in the urban areas. These services 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 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 Hong Kong Stadium is undergoing redevelopment funded by the Royal Hong Kong Jockey Club. When completed, its seating capacity will increase to 40 000 for major sporting, entertainment and cultural events.

   The council manages museums, public libraries and several major cultural venues and multi-purpose facilities, including the City Hall, the Queen Elizabeth Stadium and the Hong Kong Coliseum, the Science Museum and the Museum of Art. The Hong Kong Cultural Centre, opened in November 1989, contains a 2 100-seat concert hall, a theatre seating 1 700 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

CONSTITUTION AND ADMINISTRATION

     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 23 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 1991-2 spent about $3,888 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 ward offices spread throughout the urban area where councillors deal with and answer complaints from the public on a wide variety of matters. Since December 1991, members of the public may also make their complaints and views known to the council through the 'Members Duty Roster System'. Under this system, members of the council are placed on a duty roster to meet the public, by appointment, twice a week.

Regional Council

The Regional Council is the statutory municipal authority for the New Territories where some 2.5 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 is headed by the Director of Regional Services and 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 1991-2 provided about 80 per cent of total revenue, with the remainder being fees and charges, investment income (mostly interest from bank deposits). In 1991-2, total revenue amounted to $1,991 million while total expenditure amounted to $2,237 million.

      The council meets monthly to deal with policy issues, formal motions and members' questions 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

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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 the Heung Yee Kuk to ensure that local aspirations and views are taken into account in its deliberations. Four members from district boards as well as other personalities are co-opted to each of the district committees of the council, thus providing an opportunity for the views of district representatives to be taken into account in the planning and provision of services and facilities.

The council 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.

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 by-election was held in Tuen Mun on October 11, 1992 to fill a seat vacated by a member who had passed away. Three candidates were nominated for the seat. Of the 12 036 registered voters in the constituency where the seat was contested 29.58 per cent turned out to vote.

The functions of the district boards are basically to advise the government on a wide range of matters affecting the well-being of the people living and working in the districts. Through their 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 the broadcasting policy review, deposit protection scheme and review of the housing subsidy policy.

Where funds are available, they undertake minor environmental improvement projects and help organise and sponsor activities to promote community involvement in the districts. In 1992-3, $66.8 million was provided, partly with the assistance of the two Municipal Councils, for these purposes.

Each district board operates a 'meet-the-public' scheme under which 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

CONSTITUTION AND ADMINISTRATION

government services, distributing government forms and information materials, administering oaths and declarations for private use, and referring cases under the Meet-the-Public Scheme, Free Legal Advice Scheme and Rent Officer Scheme. During the year, a total of 9 498 480 cases were handled. 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 is also provided by the City and New Territories Administration.

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 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 4 100 mutual aid committees. They provide an extensive and effective network of communication between the government and the people at the local grass-root level.

       During the year, the administration conducted a review of the district administration scheme. Improvement measures are implemented to enhance its effectiveness.

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 Kuk's 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 became functional constituencies, each returning one member to the Legislative Council.

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Electoral System for the Urban Council, Regional Council and District Boards Elections to the Urban Council, Regional Council and District Boards are on a geo- graphical constituency basis and through a broad franchise. Practically everyone who is 21 years of age or over and who is a Hong Kong permanent resident, or has been resident in Hong Kong for the preceding seven years, is eligible to apply for registration as an elector in the constituency in which he lives. An applicant should be ordinarily resident in Hong Kong at the time of application. Registration is conducted between April and June while applications for registration can be made at any time of the year. The 1992 electoral roll carried 1 933 821 names, representing 52.5 per cent of an estimated potential electorate of 3.68 million.

   There are 210 constituencies, each having one or two seats for District Board elections, returning 274 District Board members. In constituencies where there are two seats (64), each elector can cast two votes. For elections to the Urban Council and Regional Council, there are 15 and 12 single-seat constituencies respectively. Election is by simple majority.

An elector must be registered under the Electoral Provisions Ordinance before he can exercise his right to vote. He 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.

Electoral System for the Legislative Council

The electoral system for the Legislative Council comprises both geographical and functional constituencies. There are nine double-seat geographical constituencies returning a total of 18 members. These constituencies follow closely the boundaries of District Boards and are: Hong Kong Island East, Hong Kong Island West, Kowloon East, Kowloon Central, Kowloon West, New Territories North, New Territories South, New Territories East and New Territories West.

   There are 15 functional constituencies consisting of 20 electoral divisions, which cover the commercial, industrial, finance, financial services, labour, tourism, real estate and construction, social services, medical and health care, teaching, accountancy, legal, engineering, architectural and associated professions, the municipal councils and rural sectors. They return a total of 21 members (the Labour Functional Constituency returning two members).

   The franchise for Legislative Council geographical constituency elections is the same as for the direct elections to the District Boards and the municipal councils. They use the same electoral roll. For functional constituency elections, an elector can be either a corporate or an individual. An individual elector is also required to be registered as an elector for the geographical constituency elections. A corporate elector must appoint an authorised representative to vote on its behalf. The authorised representative is not allowed to represent more than one elector in the same constituency. 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 1992, the electoral roll for functional constituencies carried 69 976 entries, compared to the registered electorate of 69 825 in 1991.

CONSTITUTION AND ADMINISTRATION

      The qualifications for candidature in geographical constituency elections are the same as in the District Board and municipal council elections. In functional constituency elections, a candidate must have in addition a substantial connection with the relevant functional constituency. Each nomination requires 10 subscribers, except for the municipal council functional constituencies which require only five subscribers due to the small electorate size of the constituencies. Except for one electoral division (Labour) which has two seats, all electoral divisions are single-seat.

      Election is by simple majority for geographical constituencies; and by a preferential elimination voting system for all functional constituencies. In constituencies where there are two seats, each elector can cast two votes.

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 5 750 members of the public are appointed to serve on a total of 469 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 is principally responsible to the Governor for the formulation of government policies and their implementation. He is the head of the Public Service. The Chief Secretary, together with the Financial Secretary and the Attorney General, are the Governor's principal advisers.

      The Chief Secretary 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. He deputises for the Governor during his absence and is the Senior Official Member of the Executive and Legislative Councils and Chairman of the Finance Committee.

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Role of Financial Secretary

The Financial Secretary, who reports directly to the Governor, 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 and the new Hong Kong Monetary Authority.

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 adop- tion of the Appropriation Bill, which gives legal effect to the annual expenditure proposals contained in the Budget. He is also 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

Although the CPU forms part of the Government Secretariat, it is not a policy branch and does not have 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.

Role of the Efficiency Unit

The Efficiency Unit (EU) was established in May 1992. The unit takes direction from the Public Sector Reform Policy Group and is a part of the Government Secretariat. Its role is to secure improvements in the formulation of policy objectives and priorities, management and motivation of staff; control over the use of resources; and the delivery of services to customers. The key principles on which these improvements are to be brought about are openness, responsibility and accountability. In other words the role of the unit is to put into practice the Public Sector Reform philosophy.

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. 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 resource branch, also comes under the aegis of the Chief Secretary. The policy branches

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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.

      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 the Audit Department and the Independent Commission Against Corruption, whose independence is safeguarded by their heads 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 are, under the umbrella of the Chief Secretary's Committee, seven policy groups which bring together branch secretaries in related programme areas. The six, which are chaired by the Chief Secretary, are: Com- munity Affairs; Constitutional Affairs; Lands, Works, Transport, Housing and Environ- mental Protection; Public Service; Social Services; Legal and Security. The Legal Affairs Policy group is chaired by the Attorney General.

Office of the Commissioner for Administrative Complaints

The Commissioner for Administrative Complaints (COMAC) is an independent authority established in 1989 under the Commissioner for Administrative Complaints Ordinance to provide for 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. COMAC has jurisdiction over all government departments and the Hospital Authority, except the Royal Hong Kong Police and the Independent Commission Against Corruption for which there are separate systems to deal with complaints from the public. A complaint lodged with the Commissioner has to be referred to him by a member of the Legislative Council other than an official member and with the complainant's agreement to such a referral.

      Between January 1 and December 31, 1992, a total of 143 complaints were received by the office. Together with 54 cases carried over from the previous year, there were in all 197 cases for investigation. During the year, 154 cases were completed. Of these, 113 were investigated, and nine (8.0 per cent) were found to be substantiated in whole and 32 (28.3 per cent) in part. In 72 cases (63.7 per cent), the complaints were found to be unsubstantiated.

       In the cases received during the year, the areas which attracted substantial numbers of complaints related to error or wrong decision, followed by lack of response to complaint, negligence or omission, rudeness, delay and faulty procedures. In terms of complaints by department, the Building and Lands Department, the Housing Department and the Inland Revenue Department received most complaints, followed by the Urban Services Department, the Correctional Services Department, the City and New Territories Administration, the Government Secretariat, the Fire Services Department and the Hospital Authority. These departments have much contact with members of the public and are more vulnerable to complaints than the others.

       In mid-1992, the government undertook a review of the COMAC redress system to identify areas where improvements might be made to strengthen its role as a safeguard against government maladministration. After a three-month public consultation exercise, the government proposed to make a number of major changes to the system. They include

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24

replacing the existing referral system to enable the public to take their complaints directly to the Commissioner, extending the Commissioner's jurisdiction to major statutory bodies, and allowing the Commissioner to publicise investigation reports of public interest subject to the names of the individuals involved in the complaint being anonymised. Legislative proposals are being introduced to put these recommendations into effect.

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.

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 certification of the government's accounts, are pre- scribed 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, the ex-Government hospitals of the Hospital 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.

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 provide independent information, advice and assurance about the economy, efficiency and effectiveness with which any branch, department, agency, other public body, public office, or audited organisation has discharged its functions. 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.

CONSTITUTION AND ADMINISTRATION

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 1992, the Director submitted two reports. The first report was tabled on April 29, covering the results of value-for-money audits completed, and the second report on November 18, covering the audit certification of the government's accounts for the preceding financial year as well as the results of value-for-money audits completed.

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

Foreign Relations

The Role of the British Government

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

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

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

The Role of 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

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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 (24 509 posts), the Municipal Services group of departments (26 618), the Education Department (6 976), Fire Services Department (7 954), and the Royal Hong Kong Police (32 811) account for 52 per cent of the establishment of the whole Public Service. As at October 1, 1992, the total strength of the service was 183 374 or about 6.6 per cent of Hong Kong's work force. Over 98 per cent are local officers. The service is structured into some 420 grades or job categories in the administrative, professional, technical and manual fields, with about 1 210 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 appoint- ments, pay and conditions of service, staff management, manpower planning, training and discipline. It is also the focal point for consultation with the principal staff associations. There are five departmental divisions each responsible for the full range of personnel management matters of a group of departments; and three functional divisions dealing with service-wide issues such as 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 prominent citizens serving as members.

The government is advised on matters relating to pay and conditions of service by four independent bodies. The Standing Committee on Directorate Salaries and Conditions of Service advises on matters affecting directorate officers (the 1 000 or so most senior public servants). The 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. The Standing Commission on Civil Service Salaries and Conditions of Service advises on matters affecting all other civil servants.

   A civil service housing package, which comprises a Home Financing Scheme, an Accom- modation 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 are currently receiving benefits under the schemes.

The government fully recognises the value of regular communication with staff. There are 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, established in most government departments, constitute an important part of the consultative machinery. In

CONSTITUTION AND ADMINISTRATION

addition, individual members of the public service or staff associations have ready access to the departmental or grade management, as well as to the Civil Service Branch. Staff are also encouraged to make suggestions to improve the efficiency of the service under the Staff Suggestion Scheme.

      In recognition of staff commitment and contributions, long serving civil servants are granted awards under the Long Service Travel Award Scheme and the Long and Meritorious Service Certificate Scheme. Those with 30 years of meritorious service are also presented with a gold pin. A retirement souvenir was also introduced recently for civil servants who have had 20 or more years of service on retirement.

      Continued efforts were made in 1992 to improve productivity and the quality of management. 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 non-directorate 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 initiatives. Public Sector Reform aims to bring about long-term productivity improvements in the public service and better services to the community. 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 improvements 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. A major initiative was launched by the Governor in his Policy Address to improve the quality of service further by engendering a culture of public service which treats clients as customers.

      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 are 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.

      The government has introduced a China Studies Programme which aims to provide officers with a better understanding of various aspects of life and government in China. It includes seminars and talks for officers at various levels. Familiarisation visits to China are

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28

also arranged to give officers first-hand experience of China. The existing management development programmes have also been expanded to include a China dimension.

  An important component of the training and development offered to senior public servants is the three-month programme run by the Senior Staff Course Centre. The centre emphasises 'learning from doing'. Each year participants examine about 100 problems, some with significant policy implications. Study tours to other countries in the region. help to broaden perspectives and foster much goodwill with host governments.

Government Records Service

The Government Records Service is responsible for the broad management of government records.

  It undertakes two different but related programmes: the Records Management Office for a record management programme to handle records at their current and non-current stages and the Public Records Office for an archives administration programme to look after the preservation and use of permanent records.

A record is the basic unit of administration and its appropriate management will have a significant impact on the efficiency of government business. 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 accom- plishing the government agency's functions to their 'death' or destruction as non-current records when all useful purposes have been served. The aim is to have fewer records to store, better records to use and more economical record management costs to finance.

The Public Records Office is one of the largest local sources of information for historical and other studies relating to Hong Kong.

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 from the public 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 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. With the declaration of the Chinese version of Chapter 1 of the Law of Hong Kong, the Interpretation and General Clauses Ordinance, made authentic in July 1992, the Chinese version of other existing laws are being processed sequentially for authentication. Since April 1989, all new principal legislation has been enacted in both English and Chinese. Cantonese (the Guangzhou dialect) is the most commonly-spoken dialect 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.

PROGRES

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Preceding page: During a visit to Hong Kong His Royal Highness the Prince of Wales addressed the plenary session of the Business Leaders' Forum.

Above: Her Royal Highness the Princess of Wales met Hong Kong entertainers at a reception in London during the 'Hong Kong Heartbeat' trade seminar.

Left: Mr Victor Fong, Chairman of Hong Kong Trade Development Council, addressed the business conference 'Hong Kong -- Britain's Bridge to Asia'.

Right: Lions Club International held its 75th International Convention in Hong Kong.

WELCOME TO HONG KONG 75TH LIONS CLUBS INTERNATIONAL CONVENTION

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LONGINES

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Asian Development bank

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of the Board of Governors

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Left: The Asian Development Bank held its 25th meeting in Hong Kong, during which delegates inspected a model and illustrations of the new international airport at Chek Lap Kok, (below).

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ASIAN DEVELOPMENT BANK

VICE PRESIDENT

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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.

· FESTIVAL HONG KONG 92

Extreme left: A spectacular parade marked the opening ceremony of Festival Hong Kong 92 in Toronto. The festival, with its theme 'Bridge Across the Pacific' was also held in Vancouver, Ottawa, Montreal and Calgary. Left and above: Scenes of celebration and ceremony in Hong Kong and Canada before and during 'Festival Hong Kong 92'.

Following page: The 'Regco 92' festival staged in the New Territories by the Regional Council opened with a colourful float procession.

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THE LEGAL SYSTEM

THE law of Hong Kong generally follows that of England. The Application of English Law Ordinance declares the extent to which English law is in force in the territory. The ordinance 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, such as the Justices of the Peace Act of 1361, to Hong Kong.

      United Kingdom legislation may be applied to Hong Kong either directly or by order of Her Majesty in Council under the legislation. In addition, the power of Her Majesty to make all such laws as may appear necessary for the peace, order and good government of the territory is expressly reserved by Article IX of the Letters Patent. In practice, the exercise of these powers is largely confined to matters which have a bearing on Hong Kong's international position. For example, the Multilateral Investment Guarantee Agency (Overseas Territory) Order 1988 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 which applies to Hong Kong by local legislation on the same topics. The Hong Kong legislature has been empowered under the Hong Kong Act 1985 to repeal or amend any enactment so far as it is part of the law of Hong Kong and to make laws having extra-territorial operation, if the enactment relates to civil aviation, merchant shipping, or admiralty jurisdiction or is required in order to give effect to an international agreement which applies to Hong Kong. Legislation has already been enacted to localise laws in the fields of admiralty jurisdiction, marine pollution and merchant shipping, and work in other areas is in progress.

A Localisation and Adaptation of Laws Unit has been established in the Attorney General's Chambers. This unit's role is to co-ordinate and speed up work in the localisation of United Kingdom legislation which now applies to Hong Kong. It also advises on the adaptation of the Laws of Hong Kong to ensure compatibility with the Basic Law of the Hong Kong Special Administration Region which was promulgated in April 1990. A review by policy branches of all ordinances within their spheres of responsibilities is being undertaken and, where appropriate, drafting instructions will be prepared with a view to appropriate amendments being enacted before July 1, 1997.

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The Governor, acting with the advice and consent of the Legislative Council, has plenary powers to enact laws 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 the form of ordinances or as subsidiary legislation made under an ordinance.

  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 and about one-third of the volumes have been issued. 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.

The Attorney General's Chambers are responsible for drafting new legislation in both Chinese and English, and translating existing legislation into Chinese. Both the Chinese and English texts are authentic versions of the laws. The first bilingual ordinance was enacted on April 13, 1989. Since then, all new principal legislation has been enacted bilingually. In October 1988 the government set up the Bilingual Laws Advisory Committee 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 them, it recommends the Governor in Council to declare those texts an authentic version of the laws. The first Chinese text of existing legislation was declared authentic in July 1992. Some 520 ordinances remain to be translated or authenticated.

Bill of Rights

Since 1976, the International Covenant on Civil and Political Rights (ICCPR) and the International Covenant on 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 embodiment of basic civil and political rights in a justiciable Bill of Rights, the Hong Kong Bill of Rights Ordinance was enacted in June 1991. This ordinance gives effect in local law to the provisions of the ICCPR as applied to Hong Kong.

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 at the same time as the Bill of Rights Ordinance.

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

THE LEGAL SYSTEM

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 22 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 29 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 fines, however a number of statutes allow increased sentences. Professional magistrates also try cases in the Juvenile Court, which has jurisdiction in charges against children and young persons up to 16 years, except in cases involving homicide.

      In addition to the professional magistrates, there are 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 usually 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

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THE LEGAL SYSTEM

32

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.

Arbitration and Alternative Dispute Resolution

Arbitration has been a popular method of dispute resolution in Hong Kong for some time. Arbitration is governed by the Arbitration Ordinance which has two distinct regimes, a domestic regime based on English Law and an international regime which includes the UNCITRAL Model Law, the model law adopted by the United Nations Commission on International Trade Law. Arbitral awards made in Hong Kong can be enforced in more than 80 other jurisdictions which are signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

The Hong Kong International Arbitration Centre (HKIAC) was established in 1985 to act as an independent and impartial focus for the development of all forms of dispute resolution in Hong Kong and South-East Asia. The HKIAC provides information on dispute resolution and arbitrations both in Hong Kong and overseas. It operates panels of international and local arbitrators and maintains lists of mediators. The HKIAC premises, situated at 1 Arbuthnot Road, have purpose-built hearing rooms and have full support facilities. The number of cases involving the HKIAC has tripled in the last two years and it is anticipated, given the increasing popularity of arbitration and mediation as a means of dispute resolution, that there will be an increase in such cases in the future.

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.

  All government departments requiring legal advice receive it from the Attorney General. He is the representative of the Crown in all actions brought by or against the Crown. He is also responsible for the drafting of all legislation.

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 if so to institute and conduct the prosecution.

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 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.

The Attorney General's Chambers have six divisions, five of which are headed by a Law Officer to whom the Attorney General delegates certain of his powers and responsibilities. The remaining division deals with administrative matters concerning chambers.

  The Civil Division, headed by the Crown Solicitor, provides legal advice to govern- ment on civil law and conducts civil litigation, arbitration, and mediation, on behalf of government.

THE LEGAL SYSTEM

The International Law Division, headed by the Law Officer (International Law), deals with all external legal matters arising out of the Sino-British Joint Declaration and other international agreements, and advises upon questions of international law.

      The Law Drafting Division, headed by the Law Draftsman, is responsible for drafting all legislation (including subsidiary legislation) in Chinese and English, and assists in steering legislation through the Executive and Legislative Councils.

The Solicitor General heads the Legal Policy Division which includes the Law Reform Commission Secretariat. The division services the professional needs of the Attorney General, and provides legal input on a wide variety of topics being considered by the government.

The Prosecutions Division is headed by the Crown Prosecutor who is commonly known as the Director of Public Prosecutions. Counsel from this division conduct the prosecution in the majority of High Court and District Court trials and often appear before magistrates when an important point of law is involved. This division also provides legal advice to police and other government departments responsible for prosecuting offences.

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 22 reports covering subjects as diverse as Commercial Arbitration, Homosexuality, Bail, Sale of Goods and Supply of Services, and Illegitimacy. The recommendations in 10 of those reports have been implemented either in whole or in part and others are still under consideration.

      The commission is currently considering references on Evidence in Civil Actions, Copyright, Fraud, Privacy, Codification of the Criminal Law, Guardianship and Custody, Insolvency, Description of Flats on Sale, and Interpretation of Statutes.

Registrar General

The Registrar General, a statutory office established by the Registrar General (Establishment) Ordinance, combines the statutory offices of Land Officer and Registrar of Companies. Previously, the Registrar General also combined the statutory office of Official Receiver but on June 1, 1992, a new department entitled the Official Receiver's Office was established by the enactment of the Official Receiver's Ordinance 1992 (No. 39 of 1992). In addition, the Registrar General, in his capacity as Land Officer, was previously responsible for the operation of the Legal Advisory and Conveyancing Section of the Land Division of the Registrar General's Department. However, on December 1, 1992, responsibility for that section was transferred to the Legal Advisory and Conveyancing Office of the Buildings and Lands Department under the Director of Buildings and Lands.

      The Registrar General's Department is therefore now divided into two main divisions. The Land Division operates a land registration service under the provisions of the Land Registration Ordinance (the Land Registry) and also a registry of owners corporations under the Multi-Storey Buildings (Owners Incorporation) Ordinance. The Companies Division comprises the Companies Registry and the Money Lenders Registry. The

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THE LEGAL SYSTEM

Companies Registry administers the provisions of the Companies Ordinance, while the Money Lenders Registry regulates money lenders under the Money Lenders Ordinance.

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.

The Legal Profession

The Law Society is the governing body for solicitors. It has wide responsibilities for maintaining professional and ethical standards and for considering complaints against solicitors. There are around 2 400 solicitors and 400 local law firms in Hong Kong. In addition there are around 30 foreign law firms in Hong Kong which advise on foreign law.

The Bar Committee is the governing body for barristers. The conduct and etiquette of the Bar are governed by the Code of Conduct for the Bar of Hong Kong. There are around 460 barristers in Hong Kong.

Legal Aid

Hong Kong has developed over the years a very comprehensive system of legal aid, advice and assistance 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, the Court of Appeal and the Judicial Committee of the Privy Council in London. Legal aid is available to eligible persons in Hong Kong, resident or non-resident, either free of charge or upon payment of a graduated contribution if they satisfy the Director of Legal Aid on financial eligibility and justification for legal action.

Applications for legal aid are subject to means testing. With effect from July 1, 1992, a person whose disposable financial resources, including both income and capital, do not exceed $120,000 is financially eligible. In calculating an applicant's disposable financial resources, the value of his owner-occupied home, tax payments and contributions to retirement schemes, apart from various allowances to cater for the support of himself and his dependants, are deducted. Also since July 1, 1992, the Director of Legal Aid has the discretion to grant legal aid in criminal cases in the interests of justice to an applicant who fails the means test.

   If a person is granted legal aid, the Director of Legal Aid will assign his case either to a private lawyer, or to one of the department's own lawyers in its litigation division.

THE LEGAL SYSTEM

The Official Solicitor

     Following the entry into force of the Official Solicitor Ordinance 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. Since inauguration and up to July 1992, the Official Solicitor received a total of 76 such requests in receivership, unclaimed estates, adoption, guardianship, and other issues. The Official Solicitor assigned less than 10 per cent of the cases to private legal practitioners for litigation and litigated the balance himself.

Civil Legal Aid

      In civil cases, apart from financial eligibility an applicant must satisfy the Director of Legal Aid that he has reasonable grounds for taking or defending an action. Legal aid is available for a wide range of civil proceedings, such as traffic and industrial accident claims, employees' compensation, immigration matters, professional negligence, family law, and Admiralty proceedings for seamen's wages. An applicant who is refused legal aid may appeal to the Registrar of the Supreme Court or in Privy Council cases to a committee of review. The total estimated expenditure for 1992 was $86 million in civil cases. During the year, 5 378 applications out of 17 294 applications were granted legal aid and $254 million was recovered for the aided persons.

      An independent counselling agency, the Hong Kong Catholic Marriage Advisory Council, funded by the Royal Hong Kong Jockey Club, provides counselling service to legal aid applicants in matrimonial cases in the department's Kowloon Branch Office.

      Since October 1984, the Director of Legal Aid has operated a Supplementary Legal Aid Scheme for people 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. It is available for claims in the High Court and certain claims in the District Court for damages for death, personal injuries and employees' compensations. Since July 1, 1992, an applicant with financial resources exceeding $120,000 but not exceeding $280,000 is eligible to apply. A successful litigant under the supplementary scheme pays back 10 per cent to 12.5 per cent of the damages he recovers to the scheme to assist other litigants in future litigation. The total estimated expenditure of the scheme in 1992 was $5 million. During the year, 71 applications out of 86 applications were granted legal aid.

Legal Aid in Criminal Cases

In criminal cases, legal aid is available for representation in proceedings in the Supreme and District Courts, and 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 petitions for clemency to the Governor in Council and in con- ducting pleas in mitigation of sentence.

      For appeals against conviction for murder, the grant 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, legal aid will be given subject to financial eligibility if the Director of Legal Aid is satisfied that there are arguable grounds of appeals.

The total estimated expenditure for 1992 was $72 million in criminal cases. During the year, 2 708 applications were granted legal aid out of 4 225 applications received.

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THE LEGAL SYSTEM

Legal Advice and Duty Lawyer Schemes

The Legal Advice and Duty Lawyer Schemes comprise three programmes to provide free legal representation, legal advice and legal information. The government funds the entire operation of the schemes and the subvention in 1992-3 was about $57 million.

Until June 1991, the Duty Lawyer Scheme provided free legal representation to defendants charged with one of nine 'specified' 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 virtually all defendants in the Magistrates' Courts who meet certain criteria (such as those in jeopardy of losing their liberty or where a substantial question of law is involved) and subject to a simple means test. The Administrator of the Duty Lawyer Scheme has a discretion to grant legal representation to defendants whose gross annual incomes exceed the specified financial limit (of gross annual income of $90,000). There are approximately 600 remunerated barristers and solicitors on the Duty Lawyer roster. In 1992, 32 632 defendants facing charges received advice and representation at trial.

The Legal Advice Scheme provides free advice without means testing at five advice centres located in District Offices. 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 others. There are approximately 408 lawyers in the scheme. Some 2 800 people are advised each year.

The Tel-Law Scheme was introduced in March 1984. It provides taped legal information by telephone. Each taped message is available in both English and Chinese. 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 aspects of matrimonial, landlord and tenant, criminal, financial, employment, environmental and 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 53 184 calls.

4

IMPLEMENTATION

OF THE SINO BRITISH JOINT DECLARATION

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. 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 offices here and their respective senior representatives are resident in Hong Kong. This has helped closer liaison and further progress on many issues. The JLG continues, nevertheless, to hold plenary sessions at least once every year in Beijing, London and Hong Kong.

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

Defence and Public Order

Both in the JLG itself and in talks at expert level, discussions on the implementation of the Joint Declaration in respect of defence and the maintenance of public order were held. 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 allow 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. At the 20th meeting of the JLG (September 1991), the two sides reached agreement in principle on the establishment of the Court of

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IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

Final Appeal. Draft legislation and a package of arrangements for establishing the court are being considered.

Localisation of Laws

As explained in Chapter 3, 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 be necessary therefore to 'localise' them, that is, replace them by legislation enacted in Hong Kong which will survive that date. At the eighth meeting of the JLG (November 1987), the two sides agreed on the general principles for consultation on the localisation of United Kingdom legislation. Since then good progress has been made. As at December 31, 1992, five localising ordinances have been enacted and 31 sets of localising regulations have been made.

Air Service Agreements

In order to maintain Hong Kong's status as an international civil aviation centre after 1997, there is an on-going Air Service Agreement (ASA) separation programme, whereby provisions involving Hong Kong in United Kingdom ASAS are separated into discrete Hong Kong ASAs. So far Hong Kong has concluded eight ASAs, with the Netherlands, Switzerland, Canada, Brunei, France, New Zealand, Malaysia and Brazil. Negotiations with a number of other aviation partners are at an advanced stage. New ASAs will be signed when the need arises.

Sub-Group on International Rights and Obligations

The Sub-Group on International Rights and Obligations, set up by the Joint Liaison Group, was formally established in July 1986 to examine and discuss matters relating to the continued application 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.

There is a considerable number of treaties and international obligations applying to Hong Kong. The sub-group has to examine each individually. The consequence is that the work of the sub-group will take a number of years to complete. So far the two sides have reached agreement in the JLG on Hong Kong's continued participation in 29 international organisations (including the General Agreement on Tariffs and Trade). The sub-group has also been discussing the continued application after 1997 of multilateral treaties currently applying to Hong Kong and has so far reached agreement on a number of treaties on customs, conservation, health, trade, postal services, marine pollution, transport, drugs, private international law, science and technology and international crime.

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. The meetings are held in Hong Kong.

   During 1992, the Land Commission held two formal meetings. The two sides agreed to make available, during the 1992-3 financial year, a total of about 164.3 hectares of land. This includes 60 hectares for the development of Container Terminal No. 9.

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

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 the 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 1992-3 financial year the agreed figure was $3,950 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 prominent bankers in Hong Kong, as well as a monetary expert from the Hong Kong Government. Over $34,223 million, representing the future SAR Government's share of premium income for the period May 27, 1985 to September 30, 1992, 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 National People's Congress (NPC) of the People's Republic of China. 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 come into effect on July 1, 1997. It prescribes the systems to be practised in the HKSAR, and provides that the HKSAR will enjoy a high degree of autonomy.

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 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 (December 1990) and work on the review is now in progress.

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5

THE ECONOMY

40

THE growth momentum of the Hong Kong economy was strengthened further in 1992. While the marked increase in re-exports continued to provide the main impetus to growth, domestic exports remained virtually static. Domestic demand was robust throughout the year. The renewal of China's Most Favoured Nation status in the United States for another year and the satisfactory resolution of the market access negotiations between China and the United States under Section 301 of the US Trade Act boosted business confidence. However, the protracted negotiations with China on the financing arrange- ments for the new airport and related projects gave rise to some uncertainty. Political differences over the proposals on constitutional development also aroused concern in the business community.

   In the external sector, domestic exports, after showing virtually no change in the first quarter, picked up slightly during the second and third quarters. However, the performance slackened again in the fourth quarter. Re-exports continued to show a strong increase. 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, both consumption and investment expenditures were buoyant. Reflecting these developments, the gross domestic product (GDP) grew by 5.0 per cent in 1992, with increases of 4.9 per cent in the first half and 5.1 per cent in the second half. The corresponding growth rate in 1991 was 4.2 per cent.

After a temporary easing in the early part of the year, the labour market tightened up again in the subsequent months as economic activity continued to grow steadily. The seasonally adjusted unemployment rate was 2.4 per cent in the first half of 1992, while in the second half it was 2.0 per cent. Labour resources continued to shift from manufacturing to services, reflecting the on-going structural transformation of Hong Kong into a more service-orientated economy. Average earnings in all major sectors showed significant increases in money terms in 1992, with appreciable gains after discounting inflation.

Consumer price inflation was generally on a moderating trend in 1992. The inflationary pressures remained mainly generated domestically rather than imported. The rate of increase in the Consumer Price Index (A) for the year as a whole was 9.4 per cent, comprising 9.6 per cent in the first half and 9.2 per cent in the second half. The corresponding increase in 1991 was 12 per cent.

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 needs, 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-orientated nature of the economy can be seen from the fact that in 1992 the total value of visible trade (comprising domestic exports, re-exports and imports) amounted to 254 per cent of the GDP. If the value of imports and exports of services is also included, this ratio becomes 288 per cent. Between 1982 and 1992, Hong Kong's total exports grew at an average annual rate of 17 per cent in real terms, which was roughly twice the growth rate of world trade. The corresponding average annual increase was 16 per cent for imports. With a gross value of $1,880 billion in overall visible trade in 1992, 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. It fell again thereafter to about 16 per cent in 1991, 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, before settling at about five per cent during the period 1984 to 1991.

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 73 per cent in 1991.

      With regard to employment, the most notable change since the early 1970s was the continuous decline in the share of the manufacturing sector in total employment, from 47 per cent in 1971 to 41 per cent in 1981, and further to 24 per cent in 1992. 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 66 per cent in 1992.

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 items within these groups. The pressure of protectionism and growing competition from

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THE ECONOMY

 other economies have resulted in local manufacturers intensifying their efforts to diversify, in respect of not only products but also markets. A major 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 changes 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 land and space constraint, 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 ones being plastics and electronics. The textiles and clothing industries remain prominent despite their continuous decline in relative importance. Other industries of importance 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 1990, the value of net output by the manufacturing sector grew at an average annual rate of 15 per cent, while manufacturing employment grew at an average annual rate of less than 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 15 per cent in 1990, while its share in manufacturing employment fell from 21 per cent to 15 per cent. Against this decline was the expansion of the electrical appliances and electronics, and watches and clocks industries. Between 1973 and 1990, their shares in the net output of manufacturing increased from nine per cent to 12 per cent, and from one per cent to three per cent respectively. In terms of employment, the share of the former, however, decreased slightly from 11 per cent in 1973 to 10 per cent in 1990, while that of the latter increased from one per cent to two per cent.

Domestic exports in 1992 consisted principally of wearing apparel and clothing accessories (33 per cent of the total value), electronics (26 per cent), textiles (seven 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 1982 to 33 per cent in 1992. On the other hand, increases were recorded 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 17 per cent in 1982 to 23 per cent in 1992.

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

     Over the past five years, the share of the United States in Hong Kong's total domestic exports has been declining, although it still remains as the largest market. On the other hand, the shares of domestic exports going to China, Germany, Japan, Canada and Australia, and to the South East Asian economies have increased. Moreover, Hong Kong has also 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 policies to facilitate its modernisation programmes. Rapid economic growth in the Asia-Pacific region over the past decade provided an added stimulus. Hong Kong, with 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, convenience 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 household incomes, there has 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 25 per cent in 1991. The contribution of transport, storage and communications to the GDP was stable at around seven to eight per cent until 1986, before rising to 10 per cent in 1991. The contribution of finance, insurance, real estate and business services to the GDP experienced considerable fluctuations. It rose from 15 per cent in 1970 to 24 per cent in 1981, but fell back to 16 per cent in 1984, mainly reflecting the slump in the property market. Thereafter it rose steadily, to 23 per cent in 1991.

      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 27 per cent in 1992. 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 20 per cent in 1992.

Between 1982 and 1992, 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 per annum. 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

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THE ECONOMY

44

total imports of services were 48 per cent and 32 per cent respectively in 1991. Travel services accounted for 33 per cent of the total value of exports of services and 48 per cent of the total value of imports of services. The corresponding shares for financial and banking services were six 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 1992, the total value of visible trade between Hong Kong and China amounted to $628 billion, representing an increase of 25 per cent over 1991. This rapid growth reflected partly the buoyant economic conditions in China and partly the sustained growth in outward processing trade.

In 1992, China was the second largest market for Hong Kong's domestic exports, accounting for 26 per cent of the total. China was also the largest market for, as well as the largest supplier of, Hong Kong's re-exports. About 86 per cent of the goods re-exported through Hong Kong were either destined for, or originated from, China.

In addition to trade in goods, Hong Kong also serves as an important service centre for China generally and South China in particular. This includes the provision of infrastructural facilities such as the port and airport, as well as institutional supports 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 1992, 21 million trips to China were made by Hong Kong residents, and another 1.7 million trips to China were made by foreign visitors through Hong Kong. These represented increases of 13 per cent and 28 per cent respectively over 1991.

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, property and infrastructure has also been increasing. As can be expected, Guangdong occupies a highly important position in this respect. It has been estimated that, in 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. This, in effect, provides Hong Kong with a substantial production base.

Concurrently, China has also been investing heavily in Hong Kong. Its investment ranges from traditional activities like banking, import/export, wholesale/retail, and trans- portation 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 in recent years. 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.

THE ECONOMY

      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 China-interest companies in Hong Kong to finance their investment activities in Hong Kong or abroad. In addition to syndicated loans, China-interest banks and other enterprises have been making greater use of negotiable certificates of deposit, bonds, commercial paper, and share issuance to raise funds.

      The prospects for further development of economic links between Hong Kong and China continue to be good, given the firm foundation that has been established over the years as well as the broadened open door policies, accelerated economic reforms and rapid economic growth in China.

The Economy in 1992

The economy continued to grow steadily in 1992. Re-exports surged further, while domestic exports recorded virtually no growth. Locally, both consumption and investment expenditures remained robust throughout the year.

      Consumer price inflation was generally on a moderating trend in 1992. For 1992 as a whole, the rate of increase in the Consumer Price Index (A) averaged 9.4 per cent, appre- ciably lower than the 12 per cent recorded in 1991. The GDP deflator, as a broad measure of overall inflation in the economy, rose slightly faster than the consumer price indices, by 10.3 per cent in 1992. This faster increase was, however, largely due to an improvement in the terms of trade, with the prices of imports rising more slowly than those of exports.

According to the preliminary estimate, the growth rate in real terms of the GDP was 5.0 per cent in 1992, with increases of 4.9 per cent in the first half and 5.1 per cent in the second half. In 1990 and 1991, the GDP grew by 3.2 per cent and 4.2 per cent respectively in real

terms.

External Trade

In 1992, re-exports grew markedly, by 29 per cent in value terms over a year earlier. After discounting for an estimated one per cent increase in prices, there was a 28 per cent increase in real terms. The corresponding growth rates in 1991 were 29 per cent and 26 per cent respectively. The robust performance of re-exports was in line with the on-going structural shift of domestic exports to re-exports.

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 and by the increase in China's external trade, re-exports involving China in both directions continued to rise rapidly in 1992. Meanwhile, re-exports not related to China showed a more moderate increase. The other major re-export markets were the United States, Japan, Germany, 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 55 per cent and 27 per cent respectively of the total value of re-exports in 1992. Analysed the major commodity

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items, re-exports of footwear, electrical machinery and appliances, telecommunications and sound recording and reproducing equipment, clothing, and textile fabrics, showed faster increases than other commodity items.

  The value of domestic exports was one per cent higher in 1992 than in 1991. After discounting for an estimated one per cent increase in prices, there was virtually zero growth in real terms. This compared with an increase of two per cent in value terms or virtually no growth in real terms in 1991. On a year-on-year comparison, domestic exports grew by one per cent in real terms in the first half of 1992, but fell by one per cent in the second half.

Domestic exports to the various major markets showed a mixed performance in 1992. Compared with 1991, domestic exports to China surged further, by 13 per cent in real terms. A large proportion of these domestic exports were related to outward processing arrangements commissioned by Hong Kong companies. Domestic exports to the United States eased back in the second half of 1992, after a pick-up in the first half. For the year as a whole, there was no growth in real terms. On the other hand, domestic exports to Germany and the United Kingdom showed marked declines amid a slack demand, but the rates of decline had moderated somewhat in the latter part of the year. For 1992 as a whole, domestic exports to these two markets declined by 20 per cent and eight per cent respectively in real terms. For domestic exports to Japan, a moderate decrease of five per cent in real terms was recorded in 1992.

Analysed by major product categories, domestic exports of textiles fell by three per cent in real terms in 1992, while those of clothing fell by two per cent. Their shares in the total value of domestic exports in 1992 were seven per cent and 33 per cent respectively. In 1992, domestic exports of electronic components recorded a sharp growth of 31 per cent in real terms. On the other hand, domestic exports of watches and clocks, and electrical appliances fell, by nine per cent, and 38 per cent respectively in real terms. Domestic exports of metal manufactures recorded virtually no growth.

Imports grew rapidly, by 23 per cent in value terms or by about 22 per cent in real terms in 1992. This compared with an increase of 21 per cent in value terms or 19 per cent in real terms in 1991. 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, it was also supported by imports retained in Hong Kong for local use.

Retained imports increased by 14 per cent in value terms in 1992. The increase in real terms was also 14 per cent. Among the various end-use categories, retained imports of consumer goods recorded the fastest growth, by about 23 per cent in real terms. Retained imports of capital goods also grew sharply, by 19 per cent in real terms. Within this category, retained imports of industrial machinery for manufacturing use registered an increase of about 11 per cent in real terms. Retained imports of food, fuels and raw materials and semi-manufactures increased by about nine per cent, 18 per cent, and seven per cent respectively 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 $30,342 million, equivalent to 3.2 per cent of the total value of imports, was recorded in 1992. This compared with a deficit of $13,096 million, equivalent to 1.7 per cent of the total value of imports, recorded in 1991. As the prices of total exports increased at a faster rate than those of imports in 1992, the terms of trade showed a small improvement.

THE ECONOMY

Domestic Demand

Indicative of a generally buoyant economy, domestic demand rose by 10 per cent in real terms in 1992, following a nine per cent growth in 1991. Private consumption expenditure grew by nine per cent in real terms in 1992, and government consumption expenditure by eight per cent in real terms. Their corresponding growth rates in 1991 were eight per cent and seven per cent. Investment demand, measured in terms of gross domestic fixed capital formation, grew by 11 per cent in real terms in 1992, having increased by 10 per cent in 1991. Among its major components, expenditure on plant and machinery was higher by 23 per cent in real terms, while expenditure on building and construction showed a marginal increase of one per cent in real terms.

The Labour Market

The labour market, after showing some easing in the early part of 1992, tightened up again in the latter part of the year. The seasonally adjusted unemployment rate rose to around 2.4 per cent in the first half of 1992, before falling to about 2.0 per cent in the second half. The underemployment rate exhibited a broadly similar trend. It rose to 2.2 per cent in the first half of the year, and then fell to 2.0 per cent in the second half.

      Between September 1991 and September 1992, employment in the manufacturing sector decreased by 13 per cent to 571 200, while employment in the service sectors as a whole increased by four per cent to 1 621 800. Labour resources thus continued to shift from manufacturing to services. Among the various service sectors, employment in water transport, air transport and services allied to transport increased by eight per cent; that in finance, insurance, real estate and business services by six per cent; that in restaurants and hotels by four per cent; and that in the wholesale, retail and import/export trades by three per cent. On building and construction sites, employment decreased by one per cent. However, for the building and construction industry as a whole, employment of site workers and non-site workers taken together still showed an increase of two per cent. As the employment situation in the manufacturing sector remained slack, vacancies in this sector declined markedly, by 18 per cent over a year earlier to 19 100 in September 1992. Nevertheless, vacancies in the service sectors as a whole rose by 10 per cent to 54 100.

      Local manufacturing output, as measured by the index of industrial production, increased by two per cent in the first three quarters of 1992 over the same period in 1991. This compared with an increase of one per cent in 1991 over 1990. The attainment of this level of performance, notwithstanding a significant reduction in manufacturing employ- ment, showed that labour productivity in the manufacturing sector had risen significantly. This was attributable partly to the marked increase in investment in machinery and equipment, and partly to the relocation of the more labour-intensive production processes to China.

      The generally tight labour market conditions boosted labour incomes. Average earnings in all major sectors recorded further significant increases in money terms during the twelve months ending September 1992. When expressed in real terms, earnings in all major sectors except restaurants and hotels increased.

      Between September 1991 and September 1992, average earnings of manufacturing workers increased by 15 per cent in money terms. After adjusting for inflation, this amounted to an increase of four per cent in real terms. Average earnings for the service

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 sectors as a whole rose by 14 per cent in money terms, or by four per cent in real terms over the same period. Of the various service sectors, earnings in the wholesale, retail and import/export trades; finance, insurance, real estate and business services; and transport, storage and communication all rose by about 12 per cent in money terms. After adjusting for inflation, the increase in real earnings in these three sectors were two per cent, two per cent and one per cent respectively. Earnings in restaurants and hotels rose by only nine per cent in money terms, which was equivalent to a decrease of one per cent in real terms.

The Property Market

The residential property market underwent some consolidation in 1992. The anti-specula- tion measures introduced by the government in late 1991 and the tight mortgage lending policy pursued by the banks continued to have their restraining effect. Transactions were considerably less in 1992 than in 1991. The prices of residential flats, after showing a further increase during the first half of the year eased somewhat during the second half, amid more sluggish trading. But the rentals on new lettings of residential flats remained stable, with some increases recorded in more favoured areas. In the market for shopping space, demand was supported by the pick-up in consumer spending and the growth in tourism. Prices and rentals rose further. The demand for office space revived along with a modest gain in rentals in most districts, while supply remained abundant. The sales market for office strata was active as buyers' interest continued to shift from residential flats to office premises. The market for older conventional factory space remained sluggish. However, well-located modern industrial buildings designed also for ancillary office uses were more favoured. As to land sales, response to the auctions of residential sites during 1992 remained generally favourable. However developers were cautious about acquiring industrial sites.

Inflation

The rate of inflation at the consumer level, as measured by the Consumer Price Index (A), rose by an average of 9.4 per cent in 1992. This compared with the corresponding increase of 12 per cent in 1991. Continuing the moderating trend since April 1991, the rate of inflation eased further in the first eight months of 1992, to 8.3 per cent in August. It rebounded to 9.9 per cent in September, partly due to the volatile movements in the prices of certain essential foodstuffs. In December, the rate of inflation stood at 9.4 per cent.

Among the various components of the CPI(A), the cost of housing recorded the fastest increase, by an average of 13 per cent in 1992 over 1991. This was followed by charges for services (12 per cent), alcoholic drinks and tobacco (10 per cent), food (nine per cent) and clothing and footwear (eight per cent). Taken together, these five components accounted for 87 per cent of the overall increase in the CPI(A). On the other hand, relatively more moderate increases were recorded in the prices of transport, miscellaneous goods, fuel and light and durable goods by an average of seven per cent, seven per cent, five per cent and two per cent respectively in 1992 over 1991. As faster price increases were generally recorded for items with a larger local input content, which was to be expected when the local resource situation was tight, it showed that inflation in 1992 was mostly generated domestically rather than imported.

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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 with minimal government inter- vention in the private sector.

      This basically free-enterprise, market-disciplined system has continued to contribute 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.

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 and computerisation. 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 land premia and appropriations from the General Revenue Account.

      The Capital Investment Fund is used to finance the government's capital investments in public bodies, such as equity injection in the Mass Transit Railway Corporation, capital investment in the Hong Kong Housing Authority and advances to the Provisional Airport Authority. Its income is derived mainly from interest and dividends on investments, disposal of investments, repayments of loans, and appropriations 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 regular source of income is derived mainly from the sharing of the proceeds of Mark Six lotteries.

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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 1991-2 was $108.0 billion. The government itself accounted for $90.0 billion excluding 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 13.5 per cent in nominal terms or 2.9 per cent in real terms. Some $27.5 billion or 25.5 per cent of the public expenditure in 1991-2 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 1992-3.

Total government revenue in 1991-2 was $113.6 billion and the consolidated cash sur- plus was $22.5 billion including net borrowing of $1.1 billion. Details of revenue by source and of expenditure by component for 1991-2 and 1992-3 (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 and on the Funds together 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.

THE ECONOMY

      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

      Hong Kong's tax system is simple and relatively inexpensive to administer. Tax rates are low, but the government accords a high priority to curbing tax avoidance and evasion. The principal direct taxes are salaries tax and profits tax. Important indirect taxes include rates on property, stamp duty on property and stock market transactions, betting duty and duties on certain specified commodities (see Appendix 11).

       The Inland Revenue Department is responsible for the collection of over 60 per cent of general revenue including earnings and profits tax, stamp duty, betting duty, estate duty, hotel accommodation tax, and entertainments tax. Revenue from these sources are collectively described as 'internal revenue'.

      Earnings and profits tax, which alone accounted for about 44 per cent of general revenue in 1991-2, is levied under the Inland Revenue Ordinance. Persons liable to this tax may be assessed on three separate and distinct sources of income, namely business profits, salaries and income from property.

      Profits tax is charged only on net profits arising in Hong Kong, or derived from a trade, profession or business carried on in Hong Kong. Profits of unincorporated business are currently taxed at 15 per cent and profits of corporations are taxed at 17.5 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. In 1991-2, the government received some $25 billion in profits tax, amounting to about 25 per cent of the general

revenue.

       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 remaining net income. No one, however, pays more than 15 per cent of their total income. The earnings of husbands and wives are reported and assessed separately. However, where either spouse has allowances that exceed his or her income, or when separate assessments would result in an increase in salaries tax payable by the couple, they may elect to be assessed jointly. Salaries tax contributed some $17 billion, or 17 per cent of total general revenue, in 1991-2.

      Owners of land or buildings in Hong Kong are 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

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maintenance. There is a system of provisional payment of tax similar to that for profits tax and salaries tax. Property owned by a corporation carrying on a business in Hong Kong is exempt from property tax (but profits derived from ownership are chargeable to profits tax). Receipts from property tax totalled $1.2 billion in 1991-2.

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. The revenue from stamp duties accounted for about nine per cent of general revenue, or $9.6 billion, in 1991-2.

Betting duty is imposed on bets at the Royal Hong Kong Jockey Club and on the proceeds of Mark Six lotteries - the only legal forms of betting in Hong Kong. The duty now accounts for about seven per cent of general revenue. The rate of duty is 11.5 per cent or 17.5 per cent of the amount of the bet, depending on the type of bet placed, and 30 per cent on the proceeds of lotteries. Yield in 1991-2 totalled some $7 billion.

Other taxes collected by the Inland Revenue Department include estate duty, imposed on estates valued at over $4 million at levels ranging from six per cent to a maximum of 18 per cent; hotel accommodation tax of five per cent, imposed on expenditure on accom- modation by guests in hotels and guest-houses; and entertainments tax, imposed on the cost of admission to race meetings at an average rate of about 28 per cent.

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 1991-2, $6.8 billion was collected in duties, accounting for about seven per cent of general revenue. Duties are levied on five groups of commodities - hydrocarbon oils, alcoholic liquor, methyl alcohol, tobacco and cosmetics.

Duties are imposed irrespective of whether the product concerned is locally manu- factured or imported. There is no discrimination on the grounds of geographical origin. The levels of duties take into account consumers' ability to pay: champagne is taxed more heavily than beer.

  The Rating and Valuation Department is responsible for assessing and collecting rates which are levied on landed property at a fixed percentage of its rateable value. The revenue raised helps finance the various public services provided by the Urban Council and Regional Council, as well as providing a stable and reliable revenue stream to the Government.

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 Regional Council. The percentage charge is now fixed at 5.5 per cent. Of this amount, three per cent of the revenue collected from Hong Kong Island and Kowloon is credited to the Urban Council and 3.75 per cent of that collected from the New Territories goes to the Regional Council. The remainder, amounting to $3.5 billion in 1991-2, is credited to general revenue.

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

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refunds of rates are allowed for vacant domestic properties, but half the rates paid may be refunded in the case of unoccupied non-domestic premises.

      The government derives significant amounts of revenue from a number of other sources. Fees and charges for services provided by government departments generated a total of about $7.2 billion in 1991-2. The government's general policy is that the cost of the service provided should be fully covered by the level of relevant fees or charge. Certain essential services are, however, subsidised by the government or provided free.

       A further $6.7 billion was generated by government-operated public utilities. The most important of these, in revenue terms, are water supplies, postal services and Kai Tak Airport. Significant sums also accrued to general revenue from the tax imposed for the registration of motor vehicles under the Motor Vehicles (First Registration Tax) Ordinance. This revenue, amounting to approximately $3.4 billion in 1991-2, is collected by the Commissioner for Transport.

      Finally, about $0.9 billion was received in the same year by way of royalties and concessions. These are paid by certain major companies holding franchises, such as the Cross Harbour Tunnel Company and television broadcasters, as well as holders of concessions to operate taxis and petrol stations.

       The cumulative effect of all these (as well as a number of minor) revenue sources is to provide the government with a stable and fairly broad-based tax system, which is able to ensure that adequate funds are available for the implementation of its medium-term expenditure programmes, as well as the maintenance of adequate fiscal reserves.

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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

Hong Kong maintains a three-tier system of deposit-taking institutions: licensed banks, restricted licence banks and deposit-taking companies.

Banking licences are granted at the discretion of the Governor in Council, in accordance with the provisions of the Banking Ordinance. In September 1992, the Governor in Council made a number of changes to the criteria for bank licence applications as part of the regular review of such criteria. In the case of a local applicant incorporated in Hong Kong, the criterion that it should be predominantly beneficially owned by Hong Kong interests has been broadened to enable close association and identification with the territory to be taken into consideration. Apart from the requirements of a paid-up capital of at least $150 million and a minimum of 10 years in the business of taking deposits from and granting credit to the public, which have remained unchanged, an applicant has also to satisfy minimum requirements on assets (net of contra items) and public deposits. The latter two requirements were increased to $4,000 million and $3,000 million respectively. In the case of a bank incorporated outside Hong Kong applying to establish a branch in the territory, the asset size requirement (net of contra items) was increased to US$16,000 million. A licence may still be granted in exceptional circumstances, however, if the bank is of exceptionally high standing or if banks from its country of incorporation are under-represented in Hong Kong. The criterion dealing with home country supervision has also been changed to the effect that the home supervisor must demonstrate the necessary capabilities for meeting the minimum standards for supervision of international banks published by the Basle Committee of Supervisors in June. In general, there should be some acceptable form of reciprocity in an overseas applicant's home country to banks from Hong Kong.

At the end of 1992, there were 164 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 148 representative offices of foreign banks. The total deposit liabilities of all the licensed banks to customers at the end of the year was $1,449 billion.

FINANCIAL AND MONETARY AFFAIRS

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

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 home super- vision. Restricted licence banks 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 1992, there were 56 restricted licence banks and their total deposit liabilities to customers was $35 billion.

      Restricted licence banks 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.

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 1992, there were 147 deposit-taking companies, and their total deposit liability to customers was $19 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 1992, there were 9 242 registered persons. Of the 311 registered corporate securities dealers, 150 were from overseas. Of the 105 commodities dealers, 41 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 1992, the Stock Exchange had 620 corporate and individual members. Only shareholders who have applied for and been granted membership of the Hong Kong Futures Exchange Limited can trade on the Futures Exchange. At the end of 1992, the Futures Exchange had 90 members.

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  Under the Insurance Companies Ordinance, insurance companies are authorised by the Insurance Authority to transact business in Hong Kong. At the end of 1992, there were 233 authorised companies. Of these, 127 were overseas companies from 29 countries.

Financial Markets

Hong Kong has a mature and active foreign exchange market, which forms an integral part of the corresponding global market. The link with other major overseas centres enables foreign exchange dealing to continue 24 hours a day round the world. With an average daily turnover of around US$61 billion in April 1992, 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 telecommunications system.

  Equally well established and active is the interbank money market which had an average daily turnover of HK$38 billion in November 1991. Wholesale Hong Kong dollar deposits and foreign currency deposits (mainly in US dollars) are traded both among authorised institutions in Hong Kong, and between local and overseas institutions. The interbank money 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. As an indication of the size of the market, at the end of 1992, Hong Kong dollar interbank liabilities accounted for 33 per cent of the total Hong Kong dollar liabilities of the banking sector and foreign currency interbank liabilities accounted for 77 per cent of total foreign currency liabilities of the banking sector.

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 fortnightly issues of 182-day bills in October 1990 and issues of 364-day bills every four weeks in February 1991. The bills are issued in paperless form for the account of the Exchange Fund and are used as a monetary market instrument. They are available in minimum denominations of HK$500,000 and are issued on a discount basis by tenders which are open to recognised dealers selected from institutions authorised under the Banking Ordinance. To promote secondary market activity, 22 recognised dealers have additionally been appointed as market makers. One of their obligations is to quote two-way yields for the bills during normal money market trading hours. At the end of 1992, outstanding issues of 91-day, 182-day and 364-day bills amounted to $12.5 billion, $4.5 billion and $3.4 billion respectively.

The Government Bond Programme launched in mid-November 1991 marked another significant development in the local capital markets. As with the Exchange Fund Bills Programme, both recognised dealers and market makers have been appointed under the bond programme. The bonds are available in minimum denominations of HK$50,000. They are issued in paperless form through tenders which are open to recognised dealers and market makers. Initially, two-year bonds have been introduced to provide continuity in the

FINANCIAL AND MONETARY AFFAIRS

maturity spectrum of the government debt market. Longer-term bonds may be issued later, having regard to the government's requirements and the development of the bond programme. At the end of 1992, outstanding value of the bonds stood at $3.0 billion. Unlike the Exchange Fund Bills which are issued for the purposes of creating an additional money market instrument to assist in maintaining exchange rates stability, the bonds are issued for the purposes of financing capital expenditure incurred by the government. The bond proceeds therefore are credited to the Capital Investment Fund and Capital Works Reserve Fund.

The local capital markets are also an important 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 come to tap the local capital markets. Some examples were the four issues of Hong Kong dollar bonds issued by the World Bank during 1989 to 1991; the Hong Kong dollar and US dollar bonds issued by the Asian Development Bank in November 1991, May 1992 and October 1992, as well as the Hong Kong dollar bonds issued by the International Finance Corporation in August 1992. All these issues have been well received by the market.

The stock market provides another important source of capital for local enterprises. It attracts both local and overseas investors. At the end of 1992, 413 public companies, with a total market capitalisation of $1,332 billion, were listed on the Stock Exchange of Hong Kong Limited. This has made Hong Kong the second largest stock market in Asia after Japan.

The Hong Kong Futures Exchange has offered futures contracts in sugar, soya beans, gold, Hang Seng Index and Sub-Indices and interbank interest rate. Trading in each of the Hang Seng Sub-Indices, - Commerce and Industry, Properties, Finance and Utilities - commenced in the second half of 1991. Helped by the active local stock market, trading in Hang Seng Index futures increased markedly during the year. Trading in soya beans futures and sugar futures ceased on March 1, and October 1, 1992 respectively. The Hong Kong Futures Exchange introduced trading in stock index options on March 5, 1993.

      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, weighed 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.

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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 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 concordant 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.

Following a review of the arrangements for the co-ordination of banking supervisors in the supervision of international banking groups, the Basle Committee issued in June 1992 a set of minimum standards that the G-10 countries have agreed to apply in the supervision of international banking groups and their cross-border establishments. These standards are designed to provide greater assurance that no international bank can operate in future without being subject to effective consolidated supervision. Hong Kong's authorisation and supervisory regime are already largely in conformity with these standards. To ensure full compliance with the new standards, changes were introduced in September to the criteria dealing with home supervision for bank licence applications from overseas incorporated banks. The home supervisor of a foreign applicant must have established, or be working to establish, the necessary capabilities to meet the minimum standards.

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 in securities transactions and the maintenance of a compensation fund to 58 compensate clients of defaulting brokers.

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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.

Two important components of the regulatory framework in Hong Kong are the Securities (Insider Dealing) Ordinance and the Securities (Disclosure of Interests) Ordinance, which were brought into operation in September 1991. The Securities (Insider Dealing) Ordinance provides much stricter penalties for insider dealing than those previously applicable. The Securities (Disclosure of Interests) Ordinance requires that company shareholders with 10 per cent or more of the voting shares of a listed company disclose their interests and dealing publicly and that directors and executives disclose certain dealings.

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 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.

The Office of the Commissioner of Insurance will assume responsibility for the regulation of private sector retirement schemes when the Occupational Retirement Schemes Ordinance is brought into operation in mid 1993. The object of the ordinance is to provide greater certainty that retirement benefits promised to employees will be paid when they fall due. The regulatory framework is based on the four guiding principles of separation of assets, sufficient funding, independent audit and disclosure of information. It is estimated that over 20 000 schemes will be registered within the prescribed two-year transitional period on commencement of the ordinance.

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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. The government is also in dialogue with the industry over the proposals for the self-regulation of insurance intermediaries (i.e. agents and brokers). 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 12 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.

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, 1992, the SFC had a total establishment of 225.

In its first three years of operation, the SFC has taken steps to develop a detailed framework of securities regulation that brings Hong Kong in line with inter-nation- ally-accepted standards of market regulation and practice. As part of this exercise, it has issued revised versions of the Code on Unit Trusts and Mutual Funds and the Code on Takeovers and Mergers. The revised versions bring the codes in line with the increasingly sophisticated investment environment and incorporate a number of features designed to deal with situations which are unique to Hong Kong. Two new Codes, a Code on Investment-Linked Assurance and Pooled Retirement Funds and a Code on Immigration-Linked Investment Schemes, have also been issued, enhancing the level of

PUBL

:

Preceding page: American singer Diana Ross appeared in concert at Hong Kong Coliseum.

Left and right: Illusionist David Copperfield amazes his Hong Kong audiences.

Right and below: The National Ballet of Canada, acclaimed as one of the world's finest classical ballet companies, danced at Hong Kong Cultural Centre.

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Left: French pianist Richard Clayderman is accompanied by his own orchestra.

Below: 'Spanish Passion' is the apt title of the entertainment presented by guitarist Paco Peña and his Flamenco Dance Company.

The world famous Vienna Boys' Choir.

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FINANCIAL AND MONETARY AFFAIRS

protection for investors of these funds within the framework of the Protection of Investors Ordinance.

The SFC has been encouraging the development of more efficient equity trading systems and a greater variety of securities and futures products. It has been working closely with the Hong Kong Securities Clearing Company in order to implement the proposed new automated book-entry central clearing and settlement system, which began clearing stock market transactions on a continuous net settlement basis in October 1992. The new clearing and settlement system is a major achievement for the Hong Kong market, allowing the development of an automated transaction and execution system (which is well underway), while at the same time improving settlement efficiency, enhancing risk management capability, and increasing trading capacity. In the first six months of 1992, capacity problems caused by the sharp increases in transaction volume on the Stock Exchange of Hong Kong highlighted the absolute necessity of a more modern system for clearing and settling trades, as well as the necessity for an automated trading system.

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 development 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. The SFC is also working on a rationalisation and updating of Hong Kong's legislative framework for securities and futures regulations into a coherent, well-organised and user-friendly body of securities law.

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.

      Foreign banks in Hong Kong tend to be the premier banks in their countries of incorporation and this is illustrated by the fact that 79 of the top 100 banks in the world in 1992 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

A mutual agreement was announced on February 19, 1992 by the Provisional Liquidator of the Bank of Credit and Commerce Hong Kong Ltd. (BCCHK) and the Hong Kong

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Chinese Bank to terminate negotiations on the Provisional Agreement for the transfer of the assets and recorded liabilities of BCCHK which had come into effect on November 22, 1991. The termination of the agreement was necessitated by the emergence of large claims from the liquidators of the various BCCI group operations in other parts of the world which could not be researched or evaluated within a time-frame consistent with the take-over of the business, and in the absence of a sufficient guarantee against unrecorded liabilities. It was deemed necessary by the Provisional Liquidator in the interests of preserving assets of the bank to seek an order for the liquidation of the bank as an early solution to the problem appeared unlikely. Subsequently, the High Court ordered the formal liquidation of the bank on March 2, 1992.

In July 1992, the Liquidator announced a Scheme of Arrangement which would enable any unsecured creditor whose claim was HK$100,000 or less to receive the full amount in priority, or to continue to rank for dividend pari passu if his claim was greater than HK$100,000 unless he elected to accept HK$100,000 in full satisfaction of his claim. A simple majority in number and 75 per cent in value of creditors who would be receiving less than full payment (i.e. those with deposits in excess of HK$100,000) voting in favour of the scheme was required by law.

The scheme was approved at a meeting of scheme creditors on September 1 and was formally approved by the Court on September 14 with no opposition lodged. Payment under the scheme to the 30 000 creditors owed $100,000 or less began on September 21, 1992, while the other large creditors owed more than $100,000 are being paid a first dividend of 41 per cent from the same date as their claims are adjudicated and admitted, and further payments will be made to them in the course of the liquidation when further assets are recovered. This represented an unprecedented bank liquidation in that 85 per cent of creditors by number received payment in full only six months after the winding-up order was made. This was made possible by the relatively high liquidity and asset quality of BCCHK which had been ringfenced from the rest of the BCCI Group by effective supervisory measures.

Following the closure of BCCHK in July 1992, there was renewed pressure for the introduction of a deposit protection scheme (DPS) in Hong Kong, principally for the protection of the interests of small depositors in the event of bank failures.

  To assess public opinion on the matter, a consultation paper was published in February 1992 inviting submissions by end of May. About 50 submissions from various organ- isations and individuals were received, and the views expressed were divergent. At the same time, other alternatives were also considered, including a proposal to afford priority claim to small depositors in the event of a bank liquidation. The Standing Committee on Company Law Reform was consulted at the end of October on the proposal. The Standing Committee gave its support to the concept. A decision was taken in January 1993 that a DPS should not be pursued, but instead legislative amendments should be sought to give effect to the proposal.

In 1992, the local financial scene was characterised by the following features. Firstly, the exchange rate of the Hong Kong dollar against the US dollar remained stable under the linked exchange rate system throughout the year. Secondly, local interest rates remained low and moved downward in line with the interest rates in the US. Thirdly, the growth rate of Hong Kong dollar domestic loans and advances slowed down during the year, while the growth in Hong Kong dollar deposits picked up strongly since the second quarter.

FINANCIAL AND MONETARY AFFAIRS

During 1992, the market exchange rate of the Hong Kong dollar against the US dollar moved within a narrow range of HK$7.72 and HK$7.78 to US$1. During the second quarter, the exchange rate of the Hong Kong dollar strengthened to around HK$7.73 in April from 7.78 at end-91. Such a move could have been triggered by the enthusiasm of foreign investors in the Hong Kong stock market. The exchange rate then moved around the range between HK$7.73 to 7.76 during May to August 1992. At the end of the year, it closed at HK$7.74.

Under the linked exchange rate system, the overall exchange value of the Hong Kong dollar, as measured by the effective exchange rate index, is influenced predominantly by the movements of the US dollar against other major currencies. Reversing the trend in the latter part of 1991, the US dollar rebounded strongly during the first quarter of 1992. The effective exchange rate index of the Hong Kong dollar rose from 109.2 at the end of 1991 to 113.2 on April 21. However, in the face of a slow recovery pace of the US economy and the substantial interest rate differential in favour of the European currencies, the US dollar weakened against other major currencies during the second quarter and the first part of the third quarter. In mid-September, the US dollar rebounded briefly amid the chaos in the foreign exchange market in Europe. Reflecting the movement of the US dollar, the effective exchange rate index fell from a high of 113.2 to 108.3 in early September before picking up to close the year at 114.2.

During the first four months of 1992, the three-month Hong Kong Interbank Offered Rate (HIBOR) generally stayed above the corresponding Euro-Dollar deposit rate. The HIBOR eased markedly in late April subsequent to two liquidity injections by the Exchange Fund on April 28 and 29. Overnight HIBOR dropped from 5.750 per cent on April 28 to 4.125 per cent on April 29 and the three-month HIBOR dropped from 4.625 per cent to 4.250 per cent. The interest rate gap between the three-month HIBOR and the corre- sponding Euro-Dollar was completely closed in mid-May. Since then, the former has fallen below the latter. In August, influenced by several large share flotation exercises, the three- month HIBOR firmed up and rose above the Euro-Dollar rate. But it fell below the Euro- Dollar rate again following a liquidity injection of HK$512 million into the system by the Exchange Fund on August 6. Since mid-September, the three-month HIBOR moved closely with the corresponding Euro-Dollar rates. Their average differential for 1992 was 0.13 of a percentage point, compared with the corresponding 0.29 percentage point recorded in 1991.

      During the year, in line with the movements in local money market interest rates, deposit rates administered by the Hong Kong Association of Banks were adjusted downward across-the-board on three occasions, by half of a percentage point on May 4, by one percentage point on May 25 and by another half of a percentage point on July 6.

       Hong Kong dollar deposits grew by 13.2 per cent during 1992, lower than the growth rate of 16.2 per cent in 1991 but was still broadly consistent with the growth in gross domestic product in money terms. On the other hand, the annual increase of foreign currency deposits slowed down to 6.3 per cent in 1992 from 8.3 per cent in 1991. 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 as a result of their slowing economies. Taken together, total customer deposits (in all currencies) increased by 9.3 per cent in 1992, compared with 11.6 per cent in 1991. The relative share of Hong Kong dollar deposits to total deposits rose to 45.5 per cent at end-1992, from 44.0 per cent at end-1991.

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  Hong Kong dollar M1, M2 and M3 rose by 24.8 per cent, 14.3 per cent and 13.7 per cent respectively in 1992. The corresponding increases for total M1, M2 and M3 were 21.1 per cent, 10.8 per cent and 9.5 per cent.

Hong Kong dollar loans recorded a growth of 12.2 per cent in 1992 while foreign currency loans increased by 9.0 per cent. Analysed by major categories, loans for use in Hong Kong (including those for trade financing) increased by 10.9 per cent. Reflecting measures announced by the government in November 1991 to cool down the overheated property market, growth in residential mortgage loans slowed down from 35.4 per cent in 1991 to 13.6 per cent in 1992. Moreover, banks generally maintained a tight credit policy on mortgage loans. In particular, the maximum loan-to-valuation ratio was kept at 70 per cent. The quarterly growth rate of these mortgage loans slowed down from 8.8 per cent in the second quarter in 1991 to an average of 4.0 per cent in the first two quarters of 1992. Loans for trade financing recorded a moderate decrease of 4.0 per cent during 1992. Loans to other major sectors, including wholesale and retail trades, building, construction, property development and investment, transport, manufacturing and financial concerns, all recorded some increases during the year.

  Turning to the financial markets, the expansion in the government borrowing programme facilitated the further development of the local capital markets. The Exchange Fund Bills market was expanded in February 1991 to include 364-day bills and the government bonds programme was first launched in November 1991. Both the bills and the government bonds were well received by the market with tenders invariably several times oversubscribed. The yields for the bills were around 20 to 60 basis points below the corresponding Hong Kong interbank offered rate at end 1992, depending on the maturity of the bills while the yields for the bonds were around 90 basis points above the corresponding US Treasury bonds. Daily turnover of the bills and bonds, taken together, in the secondary market averaged $8.2 billion, or 35 per cent of the total amount of bills and bonds outstanding, at $23.3 billion at end-1992.

  New issue activity in respect of other debt instruments in 1992 remained relatively moderate as funds can be raised through the buoyant stock market. A total of 99 new issues of negotiable certificates of deposit were launched during 1992, of which 87 were denominated in Hong Kong dollars. Of these 87 issues, 66 were arranged on fixed-rate terms and the remaining 21 on floating-rate terms. At the end of 1992, the outstanding value of Hong Kong dollar-denominated negotiable certificates of deposit amounted to $26.9 billion, compared with $23.2 billion at end-1991; 52.3 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 1992, five were denominated in Hong Kong dollars. Following a successful issue of US dollar bonds last year, the Asian Development Bank launched in May 1992 its first issue of Hong Kong dollar bonds, amounting to HK$500 million, which will mature in 1999. The Asian Development Bank launched another five-year Dragon bond issue in Hong Kong in October 1992 to raise US$300 million. These bonds are listed on the stock exchanges of Hong Kong, Singapore and Taipei. In August, the International Finance Corporation, a World Bank affiliate, also launched a maiden issue of five-year Hong Kong dollar bonds involving an issue size of HK$500 million.

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      In the local stock market, the shares prices gathered strong upward momentum since early 1992. Supported by favourable corporate results, the Hang Seng Index rose and rallied further in the second quarter. Continuing the upward trend established during the first two quarters and partly stimulated by the release of the impressive Exchange Fund size on July 15, local stock market prices rallied to 6 163 points on July 16. However since then the market underwent a period of consolidation. It then rebounded in early September and rose to a record high of 6 447 on November 12 before closing the year at 5 512, 28.3 per cent higher than the level at the end of 1991. The gain in the Hang Seng Index during the year of 28 per cent has outperformed those in many overseas stock markets. Average daily turnover in the local stock market increased notably to $2.8 billion in 1992, compared with $1.3 billion in 1991.

      The number of newly listed companies increased markedly to 64 in 1992, raising a total of $12 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 ($11.2 billion) and private placements ($26 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 the Hang Seng Index futures was more active. Daily turnover averaged 4 470 contracts in 1992, compared with 2 295 contracts in the preceding year.

      Trading in commodity futures and interest rate futures remained modest. For the year as a whole, total turnover in gold futures amounted to 1 000 lots (100 troy ounces each), while turnover in interest rate futures was 205 contracts. Due to decreasing turnover, the Hong Kong Futures Exchange decided to terminate the trading of soya bean contracts in April and sugar contracts in October 1992. Turnover in soya bean futures amounted to 4 688 lots (30 000 kg each) from January to March, while turnover in sugar futures amounted to 8 598 lots (112 000 lb each) from January to September.

The price of Loco-London gold moved within a narrow range between US$360 to US$331 in 1992. Partly affected by the chaotic situation in the European forex markets around mid-September, the price of Loco-London gold rose, from US$336 at mid-August to US$352 per troy ounce at mid-September and closed the year at US$333. The price of gold at the Chinese Gold and Silver Exchange Society showed similar movements. At the end of 1992, it was HK$3,078 per tael. Turnover on the exchange totalled 24 million taels in 1992, similar to the level in 1991.

      The number of unit trusts and mutual funds picked up to 900 at end-1992 from 854 at end-1991. Of the 112 newly authorised funds approved by the Securities and Futures Commission during the year, nine were China funds. Among the different types of funds, Hong Kong equity funds recorded the best performance in terms of investment return in the past year.

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, 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. In line with the resolution adopted by the United Nations Security Council on May 30, 1992, the Serbia and Montenegro (United

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Nations Sanctions) (Dependent Territories) Order 1992 came into force on June 5, 1992 imposing restrictions on a number of transactions with Serbia and Montenegro and persons connected with Serbia and Montenegro. Guidelines on the operation of the Order were also published on July 18, 1992.

Monetary Policy

A linked exchange-rate system was introduced on October 17, 1983 after a period of much instability in the exchange rate of the Hong Kong dollar. Under 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 to US$1. In practice therefore any increase in note circulation is matched by US dollar payment to the Exchange Fund, and any decrease in note circulation is matched by a US dollar payment from the Exchange Fund. The two note-issuing banks in turn extend this fixed exchange rate to their note transactions with all other banks in Hong Kong. In the foreign exchange market, the exchange rate of the Hong Kong dollar continues to be determined by forces of supply and demand. However, the 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 could be large enough to produce the corrective inflows or outflows, there therefore should ideally be no limit on how low or high interest rates can move.

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       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 in early 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 authorised institutions under the Banking Ordi- nance from the restriction 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 in maintaining exchange rate stability within the framework of the linked exchange rate system, the Accounting Arrangements were entered into in mid-July 1988 between the Exchange Fund and the Hongkong and Shanghai Banking Corporation Limited (HSBC) as the Management Bank of the Clearing House of the Hong Kong Association of Banks. Under these arrangements, HSBC 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 was previously 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.

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 con- ducting money market operations.

      In June 1992, the Liquidity Adjustment Facility was introduced to assist banks in making late adjustments to their liquidity positions. Bid rate (for taking overnight deposits from banks) and offer rate (for lending overnight money to banks) are set, having regard to the level of interest rate appropriate for maintaining exchange rate stability. These rates provide an additional tool for the government to influence the movements of the interbank interest rates.

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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. On December 31, 1978, the Coinage Security Fund was merged with the Exchange Fund.

  In 1976, the government began to transfer the fiscal reserves of its General Revenue Account (apart from the working balances) to the fund. 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 use of the Exchange Fund. They are repaid to the General Revenue Account when they are required 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 functions of the fund were extended on the enactment of the Exchange Fund (Amendment) Ordinance 1992 by introducing a secondary and subsidiary role of maintaining the stability and integrity of the monetary and financial systems.

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 1992, with details of its composition, is shown at Appendix 13.

   As at December 31, 1991 total assets of the fund stood at $236 billion, of which foreign currency assets amounted to US$29 billion. Accumulated earnings of the fund amounted to $99 billion. The financial position of the fund for the five years 1987-91 is shown at Appendix 13.

Establishment of the Hong Kong Monetary Authority

In order to maintain the continuity and professionalism in Hong Kong's monetary and reserves management and banking supervision, in a way which will command the

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confidence of the people of Hong Kong and the international financial community, the government announced its decision in October 1992 to seek to establish a Hong Kong Monetary Authority (HKMA). It is planned that the HKMA will be formed by merging the Office of the Exchange Fund with the Office of the Commissioner of Banking and headed by a Chief Executive. The use and management of the Exchange Fund would remain the statutory responsibility of the Financial Secretary although he would delegate his authority to the senior staff of the HKMA as appropriate.

      The HKMA would be an integral part of the government and it would initially be staffed mainly by civil servants. The HKMA would, though, be able to employ staff on terms different from those of the civil service in order to attract personnel of the right calibre, experience and expertise. The staff and operating costs of the HKMA would be charged directly to the Exchange Fund instead of to the general revenue, thus taking the HKMA outside the resource allocation constraints of other government departments.

The HKMA would be responsible for the development and execution of monetary policy; overseeing operation of both the money and foreign exchange markets and carrying out money market operations, whenever there is a need to do so, to maintain stability in the market; managing the assets of the Exchange Fund; developing the financial markets in Hong Kong; running the market for government debt; and supervising authorised institutions under the Banking Ordinance. The establishment of the HKMA would not entail the assumption of further central banking functions by the government. There is neither the need nor intention for the two residual central banking roles (i.e. bank notes issue and cheque clearing) to be assumed by the new body.

The HKMA would be accountable to the Financial Secretary, who would continue to be advised by the Exchange Fund Advisory Committee on matters relating to the control of the Exchange Fund. But reinforcing a trend over recent years, the involvement of the committee in monetary and investment matters would become much closer and the committee would function very much like a management board, including advising the Financial Secretary on the annual budget of the HKMA. To reflect the wider ambit of the fund and the increased responsibility of the committee, the membership of the committee would be suitably expanded to include additional distinguished members of the financial and related sectors.

       The Exchange Fund (Amendment) Ordinance 1992 providing for the establishment of the Monetary Authority was enacted on December 10, 1992. The ordinance also gave statutory recognition to the monetary policy objectives of Hong Kong. Apart from the primary use of the Exchange Fund to affect the Hong Kong dollar exchange rate, the ordinance made clear that the Financial Secretary could use the Exchange Fund to maintain the stability and the integrity of the monetary and financial systems of Hong Kong, with a view to maintaining Hong Kong as an international financial centre. This secondary purpose would be subordinate to the primary purpose of affecting the exchange value of the Hong Kong dollar. Should there be any conflict, the primary purpose would prevail.

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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 is to facilitate industrial and trade activities within the framework of a free market. It neither protects nor subsidises manufacturers. It never- theless 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 and Technology Development Council (ITDC). Members of the council include prominent industrialists and businessmen, academics, representatives of major industry and trade organisations, and government officers. The ITDC advises the government on the overall development of industry and technology in Hong Kong. To this end, it is assisted by the Technology Review Board and the Technology Committee. The role of the former is to review broad strategic directions in technology development having regard to global technology trends and the local circumstances, while that of the latter is to identify key enabling technologies deemed crucial to sustaining a competitive and healthy economy in Hong Kong. Industry specific committees have also been set up under the council. In addition, the council helps the government to administer the Applied Research and Development (R&D) Scheme which provides funding support to worthwhile applied R&D projects undertaken by 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 manu- facturing industries. Responsibility for providing an efficient infrastructure within which industry can operate successfully rests with a number of government departments and

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other organisations, but the responsibility for monitoring the adequacy of provision rests with the Industry Department.

      On the external relations front, Hong Kong joined the Asia Pacific Economic Co-operation (APEC) forum in November 1991. APEC is an inter-governmental economic 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, Chinese Taipei and the six countries of the Association of South-East Asian Nations (ASEAN). Hong Kong became a full member of the Pacific Economic Co-operation Conference (PECC) in May 1991. PECC is a non- governmental organisation comprising tripartite membership drawn from academia and private and public sectors, seeking to develop closer cooperation on trade and economic policy issues within the Asia Pacific region.

In the industrial field, although total employment in manufacturing fell by 13 per cent in 1992 from the previous year's figure, the total value of Hong Kong's manufactured exports rose by one per cent, compared with an increase of two per cent in 1991. 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 1992.

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. In this respect, the Hong Kong Productivity Council continued to feature in the past year as the government's principal agent in helping the manufacturing sector improve its productivity and move up the value-added ladder. With its expertise in different disciplines, the council offers diversified services including management consultancies, training programmes and technological support services.

At the same time, 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. In addition, the Hong Kong Quality Assurance Agency (HKQAA) has been established to provide third party assess- ment of companies' quality management systems according to the ISO 9000 standards and to award ISO 9000 certification to companies that meet the necessary standards. These quality improvement activities have helped to enhance the quality of Hong Kong's products and services.

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Science and Technology

 Science and technology are transforming the way that business is conducted in all areas of economic activity. Constant advancement in science and technology is essential to Hong Kong's continued prosperity. To ensure that Hong Kong can respond to the rapidly changing technological environment and to underline the vital connection between industry and technology, the Government established in early 1992 an Industry and Technology Development Council (ITDC), which replaced the Industry Development Board and the Committee on Science and Technology. With its expanded terms of reference and a more focussed and co-ordinated approach, this new council is better placed to advise the Government on the overall development of industry and technology in Hong Kong.

  Hong Kong has a skilled workforce, ready access to information and technology from overseas, and a sound infrastructure to take advantage of opportunities in technology- based industries. The government is investing substantially in infrastructure to support the use and development of technology in Hong Kong. The key elements of this infrastructure include the provision of education and training in science and technology; the provision of land at development cost to high technology industries; the provision of services and facilities to help manufacturers acquire new technologies; the provision of funding support to applied research and development in industry; and the promotion of technology transfer through inward investment.

  In June 1992, in recognition of the need for Hong Kong to improve its technological infrastructure, the Industry Department commissioned a study to examine the case for establishing a science park in Hong Kong. The study was completed in November 1992.

The government has also released a $250 million grant and committed another $188 million as an interest bearing 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 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 mid-1994.

Electronic Data Interchange

Electronic data interchange, the computer to computer exchange of business information in a standard format, is one of the techniques being implemented worldwide in an attempt to curb the amount of paperwork involved in business and to improve efficiency.

  Hong Kong's use of electronic data interchange has expanded considerably during the last few years. The government is keen to encourage this trend as electronic data interchange is seen as an important means of maintaining Hong Kong's competitiveness in international markets.

A particularly important area is the processing of statutory trade documents, such as the lodgement of trade declarations and applications for import and export licences. Following a joint study with Tradelink Electronic Document Services Limited, a group of 11 leading trade-related organisations in Hong Kong, the government agreed to take a substantial shareholding in the company. Tradelink, with government as one of its shareholders, will fund and manage a Community Electronic Trading Service. The service will act as

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the electronic gateway between the trading community and the relevant government departments, checking and validating electronic submissions before passing them through for approval.

     Tradelink will also establish way for non-computer users to access the service. In this way, both government and the wider trading community can enjoy the full benefits of electronic data interchange as rapidly as possible. An initial service is expected to commence in mid-1994. The service will bring about a significant increase in the number of companies using electronic data interchange and will help generate more demand for other electronic trading services.

In the interest of compatibility, the government agreed that the United Nations Electronic Data Interchange for Administration, Commerce and Transport, a standard language developed by the United Nations for electronic trading, will be adopted for government transactions wherever applicable.

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 8.0 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 1992 was $234,123 million, and its major export markets were the United States (27.6 per cent), China (26.5 per cent), Germany (6.8 per cent), and the United Kingdom (5.4 per cent). In 1991, the territory was the world's largest exporter (including domestic exports and re- exports) by value of clothing and toys and games, and the second largest exporter of watches.

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 were 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 571 181 (23.3 per cent) in 1992, and its contribution to the Gross Domestic Product (GDP) fell from 24.1 per cent in 1984 to 15.5 per cent in 1991. During these years manufacturers took advantage of China's open door policy to shift labour-intensive jobs into China to reap the benefits of the lower land and labour costs there. Manufacturing is now the territory's second largest employer, and makes the third largest contribution to GDP after financial and business services.

      There were 41 937 manufacturing establishments in Hong Kong in 1992, of which 36 381 employed fewer than 20 persons, and 39 882 fewer than 50 persons. The remaining 2 055 establishments accounted for more than half Hong Kong's total manufacturing employ- ment. 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.

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Clothing

The clothing industry is the largest employer and export-earner. In 1992, it employed 186 743 workers (33 per cent of total manufacturing employment) and earned $77,156 million in exports (33 per cent of Hong Kong's total domestic exports). 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 1992, it employed 60 653 workers (11 per cent of total manufacturing employment), and earned $60,291 million in exports (25.8 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. It comprises four main sectors: spinning, weaving, knitted fabrics manufacturing and finishing. In 1992, it employed 53 204 workers (nine per cent of total manufacturing employment), and earned $17,226 million in exports (7.4 per cent of total domestic exports). On top of its role as an exporter, the textiles industry is a major supplier of yarns and fabrics of various fibres and blends (mostly cotton) to the local clothing manufacturers who are actually the textiles sector's largest customer.

Watches and Clocks

In 1992, the watches and clocks industry employed 18 995 workers (three per cent of total manufacturing employment) and earned $15,476 million in exports. Besides complete electrical and mechanical watches and clocks, the industry also produces high quality components and accessories. The world's first water watch was manufactured in Hong Kong in 1987.

Plastics

 In 1992, the plastic products industry employed 35 347 workers (six per cent of total manu- facturing employment), and earned $7,508 million in exports (3.2 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

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publications. Considered as a separate industry, the toys industry employed 15 617 persons in 1992, and earned $3,723 million in exports. The manufacture of plastic toys accounted for 77 per cent of employment in the toy industry and 70 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 benefited the manufac- turing 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-1991, there were 536 manufacturing companies in Hong Kong with overseas investment. The total value of direct overseas investment was $34,399 million, and the 536 companies concerned employed 80 736 workers (12.8 per cent of total manufacturing em- ployment) and accounted for 25 per cent of Hong Kong's total domestic exports. The main sources of investment were Japan (32 per cent), the United States (28 per cent), China (11 per cent), and Australia (six per cent). More than three-fifths of this investment was con- centrated in five industries: electronics (32 per cent), electrical products (13 per cent), textile and clothing (nine per cent), tobacco (five per cent) and chemical products (five 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 support is needed. In 1992, studies were conducted on the metals and light engineering industries, textiles and clothing industries and on the pace of industrial automation in Hong Kong. The department also conducts annual surveys to estimate the value of overseas investment in Hong Kong's manufacturing industries, and to assess the investment climate in the manufacturing sector.

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 293 visits were made by engineers of the IES, and 67 referrals were made to organisations which could help to solve the problems encountered by the companies concerned. In a number of other cases IES engineers dealt with the problems themselves.

     Another major responsibility of the Industry Department is to monitor the availability of land and trained manpower for industry. Industrial land is normally sold by public

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auction or tender. Land can be sold on special terms where industries are land and capital intensive, or use advanced technology, and where their presence is considered to be economically desirable.

Two industrial estates in Tai Po and Yuen Long have been developed and managed by the Hong Kong Industrial Estates Corporation to accommodate manufacturing processes which employ advanced technology and which cannot be carried out efficiently in ordinary multi-storey buildings. Construction of a third industrial estate at Tseung Kwan O began in August 1991. The first phase with 18 hectares of serviced sites will be available by early 1994. A total of 68 hectares of industrial land will be provided upon completion of site formation work over the rest of the area in early 1995.

Additional land and accommodation were also made available for industry during the year. The government put up for sale by auction or tender 11 pieces of industrial land with a total area of 46 942 square metres, and about 545 000 square metres of flatted factory space were completed by private developers.

  Regarding manpower training for industry, technical education and industrial training is available in eight technical institutes and three industrial training centre complexes run by the Vocational Training Council. In addition, the Clothing Industry Training Authority also runs two training centres. To further strengthen manpower training, the Vocational Training Council has decided to convert the Chai Wan Technical Institute into a Technical College and build a new Technical College at Tsing Yi. Both of these are scheduled to commence operation in 1993-4. Technological training at higher levels is provided in Hong Kong's two polytechnics and three universities.

In June 1992 the New Technology Training Scheme was launched. This is providing financial assistance to employers to train, either locally or overseas, their technologists and managers in new technologies strategically important for industrial and economic develop- ment. The scheme is administered by the Vocational Training Council and assistance is provided by the Industry Department and the Hong Kong Productivity Council.

During the year the Industry Department played an active role in assisting local manufacturers to comply with environmental measures. In March 1992, the department commissioned a consultancy study on support to industry on environmental matters. The objective of the study is to assess the effects of current and planned environmental legislation on manufacturing in Hong Kong, to identify any weaknesses in the prevailing support mechanisms and to recommend a coherent support strategy. The study is scheduled to be completed by March 1993. The Department also published in March 1992 a booklet entitled 'A Guide to Pollution Control Legislation Affecting Manufacturing Industries 1992'. This will assist manufacturers by providing them with basic information on environmental legislation and where technical advice can be obtained. This booklet will be published annually.

The department was also actively involved in a number of environmental measures outlined in the 1989 White Paper on Pollution in Hong Kong. The department's role is to liaise closely with the concerned industrial organisations to ensure that they are fully aware of the government's proposals on environmental issues and to take their views into account when commenting on the implications of the proposals for Hong Kong's manufacturing industry. Issues covered during the year included the proposed controls on the handling and disposal of chemical waste under the Waste Disposal Ordinance; the proposals for the Chemical Waste Treatment Centre; the extension of MARPOL Annex III (an international

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convention for the prevention of pollution of marine water by ships) to Hong Kong; and Air Pollution Control (Amendment) Bill.

Promoting inward investment in Hong Kong's manufacturing industries is another important area of the Industry Department's work. The department 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, involving the manufacture of polystyrene and compact discs respectively, 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 Hong Kong Government Standards and Calibration Laboratory 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 and informa- tion to manufacturers on both national and international standards affecting their products. The bureau also maintains a reference library of the national standards issued by Hong Kong's trading partners and the international standards published by the International Organisation for Standardisation (ISO) and the International Electro- technical Commission (IEC). To improve the storage and retrieval of product standards information, a direct computer link with the databases of overseas standards institutions and a computerised information retrieval system have been established.

The Industry Department also operates the Hong Kong Laboratory Accreditation Scheme (HOKLAS), designed to improve the standard of testing and management in Hong Kong's laboratories and provide official recognition for those assessed as competent. HOKLAS has so far accredited 43 laboratories for testing such items as toys, textiles, electrical and electronic goods, food and construction materials. Several laboratories were accredited in 1992 in the important field of environmental 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, the American Association for Laboratory Accreditation and 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 and issued with a HOKLAS endorsed test report 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.

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  Since Hong Kong's economy is heavily dependent on exports, higher quality in production will increase its competitiveness in the market place. 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 9000. An independent subvented organisation, the Hong Kong Quality Assurance Agency, was established in 1990 to audit factories for the award of certificates. Response to the scheme has been very enthusiastic, involving both manufacturing and service sector companies.

The Governor's Award for Industry, established in 1989, rewards and recognises outstanding achievements in industrial competitiveness. In 1992, the number of award categories was increased from four to six. 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 Manufac- turers' Association of Hong Kong for machinery and equipment design; the Hong Kong Productivity Council for productivity; the Industry Department for quality; the Private Sector Committee on the Environment for environmental performance; and the Hong Kong Trade Development Council for export marketing.

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 21 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 16 operational divisions: Computer Services, Electronics Services, Engineering Services, Systems and Organisation, Computer-Aided Design Services, Chemical and Metallurgy, Manufacturing Engineering, Textiles and Apparel, Industrial Consultancy, Training, Environmental Management, Information Services, Development and Administration, Public Relations, Marketing and Accounting.

   The HKPC moved to its new building in Kowloon Tong in February 1991. The new HKPC building places all the council'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 finishing and industrial chemistry laboratories, an environmental management laboratory, sheet metal processing, precision machining and die casting laboratories.

   There was a growing demand during the year for HKPC's consultancy and technical support services. The council undertook 1 120 consultancy projects, including feasibility studies, production management, new plant projects, environmental management, quality

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     management, product design and development, and industrial automation services. It completed 2 100 laboratory-based assignments.

To facilitate the transition to high value-added products, HKPC invited local companies to join consortia to share the design and development costs of new products, namely a notebook computer, a 900-megahertz indoor cordless telephone and a palmtop computer. Thirty companies took part in these projects.

      The HKPC organised 622 training courses for 11 900 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 114 programmes were organised during the year to meet the specific training needs of individual companies.

Eight overseas study missions were organised during the year for local industrialists to gain first-hand information on the latest technology in various areas, including precision machining, textile machining and clothing manufacturing technology, quality control circles, total quality control and just-in-time systems, die casting technology, wastewater treatment technology and environmental and pollution control technology.

      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 three regional seminars on managerial productivity, industrial pollution control and strategic information technology management. In addition, HKPC hosted the 32nd Workshop meeting of Heads of National Productivity Organisations in February 1992.

Hong Kong Industrial Estates Corporation

Hong Kong Industrial Estates Corporation is responsible for developing and managing industrial estates in Hong Kong. It offers developed land in its industrial estates at cost to companies with new or improved processes and products which cannot operate in multi-storey factory buildings. The corporation now has two industrial estates in the New Territories, at Tai Po and Yuen Long. A third is under construction at Tseung Kwan O. 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.

      Currently, 108 factories are operating in the Tai Po and Yuen Long Estates while more are being built. On the Tai Po Estate, which has 73 hectares of industrial land, only one site of about 1.6 hectares is vacant. The Yuen Long Estate has 67 hectares of land in total, of which 22 hectares are still available for leasing. The land premia are $1,650 and $1,500 per square metre for Tai Po and Yuen Long respectively.

       Construction of a third industrial estate at Tseung Kwan O began in August 1991. The first phase will be completed by early 1994, making available 18 hectares of serviced sites. A total of 68 hectares of industrial land will be provided in early 1995. This new industrial estate is only three kilometres from the centre of the Tseung Kwan O New Town. Water- front sites and berthing facilities will be available for ocean-going ships. Applications for sites on this new estate are now being invited and the initial land premium has been fixed at $1,700 per square metre.

      The corporation's estates are held under leases from the Hong Kong Government. In accordance with the Sino-British Joint Declaration, such leases have been extended from

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1997 to 2047. The corporation in turn grants sites also up to 2047 to enable investors to plan with certainty.

External Trade

Hong Kong is among the top 10 traders in the world. Overall, its trade is normally in balance and in 1992 it showed a deficit. Its largest trading partner is China, followed by the United States and Japan. Its external trade was generally buoyant in 1992. Total merchandise trade amounted to $1,880,248 million, an increase of 22 per cent over 1991. Imports rose by 23 per cent to $955,295 million. Domestic exports and gross total value of re-exports increased by one and 29 per cent to $234,123 and $690,829 million respectively; together they represented an increase of 21 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 5.9 million and its diverse industries. In 1992, imports of consumer goods, valued at $394,543 million, constituted 41 per cent of total imports. The major consumer goods imported were: clothing, ($80,078 million); radios, television receivers, gramo- phones, records, amplifiers and tape recorders, ($47,662 million); footwear, ($31,689 million); baby carriages, toys, games and sporting goods, ($31,145 million); and travel goods, handbags and similar containers, ($18,883 million).

Imports of raw materials and semi-manufactured goods totalled $329,950 million, repre- senting 35 per cent of total imports. The principal items imported were transistors, diodes, semi-conductors and integrated circuits, ($43,602 million); woven fabrics of man-made fibres, ($30,609 million); plastic materials, ($29,262 million); iron and steel, ($15,523 million) woven cotton fabrics, ($15,131 million); and watch and clock movements, cases and parts, ($14,418 million).

Imports of capital goods amounted to $167,798 million, or 18 per cent of total imports. Imported capital goods consisted mainly of electrical machinery, ($21,928 million); trans- port equipment, ($17,514 million); office machines, ($16,612 million); scientific, medical, optical, measuring and controlling instruments and apparatus, ($6,709 million); and textile machinery, ($6,279 million).

Imports of foodstuffs were valued at $45,351 million, representing five per cent of total imports. The principal imported food items were fish and fish preparations, ($10,728 million), fruit, ($6,604 million); meat and meat preparations, ($5,398 million); and vegetables, ($4,485 million).

Mineral fuels, lubricants and related materials, worth some $17,653 million were imported in 1992, representing two per cent of total imports.

China and Japan were principal suppliers of imports, providing 37 per cent and 17 per cent respectively of the total. China alone supplied 32 per cent of Hong Kong's imported foodstuffs. Taiwan ranked third, providing nine per cent, followed by the United States, the Republic of Korea, Singapore, Germany and the United Kingdom.

Exports

Clothing remained the largest component of domestic exports, valued at $77,156 million or 33 per cent of the total. Exports of miscellaneous manufactured articles consisting

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mainly of jewellery, goldsmiths' and silversmiths' wares, plastic toys and dolls, and plastic articles were valued at $22,152 million, representing nine per cent of domestic exports. Exports of office machines and automatic data-processing equipment valued at $20,530 million, contributed another nine per cent to the total. Electrical machinery, apparatus and appliances mainly of household-type appliances, transistors and diodes amounted to $20,138 million or nine per cent of the total. Photographic apparatus, equipment, supplies and optical goods, watches and clocks were valued at $18,879 million (eight per cent of the total). Other important exports included textiles (seven per cent) as well as telecom- munications and sound recording and reproducing apparatus and equipment (six 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 1992, 46 per cent of all domestic exports went to the United States and the European Community. The largest market was the United States, ($64,600 million or 28 per cent of the total); China, ($61,959 million or 26 per cent); Germany, ($15,956 million or seven per cent); and the United Kingdom, ($12,541 million or five per cent). Domestic exports to Japan and Singapore increased to $10,997 million and $10,360 million respectively. Other important markets were Taiwan, Canada, the Netherlands and France.

Re-Exports

     Re-exports showed a very significant increase in 1992. Their gross total value accounted for 75 per cent of the combined total of domestic exports and re-exports. Principal commodities re-exported were miscellaneous manufactured articles, ($97,316 million); clothing, ($78,095 million); textiles, ($67,744 million); telecommunications and sound recording and reproducing apparatus and equipment, ($55,763 million); electrical machinery, apparatus and appliances, ($53,746 million); as well as footwear ($35,327 million). The main origins of these re-exports were China, Japan, Taiwan, the United States and the Republic of Korea. Largest re-export markets were China, the United States, Japan, Germany 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 ensure the conduct of trade in a non-discriminatory and stable manner. 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 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.

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

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international trade in textiles, provides the framework within which Hong Kong negotiates bilateral restraint agreements with textile importing countries.

GATT

 Hong Kong is the world's 10th largest trading entity in terms of the value of its merchandise trade. Given the externally-orientated 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 the 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. The draft final package of agreement reached in late 1991 was used as a basis for further negotiation and progress was made in various negotiating areas although some major problems remain unsolved.

  Hong Kong has continued to work 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 disciplines. Hong Kong has played a pivotal role in forging consensus on the extension of the MFA, aimed 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 textile exports to Austria, Canada, the European Community (EC), Finland, Norway and the United States.

In September 1991, the United States Government published new classification guide- lines for knitted tights for women. The Hong Kong Government considered that the guide- lines amounted to a reclassification of the products concerned as trousers. Consultations were held between the two governments from November 1991 to July 1992. A settlement was subsequently reached in July 1992 with quota adjustments for women's and girls' cotton and man-made fibre trousers.

  Pursuant to the Canadian proposal to introduce a new textile categorisation system based on the Harmonised Commodity Description and Coding System, three rounds of con- sultations were held between Hong Kong and Canada. Agreement was reached in October 1992 and the new Canadian categorisation system was implemented on January 1, 1993.

  The bilateral textiles agreement with Norway expired in June 1992. Consultations in March 1992 resulted in a new 18-month Hong Kong/Norway Textiles Agreement from July 1, 1992 to December 31, 1993 with reduction in restraint and respectable improvements in growth. The number of categories under restraint was cut from five to three. In December 1992, Hong Kong also reached agreement with Austria on an eleven months' extension of the current Hong Kong/Austria textiles agreement which expired in January 1993. The new agreement, which represents meaningful improvements in market access over the current agreement, will be automatically extended to end-1994 if the Uruguay Round Agreement is not in force by January 1, 1994.

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The bilateral textiles agreement with the EC expired at the end of 1992. Consultations in early November 1992 resulted in the extension of the agreement for two years up to December 31, 1994 extendable until end-1995. The new agreement will automatically terminate upon the entry into force the Uruguay Round Agreement. The terms of the new agreement are basically the same as those of the previous one but with regional restrictions removed.

Non-Textiles Issues

In September 1992 the EC initiated new anti-dumping proceedings against Hong Kong companies in respect of 3.5" magnetic floppy discs. The case is under investigation by the EC Commission.

The relatively uncertain developments in trade relations between the United States and China have cast a shadow over Hong Kong's economic well being. The areas of concerns include, inter alia, the uncertainty of renewal of China's most-favoured-nation (MFN) trading status and the US market access 301 action against China. The failure of the Senate to override the Presidential veto of the MFN conditionality bill as well as the successful conclusion of the market access negotiations between the United States and China are welcome news to Hong Kong. Nevertheless, the United States has to renew MFN trading status for China annually under the present United States laws. The Hong Kong Government and the private sector will continue to emphasise to the United States Administration and Members of Congress as well as the Chinese authorities the adverse effects on Hong Kong's economy that withdrawing or conditioning of China's MFN status will bring about.

      In December 1991, Turkey completed its anti-dumping investigation in respect of woven cotton fabrics originating from Hong Kong and decided that no anti-dumping duty should be levied.

In 1992, the Mexican authorities initiated anti-dumping proceedings against Hong Kong companies in respect of woven cotton fabrics, excluding denim, and candles originating from China and re-exported from Hong Kong. The investigation against woven cotton fabrics, excluding denim, was subsequently terminated in December 1992 because the Mexican authorities found that there was insufficient evidence to establish the existence of dumping. The case for candles is still under investigation by the Mexican authorities.

      The Mexican authorities have completed investigation initiated in 1991 against Hong Kong in respect of tableware and kitchenware of ceramic, porcelain or china originating from China and re-exported from Hong Kong. Final compensatory rates of 26 per cent of the declared import price for porcelain or china and 23 per cent for ceramic on tableware/ kitchenware originating from China, regardless of the country of re-export, were imposed.

In November 1992, the Mexican authorities initiated a review on the final resolution made in September 1991 to impose anti-dumping duties on imports from Hong Kong of denim of 85 per cent cotton or more. The review is in progress.

In March 1992, the New Zealand authorities initiated an anti-dumping investigation against Hong Kong companies in respect of certain men's footwear. No evidence of material injury caused by the importation of the goods from Hong Kong could be established and the proceedings were terminated.

      In April 1992, the New Zealand authorities initiated another anti-dumping investigation against Hong Kong companies in respect of certain non-leather women's footwear

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originating from China and re-exported from Hong Kong. Final duties equal to the amount by which the normal value exceeded the value for duty of the footwear when entering for home consumption in New Zealand were imposed in September 1992.

  In August 1992, the South Korean authorities initiated anti-dumping investigation against Hong Kong companies in respect of phosphoric acid originating from China and re-exported from Hong Kong. Provisional duties were imposed in October 1992.

  In September 1992, the Australian authorities initiated anti-dumping proceedings against Hong Kong companies in respect of plastic cutlery. The case is under investigation by the Australian authorities.

  In all these cases the Hong Kong Government 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 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.

  The department's work is assisted by eight overseas Hong Kong Government Offices administered by the Trade and Industry Branch of the Government Secretariat.

Hong Kong Representation Overseas

The Trade and Industry Branch oversees offices in Geneva, Brussels, London, Washington, New York, San Francisco, Toronto and Tokyo, mainly to safeguard and advance Hong Kong's economic and commercial interests overseas. (Address details are at Appendix 6.) 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.

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The Geneva Office represents Hong Kong as a contracting party to the 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 that are 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 that might affect Hong Kong's economic and trading interests in general. The Toronto Office does something similar in respect of Canada. The Tokyo Office conducts similar activities in Japan, looking after Hong Kong's commercial, economic and public relations interests there.

      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 monitor 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 21.)

The Brussels, London, New York, San Francisco and Tokyo offices also contain Industrial Promotion Units which promote direct investment in manufacturing. The Washington, New York and San Francisco offices also assist in the recruitment of administrative officers from the United States and Canada. The London and Toronto Offices act as a point of contact for Hong Kong Chinese communities (including Hong Kong students) in the United Kingdom and Canada respectively and provide advisory services and assistance to them as appropriate. The London Office also undertakes recruitment in the United Kingdom of civil servants for the Hong Kong Government. The Marine Adviser based in London is Hong Kong's permanent representative to the International Maritime Organisation. 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.

Hong Kong Trade Development Council

The Hong Kong Trade Development Council (TDC) is the territory's statutory body responsible for promoting and developing Hong Kong's trade. As the marketing arm for local manufacturers, exporters and importers, it plays a vanguard role in opening new or difficult markets for Hong Kong companies and in helping them to increase market share. It also publicises business opportunities in Hong Kong.

      The council's chairman is appointed by the Governor. The other 18 members include representatives of major trade associations, leading businessmen and industrialists, as well as two senior government officials. Seven specialised Industry Advisory Groups, with a

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membership of more than 200, provide a direct link between TDC and the business community it serves.

  Established in 1966, the council is headquartered in the Hong Kong Convention and Exhibition Centre and has 33 branch offices in 24 countries. For the convenience of local users, it also operates TDC Datashops in Tsuen Wan, Kwun Tong, Mong Kok and Central. Another datashop will be opened in Tsim Sha Tsui.

  All TDC offices locally and overseas handle trade enquiries, provide up-to-date trade and economic information, and market intelligence. Through a computerised Trade Enquiry Service, which is on-line to its global network of offices, the TDC 'matchmakes' buyers with sellers. There are 48 000 Hong Kong manufacturers and exporters registered in the TDC database, along with 215 000 overseas buyers and importers. The Trade Enquiry Service handled more than 300 000 overseas and local trade enquiries in 1992. The council also operates Hong Kong's largest electronic information network, TDC-Link. Its 2 000 subscribers are able to access the TDC's business information databank from their office or home computer.

  More than 240 major international trade promotion projects were organised by the TDC in 1992. Among them were the European Watch, Clock and Jewellery Fair in Basel, the Berlin International Audio and Visual Fair, the International Toy Fair in Nuremburg, the Tokyo Toy Show and the Japan Electronics Show. The TDC also participated in many important fairs in the United States, including the Summer Consumer Electronics Show in Chicago, the Winter Consumer Electronics Show in Las Vegas, and the American International Toy Fair in New York.

  To strengthen Hong Kong's position as a regional business hub, the TDC is developing Hong Kong as Asia's convention and trade fair capital. In 1992 it staged 16 trade fairs and consumer expos at the Hong Kong Convention and Exhibition Centre. These included Hong Kong Fashion Week, the Hong Kong Toys and Games Fair, the Hong Kong International Jewellery Show, the Hong Kong Book Fair, Food Expo and Hong Kong Showcase. The TDC's Exhibition Services Centre in Yuen Long continued to design and construct exhibition stands for the council's local trade fairs, and provide special designs and contracting services for other fairs.

  As a matter of priority, the TDC is helping Hong Kong manufacturers upgrade their products and encouraging them to market their brand names locally. In 1992 the council expanded its popular TDC Design Gallery, a retail outlet which is located in the Hong Kong Convention and Exhibition Centre. It increased the range of products for sale and intensified the promotion of Hong Kong brand labels. Design Gallery outlets were also opened in four Wing On department stores, in Sheung Wan, Central, Tsim Sha Tsui and Mong Kok.

  The TDC's Research Department published more than 70 special market surveys and detailed product reports in 1992, identifying specific opportunities for Hong Kong products in overseas markets. TDC's research unit also organised export management and practical training courses for local executives, as part of an ongoing programme.

  The TDC publishes a total of 10 product magazines. In 1992 the TDC reaffirmed its position as one of Hong Kong's biggest trade publishers by setting new world records. The 1356-page January 1992 issue of Hong Kong Toys was accepted in June by the London-based Guinness Book of Records as the 'Largest Periodical' title in the 1993 edition. This was subsequently eclipsed by the TDC's flagship product publication, Hong Kong Enterprise, whose October issue had 1 374 pages. Besides, the council produces Hong

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Kong Apparel, Hong Kong Garments and Assessories, Hong Kong Jewellery Biannual, Hong Kong Watches and Clocks, Hong Kong Household, and Hong Kong Gifts and Premiums biannually, the quarterly Hong Kong Electronics and the annual Hong Kong Optical. Together, these product magazines reach an audience of two million buyers, importers and business decision-makers in more than 100 overseas markets. The TDC's monthly newspaper Hong Kong Trader is circulated by airmail to target readers around the world, as well as the business class travellers on selected airlines. The TDC also distributes Hong Kong For the Business Visitor, which it publishes in eight languages.

      The TDC's international network of contacts includes 19 Hong Kong Business Associations whose 7 000 members are business leaders in their own communities. They provide strong endorsement of the advantages of Hong Kong as a business partner. The TDC's Overseas Associations Section also administers the Hong Kong/United States Economic Co-operation Committee and the Hong Kong-Japan Business Co-operation Committee. They are high-level committees of business and government leaders.

To further develop Hong Kong's external trade relations, the TDC organises visits to overseas markets by Hong Kong economic missions and business groups. These missions and groups visit both established and emerging markets and their activities range from calls on government leaders, press interviews and speeches at business seminars, to the staging of product exhibitions. The TDC also organises and receives inward business missions from overseas markets. These numbered more than 440 in 1992.

Hong Kong Export Credit Insurance Corporation

The year 1991 marked the 25th anniversary of the Hong Kong Export Credit Insurance Corporation (ECIC), which is a statutory corporation established in 1966 to provide insurance protection to exporters and manufacturing exporters against the risk of monetary loss arising from non-payment by their overseas buyers for goods exported and services rendered on credit which are not normally covered by commercial insurers. The maximum percentage of indemnity against country and buyers risks is 90 per cent.

The ECIC's paid-up capital of $20 million was provided by the government which also 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. Within the limits of the Hong Kong Export Credit Insurance Corporation Ordinance, Chapter 1115, the corporation 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 from the business sector and representatives from the government.

In 1991, the corporation continued to work hard to improve its services to exporters and manufacturers under the leadership of a new Commissioner. Following a series of meetings with bankers, policyholders, trade associations and staff of all levels, guidelines and manuals on operations and management have been revised and updated to improve the efficiency and productivity of the ECIC. Studies have been undertaken with a view to widening the scope of insurance cover, introducing new facilities, reducing premiums and giving premium rebates.

During 1991-2, the ECIC underwrote $15,291 million and received premiums amounting to $90 million, both being increases of 11 per cent over 1990-91. It paid out $39 million as gross claims. The excess of income over expenditure was $28 million in the year 1991-2.

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Being a member of the International Union of Credit and Investment Insurers (Berne Union), ECIC has regular access to confidential and updated economic and market information on all major trading countries. The corporation stays close to exporters and manufacturers in order to understand their needs. It holds seminars for banks, trade associations and individual exporters.

The ECIC's activities fall into three main categories. The first category 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 non-payment due to buyers' insolvency and default, war or civil disturbance and transfer delays. Cover can also be extended to outward processing operations against confiscation and non-repatriation of raw materials, work-in-progress and finished products. For export of capital goods and services sold on medium or long-term credits, the ECIC can provide tailor-made insurance policies.

The second category of ECIC's activities is the provision of credit advisory services to its policyholders. On request by a policyholder, the corporation will investigate the prospective buyer's creditworthiness, having regard to the market trading environment and the terms of payment of the proposed transaction, and advise the policyholder on the amount of credit that can be prudently extended to the overseas buyer.

Finally, the ECIC provides a risk management service when a policyholder experiences payment problems. 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 Com- merce. Other important organisations include 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 Watch and Clock Council, Hong Kong Electronics Industry Council, Hong Kong Plastics Industry Council and the Hong Kong Mould and Die Council. It also runs an annual Young Industrialist Award of Hong Kong 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

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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 provides trade information, 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 materials and product testing, pre-shipment inspection and technical consultancy services. The CMA also organises various seminars and training courses and operates two pre-vocational schools to provide technical education and training for more than 2 200 students. The CMA provides scholarships annually to outstanding students of technical colleges and post-secondary institutions. Since 1989, the CMA has been appointed by the government to organise the machinery and equipment design award category of the Governor's Award for Industry.

The Hong Kong General Chamber of Commerce is the oldest internationally-recognised trade association in Hong Kong and one of the 10 largest chambers in the world. Founded in 1861, its membership of over 3 100 member companies is representative of every sector of commerce and industry. The chamber organises trade and goodwill missions overseas and receives inbound delegations. It handles trade enquiries and extends assistance to individual visiting business people. It is authorised by the government to issue certificates of origin and is the sole local issuing authority for international Association Temporarie Admission (ATA) Carnets, through its seven local certification offices.

Although an independent, autonomous organisation receiving no subvention, the chamber is represented on a wide range of official advisory committees and bodies. The chamber founded and formed the Hong Kong Article Numbering Association, the Hong Kong Coalition of Service Industries, the Hong Kong Franchise Association and sponsors the Hong Kong Committee of the Pacific Basin Economic Council.

      Established in 1900, the Chinese General Chamber of Commerce is an association of local Chinese firms, businessmen and professionals. It has a membership of 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 both 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 is a professional management organisation incorporated in 1960 for the purpose of improving the efficiency and effectiveness of management in Hong Kong. It organises over 1 500 training programmes and provides various management services such as translation, recruitment and exhibition.

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. Its 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.

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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. 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, pharma- ceuticals, agricultural pesticides and ozone-depleting substances.

  As a measure to curb smuggling, the government amended the Import and Export (General) Regulations in May. With the amendments, the import and export of left-hand-drive vehicles and outboard engines exceeding 111.9 kilowatts are subject to licensing control. Separately, import and export licensing control was introduced in May for biological warfare agents and any article or equipment which is used for the design, development or deployment of mass destruction weapons.

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 linkages with the region have been expanding. In 1992, some 78 per cent of Hong Kong's total external trade was accounted for by the other 14 APEC member economies.

During the year, Hong Kong participated actively in the work of Asia-Pacific Economic Co-operation culminating in the 4th APEC Ministerial Meeting held on September 10-11, 1992 in Bangkok. As to PECC, the Hong Kong Committee, 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 PECC process, continued to participate actively in the various task forces. The highlight of the year was the PECC 9th General Meeting held on September 23-25 in San Francisco.

Hong Kong continued to play an active part in the informal dialogue initiated by the Organisation for Economic Cooperation 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 between March and November in Paris, Bangkok, Seoul and Sydney, with topics covering foreign direct investment, economic integration, short term economic prospects, bond market, taxation and investment.

Customs and Excise Department

The Trade Controls Branch of the Customs and Excise Department is responsible for trade-related enforcement activities. It enforces legislation concerning certification of

INDUSTRY AND TRADE

origin, textile import and export controls, import and export licensing controls of strategic and reserved commodities, weights and measures and other consumer protection pro- grammes. It also verifies and assesses import and export declarations.

     Consistent with its obligations under international conventions and trade agreements, Hong Kong enforces an effective origin certification and licensing control system on import and export of textiles and clothing products and strategic commodities. The branch works closely with the Trade Department to ensure the integrity of the system.

     To tackle the growing incidence of country of origin fraud and illegal transhipments in textile trade, the branch has established a special task force to conduct more physical checks on textile imports and exports and keep vigil over suspected consignments and traders and cargo forwarders involved in illegal transhipment.

     The branch has continued to play an active role in enforcing weights and measures legislation. In addition to investigating complaints of short weights and measures, it has initiated spot checks with a view to deterring the fraudulent use of inaccurate weighing and measuring equipment as well as the sale of prepackaged foodstuffs with incorrect weights or quantities. The branch will also be responsible for the enforcement of the Toys and Children's Products Safety Bill when enacted.

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 1992, there were 297 seizures and 153 prosecutions under the ordinance.

Government Supplies Department

The Government Supplies Department is the Government's central organisation for procurement and supply of stores and equipment required by government departments and certain subvented 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$1,370,000 in 1992) are widely advertised and open to competitive bidding internationally. 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 4000 registered local and overseas suppliers.

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  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 four 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 stores and equipment.

In 1991-2, the department placed orders to a total value of HK$3,207 million. The top major sources of supply were the United States, United Kingdom, China, Japan and Hong Kong. Major items of purchase included computer systems, rations and pharmaceuticals.

Trade Marks and Patents

The Intellectual Property Department provides a focal point for the development of Hong Kong's intellectual property regime and includes the Trade Marks and Patents Registries.

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. Since March 2, 1992, it has been possible to register trade marks for services as well as goods. 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 1992, 16 456 applications were received, 10 586 of which were in respect of goods and 5 870 in respect of services. Applications totalling 5 859, including many made in previous years, were accepted and allowed to be advertised. A total of 5 500 marks were registered in 1992, compared with 4 340 in 1991. The principal places of applicants' origin

were:

United Kingdom

United States Hong Kong

Japan

France

Italy

1355

973

Germany

759

Switzerland

362

Taiwan

317

Singapore

290

287

237

141

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The total number of marks on the register at December 31, 1992 was 62 866.

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 1 069 patents were registered in Hong Kong during the year, compared with 1 079 in 1991. 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.

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40

Preceding page: Two hundred artists exhibited works of

wide-ranging skills at the Contemporary Hong Kong Art Biennial Exhibition.

Left: Among imaginative exhibits by students at the Joint School Science Exhibition was a project exploring the possibility of human migration to the bottom of the sea. Below: Young members of a school environmental awards scheme explained their ideas to His Royal Highness the Prince of Wales at Government House. Bottom: After studying chemical engineering in the United States, Katia Tam returned to Hong Kong as operations engineer of an oil company.

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Right: Shirley Loong was prima ballerina in 'Swan Lake', one of the ballets presented by Hong Kong Ballet Group as part of the 30th anniversary of Hong Kong City Hall.

Below: Other scenes from the anniversary celebration.

Left: Hong Kong Fashion Week 92 showcased the talents of young local designers.

Below: One of the eye-catching costumes on show.

Bottom: Fashion design award winner Carol Lee.

Following page: Lee Lai-shan was lady champion and overall first runner-up in the Mobil Hong Kong Circuit Stanley Windsurfing Championships.

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 wolk,

INDUSTRY AND TRADE

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Companies Registry

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

      Local companies are incorporated under the Companies Ordinance, which is similar to, but in some aspects quite different from, 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 up-to-date needs of government and business.

      A recent amendment to the ordinance is the Companies (Amendment) Ordinance which was enacted in December 1992 and will come into operation on a day to be appointed by the Governor. It will transfer the responsibility for the vetting of prospectuses from the Companies Registry to the Securities and Futures Commission and the Stock Exchange of Hong Kong.

      During 1992 a new and more powerful computer system with twice the capacity of the previous system was installed in the Companies Registry. It commenced its live run on June 1, 1992. As a result of this enhanced system, the Companies Registry is considering the implementation over the next few years of a series of new computerised programmes beginning with the computerisation of the Document Index and the Control Book of incoming documents. During the year, other improvements achieved in the Registry's operational efficiency included the availability for search of an index of charges pending registration in the form of a computer print out, the printing of some certificates of registered charges by personal computer, the printing of certificates of incorporation of companies by computer, and further improvements in office accommodation and layout. Officers from the Finance Branch of the Government Secretariat and consultants from Coopers and Lybrand were invited to study the procedures undertaken in the Registry's Charges and Public Search Sections. As a result of implementing their recommendations, there have been significant improvements in the productivity and service levels of these sections.

      On incorporation, a company pays a registration fee of $1,000 plus $6 for every $1,000 of nominal capital. In 1992, 58 110 new companies were incorporated, 14 135 more than in 1991. The nominal capital of new companies registered totalled $5,208 million. Of the new companies, 235 had a nominal share capital of $5 million or more. During the year, 11 657 companies increased their nominal capital by amounts totalling $45,574 million on which fees were paid at the same rate of $6 per $1,000. At the end of 1992, there were 358 129 local companies on the register, compared with 304 538 in 1991.

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

A registration fee of $500 and some incidental filing fees are payable in such cases. During the year, 550 of these companies were registered and 185 ceased to operate. At the end of the year 3 193 companies were registered from 72 countries, including 656 from the

United States, 365 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.

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Plans are under way to give the independent Companies Registry trading fund status which would give it a considerable degree of financial and managerial autonomy in carrying out its functions.

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, 560 applications were received and 504 licences were granted. At the end of 1992, there were 537 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 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, the Official Receiver becomes the receiver or provisional liquidator respectively.

In estates where the assets realised are less than $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 contributories in compulsory liquidations, is held to decide whether the Official Receiver or another person from the private sector should 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 295 Receiving Orders and 342 Winding-up Orders, which is an increase of 1.43 per cent over the previous year. The assets realised by the Official Receiver during 1992 amounted to $131.4 million, and $221.3 million in dividends were paid to creditors in 205 insolvency cases.

Hitherto part of the Registrar General's Department, the Official Receiver's Office was established as a separate legal entity starting from June 1, 1992. At the same time a new grade of Insolvency Officer was introduced and the work of the office was reorganised from

INDUSTRY AND TRADE

a function-orientated to an overall case management approach in order to streamline procedures and improve efficiency.

Consumer Council

     Established in 1974, the Consumer Council is the statutory body charged with protecting and promoting the interests of consumers of goods and services. The council comprises a chairman, vice-chairman and 20 members appointed by the Governor from a wide cross section of the community. It has an office, headed by a Chief Executive, with a staff establishment of 107. It is a council member of the International Organisation of Consumer Unions.

      The council provides a comprehensive consumer protection service embracing con- sumer representation and legislation, advice and complaints, research and testing, and information and publications. It maintains close liaison with the government through the Trade and Industry Branch and is consulted on major policies affecting the interests of the consumer public. It is represented on many committees dealing with specific consumer issues and concerns. Its head office was relocated to new premises which it bought this year.

      To cope with an increasing demand for its service and a changing environment, the council has to focus its resources on the areas of work that will best benefit the consumer in the years ahead. Four broad areas were identified for special attention. They include monitoring monopolistic tendencies in the marketplace and their impact on the livelihood of the ordinary consumers, and trade practices which leave consumers in a weak bargaining position. The council remains an active ally of environmental protection and green consumerism, and the international consumer movement.

      The Consumer Council continued its efforts to safeguard the interests of property buyers. For example, the council investigated consumer grievances relating to the practices of estate agents and studied whether and how to regulate estate agent practices. For the first time, it named specific developers and sales agents for the significant difference between the gross and saleable floor areas of the properties sold by them. In addition, it is devising ways and means to hold developers liable to purchasers for the rectification of defects in new buildings and to extend such defect liability period from the existing six months to a more reasonable length of time following occupation.

The Council's efforts in the field of consumer product safety are beginning to bear fruit. In June 1992, the legislation requiring registration of electrical contractors and workers in order to enhance the safety of fixed electrical installations was implemented. Legislation governing the safety of toys and children's products is now being processed in the Legislative Council. In addition, the council is helping to examine legislating controls on consumer products safety.

      The council's call to improve consumer representation and consultation in the provision of public utility and public transport services was well-received and a number of these companies have set up consumer consultative groups or the likes. To counter the excessive speculation in the public tender for taxi licences and to encourage ownership by bona fide taxi drivers, the council proposed a relaxation of restriction on the number of licences issued and a tightening of the free transfer of licences. In addition, the council recommended changes to the motor insurance industry, including the scrapping of the basic tariff rate set by the Accident Insurance Association and a review of the basic

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commission structure for agents and brokers. The council will continue to periodically review the situation to safeguard the interests of motorists.

  The council also participated in a review of the regulatory system of the outbound travel industry which has led to important changes to the existing self-regulatory structure and an increase in the level of ex-gratia compensation payments to consumers in the event of default by travel agents. The council remains firmly committed to its support for the introduction of a Deposit Protection Scheme as it not only will offer protection to smaller depositors in the event of bank failure, but will facilitate financial and social stability and enhance competition in the banking sector. The council is also strongly behind a campaign to assert patients' rights and to demand that medical practitioners disclose their schedule of charges and inform patients about the medicines they have prescribed.

  During the year, 9 282 complaints and 249 097 enquiries for advice and information were received at the 16 Consumer Advice Centres throughout the territory. The diversity of topics of consumer interest, published in the council's monthly magazine CHOICE, reflected both the quality and quantity of other ongoing activities in research, survey and product testing. Numerous consumer education activities involving the community at large were organised throughout the year in a constant effort to raise consumer awareness.

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, manage- ment 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. A poster and slogan design competition for primary and secondary school students was organised to stimulate new ideas from the younger generation on the promotion of metrication. In arranging these promotional activities, the committee invited members from the Junior Police Call organisation to assist in the promotion of metrication and appointed them as 'Metrication Ambassadors' in recognition of their voluntary efforts.

8

EMPLOYMENT

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 the third quarter of 1992, Hong Kong had a workforce of 2.8 million, of whom 64 per cent were male and 36 per cent female. Of this workforce, 27.9 per cent were engaged in wholesale and retail trades, restaurants and hotels; 10.8 per cent in transport, storage and communications; 8.6 per cent in construction; 8.6 per cent in financing, insurance, real estate and business services; and 23.5 per cent in manufacturing. According to the survey of employment, vacancies and payroll in the manufacturing sector conducted in September, 571 181 people were engaged in 41 937 establishments, including some 239 947 people in the textile and wearing apparel sectors, which are the largest employers in the manu- facturing 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 1992 was 1.9 per cent, and underemployment 1.9 per cent. Compared with 1991, the unemployment rate decreased slightly. This showed that 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 while a limited number of foreign workers were allowed to be brought in. The new airport project is likely to further tighten the labour supply in the construction industry and a small number of foreign workers have already been recruited.

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. These rates continued to increase in money terms during the year. The average wage rate for all employees, including wage earners and salaried employees up to the supervisory level, increased by 10.2 per cent in money terms, or by 0.3 per cent in real terms between September 1991 and September 1992.

       The average wage rate in the manufacturing sector rose by 10.3 per cent in money terms between September 1991 and September 1992. After allowing for rises in consumer prices, the wage rate increased in real terms by 0.4 per cent during the same period.

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In September, 75 per cent of manual workers in the manufacturing sector received a daily wage, including fringe benefits, of $174 or more, and 25 per cent received $261 or more. The overall average daily wage was $224.

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, some employers 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 schemes 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 1992, a total of 13 008 private retirement schemes had been approved by the Inland Revenue Department.

  In November 1991, an inter-departmental working group on retirement protection was set up under the chairmanship of the Secretary for Education and Manpower to review the options, other than a central provident fund, which would enable workers to secure better retirement protection. In October 23, 1992, a consultation paper on A Community-Wide Retirement Protection System was issued to the general public and their views on it were invited.

Under the long service payment scheme, employees who have completed five years' service or more are entitled to long service payment upon dismissal other than by way of summary dismissal or redundancy, or upon retirement on grounds of ill-health. The payment is payable also to the families of eligible employees who die in service. Retirement at the age of 65 or above with at least 10 years' service will also attract long service payment. The amount of long service payment is calculated at the rate of two-thirds of a month's wages for each year of service. The amount receivable is reduced at a rate which takes into account the factors of age and years of service.

The Employment Ordinance was amended in July 1992 to better protect an employee who is dismissed due to removal of the workplace. Before the amendment, an employee who was dismissed in such circumstances was entitled to severance payment if the workplace were moved across Victoria Harbour. The ordinance amendment enables a dismissed employee to claim severance payment if the removal causes him undue hardship, even though the removal is not across the harbour.

To discourage exploitation of workers, the maximum penalty for late or non-payment of wages by unscrupulous employers was increased tenfold in May 1992. An imprisonment term of one year for the offence was also introduced.

Labour Conditions

Children below the age of 15 are prohibited from working in any industrial undertaking. Children aged 13 and 14 may be employed in non-industrial establishments subject to their having completed nine years' education and other conditions which aim to protect their safety, health and welfare. However the vast majority of children in this age group are still in the formal education sector.

EMPLOYMENT

      Working hours, night work, rest periods, overtime work for young persons aged below 18 and women in industrial establishments and work in dangerous trades are strictly regulated by law.

The Labour Inspectorate of the Labour Department is responsible for monitoring employers' compliance with labour standards and statutory benefits in respect of em- ployment of women and young persons, payment of wages, leave, sickness allowance and maternity protection as stipulated in the Employment Ordinance which applies to both local and foreign workers.

      In addition to regular inspections of workplaces six special teams are deployed to enforce the provisions of the Employment Ordinance for both local and foreign workers.

      Special campaigns are organised each year to tackle particular subjects. In 1992, nine campaigns involving 26 100 establishments were conducted to deter the employment of children and illegal immigrants.

Labour Legislation

The Commissioner for Labour is the principal adviser to the government on labour affairs and is responsible for initiating proposals for new labour legislation and amendments to existing legislation. In respect of labour matters, 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 neighbouring countries at a similar stage of economic development. This objective has been achieved through legislative enactments totalling 125 in the past decade. During 1992, 17 pieces of labour legislation were enacted.

Labour Advisory Board

The Labour Advisory Board, a non-statutory advisory body on labour matters, plays an active role in the formulation of labour policies and legislation. Established in 1927, the board has six members representing employers and another six representing employees, with the Commissioner for Labour or her deputy as the ex-officio chairman. Of the employer representatives, five are nominated by five major employer associations and one appointed ad personam. Five of the employee representatives are elected by registered employee 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 under the Labour Advisory Board on special subject areas such as employment services, industrial safety and health, labour relations, employees' compensation and the implementation of international labour standards. 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 employers and employees can 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

The International Labour Organisation adopts international labour conventions which set out the standards on matters relating to basic human rights, employment, social policy, labour administration, labour relations, conditions of work and social security. As a

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dependent territory of the United Kingdom, Hong Kong's declarations on the application of the conventions are made by the United Kingdom Government after consultation with the Hong Kong Government. The Commissioner for Labour ensures that Hong Kong's obligations under International Labour Conventions are observed.

International Labour Conventions have significant influence on the formulation of labour legislation in the territory. Hong Kong now has a comprehensive body of labour law governing the conditions of employment, safety and health and employees' com- pensation. As at December, Hong Kong applied 48 conventions, 29 in full and 19 with modification, and compared 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, 17 new unions were registered. At the end of the year, there were 522 unions, comprising 481 employees' unions, 27 employers' associations and 14 mixed organisations of employees and employers, and their total memberships were about 488 000, 2 900 and 15 400 respectively.

The majority of employees' unions are affiliated to one of the six local societies registered under the Societies Ordinance - Hong Kong Federation of Trade Unions (87 affiliated unions with about 181 900 members); Hong Kong and Kowloon Trade Unions Council (69 affiliated unions with about 30 600 members); Hong Kong Confederation of Trade Unions (27 affiliated unions with about 71 100 members); the Joint Organisation of Unions, Hong Kong (18 affiliated unions with about 9 900 members); Hong Kong Trade Union Education Centre (13 affiliated unions with about 65 000 members); and the Federation of Hong Kong and Kowloon Labour Unions (18 affiliated unions with about 23 800 members). The remaining 249 employees' unions have a total membership of about 105 700.

Labour Administration and Services

Headed by the Commissioner for Labour, the Labour Department is responsible for formulating proposals on labour legislation, promoting good labour relations, protecting the safety and health of workers, providing assistance to job seekers and to employees injured at work and persons suffering from occupational diseases in obtaining compen- sation, and enforcement of legislation regulating employment conditions. During 1992, there were 6799 prosecutions for breaches of ordinances and regulations administered by the Labour Department. Fines totalling $19,420,700 were imposed.

Labour Relations

In 1992, the Labour Relations Division of the Labour Department conciliated in 137 trade disputes (each involving 21 or more workers) which involved 11 work stoppages, with a loss of 3 296 working days. The service also dealt with 17 130 claims for wages and other employment-related payments.

   The Labour Relations Ordinance provides the machinery for special conciliation, voluntary arbitration and boards of enquiry to settle trade disputes which cannot be resolved through ordinary conciliation.

EMPLOYMENT

The Labour Relations Division endeavours to promote harmonious labour-management relations in the private sector through a variety of activities such as promotional visits to individual establishments, employers' associations and employees' trade unions; organising training courses, seminars and exhibitions; and publishing newsletters, information leaflets and pamphlets on a wide range of labour matters. Four territory-wide seminars on case studies of the Employment Ordinance and two seminars on the community-wide retirement protection system were organised in 1992. These seminars attracted 1 000 participants.

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

concern.

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 1992, the tribunal heard 3 949 cases involving employees as claimants, and a further 426 cases initiated by employers. More than $42 million was awarded by the presiding officers. Of these cases, 87 per cent were referred by the Labour Relations Service after unsuccessful conciliation attempts.

Protection of Wages on Insolvency Fund

The Protection of Wages on Insolvency Fund is financed by an annual levy of $250 on each business registration certificate. Employees who are owed wages and other termination benefits by their insolvent employers may apply to the fund for ex-gratia payment. It 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. In respect of severance payment, it covers an applicant's entitlement in full 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.

Finding Employment

The Employment Services Division of the Labour Department provides free placement services to help employers recruit staff and job-seekers to find suitable employment. Its Local Employment Service operates from 10 offices which are linked by a facsimile system for the rapid exchange of vacancy information. Starting from 1992, employers wishing to employ foreign workers under the importation of labour scheme are required to notify the service of vacancies. This requirement ensures that local job-seekers have priority to fill those vacancies.

As a result of economic restructuring in recent years, there is a growing need for local workers to be retrained so that they can obtain employment in another trade or a higher level job in the same trade. During the year, the government established an Employees Retraining Scheme which was financed by a levy imposed on employers of imported workers. Under this scheme, a local employee undergoing retraining is paid a retraining allowance. The Employees Retraining Board comprising representatives of employers,

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employees, training authorities and government was established to manage the funds and advise on the planning and implementation of the scheme. The Local Employment Service is responsible for processing applications under the scheme and assisting the retrainees in finding employment.

  The Selective Placement Division helps disabled persons integrate into the community by providing a free employment counselling and placement service for hearing impaired, sight impaired, physically disabled, mentally retarded and ex-mentally ill persons seeking open employment.

  The division launched various activities to promote its work and the employability of the disabled. These included district-based exhibitions, presentation of awards to employers and disabled employees, and quarterly newsletters for distribution to employers of various trades and industries. Pamphlets concerning employment of people with various disability types were also issued to members of the public. Promotional visits were made regularly in order to widen the employment opportunities of disabled job-seekers.

Careers Guidance

The Careers Advisory Service of the Labour Department is responsible for promoting careers education in Hong Kong.

The service operates 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. It also produces written and audio-visual resource materials including careers pamphlets, job sheets, slide presentations and films. These materials are made available to the public free of charge.

The service organises a wide range of careers activities for young people including careers seminars, quizzes, exhibitions and visits to commercial and industrial establish- ments. In February, it joined hands with the Hong Kong Trade Development Council for the first time in staging the Education and Careers Expo '92 which attracted more than 160 000 visitors.

  The service also helps in the training of careers teachers. Every year it organises a seminar on careers education in conjunction with the Education Department and Hong Kong Association of Careers Masters and Guidance Masters, and runs a certificate course for careers teachers jointly with the Education Department and the University of Hong Kong.

Foreign Workers

The Immigration Department is responsible for controlling the entry of foreign workers. Generally speaking, a foreigner may be permitted to work or invest in Hong Kong if he possesses a special skill, knowledge or experience of value to and not readily available in Hong Kong, or if he is in a position to contribute to the economy. To maintain Hong Kong's economic competitiveness, the Immigration Department always ensures that the policy is well understood by employers and is flexibly applied. Genuine businessmen and entrepreneurs are welcome to establish a presence in Hong Kong, bringing with them the needed capital and expertise. Qualified professionals, technical staff, administrators and managerial personnel are also admitted with minimum formalities.

During the year, 13 859 professionals and persons with technical, administrative or managerial skills from more than 50 countries were admitted for employment.

EMPLOYMENT

      To remove manpower shortage in certain bottleneck areas, a separate scheme for the importation of skilled workers at the supervisory, technician, craftsman and operative level was introduced in 1989 and repeated in 1990. After a review, it was decided in January 1992 that the scheme should be expanded in such a way that the total number of such workers in Hong Kong did not exceed 25 000 at any one time. Discounting those 13 000 workers who came under the previous schemes and whose contracts were still valid, employers were allowed to import 12 000 workers in 1992. This scheme received overwhelming response from employers. Despite the quota of 12 000 workers, the Immigration Department received some 8 350 applications from employers, involving a total of 92 600 workers.

      In addition, to facilitate the construction of the new airport and related projects, a scheme to import initially 2 000 construction workers was introduced in May 1990. A quota of 1 247 has so far been allocated.

Foreign Domestic Helpers

The entry of foreign domestic helpers is subject to the condition that they have experience in that field of work, that their employers are bona fide Hong Kong residents who are prepared to offer reasonable terms of employment including wages and accommodation, and that the employers are willing to provide for the helpers' maintenance in Hong Kong as well as the costs for repatriation to their country of origin. Because of the affluence of Hong Kong, the demand for foreign domestic helpers has increased steadily. In 1992, there were 101 182 such helpers in Hong Kong, representing an increase of 19.6 per cent when compared with 84 619 in 1991. About 88.1 per cent of these domestic helpers were 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 80 823 employment contracts in 1992.

     The service is frequently consulted by the public on application procedures for the employment of foreign domestic helpers and interpretation of the terms of employment contracts. It also provides a conciliation service in wage claims arising out of such contracts.

Employment Agencies

The Employment Agencies Administration of the Labour Department is responsible for administering Part 12 of the Employment Ordinance and the Employment Agency Regulations, which were amended in May 1992 to facilitate more effective control on the licensing and operation of employment agencies in Hong Kong. The service issued 1000 licences in 1992.

Employment Outside Hong Kong

The External Employment Service is responsible for enforcing the Contracts for Employ- ment Outside Hong Kong Ordinance, which was amended in May 1992 to extend the requirement for such contracts to be attested by the Commissioner for Labour from manual workers to include non-manual workers with monthly wages not exceeding $20,000. The service attested 85 new contracts in 1992.

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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, restaurants, catering establishments, building and engineering construction sites and other industrial under- takings. Advice and assistance are given to managements on various safety and health aspects, including the adoption of safe working practices and factory layouts to achieve a better working environment. The inspectorate also investigates industrial accidents and dangerous occurrences.

  The Factories and Industrial Undertakings (Cargo Handling) (Amendment) Regulations and the Factories and Industrial Undertakings (Noise at Work) Regulations were enacted in July 1992. The former extends the requirements on safe handling and storage of containers from container ports to all container yards, and the latter provides better protection for employees engaged in noisy work processes.

  To promote self-regulation, the Safety Programme Promotion Unit helped industry develop in-plant safety committees. The unit assisted management and workers in identifying and assessing hazards at work and in devising and improving their safety and health programmes. The unit also assisted in organising seminars, safety training courses and other promotional activities. A two-day symposium on safety and health management with training workshops for trainers was organised jointly with the Regional Office for Asia and the Pacific of the International Labour Organisation in May.

  The Factory Inspectorate placed much emphasis on the regulatory activities in high-risk areas of factories and construction sites. Special enforcement campaigns were launched in the year to promote machinery safety, fire prevention and construction safety. During these campaigns 23 568 factories, 669 restaurants and catering establishments and 1 246 construction sites were inspected and 1 536 summonses were taken out.

  Throughout the year, the Industrial Safety Training Centre conducted courses for workers, supervisors and managers from various industries. Talks on safety at work were organised for teachers and students of technical institutes and special talks were arranged with the Education Department as part of the Summer Job Safety promotional activities. The centre also gave talks on safety management to medical and engineering students of the University of Hong Kong and business students in post-secondary institutions. In collaboration with Hong Kong Polytechnic, the centre continued to organise evening courses leading to the award of a post-experience certificate in industrial safety. It also assisted the Construction Industry Training Authority in running certificate courses for construction safety officers.

  The inspectorate, in conjunction with the Information Services Department, continued its publicity programme for the promotion of industrial safety and health. It also assisted the new airport projects co-ordination office in publishing the airport core programme site safety manual for promoting the safety of the new airport projects. Four large-scale symposia and conferences on safety and health management, construction safety, printing safety and safety auditing were held.

  A construction site safety award scheme was organised later in the year jointly by the Factory Inspectorate, Housing Department, Hong Kong Construction Association Ltd and Hong Kong Construction Industry Employees General Union.

EMPLOYMENT

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 who are on the approved list as boiler inspectors/air receiver inspectors. The division also investigates accidents involving pressure equipment.

The Pressure Equipment Advisory Committee advises the Boilers and Pressure Vessels Authority, presently the Commissioner for Labour, on the effective control of pressure equipment. The authority accords recognition to local inspection bodies, who meet the criteria, for issue of certificates of inspection during construction of the equipment under the ordinance. The authority also issues advice in the form of code of practice and guides on the operation and maintenance of different types of 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.

The division provides technical advice to the Director of Fire Services on approval of pressurised containers and storage installations for compressed gases within the provisions of the Dangerous Goods Ordinance. The expertise in the field of pressure equipment is available, free of charge, to any organisation in private or public sectors.

Occupational Health and Hygiene

The Occupational Health Division of the Labour Department protects workers 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 work- place, 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 to promote occupational health. With sponsorship from the Occupational Safety and Health Council, it also organised a week-long exhibition on Occupational Health Perspective - Industrial Chemicals and you which attracted some 30 000 visitors. It continued to publish a series of booklets and codes of practice on occupational health and the prevention of occupational diseases. Occupational health promotion and education activities were carried out by nursing officers.

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 were completed. Programmes to monitor various chemicals, dusts and other occupational health hazards were also carried out.

      The division carries out medical examinations on 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 registered nurses of the division handle medical clearance for employees' compensation cases and its occupational

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health officers are appointed as members of special assessment boards and prostheses and surgical appliance boards under the Employees' Compensation Ordinance.

The laboratory of the division, which is a member of the Hong Kong Laboratory Accreditation 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 Occupational Safety and Health 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-govern- ment bodies having such common goals.

The council 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 the premium of all employees' compensation insurance policies.

To assist the council in routine operation, five functional committees have been formed to deal with publicity, staffing, finance, education and research, and general affairs. There are also nine industry-based committees covering the catering, construction, electronics, metalware, ship building and ship repairing, plastics, printing, transport and physical distribution industries. One additional advisory committee specialising in chemicals was established in the year.

The year under review ended with a significant expansion in the training activities of the council in that agreement was reached to transfer general safety and health training courses by stages from the Labour Department to the council. Other training courses for safety and health supervisors; health and safety management for civil engineers; competence programmes on ionising, radiation protection and safe handling of asbestos; management of dangerous substances; laser safety; and noise assessment were also conducted with gratifying feedback from the public. A total of 3 858 employees or professionals were trained through the courses.

Throughout the year, the council organised 13 seminars which focused on selected technical topics for professionals and interested members of the public. Research projects were also undertaken by the council to improve occupational safety and health in Hong Kong. Consultancy services of the council, which are provided on a cost recovery basis, also experienced increased demand.

The council also produced safety and health literature, codes of practice and guide- books, Green Cross (a bi-monthly magazine), safety advice pamphlets, bulletins for individual industries and posters. A comprehensive library housing a wide collection of safety and health journals, technical reference books and an advance data base on occupational safety and health is open for public use.

In addition, the council launched campaigns to arouse public interest in occupational safety and health. A major campaign was the Occupational Safety and Health Week staged from November 9 to 15.

The council's occupational safety and health employees' participation scheme continued to offer financial assistance to employees' organisations running safety and health activities. During the year, 21 employees' organisations received financial subsidy under the scheme.

EMPLOYMENT

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.

      The Employees' Compensation Assistance Ordinance establishes the Employees' Com- pensation Assistance Fund to make payments of statutory compensation and damages at common law due to an injured employee or dependants of a deceased employee when an employer defaults or an insurer becomes insolvent. It also covers claims from employers failing to obtain indemnity from their insolvent insurers. The fund, financed by a levy on all employees' compensation insurance premiums, is administered by the Employees' Compensation Assistance Fund Board.

      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 10 major hospitals in Hong Kong. In 1992, ordinary assessment boards convened 534 sessions and completed assessment of 16 200 cases referred to them by the Commissioner for Labour and 1 221 review cases. Special assessment boards convened six sessions and completed assessment of six cases referred to them by the ordinary assessment boards.

In 1992, 189 pneumoconiosis cases were awarded compensation amounting to $28,646,875. The Pneumoconiosis Compensation Fund Board also financed research, educational and publicity programmes to enhance awareness of pneumoconiosis and to promote prevention of the disease.

      The Employees' Compensation Ordinance was amended in July 1992 to provide for a simplified procedure for the settlement of minor injury cases which only incapacitate the injured employees for seven days or less. Under this new procedure, an employer may agree with his employee on the amount of compensation to be paid without recourse to the Labour Department or the Court.

The coverage of the ordinance has been expanded to include part-time domestic helpers. The definition of 'dependants' has also been extended to include children of an employee born after his death and parents and grandparents who will retire within two years and will then be likely to be dependent on the earnings of the deceased for a living.

Telephone Enquiry Service

In 1992, the staff of the General Enquiry Telephone Service was enhanced to handle 172 486 public enquiries on the Employment Ordinance and its subsidiary regulations, the Protection of Wages on Insolvency Ordinance, the Employees' Compensation Ordinance, and matters relating to the employment of foreign domestic helpers. Where appropriate, pre-recorded tapes in both English and Chinese were used to supplement the informa- tion given.

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EVERY day in Hong Kong, people consume about 920 tonnes of rice, 1020 tonnes of vegetables, 8 060 pigs, 410 head of cattle, 280 tonnes of poultry, 550 tonnes of fish and 1 460 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 49 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 26 per cent of fresh vegetables, 27 per cent of live poultry, six per cent of live pigs, 12 per cent of freshwater fish and 63 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 department 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 1 810 hectares in 1992. The value of crop production was about $442 million.

PRIMARY PRODUCTION

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 1992 amounted to $155 million and that of poultry, including chickens, ducks, pigeons and quails, amounted to $525 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.

Local vegetable growers are encouraged to cultivate premium vegetables including traditional Chinese types, exotic varieties and vegetables produced through organic farming and hydroponics. Technical advice and marketing services are provided to help interested farmers.

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, 1992, loans issued

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since the inception of these three funds had reached $292 million, with $287 million having been repaid.

There are 65 co-operative societies and two federations among the farming community with a total membership of some 11 548 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 another at Hok Tau in Fanling have been satisfactory. Plans are in hand to extend this scheme to other suitable areas.

Fishing Industry

Marine fish constitute one of Hong Kong's most important primary products. In 1992, total production from marine capture and culture fisheries was estimated at about 223 400 tonnes with a wholesale value of $2,510 million. This represented a decrease of three per cent in weight and a decrease of one per cent in value compared with 1991. In weight terms, marine capture contributed 98 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 55 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 73 per cent or 160 000 tonnes of marine fish landed in 1992. The total landed catch of live and fresh marine fish available for local consumption amounted to 96 000 tonnes with an estimated wholesale value of $1,050 million.

Marine fish culture is practised within 26 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 1 651 licensed mariculturists. Young fish are reared in cages suspended from buoyed rafts. Grouper, seabream and snapper are the most common culture species. In 1992, this sector supplied 3 400 tonnes of live marine fish valued at $210 million.

Freshwater fish are also cultured. Fish ponds covering 1 350 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

PRIMARY PRODUCTION

increasing urbanisation of the New Territories. During the year, pond culture yielded 5 400 tonnes, or 13 per cent of the local consumption of freshwater fish.

Fisheries Development

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. Efforts to develop a deep sea prawn resource located in the South China Sea at depths between 500 to 1 000 metres continued. In addition, pair trawl fishermen were directed towards a deep sea prawn species occurring at 200 metres depth. This was pursued by interested fishermen with onboard freezing equipment provided by the Fish Marketing Organisation.

Large scale development projects involving construction works affecting the foreshore and seabed exert adverse impact on the marine environment and marine resources. To offset such impact and to enhance recovery, the department is actively investigating the feasibility of deploying artificial reefs.

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 loss.

      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.

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 $26.52 million at the end of 1992, are revolving funds which provide shorter-term financing mainly for recurrent purposes. By December 31, loans issued since the inception of the four funds totalled $237 million, with $220 million having been repaid.

At the end of the year, 2 067 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.

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Marketing

Much of the wholesale marketing of primary products - particularly fresh foods - is the responsibility of the Agriculture and Fisheries Department and the Vegetable and Fish Marketing Organisations. This year, 47 per cent of the total quantity of locally-produced vegetables, and 68 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, 44 400 tonnes of local vegetables valued at $122 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 1992, the wholesale fish markets handled 68 000 tonnes of marine fish, crustacea and molluscs which were sold for $590 million. This included 3 300 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 adjacent areas, 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 the first of these, phase one of the wholesale market complex on Hong Kong Island has been completed and the fruit, freshwater fish and egg markets subsequently relocated to the complex which became fully operational by the end of 1991. Construction work for phase two which includes poultry and vegetable markets is progressing satisfactorily and is expected to be completed by early 1994. Steady progress has also been made in the planning of the Kowloon complex which is to be built on the new West Kowloon

PRIMARY PRODUCTION

reclamation. The complex is to be constructed in two phases and works for phase one started during the year are expected to be completed in late 1993. Pending the eventual completion of the complexes, the 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 and Quarrying

The Mines and Quarries Division of the geotechnical engineering office of the Civil Engineering Department enforces legislation relating to mining, quarrying and explosives. It processes mining and prospecting applications and inspects mining and prospecting areas, stone quarries, blasting sites and explosives stores.

There was no mining activity in 1992, but there was an application for a prospecting licence. During this year, Hong Kong's total consumption of sand, aggregates and other rock products amounted to 19 million tonnes. Around one half of the territory's demand for aggregates and sand is met locally, the balance is imported from China. The local quarries and stone processing sites are supervised by the division.

The Mines and Quarries Division controls the possession, conveyance, storage, manu- facture and use of explosives in Hong Kong, 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, and undertakes the delivery of explosives from government depots to blasting sites.

Quarrying and site formation works were the largest users of explosives in 1992. Sewerage tunnel construction and seismic surveys also used explosives, albeit in smaller quantities. Overall consumption of explosives in the territory was 4 000 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.

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A STRONG foundation to develop Hong Kong's human resources for the next century is being laid by a series of reforms to school education and by increasing opportunities at the tertiary level. To maintain Hong Kong's position as one of the economic powerhouses of Asia, education continues to be given high priority in the government budget, where it receives a larger share of resources than any other programme.

With targets of provision almost fully achieved at the school level, and with the tertiary expansion programme well on course, attention during the year was focussed on measures to ensure that schools can deliver the quality of education needed to sustain continued social and economic progress. New policies were implemented in several areas relating to the school curriculum, school management and learning assessments. Major proposals for improving the professional development, status and working environment of teachers were unveiled in the Education Commission's fifth report (ECR5), published in June.

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 Examination (HKCEE). Others join a full-time craft course of vocational training; while a small number choose to leave formal education at this point.

Following the HKCEE, opportunities for progression include a two-year sixth form course leading to the Hong Kong Advanced Level Examination (HKALE); two or three-

EDUCATION

year vocational courses leading to a certificate or diploma; and a three-year course of teacher training. After the HKALE, 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 receiving public funds under a code of aid. Tertiary institutions (except for the self-funding Open Learning Institute) are autonomous statutory bodies receiving public funds through the University and Polytechnic Grants Committee (UPGC). A comprehensive system of technical education and vocational train- ing is provided, with public funds, by the statutory Vocational Training Council (VTC).

The Legislative Framework

Any institution offering education to 20 or more pupils in a day must operate in accord- ance 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, teachers and managers, 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, 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 colleges, technical institutes, industrial training centres, and skills centres for the disabled. 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, the Institute of Language in Education (ILE) and the Curriculum Development Institute.

      The main responsibilities of the Education Department relate to the planning and provision of public sector school places; the allocation of pupils to these places; support for curriculum development; professional training for non-graduate teachers; language education 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 some private institutions. 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 1.2 million students, or 21 per cent of the total population, were in full-time education during the year. They attended 1900 institutions, and were taught by 54 000 teachers supported by a large number of support staff. There were some 297 000 candidates for local public examinations, with a further 219 000 candidate entries for 18 overseas

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examinations. The total public budget for education in 1992-3 was $22,860 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, the highest advisory body on education, advises the govern- ment on the development of the education system in the light of community needs. Its terms of reference are to define overall objectives; to formulate policies, and recommend priorities for implementation having regard to the resources available; to co-ordinate and monitor the development of education at all levels; and to initiate educational research.

The commission has 13 members, of whom 11, 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 the vice-chairman, and the Director of Education.

In June the commission published its fifth report, containing extensive recommendations for improving the professional development, status and working environment of teachers. Among the major proposals were the upgrading of the colleges of education and Institute of Language in Education into an autonomous Institute of Education; the creation of a new in-service qualification, the Advanced Teacher's Certificate; measures to upgrade 35 per cent of primary teacher posts to graduate status within 15 years; and improvements in teacher/pupil ratios. The report also proposed the creation of three new advisory bodies: an advisory committee on teacher education and qualifications; a committee on home- school co-operation; and a council on professional conduct in education. Following widespread public support during the consultation period, the government made plans to begin implementing the recommendations during 1993.

In October the commission published a draft statement of aims for school education in Hong Kong. This too was well received by the public, and preparations were made to issue a revised version as an official statement of government policy.

The Board of Education

The board is a statutory body appointed to advise the government, through the Director of Education, on educational matters at school level. Its focus is on the implementation of approved policies, and the need for new or modified policies relating to school education. Its members include the chairmen of advisory and executive bodies concerned with the school system: the Curriculum Development Council (CDC); 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 professions. Two government officials sit on

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the board: the Director of Education as vice-chairman, and the Deputy Secretary for Education and Manpower.

The Curriculum Development Council

The CDC was reconstituted in January 1992, along lines recommended in the Education Commission's fourth report (ECR4). It became a free-standing committee appointed by the Governor to advise the government through the Director of Education on curriculum matters. Its members include not only educators, but also employers and parents.

The CDC continued many of the curriculum development activities undertaken by the former Curriculum Development Committee, and examined new curriculum needs. During the year it continued to consolidate syllabus development, conduct research on curriculum issues, and develop school-based curricula. The development of teaching targets and target-related assessments in the three core subjects progressed well, as did the preparation of new subjects: general studies for primary students; and travel and tourism and science for non-science students at the secondary level. Curriculum guides, which help in devel- oping subject syllabuses in compatible directions, were produced for each educational level and issued to schools. Guidelines on environmental education in schools were also issued.

Curriculum Development Institute

The Curriculum Development Institute (CDI) was set up in April 1992 as a new division within the Education Department. It is responsible for developing curricula, and for helping schools to implement curriculum policies and innovations. It provides a secretariat for the CDC; conducts research, experimentation and evaluation in curriculum planning; issues updated curriculum guides and subject syllabuses; develops resource materials, manages resource centres and provides resource library services; liaises with the HKEA, the Advisory Inspectorate of the Education Department and teacher training institutions on the development and evaluation of the curriculum; and reviews school textbooks.

The CDI is staffed by both civil servants and experts from outside the civil service. This arrangement ensures a regular infusion of new ideas to sustain the creative and innovative approach needed for good curriculum development; and also enables the CDI to draw on the practical experience of its civil service members, including their close links with schools. During the year, over a hundred officers were redeployed from the Inspectorate Division to the CDI, and the first non-civil servant experts were recruited.

The University and Polytechnic Grants Committee

The UPGC, appointed by the Governor, advises on the development and funding of higher education, and administers public grants to the tertiary institutions. Its members, all prominent in their field, include 10 academics from overseas, three local academics and five local professional and business people. No government officer sits on the committee, but its secretariat is staffed by civil servants.

Since 1965, when the then University Grants Committee was created, student numbers have increased more than tenfold, from about 4 000 full-time equivalent in two universities to about 48 000 in seven institutions. These, in order of age as a tertiary institution, are the University of Hong Kong, the Chinese University of Hong Kong, Hong Kong Polytechnic, Hong Kong Baptist College, City Polytechnic of Hong Kong, Hong Kong University of Science and Technology, and Lingnan College.

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  In 1992, in the light of the latest population forecast and estimates of the supply of matriculants over the next few years, the government took the view that planned provision of first-year first degree places for 1994-5 could be revised from 15 000 to 14 500, without affecting the target of places for 18 per cent of the mean of the 17-20 year old population. The UPGC, in consultation with the institutions, then formulated a revised expansion scenario in which growth in first-year places during the 1992-5 triennium would be 12 per cent each year, rather than the previously planned 14.5 per cent. As a result, the UPGC was able to return to the government $509 million from the $18,200 million of approved recurrent funding for the triennium.

  Recruiting and retaining academic staff of the right calibre is crucial to the tertiary expansion programme. To help train local students for future careers in Hong Kong's institutions, the UPGC strategy includes a substantial increase in research student places, from about 1 300 in 1991-2, to almost 2 800 in 1994-5.

  During the year the UPGC continued to monitor progress towards a revised structure of tertiary education, with a unified admission point following Secondary 7. A simplified procedure for the joint university and polytechnic admissions system was designed, applicable to those entering the sixth form in 1992 and aiming for a tertiary place in 1994, when the revised structure will be fully in place.

The UPGC also started a major review of the development of tertiary education, to take stock of progress achieved and formulate advice to the government on further development after 1994-5.

The Research Grants Council

The RGC, established in 1991, advises the government through the UPGC on the needs of institutions for academic research and the funding required, and monitors the use of public research funds. It comprises six locally-based academics, five overseas academics, and three local professionals and industrialists. Three specialist panels comprising mostly local academics consider grant applications in the areas of physical science and engineering, biology and medicine, and humanities and social science. An independent network of academic referees gives impartial advice on research proposals. In 1992 the RGC disbursed $122 million in earmarked grants, and received government approval to increase funding to $144 million in 1993. The RGC and the British Council also jointly sponsored the United Kingdom/Hong Kong Joint Research Scheme, aimed at strengthening links between tertiary institutions in the UK and Hong Kong.

The Vocational Training Council

Established under the Vocational Training Council Ordinance and funded by a subvention from the government, the VTC advises the Governor on measures to ensure a com- prehensive system of technical education and industrial training suited to the developing needs of Hong Kong, and administers technical colleges, technical institutes, industrial training centres and skills centres for the disabled. (Two industry sectors, construction and clothing, operate training centres funded by levies under separate statutory authorities). The VTC also administers the statutory apprenticeship scheme. The 23 members of the council include prominent industrialists and academics and four government officers: Secretary for Economic Services, Director of Education, Commissioner for Labour and Director-General of Industry.

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To ensure that the VTC's advice and operations meet the needs of industry and the service sector, the government has appointed, on the VTC'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 continued preparations for taking over 6 670 sub-degree places from the polytechnics in September 1993, as part of the government's plans for tertiary expansion. Construction work started on a new technical college on Tsing Yi Island and on the conversion of the technical institute at Chai Wan to another technical college. A new industrial training complex at Pok Fu Lam became operational, and the modification and upgrading of existing technical institutes was completed in late 1992.

Hong Kong Examinations Authority

The HKEA is 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: the HKCEE; the HKALE; and the Hong Kong Higher Level examination.

The HKEA also offers proficiency tests, aimed at adults, in Putonghua and in English language speaking skills, and basic proficiency tests for school-leavers in English language, Chinese language and mathematics. On behalf of overseas examining bodies it conducts a large number of examinations leading to academic, professional or practical qualifications.

      In 1992, a total of 128 457 candidates entered for the HKCEE, 2 165 for the higher level examination, and 16 879 for the HKALE. The basic proficiency tests attracted 1996 candidates. A total of 219 000 candidates sat for overseas examinations: 65 900 for the London Chamber of Commerce and Industry, 45 100 for the Associated Board of the Royal Schools of Music, and 27 000 for the Test of English as a Foreign Language (TOEFL).

With the phasing out of the Higher Level examination, held for the last time in 1992, from September 1992 all sixth form courses will be for two years, and will lead to the HKALE, the entry route to all tertiary institutions other than the Open Learning Institute. In 1992, for the first time, most HKALE subjects were offered in both Chinese and English. Previously they were offered in English only. Preparations continued for offering advanced supplementary subjects in the 1994 HKALE.

Hong Kong Council for Academic Accreditation

     The HKCAA was established by ordinance in June 1990 to undertake academic accreditation activities for non-university degree awarding institutions, to ensure that the degrees they award meet internationally recognised standards. The council has 22 members including experts in accreditation, local and overseas academics, and local industrialists and business people. Its activities are administered by a small secretariat.

During the first two years of operation, the HKCAA has reviewed the standards of four institutions, scrutinised 73 degree programmes and monitored a number of other programmes. It has stimulated the creation of an international network of similar agencies, for which it provides administrative support. Other activities include seminars and

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professional development workshops on quality assurance in higher education; and advice and assistance in response to relevant requests from the tertiary sector, government, and individuals. This includes advising on overseas institutions advertising or operating in Hong Kong, and on the development of teacher education.

  The HKCAA maintains a register of subject specialists, which now includes nearly a thousand names of local and overseas academics and experts. Members of institutional review and validation teams are drawn from this register.

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 Education 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 1992, a total of 856 schools were in the care of 254 sponsoring bodies, with between one and 72 schools operated by any one body.

  The School Management Initiative (SMI) was introduced in 1991 to give school managements in the public sector more decision-making power in return for more formal procedures for planning, implementing and evaluating their activities. The 21 aided secondary schools which joined the scheme in September 1991 made good progress in developing a new school management framework, and came under more flexible funding arrangements in September 1992. A further 13 secondary schools (10 government and three aided schools) joined the SMI in September 1992. An advisory committee, whose members provide a wide range of education and management expertise, offered advice and support to schools taking part in the SMI. During the year the committee produced reference materials on the school plan, school profile, staff appraisal, school policies and procedures and financial management. A newsletter, the SMI Quarterly, publicised the scheme and provided a forum for sharing experiences in school management reform.

Governing Bodies of Tertiary Institutions

Each tertiary institution has its own structure of governance, set out in its ordinance. In all cases the structure includes a governing body (called the Court, the Council, or the Board of Governors) and a body to regulate academic affairs (called the Senate or the Academic Board). Some institutions operate under three bodies: a governing body, an executive body, and a body dealing with academic affairs.

  In addition to representatives of the institution's staff, a majority of members of the governing bodies are drawn from the community. Some institutions are required by their ordinance to include experienced businessmen or industrialists on the governing body. This helps to ensure that the institution's services are relevant to Hong Kong's needs.

Funding of Education

Approved public spending on education in the 1992-3 financial year, at HK$22,860 million, represented 23 per cent of the government's total recurrent expenditure and 7 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 some private secondary schools receive public funds under two schemes. Under the Direct Subsidy Scheme (DSS), 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 (BPS), from which the government buys places to make up shortfalls in government and aided school places, are 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. International schools meeting specified criteria may also be granted land at a nominal premium.

During the year, the government continued to develop a linked series of computer models for the financing of education. These will help planners to evaluate the resource implications of different policy scenarios, as an aid to policy formulation.

Student Finance

The Student Financial Assistance Agency administers various financial assistance schemes and scholarships, described below. The aim of financial assistance is to ensure as far as possible that students are not denied access to education because of lack of means. Scholarships are awarded on the basis of academic merit.

Student Travel Subsidy

Students aged between 12 and 25 in full time study up to first degree level are eligible for a subsidy to cover part of their study-related travelling expenses. During the year, 172 735 students received assistance totalling $131 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 102 440 students received a total of $29.6 million.

Fee Remission

The policy on fees for public-sector places beyond Secondary 3 is to balance the benefit to the community and to the individual of the higher level of education. The Fee Remission Scheme, by relieving students of half or all the standard school fee, helps to ensure that those in need can continue their education without undue financial strain on their families. During the year 49 585 students benefited under the scheme.

A kindergarten fee remission scheme was introduced in August 1990. Assistance available ranges from 25 to 100 per cent of the weighted average of fees charged by non-

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profit-making kindergartens. During the year, a total of $24.74 million was granted to 10 988 kindergarten pupils.

Local Student Finance Scheme

 Full-time students in local tertiary institutions funded by the UPGC may apply for means-tested assistance under the Local Student Finance Scheme. This provides for loans to meet living expenses, and for grants to cover tuition fees, faculty expenses and student union dues. During the year, 11 865 students received loans totalling $128.7 million. Of these, 8 976 also received grants totalling $68.2 million.

United Kingdom-Hong Kong Joint Funding Scheme

A joint funding arrangement between the governments of the United Kingdom and Hong Kong provides grants on a means-tested basis to full-time students attending first degree or higher national diploma courses in the United Kingdom. The grant meets the difference between fees for home students and fees for overseas students. During the year grants of £4.4 million and loans of $29 million were made to 1 797 students.

United Kingdom-Hong Kong Scholarships

These scholarships aim to provide educational opportunities at tertiary level in the United Kingdom for outstanding students from Hong Kong. The scholarship fund is contributed equally by the United Kingdom Government and the Royal Hong Kong Jockey Club on behalf of the Hong Kong Government. Nine scholarships were awarded in the 1991-2 academic year.

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. The fund promotes education and learning among Hong Kong people, and encourages research. In the 1991-2 academic year $6 million was disbursed. Thirteen students were awarded fellowships or scholarships for postgraduate or undergraduate study overseas. Locally, 43 postgraduate research students were awarded fellowships, and 82 under- graduate, diploma and certificate students received scholarships. Awards from the fund were also made to five students excelling in public examinations, nine disabled students at tertiary, secondary and post-secondary level, and 597 outstanding senior secondary students nominated by school heads.

Education Scholarships Fund

In addition to the above schemes, 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 1992, 189 730 children aged three to five were enrolled in 743 kindergartens. All kindergartens are privately operated. An increasing number are run on a non- profit-making basis which renders them eligible for rent and rates rebates. They may also

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be allocated premises in public housing estates. Most kindergartens operate two half-day sessions, but the number of whole-day places is increasing.

A fee remission scheme is available to needy parents with children in kindergartens. Assistance ranges from 25 to 100 per cent of the weighted average of fees charged by non-profit-making kindergartens. In 1992, 10 988 children benefited from the scheme.

The department gives professional advice to kindergarten managers, teachers, parents and the public. It produces curriculum development materials and runs basic training courses, seminars, workshops and exhibitions to help heads and teachers develop their professional skills. The department also publishes guidelines to help teachers organise the curriculum and learning activities.

Primary Schools

     Primary schooling, beginning at the age of six and lasting six years, has been provided free of tuition fees 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 competi- tion for entry to popular schools.

In September 1992, 501 625 children were enrolled in 652 primary schools. Four new school buildings were completed during the year to provide for the growing population in the new towns.

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, which offer a more child-centred teaching method.

Most primary school buildings accommodate two half-day sessions, a system adopted since the 1950s to meet demand from an increasing school population in a situation of severe space constraints. The Education Commission's Report No. 4 recommended a programme for phasing in whole day operation for all Primary 5 and 6 classes over a number of years. But this was not fully supported by the public. During the year, the government accepted the Education Commission's revised recommendation that whole- day schooling should remain a long term goal. In the meantime, any primary school wishing to convert to whole-day operation will be allowed to do so, wherever this will not adversely affect the supply of places in the district concerned.

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 CDC, and is regularly revised and updated to meet changing educational and community needs. Awareness of the benefits of the 'activity approach' method is growing and it is now used in 262 schools.

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  All teaching posts in primary schools are in non-graduate ranks. The primary 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.

As recommended in the Education Commission's Report No. 4, a framework of teaching targets and target-related assessments (TTRA) has been developed to set a clearer direction for teaching, learning and assessment. The TTRA initiative will be introduced first to primary schools in the three basic subjects of Chinese, English and mathematics. Seminars were held for all primary school heads, and teachers taking classes at Primary 4 to Primary 6, to prepare them for implementing TTRA at Primary 4 level in 1993.

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 schools. 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 1992, 44 000 students from 227 primary schools took part in 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. A total of 84 696 primary pupils took part in the 1992 allo- cation, of whom 74 549 (88.02 per cent) found places in government and aided grammar schools, 4 886 (5.77 per cent) in prevocational schools, and 5 261 (6.21 per cent) in private schools in the Bought Place Scheme (BPS).

Secondary Schools

In 1978 universal free education was extended to junior secondary classes. The policy for public sector provision after Secondary 3 is broadly to meet the demand for places on a senior secondary or vocational course. In 1992 the number of subsidised Secondary 4 places was equivalent to 82 per cent of the 15-year-old population, with places for a further eight per cent 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.

Secondary 3 leavers are selected for subsidised places in Secondary 4 or on a vocational course according to internal school assessments and parental preference. One objective of the selection process is to enable as many students as possible to progress to Secondary 4 within the same school. In 1992, 74 748 students took part in the process, of whom 63 253 secured a Secondary 4 place and 3 999 were admitted to craft courses.

The Secondary 6 admission procedure introduced in 1991 was expanded to include sixth form places in prevocational and BPS schools. Over 99.5 per cent of the 21 993 places available were filled.

To meet provision targets new secondary schools are built and places are bought from private schools. During the year, seven new secondary schools were completed, providing

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8 120 places. Another 19 schools will be completed between 1993 and 1995 to meet increasing demand and to reprovision schools from areas of surplus to areas of shortfall. The majority of these schools will be built to a new standard design introduced in 1990, which provides additional teaching spaces and better facilities.

There are three main types of secondary school in Hong Kong: grammar, technical and prevocational. In 1992, the 410 grammar schools had a total enrolment of 403 619. They offer a five-year secondary course in a broad range of academic, cultural and practical subjects leading to the HKCEE. Most offer in addition a two-year sixth form course leading to the HKALE. The 22 technical schools, which prepare students for the HKCEE with an emphasis on technical and commercial subjects, had an enrolment of 21 967. Qualified candidates can continue their studies in the sixth form or in technical institutes.

The 23 prevocational schools had an enrolment of 20 199. These offer an alternative form of secondary education suited to students with an aptitude for practical and technical subjects. They provide a solid foundation of general knowledge and a broad introduction to technical and practical education upon which future vocational training may be based. The curriculum in Secondary 1 to 3 is made up of about 40 per cent technical and practical subjects and 60 per cent general subjects. The technical and practical content is reduced to about 30 per cent in Secondary 4 and 5. Students completing Secondary 3 in a pre- vocational school may enter approved apprenticeship schemes or continue their studies to Secondary 5 and take the HKCEE. Qualified candidates can continue their studies in polytechnics or technical institutes. In September some prevocational schools started to provide sixth form classes, to prepare students for technical or other studies in the polytechnics, universities or other tertiary institutions.

      The Direct Subsidy Scheme (DSS) was introduced in 1991 to strengthen the private secondary school sector, as a means to improve the quality and diversity of education. Under the scheme private secondary schools meeting specified standards can receive a public subsidy for each eligible student. They are free to decide their own curriculum and to set entrance requirements and fee levels. Nine schools were admitted to the DSS during the 1991-2 school year, and a sixth form college was admitted in September 1992.

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 so that they may if they wish apply to join the DSS. Twenty private schools were operating under contracts with the government which specify improvements in such areas as whole day operation, the class structure, teacher qualifications and school facilities. The contracts will expire in August 2001, unless terminated earlier by either party.

      The curriculum for secondary education is divided into two levels: junior and senior. The junior secondary curriculum aims to provide a well-balanced and basic education suitable for all students in Secondary 1 to 3, whether or not they continue formal education beyond Secondary 3. It is designed to follow on from the primary curriculum, to form an integral learning framework for the nine years of free and universal education.

The senior secondary curriculum aims to prepare students for education beyond Secondary 5 as well as the world of work, and offers a diverse range of subjects from which schools and students select according to individual needs and interests, school traditions and the facilities available.

The new sixth form curriculum introduced in schools in September 1992 aims to provide a more broadly-based and balanced programme of study for students intending to proceed

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to tertiary education or join the workforce after Secondary 7. The range of choices in the HKALE was enlarged by new practical and technical subjects at A-Level, and by 17 new Advanced Supplementary (AS) subjects. To help teachers prepare for the new AS-level subjects, short courses, seminars and workshops were organised and run by the Advisory Inspectorate, and by tertiary institutions with financial help from the department.

  The CDC prepares, and keeps under review, teaching syllabuses for all subjects offered at the secondary level. During the year, the syllabuses for computer studies, mathematics, and home economics were revised.

  Teaching guidelines and supporting materials are provided to schools for cross- curricular studies such as civic education, moral education, sex education and environ- mental education. Civic and moral education are promoted by making use of learning opportunities across the curriculum and in the extra-curricular life of the school. Sex and AIDS education is integrated into various subjects in primary and secondary schools. The aim is to enable pupils to understand sex as part of overall personal and social well- being, and not as something isolated from other aspects of behaviour. Resources for sex and AIDS education were developed and issued to schools. A newsletter, Sex Education News, was published regularly to inform teachers about sex education resources and activities. A learning pack on AIDS was issued to secondary schools in July to help teachers discuss with their pupils moral and social issues related to AIDS. A calendar card design competition was organised in December in support of the World AIDS Day.

  Environmental education is promoted through relevant topics and themes in 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. It is supplemented by extra-curricular activities. Guidelines on environmental education in schools were issued in July, and various activities to promote environmental education were organised by the department, some in conjunction with other government departments or voluntary agencies.

  In September, two new computer subjects for the sixth form, computer studies at A-level and computer applications at AS-level, were introduced to 21 public sector schools. Senior secondary students in 370 schools took the HKCEE computer studies course, while computer literacy for Secondary 1-3 was taught in 189 schools. Students in over 75 per cent of special schools were also given the chance to learn through computers and to employ the new technology in communication and rehabilitation.

  The school-based Curriculum Project Scheme, introduced in 1988, encourages practising educators to develop projects which adapt the centrally designed curriculum to meet the varied abilities and needs of pupils. Apart from producing useful curriculum materials, the scheme helps to develop curriculum development and planning skills among teachers. The scheme provides production expenses, and an award on satisfactory completion of a project. In the 1991-2 school year, 47 schools were involved 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 attracted 33 000 participants from 212 schools. A booklet containing the winning book reports was sent to all schools for students' reference. An inter-school project competition was organised to encourage among pupils a positive attitude towards

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life, and an exhibition of the winning projects was held in November 1992. 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. The government accepted recommendations in the Education Commission's Report No. 4 to establish a framework for grouping secondary students according to their ability in the two languages. Objective target-related assessments in the two languages were being developed, to help schools and parents decide on the most appropriate medium of instruction for each student. To enable school authorities to prepare for a clear policy on their medium of instruction before the new assessments are available, they were given information from existing assessment instruments on the language abilities of past intake cohorts.

       Target-related assessments were also being 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.

      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, with additional teachers to help schools strengthen language teaching; provide remedial teaching, careers guidance, counselling, extra-curricular activities and library services; and offer split class teaching of such subjects as second language, domestic science, woodwork, metalwork, computer studies, art and design and music. The ratio of graduates to non-graduate teachers is about 7:3. The pupil to teacher ratio is about 20:1. The class structure of a standard government or aided secondary school is six classes each in Secondary 1-3, four classes each in Secondary 4-5 and two classes in each sixth form year.

Extra-Curricular Activities

Extra-curricular activities are an integral part of school education. They usually take place outside school hours, in the school premises or elsewhere, under teacher supervision. The department provides professional guidance and advice to teachers through in-service training programmes and school inspections, and also subsidises certain activities. Inter- school programmes and activities organised or co-ordinated by the department include the Community Youth Club, the Duke of Edinburgh's Award Scheme, the Sister Schools Scheme, the Lions Clubs International Hong Kong Secondary Schools Adoption Scheme, and the Schools Drama Festival.

       The Community Youth Club, established in 1977 to help build a strong community spirit among students through organised activities, had a membership of about 120 000 students from 1064 primary and secondary schools. Up to June 1992, 46 293 members had gained awards under the CYC Merit Award Scheme. In recognition of their outstanding service, 19 primary school members were taken on a tour to Singapore during the summer holiday, and 24 secondary school members visited England.

       The department is the largest of the 20 operating authorities of the Duke of Edinburgh's Award Scheme in Hong Kong, with 20 370 members from 181 schools. Over 130 training courses and functions at bronze, silver and gold levels were organised during the year.

      The Sister Schools Scheme which started in 1981 under the auspices of Lions Club International District 303, matches ordinary and special schools to promote social inter- action and friendship among students. In 1992, 43 special schools and 45 ordinary schools

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were made sister schools, and about 20 000 pupils took part in activities sponsored by the scheme.

The Hong Kong Secondary Schools Adoption Scheme was devised jointly by the department and Lions Club International District 303, to encourage links between Hong Kong schools and Lions Club districts around the world. It was launched at the International Lions Club Convention held in Hong Kong in June. The aim is to promote mutual understanding, co-operation, assistance and cultural exchange.

  The department also supports inter-school activities in music, speech, drama and sports. In the 1991-2 academic year the music festival organised by the Hong Kong Schools Music and Speech Association attracted 63 900 students from 923 schools, while 52 800 took part in the speech festival. The Schools Drama Festival, organised under the guidance of the School Drama Council, encouraged drama productions involving about 3 200 students from 109 schools. Sporting activities organised by the Hong Kong School Sports Association and the New Territories School Sports Association attracted over 111 200 participants from more than 1 200 schools.

Special Education

The main policy objective of special education is to integrate the disabled into the com- munity 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 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 assessments at 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, mentally handicapped, maladjusted, socially deprived and 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, or children with learning difficulties. Remedial services for children integrated into ordinary classes include centre-based remedial support outside school hours, a peripatetic teaching service, as well as advice for ordinary teachers on how to cope with handicapped students.

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. The CDC's Special Education Co-ordinating Committee, with members from government departments and schools, advises on special educational needs. Special schools also offer extra-curricular activities to enrich the practical life experiences of day and residential pupils.

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In response to recommendations in the Education Commission's Report No. 4, a research project was commissioned on education for the gifted, and improvements began to be implemented in services for less able pupils.

International Schools

In keeping with Hong Kong's international character, a number of schools offer curricula designed for the needs of a particular cultural, racial or linguistic group.

The English Schools Foundation (ESF) was established by ordinance in 1967. It operates nine primary schools (known as junior schools), five secondary schools for children whose first language is English, and a special education centre for English-speaking pupils with moderate to severe learning difficulties. The education provided is similar in content and method to that available in Britain, and is aimed at British public examinations. To meet the heavy demand for places on Hong Kong Island, one of the secondary schools operated during the year in temporary premises pending completion of a new building. The ESF receives public grants based on grants paid to local aided schools, and charges fees to meet additional staffing and administrative costs.

Other international schools provide education on the American, Canadian, French, Japanese, German, Swiss and Singaporean patterns. In the school year 1992-3, there were 12 schools operating up to secondary level, 13 at primary level and 16 kindergartens. Some of these schools have received help from the Hong Kong Government in the form of favourable land grants and reimbursement of rates. Some are sponsored by their own governments or communities while some have received assistance from both sources. Four international secondary schools have joined the DSS.

Teacher Education

Four colleges of education offer pre-service professional training for non-graduate teachers in primary and secondary schools, as well as in-service initial training for primary, secondary and kindergarten teachers. To acquaint serving teachers with modern teaching methods and approaches, the colleges offer refresher courses in primary and secondary teaching, and advanced courses of teacher education for non-graduate teachers of cultural, practical and technical subjects in secondary schools. Full time pre-service courses last three years for those with HKCEE qualifications, and two years for those with two A-levels. In October 2 144 trainees were on full time courses and 2 356 were on part time or short courses.

      The University of Hong Kong and the Chinese University of Hong Kong offer post- graduate 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 inno- vation, resource development, educational psychology, student guidance and counselling, professional development of teachers, and educational administration.

      The Institute of Language in Education (ILE) offers full time and part time language- related courses and seminars for serving teachers of Chinese (including Putonghua) and English; conducts policy-focused research and development; provides a resource centre for language teachers; publishes a professional journal, books and newsletters; offers consultancy services on languages in education; and organises an annual international conference. During the year 671 teachers attended full time courses, and 859 attended

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 part time courses. Of these, 118 attended a summer immersion programme in the United Kingdom. The ILE international conference in December, on the theme of language and content, attracted over 300 local and overseas scholars, and over 100 papers were delivered.

  The four colleges and the ILE are run directly by the Education Department. By the year's end, preparations were in hand to implement the recommendation, in Education Commission Report No. 5, that the colleges and ILE should be upgraded into an auto- nomous Institute of Education.

Support Services

Teaching and learning in schools is backed up by a wide range of services, mostly provided or supported by the department.

  The Advisory Inspectorate advises schools on curriculum, teaching methods and educational resources, and offers short courses, seminars and workshops for teachers. Its teaching and resource centres offer resources and advice to kindergarten, primary and secondary teachers in the areas of language, mathematics, science, social and cultural subjects, computer education, technical subjects, civic education, religious, ethical and moral education, sex education, and kindergarten teaching.

  Changes to the student guidance service, to implement the 'whole school approach' recommended in Education Commission Report No. 4, began in September 1992, when the first batch of aided primary schools were provided with their own student guidance teachers. The department's student guidance section provides training in student guidance at primary level, enforces compulsory education, and ensures an adequate provision of study room facilities.

  Educational television programmes, produced jointly by the department and Radio Television Hong Kong, are transmitted to schools by the two local commercial television stations. Syllabus-based programmes for students in Secondary 1 to 3 cover Chinese language, English language, mathematics, social studies and science while those for pupils in Primary 3 to 6 cover the same five subjects plus health education. A new series of programmes, called Value of Life, was produced in response to the increased number of student suicides during the 1991-2 school year.

Starting in July, microcomputers began to be installed in government and aided schools to help in their administration work. By the year's end, computers were installed in 350 schools, and their staff trained to use the standard software including Chinese and English word processing, spreadsheet, and database packages. The project is expected to be completed by the end of 1993. In December, consultants delivered a plan for an informa- tion systems strategy, aimed at making better use of information technology to support the school education service.

  The Hong Kong Teachers' Centre, established in 1989, promotes professionalism and a sense of unity among teachers. It is supervised by an advisory management committee with wide representation from schools, teacher organisations and educational bodies, and is staffed by the department. During the year, the centre organised or was associated with over 600 activities with 50 000 participants. 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. During the year, the ERE completed

EDUCATION

development of Series 4 of the standardised Hong Kong Attainment Tests for Primary 4 to Primary 6 in the three core subjects of Chinese, English and mathematics. Such tests are administered each year by primary and secondary schools. The results enable schools to 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 to monitor standards across years and levels. Research projects conducted by ERE in 1992 included studies into the continuity of curriculum and teaching practices between the various levels of education; the effects of the change of medium of instruction at junior secondary level; and the efficacy of different curriculum approaches. The ERE also participated in the international reading literacy study project of the International Association for the Evaluation of Educational Achievement.

       The department's 19 district education offices, each headed by a senior education officer, provide advice and assistance to schools, teachers, parents and students, and act as channels of communication between them and the department. District education 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, 4 408 students went to study in Britain, 3 583 to Canada, 5 410 to the United States, and 2 866 to Australia. Exhibitions promoting overseas education were staged by American, Australian, British and Canadian organisations.

      The Students Division of the Hong Kong Government Office in London promotes the interests of Hong Kong students in the United Kingdom. It maintains close liaison with universities, polytechnics and colleges, and also with official and unofficial bodies including government departments concerned with the welfare of overseas students. The division monitors developments in education in the UK. It works closely with the department to help students wishing to further their studies in the UK, and with the Student Financial Assistance Agency to administer the UK-HK Joint Funding Scheme. It also maintains close contact with the Hong Kong student community through college-based student societies.

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 VTC, which operates seven technical institutes and provides industrial training for the major industrial and service sectors. Two other training authorities operate levy-funded training schemes for the clothing and construction industries.

      The manpower needs of each economic sector are assessed by regular manpower surveys, conducted by the VTC training boards and general committees. During the year 14 sectors were surveyed. Based on survey findings, proposals are formulated for new or modified 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, organisation of out-centre training courses, training seminars and trade tests, and the preparation of job specifications, trade test guidelines, training curricula, and glossaries of common technical terms.

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Technical Education

Technical education at technician and craft level is provided by the VTC's seven tech- nical institutes. Disciplines cover environmental studies, chemical technology, clothing technology, commercial studies, accountancy, computing studies, construction, design, electrical engineering, electronic engineering, child care, hairdressing, hotel-keeping and tourism studies, marine engineering and fabrication, manufacturing engineering, mechanical engineering, motor vehicle engineering and printing and textiles.

Courses leading to a recognised qualification are offered with several modes of attendance. Courses for craft apprentices, usually Secondary 3 leavers, are offered on a part time day release or block release basis. At technician level, full time, 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 Technology Education Council. Students completing them may register for BTEC awards.

In September 1992, the institutes offered 321 courses taught by 792 full-time teaching staff and about 730 supporting staff. Evening courses were delivered by 1930 part time lecturers. Enrolment in the 1992-3 academic year totalled 9 400 full time, 15 800 part time day and 25 600 part time evening students. In addition, about 9 000 serving employees attended 198 short courses to upgrade their knowledge and skills.

  In July, 6 000 full time, 5 300 part time day and 9 800 evening students graduated from the institutes. The employment of graduates from full time courses was surveyed during the year. Findings again showed that graduates had little difficulty in finding jobs, and that most found work relevant to the training they had received.

Industrial Training

 The VTC's 19 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 1992, over 30 000 trainees attended full time or part time courses. Trade tests for serving employees were offered in six industries, including automobile, building and civil engineering, electrical, machine shop and metal working, plastics and printing. Training boards in conjunction with educational and training institutions organised out-centre training courses to upgrade or update serving employees.

The Engineering Graduate Training Scheme, administered by the VTC, helps engi- neering students and graduates complete the professional training which will gain them recognition by the Hong Kong Institution of Engineers or other professional bodies. In 1992, 85 engineering firms took part in the scheme, which provided 280 training places.

  The VTC's Management Development Centre 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 1992, 7 700 trainees attended courses. The three training centres of the Construction Industry Training Authority, funded by a levy on the value of construction works exceeding $1 million, provided courses for 4 000 trainees.

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Training in New Technology

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.

      A new Technology Training Scheme was launched during the year. The scheme will provide matching grants from a special fund to help industrial employees acquire skills in new technologies of benefit to Hong Kong industry.

Retraining for Local Workers

At the request of the government and as part of the employees retraining scheme, the VTC organised specially designed retraining programmes for local workers displaced as a result of economic re-structuring to provide them with opportunities for acquiring new or upgraded skills they need to obtain employment.

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 a craft foundation course in a technical institute, may lead to exemption from the first year of the apprenticeship.

The Office of the Director of Apprenticeship 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. The office also provides a free apprentice placement service to job-seekers who are interested in apprentice training. In 1992, 4 300 contracts were registered. Of these, 850 were in non-designated trades. The contracts covered 3 650 craft apprentices, and 650 technician apprentices. By the year's end 9 000 apprentices were being trained.

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 provide 840 places, of which 358 are residential.

The VTC also provides support services. The vocational assessment service assesses individual potential and helps those assessed to select a suitable vocational training programme. Internationally recognised test batteries, as well as work samples designed to match local industrial skills profiles, are used. All mildly mentally disabled school leavers attend a one-week vocational assessment programme. An eight-week vocational assessment programme is also operated to provide an in-depth assessment for more complex cases.

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  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. Information and resource materials on vocational rehabilitation are produced and made available to disabled persons and professionals in this field.

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 placement service to ensure that training matches the demand for skills in the local employment market. The annual employment survey of disabled students and trainees completing full-time courses in technical institutes and skills centres showed that about 90 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 locally. By 1992 this figure had increased to 20 per cent, and expansion plans announced by the government in 1989 will take it to 25 per cent by 1994-5. A first year first degree place will be available for about five out of every six matriculants, helping to supply the graduates needed to sustain Hong Kong's economic growth.

  Degrees up to PhD level awarded by local institutions are widely recognised around the world. Academic standards are assured by appointing external examiners from prominent overseas institutions. Degrees awarded by non-university institutions are also validated by the HKCAA on behalf of the UPGC.

The Tertiary Institutions

The oldest tertiary institution is the University of Hong Kong, founded in 1911. Its 9 162 full time and 2 254 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. There are 8 363 full time and 2 524 part time students in seven faculties: arts, business administration, education, engineering, medicine, science and social science.

  The Hong Kong Polytechnic, founded in 1972, offers postgraduate, first degree and sub-degree courses in six faculties: applied science and textiles; business and information systems; communication; construction and land use; engineering; and health and social studies. The polytechnic's part time and sandwich courses encourage concurrent work and study, and close links are maintained with industry, commerce and the community. Enrolment in October was 10 209 on full time and sandwich courses and 14 989 on part time courses.

  The 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 3 634 full time and 64 part time students in five faculties and schools: arts, business, communication, science and social sciences.

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The City Polytechnic of Hong Kong, founded in 1984, has 7 729 full time, 5 734 part time and 379 sandwich course students. The four faculties of business, humanities and social sciences, law, and science and technology offer first degree courses, postgraduate diplomas and master's degree courses, as well as MPhil and PhD programmes by research. Diploma and higher diploma courses in commerce, humanities and social sciences, and technology are offered by the College of Higher Vocational Studies.

      The Hong Kong University of Science and Technology was incorporated in 1988 and admitted its first class in October 1991. Three schools - science, engineering, and business and management - offer first and advanced degrees. The fourth school, humanities and social science, offers advanced degrees and provides general education to all under- graduates. In October the university had 1 749 full time undergraduate students and 246 full time and 258 part time postgraduate students.

      Lingnan College was founded in 1967 to continue the tradition of Lingnan University. The college was upgraded to tertiary status under the aegis of the UPGC in July 1991 and subsequently incorporated under its own ordinance in 1992. It has three faculties arts, business, and social sciences - and a general education division. In October, enrolment was 1495 full time students, of whom 371 were pursuing honours degree studies and 1 124 honours diploma studies. Enrolment is planned to increase to 1 800 by 1994, when the college is expected to be relocated to a new campus in Tuen Mun.

      The Open Learning Institute of Hong Kong (OLI), established in 1989 as the seventh degree-granting institution, is funded initially by a government subvention, but aims to become self-financing by 1993-4. It provides distance learning courses, under an open-access policy, for adults who want to study for personal development or obtain a further qualification. In April about 15 500 students were actively pursuing studies. Degree programmes are offered in three schools: science and technology, business and administration, and arts and social sciences. In June the OLI established a School of Education to offer degree programmes and professional training courses for serving teachers. A Centre for Continuing and Community Education was also launched, to offer sub-degree and postgraduate studies and short training courses for adults.

      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 the 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 commerce include 13 departments, which offered day and evening courses to 3070 students in October 1992. 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 work. There are numerous private schools offering language, business and computer courses. The British Council, Alliance Francaise, Goethe Institute and Japanese Consulate all offer language courses.

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  All tertiary institutions except the Hong Kong University of Science and Technology and Lingnan College operate extra-mural departments or divisions of continuing educa- tion. These offer an enormous variety of courses, some at degree level, in such areas as languages, 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, and courses of personal development at post-secondary level. 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 363 adult education projects organised by 67 voluntary agencies.

The British Council

The aim of the British Council in Hong Kong is to offer British skills and expertise in the key areas of science and technology, the arts and English language teaching and learning, to meet the challenge of Hong Kong's changing needs into the next century.

  English language teaching is one of the council's major programmes in Hong Kong. Through its general and business English course, distance learning language programmes with Radio Television Hong Kong, summer schools and teacher training courses, the English Language Centre provided English language learning opportunities for over 42 000 Hong Kong residents in 1992. In addition, the council arranged for 100 teacher trainees from the colleges of education to visit the United Kingdom for total immersion courses jointly funded by the Education and Manpower Branch.

  The council provides access to British expertise in helping to develop Hong Kong's industry through promoting technology transfer, including working closely with Industry Department and Hong Kong Polytechnic on post-experience training, and a feasibility study on a Science Park for Hong Kong. The council is also working in close collaboration with the government, higher education and other organisations in areas such as the environment, law, planning and accountancy, in some cases through schemes linking Hong Kong and Britain with China. The annual Science Lecture Series for Young People took place at the Science Museum on the theme of the environment and an annual scholarship in environmental science was awarded, co-funded with the Swire Educational Trust and the Aberdeen University Hong Kong Association.

  The council's library and information services are open to all Hong Kong residents and cover all aspects of British life and culture, with an emphasis on English literature and English language teaching. The collections include books, magazines, newspapers, videos, CD-ROM, music on CD and audio tapes. The library facilities are computerised and free to students of the council's English Language Centre. Others are charged a nominal annual subscription.

  The Educational Counselling Service provides free and impartial advice to students on educational opportunities available in Britain. In 1992, 28 000 students used the service for information on studying in British universities and colleges.

11

HEALTH

THE Department of Health is the health authority and adviser to 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 such as out-patient clinics, family health and family planning, health education and community health, territory-wide health services for 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, pharmaceutical 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.

      The Hospital Authority is an independent statutory body responsible for the manage- ment and control of all public hospitals in Hong Kong. The Authority was established in December 1990 to integrate government and government-assisted hospitals with a view to optimising the use of resources, facilitating hospital management reforms and enhancing community participation. A comprehensive range of medical treatment and rehabilitation services is provided to patients through hospitals and specialist clinics operated by the Authority. Starting in 1992, management reforms have been introduced in eight public hospitals with emphasis on defining clear lines of accountability as well as greater devolution of responsibilities.

The Department of Health and the Hospital Authority 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. Tuen Mun Hospital opened in 1990 and is now operating with 952 beds to serve the population in New Territories West and will provide a total of 1 607 beds upon full operation. Physical construction of the 1 620-bed Pamela Youde Hospital in Chai Wan is scheduled for completion in late 1992.

For the 1992-3 financial year, the allocation of funds to medical and health services to the public sector amounted to $11,303 million including $10,035 million for the Hospital Authority. In addition, subventions totalling $169 million were provided for other medical institutions and organisations. Capital expenditure on new hospitals and other buildings, including equipment and furniture, was about $935 million.

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Health of the Community

The community's good general level of health is attributable to the comprehensive range of preventive, promotive and personal health services, and a comparatively high standard of living. This is reflected by health indices which compare favourably with those of industrialised nations. Infant mortality remained below seven per 1 000 live births and the average life expectancy at birth has increased to 81 for females and 75 for males.

  Cancers, heart diseases and cerebrovascular diseases (strokes) continue to be the leading causes of death, accounting for 58 per cent of the mortalities in the territory. These diseases generally affect older people. Given the continual ageing of the population, it is anticipated that these diseases will remain prominent in the near future.

  There were three cases of cholera at the end of 1992. One was a local sporadic case while two were imported cases with a history of travel abroad. Prompt control was instituted and no secondary spread was found.

  Although communicable diseases are largely under control, they still pose a threat. Viral hepatitis and tuberculosis have re-emerged, both locally and overseas.

  In 1992, Hong Kong experienced its biggest hepatitis A epidemic to date. This commenced in December 1991 and continued until July 1992. A total of 3 496 cases were reported, of which 281 cases occurred among Vietnamese migrants. To control the situation, health education and publicity measures were increased and control of food premises (including raiding and prosecution of illegal food hawkers) were stepped up.

  There were 6 534 tuberculosis notifications during the year, representing a notification rate of 112 per 100 000 population. A total of 410 deaths were reported.

  To protect the population from infectious diseases, children in Hong Kong are immunised against nine important infectious diseases from an early age. These include tuberculosis, diphtheria, pertussis, poliomyelitis, tetanus, hepatitis B, measles, mumps and rubella. As a result of the high coverage of immunisation, diphtheria and poliomyelitis have been virtually eradicated from the territory and the incidence of other diseases among children are kept at low levels.

  The immunisation programmes are carried out at maternal and child health centres for children under six, and at primary schools. BCG, polio type 1 vaccine and the first dose of hepatitis B are given to newborn babies in hospitals and maternity homes. The coverage rates are over 97 per cent.

  Immunisation for all infants against hepatitis B was first introduced in November 1988. Hepatitis B vaccination was also offered to children born between 1986 and 1988 on a one-off basis in 1992. A total of 141 338 vaccinations were given between July and November 1992.

  All new born babies are covered in the Combined Neonatal Screening Programme for congenital hypothyroidism and glucose-6-phosphate-dehydrogenase deficiency. This 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.

HIV Infection and AIDS

 The influence exerted by HIV (Human Immunodeficiency Virus) and AIDS (Acquired Immunodeficiency Syndrome) virus infection is increasing world-wide. As there is yet no cure for AIDS and no effective vaccine against HIV infection, HIV continues to pose a

HEALTH

serious threat. In 1992, 73 cases of HIV infection were reported. This brings the total number of cases reported since the beginning of the surveillance programme in April 1985 to 339. Fourteen new cases of AIDS were reported in 1992, giving a cumulative total of 73 cases, of which 48 have died.

      The fight against HIV/AIDS continues with the Advisory Council on AIDS of the Department of Health taking the lead. Under the Council, the Committee on Education and Publicity on AIDS (CEPAIDS) continues to work towards promoting greater community involvement 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 confidentiality 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.

The Scientific Working Group, also under the council, is concerned with the technical aspects of the preventive programmes. The working group concentrates on the production of comprehensive guidelines for the prevention of transmission of HIV in health care settings, oversees HIV surveillance programmes, undertakes quality assurance programmes on HIV antibody testing and carries out studies and scientific research projects.

      To foster collaboration with the community, the Hong Kong AIDS Foundation was incorporated in May 1991 as a non-governmental organisation to supplement and complement government's efforts. The Foundation's activities include research, health promotion and education, publicity and counselling services. In particular, it mobilises public support and opens up avenues for community participation.

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 such as students, prison inmates and intravenous drug abusers. Members of the public can use a special telephone hotline to obtain advice in confidence. Blood tests may be arranged under conditions of complete anonymity.

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 transmission of HIV through this route has become unlikely.

Review of Primary Health Care

Primary health care, which emphasises promotion of general health and prevention of disease, is recognised world-wide as the most cost-effective means to provide health care services.

The Working Party on Primary Health Care, whose report was endorsed by the Government in 1991, made 102 recommendations to improve Hong Kong's primary health care service. The key recommendations are being implemented in phases. These include improvements to over 50 general out-patient clinics, the establishment of a well woman clinic, preventive health programmes for the elderly and a clinical information system. A review on occupational health has also been conducted.

      Training in family medicine is a priority area for improvement. Several training programmes have been devised. A training and education centre in family medicine was opened in Ngau Tau Kok Jockey Club Clinic.

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District Health System

The District Health System is a new organisational framework for the delivery of primary health care services. It attaches importance to the need for efficient co-ordination among various providers of medical and health services and community participation. One of its main features is the decentralisation of health services from the regional to the district level and public involvement in service planning and health promotion.

A pilot District Health System programme was initiated in 1992 in Kwun Tong. To facilitate co-ordination with hospitals and other community service providers and the community, a District Health Committee was set up. Its functions include liaison between different services, provision of a forum for information exchange and enhancing the role of the community in the identification of health needs.

Hospitals and Development Programmes

Hospitals in Hong Kong provide a total of 26 412 beds, representing 4.6 beds per thousand population. Public hospitals provide low-charge services which are easily accessible to the people of Hong Kong. In 1992, 693 200 patients were treated in public hospitals, while 4 251 360 attendances were made at specialist clinics.

  Cases of acute illness and accident casualties are handled by the accident and emergency departments of major public hospitals free of charge. In 1992, 1 286 500 attendances were made - an average of 3 515 per day.

  During the year, 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 the Department of Health and the Hospital Authority continue to provide medical care to Vietnamese migrants. In 1992, they accounted for 13 010 attendances at accident and emergency departments and 11 350 hospital admissions, with a total of 69 130 bed days occupied.

  Projects in the hospital development programme have progressed satisfactorily with the opening of the Argyle Street Ophthalmic Centre and the Tung Wah Eastern Hospital Paramedical Block. Construction work on the 1 620-bed Pamela Youde Hospital in Chai Wan is scheduled for completion in late 1992.

  New or additional services are being progressively introduced in Tuen Mun Hospital, Queen Mary Hospital Extension, Ruttonjee Hospital, Shatin Cheshire Home and Shatin Infirmary and Convalescent Hospital. The accident and emergency service provided by Tuen Mun Hospital has been extended to 24 hours per day since early 1992.

  Major projects under construction include extension to the United Christian Hospital, refurbishment and air-conditioning of Queen Elizabeth Hospital, and expansion of the delivery suite and specialist clinic at Prince of Wales Hospital. Future projects include redevelopment of Haven of Hope Hospital, redevelopment of Castle Peak Hospital, relocation of Nethersole Hospital to Tai Po, extension of Kwong Wah Hospital, establishment of a Geriatric Day Hospital at Wong Tai Sin Infirmary and construction of Tai Po Infirmary and Convalescent Hospital.

Clinics

General out-patient services form a vital part of the health care system. Government now operates 63 general out-patient clinics. In the more densely-populated areas with higher

F

BON

OU.S.DIVERS

AQUA-MINO

Preceding page: The abundance of marine life at Pak Sha O attracts many amateur divers.

Left: Divers prepare to visit the beautiful flora and fauna of the underwater world.

Below: Pak Sha O waters provide a home for Gorgunian Soft Coral (top) and Castle-like Brain Coral.

Top to bottom: the Parasitic Cowry Snail with soft coral;

tentacles of anemone; the 'eye' of the long spined sea urchin.

Right: A diver encounters a shoal of small fish.

Top row (left to right): 'Peacock' worm; Zoanthid soft coral; Colourful Nudibranch;

bottom row (left to right): a Clownfish with its anemone host; a file shell on stony coral; anemone shrimp.

Above: The feather star. Right: Pearly soldier fish.

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demand, evening, Sunday and public holiday sessions are also provided. Total attendance was 10.7 million in 1992. To cater for increasing demand, 13 additional clinic projects have been included in the medical development programme in the next decade. Mobile dispensaries and floating clinics provide the necessary medical services to 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 Royal Hong Kong Auxiliary Air Force.

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The Department of Health also operates child assessment, tuberculosis and chest, leprosy, social hygiene, dermatology and clinical genetics services, providing both preventive and curative services for different patient groups.

      At the end of the year, there were a total of 89 clinics operated by various charity organisations registered under the Medical Clinics Ordinance and 139 registered as exempted clinics. Registered medical practitioners belonging to the Estate Doctors' Association run clinics in housing estates to provide a low-cost service for residents. Private medical practitioners continue to attend to the majority of out-patients.

Family Health

The Family Health Services of the Department of Health operate 46 maternal and child health centres, providing a comprehensive health programme for women of child-bearing age and children below six years. Ante-natal and post-natal medical consultation, as well as family planning services, are offered to women. Immunisation, child health advice and physical examinations are provided for children. During the year, about 90 per cent of. newborn babies attended maternal and child health centres.

Under the Comprehensive Observation Scheme, children are assessed at different ages. for early detection of developmental abnormalities. They are referred to specialist clinics or child assessment centres for further examination as necessary.

At present, there are four government and one government-assisted assessment centres. These provide comprehensive physical, psychological and social assessment as well as treatment, parental counselling and referral for appropriate placement of children in the various institutions and centres run by the government and voluntary agencies. Three more centres have been included in the Department of Health's medical 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 public hospitals, with emphasis on the promotion of breast-feeding. A telephone service is available to answer public enquiries.

      The government-subvented Family Planning Association of Hong Kong runs 22 birth control clinics, providing services such as pre-marital counselling, contraception, sterilisa- tion, vasectomy and advice on sub-fertility. There is also emphasis on health education and publicity on family planning and sex education.

School Health

The School Medical Service Scheme is operated by an independent School Medical Service Board. Participation is voluntary and all children from Primary 1 to Form 3 of the participating schools can join the scheme by paying a token fee of $20 a year. As at

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December 31, 1992, more than 339 200 children from 1 112 schools have participated - representing about 46 per cent of the eligible school population - and about 490 general medical practitioners have enlisted. Starting from November 1, 1992, each child has to pay $16 for each consultation made at the chosen medical practitioner's office. The government contributes $136 a year for each pupil enrolled and also bears the administrative cost.

   School health service deals with the environmental health and sanitation of school premises and the control of communicable diseases. School health officers, health nurses and health inspectors make regular inspections of schools to advise on matters concern- ing 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 entry 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 gives medical advice to vessels at sea.

The food catering service for international airlines is kept under close surveillance by health staff to ensure that 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.

Occupational Health

The Occupational Health Division of the Department of Health provides an advisory service to Government and the public on matters concerning the health of workers and the hygiene of workplaces. It also supervises the observance of occupational health standards and practices in the work place. The objectives of the division are to maintain and improve the physical and mental well-being of workers, to protect them against any health hazard arising from employment and to help them adjust to their jobs. The emphasis is on occupational disease prevention and health promotion. In 1992, the division continued to participate in occupational health activities organised to promote public awareness of the importance of health at work. The division itself also organised a large-scale exhibition on Occupational Health Perspective - Industrial Chemicals and You in early 1992.

Dental Services

The School Dental Service aims to promote dental health among primary school children. Services include regular dental examination, treatment and oral health education. Participation is voluntary at an annual fee of $10 per child. In the 1992-3 school year,

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398 759 children from 991 schools participated, representing 78 per cent of the primary school population.

      The Oral Health Education Unit of the Department of Health organises oral health education activities for the community. In 1992, an exhibition on Healthy Teeth, Happy Life was organised.. The unit has also planned a three-year oral health education pro- gramme for pre-school children. This will be launched in February 1993.

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 correctional institutions and patients in public hospitals.

Services for the Mentally Ill and Mentally Handicapped

     Medical services for mentally ill persons include treatment in hospitals, out-patient clinics and day hospitals and out-reaching services. The Mental Health Service, in conjunction with local academic and non-governmental organisations, provides a comprehensive psychiatric service for the territory. Emphasis is placed on continuity of care and integrating rehabilitation with medical treatment.

At the end of 1992, 3 514 beds were provided in psychiatric hospitals, and 879 beds in public psychiatric units of general hospitals, with 871 additional beds being planned for mentally ill persons in various public 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. Community psychiatric nursing service and domiciliary occupational therapy service in particular aim to provide continual care and treatment programmes 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 nine Community Psychiatric Nursing Service centres and two more are being planned. The various other complementary rehabilitative services include day centres, half-way houses, longstay 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 rehabi- litation services are cared for in Tuen Mun Hospital with 200 beds, Caritas Medical Centre with 300 beds and Duchess of Kent Children's Hospital with 10 beds. In order to meet the great demand in this area, a further 676 beds have been planned.

Support Services

The Pathology Service of the Department of Health provides both clinical and public health laboratory services for government clinics and some public hospitals.

The Forensic Pathology Service with its fully-established forensic laboratory works closely with the Royal Hong Kong Police on the medical aspects of criminology and other medico-legal work. It also performs investigations in all homicides and coroners' cases.

The Virus Unit is the central laboratory for the diagnosis and surveillance of viral infections including HIV infections. It provides laboratory support for the screening, assessment and guidance of vaccination programmes against viral diseases. Moreover, the Institute of Immunology undertakes the monitoring and quality control of biological products, including vaccines for use in local health services.

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  The Central Neonatal Screening Laboratory co-ordinates the laboratory activities of the territory-wide neonatal screening programme on congenital hypothyroidism and glucose- 6-phosphate-dehydrogenase deficiency.

  The Pharmaceutical Service of the Department of Health is made up of two divisions. The first division provides pharmaceutical service to all government clinics. The second 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. In 1992, there were 65 prosecutions.

Radiation Health

 Regular visits are made by the staff of the Radiation Health Unit of the Department of Health to medical, commercial and industrial premises to inspect the working conditions of radiation workers. The unit also issues radiation licences to proprietors in accordance with the Radiation Ordinance and Regulations. It assists in the Background Radiation Monitoring Programme organised by the Royal Observatory to establish an accurate baseline of background radiation levels in Hong Kong.

Community Nursing Service

The Community Nursing Service of the Hospital Authority provides domiciliary and rehabilitation nursing care and treatment to the sick, the elderly infirm and the disabled in their own homes. The service is provided through a network of eight hospital stations and 42 satellite centres. During the year, 20 100 patients were served and 270 200 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 1992, the unit was actively involved in a number of campaigns including those on prevention of communicable diseases such as viral hepatitis and malaria; organ donation; diabetes; self-care; and AIDS.

  The theme of the major health education campaign for 1992 was Healthy Members, Happy Family. A series of programmes including a 24-hour pre-recorded telephone information service, cartoon wording competition, photo competition and health news were arranged. An exhibition was held in the Science Museum in September.

  Special training courses were arranged for students and teachers, notably the 13th Young Health Leaders' Training Course, which was held in July. Health talks and presentations were delivered to schools, voluntary agencies, private companies and government departments. Health education materials like pamphlets, cassettes, slides, videos and exhibits were produced for distribution or loan.

  Close liaison is maintained with both government and non-government organisations in promoting health educational activities.

Smoking and Health

The Smoking (Public Health) (Amendment) Ordinance 1992 was passed by the Legislative Council on January 29, 1992. As an important step in the government's on-going anti-

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     smoking policy, the new law further prohibits smoking in public places and public transport, limits tobacco advertising, restricts the tar content in cigarettes and conveys stronger health warnings to the public. Following this, the government launched a consultation exercise from August to October to solicit views on proposals furthering restrictions on the use, sale and promotion of tobacco products.

      The Hong Kong Council on Smoking and Health is an independent 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. With a $2 million grant from the Royal Hong Kong Jockey Club, it completed a year-long youth project in collaboration with the Community Youth Club of the Education Department with the aim of promoting a happy and healthy lifestyle among young people without addiction to smoking. More than 500 schools have taken part in various activities, involving hundreds of thousands of students.

Medical Charges

The government is committed to the policy that no one is denied adequate medical treatment through lack of means. Medical charges remain low, reflecting a substantial subsidy from public funds. Patients in general wards of public hospitals are charged $43 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 $21, while that for specialist clinics is $33. Charges for physiotherapy, occupational therapy and child assessment services are $33. Attendance at geriatric or psychiatric day centres and home visits by community nurses cost $34. These fees may also be waived if warranted.

The charge for injections and dressings in general out-patient clinics is $9, while charges for visits to family planning clinics and methadone clinics remain at $1. These levels of charges reflect 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 was 163 in 1992 and 155 in the Chinese University of Hong Kong.

      Under the Licentiate Scheme of the Hong Kong Medical Council, 35 externally-trained doctors passed the local licentiate examination in 1992. After satisfactory completion of an externship programme in public hospitals, they will become registered medical practitioners.

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Training in dentistry is available at the University of Hong Kong which produced the eighth batch of 38 graduates in January 1992. The training of dental therapists is provided at the Tang Shiu Kin Dental Therapists Training School.

Three-year basic nursing training is offered by schools of nursing of the Hospital Authority (HA) and one private hospital. The Hong Kong Polytechnic and the Chinese University of Hong Kong also conduct undergraduate degree nursing courses. On completion of either programmes and having registered with the Nursing Board of Hong Kong, graduates are licensed to practise as registered nurses. The three-year training capacity for student nurses in the HA general nursing schools is 3 417 while that of the psychiatric nursing schools is 520. Two-year programmes are also organised to train pupil nurses to become enrolled nurses. The two-year training capacity for HA schools is 991 in the general stream and 160 for the psychiatric. Opportunities for further training in specialised fields are available both locally and overseas.

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 training. There is also in-service training for prosthetists, mould laboratory technicians and therapeutic radiographers in the respective units of public 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 government departments and other institutions. Much of the work is related to the protection of public health and the environment. The laboratory has statutory respon- sibilities for testing under a number of ordinances and regulations.

Food and food products are regularly tested over the year for composition, additives, toxic residues and contaminants. Several outbreaks of food poisoning arising from consumption of vegetables contaminated with toxic pesticide residues, have led the laboratory again to be heavily involved in the checking of vegetable samples. Results of analysis are made available within a few hours of sample receipt to enable client departments to take appropriate follow-up action in good time.

Pharmaceutical products for use in public hospitals and clinics are tested for compliance with pharmacopoeia or other specifications. Those intended for use and sale locally are examined for compliance with registration and labelling requirements. Herbal medicines are checked for the presence of synthetic drugs and toxic metals.

In other areas of public health, projects have been conducted with the Consumer Council to test for toxic and carcinogenic substances in several types of consumer products, and a unit was set up to undertake comprehensive testing of toys and products for children for compliance with safety requirements.

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A wide range of commodities continued to be examined on behalf of the Customs and Excise Department. These included dutiable commodities tested for duty assessment purposes, weighing equipment for compliance with the weights and measures ordinance, suspected forged commodities for identification, and gold and platinum articles for fineness determination. Research is now underway to study the quality of precious stones.

In the realm of environmental protection more litigation-related samples were examined on top of the bulk of samples analysed on behalf of the Environmental Protection Department for the monitoring of air, river and marine waters and sediments for a variety of pollution level indicators. These samples included industrial fuels for sulphur deter- mination, illegal sewage discharges for microbiological tests, and industrial effluents for the determination of toxic and environmentally harmful substances.

Analytical and advisory services in relation to storage, carriage and classification of dangerous goods continued to be provided to the Fire Services Department. Immediate testing of medical gases was carried out to support their safe use in hospitals. In addition, a 24-hour service was provided to render assistance to fire service personnel at scenes of emergency involving hazardous chemicals.

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 abusers and to dissuade people, particularly young people, from experimenting with drugs, so as to eradicate drug abuse from the community.

       The exact number of drug abusers is not known. However, the government's computerised Central Registry of Drug Abuse and other linked indicators suggest that at the end of 1992 there were about 38 000 'active' drug abusers, which was 0.8 per cent of the population aged 11 and above.

Data collected by the registry, based on 498 000 reports on 70 000 persons, indicate that 90 per cent of drug abusers are male and 10 per cent female. Sixty seven per cent of the 'active' abusers were over 30-years-old at the end of 1992, 25 per cent were in the 21 to 30 bracket and 8 per cent were aged under 21. The most common drug of abuse is heroin, which was used by 93 per cent of the persons reported to the registry in 1992. In the case of young persons below the age of 21, the common drugs of abuse included heroin, cough medicines and cannabis.

       A total of 2 500 drug abusers came to the notice of the registry for the first time in 1992. Of the new cases, 85 per cent were male and 15 per cent were female. Most of them, or 70 per cent, were within the age bracket of 16 to 30. The drugs reported to be commonly abused by these new cases were again heroin, cough medicines and cannabis.

Overall Strategy and Co-ordination

The government has a comprehensive anti-drug 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 abusers 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

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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-drug 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

The Dangerous Drugs Ordinance is the main piece of legislation dealing with drug offences. In June, amendments to the ordinance were passed which modified and repealed presumptions which were incompatible with the Bill of Rights, raised the maximum fines for the offences of possession of dangerous drugs and revised the definition of drug trafficking to include the offence of possession of dangerous drugs for the purpose of unlawful trafficking. As a further deterrent to the abuse of psychotropic substances by youngsters, all benzodiazepines liable to abuse were included in the first schedule to the Dangerous Drugs Ordinance in October 1991. The full sanctions and controls provided under the ordinance have been applied, with effect from January 1992, with regard to the possession, import, export, supply and otherwise dealing with benzodiazepines.

  The Royal Hong Kong Police and the Customs and Excise Department seized some 580 kilograms of No. 4 heroin, 3 000 kilograms of cannabis and 17 kilograms of methylamphetamine (or 'ice') during the year. These included the seizure of 396 kilograms of No. 4 heroin in June, 1 555 kilograms of cannabis in May and 15 kilograms of methyl- amphetamine in May. 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 1992, police and customs action resulted in the arrest of 8 900 persons for drug offences.

Treatment and Rehabilitation

The voluntary Methadone Treatment Programme operated by the Department of Health provides both maintenance and detoxification for out-patients. Methadone maintenance is designed to reduce or eliminate an abuser'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 drug abusers and the community. There are 24 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 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 four regional social service centres, five halfway houses, a job skill training laboratory and a clinic which provides pre-admission medical examination, counselling and detoxification services, urine analysis and post-discharge medical care.

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      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 two to 12 months, the actual period being determined by the inmate's progress and the likelihood of continued abstinence from drugs following release. All persons discharged are given one year of statutory after-care.

      In 1992, the two voluntary treatment programmes and the Correctional Services Department's compulsory treatment programme admitted 12 200 abusers. On average, 12 800 drug abusers and ex-drug abusers 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 113 cases and 1 176 telephone and drop-in enquiries during the year. PS33 is operated by the Hong Kong Christian Service with financial support from the Royal Hong Kong Jockey Club.

Preventive Education and Publicity

The government and the community continued their efforts in promoting anti-drug preventive education and publicity. The main themes of the publicity campaign in 1992 were similar to those for 1991, with more emphasis being placed on alerting youngsters to the harmful effects of abusing drugs and other substances. The publicity message for the year was Substance abuse can ruin your life, Say NO to drugs.

       Six district campaigns were held involving the community through carnivals, variety shows, competitions and exhibitions.

       The Narcotics Division's school talks team gave 295 drug education talks to 100 917 students in 165 secondary schools and technical institutes throughout the territory. Starting from September, drug education talks using different approaches were extended to Primary 6 students and to the four colleges of education. Apart from school students, talks were also organised for members of youth organisations, parents, juvenile offenders at the boys' and girls' homes operated by the Social Welfare Department and Vietnamese illegal immigrants.

      To support the annual International Day Against Drug Abuse and Illicit Trafficking, a bus parade was organised and a large-scale exhibition was held in Kwai Fong Metroplaza in June. A simple anti-drug message, Say NO to Drugs, was also applied as a post mark on all mail in June.

       In 1992, a Community Against Drugs Scheme was established to replace the former Youth Against Drugs Scheme with a view to encouraging more interested groups to plan and implement their own anti-drug education and publicity projects. Under the scheme, financial support up to $5,000 per project will be granted. The 55-member ACAN Youth Volunteer Group took part in district campaigns and organised a number of community involvement 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 2731 enquiries, the majority seeking information on treatment facilities.

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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 36 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-drug personnel from overseas. During the year, 303 people from 25 countries and international bodies came to Hong Kong on study visits and training

courses.

As at the end of the year, bilateral agreements had been concluded with 11 foreign jurisdictions with a view to enhancing international co-operation, particularly as regards the tracing and confiscation of the proceeds of drug trafficking.

Environmental Hygiene

The Urban Services Department and the Regional Services Department, working under the Urban Council and the Regional Council, are responsible for street cleaning, collection and removal of refuse and nightsoil, cleansing of gullies, management of public toilets and bathhouses, pest control and services for the dead.

  A regular workforce of about 8 500 is employed in cleansing duties, employing a fleet of 550 specialised vehicles which include refuse collection vehicles, street washers, mechanical sweepers, nightsoil collectors and gully emptiers.

  Streets are swept, either manually or mechanically, up to six 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 4 760 tonnes of refuse and junk are collected daily, including 114 tonnes removed by a contractual barging service from outlying islands for disposal on the mainland. A free nightsoil collection service is also provided every day in those areas without a water-borne sewage and disposal system. These services are provided free.

There are 1 109 refuse collection points and 1 584 bin sites in the territory. The two departments continued to contract out some of their cleansing services to private contractors to reduce the direct involvement of departmental labour and enhance cost-effectiveness. In the urban areas, the contracts covered 307 public toilets and bathhouses, manual street sweeping of Tai Kok Tsui, part of Wan Chai and two squatter villages. In the New Territories, the contracting-out of street cleansing services was extended to cover selected areas in Tuen Mun, Sha Tin and Sai Kung districts from April 1992. The provision of desludging services for Vietnamese migrant centres was also assigned to a private contractor. As the performance of the private contractors has been found to be satisfactory, contracting out will be extended to other suitable localities. Under active planning are the contracting-out of waste collection in Tai Po township and cleansing for remote areas in Sai Kung.

During the year, the Keep Hong Kong Clean Campaign celebrated its 20th anniversary. To mark the special year, the Joint Urban Council/Regional Council Steering Committee stepped up its efforts to spread the keep clean message by launching a seven-phase clean-up programme, covering the environment, water, roads, schools, homes, squatter areas and

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     villages, as well as the countryside and country parks. The campaign focused on community involvement, education and publicity through all media of communication.

      The 20th anniversary celebrations included mass participation events, a parade carnival and the Keep Hong Kong Clean 20th Anniversary Rally, at the launching and conclusion of the campaign year, involving the active participation of the District Boards.

To encourage greater public participation and achieve wider media publicity, the two municipal councils engaged an advertising agency. Along with the 20th anniversary theme, a new slogan, Thanks for Keeping Hong Kong Clean, was adopted. Television Broadcasts Limited was engaged to build up publicity for the campaign through nominating a 'Star of Cleanliness' each month and a grand finale TV spectacular in November.

The Dragon of Cleanliness, the mascot for the campaign, continued to participate actively in various campaign activities to put across the keep clean message.

      Law enforcement remained a major weapon against litter offenders, and special efforts were made by enforcement officers to deter littering. During the year, 37 000 litterbugs were fined a total of $10.5 million.

Controls

Both municipal councils are the authorities responsible for environmental hygiene and staff of the two municipal services departments enforce the Public Health and Municipal Services Ordinance and its subsidiary legislation to ensure that standards of hygiene in the territory are well maintained. The staff regularly inspect licensed and permitted premises, common parts of buildings, squatter areas, construction sites and undeveloped land. They respond to complaints about sanitary nuisances, vermin infestation and substandard foods. They also 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 continued. with the Selective Inspection System for the inspection of licensed food premises. Under this system, food business establishments are graded according to their past performance. The frequency of inspection for each establishment is then determined in accordance with its grading.

In order to maintain standards on food premises and to deter offences against licensing and hygiene regulations, a Demerit Points System is used under which the accumulation of 15 points for convictions within 12 months forms the basis for suspension or cancellation of a food business licence or permit.

The Regional Services Department continued to exercise strict control over food premises which failed to apply for a licence or which had not complied with the specified requirements. Since 1987, the prosecution of offenders had increased in frequency from monthly to weekly. This had had the effect of dramatically reducing the number of unlicensed food businesses to 75 in December 1992.

For the prevention of vector-borne diseases, pest control staff of the two departments carried out 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 migrant centres. Technical support is provided by the Pest Control Advisory Section of the Department of Health.

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Environmental Health Education

An important role of the Health Education Unit of the Hygiene Division 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 1992. Of these campaigns, the most notable were the Environmental and Health Drive held early in the year and the 1992 Food Hygiene Campaign with the theme Food Safety Is Our Talking Point organised during the hot summer months for members of the food trade and school teachers. The former aimed at arousing public attention to the importance of keeping a clean home environment while the latter promoted the adoption of good hygiene practices during food preparation in order to prevent food-borne diseases.

  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 Hygiene

The Hygiene Division of the Department of Health consists of three sections, the Food section, Pest Control Advisory Section and Health Education Unit.

  The health inspectorate, backed by a hygiene consultant, controls food for sale, both imported and locally produced. Supported by laboratory resources and assisted by a scientific advisory arm, the inspectorate ensures that consumers are able to buy good whole- some 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 consumers. 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, another border checkpoint at Lok Ma Chau was built and became operative in 1992.

  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 to facilitate international trade in foods.

  On the international scene, Hong Kong maintains close ties with the World Health Organisation and the Food and Agriculture Organisation of the United Nations and other international authoritative bodies on foods. As the bulk of local food supply comes from China, Hong Kong has been working closely with Chinese authorities towards promoting food safety and better food hygiene. Regular meetings are held with officials from Guangdong and Shenzhen Commodities Inspection Bureaux.

HEALTH

Market

The Urban Council operated 62 retail markets in the urban areas in 1992. In these markets, 10 035 stalls offered commodities ranging from fresh food to household items.

      Old and outdated markets have been replaced gradually by multi-purpose complexes managed by the Urban Council with new markets and cooked food centres on the lower floors. On the upper floors of the 14 existing complexes, a variety of facilities are provided for indoor sports activities, cultural and recreational pursuits.

New markets with food centres are built not only to meet hawker resiting commitments which was the case in the past, but also to meet consumer demand. This approach, together with improvements in design, has been adopted in planning and building more pleasant and viable markets.

      The pilot scheme of contracting out cleansing has been implemented in 14 markets eight on Hong Kong Island and six in Kowloon. The scheme will be extended to more markets.

The Regional Council is responsible for the management of public markets in the New Territories. In 1992, a new market with 35 stalls was completed at Mui Wo and provided space for resiting all the licensed hawkers and eligible unlicensed hawkers trading in the vicinity. The council now manages 46 markets providing 5 222 goods stalls and 378 cooked food stalls.

      During the year, the council continued to improve its existing markets. Apart from better ventilation already provided, installation of an additional escalator has been planned for Tung Yick Market in Yuen Long to improve its accessibility. At the Yeung Uk Road Market in Tsuen Wan, a water scrubber system and a jet cleaner were installed at the poultry scalding room and refuse collection chamber to improve their sanitation. Recommendations of the council's working group on market design were adopted for the proposed Shek Wu Hui Market under planning for completion in 1994-5. Another working group formed by the council is currently reviewing market policy and related management matters.

Hawkers

     The Urban Council is responsible for the licensing of street hawkers in the urban areas and the Regional Council is responsible for their management in public places in the New Territories. In 1992, there were 14 400 licensed hawkers in the territory, a decline of 1 200 compared with 1991. This was attributable to the policy of not renewing or allowing succession of itinerant hawker licenses and resiting on-street hawkers into new markets. The completion in 1992 of the Nam Cheong Street Temporary Market, the Tung Chau Street Temporary Market and the Java Road Cooked Food Centre made it possible to resite 381 on-street licensed hawkers formerly trading in the vicinity. Moreover, steady progress continued in a scheme introduced in 1990 for itinerant hawkers to voluntarily surrender their licences in exchange for ex-gratia payment, a fixed-pitch hawker licence or a mini-stall tenancy. By the end of 1992, 1 550 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 227 fixed-pitch newspaper hawker licences have been issued. The issue of other classes of licences will depend on the availability of suitable sites identified to be viable and acceptable. Both municipal councils have a firm policy of not issuing any new

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hawker licences to itinerant hawkers, whose trading activities cause serious obstruction to pedestrians and vehicular traffic in highly built-up urban areas.

  Control over hawking is maintained by the two municipal services departments through the deployment of general duties teams. These are civilian staff trained in law enforcement duties and number 2 700. During the year, they secured 117 000 court convictions for hawking offences.

  Restructuring of the general duties teams in the New Territories was completed during the year. Besides strengthening their capability to make arrests, all squads were equipped with radio transceivers and an additional vehicle to enhance their efficiency. Furthermore, eight special squads were set up under two sub-regional commands to reinforce district- based operations. The Regional Council also formed a working group to examine hawker policies and control strategies against illegal hawking and illegal shop extensions. A computerised hawker offence record system was implemented in April 1992 with which previous conviction records of offenders were computerised and presented to the court for reference and consideration of heavier penalties on recidivists.

Abattoirs

 There are two abattoirs in the urban areas and three slaughterhouses in the New Territories, including a new one on Cheung Chau which also serves the nearby islands. With the exception of the Cheung Sha Wan Abattoir which is run by the Urban Council, all the others are managed by licensed private operators. To meet long-term demand, a site has been reserved for a new slaughterhouse in Sheung Shui.

During the year, 2930 000 pigs, 150 000 head of cattle and 15 000 goats were slaughtered, which accounted for about 100 per cent of the local fresh meat supply. To ensure the wholesomeness of their meat, all slaughtered animals were inspected by qualified health inspectors of the two municipal services departments.

  The Regional Services Department also kept vigilance against illegal slaughtering to ensure that only wholesome meat is supplied to the market. In the past year, health inspectors carried out 49 raids on suspected illegal slaughterhouses and nine offenders were successfully prosecuted. Staff also carried out spot checks on meat stalls and 10 persons were prosecuted in 1992 for possession of unstamped carcasses for sale.

Cemeteries and Crematoria

It is government policy to encourage cremation rather than burial for the disposal of the dead. During the year, over 73 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 urn cemeteries.

  The Urban Council operates one public funeral parlour in Kowloon which provides free funeral services for the needy. Two service halls at the parlour are also opened for public use free of charge.

  In the urban area, the Urban Council manages five public cemeteries and two public crematoria, and monitors 18 private cemeteries. There are also two war cemeteries under the management of the Commonwealth War Graves Commission.

  The Regional Council manages six public cemeteries and four public crematoria in the New Territories. It also oversees the operation of nine private cemeteries and six private

HEALTH

crematoria, and provides six columbaria for the deposit of cremated ashes. As at December 1992, these columbaria contained 35 000 niches.

Auxiliary Medical Services

The Auxiliary Medical Services (AMS) is a disciplined medical civil defence corps with the primary mission of augmenting the regular medical and health services in times of natural disasters and emergencies, such as typhoons, rainstorms or landslides, aircraft crashes, large-scale fires, major epidemics, civil disturbance and influx of illegal immigrants.

      Since its formation in 1950, the AMS has grown from a membership of 2 000 to over 5 800 in 1992. They come from all walks of life, comprising physicians, nurses, pharm- acists, dispensers, radiographers, paramedical personnel, civil servants and laymen in the private sector.

By statutory requirement, the Director of Health is the Commissioner of the AMS who is responsible to the Governor for the efficient operation of the corps. Assisting him is a number of deputy and assistant commissioners appointed on a voluntary basis.

With the exception of medical and nursing professionals, volunteer members all receive comprehensive training in the areas covering first-aid, squad drill, basic ambulance aid and practical ambulance manning, casualty evacuation, home nursing, clinical and hospital ward attachment, life saving, leadership and management development.

Under emergency situations, volunteer members would be mobilised and equipped with the necessary medical resources to provide immediate first-aid treatment for the injured at a 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.

If paramedical assistance at a scene is required, the AMS Emergency Response Task Force (ERTF/AMS) would be available at short notice. Medical officers, nurses and trained members of the ERTF/AMS are equipped to undertake nursing aid and minor surgery at the spot.

Apart from being in full readiness to perform emergency roles and functions, AMS is committed to provide supplementary medical services to government departments and outside agencies for ambulance manning, life-guard duties, clinical services in methadone clinics 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.

During the year, AMS continued to assist in the daily manning of 25 methadone clinics and provide round-the-clock clinical manning at 10 sick bays in seven Vietnamese boat people centres. More than 684 636 man-hours were committed to operational tasks in the year.

     The AMS also carries the responsibility of providing first-aid training to civil servants. A total of 2 752 government servants completed the basic first-aid certificate course and qualified as first-aiders in 1992.

The Mui Wo Sub-unit Headquarters and the New Territories Regional Headquarters were set up in April and November respectively to enhance operational efficiency and to provide local training facilities.

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156

 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 Reha- bilitation 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 in Appendix 32A.

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 1992-3 by 11 per cent to $6,384 million.

The Protection of Women and Juveniles (Amendment) Bill 1992 was published in the Hong Kong Government Gazette in March 1992. Among other things, it aims at widening the circumstances in which a child may be considered to be in need of care or protection and providing the Director of Social Welfare with more flexible powers of intervention and investigation.

Arising from widespread public concern over tragedies involving young children left unattended at home, the three-month public consultation exercise on measures to prevent children from being left unattended at home was concluded in January 1992. The majority was of the view that legislation to prohibit parents from leaving children unattended at home should not be introduced but recommended an increase of child care facilities and support services, the promotion of mutual help groups and the enhancement of public education. These recommendations were considered and endorsed by the Social Welfare Advisory Committee. Follow-up actions are carried out by the department.

  During the year, seven new day nurseries, two homes-cum-care-and-attention units, six social centres for the elderly, and nine children and youth centres were established.

With improved housing, financial assistance and community support services, the need for self-care hostels for the elderly is now less obvious. To meet the changing trend, some of the self-care/meal places in hostels for the elderly are being converted into meal/care-

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and-attention places. This approach is particularly valuable not only in expanding the number of care-and-attention places but also useful in minimising the transfer of elderly residents to a completely new environment when their health deteriorates.

Community Chest

The Community Chest, which organises and co-ordinates fund-raising activities for its member agencies, raised $132 million in 1991-2, compared with $113 million in 1990-91. More details about the Community Chest are in Appendix 32B.

Social Security

     Social security is a major social welfare programme aimed at meeting the needs of vulnerable groups in the community requiring financial or material assistance. The Public Assistance Scheme and the Special Needs Allowance Scheme are the key elements in the non-contributory social security system. They are supplemented by three other schemes: Criminal and Law Enforcement Injuries Compensation Scheme, Traffic Accident Victims Assistance Scheme and Emergency Relief.

      The 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 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.

Public assistance payments comprise four components: basic allowance, rent allowance, supplements and special grants. Essential needs such as food, clothing, fuel and light, are met by the basic allowance. Rates of the basic allowance were increased across the board by 10.74 per cent in April 1992 to keep pace with inflation. Current rates of the monthly basic allowance are $825 for a single person; $620 for each of the first two eligible members of family; $610 for each of the next two eligible members; and $600 for each additional eligible member. To cover the cost of accommodation, a separate allowance is paid. For personal needs arising from the recipients' particular circumstances, additional supple- ments are provided. A monthly old-age supplement of $413 is given to those aged 60 to 69, and $470 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 $413 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. A child supplement of $205 per month is given to children of public assistance recipients aged below 15 and to those aged 15 to 18 in full-time education and not receiving educational grants. 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: $1,050 for a single person; $2,100 for a family with two to four members; and $3,150 for a family with five or more members. In addition, special grants are given where necessary to meet other needs such as school fees, travelling or special diets. To encourage self-help, an individual's monthly earnings of up to $620 may be disregarded in the calculation of assistance payable.

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  At the end of 1992, the number of public assistance cases was 79 700, compared with 71 294 in 1991. The majority of recipients were the elderly, the disabled and single parent families. Expenditure on public assistance during the year amounted to $1,339.0 million, representing an increase of 24.0 per cent over the previous year.

  The Special Needs Allowance Scheme provides flat-rate allowances for the severely disabled and the elderly. Any person 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 10.74 per cent in April 1992 to reflect the rise in the cost of living.

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 or a medical institution under the Hospital Authority. The current monthly rate for disability allowance is $825 and, for higher disability allowance, $1,650.

  Old age allowance is non-means-tested for those aged 70 and above, and they are entitled to a current rate of $470 per month. For those aged 65 to 69, the monthly allow- ance is set at a lower rate of $413, subject to a declaration that income and assets do not exceed prescribed levels.

The number of people receiving disability and old age allowances at the end of the year was 501 200, compared with 471 803 at the end of 1991. Expenditure on special needs allowances during the year was $2,860.1 million, representing an increase of 16.7 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.

During the year, total payments amounted to $9.0 million, compared with $7.6 million in the preceding year.

The Traffic Accident Victims Assistance Scheme is no fault and non-means-tested scheme. It provides cash payments to victims of traffic accidents or their dependents. 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 an injury case, the victim must be medically certified to require at least three days sick leave. Payments cover personal injury and death but not damage to property.

Under the scheme, an applicant retains the right to claim legal damages or compensation from other sources for the same accident. In case of a successful claim, the applicant is

SOCIAL WELFARE

      required to refund either the payment received from the scheme or the amount of damages or compensation, whichever is the less.

      During the year, 5 460 applications were received and 4970 were approved for assistance, with payments of $69.0 million compared with $55.5 million in 1991.

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 dependents to relieve hardship arising from personal injury or death.

      With the exception of burial grant, the rates of grants payable under the Criminal Injuries Compensation Scheme, the Traffic Accident Victims Assistance Scheme and the Emergency Relief Fund were increased in March and September 1992 to cover the rise in living cost and in the average manufacturing workers' wages.

      During the year, emergency relief was given to 4 042 registered victims on 98 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 19 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, 138 appeals were heard by the board. Of these, six were related to public assistance, 130 to special needs allowance and two to traffic accident victims assistance.

Services for Offenders

The Social Welfare Department has several statutory duties in the field of services for offenders. These duties are to put into effect the directions of the courts on the treatment of offenders through social work methods. The overall aim is to rehabilitate offenders through probation supervision, the Community Service Orders Scheme, residential training for young offenders and after-care services.

       Probation service is provided in 11 probation offices which serve 10 magistracies, the District and Supreme Courts. Probation officers make inquiries into the background and home surroundings of offenders as the court may direct and of prisoners for consideration of reducing sentences. They also supervise offenders in complying with the requirements of probation orders. 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-orientated approach. To promote community involvement in the rehabilitation of offenders, volunteers are recruited to befriend probationers and residents of institutions and assist them in activities that do not require professional skills and knowledge.

      The Community Service Orders Scheme is a community-based treatment with punitive and rehabilitative aims. It requires an offender over the age of 14 and convicted of an

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 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 extended to serve all magistrates in the year.

  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 girls in need of statutory care and protection. The Pui Yin Juvenile Home is a remand home for boys. The Pui Chi Boys' Home provides residential training for juvenile probationers. The O Pui Shan Boys' Home and Castle Peak Boys' Home are reformatory schools for boys aged under 16 on admission. The Kwun Tong Hostel is a probation hostel for young men aged between 16 and 21.

Plans are in hand to improve 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.

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 organisations 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 while the subvented welfare sector operates 23 such centres. The major services provided in family services centres include: family casework and counselling; care and protection of children and young persons aged under 21; and referrals for schooling, housing, employment and financial assistance.

  Wai On Home, run by the Social Welfare Department and Harmony House, run by a non-governmental organisation, 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 hostels for the homeless in the urban area.

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A wide range of child welfare services is provided. The Child Protective Services Unit caters for abused children. The Adoption Units are 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 Services 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. Chuk Yuen Children's Reception Centre and Sha Kok Children's Home provide for the temporary care of children aged up to eight. The first hostel for girls run by the department, Wai Yee Hostel, started its operation in November 1991. The hostel, located in Tuen Mun, has facilities for 100 girls aged between seven and 18 who are in need of care and protection.

       In addition to the work carried out by the Social Welfare Department, subvented welfare organisations also provide residential child care services in children's homes, homes and hostels for boys and girls, foster homes and small group homes.

       Child care centres are available for children under the age of six. Such centres must comply with 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 34 807 places in day child care centres and 591 places in residential child care centres. New modes of child care services were being tried out as experimental projects to meet the changing needs of families. A flexible and temporary form of child care service on half day or full day basis when carers stay away from home for short periods of time was introduced in March 1992. Families with low incomes and social needs for children to attend a child care centre may make use of the Fee Assistance Scheme in meeting nursery fees. A total of 7 710 children were receiving fee assistance at the end of the year.

      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 Social Welfare 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 telephone hotline service, answering enquiries and providing professional 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 education programmes in the territory. The 1991-2 family life education publicity campaign adopted the main theme of Happy Marriage and Responsible Parenthood. The campaign aimed at arousing public awareness of the importance of harmonious marital relationships and effective parenting. A wide variety of publicity media, including television, posters, booklets on effective parenting, bus advertisements, a slogan competition, an exhibition and an opening event 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 resource materials and audio-visual equipment on loan.

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Medical Social Service

The Social Welfare Department continues to provide medical social service in public 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 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 facilities, canteen services, community education, as well as respite care. At the end of 1992 there were 64 home help teams, 129 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 pilot teams, which started in April 1991, continue to operate.

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 1992, there were 1727 hostel places, 5 886 home places and 3 406 care-and-atten- tion places.

In addition sheltered housing is provided in private housing flats as well as in public housing estates for 1 822 elderly people who are capable of living independently.

The Registration Office of Private Homes for the Elderly provides 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 in the final stage of drafting.

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 from six 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 establish- ment 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.

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      Children and youth centres, operated mainly by subvented non-governmental organi- sations, serve as focal points for a variety of programmes and activities for the personal growth and social development of young people. In 1992 nine combined children and youth centres were opened, making a total of 214 children centres and 215 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 1992, there were totally 24 outreaching 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. In 1992, there were totally 150 School Social Work Units covering all secondary schools in the territory.

      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 85 000 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 36 711 through its 20 operating authorities.

Rehabilitation of Disabled Persons

The objective of Hong Kong's rehabilitation services is to integrate disabled persons 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 Green Paper on Rehabilitation entitled 'Equal Opportunities and Full Participation: A Better Tomorrow for All' was published in March 1992 to consult the public on the way forward for future development of rehabilitation services in Hong Kong. Public comments received are being examined carefully and a White Paper on Rehabilitation will be produced in 1993.

The Department of Health is responsible for providing immunisation programmes against various communicable diseases and promoting health education to prevent disabilities. It also provides screening services for early detection and identification of disabilities. The Hospital Authority is responsible for providing medical rehabilitation services. The Social Welfare Department is responsible for the planning and development of a wide range of social rehabilitation services, either through direct service provision or subvention to non-governmental organisations. The Education Department is responsible for the planning and development of education and related supportive services for disabled children of school age. The Labour Department is responsible for job placements for the hearing and visually impaired, the physically handicapped, the mentally handicapped and ex-mentally ill persons. The Transport Department subvents a 'Rehabus' Service for disabled persons who have difficulties in using public transport. The Vocational Training Council is responsible for providing and co-ordinating vocational training for disabled persons.

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By the end of the year, the Social Welfare Department and non-governmental organi- sations provided a total of 718 integrated programme places, 987 special child care centre places (including 54 residential places) and 905 early education and training centre places for pre-school disabled children. In addition, the service of a clinical psychologist was provided for autistic children in special child care centres as a special provision. For disabled adults, there were 2 033 day activity centre places which provided day care, daily living skills and work training for the mentally handicapped; 4 155 sheltered workshop places to provide employment for disabled persons who were unable to compete in the open job market; and 2 061 hostel places for those disabled persons who could neither live independently nor be adequately cared for by their families, or who lived in areas too remote from their places of training or employment. For aged blind persons unable to look after themselves adequately or in need of care and attention, 339 places in homes and care and attention homes for the aged blind were provided. In addition, 200 long stay care home places, 809 halfway house places and 110 day 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. Various supported employment service models are being developed.

To improve service quality, professional back-up from clinical psychologists, occupa- tional therapists and physiotherapists is provided to all rehabilitation day centres and hostels. Other support services include respite service which provides short-term relief to families with mentally handicapped persons, and five home-based training teams which help train mentally handicapped persons as an interim measure while they await 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 mentally handicapped persons 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 $6.7 million in the form of grants or sponsorships to 21 non-governmental organisations and one government department, enabling them to undertake projects for the benefit of mentally handicapped persons. The fund stood at $108 million on March 31, 1992.

Staff Development and Training

Training of professional social workers is provided by the universities, polytechnics and post-secondary colleges. The Social Welfare Department and non-governmental organi- sations assist in arranging practical work placements for social work students from these institutions. The department, through its Lady Trench Training Centre, conducts 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 increasingly complicated social problems.

During the year, the training centre organised 264 programmes, seminars and workshops for 8 281 participants, compared with 184 programmes in 1991. It also operates a child care

SOCIAL WELFARE

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, 80 staff attended 35 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 1992, a total of 116 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.

The department is also involved in the work of the Advisory Committee on Social Work Training and Manpower Planning. The committee advises the government, through the Social Welfare Advisory Committee, on all matters relating to the education and training of social workers, including the planning of manpower to meet welfare service needs.

Research and Statistics

The department conducts surveys and maintains data systems for the monitoring and development of social welfare services. Seven surveys were carried out during the year. In conjunction with the Hong Kong Council of Social Service, the department runs the Social Welfare Manpower Planning System which collates information on individual social work personnel and on the demand for and supply of trained social workers for facilitating overall manpower planning in the welfare sector. The department also maintains nine other data systems, these being the Integrated Law and Order Statistical System on offenders under the charge of the department, the Child Protection Registry, the Street Sleepers Registry, the Planned Welfare Projects Registry, and five central referral systems for co-ordinating the referral of clients to various welfare institutions.

Subvention and Evaluation

     Financial assistance is given to 159 non-governmental organisations for the provision of social welfare services in accordance with government policies. Financial assistance for capital and special expenditure is also 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 Subventions and Lotteries Fund Advisory Committee which advises on the allocation of subventions and lotteries grants to agencies providing social welfare and rehabilitation services. During the year, the department conducted seven 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.

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Community building efforts involve the provision of purpose-built facilities for group and community activities, the formation of citizens' organisations and the encouragement of community participation in the administration of public affairs, solving community problems, promoting social stability and improving the quality of life in general.

The City and New Territories Administration and the Social Welfare Department are the two departments principally responsible for implementing this programme. The City and New Territories Administration, through its network of district offices, is primarily concerned with promoting mutual care and community spirit through local organisations, such as area committees, mutual aid committees, rural committees, kaifong welfare associations, women's organisations, and local arts and sports associations.

The Social Welfare Department is responsible for various aspects of group and com- munity work aimed at promoting the development of individuals and groups and at fostering a sense of community responsibility.

Community centres run by the City and New Territories Administration are provided throughout the territory to serve as a base for community building work.

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 organi- sations for exchange programmes.

The commission is developing a Charter for Youth containing important principles and ideals covering the protection, nurture and promotion of young people's interests and stating the roles of all concerned in promoting youth affairs. A consultative docu- ment on the draft Charter for Youth was published in February 1992 to seek the views of the public.

   The commission also completed two studies in 1992. These are a study on the attitudes and expectations of youth towards their future; and on the influence of the mass media on youth. The commission's recommendations on these two subjects were presented to the relevant government departments. Working groups have also been set up to examine youth participation in community activities as well as their education and career plans. These studies will identify necessary measures to build Hong Kong's youth for the future.

   The commission has also started to build up a liaison network with youth and youth- related organisations to facilitate its work and to promote better co-ordination in further- ing the well-being of youth.

Committee on the Promotion of Civic Education

In May 1986, the government set up the Committee on the Promotion of Civic Education to encourage all sectors of the community to 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 encourages, through sponsorship, community efforts in organising civic education activities among different age groups.

           The committee sponsored 29 projects in 1992 with an allocation of over one million 166 dollars. As the committee has chosen 'the rule of law' as one of its major work emphases

SOCIAL WELFARE

for 1992-4, an exhibition entitled Equality Under the Rule of Law was held to encourage greater understanding of the key concepts of the rule of law among the public.

      At the request of the government, the committee has also taken up the responsibility to promote human rights education. Series of human rights-related civic education programmes, including seminars and production of teaching kits will be organised in 1992-3.

In 1991-2 other promotional activities launched by the committee included seminars, a survey on voting behaviour 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 and voluntary agencies.

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 MORE public sector flats are being built for ownership to meet a growing demand for them, reflecting a trend in Hong Kong's economic development.

In helping to meet Hong Kong's public housing demands as projected by the Long Term Housing Strategy, the Housing Authority will be building some 177 000 rental flats and 214 400 flats for sale between now and the year 2001.

  Meanwhile, it continues to build at a rate of around 40 000 units a year, producing 27 855 flats 15 557 for rent and 12 298 for sale in addition to a wide variety of commercial, community and educational premises and supporting infrastructure.

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  In all, some 3 000 000 people live in Hong Kong's 146 public sector estates, including nearly 500 000 who live in 110 ownership courts.

Further progress

Progress in housing development during the year included the completion of a redevelop- ment programme which has provided homes for over 500 000 people.

  Some other achievements of direct benefit to the people were: a greater opportunity for home ownership through a higher income limit, temporary rent relief for domestic tenants facing financial hardship, a chance to rent flats with a larger living space per person, an increase in the waiting list income limits, an increase in the production of one-person units, and a higher standard of refurbishment of vacant flats.

Housing Authority

The Housing Authority, which evolved from a number of bodies, was established on April 1, 1973 under the Housing Ordinance.

  It was reorganised on April 1, 1988 and given a separate financial identity and auto- nomy, together with sufficient flexibility to deal with the priorities under the government'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 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 ancillary commercial facilities throughout the territory, and administers the Private Sector Participation Scheme and the Home Purchase

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Loan Scheme. It acts as the government's agent to clear land, prevent and control squatting and maintain improvements to squatter areas.

It 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 33 non-official committee members who sit on one or more of the various committees which deal with particular housing issues. Many members of the authority and of the committees also serve the Hong Kong community as executive, legislative, urban or regional councillors, or as members of the New Territories Heung Yee Kuk, district boards, area committees and mutual aid committees and other government boards and 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 the clearance of Kowloon Walled City, established in January 1987, is expected to complete its work soon.

      Other ad hoc committees have completed or are about to complete their tasks of examin- ing the housing needs of the 'sandwich class'; reviewing domestic rent policy and allocation standards; reviewing the policy on housing subsidy; setting out a programme of work on the allocation and standards of vacant flats and reviewing schemes to promote home ownership.

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, 1992 the government's capital investment and contribution to housing stood at about $110.3 billion, which comprised permanent capital of $25.1 billion, contri- bution to domestic housing of $75.8 billion and non-domestic equity of $9.4 billion.

In the 1991-2 financial year, recurrent expenditure on the authority's domestic rental properties, covering mostly management and maintenance costs, totalled $5,649.2 million, while income from domestic rents was $4,905.4 million, resulting in a deficit of $743.8 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 offset this deficit partly from income derived from its non-domestic properties which, over the same period, generated a surplus of $478.9 million after charging amortisation and paying interest on permanent government capital and 50 per cent dividends to government.

      The authority spent $7,411.5 million on its capital programmes, of which $6,661.5 million (89.9 per cent) was financed by the authority, while the balance of $750.0 million (10.1 per cent) came from the government through supplementary injection of capital.

Construction

With the continued lower levels of private sector workload and an improvement in the labour shortage situation of previous years, tender prices remained very competitive throughout the year.

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A total of 198 housing blocks containing 102 540 flats were being built during the year. The waiting list for public rental housing is being steadily reduced, and, in order to meet increasing public demand, construction work in the coming years will be geared to producing a greater proportion of flats for sale under the Home Ownership Schemes and more fully self-contained flats for smaller or one person households.

The first of the new Harmony range blocks was completed during the year, and 14 more will be completed in 1993.

Quality assurance

The emphasis being placed on quality assurance has received the support of the construction industry, and it is expected that by early 1993 about half of the major companies employed by the authority will be certified as firms capable of complying with the international quality standard ISO: 9000.

  Meanwhile, the Housing Authority's Construction Branch is establishing its own quality management system and expects to achieve certification to ISO:9001 in 1993. Other quality measures include the selection of contractors to tender for new works building contracts based on their performance on existing contracts as measured by the performance assess- ment scoring system, and the further development of a similar system for use in relation to maintenance building contracts.

  Quality assured components are now extensively used on the authority's construction projects and these include kitchen and bathroom doorsets, domestic cooking bench sink units and steel collapsible security gates. Staircase balustrades and balcony grilles will be added in 1993 and steps have been taken to increase the use of precast facades on standard domestic blocks.

  In addition to this, precast staircases and aluminium windows are now specified in all of the rental blocks.

Site safety

A very successful site safety campaign was carried out during the year to ensure that the work sites and nearby areas were safer places for workers and members of the public.

Research and development are being carried out on a number of projects to ensure that public housing continues to satisfy the needs of Hong Kong in the years ahead. These include measures to meet the increasing demand for small household accommodation by adding special annex wings to existing Harmony blocks, constant upgrading and improve- ment of design standards, studies on Harmony block thermal and energy performance and individual colour studies for rural and outlying island sites.

Maintenance

Spending on maintenance and improvement works for the year amounted to $1.4 billion.

A notable feature of the year's maintenance works was the emphasis placed on repairs to the newer housing stock, following completion of the structural repair operations which were carried out on older buildings over a five-year period at a total cost of $1.6 billion.

More time was also spent on leaking shower trays, water seepage problems in bathrooms and external mosaic tile finishes.

In the continuing management of materials containing asbestos, abatement works were carried out in 90 blocks at a cost of $40 million, and asbestos cement roofing sheets were

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removed during demolition of 72 older temporary housing areas as part of the phasing out of this particular form of housing.

Other maintenance activities included completion of the programme for reinforcement of electrical supplies to prevent summer overloading in 122 blocks in 37 estates at a cost of $46 million.

There was also significant improvement in the breakdown rate for lift installations, which was halved from one breakdown per lift each month.

Under the modernisation programme, 52 new lifts were installed and design and contract specifications were drawn up for 55 more.

A major five-year programme was started to upgrade 40 commercial centres with new facilities and finishes in order to meet residents' needs and attract customers. It will cost $300 million.

During the year, liaison with tenants was strengthened, and a new and improved main- tenance system referred to as CARE - for Condition, Appraisal, Repair and Examination - was introduced.

      In the next five years, the authority will spend $2.7 billion in its commitment to provide a reliable and efficient maintenance service.

Building Works

Meanwhile, building works continue on a large number of estates and commercial premises, in various locations in the urban areas and in the new towns.

      In the urban areas, work is being carried out mainly in the eastern and southern parts of Hong Kong Island, and in Central and East Kowloon.

      In the new towns, much work is being carried out in Tin Shui Wai, Ma On Shan, Tai Po, Fanling and Tseung Kwan O.

In Tin Shui Wai, one of the newest new towns, intake of tenants began in April for 4 022 rental flats in Phase 1 of Tin Yiu Estate, and, later in the year, 1 824 ownership flats were made available to the public.

      Plans for the development of Tiu Keng Leng, as part of Tseung Kwan O New Town, are well underway. Six phases of public housing works will be completed there between 1999 and 2000, providing a total of 12 100 flats for 40 600 people.

      And, as part of the North Lantau New Town Development Phase 1 at Chek Lap Kok, 1710 rental flats and 2 640 ownership flats will be available by mid-1997, together with ancillary facilities. Site formation work on this public housing project started in April, and piling and building works will follow. The design concept places strong emphasis on the visual and physical connections between the public housing development and the adjacent Town Centre as well as segregation of pedestrian and vehicle movements.

      Residential buildings will be set back and orientated in such a way as to minimise noise nuisance created by major roads.

Redevelopment

Redevelopment of the older estates to bring them up to current standards is an integral part of public housing development.

      During the year, 63 Mark III to VI and former Government Low Cost Housing blocks were redeveloped thereby improving the living conditions of 15 900 families. Under this massive redevelopment programme, which is a continuation of the Mark I/II blocks

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redevelopment programme completed in 1991, a total of over 500 blocks involving some 720 000 families will be cleared by 2001.

Rent Policy

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 average low interest rates.

To meet the demand for more spacious allocation, the Ad Hoc Committee to Review Domestic Rent Policy and Allocation Standards recommended in 1991 that in future, upon their moving into public housing, tenants could choose to live at the minimum internal floor area allocation standard of seven square metres per person with the median rent-income ratio not exceeding 18.5 per cent, or at the current minimum standard of 5.5 square metres per person with the income ratio not exceeding 15 per cent. Present rents are $41.8 per square metre for the newest urban estates and $23.1 for the newest New Territories estates.

On average, public housing tenants pay about 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.

Home Ownership Scheme

More flexible purchase arrangements were introduced for the Home Ownership Scheme (HOS) during the year, allowing buyers to start paying their mortgages before occupation of their flats in return for a discount in the price and about 29 per cent of purchasers chose these immediate mortgage terms. The Home Ownership Scheme was established in the 1970s to provide flats for sale at prices below market value to lower middle income families and housing tenants.

Private sector applicants for these flats may not own domestic property and are subject to a household income limit of $18,000 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.

Since the scheme started in 1978, a total of 172 944 flats, including 55 984 produced under the complementary Private Sector Participation Scheme (PSPS) have been sold to eligible families. About 55 per cent of these families were public housing tenants who were required to surrender their rental flats to the authority on obtaining HOS flats.

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, favourable mortgage terms are provided by 50 financial institutions for the purchase of 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.

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HOUSING

      As part of the continuing implementation of the Long Term Housing Strategy, the production of ownership flats will increase from 14 000 flats a year to around 17 000 flats a year from 1991 to 1996. Of these, about 33 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 1992, a total of 19 782 flats were sold, starting in January with 6 452 flats in Phase 13C. Applications were invited for a further 6 474 flats in Phase 14A in April, and nearly 60 000 applications were received.

In August another 6 856 flats were put up for sale, and in December 7 469 more flats were offered.

      The prices of flats sold ranged from $294,200 for a flat of 40.9 square metres (saleable floor area) at Tin Yau Court, Tin Shui Wai, to $1,333,700 for a large flat of 58.1 square metres at Po Hei Court, Sham Shui Po.

Home Purchase Loans

Under the Home Purchase Loan Scheme, which is an integral part of the housing programme, lower-middle-income families are given assistance in buying flats of their own in the private sector.

      Eligible applicants are offered an interest-free loan of $150,000, repayable in 20 years to help towards the purchase at downpayment or completion stage.

      The authority has introduced a new option whereby eligible applicants can opt for a monthly mortgage contribution of $2,000 for 36 months, which is not repayable.

      Since the implementation of the loan scheme in 1988, 7 645 loans and 122 subsidies have been granted. As a result, 4 352 public housing units have been recovered for allocation to other families.

Allocation

During the year, 23 000 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 compre- hensive redevelopment programme (28 per cent), and families affected by development clearance (11 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, families affected by the Kowloon Walled City clearance and applicants from temporary housing areas.

      In all, the Housing Authority owns and manages some 645 000 rental flats of different sizes, amenities and rent levels in 146 estates.

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. This enables housing allocation and duplication checks to be carried out effectively and also produces useful statistical information.

Some 8 000 flats, mainly in Tin Shui Wai and Tuen Mun, were allocated to successful waiting list applicants. The waiting time for these districts is the shortest and has been reduced to about one year.

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Applicants for public rental housing through the waiting list are considered in the order of registration and in accordance with the choice of districts indicated by applicants. Accommodation is offered to those who, on investigation, are found eligible in respect of their family income and residence in Hong Kong. The income limits range from $6,700 for a family of two to $18,000 for a family of 10 or more. The number of applications at the end of the year stood at 153 000. In addition, there were 27 000 applications on the Single Persons Waiting List established in January 1985. The income limit for single persons is $3,800.

  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, 9 500 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, 6 400 families have benefited from this scheme.

In 1986, the authority introduced a sheltered housing scheme with a warden service for able-bodied elderly persons.

In 1992, new sheltered housing projects were opened at Tak Tin Estate in East Kowloon, Fung Tak Estate in Central Kowloon and Wan Tau Tong Estate in Tai Po 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.

Housing for Elderly

Since 1987, housing units have been provided as a supplementary housing resource for able-bodied elderly persons who are self-reliant and independent. A warden service to deal with emergency situations is also provided.

   Cases in which a higher level of health care is required are referred to the Social Welfare Department for transfer to more suitable housing.

Sitting Tenants

An earlier scheme introduced in 1991 having failed to meet with sufficient response, plans are underway to present a revised scheme for the sale of flats to sitting tenants, probably in 1993.

   Under the original scheme, tenants in a number of selected rental blocks were offered the chance to buy the flats they occupied, provided that 50 per cent of tenants in each block opted to do so.

It is likely that the relaunch of the scheme will have modifications to ensure its success.

Housing Subsidy Policy

The Housing Subsidy Policy, in effect since 1987, has been generally supported by the public. Criticisms by some groups were reviewed by an ad hoc committee whose recommendations were released for public consultation in September. A final report will be prepared for decision by the Housing Authority early next year.

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 plus rates.

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There are some 284 000 households with 10 years' residence in public housing, and around 24 per cent of these will be required to pay double rent.

Rent Assistance

A new Rent Assistance Scheme was started in September 1992, to grant temporary rent relief to domestic tenants in public housing estates facing financial hardship.

      A public housing domestic tenant whose rent-to-income ratio exceeds 25 per cent as a result of an increase in rent or a reduction in household income after moving in may apply for rent assistance. This will take the form of a rent reduction for a period of six months and be renewable for a further six months if the rent-to-income ratio still exceeds 25 per cent.

The amount of reduction will be 25 per cent for tenants whose ratio exceeds 25 per cent, or 50 per cent for those whose ratio exceeds 33 per cent.

       Tenants who still have financial difficulty after 12 months may arrange to transfer to cheaper housing in the same district. They will be entitled to a domestic removal allowance and a rent-free period of one month on transfer.

      A family which has already moved to cheaper housing because of hardship but whose ratio still exceeds 25 per cent will be entitled to further rent assistance, subject to review at six-month intervals.

So far, 195 families have benefited from the scheme.

Agency Management Scheme

Under an agency management scheme, 33 Home Ownership Estates are 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 day-to-day management of their own properties, with the authority remaining ultimately responsible for management standards and policy.

Housing Information Centres

For the benefit of residents of private buildings affected by redevelopment, the authority established two Housing Information Centres in conjunction with the City and New Territories Administration. With the support of the Social Welfare Department, Labour Department, Education Department and Rating and Valuation Department, these centres provide enquiry and advisory services to the residents on matters relating to public housing, education, employment, social welfare, and their rights under existing tenancies.

One centre is located at Mong Kok District Office; the other is at Wan Chai District Office.

Management

Visits are regularly made by the chairman and members of the authority to the estates to meet community representatives and for informal exchanges of views.

Illegal Parking and Hawking

     Much attention is given to the problem of illegal parking on the roads in the 138 rental estates, nine factory estates, 44 home ownership courts and 24 temporary housing areas under the control of the authority.

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  Under the by-laws, the authority is empowered to impose charges for impounding and removing illegally-parked vehicles from housing estates. Meanwhile, steps are being taken to enable fixed penalty tickets to be issued to traffic offenders.

  On the other hand, with the proven success of the plan to privatise the authority's car parks in 28 estates, five management contracts have been signed with three private companies to place 27 more estates under the scheme for a period of three years.

  Hawking is another perennial problem, and, to keep these activities within estates under control, staff are required to work irregular hours. During the year, there were 12 550 arrests and seizures and 750 prosecutions for hawking activities.

Welfare Services

 By the end of the year, 888 welfare premises in Housing Authority estates and courts were let for welfare and community services at a concessionary rent of $25 per square metre per month. Non-domestic premises at less popular locations were also let at a fair market rate to community organisations.

  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.

  In view of the successful experimental project in providing out-reaching services to elderly people in Choi Hung and So Uk Estates, the Estate Liaison Officer Scheme has been extended to Tung Tau and Pak Tin Estates. Housing management staff visit the elderly persons to help them take part in various activities and to render assistance.

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 20 000 square metres was completed in 1992.

This commercial space is let under some 30 800 separate tenancies which generated a rental income of $2,460 million during the year, representing one-third of the total rental income of the authority.

The stock includes 17 660 flatted factory units in 17 flatted factories and 4 260 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 less than half market levels.

  In line with the policy not to subsidise commercial tenants, rents for other commercial premises are fixed at market levels. During the year, 820 commercial premises were let by rental tendering while another 115 premises with a total floor area of 19 000 square metres were let on negotiated terms. Negotiation provides a more flexible approach and assists in attracting anchor tenants, especially those who take large spaces for the operation of superstores, single-operator markets and food courts.

  The completion of Tin Yiu and Tin Shui shopping centres in Tin Shui Wai provided a wide variety of retail outlets catering for the daily necessities of the new town residents. Other shopping centres opened during the year include Kwong Tin, Siu Lun Court and Shek Lei where marketing efforts secured satisfactory occupancy.

  Improvements were made to 10 existing shopping centres to modernise facilities and provide better services to the estate residents as well as shoppers. In particular, major upgrading schemes were being undertaken at the two large district shopping centres of Lok Fu and Wong Tai Sin. A co-ordinated strategy for improvement of older shopping centres

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was formulated and a five-year improvement programme was drawn up for the upgrading of some 30 selected centres.

Clearance

During the year, 213 hectares of land were cleared for development. Around 11 330 people affected were given permanent rehousing and 3 690 given temporary rehousing. Some 520 industrial, commercial and agricultural undertakings affected by clearances were awarded ex-gratia allowances.

The year also marked the completion of the clearance programme for all the potentially hazardous slopes in the urban areas which began six years ago. About 58 000 squatters were cleared under this programme.

      A total of 2 860 people who became homeless as a result of fires and landslips were provided with either permanent or temporary accommodation.

Temporary Housing

Temporary Housing Areas (THAs) are provided for people made homeless by squatter clearances, fire and other natural disasters, but who are not immediately eligible for permanent public housing.

      The one-storey or two-storey houses are built of wooden materials, and are partitioned into different sizes to suit requirements. Each unit is provided with electricity and metered water supply and a kitchen and shower area.

      During the year, 9 200 persons were given temporary housing. At the same time 10 800 people moved from THAS to permanent public housing through the waiting list, trawling and clearance, or to their own homes purchased under the Home Ownership Scheme or the Home Purchase Loan Scheme in which they had priority.

At the end of the year, there were 55 THAs in the territory housing 65 000 people. Due to reduced demand, construction of new houses has been discontinued.

Transit Centres

     There are eight transit centres in the territory with a capacity for 1 300 persons. They provide immediate shelter for persons made homeless by fires or natural disasters.

Cottage Areas

There are six cottage areas, accommodating 9 900 people. The largest, Tiu Keng Leng Cottage Area at Tseung Kwan O, housing some 5 600 people, will soon be cleared.

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 by daily patrols and regular hut-to-hut checks, and good control has been maintained.

      The squatter population has been reduced to 45 851 in the urban area and 227 978 in the New Territories, as a result of rehousing through clearance and the Waiting List.

Squatter Area Improvements

The Housing Authority continues to undertake repairs and maintenance of services and facilities provided under the squatter area improvement programme. It is also responsible

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for settling electricity charges for public lights in squatter areas installed under this programme.

Kowloon Walled City

The Kowloon Walled City clearance was completed in July 1992. Some 28 000 residents and 900 commercial undertakings had moved out of the Walled City. About $3 billion cash compensation had been paid out.

The demolition contract, costing about $42 million, was awarded in November 1992. The structures on the 2.7 hectare site are being demolished by conventional methods. Demolition work is due for completion in March 1994. Special measures have been taken to protect the Yamen Building and other antiquity items, namely two Chinese cannons, granite lintel and the couplet of the Longjin Free School, two stone tablets of the Tin Hau Temple and three old wells. They will be preserved and incorporated in a public park with community facilities.

  Park development works will commence in April 1994 and be carried out in two phases. The entire development is expected to be completed in the latter half of 1995.

Rent Control in the Private Sector

Statutory controls on rents and security of tenure date back to 1921 in Hong Kong. The legislation governing these matters is the Landlord and Tenant (Consolidation) Ordinance. Parts I and II of this ordinance apply controls over the rent levels and give security of tenure in respect of certain domestic tenancies. For nearly all other domestic tenancies Part IV of the ordinance gives security of tenure but the tenant must pay the prevailing market rent.

Under the ordinance, 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 an agreed surrender by the tenant of 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. It provides an advisory and mediatory service to deal with the many practical problems arising from rent controls and 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 controls should be phased out. To this end a bill has been introduced to the Legislative Council to allow controlled rents under Parts I and II to increase progressively up to market levels. However, security of tenure will still be preserved.

Pre-War Premises

Legislation controlling rents and providing security of tenure for pre-war premises was instituted by proclamation immediately after World War Two. In 1947 it 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 has applied only to domestic premises. Substantially reconstructed buildings are however excluded from Part I controls.

       Rent increases under Part I are controlled by reference to the standard rent of the premises (the rent payable in respect of the unfurnished premises on or most recently before December 25, 1941). The rent chargeable under the ordinance is the permitted rent which in 1992, is 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.

      The legislation provides for the exclusion from control of premises for the purpose of redevelopment, and generally possession is subject to the payment of compensation to the protected tenants. Jurisdiction under Part I is exercised by the Lands Tribunal, while technical functions are performed by the Commissioner of Rating and Valuation.

Post-War Premises

Comprehensive legislation to control rent increases in post-war domestic premises has been in force in one form or another since 1963 - apart from the period between 1966 and 1970 - and this is now contained in Part II of the Landlord and Tenant (Consolidation) Ordinance.

       Part II controls rent increases and provides security of tenure to tenancies and sub- tenancies in post-war domestic premises completed or substantially rebuilt after August 16, 1945 and before June 19, 1981. It does not however apply 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 to certify the increase which 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 of less than 70 per cent of the prevailing market rent, the permitted increase will be the amount necessary to bring the current rent up to that percentage of the prevailing market rent. Both the landlord and tenant may apply to the commissioner for a review of his certificate and further to appeal to the Lands Tribunal against the commissioner's review.

       For nearly all domestic tenancies not subject to Part I or II controls, Part IV of the ordinance provides security of tenure for a sitting tenant who is prepared to pay the prevailing market rent on renewal of his tenancy. However, Part IV does not impose control on rents. Under these provisions, a further tenancy must be granted to the existing tenant 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. Provisions also exist 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.

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  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 Develop- ment 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 Chairman of the Development Progress Committee and the Port Progress Committee. These two com- mittees are responsible for monitoring the general progress of the physical develop- ment 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, policy responsibility for conservation rests with SPEL.

  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 operation and works agency activities of the Architectural Services Department, Civil Engineering Department, Drainage Services Department, Electrical and Mechanical Services Depart- ment, Highways Department, Territory Development Department and Water Supplies Department. The New Airport Projects Co-ordination Office (NAPCO) was also set up in February 1991 under the Secretary for Works and it co-ordinates the implementation of the massive projects of the Airport Core Programme (ACP).

Planning

 Town planning seeks to bring about a good living and working environment for the present and future population of Hong Kong. Given limited land resources relative to

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     requirements, it is a great challenge to plan for the competing demands from housing, commerce, industry, transportation, utilities, as well as recreational, educational, medical and health, and other community facilities.

The work of town planning 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, the Ordinance Review and Technical Administration Division. Work undertaken by the three units is diverse, complex and interrelated. Major planning tasks undertaken by the department in 1992 include:

- formulation of proposals for the new Planning Ordinance;

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updating and reviewing the Territorial Development Strategy, the North West and South West New Territories Sub-Regional Development Strategies and the Hong Kong Planning Standards and Guidelines;

follow-up work on the Rural Planning and Improvement Strategy, the Port and

Airport Development Strategy and the Metroplan Selected Strategy;

forward planning and development control for the districts, including co-ordination of various urban renewal efforts; and

undertaking enforcement actions against unauthorised developments in designated rural areas.

Review of Town Planning Ordinance

The Town Planning Ordinance for Hong Kong was first enacted in 1939. 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, to provide the necessary degree of guidance and control for planning and development in Hong Kong to meet changing circumstances.

      Public consultation on the comprehensive review of the Town Planning Ordinance, which commenced in July 1991, concluded in January 1992. A total of 75 written sub- missions were received from various public bodies, professional and academic institutions, community groups, individuals and academics overseas. The Legislative Council also held a motion debate on the subject on January 15, 1992.

      As part of the comprehensive review, the Special Committee which was set up in July 1991 to consider specifically the complex and contentious issue of compensation and betterment arising from planning actions has received 63 submissions. After care- ful consideration of the submissions and views from various sectors, the Special Com- mittee submitted a report to the Governor in March 1992. The report was published in April 1992.

The Administration has finalised proposals for the new Planning Ordinance in the light of the public comments received.

Hong Kong Planning Standards and Guidelines

The Hong Kong Planning Standards and Guidelines (HKPSG) is a manual for government town planners 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

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 social and economic trends. Major revisions during the year included road standards and internal transport (including parking) facilities, new standard design school buildings, standards and guidelines for industrial development, open space and recreation facilities, and planning guidelines for conservation of natural landscape.

  A summary of the standards and guidelines has long been made available to the public. Since 1990, the distribution of the HKPSG has been extended to the libraries of tertiary educational institutions, public libraries and other institutions. To further promote public awareness of planning and to facilitate the use of these guidelines by non-government bodies in their own work, the government decided to publish the document chapter by chapter for public reference. At the end of 1992, nine chapters of the document were available for sale at the Government Publications Sales Centre.

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, taking into account the changing role of the territory in the context of recent economic and infrastructural developments in the Pearl River Delta region and the deeper hinterland of China.

The TDS Review consists of three main streams of work. The first stream, which has been completed, comprises appraisal and review studies, including identification and assessment of goals and objectives, key issues, development constraints and opportunities, evaluation criteria, and sectorial land use studies on industry, housing, office and business park, recreation, rural land, landscape/conservation and environment. The second stream, which is now in progress, comprises formulation and evaluation of TDS development options on the basis of the results of the first stream. The third stream consists of production of a recommended development strategy and a medium term implementation plan. The current review of the TDS is expected to be completed in 1993.

Sub-Regional Development Strategies

The Sub-Regional Development Strategies serve as a bridge between the TDS and district plans. They are prepared to translate the long-term broad-brush territorial goals into district planning objectives for the five sub-regions of Hong Kong, namely Metro area, North East New Territories (NENT), South East New Territories (SENT), North West New Territories (NWNT) and South West New Territories (SWNT). Following the government's decision in October 1989 on the replacement airport at Chek Lap Kok and on port expansion, work on the review for the NWNT and SWNT sub-regions commenced in early 1990. Each of these reviews aims at producing for the sub-region an appropriate land use-transport-environment strategic development framework for the target year 2011.

The review of the NWNT Development Strategy has examined key issues in the NWNT including the protection of Deep Bay and the Mai Po marshes, problems of open storage, flooding and deteriorated agricultural land. Given a long-term land use budget and inputs from other relevant studies such as the Port and Airport Development Strategy (PADS) and the Rural Planning and Improvement Strategy (RPIS), three development scenarios

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with a range of development patterns were postulated. Under these scenarios, a number of initial and hybrid development options were generated and evaluated in terms of environment, land valuation, engineering costs and transport aspects. A final recom- mended strategy will be formulated by the end of 1993 pending the results from the TDS. Development statements for individual districts are being produced based on the goals and concepts of the Development Strategy to serve as a basis for district planning, development programming activities and statutory planning control within the NWNT.

      In view of development pressures arising from the replacement airport and the port facilities in North East Lantau, the review of the SWNT Development Strategy attempted to reach a balance between future urbanised development and conservation in the SWNT. Three development scenarios with a range of development patterns were postulated. Under these scenarios, a number of initial and hybrid options were generated, evaluated and tested before the formulation of a recommended strategy for SWNT by the end of 1992. Development statements for individual districts would then be produced based on the goals and concepts of the Development Strategy to serve as a basis for district planning, development programming activities and statutory planning control within the sub-region.

Metroplan

The Metroplan Selected Strategy was approved by the Governor in Council in September 1991 to provide a planning framework for public and private sector development with the aim of making Hong Kong city a better place in which to live and work. Rather than a programme by itself, it is a conceptual strategy for developing and upgrading the Metro sub-region including Hong Kong Island, Kowloon and New Kowloon, Tsuen Wan and Kwai Tsing. To further publicise the principal components of the strategy, a mobile exhibition was mounted in four different locations in early 1992.

      To achieve the Metroplan objectives, with the help of consultants work started on a series of development statements to provide a planning brief for each district with priorities being given to West Kowloon, South-East Kowloon (including the Kai Tak Airport site), Tsuen Wan Kwai Tsing and Central-Western. Also as a follow-up to Metroplan, a consultancy study is underway to establish the appropriate institutional framework and map out a coherent strategy to restructure and upgrade the obsolete industrial areas in the Metro sub-region. The results of all these studies will be available in 1993.

District Planning

Most development projects are implemented in accordance with statutory or departmental town plans prepared at the district level. The purposes of these plans are to regulate and provide guidance to development in terms of types of land use, building density and development characteristics of individual sites to ensure developments are compatible with the surrounding environment, to ensure adequate provision of community facilities and public utility services, and to meet the long-term planning objectives of the territory.

      Statutory Outline Zoning Plans (OZP) for various districts of the main urban areas and new towns and Development Permission Area (DPA) plans for many 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. Planning Department is the executive arm of the TPB. Once exhibited for public inspection under the ordinance, both the OZP and

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DPA plans acquire statutory effect. The Building Authority is empowered to disapprove plans of new building works submitted under the Buildings Ordinance if the building proposals contravene the zoning or the development restrictions on the statutory OZP or DPA plans.

  At the end of 1992, there were a total of 50 OZPs, covering the main urban areas and new towns. These plans indicate the proposed broad land use patterns, major road systems of individual districts, and specific development restrictions within individual zones, and serve as development guides to public and private investment. In 1992, two new OZPs were published and 12 existing plans were amended by the TPB.

In response to the increasing number of unregulated and haphazard developments in the New Territories, such as open storage and container yards, which have led to the general degradation of the rural environment, DPA plans have been prepared by the TPB since the enactment of the Town Planning (Amendment) Ordinance 1991 which extended the statutory planning jurisdiction to the non-urban areas. DPA plans are transitional plans prepared for areas which require immediate planning control but where time does not allow the preparation of OZPS. Unlike OZPs, zonings on DPA plans are not comprehensive and there are many 'unspecified' areas on these plans where planning permission is required for all types of development other than those listed as always permitted. It is intended that all DPA plans will be replaced by OZPs within three years after publication. At the end of 1992, there were a total of 31 DPA plans exhibited by the TPB.

  Attached to and forming part of the OZPS and DPA plans are notes setting out the types of land use which are always permitted as of right under a particular zoning 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 changing community needs and market demand. The ordinance allows an unsuccessful applicant the right to request the TPB to review its decision. During the year, the board considered 608 applications for planning permission and 96 applications for review as compared with 396 and 47 respectively in 1991.

  An independent Town Planning Appeal Board was set up in November 1991 under the ordinance to deal with appeals lodged by applicants who felt aggrieved by the decisions of the TPB upon review of their planning applications. Since its establishment, the Appeal Board has received 19 appeal cases and has heard seven cases.

  To assist the board in assessing planning applications and to guide applicants in their submission of planning applications, the TPB regularly promulgates guidelines for applica- tions for various types of development. During the year, new guidelines for applications for factory/workshop/warehouse use within the 'unspecified use' area on DPA plans and revised guidelines for composite 'industrial-office' buildings in the industrial zone were released adding to the nine other sets of guidelines for other types of development issued in previous years.

During the year, a survey on the characteristics of offices, showrooms and research and development facilities currently established within existing industrial buildings and a study on underground development of commercial facilities extending beyond private land were completed to provide inputs to the revision of existing TPB guidelines for processing related planning applications. Another consultancy study on the operational characteristics of wholesale activities was also commissioned to provide a basis for formulating new planning guidelines and updating the notes to statutory plans.

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Apart from statutory OZPs and DPA plans, the Planning Department prepares outline development plans and layout plans for individual districts to show the planned land use patterns, development restrictions and road network in greater detail. These are non- statutory departmental plans to serve as a guide for land formation, implementation of public work projects as well as subsequent land sales and allocations. At the end of 1992, there were a total of 30 outline development plans and 234 layout plans.

During the year, the Planning Department provided planning inputs to a number of major reclamation and development projects, notably the Central and Wan Chai and the West Kowloon Reclamations. The plan for Hung Hom Bay Reclamation was also reviewed. Various planning studies were in progress, including those for the West Kowloon Development Statement and Tsuen Wan and Kwai Tsing Development Statement, and those on restructuring obsolete industrial areas, future development in Stanley, planning for vehicle repair workshops and density guidelines for private residential areas. The two major district planning consultancy studies commissioned in 1991 on the Comprehensive Review of Special Control Areas and the Review of Building Density and Height Restrictions in Kowloon and New Kowloon were near completion. The recommendations of these studies would be submitted to the TPB for consideration prior to incorporation into the relevant OZPs. Another study was commissioned in late 1992 to examine and assess the redevelopment potential of a number of under-developed government sites. In the New Territories, major forward planning studies covered North Lantau and the Lantau Port Peninsula. Studies were also being undertaken to identify suitable back-up sites to meet the increasing demand for container and open storage sites due to the rapid growth of the cross-border trade and the associated transport and storage activities.

Enforcement

One of the amendments introduced under the Town Planning (Amendment) Ordinance 1991 is the provision of enforcement powers in areas covered by DPA plans. Under the ordinance, no person should undertake or continue development in a DPA unless the development is an existing use, is permitted under the DPA plan or planning permission to do so has been granted. Any development which does not satisfy any of these criteria is an unauthorised development and may be subject to enforcement proceedings by the Director of Planning.

Since July 1991, patrol teams have been established in the Planning Department to carry out regular patrol within the DPAs to identify suspected unauthorised developments. On receipt of public complaints and referrals from other departments, the teams also carried out individual site inspections to ascertain the nature of the suspected unauthorised developments and make recommendations on appropriate enforcement action. After detailed investigation, 476 warning letters were issued in respect of 62 such cases, 47 enforcement notices for 17 cases and three stop notices for three cases were served in 1992.

Rural Planning and Improvement Strategy

The Rural Planning and Improvement Strategy (RPIS) was endorsed by the Executive Council in March 1989. Its main objective is to improve the quality of life in the rural areas of the New Territories. RPIS is being implemented at both strategic and district levels. At the strategic level, land use policies are continuously reviewed to control incompatible developments and provide a more sustainable and cost-effective basis for public and

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private investments. In this regard, a number of reviews and studies have been or are being undertaken. They included a study on better utilisation of agricultural land and review of the rural upgrading concept.

  At the district level, rural improvement projects are undertaken under the Rural Development Programmes to address rural needs. These improvement projects include village improvement and expansion works; provision of sewers and sewage treatment plants; improvement, reconstruction and expansion of village access roads; provision of local recreational facilities in village areas; works related to land drainage, river training and flood prevention schemes; and the provision and improvement of communal irrigation, field drainage and farm access in selected agricultural areas. These rural improvement projects are initiated, implemented and monitored by the various District Rural Development Working Groups, with a budget totalling about $4 billion over a span of 10 years.

  The implementation and progress of the rural development programme is overseen and monitored by the Rural Development Steering Committees while the overall policy and development management aspects of the RPIS are monitored by the RPIS Monitoring Group.

Port Development

The Port and Airport Development Strategy (PADS) provided a development strategy for the integrated phased provision of new port facilities along with related infrastructure. The main features of the port development element of PADS include container terminals at Stonecutters Island and South East Tsing Yi, port facilities at the proposed Lantau Port Peninsula, a River Trade Terminal (RTT) at Tuen Mun and provision for industry at Tuen Mun and Tseung Kwan O.

  In March 1991 Container Terminal 8 was let by private treaty grant with estimated completion dates between September 1993 and March 1995 for its four berths. During 1992 tenders were invited for the construction of Container Terminal 9 at South East Tsing Yi. Expressions of interest were also sought for the development of the proposed RTT at Tuen Mun Area 38.

The first review of the Port Development Strategy was completed, resulting in the production of an updated Port Development Plan and Programme in June 1992. The Study of Port-related Industrial and Commercial Enterprises (SPICE), which was carried out by the Planning Department with the assistance of the Census and Statistics Department and specialist consultants, was completed in May 1992. It provides a strategic forecast of land required to accommodate a range of industrial and commercial enterprises that are important to the successful operation of the port.

After the production of a series of development statements which set out the development objectives and priorities of each component of PADS, a number of port development studies were initiated. The Lantau Port Peninsula Development Study and the Western Harbour Development Study commenced in August and September 1991 respectively. The main objective of these studies was to plan for a port peninsula at north-east Lantau Island to accommodate container terminals, river trade terminals, cargo handling areas and other waterfront facilities and to provide for additional sheltered waters in the Western Harbour. Also in August 1991, the Tuen Mun Port Development Study commenced. This study was aimed at investigating the feasibility of accommodating deep

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waterfront industries and cargo working area within the study area. To enable detailed planning and design to proceed for port facilities with deep waterfront industries, including potentially hazardous installations, on the eastern side of Tseung Kwan O, the Engineering Feasibility Study of the Development of Tseung Kwan O Area 137 began in February 1992 with the objective of producing an outline engineering design for the area.

Airport-Related Development

To facilitate the operation of the new airport at Chek Lap Kok, an airport support community was proposed in the PADS to be developed in Tung Chung and Tai Ho areas in the northern part of Lantau Island. In July 1990, consultants were appointed by the government to carry out the planning of this community. It was recommended that a new town should be developed which would incorporate residential, industrial and commercial activities and all the necessary backup infrastructure requirements both for the new town itself and to serve, where practicable, the new airport. The proposed new town would involve about 760 hectares of land with a designed population capacity of 200 000 persons up to 2011.

This new town is likely to be the latest generation of new towns in Hong Kong. It provides a unique opportunity to create a well planned, high amenity living environment which will serve as an important 'gateway' for air travellers to and from Hong Kong. Indeed, in designing the town centre special attention was given to establishing the image of the town.

      The new town comprises two discrete urban development areas at Tung Chung and Tai Ho with proposed populations of 150 000 and 50 000 respectively by 2011. Residential and commercial developments are concentrated in the town centre and two district centres in Tung Chung and Tai Ho, each incorporating a Lantau Line railway station and public transport terminus. The town centre provides the retail, commercial and cultural core of the new town. The necessary retail and commercial uses will be distributed in a hierarchy of centres comprising the town centre, district centres serving Tung Chung and Tai Ho, and local centres within housing areas. Land will be reserved at Siu Ho Wan for airport related industrial uses. A number of major utilities including a water treatment works, a sewage treatment works, a railway depot and a refuse transfer station will also be located at Siu Ho Wan.

       There will be four phases of development for the new town between now and 2011. The first phase of the development, which is earmarked as one of the Airport Core Programme projects, will be completed by 1997 to coincide with the opening of the new airport and will accommodate about 20 000 residents at Tung Chung. Site formation works, involving substantial reclamation, are in progress.

Two independent authorities have been set up to administer the new airport and the sea port developments. The Provisional Airport Authority is concerned with the Chek Lap Kok airport development, while the Port Development Board deals with sea port plans. See chapters 16 and 17 for details of the airport and sea port respectively.

New Towns and Rural Townships

The programme for Hong Kong's new towns is an expansion of the initial 10-year housing programme aimed at providing proper living conditions for 1.8 million people. Starting from new town development programmes back in 1973 to co-ordinate planning and

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construction activities for the provision of land, infrastructure and a full range of social, educational and recreational facilities in the New Territories, it has outgrown the public housing-led concept and become more concerned with the 'quality of life' of the populace living in the new towns.

At the end of 1992, about 2.5 million people were housed in the new towns. The present design population capacity of the eight new towns at Sha Tin, Tai Po, Fanling/Sheung Shui, Yuen Long, Tin Shui Wai, Tuen Mun, Tsuen Wan, Tseung Kwan O and rural townships is 3.5 million. The population build up is embodied in programmes extending to the 2000s.

  The year 1993 marks the twentieth anniversary of the Territory Development Department, which was created in 1973 (under the name of New Territories Development Department), to plan and implement the new town development programmes. In 1986 the department extended its role to cover works co-ordination and further development in the urban areas. Hence its present title and its readiness for the added emphasis on the urban extension areas.

  The department is constituted on a multi-disciplinary basis and includes professional officers with expertise in civil engineering, architecture, landscaping and planning. They work closely with the Housing Department, Planning Department, City and New Territories Administration, Architectural 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

Tsuen Wan New Town extends over the areas of Tsuen Wan, Kwai Chung and Tsing Yi Island. Its population is currently estimated to stabilise over the next 10 years at around 710 000. While new development and redevelopment will take place, the gradual reduction in family size and increased provision of larger flats will result in a decrease in population in some areas resulting in no overall increase.

Container Terminal No. 8 (CT8) at Stonecutters Island is already under construction. The first berth is anticipated to be commissioned in September 1993 and the remaining three berths at six-month intervals thereafter. Completion is expected by April 1995. Container Terminal No. 9 (CT9) will be sited at south-east Tsing Yi. Construction work is expected to commence in early 1993. Upon completion of CT9 development in early 1997, Hong Kong's container handling capacity will be increased by about 64 per cent. Detailed design for the duplicate Tsing Yi South Bridge has been completed and the construction work will commence together with the CT9 development. Its timely completion is essential to tie in with the opening of the first berth of CT9 scheduled for mid-1995.

  Major highway projects will further extend and improve the principal road network. In Tsuen Wan, with the completion and opening of the flyover for the improvement of Texaco Road (Phase I) at the end of 1991, traffic conditions at the junctions of Texaco Road/Yeung Uk Road and Texaco Road/Sha Tsui Road were greatly improved. Footbridge systems at the junctions of Kwan Mun Hau Street/Castle Peak Road and Yeung Uk Road/Ma Tau Pa Road were also completed and opened to pedestrians in late

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     1991, resulting in a significant increase in the capacity of the road junctions. In Kwai Chung, with the completion of the contract works for improvements to Kwai Chung Road South and Container Port Road by the end of 1992, the comprehensive scheme for improvements to the Kwai Chung Road Corridor between Castle Peak Road and Mei Foo Bridge has been fully implemented. This has resulted in a significant improvement to the traffic conditions along this main route and in the container port area. Major road improvement works to Hing Fong Road and Texaco Road (Phase II) were progressing satisfactorily.

Community facilities completed in 1991 included Tsuen Wan District Police Head- quarters, two community halls and an urban clinic in Tsing Yi, one special school for the physically handicapped in Kwai Chung, a local open space in Shek Yam and two sitting out areas in Tsuen Wan Sam Tung Uk resite village. The opening of Tso Kung Tam outdoor recreation centre in October 1991 provided dormitories for overnight campers and recreational facilities.

Sha Tin

The development of Sha Tin is virtually complete with much of the remaining works concentrated in Ma On Shan. Works carried out during 1992 aimed at complementing and enhancing the infrastructure and providing community facilities to cater for a population which will increase from the present 550 000 to around 620 000 by the end of the 1990s with 66 per cent of the population living in public housing.

Major road-links with urban Kowloon and the north-eastern New Territories have been completed including the Tate's Cairn Tunnel and the Sha Tin Approaches.

      In Ma On Shan, the final reclamation contract to provide 23 hectares of land progressed satisfactorily.

On the pollution-control scene, the water quality of Shing Mun River and Tolo Harbour has improved significantly since the commissioning of facilities for the marine disposal of sludge and modification of the sewage treatment works. A further improvement scheme by exporting the effluent to Kai Tak Nullah is being constructed for commissioning in mid-1993.

Community projects completed in 1992 included a neighbourhood community centre, a sub-divisional fire station, ambulance depot and ambulance training school and a public leisure pool and a district open space. Construction of another primary school, a special school for moderately mentally handicapped children, a district open space and the expansion and reprovisioning of facilities for the Prince of Wales Hospital progressed satisfactorily.

Tai Po

Tai Po New Town is about 20 kilometres north of Kowloon, situated at the head of Tolo Harbour. The harbour and the surrounding hills at Pat Sin Leng and Tai Mo Shan provide Tai Po with an attractive scenic setting. It is well served by the electrified Kowloon-Canton Railway with two railway stations, and the Tolo Highway.

The population of Tai Po is about 244 000 at present and the projected population by the end of the 1990s is around 280 000. Seventy per cent of the population are now accommodated in public housing developments comprising six public rental estates, six home ownership schemes and three private sector participation schemes.

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  A total of 11 hectares of land was formed and serviced for various uses in 1992. One of the sites was designated for the Nethersole Hospital, which is to be relocated from the urban area in Hong Kong to serve as a general hospital in Tai Po. Construction of the new hospital commenced in 1992 and is scheduled for completion in 1996.

Tai Po Sewage Treatment Works caters for effluent from residential developments in Tai Po as well as from an industrial estate. Since the commissioning of the first stage in 1979, the works have been expanded over the years to cope with the developing new town. The latest expansion was under design for commissioning in 1995.

To serve the growing population, community facilities completed in 1992 included two primary schools, one secondary school, a district open space and a neighbourhood community centre. Construction of another secondary school and a park along the sea- front progressed satisfactorily.

Fanling/Sheung Shui

Although Fanling/Sheung Shui is only about four kilometres 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 in 1992 was about 153 000 and is expected to reach 220 000 by the end of the 1990s. Formation and servicing works in several areas progressed satisfactorily and 35 hectares of land were produced for various uses in 1992. Another internal transport facility comprising a terminal for buses, mini-buses and taxis was provided at Luen Wo Hui.

To improve flood-control, the training of River Indus Minor and rehabilitation of the moat at Sheung Shui Tsuen progressed to near completion.

Community facilities completed in 1992 include a secondary school while two secondary schools, a rural centre at Ta Kwu Ling, an open space, expansion and improvement to Fanling Hospital Phase I and a market complex were under construction. A district hospital with 720 beds was also being planned.

At Sha Tau Kok, a small township with a population of 4 500 on the border with China, formation and servicing of a security buffer zone near Chung Ying Street to guard against illegal immigrants were progressing.

Tuen Mun

Tuen Mun, in the West New Territories, 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. In 1992, about five hectares of additional land were reclaimed for industrial development and district open space.

The present population is about 430 000 of which about 70 per cent live in public housing developments which include 11 public rental estates and 13 home ownership and private sector participation schemes. One more home ownership scheme was completed in late 1992. Within the next five years, three more home ownership and private sector participation schemes will be developed to accommodate a further 23 000 people. Together with some high-density private housing development along the south-eastern coast, the new town will provide homes for about 480 000 people by the mid-1990s.

  In the provision of educational facilities, one prevocational school was completed by the end of 1991 and two additional secondary schools were completed in mid-1992. To meet

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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 early 1990 and the last stage in early 1992. One urban clinic is under construction and works will be completed in mid-1993.

A marina along the south-east coast of the town was programmed for completion in mid-1993. This private development consists of residential buildings, hotels, shops and recreational facilities, including berths for 300 boats. Eleven out of 19 residential blocks were completed and occupied.

       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 2 200 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 areas.

       The backbone of the transport service, serving the town and linking it with Yuen Long, is the Light Rail Transit system. Three additional links - Pier Head to Yau Oi, Yau Oi to Sam Shing, and Town Centre to North East Tuen Mun - have been completed and in operation since February 1992.

A feasibility study for the development of a 125-hectare site in the western part of Tuen Mun for the establishment of special industries and a terminal for river trade with China was completed in late 1991. The actual reclamation work for the special industry area was scheduled to commence in 1994 and the river trade terminal was planned to be developed by the private sector. The planning and engineering feasibility study of reclaiming an even larger area to the north of Tap Shek Kok in Tuen Mun West for both deep waterfront industries and cargo working terminal development was scheduled for completion by early 1993.

Yuen Long, Tin Shui Wai and the North-Western New Territories

Development of Yuen Long from its former market town status into a thriving new town community began early in the 1970s. In 1992, the population of the town stood at 130 000 and is expected to grow to 140 000 by the end of the 1990s.

       Environmental improvement work for the Yuen Long nullahs was completed in late 1992. Improvements to the water quality in the upper nullahs were quite noticeable and the offensive smell experienced in the past abated.

Three major infrastructure contracts in Tin Shui Wai have been completed, while another three major contracts are in progress. These contracts are to be completed in phases to provide access and services to private and public housing developments. The formation of the first stage of the Light Rail Transit link into Tin Shui Wai was completed in late 1992 and service is due to commence in early 1993. The two public housing estates, Tin Yiu Estate and Tin Shui Estate, were being completed in phases. The first residents started moving into their new flats in April 1992. They were followed shortly afterwards by the residents of the private development, Kingswood Villa. A third public housing development is planned to commence in 1993. After its completion in 1997 the new town population is expected to reach 140 000. The provision of community facilities in Tin Shui Wai has been programmed to coincide with population intake.

       Long Tin Road and Long Ping Road, which connect the south east of Tin Shui Wai to Yuen Long were completed in early 1992. The construction of the Tuen Mun-Yuen Long Eastern Corridor was in progress for completion in 1993. Construction of the Yuen Long

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Southern By-Pass and the Tin Shui Wai West Access commenced in 1992. As these major roads are being completed, the traffic around this area will be progressively improved.

To cope with developments 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 nine-kilometre sewer tunnel underneath Castle Peak and a 3.1-kilometre submarine outfall at Urmston Road, were under construction, to be completed in February 1993.

In the Tuen Mun-Yuen Long Corridor, construction of the infrastructure for a commercial/residential development at Hung Shui Kiu was completed. A contract for developing a village area in Ping Shan, the first pilot scheme for village expansion areas in the Yuen Long district, commenced in early 1992 for completion in late 1993.

Tseung Kwan O and Sai Kung

The development Tseung Kwan O New Town began in 1983. Development of the new town is divided into three phases. The major part of the new development areas is formed by reclaiming Tseung Kwan O Bay. A total of about 66 million cubic metres of earth will be required to complete the land formation of all three phases of the new town development. A major part of Phase I area has been completed. Reclamation for the Phase II development commenced in 1990 for completion in 1997. Reclamation of Phase III started in 1991 and will extend beyond 2000. Population intake into the new town stood at 109 500 towards the end of 1992. The population capacity upon full development will be about 445 000.

  About 390 hectares of land have been formed so far together with main drainage and the supporting engineering infrastructure. A large proportion 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 together with the associated urban infrastructures was under construction. Roads and main drainage works in Hang Hau were substantially complete, while the reclamation at the north of the future town centre was in progress.

  Works for the provision of land and services for the Tseung Kwan O Industrial Estate started in August 1991. Upon completion in early 1996, 71 hectares of land will be available for industrial use. Reclamation of the southern part of Siu Chik Sha also commenced in December 1991. A study was started to examine the feasibility of developing a site of 120 hectares for deep waterfront industry and storage.

  Work commenced on the construction of the first district open space in Tseung Kwan O. Located near the Po Lam housing estate, the project will provide extensive active recreational facilities upon completion in early 1994.

  At Sai Kung, the construction of a seawall extension was completed in February 1992. Reclamation of Sai Kung Creek was in progress to provide land upon its completion in late 1993 for a rural public housing estate site.

Islands District

Improvement work on the living environment and facilities for residents and visitors to the Islands district continued during 1992.

  Site formation for the first rural public housing estate on Peng Chau was completed and foundation and building works were commenced in late 1992. In Cheung Chau, a loading/unloading area was completed and opened for public use and more open spaces

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were formed. Construction of a fire boat berthing point at Mui Wo and upgrading of roads and sewerage at Rural Committee Road and Chung Hau Street commenced in August 1992, for completion within two years.

During the year, community facilities completed were an indoor recreation centre in Cheung Chau and a beach building in Ma Wan.

Urban Development Areas

Six development areas at Aldrich Bay, Siu Sai Wan, Hung Hom Bay, West Kowloon, Central/Wan Chai and Belcher Bay, all involving reclamations in Victoria Harbour, are under planning or construction to meet forecast development needs in the 1990s and beyond. The Aldrich Bay Reclamation will produce about 18 hectares of land for residential, public housing and open space uses. The newly completed typhoon shelter has already been put into use while reclamation of the old typhoon shelter started in August 1992 for completion in August 1997.

       The Siu Sai Wan development includes the formation of about 56 hectares of land for industrial, residential, government/institution/community and other uses. Land formation was complete and developments have already taken place.

       Twenty hectares of land have so far been formed at Hung Hom Bay out of a total of 36 hectares, with the remaining area due for completion in 1994. Future uses for this reclamation will include residential, commercial, community facilities, open space, trans- port interchange facilities and expansion of the existing 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.

Steady progress was maintained in the West Kowloon Reclamation scheduled for substantial completion by the end of 1994. In accordance with Metroplan the reclaimed area of some 330 hectares will provide opportunities for thinning-out existing high density development in the West Kowloon hinterland as well as accommodating strategic transport links to serve the new airport at Chek Lap Kok, namely the Airport Railway, the West Kowloon Expressway and Route 3.

       Tenders for 20 hectares of reclamation in Central Hong Kong Island between Blake Pier and Rumsey Street multi-story carpark were invited in June 19, 1992. This reclamation will provide land for the Central terminal of the Airport Railway and also provide opportunities for the development of commercial and open space uses.

       Belcher Bay reclamation will create about 10 hectares of land mainly for the construction of a dual carriageway connecting the existing upgraded Connaught Road West with Smithfield in Kennedy Town. Both the reclamation and the link were scheduled to commence in January 1993 for completion by 1996 to tie in with the opening of the Western Harbour Crossing.

Urban Renewal

Over the years, government and private developers have been involved in the redevelop- ment of the older urban districts where buildings are old and in dilapidated condition and where the provision of various community and infrastructural facilities is inadequate. 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 better urban environment.

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The Land Development Corporation (LDC) was established in January 1988 to encourage and speed up urban renewal. A section was set up in the Planning Department to serve as the main contact point between the LDC and the government. This section is responsible for processing LDC redevelopment proposals, making planning assessments and preparing planning briefs for various urban renewal schemes, and identifying suitable areas for urban renewal.

Since the inception of the LDC, about 20 projects have been initiated within the designated old urban districts. Up to the end of 1992, there were five comprehensive redevelopment scheme plans drawn up and gazetted under the Town Planning Ordinance.

Of the five redevelopment schemes, the Jubilee Street and Wing Lok Street Schemes were approved by the Executive Council in 1991 and the Queen Street Scheme was approved in September 1992. Resumption of private land and properties in the first two schemes was largely completed and construction works would soon be commenced. On completion, they will provide high quality office/commercial buildings and much needed open space and community facilities for the district. The Queen Street Scheme is to provide residential and commercial/office use, together with a multi-purpose social welfare complex, ample provision of public open space, a cooked food centre and a day nursery. Site assembly work is in progress.

The other two redevelopment schemes were still being processed by the TPB in accordance with provisions of the Town Planning Ordinance. Objections against the Argyle Street/Shanghai Street Scheme were heard by the TPB and the scheme is to be submitted to the Executive Council for approval in early 1993. On the other hand, preliminary consideration of the objections raised against the Sham Chun Street Scheme was held and the TPB decided to uphold the objections.

Apart from the comprehensive redevelopment schemes, a number of smaller commercial and residential redevelopment proposals were also being undertaken by the LDC. On Hong Kong Island, the commercial/office development in Queen's Road Central was completed, and the residential projects at Third Street and Li Chit Street were under construction. In Kowloon, there were two residential projects, one located at Yim Po Fong Street and one at Soy Street, and two commercial projects, one at Dundas Street and the other at Sai Yeung Choi Street South. Land grants for these projects were either completed or being processed.

Another notable LDC scheme was the renovation of the Western Market building at Sheung Wan. The scheme was planned to bring viable uses into a historic building by converting it into a London Covent Garden type of bazaar. The renovated market, opened in late 1991, has brought new life with traditional Chinese trades and crafts which are the prime characteristics of the Sheung Wan district.

To formulate area-specific renewal strategies and identify urban redevelopment opportunities, consultancy studies have been commissioned by the LDC. In 1992, two studies of redevelopment opportunities in Tsuen Wan Town Centre and Hung Hom were completed. The Planning Department also commissioned a survey on social attitudes towards urban renewal in mid-1992. The survey is expected to be completed by the end of the year. The findings will be used by the government as a reference in the formulation of future urban renewal approaches and the implementation of the Metroplan.

The Hong Kong Housing Society has also contributed to the urban renewal process by undertaking a number of urban improvement schemes in the old urban areas. There were

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     three such projects in progress, one in Yau Ma Tei, one in Sheung Wan (both scheduled for completion in 1995) and one in Sham Shui Po (to be completed in 1993).

Building Development - Private Sector

As the property market continued to boom, the number of occupation permits issued for completed buildings was 443, compared with 440 in 1991. The amount of usable floor area provided was 3.1 million square metres and the total costs of new building works were $23,518 million.

      The skyline of Hong Kong changed following the completion of a 78-storey office building, the Central Plaza. With a height of 374.30 metres, it is the tallest concrete- framed building in the world, the tallest building in Asia, and the fourth tallest building in the world. Phase I of the Hong Kong University of Science and Technology was completed and Phase II was at an advanced stage of completion. A major residential development was well underway at Ap Lei Chau comprising 38 tower blocks of flats for more than 50 000 people.

      As new buildings in Hong Kong become more sophisticated, it is imperative to maintain a high standard of building safety. New Building (Planning) Regulations were introduced in 1992 requiring the provision of easy means of access within new buildings for fire fighting and rescue purposes.

      The Buildings Ordinance Office also continued to place great emphasis on building safety in existing buildings. More staff were employed to deal with the problem of potential dangers arising from older buildings. Efforts in publicity and civic education were maintained to promote public awareness of the need for efficient maintenance and repair of buildings. In the on-going enhanced planned survey exercise, 8 624 buildings in suspect condition were inspected resulting in the issue of 910 orders requiring repair or demolition of buildings.

On the morning of May 8, 1992, Hong Kong experienced a severe rainstorm. This event, one of the worst on record, meant that the Buildings Ordinance Office had to attend to a total of 85 emergency cases, resulting in the immediate closure of one building on a permanent basis, and 20 buildings temporarily.

The problem of unauthorised building works remained a problem for the Buildings Ordinance Office. Operations were launched to clear external appendages which threatened the safety of public thoroughfares. Fifty two buildings were targeted for clearance during the year. Of the 11 160 appendages removed, 6 140 were removed voluntarily by the building owners themselves, attesting not only to the success of the operations but also to the willingness of the public to co-operate.

      The office played an active role in promoting energy conservation by co-ordinating a study on the use of overall thermal transfer values in air-conditioned buildings as a means to achieve energy efficiency. A draft handbook was prepared and commended to the building industry for use on a trial basis.

      The office was also alert to the wasteful use of tropical hardwood in the building industry, to the detriment of the environment. Practice notes were issued to authorised persons, registered structural engineers and registered contractors aiming at encouraging the use of alternatives to timber for construction purposes. An exercise was initiated to examine existing building regulations to further the cause.

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Building Development - Public Sector

The Architectural Services Department is a multi-disciplinary organisation having responsibility for providing technical advice on building related matters to government departments; financial and project management of public building developments under the Public Works Programme and for monitoring public expenditure on subvented building projects financed by Government. The department provides professional design services for Government, Urban and Regional Council buildings; and maintenance management services for buildings owned or occupied by Government, Urban and Regional Councils, subvented schools and the British Forces in Hong Kong.

  During 1991-2, the department had under study, design and construction over 700 projects valued at $39 billion. In addition, the value of subvented projects monitored by the department amounted to $11 billion. Work valued at $5.8 billion was carried out on building projects undertaken or monitored by the department. Expenditure on main- tenance and minor alteration works to Government, Urban Council, Regional Council, Hospital Authority, Subvented Schools and British Forces properties amounted to $0.8 billion.

  In the 12 month period to March 1992 tender prices dropped by about 15 per cent primarily due to market forces. On the other hand, over the same period, labour and basic material costs rose by 10 per cent and three per cent respectively.

  The department is in the preliminary stages of the design of government facilities for the new airport at Chek Lap Kok. At the Kai Tak Airport passenger terminal the refurbishment programme and the transport terminus improvements were completed in August and September 1992 respectively. Part of the south apron development project of the Royal Hong Kong Auxiliary Air Force Headquarters was completed in August 1992.

  Under the Airport Core Projects programme, Phase I of the Cheung Sha Wan Wholesale Market commenced in April 1992 and will be completed in September 1993. In conjunction with the second phase it will provide Kowloon and the New Territories with an integrated wholesale market facility.

  The Western Wholesale Market, Phase II, at Kennedy Town is also currently under construction and will be completed by April 1994.

  Various other market complexes and sports and recreational facilities were completed during the year for the Urban Council including Chai Wan Park and Electric Road Market Complex. Construction started in 1992 included the largest indoor games hall to be built in Hong Kong (on the Western Reclamation) as well as various other facilities.

  The Regional Council increased its provision of public facilities with the completion of the Shatin Leisure Pool Complex, the Tai Po Sports Ground and indoor recreation centres at Fanling and Cheung Chau. Construction commenced on an air-conditioned market complex in Shek Wu Hui and two air-conditioned indoor recreation centres in Kwai Chung and Tsuen Wan.

  Medical and health projects completed during the year included the Pamela Youde Hospital at Chai Wan, the Block B extension to Queen Elizabeth Hospital, improvement works to Tsan Yuk Hospital and the Nurses Training School and staff quarters associated with the Pamela Youde Hospital.

During the year work commenced on the Queen Elizabeth Hospital refurbishment due for completion in 1996. Piling work was completed on the Wong Chuk Hang complex for the elderly and overall completion is expected in 1994. Other hospital projects under

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design, construction and refurbishment are the Shum Wan Laundry, Prince of Wales Hospital; General and Children's Cancer Centre, Siu Lam Hospital; and Queen Mary Hospital extension and improvements.

Public clinics under construction and due for completion in 1993 are the Tuen Mun Urban Clinic and the Tin Shui Wai Urban Clinic. The Sha Tin Urban Clinic was completed in January 1992.

      For the disciplined services, a number of projects were completed this year. Police projects included a Divisional Police Station at Tin Shui Wai, completed in time to serve the new town with its first population in-take, and Ping Shan Police Dog Unit Head- quarters. For the Fire Services Department a new combined Sub-Divisional Fire Station, Ambulance Depot and Ambulance Training School at Ma On Shan, as well as new ambulance training facilities were completed.

      Among projects under construction during the year were the Sub-Divisional Fire Station at Tsing Yi, Lai King Division Fire Station at Kwai Chung and foundation work for the New Police Headquarters complex.

The Property Services Branch of Architectural Services Department provided mainten- ance and alteration works to over 6 000 government, Urban Council, Regional Council, Hospital Authority, subvented schools and British Forces buildings. There was a noticeable increase in the number of major refurbishment and fitting out projects being undertaken, including Stage 3 of the refurbishment of Queen Mary Hospital, Central Government Offices West Wing and refurbishment of a building in Kennedy Road as a meeting venue for the Sino-British Joint Liaison Group.

Government's continued commitment to improving facilities for handicapped persons was reflected by the completion of Phase 2 of a rolling programme to modify existing public buildings to facilitate access for the disabled. In total 94 locations ranging from hospitals and post offices to markets and playgrounds have been provided with access and, where feasible, special toilets.

      The Antiquities Group within the branch were again rewarded for their work in restoring and repairing historically important buildings in Hong Kong. The Kun Ting Study Hall in Ping Shan was awarded the Hong Kong Institute of Architects President's Prize. The building is a traditional Chinese Study Hall which was authentically restored by artists and craftsman from China using salvaged materials and historical evidence provided by villagers.

The Subvented Projects Division advises departments providing subvention to private organisations for building and maintenance works. These include subvention provided for tertiary institutions and health facilities.

Since the establishment of the Hospital Authority in December 1991 the department has been responsible for monitoring capital subvention for building and improvement projects at facilities under the auspices of the authority.

      Advice is also given on facilities to be provided to the government by private developers as a requirement of condition of land grant.

Land Administration

The Lands Administration Office of the Buildings and Lands Department co-ordinates all aspects of land administration throughout the territory.

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  The office's main functions are to acquire and make available land for the government's development programmes, to dispose of sufficient land to meet demand and to manage all unallocated government land.

  Although most government land available for private sector development is sold by public auction or tender, land is also made available at nominal premium to the Housing Authority for its public rental estates and home ownership schemes and to non-profit- making charitable medical and educational institutions which operate schools, hospitals, social welfare and other community services.

  A land sales programme is issued at the beginning of each financial 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.

Land Acquisition

When private property is needed in the public interest, which in most cases is 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 the Crown Lands Resumption Ordinance, the Land Acquisition (Possessory Title) Ordinance, the Mass Transit Railway (Land Resumption and Related Provisions) Ordinance or the Roads (Works, Use and Compensation) Ordinance. These ordinances provide for payment of compensation based on the value of property, and for business loss where appropriate, 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 domestic units within the urban area.

  During 1992 about 0.4 million square metres of private land was acquired in the New Territories for various projects at an acquisition and clearance cost of about $0.79 billion. These projects included the Lantau Fixed Crossing, the North Lantau Expressway, Tung Chung New Town Development, pumping stations and aqueducts for water supply from China, the Tin Shui Wai West Access and the North East New Territories Landfill Site and its associated works.

  In the urban area Kowloon Walled City was finally cleared and demolition of the buildings started. It previously covered an area of 2.7 hectares with a population of some 28 250. Owners and occupiers of 8 494 premises, including 983 premises used for business purposes, were eligible for compensation payable on an ex-gratia basis and expenditure on com- pensation incurred to date is $3,017 million, of which $546 million was incurred during 1992.

  Elsewhere in the urban areas of Hong Kong and Kowloon, acquisition for the implementation of urban renewal projects to be carried out by the Land Development

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     Corporation and Hong Kong Housing Society, together with other smaller projects involved 538 properties and expenditure of $2,244 million.

Land Disposal

All land in Hong Kong is held by the government which sells or grants leasehold interests. Such grants and leases are 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, but the Land Commission may increase this limit and regularly does. The land disposal limit this year is 164.30 hectares with a 5-hectare 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 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

     There was a steep increase in residential property prices in 1991 exacerbated by the problem of speculation in new developments. In order to combat this, and in addition to other fiscal measures introduced by the Government, the Lands Administration Office, with the agreement of the Land Commission, disposed of land through the Land Sales Programme that will provide a substantial increase in the number of residential units when compared with previous years.

      Major land transactions/negotiations in 1992 included the invitation of expressions of interest for a 60-hectare site on east Tsing Yi for Container Terminal 9 with the granting of the site in early 1993.

      Two grants of land in the Central District of Hong Kong Island were made to the Land Development Corporation for redevelopment of inner city areas into new commercial/ residential buildings with provision for markets, bazaars and varying social service facilities.

Three sites with a total area of 3.07 hectares were sold under the Private Sector Participation Scheme which will provide a total of 4 600 flats. A further eight sites were granted to the Hong Kong Housing Authority for the development of home ownership Schemes. These included two large sites comprising 2.66 hectares and 2.77 hectares in Kowloon East.

In the New Territories, nine sites with a total area of 9.98 hectares were sold by tender restricted to holders of Land Exchange Entitlements (Letters A/B), thereby reducing the amount of outstanding Letters B to be redeemed to approximately, 3 500 000 square feet. Commercial/residential sites in Tseung Kwan O comprised a total of three sites in this programme and amounted to an area of 7.05 hectares.

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

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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 (except in the New Territories District Land Registries) 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.

Registration is therefore essential to the protection of title, but does not guarantee it. Approval in principle has been 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. Legislative amendments based on the report are being put in place.

  The records of transactions effecting 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 Registries in the New Territories. Before any land transaction is completed a land search to ascertain property ownership should always be made. During the year, 3 207 280 such public land searches were made and 685 136 instruments registered throughout the territory, compared with 3 168 942 and 823 842 respectively in 1991. At the end of the year, there were 1 505 003 property owners, an increase of 57 612 over the previous year.

  On December 1, 1992 the Legal Advisory and Conveyancing Section of the Land Division of the Registrar General's Department was transferred to the Buildings and Lands Department to form a new Legal Advisory and Conveyancing Office within the department. This office 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 and completion of conditions of sale, grants and exchanges of government lands, 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. It is also responsible for the processing of the Consent Applications which are governed by the rules of the Land Authority

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Consent Scheme. During the year, 21 applications involving 10 124 units in the urban areas were approved and in the New Territories 30 applications involving 15 013 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 and managing a computerised land information system.

      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.

There is a world-wide trend to use a Global Positioning System (GPS) in place of conventional methods to fix geodetic control points. This method makes use of signals from orbiting satellites to determine the position of any point on earth. The Survey and Mapping Office will use GPS for geodetic work in the near future.

      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 request the office, on payment of a fee, to supply boundary information or to reset-out the private lot boundaries on ground. Legislation will be introduced to administer boundary surveys by authorised persons in order to protect the public interest, regulate private sector practices and strengthen the cadastral survey system. Contracting out of some cadastral surveys covering small house lots in the New Territories continued in 1992.

      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). In addition, there are other smaller scale maps such as the monochrome map series at 1:5 000 (157 sheets) and the coloured map series at 1:20 000 (16 sheets); 150 000 (two sheets); 1:100 000 (one sheet) and 1:200 000 (one sheet). 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 (seven sheets) and the Tourist Guide, has been strong and the design and contents are continually updated 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 services for many government departments. These include full-colour mapping for the geological series, base maps for weather forecasting, aeronautical charts, electoral boundary maps and pollution control plans. Its Reprographic Unit also provides services in photo-reproduction and plan copying, and serves as an essential back-up for in-house map reduction and other cartographic activities.

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  The computerised land information system is being installed in District Survey Offices by phases once the digital map data and land records are available. The system processes and analyses land information and is a useful tool for enquiry on land status and decision making. The system also automates the production of large scale maps and cadastral plans. Up-to-date mapping and boundary information can be made readily available to users. Besides producing standard 1:1 000 survey sheets containing full topographical features, the system can also produce plans according to the user's specifications. The users can choose the features to be shown, such as buildings, roads and contour lines; colours and symbols for different features; and plan scale and plan size. Mapping information in digital form may be supplied to the public on payment of a licence fee and direct on-line access to the central mapping data may also be possible. The data conversion for other districts in the territories will be speeded up by contracting out the work and is scheduled to be completed by 1994.

  The Photogrammetric Survey Section provides aerial photographs and photogrammetric mapping as well as data 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.

Drainage Services

The Drainage Services Department is responsible for planning, designing, constructing, operating and maintaining sewerage, sewage treatment and stormwater drainage infra- structures.

Treatment and disposal of foul water

The treatment and 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. Projects on foul water disposal can be broadly 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 Hong Kong Island, Kowloon, Tsuen Wan and Tseung Kwan O into a deep tunnel intercepting sewer system that will discharge, after treatment on Stonecutters Island, through a long sea outfall into the Dangan Channel.

  Under the 'existing schemes' category the largest project is the North West Kowloon Sewage Treatment and Disposal Scheme. In this scheme, the sewage from Sham Shui Po, Mong Kok and Yau Ma Tei with a total population of about 1.2 million will be collected and treated prior to discharge. All construction works have been completed and the operation of the scheme has been in commission since August 1992. The second largest project in this category is the Tolo Harbour Effluent Export 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, submarine pipelines

LAND, PUBLIC WORKS AND UTILITIES

and a sewer tunnel of 3.2-metre diameter and 7.5 kilometres in length under Tsz Wan Shan. The sewer tunnel was broken through in June 1992 and construction for the whole of the works is scheduled for completion in two stages in 1993 and 1995.

Other projects which are being implemented under this first category include the construction of a sewage screening plant to serve a population of 1.2 million in the Tsuen Wan and Kwai Chung area, a secondary sewage treatment plant to serve the rural public housing in Peng Chau and the upgrading and extending of the existing Tseung Kwan O sewage treatment plant. In late 1992, the government completed the 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. The extension of Yuen Long sewage treatment works was also completed in 1992.

Under the second category, projects are being implemented to improve the sewage collection, treatment and disposal facilities in the areas of Tsuen Wan, Kwai Chung, Tsing Yi, Yuen Long, Kam Tin and Port Shelter. Design works are being carried out for these projects and construction works are scheduled for commencement either in 1993 or 1994. In East Kowloon and the southern district of Hong Kong Island, works to improve sewage disposal facilities have already started.

Under the third category, engineering feasibility studies were carried out to study the details for the implementation of the strategic sewage disposal scheme. The studies have provided useful information for the design of this massive sewerage scheme involving a system of deep sewer tunnels.

Stormwater drainage

     For stormwater drainage, the Drainage Services Department is responsible for the formulation of strategies, standards, project planning and implementation. Past records indicate that the North and North-West New Territories are particularly vulnerable to flooding. Further to an initial territory-wide study carried out by consultants in 1989 to review rainfall, stream flow and flooding prediction, the department has commissioned another study with the aim of drawing up basin management plans for the main rivers in the North and North-West New Territories and to 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 have been widely distributed through District Offices to people living in flood-prone areas.

Among structural measures, which the 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. Construction of 6.5 kilometres of channels for the Tin Shui Wai hinterland has been completed and design has already been put 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 1993. As an associated measure, flood water pumping systems have also been constructed to mitigate the impact of flooding in low lying villages. About a dozen, mainly in the New Territories, are currently in operation and more are planned for construction in the future.

The ground work for the creation of a Land Drainage Ordinance has been completed and a Land Drainage Bill is being prepared. The bill, when enacted, will empower the government to access and maintain important watercourses running through private land, or through government land but surrounded by private land.

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Operation and maintenance of drainage system

With the commissioning of each additional item of infrastructure there is a consequential increased commitment in operations and maintenance. At present, the sewage treatment facilities are being operated to provide grit removal and screening for sewage of some 1.3 million cubic metres per day and to provide full biological treatment for sewage of another 350 000 cubic metres per day. Sludges produced from both sewage treatment works and water treatment works at Sha Tin are dumped at sea by the 1 400 cubic metre-capacity purpose-built vessel Sha Tin Prince which commenced operation in March 1991. The environmental effect of such dumping is carefully monitored.

The department also operates an all-the-year-round emergency storm damage organisation. This organisation is run by staff working on a rotational basis and is supported by the department's direct labour force and contractors. Its operation ensures that emergency situations, even outside normal working hours, can be dealt with efficiently. Effective maintenance of the drainage infrastructures is an essential part of the total effort to reduce the risk of flooding as well as to ensure the proper and effective disposal of foul water. Since the establishment of the department, the approach to operation and maintenance of the public drainage system has progressively shifted from crisis management to preventive maintenance. Resources have been deployed to carry out regular inspection, cleansing, repair and improvement of the drainage system, especially at identified drainage black spots. The results are promising and although the public drainage system has become larger and more complex with urbanisation, the number of drainage complaints, chokage and flooding show steadily declining trends. The department now maintains 2 850 kilometres of watercourses, drains and sewers, increasing at the rate of 50 kilometres per year. Some 90 000 cubic metres of silt are removed from drains and watercourses each year to keep their pollution level low and keep them free-flowing.

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 6 494 design proposals in 1992.

The GEO also operates the Landslip Warning System and a 24-hour emergency service to provide advice on landslips. An exceptionally heavy rainfall event occurred on May 8, 1992, which resulted in more than 350 landslip incidents, two of which involved fatalities. GEO staff attended all of these incidents giving advice on immediate measures to prevent further danger as well as on permanent remedial measures.

In June 1992 arrangements were made for members of the public to gain access to the government's catalogue of slopes and to obtain information about the results of the squatter area studies undertaken by GEO.

  During 1992, landslip preventive works were completed on 33 slopes and retaining walls requiring the expenditure of $62.3 million in the Landslip Preventive Measures Programme and substantial remedial works were carried out to three major landslips. Preliminary studies were carried out on 1 602 slopes and retaining walls and detailed geotechnical investigations were finished on 53 slopes and retaining walls. In addition, the inspection of a number of boulder and rock outcrop features along Seymour Cliffs in the Mid-Levels was undertaken, with preventive stabilisation works completed on 45 features, at a cost of $2.6

Preceding page: A jade lover with her collection. Both for its value and beauty jade is sought after in Hong Kong. Left and below: Art specialists at an auction preview.

CHRISTIE'S SWIRE

HKS

50.000

LOT

NTS

159.235

15

SIN

10.320

CHRISTILN

YEN

778.210

US$

6.465

UKP

3.765

1766

Above: Antique and modern art and ornaments go under the auctioneer's hammer.

Following Pages (left): Modern Chinese oil paintings command considerable interest and high prices. Right (top to bottom): A dealer discusses the merits of an exhibit; experts examine an antique horse and carry out tests to check its age.

1 ཆོ སཱདྷཙ བ བ 1:|: !!

PU

A young buyer studies a fine antique watch at a specialist clock shop.

LAND, PUBLIC WORKS AND UTILITIES

million. Works also commenced on the extension to the Mid-Levels boulder fence behind Conduit Road together with in-situ stabilisation of large boulders in the boulder field behind the fence. Completion of this project will be mid-1993 at an estimated cost of $5.8 million. Stabilisation works were in progress to the slopes of an old landfill borrow area at Fung Shing Street, Ngau Chi Wan, with a contract sum of $6.9 million. Remedial works to four disused air raid precaution tunnels were completed at a cost of $9.2 million.

The Hong Kong Geological Survey continues to publish 1:20 000 scale geological maps and memoirs for the land and marine areas of the territory. During 1992, new geological maps for Silver Mine Bay, Kat O Chau and Cheung Chau were published. Geological maps at 1:20 000 scale are now available for more than 80 per cent of the territory. A seismotectonic study and a gravity survey of the territory were completed during the year. Large-scale (1:5 000) geological survey work is well underway in the development areas of North Lantau. Geophysical survey and borehole data for the mapping are being transferred into a computer database, and computer-aided cartography is being developed for map production. Engineering geology studies have been essentially completed in North Lantau, and have identified the major geotechnical constraints that could significantly affect the costs or timely implementation of the new airport and related projects and the future port-related developments in the area.

The Geotechnical Information Unit (GIU), which houses the largest collection of geotechnical data in Hong Kong, continues to serve as an important reference centre in its premises in the Civil Engineering Building in Ho Man Tin. The GIU served more than 4 000 users during the year.

The office's work on the use of underground space continued in 1992. Geoguide 4: Guide to Cavern Engineering, which is aimed at providing guidance on design and construction of caverns, has been published and is now on sale. The office also continued to carry out studies to establish cavern development opportunities on a regional basis, and preliminary engineering geological studies of specific sites for potential cavern projects. In 1992, four preliminary engineering geology studies for various cavern uses were completed. Geotechnical advice was also provided on cavern projects being planned or constructed by other departments.

The Marine Geotechnology Section provided advice and carried out research and development work on the marine geotechnical aspects of Port and Airport Development Strategy (PADS) projects, notably on foundations for marine structures and reclamations.

A comprehensively revised draft edition of Geoguide 1: Guide to Retaining Wall Design was circulated to private and public sector practitioners both in Hong Kong and overseas in 1992, and much valuable comment was obtained which assisted in finalising the document for publication.

The GEO manages the Public Works Central Laboratory at Kowloon Bay and five public works regional laboratories in various parts of Hong Kong. The six public works laboratories together employ over 150 staff, of whom 10 are professionals and 140 are of technical and clerical grades. Over 250 000 tests on various construction materials were carried out during 1992. The laboratories are accredited under the Hong Kong Laboratory Accreditation Scheme (HOKLAS) to provide calibration services, as well as to carry out tests on such construction materials as concrete, steel, aggregates, cement and pulverised fuel ash. Application for HOKLAS accreditation of bituminous materials testing is in hand.

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The office continues to upgrade the level of services available for land and marine ground investigations and geophysical surveys. A number of major ground investigations were undertaken for PADS, including the terminal building at Chek Lap Kok Airport, Lantau Fixed Crossing, West Kowloon Expressway, Western Harbour Development Study, and for studies on the restoration of a number of old landfill sites. Marine investigations continued for assessment of marine sources of sand in Hong Kong waters for use in planned reclamation works.

Fill Management

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. Around 350 million cubic metres of fill from marine sources and a similar quantity from land sources are needed for new reclamations over the next 15 years. The FMC Secretariat uses a comprehensive computerised database on which the committee makes decisions on reservation, allocation and efficient utilisation of fill resources for all government and major private projects. During 1992, some 115 million cubic metres of marine fill were allocated for the construction of reclamations.

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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 600 million cubic metres and this will continue to increase in stages to 690 million cubic metres by 1995. 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 view of the very low reservoir storage level in February 1992, an additional supply of 105 million cubic metres was agreed for the period of March 1992 to February 1993. Subsequently, abnormally high rainfall was recorded in March to June. China agreed to defer the delivery of 38 million cubic metres of the additional quantity to the period of March 1993 to February 1994. 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 up to a maximum of 1 100 million cubic metres per year to cope with the anticipated demands beyond 1994, 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. The first contract commenced work in December 1991. Works in progress included new pumping stations at Muk Wu and Tai Po Tau as well as delivery pipelines between the two pumping stations.

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Water Works

      Full supply was maintained throughout the year. At the beginning of 1992, there were 177 million cubic metres of water in storage, compared with 179 million cubic metres at the start of 1991. The combined storage of Hong Kong's largest reservoirs, High Island and Plover Cove, was 133 million cubic metres. Rainfall for the year was 2 679 millimetres compared with the average of 2 214 millimetres. Water piped from China during the year totalled 668 million cubic metres.

      A peak consumption of 2.82 million cubic metres per day was experienced, compared with the 1991 peak of 2.76 million cubic metres. The average daily consumption throughout the year was 2.43 million cubic metres, an increase of 0.6 per cent compared with the 1991 average of 2.42 million cubic metres. The consumption of potable water totalled 889 million cubic metres compared with 884 million cubic metres in 1991. In addition, 127 million cubic metres of salt water for flushing was supplied, compared with 123 cubic metres in 1991.

       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 site of the decommissioned plant has been handed over to the Provisional Airport Authority as a trans-shipment centre for the construction of the new airport.

       Planning studies were completed during the year for the improvement of water supply to Tseung Kwan O, Tuen Mun, Tai Po, Sheung Shui, Fanling, East Kowloon and West Kowloon including the new reclamation area. These included the provision of salt water supplies to Tseung Kwan O and Tai Po. Planning is in hand for the major new treatment works at Tai Po (formerly 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 Yuen Long, Tin Shui Wai and the metropolitan south-eastern area of Kowloon, the central, western mid level and high level areas of Hong Kong Island and the Northwest New Territories is also in progress. A planning study on the treatment and disposal of sludge generated from the existing treatment works was also completed.

      Regarding water supply to the new airport at Chek Lap Kok and other developments in North Lantau associated with the Port and Airport Development Strategy, works for the permanent water supply system will be implemented in stages with the Stage I works to be commissioned by mid-1996 to phase in with the commissioning of the new airport. The Stage I works include submarine and land mains, a water treatment works, pumping stations, a fresh water service reservoir and a raw water aqueduct between Siu Ho Wan and Silvermine Bay. Part of the design work was in an advanced stage. Mainlaying work along the North Lantau Expressway commenced in June 1992. The bulk of the works will commence by the end of 1993. The temporary water supply system providing water supply to construction activities for the new airport and other infrastructural projects was completed.

      Consultants have completed the investigation for the Ma On Shan Treatment Works and proceeded with the detailed design. Design work by in-house staff has been completed on the Sham Tseung Treatment Works Stage I and continued on the extension of Sheung Shui Treatment Works. Other major design works in progress included the flushing water supply system in Ma On Shan and Tai Po, additional service reservoirs, pumping stations and water supply networks in Tuen Mun, Yau Kom Tau, Tsuen Wan, Tsing Yi, Tseung Kwan O, Hong Kong west mid level, Ap Lei Chau and Repulse Bay. Design works for the

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improvement of chlorine storage facilities in Tsuen Wan, Tuen Mun and Tai Po Tau Treatment Works and Tai Lam Chung Pre-Chlorination House were also in progress. Design of the expansion of the distribution network to supply remote villages in the New Territories continued.

Construction for the Au Tau Treatment Works Stage II and a new intake tower in Tai Lam Chung Reservoir commenced. Construction works for the Sham Tseng Treatment Works and extension of Yau Kom Tau Treatment Works were in progress.

Au Tau Treatment Works Stage I and Pak Kong Treatment Works Stage II were put into operation. The distribution system was continuously extended and enlarged to meet urban and rural demands in the territory. Expansion of the distribution network to supply remote villages in the New Territories continued.

The number of consumer accounts continued to rise at a rate of about three per cent per annum and the consumer account base expanded to approximately 1.93 million at the beginning of 1992. Computer systems were widely employed to provide efficient and effective enquiry services; handling applications for new water supply and change of consumer; and issuing water bills, connection fees and deposit demand notes. A project to introduce handheld computers for meter reading in order to further improve efficiency of the billing process was carried out during the year with a target implementation date of early 1993. Efforts to promote the autopay service continued, and the number of consumer accounts using autopay for payment of water charges reached 201 000 or about 10 per cent of all consumers.

A SAVE WATER publicity campaign continued in the early months of the year but was scaled down since May following heavy rainfall which greatly improved the reservoir storage situation. The public was reminded of the importance of following safety guidelines in the installation of electric thermal storage type water heaters for domestic purposes. Consumers' attention was drawn to their responsibility for maintenance of their plumbing installations and carrying out simple checks themselves in the event of supply problems prior to seeking assistance from the Water Authority.

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 a mutually agreed scheme of control agreements. The agreements require each company to seek the approval of the government for certain aspects of their financing plans, including projected tariff levels.

  The operations of the three generating companies affiliated to CLP, namely, Peninsula Electric Power Company Limited (PEPCO), Kowloon Electricity Supply Company Limited (KESCO) and Castle Peak Power Company Limited (CAPCO) were consolidated under CAPCO in April 1992. CAPCO's present generating facilities include Tsing Yi 'A' (796mw), Tsing Yi 'B' (876mw), Castle Peak 'A' (1 752mw), Castle Peak 'B' (2 708mw) and Penny's Bay (300mw) power stations. The total installed capacity is 6432mw.

LAND, PUBLIC WORKS AND UTILITIES

The government has also approved the installation by CLP of four 600mw blocks of additional generating capacity, the first two of which will be installed in a new power station at Black Point, Tuen Mun, in 1996 and 1997 respectively. The other two blocks will be commissioned within the periods 1998 to 2000 and 1999 to 2001. All of them will be fuelled by natural gas piped from the Yacheng 13-1 gas field off Hainan Island in China.

       CAPCO is 60 per cent owned by Exxon Energy Limited and 40 per cent by CLP, while the associated transmission and distribution systems are wholly owned by CLP. CLP's present scheme of control agreement will expire on September 30, 1993. The government has entered into a new agreement with CLP, Exxon Energy Limited and their generating companies that will commence on October 1, 1993 and last for 15 years.

CLP's transmission system operates at 400kV, 132kV and 66kV, and distribution is effected mainly at 33kV, 11kV and 346 volts. The supply is 50 hertz alternating current, normally at 200 volts single phase or 346 volts three phase.

CLP has more than 170 primary and over 6903 secondary substations in its trans- mission and distribution network. An extra high voltage transmission system at 400kV 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 in progress.

       In HEC's supply areas, electricity is supplied entirely from the Lamma Power Station. At the end of 1992, the total installed capacity at the Lamma Power Station was 2 605mw. There are plans to add a further 350mw unit to Lamma in the mid-1990s.

HEC's transmission system operates at 275kV, 132kV and 66kV and distribution is effected mainly at 11kV and 346 volts. With the exception of a small proportion of 132kV 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 the amount of generating capacity that needs to be kept spinning as reserve against the tripping of other units. The interconnection, commissioned in 1981, currently has a capacity of 720mvA.

CLP's system is also interconnected with that of Guangdong General Power Company of China and electricity is exported to Guangdong Province each day. Such sales, which are made from existing generating capacity at off-peak times, are governed by an agreement with the government signed in March 1992 under which CLP's consumers receive priority of supply and 80 per cent of the profit from the sales.

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 arrangements, which afford 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

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210

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 Guangdong Nuclear Power Station will comprise two 985mw pressurised water reactors which are scheduled for commissioning in 1993 and 1994 respectively. About 70 per cent of the power from the station will be purchased by CLP to meet part of the longer-term demand for electricity in its area of supply.

The new Electricity Ordinance enacted in 1990 provides among other things for the registration of electrical workers and contractors. To ensure that electrical work is carried out by qualified personnel, only registered electrical workers and contractors are allowed to practise with effect from June 1, 1992. To be eligible for registration, they must possess the necessary experience and qualifications. The registration of electrical workers and contractors started in November 1990 and November 1991 respectively. By the end of 1992, 50 706 and 6 118 qualified electrical workers and contractors had been registered.

  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 appointed in February 1991 to advise on the implementation of voltage upgrading in the territory. The voltage upgrading is planned to be carried out in two phases and to be completed in about six years. Phase I conversions, covering existing installations inside government buildings, started in August 1990 and was completed in November 1992. Phase II conversions will cover existing installations in Housing Authority and private sector buildings. This phase commenced in January 1993 and will take about four years to complete.

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 about 1.86 million. In 1992, Towngas accounted for 63 per cent of the total fuel gas sold in energy terms and LPG for 37 per cent.

HKCG manufactures Towngas at two plants, one 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 2.2 and 8.4 million cubic metres per day respectively.

Towngas is distributed through an integrated distribution system to about 910 thousand customers for cooking and heating purposes. The mains network extends to the urban areas of Hong Kong Island, including Aberdeen, Repulse Bay, Stanley and Ap Lei Chau; Kowloon; and many new towns in the New Territories, including Sha Tin and Tai Po, Yuen Long and Tsing Yi Island. HKCG is currently constructing a 90km network of 600mm diameter transmission pipeline in the New Territories. The new transmission line is

LAND, PUBLIC WORKS AND UTILITIES

designed to operate at elevated pressure and will provide an additional 0.8 million cubic metres of 'line pack' storage capacity.

SNG is distributed by HKCG under the Towngas trademark from a temporary plant located in Tuen Mun specifically designed and operated to provide the gas requirements of this new town. The 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 63 per cent of total sales is distributed to customers, via dealer networks, in portable cylinders. The remaining 37 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 535 LPG dealers operating within the territory. Additionally, 23 LPG site operators manage 475 bulk storage installations under government-monitored arrangements. Altogether there are 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 now using cylinders has fallen to less than 35 per cent in 1992; and the number of upgraded gas water heaters amounts to some 62 250. Apart from suicide cases there were no fatalities arising from fuel gas incidents during 1992.

As 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 the Gas Safety Advisory Committee was established for the purpose of advising the authority upon all relevant matters. Since April 1, 1992 it has been necessary for all gas supply companies, gas installers and contractors to be registered with the Gas Authority. In 1992, seven gas supply companies, 2 427 gas installers and 353 gas contractors were registered under the scheme. In addition, the administrative arrangements for controlling safety in the transportation of LPG in tankers and cylinder wagons have been transferred from the Director of Fire Services to the Gas Authority.

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.

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 927 registered architects and 993 registered professional engineers. The Surveyors Registration Ordinance and the Planners Registration Ordinance were enacted in July 1991. Their registration boards have been established and the registers will be open to applicants. Registration for all four professions requires, in addition to approved professional qualifications, ordinary residence and at least one year's professional experience in Hong Kong.

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THE first signs of the massive new transport infrastructure to be built under the airport core programme appeared during the year when works commenced on the Lantau Fixed Crossing and reclamations in West Kowloon and North Lantau.

Of the 10 airport core projects, six are related to transport links, the Western Harbour Crossing, the West Kowloon Expressway, the Tsing Yi section of Route 3, the Lantau Fixed Crossing, the North Lantau Expressway and the Airport Railway.

The growth in the number of vehicles on Hong Kong's roads is continuing at a high rate. However, traffic conditions did not deteriorate generally during the year as new roads and improved traffic management techniques enhanced capacity.

The need for the continued expansion of road and rail infrastructure, and the management of vehicle growth in the longer term were confirmed by a study to update the Second Comprehensive Transport Study that was completed by mid-1992. Since road transport accounts for two-thirds of all public transport journeys, the maintenance of bus speeds is an important objective. Greater efficiency in the movement of freight by road, rail and sea will also play a part in alleviating road congestion. In this regard, a Freight Transport Study will report its findings in early 1993. The objective of efficient use of limited road space is complemented by the policy of encouraging the use of railways as a mass carrier. A Railway Development Study has been commissioned to draw up a railway development programme up to 2011. The report on the study will be available in early 1993.

   Emphasis continues to be placed on improving the efficiency with which transport and related services are delivered to the public. The Transport Department has continued its programme to contract out the management of certain services which are better provided by the private sector. During the year contracts were awarded for the management of the new Kowloon Bay Vehicle Examination Centre, and the four remaining government-run road tunnels. A contract for the management of a new cross-border coach terminal will be awarded in 1993, and preparatory work is proceeding to contract out the management of parking meters.

   Changes were made during the year to the bus franchising arrangements, with the aim of promoting healthy competition. In June, the government invited tenders for a franchise to operate 26 bus routes taken away from China Motor Bus Company (CMB)'s current network. The franchise was awarded to Citybus Limited and the new services will start in September 1993.

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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. He is assisted by the Transport Advisory Committee, which advises the Governor in Council on major transport policies and issues. The committee has 11 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 main- tenance 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, car parks 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 prosecutions 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 1992, the unit conducted 14 prosecutions in respect of buses and other vehicles, 4767 cases for which disqualification was sought under the Driving Offence Points System and 96 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 Updating of the Second Comprehensive Transport Study has been finalised. It provides a territorial transport infrastructure development strategy up to 2011, taking account of the port and airport projects. Key findings from this exercise have been fed into the Railway Development Study, commissioned to establish a long term railway development programme, and the Freight Transport Study. Apart from these studies, a Travel Characteristics Survey was carried out to obtain trip-making and socio-economic data from households as an aid to forward planning of transport infrastructure and services.

Construction works on some of the airport core programme projects, such as Tsing Ma Bridge and North Lantau Expressway, have commenced and works on other projects are

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progressing to ensure completion in time for the opening of the new airport. A study is being planned to examine the transport and traffic requirements of the new airport, with the focus on transport links with other parts of the territory. The study will also examine the impact of the westward emphasis of the new airport and the airport-related highways projects on the existing transport patterns.

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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 30 000 vehicles per day. Starting from July 1, 1992, the opening time of the crossings was advanced by half an hour to 7 am, and the closing time at the Man Kam To Crossing was extended by two hours to 10 pm for goods vehicles. Commencing December 1, 1992, the closing time at Lok Ma Chau was also extended to 10 pm.

Cross-border vehicular traffic increased by about 12 per cent during the year compared with 1991. The increase mainly occurred at Lok Ma Chau. The average daily traffic figures at the three crossing points in 1992 were about 1 800, 9 700 and 6 300 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, 23 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 2.81 million tonnes (revenue tonnes) of freight (1991: 3.18 million tonnes) and 1.9 million head of livestock (1991: 1.9 million) were brought into Hong Kong by rail. Exports to China by rail accounted for 1.18 million revenue tonnes, an increase of 12 per cent from the 1.05 million tonnes carried in 1991. Cross-border passenger traffic on the railway was 38 million in 1992 (1991: 34 million). A further extension of the terminal building at Lo Wu is being constructed to cope with growth in rail traffic. The project is scheduled for completion in early 1995.

In 1992, ferry services between Hong Kong and China carried 5.1 million passengers (4.3 million in 1991). At the end of the year, there were 26 ferry routes between Hong Kong and China operated by eight companies. The China Ferry Terminal in Canton Road has sufficient capacity to meet demand beyond the turn of the century.

The opening of the Shenzhen Airport in October 1991 provided a further impetus to the growth of cross-border traffic. There are now coach and ferry services between the airport and Hong Kong. These new services are expected to continue to expand and to further utilise the spare capacity at the Lok Ma Chau Crossing and the Hong Kong China Ferry Terminal.

Construction of Phase I of the Guangzhou-Shenzhen-Zhuhai Superhighway linking Guangzhou and Huanggang started in January 1992. When completed, it will further increase cross-border traffic, particularly through Lok Ma Chau.

Road Network

Hong Kong's roads have one of the highest vehicle densities in the world. At the end of 1992, there were 414 638 licensed vehicles and about 1 559 kilometres of roads 415 on Hong Kong Island, 392 in Kowloon and 752 in the New Territories. This high vehicle

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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 762 flyovers and bridges, 426 footbridges and 239 subways to assist the mobility of vehicles and people.

To cope with the ever-increasing transport demands, the Highways Department has continued an extensive construction programme, with about 50 road projects under construction and a similar number being actively planned at any one time.

Expenditure on highway construction was about $2,393 million, while another $613 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 and the New Territories to the Lok Ma Chau border crossing point.

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 Kwun Tong Bypass, Tate's Cairn Tunnel and the approach road linking Tate's Cairn Tunnel to Tolo Highway were all completed in June 1991.

Improvements to Major Road Networks

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 from Fairview Park to Au Tau will be completed in early 1993.

       The Yuen Long to Tuen Mun Eastern Corridor is under construction in the north-west New Territories for completion in mid 1993 to provide an eastern continuation of Route 2. This corridor is a dual two lane trunk road along the eastern side of Castle Peak Road to connect with the Yuen Long Southern Bypass, construction of which started in early 1992 and is scheduled for completion in late 1994.

      To improve cross-border traffic and relieve access to the north-west New Territories, the Country Park section of Route 3 is under planning for completion by late 1990s. It will be a dual three-lane carriageway connecting Ting Kau with Yuen Long. Consideration is being given to privatising this project.

URBAN COUNCIL PUBLIC LIBRARIES

REFERENCE LIBRARY

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New Airport Access

The relocation of the airport to Chek Lap Kok requires additional road links to serve the new airport and its supporting community. The major highway projects to cater for airport traffic include the Western Harbour Crossing, West Kowloon Expressway, Kwai Chung and Tsing Yi sections of Route 3, the Lantau Fixed Crossing and the North Lantau Expressway.

The Western Harbour Crossing will be a tunnel constructed by a private sector franchisee under a 'build, operate and transfer' arrangement with dual three-lane capacity connecting the western end of Hong Kong Island with the West Kowloon Reclamation. Construction is planned to start in mid-1993. Upon its completion in mid-1997, it will also help to relieve congestion of the existing cross harbour tunnels.

The West Kowloon Expressway will link the northern portal of 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 the Lantau Fixed Crossing, the Tsing Yi section of Route 3 will be a dual three-lane carriageway extending into a dual four-lane viaduct in Kwai Chung to cope with the high traffic volume. Construction for this section of Route 3 is expected to start in 1993.

The Lantau Fixed Crossing will comprise the Kap Shui Mun Bridge linking north-east Lantau to Ma Wan and the Tsing Ma Bridge across the Ma Wan Channel. The latter, in the form of a suspension bridge with a main span of about 1.4 kilometres, will be one of the longest of its kind in the world and will become a prominent landmark in Hong Kong. The construction of Tsing Ma Bridge commenced in May 1992 for completion in mid-1997. Construction of the Kap Shui Mun Bridge, with a main central span of 430 metres, will be completed at the same time. The crossing will provide a road and rail link with Lantau Island. The North Lantau Expressway will be a 12.5-kilometre dual three-lane carriageway along the northern coast of Lantau linking the Lantau Fixed Crossing to the new airport at Chek Lap Kok. The construction of the expressway is in three sections. Work on the first two sections at Tai Ho and Yam O started in June and October 1992.

The Airport Core Programme also includes a rail link which will provide both a fast and efficient train service to the new airport and a domestic service to bring relief to the Nathan Road Corridor of the Mass Transit Railway, serve new developments on the West Kowloon Reclamation and the Tung Chung New Town, and provide a third cross harbour rail link.

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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. Where necessary, consideration is also given to providing air-conditioning units and double glazing in domestic premises where noise levels cannot be brought within the required standard by other means.

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Road Opening Works

      Besides serving as carriageways for vehicles and pedestrians, the highways also provide space to install various utility services, such as water mains, sewers and electric and telephone cables. To cope with the demand resulting from the rapid development in Hong Kong, utility companies often have to excavate the carriageways and footways to maintain services by renewal, repair, and enlargement of pipes, cables and ducts. On average 160 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 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. It was used by 77 000 vehicles a day in 1992.

      The Aberdeen Tunnel was opened in 1982. It links the north and south sides of Hong Kong Island, with a daily traffic volume of 50 000 vehicles. This government owned tunnel is operated and managed by a private tunnel company under a management contract for three years. The toll is $5.

The Shing Mun Tunnels, opened to traffic in 1990, link Sha Tin to Tsuen Wan. The average daily traffic, which has increased steadily since opening, was 40 000 vehicles in 1992. The toll is $5.

      The Tseung Kwan O Tunnel was opened in late 1990. Linking Kowloon to Tseung Kwan O New Town, it was used by 14 000 vehicles daily, charging a $3 toll per vehicle. From July 1, 1992, the operation hours of the tunnel were extended to operate between 7 am and midnight. The tunnel opened for 24 hours per day from January 1993.

       The toll-free Airport Tunnel provides direct road access from Hung Hom to Hong Kong International Airport, and also passes underneath the airport runway to Kowloon Bay. Opened in 1982, it was used by an average of 53 000 vehicles per day in 1992.

      Similar to Aberdeen Tunnel, the management of the Lion Rock Tunnel, Airport Tunnel, Shing Mun Tunnels and Tseung Kwan O Tunnel have been contracted out by the Government to the private sector with effect from January 1993. Toll charges remain under government control.

       The Cross Harbour Tunnel, opened in 1972, connects Causeway Bay on Hong Kong Island and Hung Hom in Kowloon. Used by an average of 120 000 vehicles each day in 1992, it is one of the world's busiest four-lane road tunnels. Tolls now range from $4 to $30, including a government passage tax.

       The Eastern Harbour Crossing is the second cross-harbour road tunnel. Opened in September 1989, it links Quarry Bay on Hong Kong Island and Cha Kwo Ling in Kowloon. It is connected by an elevated section of Route 6 to the Kowloon portal of Tate's Cairn Tunnel. By the end of 1992, traffic in this tunnel averaged 70 000 vehicles per day. Tolls now range from $5 to $30.

      The Tate's Cairn Tunnel was opened to traffic in June 1991, to provide an additional direct road link between the north-east New Territories and Kowloon. The tunnel

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measures four kilometres from portal to portal and is the longest road tunnel in the territory. The daily throughput at the Tate's Cairn Tunnel has been increasing steadily. It carried 70 000 vehicles a day at the end of 1992. Tolls now range from $4 to $8.

The Cross Harbour Tunnel, the Eastern Harbour Crossing and Tate's Cairn Tunnel were all built by private sector franchisees under 'build, operate and transfer' arrangements.

Traffic Management and Control

At the end of the year, there were about 1060 signalised junctions in the Territory, comprising 430 in Kowloon, 270 on Hong Kong Island and 360 in the New Territories.

In Kowloon, the operation of about 350 signalised junctions was under the control of the existing Kowloon Area Traffic Control (ATC) System, which has been in operation for more than 15 years. Due to its now obsolete technology and limited capacity, it is difficult to maintain and expand the system. Work to replace it with a modern system with adequate capacity commenced in early 1992, and the new system using a traffic responsive control technique will be commissioned in 1995. At that time, all the signalised junctions in the Kowloon peninsula will be controlled by the new system.

On Hong Kong Island, the operation of all the signalised junctions on the northern shore from Kennedy Town to Shau Kei Wan is under the control of the Hong Kong ATC System. The expansion of the system to the Mid-Levels area was substantially completed during the year. In total, about 220 junctions on Hong Kong Island were under ATC control.

Implementation works for the traffic monitoring Closed Circuit Television (CCTV) System for Hong Kong Island were completed during the year at a project cost of $18 million. Under the scheme, 35 roadside cameras were commissioned.

As the first step to extend ATC to the new towns, a contract for the installation of a new ATC System for the Tsuen Wan New Town was awarded together with the Kowloon ATC renewal contract. Initially, an interim system providing basic ATC facilities will be commissioned in 1993 controlling some 85 junctions in Tsuen Wan, Kwai Chung and Tsing Yi. The final system providing traffic responsive control will be completed in 1995. The ATC system will also be supplemented by a traffic monitoring CCTV system. When this system is commissioned in 1995, it will have about 20 roadside cameras.

Following Tsuen Wan New Town, ATC will be extended to Shatin New Town, and planning has already started for implementation of the scheme by 1996.

Parking

The government owns 14 multi-storey car parks 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 its terminus. The private sector also operates multi-storey and open-air public car parks in commercial buildings, housing estates and open-air lots providing over 50 000 parking spaces. On-street parking is usually metered and provided at locations where traffic conditions permit. By the end of the year, there were 13 000 metered spaces throughout the territory,

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most of which operate between 8 am and midnight from Monday to Saturday. In Causeway Bay, Happy Valley 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 31 131 in 1991 to 41 878 in 1992, an increase of 34.52 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 to 100 per cent to 90 per cent to 120 per cent of the cars' Cost Insurance Freightage values on March 6, 1991, the total number of licensed cars in December 1992 was 237 035, a growth of 11.80 per cent over the figure in December 1991.

      The total number of registered goods vehicles in December 1992 was 140 491, an increase of 6 462 or 4.82 per cent compared with the total of 134 029 in December 1991. Included in these were 105 606 light goods vehicles which grew by 2.36 per cent compared with 1991. In line with the policy to restrain the ownership and use of this class of vehicles, the First Registration Tax and annual licensing fees of van-type light goods vehicles were increased by 50 per cent and 90 per cent and $4,140 and $2,115 respectively. 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 licensed light goods vehicles stood at 88 432, a decrease of 1.34 per cent over the same period in 1991. Meanwhile, the number of medium goods vehicles increased by 9.78 per cent to 30 006 by end-1992.

      At the end of the year, the total number of licensed vehicles in all classes was 407 858, an increase of 7.42 per cent over 1991.

At the end of 1992, there were 961 235 licensed drivers; an increase of 5.95 per cent over the numbers in 1990. The number of new learner-drivers increased from 5 946 per month in 1991 to 6 164 per month in 1992.

       Since the introduction of the Driving Offence Points System in 1984, 16 918 drivers have been disqualified. A total of 201 091 warning notices have been served and 355 020 drivers have incurred penalty points for committing offences scheduled under the Road Traffic (Driving-Offence Points) Ordinance. The figures for 1992 were 4 767, 38 225 and 30 446 respectively.

Vehicle Examination

During 1992 there were major changes to vehicle inspection in the Territory. In June, the management and operation of New Kowloon Bay Centre was taken over by a Government contractor who had been awarded a three-year contract following a competitive tendering exercise.

With effect from August 1, 1992, it became necessary for all light goods vehicles manu- factured before 1989 to be inspected annually, while all medium and heavy goods vehicles made before 1987 also required inspection from the same date. This is an important step in ensuring the road worthiness of commercial vehicles.

      Private cars over six years old continued to be inspected at the 17 designated car testing centres operated by the private sector, as were goods vehicles with a gross vehicle weight

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under 1.9 tonnes over three years old. In 1992, 87 913 cars and 6 628 light goods vehicles were inspected at car testing centres, while a further seven centres were added to the scheme during 1992.

  All public transport vehicles continued to be inspected annually, while the random inspection of in-service franchised buses was increased slightly.

Changes to the vehicle emission controls came into effect on January 1 and resulted in approval being given for many new models of private car designed to use unleaded petrol only.

Road Safety

Traffic accidents involving injury decreased by 0.1 per cent in 1992. During the year there were 15 310 accidents, of which 3 439 were serious and 316 fatal. This compares with 15 327 in 1991 (3 561 serious, 300 fatal). In-depth investigations were carried out at 114 traffic accident blackspots in order to identify accident causes. Remedial accident preven- tion measures were recommended at 89 of these locations. These measures, when implemented, have been shown to reduce accidents by 30 per cent on average. Accident statistics are at Appendix 39.

Road safety campaigns continued to play an important role in reducing traffic accidents. The major themes of 1992 campaigns were adult pedestrian safety, particularly for the elderly, and promoting road safety for drivers, especially light goods vehicle drivers and motorcyclists. Posters, television announcements and leaflets were produced and widely distributed. To convey road safety messages to mass audiences, a series of radio and television road safety programmes were broadcast. A set of 'dos' and 'don'ts' which aim to convey simple rules to motorists and pedestrians was publicised through various established channels such as the Road Safety Quarterly and district functions organised by the police. A road safety jingle was composed and broadcast on radio. A road safety campaign targeted at kindergarten children was launched in mid-1992.

  The new microcomputer-based traffic accident data system has been in use since 1991. Accident records are updated daily. Accident statistics and map plots for traffic accident blackspot analysis and road safety strategy formulation are retrieved, compiled and analysed as a basis for instituting road safety improvements.

By the end of 1992, the Road Safety Association of Hong Kong operated 640 school road safety patrols and school staff patrols operated at 627 schools, all with the objective of ensuring the safety of school children on their way to and from school. The Road Safety Council, an advisory body, continued to co-ordinate all road safety matters in the territory.

Public Transport

The Hong Kong public transport system is notable for its variety of modes and operators, its intensity of usage, and the absence of Government subsidies. A network of rail, ferry, bus and other road services extends to almost every part of the territory.

Railways

There are five rail systems, comprising a heavily-utilised underground/elevated mass transit system, a busy suburban railway, a modern light railway, a traditional street tramway and the Peak funicular railway. The first three rail systems are operated by public

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corporations, wholly owned by Government. The other two are owned by the private

sector.

Mass Transit Railway

The Mass Transit Railway Corporation (MTRC) operates a three-line metro system comprising 43 route-kilometres with 38 stations served by a fleet of 671 cars operating in eight car trains. The system was opened in stages between October 1979 and August 1989. 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 2.05 million passengers a day. In relation to the length of the system it is the second busiest underground railway in the world. Adult fares range from $3 to $8.5 per trip according to distance travelled.

A plan for the construction and financing the Airport Railway is in hand. This new railway, when built, will consist of two separate rail services: a dedicated express service linking Chek Lap Kok Airport to Central, with stations at the airport, Tsing Yi, West Kowloon and Central and a domestic service between Tung Chung and Central with stations at Tung Chung, Tsing Yi, Lai King, Tai Kok Tsui, West Kowloon and Central. The domestic service will interchange with the Tsuen Wan line of the existing MTR system at Lai King and the Island Line at Central, thus bringing relief to the MTR Nathan Road corridor.

Kowloon-Canton Railway

The Kowloon-Canton Railway 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.

Although the 34-kilometre railway caters for freight trains to and from China, for four daily passenger through trains each way between Kowloon and Guangzhou and since January 8, 1993 two daily passenger through trains each way between Kowloon and Foshan, 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 1992 the railway handled 561 600 passenger journeys daily. Peak period average headways range from five minutes at the northern end of the line to almost every three minutes between Fo Tan and Kowloon. Passenger traffic is carried in a fleet of 351 cars operated in train formations of 12 cars. There are 13 stations along the railway. A major programme to replace old escalators and install additional ones began in 1991 and continued throughout the year.

Freight is handled by about 12 trains each way daily, which hauled 2.8 million revenue tonnes of inbound freight and 1.2 million tonnes of outbound freight in 1992. 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. In addition, a Hung Hom-Daleng railway container shuffle service was commissioned on December 7, 1992.

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Light Rail Transit

In addition to its main line, the KCRC owns and operates the 30.7-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 Pier and Yau Oi Estate. Two other extensions, to north-east Tuen Mun and Sam Shing, were commissioned on February 2, 1992. The extensions increased the number of stops served by the system from 41 to 51. Six services are provided on the network by a fleet of 85 cars which operate either singly or in pairs. By the end of the year, 314 100 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. The LRT operates 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 $2.7 to $3.9.

   An extension to the new town of Tin Shui Wai was commissioned on February 10, 1993. Delivery of an additional batch of 30 cars started in September 1992, and is scheduled for completion before mid-1993.

Tramways

Electric trams have operated on Hong Kong Island since 1904. Today, Hongkong Tramways Limited operates six overlapping services over 13 kilometres of double track along the north shore of Hong Kong Island between Kennedy Town and Shau Kei Wan and along nearly three kilometres of single line around Happy Valley. The 163 trams, including two open-balcony trams for tourists and private hire, comprise the only all-double-deck tram fleet in the world. All trams had been re-bodied by 1991. Tramway patronage rose marginally during 1992, with an average of 338 000 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 Central (Garden Road) to the Peak (Victoria Gap). The 1.4 kilometre line began operation in 1888 and climbs 373 metres on gradients as steep as one-in-two. The line was modernised in August 1989. The service caters largely for sightseers but also serves Peak district commuters. The line serves an average 8 925 passengers a day. One-way fares for adults and children are $10 and $4 respectively.

Road Passenger Transport

Road passenger transport 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 by non-franchised buses, green minibuses, public light buses and taxis.

Franchised Buses

  The standard and capacity of franchised bus services continued to improve through effective planning and co-ordination. There are four franchised bus companies which together carried 3.4 million passenger boardings daily on a network of 434 regular routes.

The largest bus operator is the Kowloon Motor Bus Company (1933) Limited (KMB), which ran 266 bus routes in Kowloon and the New Territories in addition to 33

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cross-harbour routes operated jointly with the China Motor Bus Company (CMB) and two cross-harbour routes of its own. During the year, the quality of services provided by KMB was upgraded by introducing 16 air-conditioned bus routes. KMB also operates 'Airbus' services to and from the airport, comprising three routes to Hong Kong Island and one within Kowloon.

       The KMB fleet at the end of the year comprised 3 121 registered vehicles, including 2 610 double-deck conventional buses and 241 and 270 air-conditioned double and single deck buses respectively. Their capacities range from 24 to 164 places. In 1992, KMB made 970 million passenger trips and operated 234 million vehicle-kilometres, compared with 973 million passenger trips and 217 million vehicle-kilometres in 1991. KMB's current franchise extends until August 31, 1997. Fares ranged from $0.50 to $8.50 for non air-conditioned and from $1.20 to $15.0 for air-conditioned services.

       To attract commuters who might otherwise have used and overloaded the busy section of the Mass Transit Railway (MTR) along Nathan Road, eight new air-conditioned bus routes were introduced in 1992, offering express services from Tsuen Wan, Tsing Yi, Yuen Long and Tai Po to Tsim Sha Tsui in Kowloon. In addition, five new cross harbour routes from Kowloon, Lei Muk Shue, Kwai Tsing and Ma On Shan to Hong Kong Island were put into operation in the summer. The provision of such services helped keep the MTR passenger flows along Nathan Road within acceptable levels.

Bus services on Hong Kong Island are provided by the China Motor Bus Company (CMB), which operated 97 Island routes and, jointly with KMB, 33 cross-harbour routes. At the end of 1992, CMB's fleet comprised 1 004 double-deckers and 23 single-deckers, of which 61 and 22 respectively were are air-conditioned. They made 263 million passenger trips and travelled 52 million vehicle-kilometres during the year compared with 266 million and 52 million respectively in 1991. During the year, CMB purchased 20 air-conditioned double-deckers and four air-conditioned single-deckers for improving services. Fares ranged from $1.60 to $15. The company's franchise extends until August 31, 1995 but 26 of its existing routes are to be withdrawn from its network in 1993.

The New Lantao Bus Company (1973) Limited (NLB) operates six regular and one recreational franchised routes on Lantau Island with a fleet of 61 single-deck and 15 double-deck buses. Most NLB services connect with the ferries at Mui Wo. Operational efficiency was improved in September 1991 by the opening of a new bus depot in Mui Wo. The average weekday ridership on NLB in 1992 was 8 680 passengers. Boosted by recreational traffic, average patronage on Sundays and public holidays was 18 470 passengers. Fares ranged from $1.1 to $19. To better meet peak recreational demand, NLB introduced in June 1991 a special service between Mui Wo and Po Lin Monastery, using air-conditioned coaches ferried to Lantau at weekends. In 1992, average patronage on this special service was 2 070 passengers per day.

      The fourth franchised bus operator is Citybus Limited. This company had been running non-franchised bus services since 1979. In August 1991, it was awarded a franchise for a route between Central (Macau Ferry) and MacDonnell Road using nine buses on which a $4.50 fare was charged. This was the first franchised bus route awarded by competitive tender.

      To promote healthy competition among transport services providers, 24 Hong Kong Island routes and two cross harbour tunnel routes with a total fleet requirement of 200 buses will be withdrawn from CMB's network upon the expiry of its current franchise on

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August 31, 1993. Citybus Limited was awarded the franchise in September 1992 for these 26 routes to commence service on September 1, 1993 for a period of three years.

Minibuses

Hong Kong's minibuses are licensed to carry a maximum of 16 seated passengers. There were 6 900 minibuses in 1992. 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 authorised only 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 1992, there were 1 468 of them operating on 214 approved routes, each with fixed fares and timetables. They carried 705 000 passengers a day. Red PLBs operate without a schedule. They do not have fixed routes, timetables and fares. In 1992, there were about 2 868 red PLBs which carried 1 016 000 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 1992, one green minibus selection exercise was conducted for application 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 1991. During the year, no new licences for urban taxis were issued. At the end of 1992, there were 14 949 urban taxis, 2 731 New Territories taxis, and 40 Lantau taxis, carrying an average of 1 077 100, 188 500 and 1 050 daily passengers respectively.

The operating boundary of New Territories taxis was revised in 1992 to enable them to ply between the north-east and north-west New Territories via the Shing Mun Tunnels.

During the year, a working group was set up by the Transport Advisory Committee to review the government's policies on taxis. A public consultation exercise was launched by the Transport Advisory Committee in October 1992 to seek public views on various measures identified by the working group for the improvement of taxi services.

Non-Franchised Bus Operators

Residents' services were introduced in 1982 to give commuters an added choice. These services operate primarily during peak hours, supplementing services provided by the franchised bus operators. This helps keep down the number of franchised buses that would otherwise be left idle during off peak hours. Residents' organisations may request a non-franchised bus operator to apply for such a service, which requires a passenger service licence. Residents' services operate in accordance with approved schedules of service, which specify the routing, timetable and stopping places. 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 79 residents' services running 70 000 passenger trips a day. Vehicles used on these services ranged from small coaches to double-deck buses. Sixteen residents' services were introduced during the year providing bus services from various residential areas mainly in the New Territories, the mid-levels and the southern part of Hong Kong Island.

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      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 1992, the licensed fleet of non-franchised buses totalled 4 011 vehicles, of which 288 were double- deckers. An increasing proportion of these vehicles were air-conditioned.

Ferries

      Ferries remain a well-used mode for crossing the harbour. They also provide an important transport link to the new towns in north-west New Territories and are essential for travelling to Hong Kong's outlying islands. Existing services are provided largely by two franchised operators Star Ferry Company Limited (SF) and the Hong Kong and Yaumati Ferry Company Limited (HYF).

      SF operates 12 vessels across the harbour and, during the year, carried 35.8 million passengers on its three routes. Fares ranged from $1 to $1.5.

HYF owned 73 licensed vessels and operated 23 ferry routes, including passenger and vehicular services across the harbour, hoverferry services to north-west New Territories, services to the outlying islands and charter services. In 1992, the company carried 112 500 passengers and 6 600 vehicles daily. A cross-harbour trip cost $3.3 for a passenger and $4 for a private car. Fares for passenger services to the new towns range from $5 to $15 and the outlying islands from $4.50 to $23.

       Fourteen other ferry services were operated by eight licensed operators, including the service to Discovery Bay, Lantau. These were supplemented by kaitos, or local village ferry services, which were licensed to serve remote coastal settlements. At the end of the year, 109 kaitos were in operation, run by 94 operators.

The Port of Hong Kong

      Hong Kong is the largest container port in the world. In 1992 it handled almost eight million TEUS (20-foot equivalent units). It is also one of the busiest world ports in terms of vessel arrivals and cargo and passenger throughput. Some 146 000 ocean-going and river trade vessels arrive in Hong Kong annually, handling over 100 million tonnes of cargo, and 19 million international passengers, the majority of whom are carried on the world's largest fleet of high speed ferries operating to neighbouring China and Macau. Forecast growth in cargo (particularly containers) and passenger throughput have resulted in planning and development of new port facilities to meet a doubling of current demand by 2006.

With limited and diminishing water area to accommodate the current and forecast levels of port activity, marine safety and navigational efficiency are a major concern. To address these matters, the waters of Hong Kong are covered by a modern computer/radar Vessel Traffic System, run by the Marine Department of the Hong Kong Government. Its effectiveness, coupled with a comprehensive system of aids to navigation, fairways, marine traffic separation schemes, and harbour patrols, has contributed to Hong Kong's continuing low level of marine accidents by world standards.

Hong Kong is a prominent centre for ship owning, ship financing and ship management activities, and local ship owners and ship managers control a significant percentage of the world's tonnage. The territory operates the Hong Kong Shipping Register which reflects the government's long-term commitment to the highest international standards of maritime safety while recognising commercial realities.

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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 relation to the port is to ensure that conditions exist for ships to enter port, work their cargoes and depart 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 when moving within the port and its approaches.

  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 76 mooring buoys within the port for ships to work cargo in the stream. There are two classes of buoy suitable for vessels up to 137 and 183 metres in length respectively. The majority of these are typhoon moorings to which vessels may remain secured during tropical storms, thus reducing operational costs.

In 1992, some 146 000 ocean-going and river-trade vessels called at Hong Kong and loaded and discharged more than 100 million tonnes of cargo, of which 55 per cent was containerised. This included 60 million tonnes of general goods from ocean-going vessels.

  A variety of harbour craft play a significant role in the efficient running of the port. During the year over 1 800 lighters and 280 motorised cargo boats transported cargo to and from ocean-going ships in the anchorages and at buoys in the harbour, and private or public cargo working areas ashore. These are part of Hong Kong's 20 000 local vessels which include ferries, barges, fishing boats and pleasure vessels.

  The port handled 7.97 million TEUs in 1992. Of these, about 67 per cent or 5.08 million TEUS were handled at Terminals 1 to 7 of the Kwai Chung Container Port, and another 33 per cent or 2.54 million TEUS from vessels in the stream. Expansion of container terminal facilities continued apace, with construction of the four berth Terminal 8 well advanced. This new terminal, with a capacity of 1.6 million TEUS, is being 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 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. Thus, plans are well advanced for major developments which, when completed, will more than double the port's capacity by 2006. The principal features are to develop container terminals together with other marine facilities on Tsing Chau Tsai peninsula on Lantau Island over the next decade. (See Chapter 17)

The 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 an excellent example. Most of the port facilities, such as the container terminals and dockyards, are privately built, owned and operated.

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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, opera- tions and land-related issues relevant to container terminals. The massive and diverse development of the port over the next decade will require wide and detailed consultation on all aspects of port planning. A Port Development Board was established in 1990 for this pur- pose. The Port Operations Committee, which was re-organised in 1992, advises the Director of Marine on the operational needs of the port. Membership of the board and committee is drawn from a cross-section of shipping, government, commercial and port user interests.

Shipping Services

Passenger throughput at the ferry terminals managed by the Marine Department is also on the increase. In 1992, the China Ferry Terminal in Tsim Sha Tsui and the Macau Ferry Terminal in Central handled a total of 19.3 million passengers on routes to China and Macau of which 14.1 million used the Macau service and 5.2 million the China services. This throughput represented an increase of 7.8 per cent over 1991.

The implementation of the computer/radar Vessel Traffic System has been completed. This now plays a vital role in the monitoring of shipping movements in Hong Kong waters with the aims of enhancing safety and navigation efficiency. 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, and to follow the advice or instructions given.

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 centre's executive functions. 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 trans- porting government staff. The department also maintains scavenging craft together with a contracted fleet of other vessels who together collect and scavenge some 5 900 tonnes of refuse annually from ocean-going ships and Hong Kong waters.

      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 craft. In 1991, the government awarded a $300-million contract to an Australian shipbuilder for the construction of six police patrol/command launches. The first two were delivered during 1992.

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 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 other shipyards are available to undertake repairs to small vessels and build and maintain sophisticated patrol craft and pleasure vessels.

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During the year, the government, through 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, this illegal activity has been 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 the size and number of ships visiting the port, and the consequential demand for accurate and up-to-date hydrographic surveying and charting services. The Marine Department intends to establish its own hydrographic office to perform these functions in order to satisfy the identified needs of port users.

   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 all 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 installed and is operated in the centre to facilitate full implementation of the Global Maritime Distress and Safety System.

   Hong Kong is a prominent centre for ship owning, ship financing and ship management activities. Most local ship owners 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 1992, the association members' fleet stood at 1223 ocean-going vessels totalling 71.2 million deadweight tonnes or 40.1 million gross registered tonnage, of which 137 vessels representing 12.2 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. These accord 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 on request by their administrations.

   During 1992, a total of 1 176 ships visiting the Port of Hong Kong were subjected to inspection to enforce international conventions. This represented about 25 per cent of ocean-going ships (which exclude river-trade coastal ships) which visited Hong Kong inspected under the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, and two per cent inspected under the International Convention for the Safety of Life at Sea and the International Convention for the Prevention of Pollution from Ships. Of this second group about 70 per cent required deficiencies to be made good before the ship could sail from Hong Kong.

   Hong Kong has one of the world's largest fleets of sophisticated high speed pas- senger craft, comprising jetfoils, hydrofoils, sidewall hovercraft and catamarans. These

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dynamically-supported craft operate from Hong Kong to Macau and various ports in China. Safety is enhanced by the adoption of failure-mode effect analysis in analysing/ predicting shipboard system failures as part of the statutory requirements, supported by supervised crew training.

A plan-approval and survey service is also provided for local vessels. Those vessels plying within the waters of Hong Kong need to be licensed under the Shipping and Port Control Ordinance and 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 Marine Department conducts a wide range of examinations for persons requiring certificates of competency for service on vessels of all sizes and types operating in international and local waters. The department 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 ship owners is the falling recruitment of local seafarers. Concerted efforts have been made by the Marine Depart- ment, Hong Kong Shipowners' Association, Merchant Navy Training Board, training institutions and seafarers' unions to stimulate the recruitment of trainee officers and to enhance the image of seafaring careers. The Hong Kong Shipowners' Association has agreed to sponsor 40 deck cadets at the Seamen's Training Centre and 30 engineering cadets for the three-year course at Hong Kong Polytechnic. 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 supervise the employment of about 2 800 active seafarers on board some 680 ships of various flags. Considerable attention has been given to providing more comprehensive training for Hong Kong seafarers. The Seamen's Training Centre 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 while recognising 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. Administered by the Marine Department, the register had a total fleet amounting to 7.2 million gross registered tonnage at the end of 1992.

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Hong Kong is independently represented as an Associate Member of the International Maritime Organisation and, in accordance with the Sino-British Joint Declaration, this status will continue after 1997. During the year Hong Kong played host to an IMO working group involved in revising the Code of Safety for Dynamically Supported Craft. This is one area in which Hong Kong has made a considerable contribution to the IMO's work. Others include the development of the Protocol to the 1997 International Convention for the Safety of Fishing Vessels and initiating work on international eyesight standards.

Civil Aviation

The year saw the resumption of strong growth both in passenger and cargo throughput at the airport, following a moderate growth period in 1991 due to the Gulf War and the worldwide economic slowdown. A total of 22.1 million passengers passed through the terminal, an increase of 15.3 per cent over the total of 19.2 million in the previous year. A total of 956 896 tonnes of cargo, valued at $332 654 million, were handled, compared with 849 786 tonnes of air cargo valued at $282 635 million in 1991. 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 13 per cent in value terms respectively. The USA remained the major market for exports and re-exports by air, accounting for 37 per cent and 23 per cent respectively.

In 1992, an increase of 10.3 per cent in aircraft movements was recorded, bringing the annual total to 120 999 of which 76 per cent were wide-bodied aircraft.

  The programme of improvements at Kai Tak started in 1988 and is expected to be completed by the end of 1993. It is aimed at enabling the airport to meet continuing high growth in passenger and cargo throughput until the commissioning of the new airport at Chek Lap Kok, off the north coast of Lantau Island. (See Chapter 16)

In March, facilities within the passenger terminal were reconfigured and an additional passenger handling facility was brought into operation to cope with the continued growth in passengers transiting through Hong Kong, particularly passengers from Taiwan. transferring to flights to the People's Republic of China. Furthermore, a second interline baggage handling facility was commissioned. A mechanised system for the recovery of self-help trolleys was put into operation to increase the efficiency of trolley retrieval from the transport terminus back to the baggage reclaim hall.

In August, the refurbishment of the older part of the passenger terminal building, costing $283 million, was completed. Passengers can now enjoy both a more attractive environment and more efficient facilities on their arrival and departure through the building.

Other improvements made within the passenger terminal building include the installa- tion of two additional flight information display boards and the commissioning of a new Cathay Pacific Airways airside first class lounge. The latter facilitated a reorganisation of the available lounge space to optimise use of its existing area.

Several schemes to improve transport facilities and road access to the airport were also completed in 1992. They included improvements to Sung Wong Toi Road to facilitate traffic flow from the west; the realignment of the Eastern Road and the provision of a new roundabout at the eastern approach to the airport. The transport terminus was expanded to provide more space for waiting taxis and airport buses.

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During the year, work also commenced on a number of new improvement projects including the widening of the departure pier area to relieve congestion in the airside departure lounge, and construction of an eight-bus dock to provide additional facilities to serve passengers transferring to aircraft positioned on outer bays. A contract was also signed in August to replace three pairs of passenger boarding bridges. Installation work is expected to start in May 1993 with completion in September.

In October, work started on resurfacing and regrooving the runway and is due to be completed in April 1993.

Efforts to increase aircraft parking capacity continued. Four additional parking bays for B747-sized aircraft, equipped with fixed ground power, refuelling facilities and floodlighting, were put into operation in November. Development of a further 11 parking bays on the Kowloon Bay Reclamation is on schedule. Completion of this new apron will be in phases in 1993 during which two new taxiway bridges will also be commissioned to provide a circular taxiway system linking this apron to the runway.

Installation of a computerised aircraft parking bay allocation system commenced in December. The system, when fully operational in June 1993, will maximise the utilisation of aircraft parking bays so that increased demand from traffic growth can be met.

Aside from physical developments, improvement to air traffic control facilities were also implemented. During the year the precision approach radar was replaced. Equipment installation and staff training took approximately two months to complete and the new radar was put into operation in November. Work on improvements to the existing radar system is continuing, with the approach surveillance radar and terminal area radar scheduled for replacement in mid-1993 and end-1994 respectively.

The Civil Aviation Department will be responsible for the provision of the air traffic control system for the new airport at Chek Lap Kok. Work on drawing up specifications for the various components of the system has already started with a view to calling tenders early in 1993.

To further enhance security arrangements at Kai Tak Airport all airlines have now complied with a requirement that all checked baggage of departing passengers be security screened by X-ray. To this end, all check-in desks at the passenger terminal have been equipped with modern X-ray equipment. Kai Tak Airport is now one of the few airports in the world where all departing passengers' checked baggage is security screened by X-ray.

As part of a continuing process of equipment updating, the Airport Fire Contingent took delivery of a replacement foam tender vehicle during the year. With the airport expanding into the South Apron another motorised inflatable rescue boat has been purchased. A contract for a further fire rescue vessel for delivery in early 1993 has also been concluded. This additional equipment will ensure adequate fire and rescue cover within the water area between the runway promontory and the South Apron.

Hong Kong is home to three airlines. During the year, Cathay Pacific Airways (CPA), the largest of the three, commenced scheduled all-cargo services to Los Angeles in July and scheduled passenger services to Adelaide and Cebu in October and December respectively. To cope with the increasing scale of its operations, CPA acquired three B747-400s and converted one of its B747-200 passenger aircraft into a freighter. At the end of 1992, its fleet comprised 18 L1011s, seven B747-200s, six B747-300s, 14 B747-400s and four B747-200 freighters, a total of 49 aircraft.

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  Hong Kong Dragon Airlines (Dragonair) continues to operate scheduled services to seven cities in China and four other cities in Asia with its five B737s and one L1011. In addition, the airline commenced scheduled services to Hiroshima in July. It also operates a number of non-scheduled passenger services to other cities in Asia, mostly in China and Japan.

  Air Hong Kong (AHK) continues to operate scheduled all-cargo services to Manchester, Brussels, Nagoya and Ho Chi Minh City and non-scheduled cargo services to a number of destinations in Asia with its three B747F and one B707F aircraft. In October, the airline commenced scheduled all-cargo services to Singapore.

  The year saw the introduction of scheduled air services to Hong Kong by Vietnam Airlines, Scandinavian Airlines System, Aeroflot and Tower Air. As a result, the number of scheduled airlines serving Hong Kong increased to 50. During the year, these airlines operated about 1 130 direct round trip services weekly between Hong Kong and some 92 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 1992, the Air Transport Licensing Authority granted five licences to Hong Kong Airlines, one to Cathay Pacific Airways, one to Dragonair and three to Air Hong Kong.

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FOR an externally orientated economy like Hong Kong, an efficient international airport plays a vital role. Efficient road and rail transport facilities are also essential, along with land for development. Without such basic ingredients, an economy like Hong Kong's cannot flourish and grow.

The Airport Core Programme (ACP) has been designed to provide these facilities in 10 core projects which will build a base for economic expansion into the next century. Hong Kong's key role as a centre for international and regional aviation will be enhanced by a new modern airport located away from centres of urban population and capable of operating round-the-clock. Associated infrastructure developments will relieve serious traffic congestion, open up new land for urban development and for further expansion of port facilities. New space will be provided for recreational activities, and there will be overall environmental benefits.

The programme comprises: an airport at Chek Lap Kok off north Lantau to replace Kai Tak in 1997; six road and rail projects, including extensive tunnels and bridges, stretching from the central district under the harbour, along the west side of Kowloon, across Tsing Yi and Ma Wan, and along the north Lantau coast; two major land reclamations in West Kowloon and Central; and a new town on north Lantau.

Overall the programme is based on sound financial principles with good returns for government investments and maximum involvement of the private sector. Cost-effective concepts and designs have been drawn up for individual projects. Contracts are being placed on the basis of open and fair tender evaluations, and there are strong and comprehensive financial and project management controls.

The Need to Replace Kai Tak

A new airport is needed because Kai Tak, which has only one runway, is approaching its full capacity of 24 million passengers a year and cannot viably be enlarged beyond a current expansion programme. In terms of international traffic, it is already the world's fourth busiest airport for passengers, and freight. It handles about 80 per cent of Hong Kong's six million visitors a year and 30 per cent of its domestic exports. It also plays an important role in the development of southern China, as well as Hong Kong.

In the past year, throughput of passengers has been growing at about 12 per cent. This means that Kai Tak will be unable to accommodate forecast passenger demand before the new airport at Chek Lap Kok is planned to open in 1997. If this happens, Hong Kong's

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economy will begin to suffer: for example, the economic disbenefits to Hong Kong of not going ahead with the airport have been estimated to be at least $420 billion over the period 1997-2010. This represents only quantifiable losses: it does not include indirect losses caused for example by declining effectiveness of Hong Kong as an international trading and financial centre, which could double the estimate.

  The ACP was conceived in 1991 out of the Port and Airport Development Strategy (PADS) which had been unveiled in 1989 after years of study. PADS had been designed to provide, in the most cost effective way, for the growth of both the port and the airport. It includes major extensions to Hong Kong's container port and other develop- ments, which are going ahead separately, whereas the 10 ACP projects are all associated with the opening of the airport at Chek Lap Kok (with the first of two planned runways) in 1997.

Memorandum of Understanding

In September 1991, the Prime Ministers of Britain and China signed the 'Memorandum of Understanding Concerning the Construction of the New Airport in Hong Kong and Related Questions' (MOU). This memorandum recognises the 'urgent need for a new airport in Hong Kong in order to ensure and develop its prosperity and stability', and the 'need for the airport project to be cost effective'. It requires the Hong Kong Government to complete the ACP projects 'to the maximum extent possible' by June 30, 1997, and says that the Chinese Government will 'support the construction of the new airport and related projects'.

  The MOU also provides for a joint Airport Committee which has been set up under the auspices of the Sino-British Joint Liaison Group. This committee has become the primary forum for discussions with China on the ACP. The main topics of discussion during 1992 were overall financing plans for the airport and airport railway.

  The Consultative Committee on the New Airport and Related Projects (ACC), established under the MOU, held six plenary meetings and four special meetings in 1992 on various aspects of the ACP. Four sub-committees were formed relating to: the airport and its related land development projects; traffic and transport; financial matters and planning; and the environment and people's livelihood. A total of 18 sub-committee meetings were held in 1992.

Implementing and Financing the ACP

The ACP is being implemented by the government, two statutory corporations wholly owned by the government, and by a franchisee to be appointed for the Western Harbour Crossing (WHC). The government is carrying out direct capital works projects to reclaim land, and to build highways and a new town near the airport. The Airport Authority (AA), which is to replace the existing Provisional Airport Authority, is responsible for building and operating the airport. The Mass Transit Railway Corporation (MTRC) will build and operate the Airport Railway. The WHC will be wholly privatised.

The estimated cost of the 10 ACP projects was announced in April 1992 at $112.2 billion (in March 1991 prices). This equals $163.7 billion in money of the day. (Sometimes known as out-turn prices, money of the day takes into account the impact of inflation on the value of the dollar while projects are designed and built, thus providing a more realistic

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projection of out-turn prices. This is particularly relevant to the ACP because most contracts are let on a fixed price lump sum basis, meaning that the contract award price is already adjusted to cover inflation over the contract period).

      The government's capital expenditure on the ACP works programme is approximately $60 billion. This is expected to amount, between 1992-3 and 1996-7, to 25 per cent of the government's total capital expenditure (which covers public works, and other expenditure from the Loan Fund and non-recurrent account of the General Revenue Account). The remaining 75 per cent of the government's total capital expenditure will be spent on other social services and essential activities.

      The ACP provides ample opportunities for private sector participation. These can be in the form of: investment in franchises for the Western Harbour Crossing and facilities at the airport; commercial lending for the airport and the railway; and real estate development associated with the airport and the railway.

Benefits for the Community

The main benefits for the community - in addition to the airport itself - will come from the improved road and rail facilities, an easing of congestion in West Kowloon, and the opening up of North Lantau. The closure of Kai Tak will also have environmental benefits because some 350 000 residents living under the flight path will escape the noise of aircraft. Overall there will be the substantial benefits to Hong Kong's economy that have already been mentioned.

The government's proposed financial contribution would also yield substantial benefits for taxpayers. For example, it is estimated that by the year 2020, the new airport, the Lantau Fixed Crossing, and the Airport Railway would have generated additional revenue for the government totalling over $300 billion comprising: nearly $50 billion from the airport at Chek Lap Kok (over and above the revenues which Kai Tak would generate); over $75 billion from the MTRC; over $190 billion from the Lantau Fixed Crossing. An internal rate of return approaching 12 per cent by 2020, and close to 15 per cent by 2040, has been forecast on the government's proposed investment in those elements of the ACP directly required to support the new airport.

New Reclaimed Land

The ACP involves the creation of 1 828 hectares of new land comprising: a 938-hectare reclamation area, centred around the islands of Chek Lap Kok and Lam Chau off northern Lantau, which will provide a platform of 1 248 hectares (including the islands) for the airport itself; a 540 hectare strip along the northern shore of Lantau for Tung Chung New Town Phase I; a 330 hectare reclamation off West Kowloon; and a 20-hectare section of a larger reclamation adjacent to the Central-Wanchai urban area on Hong Kong Island.

The West Kowloon Reclamation will provide housing for 91 000 people and some five hectares of commercial space, as well as vital road and rail arteries linking Kowloon with the new airport and the north-west New Territories. A 20-hectare portion of the Central-Wanchai Reclamation will provide opportunities for the development of Hong Kong's central business district, plus a site for the Central terminus of the Airport Railway. Both reclamations will include abundant landscaping and areas of open space.

      Tung Chung new town, occupying two valleys at Tung Chung and Tai Ho on northern Lantau and a coastal strip of reclamation between them, is planned to house 20 000 people

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  by 1997 and 200 000 by 2011. In addition to providing support services for the new airport, it will accommodate commercial and industrial developments and will serve as an impressive gateway to Hong Kong for visitors. There will be a mixture of private, public rental, and home ownership scheme housing, several shopping centres, an office and hotel complex in the town centre, and a peripheral 52-hectare industrial park. Extensive landscaping has been designed to shield the town from the airport to the north-west and to provide generous recreational areas, supplemented by the hilly backdrop of Lantau Country Park to the south. Strong emphasis has been placed on community facilities and both local and long-distance rail and bus transport.

The Airport at Chek Lap Kok

Detailed planning of the airport at Chek Lap Kok progressed rapidly in 1992. The Provisional Airport Authority, a statutory corporation set up in April 1990 with the Hong Kong Government as its sole shareholder, is planning an airport which will be operationally safe and efficient, environmentally friendly, and commercially viable.

   Scheduled to open in 1997 with the first of two planned runways on a 1 248-hectare island site, the airport will have an immediate annual capacity of 35 million passengers and 1.5 million tonnes of cargo. There is provision for this to expand incrementally to 87 million passengers and 9.0 million tonnes of cargo by the year 2040. Because of its location off North Lantau, the airport will be able to operate round-the-clock without causing noise problems for Hong Kong residents.

In the first quarter of 1992, the authority completed the airport's master plan, and a draft financial plan was agreed with the government. The master plan sets out com- prehensive planning and design criteria for the formation of the airport island and facilities, providing for a phased development into a two-runway airport.

A commercial plan was also drawn up. It aims to enhance the airport's financial viability and operational efficiency by maximising private sector participation. The authority's commercial strategy is aimed at providing quality through competition where practicable, while deriving market-based licence fees. Airport-related commercial activities on the island will cover about 100 hectares of land and will include hotels, offices, and other business activities.

After completion of the master plan, detailed design work has continued. International bids were invited by the authority, and a contract was awarded, for the design of the passenger terminal and concourse complex.

The terminal will occupy an area of over 430 000 square metres and will be 1.4 kilometres in length (equal to the distance from the City Hall in Central across the harbour to the Hong Kong Space Museum). It is being designed as a single, long and sweeping structure with glass cladding.

International tenders were invited during the year for the site preparation contract, which involves reclaiming land and constructing the airport island platform. An international consortium was selected from the tenderers in July, after the design of the platform had been modified with realignment of the southern runway and terminal building at a cost saving of $150 million. The government obtained Finance Committee approval at the end of November for funds to allow the authority to award this contract. This decision enabled the government to take an important step forward on the ACP, and afforded more time to seek an agreement with China on the overall financing plan.

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Preceding Page: A visitor to Ocean Park aviary.

Opposite page: Kowloon's best known market for bird fanciers is known as 'Bird Street'.

Right: The popularity of bird keeping brings brisk business to dealers.

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Left: Taking the pets for a walk.

Below: Birds are the main talking point when

enthusiasts gather during their morning stroll.

Opposite page: Birds are part of the family for many people.

Left: The new Sir Edward Youde aviary in Hong Kong Park offers a natural habitat for hundreds of exotic birds from many parts of the world.

Right: An international population of birds at the aviary attracts both bird lovers and tourists.

Following page: A cockatoo swoops down to take its entertainment fee from a spectator at an Ocean Park bird show.

AIRPORT

       Work on the contract, which involves moving 331 million cubic metres of material, started in December. On average, eight million cubic metres of material - equivalent to eight times the volume of the Bank of China building in Central Hong Kong - will need to be moved every month for 41 months. The islands of Chek Lap Kok and Lam Chau will be levelled, and the excavated materials will be used for the reclamation, along with marine sand and other fill material. In advance of this contract, 38 hectares of land were formed at Chek Lap Kok under an Advance Works Contract.

The authority also invited expressions of interest during 1992 for a wide range of construction activities and commercial franchises, including infrastructure design, air cargo handling, aircraft maintenance and engineering, catering, and aviation fuel supply.

As an organisation, the authority developed into a recognised corporate entity. Between March 1991 and the end of 1992, it grew from a staff of one (the chief executive officer) to well over 400, with most key positions filled.

New Transport Facilities

The ACP includes five major highway projects designed to cater for the new airport's traffic and to relieve congestion on existing roads. They comprise the Western Harbour Crossing, West Kowloon Expressway, Kwai Chung and Tsing Yi sections of Route 3, the Lantau Fixed Crossing, and the North Lantau Expressway.

Together with the Airport Railway, they will also provide rapid transit between Tung Chung New Town and Central, so stimulating developments on north Lantau in the same way that the Kowloon Canton Railway triggered development in the eastern New Territories when it was double-tracked and electrified.

Congestion will be relieved in West Kowloon, Kwai Chung and Tsing Yi: for example, when the West Kowloon Expressway opens, peak hour traffic volume on the existing West Kowloon Corridor is projected to drop by as much as 40 per cent.

New Highways

The Western Harbour Crossing has been planned as a dual three-lane immersed tube road tunnel linking the West Kowloon Reclamation to the Western District of Hong Kong Island. In addition to providing a key part of the airport highway route, it is also intended to relieve congestion at the two existing cross harbour tunnels. Like these two tunnels, it is intended to be financed, constructed and operated by the private sector under a 30-year franchise. Private sector bids were invited in 1992, and the government subsequently negotiated with a consortium which submitted the single conforming bid. Construction is planned to start in mid-1993, for completion in mid-1997.

The project comprises a two kilometre tunnel, associated approach roads, a major road interchange on Hong Kong Island and a toll plaza. The tunnel will link the new West Kowloon Expressway with a new section of elevated road on Hong Kong Island connecting with Connaught Road Central.

The West Kowloon Expressway will link the northern portal of the Western Harbour Crossing to Lai Chi Kok, forming an important part of Route 3, with a dual three-lane carriageway. It will serve developments on the West Kowloon Reclamation and will also substantially relieve existing local and distributor roads in central and west Kowloon. A further section of Route 3 will connect Kwai Chung with the Lantau Fixed Crossing through Tsing Yi, with a dual four-lane viaduct in Kwai Chung.

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   The Lantau Fixed Crossing will comprise: the Tsing Ma suspension bridge linking Tsing Yi to Ma Wan; viaducts crossing Ma Wan; and the Kap Shui Mun Bridge, with a cable stayed design, linking Ma Wan to Lantau. The Tsing Ma Bridge will become a prominent Hong Kong landmark: its main span of about 1.4 kilometres will be the world's longest, carrying both road and railway. Construction contracts for the bridges and viaducts were awarded in 1992.

   The North Lantau Expressway will be a 12.5-kilometre dual three-lane carriageway along the northern coast of Lantau, linking the Lantau Fixed Crossing to Tung Chung New Town and the airport at Chek Lap Kok. Construction of the expressway is being carried out in three sections and work on the first two sections started in 1992.

Airport Railway

The Airport Railway has been planned to provide two separate rail services, 34-kilometres long, operating mainly on the same tracks but with separate platforms: a fast passenger link to the airport at Chek Lap Kok, called the Airport Express Line, and a domestic service called the Lantau Line. Both will have maximum operating speeds of 135 kilometres per hour, compared to 80 kilometres per hour on existing MTR lines.

The Airport Express Line is designed as an all-seated, business class-type express service providing a 23-minute link between Hong Kong Central and the airport, with only two stops at West Kowloon and Tsing Yi. It is envisaged that five-car trains will be used initially, increasing as required to a maximum of 10-car trains, operating at 4.5 minute frequency.

   Serving northern Lantau, western Kowloon, and Central, the Lantau Line is designed as a conventional mass transit commuter service. It has been designed to bring much needed relief to the existing MTR Tsuen Wan Line, particularly the Nathan Road Corridor where the MTR is now carrying its capacity of 72 000 passengers at the morning peak hour. Stations are planned at Hong Kong Central, West Kowloon, Tai Kok Tsui, Lai King, Tsing Yi and Tung Chung New Town, with provision for additional stations later.

   Tung Chung New Town, the terminus of the Lantau Line, is targeted to have a population of 200 000 by 2011. Other new town developments along the route of the railway have been planned at Tai Ho, Yam O and Tung Chung West where stations can be added later.

   Five sites totalling approximately 62 hectares have been identified along the railway route for residential and commercial property development. They are at Hong Kong Central, West Kowloon, Tai Kok Tsui, Tsing Yi and Tung Chung.

   During 1992, the government agreed a draft financial plan for the railway with the Mass Transit Railway Corporation (MTRC) which is to be responsible for building and operating the railway. Following completion of a feasibility study, preliminary design work was started on the railway's eight kilometres of tunnels, six kilometres of elevated structures and 20 kilometres of ground level track.

Government Contracts and Tenders

A total of 18 government construction contracts worth over $18 billion had been awarded by the end of 1992, of which nine contracts worth more than $15 billion were awarded in 1992. All were on time and within budget estimates. They represented about 50 per cent of the total value of the government's ACP contracts.

AIRPORT

        Two contracts with a total value of $8.78 billion were awarded for the Lantau Fixed Crossing - one for the Tsing Ma Bridge and the other for the Kap Shui Mun Bridge and Ma Wan Viaduct.

      On the North Lantau Expressway, contracts for the Tai Ho and Yam O sections, which make up two thirds of the length, were let for a total of $4.4 billion. Tenders for the Tung Chung section were invited in March 1993.

On the West Kowloon Reclamation, seven contracts costing some $4.3 billion were let for a variety of work. Five more are due to be let in 1993. A site formation contract costing $732 million was also let for the Tung Chung development where construction of public housing and government facilities is scheduled to start in 1994.

Tenders for the first phase of the Central and Wanchai Reclamation engineering works were invited in June 1992. They were returned in September 1992.

On Route 3, prequalification exercises for a tunnel and viaduct were completed and tenders were invited in August and September. Tenders for the bridge were invited in November 1992.

       Tenders for the north and south sections of the West Kowloon Expressway were scheduled to be invited in the first quarter of 1993.

      The government has stressed that it welcomes international participation in the contracts and that it is strictly applying its traditional level playing field approach on tendering procedures and the award of contracts.

A significant number of international companies have won construction and site investigation contracts, often in joint ventures. They have come from a wide range of countries including Japan, the United Kingdom, the United States, the People's Republic of China, Australia, France, the Netherlands, New Zealand and Italy as well as Hong Kong. Firms winning consultancies have come from the UK, USA, the Netherlands and Japan as well as Hong Kong.

The selection of contractors, whether local or multi-national, is strictly based on the extent to which they can meet the government's requirements in terms of completion on time, within the government's required standards and specifications, and at the lowest possible price.

Management and Cost Controls

An overall strategy has been drawn up to establish the scope of the ACP, the critical programme objectives, and the budget. This is the basis for the overall programme and project management. Fixed price lump sum contracts are being used for most projects to minimise risks to the government, especially from inflation and the estimation of quantities.

A cost control system has been introduced for the ACP, laying down procedures for monitoring, scrutinising, and controlling costs during the design and construction of the government-funded projects. Early warnings of cost increases are reported to the New Airport Projects Co-ordination Office (NAPCO) and department heads. Proposed design changes leading to higher costs have to be fully justified and approved before detailed design is started. This system enables trends, which could lead to cost increases, to be identified early. If cost increases are accepted, offsetting savings are sought in the same or other ACP projects.

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Government works departments, and non-government participants such as the Pro- visional Airport Authority, MTRC, and the Western Harbour Crossing franchisee, have full responsibility for their own project-level planning, execution, control, and manage- ment. They are required to complete projects on time and within budget and to report progress, and co-ordinate their work, through NAPCO.

Comprising government staff integrated with consultants from International Bechtel, NAPCO's job is to ensure compliance with plans, programmes and budgets, and to act as a focal point for the management of project interfaces and resolution of problems.

Apart from the cost control systems, the highly competitive tendering system has also been effective in controlling expenditure on the ACP.

Protecting the Environment

Environmental impact assessment (EIA) studies have been undertaken for each of the projects, sometimes at both the feasibility and detailed design stages, and as an integral part of project planning and design. These studies have generally shown that, with suitable mitigation measures in place, the projects will be environmentally acceptable when they are built and operating.

The island formed at Chek Lap Kok by the airport reclamation will allow tidal water to flow between the airport and the north Lantau coastline, flushing partially enclosed areas of water to the east. Most of the natural coastline to the west of Tung Chung will be retained. Following ecological studies, a colony of rare Romer's tree frogs has been rescued from Chek Lap Kok. Mangrove communities are also to be re-established, and compensatory new woodlands are to be planted.

An environmental project office has been established by the Environmental Protection Department (EPD) to monitor pollution in the West Kowloon area during work on the reclamation and associated transport projects. The office consists of senior EPD staff and a specialist consultancy team with experience. It will monitor overall environmental quality and handle pollution problems.

Safety at Work

The government continued to promote safety at work, and began to implement a package of safety measures on the ACP construction sites. The Airport Core Programme Construction Safety Manual was published in July 1992, setting out the government's policy and objectives, and safety measures.

   These requirements are being incorporated in each contract to ensure there is an effective safety management system on sites, including a special site management committee. Accident prevention and safety management training courses are being organised for site staff.

The government, together with the Provisional Airport Authority and MTRC, started compiling a database to assist with the monitoring of accident rates, analysis of the causes of accidents, and formulation of prevention measures. Safety promotion campaigns and awards are being organised to increase awareness, especially among construction workers. The MTRC and Provisional Airport Authority have agreed to implement similar

measures.

17

PORT DEVELOPMENT

HONG KONG'S port already handles more containers a year than the whole of Britain. Only the USA and Japan have a bigger container throughput than Hong Kong.

      Each year, between now and the year 2011, Hong Kong must increase its handling capacity by one million containers. That is the equivalent of building every year a port the size of Oakland, California, or Felixstowe, Britain's busiest container port.

      To handle this huge rise in throughput the territory will build a completely new port on the north-east of Lantau Island. This will involve one of the world's biggest civil engineering projects.

      Plans call for the completion of 17 new container berths at Lantau. Hong Kong's present container port at Kwai Chung has 14 berths with another eight to be built by 1995.

      Container berths are not the only facilities needed. The new port will need back-up and cargo working areas, ship-repair facilities, a river trade terminal to handle vessels from China and an extensive road network including an expressway. Eventually a link, by tunnel or bridge, will connect Lantau directly with Hong Kong Island. New channels must be dredged to provide marine access and breakwaters constructed to shelter working container vessels from wave action.

      Like Kwai Chung, the new port will not just serve Hong Kong which owes its very existence to its position as an entrepôt for China. With the modernisation of China's economy and its opening up to world markets, that entrepôt trade has assumed a renewed importance.

      Many of the goods transhipped to and from China through Hong Kong move by river boats down the Pearl River, for generations the gateway to trade with China. To cater specifically for this private companies will build and operate a River Trade Terminal at Tuen Mun on the mainland north of Lantau.

      The new port cannot begin to operate until 1997, when the Lantau Fixed Crossing, one of the world's longest suspension bridges, comes into operation. The bridge will provide transport access to both the new port and the new airport at Chek Lap Kok.

      Hong Kong may have to wait until 1997 for its new facilities on Lantau, but meanwhile the port must handle ever increasing amounts of cargo. Clearly port operators cannot wait for the new facilities on Lantau to commence work. To cope with increasing demand two new container terminals will come into operation close to the present container port. Lack of space at Kwai Chung means these will be sited at Stonecutters Island (Terminal 8) and at South-East Tsing Yi Island (Terminal 9).

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Work is already well underway at Terminal 8, which involves the reclamation of 110 hectares of land to the north of Stonecutters Island.

   Of the reclaimed land, 48 hectares will house a four-berth terminal while 62 hectares will be used for back-up facilities.

As with Hong Kong's other seven terminals, private companies are designing, building and will operate Terminal 8. The government has awarded development rights to a consortium formed by Modern Terminals Ltd., Hongkong International Terminals Ltd. (the two major terminal operators at Kwai Chung) and mainland Chinese shipping operators.

Construction of Terminal 8 started in October 1991. The first berth should begin operation in mid-1993 and the whole terminal should be completed by the end of 1994.

The government is expected to execute the grant of Terminal 9 early in 1993. The terminal will comprise 60 hectares containing four berths with a total capacity of 1.6 million 20-foot equivalent units a year, the same start up capacity as Terminal 8. A further 26 hectares will be available for back-up purposes and there will be an additional 39 hectares for industrial and community use.

The first berth at Terminal 9 should be operating by mid 1995.

Port Development Board

Hong Kong has never had a Port Authority as port facilities were built and are operated by private companies. But with a development as massive and extensive as the new port there is a need for a co-ordinating body to keep development plans up to date and to act as a link between the private and government bodies involved.

   The Port Development Board (PDB) is filling that role. Set up in April 1990, the board has a non-official chairman and advises the Governor, through the Secretary for Economic Services, on all aspects of port planning and development.

Specifically, the PDB's brief is to assess development needs in the light of changing demand, port capacity, productivity and performance. It considers the competitiveness of Hong Kong compared with other major regional ports.

The board recommends strategies for creating new port facilities and co-ordinates government and private sector involvement in developing them. It acts as a focal point for ideas and opinions expressed by port operators or anyone affected by the port expansion.

   Among the board's first tasks was to update the forecasts from which consultants had produced plans.

   The PDB found that total port traffic should continue to grow by 6.5 per cent a year between 1990 and 2011 when total throughput will reach 284.2 million tonnes. This will include 179.6 million tonnes of inward cargo and 104.7 million tonnes of outward cargo. More than 90 per cent of the cargo will be carried by ocean-going vessels and the rest by river vessels.

Transhipment traffic will account for 21 per cent of the ocean traffic in 2011, a slight increase on the 20 per cent in 1990.

   Analysed by commodity, inward cargo in 2006 will consist mainly of coal (30 per cent), petroleum products (21 per cent) and chemical and related products (10 per cent). About 43 per cent of the cargo will be containerised, 34 per cent dry bulk, 21 per cent liquid bulk and two per cent break-bulk.

PORT DEVELOPMENT

      Outward cargo will comprise mainly manufactured articles (35 per cent), petroleum products (18 per cent), primary materials (12 per cent) and machinery and transport equipment (nine per cent).

       The board estimates that the number of fully containerised ships calling at Hong Kong will increase from 8 390 in 1990 to 21 000 by 2006. The number of conventional general cargo ships will remain constant.

From these figures the PDB has concluded that by 2011 the new port will need 17 additional container berths each with a quay length of 320 metres; about 9 600 metres of cargo working seafrontage; some 300 hectares of land for backup areas at container terminals and about 4 000 hectares of buoy and anchorage area to support port operations. The board has also concluded that the new port infrastructure must include ship repair facilities to service the growing fleet of ocean-going vessels calling at Hong Kong. Besides servicing these ships such repair facilities will ensure that the port can recover quickly from a major maritime accident or from storm damage.

      Ship repairing is among the oldest industries in Hong Kong, and like the port itself, has suffered from a scarcity of waterfront land, particularly land with good deep-water access.

      The PDB recommends planning a dockyard industry supporting a minimum of eight floating or dry docks (supported by alongside berths or finger piers) by the mid-1990s with flexibility to increase the number of docks to at least 10 by 2006.

      From its early days Hong Kong has been a buoyage port with most cargoes handled over the sides of ships into or out of lighters moored alongside vessels. Even with the growth of containerisation the port still handles much of its cargo in this way. Lighters carry containers to and from ships anchored mid-stream

       In 1991, 23 million tonnes of cargo was handled like this of which 44 per cent was containerised. The year under review saw a 62 per cent increase in mid-stream container handling to a total of 2.5 million TEUS.

      The Port Development Board has plenty of work ahead as it finalises more detailed plans for port expansion. To help it plan for special needs in the port it originally had three committees, the Ship Repair Facilities Committee, the River Trade Cargo Activities Committee and the Mid-Stream Operations Committee.

       In June and July 1991 board members endorsed the setting up of the Port Land and Transport Committee and the Container Handling Committee. A Working Group was established in March 1992 to examine appropriate institutional arrangements for future port development.

      The Port Land and Transport Committee advises the government on land required to support port cargo handling facilities. This includes land for ancillary port operations and transport systems required to ensure smooth movement of cargo to and from the port.

      The Container Handling Committee provides data, analyses and advice to the govern- ment on container handling facilities. It examines world-wide containerisation trends, Hong Kong's position in the Asia Pacific Region and the increased potential for container- isation in China.

      Through the work of its various committees the Port Development Board will continue to act as a bridge between the government's strategic planning proposals and the commercial necessities of a successful port.

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PORT DEVELOPMENT

Development Studies

That Hong Kong would need huge new port facilities to cope with its phenomenal growth became apparent in the early 1980s. It was also obvious that Kai Tak, one of the world's busiest airports, would reach its maximum capacity in the mid 1990s and that a new airport would have to be built.

Just as Hong Kong's phenomenal business success had put pressure on the port it had stretched the facilities at Kai Tak airport. As with the Kwai Chung container port, geography meant that Kai Tak was incapable of expansion. Hong Kong needed a new, airport as well as a new port. It made economic and engineering sense to consider both together.

In July 1987 the Executive Council approved the launching of the Port and Airport Development Study. Its acronym, PADS, has since entered the everyday language of Hong Kong.

In October 1989 the Governor, Sir David Wilson, announced that both the airport and new port would be built at Lantau Island.

Although PADS determined the general site of the port, stretching south-east from Penny's Bay on Lantau towards Hong Kong Island, it did not decide its exact pattern.

Since August 1991 APH Consultants, have, on behalf of the government, been carrying out the Lantau Port and Western Harbour Development Studies to decide the best layout for the new port. APH is a joint venture of Acer, Au Posford Consultants Ltd. and Frederick R. Harris (Far East) Ltd.

The consultants examined five options including a peninsula, a series of connected islands with berth entrances to the east and to the west, and east and west facing basins.< They evaluated different configurations from port and harbour aspects, marine risk and navigation, environmental impact, transport and traffic links and onshore land planning.

The evaluation showed a strong preference for the west-facing island layout. Its main advantages are:

* Long term development potential is much higher than for other configurations.

* The preferred western approach channel allows for better marine traffic arrangements and manoeuvering into and out of the port basins. Ship/ship and ship/ferry encounter risk is low, typhoon evacuation fast and traffic control needs are small.

* Water quality impacts are similar for all concepts. West facing islands will mean better air quality because the expressway serving the port will be located further from residential areas in Discovery Bay and on Peng Chau.

* While there are no great differences for traffic and transport arrangements, the Island

West will give better direct port access.

From an on-shore and general planning viewpoint, Island West is compatible with developments on Peng Chau and Discovery Bay.

* Island West will mean the lowest cost for Phase One development of the port. Comprising the first four berths of Terminal 10, this will be the most expensive phase. It will include flyovers, road junctions, interchanges and other infrastructure that must be in place before later phases begin.

Strategy Review

Throughout the year the PDB and the government's Planning Department, with the help of consultants, have been carrying out the Port Development Strategy Review.

PORT DEVELOPMENT

The review sought to:

* update PADS port cargo and commodity forecasts to 2006 and to extrapolate these to

2011;

*

reassess the economics of mid-stream operations;

* re-examine the port-mix scenario recommended by PADS;

* determine long-term requirements for typhoon shelters, shipyards, container back-up

and river-trade facilities; and

* include the revised forecasts in a total programme for different types of physical

facilities.

The review found that between 1980 and 1990 total port traffic grew by 12.5 per cent a year.

In forecasting future growth the review took into account several key factors, including: developments in Hong Kong; developments in China; the world economic outlook; potential competition from regional ports; containerisation trends; likely impact of port charges on traffic growth; and the outlook for transhipment traffic.

The review forecast that the number of ocean-going vessels calling at Hong Kong would increase from 20 363 in 1990 to 33 000 a year by 2006. The number of fully cellular container ships would rise from 8 390 to 21 000 in the same period.

The port development plan and programme will be reviewed regularly to ensure that it remains relevant to Hong Kong's needs and that it can be achieved within the required time.

Through the refinement of periodic strategy reviews and the regular monitoring of the progress and updating of the port development plan and programme, the competitive advantage of Hong Kong can be assured well into the 21st century.

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18

PUBLIC ORDER

246

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 has operational responsibility for crime prevention and detection, the maintenance of public order and, since April, 1992, has fully resumed 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 correc- tional and rehabilitative programmes. The department also manages six Detention Centres for Vietnamese Migrants.

   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 1992, the Fight Crime Committee continued to provide advice on measures to combat crime. Specific subjects considered included measures to counter organised and serious crimes, triads in schools, crime involving juvenile and young offenders, robberies of goldsmith and jewellery shops, regulation of the security industry and ways to encourage the public to participate actively in the fight crime effort.

The Organised Crime Bill was published in the form of a White Bill for public comment in August 1991. In the light of the comments received, the Fight Crime Committee agreed that the bill should be refined and improved to form the Organised and Serious Crimes Bill. This bill was introduced into the Legislative Council on July 15. The objective of the bill is to tackle organised crime, including triads, and other serious crimes effectively by, among other things, enhanced investigative powers and provisions to enable heavier

PUBLIC ORDER

sentences to be imposed. District Boards and District Fight Crime Committees were briefed on the bill after its introduction into the Legislative Council. An ad hoc group of the Legislative Council is studying the bill in detail.

       The Fight Crime Committee supported in principle in September 1990 the proposal to introduce a statutory post-release supervision scheme for adult offenders. The scheme aims to rehabilitate ex-offenders, reduce the threat posed by some to public safety, reduce the chances of their committing further crimes and turn them into useful members of society. The Fight Crime Committee further examined how the scheme could operate in July 1991. The Post Release Supervision Bill, which sets out the framework for the scheme, is under preparation. It is expected that the bill will be introduced into the Legislative Council in 1993.

       The committee has devoted much of its attention to the problem of juvenile crime, in particular, triad activities in schools. There is no indication of an organised triad campaign to enter schools for recruitment. However, more can be done by schools and the government to strengthen liaison and to educate youngsters on the pernicious nature of triad activities. An inter-departmental working group has been set up to consider ways to reinforce support for schools which face triad problems. The police have also stepped up presence near such schools.

       Triads are only one aspect of the juvenile delinquency problem. The majority of the youngsters who commit crime are not related to triad societies. The question why these youngsters commit crime is the subject of a research which the research team of the Social Sciences Research Centre of the University of Hong Kong has been commissioned to undertake by a sub-committee of the Fight Crime Committee. The purpose of the research is to find out the social causes of crime committed by offenders aged between seven to 20. The study started in September and is expected to be completed in early 1994.

       The Young Offenders Assessment Panel continued to provide advice to the courts on the rehabilitation programmes most likely to reform juveniles and young people. A special Outward Bound course has also been arranged for inmates of the Correctional Services Department.

During the year, the Security and Guarding Services Bill was further refined in preparation for its submission to the Executive Council. The bill 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.

In view of the spate of armed robberies on goldsmith and jewellery shops in the early part of 1992, a working group set up by the committee has reviewed the security measures for such premises. The working group recommended that the goldsmith and jewellery trade should regulate its own security measures by setting up a Security Measures Group to promote acceptable standards of security. The group also proposes a set of guidelines on minimum standards of security relating to alarms, safes and access control for gold- smith and jewellery shops to follow. These recommendations were endorsed by the committee.

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 community awareness of the need to prevent crime and community participation in combating crime.

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Members of all 19 District Fight Crime Committees took part in a Fight Crime Conference in October. The conference provided an opportunity to reinforce the link between the committee and the district committees and to exchange views on crime-related matters.

Police Force

Following a comparatively quiet opening to the year, a spate of major armed robberies and associated violence occurred in the three-month period between March and May. Groups of armed criminals, mainly from China, showed callousness and brutality previously unknown to Hong Kong. Firearms were discharged wantonly on crowded streets and hand grenades thrown at pursuing police officers. In one case, two victims were shot dead simply for failing to respond quickly enough.

This outbreak of violence at an unprecedented level, without any actual increase in the number of crimes, naturally attracted headline media coverage and calls from all levels of the community for effective response.

The police responded with a number of initiatives which rapidly brought the situation under control. Police presence on the street was reinforced with the redeployment of all available personnel. Stop and search operations were mounted to identify suspects.

Crime prevention publicity was stepped up. It targeted high risk premises such as jewellery shops.

The Force criminal intelligence system focussed on the identification of local organisers and drivers for the gangs of mainland criminals.

   Perhaps most significantly, liaison with China was enhanced to unprecedented levels. The Commissioner of Police, Mr Li Kwan-ha, made a number of widely publicised visits to various parts of China, including Beijing and Guangzhou, and received full co-operation. Regular liaison at all levels between Hong Kong and Chinese police officers quickly developed to become the norm.

Among measures agreed early in the year was the appointment of two Chinese liaison officers to be stationed in Hong Kong to facilitate the flow of criminal investigation intelligence. As at year's end, the arrival date of the liaison officers had not been firmed up.

The problem of illegal immigrants from China was even greater than in 1991, as indicated by 40 per cent more arrests. Illegal immigration is a natural result of Hong Kong's geographical and economic circumstances, including a present shortage of labour; but in 1992 it was also fuelled by various rumours of a government amnesty, the arrival of the new Governor, and the impression that illegal work would be possible on the port and airport projects. Such impressions were also deliberately fostered by criminals organising the importation of illegal immigrants from the southern part of China, particularly for unscrupulous sectors of the building industry. This organised employment of illegal immigrants especially on building sites became more common in 1992 and has been tackled by various measures including sanctions on contractors who have allowed employment of illegal immigrants by their sub-contractors, and publicity and recruitment of more help from the legitimate workers, whose livelihood is most threatened, against illegal immigrant employment.

The problem of missing vehicles, particularly high-valued private cars, and their subsequent smuggling into China, remained a cause of concern throughout the year. This phenomenon was high on the agenda in liaison with mainland officials. Six vehicles were

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returned from China in the last quarter of the year. Recently, China has also announced measures to ban the registration as well as transfer of ownership of right-hand-drive vehicles in the Guangdong province. These measures, if properly enforced, will effectively reduce the theft of high-valued private cars.

       The year continued to witness major developments in the Force to meet future needs. Kowloon was split into two regions - Kowloon East and Kowloon West -- and three new police stations at Waterfront, Ma On Shan and Tin Shui Wai were opened.

Technological advances also progressed on schedule to modernise the Force. These included the upgrading and enhancement of the computer-based command and control system. This has enabled a more efficient and rapid deployment of resources to incidents.

In May, an inter-departmental study on the recruitment and retention of junior police officers was conducted. A package of recommendations, including those on improved remuneration for junior police officers, was approved by the Executive Council.

In July, a high-profile recruitment campaign was launched. By the end of the year, a total of 1789 constables was recruited. This represented a 43.6 per cent increase over last year.

Crime

The total number of crimes reported to police in 1992 was 84 056, a decrease of 5.2 per cent compared with 88 659 in 1991. The crime rate, defined in terms of the number of crimes per 100 000 of the population, was 1 446.4. This represented a drop of 6.1 per cent, compared with 1991. The crime rate of Hong Kong has been steady in recent years, ranging from 1 407.1 to 1 547.9.

Violent crime, a category which includes murder, wounding, serious assault, rape, indecent assault, kidnap, blackmail, criminal intimidation, robbery and arson, registered a decline in the year, with a total of 18 567 cases being recorded, compared with 19 558 in 1991. Robbery, wounding and serious assault accounted for 76 per cent of the total number of violent crimes in 1992.

Vehicle theft remained a cause for concern. There were 6918 motor vehicles reported missing in 1992, compared with 6 475 in 1991.

The number of robberies involving the use of firearms - both genuine and pistol like objects - was 418, compared with 547 in 1991.

       A total of 37 953 crimes or 45.2 per cent was detected in 1992, and some 41 780 persons were arrested for various criminal offences. Of the persons arrested, 6 533 were juvenile offenders (aged under 16) and 7 656 were young person offenders (aged between 16 and 20).

Organised Crime and Triads

A general trend towards increased violence and incidents involving the use of genuine firearms was noted in the early months of the year. In 1992, 56 genuine firearms, and 50 grenades were seized, compared with 116 and nine respectively in the previous year.

A series of violent robberies involving the use of powerful firearms occurred in April and May. In some of these incidents, grenades were thrown indiscriminately, resulting in fatal and serious injuries to several members of the public and the police. Prompt action by the police contained the trend effectively. Subsequent investigations also led to the arrests of many key members of the gangs.

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   There was a tendency for criminals to flee to China after committing crimes in Hong Kong. However, continued and improving close co-operation between Hong Kong and the mainland police authorities curbed the trend.

   Illegal immigrants' involvement in armed robberies in Hong Kong remained significant. These people were generally unfamiliar with the local situation and often collaborated with local criminals in committing crimes.

   There was an increased use of firearms by triad gangs in settling disputes among themselves. The Sun Yee On, which was responsible for over 50 per cent of the triad- related offences in Hong Kong, was the major target of investigation by the police throughout the year. Several successful operations resulted in the arrest of a large number of triad members and office-bearers of the gang. They were charged with triad-related offences, possession of firearms, rape, money laundering, extortion and other offences. Investigation into other triad groups, including the Wo Shing Wo, 14K and Wo On Lok also led to a number of arrests.

   Following the occurrence of a number of incidents involving well-known film directors and movie stars, the police also focussed on triad involvement in the Hong Kong film industry. Despite some successes, it remained difficult to collate evidence in triad-related investigations. This can be attributed to the reluctance on the part of members of the public, particularly the victims, to come forward as witnesses. The Organised and Serious Crimes Bill, which was introduced into the Legislative Council in July, requires persons having information relevant to an investigation to answer questions. In preparation for the passage of this bill, the police are giving consideration to how measures for protecting witnesses can be stepped up.

   Despite continued efforts to combat the theft of luxury vehicles, the number of such cases increased steadily throughout the year. A total of 1 889 luxury vehicles was stolen in 1992, compared with 802 in 1991. This rise was fuelled by the conveniently located and seemingly insatiable market in China. High-powered speedboats remained a popular means of transport for the smuggling of these vehicles. Some improvements in prevention have been achieved with the introduction of improved anti-theft devices by car manufacturers.

   During the year, co-operation with overseas law enforcement agencies was stepped up significantly. Two cases were particularly worthy of note. In the first case, two men were arrested in Hong Kong in connection with the pay-off for a case of kidnap which occurred in Canada. In the second case, a Japanese man was identified in Hong Kong to have been involved in a bomb incident in Japan. Closer liaison with China also resulted in a number of arrests of violent criminals on both sides of the border.

Commercial Crime

  During the year, the Commercial Crime Bureau's Fraud Division continued to investigate complaints from the business sector. A noteworthy case of fraudulent trading involved more than 1 400 victims. The Counterfeit and Forgery Division saw more successes in the fight against counterfeit and forgery activities. In one incident, a printing factory was found to be engaged in the production of counterfeit Japanese banknotes, each of 10 000 yen in face value. In another case, 500 forged credit cards and a number of counterfeit passports were seized from a manufacturing centre located in a domestic premises.

On the international front, the Intelligence Section continued to monitor the activities of international fraudsters. A number of attempted deceptions were successfully averted. A

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one-week seminar was held with Public Security Bureau officials in Guangdong, China. Liaison with overseas law enforcement agencies led to arrests in Hong Kong, the Netherlands and the United States of America.

      The year also saw the introduction of the Computer Crimes Bill into the Legislative Council. Upon enactment of the bill, the Commercial Crime Bureau will be able to investigate crimes involving the use of computers.

Narcotics

The repeated bumper harvest of opium in the Golden Triangle meant that more heroin was passed onto world markets. Although significant seizures were made locally throughout the year, the abundance in supply led to a fall in prices.

      Continuing the trend of the last few years, No. 4 heroin almost completely replaced the No. 3 product as the main drug abused in Hong Kong. The majority of drug addicts in the territory use heroin, although there was evidence of other psychotropic substances being abused, particularly by the young.

On the enforcement side, major successes against highly organised trafficking groups were achieved both locally and internationally, while the territory's level of co-operation and liaison with overseas law enforcement agencies continued to grow.

      Of particular note was the seizure of a shipment of No. 4 heroin (396 kilograms) in June. This was the second largest heroin seizure ever in the territory, with the drugs having a retail value of $171 million. In addition, there were two major seizures of cannabis, one of 1 555 kilograms in May and another of 1 200 kilograms in July.

The Drug Trafficking (Recovery of Proceeds) Ordinance, which provides for the restraint and confiscation of the assets of convicted drug traffickers, continued to be a valuable weapon in the fight against the illicit drug trade. The legislation resulted in the freezing of $175,096,447 of drug-related assets to date.

      Some 611.99 kilograms of opiate drugs, comprising opium, No. 3 heroin and No. 4 heroin, were seized, compared with 183.94 kilograms in 1991. There were 8 853 arrests for narcotics offences, compared with 7 688 in the previous year.

Crime Prevention

The Crime Prevention Bureau continued to promote the concept of crime prevention through structured publicity and the provision of professional advice to the community. Vehicle-related crime in particular was accorded a high priority, followed by domestic security.

Liaison between the bureau and the insurance and motor vehicle industries continued. It resulted in the introduction of more measures to reduce the incidence of vehicle theft, including education of the public on the need for better vehicle protection and the pursuit of better security measures in newly manufactured vehicles.

      The phased police response to activated intruder alarms worked well. Man-hours were saved and standards of installation and maintenance improved, thereby reducing the number of false alarms.

Juvenile anti-crime education continued through the medium of the 'Robotcop', a computerised robot, which was used in over 200 displays in schools, youth functions, shopping centres and exhibitions throughout the year.

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Crime Information

The Criminal Records Bureau is the sole repository for criminal records in Hong Kong. It houses complete records on all persons convicted of crime in the territory.

The records and indices held by the bureau comprise details of persons wanted, suspected offenders, missing persons, stolen property, outstanding warrants and missing vehicles. Currently the indices hold particulars of some 551 612 criminal records, 12 225 wanted persons, 2 551 missing persons, 9613 outstanding warrants and 602 missing vehicles. During 1992, the Enhanced Police Operational Nominal Index Computer System (EPONICS) dealt with a total of 2 601 141 enquiries.

Ballistics and Firearms Identification

The Ballistics and Firearms Identification Bureau handled 338 cases in 1992, compared with 344 in 1991. A total of 56 commercially-manufactured firearms and three homemade and converted firearms were seized.

  Fully-automatic weapons were used by criminals in a number of shooting incidents; a Polish assault rifle and a Polish sub-machine-gun were seized in related successful operations against armed gangs. Examination of these weapons showed that both firearms had been used in previous criminal shooting incidents in the territory.

Identification

The Identification Bureau continued to provide an efficient service to all units in the Force in fingerprint technology and forensic photography.

The Phase I computerisation of fingerprint identification proved effective. A total of 555 fingerprint identifications were achieved in the year. A feasibility study on the Phase II of the project was being carried out.

During the year, officers from the Scenes of Crime Section attended 25 069 crime scenes to examine traces of finger, palm and sole prints, resulting in 1 140 persons being identified as having connection with 1 220 criminal cases.

The Main Fingerprint Collection processed 99 351 arrest fingerprint forms and identified 34 846 persons with previous convictions.

Interpol

The Hong Kong National Central Bureau of the International Criminal Police Organ- isation, more commonly known as Interpol, is one of the most active members in the South-East Asian region. It handles an average of some 8 000 cases of crimes of various nature every year, including deportations and extraditions.

  The bureau acts as a co-ordination centre in dealing with criminal information and associated enquiries between Hong Kong and the rest of the world, and disseminates information on behalf of the formations within the Force to participating countries. It also maintains close liaison with local consulate officials.

Two officers are seconded to the Interpol General Secretariat in Lyons, France, and close liaison with the secretariat is thereby maintained. In recent years, contacts with China have increased markedly, and an additional post, established at superintendent level, was created in October 1991 to cope with the increasing volume of work generated.

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Public Order

There was no incident of major public disorder in Hong Kong during 1992.

The Police Tactical Unit (PTU) Companies were, however, again heavily committed to assisting in anti-crime patrols and a wide variety of operations.

       In October, the formation of the fourth Field Patrol Detachment (FPD) Company completed the police resumption of border duties from the Army. In the year, a total of 2 210 officers of varying ranks were trained in internal security measures and FPD tactics.

       Routine training of District Internal Security (IS) Units continued throughout the year. In addition, public order training for women police commenced in July, with the formation of a women's IS Company. For the first time, CID officers also attended PTU to receive instruction on tactics in dealing with armed suspects.

Illegal Immigration

During 1992, a total of 35 645 illegal immigrants was arrested by the Security Forces. This represented a 40 per cent increase over 1991. There was a particular increase in the numbers arriving by sea, with 42.9 per cent compared to 39.4 per cent in 1991.

       A total of 32.6 per cent of those arrested had made previous illegal visits to the territory. Good prospects of employment were considered the main attraction. As a result, police action against employers was stepped up, focussing on construction sites, factories, restaurants and other places which provided employment opportunities.

Vietnamese Migrants

All Vietnamese migrants are held in detention centres to await a screening process to establish their refugee status in accordance with the 1951 United Nations Convention. Those classified as economic migrants are kept in detention centres, pending repatriation to Vietnam.

Due to the large influx of over 20 000 in 1991, it was agreed with the Vietnamese authorities that all new arrivals from October 29, 1992 onwards would be screened immediately and those screened out as non-refugees promptly repatriated. This policy effectively curbed the upward trend, and only 12 arrivals were recorded in 1992.

However, the existing population continued to place a strain on both the police force and Hong Kong in terms of financial commitment, manpower and resources. The Shek Kong Detention Centre incident in February 1992, which claimed 24 lives, vividly demonstrated the underlying tension and the potential dangers in managing a community of this nature.

On the positive side, with the implementation of the Orderly Repatriation Programme, the number of Vietnamese volunteering to return home markedly increased. This, together with the small number of arrivals, gave rise to optimism that an end to this tragic problem could soon be in sight.

As of December 31, the total number of Vietnamese migrants stood at 45 387, of which 2600 were accorded refugee status, 27 245 were classified as non-refugees, 1 547 were pending screening and 70 were Vietnamese illegal immigrants from China. Resettlement accounted for 3 439, and 421 births were recorded. Two hundred and eighty were repatriated to Vietnam under the Orderly Repatriation Programme. Voluntary repatriation stood at 12 332 and 35 ex-China Vietnamese illegal immigrants from China were returned to China.

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Traffic

The year recorded a rise in vehicle registration, resulting in an increase in traffic density, hence additional pressure on the limited road space. This increase in density translated into a figure of 270.5 vehicles per kilometre.

  Traffic congestion at peak periods continued to increase and the rush hours were extended. This resulted in traffic police becoming more heavily committed to traffic control

matters.

The accident rate remained stable, with a marginal decrease of 0.1 per cent. The number of serious traffic accidents, however, decreased by 3.5 per cent.

  The most common causes for accidents continued to be speed related. Vigorous enforcement action was taken, resulting in more than 160 000 speeding offences being detected and processed during the year. Technological advances in speed detection systems permitted the deployment of vehicle-borne computerised systems, such as VASCAR, and helped reduce speed-related offences and accidents.

Efforts to improve road safety through education continued, with a resultant downward trend in accident involvement among children and the elderly, despite an increase in these age brackets in the population.

Marine Region

The year 1992 saw a marked increase in the number of arrests of illegal immigrants en route to Hong Kong from China by negotiating the sea boundaries. On average, 97 illegal immigrants were caught each day compared with 70 in 1991. Throughout the year the use of vessels to smuggle illegal immigrants into Hong Kong continued to rise and accounted for almost half of the illegal immigrants intercepted.

Marine Region also played a major role in search and rescue operations within the very busy territorial waters of Hong Kong. As at December 31, the region had responded to 183 incidents as compared to 181 in 1991. These ranged from searching for missing sailboarders to dealing with sinking large ocean-going vessels, both in inshore waters and in and around the international boundary.

Two officers received the Queen's Gallantry Medal from Her Majesty the Queen at an investiture ceremony at Buckingham Palace for their outstanding bravery displayed in the course of rescuing crew members from a sinking ship during the passage of a typhoon. Another two officers received the Queen's Commendation for Brave Conduct for their part in the rescue of a group of fisherfolk from rocks off Lantau Island in adverse weather conditions.

The new base for Marine East Division at Tui Min Hoi, Sai Kung, was opened, as was a police post at Sok Kwu Wan on Lamma Island.

Of the 21 new launches ordered in the latest phase of the launch expansion programme, one command/patrol, six inshore patrol and two logistics vessels were taken into service.

Bomb Disposal

During 1992, the Explosive Ordnance Disposal Unit dealt with a total of 5 745 explosive devices, ranging from improvised bombs made by criminals to unexploded shells, vintage aircraft bombs and pyrotechnics. The year 1992 saw an increase in the use of grenades by criminals, with a resultant seizure and disposal of 50 bombs, a 556 per cent increase over 1991.

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Community Relations

It has been the Force's long standing objective to seek more active support from the public in the fight against crime. In this connection, a territory-wide Fight Crime Campaign was conducted throughout the year under a main theme of 'Join Forces Against Crime'. Pivoting on the four sub-themes of 'What to Report', 'How to Report', 'Safe to Report' and 'Duty to Report', the campaign produced a comprehensive package, comprising two TV Announcements of Public Interest (APIs), a mobile exhibition and a series of poster displays in the Mass Transit Railway (MTR) and other prime locations.

        The Good Citizen Award Scheme and the Good Citizen of the Year Award Scheme continued to prove effective as a means of promoting public assistance in the fight against crime. These two schemes are jointly administered by the Royal Hong Kong Police and the Hong Kong General Chamber of Commerce. Since the inception of these two schemes in 1972 and 1984 respectively, 2 264 persons have received the Good Citizen Award and 25 persons have been awarded the Good Citizen of the Year Award, in recognition of their outstanding courage, resourcefulness and initiative.

        The Police Hotline (527 7177) received a total of 6 254 calls from civic-minded citizens, resulting in 1 602 persons arrested for various crimes. Another method by which the public could supply information to the police was by completing a Crime Information Form (CIF). In 1992, the police received 2 111 completed forms which resulted in 475 arrests.

The Junior Police Call (JPC), enjoyed an active membership of 169 312 members and 14 063 leaders. Since its inception in 1974, the JPC movement has remained an effective tool in harnessing the collective efforts of young people to assist the police in the fight against crime. Members took part in fight crime activities and crime prevention campaigns. In addition, JPC members also participated in a wide range of community services such as flag-selling and fund-raising activities for charitable organisations. The success of the movement has helped to develop its members into healthy youth and responsible citizens of the future.

The Royal Hong Kong Police, in conjunction with Radio Television Hong Kong, produced three television programmes. The objective of these programmes was to convey crime prevention messages and to appeal to viewers for crime information. Reconstructions of crime cases in a dramatised format or in a documentary approach were featured to elicit public response. These programmes, known as Crime Watch, Police Call and Police Report, are broadcast on a regular basis on both the English and Chinese channels of the two local television stations. Audience ratings of these programmes remained high.

During the year, the Force handled 108 visits, receiving a total of 444 overseas and 723 local visitors, whose status ranged from Members of Parliament to college students.

Planning and Development

The beginning of the year saw plans for the split of Kowloon into Kowloon West and Kowloon East Regions reach fruition on January 1. The two Regional Headquarters are based at Kowloon City and Tseung Kwan O respectively.

Plans for the split of the New Territories into New Territories North and South Regions gained momentum, and a target implementation date for April 1, 1993 was set. Once implemented, the two Regional Headquarters will be based at Tai Po and Ma On Shan respectively.

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   Force-wide planning centred on developments taking place in North Lantau and West Kowloon. A temporary police station at Tung Chung in North Lantau currently under construction will, on completion in late 1993, provide a base for enhanced police coverage until the permanent stations planned for Chek Lap Kok Airport and Tung Chung New Town become operational.

The South East Kowloon Development Study was actively monitored in anticipation that additional police services will be required in that area as a result of flight operations at Kai Tak Airport being moved to Chek Lap Kok.

Tin Shui Wai Divisional Police Station and new facilities for the Police Dog Unit at Ping Shan were completed during the year. The construction of new ranges at the Police Tactical Unit continued and work on the refurbishment or modification of facilities at nine police stations commenced. New quarters for junior police officers on a site in Wong Tai Sin were added to the list of the quarters construction programme underway at Tsing Yi and Fanling.

The construction of a second tower block for the new Police Headquarters at Arsenal Street commenced in mid-1992. On completion in 1996, this building will accommodate most of the headquarters formations presently housed in leased accommodation.

Communications

Last year's programme to replace outdated and inefficient telephone exchanges in police facilities continued. Following the acquisition of a large number of facsimile machines, document transmission throughout the territory was speeded.

The difficult terrain and working conditions experienced by the Field Patrol Detachment and the increased workload arising from its assumption of all anti-illegal immigration duties previously undertaken by the military along the border with Shenzhen placed considerable strain on existing communications. To overcome this problem, a new radio system was introduced. This greatly improved communications and the co-ordination of operations.

   Communications also have a role to play in the training of police officers in regard to the use of firearms. The provision of interactive audio/video systems during the year to simulate real life situations added a significant new dimension to the firearms training programme.

   The heavy involvement of the Marine Police in combating both smuggling and illegal immigration put stress on existing facilities in the maintenance of communications equipment. The removal of the Marine Radio Workshop to improved facilities in the Canton Road Government Offices and the opening of a new maintenance facility in the new Tui Min Hoi Marine Police Base in Sai Kung provided a much needed additional maintenance capability. The introduction of a computer-based management system for maintenance schedules and management of spare parts further helped to reduce the amount of idle time of equipment caused by technical failure or routine preventive maintenance.

   Planning to meet the communications needs of police facilities at the new airport and for the increased policing required by planned development on Lantau Island also commenced during the year. This will remain a single major commitment of the engineering resources for the foreseeable future.

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       On a continuing basis, as old communications systems enter the second half of their life expectancy, planning has begun to identify suitable replacement equipment, to meet the changing needs of the Force through the application of state-of-the-art technology and to contribute towards the development of a fully integrated force-wide communications system.

Information Technology

The Information Technology Branch continued to plan, develop and implement computer- based information technology systems in accordance with the Force's Information Technology Strategy. The ever-growing workload of operational units, coupled with manpower retention and recruitment difficulties, had resulted in the need for improved efficiency and effectiveness at all levels of the Force an area in which information technology plays an important role.

Work continued throughout 1992 to upgrade and enhance the computer-based Command and Control System used by the Force to more effectively command, control and deploy resources to incidents. Work was in hand to incorporate several additional sub-systems to expand the system by the provision of remote terminals to all police stations and to provide separate internal security and training and exercise modes. When work is completed in late 1993, all levels of the Force will have direct access to the system, thereby enabling commanders and operational units to have an immediate access to the most up-to-date and wide-ranging information relevant to their particular needs. As an associated development, an additional interface was put into operation during the year, enabling a direct access to other government systems which held motor vehicle, driver and identity card data.

An experimental project to fully computerise Wan Chai District with the objective of producing an essentially paperless station environment moved closer to completion during the year, following the successful incorporation of a personnel and training sub-system. Although this is only a pilot project, the exercise has so far been very successful. It has laid the cornerstone for the eventual full computerisation of all police stations, which is, however, subject to funding approval.

Work continued throughout the year to extend the Criminal Intelligence Computer System to attend to the need of the Narcotics Bureau and Commercial Crime Bureau with a view to enhancing the Force's intelligence gathering and analysis capabilities in these complex and important areas of law enforcement.

The production of an infrastructure which integrates all major computer systems to enhance efficiency by the provision of state-of-the-art technology to support the Force in the discharge of its duties remains the overall direction of the Information Technology Strategy.

Transport

Transport Branch is responsible for the procurement and maintenance of the Force vehicle fleet and the training and management of police drivers. The establishment of the fleet, standing at 2 276 at the end of the year, is reviewed on an annual basis, with additional vehicles purchased to stay in line with operational requirements.

       With the increase in the number of roads making up the strategic road network and the problems associated with its policing, consideration was given to upgrading the motor

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cycles used for patrol purposes. Trials were carried out with a number of motor cycle brands to determine which was the most suitable for police use.

   An automatic car washing plant was built at Police Headquarters. It proved to be successful and consideration was given to introducing further plants throughout the Force. Additionally, funds were requested for a computerised fuel dispensing system, which would reduce the number of personnel required to operate petrol pumps and provide greatly enhanced information on vehicle fuel consumption to bring about more effective management of the Force fleet.

Research

Research Branch carries out studies and assessments of Force organisation and also reviews its tactics and special equipment needs. Its objectives are not only to maintain efficiency and cost-effectiveness but also to ensure the Force is properly equipped to carry out its job.

   In 1992, following the introduction of computerised information systems for police stations, Research Branch conducted a study of Force nomenclature with an aim to standardising post, rank and departmental titles.

In circumstances whereby possible manpower savings might be identified, studies were undertaken on the most appropriate level of manning for Regional Missing Persons Units and the MTR Police Control Room.

   In order that patrol officers might be better protected from criminals armed with high velocity weapons and hand grenades, a study was conducted on the armouring of police vehicles.

   Following a series of proposals concerning ways of enhancing recruitment and retention of officers, Research Branch conducted a wide-ranging review of the ratio of male to female officers within the Force with a view to extending the operational role of female officers.

   In view of the rapid pace of development in Hong Kong, studies also commenced to find out the factors affecting the size and layout of foot and motor cycle patrol beats. Another study concerning expansion within the Force addressed the potential amalgamation of formation registries in the new Police Headquarters Phase II complex.

Inspection Services Wing

The Management Resources Studies which commenced in 1991 were concluded during the first quarter of 1992, with a total of 29 studies being completed. A wide range of recommendations were made, resulting in savings in manpower and capital and recurrent costs.

   Regular Force inspections to ensure the effective and efficient operation and adminis- tration of the Force resumed in April 1992. These inspections, now in their fourth cycle, will take five years to complete. Up to the end of 1992, 14 formations had been inspected.

Licensing and Societies Registration

  During the first half of the year 32 societies were registered by the Registrar of Societies, who also exempted 118 from the requirement to be registered. Since the enactment of the Societies (Amendment) Ordinance 1992 on July 17, 344 societies have notified the Societies Officer of their establishment. For the whole year, 116 societies were dissolved.

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       An average of 3 000 people applied for registration as watchmen every month. At the end of the year 20 000 watchmen were registered, with 1000 of them licensed to carry arms.

A total of 1700 persons were licensed to possess arms for competition or target shooting, and 180 persons applied for arms licences throughout the year.

At the end of the year, 725 notifications of public meetings were processed. 300 licences for public processions, 826 loudspeakers and 959 lion dance permits were issued.

A total of 183 applications for massage establishment licences, 148 applications for auctioneer licences, 270 applications for marine store dealer licences, 159 applications for pawnbroker licences and 46 applications for temporary liquor licences were processed within the year.

Police Dog Unit

The Police Dog Unit was founded in 1949 and its headquarters at the former Ping Shan Police Station in the New Territories established in 1965. Basic, assessment, refresher training courses, breeding and all veterinary support functions are carried out at the headquarters. On completion of their training, handlers and their dogs are posted to various formations. The unit is expanding its areas of expertise to include explosives search capability.

Complaints Against Police

The Complaints Against Police Office investigates all complaints from the public con- cerning the conduct and behaviour of members of the Force, including civilian staff and auxiliary police officers. The investigation of all complaints against police is monitored by the independent Police Complaints Committee.

In 1992, 3 250 complaints were received, an increase of 96 cases or 3.0 per cent over 1991. Over 98 per cent of the complaints in 1992 were made by persons either involved with or subjected to police action. Complaints of assault, neglect of duty and conduct/manner made up the majority of the complaints, 79 per cent in the total. Investigations into 3 102 cases were completed, of which 64 cases (2.1 per cent) were substantiated, 20 cases (0.6 per cent) classified as false, and 2 116 cases (68.2 per cent) were either withdrawn or not persuable. A total of 391 cases were dealt with by way of the new Informal Resolution Scheme introduced force-wide at the beginning of 1992. These represented 12 per cent of all complaints. A total of 13 police officers were disciplined and five charged with offences as a result of the complaints. In addition, 219 officers were subject to corrective action.

The Complaints Against Police Office is also responsible for advising Force members on how complaints can be prevented. Throughout the year lectures and seminars on complaint prevention continued to be organised for junior police officers with the aim of improving public relations and reducing situations of conflict.

Personnel and Recruitment

At December 31, 1992, the Force establishment totalled 27 206 and 5 820 for disciplined and civilian staff respectively.

With regard to the recruitment of inspectors, 28 local candidates were appointed from 1 169 applicants, while 20 overseas officers were taken on strength during the same period. In addition, 38 junior police officers were promoted to inspectors.

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There was a significant improvement in the recruitment of constables during the year. A total of 9 885 applications for constables were received, with 1789 subsequently being taken on strength. Compared with 1991, the number of applications increased by 615 (6.8 per cent) while the number appointed to the rank rose by 543 (43.6 per cent).

Conditions of Service

In 1991 the Commissioner made several submissions to the Administration, proposing among other things that a special allowance be given to retain junior officers in particular as well as to attract new entrants. An inter-departmental Study Group on the Recruitment and Retention of Junior Police Officers was appointed in early 1992. This group published its findings in May. A total of 42 recommendations were made relating to salaries, quarters and conditions of service. All junior police officers subsequently received an average five per cent salary increase.

Training

Training continues to be a vital part of a police officer's career, starting with basic training on recruitment, followed by in-service training, which takes place both locally and overseas, and training after promotion.

Training for newly recruited inspectors and constables takes place at the Police Training School at Wong Chuk Hang, a modern 18 hectare campus. The 36-week inspectors' and the 24-week constables' initial training courses cover similar projects: criminal law, social studies, police and court procedures, drill, firearms, first aid, physical fitness, swimming, life saving and self defence. Inspectors are trained to higher levels than constables and their course includes training in management and leadership. As part of recruit training, expatriate inspectors study colloquial Cantonese while functional English is taught to local inspectors.

In-service training follows at regular intervals throughout an officer's service, mainly to keep officers up-to-date with new legislation and procedures. It also consists of tailor-made courses for officers in more specialised branches such as marine, traffic, catering, financial investigation and instructional work. In addition, language courses of English, Mandarin and Vietnamese are run. During the year, some 50 officers were sent to the United Kingdom, Canada, the United States, New Zealand, Australia and Malaysia for manage- ment, specialist and technical training.

The Force encourages officers who, on their own initiative, seek to improve their job-related skills by enrolling in local tertiary institutes on a part-time basis or by undertaking distance learning courses. A prime example was the successful completion by 21 officers of the Hong Kong University Certificate course in criminal justice in the year. They are now eligible to proceed to the two year part-time Master of Arts course in public order. Subject to the exigencies of the service, these officers are granted day release to attend lectures.

   Promotion training takes place as soon as possible after an officer's promotion, at the Police Training School for non-commissioned officers and at Force Training Wing Head- quarters in Hennessy Centre for chief inspectors and superintendents. The instruction is specifically designed to equip officers with the management and decision making skills necessary for their new ranks. It serves to broaden their outlook and provide an effective base for their further development. The syllabi consist of lectures from a wide cross section

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of the community, including senior police and government officers, academics, executives from commerce and industry and members of the Legislative and Executive Councils.

       At the Detective Training School, courses at standard and advanced levels are conducted to improve the standard of criminal investigation throughout the Force.

      All officers were trained on the new Rules and Directions for the Questioning of Suspects and the Taking of Statements which came into operation on October 1, replacing the previously used Judges' Rules.

       Throughout the year, great emphasis was placed on weapon training. New courses were designed, new indoor revolver ranges brought into use and greater awareness of tactics on the street taught to officers in front-line operational units.

Promotions

Promotion prospects in the Force remained good at most levels. During the year, a total of 39 gazetted officers were promoted to senior superintendent of police and above, 33 chief inspectors to superintendent, 50 senior inspectors to chief inspector, 61 sergeants to station sergeant and 201 constables to sergeant. In addition, nine exceptionally experienced station sergeants also advanced to the rank of inspector.

In 1992, 549 officers retired from the Force, 38 officers were invalided out, 681 resigned, 260 were compulsorily retired and 30 were either dismissed or had their services terminated.

Awards

A total of 1 365 officers were awarded the Colonial Police Long Service Medal after 18 years of continuous police service; 368 officers were awarded the 1st Clasp to the Medal after 25 years service and another 244 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 27 officers the Colonial Police Medal for Meritorious Service (CPM). Three officers received the Queen's Commendation for Brave Conduct, and 38 officers were awarded the Governor's Commendation.

Welfare

The origins of the present Force welfare organisation can be traced back to 1948, when a welfare fund was established under the Police Force Ordinance. From this early beginning, the Force Welfare Branch has grown extensively, and it now 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.

During the year, staff made 5 280 casework visits and conducted 3 507 casework interviews throughout the territory.

The Family Life Education Programme, which aims to educate parents about their children's emotional and learning difficulties, continued to prove popular among participating officers and their families. A total of 1 888 children of regular and auxiliary police officers were awarded bursaries from the Police Children's Education Trust and the Police Education and Welfare Trust to assist them to pursue education at various levels.

Royal Hong Kong Auxiliary Police

      Manned entirely by part-time volunteers from all walks of life, the Royal Hong Kong Auxiliary Police has a proud history dating back to 1914. The traditional role of the Force

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is to provide the regular police with additional manpower for such emergencies as natural disasters and public disorder.

   Day to day, the Auxiliary Police are fully integrated with their regular counterparts to provide 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 5 636 out of a total establishment of 5 746 in all ranks. Approximately 12 per cent of the Force are women officers.

   Throughout the year, the average daily turnout of auxiliaries for normal constabulary duty was 850 officers. Until April 6, an additional 50 personnel were called on each day to provide guard duties at refugee camps set up to house the large numbers of Vietnamese migrants. Deployment as a regional reserve of the Force for unexpected contingencies and pre-planned anti-crime operations was subsequently made.

Customs and Excise

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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 3 897 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 enforcement of intellectual property protection legislation.

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Revenue Protection

The department is responsible for collecting revenue on five groups of dutiable commodities in Hong Kong - liquor, tobacco, hydrocarbon oil, methyl alcohol and cosmetics. In 1992, revenue of $7,277 million was collected on these dutiable commodities, an increase of $1,058 million (or 17 per cent) as compared with $6,219 million in 1991.

Duty on non-alcoholic beverages, which was imposed in 1985, was abolished on March 4, 1992. However, new legislation prohibiting the use of duty-exempt diesel oil by pleasure vessels was introduced on June 1. This was because the exemption of duty on diesel oil was originally intended as an economic incentive to benefit industry and fishing and not intended to subsidise recreational activities.

In a related field, cases involving the illegal use of duty-exempt diesel oil by road vehicles increased significantly. Some 338 persons were arrested and 122 664 litres of industrial diesel oil were seized.

   In addition to small quantities of duty-free cigarettes brought in by visitors and returning local residents at the entry points, substantial quantities of dutiable cigarettes continued to be smuggled into Hong Kong from China by vehicles and small vessels. This resulted in a serious proliferation of the illegal sale of dutiable cigarettes in markets and other outlets. Enforcement action was stepped up to prevent these activities and, as a result, 1842 cases were detected and 15 million cigarettes with a duty potential of $8 million were seized.

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Anti-Narcotics Operations

The department plays an important role in the prevention and suppression of illicit trafficking in narcotic drugs. Apart from suppressing the illicit trafficking of drugs locally, the department also exchanges intelligence and co-operates closely with other Customs administrations and law enforcement agencies in the fight against drug traffickers at the international level.

      During the year, the department prosecuted 998 persons for drugs offences and seized 103 kilograms of heroin, 25 kilograms of opium and 73 kilograms of cannabis.

Recovery of Drug Trafficking Proceeds

The department has a responsibility for enforcing the Drug Trafficking (Recovery of Proceeds) Ordinance which is an effective tool in confiscating assets derived from drug trafficking.

During 1992, the department successfully obtained four court orders prohibiting dealing with realisable properties amounting to $14.6 million which were suspected to be connected with drug trafficking offences. Three cases were concluded with the confiscation of drug proceeds totalling $0.1 million.

Anti-smuggling and Import and Export Controls

In 1992, the department detected 778 smuggling cases under the Import and Export Ordinance, arrested 1 052 persons and seized $223 million worth of goods.

Smuggling between Hong Kong and China remained prevalent in 1992. Smuggling by sea, especially in Tolo Harbour, was particularly serious in early 1992. In May, in order to stop this, the Joint Police/Customs Anti-smuggling Task Force installed a 1.3 kilometre floating boom across the mouth of Tolo Harbour. Since the erection of the boom, smuggling activities have been contained.

       In addition to these measures, two legislative amendments, namely the Import and Export (General) Regulations (Amendment of Schedules) Order 1992 and the Import and Export (Carriage of Articles) Regulations (Amendment of Schedule) Order 1992, were introduced in May 1992 to control the import and export of left hand drive vehicles and of outboard engines exceeding 150 horsepower, and the carriage of outboard engines exceeding 150 horsepower by vessels under 250 tons respectively.

Strategic Commodities

To tighten the control of strategic commodities, the Import and Export (Strategic Commodities) (Amendment) Regulations 1992 came into effect in May 1992. Licensing control on the import and export of strategic commodities was extended to include certain articles capable of being used in connection with chemical, biological or nuclear weapons, in so far as the importer or exporter knows that they will be used, or suspects that they might be used, for those purposes. The list of controlled articles was also expanded by including certain biological agents.

Customs Co-Operation Council

The Customs Co-Operation Council (CCC), of which Hong Kong is a member, was originally established to improve and rationalise international Customs operations and facilitate international trade. The Customs and Excise Department has assisted the CCC to

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run a regional liaison office established in Hong Kong since December 1987. This is a central body, primarily for the co-ordination, analysis and dissemination of intelligence on Customs fraud and drug-related matters within the Economic and Social Commission for Asia and the Pacific Region.

Enforcement of Intellectual Property Rights Protection Legislation

The Customs and Excise Department investigates complaints relating to infringement of copyright and trade marks as well as false trade descriptions. Apart from maintaining close liaison with overseas enforcement authorities and with the owners of copyright and trade marks in the fight against counterfeiting and piracy, government officers have also been sent to international conferences and seminars on intellectual property rights protection.

The piracy of computer software and video tapes was contained significantly by the department's continued enforcement action. A new type of piracy of TV games emerged in 1992. Large quantities of infringing TV games and printed circuit boards were seized from various retail outlets and TV games centres with a total value of $37.80 million.

In suppressing illicit trade in counterfeit and falsely-labelled goods, seizures amounting to $193.40 million were recorded in 1992. Great attention was paid to the eradication of local manufacturing and distribution centres. Efforts were also made to eliminate retail outlets for fake watches, leatherware and clothing articles.

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 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 3 102 complaint cases, after being satisfied that each case had been thoroughly and impartially investigated by CAPO. Arising from the reviewing of these complaint cases, the committee proposed a number of changes to police practices, procedures and instructions, with a view to improving the overall effectiveness of the complaint system and assisting 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; 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.

   The ICAC received a total of 2 276 reports of corruption allegations in 1992. Setting aside those arising from public elections, 1 167 reports concerned the private sector, which was an increase of two per cent over 1991. Another 1 032 reports were made against civil servants, an increase of six per cent compared with 1991. There were 58 reports against employees of public bodies as compared with 64 in 1991.

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      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 1992, the ICAC received 820 non-corruption complaints, 594 of which were subsequently referred to the government departments concerned.

Operations

The Operations Department receives and investigates reports of suspected corruption offences under the Prevention of Bribery Ordinance and the ICAC Ordinance and deals. with election malpractices under the Corrupt and Illegal Practices Ordinance.

      Of the 2 276 corruption reports in 1992, the majority were lodged by members of the public who either visited or telephoned the department's report centre or one of ICAC's eight regional offices; 68 per cent of them were willing to identify themselves. The year saw an exceptionally high proportion of reports which were pursuable: 1 679 reports contained sufficient information for an investigation to commence.

      The department's investigative case load remained at a high level during the year. Investigations resulted in the prosecution of 303 persons; another 167 were cautioned for lesser breaches of the law. At the end of the year 117 cases were awaiting trial and 1 001 investigations were still in progress.

      The department has completed 178 investigations arising from the 1991 public elections: 10 persons have been charged, four persons were cautioned on the advice of the Attorney General, and another 76 verbally warned for minor election offences.

      Video and audio recording of interviews with suspects are now a standard practice in the department's investigative process. All interview rooms were converted to offer video and audio recording facilities by the end of the year.

      After a comprehensive review of the Prevention of Bribery and the Independent Commission Against Corruption Ordinances, legislative changes had been introduced to bring them in line with Hong Kong Bill of Rights Ordinance. These changes have ensured that the law continues its effectiveness and the ICAC maintains its capability to investigate corruption.

      Computerisation of the department's manual records in a mainframe computer was completed in the end of the year; it has improved the department's capability to search and co-relate data.

Corruption Prevention

The Corruption Prevention Department is responsible for reviewing the practices and procedures of government departments and public bodies and recommending changes to reduce the likelihood of corruption. The department's Advisory Services Group provides free and confidential advice to private organisations on request.

      During 1992, the department carried out 95 studies of specific activities within government departments and public bodies, addressing problems related to the implementation of policies and legislation and the management control of procedures and systems.

      The department worked closely with the Immigration Department to plug any loopholes which might exist in the approval of applications for imported labour. This was complemented by a review of the labour legislation and corresponding enforcement measures to ensure compliance by employers. The department also conducted a major

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study of the inspection and verification procedures of the trade control function of the Customs and Excise Department.

The management of private multi-storey buildings had generated a sizeable proportion of corruption compliants. In conjunction with the City and New Territories Adminis- tration, the department introduced standard deeds of mutual covenant and produced a handbook advising owners' corporations on building management. It also assisted in reviewing the legislation in an attempt to improve the management of owners' corporations and to provide a legal framework conducive to effective building management.

The department played a consultative role in the privatisation of certain government functions and activities especially in the transport field. The main concern was to ensure that the selection criteria for tenderers were objective, and the operating procedures of the successful tenderers were free from corruption opportunities.

The department's Advisory Services Group responded to requests for assistance from 188 companies in 1992. It gave advice on ethical guidelines for employees and im- provements to system controls to prevent corruption and fraud. Also, as the number of credit card frauds increased, the group recommended measures to companies concerned to prevent the illicit release of credit card information by corrupt employees to counterfeiting syndicates.

Community Relations

The Community Relations Department educates the public against the evils of corruption and enlists their support to fight the problem; it also aims to promote higher social and business ethical standards. It works through the mass media as well as direct personal approaches for different target audiences.

The department's eight regional offices act as focal points for carrying out anti- corruption liaison work and providing preventive education services to the community.

   The department continued to place emphasis on the commercial and manufacturing sectors. Corruption prevention packages were produced for companies in the trading, real estate, hotel, property management, advertising, airline, travel and retailing industries. The packages were specially designed to help the chief executive identify corruption-prone areas in his company and to suggest preventive measures. During the year, specially-trained staff of the department established personal contacts with chief executives and senior managers of 1 820 companies to introduce these packages to them.

Using the less labour-intensive method of direct mail, the department put anti- corruption messages across to over 13 000 small trading firms during the year. This method was developed specifically to enhance liaison with the large number of small-sized firms.

A total of 58 organisations from both the private and public sectors took part in the department's Community Participation Programme under which they organised their own anti-corruption activities and received a small ICAC subsidy towards the cost of those activities.

   For government departments and public bodies, the department conducted talks and seminars for a total of 18 350 existing staff and new recruits. The objective was to inform them of the law and to enhance their awareness against bribery in the course of their duty.

   On the mass media front, in addition to a series of television, radio and press adver- tisements, advertising on buses and telephone booths was introduced to motivate the public to support ICAC's work and to report corruption offences. A television drama series

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      based on actual ICAC cases was televised during the year. The television series aimed to increase the public's understanding of ICAC's investigation work. A radio drama phone-in programme was produced with the co-operation of Radio Television Hong Kong. It provided a forum for the public to express their views on issues about corruption.

      A new package of anti-corruption teaching material has been developed by the department for launching in early 1993: the 'Onward to 21 - Life and Work Guidance Package' is designed to instil a positive attitude and a strong sense of work ethics in would-be school leavers.

International Co-operation

International inter-agency co-operation is essential if effective action is to be taken against corruption which crosses all forms of borders and boundaries. A good example was the great success in the crackdown of syndicated corruption-related crime in credit card fraud in which inter-agency cooperation was an essential element.

In March, the commissioner and heads of the ICAC's three departments delivered key speeches at the Fifth International Anti-Corruption Conference held in Amsterdam. The commissioner led an ICAC delegation to China to visit the Guangdong Provincial People's Procuratorate and the Supreme People's Procuratorate in September, and the Hainan Supervision Bureau in October for a general exchange of views and experience.

       In Hong Kong, the ICAC played host to a regional seminar on corruption-related crime in September with a view to creating a multi-agency forum within the Asia-Pacific region for discussion of particular operational problems which have regional or global implica- tions. The seminar was attended by 16 overseas delegates from six countries. During the year, the ICAC also received 65 visitors from law enforcement agencies of various countries, including the United Kingdom, the United States of America, Australia, China, Egypt, Zambia and Tanzania.

       On the investigation side, the Operations Department sent its officers overseas on more than 118 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 comprises seven 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.

       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.

      Members of the public can lodge formal complaints against ICAC officers to an ICAC Complaints Committee comprising eight members, among who are five members of the

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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.

The Way Ahead

The ICAC will be reaching its 20th year of operation in 1994. While corruption is no longer a way of life as it was when the Commission was established in 1974, the community must continue to remain vigilant. Given continued public support, the ICAC is confident that the problem will be kept under control in the run-up to 1997 and beyond.

Government Laboratory

The Forensic Science Division of the Government Laboratory provides a comprehensive scientific forensic service to law enforcement departments in Hong Kong. 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. In line with its commitment for the provision of expert evidence in courts of law, the service not only encompasses a wide range of analytical tasks but also, where necessary, supplements the analytical results with informed scientific opinion on their significance. The scientific evidence can be instrumental, not only in helping law enforcement agencies and the Crown Prosecutor decide whether or not to prosecute but also in assisting the court in criminal trials at all levels. In this way, the division forms an important link between law and order and judiciary services.

   The nine specialist sections of the Division are organised into two groups. The Presumptive Evidence Group concentrates on cases involving opinion evidence, whilst the Definitive (Statutory) Evidence Group concentrates on the activities of the sections concerned with drug analysis. In addition, the division provides a 24-hour scene-of-crime service to law enforcement agencies in Hong Kong. During the year 551 crime scenes were attended with scientific evidence collected at the scenes of crime for subsequent examination.

   After three years of painstaking development, with over 600 samples profiled to establish a database for the local ethnic community, DNA profiling is now at a stage where limited casework can be undertaken for investigations where body fluid analysis is vital for the police investigation, in particular serious crime against the person, such as serial rape cases and homicide. As a new service, funding for the DNA Section has been restricted by the government austerity drive but it was still possible for more than 1 000 case-related profiles to be performed and that demands for DNA profiling will increase. Increases in both document items received and case numbers were experienced in the Questioned Documents Section and the trend is in line with Hong Kong becoming one of the world's major financial centres. The escalating trend in the number of cases involving vehicle engine or chassis number restorations has reflected the growing menance of vehicle theft in the city.

   The Definitive (Statutory) Evidence Group deals with drug analysis and forensic toxicology which are method intensive. During the year, over 5 800 biological samples, 50 000 urine samples for drug monitoring, 50 000 opiate drug samples and 28 000 non- opiate drug samples were examined. Overall the group has encountered increasing numbers

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of a wider range of drugs. For example, in late 1991-early 1992 there was an emergence of heroin laced with methylamphetamine, two drugs of opposite physiological effect, one a narcotic analgesic, the other a central nervous stimulant. The advantage of automated analytical systems has been recognised and assay of heroin is now fully automated. In addition, considerable efforts have been directed towards improving work flow and intelligence gathering by the use of computers so that drug trends can be more closely monitored and the relevant authorities more quickly alerted and appropriate legislation eventuated to control any changing drug abuse situation.

In December the Forensic Science Division vacated its dispersed Police Headquarters locations to join its sister division, Analytical and Advisory Services, in a new custom-built Government Laboratory complex, in Ho Man Tin. The co-ordination of resources and vastly improved facilities resulting from the move will herald a new era in the progress of forensic analysis in Hong Kong.

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 and terrorists are detected and refused entry into Hong Kong. In 1992, 21 662 such travellers and persons not in possession of proper documentation were refused permission to land and 2 477 persons were refused visas.

Detection of Forged Travel Documents

      During the year, a total of 2 840 forged travel documents were detected, representing an increase of 1.68 per cent on the 2 793 in 1991.

       Sustained efforts were required to guard against the upsurge in the use of forged travel documents by illegal immigrants and travellers. Intelligence on forgery was collected and quickly disseminated. There was frequent contact with other local and overseas law enforcement agencies and consulates, and special operations are mounted against forgery syndicates.

Interception of Wanted Persons

      During the year, 101 055 persons were intercepted at immigration control points and immigration and registration of persons offices. Of these, 654 were wanted in connection with murder cases, 4 373 were suspected robbers, 52 455 were involved in the trafficking of dangerous drugs and 36 403 were involved in other criminal offences. In addition, 239 known or suspected terrorists were identified at points of entry.

Illegal Immigration

The availability of employment opportunities in Hong Kong continued to attract large numbers of illegal immigrants to the territory. The lower wages accepted by those immigrants encouraged unscrupulous employers to offer them employment. Frequent checks were therefore conducted at target locations, including construction sites, factories, restaurants and other places of employment. Illegal immigrants arrested at these places were prosecuted and sentenced to imprisonment before they were repatriated to their

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places of origin. Employers of illegal immigrants, including principal contractors in the construction industry, were also prosecuted and fined and, in serious cases, custodial sentences were imposed. In addition, publicity has emphasised that there will be no amnesties.

In 1992, a total of 43 096 illegal immigrants were apprehended and repatriated. This represents an increase of 28.01 per cent on the 33 667 in 1991.

Investigation and Prosecution of Immigration Offences

During the year, a total of 6 639 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.

Deportation and Removal

The Immigration Department is responsible for the application, issue and execution of deportation and removal orders. During the year, 6 188 persons who were convicted for possession or trafficking in dangerous drugs, deception, theft and other criminal offences were considered for deportation, and consequently 199 were deported. In addition, 4 746 persons were removed from Hong Kong under removal orders. These included 4 400 illegal immigrants and 346 persons who had breached their condition of stay.

Fire Services

It was again a busy and eventful year for the Fire Services Department which responded to 27 810 fire calls, 17 056 special service calls, 251 058 emergency and 172 924 non-emergency ambulance calls.

The fires caused 43 deaths and 573 people injured, including 32 firemen. A total of 22 347 people were rescued by Fire Services personnel during the year.

Fire Prevention

The department is responsible for formulating and enforcing fire safety regulations. It also advises and assists the community on fire protection measures and abatement of fire hazards. Besides updating and reviewing existing fire safety legislation and Codes of Practice, the Fire Protection Bureau places great emphasis on public education concerning fire prevention. In addition to a major publicity campaign, fire officers gave 409 lectures/ talks during the year to a total audience of 17965 from different sectors of the community, including students. These were supplemented by exhibitions and demons- trations aimed at educating the public on fire safety. The department is also responsible for research on matters associated with fire safety. A total of 5 018 fire hazard complaints were received from members of the public in 1992. There is a growing public concern about fire hazards and an increasing awareness of the services provided by the department. Fire Services personnel made 74 489 inspections of all types of premises and issued 4 473 abatement notices for the removal of fire hazards. There were 523 prosecutions during the year for non-compliance with abatement notices and for summonses, resulting in fines amounting to about $1.8 million. Furthermore, direct prosecutions on obstruction to means of escape and indiscriminate blocking of fire exits in buildings amounted to 210 convictions with total fines of $0.8 million.

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Plans for new buildings are vetted by the department, and during this process requirements for built-in fire protection are specified and advice is given. Some 7 100 submissions of building plans were processed during the year.

Upon the enactment of the Hotel and Guesthouse Accommodation Ordinance and the Clubs (Safety of Premises) Ordinance in 1991, six fire protection officers were deployed to assist the controlling authority, the Secretary for Home Affairs, in the licensing process on fire safety matters. In 1992, a total of 776 and 1 685 inspections were made by fire officers to hotels/guesthouses and club establishments respectively. Requirements to upgrade fire safety measures in these premises to current standards were also issued.

Ambulance Services

The Ambulance Service, staffed by 2 063 uniformed personnel and 153 civilians, operates 281 ambulances and ambulance-aided motorcycles from 29 depots/stations throughout the territory and from many fire stations.

During the year, the service handled a total of 423 982 emergency and non-emergency calls providing assistance to 546 352 people, representing an average of 1 158 calls per day.

       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 radio/telephone patching system was installed in the Fire Services Communication Centre to enable interactive communication between ambulances and major hospitals.

A group of ambulance personnel were trained in the use of automatic advisory defibrillators to handle patients/casualties suffering from heart attacks. Since December 1991, all ambulance-aid motorcycles have been equipped with defibrillators.

       Plans have been formulated to enhance the standard of ambulance service to paramedic level. Two ambulance officers have been sent to the Academy, Institute of Justice, British Columbia, Canada, for paramedic training. These officers will be involved in the planning of locally-organised paramedic training courses.

       With a view to better utilising ambulance resources, the department is planning to hive off the non-emergency ambulance service to the Hospital Authority in phases.

Appliances and Workshops

The department has some 700 modern operational appliances and vehicles fitted with up-to-date fire-fighting and rescue equipment to ensure that fast and efficient fire-fighting and rescue operations can be carried out. During the year, 50 new or replacement appliances and vehicles of various kinds were put into service.

The department is constantly evaluating new products from different parts of the world to see if they can be used locally. A new type of pumping appliance, which has excellent road holding characteristics and exceptional manoeuvrability, will be introduced to Hong Kong.

To maintain its fleet of fire appliances and rescue equipment in an effective and satisfactory condition, the department operates four workshops - one each on Hong Kong Island, and in the New Territories, and two in Kowloon.

Communications

The computer based mobilising and communication system installed in the Fire Services Communication Centre enables rescue and ambulance resources to be mobilised efficiently

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and effectively. This system assists the department to respond to about 85 per cent of all fire calls within the prescribed graded response time and to about 91 per cent of all emergency ambulance calls within the target travel time.

Staff Training

The Fire Services Training School at Pat Heung, New Territories, provides initial training for all ranks except senior firemen/firewomen (control) in the Mobilising and Commu- nications Group. In August 1992 a new Ambulance Training School at Ma On Shan in Sha Tin was established and took over the training of ambulance personnel. The various training courses range from three to 26 weeks in duration.

During the year, 272 recruits comprising 48 station officers, five senior firemen (control), seven senior firewomen (control), 167 firemen and 45 ambulancemen successfully completed their initial training.

The Fire Services Training School also provides training to 525 staff of other government departments and private organisations on basic fire-fighting and the use of breathing apparatus. In response to requests from fire services of other countries, the school also provides training for their officers.

To meet operational needs and for career development purposes, 12 officers were sent to the United Kingdom, the United States, Canada and Japan for management and professional training. In-service training is provided for 216 fire and 1001 ambulance personnel. The Driving Training School conducted appliance driving and operation courses for 1 476 officers and other ranks during the year.

Establishment and Recruitment

As at the end of 1992, the establishment stood at 7 228 and 728 for uniformed and civilian staff respectively. The department continued its recruitment exercises with 65 station officers, 12 senior firemen/firewomen (control) and 310 firemen being appointed. Standards are high and on average only 13.5 per cent are accepted for appointment.

Buildings and Quarters

In line with government policy to provide an emergency response to all areas within minimum set times according to the category of risk, the department continues to plan and build fire stations and ambulance depots at strategic locations to cope with local developments.

During the year, Siu Lek Yuen Fire Station, Ma On Shan Fire Station, Ma On Shan Ambulance Depot and Ho Man Tin Ambulance Depot were completed to improve services in these areas. There are now 63 fire stations, 29 ambulance depots/stations and five fireboat stations in the territory. Planning is in hand for the provision of about 980 additional married quarters for firemen and ambulancemen.

Correctional Services

The Correctional Services Department administers a wide range of programmes for both adult and 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 migrants.

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At the end of 1992, 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 one in Queen Elizabeth Hospital and six detention centres for Vietnamese migrants. Policy guidance and administrative support is provided from its headquarters. There were 7 070 staff looking after 11 207 inmates, 32 746 Vietnamese migrants, and 3 256 persons under after-care supervision.

During the year, the number of Vietnamese migrants gradually decreased as a consequence of the implementation of the Orderly Return Programme and there was a decline in the number of Chinese illegal immigrants in custody. The workload of the department in managing Vietnamese migrants however remains heavy. This is due to taking over the management of some 6 500 Vietnamese migrants from the police-run Sek Kong Detention Centre.

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. 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 training centre 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

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  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 then increasing number of illegal immigrant prisoners. During 1992, the general overcrowding was slightly eased.

   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 two to 12 months depending on their progress. In-centre treatment is followed by 12-months statutory after-care supervision.

Male addicts are treated at Hei Ling Chau Addiction Treatment Centre 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 employment and accommodation. Temporary accommodation is available at the New Life

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      House, a halfway house for those who are in need of such support immediately following release.

Young Offender Assessment Panel

The Young Offender Assessment Panel, comprising staff from the 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.

Skill training programmes have also been introduced on a voluntary basis 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.

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 to specialist clinics in public hospitals. Those requiring hospitalisation are usually kept in custodial wards in public hospitals under the charge of correctional services officers.

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.

Ante-natal and post-natal care is provided within institutions for female inmates but babies are normally delivered in public hospitals.

In addition to the custodial ward at Queen Mary Hospital, the department took over the security management of the custodial ward at Queen Elizabeth Hospital in June 1992. Although HIV/AIDS is still not a problem among the penal population, the department is committed to a programme of education and prevention.

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Psychological Services

 Clinical psychologists and specially-trained officers provide a wide range of counselling services for 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, 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.

Inspectorate and Management Services

The Department's Inspectorate and Management Services Division provides support to continuously refine and develop departmental strategy and policy on penal management functions. The division consists of three units each tasked with the responsibility to systematically review and streamline procedures, rules and regulations; to conduct inspections and to monitor activities in penal institutions; and to redress grievances and investigate complaints lodged by the prisoners and the public as well as correctional services staff.

After-care Services

After-care services are provided to inmates discharged from training, detention and drug addiction treatment centres, and to young prisoners, also including adult prisoners who participate in the Release Under Supervision and Pre-Release Employment Schemes. The primary objective of after-care is to assist offenders in their rehabilitation and re-integration into the community. It also plays an essential role in enhancing their determination in leading an industrious and law-abiding life upon discharge.

  After-care commences immediately after the admission of an inmate into an institution. Each inmate is assigned to the care of an after-care officer who will provide him with adequate support and guidance enabling him to adapt 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 upon release.

  Regular contacts with the ex-inmates are 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.

  Under the provisions of the Prisoners (Release Under Supervision) Ordinance, prisoners, other than those serving life sentences or subject to deportation upon discharge, who have

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served not less than half or 20 months (whichever period is the longer) of a sentence of three years or more may apply to join the Release Under Supervision Scheme for the remaining portion of their sentences; and those who are serving sentences of two years or more and are within six months of completing their sentence after taking into consideration remission, may apply to join the Pre-Release Employment Scheme. Following approval by the Release Under Supervision Board, successful applicants then go out to 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 sentences in an open environment under close supervision. Prisoners who breach supervision conditions may be recalled to serve the remainder of their sentences.

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 1992, the annual success rates were 93 per cent for detention centre inmates, 71 per cent for male training centre inmates, 92 per cent for female training centre inmates, 77 per cent for young male prisoners, 100 per cent for young female prisoners, 64 per cent for male drug addiction treatment centre inmates, 72 per cent for female drug addiction treatment centre inmates, 100 per cent for Release Under Supervision Scheme and 100 per cent for Pre-Release Employment Scheme.

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 public organisations.

       All convicted prisoners who are medically fit are required by law to work six days per week. 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 doing 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. Other trades 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 $300 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.

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.

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   The department now manages six centres for Vietnamese migrants who are held pending their screening procedure or repatriation arrangement. 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.

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.

Staff Training

The department's Staff Training Institute is responsible for the planning and implementation of training programmes for both new and serving officers. All recruit officers and assistant officers must undergo a Basic Training Course 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-orientated courses are provided throughout the year for serving officers to update their professional knowledge, to prepare for promotion and to 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.

Non-Government Organisations

A number of organisations assist the department in providing services to help ex-prisoners reintegrate into the community. These organisations include the Society for the Rehabilitation of Offenders, Hong Kong Caritas Lok Heep Club and the Christian Kun Sun Association who provide a wide range of services, such as case work, counselling, hostel accommodation, employment guidance, recreational activities as well as 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 departments tackling emergency situations. The CAS is financed by the government and has an establishment of 3 818 uniformed and disciplined adult volunteers, 3 232 cadets and 126 permanent staff.

Role and Responsibilities

With a 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 Vietnamese detention centres; 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.

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Civil Duties

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 Migrant Duties

The CAS permanent staff and volunteers are presently required to manage two Vietnamese Centres, namely the New Horizons Vietnamese Refugee Departure Centre for Vietnamese refugees who have been accepted for resettlement overseas and the Kai Tak Vietnamese Migrant Transit Centre for Vietnamese migrants who have volunteered for repatriation to Vietnam, pregnant Vietnamese women pending delivery, together with their accom- panying relatives from detention centres elsewhere and other Vietnamese migrants lodged temporarily while seeking medical treatment/advice or other facilities.

The work in the centres is both physically and psychologically exhausting. Duties are performed under demanding and difficult conditions. Much dedication and patience is required of those involved.

The CAS has been capable of meeting all demands encountered in this area thus far. CAS volunteers have been involved in dealing with the Vietnamese migrant problem since 1975 and continuously since 1988. This work will continue for the foreseeable future.

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 services. The centralised courses in 1992-3 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 was organised for both permanent staff and volunteer officers. In 1992, one officer attended the Asian Disaster Preparedness Centre in Bangkok, Thailand, for disaster management training and two officers were attached to the Royal Air Force in the United Kingdom to undergo advanced Mountain Rescue Training. A contingent of senior CAS Officers was invited to visit the Civil Defence establishment in Shanghai in April 1992 to study the disaster management technology in China.

Cadet Corps

The Cadet Corps is divided into three girl units, 24 boy units and five 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 1992, four cadets qualified for the Gold Award, 20 for Silver Awards and 72 for Bronze Awards. At 18, the cadets leave the corps and may join the Adult Services.

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Royal Hong Kong Auxiliary Air Force

The Royal Hong Kong Auxiliary Air Force (RHKAAF), based at Kowloon Bay, 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. Two Sikorsky Blackhawk helicopters were delivered in January 1993 to provide specialist flying support to the police. With an establishment of 226 permanent staff and 47 part-time volunteers comprising aircrew, engineers and administrative staff, the RHKAAF can operate round-the-clock for seven days a week during an emergency. Over 6 152 hours were flown during the year.

In 1992, the RHKAAF responded to 898 requests for emergency medical evacuation and rescue. 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 127 search and rescue operations were carried out, involving helicopters and fixed-wing aircraft. During the dry season, the helicopters assisted in 113 fire-fighting operations and dropped over 1345 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 6 768 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.

  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.

The Royal Hong Kong Auxiliary Air Force, one of Her Majesty's Commonwealth Air Forces, disbanded on March 31, 1993 and on April 1, 1993 was re-established as the Hong Kong Government Flying Service and become a full-time civilian disciplined Force providing flying services to the Hong Kong Government under civil aviation legislation.

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TRAVEL AND TOURISM

      HONG KONG'S outbound travel business is operated 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 regulation of the outbound 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 seven association members: Hong Kong Association of Travel Agents Limited; Federation of Hong Kong Travellers Limited; International Chinese Tourist Association Limited; Society of International Air Transport Association Passenger Agents Limited; Hong Kong Taiwan Tourist Operators Association Limited; Hong Kong Association of China Travel Organisers Limited; and Hong Kong Outbound Tour Operators' Association 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.

       Outbound travellers on tours are covered by a scheme that offers a high degree of protection. Formerly, a one per cent levy was raised on all outbound tour fares to make up the Travel Industry Council Reserve Fund, which was established in 1988. If a licensed travel agent should collapse, outbound travellers might claim compensation from this fund for up to 70 per cent of tour fares paid. A recent review of the regulatory scheme recommended a reform package which included a split of the levy into two: a 0.15 per cent levy for the council in recognition of its self-regulatory efforts and a 0.85 per cent levy for the reserve fund for compensating aggrieved travellers. In addition, the review recommended that when the reserve fund had accumulated $100 million, the compensation rate to eligible outbound travellers would be revised upwards to 80 per cent of tour fares paid and the levy for the reserve fund would be reduced to 0.35 per cent. Whenever the reserve fund fell below $70 million, the levy for the reserve fund would be increased to 0.85 per cent and would stay at this level until the fund reached $100 million again. The review also recommended the reconstitution of the fund into an independent statutory body to enhance its public accountability and transparency. Part of the reform package has been implemented. Full implementation of the package shall await enactment of the Travel Agents (Amendment) Bill 1992 which was introduced into the Legislative Council on October 14, 1992.

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  In 1992, there was no travel agent failure. The reserve fund increased by $30,723,112 in 1992 and had a balance of $118,248,957 at the end of the year. The fund has paid out $12,709,093 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. Recovering from the effects of the Gulf War a new record number of visitors, some 7.0 million, came to Hong Kong in 1992, an increase of 15.5 per cent over the previous year. Tourism earnings registered an increase of 20.0 per cent in 1992, reaching a total of $47.5 billion.

Hong Kong remained Asia's most popular travel destination. The biggest growth in visitors in recent years has been from the neighbouring countries in the Asian region, notably Taiwan and Japan, which accounted for 23.4 per cent and 19.0 per cent respectively in 1992, as well as South-East Asia (17.4 per cent) and South Korea (2.8 per cent). Visitors from Western Europe, the United States/Canada and Australia/New Zealand accounted for 13.6 per cent, 12.5 per cent and 4.4 per cent respectively.

To cater for the accommodation needs of the continuing growth of visitors to Hong Kong, six new hotels opened in 1992, bringing the total number of rooms available in Hong Kong to 33 400.

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 1992, the association had 1778 members, comprising air- lines, hotels, travel agents, tour operators and retail, restaurant and other visitor service establishments.

The HKTA maintains two information and gift centres: at the basement of Jardine House and at the Kowloon Star Ferry concourse. In addition, it operates two information counters at Hong Kong International Airport at Kai Tak. Together, these centres assisted 2.2 million visitors in 1992.

The association also operates a general information telephone service in nine languages for visitors in Hong Kong and a special shopping information service. Together, these lines handled enquiries from 59 000 visitors in 1992.

During the year, a new 'Infofax' service was introduced, expanding further HKTA's information service worldwide. The service gave members of the local and overseas travel trade and consumers access to information on sightseeing, shipping, dining, special interest activities and a calendar of events. The association also distributed some 9.5 million pieces of literature in 12 languages to visitors on arrival.

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The HKTA has built up a network of 17 overseas offices through which overseas marketing of Hong Kong as a travel destination is primarily undertaken. It also has agreements with Cathay Pacific Airways Ltd. whereby the airline acts as the association's information agent in an additional 42 cities around the world.

       The year 1992 continued to be an active year for the HKTA. It headed Hong Kong delegations to 13 major travel trade events overseas, including the World Travel Market in London and International Tourism Bourse in Berlin. It also participated in Festival Hong Kong '92 in Canada to promote Hong Kong as a travel destination to potential visitors from that market. The association was involved in a travel agency window display contest, a Hong Kong carnival, travel trade seminars, a Hong Kong food festival, dragon boat races and department store promotions.

      In conjunction with such other travel industry partners as the Hong Kong Hotels Association and airlines, the HKTA carried out various marketing campaigns overseas. They included: a South-East Asia roadshow to Bangkok, Singapore, Kuala Lumpur, Jakarta and Manila; a Hong Kong/Macau 'update seminar' in five Japanese cities; and a Hong Kong travel mission to Taiwan.

       Familiarisation visits to Hong Kong were arranged for 4 160 travel agents and a further 640 visiting travel trade personnel were briefed to encourage them either to include Hong Kong in their itineraries or to extend the Hong Kong portion of their Far East packages. In addition the association assisted 1430 overseas media representatives with their coverage of Hong Kong. For example 66 food writers and members of television crews were brought in to cover the 1992 Hong Kong Food Festival, resulting in extensive overseas publicity for Hong Kong's culinary attractions.

      In co-operation with Cathay Pacific Airways Ltd. the HKTA initiated a Friends of Hong Kong Super C