Hong Kong Yearbook - Annual Report for the Year 1993

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HONG KONG 1994

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香港公共圖書館

HON

KONG

NG KONG PUBLIC LIBRAR

市政局公共圖書館 UCPL

3 3288 01859442 6

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HONG KONG 1994

Editor:

Designers:

Photography. URBAN COUNCIL PUBLIC LIBRARIES

85/-25

Renu Daryanani

Government Information Services

Everett Lee

Liu Chiu-tsan

Government Information Services

Stone Chiang, Augustine Chu, David Ho, Au-yeung Yiu-man and

ther staff photographers.

Other photographs by arrangement with Neil Pryde Ltd,

South China Morning Post,

Chinese University of Hong Kong and

Hong Kong University of ence and Technology

Acc

NO 1407261

Class

Author

HON

HKCr

Special Contributor:

Sir David Ford (Chapter 1)

Statistical Sources:

Census and Statistics Department

The editor acknowledges all contributors and sources.

Copyright reserved

Code No.: F30019400E0 (ISBN 962-02-0139-6)

Price: HK$60.00

US$26.00 UK £19.00

Cover: Central Plaza, Asia's tallest building, stands out in the constantly changing skyline of Hong Kong Island.

Frontispiece: Hong Kong and its environs in 1846, as seen from the Anchorage by Lieutenant I. G. Heath RN, of HMS Iris.

(Reproduced with the permission of the Hydrographer of the Navy.)

CONTENTS

Chapter

Page

CALENDAR OF EVENTS IN 1993

1

1

A RARE ALCHEMY

231ЯAЯ8U

9

1

2

CONSTITUTION AND ADMINISTRATION

16

3

THE LEGAL SYSTEM

4

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

༈ncrnaf

38

47

5

THE ECONOMY

50

6

FINANCIAL AND MONETARY AFFAIRS

64

7

INDUSTRY AND TRADE

85

8

EMPLOYMENT

9

PRIMARY PRODUCTION

123

10

EDUCATION

129

11

HEALTH

153

12

SOCIAL WELFARE

174

13

HOUSING

187

14

LAND, PUBLIC WORKS AND UTILITIES

200

15

TRANSPORT

233

16

THE AIRPORT CORE PROGRAMME

255

17

PORT DEVELOPMENT

265

18

PUBLIC ORDER

270

19

TRAVEL AND TOURISM

306

20

THE ARMED SERVICES

311

21

COMMUNICATIONS AND THE MEDIA

315

22

RELIGION AND CUSTOM

334

23

RECREATION, SPORTS AND THE ARTS

339

24

THE ENVIRONMENT

377

25

POPULATION AND IMMIGRATION

410

26

HISTORY

417

APPENDICES

426

INDEX

499

ILLUSTRATIONS

Between pages

8-9

Events I

Events II

Industries

48-49

96-97

Tourism

128-129

Buildings

208-209

Ships and Boats

240-241

Festivals

336-337

Fun

368-369

END-PAPER MAPS

Front:

The Territory of Hong Kong

Back:

Hong Kong's External Trade

APPENDICES

1

2-5

6

Appendix

UNITS OF MEASUREMENT

CONSTITUTION AND ADMINISTRATION

OVERSEAS REPRESENTATION

Page

428

433

439

7-11

THE ECONOMY

444

12-14

FINANCIAL AND MONETARY AFFAIRS

454

15-16

INDUSTRY AND TRADE

460

17-20

EMPLOYMENT

465

21-23

PRIMARY PRODUCTION

470

24-27

EDUCATION

472

28-31

HEALTH

474

333 33

32

SOCIAL WELFARE

477

HOUSING

483

34-36

LAND, PUBLIC WORKS AND UTILITIES

484

37-38

TRANSPORT

487

39-42

PUBLIC ORDER

490

43

COMMUNICATIONS AND THE MEDIA

495

44

RECREATION, SPORTS AND THE ARTS

496

45

THE ENVIRONMENT

497

46

HISTORY

498

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

*

*

*

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

1.1

12.1

13.1

15.1

21.1

28.1

1.2

4.2

19.2

24.2

CALENDAR OF EVENTS IN 1993

Twenty-one people are trampled to death during crowd revelry at Lan Kwai Fong, Central, where thousands gathered to welcome in the New Year. The Governor, the Right Honourable Christoper Patten, orders an immediate inquiry and appoints a High Court judge to recommend ways to prevent similar tragedies.

The government announces that the Bank of China will become the third note-issuing bank in Hong Kong in May 1994.

A motion to withdraw the government's political reform proposals is defeated in the Legislative Council.

Cathay Pacific flight attendants strike over a staff deployment and pay adjustment dispute. Air traffic during the Lunar New Year is seriously disrupted before the strike is called off on January 30.

The Governor opens the $400 million Island East Refuse Transfer Station, part of a multi-billion dollar long-term waste management strategy.

A Compendium of Proposals on the 1994-95 elections is published. It includes 65 written submissions received since October 7, 1992, when the Governor announced proposals on constitutional development.

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

A $2.6 billion contract is signed for the West Kowloon Reclamation, one of the major projects in the Airport Core Programme.

A Provisional Governing Council is appointed to prepare for the formal establishment of a new institute of education, the Hong Kong Institute of Education.

Legislative Councillors elect fellow member, Mr John Swaine, as President of the council.

Hong Kong signs a new air services agreement with Sri Lanka.

URBAN COUNCIL PUBLIC LIBRARIES

REFERENCE LIBRARY

1

2

CALENDAR OF EVENTS IN 1993

25.2

26.2

27.2

3.3

5.3

12.3

16.3

19.3

26.3

30.3

31.3

1.4

2.4

The government approves a package of measures, recommended by the Education Commission Report No. 5, for improving the quality of education in primary and secondary schools.

An $856 million contract is awarded for the construction of the Cheung Ching Tunnel on the Tsing Yi Island section of Route 3, a key element in the Airport Core Programme's highway network.

A record price of $9.5 million is paid for the vehicle registration number '2' in a government auction, the proceeds of which are used for charitable

purposes.

Financial Secretary, Mr Hamish Macleod, presents the 1993-94 Budget in the Legislative Council, which provides for real increases of more than seven per cent in recurrent expenditure on social welfare, health and education. The Governor leaves for a two-day visit to Japan to meet government officials and business leaders. He also addresses the ninth annual meeting of the United Kingdom-Japan 2000 Group at Awashima, where Hong Kong is featured as a major agenda item for the first time.

The Electoral Provisions (Miscellaneous Amendments) Bill 1993, which sets out in legislative form various proposals in the constitutional package in the Governor's address to the Legislative Council in October 1992, is published in the Government Gazette.

The University of Hong Kong, the territory's oldest tertiary institution, celebrates the 80th anniversary of its foundation day.

A Charter for Youth is introduced, proclaiming principles and ideals for youth development with the aim of giving young people the best possible opportunities in life.

The Tin Shui Wai new town is opened by the Governor. The first phase of the development covers 169 hectares and will provide homes for some 135 000 people by 1995.

Hong Kong is ranked sixth in global foreign exchange market activity in a report by the Bank of International Settlements.

The Governor leaves for a visit to Brussels and London. It is his first visit to Brussels as Governor.

The Royal Hong Kong Auxiliary Air Force is formally disbanded and succeeded by the Government Flying Service.

The Hong Kong Monetary Authority is formally established, by merging the Office of the Exchange Fund and the Office of the Commissioner of Banking.

The government publishes a consultative paper on the findings of the Railway Development Study, which presents proposals for the further development of Hong Kong's railway system up to 2011.

CALENDAR OF EVENTS IN 1993

16.4

22.4

30.4

2.5

4.5

7.5

12.5

18.5

29.5

31.5

2.6

The Council for the AIDS Trust Fund is appointed, to advise on the management and disbursement of a special trust fund to provide assistance to those infected with AIDS and to enhance awareness of AIDS prevention. Sino-British talks open in Beijing on the arrangements for the 1994-95 elections in Hong Kong. The talks stretch to 17 sessions, totalling more than 150 hours.

A $2.27 billion contract is awarded for the construction of the Kwai Chung Viaduct section of Route 3.

The Governor begins his first visit to the United States as Governor of Hong Kong, during which he meets President Bill Clinton to discuss trade and the economic relationship between Hong Kong and the United States. Secretary for Security, Mr Alistair Asprey, leaves for a seven-day visit to Vietnam to discuss the return and reintegration of Vietnamese non-refugees. Hong Kong signs a mutual recognition agreement on laboratory accreditation with the Netherlands. The agreement, which covers laboratory testing standards, will facilitate the access of exports between the two territories.

The Sino-British Land Commission holds its 27th meeting to discuss the 1993-94 Land Disposal Programme. The meeting, which is continued on May 11, agrees that 127.8 hectares of land should be made available during the year.

Former Prime Minister, Baroness Thatcher of Kesteven, arrives in Hong Kong for a two-day visit as guest of the Governor.

The Royal Navy moves to its new HMS Tamar headquarters on Stonecutters Island.

Legislative Councillor, Mr Stephen Cheong, passes away at the age of 51. Mr Cheong served in the Legislative Council for 12 years.

Minister of State for Foreign and Commonwealth Affairs with special responsibility for Hong Kong, Mr Alistair Goodlad, arrives in Hong Kong for a four-day visit.

The government awards a subscription television licence to Wharf Cable Limited.

A $670 million contract is awarded for the construction of the Route 3 Rambler Channel Bridge, part of the Airport Core Programme highways network.

The first integrated chemical waste treatment facility in the Asia-Pacific region opens on Tsing Yi Island.

Twelve people are killed when a passenger hoist collapses at a construction site in North Point.

3

4

CALENDAR OF EVENTS IN 1993

4.6

5.6

6.6

8.6

11.6

21.6

23.6

30.6

1.7

5.7

7.7

9.7

14.7

The Sino-British Airport Committee meets in Hong Kong, to continue discussions on the financial arrangements for the new airport projects. Three further meetings are held during the year.

Secretary for Health and Welfare, Mrs Elizabeth Wong, leads a government delegation to the Ninth International Conference on AIDS in Berlin.

The last group of 175 recruits of the Royal Hong Kong Regiment (The Volunteers) pass out. The regiment will be disbanded in 1995.

The government announces arrangements for a new housing scheme to help middle-income families buy their own homes.

Hong Kong Monetary Authority Chief Executive, Mr Joseph Yam, represents Hong Kong at the annual meeting in London of the Central Bank Governors, hosted by the Bank of England.

The Sino-British Joint Liaison Group holds its 26th meeting in Hong Kong to discuss arrangements for the smooth transfer of sovereignty over Hong Kong in 1997. The 27th and 28th meetings are held in Beijing and London on September 14 and December 7, respectively.

A $3.2 billion contract is signed for the West New Territories Landfill, the first of three strategic large-capacity landfills to be developed under Hong Kong's long-term waste management strategy.

The government announces arrangements for the implementation of the Home Secretary's decision to allow Hong Kong British Dependent Territories Citizens to retain their passports in addition to their British National (Overseas) passport.

The Governor attends a Cabinet Committee meeting in London to discuss the way forward in the Sino-British talks on the political development in Hong Kong.

The Telecommunications Authority is set up to oversee all aspects of the regulation of telecommunications services in Hong Kong.

Twenty senior civil servants attend the first seven-week China studies course at Beijing's Qinghua University.

The 30 000th Vietnamese illegal immigrant returns home under the UNHCR's Voluntary Repatriation Programme.

Hong Kong becomes the first major city in the world to have a completely digital telephone network.

Secretary of State for Foreign and Commonwealth Affairs, Mr Douglas Hurd, arrives in Hong Kong, after a visit to Beijing.

A medical services consultative document, 'Towards Better Health', is published, offering various options for health care reform including increased accessibility, more choice, better services, improved efficiency and cost-effectiveness, and simpler administration.

CALENDAR OF EVENTS IN 1993

19.7

20.7

23.7

31.7

5.8

25.8

26.8

2.9

A $1.27 billion contract is awarded for the construction of the Western Kowloon Expressway North Section.

The Privy Council makes Orders providing for the implementation of the final phase of the British Nationality Selection Scheme, and for the phased issue of British National (Overseas) passports to British Dependent Territories Citizens before July 1997.

The Ministry of Defence announces plans for the deployment of British Forces in Hong Kong between now and 1997. The garrison will be reduced in stages over this period, as local forces assume responsibility for its former operational tasks.

The government announces the establishment of the Boundary and Election Commission, an independent body to take charge of electoral matters including the delineation of geographical constituency boundaries.

The government announces the sale of Overseas Trust Bank, Limited to the Guoco Group Limited for a total consideration of $4,457 million. The sale of the bank, taken over in June 1985, marked the end of the government's efforts to rescue banks in the 1980s.

A $997 million contract is awarded for the construction of the Western Kowloon Expressway South Section.

Hong Kong's essential services mobilise, in response to a request from the Mayor of Shenzhen, to assist their Guangdong counterparts to fight a major fire at a dangerous goods storage depot at Qingshuihe in Shenzhen.

Baron Kadoorie of Kowloon in Hong Kong and of the City of Westminster, the first Hong Kong resident to be made a member of the House of Lords, dies at the age of 94.

The Green Paper on Equal Opportunities for Women and Men is released for public consultation.

A $1.72 billion contract for the first phase of the Central Reclamation is awarded by the Mass Transit Railway Corporation on behalf of the government.

A $5.7 billion contract for the construction of the Western Harbour Crossing is signed.

Container Terminal 8, which has the capacity to handle 1.8 million TEUS a year, is officially commissioned.

3.9

15.9

Hong Kong and Australia sign a new air services agreement and an agreement for the promotion and protection of investments.

21.9

Mrs Anson Chan, Secretary for the Civil Service, is appointed Chief Secretary to succeed Sir David Ford on November 29. She is the first local, female officer to be appointed to the post.

5

6

CALENDAR OF EVENTS IN 1993

22.9

23.9

24.9

26.9

30.9

1.10

4.10

6.10

11.10

15.10

16.10

26.10

Hong Kong and the Guangdong authorities sign a Memorandum of Understanding on emergency co-operation in the event of a nuclear incident at the Daya Bay Nuclear Power Plant.

A $3.5 billion contract for the Southeast New Territories Landfill is signed.

Central Plaza, the tallest building in Asia and the fourth tallest in the world, dedicates to the people of Hong Kong an innovative time piece - 'Lightime' - located at the top of the 374-metre building.

Financial Secretary, Mr Hamish Macleod, leaves for the United States to attend the annual meetings of the International Monetary Fund and the World Bank.

Torrential rain accompanying Typhoon Dot causes widespread flooding in the northwest New Territories, affecting an estimated 400 hectares of farmland. More than 300 millimetres of rain falls in 72 hours, twice the average for the whole of September.

Major proposals for Hong Kong's growth up to the year 2011 are published in a consultative document entitled 'Territorial Development Strategy Review - Development Options'.

Foreign Secretary, Mr Douglas Hurd, and Chinese Foreign Minister, Mr Qian Qichen, meet in New York to exchange views on issues including those relating to Hong Kong.

Hong Kong's first female fire-fighters join the ranks of the Fire Services, which also celebrated its 125th anniversary this year.

The Governor delivers his second policy address in the Legislative Council and outlines the priorities to meet rising public aspirations in the year ahead.

Minister of State for Foreign and Commonwealth Affairs with special responsibility for Hong Kong, Mr Alastair Goodlad, arrives in Hong Kong for a two-day visit.

The Central to Mid-Levels Escalators open for public use. The escalator system, measuring about 800 metres in length and climbing about 135 metres in height, is the longest in the world.

A 12-member delegation of the House of Commons Foreign Affairs Committee arrives in Hong Kong for a four-day visit. The trip is part of the committee's inquiry into relations between the United Kingdom and China in the period up to and beyond 1997.

Hong Kong enters the Guinness Book of Records for the largest jig-saw puzzle ever assembled. The jig-saw puzzle, measuring 21 936 square metres, was assembled by some 1 500 able and disabled young people to mark the International Day of Disabled Persons.

CALENDAR OF EVENTS IN 1993

29.10

31.10

4.11

5.11

10.11

14.11

15.11

17.11

20.11

22.11

30.11

1.12

The provisional constituency boundaries drawn up by the Boundary and Election Commission for the 1994 District Board elections are gazetted for public consultation.

Wharf Cable Limited commences broadcasting with eight cable television channels.

A China Airlines Boeing 747 jetliner from Taipei skids off the airport runway at Kai Tak into Victoria Harbour. Among the 296 passengers and crew on board, 23 passengers sustained minor injuries.

Heavy rain from Typhoon Ira causes widespread flooding and mudslips, resulting in two deaths, and disruption of water supply to 400 000 residents in Tuen Mun for four days.

The Governor attends a Cabinet Committee meeting in London to review progress of Sino-British talks held to date on the arrangements for the 1994-95 elections in Hong Kong.

A 'Hong Kong Works' conference organised by the government, in association with the Institute of Directors, is opened in London by Prime Minister, Mr John Major.

Chief Secretary (Designate), Mrs Anson Chan, launches Hong Kong '93 in Europe a major trade and economic promotion in Hong Kong's foremost trading partners in continental Europe: Germany, the Netherlands and France.

Hong Kong and Australia sign an agreement on the surrender of accused and convicted persons that will remain in force after 1997.

A delegation led by the Secretary for Trade and Industry, Mr Chau Tak-hay, attends the three-day annual ministerial meeting of the Asia-Pacific Economic Co-operation (APEC) in Seattle.

Financial Secretary, Mr Hamish Macleod, joins world leaders at the first APEC Economic Leaders Meeting in Seattle to discuss future economic development in the region.

The seventh annual conference of the Asian Association of Open Universities opens in Hong Kong. The conference attracts participants from 30 countries.

The government announces that it will license three new fixed telecommunications networks, marking an important new stage in the implementation of its pro-competitive telecoms policy.

The Legislative Council passes a resolution to establish a disaster relief fund to help victims outside Hong Kong. The $50 million fund will allow the territory to respond quickly to international appeals for humanitarian aid.

7

8

CALENDAR OF EVENTS IN 1993

4.12

9.12

10.12

11.12

13.12

17.12

29.12

31.12

A $305.9 million contract is awarded for the supply and installation of a traffic control and surveillance system on the Lantau Fixed Crossing and part of Route 3. The contract forms part of the Airport Core Programme. The Hong Kong Academy of Medicine is formally inaugurated.

The Electoral Provisions (Miscellaneous Amendments) (No. 2) Bill 1993 is gazetted. The Bill deals with the more immediate issues relating to the 1994-95 elections, including a 'single seat, single vote' system for all three tiers of geographical constituency elections; lowering the voting age from 21 to 18 years; abolishing appointed membership in the municipal councils and district boards; and relaxing existing restrictions on Hong Kong residents who are members of the Chinese People's Congresses from running for election and holding office in the Legislative Council, municipal councils and district boards.

The government announces its intention to pursue a compulsory contributory old-age pension scheme. A feasibility study will be undertaken on the subject.

Phase I of the Cheung Sha Wan wholesale food market - the first building to be completed under the Airport Core Programme is officially opened. The $504 million market is designed to handle over 370 000 tonnes of fresh foodstuffs yearly.

A ground-breaking ceremony is held for the new campus of the Open Learning Institute in Ho Man Tin.

The Housing Authority commemorates the 40th anniversary of Hong Kong's public housing programme which has so far provided homes for three million people, half of Hong Kong's population.

A $519.59 million waterworks contract - part of the North Lantau water supply project is approved for award under the Airport Core Programme. The Tian Tan Buddha, at 26.4 metres the largest outdoor bronze statue of Buddha in the world, is inaugurated at the Po Lin Monastery on Lantau Island. Monks from 13 countries are among the thousands attending the inauguration.

The Financial Secretary, Mr Hamish Macleod, is made a Knight Commander of the Most Excellent Order of the British Empire in the Queen's New Year honours list.

After a succession of records, the Hang Seng Index closes for the year at 11 888.39 points, up 115.67 per cent from 12 months earlier.

$40

ON

:

الدة الولادة

HONG KONG

WORKS

     Above: Promoting Hong Kong business interests was high on the agenda for the Governor, Mr Christopher Patten (left), seen here with the Prime Minister, Mr John Major, and Lord Young of Graffham (centre), during a Hong Kong trade conference in London.

     Preceding page: Her Royal Highness Princess Anne presents a trophy at the Royal Hong Kong Jockey Club racecourse at Happy Valley, during a visit in November.

      Hong Kong, represented by Financial Secretary Mr Hamish Macleod (second from right), was an active participant in the APEC Economic Leaders summit hosted by U.S. President Mr Bill Clinton, in November. Pictured from left are: Canadian Prime Minister, Mr Jean Chretien; the President of the People's Republic of China, Mr Jiang Zemin; Mr Clinton; Australian Prime Minister, Mr Paul Keating; the President of the Philippines, Mr Fidel Ramos; Thailand's Prime Minister, Mr Chuan Leekpai: Mr Macleod; and South Korean President, Mr Kim Young Sam.

11

U

The Governor shares a light-hearted moment with U.S. President Mr Bill Clinton, during Mr Patten's first

visit to Washington, as Governor, in May.

128

199

Baroness Thatcher of Kesteven showed keen interest in recent developments along the northern shore of Hong Kong Island when she toured the Eastern District atop a double-decker tram in May, accompanied by the Governor.

3

MALT

į

RIES

Above: The Former U.S. President, Mr George Bush, called on Mr Patten, during his visit to the territory in mid-November.

Left: The German Chancellor, Dr Helmut Kohl, leaves Government House after a meeting with the Governor on November 20.

    On her official visit to Europe in November, the Chief Secretary designate, Mrs Anson Chan, called on the President of the Senate of France, Mr René Monory.

1

RARE ALCHEMY

sonal view by Sir David Ford, KBE EVO JP. Sir David served in Hong Kong for 27 years. Chief Secretary from February 1987 to November 1993

He is now Hong Kong Commissioner in London.

FOR me, Hong Kong defines not so much a place as a people, not so much its tightly circumscribed location as the unbounded spirit of its inhabitants.

-

       When I arrived 27 years ago, my reaction was that of most people who see Hong Kong for the first time. I was bowled over by a spectacular natural harbour, around which was arrayed

even then

a no less spectacular architectural achievement. But this soon gave way to a more enduring sense of admiration for the human enterprise which projected that image across the world, to millions who may never have seen it except in the graphic representation of its unmistakable contours.

The panorama looked compelling enough on a postcard, but it was a label that, on a global dimension, aroused the greater curiosity. 'Made in Hong Kong' it declared - a simple but telling label, small and modest in its earliest appearance, and then bigger and prouder as, with increasing confidence, year after year it attached itself to product after product.

What was the source of all this abundance of every known variety of manufactured produce for which the world could conceivably find a use? The typical atlas was unhelpful to those who did not know where to start looking. One needed a magnifying glass in the right quadrant.

Finding the location instantly prompted the question. Was it conceivable that an area so small could produce so much? The answer, as the world now knows, because Hong Kong has so magnificently proved the point, is a resounding yes - if you have the right people living in it.

What then are the ingredients alloyed in the character of such a people, who have surmounted tiny territorial confines to leave their imprint upon far wider horizons?

Many elements have been identified in the composition. Business acumen, quickness of eye in recognising opportunity, willingness to venture on the outcome, mingled with endurance, determination to succeed against all odds, adaptability to circumstance and, not least, total commitment of physique and intellect to the accomplishment of the principal goal.

Though these characteristics are neither unique nor unprecedented, they have combined here, in the crucible of Hong Kong, to produce a rare alchemy. An alchemy that resists analysis, retaining its properties of toughness and imperishability, however hot the flame.

Hong Kong, when I first saw it, was in crisis. The Cultural Revolution was in full conflagration across the border and had already ignited riots in Hong Kong streets,

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threatening to engulf this tiny corner of China which history had temporarily vouchsafed to British governance. That it never did so was due as much to the good sense and resolution of the Hong Kong populace as to the steadfastness of our administration and the efforts, behind the scenes in Beijing, to avert the danger.

Crisis mainly external, mainly arising from causes beyond Hong Kong's control has never been long absent or far removed from the life of its people. Whether induced by political change, economic circumstance or natural phenomena, the risk factor is inherent in the conditioning of the Hong Kong temperament, as much to be taken into account as the daily meteorological forecast. People who live in a typhoon belt learn to build strong shutters. They know how to contain the damage and, if necessary, to rebuild and start afresh.

Change dramatic change - was thrust upon Hong Kong soon after it emerged from the Japanese occupation of World War Two. America imposed a trade embargo upon China for intervening in the Korean War, and Hong Kong, which had lived by the China trade, had to seek other means of survival. This it did through rapid industrialisation, to produce just about every product that not only America but any quarter of the world might need, or be induced to buy, even if hitherto ignorant of its existence.

   Vivid among my early impressions of Hong Kong were scenes of hastily built flatted factories, erected by the government to house the thousands of little entrepreneurs staking their hard earned and often meagre capital on their ambitions to manufacture better, faster and cheaper than their rivals. A stroll through the streets of San Po Kong or Sham Shui Po meant dodging the lorries, the baling trucks, the handcarts and the jostling, high-spirited labourers who knew what the word 'labour' stood for and were not afraid of it.

Meeting the boss of any of these factories, I would be persuaded that the arrangement was only temporary, that he would soon outgrow these rented premises and move to his own establishment. Meeting his staff, I would sense that their arrangement with him was only temporary, that they would soon acquire enough experience and capital to invest in their own factories.

Where, I wonder, have they since dispersed? Those bright, those energetic, incurably hopeful men and women with their unquenchable ambitions who typified and still typify --- our population. What fortunes have they made, and possibly lost, and made again? The spectacle I witnessed then was of apparent chaos, but it worked, and from those tiered factory tenements emerged a prodigious flow of the thermos flasks, hand-painted porcelains, shoes, textiles, torches and plastic flowers which preceded the computers, quality garments, watches, cameras and highly sophisticated electronic components of today.

   I quickly grasped the fact that where others spoke of returning home, the Cantonese of Hong Kong spoke of returning to work. The colloquial phrase faan gung (I) has precisely that meaning, placing the emphasis on the epicentre of their existence.

   This concentration on the workplace, and on work itself as the very meaning of life, accounts for the appearance of Hong Kong and the manner in which it has evolved. If the concept of 'home' was transposed into the workplace, then that other location where one snatched a few brief hours of rest had to be as close by as possible, to reduce the amount of time taken up in travelling that could be more profitably employed in productivity.

Hence the emergence of what I regard as the most remarkable urban development in the world remarkable because it has responded to the dictates of the populace, rather than

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through a random series of arbitrary decisions, as to where to put what. It was a development that took its cue from the early and in the prevailing force of circumstances, at the time necessarily very expedient rush to simply cope with the astonishing flood of refugees pouring into Hong Kong in the late forties and early fifties.

Those were the years that saw the growth of the first high-rise or perhaps, by today's standards, medium-rise residential blocks, cheek by jowl with industrial areas, where a few square feet of tiered bunk space would suffice for sleeping, so long as one had elbow room to cook and a window from which to thrust the poles of washing.

       I well remember how parties of overseas visitors would react with dismay to see whole families crowded into such confines. They had to be educated to the hard facts about Hong Kong's survival; principally, the fact that this was the only way in which our administration could provide housing for the thousands of refugees who had fled China to seek freedom and opportunity, for which they considered such basic resettlement was a small price to pay.

       That standards of housing have since improved beyond all recognition, that greater affluence has encouraged a taste for more spatial and better quality design, that old resettlement blocks have either disappeared or been extensively renovated, does not alter the underlying priority of proximity. Which, in turn, has dictated a wholly new architectural principle of development on the vertical rather than the horizontal plane, transforming Hong Kong into a multi-storeyed megalopolis where all amenities - shops, schools, recreational parks and transportation systems - are layered for instant and

convenient access.

       However, containment within the traditional urban areas around the harbour could not be achieved indefinitely. There was a limit to the miracles of hillside engineering, on the steepest of seemingly impossible slopes, that even Hong Kong could not surpass.

       And when that limit was reached, one of the greatest tasks the government had to face, back in the late sixties and early seventies, was the challenge of persuading the populace to move to the New Territories. So far from work? So removed from the whole premise of existence?

       But it had to be. It had to come. The twin cities of Victoria and Kowloon were straining at the seams. The overspill into Kwun Tong, on the north side of Kowloon Bay, and westwards to Tsuen Wan, had only temporarily allayed the demands for more industrial zones, for more and better housing.

       At that time, the last rice fields were dwindling in the backwaters of the New Territories, and agricultural land had been steadily taken over by market gardens. Fishing ports and market towns like Tai Po, Fanling, Sheung Shui and Yuen Long had survived pretty well unchanged for a century or more. I remember that Castle Peak Bay, where the tower blocks of Tuen Mun are now arrayed on reclaimed land, was largely given over to boatyards building those majestic sailing junks which have also long since departed from Hong Kong waters.

One could appreciate why the city dwellers of Hong Kong and Kowloon would look askance at the rusticity of this seldom visited hinterland.

       To entice them there, the new satellite towns would have to be the very models of ingenuity, benefiting from the lessons learned in those older urban conurbations. And above all, it was apparent that the chief objective must be proximity

everything.

of everyone to

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Conspicuous among the first of the satellites, along with Tai Po, Yuen Long and Tuen Mun, was Sha Tin, nestling at the foot of a valley where, seemingly not too long ago, rice had been cultivated for the Emperor in Beijing. Sha Tin became something of a test case, and a major publicity campaign was undertaken by its District Office and the Housing Department to lure its pioneer settlers.

albeit

Those due to be rehoused under the resettlement programme provided the frequently reluctant spearhead of this emigration, followed in due course by private developers, once it was apparent Sha Tin really was fulfilling its promise. And behind these came a wave of business and commercial investors, increasingly convinced that here indeed was an independent, self-contained, fully-serviced township, directly linked by road and rail to the older developed areas just south of the Kowloon foothills.

While architecture and infrastructure served to build the framework of the new town, building the community to inhabit it called for another kind of engineering - social rather than structural. And the government responded to this challenge by developing communal programmes and institutions that would put the pioneer settlers in touch with each other, turning strangers into neighbours and engendering a spirit of shared endeavour that marked the first step towards civic pride.

   Sha Tin served as the prototype, not only for other satellites in the New Territories but for architects and town planners from abroad to come and admire. As a major exhibition at the Frankfurt Museum of Architecture demonstrated in November 1993, what has been achieved in Sha Tin is a far cry from the nightmare visions of H.G. Wells and movie maker Fritz Lang when, earlier this century, they respectively conceived their journeys in The Time Machine and to the equally grim fantasy of Metropolis.

Sha Tin and its successors have shown that it is not only possible to house multitudes, humanely, comfortably and decently, in what might once have been regarded as impossibly confined spaces, but that people will readily choose to dwell in such conditions, in order to enjoy the convenience and the accessibility they afford.

What a tribute to the farsightedness, the care, the pride and dedication of the govern- ment planners and architects who designed such a showcase for 20th century living! Unsung public servants, operating from small back rooms away from the public spotlight, they too contracted that contagious Hong Kong infection which drives people to give unremittingly of their best. And they exemplified the spirit of a civil service that, I submit, has been crucial to Hong Kong's success.

One story, so frequently retold it has come to be regarded as apocryphal, relates how that whole development plan for the New Territories came about. It tells of a group of senior civil servants who sat around a dinner table back in the sixties, after a typically exhausting day, to pursue, informally, the problem of what could be done about the growing pressure on diminishing land supply around the main harbour. One of them unfurled his napkin and started sketching in the New Territories and its existing, but meagre, centres of population. Somebody else drew a finger from an approximate Kowloon across an imaginary mountain range and presto! "Let's take a look at that on paper in the morning."

It may not be true, but one would like it to be true, because it rings true.

Which brings me to another change enforced by altered circumstance in the aftermath of World War Two. The style of our administration has been transformed beyond recognition. What that style once was is best captured in the charming reminiscence by

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Austin Coates, Myself a Mandarin, describing days, not so long ago, when a young district officer in the New Territories would have much in common with his counterpart in colonial Africa, who dispensed justice from tent flaps and parleyed with tribal chiefs.

The subsequent influx of refugees, the sheer numbers of people settling in and around the central harbour and by now, also in the latter-day metropolises spreading in the New Territories demanded a fresh approach. It was clear that the traditional role of the district officer, with its emphasis on intimate human contact, would be impossible to sustain. Yet the bridge he provided between government and community was so valuable that he could not be allowed to disappear. So he was transplanted into the urban environment, given a larger and considerably more populated 'parish', and provided with an office where his parishioners were free to drop by at any time, to seek assistance or discuss their grievances.

The new system worked, thanks in part to the newly developed mutual aid committees and the traditional kaifong associations, through which contact was maintained with all levels of society, but even more to the dedication and resourcefulness of the young administrative officers recruited to its ranks, many of whom now occupy very senior posts in the higher echelons of government.

Their task was infinitely more complex than that of their pastoral predecessors. The districts they served were no longer remote agrarian backwaters but densely populated, increasingly sophisticated communities swelling the ranks of Hong Kong's rapidly expanding middle class. Old style paternalistic administration would be out of place in this new age of awakening expectations.

Accessibility was once again the key to satisfying these expectations. Which meant communication not only at the grassroots level between citizens and civil servants, but between the different kinds of civil servant now emerging to cater to the altered priorities. Hotlines were established between the district officers and the new professionals cropping up in the pages of the government telephone directory - the civil engineers, the architects, the housing managers, the road builders and the whiz kids trained overseas in whole new fields of urban planning and administration. The objective of this network was to make the government more responsive and responsible to a people no longer content to ignore the existence of a remote administration so long as it didn't interfere with their freedom to make a living.

Accessibility also called for a rapid response in the full public arena of broadcast radio and television, where public servants were expected to give instant answers to sometimes very complex questions. Some fared better than others, but at least the overall impression was of a government prepared to be called to account for its actions, to explain its policies and to answer its critics.

If at times this engendered an appearance of Hong Kong as one huge debating forum, with people picking up the phone on an impulse to talk on air to the population at large, on any subject under the sun, so much the better. There is no sense of community stronger than that which exists at the village level, and if the spirit of the village debating hall can be transposed into the metropolitan dimension, the fabric of society holds stronger, endures longer and resists the terrible deprecations that have occurred in other cities around the world that have lost their commonalty, their central identity, their shared experience.

Hong Kong has been extremely fortunate to remain one huge, closely integrated, immensely powerful village, a village where things get done in the good old, tried and

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trusted village style, where people know each other at all levels of life, where the proverbial Madam Wong of Wong Tai Sin has as much right to be heard as the Governor. Long may it cling to that most valuable of assets.

   Herein also lies the secret of why Hong Kong functions so well, and acts so fast, in the stress of crisis, or in its communal response to the needs of others; why it can, not only ride out, but continue to prosper in times of global recession; why it has earned a place in the Guinness Book of Records for the generosity of its charitable donations. It is, quite simply, a community endowed not only with brains but with heart, a com- munity which cares and shares precisely the way you would hope to find in the village

context.

The phrase 'Hong Kong Inc.' is no glib sobriquet. It accurately defines the corporate behaviour of a highly interactive and integrated society. A society mercifully spared the divisions of class and caste that have bedevilled the efforts of so many other societies to achieve anything like the same unanimity of purpose. Whereas theirs have developed in layers based on social distinctions, long and carefully cultivated, ours is a crucible too much on the boil to permit any such sedimentary process.

   In our society, yesterday's hawker can be today's millionaire; and if he over-reaches his cash flow and is forced back to his street stall to begin all over again, nobody will think the worse of him but will admire his courage for trying that hard.

   In our society, the carelessly parked Mercedes may be stolen by an enterprising smuggler with a waiting, high horsepower vessel especially tailored to its dimensions. But it is unthinkable that it should be vandalised by the envious and spiteful simply because it represents unattainable wealth.

Unattainable wealth? Not in Hong Kong. So why should the owner of the Rolls Royce be abused when he can be emulated, when his vehicle testifies to his very proper success and symbolises what others are aiming for and merely waiting to achieve?

   Whatever its origins, and however free it may be of the barriers that break down and separate other communities, how do you account for the performance of 'Hong Kong Inc."? How do you get a society to respond with such speed, and with such consensus, to a commonly agreed course of action? Not by imposing the will of an individual or an administration, but by allowing the naturally evolved, in-built machinery of consensus to take its natural course.

It is a formula that has served both the community and its government to good effect over a long period of time; a process of consultation, either through advisory committees or appeals for public comment, embarked upon before major new policies are put in place. Indeed, in the past we often demonstrated our concerns in the collective, corporate response far better than we did as individuals.

As individuals we were, until relatively recently, less articulate - probably because the Chinese traditionally placed common good above individual interest. When I first came to Hong Kong, I was surprised to find there existed no word in the Chinese language that expressed the concept of the individual in terms other than as rebel and renegade.

Happily, in my view, that tradition has disappeared, and a very strong and healthy respect for the individual within the social context has flowered and taken firm root. Which is as it should be in a world where human rights are coming increasingly to the fore, when the world is placing greater value on the freedom of the individual as something not to be readily and automatically surrendered to the interests of the majority.

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In Hong Kong, we need to balance the public good with the private need, the will of the majority with the protection of the minority. And, happily, there are more and more champions emerging in our midst to defend the latter against the former. One has only to scan the reader's correspondence in a typical newspaper to see how much more freely nowadays the voice of individual reason makes itself heard in columns where once sheer indifference, or absence of opinion, marked the comfortable complacency of the silent majority.

       If there is still an area in our society where an element of exclusion persists, where the distinction of 'us' from 'them' survives, it is in the attitude of the public towards its public service.

       And here, we have been in danger of forgetting our commonalty of interest. Because it has been fashionable elsewhere to regard civil servants as some kind of pampered, wholly separate species, the trend has been transplanted to Hong Kong, ignoring the reality that civil servants are first and foremost fellow citizens, with the same concerns and aspirations as anyone else. And, by definition, imbued with the identical qualities that make Hong Kong citizens so special.

Of these qualities, I would count ingenuity as especially beneficial to the new adminis- trative style. A quality upon which, as I have already remarked, heavy demands were placed when Hong Kong was inundated with refugees from China in the mid-century. And, again, much later, when we were confronted with a massive influx of illegal immigrants from Vietnam, who were arriving, from the late seventies to the end of the following decade, at the rate of hundreds if not thousands a day, to strain our overburdened resources.

       Our ability to cope, to take the strain, to vault every hurdle placed in our path, has sometimes seemed as much a liability as an asset. And no more so than in the case of the Vietnamese boat people. At first, there was an international response to the problem, but when compassion fatigue set in, and the numbers failed to diminish, it became steadily easier to regard Hong Kong's ability to cope as evidence that this too was no more than just another straw on the back of an imperishable camel.

Much the same perception, time and again throughout history, has dogged our endeavours for fair treatment, whether in the form of requests for special recognition of our status as a developing country or in trade negotiations. Our record of achievement despite the obstacles has led others to believe we lead some kind of charmed existence, as though we were the economic equivalent of that renowned escape artist Houdini, capable of extricating ourselves from any predicament, however chained, manacled and encumbered.

       A very dear friend of mine, born here and totally, irrevocably committed to this little but towering territory, told me how much she hates to hear the word challenge go hand in hand with Hong Kong, as though the two were synonymous. "It merely encourages others", she argued, "to inflict impossible demands on us because they think we thrive on them".

       She was right of course. But also wrong. Because, although they do not invite challenge, although they would do anything to avert yet another of its obstacles, the people of Hong Kong do thrive on adversity. Ask him why, and your typical citizen would shrug. He can't help it. It's in his nature.

       This is why I regard myself as fortunate for having been privileged to share the Hong Kong experience. And why I shall forever carry with me the memory, not so much of a place as of a very special people.

URBAN COUNCIL PEDDC Liv

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Arrangements for the 1994 and 1995 Elections

THE Governor announced, in his annual policy address in October 1992, a constitu- tional package to ensure that Hong Kong has a vigorous and effective executive-led government which is accountable to the legislature; to broaden the participation of the community in the conduct of Hong Kong's affairs; and to devise arrangements for the district board elections in 1994 and the Legislative Council and municipal council elections in 1995 which command the confidence and the support of the community. Many of the proposals which aimed to achieve the first two objectives were implemented during 1993.

   Regarding the 1994 and 1995 elections, it was proposed that the voting age should be lowered from 21 to 18; that corporate voting be replaced by individual voting in all the present Legislative Council functional constituencies; that every eligible member of Hong Kong's 2.7 million-strong working population be able to vote in one of the nine additional functional constituencies; that a 'single seat, single vote' voting system be adopted for all geographical constituency elections; that all appointed seats in the municipal councils and the district boards be abolished; and an Election Committee drawing all, or most, of its members from the elected district boards be established to elect up to 10 Legislative Council members in 1995.

   Government representatives of Britain and the People's Republic of China started discussion in April 1993 on arrangements for the 1994 and 1995 elections. The discussions on the elections for Hong Kong's three-tier system of representative government were held in accordance with the Sino-British Joint Declaration on the Question of Hong Kong, the principle of convergence with the Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China and the relevant agreements and understandings reached between Britain and China.

   The British side aimed for arrangements which were fair, open and acceptable to the people of Hong Kong and, at the same time, were within the framework of the Basic Law so that continuity through 1997 could be achieved. Additionally, the British side had made clear that it was essential for the two sides to reach an agreement on the 'through train' arrangement, so that there would be clear and objective criteria for members of the Legislative Council elected in 1995 to remain in the legislature through 1997 for their full four-year term.

CONSTITUTION AND ADMINISTRATION

In his policy address to the Legislative Council in October 1993, the Governor reported that, conditional on an overall agreement including acceptable arrangements for the 'through train', the British side had offered revised proposals on the arrangements for functional constituencies and the Election Committee. Firstly, the British side had devised a new proposal for the nine new functional constituencies based on organisations and with a total eligible electorate of about one-third of that in the original proposal. Secondly, the British side had put forward proposals for a four-sector Election Committee along the lines set out in the Basic Law for the post-1997 Election Committee, while maintaining the view that all members of the Election Committee should themselves be elected. These alternative proposals were designed to meet known Chinese concerns, while upholding the British side's firm objective of ensuring open and fair elections in Hong Kong.

Despite the 17 rounds of talks held since April, both sides were unable to reach agreement by December on the more straightforward and immediate issues relating to the elections. These immediate issues required legislation by February 1994 if orderly arrangements are to be in place for the 1994 and 1995 elections. To provide slightly more. time for the talks to continue on the more difficult issues, draft legislation on the more immediate issues was introduced into the Legislative Council on December 15.

       The Electoral Provisions (Miscellaneous Amendments) (No. 2) Bill 1993 covered the lowering of the voting age from 21 to 18 for all three tiers of elections; the adoption of the single-seat, single-vote voting method for the Legislative Council, municipal council and the district board geographical constituency elections; the abolition of appointed district board and municipal council membership; and an increase in the number of elected municipal council seats (from 15 to 32 for the Urban Council and from 12 to 27 for the Regional Council).

       As a mark of the British side's sincere wish to continue co-operation with the Chinese, the Bill also contained draft provisions to permit, as proposed by the Chinese side during the talks, Hong Kong residents who were members of Chinese People's Congresses at various levels to serve in the Legislative Council, the municipal councils and the district boards.

General

Hong Kong is administered by the Hong Kong Government, which is headed by the Governor. Under the terms of the Joint Declaration, which entered into force on May 27, 1985, Hong Kong will become, with effect from July 1, 1997, a Special Administrative Region of the People's Republic of China.

The Governor is the representative of the Queen in Hong Kong. He has the ultimate direction of the administration of Hong Kong. An Executive Council offers advice to the Governor on important matters of policy.

       At the central level of the three-tier system of representative government, the Legislative Council enacts laws, debates policy issues and controls public expenditure. At the regional level, the two municipal councils the Urban Council and the Regional Council provide public health, cultural and recreational services in their respective regions. At the district level, 19 district boards offer advice on the implementation of policies in their districts and provide an effective forum for public consultation.

        There are elections on the basis of universal franchise at all the three tiers of repre- sentative government: two-thirds of district board members, 38 per cent of Urban

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Council members, 33 per cent of Regional Council members, and 30 per cent of Legis- lative Council members are elected from geographical constituencies.

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 consultation with the community. 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 Right Honourable Christopher Patten, assumed office on July 9, 1992, and is the 28th incumbent.

The System of Government

Executive Council

The Executive Council comprises three ex officio members the Chief Secretary, the Financial Secretary and the Attorney General - and 10 other members appointed by the Governor with the approval of the Secretary of State, including one official. The council normally meets once a week, and its proceedings are confidential, although many of its decisions are made public.

The Governor is required by the Royal Instructions to consult the council on all important matters of policy. The Governor in Council - the Governor acting after

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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 in an 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

The Legislative Council comprises 60 members. There are three ex officio members the Chief Secretary, the Financial Secretary and the Attorney General - and 57 non-official members. Of the 57 non-official members, 18 are appointed members and 39 are elected members. The appointed members are appointed by the Governor, with the approval of the Secretary of State. Among the elected members, 21 are elected by functional constituencies, each representing an economic, social or professional sector, and 18 elected by direct elections in geographical constituencies which cover the whole territory. The Governor was the President of the Legislative Council until February 19, 1993, when he handed over the presidency to a non-official member elected to that office by all non-official Legislative Councillors.

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 disallow- ance 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 March.

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.

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   The council normally meets in public once a week for the transaction of normal council business. In addition, about once a month, the Governor addresses or answers questions from members at a special sitting.

House Committee

The House Committee of the Legislative Council consists of all members of the council other than the President and ex officio members. Its chairman and deputy chairman are elected from among its members. The House Committee performs overall co-ordinating and house management functions in respect of the business of the council and its committees. It also considers matters referred to it by these committees.

   When the Legislative Council is in session, the House Committee meets every week to discuss the council's proceedings and to undertake preparatory work for meetings of the full council. Regularly on the agenda of these meetings are reports on subsidiary legislation tabled in the council; questions that members intend to put to the government; motions and bills to be debated; and any other matters of public concern or relating to the business of the council.

The House Committee may appoint sub-committees to assist in the consideration of specific subsidiary legislation and issues of public concern. Sittings of the committee and its sub-committees are normally held in public.

Finance Committee

The Finance Committee of the Legislative Council consists of the Chief Secretary as the chairman, the Financial Secretary and 56 non-official members. It scrutinises public expenditure, both at special meetings held in March at which members examine the draft estimates of expenditure for the year ahead, and at regular meetings, held throughout the year, to consider requests which entail changes to the provisions agreed upon 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 26 members of the Legislative Council, one of whom is the chairman. Representatives of the Secretary for the Civil Service and 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 as the chairman. The Secretary for Planning, Environment and Lands; the Secretary for Works; the heads of all works departments and the Environmental Protection Department; and representatives from the Finance Branch are in attendance at all meetings to provide advice. The sub-committee makes recom- mendations to the Finance Committee in the upgrading of projects to Category A of the public works programme, which indicates their readiness to start, and on changes to the scope and approved estimates of projects already in that category.

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Public Accounts Committee

The prime concern of the Public Accounts Committee of the Legislative Council 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 committee, established in 1978, is a standing committee consisting of a chairman and six members, none of whom is an ex officio member of the council. Its 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. It also examines, and reports on, matters relating to the performance of the Director of Audit's duties and the exercise of his powers under the Audit Ordinance, and on 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 in November 1986. These guidelines were agreed upon by the Public Accounts Committee and the Director of Audit, and have been accepted by the government.

The Director of Audit submits two reports to the 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 reports, 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 tabled in the Legislative Council within three months of the submission 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 tabled in the Legislative Council within three months of the submission of the Public Accounts Committee's report.

Committee on Members' Interests

The Committee on Members' Interests, established by a 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. It also 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 makes recommendations on matters relating to members' interests. The committee sits in public, unless the chairman otherwise orders in accordance with any decision of the committee.

Bills Committee

After a bill has been introduced into the Legislative Council, it is referred to the House Committee. The House Committee may, as it sees fit, allocate the bill to a Bills Committee for detailed scrutiny.

Any member of the Legislative Council, other than the President and ex officio members, may join a Bills Committee. The chairman is elected by the committee from among its members. Government officials and members of the public may be invited to attend such meetings. A Bills Committee may consider the principles and merits of a bill allocated to it

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for scrutiny, as well as the detailed provisions of the bill. In addition, it may consider any amendments relevant to the bill. A Bills Committee may also appoint sub-committees for the purpose of assisting it in the performance of its functions. Sittings of Bills Committees and their sub-committees are normally held in public.

   After a Bills Committee has completed scrutiny of a bill, it makes its reports to the House Committee. A Bills Committee is dissolved on the enactment of the bill it has considered, or as decided by the House Committee.

Panels

The Legislative Council has set up 18 panels to examine and monitor government policy

matters.

   The panels cover community and New Territories affairs; constitutional development; economic services and public utilities; education; environmental affairs; finance, taxation and monetary affairs; health services; housing; information policy; lands and works; administration of justice and legal services; manpower; public service; recreation and culture; security; trade and industry; transport and welfare services.

   Council members, other than the President and ex officio members, may join any of the panels. The chairman and deputy chairman of a panel are elected from among its members. Besides meeting among themselves, panel members hold sessions with senior government officials and interest groups to hear their views.

   A panel may form sub-committees to study specific issues and to report to it. Sittings of panels and their sub-committees are normally held in public.

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. In 1993, no select committee was formed.

OMLEGCO

OMLEGCO stands for the Office of the (non-government) Members of the Legislative Council.

Before October 1992, the office was called OMELCO (Office of the (non-government) Members of the Executive and Legislative Councils), serving, among other things, as a link between the members of the two councils. With the withdrawal of members of the Executive Council, following the separation of the non-government membership of the two bodies, OMLEGCO continues to play a role in facilitating communication between members of the Legislative Council and Executive Council, as well as the community.

   Collectively, the non-government members of the Legislative Council play a significant role in the administration of Hong Kong. They scrutinise, process and enact legislation; approve public expenditure; monitor the effectiveness of public administration; and consider complaints and representations from members of the public.

   In 1993, OMLEGCO continued with the process of developing a formal committee system for the Legislative Council, to facilitate the efficient transaction of council business. The House Committee, Bills Committees and panels are now formal committees of the council.

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      Councillors operate redress system, under which members of the public can make representations on, or seek solutions to, problems arising from government policies, decisions and procedures. Every week, a number of councillors are on duty to oversee the system and to receive representations made by deputations.

also on 'ward duty' for two hours a day, to meet complainants who wish to discuss their complaints with a councillor. Cases received are examined in the light of government policies and procedures. If members consider a complaint to be justified, they will ask the government department concerned to reconsider the decision or to re-examine the procedures that have given rise to the complaint. Where a change in policy or in law is considered necessary, members will make recommendations to the appropriate policy branch in the Government Secretariat. Cases involving matters of policy, or of particular importance, are put to the appropriate Legislative Council policy panels for further consideration by members. Members may also ask questions in the council on the problem itself, or the policy giving rise to it. During the 1992-93 session, more than 2250 new cases were handled under the Legislative Council Members' Redress System.

Pursuant to the Governor's announcement in October 1992 that the Legislative Council must have clear and separate management of its own affairs, members decided to merge OMLEGCO and the Office of the Clerk to the Legislative Council, to form an independent Legislative Council Secretariat with financial and managerial autonomy. The new secretariat will be put under the management of a statutory Legislative Council Commission. Preparatory work for its establishment is underway. It is envisaged that the commission and the new secretariat will be set up by April 1, 1994.

Urban Council

The Urban Council is a statutory council with responsibilities for the provision of municipal services to almost 3.2 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 to the police as the council does not have the manpower or finance to shoulder the whole burden.

       Within the urban areas, 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. Included among its facilities is the Hong Kong Stadium, which is undergoing redevelopment funded by the Royal Hong Kong Jockey Club. Work will be completed by March 1994 and 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, the Hong Kong Coliseum, the Hong Kong Science Museum and the Museum of Art. The City Hall, opened in 1962, is undergoing a $72 million renovation programme to improve the efficiency and effectiveness of its infrastructure. The renovation work started in July and will take 15 months to complete in phases. The council promotes cultural performances and runs a comprehensive programme of public entertainment throughout the urban areas.

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24

   The council consists of 40 members - 15 elected from geographical constituencies, 15 appointed by the Governor and 10 representative members from the urban district boards. It meets in public once a month to pass by-laws and deal with its 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 14 select committees and 26 working groups or sub-committees. 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 its staff of 16300. The director is charged with carrying out the council's policies and implementing its decisions.

   The council is financially autonomous and during 1992-93, spent about $4,033 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 areas, where council members deal with and answer complaints from the public on a wide variety of matters. Members of the public may also make their complaints and views known to the council through the 'Members Duty Roster System'. Under this system, the council members 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 2.6 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 from geographical constituencies, nine are elected as representatives of the nine New Territories district boards, and 12 are appointed by the Governor. The remaining three are ex officio members, being the chairman and the two vice-chairmen of the Heung Yee Kuk (a statutory advisory body which represents the indigenous population of the New Territories). 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, and in 1992-93, this provided about 84 per cent of total revenue. The remainder of its revenue comes from fees and charges, and rental income (mostly rent for market stalls). In 1992-93, total revenue amounted to $2,446 million, while total expenditure came to $2,351 million.

The council meets monthly to deal with policy issues, formal motions and members' questions on its activities. It has 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. The district committees deal with and monitor the provision of services, and advise on the management of council facilities in individual districts. The

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select committees meet monthly, the district committees meet bi-monthly, and the Liquor Licensing Board meets quarterly. All meetings of the council, its various committees and the Liquor Licensing Board are open to the public, unless confidential items are under discussion.

       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 district board members and other personalities are co-opted to each of the district committees of the council, 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 its responsibilities. These organisations include the Council for the Performing Arts, the Sports Development Board, the Hong Kong Arts Centre, the Chung Ying Theatre, the Hong Kong Children's Choir, the Hong Kong Ballet and the Hygiene Services Advisory Committee.

District Administration

District boards are statutory bodies which provide a forum for public consultation and participation in the administration of the districts. For the 1991-94 district board term, there are 19 district boards throughout the territory, with 274 elected members and 140 appointed members. In the New Territories, 27 rural committee chairmen are ex officio members of the respective district boards.

The next district board elections will be held in September 1994.

The main function of the district boards, set up in 1982, is 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 an important contribution to the management of district affairs. District boards are also consulted on a wide range of territory-wide issues.

The budgets, responsibilities and functions of district boards were expanded in 1993, to give them greater influence over district matters. For 1993-94, $75 million is being made available to the district boards for the implementation of minor environmental improvement and community involvement projects in the districts. An additional $17 million was provided by the two municipal councils for district boards to undertake minor environmental improvement projects. The responsibilities for managing these funds and for determining the priorities of projects were also assumed by the district boards. In addition, the district boards were given responsibility for overseeing the management of community halls.

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

In each district, there is a district management committee, 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

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advice given by the board. To improve communication between the district management committee and the district board, district board chairmen are invited to attend the committee's meetings.

   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 residents' 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 grassroots level.

   Attached to the district offices are 20 public enquiry service centres, which provide a wide range of free services to members of the public.

These include answering general enquiries on 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 11 585 645 cases were handled. To strengthen the public enquiry service, a central telephone enquiry centre also operates during office hours.

Links Between the Representative Institutions

The Urban Council and the Regional Council, which cover much the same fields in their respective areas, hold liaison meetings and institute joint ventures such as the Keep Hong Kong Clean Campaign during the year.

   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. Seats are reserved on the district boards for rural committee chairmen, who are also ex officio members of the 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 two vice-chairmen on the council.

   Starting from the 1991-92 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.

The Electoral System

Electoral System for the Municipal Councils and District Boards

  Elections to the Urban Council, Regional Council and district boards are on a geographical constituency basis and through a broad franchise. Practically everyone who is

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      21 years-of-age or over, and who is a Hong Kong permanent resident or has ordinarily resided 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. A statutory registration exercise is conducted between April and June each year, although applications for registration can be made at any time of the year. The 1993 electoral roll carried 1944 680 names, representing 52.4 per cent of an estimated potential electorate of 3.71 million.

       There are 210 constituencies, each with one or two seats, for district board elections, returning 274 district board members. In the 64 constituencies where there are two seats, each elector can cast two votes. For elections to the Urban Council and the Regional Council, there are 15 and 12 single-seat constituencies, respectively. Elections to the district boards and the municipal councils are by simple majority.

       An elector may vote only in the constituency in which he has been registered. He may, however, stand for election to the Urban Council, the Regional Council or a district board in any constituency, provided he has been ordinarily resident in Hong Kong for the preceding 10 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 two on Hong Kong Island, three in Kowloon and four in the New Territories, returning a total of 18 members. Elections for geographical constituencies are by simple majority, and each elector can cast two votes.

There are 15 functional constituencies consisting of 20 electoral divisions, which cover the commercial, industrial, finance and financial services, labour, tourism, real estate and construction, social services, medical and health care, teaching, accountancy, legal, engineering, architectural, surveying and planning, municipal council and rural sectors. They return a total of 21 members (with the labour functional constituency returning two members). A preferential elimination voting system is used for the functional constituencies.

The franchise for Legislative Council geographical constituency elections is the same as for the elections to the district boards and the municipal councils. They use the same electoral roll. For functional constituency elections, the electorate is made up of either individual or corporate electors, or a mixture of both. An individual elector in a functional constituency is also required to be a registered elector for the geographical constituency elections. A corporate elector which wishes to vote at a functional constituency election is required to nominate an authorised representative to vote on its behalf. An authorised representative is not allowed to represent more than one elector in the same functional constituency, and no individual elector or authorised representative is allowed to be registered in more than one functional constituency. In 1993, the electoral roll for functional constituencies carried 70 400 entries, representing 61.7 per cent of an eligible electorate of 114031.

       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

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constituency in which he stands. Each nomination requires 10 subscribers who are electors in that functional constituency, except for the municipal council functional constituencies which require only five subscribers, due to the small electorate in the constituencies.

Boundary and Election Commission

The three-member Boundary and Election Commission, appointed by the Governor on July 23, is an independent authority established under the Boundary and Election Commission Ordinance. It is responsible for reviewing the geographical constituency boundaries of the Legislative Council, municipal councils and district boards, and making recommendations to the Governor. It is also responsible for overseeing the conduct and supervision of elections, keeping under review the procedure for these elections and the arrangements for registration of electors to ensure that the elections are conducted openly, honestly and fairly. The commission performs its functions through the Registration and Electoral Office, which is staffed by civil servants and headed by a Chief Electoral Officer.

   In October, the commission published its provisional recommendations on the 1994 district board constituency boundaries and commenced a 30-day public consultation on these recommendations. The provisional recommendations were drawn up in accordance with the statutory criteria laid down in the Boundary and Election Commission Ordin- ance which include the population quota, community identities, physical features and development of the relevant areas. On December 30, the commission submitted its recommendations, which took into account the representations received during the public consultation, to the Governor for consideration.

Advisory Committees

The government's network of 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. Advisory bodies of one kind or another are found in nearly all government departments and quasi-government bodies.

   In general, advisory bodies are 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 5 720 members of the public have been appointed to serve on a total of 563 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.

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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. She is the head of the public service. The Chief Secretary is one of the Governor's principal advisers, along with the Financial Secretary and the Attorney General.

       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. She 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.

Role of Financial Secretary

The Financial Secretary, who reports directly to the Governor, is responsible for the fiscal and economic policies of the 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, Financial Services, 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 outlining the government's budgetary proposals and moving the adoption of the Appropriation Bill, which gives legal effect to the annual expenditure proposals contained in the budget. He is also responsible under a number of ordinances for carrying out executive duties, such as setting levels of certain charges and remunerations, and overseeing the accounts of certain trust funds and statutory bodies.

Role of the Central Policy Unit

The Central Policy Unit forms part of the Government Secretariat, but 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 was established in May 1992. The unit reports to the Chief Secretary. Its objective is to pursue the government's commitment to improve services to the community and to achieve openness and accountability by formulating, securing support for and co-ordinating the implementation of a programme of public sector reform.

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The Structure of the Administration

The administration of the Hong Kong Government is organised into branches and departments. The branches, each headed by a policy 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: the Home Affairs Branch (known, before October 15, as the City and New Territories Administration); Constitutional Affairs Branch; Education and Manpower Branch; Health and Welfare Branch; Planning, Environment and Lands Branch; Recreation and Culture Branch; Security Branch; and Transport Branch.

   The Civil Service Branch, a resource branch, also comes under the aegis of the Chief Secretary.

   The policy branches whose secretaries report directly to the Financial Secretary are: Economic Services, Financial Services (known, before April 1, as Monetary Affairs), Trade and Industry, and Works.

The Finance Branch, a resource branch, is also responsible to the Financial Secretary. There are 76 departments and agencies whose heads are, with certain exceptions, 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, whose independence is safeguarded by the Director reporting directly to the President of the Legislative Council; the Independent Commission Against Corruption, whose independence is safeguarded by the Commissioner 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.

   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: Community Affairs; Constitutional Affairs; Lands, Works, Transport, Housing and Environmental Protection; Public Services; Social Services; and 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 to provide citizens with some means through which 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, except the Royal Hong Kong Police Force and the Independent Commission Against Corruption, for which there are separate systems to deal with complaints from the public. He also has jurisdiction over the Hospital Authority.

   In mid-1992, the government undertook a review of the COMAC redress system to identify areas where improvements can be made to strengthen its role as a safeguard against government maladministration. After a three-month public consultation exercise, the government proposed a number of changes to the system. They include replacing the referral system to enable the public to take their complaints directly to the Com- missioner, extending the Commissioner's jurisdiction to major statutory bodies, and

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allowing the Commissioner to publicise investigation reports of public interest, subject to the withholding of the names of the individuals involved in the complaint. To put these recommendations into effect, the Commissioner for Administrative Complaints (Amendment) Bill 1993 was introduced into the Legislative Council on July 21. It is to be scrutinised by a bills committee of the council, to be formed soon.

       Between January 1 and December 31, a total of 166 complaints were received by the office. Together with 41 cases carried over from the previous year, there were altogether 201 cases for disposal. During the year, 168 cases were completed. Of these, 88 were investigated and 18 were settled by mediation or informal resolution. Of those cases investigated, 10 (11 per cent) were found to be substantiated in whole and 26 (30 per cent) in part. In 52 cases, (59 per cent), complaints were found to be unsubstantiated.

       The areas which attracted substantial numbers of complaints in 1993 related to errors or wrong decisions; followed by delay, negligence or omission; faulty procedures; disparity in treatment or unfairness; rudeness and failure to follow procedures. In terms of complaints by department, the Buildings and Lands Department (which was reorganised into the Buildings Department and the Lands Department on August 1) received the most complaints, followed by the Housing Department, the Inland Revenue Department, the Immigration Department, the Correctional Services Department, the Government Secretariat, the Labour Department and the Marine Department. These departments have much contact with members of the public and are more vulnerable to complaints than the others.

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 in the territory. An Auditor-General was first appointed in 1844, only three years after the 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 on these to the President of the Legislative Council. Certain specific duties relating to the examination, audit, reporting and certification of the government's accounts are prescribed in the ordinance, and wide powers are given to the Director regarding his access to books, documents and records, and the explanations which he may require. 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, and considerable discretion is given to him in the conduct of his inquiries. The Director functions independently of the administration and he is free to report publicly as he sees fit.

Aside from auditing the government's accounts, the Director of Audit also audits the accounts of the Urban Council, the Regional Council, the Vocational Training Council, the Hong Kong Housing Authority, the ex-government hospitals under the Hospital Authority, and more than 50 statutory and non-statutory funds and other public bodies. He reviews, in addition, the financial aspect of the operations of the multifarious government-subvented organisations in Hong Kong.

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Government auditing practised in Hong Kong falls into two main categories, termed 'regularity' audit and 'value-for-money' audit, respectively. The regularity audit, which is intended to provide an overall assurance of the general accuracy and propriety of the financial and accounting transactions of the government and other audited bodies, 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 properly presented or give a true and fair view of the state of affairs, although, with the considerable volume and variety of government revenue and expenditure, it cannot be expected 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 in 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.

The Director of Audit's report, after it has been submitted to the President of the Legislative Council and laid before the council, is considered by the Public Accounts Committee. In 1993, the Director submitted two reports. The first report was tabled on April 28, covering the results of value-for-money audits completed, and the second report on November 17, 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 essentially one of co-operation. 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 to 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. 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

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of autonomy, and full autonomy regarding trade matters. It is a contracting party to the General Agreement on Tariffs and Trade in its own right.

The Role of the Political Adviser

The Political Adviser is a senior member of the British Diplomatic Service, seconded to the Hong Kong Government principally to advise the Governor and the Chief Secretary on international issues, and particularly matters concerning Hong Kong's relations with China. His office is part of the Hong Kong Government.

       The Political Adviser's office, in conjunction with the Constitutional Affairs Branch, is closely involved in the work of implementing the Sino-British Joint Declaration on the Question of Hong Kong. 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 China's Guangdong Province, particularly in the Shenzhen Special Economic Zone. Close and effective cross-border co-operation has developed in diverse areas, including immigration, the fight against crime, anti-smuggling operations, transport, environment issues, customs, the postal services and telecommunications.

       The Political Adviser's office is also a communication channel between the Hong Kong Government and foreign and Commonwealth missions in the territory. These missions do, however, deal directly with the relevant departments of the Hong Kong Government in most day-to-day matters.

The Public Service

The Public Service employs about 6.7 per cent of Hong Kong's workforce. It provides staff for all government departments and other units of the administration. As at October 1, 1993, the total strength of the Public Service was 181 295. Nearly 99 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 1210 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 matters such 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. In addition, its General Grades Office is responsible for the overall management of officers in certain categories of general grades.

       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 1000 or so most senior public servants). The Standing Committee on Judicial Salaries and Conditions of Service advises

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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 new civil service housing package, which comprises a Home Financing Scheme, an Accommodation Allowance Scheme and an improved Home Purchase Scheme, was introduced in October 1990. The objective of the housing package is to make more effective use of the resources provided for civil service housing benefits and to encourage home ownership among civil servants. Over 17000 officers are currently receiving benefits under the schemes.

   The government fully recognises the value of regular communication and consultation with staff. There are four central consultative councils 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 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 encouraged to make suggestions to improve the efficiency of the service under the Staff Suggestions Scheme, which was recently revised to enable individual departments to consider and reward valuable suggestions, rather than having all suggestions considered centrally.

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. Civil servants with 20 or more years of service on retirement are given a retirement souvenir.

   Traditionally, the terms of employment offered to civil servants have been divided into two major categories overseas and local. Whether an officer should be offered overseas or local terms was determined before he joined the service and could not be altered after the appointment, irrespective of changing circumstances. A review of this policy was conducted with a view to rationalising the position of permanent residents, whose rights are guaranteed by the Bill of Rights, and making provisions for the future as stipulated under the Basic Law. A two-stage approach was adopted.

   As an interim measure, overseas agreement officers who are permanent residents of Hong Kong could apply for transfer to local terms for one contract only, subject to certain conditions. These conditions include service need, satisfactory conduct and performance, and physical fitness. However, the Public Officers (Variation of Conditions of Service) (Temporary Provisions) Ordinance, introduced into the Legislative Council as a private member's Bill, suspended the interim measure until April 1994. The ordinance was enacted in December despite opposition by the government.

   For the long term, the government has proposed bringing in standardised conditions of service, and defining for the first time who should in future be regarded as 'local'. The objective is to converge with the Basic Law, while still complying with existing laws. A wide-ranging consultation exercise is being conducted and a consolidated proposal will be developed, with the intention of discussing the matter with the Chinese authorities in due

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       Meanwhile, the government is developing its use of manpower planning techniques and practices, 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.

Public Sector Reform

Public sector reform is a programme of financial and management reforms, aimed at bringing about long-term improvements to the efficiency and management of the public sector, and better service and accountability to the community. The Efficiency Unit was established to serve as a focal point to direct and co-ordinate the efforts of public sector reform.

The government is committed to providing the best service possible to the public. In October 1992, the Governor launched the performance pledge programme, to help engender a culture of service in the public sector. The majority of government departments directly serving the public have already produced performance pledges, informing their customers what services are available, what standards have been set and how those standards are being monitored. Customer liaison groups are in place in some 12 departments under the programme. Some 20 departments are also involving their customers through advisory groups and users' committees. These groups are an important forum to channel customer input on the services provided. The performance pledge programme will be a permanent feature of the public sector. The government will continue to build on the message of serving the community within the Public Service.

In 1993, the government embarked on a practical programme of public sector reform which sees the Civil Service Branch and Finance Branch concentrating more on their strategic roles; and policy branches and departments being given more responsibility over the way in which they manage their activities. This gives the necessary authority to those responsible for the delivery of programmes to do so in the most effective way, channelling available resources to priority activities. Departments now have greater authority in matters such as non-directorate appointments and promotions, leave and passage, and professional training.

The government also introduced a system of programme management, which divides a department's work into its major activities, for monitoring and review purposes. This has placed more emphasis on performance measurement, quality of service, value for money and, not least, accountability. The government has also adopted a more business-like approach to the delivery of services. This has seen an increase in the use of new technology, including office automation, desktop publishing and automated telephone answering systems.

Civil Service Training

The government attaches great importance to the training of civil 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 knowledge and 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.

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   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. It also provides advice and assistance to departments in planning and implementing their training programmes.

   The China Studies Programme, which aims to provide officers with a better under- standing of various aspects of life and government in China, is being strengthened. Seminars and talks are conducted for officers at various levels. Chinese studies courses in China and familiarisation visits to China are also arranged to give officers first-hand experience of the country. Existing management development programmes have also been expanded to include a China dimension.

   The programmes offered by the Senior Staff Course Centre play an important role in the training and development offered to senior public servants. The centre emphasises 'learning from doing'. Participants analyse real administrative and organisational problems, and make proposals for improvement.

Government Records Service

The Government Records Service is responsible for the management of government records. It undertakes two different but related programmes: the Records Management Office is responsible for a records management programme to handle records at their current and non-current stages, and the Public Records Office for an archive adminis- tration programme to look after the preservation and use of permanent records.

The appropriate management of records affects the efficiency of business in government. It is the responsibility of the Records Management Office to oversee and develop a comprehensive system to manage records effectively and efficiently, from their creation to their 'death' or destruction, 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 and other government boards and committees where English and Chinese are used.

A Bilingual Laws Advisory Committee was set up in October 1988 to advise the Governor in Council on, among other things, the authentication of Chinese texts of existing laws which are being translated. Following the declaration of the Chinese version of Chapter 1 of the Laws of Hong Kong, the Interpretation and General Clauses

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Ordinance, to be authentic in July 1992, eight more ordinances were declared authentic in 1992-93. Chinese versions 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 is the most commonly-spoken dialect in the territory among the local Chinese community, while Putonghua has gained popularity as closer ties with China are developed. English continues to be used not only by the expatriate community, but by a wide cross-section of the local community in commercial, financial and professional circles.

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THE legal system in Hong Kong is firmly based on the rule of law and the independence of the judiciary.

   Capital punishment was formally abolished in April and was replaced by the mandatory sentence of life imprisonment for murder, and discretionary maximum sentences of life imprisonment in the case of treason and piracy. Since 1966, all sentences of death had been commuted to imprisonment for life or for determinate terms by exercise of the Royal Prerogative.

   The body of local jurisprudence in respect of the Hong Kong Bill of Rights Ordinance continued to grow during the year, almost exclusively in relation to the criminal law. A decision of the Privy Council in May, on appeal from the Hong Kong Court of Appeal, provided guidance on when it may be appropriate to place an onus of proof on an accused person.

   The Sino-British Joint Declaration on the Question of Hong Kong and the Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China provide that the present judicial system will be maintained after 1997, except for those changes consequent upon the establishment of the Court of Final Appeal (CFA). At the 20th meeting of the Sino-British Joint Liaison Group in September 1991, the two sides reached agreement in principle on the establishment of the CFA. Action is in hand to establish the CFA before 1997 to replace the Judicial Committee of the Privy Council as Hong Kong's highest appellate body.

Law in Hong Kong

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 the territory so far as they are applicable to the circumstances of Hong Kong or its inhabitants, subject to such modifications as circumstances may require. The ordinance applies some English Acts, such as the Habeas Corpus Act 1816, to Hong Kong.

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 the territory is, and has been since its earliest days, enacted in the form of ordinances or as subsidiary legislation made under an ordinance.

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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 75 per cent of the volumes have been issued. The new edition will be based upon the 1989 revised edition, as amended by laws taking effect since then 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 Com- mittee, 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, and then recommends the Governor-in-Council declare these approved 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.

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.

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. The unit's role is to give legal advice on the localisation of United Kingdom legislation which presently 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 Administrative Region, which was promulgated in April 1990. A review by policy branches of all ordinances within their spheres of responsibilities has been undertaken and, where necessary, drafting instructions will be prepared with a view to appropriate amendments being effective before July 1, 1997.

Human 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

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extended to Hong Kong. The Sino-British 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. The 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, to ensure that no law can be made in Hong Kong which restricts the rights and freedoms enjoyed in Hong Kong in a manner which is inconsistent with the ICCPR as applied to the territory. The amendment came into operation at the same time as the Bill of Rights Ordinance.

The 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. Recruitment is underway for a Judiciary Administrator to take over from the Registrar the responsibility for assisting the Chief Justice in the overall administration of the judiciary. The new Judiciary Administrator is expected to be in post next year. The Registrar and Deputy Registrars will then be free to concentrate on their judicial and quasi-judicial duties.

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

   The most senior court in Hong Kong is presently 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. The Court of Appeal, the highest court in Hong Kong, 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 involving a value up to $120,000, and its criminal jurisdiction provides for sentences up to seven years' imprisonment. Its judges sit without a jury and may try the more serious cases, the principal exceptions being cases alleging murder, manslaughter and rape, which are reserved for trial by the High Court. There are 29 Judges of the District Court.

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The Magistrates' Courts try annually some 90 per cent of all the cases heard in the territory. There are 71 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 empowered to impose sentences of up to two years' imprisonment and fines of up to $10,000; however, under a number of statutes, they are empowered to impose higher fines. Professional magistrates also try cases in the Juvenile Court, which has jurisdiction in charges against children and young persons aged 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 sentencing 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 inquiries into unusual circumstances causing death. The Small Claims Tribunal hears civil claims of up to a limit of $15,000. The Labour Tribunal hears individual civil claims arising from contracts of employment. The Lands Tribunal has jurisdiction in matters of rating and valuation, and in assessing compensation when land is resumed by the government or reduced in value by development. The Obscene Articles Tribunal has jurisdiction to determine whether or not an article is obscene, and to classify it into statutory categories of acceptability or otherwise.

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

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

       It is the government's policy to move towards greater use of Chinese in the courts. A working party, headed by a Justice of Appeal, is looking into the issue.

The government attaches great importance to judicial efficiency. To strengthen the administrative structure of the judiciary, the Working Party on Judiciary Administration was formed in October. Chaired by the Chief Justice, this high-level working party comprises members of the judiciary, the legal profession and the public. It is conducting a thorough review of existing administrative systems to determine how and where improvements can be made.

Three Court Users Committees were appointed by the Chief Justice during the year to advise on matters of concern to users of the courts. The Criminal Court Users Committee, the Civil Court Users Committee and the Tribunal Court Users Committee will look at all matters of practice and procedure, administration of the courts as well as the facilities provided in court buildings.

Arbitration and Alternative Dispute Resolution

Arbitration has been a popular method of dispute resolution in Hong Kong for some time. It is governed by the Arbitration Ordinance, which has two distinct regimes a domestic

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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 Southeast 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 full support facilities. The number of cases involving the HKIAC has substantially increased in recent years. It is anticipated, given the increasing popularity of arbitration and mediation as a means of dispute resolution, that there will be a further increase in such cases in the future.

The 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 the Judicial Services Commission, and the 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 the chambers.

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

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.

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       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 prosecu- tion in the majority of High Court and District Court trials, and often appear before magistrates when an important point of law is involved. The division also provides legal advice to the 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 23 reports covering subjects as diverse as commercial arbitration, homosexuality, bail, sale of goods and supply of services, and illegitimacy. The recommendations in 11 of its reports have been implemented, either in whole or in part. The other reports are still under consideration.

The commission is currently considering references on evidence in civil actions, fraud, privacy, codification of the criminal law, guardianship and custody, insolvency, description of flats on sale, and interpretation of statutes.

Registrar General

The office of the Registrar General was established in 1949 by the Registrar General (Establishment) Ordinance. Prior to its re-organisation, the Registrar General's Depart- ment included what are now the Intellectual Property Department, the Office of the Com- missioner of Insurance, the Official Trustee and the Official Solicitor (both in the Legal Aid Department), the Official Receiver's Office, the Legal Advisory and Conveyancing Office of the Lands Department, the Land Registry, the Companies Registry and the Money Lenders Registry.

On May 1, the re-organisation of the Registrar General's Department was completed, with the establishment in the final phase of the new Land Registry and the new Companies Registry as separate departments of the government. The Land Registry operates a land registration service under the provisions of the Land Registration Ordinance, and a registry of owners corporations under the Building Management Ordinance. The Companies Registry administers the provisions of the Companies Ordinance and a number of related ordinances, and includes the Money Lenders Registry, which regulates money lenders under the Money Lenders Ordinance.

      On August 1, the Land Registry and the Companies Registry were the first departments of the government to be operated on the basis of their own separate trading funds, established by resolution of the Legislative Council under the provisions of the Trading Funds Ordinance. The establishment of these trading funds represents a new initiative designed to enable certain government agencies to improve and meet increasing demand for the services they provide to the public.

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Director of Intellectual Property

The Director of Intellectual Property was established in 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. The department is also responsible for other forms of intellectual property protection, and will serve as a focal point for the further development of Hong Kong's intellectual property regime.

The Legal Profession

There are around 2 700 solicitors and 425 local law firms in Hong Kong. In addition, there are around 30 foreign law firms which advise on foreign law.

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 500 barristers in Hong Kong.

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.

Legal Aid, Advice and Assistance

Hong Kong has developed, over the years, a comprehensive system of legal aid, advice and assistance, funded by the government through the Legal Aid Department and the Duty Lawyer Service. The latter is administered by the Law Society and the Bar Association.

Legal Aid

The Legal Aid Department provides assistance in legal representation to persons in both civil and criminal cases heard in the District Court, the High Court, the Court of Appeal in Hong Kong and also, the Judicial Committee of the Privy Council in England. An applicant is required to satisfy the Director of Legal Aid of his financial eligibility (the means test) and of the justification for legal action (the merits test).

Under the means test, a person whose disposable financial resources, including both income and capital, do not exceed $120,000 is eligible for legal aid. In calculating an applicant's disposable financial resources, the value of his owner-occupied home, tax payments and contributions to retirement schemes, in addition to various allowances for the support of himself and his dependants, are deducted. In criminal cases, the Director of Legal Aid has a discretion to grant legal aid to an applicant who fails the means test, if it is in the interests of justice to do so.

Legal aid is granted to a successful applicant either free of charge or upon payment of a graduated contribution, depending on his disposable financial resources. 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.

Legal Aid in Civil Cases

In civil cases, apart from financial eligibility, an applicant must satisfy the Director of Legal Aid, under the merits test, that he has reasonable grounds for taking or defending a

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court action, and that it is reasonable to grant aid in the circumstances of the case. Legal aid is available for a wide range of civil proceedings, including traffic and industrial accident claims, employees' compensation, immigration matters, professional negligence, employment and family law disputes, and landlord and tenant matters. An applicant who is refused legal aid, either because he fails the means or merits test, may appeal against such refusal to the Registrar of the Supreme Court or, in Privy Council cases, to a committee of review. The department's total expenditure for 1993 was $88 million in civil cases. During the year, 19 653 applications were received, out of which 6 627 were granted legal aid and $269 million was recovered for the aided persons.

       The Director of Legal Aid also operates 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. The scheme is available for claims in the High Court, the Court of Appeal, and certain claims in the District Court for damages and compensation for personal injuries. An applicant with financial resources exceeding $120,000, but not exceeding $280,000, is eligible. The scheme is self-financing, funded by contributions from damages or compensation recovered. A successful litigant is required to pay back to the scheme 10-12.5 per cent of the damages he recovers. The total expenditure of the scheme in 1993 was $5 million. A total of 78 applications were received, out of which 52 were granted legal aid.

      An independent counselling agency, the Hong Kong Catholic Marriage Advisory Council, funded by the Royal Hong Kong Jockey Club, provides counselling services to legal aid applicants in family problems in the department's Kowloon branch office.

Legal Aid in Criminal Cases

In criminal cases, legal aid is available for representation in proceedings in the Supreme Court and District Court, in the Magistrates' Courts (where the prosecution is seeking committal of a defendant to the High Court for trial), in appeals from the Magistrates' Courts, and appeals to the Court of Appeal and to the Privy Council.

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 appeal.

      With effect from July 1992, an amendment to the Legal Aid in Criminal Cases Rules was introduced, to provide the Director with discretion to grant legal aid to an applicant charged with a criminal offence even if his disposable financial resources exceed the limit of $120,000, if the Director is satisfied that it is in the interests of justice to do so. The great majority of persons charged with criminal offences have therefore become eligible for the grant of legal aid.

The total expenditure on legal costs on criminal cases for 1993 was $108 million. During the year, 2 925 applicants were granted legal aid out of 4 656 applications received.

The Official Solicitor

      Following the entry into force of the Official Solicitor Ordinance in August 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 its inauguration and up to July 1993, the Official

45

THE LEGAL SYSTEM

46

Solicitor received a total of 157 such requests in receivership, unclaimed estates, adoption, guardianship, and other cases. The Official Solicitor assigned less than 10 per cent of the cases to private legal practitioners for litigation, and litigated the balance herself.

Duty Lawyer Service

The Duty Lawyer Service was, until August 17, 1993, known as the Law Society Legal Advice and Duty Lawyer Schemes. It operates the Legal Advice Scheme, which provides legal advice; the Duty Lawyer Scheme, which provides legal representation; and the Tel Law Scheme, which provides legal information over the telephone.

The service is jointly managed and administered by the Law Society and the Bar Association of Hong Kong. It is funded by the government and the subvention in 1993-94 was approximately $57 million.

The Legal Advice Scheme was set up in 1978 to provide to members of the public free advice, without means testing, at five advice centres located in the 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 the Social Welfare Department. There are approximately 450 lawyers in the scheme. A total of 3 057 people were given legal advice during the year.

The Duty Lawyer Scheme was introduced in 1979. It initially provided free legal representation to defendants charged with one of six 'scheduled' offences in three magistracies. This was subsequently extended to nine 'scheduled' offences in 1981 and covered all magistracies in 1983. Upon the enactment of the Bill of Rights Ordinance in 1991, the scheme was expanded to offer representation to virtually all defendants charged in the magistracies who cannot afford private representation.

The scheme also assigns barristers and solicitors, on a roster basis, to advise defendants facing extradition, to monitor the one-way viewer in police identification parades and to represent hawkers upon their appeals to the Governor in Council.

Applicants are subject to a simple means test, with the financial eligibility limit set at a gross annual income of $90,000. The Administrator of the Duty Lawyer Service has a discretion to grant legal representation to defendants whose gross annual income exceeds the specified financial eligibility limit. An applicant is also subject to a merits test, based on the 'interest of justice' principle in accordance with the Bill of Rights Ordinance. The prime consideration is whether the defendant is in jeopardy of losing his liberty or whether a substantial question of law is involved.

In 1993, there were approximately 710 remunerated barristers and solicitors on the duty lawyer roster. A total of 35 413 defendants facing charges received advice and representation at trial under the Duty Lawyer Scheme.

The Tel Law Scheme was introduced in 1984 as a free telephone enquiry service. It provides members of the public with basic taped legal information, in both English and Chinese, on the legal aspects of everyday problems. The tapes covers aspects of matrimonial, landlord and tenant, criminal, financial, employment, environmental and administrative law. The tapes are constantly updated, and new tapes are added when a new subject is identified as being of interest to the public. During the year, Tel Law handled over 47 611 calls.

4

SIMPLEMENTATION

OF THE SING BRITISHT.

JOINT DECLARATION

THE Sino-British Joint Declaration on the Question of Hong Kong was signed by the British and Chinese Governments on December 19, 1984. Under the terms of the agreement, on July 1, 1997, the British Government will restore Hong Kong to the People's Republic of China and Hong Kong will become a Special Administrative Region (SAR) of China, enjoying a high degree of autonomy. Also, the capitalist system and life-style of Hong Kong will remain unchanged for 50 years.

      To ensure effective implementation of its provisions, the Joint Declaration provided for the establishment of the Sino-British Joint Liaison Group (JLG) and the Sino-British Land Commission.

The Sino-British Joint Liaison Group

The functions of the JLG 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. It is an organ for liaison, with no role in the administration of Hong Kong.

       The JLG comprises a senior representative and four other members on each side. It held its first meeting in July 1985. Since July 1988, it has taken Hong Kong as its principal base. Both sides have established offices in the territory and their respective senior representa- tives are resident in Hong Kong. The JLG holds plenary sessions at least once every year in Beijing and London, besides Hong Kong.

      During the year, the JLG held three plenary sessions in June, September and December, the last one being its 28th meeting. It also held expert talks on a number of issues. While some limited progress was made, the overall progress was slow.

Matters discussed included defence lands, major franchises and contracts extending beyond 1997, right of abode, travel documents, international rights and obligations, air services agreements, and localisation and adaptation of laws.

Defence Lands

During the plenary sessions and talks at expert level, the JLG further discussed the future of lands in Hong Kong presently used for defence purposes. The objective was to agree on a package which would satisfy both the reasonable defence requirements of the Chinese Government after 1997 and the need to release land for the socio-economic development of Hong Kong.

47

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

48

Franchises and Contracts Extending Beyond 1997

The JLG discussed a number of major franchises and contracts extending beyond 1997. Agreement was reached on the Scheme of Control Agreement with the Hong Kong Electric Company Limited and Hong Kong Electric Holdings Limited; the West New Territories Landfill; the Southeast New Territories Landfill; and the subscription television licence.

Right of Abode

The JLG continued to discuss the alignment of the provisions on right of abode in the Immigration Ordinance with those in the Basic Law. It also discussed the questions of right of abode for persons not of Chinese race, and for children born outside Hong Kong to Hong Kong permanent residents.

Travel Documents

The JLG agreed on the transitional arrangements for the issue of Hong Kong re-entry permits. So far, the JLG has reached agreement on transitional arrangements for nearly all existing travel and identity documents.

International Rights and Obligations

The Sub-Group on International Rights and Obligations was formally established under the JLG in July 1986, to examine and discuss the continued application after 1997 of international rights and obligations affecting Hong Kong. The sub-group, based in Hong Kong, reports its conclusions to the JLG.

During the year, the JLG reached agreement on the continued application to Hong Kong of 12 international treaties. So far, the two sides have reached agreement on the continued application of about half of the approximately 200 multilateral treaties which currently apply to Hong Kong. These include agreements on Hong Kong's continued participation in some 30 international organisations, including the General Agree- ment on Tariffs and Trade (GATT), the Asian Development Bank, the Economic and Social Commission for Asia and the Pacific (ESCAP) and the International Maritime Organisation.

Air Services Agreements

In order to maintain Hong Kong's status as an international civil aviation centre after 1997, there is an on-going air services agreements (ASAs) separation programme, under which provisions involving Hong Kong in United Kingdom ASAS are separated into discrete Hong Kong ASAS. Two ASAS were signed in 1993. To date, Hong Kong has signed 10 ASAs, with the Netherlands, Switzerland, Canada, Brunei, France, New Zealand, Malaysia, Sri Lanka, Brazil and Australia.

Localisation and Adaptation of Laws

The Joint Declaration provides that after the establishment of the SAR, the laws previously in force in Hong Kong shall be maintained, except for those that contravene the Basic Law, and subject to any amendment by the legislature of the SAR.

Nearly 300 United Kingdom laws which currently apply to Hong Kong will cease to have effect in the territory after June 30, 1997. Apart from 80 that will not be needed after 1997, the rest have to be 'localised', that is, replaced by legislation enacted in Hong Kong

t

A

Ten years in construction, the Tian Tan Buddha - the world's largest, outdoor, bronze image of Buddha drew thousands of devotees to the Po Lin Monastery on Lantau Island to witness the inauguration of the statue at the year's end.

...

A milestone was reached in September, when Mrs Anson Chan (above), became the first local, female officer appointed to the top civil service post of Chief Secretary. Right, and opposite page: As Chief Secretary (des- ignate), Mrs Chan had a hectic schedule of engagements in November, leading Hong Kong '93 - the biggest promotion ever staged by Hong Kong in Europe.

HONG KONG

MEANS BUSINESS

Wi

7

November 1999

14

Visitors to the University of Hong Kong's Expo 2001 exhibition (above), caught an exciting glimpse of the territory's future.

Right: The shape of things to come held onlookers spellbound at the Transport Department's prize- winning pavilion.

UBL

شت

Top: Thirty years ago, the vision behind the Chinese University of Hong Kong was just beginning to change the landscape at Ma Liu Shui.

Above: Today, the Chinese University of Hong Kong is firmly established in the life of the community, as it celebrates its 30th anniversary.

     Opportunities in education continue to grow. In 1993, the Governor officiated at the first congregation of the Open Learning Institute of Hong Kong (above); while (right), the Hong Kong University of Science and Technology began its third year of operation.

104.

有線新聞台

T

Above: Television viewers gained a wider choice of channels, when Wharf Cable Ltd, introduced the territory's first subscription televi- sion service on October 31.

Left: Public transport scored a world 'first', with the opening of the escalator service between Central

District and the Mid-Levels. In addition to the convenience, it's free of charge.

ואיזן

CURRENT HANG SENG INDEX

2

+199.30

JJ

Top: Teamwork and determination were rewarded with an entry in the Guinness Book of Records, when some 1 500 able and disabled young people produced the largest jig-saw puzzle ever assembled, to mark the International Day of Disabled Persons.

Above: Champagne corks popped at the Stock Exchange of Hong Kong on December 10, when the Hang Seng Index soared through the mythical 10 000-point barrier. After a succession of records, the Index closed the year at 11 888.39 points.

111111

IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

in order to survive July 1, 1997. The JLG has so far agreed on the localisation of some 30 United Kingdom enactments.

The laws of Hong Kong also need to be reviewed and, if necessary, 'adapted' to ensure their compatibility with the Basic Law, so that they can continue to be in force.

During the year, both sides continued to exchange views on the localisation and adaptation of laws.

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. It holds meetings in Hong Kong.

During 1993, the Land Commission held two formal meetings. The two sides agreed to make available, during the 1993-94 financial year, a total of about 127.8 hectares of land. This included 45.59 hectares for the development of the Black Point Power Station. Discussions continue on the land grant for Container Terminal 9, construction of which has to commence as soon as possible to meet the growing demand for container handling capacity.

Under the terms of 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 SAR Government. 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 $44,232 million, representing the future SAR Government's share of premium income for the period May 27, 1985 to December 31, 1993, 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 SAR by China's National People's Congress (NPC). The Basic Law Drafting Committee and Basic Law Consultative Committee were established in 1985 to undertake the drafting of the Basic Law and to canvass public views on the drafts of the Basic Law. The first draft was published in April 1988 and the second draft in February 1989. The Basic Law was promulgated in April 1990 by the NPC, together with the designs for the flag and emblem of the SAR. It will come into effect on July 1, 1997.

Like the Joint Declaration, the Basic Law provides that the SAR will enjoy a high degree of autonomy and that the capitalist system and way of life shall remain unchanged for 50 years after July 1, 1997. It also prescribes the systems to be practised in the SAR.

49

5

THE ECONOMY

50

  THE Hong Kong economy maintained a steady growth in 1993. The gross domestic product (GDP) grew by 5.5 per cent in real terms, with increases of 5.4 per cent in the first half of the year and 5.6 per cent in the second half. The corresponding growth rate in 1992 was 5.3 per cent.

Locally, consumer spending continued to register solid increases.

Investment in building and construction strengthened, supported by the acceleration in activity in the public sector.

   However, investment in machinery and equipment consolidated, following the large increases in the previous years.

   Externally, re-exports continued to perform strongly. The growth rate was, however, less rapid in the fourth quarter, affected by the slack demand in the major overseas markets. Many of these re-exports were products of outward processing arrangements involving Hong Kong companies and manufacturing entities in China. Domestic exports, after showing virtually no change in the first quarter, slackened further in the ensuing three quarters.

   In line with the steady economic growth, the labour market tightened slightly in the second half after a temporary easing earlier in the year. The seasonally adjusted unemployment rate was 2.3 per cent in the first half of 1993, while in the second half it was two per cent. Labour resources continued to shift from manufacturing to the services sector, induced by the on-going structural transformation of Hong Kong into a more service-oriented economy. Average earnings in the major sectors showed further significant increases.

Apart from temporary relapses in some months due to volatile movements in the prices of certain essential foodstuffs, consumer price inflation was generally on a moderating trend during 1993. The inflationary pressures were largely generated domestically, rather than imported.

   The rate of increase in the Consumer Price Index (A) for the year as a whole was 8.5 per cent, appreciably lower than the 12 per cent recorded in 1991 and 9.4 per cent recorded in 1992.

   The GDP deflator, as a broad measure of overall inflation in the economy, also moderated, from 10.1 per cent in 1992 to 7.8 per cent in 1993. The rate of increase in the domestic demand deflator was consistently lower than that in the GDP deflator, and it decelerated from 6.6 per cent in 1992 to 5.7 per cent in 1993.

THE ECONOMY

Structure and Development of the Economy

     Due to its 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-oriented nature of the economy can be seen from the fact that in 1993, the total value of visible trade (comprising domestic exports, re-exports and imports) amounted to 250 per cent of the GDP. If the value of imports and exports of services is also included, this ratio becomes 282 per cent. Between 1983 and 1993, 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 $2,119 billion in overall visible trade in 1993, Hong Kong ranks 10th 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 fisheries, 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 to about 13 per cent in 1992, reflecting partly the continued expansion of the services sector and the progressive relocation of manufacturing processes across the border. 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 1992.

       The contribution of the tertiary services sector 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 62-64 per cent during the period 1983 to 1986, before rising steadily to 76 per cent in 1992.

The most notable change in employment 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 22 per cent in 1993. On the other hand, the share of the tertiary services sector as a whole in total employment increased from 41 per cent in 1971 to 47 per cent in 1981, and further to 69 per cent in 1993.

The Manufacturing Sector

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

51

THE ECONOMY

52

these groups. The pressures of protectionism and growing competition from other economies have resulted in local manufacturers intensifying their efforts to diversify, not only products but markets. A major proportion of Hong Kong's manufacturing output is eventually exported. During the period 1984 to 1993, the volume of domestic exports grew at an average of 5.1 per cent per annum, notwithstanding the restructuring in the manufacturing sector and decline in employment.

   Manufacturing firms in Hong Kong must be flexible and adaptable 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 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 land and space constraints, the territory's manufacturing industries usually operate in multi-storey factory buildings, resulting in concentration in the production of light manufactures.

   Over the past 30 years, many industries have emerged and grown, the most notable being plastics and electronics. The textiles and clothing industries remain prominent, 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 1991, the value of net output by the manufacturing sector grew at an average annual rate of 14 per cent, while manufacturing employment fell at an average annual rate of one per cent. Even after taking into account the effect of price increases on the output value, a significant improvement in labour productivity was evident.

   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 1991, while its share in manufacturing employment fell from 21 per cent to 15 per cent. Set against this decline was the expansion of the electrical appliances and electronics, and watches and clocks industries. Between 1973 and 1991, their shares in the net output of manufacturing increased from nine per cent to 12 per cent, and from one per cent to two per cent, respectively.

   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. Over the past five years, China's share of Hong Kong's total domestic exports has been increasing steadily, and in 1993, overtook the United States of America to become the territory's largest market. The shares of domestic exports to a number of countries in the Asia-Pacific region have also risen. In 1993, Singapore became the fourth largest market for Hong Kong's domestic exports. The territory has, in addition, diversified into other new markets, including countries in the Middle East, Eastern Europe, Latin America and Africa.

The Services Sector

  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 services sector to flourish and diversify. Of particular note has been the rapid growth

THE ECONOMY

and development in finance and business services, including banking, insurance, real estate, and a wide range of other professional services.

Entrepôt trade re-emerged prominently 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 in general, and China in particular, increased rapidly. Re-export trade thus showed a significant increase, with an average annual growth rate of 26.6 per cent in real terms during 1984 to 1993.

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 in- creasingly popular. This development has been reinforced by the rapid growth in tourism. Restaurants and hotels have also experienced a substantial increase in business. With higher household incomes, there has been a growing demand for services of a better quality and services in the community, social and recreational fields have also grown substantially.

       Analysed by sectors, the contribution to the GDP of the wholesale, retail and import/ export trades, restaurants and hotels varied between 19 and 21 per cent from 1970 to 1983, before rising to 27 per cent in 1992. The contribution to the GDP of the transport, storage and communications group was stable at around seven to eight per cent, before rising to nine per cent for the period 1987 to 1991, and further to 10 per cent in 1992. 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. It rose steadily in the following years, to 24 per cent in 1992.

       Within the services sector, the most notable increase in employment was in the wholesale, retail and import/export trades, restaurants and hotels field. The largest employer in the services sector, its share of the total employed workforce rose from 16 per cent in 1971 to 19 per cent in 1981 and further, to 28 per cent, in 1993. This was followed by finance, insurance, real estate and business services, where the employment share rose from three per cent in 1971 to five per cent in 1981 and further, to nine per cent, in 1993.

Between 1983 and 1993, exports of services rose at an average annual rate of nine per cent in real terms, while imports of services were higher at 10 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 total imports of services were 45 per cent and 33 per cent, respectively, in 1992. Travel services accounted for 35 per cent of the total value of exports of services and 46 per cent of the total value of imports of services. The corresponding shares for financial and banking services in total exports and total imports of 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. The two are each other's major trading partners.

53

THE ECONOMY

54

   In 1993, the total value of visible trade between Hong Kong and China amounted to $740 billion, representing an increase of 18 per cent over 1992. This rapid growth reflected partly the buoyant economic conditions in China and partly the sustained growth in outward processing trade.

China was the largest market for Hong Kong's domestic exports during the year, accounting for 28 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 88 per cent of the goods re-exported through Hong Kong were 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 use of the port and airport, as well as institutional support such as financial and related business services. This is evidenced, among other things, by the increasing importance of Hong Kong as a centre for entrepôt, trans- shipment and other supporting activities involving China.

   Hong Kong has always been a convenient gateway to China for business and tourism. In 1993, 23 million trips to China were made by Hong Kong residents, and another 1.9 million trips to China were made by foreign visitors through Hong Kong. These repre- sented increases of eight per cent and 10 per cent, respectively, over 1992.

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 Province occupies an important position in this respect. It has been estimated that, in Guangdong, more than 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 such as banking, importing and exporting, wholesaling and retailing, and transportation and warehousing to newer areas such as property develop- ment, provision of financial services, manufacturing and involvement in infrastructural projects.

Increasing financial links between Hong Kong and China are reflected by the rapid growth in financial transactions with China in recent years. The Bank of China Group is now the second largest banking group in Hong Kong, after the Hongkong Bank Group. The latter group is among the best-represented foreign banks in China; others include the Bank of East Asia and the Standard Chartered Bank.

   Hong Kong is a major funding centre for China. Most of China's fund-raising activities in the territory 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 gain access to external borrowings. These loans are mostly for financing China's own economic development, but some are used by China-interest companies in Hong Kong to finance their investment activities in the territory 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 the issue of shares to raise funds. A

THE ECONOMY

major development in 1993 was the listing of the shares of six of China's state-owned enterprises on the Hong Kong Stock Exchange.

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

The Economy in 1993

External Trade

      Reflecting the on-going structural shift of domestic exports to re-exports, re-exports grew further by 19 per cent in value terms in 1993 over the level for the previous year. With an estimated one per cent decrease in prices, there was a 20 per cent increase in real terms. The corresponding growth rates in 1992 were 29 per cent and 28 per cent, respectively.

China remained the largest source of, as well as the largest market for, Hong Kong's re-exports. Supported mainly by the expansion of outward processing activities across the border, re-exports involving China (in both directions) continued to rise rapidly. Re-exports not involving China showed only a marginal increase. The other major re-export markets were the United States of America, Germany, Japan, Taiwan and the United Kingdom. The major suppliers of Hong Kong's re-exports, apart from China, were Japan, Taiwan, the USA, and the Republic of Korea.

Analysed by end-use categories, Hong Kong's re-exports comprised mostly consumer goods, and raw materials and semi-manufactured goods, which represented 54 per cent and 26 per cent, respectively, of the total value of re-exports. Re-exports of footwear, clothing, telecommunications and sound recording and reproducing equipment, textile fabrics, and electrical machinery and appliances showed faster increases than re-exports of other commodity items.

The value of domestic exports fell by five per cent in 1993 over 1992. As prices were relatively static in 1993, there was a five per cent decline in real terms. This compared with an increase of one per cent in value terms or virtually no growth in real terms in 1992. On a year-on-year comparison, domestic exports recorded virtually no change in real terms in the first quarter of 1993, but fell by seven per cent, five per cent and seven per cent in the following three quarters, respectively.

Domestic exports to China were up by three per cent in real terms in 1993 a much slower growth rate than the 14 per cent increase recorded in 1992. A large proportion of these domestic exports were related to outward processing arrangements commissioned by Hong Kong companies. Domestic exports to the USA, Germany, the United Kingdom and Japan declined, by nine per cent, 11 per cent, 10 per cent and 13 per cent, respectively, in real terms in 1993. On the other hand, domestic exports to a number of economies in the Asia-Pacific region continued to rise considerably.

Analysed by major product categories, domestic exports of metal manufactures recorded the fastest growth, up by four per cent in real terms. This was followed by domestic exports of electronic components, up by three per cent. Conversely, domestic exports of textiles, metal ores and scrap, clothing, watches and clocks, and electrical appliances fell, by one per cent, four per cent, eight per cent, 15 per cent and 20 per cent, respectively, in real terms.

       Imports grew by 12 per cent in value terms, or by about 13 per cent in real terms, in 1993. This compared with an increase of 23 per cent in value terms, or 22 per cent in real

55

THE ECONOMY

56

terms, in 1992. The major sources of Hong Kong's imports were China, Japan, Taiwan, the USA, the Republic of Korea and Singapore. The slower growth in imports in 1993 was largely attributable to the less rapid rise in re-exports and the more moderate increase in imports retained for local use.

   Retained imports increased by only three per cent in value terms, or by about four per cent in real terms. Among the various end-use categories, retained imports of consumer goods, food, capital goods and raw materials and semi-manufactured goods increased by about 10 per cent, two per cent, one per cent and one per cent, respectively, in real terms. But retained imports of fuels fell by nine per cent in real terms.

   With the value of total exports (domestic exports plus re-exports) smaller than that of imports, a visible trade deficit of $26 billion, equivalent to 2.5 per cent of the total value of imports, was recorded in 1993. This compared with a deficit of $30 billion, equivalent to 3.2 per cent of the total value of imports, recorded in 1992. As the prices of total exports declined at a slower rate than those of imports in 1993, the terms of trade showed a small improvement.

Domestic Demand

  Domestic demand recorded further solid growth of five per cent in real terms in 1993, following a 10 per cent growth in 1992. Against the background of full employment and rising real incomes, private consumption expenditure registered a further significant increase of seven per cent during the year, having risen by eight per cent in 1992. Government consumption expenditure, on the other hand, recorded only a modest increase of two per cent (in national accounts terms). Investment demand, measured in terms of gross domestic fixed capital formation, grew by five per cent in real terms in 1993, following a 10 per cent increase in 1992. Among its major components, expenditure on building and construction recovered significantly to register an increase of 14 per cent in real terms in 1993, following virtually no growth in 1992. The pick-up was mainly attributable to the acceleration in work on a number of major infrastructural projects in the public sector. Expenditure on machinery and equipment consolidated, however, registering an increase of six per cent in real terms in 1993, compared with 22 per cent in 1992.

The Labour Market

  The labour market tightened slightly in the latter part of 1993, after a temporary easing earlier in the year. In the fourth quarter, the seasonally-adjusted unemployment rate was two per cent, the same as that in the third quarter but 0.1 of a percentage point lower than that in the same quarter in 1992. The under-employment rate, at 1.5 per cent, was 0.2 of a percentage point higher than that in the third quarter and 0.5 of a percentage point lower than that in the same quarter in 1992.

   Continuing the shift to the services sector, employment in the manufacturing sector decreased by 11 per cent from the level of a year earlier to 508 100 in September 1993, with vacancies also declining markedly by 26 per cent over the same period to 14 100. Offsetting this, employment in the services sector as a whole increased by six per cent to 1 722 900, and vacancies also rose, by three per cent to 55 800. In the services sector, employment in the wholesale, retail and import and export trades increased by eight per cent; that in

THE ECONOMY

      finance, insurance, real estate and business services by nine per cent; and that in water transport, air transport and services allied to transport by seven per cent, but employment in restaurants and hotels fell by two per cent. On building and construction sites, employment decreased by 18 per cent. However, for the building and construction industry as a whole, employment of site and non-site workers taken together showed a smaller decline of five per cent.

The generally tight labour market conditions continued to boost labour incomes. Comparing September 1993 with September 1992, average earnings in all major economic sectors, in terms of payroll per person engaged, continued to show significant increases in money terms. Average earnings in the wholesale, retail and import and export trades recorded the fastest increase, up by 14 per cent in money terms between September 1992 and September 1993. This was followed by finance, insurance, real estate and business services, up by 13 per cent; restaurants and hotels, up by 12 per cent; and manufacturing, up by 10 per cent. After adjusting for inflation, the increases in real terms for these sectors were six per cent, five per cent, three per cent and two per cent, respectively. Earnings in transport, storage and communications recorded a more moderate increase of eight per cent in money terms, giving virtually no change in real terms.

The Property Market

After a brief consolidation in the first quarter of 1993, trading in the residential property market picked up markedly, along with a price upsurge, in the second quarter. Market sentiment was boosted by the success of a number of pre-completion sales exercises by the major developers, and the resumption of the Sino-British talks on Hong Kong's constitutional development and on financing arrangements for the new airport. Trading remained active during most of the third quarter with flat prices rising further. But activity contracted somewhat towards the end of the quarter. Notwithstanding a sustained low mortgage rate, reduced affordability following the large price increases and the tightening of mortgage lending by the major banks during the third quarter had set in to dampen demand. The market turned quieter during most of the fourth quarter as flat prices softened slightly. But trading activity revived again towards the end of the year, stimulated this time by the price fetched in the auction of a residential site in Kowloon Tong in mid-December, which was substantially above expectations. Meanwhile, the rental market for residential property was on a steady course, with rentals showing a less rapid increase than sale prices. The average rental yield for residential flats thus fell further in 1993.

       In the market for shopping space, demand remained firm due to the rapid increase in visitor arrivals and the steady growth in spending by local residents. Sale prices and rentals for shop premises continued to rise significantly. For office space, rentals were on a general uptrend due to a sustained growth in end-user demand as the economy became more and more service-oriented. Trading in office strata in prime office premises also attracted considerable investment interest, and prices rose significantly. The market for industrial property, however, remained soft. Prices and rentals for conventional flatted factory space were generally static. But the market for modern industrial premises designed also for ancillary office use fared better, with prices and rentals picking up continuously.

The response to the various government land auctions conducted in 1993 was generally

good.

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58

Inflation

  Consumer price inflation, as measured by the Consumer Price Index (A), or CPI(A), moderated to 8.5 per cent in 1993, from 9.4 per cent in 1992. The CPI(B), Hang Seng CPI and Composite CPI showed broadly similar trends. They rose by an average of 8.7 per cent, 9.5 per cent and 8.8 per cent, respectively, in 1993, compared with increases of 9.6 per cent, 9.8 per cent and 9.6 per cent, respectively, in 1992.

The year-on-year rate of increase in the CPI(A) decelerated from 9.4 per cent in the fourth quarter of 1992 to 8.8 per cent in the first quarter of 1993 and further to 8.2 per cent in the second and third quarters. In the fourth quarter, it edged higher to 8.7 per cent, largely reflecting the volatility in the prices of certain fresh food items amidst changing weather conditions. In December, the year-on-year rate of increase in the CPI(A), CPI(B), Hang Seng CPI and Composite CPI stood at 8.6 per cent, 8.5 per cent, 10.2 per cent and nine per cent, respectively.

Among the various components of the Consumer Price Index (A), the cost of housing continued to show the fastest increase, up by an average of 12.6 per cent in 1993 over 1992. This was followed by price increases for alcoholic drinks and tobacco (10.5 per cent), and miscellaneous services (9.5 per cent). These three components together accounted for 48 per cent of the overall increase in the index. Comparing the first half of the year with the second half, however, the rates of increase in their prices were generally on a moderating trend.

The prices for durable goods, fuel and light, miscellaneous goods and food increased at a much slower rate, by an average of two per cent, four per cent, seven per cent and seven per cent, respectively. As faster price increases were generally recorded for items with a larger local input, inflationary pressures were mostly generated domestically rather than imported.

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 re- sources in the economy is best left to market forces, with minimal government interven- tion 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 a 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 Hong Kong Housing Authority, the Urban Council and the Regional Council.

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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 Corporation and Kowloon-Canton Railway Corporation), is excluded.

       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 government 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 acquisi- tions, capital subventions, major systems and equipment items and computerisation. On May 27, 1985, when the Sino-British Joint Declaration on the Question of Hong Kong 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 finances the government's capital investments in public bodies, such as equity injection in the Mass Transit Railway Corporation, capital invest- ments in the Hong Kong Housing Authority and advances to the Provisional Airport Authority. Its income is derived mainly from dividends and interest on investments and appropriations from the General Revenue Account.

       The Loan Fund finances government loan schemes such as housing loans and student loans. Its income is mainly derived from loan repayments, interest on loans and appropria- tions from the General Revenue Account.

       The Lotteries Fund finances social welfare services through grants and loans. Its regular source of income is derived mainly from the sharing of the proceeds of Mark Six lotteries.

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 the 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 1992-93 was $123.5 billion. The government itself accounted for $105 billion, excluding equity injections in the Mass Transit Railway Corporation, the Hong Kong Housing Authority, the Provisional Airport Authority and other bodies. The growth rate over the preceding year was 13.9 per cent in nominal terms or 3.7 per cent in real terms. Some $31.1 billion or 25.2 per cent of the public expenditure in 1992-93 was of a capital nature. An analysis of expenditure by function is at Appendix 8.

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   Public expenditure has been around 15 to 17 per cent of the gross domestic product since 1987-88. It is estimated that this will rise to about 19 per cent in 1993-94. The growth rate of public expenditure is compared with the rate of economic growth at Appendix 9.

   Total government revenue in 1992-93 came to $132.8 billion. The consolidated cash surplus was $22 billion, including net borrowings of $2.5 billion. Details of revenue by source and of expenditure by component for 1992-93 and 1993-94 (estimated) 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 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 (1974-75, 1982-83, 1983-84, 1984-85 and 1990-91), the General Revenue Account has shown a surplus of income over expenditure at the end of each year for the past 20 years. The accumulated net surpluses on the General Revenue Account and on the Funds, together, form the government's fiscal reserves. These are available to meet any calls on 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). Additional income is derived from fees and charges for the services the councils provide.

   The Hong Kong Housing Authority, operating through the Housing Department, is also financially autonomous. Its income is derived mainly from flat sales and 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 activities such 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. 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. The government accords a high priority to curbing tax avoidance and evasion. (For a compilation of the major sources of revenue, see Appendix 11.)

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The Inland Revenue Department is responsible for the collection of over 50 per cent of total revenue, including earnings and profits tax, stamp duty, betting duty, estate duty and hotel accommodation tax. Revenue from these sources are collectively described as internal

revenue.

Earnings and profits tax, which alone accounted for about 39 per cent of total revenue in 1992-93, is levied under the Inland Revenue Ordinance. Persons liable to this tax may be assessed on three separate and distinct sources of income: business profits, salaries and income from property.

Profits tax is charged only on net profits arising in Hong Kong, or derived from a trade, profession or business carried on in Hong Kong. Profits of unincorporated businesses are currently taxed at 15 per cent and profits of corporations are taxed at 17.5 per cent. Tax is payable on the actual profits for the year of assessment.

Profits 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 1992-93, the government received some $32 billion in profits tax, amounting to about 24 per cent of the total

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 segments of net income (that is, income after deduction of allowances) of $20,000, to nine per cent and 17 per cent on the second and third segments of $30,000 each, respectively, 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 $20 billion, or 15 per cent of total revenue, in 1992-93.

Owners of land or buildings in Hong Kong are charged property tax at the standard rate of 15 per cent for the actual rent received, less an allowance of 20 per cent for repairs and 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 $1.3 billion in 1992-93.

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 10 per cent of total revenue, or $13 billion, in 1992-93.

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 six per cent of total 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. The yield in 1992-93 totalled some $8 billion.

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62

Other taxes collected by the Inland Revenue Department include estate duty, imposed on estates valued at over $5 million at levels ranging from six per cent to a maximum of 18 per cent, and hotel accommodation tax of five per cent, imposed on expenditure on accommodation by guests in hotels and guest-houses.

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 1992-93, $7.2 billion was collected in duties, accounting for about six per cent of total revenue. Duties are levied on four groups of commodities - hydrocarbon oils, alcoholic liquor, methyl alcohol and tobacco.

Duties are imposed irrespective of whether the product concerned is locally manu- factured or imported. There is no discrimination on the grounds of geographic origin.

   A comprehensive review of the Dutiable Commodities Ordinance is presently being undertaken to update terminology and streamline administrative procedures.

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, besides providing a stable and reliable revenue stream for the government.

   The rateable value is an estimate of the annual rent at which a property might be expected to be let, as at a designated date, and general revaluations are conducted at intervals to keep rateable values up-to-date. During the year, the department prepared new lists of rateable values to take effect on April 1, 1994. These rateable values reflect rental values at July 1, 1993.

The percentage charge is fixed annually by the Legislative Council in accordance with the financial requirements of the government, the Urban Council and the Regional Council. The percentage charge for the year 1993-94 was fixed at 5.5 per cent. Of this amount, three per cent of the revenue collected from Hong Kong Island and Kowloon was credited to the Urban Council and 3.75 per cent collected from the New Territories went to the Regional Council. The remainder, amounting to $4.4 billion, was credited to the government's General Revenue Account.

   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 $8 billion in 1992-93. The government's general policy is that the cost of the service provided should be fully covered by the level of relevant fees or charges. Certain essential services are, however, subsidised by the government or provided free.

   A further $7.2 billion was generated by government-operated public utilities. The most important of these, in revenue terms, are water supplies, postal services and the 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 $4.9 billion, was collected by the Commissioner for Transport.

In addition, some $8.9 billion, or about seven per cent of the total revenue of the year, was generated by land transactions. Following the implementation of Annex III of the Joint Declaration, revenue from land transactions decided upon before the coming into force of the Joint Declaration, and from those conferring a benefit that expires on or before June 30, 1997 (amounting to some $300 million in 1992-93), was credited to the general

THE ECONOMY

     revenue. All revenue from other land transactions is credited to the suspense account of the Capital Works Reserve Fund, pending sharing with the future Hong Kong Special Administrative Region Government. The sharing arrangement in 1992-93 resulted in $8.6 billion being transferred to the works account of the Capital Works Reserve Fund and $7.6 million to the future Hong Kong Special Administrative Region Government's account.

A further sum of some $1.1 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 Limited and television broadcasters, as well as holders of concessions to operate taxis and petrol stations.

      The government's revenue sources provide for 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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FINANCIAL AND MONETARY AFFAIRS

64

  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.

Some 513 authorised institutions from about 40 countries conduct business under the Banking Ordinance and the presence of 81 of the world's top 100 banks has helped promote the territory as an international financial centre.、

   The external assets of the banking sector were ranked the fourth largest in the world and the forex turnover was the sixth largest in 1993.

   Hong Kong also has the second largest stock market in Asia outside Japan. During the year under review, the Hang Seng Index reached a succession of new records, closing 115.67 per cent higher at 11 888.39 points on December 31. It was also the year when 'H' shares of state-owned enterprises of the People's Republic of China were first listed on the local exchange.

   In January, the government announced that the Bank of China will become the third note-issuing bank in Hong Kong in 1994.

   On April 1, the Hong Kong Monetary Authority was set up to oversee monetary and reserves management and banking supervision.

   During the year, the Hong Kong Government also successfully sold the Overseas Trust Bank to a subsidiary of the Guoco Group Limited for a total consideration of $4,457 million. The Overseas Trust Bank was taken over by the government in June 1985. It was the last government-owned bank returned to the private sector.

Financial Institutions

Hong Kong maintains a three-tier system of deposit-taking institutions licensed banks, restricted licence banks and deposit-taking companies, which are collectively called authorised institutions.

   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 a 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 then prevailing requirements of a paid-up capital

FINANCIAL AND MONETARY AFFAIRS

of at least $150 million and a minimum trading period of 10 years as an authorised institution, an applicant has to also 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 1992. 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 1993, there were 172 licensed banks in Hong Kong, 32 of which were locally incorporated. They maintained a total of 1 605 offices. In addition, there were 142 representative offices of foreign banks. The total deposit liabilities of all the licensed banks to customers at the end of the year was $1,676 billion. (For details, see Appendix 12.)

       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 of up to 15 months less a day, with the exception of deposits of $500,000 or above, 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 manage- ment. If incorporated overseas, the applicants must also be subject to adequate home supervision. 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 1993, there were 57 restricted licence banks and their total deposit liabilities to customers was $29 billion.

       Restricted licence banks may 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', 'investment' or 'wholesale'. 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 Hong Kong Monetary Authority. In addition to certain basic criteria, registration will be granted only to companies which are more than 50 per cent owned by a bank. 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 1993, there were 142 deposit-taking companies, and their total deposit liability to customers was $17 billion.

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FINANCIAL AND MONETARY AFFAIRS

66

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 the securities business, fund management and the provision of investment advice.

   The government's sale of the Overseas Trust Bank to a subsidiary of the Guoco Group Limited in 1993 marked the end of the government's efforts to rescue banks in the 1980s. The Exchange Fund was involved in the rescue of seven banks in the 1980s, either by direct government acquisition or by provision of assistance in acquisitions by third parties. These rescues were carried out to maintain the stability of Hong Kong's banking sector and monetary system during a critical period. The latest estimate of the total net costs of the seven rescues amounted to $3.8 billion (about 3.6 per cent of the accumulated earnings and 1.3 per cent of the total assets of the Exchange Fund as at the end of 1992).

   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 Com- modities Trading Ordinance and the Securities and Futures Commission Ordinance. At the end of 1993, there were 10 840 registered persons. Of the 355 registered corporate securities dealers, 177 were from overseas. Of the 117 commodities dealers, 50 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 the year, the stock exchange had 579 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 1993, the Futures Exchange had 107 members.

Under the Insurance Companies Ordinance, insurance companies are authorised by the Insurance Authority to transact business in Hong Kong. At the end of 1993, there were 229 authorised companies. Of these, 125 were overseas companies from 27 countries.

Financial Markets

Hong Kong has a mature and active foreign exchange market, which forms an integral part of the corresponding global market. The link with other major overseas centres enables foreign exchange dealing to continue 24 hours-a-day around 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 the territory, including the US dollar, Deutschemark, Yen, Sterling, Swiss franc, Australian dollar and Canadian dollar. As a market in foreign exchange, Hong Kong is favoured for many reasons, including an advantageous 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 $111 billion in December 1993. 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

FINANCIAL AND MONETARY AFFAIRS

www.amcomm

      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 1993, Hong Kong dollar interbank liabilities accounted for 30 per cent of the total Hong Kong dollar liabilities of the banking sector and foreign currency interbank liabilities accounted for 76 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 $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, 28 market makers and 102 recognised dealers had been appointed by the end of 1993. The market makers are obliged to quote two-way yields for the bills during normal money market trading hours. At the end of the year, outstanding issues of 91-day, 182-day and 364-day bills amounted to $15.6 billion, $6.2 billion and $4.4 billion, respectively.

Following the establishment of the Hong Kong Monetary Authority (HKMA) on April 1, 1993, the two-year Exchange Fund Notes were first issued in May. They will phase out outstanding two-year government bonds by early 1995. The notes' proceeds are credited to the Exchange Fund, instead of the Capital Works Reserve Fund as in the case of government bonds. To help further develop Hong Kong's debt market, the HKMA launched in October the first quarterly issue of three-year Exchange Fund Notes. This has provided a reliable benchmark for three-year money. The outstanding Exchange Fund Notes and government bonds amounted to $5.4 billion at the year's end. As with the Exchange Fund Bills programme, both recognised dealers and market makers have been appointed under the Exchange Fund Notes programme. The notes are available in minimum denominations of $50,000. They are similarly issued in paperless form through tenders.

       The local capital markets are 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 organ- isations and companies. Although the majority of issuers are locally-based institutions, a number of non-resident institutions have also come in to tap the local capital markets in recent years. Among the multilateral agencies active in this area in 1993 was the International Finance Corporation (IFC), which issued Hong Kong dollar bonds of $500 million in February. The Asian Development Bank (ADB) issued 30 billion Yen worth of Dragon-yen bonds in March, which were placed simultaneously in Hong Kong, Singapore and Taipei. In May, the Nordic Investment Bank (NIB) also issued US$250 million five-year Dragon bonds which were placed in Hong Kong, London and Singapore. In August and September, the IFC launched two further Hong Kong dollar bond issues of $750 million and $500 million, respectively. In September, the ADB launched its second Hong Kong dollar bonds programme to raise $1 billion. In November, the NIB launched

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FINANCIAL AND MONETARY AFFAIRS

its first Hong Kong dollar issue of $500 million, and the World Bank launched a $1 billion issue which was priced with reference to the benchmark established in October by the three-year Exchange Fund Notes. All these issues were well received by the market.

To promote and facilitate the development of the Hong Kong dollar debt market, the HKMA launched the Central Moneymarkets Unit (CMU) Service in December, with clearing operations to commence on January 31, 1994. The CMU Service, run by the HKMA, performs the role of a central custodian and clearing agent for Hong Kong dollar debt instruments issued by private sector borrowers. It handles debt instruments which are either immobilised or dematerialised, and the transfer of title is effected by computer book entry. The CMU Service offers an efficient, safe and convenient clearing system, which will go a long way towards reducing transaction costs and settlement risk.

   The stock market also serves as an important source of capital. In 1993, after the signing of a Memorandum of Regulatory Co-operation by the regulatory authorities and stock exchanges of Hong Kong and the People's Republic of China, 'H' shares of six state-owned enterprises of China were listed on the local stock exchange.

   At the end of the year, 477 public companies were listed on the Stock Exchange of Hong Kong Limited.

   With a total market capitalisation of $2,975 billion, the Hong Kong stock market was ranked sixth in the world, after the United States of America, Japan, the United Kingdom, Germany and France.

The Hong Kong Futures Exchange Limited successfully launched the first traded options contract in Hong Kong. Since they commenced trading in March, Hang Seng Index options have been well-received by investors. Meanwhile, the futures exchange continues to offer futures contracts in the Hang Seng Index and Sub-Indices, interbank interest rates and gold.

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 closely follow 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 adequate regulation to ensure, as far as possible, sound business standards and confidence in the institutional framework, but without unnecessary impedi- ments of a bureaucratic or fiscal nature.

The authority for the prudential supervision of banks, restricted licence banks and deposit-taking companies is vested in the HKMA. Its authority is derived from the Banking Ordinance, the provisions of which relate to the supervision of authorised institutions, in order to provide a measure of protection to depositors and to promote the general stability and effective operation of the banking system.

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The HKMA has broadened its approach to supervision, which was previously reliant on on-site examinations. Such 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 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 interviews with the senior management of institutions, at which the business, prospects and potential areas of concern of institutions are discussed. This broader approach to supervision has enhanced the HKMA's ability to identify potential areas of concern, which can be followed up by on-site examinations.

       As an international financial centre, Hong Kong's banking supervisory policies are in line with international standards, especially those recommended by the Basle Committee on Banking Supervision. In 1992, the Basle Committee issued 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 without being subject to effective consolidated supervision. To ensure compliance with these standards, Hong Kong added them to its bank licensing criteria in September 1992. In the case of a foreign applicant, its home supervisor must have established, or be working to establish, the necessary capabilities to meet the minimum standards.

In February 1993, the same requirement was added to the licensing criteria for restricted licence banks and deposit-taking companies.

The Basle Committee issued another paper in 1992 setting out a number of proposals on the supervision of liquidity for consideration by banking supervisors worldwide. In the light of these proposals, the HKMA carried out a review of its own regime on the supervision of liquidity. A working group on liquidity, comprising representatives nominated by the Hong Kong Association of Banks and the Hong Kong Association of Restricted Licence Banks and Deposit-taking Companies, was established to consider the proposals put forward by the HKMA. Two consultation papers, setting out the details of a proposed new approach towards the supervision of liquidity, were issued in April and July, respectively, for comment by the banking industry. Under the proposed new approach, the adequacy of an institution's liquidity would be assessed having regard to six factors: liquidity ratio, maturity mismatch profile, ability to borrow in the interbank market, intra-group transactions, loan to deposit ratio, and diversity and stability of deposit base. After extensive consultation, the proposal was found acceptable by the market. The HKMA plans to implement the new regime in June 1994.

Due to the rapid rise in property prices and speculation in the property market, the government issued in 1991 a number of warnings about the need for greater prudence in residential mortgage lending. In November that year, a number of leading institutions. responded to these warnings by lowering their loan-to-value ratio for residential mortgages to 70 per cent, which then quickly became an industry norm. Since then, the HKMA has worked to ensure that the guideline is observed by all authorised institutions. The HKMA conducts a monthly survey on the residential mortgage lending of a sample of 33 institutions, which together account for about 94 per cent of such lending in Hong Kong, to monitor the possible impact of the guideline on the residential property market and on the mortgage business of institutions.

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70

In response to a series of large over-subscriptions to new share issues, the HKMA established a working group in February to assess implications on the monetary and banking systems. The working group concluded that the monetary and banking systems have been able to cope well with the large over-subscriptions. However, it was not entirely clear that individual institutions had adequately understood and fully managed the risks arising from the financing of the subscriptions to new share issues. As a result, the working group made a number of recommendations which aimed to prevent institutions from over-exposing themselves to such risks. The recommendations include a requirement that institutions should apply a margin requirement of not less than 10 per cent to all their lending for subscriptions of new share issues. This margin requirement should apply to all customers generally, including brokers related to the lending institution. The working group also recommended that the receiving bank of application monies should, when it recycles monies to the interbank market, adhere to the normal credit limits it has assigned to individual banks, which should not be exceeded, unless exceptional circumstances apply, subject to a maximum credit limit of not more than 25 per cent of the capital base of the receiving bank or of its parent bank, as appropriate.

Hong Kong is a member of the Financial Action Task Force, with a mandate of encouraging international efforts in the fight against drug money-laundering. Its system to prevent money-laundering conforms to international standards. To help combat money- laundering, a guideline on the prevention of the criminal use of the banking system for the purposes of money-laundering was issued in 1989 by the then Commissioner of Banking. This guideline was revised in 1993, in the light of the new anti-money-laundering initiatives taken by the international community. It spells out clearly the HKMA's expectations of the internal policies and procedures which institutions should adopt to guard against money-laundering.

The Commissioner of Insurance and the Securities and Futures Commission (SFC) have also taken initiatives separately to ensure that the insurance and securities and futures industries, respectively, take appropriate measures to guard against money-laundering. This included the issue in December of a guideline by the Commissioner of Insurance and the plan for legislative changes by the SFC to enable it to require appropriate actions to be taken by market players.

The SFC, which was established in 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 Commodities Exchanges (Prohibition) Ordinance, the Securities (Clearing Houses) Ordinance, the Securities (Disclosure of Interests) Ordinance, the Securities (Insider Dealing) Ordinance and part of the Companies Ordinance in so far as it relates to prospectuses and purchases by a company of its own shares. The commission will take on additional regulatory responsibilities when the Leveraged Foreign Exchange Trading Bill comes into effect.

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,

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investment advisers and other intermediaries. They also provide for the investigation of suspected malpractices in securities transactions and the maintenance of a compensation fund to compensate clients of defaulting brokers.

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

The Commodities Trading Ordinance, together with the Securities and Futures Commission Ordinance, provides a regulatory framework within which the Futures Exchange operates and dealers, commodity trading advisers and representatives conduct their business. It includes provisions for the registration of dealers and their representatives and the maintenance of a compensation fund to compensate clients of defaulting commodity dealers.

       The Securities (Clearing Houses) Ordinance provides for the recognition of a clearing house and approval of clearing house rules by the Securities and Futures Commission, and makes certain exceptions to insolvency law in relation to a clearing house and its role in guaranteeing the settlement of market transactions.

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 dealings publicly and that directors and executives disclose certain dealings.

The Leveraged Foreign Exchange Trading Bill, when enacted, will add a new component to the regulatory framework. The Bill provides for the regulation, by the Securities and Futures Commission, of the retail end of leveraged foreign exchange trading where an investor buys or sells spot currency by putting up a small percentage of the full value of the contract, settlement being made with reference to differences in exchange rates rather than actual delivery. Leveraged foreign exchange traders and their representatives will be required to be licensed under the proposed framework. The Bill also provides for the investigation of suspected trading malpractices, supplemented by rules governing arbitra- tion, conduct of business, maintenance of financial resources, accounts and audit, contract notes and appeal procedures.

       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). The conduct of insurance business in or from Hong Kong is restricted to authorised companies, to Lloyd's members 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

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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 a 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 the winding-up of the company involved.

  Self-regulatory measures to strengthen professional discipline in the insurance market have been formulated by the insurance industry, after consultation with the govern- ment. The measures involved the adoption by the 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. Enabling legislation is to be introduced to support the self-regulatory system under which no person shall be allowed to act as an insurance intermediary unless he is a registered insurance agent or an authorised insurance broker. The self-regulatory system will benefit Hong Kong as a developing international insurance

centre.

The Occupational Retirement Schemes Ordinance, providing a registration system for voluntarily established occupational retirement schemes, was brought into force on October 15, 1993. The Commissioner of Insurance was appointed the Registrar of Occupational Retirement Schemes to take on the responsibility for the regulation of private sector retirement schemes. The objective of the ordinance is to provide greater certainty that retirement scheme benefits promised to employees will be paid when they fall due. The ordinance requires all schemes operating in, or from, Hong Kong to be either registered with, or exempted by, the Registrar. All registered schemes are required to comply with certain basic requirements. These include requirements on asset separation (the assets of a scheme must be kept separate and distinct from the assets of the employer or the administrator); independent trusteeship (there should be at least one independent trustee who must not be the relevant employer himself, his employee or associate); restricted investments (prohibiting any loan to the employer of the scheme or his associate out of the scheme's assets, and any excessive investment in the business undertaking of the employer); funding (the assets of the scheme must be sufficient to meet its aggregate vested liability); independent audit and actuarial reviews; and submissions of annual financial statements to the Registrar. There are also requirements for disclosure of information, concerning the operation of the scheme, to its members.

Under the ordinance, existing retirement schemes are required to apply for registration or exemption, before October 15, 1995. It is estimated that there are about 25 000 retire- ment schemes currently in operation in Hong Kong.

The Securities and Futures Commission

The Securities and Futures Commission (SFC) was established on May 1, 1989, following the enactment of the Securities and Futures Commission Ordinance, which represented a first important phase in the overhaul of securities legislation in Hong Kong and the

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implementation of some of the major recommendations made by the Securities Review Committee in May 1988.

The ordinance transfers to the SFC the functions of the former Securities Commission, the Commodities Trading Commission and the Office of the Commissioner for Securities and Commodities Trading. It provides a general regulatory framework for the securities and futures industries, leaving certain elements to be covered 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 of them executive), who are appointed by the Governor. Each year the commission must present to the Financial Secretary a report and an audited statement of its accounts, which are laid before the Legislative Council.

       The commission 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, although no funding was sought from the latter in 1993. 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. Its annual budget in 1993 was about $180 million. On December 31, 1993, the SFC had an establishment of 222.

In its first four years of operation, the SFC has taken steps to develop a detailed framework of securities regulation that brings Hong Kong in line with internationally- 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 Take- overs 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 (the Code on Investment-Linked Assurance and Pooled Retirement Funds and the Code on Immigration-Linked Investment Schemes) have also been issued, enhancing the level of 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 stock exchange on the phased implementation of an Automatic Order Matching and Execution System (AMS) since November 1993, under which orders are entered into the screen-based trading system and executed automatically when the buy and sell prices match. The AMS enhances the trading capacity and efficiency of the stock market and enables the instant capture and dissemination of market data, which will contribute to greater market integrity and transparency.

Implementation of the AMS will facilitate the introduction of the short-selling of stocks on January 3, 1994. A sound regulatory structure has been developed to allow such short-selling through registered members of the stock exchange. Initially, 21 shares will be eligible for short-selling. These shares are the largest Hang Seng Index constituent stocks, a significant proportion of which are in the hands of the public.

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In May, the Hong Kong Securities Clearing Company successfully completed the phased admission of listed securities into the Central Clearing and Settlement System (CCASS). This is an automated book-entry system that handles the settlement of securities among brokers. The system was tested by the sharp increase in turnover during the last quarter of 1993 and proved capable and efficient in handling the large volume of transactions.

   Both the stock exchange and futures exchange finalised codes of conduct for their members in 1993. In addition, the SFC will introduce a code of conduct that applies to all other persons registered under the Securities Ordinance and the Commodities Trading Ordinance in 1994. All these codes are based on the principles developed by the International Organisation of Securities Commissions, of which Hong Kong is a member.

The SFC is also rationalising and updating Hong Kong's securities and futures legislation into a coherent, well-organised and user-friendly corpus of securities law.

   Transaction costs of securities trading decreased further during the year under review. The stamp duty and statutory levy were reduced from 0.2 per cent and 0.025 per cent to 0.15 per cent and 0.02 per cent, respectively, on the value of each purchase and sale of securities. The special levy on stock and futures transactions, which was introduced in 1987 to help repay the Lifeboat Loan made available after the market crash, was suspended with effect from August 16.

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 Southeast Asia and excellent communications with the rest of the world, have helped the territory to develop into an important international financial centre. The absence of any restrictions on capital flows into and out of the territory is also an important factor.

Foreign banks in Hong Kong tend to be the premier banks in their countries of incorporation and this is illustrated by the fact that 81 of the top 100 banks in the world in 1993 have operations in the territory. In addition, many merchant banks or invest- ment 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 the territory, and Hong Kong investment overseas is also believed to be considerable.

The Financial Scene

In respect of the liquidation of the Bank of Credit and Commerce (Hong Kong) Limited (BCCHK), two further dividends of 10 per cent and seven per cent were declared in April and October, respectively, to creditors with claims of over $100,000. This brought the total to 58 per cent, following the first payment of 41 per cent in September 1992 to creditors who were not covered by the court-sanctioned Scheme of Arrangement. Recovery of assets will continue and further dividend payment is expected.

FINANCIAL AND MONETARY AFFAIRS

During the year under review, the exchange rate of the Hong Kong dollar against the US dollar remained stable under the linked exchange rate system. Local interest rates remained at low levels, consistent with the interest rates in the United States of America. Hong Kong dollar deposits and loans recorded solid growth.

       The market exchange rate of the Hong Kong dollar against the US dollar moved within a narrow range of HK$7.722 and HK$7.761 to US$1. In May, it strengthened briefly to around HK$7.722. An inflow of overseas funds into the buoyant stock market and the firming up of interbank interest rates associated with new share issues contributed to the strengthening. In late June, it weakened once to an intra-day low of about HK$7.78, partly due to a rumour on the repatriation of funds to China to defend the exchange rate of the Renminbi. It then quickly rebounded to around HK$7.75 towards the end of June. During the fourth quarter, there was a strong inflow of overseas funds into the local stock market. As a result, the exchange rate of the Hong Kong dollar strengthened slightly, closing the year at HK$7.726 to US$1.

The marco-adjustment stabilisation programme of China, introduced in July, seemed to have little impact on the Hong Kong monetary sector. There was no clear sign of significant net outflow of funds to China, as evidenced by the stable Hong Kong dollar market exchange rate.

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. During most of the year, the US dollar appreciated against the major European currencies, as a result of the narrowing of the interest rate differential between the US dollar and the European currencies and the volatility in the exchange rates of some of the currencies under the Exchange Rate Mechanism. On the other hand, the US dollar weakened against the Japanese Yen in the face of the persistent trade surplus in favour of Japan. This trend was, however, reversed in the fourth quarter in view of the improved performance of the US economy. Largely reflecting these movements, the effective exchange rate index of the Hong Kong dollar edged up from 114.2 at the end of December 1992 to 115.3 in early February and then eased to 111.5 towards the end of April. It fluctuated around the range of 112-113 during the third quarter before edging up during the fourth quarter to close the year at 114.3. (For details, see Appendix 13.)

Partly affected by the strong funding demand around the Lunar New Year, the three-month Hong Kong interbank offered rate (HIBOR) generally stayed above the corresponding Euro-dollar deposit rate in January and firmed up further in mid-February under the influence of large share flotation exercises. Subsequent to a liquidity injection into the banking system by the Hong Kong Monetary Authority, the differential between the three-month HIBOR and the corresponding Euro-dollar rate narrowed towards the end of February. The two rates moved closely together between March and June but HIBOR was slightly higher than the corresponding Euro-dollar rate in July, again due to some share flotation exercises. Since July, the three-month HIBOR has eased slightly, drifting marginally below the corresponding Euro-dollar rates in October and the first half of November, but firming towards the end of the year due to share flotation exercises as well as year-end tightness in interbank liquidity. For 1993 as a whole, the average interest rate differential (in terms of three-month rates) was 0.15 of a percentage point, about the same as the corresponding 0.13 percentage point recorded in 1992.

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76

   During the year, deposit rates administered by the Hong Kong Association of Banks remained unchanged. At the year's end, the savings deposit rate was 1.5 per cent while the three-month and 12-month deposit rates were 2.75 per cent and 3.75 per cent, respectively. The best lending rate stood at 6.5 per cent.

   Hong Kong dollar deposits grew by 25.5 per cent during 1993, higher than the growth rate of 13.2 per cent in 1992. This was also higher than the growth in gross domestic product in money terms, at around 15 per cent. The acceleration in the growth of Hong Kong dollar deposits, particularly during the fourth quarter, was due to the inflow of funds. Foreign currency deposits increased by 5.5 per cent in 1993, compared to the 6.3 per cent increase recorded in 1992. Taken together, total customer deposits (in all currencies) increased by 14.6 per cent in 1993, compared with 9.3 per cent in 1992. The relative share of Hong Kong dollar deposits to total deposits rose to 49.8 per cent at the year's end, from 45.5 per cent a year earlier.

   Hong Kong dollar M1, M2 and M3 rose by 20.8 per cent, 26.9 per cent and 25.2 per cent, respectively, in 1993. The corresponding increases for total M1, M2 and M3 were 20.6 per cent, 16 per cent and 15.6 per cent, respectively. (For details, see Appendix 14.)

   Hong Kong dollar loans recorded a growth of 17.9 per cent in 1993, while foreign currency loans increased by 14.6 per cent. Analysed by major categories, loans for use in Hong Kong (including those for trade financing) increased by 17.7 per cent. Growth in residential mortgage loans increased from 13.6 per cent in 1992 to 19.5 per cent in 1993. Following a moderate growth of 2.3 per cent in the first quarter, the growth rate accelerated to 6.1 per cent and 7.7 per cent in the second and third quarters, respectively, as trading in the residential property market, in particular the luxury flats sector, revived, alongside a more bullish sentiment. In response to this, banks tightened their lending policy by reducing the maximum loan-to-valuation ratio of luxury flats from 70 per cent to 60 per cent in July. The growth in residential mortgage loans slowed in the fourth quarter to 2.2 per cent. Loans for trade financing recorded a significant increase of 15.7 per cent during 1993, largely reflecting the pick-up in trade activities. 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 pro- gramme facilitated the further development of the local capital markets. The two-year Government Bond programme was being replaced by the two-year Exchange Fund Note programme, starting from May. The Exchange Fund bills and notes continued to receive favourable market response, with tenders invariably several times over-subscribed. At the end of the year, the yields for the bills were around 35 to 45 basis points below the corresponding Hong Kong interbank offered rate, while the yields for the three-year Exchange Fund notes were around 20 basis points above the corresponding US Treasury bonds. Daily turnover of the bills and bonds, taken together, in the secondary market averaged $15.3 billion, or 48 per cent of the total amount of bills, notes and bonds outstanding, at $31.7 billion, at the year's end.

   New issue activity in respect of other debt instruments remained relatively moderate as equity funds were raised through the buoyant stock market. A total of 125 new issues of negotiable certificates of deposit were launched during 1993, of which 87 were denominated in Hong Kong dollars. Of these 87 issues, 57 were arranged on fixed-rate terms and the

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remaining 30 on floating-rate terms. At the end of the year, the outstanding value of Hong Kong dollar-denominated negotiable certificates of deposit amounted to $33.5 billion, compared with $26.9 billion a year earlier; 54 per cent of these were held outside the local banking sector.

       Of the 20 new issues of commercial paper and other debt instruments reported to the Securities and Futures Commission during 1993, eight were denominated in Hong Kong dollars.

       The local stock market was very buoyant in 1993. Favourable corporate results helped push the Hang Seng Index up to new records throughout the year. Stimulated by an influx of overseas funds in the fourth quarter, the Hang Seng Index saw a remarkable advance from October when the strong momentum was supported by heavy turnover. The Index rose to a record high of 11 959.06 on December 30, before closing the year at 11 888.39 - 115.67 per cent higher than the level recorded at the end of 1992. Although most Asian stock markets also reported outstanding gains during the year, the performance of the Hong Kong stock market ranked second in the region and also second among the top 15 major stock markets in the world. Average daily turnover in the local stock market also rose substantially to $4.9 billion in 1993, compared with $2.8 billion in 1992.

       The number of newly-listed companies was 68, raising a total of $28.9 billion. Among these newly-listed companies, six were state-owned enterprises of the People's Republic of China. They attracted particular market attention. The listing of these enterprises in Hong Kong was one of the most important market development initiatives in recent years. The six enterprises, which together raised a total of $8.1 billion, were among the nine selected by Chinese authorities in early 1992 to apply for a listing in Hong Kong.

In addition to new share issues, funds were tapped through rights issues ($9.3 billion) and private placements ($35 billion).

The Hong Kong Futures Exchange launched options contracts on Hang Seng Index futures on March 5. The instrument was well-received by market practitioners and was traded actively, with the highest turnover of 6 147 contracts being recorded on October 15. Trading in Hang Seng Index futures was also buoyant. The average daily turnover increased considerably to 9 597 contracts in 1993, with a post-1987 crash high of 26 288 contracts reported on November 24, compared with the daily average of 4 347 contracts in the preceding year. Hang Seng Sub-Index futures were, however, unable to share a similar level of activities, while the trading of gold futures and interest rate futures remained inactive.

The price of Loco-London gold moved between US$325 to US$409 in 1993. Partly attributable to the buying wave from Japanese investors due to the weak US dollar and the concerns of inflationary pressure in the United States of America, the price of gold rose from US$333 per troy ounce at the end of 1992 to US$408.80 per troy ounce in early August. It then fell to around US$342.70 per troy ounce, but rebounded to US$391 per troy ounce at the end of the year.

The price of gold at the Chinese Gold and Silver Exchange Society exhibited similar movement. At the end of the year, gold cost HK$3,592 per tael. Turnover on the exchange totalled 25 million taels in 1993.

The number of unit trusts and mutual funds decreased slightly to 895 at the year's end, from 900 a year earlier. Of the 112 newly-authorised funds approved by the Securities and Futures Commission during the year, many were invested in the emerging markets of Asia

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and Latin America, including two funds (making a total of 12) invested in China. Among the different types of funds, Asian equity and warrant funds recorded the best performance in terms of investment return.

Companies Registry

  On May 1, the Companies Registry became an independent department, following the dissolution of the Registrar General's Department of which it was formerly a constituent division. The registry is headed by the Registrar of Companies.

   On August 1, the registry became one of the first two government departments to be operated on a trading fund basis. As a trading-funded department, the registry is allowed to retain a proportion of its revenue, rather than paying this over to general revenue. Although it is required to balance its income and expenditure, it will be in a far better position to deploy its resources flexibly, in order to react to changing demands for its services. With the financial freedom of a trading fund, the registry will be in a better position to improve its services.

The registry's main functions and responsibilities include the incorporation and registration of companies; the administration and enforcement of the Companies Ordinance and a number of other ordinances (including the Trustee Ordinance as this relates to trust companies, the Registered Trustees Incorporation Ordinance and the Limited Partnerships Ordinance); the registration of documents required to be lodged by registered companies; and the provision of facilities for the search of company records.

The Companies Ordinance is subject to continual review and improvement, subject to the advice of the Standing Committee on Company Law Reform. The committee was established in 1984 and its secretary is a senior legal officer of the Companies Registry. Its main task is to ensure that Hong Kong's company laws meet the up-to-date needs of government and the business community. In January, the Companies (Amendment) Ordinance 1993 was enacted and came into operation on July 1. It enables the Registrar of Companies to strike off a company which has for two consecutive years failed to forward to the Registrar its annual return. It also allows a company by special resolution to authorise its directors to change its status to that of a 'dormant' company, after which it will be exempted from fulfilling certain requirements of the ordinance while it remains dormant.

   On incorporation under the Companies Ordinance, a local company pays a registration fee of $1,300, plus $6 for every $1,000 of nominal capital. In 1993, 61 831 new companies were incorporated 3721 more than in 1992. The nominal capital of new companies registered totalled $7,622 million. Of the new companies registered, 309 had a nominal share capital of $5 million or more. During the year, 12 108 companies increased their nominal capital by amounts totalling $57,005 million. At the end of the year, there were 415 911 local companies on the register, compared with 358 129 in 1992.

Companies incorporated overseas are required to register certain documents with the registry, within one month of establishing a place of business in the territory. A registration fee of $650 and some incidental filing fees are payable in such cases. During 1993, 498 of these were registered. At the end of the year, 3 544 companies were registered from 73 countries, including 694 from the United States of America, 373 from the United Kingdom and 318 from Japan.

During 1993, the Companies Registry continued to explore ways and means of improving its services, in consultation with the Efficiency Unit of the Government

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     Secretariat. The Efficiency Unit undertook an overall operations review of the registry which covered a wide range of areas. At present, the registry is able to complete the incorporation of a local company in seven working days and complete the registration of a charge in 10.5 to 14 working days. The registry aims to further improve its services by streamlining its practices and procedures, and through better staff deployment, office automation and computerisation. Preparatory work for computerising the control book and document index of incoming documents was at an advanced stage and the project is expected to be functional in mid-1994. During 1994, it is intended to provide a computerised directors' index for listed companies, subject to the enactment of the relevant enabling legislation by the Legislative Council. In the longer-term, the registry intends to provide remote search facilities for its main professional customers. The possibility of storing corporate data on optical disks rather than microfilm will also be examined.

Money Lenders

     Under the Money Lenders Ordinance, anyone wishing to carry on business as a money lender must apply to a licensing court for a licence. The ordinance does not apply to banks and deposit-taking companies authorised under the Banking Ordinance.

      Any application for a licence is, in the first instance, submitted to the Registrar of Companies as Registrar of Money Lenders. A copy is also 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, 645 applications were received and 624 licences were granted. At the end of 1993, there were 610 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. Any agreement for the repayment of any such loan, or security given in respect of such a loan, is unenforceable.

Bankruptcies and Compulsory Winding-up

The Official Receiver's office administers the estates of individual bankrupts and companies ordered to be compulsorily wound up by the courts.

      Once a receiving order is made against the property of an individual bankrupt, or a winding-up order is made against a company by the courts, the Official Receiver becomes the interim receiver or provisional liquidator, respectively.

       In cases where the assets of an estate are not likely to exceed $200,000 in value, the Official Receiver applies to the courts for a summary procedure order and is appointed 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 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.

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   The work of the Official Receiver where he acts as trustee or liquidator includes the investigation of the affairs of the bankrupt or the wound-up company, the realisation of assets and the distribution of dividends to creditors. The Official Receiver also prosecutes certain offences set out in the Companies and Bankruptcy Ordinances. In addition, he supervises the work of outside liquidators and trustees.

During the year, staff adapted smoothly to handling cases under the new 'overall case management' system introduced in June 1992. Efficiency, productivity and accountability have improved in the Official Receiver's office. This has resulted in increases in the amount of dividends declared and payable, book debts recovered and in the number of bankruptcy and winding-up cases completed. There has also been an increase in the number of summonses issued and the amount of fines awarded by the courts for failure to file statements of affairs in liquidations.

During the year, the courts made 329 receiving orders and 408 winding-up orders, an increase of 15.7 per cent over the previous year. The assets realised by the Official Receiver during 1993 amounted to $157.4 million, while $179.38 million in dividends were paid to creditors in 251 insolvency cases. A total of 66 convictions were obtained and the total amount of fines imposed by the courts was $326,458.

Establishment of the Hong Kong Monetary Authority

To maintain the continuity and professionalism in Hong Kong's monetary and reserves management and banking supervision, in a way which commands the confidence of the people of Hong Kong and the international financial community, the Hong Kong Monetary Authority (HKMA) was established in April by merging the Office of the Exchange Fund with the Office of the Commissioner of Banking. The Exchange Fund (Amendment) Ordinance 1992, providing for the establishment of the HKMA, was enacted on December 10, 1992 and came into operation on April 1, 1993.

The HKMA is responsible for the development and execution of monetary policy; maintenance of exchange rate and monetary stability; the development of the debt market in Hong Kong; promoting the efficiency, integrity and development of payment and settlement arrangements; managing the assets of the Exchange Fund; prudential supervision of authorised institutions under the Banking Ordinance; and formulating policies relating to banking supervision. These functions are now carried out by its four departments: the Monetary Management Department, Reserves Management Depart- ment, Banking Policy Department and Banking Supervision Department. A fifth, the External Department, will be set up in 1994 to develop contacts and co-operation with other central banks and multilateral financial institutions, strengthen the HKMA's research capabilities and monitor international monetary developments.

   The HKMA is an integral part of the government, but is able to employ staff on different terms to those of the civil service to attract personnel of the right calibre, experience and expertise. The staff and operating costs of the HKMA are charged directly to the Exchange Fund, instead of the general revenue.

The HKMA is accountable to the Financial Secretary, who is advised by the Exchange Fund Advisory Committee on matters relating to the control of the Exchange Fund. The involvement of the committee in monetary and investment matters has become much stronger. It functions very much like a management board, and advises the Financial Secretary on the annual budget of the HKMA.

FINANCIAL AND MONETARY AFFAIRS

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 a US dollar payment to the Exchange Fund, and any decrease in note circulation is matched by a US dollar payment from the Exchange Fund. The two note-issuing banks in turn extend this fixed exchange rate to their note transactions with all other banks in Hong Kong. In the foreign exchange market, the exchange rate of the Hong Kong dollar continues to be determined by forces of supply and demand. Against the fixed exchange rate for the issue and redemption of CIs, the market exchange rate stays close to the rate of HK$7.80 to US$1. In the last few years, the Hong Kong dollar has stayed on the strong side of the link. As a result, some banks have levied charges on large cash deposits to avoid the exchange rate loss on banknote transactions. Discussions are being held with the note-issuing banks on a new arrangement under which all banknote transactions among banks will be for Hong Kong dollar value. This arrangement will make cash-handling charges unnecessary. Exchange rate stability will not be adversely affected. Hong Kong dollar banknotes will continue to be 100 per cent backed by US dollars at the fixed rate of HK$7.80 to US$1. Note-issuing banks will continue to place US dollars with the Exchange Fund in order to acquire the CIs necessary for backing the banknotes they issue.

       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 induce an inflow of funds to offset the original outflow arising from the balance of payments deficit while reducing domestic demand and imports and enhancing export competitiveness, contributing 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 balance.

       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. To ensure that the interest rate gap is large enough to produce the corrective inflows or outflows, there is 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, under which banks may impose deposit charges (negative interest rates) on large Hong Kong dollar credit balances maintained by their customers, if the need arises. The revised rules provided a tool to deter 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 Ordin- ance from the restriction of 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 so assist it in maintaining exchange rate stability within the framework of the linked exchange rate system, 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, the 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 the HSBC or with other banks. The 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 the HSBC. Through its borrowing of 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 so raise interest rates in the interbank market, in this way 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, 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 Exchange Fund bills). The bills are designed to complement the accounting arrangements by providing the Exchange Fund with an additional instrument for conducting money market operations.

In June 1992, the Liquidity Adjustment Facility was introduced to assist banks in making late adjustments to their liquidity positions. The 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.

FINANCIAL AND MONETARY AFFAIRS

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 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. The bulk of the government's financial assets are, therefore, with the fund, which holds its assets mainly in the form of bank deposits in certain foreign currencies and in Hong Kong dollars, and marketable interest-bearing instruments in foreign currencies.

      The principal activity of the Exchange 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.

In the past, the management of the fund was passive, characterised by a conservative approach with a preference for a high degree of liquidity and for short-term investments. Both the overall size of the fund, and the greater emphasis on the long-term stability and strength of Hong Kong's financial system, now enable the management of the Exchange Fund to have a longer-term outlook. The HKMA has upgraded and modernised its management of the Exchange Fund. Strategies more appropriate to a long-term fund, such as a benchmark approach and a greater use of the long-term capital markets, have been adopted. The range of currencies and instruments used has been increased, including, for the first time, investments in traded equities for a part of the Exchange Fund. The resources allocated to the management of the fund have also been increased fivefold. The HKMA has placed great emphasis on establishing links with other market participants. The aim is for openness and co-operation with the markets, with a view to developing good working relationships to enable the markets to play their part in assisting in the modernisation of the management of the fund.

       Another function related to the Exchange Fund is the supply of notes and coins to the banking system. Bank notes (currently of $10, $20, $50, $100, $500 and $1,000 denominations) are issued by the Hongkong and Shanghai Banking Corporation Limited and Standard Chartered Bank. Apart from a very small fiduciary issue, which is backed by gilt-edged securities, the note-issuing banks may only issue currency notes against holdings of certificates of indebtedness issued by the fund. Legislative amendments were passed in July to make the Bank of China the third note-issuing bank. The Bank of China intends to commence issuing banknotes in May 1994.

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These non-interest-bearing Certificates of Indebtedness 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. New $5 and $2 coins depicting the bauhinia flower have been issued since January, while the existing coins are being gradually withdrawn. New $1, 50 cents and 20 cents coins were circulated in October. The total currency in circulation at the end of 1993, with details of its composition, is shown at Appendix 14.

   As at December 31, 1992, total assets of the fund stood at $287 billion, of which foreign currency assets amounted to US$35 billion. Accumulated earnings of the fund amounted to $107 billion. The financial position of the fund for the six years 1987-92 is shown at Appendix 14A.

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HONG KONG's total exports continued to register double-digit growth in 1993, increasing by 13 per cent from the previous year.

       Re-exports recorded a significant 19 per cent rise, as the territory's role as an entrepôt for China dominated external trade. The gross total value of re-exports was $823,224 million.

      Domestic exports continued to be affected by the ongoing structural shift in the composition of Hong Kong's exports from domestic exports to re-exports and registered a five per cent decrease, totalling $223,027 million in value.

Imports rose by 12 per cent to $1,072,597 million.

Total merchandise trade amounted to $2,118,847 million, up 13 per cent from 1992. Despite the recessionary economic climate in some of the territory's major markets, the manufacturing industry in general performed well during the year. Hong Kong also reinforced its growing role as a major service and sourcing centre for the Asian region.

       Other highlights of the year in the trade and industry sectors included the setting up of the Hong Kong Industrial Technology Centre Corporation and the Hong Kong Applied R&D Fund Company Limited to promote new technologies.

Trade and Industrial Policies

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 under multilateral and bilateral trade or trade-related agreements; and to secure, maintain and improve access for Hong Kong's exports.

       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 recognises, however, a responsibility to provide an acceptable industrial infrastructure, particularly in terms of land and manpower, 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), the government's advisory body on all major industry and technology-related matters. The ITDC chairman is a non-official and its members include prominent industrialists and businessmen, academics, representatives of major industry

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and trade organisations, and government officials. The council is assisted by a network of committees in its work. Productivity, product innovation and quality improvement services are mainly provided by the Industry Department and the Hong Kong Productivity Council. The Industry Department also promotes inward investment in Hong Kong's manufacturing industries and is responsible for monitoring the provision of an efficient infrastructure within which industry can operate successfully.

On the external relations front, Hong Kong joined the Asia-Pacific Economic Co-operation (APEC) and the Pacific Economic Co-operation Council (PECC) in 1991. APEC is an inter-governmental economic forum inaugurated in 1989. Its 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. PECC is a non-governmental organisation, comprising tripartite membership drawn from academia and business and public sectors, seeking to develop closer co-operation on trade and economic policy issues within the Asia-Pacific region.

   Hong Kong's continuing success as a leading manufacturing and commercial centre is due to a simple tax structure and low tax rates, 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.

   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.

The government, which supports this restructuring, implements a comprehensive programme to develop the territory's existing quality infrastructure and encourage greater use of quality assurance in manufacturing through a Quality Awareness Campaign. In addition, the Hong Kong Quality Assurance Agency has been established to provide third-party assessment of the quality management systems of companies according to the ISO 9000 standards, and to award ISO 9000 certification to companies that meet the necessary standards. These activities have helped enhance the quality of Hong Kong's products and services.

Science and Technology

  Science and technology are transforming the way that business is conducted in all areas of economic activity. To ensure that the territory could respond to the rapidly changing technological environment and to underline the vital connection between industry and technology, the former Industry Development Board and the Committee on Science and Technology were replaced by the Industry and Technology Development Council (ITDC) in early 1992.

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With its expanded terms of reference and a more focussed and co-ordinated approach, the council is better placed to advise the government in this area. A proposal was being drawn up at the end of the year to provide the ITDC with a budget of more than $900 million over the next four years to support industry. A Technology Committee advises on technology issues with relevance to Hong Kong's industrial and economic development, and the Technology Review Board gives advice on the directions for technology development on the basis of global technology trends.

       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.

On June 1, the Hong Kong Industrial Technology Centre Corporation was established to facilitate the promotion of technological innovation and the application of new technologies in local industries. Among other things, the centre acts as an incubator for technology-based companies that are starting up.

A study commissioned by the Industry Department in 1992 made recommendations to upgrade Hong Kong's technology infrastructure, including the establishment of a science park. The department is now planning to commission a further study to examine the feasibility of implementing these recommendations.

In December 1991, the Finance Committee of the Legislative Council approved $200 million from the Capital Investment Fund as up-front capital for an applied research and development (R&D) scheme. The objective of the scheme is to increase the currently limited volume of applied R&D activity in Hong Kong by providing government funding as a catalyst. The longer-term objective is to improve the technological capability and competitiveness of local industry, in this way helping to sustain Hong Kong's economic growth. A private company named the Hong Kong Applied R&D Fund Company Limited was established in February to administer the scheme. The company is wholly owned by the government, with a board of directors comprising mainly non-officials with a wide spectrum of expertise. Under the scheme, funding support of up to half the cost of a single applied R&D project, or a total of $10 million for a single company or organisation, can be granted. Funding support can either take the form of a loan or equity participation, or a combination of both. Companies incorporated under the Companies Ordinance and statutory bodies undertaking applied R&D locally are eligible to apply.

External Trade

      Hong Kong is the world's 10th largest trading entity in terms of the value of its merchandise trade.

With total exports valued at $1,046,251 million and imports at $1,072,597 million, the territory recorded a trade deficit of $26,346 million in 1993.

Its largest trading partner is China, followed by the United States of America and Japan. Appendices 15 and 16 provide summary statistics of external trade.

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Imports

Hong Kong is almost entirely dependent on imported resources to meet the needs of its population of six million and its diverse industries. In 1993, imports of consumer goods, valued at $461,195 million, constituted 43 per cent of total imports. The major consumer goods imported were: clothing ($90,526 million); radios, television receivers, gramophones, records, amplifiers and tape recorders ($51,284 million); footwear ($42,482 million); baby carriages, toys, games and sporting goods ($36,429 million); and travel goods, handbags and similar containers ($21,013 million).

Imports of raw materials and semi-manufactured goods totalled $355,355 million, representing 33 per cent of total imports. The principal items imported were transistors, diodes, semi-conductors and integrated circuits ($55,847 million); woven fabrics of man-made fibres ($29,349 million); plastic materials ($28,467 million); iron and steel ($22,407 million); woven cotton fabrics ($15,231 million); and watch and clock movements, cases and parts ($15,204 million).

Imports of capital goods amounted to $202,880 million, or 19 per cent of total imports. They consisted mainly of electrical machinery ($26,819 million); transport equipment ($21,912 million); office machines ($17,743 million); scientific, medical, optical, measuring and controlling instruments and apparatus ($7,689 million); and textile machinery ($7,069 million).

Imports of foodstuffs were valued at $44,986 million, representing four per cent of total imports. The principal imported food items were fish and fish preparations ($10,426 million); fruit ($6,878 million); meat and meat preparations ($5,665 million); and vegetables ($4,228 million).

Mineral fuels, lubricants and related materials worth some $18,668 million were imported in 1993, representing one per cent of total imports.

China and Japan were principal suppliers of imports, providing 38 per cent and 17 per cent, respectively, of the total. China alone supplied 28 per cent of Hong Kong's imported foodstuffs. Taiwan ranked third as a supplier of imports, providing nine per cent, followed by the United States of America, the Republic of Korea, Singapore, Germany and the United Kingdom.

Exports

Clothing remained the largest component of domestic exports, valued at $71,857 million or 32 per cent of the total. Exports of miscellaneous manufactured articles, consisting mainly of jewellery, goldsmiths' and silversmiths' wares, plastic toys and dolls, and plastic articles, were valued at $11,751 million, representing 5.3 per cent of domestic exports. Exports of office machines and automatic data-processing equipment, valued at $17,619 million, contributed another eight per cent. Electrical machinery, apparatus and appliances mainly for household use, transistors and diodes amounted to $11,232 million or five per cent of the total. Photographic apparatus, equipment and supplies, optical goods, and watches and clocks were valued at $16,096 million or 7.2 per cent of the total. Other important exports included textiles (7.3 per cent) as well as telecommunications 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 1993, 43 per cent of all domestic exports went to the USA and the European Community. The largest markets

INDUSTRY AND TRADE

were the USA ($58,987 million or 26 per cent of the total); China ($64,239 million or 28 per cent); Germany ($14,430 million or 6.2 per cent); and the United Kingdom ($10,771 million or 4.8 per cent). Domestic exports to Japan and Singapore increased to $9,603 million and $11,447 million, respectively. Other important markets were Taiwan, Canada, the Netherlands and France.

Re-exports

      Re-exports showed a very significant increase in 1993 primarily because of China's significant economic development and the continued growing importance of Hong Kong as an entrepôt for China. The gross total value of Hong Kong's re-exports accounted for 79 per cent of the combined total of domestic exports and re-exports. Principal commodities re-exported were miscellaneous manufactured articles ($109,460 million); clothing ($89,842 million); textiles ($70,476 million); telecommunications and sound recording and repro- ducing apparatus and equipment ($72,981 million); electrical machinery, apparatus and appliances ($69,262 million); as well as footwear ($47,891 million). The main origins of these re-exports were China, Japan, Taiwan, the USA and the Republic of Korea. The largest re-export markets were China, the USA, Japan, Germany and Taiwan.

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 ship-building, ship repair and aircraft engineering industries, light manufacturing industries predominate. About 80 per cent of Hong Kong's manufactured products are exported, and clothing, electronic products, textiles, watches and clocks, and plastic products have for many years accounted for the bulk of this output. The major markets in 1993 for Hong Kong's manufactured exports, worth $223,027 million, were China (28.4 per cent), the United States of America (27 per cent), Germany (6.3 per cent), Singapore (5.1 per cent) and the United Kingdom (4.8 per cent).

Manufacturing developed on a large scale in Hong Kong in the 1950s. The territory's limited space precluded the development of heavy or land-intensive industries; its manufacturing industries were 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. However, it lost this dominating position in the 1980s. Employment in the manufacturing sector fell from 904 709 in 1984 (41.7 per cent of total employment) to 508 133 (20.5 per cent) in 1993. Its contribution to the Gross Domestic Product (GDP) fell from 24.1 per cent in 1984 to 13.2 per cent in 1992. Over this period, 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 made the fourth largest contribution to the GDP after wholesale, retail and import/export trades, restaurants and hotels; financing, insurance, real estate and business services; and community, social and personal services in 1992.

There were 39 238 manufacturing establishments in Hong Kong in 1993, of which 34 383 employed fewer than 20 persons, and 37 415 fewer than 50 persons. The remaining 1 823 establishments accounted for about half of Hong Kong's total manufacturing employment.

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Many smaller establishments are linked with larger factories through an efficient and flexible sub-contracting network, which has enabled Hong Kong's manufacturing sector to respond swiftly to changes in external demand.

Clothing

The clothing industry, including the manufacture of wearing apparel, knit outerwear and knit underwear, is the largest employer and export-earner in the manufacturing sector. In 1993, it employed 166 401 workers (33 per cent of total manufacturing employment) and earned $71,857 million in exports (32 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 1993, it employed 53 591 workers (11 per cent of total manufacturing employment), and earned $57,333 million in exports (25.7 per cent of total domestic exports). The industry produces a wide range of sophisticated and high quality products and components, including television sets, hi-fi equipment, electronic dictionaries, calculators, wired and cordless telephones, modems, microcomputers, computer memory systems, facsimile machines, talk-back toys, watches, multi-layer printed circuit boards, electronic modules, liquid crystal displays, quartz crystals and semi-conductor devices, and surface-mounted devices.

Textiles

The textiles industry, excluding the manufacture of knit outerwear and knit underwear, is the third largest export-earner. It comprises four main sectors: spinning, weaving, knitted fabrics manufacturing and finishing. Textiles finishing, including bleaching, dyeing and printing, is the largest among the four sectors. In 1993, the industry employed 44 182 workers (nine per cent of total manufacturing employment), and earned $16,180 million in exports (7.3 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 local clothing manufacturers, who are actually the textiles sector's largest customer.

Watches and Clocks

The watches and clocks industry is the fourth largest export-earner. In 1993, the industry employed 17 287 workers (three per cent of total manufacturing employment), and earned $13,161 million in exports (5.9 per cent of total domestic exports). Besides complete electronic and mechanical watches and clocks, the industry also produces high quality components and accessories.

Plastics

During the year under review, the plastic products industry employed 27 516 workers (five per cent of total manufacturing employment), and earned $5,869 million in exports (2.6 per cent of total domestic exports). Major export items included toys, containers, travel goods, handbags, packing bags and household articles.

INDUSTRY AND TRADE

Printing

The printing industry has grown significantly in the past two decades. Most manufacturing industries in Hong Kong produce mainly for export, but the majority of the output of the printing industry is for local consumption. In addition to printing books, newspapers and periodicals, the industry supports other manufacturing industries by providing packaging printing services. In 1993, the industry employed 40 918 workers (eight per cent of total manufacturing employment) and earned $4,447 million in exports (two per cent of total domestic exports).

Other Industries

      Other important light manufacturing industries include jewellery, metal products, toys, food and beverages, industrial machinery, household electrical appliances and photo- graphic 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 manu- facturing 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 ship-building 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

There were 472 manufacturing companies in Hong Kong with overseas investment at the end of 1992. The total value of direct overseas investment was $37,279 million. The 472 companies employed 72 148 workers (12.8 per cent of total manufacturing employment) and accounted for 23 per cent of Hong Kong's total domestic exports. The main sources of investment were Japan (33 per cent), the United States of America (27 per cent), China (11 per cent), and the United Kingdom (five per cent). More than three-fifths of this investment was concentrated in four industries: electronics (31 per cent), electrical products (11 per cent), textiles and clothing (11 per cent) and food and beverages (seven per cent).

Documentation of Imports and Exports

As a free port, Hong Kong keeps its import and export licensing requirements to a minimum. A wide range of products do not need licences to enter or leave the territory. Where licences or notifications are required, they are intended to achieve two main objectives. Firstly, they help Hong Kong to fulfil its international obligations to restrain exports of textile products and to monitor the flow of these products into Hong Kong. Secondly, they are imposed on health, safety, environmental, security or anti-smuggling grounds. Items covered include strategic commodities, reserved commodities (namely, rice, frozen meat and frozen poultry), pharmaceutical products and medicines, pesticides, left-hand drive vehicles and ozone-depleting substances.

Hong Kong maintains a certification of origin system that enables the origin of goods which Hong Kong exports to be established. The Trade Department administers this

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system and issues certificates of origin where required. Five other organisations have been designated by the government to issue certificates of origin. They are the Hong Kong General Chamber of Commerce, the Federation of Hong Kong Industries, the Indian Chamber of Commerce Hong Kong, the Chinese Manufacturers' Association of Hong Kong and the Chinese General Chamber of Commerce.

Electronic Data Interchange

Hong Kong's use of electronic data interchange has expanded considerably during the past few years. 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.

The government is keen to encourage this trend to maintain Hong Kong's com- petitiveness in international markets. A particularly important area is the processing of statutory trade documents. Following a joint study with Tradelink Electronic Document Services Limited (a group of 11 leading trade-related organisations in Hong Kong), the government has taken a substantial shareholding in the company. Tradelink will fund and manage a Community Electronic Trading Service. The service will act as the electronic gateway between the trading community and the relevant government departments, checking and validating electronic submissions before passing them on for approval.

Both Tradelink and the government are now installing the computer systems required. The current plan is to commence joint testing by the middle of 1994, with a launch of the service in 1995. The scope of the initial service will cover the lodging of trade declarations and applications for export licences for textiles and clothing shipped under quota. 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 interests of compatibility, the government has 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 Industry Department

One of the main tasks of the Industry Department is to carry out regular studies of Hong Kong's main manufacturing industries, with the aim of enabling the government to identify constraints on their efficiency and assess where support is needed. In 1993, a techno- economic and market research study on the electronics industry was conducted, while another on the metals and light engineering industries was completed. The department also conducts annual surveys on overseas investment in Hong Kong's manufacturing industries and on the establishment of regional representation by overseas companies in Hong Kong.

The department provides information on industrial support services available to manufacturers through its Industrial Extension Service (IES), and encourages manu- facturers to upgrade their operations by making use of these services. In 1993, a total of 288 visits were made by IES engineers, and 236 referrals were made to organisations which could help to solve the problems encountered by the manufacturers concerned. IES engineers dealt with the problems themselves in a number of other cases.

INDUSTRY AND TRADE

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

During the year, the government put up for sale by auction or tender eight pieces of industrial land with a total area of 32 033 square metres. About 311 000 square metres of flatted factory space were completed by private developers.

       Meanwhile, the two industrial estates in Tai Po and Yuen Long, managed by the Hong Kong Industrial Estates Corporation, will be joined by a third industrial estate at Tseung Kwan O in 1994.

       Technical education and industrial training are provided in two technical colleges, seven technical institutes and three industrial training centres run by the Vocational Training Council. In addition, the Clothing Industry Training Authority runs two training centres. Technological training at higher levels is mainly provided in Hong Kong's two polytechnics and three universities.

In June 1993, the government injected an additional capital sum of $50 million into the New Technology Training Scheme, on top of the original $55 million. The scheme was launched in June 1992 and is administered by the Vocational Training Council. It provides financial assistance to employers to train, either locally or overseas, their technologists and managers in new technologies strategically important for the industrial and economic development of Hong Kong. The number of training places and the level of training grants have since increased.

During the year, the department played an active role in assisting local manufacturers to comply with environmental measures. A consultancy study on support to industry on environmental matters, commissioned by the department in 1992, was completed in June 1993. The study assessed the operational and financial effects of current and planned environmental legislation and measures on manufacturing in Hong Kong. It recommended a package of support measures designed to help manufacturers improve their competi- tiveness while moving towards compliance with environmental controls. The department, together with other interested parties, is now planning the implementation of these support

measures.

In February, the department published an update to the booklet entitled A Guide to Pollution Control Legislation Affecting Manufacturing Industries. The guide provides basic information to manufacturers on environmental legislation and where technical advice can be obtained.

Promoting inward investment in Hong Kong's manufacturing industries is another important area of the 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, Toronto, Brussels and London. Much of the recent manufacturing investment has been from multinationals at the forefront of technological development, and this has helped raise technology and skill levels in the local manufacturing sector.

The department is also increasingly involved in the promotion of the wider application of quality assurance in the manufacturing sector. It has developed a range of services to assist manufacturers to improve the quality of their products. Its Standards and

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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 infor- mation 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 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 to provide official recognition for those assessed as competent. HOKLAS has so far accredited 47 laboratories for testing such items as toys, textiles, electrical and electronic goods, food and construction materials. Several laboratories are accredited in the environmental testing field. A number of 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, the Testing Laboratory Registration Council of New Zealand and the Dutch Accreditation Board for Calibration Laboratories, Test Laboratories and Inspection Bodies. Under these agreements, Hong Kong products should 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. The basic message, disseminated through seminars and workshops, and through a range of promotional literature, is that investment in quality is profitable. 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 (HKQAA), 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 HKQAA signed a Memorandum of Understanding with the British Standards Institution (Quality Assurance) in June. Under this agreement, companies in Hong Kong can be awarded ISO 9000 certificates both from the HKQAA and the British Standards Institution (Quality Assurance), with the auditing being carried

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out in Hong Kong by the HKQAA. Similarly, the arrangement applies to British companies in the United Kingdom audited by the British institution.

The Governor's Award for Industry, established in 1989, recognises and encourages excellence in different aspects of industrial performance. The annual award scheme was broadened in scope from two award categories to six award categories in 1992. Different organisations are responsible for arranging annual competitions in each of these categories. The Federation of Hong Kong Industries is responsible for the consumer product design category; the Chinese Manufacturers' Association of Hong Kong for the machinery and equipment design category; the Hong Kong Productivity Council for the productivity category; the Industry Department for the quality category; the Private Sector Committee on the Environment for the environmental performance category; and the Hong Kong Trade Development Council for the export marketing category. Award presentations are made personally by the Governor.

Hong Kong Industrial Technology Centre Corporation

The Hong Kong Industrial Technology Centre Corporation (HKITCC) was established on June 1 by statute, to facilitate the promotion of technological innovation and application of new technologies in Hong Kong industry. It replaced the Provisional Hong Kong Industrial Technology Centre Company Limited, which was formed in May 1990 to undertake groundwork for the statutory corporation. The HKITCC aims to fulfil its mission through three primary functions: the incubation and accommodation of technology-based businesses; the provision of technology transfer services; and the provision of product design and development, and support services.

The HKITCC is governed by a board of directors, consisting of a chairman appointed by the Governor and 11 directors appointed by the Financial Secretary. It is committed to creating innovative synergy within its technology centre. It will do this by identifying and championing the creation of new businesses, tracking technology trends and business opportunities, assisting partnership formations, and encouraging investment in technology enterprises. The HKITCC is required to conduct its business according to prudent com- mercial principles.

The government has provided a grant of $250 million and committed another $188 million as an interest-bearing loan to meet the initial expenses of setting up the technology centre. A site of about 5 600 square metres at the junction of Tat Chee Avenue and Fa Po Street in Kowloon Tong was granted for the construction of the centre.

       Construction of the building to house the technology centre commenced in August 1992, and should be completed by mid-1994. The building will have a total area of 22 000 square metres. Upon its completion, the HKITCC is expected to gradually become financially self-sufficient, with income from rent. Pending its completion, the HKITCC leased space in the Hong Kong Productivity Council Building in October 1991, and has already started providing some services.

The HKITCC introduced a pilot 'incubation programme' in early 1992. Six technology- based companies have been recruited under the programme. They have been provided with a range of infrastructure and support services, including help with business planning and development, communications, marketing and access to laboratory facilities at higher educational institutes. Other business centre services such as conference facilities, accounting and secretariat services are also available on site.

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The HKITCC's support services in the transfer of technology locally and internationally are an additional benefit to its tenants. The HKITCC sponsors and organises technology transfer and innovative technology seminars. It intends to establish links with tertiary institutions and industrial support organisations to facilitate technology transfer among companies in the programme and local industry. Through its technology transfer support services, the HKITCC assists tenants by brokering and licensing technology, and by providing referrals for research, design and development contract services.

Hong Kong Productivity Council

There was a growing demand during the year for the Hong Kong Productivity Council's (HKPC) consultancy and technical support services.

The HKPC was established by statute in 1967 to promote increased productivity in Hong Kong industry. It is financed by an annual government subvention and by fees earned from its services. The council consists of a chairman and 22 members appointed by the Governor. Its membership is drawn from the management, labour, academic and professional fields and from the government.

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 17 operational divisions: computer services, electronics services, automation services, quality and management, computer-aided design services, chemical and metallurgical, manufacturing engineering, textiles and apparel, business management services, training, environmental management, information services, human resources, development and administration, public relations, marketing and accounting.

  During the year, the council undertook 1 208 consultancy projects, covering, among other items, feasibility studies, production management, new plant projects, environmental management, quality management, product design and development, and industrial automation services.

To facilitate the transition to high value-added production, the HKPC invited local companies to join consortia to share the design and development costs of new products. Three consortium projects were completed successfully. These involved 30 local companies in the design and development of a notebook computer, a 900-megahertz indoor cordless telephone, and a palmtop computer with the most advanced application-specific integrated circuit (ASIC) ever developed in Hong Kong.

The HKPC put together a consortium of eight local companies to transfer 3D laser stereolithography (SLA) technology from the United States of America. The SLA machine facilitates rapid prototyping, and is crucial for Hong Kong's manufacturing sector in keeping abreast of competition in the area of marketing and product design.

The HKPC organised 693 training courses for 13 980 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 134 programmes were organised during the year to meet the specific training needs of individual companies.

Twelve overseas study missions were organised for local industrialists to gain first-hand information on the latest technology and management techniques practised in various

Tili

Renowned for their swift reponse to international fashion currents, Hong Kong's garment makers rely heavily on an efficient and flexible network of support industries, such as zipper manufacturers.

NEIL

Sailmaking for the leading edge of international yacht racing and windsurfing has become one of the territory's most exciting industrial success stories.

H

I.

Long-established as an important light industry, Hong Kong's skilled jewellers and goldsmiths create beautiful adornments for the world market.

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On top of its role as an exporter, the textile industry is a major supplier of thread, yarn and fabric to local clothing manufacturers.

0

Combining modern equipment and traditional

themes, an artist (right) transforms panes of glass into works of art.

YBLE

Careful market research ensures the territory's fashion accessories are totally in step with the new season's apparel.

HUIT MAIN

High-quality ceramics claim an exclusive niche among the wide range of home decorating and furnishing lines which carry the label 'Made in Hong Kong'.

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areas, including quality control, human resources development, precision sheet-metal stamping, and mould and die technology.

To meet the increasing demand from institutions and companies for HKPC services in the Pearl River Delta area of China, the HKPC has established a Guangzhou Liaison Office in addition to its Shenzhen Liaison Desk. The office was officially opened in November. Its main function is to strengthen the capabilities of the HKPC by using specialist resources in China, which are not available in Hong Kong, and sub-contracting work to them to reduce costs. It also acts as a marketing agent for HKPC services and co-ordinates HKPC projects in the region.

The HKPC is the government's agent for the Asian Productivity Organisation (APO). During the year, under the sponsorship of the APO, the HKPC hosted two APO programmes a seminar on total quality management and a symposium on the manage- ment of innovations and technology development strategies.

The HKPC Building in Kowloon Tong houses all the council's operations under a single roof. It contains a display area, an auditorium, a technical reference library, electronic data processing facilities, and a computer-aided design service centre. There are also laboratories for surface mount technology, radio frequency and digital communications, photo-chemical machining, metal finishing and industrial chemistry, environmental management, sheet-metal processing, precision machining and die-casting. The building also houses a mould and die technology centre and a 3D-stereolithography technology centre.

Hong Kong Industrial Estates Corporation

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

Over 100 factories were operating in the Tai Po and Yuen Long estates and more were being built at the end of the year. On the Tai Po estate, which has 73 hectares of industrial land, only one vacant site of about 0.9 hectare, reserved for a high-technology industry, remained. The Yuen Long estate has 67 hectares of land in total, of which 16.5 hectares were still available for leasing. The land premia stood at $1,900 per square metre for Tai Po and $1,600 for Yuen Long.

Construction of the third industrial estate at Tseung Kwan O began in August 1991. The first phase, with 20 hectares of serviced sites, will be available by early 1994. A total of 68 hectares of industrial land will be provided by 1996. The new industrial estate is only three kilometres from the centre of Tseung Kwan O new town. Waterfront sites and berthing facilities will be available for ocean-going ships.

       The corporation's estates are held under leases from the government which extend to the year 2047. The corporation also grants sites to 2047, enabling investors to plan up to the middle of the next century with certainty.

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External Commercial Relations

Hong Kong possesses full autonomy in the conduct of its external commercial relations. The Governor is 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 pursues a free trade policy, and the success of the policy is evidenced by the steady rise in the value and sophistication of Hong Kong's exports in recent years. Within the context of the free trade policy, Hong Kong's commercial relations are designed to ensure that Hong Kong's trad- ing 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 international trade in textiles, provides the framework within which Hong Kong negotiates bilateral restraint agreements with textile importing countries.

GATT

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 GATT and the free trade principle it espouses. Hong Kong participated in GATT activities for many years as a British dependent territory, before becoming a separate contracting party 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 Uruguay Round (UR) of multilateral trade negotiations which were finally concluded on December 15 over seven years after the negotiations were launched in 1986. The package of Uruguay Round Agreements, known as the Final Act, covers a wide range of subjects. Apart from traditional subjects such as tariff reductions on goods, it also includes new areas such as trade in services, trade-related intellectual property rights and trade-related investment measures; a review of GATT disciplines; the creation of a new institution-the World Trade Organisation - to replace the existing GATT structure; and the phasing out of the Multi-Fibre Arrangement (MFA) which provides a legal basis for discriminatory quota restrictions in the area of textiles and clothing.

In overall terms, Hong Kong stands to gain from the successful conclusion of the Round which will strengthen and boost confidence in the most-favoured-nation-based multilateral trading system. It is intended that at a ministerial meeting to be held in April 1994 in Morocco, ministers of GATT UR participants will sign and authenticate the UR agreement and agree on certain implementation details.

Hong Kong continued to work closely with other exporters of textiles and clothing in the International Textiles and Clothing Bureau to press for the integration of the textiles sector into the GATT. Hong Kong has played a pivotal role in forging a consensus on the recent short extension of the MFA, aimed at bridging the gap between the expiry of the MFA and the implementation of a UR agreement.

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Textiles

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

       During the year, representatives of the governments of Hong Kong and the United States of America met to discuss bilateral and international co-operation to control and eliminate illegal trans-shipments of textiles. Both governments agreed to continue their mutual efforts to address the matter.

      The bilateral textiles agreement with Canada expired at the end of 1993. In October, Hong Kong and Canada agreed to extend the agreement for two years up to the end of 1995.

       Both the bilateral textiles agreements with Finland and Norway expired in December. Consultations with Finland in September resulted in a new Hong Kong/Finland textiles agreement extending the current agreement for a maximum of two years from January 1994 to December 1995. Following consultations with Norway in October, Hong Kong secured a new Hong Kong/Norway textiles agreement, also extending the current agreement for a maximum of two years from January 1994 to December 1995. The new agreements represent improvements in market access over the previous agreements. They will be automatically terminated upon the entry into force of the Uruguay Round agreement on textiles and clothing.

Non-textiles Issues

Anti-dumping investigations against Hong Kong companies in respect of 3.5-inch magnetic floppy disks, initiated by the European Community (EC) in September 1992, are still in progress. The Hong Kong Government considers that there is insufficient evidence of dumping, injury and link between the two for initiation of investigation, and submitted two representations during the year to the EC, seeking termination of the anti-dumping proceedings.

       The relatively uncertain developments in trade relations between the United States of America and China continued to cast a shadow over Hong Kong's economic well-being. The areas of concern include, among other matters, the uncertainty of the renewal of China's Most Favoured Nation (MFN) trading status and the trade sanctions against China on the latter's alleged missile-related technology transfer to third countries. On May 28, 1993, China's MFN trading status in the USA was renewed for another year by an Executive Order of the President, Mr Bill Clinton. The order provides that in 1994, the US Secretary of State shall not recommend extension to the President unless he determines that the extension will substantially promote the freedom of emigration and China is complying with the 1992 China/USA agreement concerning prison labour. The Hong Kong Government and the private sector will continue to emphasise to the United States administration and members of Congress the adverse effect on Hong Kong's economy of the withdrawal of China's MFN status, or imposition of conditions on its renewal.

In August 1992, the South Korean authorities initiated an anti-dumping investigation against Hong Kong companies in respect of phosphoric acid originating from China and re-exported from Hong Kong. Final anti-dumping duties on the goods in question were imposed for a period of three years with effect from February 20, 1993.

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  In September 1992, the Australian authorities initiated an anti-dumping proceeding against Hong Kong companies in respect of disposable plastic cutlery. The Australian authorities completed the investigation in July 1993 and decided not to impose anti- dumping duties against the territory, as there was no evidence that exports from Hong Kong had resulted in material injury to their local industry.

  In March 1993, the South Korean authorities initiated another anti-dumping inves- tigation against Hong Kong companies in respect of sodium carbonate originating from China and re-exported from Hong Kong. Final anti-dumping duties on the goods in question were imposed for a period of three years with effect from December 31.

  In November 1993, the Australian authorities initiated an anti-dumping inquiry against Hong Kong companies in respect of clear float glass. The case is under investigation.

Trade Department

The Trade Department is responsible for Hong Kong's commercial relations with foreign governments. It implements trade policy and agreements, and conducts 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 in different geographical areas. Their work includes the conduct of trade negotiations and the implementation of textiles agreements, as well as the 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 regional economic co-operation, 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 MFA. 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 the rice control scheme.

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

Hong Kong Representation Overseas

The Trade and Industry Branch oversees Hong Kong Economic and Trade Offices in Geneva, Brussels, Washington, New York, San Francisco, Toronto and Tokyo, mainly to safeguard and advance Hong Kong's economic and commercial interests overseas. The Hong Kong Government Office in London also promotes the territory's economy. (Address details are at Appendix 6.)

  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. It is also responsible for Hong Kong's commercial relations with Switzerland.

INDUSTRY AND TRADE

       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 Turkey, the Czech Republic, the Slovak Republic, Hungary, Poland, and other Central and Eastern European countries. With effect from July 1, it also took over responsibility for Hong Kong's commercial relations with Austria and the Nordic countries (Finland, Norway and Sweden).

       The London Office is responsible for Hong Kong's commercial relations with the United Kingdom. Moreover, it is also responsible for monitoring the economic and political developments in the United Kingdom that are of interest to Hong Kong, for promoting the territory's interests, enhancing understanding of Hong Kong affairs and promoting 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 that might affect Hong Kong's economic and trading interests in general.

       The Toronto Office has a similar role in Canada, while the Tokyo Office conducts similar activities in Japan.

Participation in International Organisations

As 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.

       The territory's economic links with the region have been expanding. In 1992, some 80 per cent of Hong Kong's total external trade was accounted for by the other 14 member economies of the Asia-Pacific Economic Co-operation (APEC).

During the year, Hong Kong participated actively in the work of the APEC, culminating in the fifth APEC Ministerial Meeting held from November 17 to 19 in Seattle. The Financial Secretary represented Hong Kong at the APEC Economic Leaders Conference held on November 20 to discuss strategic economic and trade issues affecting the region.

       The Hong Kong Committee of the Pacific Economic Co-operation Council (PECC), set up in March 1990 to advise on Hong Kong's participation in, and co-ordinate the territory's input to, the PECC process, continued to participate actively in the various task forces. The 10th general meeting of the PECC will be held from March 23 to 25, 1994 in Kuala Lumpur.

Hong Kong Trade Development Council

The Hong Kong Trade Development Council (TDC) was set up by statute in 1966 to promote and expand the territory's trade. As the international marketing arm for the territory's manufacturers and traders, it plays a vanguard role in opening new or difficult markets for Hong Kong companies.

Through a network of 37 branch offices in 26 countries, the TDC also generates international awareness of business opportunities in Hong Kong, and the territory's advantages as a gateway to markets throughout Asia.

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The council's chairman is appointed by the Governor. Its 18 council members include representatives of major trade associations, leading businessmen and industrialists, as well as two senior government officials.

   To ensure the wide range of trade services offered by the TDC are useful and supported, the council receives extensive input from manufacturers and traders. Its seven specialised Industry Advisory Committees, with a total membership of more than 200, advise on services and promotional strategies.

Over the past 27 years, the TDC has developed a computer database of about 55 000 local manufacturers and trading firms, and 240 000 overseas importers, categorised according to product and market. This databank is the cornerstone of the council's Trade Enquiry Service, and is invaluable to companies who need to build their own network of overseas contacts. The TDC matches Hong Kong companies with buyers, sellers and agents from around the world, and processes over 300 000 trade enquiries globally each year. Enquiries arrive around-the-clock by telephone, facsimile, letter and personal attendance at the head office, overseas offices and the datashop service centres located in Hong Kong's prime commercial and industrial areas.

   Overseas trade promotional projects organised by the TDC are designed to help Hong Kong companies expand their business in existing markets or to make inroads into emerging ones. In 1993, the TDC took more than 2 600 of the territory's companies to the frontline of markets, from Buenos Aires to Beijing, from Moscow to Basel and Hanoi. Nearly $12 billion worth of business orders were taken, and participating firms reported more than 70 000 new business contacts.

   The TDC also plays an important role in promoting Hong Kong as the trade fair capital of Asia, organising 16 fairs each year, many of which are the largest of their kind in the region. These include Hong Kong Fashion Week, the Hong Kong Toys and Games Fair, the Hong Kong International Jewellery Show, the Hong Kong Electronics Fair and the Hong Kong Book Fair.

   In early 1993, the government agreed to pursue further a TDC proposal to build an extension to the Hong Kong Convention and Exhibition Centre (HKCEC), which is presently operating at near-capacity. The extension will more than double the size of the existing facility, placing Hong Kong firmly on the world map as the trade fair and conference capital of Asia.

   The council has a special commitment towards developing China's burgeoning consumer market for Hong Kong companies and their products. This is achieved through special promotions of Hong Kong products, mounted in large mainland department stores to promote the territory's brand names. Under the TDC banner, Hong Kong companies also participate in mainland trade fairs and high-level business seminars in China.

   More recently, the council has added to its China programme by staging trade fairs in Shenzhen. Four events were launched in the past two years - the International Machinery and Industrial Supplies Fair, the Joint Venture Products Exhibition, the International Fashion and Accessories Fair, and the International Toys and Gifts Fair. To support this increasingly active programme, the council opened a new branch office in Shenzhen during the year, in addition to its existing network in Guangzhou, Beijing and Shanghai.

   Closer to home, another important role of the TDC is to encourage Hong Kong manufacturers to upgrade local products, so they can retain and improve their competitive edge in world markets. Spearheading this initiative is the TDC Design Gallery, which

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displayed the work of more than 50 local designers and 70 Hong Kong brand names in 1993. Set up as a showcase for the best of Hong Kong design, the prime location of the store in the HKCEC complex gives it wide international exposure, with a steady flow of buyers passing through during major trade fairs and many sourcing enquiries referred to manufacturers and designers. Additionally, the TDC's organisation of the export marketing category in the Governor's Award for Industry serves to heighten awareness of the importance of export marketing strategies.

To promote a positive environment for Hong Kong's trade, the TDC initiates and maintains high-level contacts with business leaders, economic policy-makers and media around the world. It receives almost 500 incoming missions from international markets each year, and advances bilateral ties with both new and long-standing trade partners through influential bodies such as the Hong Kong/Japan Business Co-operation Committee. A special initiative of the TDC in the United States of America is Operation Pacific Bridge, a highly-focussed programme aimed at helping US companies access the China market by using Hong Kong as a springboard. In 1993, the council again partnered the Geneva-based World Economic Forum in organising the second Europe/East Asia Economic Forum at the HKCEC.

The TDC produces updated information on markets, including trade statistics, market surveys and product reports as well as market and industry profiles, import regulations and procedures. Its Research Department publishes the monthly International Market News and the quarterly New Market Search, which focus specifically on emerging markets; and Trade Developments, a series of detailed reports on markets around the world. Other publications include Hong Kong for the Business Visitor, which is published in seven languages; and 15 product magazines, in English, Chinese and Spanish, with a global circulation of 1.6 million. Titles include Hong Kong Enterprise, Hong Kong Toys, Hong Kong Garments and Accessories, Hong Kong Apparel, Hong Kong Household, Hong Kong Electronics, Hong Kong Watches and Clocks, Hong Kong Gifts and Premiums, Hong Kong Optical, Hong Kong Jewellery and Hong Kong Leather Goods and Bags.

To help keep overseas traders informed of business developments and opportunities in Hong Kong, the Publicity Services Department publishes Hong Kong Trader, a monthly newspaper which reaches leading businessmen in 162 markets around the world.

Hong Kong Export Credit Insurance Corporation

The Hong Kong Export Credit Insurance Corporation (ECIC) helps Hong Kong exporters to minimise risks and expand their markets.

The ECIC is a statutory corporation set up in 1966. It provides insurance protection to 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 government guarantees the payment of all moneys due by the corporation, with the limit for maximum contingent liability arising from its insurance and guarantee operations currently set at $7,500 million.

Under the Hong Kong Export Credit Insurance Corporation Ordinance, the ECIC has a paid-up capital of $20 million provided by the government and is autonomous in day- to-day operations. It is run on a self-sufficient, commercial basis. A 12-member advisory board, comprising prominent members from the business sector and representatives from the government, advises the corporation on the conduct of its business.

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In 1992-93, the ECIC insured exports worth $15,652 million and received gross premium income of $91 million. The maximum liability of policies was $6,406 million. The number of claim cases jumped by 30 per cent to 116 and gross claim payments amounted to $35 million. The excess of income over expenditure was $38.42 million.

   The ECIC is a member of the International Union of Credit and Investment Insurers (the Berne Union) and has an international network of contacts. It has ready access to confidential and updated economic and market information on other countries, and credit reports on overseas buyers.

The ECIC's services to the exporting community fall into three main categories. The first category is the protection provided by the corporation to indemnify policy-holders for 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, default and repudiation, war or civil disturbance and transfer delays. Cover can 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.

Second, the ECIC provides credit advisory services to its policy-holders. On request by a policy-holder, 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 policy-holder on the amount of credit that can be prudently extended to the overseas buyer.

Third, when a policy-holder encounters payment problems, the ECIC provides a risk management service and advises the policy-holder on possible courses of action, either to prevent or minimise any loss.

During the year, the corporation expanded its links with trade associations, banks and individual exporters. Publicity was stepped up and outreaching activities extended to exporters and manufacturers. A new External Trade Specific Shipment(s) Policy was introduced, providing cover for transactions with a payment period exceeding 180 days. Increased demand for services was met by streamlining procedures and more efficient use of resources. Premium reductions were continued for qualified policy-holders, and service standards formulated prior to the introduction of a performance pledge on April 1.

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, long-established and more influential associations are the Federation of Hong Kong Industries, the Chinese Manufacturers' Association of Hong Kong, the Hong Kong General Chamber of Commerce and the Chinese General Chamber of Commerce. 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 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

INDUSTRY AND TRADE

custom-built multi-risks insurance policy, consultancy work on quality assurance, trade marks and copyrights, trade enquiries and economic research.

With a membership spanning all industrial sectors, the federation services the Hong Kong Toys Council, the Chemical and Pharmaceutical Industries Council, the Transport Services Council, the Hong Kong Watch and Clock Council, the Hong Kong Electronics Industry Council, the Hong Kong Plastics Industry Council and the Hong Kong Mould and Die Council. It also runs the annual Young Industrialist Awards 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 International Chamber of Commerce. With a membership of over 3 800 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 2000 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 is one of the 10 largest chambers of commerce in the world. Founded in 1861, its membership of over 3 600 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 businessmen. It is authorised by the government to issue certificates of origin and is the sole local issuing authority for international Association Temporarie Admission Carnets through its nine 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 and 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 interests and industries. Apart from providing a variety of services, including certification of origin and 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, to enable them to better understand the various aspects of Hong Kong's economy.

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The Hong Kong Management Association is a professional management organisation, incorporated in 1960 to improve the efficiency and effectiveness of management in Hong Kong. With a membership of over 7 500, it organises some 1600 training programmes and provides various management services such as translation, recruitment and the organisation of exhibitions.

  The Hong Kong Exporters' Association was formed in 1955, and has a membership of 300 export and manufacturing companies. 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 assist in solving any trade problems they may encounter.

Customs and Excise Department

The Trade Controls Branch of the Customs and Excise Department is responsible for the enforcement of Hong Kong's ordinances and regulations relating to trade controls. These include certification of origin, import and export licensing of textiles and strategic commodities, reserved commodities control, verification and assessment of trade declarations, consumer protection, and weights and measures.

  During the year, a high level of enforcement was maintained to protect the integrity of Hong Kong's certification and licensing systems, and to fulfil obligations under international trade agreements. In particular, action was stepped up against country of origin fraud and illegal trans-shipments in the textile trade by conducting more physical checks on textile imports and exports and by monitoring consignments, traders and cargo-forwarders suspected of involvement in illegal trans-shipment.

  Greater emphasis was placed on the enforcement of consumer protection legislation, particularly the new Toys and Children's Products Safety Ordinance, which came into effect on July 1.

Trade in Endangered Species

The import, export 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 investigated and prosecutions are instituted if there is evidence of a breach of the ordinance. During 1993, there were 426 seizures and 117 prosecutions under the ordinance.

Government Supplies Department

The Government Supplies Department is the government's central organisation for pro- curement and supply of stores and equipment required by government departments and certain subvented organisations.

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       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 ($1.37 million in 1993) are widely advertised and open to competi- tive bidding internationally. All purchases, ranging from simple office sundries to complex computer systems, are made entirely on the basis of the 'best value for money', regardless of the source of supply. Due to its open procurement policy, goods and services are purchased from over 40 countries and some 4 100 registered local and overseas suppliers.

      To ensure continuity of supply, the department maintains goods, which are generally required by other departments, in its main stores in Hong Kong and Kowloon and two sub-stores specially established to serve the government's engineering workshops. It also seconds supplies staff to other departments to ensure a professional approach to acquisition and maintenance of stores and equipment.

      In 1992-93, the department placed orders of a total value of HK$2,593 million. The major sources of supply were the United States of America, the United Kingdom, China, Germany, Japan and Hong Kong itself. Major items of purchase included computer systems, rations and pharmaceuticals.

      In the purchase of goods and equipment, the department always takes into consideration environmental protection factors.

Intellectual Property

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

      During the year, two consultative documents on proposals for the reform of both the trade marks and patents law, respectively, were issued. In addition, a bill was introduced in the Legislative Council to provide specific statutory protection for the layout-designs (topographies) of integrated circuits in Hong Kong.

Trade Marks and Patents

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 1992, it has been possible to register trade marks for services as well as goods. The registration procedure is laid down in the Trade Marks Rules, and the prescribed forms may be obtained free from the Trade Marks Registry. Every mark, even if it is already registered in another country, must satisfy the requirements of the ordinance before it may be accepted for registration. During 1993, 14 280 applications were received, 12 043 of which were in respect of goods and 2 237 in respect of services. Overall, 8 260 applications, including those made in previous years, were accepted and allowed to be advertised. A total of 5 720 marks were registered in 1993, compared with 5 500 in 1992. The principal origin of applicants was as follows:

USA Hong Kong

Japan

UK

Germany

1 408

1 240

France Italy

321

285

647

Switzerland

183

347

Taiwan

166

328

Netherlands

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The total number of trade marks on the register at December 31, 1993 was 66 670.

The Patents Registry registers patents that have been granted in the United Kingdom and European Patents (United Kingdom). The Registration of Patents Ordinance provides that any grantee of a United Kingdom Patent or European Patent (United Kingdom) may, within five years from the date of its grant, apply to have the patent registered in Hong Kong.

A total of 1 438 patents were registered in Hong Kong during the year, compared with 1069 in 1992. Registration of a United Kingdom Patent or European Patent (United Kingdom) 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.

Consumer Council

The Consumer Council was set up under the Consumer Council Ordinance in 1974 to protect and promote the interests of consumers of goods and services, as well as purchasers, mortgagors and lessees of immovable property. The council's chairman, vice-chairman and 20 other members are appointed by the Governor to represent a diversity of consumer interests. A Chief Executive heads the 101-strong office, which is divided into five sections: administration; complaints and advice; survey; research; and information and publication.

Since the late 1980s, Hong Kong has evolved from a manufacturing-based to a service-based economy. While a manufacturing-based, export-oriented economy is more attuned to competition in the international markets, a service-based economy is highly susceptible to domestic monopolies and the concentration of market power. This phenomenon is likely to be detrimental to consumer interests. The council has begun to look into the matter in recent years.

This aspect of work was intensified with the Governor, in his 1992 policy address, calling on the council to defend free markets and to help provide consumers with redress against unscrupulous business practices. A market structural analysis, including a study on restrictive trade practices and the behavioural aspects of the market, was underway at the end of the year. Parallel to the main study were five other sectoral studies to ascertain whether a competitive environment is maintained in the financial services, gas supply, supermarket, broadcasting and telecommunications industries. A final report is expected to be completed by mid-1994.

The council has submitted proposals to the government on the tendering of government carparks and the contracting-out arrangements for the management of parking meters. The proposals stressed the need to award the contracts to more than one operator, to promote competition.

The council's efforts to safeguard the interests of property buyers continued. Recom- mendations to regulate estate agents through legislation and a full licensing system were well-received by the trade and the public, and the matter is under active consideration by the government. Meanwhile, the interest of the local population in the booming Chinese property market induced the council to make several study visits to Guangdong, to obtain first-hand information on the property transaction procedures adopted in the province. A series of articles were published subsequently in the council's monthly magazine, CHOICE, and a seminar on the topic was organised in May, offering advice to interested buyers.

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The Toys and Children's Products Safety Ordinance came into effect in July, ushering in a new era of consumer protection in product safety. The ordinance came into being after years of advocacy by the council. In addition, preparation of legislation on consumer product safety reached its final stage.

Regulation of insurance agents and brokers by the insurance industry was introduced early in 1993, five years after the council's first call to monitor the industry.

Following the disclosure of a high level of consumer dissatisfaction with the service of bridal salons, operators in the trade heeded the council's call to establish an ethical code of practice.

The government earmarked $10 million for allocation to the council for the establish- ment of a Consumer Representative Action Fund, to assist groups of consumers to initiate collective legal action against a common defendant whose conduct was detrimental to the consumers. The council commissioned a legal consultancy to formulate the modus operandi of the fund.

While taking on new challenges, the council continued its work to improve consumer welfare through handling consumer complaints, providing consumer advice, organising consumer education activities and conducting in-depth studies, tests and survey projects.

During the year, the council received 9 509 complaints and 198 147 enquiries for advice and information at its 16 Consumer Advice Centres throughout the territory. A total of 11 shops were named for engaging in sharp business practices.

The council was also active in promoting consumer awareness on environmental issues. The wastage of resources in the over-packaging of products, the virtues of using recycled paper and the truthfulness of so-called 'green labels' were some of the subjects covered in CHOICE.

In November, the council joined forces with the Environmental Protection Department to organise a high-level workshop comprising representatives of major supermarkets and department stores. Armed with the result of a consumer attitude survey on the use of plastic bags, the council continued to persuade the private sector to minimise their use.

Aside from CHOICE, which has an average circulation of 45 000 copies, other council publications include a guide to property purchase and to medical and health services.

In safeguarding consumer interests, the council works closely with various government departments and policy branches. It is consulted on major policies affecting consumer interests and is represented on many committees dealing with specific consumer issues and concerns. It is also a council member of the International Organisation of Consumers Union, which is dedicated to the protection and promotion of consumer interests through research, information and educational activities.

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 the territory. Government departments use metric units exclusively.

A metrication committee, comprising representatives of industry, commerce, manage- ment and consumer bodies, and government officials, is the focal point of liaison for all matters concerning metrication. It advises on, and encourages the commercial and industrial sectors to develop, metrication programmes.

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   During the year, the committee continued to direct its efforts towards the retail sector. Conversion charts calibrated in metric, Chinese and imperial units were installed in some 60 Urban Council and Regional Council public markets under a private-sector sponsored programme. Metric scale demonstration counters were also set up in various outlets of a major supermarket chain to enhance public awareness of the use of metric units, and publicity materials and metric conversion tables were distributed. In conducting these promotional activities, the assistance of members of the Junior Police Call was sought and they were appointed as Metrication Ambassadors in recognition of their voluntary efforts. A variety show on metrication was screened on a Chinese television channel. A territory-wide Chinese essay-writing competition was also organised for primary and secondary school students to increase their awareness of the adoption of metrication in their daily life.

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HONG KONG's labour force grew moderately in 1993. In the third quarter, the labour force had grown by 3.7 per cent, compared to the corresponding period of 1992. With a buoyant economy, unemployment and underemployment remained low, at two per cent and 1.3 per cent, respectively, of the labour force.

The territory's employed stood at 2.8 million, of whom 63 per cent were male and 37 per cent female.

Of the employed, 21.1 per cent were engaged in the manufacturing sector and 69.7 per cent in various services sectors - 28.9 in wholesale, retail, import and export trades, restaurants and hotels; 11.2 per cent in transport, storage and communications services; 9.4 per cent in financing, insurance, real estate and business services; and 20.2 per cent in community, social and personal services.

A large number of Hong Kong residents now work in China, following the rapid growth of its economic link with the territory in recent years. According to a recent survey, some 52 400 Hong Kong residents work on the other side of the border.

       As an industrialised economy, the vast majority of employment in Hong Kong is found in industrial and commercial establishments. As a result of continual expansion during the past decade, establishments in the services sector now employ three times as many workers as the manufacturing sector. In September, there were 243 303 establishments in the services sector employing 1 722 873 persons, an increase of 6.2 per cent in employment over the corresponding period of 1992. In contrast, there were only 39 238 establishments in the manufacturing sector employing 508 133 persons, a decrease of 11 per cent in employment. With this shift in employment, which underlines the economic restructuring underway in Hong Kong, many manufacturing workers have been displaced from their jobs. A scheme involving the injection of $300 million into an Employees Retraining Fund by the government is being implemented to re-train affected workers.

       In terms of employment size, the import and export trade is the largest industry group in the services sector, employing 452 262 persons in September. Other major service industry groups include the retail trade, restaurants, and business services, which have an employment size of 198 199, 187 655, and 127 793 persons, respectively.

       Despite declining employment, the clothing industry remains the largest manufacturing industry, employing 166 401 persons in September. Establishments in the electronics and textiles industries are the next two largest groups of employers in manufacturing, employing 53 591 and 44 182 persons, respectively.

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Details of the distribution of establishments and employment by industry group are shown at Appendices 17 and 18, respectively.

Wages

Wage rates are calculated on a time basis, either daily or monthly, or on an incentive basis according to the volume of work performed. The average wage rate for all employees, including wage-earners and salaried employees up to the supervisory level, increased by 10.4 per cent in money terms, or by 2.4 per cent in real terms, between September 1992 and September 1993.

At the third quarter of 1993, the average monthly wage for the supervisory, technical, clerical and miscellaneous non-production workers in the wholesale, retail, import and export trades, restaurants and hotels sector was $8,579. This represented an increase of 10.3 per cent over the same period in 1992, or an increase of 2.2 per cent in real terms.

The average wage rate in the manufacturing sector rose by 10 per cent in money terms between September 1992 and September 1993. After allowing for rises in consumer prices, the wage rate increased in real terms by 1.9 per cent during the same period.

   In September 1993, 75 per cent of manual workers in the manufacturing sector received a daily wage, including fringe benefits, of $189 or more; and 25 per cent received $297 or more. The overall average daily wage was $266. The overall average monthly rate was $6,780.

Employee Benefits

The Employment Ordinance provides for benefits and entitlements including statutory holidays, annual leave, rest days, maternity leave, sickness allowance, severance payment and long service payment for employees. In addition, some employers provide employees with fringe benefits such as subsidised meals or food allowances, good attendance bonuses, free or subsidised medical treatment, and transport to and from work. 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.

In December 1993, the government announced that it would pursue a compulsory, contributory Old-age Pension Scheme, subject to the outcome of a feasibility study advising on the financial and technical aspects of such a scheme; endorsement by the community of proposals resulting from the feasibility study; and consultation with the Chinese Government. The government would also continue to promote voluntary retire- ment schemes vigorously. At the end of the year, a total of 14 637 private retirement schemes had been approved by the Inland Revenue Department.

Labour Administration and Services

The Labour Department, headed by the Commissioner for Labour, is responsible for implementing labour policies and enforcing labour legislation. These objectives are achieved through the promotion of the safety, health and welfare of the working community, as well as the promotion of harmonious labour relations, safeguarding of the rights and benefits of employees under labour laws, and the provision of free employment services and careers guidance. During 1993, there were 8 041 prosecutions for breaches of ordinances and regulations administered by the department. Fines totalling $22,793,100 were imposed.

EMPLOYMENT

Labour Conditions

The employment of children aged under 15 years is prohibited in all industrial under- takings. Children aged 13 and 14 years 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 in this age group is still at school.

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

The Labour Inspectorate of the Labour Department is responsible for monitoring employers' compliance with requirements in the Employment Ordinance relating to the employment of women and young persons, payment of wages, annual leave and statutory holidays, sickness allowance and maternity protection. The ordinance applies to both local and foreign workers.

Labour Legislation

The Commissioner for Labour is the principal adviser to the government on labour affairs. She is responsible for initiating proposals for new labour legislation and amendments to existing laws. The government's policy on labour is to achieve levels of safety, health and welfare for employees in Hong Kong which are broadly equivalent to those provided in neighbouring countries at a similar stage of economic development. This objective has been achieved through a total of 119 legislative enactments in the past decade.

During 1993, 11 pieces of labour legislation were enacted. An amendment to the Protection of Wages on Insolvency Ordinance raised the amount of ex gratia payments in respect of arrears of wages and wages in lieu of notice covered by the ordinance. An amendment to the Pneumoconiosis (Compensation) Ordinance provided a new compensation scheme for pneumoconiosis sufferers, offering improved benefits in the form of monthly payments until death. The maximum level of compensation payable under the Employees' Compensation Ordinance was revised, while an amendment to the Factories and Industrial Undertakings Ordinance revised the levels of penalty, to discourage infringement of the ordinance.

Labour Advisory Board

The Labour Advisory Board, a non-statutory body, helps to formulate labour policies and legislation. It has six members representing employers and another six representing employees. The Commissioner for Labour, or her deputy, is the ex officio chairman.

      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 board on special subject areas including employment services, industrial safety and health, labour relations, employees' compensation and the implementation of international labour standards. The views of employers and employees are canvassed in the formulation of labour policies through consultation with the board, to provide a progressive yet balanced programme of labour legislation for the benefit of all concerned.

International Labour Standards

A number of international instruments set out labour standards. Among them are the International Labour Conventions of the International Labour Organisation. These

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conventions set out the standards on matters relating to employment rights, conditions of work, social policy, labour administration, labour relations and social security. The Commissioner for Labour ensures that Hong Kong's obligations under these conventions are observed.

   The International Labour Conventions have significant influence on the formulation of labour legislation in the territory. At the end of 1993, Hong Kong applied 49 conventions, which compared favourably with most members of the International Labour Organisation in the region.

Trade Unions

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, 22 new unions were registered. At the end of 1993, there were 532 unions, comprising 491 employees' unions, 26 employers' associations and 15 mixed organisations of employees and employers. Their total memberships were about 525 800, 2 600 and 14 500, respectively.

   The majority of employees' unions are affiliated to one of the five major local labour organisations registered under the Societies Ordinance. These are the Hong Kong Federation of Trade Unions (89 affiliated unions with about 192 500 members); Hong Kong and Kowloon Trades Union Council (66 affiliated unions with about 30 600 · members); Hong Kong Confederation of Trade Unions (27 affiliated unions with about 75 200 members); the Joint Organisation of Unions, Hong Kong (18 affiliated unions with about 9 700 members); and the Federation of Hong Kong and Kowloon Labour Unions (20 affiliated unions with about 21 600 members). The remaining 271 employees' unions have a total membership of about 196 200.

Labour Relations

In 1993, the Labour Relations Division of the Labour Department conciliated in 157 trade disputes (each involving 21 or more workers), which involved 10 work stoppages and a loss of 16 204 working days. The service also dealt with 17 866 claims for wages and other employment-related payments.

A dispute between the Flight Attendants Union and the management of Cathay Pacific Airways Limited over staff deployment and pay adjustment issues developed into a strike in January, which lasted for 17 days and resulted in the loss of 15 000 working days. The strike, which straddled the Lunar New Year holidays, was unusually long in the experience of Hong Kong.

In July, some 170 staff of the China Motor Bus Company Limited were made redundant, following a government decision to grant Citybus Limited a franchise to operate 26 bus routes, to be excised from the existing network of the former bus company. The staff were dissatisfied with the compensation package, the scale of the retrenchment and other arrangements in the execution of the retrenchment exercise. The matter attracted considerable attention from the public.

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

EMPLOYMENT

       The division endeavours to promote harmonious labour-management relations in the private sector through a variety of activities such as promotional visits and talks 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 one seminar for contractors of the airport core programme were organised in 1993. These seminars attracted some 600 participants.

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

The Labour Tribunal

The Labour Tribunal, which is part of the judiciary, provides a quick, inexpensive and informal method of adjudicating various types of disputes between employees and employers.

In 1993, the tribunal heard 4 029 cases involving employees as claimants, and a further 375 cases initiated by employers. More than $54 million was awarded by the presiding officers. Of these cases, 86 per cent were referred by the Labour Relations Division 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. Previously, it covered wages not exceeding $8,000 accrued during a period of four months preceding the date of application, and seven days' wages in lieu of notice, up to $2,000. These two payment limits were revised in February and the respective levels were set at $18,000 and one month's wages, up to $6,000. The fund also covers an applicant's entitlement to severance payment, 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.

During the year, the fund received 7054 applications and paid out a total of $76.6 million to 6 137 applicants.

Finding Employment

The Employment Services Division provides free placement services to help employers recruit staff, and to assist job-seekers in finding suitable employment. Since 1992, employers wishing to employ foreign workers under the importation of labour schemes must notify the division of vacancies. This requirement ensures that local job-seekers have priority in filling the vacancies.

As a result of economic restructuring in recent years, there is a growing need for local workers to be re-trained so that they can obtain employment in another trade or more senior jobs in the same trade. In 1992, the government established an Employees Retraining Scheme which was financed by a $300 million government grant and a levy imposed on employers of imported workers. Under this scheme, a local employee undergoing re-training is paid a re-training allowance of up to $3,400 each month or

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$30 per session for half-day and evening courses. A wide variety of courses were on offer. At the end of 1993, 6 903 persons had completed re-training and 1901 were undergoing re-training.

In May, an on-the-job training scheme was launched to bridge the gap between employers with unfilled vacancies and re-trainees looking for jobs. Cash reimbursements of training expenses are made to employers providing on-the-job training. The division is responsible for processing applications under the schemes and assisting the re-trainees to find employment. At the end of 1993, 342 firms (331 already gazetted) had joined the scheme, offering a total of 4 217 jobs.

The Selective Placement Division helps disabled persons integrate with the community through open employment. It provides a free employment counselling and placement service for the hearing impaired, sight impaired, physically disabled, mentally retarded and ex-mentally ill.

The division launched a series of activities to promote the employment of the disabled. These included district-based exhibitions, presentation of awards to employers and disabled employees, and talks to interested parties. Quarterly newsletters were published and distributed to some 20 000 employers. Pamphlets promoting the employment of persons with various disabilities were also issued to members of the public. Apart from making regular promotional visits to employers, special campaigns were conducted in selected trades and industries to identify and secure suitable vacancies for disabled job-seekers.

Careers Guidance

The department's Careers Advisory Service promotes careers education by building up a data bank of careers information and organising careers activities for young people.

  The service operates two careers information centres, each equipped with a reference library, an audio-visual unit and an enquiry service. It produces written and audio-visual resource materials, including careers pamphlets, job-sheets, slide presentations and films. All these materials are available to the public free of charge.

The service organises a wide range of activities, including seminars, visits to places of work, exhibitions and quiz competitions. In February, it joined hands with the Hong Kong Trade Development Council to stage the Education and Careers Expo '93, which attracted more than 165 000 visitors. More than 136 500 students took part in the 12th Careers Quiz organised by the service in November.

Foreign Workers

The Immigration Department is responsible for controlling the entry of foreign workers. 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 department applies the policy in a flexible manner. Genuine businessmen and entrepreneurs are welcome to establish a presence in the territory, bringing with them capital and expertise. Qualified professionals, technical staff, administrators and managerial personnel are also admitted with minimum formalities.

During the year, 17 202 professionals and persons with technical, administrative or managerial skills from more than 60 countries were admitted for employment.

EMPLOYMENT

To alleviate manpower shortages in certain bottleneck areas, a separate scheme for the importation of skilled workers at the supervisory, technician, and craftsman levels was introduced in 1989. The scheme was extended in 1990 to include experienced operatives. 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 12 000 workers who came under the previous schemes and whose contracts were still valid, employers were allowed to import 13 000 workers. The Immigration Department, however, received some 5990 applications from employers, involving a total of 62 300 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. As demand continued to grow, it was decided in January 1993 to expand the scheme so that the number of workers admitted would not exceed 5 500 at any one time. At the end of 1993, 1 885 imported workers were in Hong Kong under this scheme.

Foreign Domestic Helpers

The entry of foreign domestic helpers is subject to the conditions 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 of repatriation to their country of origin.

Measures were introduced in 1993 to improve the service relating to the employment of foreign domestic helpers. In March, the Labour Department abolished the requirement of contract attestation. A one-stop service is now provided by the Immigration Department in processing applications for employment visas and extensions of stay. The number of service locations was increased in June. Helpers and employers can now obtain consultation and conciliation services from 11 offices of the Labour Relations Service.

In the past few years, the demand for foreign domestic helpers has risen steadily. In 1993, there were 120 604 such helpers in Hong Kong, representing an increase of 19.2 per cent compared with 101 182 in 1992. About 87.4 per cent of these domestic helpers were citizens of the Philippines.

Employment Agencies

The Employment Agencies Administration of the Labour Department is responsible for administering Part XII of the Employment Ordinance and the Employment Agency Regulations, which govern the licensing and operation of employment agencies. The department issued 1 061 licences in 1993.

Employment Outside Hong Kong

The External Employment Service is responsible for administering the Contracts for Employment Outside Hong Kong Ordinance to protect the interests of local employees engaged to work outside Hong Kong by foreign employers. All such employment contracts involving manual employees, or non-manual employees with monthly wages not exceeding $20,000, are required to be attested by the Commissioner for Labour. The department attested 67 contracts in 1993.

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Industrial Safety

 The Factory Inspectorate Division 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 undertakings. Advice and assistance are given to managements on various safety and health aspects, including the adoption of safe working practices and improving factory layouts to achieve a better working environment. The inspectorate also investigates industrial accidents and dangerous incidents.

  During the year, two serious industrial accidents occurred. In the first case, the main mast of a tower crane involved in the construction of the Tsing Ma Bridge buckled during a load test. The two operators inside the driving cabinet died. The other accident involved the failure of a passenger hoist installed at a construction site at North Point. The cage of the hoist plunged from the 20th floor, fatally injuring all 12 workers inside. The incidents were thoroughly investigated by the inspectorate in joint efforts with other authorities. The inspectorate also took prompt action to ensure that the construction industry had adopted suitable safety precautionary measures to prevent the recurrence of similar accidents.

  The Factories and Industrial Undertakings (Noise at Work) Regulations 1992 came into operation in mid-July. It provides better protection for employees engaged in noisy work processes. The Factories and Industrial Undertakings (Lifting Appliances and Lifting Gear) (Amendment) Regulations were also enacted in July. The regulations have been extended to cover lifting appliances operating at construction sites, and strengthens the regulatory measures in respect of lifting appliances.

  To promote self-regulation, the Safety Programme Promotion Unit helped industries to set up in-plant safety committees. During the year, the unit helped contractors working on the new airport projects to set up 25 management and site safety committees. The unit also assisted managements and workers to identify and assess hazards at work, and to devise their safety and health programmes. A three-day workshop on the national implementation of International Labour Conventions was jointly organised with the International Labour Organisation in February. A symposium on construction safety and health management was also organised for the construction industry in April.

  The Factory Inspectorate placed much emphasis on regulatory activities in the high-risk areas of factories and construction sites. Special enforcement campaigns were launched to promote machinery safety, fire prevention and construction safety. During these campaigns, 23 655 factories, 341 restaurants and catering establishments and 1 746 con- struction sites were inspected and 1 483 summonses were taken out. The inspectorate also worked closely with the New Airport Projects Co-ordination Office in setting up various management and working committees to promote safety and health for workers involved in the new airport projects.

  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 safety talks to university and post-secondary students and to various other organisations. In collaboration with the Hong Kong Polytechnic, the centre continued to organise evening courses leading to the award of certificates in industrial safety. It also assisted the

EMPLOYMENT

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. Four large-scale symposia and conferences were also held on passenger hoist safety, bridge construction safety, scaffolding safety, and chemical safety.

Construction site safety award schemes for the construction industry and the airport core programme were jointly organised by the Labour Department, Housing Department, Marine Department, New Airport Projects Co-ordination Office, Provisional Airport Authority, Mass Transit Railway Corporation, Occupational Safety and Health Council, Hong Kong Construction Association Limited and Hong Kong Construction Industry Employees General Union.

Boiler and Pressure Vessel Safety

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 pressure equipment covered by the two ordinances.

The former ordinance stipulates that pressure equipment, including steam boilers, thermal oil heaters, steam receivers, steam containers, air receivers and pressurised cement tanks mounted on trucks or trailers, must be approved by and registered with the division. The equipment must be inspected periodically by qualified engineers who are on the approved list of appointed examiners. The division also investigates accidents involving pressure equipment.

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

During the year, the division processed 2 297 equipment registration applications, and inspected 3 584 factories and 5 600 items of pressure equipment. It also continued to assist the Haking Wong Technical Institute and the Occupational Safety and Health Council in organising training courses on the safe operation of 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 has issued a code of practice for appointed examiners, and guidebooks on the safe operation and maintenance of pressure equipment.

       The division also provides technical support and advice to the Director of Fire Services on the approval of pressurised containers and storage installations for compressed gases under the provisions of the Dangerous Goods Ordinance. During the year, the division assisted the approval process of 24 934 cylinders for licensing purposes and made 74 site inspections.

Occupational Health and Hygiene

The Occupational Health Division protects workers against health hazards arising from employment. It provides an advisory service to the government and the public on matters concerning the health of workers and the hygiene of workplaces, and complements the Factory Inspectorate Division in supervising health standards and practices in industry.

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  The division published a series of booklets and codes of practice on occupational health and prevention of occupational diseases. Its staff carried out an on-going programme of occupational health promotion and educational activities, including delivery of health talks and lectures. With the Occupational Safety and Health Council as its co-organiser, the division also organised a week-long exhibition and a seminar on occupational health in the office environment.

  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 measures. 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 persons 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. Registered nurses of the division handle medical clearances for employees' compensation cases. Its occupational health officers serve as members of special assessment boards, and of 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; promote the use of modern technology; disseminate technical knowledge; provide consultancy services; and encourage co-operation and communication among government and non-government bodies with similar 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 in Hong Kong.

  The council has formed four functional committees to deal with administration, finance, publicity, and education and research. It has industry-based committees covering the catering, construction, electronics, metalware, ship-building and ship-repairing, plastics, printing, textiles, and transport and physical distribution industries. The council also established the Chemical Safety and Health Advisory Committee and the Occupational Health Advisory Committee during the year.

  In the year under review, the scope and number of the council's training courses expanded significantly as a result of close co-operation with the Labour Department. These jointly-organised training courses focussed mainly on general safety and health training. At the same time, the council continued to organise its own courses for managers and supervisors on safety management techniques; as well as competence programmes on ionising radiation protection, safe handling of asbestos, laser safety, management of dangerous substances and noise assessment. The council co-operated with other institutions in offering safety and health training to safety practitioners. During the

EMPLOYMENT

year, it successfully organised safety and health training courses for graduate engineers, in conjunction with the Hong Kong Institution of Engineers; and laboratory safety training for laboratory technicians, with the Government Laboratory. There was an increased demand for in-company training programmes, with a total of 5 500 company staff at all levels attending the training courses.

       During the year, the council organised 12 seminars which focussed on selected technical topics for professionals and interested members of the public. Research projects were also undertaken to improve occupational safety and health in Hong Kong. The council continued to provide consultancy services on a cost recovery basis.

Campaigns to arouse public interest included the Occupational Safety and Health Week, held in November. There was a significant increase in co-operation with district-based organisations in staging promotional activities.

To fulfil its role in the dissemination of technical information, the council produces safety and health literature, codes of practice and guidebooks, a bi-monthly journal Green Cross, safety advice pamphlets, bulletins for individual industries and posters. A comprehensive library on occupational safety and health is open for public use. It houses a wide collection of journals, technical reference books and a database.

The council's occupational safety and health employees' participation scheme continued to offer financial assistance to employees' organisations running safety and health activities. During 1993, 23 employees' organisations received subsidies under the scheme.

Employees' Compensation

The Employees Compensation Division of the Labour Department administers the Em- ployees' Compensation Ordinance and the Pneumoconiosis (Compensation) Ordinance.

The department ensures that injured employees and dependants of deceased employees covered by the Employees' Compensation Ordinance obtain compensation from their employers in respect of occupational diseases, or injuries, or deaths, caused by accidents arising out of, and in the course of, employment. It also ensures that persons covered by the Pneumoconiosis (Compensation) Ordinance obtain speedy compensation from the Pneumoconiosis Compensation Fund, which is financed by a levy imposed on the construction and quarrying industries.

To provide quick financial relief to employees injured at work and to dependants of employees who die as a result of work-related accidents, a loan scheme was set up in July. Under the scheme, an interest-free loan of up to $15,000 is provided for in each eligible employees' compensation case. The Employees' Compensation Assistance Scheme makes payments of statutory compensation and damages, awarded by common law, which are 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.

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 1993, Ordinary Assessment Boards convened 529 sessions and completed assessments of 15 215 cases referred to them by the Commissioner for Labour and 1 274 review cases. Special Assessment Boards convened nine sessions and completed assessments of eight cases referred to them by the Ordinary Assessment Boards and one review case.

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A total of 158 pneumoconiosis cases were awarded compensation from the Pneu- moconiosis Compensation Fund. The Pneumoconiosis Compensation Fund Board, which was established to administer the fund, also financed research, educational and publicity programmes to enhance awareness of pneumoconiosis and to promote prevention of the disease.

  In July, the Pneumoconiosis (Compensation) Ordinance was amended so that com- pensation is provided in the form of monthly payments until death instead of a lump sum Pneumoconiosis sufferers who were diagnosed before January 1, 1981, and who are not covered by the ordinance, receive ex gratia payments on a quarterly basis from the government.

The Employees' Compensation Ordinance was also amended in July to improve the maximum levels of compensation. The increase will come into effect on January 1, 1994. Other amendments include improving the provisions on compulsory insurance; and expanding the schedule for assessing the degree of loss of earning capacity suffered by an injured employee, and the schedule for occupational diseases.

Telephone Enquiry Service

The General Enquiry Telephone Service of the Labour Department handles 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.

In April, a computer-operated answering facility was installed to supplement the public enquiry service. The new system provides a round-the-clock service to the public while the staff operators deal with more complicated enquiries during office hours.

  During the year, a total of 833 109 calls were handled by the General Enquiry Telephone Service.

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PRIMARY PRODUCTION

MOST of Hong Kong's food supplies are imported-with China supplying about 47 per cent of the territory'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. The territory's farmers and fishermen produce about 24 per cent of fresh vegetables, 27 per cent of live poultry, six per cent of live pigs, 12 per cent of freshwater fish and 61 per cent of all live and fresh marine fish consumed. Their produce is highly regarded in the marketplace for its freshness and quality and so tends to fetch higher prices.

       Each day, Hong Kong people consume about 950 tonnes of rice, 1020 tonnes of vegetables, 7610 pigs, 370 head of cattle, 270 tonnes of poultry, 570 tonnes of fish and 1 700 tonnes of fruit. Based on these figures, they are among the world's highest consumers of protein, according to the United Nations Food and Agriculture Organisation.

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, which aim 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 industry sectors to establish and update productivity standards and identify areas for improvement.

Local production statistics are given at Appendix 22.

Agricultural Industry

As only about 7.5 per cent of Hong Kong's total land area is suitable for farming, local agriculture is directed towards the production of high quality fresh foods through intensive land use.

       The most common crops are vegetables and flowers, although a small quantity of fruit and other high-yield field crops are also grown. About 1 740 hectares of land were under vegetable and flower cultivation in 1993. The value of crop production was about $412 million.

       The main vegetable crops grown are white cabbage, flowering cabbage and lettuce. These are cultivated throughout the year, with peak production in the cooler months. Some

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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. Their production is declining though, as the industry adjusts to the progressive implementation of environmental pollution controls under the livestock waste control scheme. Pigs in Hong Kong are mostly crosses of imported breeds. The value of locally-produced pigs in 1993 amounted to $151 million and that of poultry, including chickens, ducks, pigeons and quail, amounted to $478 million.

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, especially those that are less labour-intensive, are evaluated and promoted if found suitable for local development. Experiments to improve quality and yield are conducted. 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 introduced the rearing of pigs on sawdust litter, a 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 by the department.

Agricultural extension officers are assigned 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. At the end of 1993, loans issued since the inception of these funds had reached $298 million, with $293 million having been repaid.

A total of 65 co-operative societies and two federations, with an overall membership of some 10 535 farmers, help to promote agriculture within the farming community. The Director of Agriculture and Fisheries acts as their registrar. His powers and duties include the registration of the co-operative societies and their by-laws, the auditing of accounts and general supervision of operations.

PRIMARY PRODUCTION

An agricultural land rehabilitation scheme, aimed at returning fallow arable land 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 is offered. The satisfactory results of pilot schemes at Cheung Po in Yuen Long and Hok Tau in Fanling have resulted in the extension of the scheme to other suitable areas.

Fishing Industry

      Marine fish constitute one of Hong Kong's most important primary products. During the year under review, total production from marine capture and culture fisheries was estimated at about 221 200 tonnes, with a wholesale value of $2,540 million. This represented a decrease of one per cent in weight and an increase of two per cent in value compared with 1992. In weight terms, marine capture contributed 96 per cent towards total production while the remainder came from culture operations.

The Hong Kong fishing fleet, manned by 21 000 fishermen, comprises some 4 500 vessels of which 4 200 are mechanised. It plays a vital role in primary production, catching over 150 species of commercially important fish and supplying over 60 per cent of all marine produce consumed locally. Golden thread, bigeyes, lizard-fish, 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 79 per cent, or 172 000 tonnes, of marine fish landed in 1993. The total catch of live and fresh marine fish available for local consumption amounted to 89 300 tonnes, with an estimated wholesale value of $1,080 million.

       Marine fish culture is practised within 26 designated fish culture zones, most of which are found around the coast of the eastern New Territories. Fish culture licences are issued by the Agriculture and Fisheries Department. At the year's-end, there were 1 640 licensed mariculturists. Young fish are reared in cages suspended from buoyed rafts. Grouper, seabream and snapper are the most common culture species. This sector supplied 3 010 tonnes of live marine fish valued at $190 million during the year.

Freshwater fish are also cultured. Fish ponds covering 1 330 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 with the increasing urbanisation of the New Territories. During the year, pond culture yielded 5 760 tonnes, or 12 per cent, of freshwater fish for local consumption.

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.

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Large-scale development projects involving construction works affecting the foreshore and seabed have an adverse impact on the marine environment and marine resources. To offset these effects, the department, in collaboration with the Swire Marine Laboratory of the University of Hong Kong, is investigating the feasibility of deploying artificial reefs. The first experimental reef, located at Pak Sha O and covering an area of 100 square metres, was deployed in December 1993.

Aquaculture studies are directed towards the development of more efficient culture systems and improved husbandry techniques to increase productivity and minimise the impact on the environment. A moist pellet preparation which substantially reduces pollution due to wastage and leacheate, and increases nutritional value was introduced to mariculturists to replace trash fish as feed. The feasibility of open sea cage culture is being explored with a view to introducing marine fish culture to more exposed coastal waters. Studies on the marine environment 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, first aid, survival, fire-fighting and the use of ancillary equipment such as radar and weather facsimile equipment, and seminars on safety on board fishing vessels at sea are organised regularly at major fishing ports. The department also advises local fishermen interested in building steel-hulled fishing vessels and organises sea-fishing endorsement courses to train and qualify them to operate these vessels. In the long-term interest of the fishing industry, the department, in collaboration with the Marine Department and Post Office, is actively involved in the formulation of international and regional standards on fishing vessel safety under the Torremolinos Convention. Standard vessel drawings were prepared for distribution to the industry to cope with the Convention's requirements.

The department administers four loan funds servicing the fishing fleet. The Fisheries Development Loan Fund with $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 a total capital of $27.72 million at the end of 1993, are revolving funds which provide shorter-term financing, mainly for recurrent purposes. By December 31, loans issued since the inception of these four funds totalled $257 million, with $233 million having been repaid.

At the end of the year, there were 63 co-operative societies and four federations supported by fisherfolk, with 2 043 members from the fishing community.

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

Marketing

Much of the wholesale marketing of primary products, particularly fresh foods, is the responsibility of the Agriculture and Fisheries Department, and the vegetable and

PRIMARY PRODUCTION

fish marketing organisations. In the year under review, 43 per cent of locally-produced vegetables, and 68 per cent of the landed marine fish, were sold through these 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 and surpluses are ploughed back into the development of marketing services and the farming industries. The organisation 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 that it handles, to safeguard public health. During the year, 37 300 tonnes of local vegetables valued at $114 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 1993, the wholesale fish markets handled 64 000 tonnes of marine fish, crustacea and molluscs which were sold for $573 million. This included 5 360 tonnes of imported marine fish.

The wholesale marketing of imported vegetables, fruit, poultry, eggs, freshwater fish and crustacea takes place at various Agriculture and Fisheries Department wholesale markets throughout the territory.

Facilities in some of these markets have become dilapidated and congested. Unable to cope with the increasing throughput, their 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 with large modern wholesale market complexes, on Hong Kong Island and in Kowloon, and to centralise the wholesale marketing of fresh foodstuffs. The department has so far completed the first phases of the complexes on Hong Kong Island and the West Kowloon Reclamation. Phase one of the Hong Kong complex, which handles fruit, freshwater fish and eggs, was commissioned in 1991. Phase one of the Kowloon complex was handed over to the department in September 1993. It provides facilities for the wholesale marketing of imported vegetables, freshwater fish and eggs as well as incorporating the Fish Marketing Organisation market for Cheung Sha Wan. Phase two work on the Hong Kong complex, which includes the poultry and imported vegetable markets, is progressing satisfactorily. Preparation is being made for these markets to be commissioned in early 1994. Pending the completion of the second phase of the Kowloon complex and the permanent markets

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planned for the New Territories, the department continues to operate two temporary wholesale markets at North District in the New Territories for agricultural products, and at Cheung Sha Wan in Kowloon for poultry.

During the year, the wholesale markets managed by the department handled 180 810 tonnes of local and imported vegetables, 90 660 tonnes of local and imported poultry, 42 240 tonnes of local and imported freshwater fish and fishery products, 129 040 tonnes of imported fruit and 20 590 tonnes of imported fresh and preserved eggs. The total value of the produce amounted to $4,668 million.

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, and administers quarrying contracts. It processes mining and prospecting applications and inspects mining and prospecting areas, stone quarries, blasting sites and explosives stores.

Hong Kong used 1.7 million tonnes of sand, aggregates and other rock products in 1993. About half of the territory's demand for aggregates and sand was met locally, with the balance imported from China. Local quarries and stone processing sites are supervised by the division. New contracts for the Shek O and Anderson Road quarries were prepared to facilitate the progressive rehabilitation of these quarry sites within defined time-spans, in return for the granting of rights to the quarry operators to process and sell surplus rock excavated during the course of the rehabilitation. These quarry sites will be rehabilitated by recontouring and extensive planting to blend with the surrounding natural hillsides in accordance with guidelines set down in the Metroplan Landscape Strategy for the Urban Fringe and Coastal Areas. Rehabilitation schemes for the Mount Butler and Lamma Island quarries are currently being arranged. In 1993, there was one kaolin mine operating under a mining lease.

The Mines and Quarries Division manages three government explosives depots, which provide bulk storage facilities for imported as well as locally-manufactured explosives, and undertakes the delivery of explosives from the depots to blasting sites. It also issues shotfirers' blasting certificates.

The largest use of explosives during the year was for site formation works for the new airport project. A new government explosives depot was set up at the airport site on Chek Lap Kok Island to ensure uninterrupted supply for site preparation work. Explosives were also used in Hong Kong for quarrying works, sewerage tunnel construction and seismic surveys. The overall consumption of explosives was 21 700 tonnes.

In 1993, the government promulgated procedures for the controlled use of pyrotechnics in the production of motion pictures, television programmes and theatrical performances. The division is responsible for issuing storage licences and removal permits, and provides technical support to the Recreation and Culture Branch in assessing the suitability of pyrotechnics and pyrotechnicians.

Popular with local residents and tourists, a brilliantly ornate floating restaurant awaits the evening's dinner patrons, in the Shing Mun River, Sha Tin.

*

Setting high standards in visitor accommodation helps to secure Hong Kong's Number One ranking as Asia's most popular travel destination.

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Unforgettable backdrop. Nearly half of all international visitors to Hong Kong make their way to The Peak on Hong Kong Island (left), to admire the view; while (below), many also have their fortune revealed at Wong Tai Sin Temple.

Above and right: Stanley Market is a magnet for intrepid shoppers who are prepared to work a little harder for their bargains.

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Hong Kong thoroughly enjoys its reputation as an exciting tourist destination, where the delights of shopping, dining, and sightseeing can be experienced within a surprisingly compact area.

      Pictured, clockwise: A gold necklace wins approving smiles; Sold. Another suit, and another suitcase; A seafood dinner begins with a guarantee of freshness; Time out for an authentic Chinese lunch is time well spent.

WELCOME

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Lately modernised and air-conditioned, the Peak Tram has been a favourite with tourists and Peak commuters for over 100 years. Right: On a clear day, the funicular tramway promises breathtaking views as well as a swift ride up the mountain.

LEAGE. MONE FIRMINO

10

EDUCATION

ABOUT one-fifth of Hong Kong's population was engaged in full-time study, indicating the importance the community attaches to education.

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 except social services.

       With targets of provision almost fully achieved at the school level, and with the tertiary expansion programme well on course, attention during the year continued to be focussed on measures to ensure that schools can deliver the quality of education needed to sustain social and economic progress. Major recommendations in the Education Commission's fifth report, for improving the professional development of teachers and the working environment in schools, were accepted as government policy in February.

The Structure of the Education System

Educational opportunities encompass 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. All kindergartens are in the private sector. 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 (or completion of Secondary 3, whichever is earlier).

Pre-school education begins for most children in a kindergarten, at the age of three. Primary school begins normally 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, technical or prevocational 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 full-time craft courses of vocational training; while a small number choose to leave formal education at this point.

Following the HKCEE, students may progress to a two-year sixth form course leading to the Hong Kong Advanced Level Examination (HKALE); to a two or three-year vocational course leading to a certificate or diploma; or to a three-year course of teacher training. Post-HKALE opportunities include a place on a degree or diploma course, or on a course of teacher training normally lasting two years. Those leaving full-time education

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at the end of the senior secondary or sixth form courses have opportunities for part-time study or vocational training through to degree level.

   Most educational establishments are provided in the public sector, but 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 are autonomous statutory bodies which (except for the self-funding Open Learning Institute) receive public funds through the University and Polytechnic Grants Committee (UPGC). A comprehensive system of technical education and vocational training is provided, with public funds, by the statutory Vocational Training Council (VTC).

   About 1.2 million students, or 20 per cent of the total population, were in full-time education during the year. They attended 1946 institutions, and were taught by some 55 000 teachers assisted by a large number of support staff. There were some 140 500 candidates for local public examinations, with a further 204 000 candidate entries for 18 overseas examinations.

The Legislative Framework

Any institution offering education to 20 or more students in a day, or to eight or more students at any one time, must operate in accordance with statutory requirements. The operation of schools (including kindergartens, primary and secondary schools, and commercial colleges) is governed by the Education Ordinance, which provides for the registration of schools, 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, fees and charges, and the qualifications of teachers.

   The Post-Secondary Colleges Ordinance covers institutions offering post-secondary courses outside the tertiary sector. The Vocational Training Council Ordinance covers technical colleges, technical institutes, industrial training centres, and skills centres for the disabled. Two important bodies with a quality control role have been established under their own ordinances: the Hong Kong Examinations Authority and the Hong Kong Council for Academic Accreditation. The Education Scholarships Fund Ordinance provides for the administration of a large number of scholarships donated by generous members of the public.

The Government's Role

The Secretary for Education and Manpower heads the Education and Manpower Branch of the Government Secretariat. He is responsible for formulating and reviewing education policies, securing funding in the government budget, liaising with the Legislative Council on educational issues, and overseeing the effective implementation of all education programmes.

   The Director of Education is responsible for supervising education at kindergarten, primary and secondary levels. 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 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 these places to pupils; curriculum

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development, including the development of a target-oriented curriculum and related assessments; professional training for non-graduate teachers; language education for teachers; monitoring teaching standards; and administering the funding of public sector schools and some private institutions. The department also plays an important role in policy development and review.

Other government agencies with a role in education are the Secretariat of the University and Polytechnic Grants Committee, and the Student Financial Assistance Agency.

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, Hong Kong Examinations Authority and Hong Kong Council for Academic Accreditation; on management committees of schools; and on the governing bodies of tertiary institutions.

The Education Commission

The commission advises the government on the development of the education system as a whole 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 planning and de- velopment of education at all levels; and to initiate educational research.

The commission has 15 members, of whom 13, including the chairman, are appointed from outside the government to bring a wide range of personal and professional experience to the issues under review. They include the chairmen of the Board of Education, UPGC, VTC and Advisory Committee on Teacher Education and Qualifications. The two government members are the Secretary for Education and Manpower, who is the vice-chairman, and the Director of Education.

In February, the government accepted as policy the recommendations in the com- mission's fifth report, and implementation proceeded as planned during the year. Three new bodies recommended in the report were set up: the Committee on Home-School Co-operation, the Provisional Governing Council of the Institute of Education, and the Advisory Committee on Teacher Education and Qualifications. Planning proceeded for the setting up of a fourth body, the Council on Professional Conduct in Education.

Having completed five comprehensive reviews of education policy, the commission considered that further wide-ranging reviews would not be needed in the next few years. Instead, the commission selected three topics for in-depth study: education standards, language proficiency, and the funding of schools.

In September, the government published a policy document, School Education in Hong Kong: a Statement of Aims, based on a draft issued by the commission for public consultation in 1992. At the same time, plans were announced for monitoring progress in implementing the aims.

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

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approved policies, and the need for new or modified policies relating to education in schools. Its members include the chairmen of advisory and executive bodies concerned with the school system: the Curriculum Development Council; the Private Schools Review Committee; and advisory committees on home-school co-operation, school guidance and support services, school administration and finance, and school allocation systems. Other members include a representative of the teaching constituency and persons experienced in kindergartens, special schools, school administration, vocational training, tertiary education, business and the professions. Two government officials sit on the board: the Director of Education as the vice-chairman, and the Deputy Secretary for Education and Manpower.

The Curriculum Development Council

The council is appointed by the Governor to advise the government, through the Director of Education, on curriculum matters. Its members include educators, employers and parents.

   During the year, the council continued to consolidate syllabus development, conduct research on curriculum issues, develop school-based curricula and help in developing the Target Oriented Curriculum. Curriculum guides, which aim to ensure that subject syllabuses are developed in compatible directions, were produced for each educational level, and were issued to schools.

Curriculum Development Institute

The institute, set up in 1992 as a new division of the Education Department, is staffed by both civil servants and educationists drawn from outside the civil service. This ensures a regular infusion of new ideas to sustain the creativity and innovation needed for good curriculum development, while enabling the institute to draw on the practical experience of its civil service members.

The institute is responsible for developing curricula and helping schools to implement curriculum policies and innovations. It provides a secretariat for the Curriculum Development Council, and conducts research, experimentation and evaluation in curriculum planning. A major part of its work during the year was to develop the Target Oriented Curriculum (TOC), formerly known as the Teaching Targets and Target-Related Assessment. The TOC is a major and long-term curriculum reform, requiring substantial changes in the approach to teaching and assessment, as well as the commitment and co-operation of all educators. A curriculum framework for the TOC was developed; learning targets for Chinese, English and mathematics were identified; a pilot scheme was conducted in 20 primary schools; and reference and resource materials connected with the TOC were issued to schools. The institute also provided advice and assistance to other schools which were evaluating the TOC in 1993-94.

During the year, the institute issued updated curriculum guides and subject syllabuses, and developed resource materials. Circulars on the teaching of different subjects were issued to secondary schools to suggest ways to make learning more pleasurable and effective, and seminars on this topic were held for teachers. Guidelines on school homework were also issued. To find ways to reduce the weight of school bags, the institute held meetings with publishers' associations to see how textbooks could be made smaller and lighter, and guidelines on school bags were issued to schools.

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The institute developed and tested new projects including learning programmes, integration of subjects, curricula for the gifted and the less able, and a modular curriculum. It continued to review textbooks and advise schools on their use. It liaised with the Hong Kong Examinations Authority and teacher training institutions on the development and evaluation of the curriculum.

The University and Polytechnic Grants Committee

The UPGC is appointed by the Governor to advise on the development and funding of higher education, and to administer public grants to tertiary institutions. Its membership is comprised of nine overseas academics, five local academics, and three local professionals and businessmen. No government officials sit on the committee, but its secretariat is staffed by civil servants.

Since 1965, when the then University Grants Committee was set up, full-time equivalent student numbers have multiplied more than 12 times, from 4 100 in two universities to more than 51 000 in seven institutions. These (in order of age as a degree-awarding 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.

The successful achievement of the planned expansion of tertiary education in the period to 1994-95 depends crucially on recruiting and retaining academic staff of the right calibre. The UPGC provides advice and assistance to the institutions, and is closely monitoring the staffing situation. To help train local students for careers in Hong Kong's tertiary sector, the number of places for postgraduate degrees by research is being increased from about 1 300 in 1991-92 to almost 2 800 in 1994-95.

During the year, the UPGC continued to monitor progress towards a revised structure of tertiary education, based on normative three-year degree courses with admission after completion of the two-year sixth form course. It continued to review the development of higher education in the period 1991-2001, and submitted an interim report describing progress in the expansion and restructuring programme to date, and anticipating the 1995-98 triennium and beyond.

The Research Grants Council

The council advises the government, through the UPGC, on the needs of tertiary institutions for academic research and the funding required, and monitors the use of public research grants. It comprises six locally-based academics, five overseas academics and three local professionals and industrialists. Grant applications are considered by three specialist panels comprising mostly local academics, covering physical sciences and engineering, biology and medicine, and humanities and social sciences. An independent network of academic referees provides impartial advice. In 1993-94, the council disbursed $155.6 million in earmarked grants for academic research projects. Spending is planned to increase to $180 million in 1994-95. The council and the British Council jointly sponsored the United Kingdom-Hong Kong Joint Research Scheme, aimed at strengthening existing links between tertiary institutions in Britain and Hong Kong.

The Vocational Training Council

Established under the Vocational Training Council Ordinance and funded by public subvention, the VTC advises the government on measures to ensure a comprehensive

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system of technical education and industrial training suited to the developing needs of Hong Kong. It administers technical colleges, technical institutes, industrial training centres and skills centres for the disabled. The VTC also administers the statutory apprenticeship scheme. The council's 23 members include industrialists, academics and government officials.

   To ensure that the VTC's advice and operations meet the needs of industry and the service sector, the government has appointed, on the council's advice, 20 training boards and eight general committees with members representing those who employ the graduates of VTC training courses. Each training board is responsible for training in one sector of the economy, such as electronics, textiles and 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 completed the building of a new technical college on Tsing Yi Island and the conversion of the former Chai Wan Technical Institute into a second technical college. Both colleges offer higher diploma and higher certificate courses transferred from the polytechnics, as part of the government's plans for expanding tertiary education. They admitted their first students in October. Planning started for a new skills centre at Pok Fu Lam, with a tentative completion date of mid-1996.

The Hong Kong Examinations Authority

The authority is an independent, self-funding and non-profit-making statutory body, with members drawn from the teaching profession, tertiary institutions and the business community. Its main role is to operate two local public examinations the Hong Kong Certificate of Education Examination (HKCEE) and the Hong Kong Advanced Level Examination (HKALE). It also offers proficiency tests in Putonghua, aimed at adults. On behalf of overseas examining bodies, the authority conducts a large number of examinations leading to academic, professional or practical qualifications.

   In 1993, 118 500 candidates entered for the HKCEE, and 22 000 for the HKALE. Candidates for overseas examinations totalled 204 000, of whom 62 500 sat for the London Chamber of Commerce and Industry, 45 800 for the Associated Board of the Royal Schools of Music, and 21 100 for the Test of English as a Foreign Language (TOEFL) examinations.

Among the subjects studied by sixth form students were 17 new advanced supplementary subjects, which will be examined for the first time in 1994. These subjects provide students with a broader sixth form curriculum, which includes two core language subjects: Use of English, and Chinese Language and Culture.

The Hong Kong Council for Academic Accreditation

The council has 22 members, including senior academics from Hong Kong and overseas, and local industrialists and business people. Its activities are administered by a small professional secretariat with expertise and experience in higher education and quality

assurance.

   The council reviews the non-university degree-awarding institutions and their individual courses, to ensure that the degrees they award meet internationally-recognised standards. On average, about 40 review exercises have been conducted yearly, but this number will be reduced as, during the year, the two polytechnics and Baptist College were granted full

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responsibility for reviewing their own courses. The council maintains a register of over 1000 local and overseas academics, and other experts, from which members of institutional review and validation teams are drawn.

Other activities are now taking on a larger role, including the provision of advice to the government and other bodies on the standards of overseas institutions and the status of their awards. To be able to give such advice, and to study and contribute to the develop- ment of quality assurance processes in higher education, the council makes and maintains contact with relevant organisations around the world. It has stimulated the creation of an international network of such bodies, for which it provides administrative and editorial support. The year saw significant growth in links with accreditation bodies in China.

During the year, advice was given to the Advisory Committee on Teacher Education and Qualifications on the academic quality and professional relevance of teacher education qualifications; to the Provisional Governing Council of the Institute of Education on academic upgrading; and to professional bodies on accreditation procedures. Seminars and professional development workshops were held on quality assurance in higher education.

School Management Committees

Under the Education Ordinance, a non-government school is run by its own management committee. The committee employs 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, a total of 840 schools were in the care of 377 sponsoring bodies, with a sponsoring body operating as many as 72 schools.

In September, the number of schools joining the School Management Initiative (SMI) rose to 127. The SMI started in 1991 as a scheme to give school management committees in the public sector more decision-making power and more flexibility in the use of resources, in return for more formal procedures for planning, implementing and evaluating their activities. During the year, the SMI Advisory Committee produced school administration manuals and other reference materials. A newsletter was sent regularly to school heads and teachers to keep them informed of developments in the SMI. An SMI exhibition in June attracted 1 500 visitors, and four regional exhibitions were subsequently organised.

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.

The Governor is empowered by the ordinances to appoint the chairman of each governing body, as well as a prescribed number of members. This ensures that the governing body has a balanced distribution of members from the industrial, commercial and academic fields.

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Funding of Education

Approved public spending on education in the 1993-94 financial year amounted to HK$25,298 million, representing 21 per cent of the government's total recurrent expenditure and five per 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. An unknown, but certainly large, additional sum was spent privately on education.

   Non-profit-making kindergartens are eligible for rent and rates reimbursements, and needy parents of kindergarten pupils may apply for fee remission. 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, a 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. A secondary school in the Bought Place Scheme, from which the government buys places to make up shortfalls in government and aided school places, is given financial assistance to raise standards.

   The site for an aided school is granted to the sponsor by private treaty at a nominal premium, except when 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.

In January, following three years of development work, consultants delivered a linked series of computer models for the financing of education. These financial models were used by planners to assess the resource implications of different policy scenarios, as an aid to policy formulation.

Student Finance

The Student Financial Assistance Agency administers several financial assistance schemes, which ensure, as far as possible, that students are not denied access to education because of a lack of means. The agency also administers a number of scholarships, which are awarded on the basis of academic merit. These schemes are described below.

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 travel expenses. In the 1992-93 academic year, 168 049 students received assistance totalling $137 million.

Textbook Assistance

Primary and junior secondary students who need help to meet the cost of textbooks and stationery may apply for a grant. In 1992-93, 112 524 students received assistance totalling $36.9 million.

Fee Remission

The Senior Secondary Fee Remission Scheme, which relieves secondary students from Secondary 4 upwards of half or all the standard school fee, helps those in need to continue

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their education without undue financial strain on their families. In 1992-93, 61 360 students were granted fee remission amounting to $94 million.

The Kindergarten Fee Remission Scheme provides assistance to eligible families, ranging from 25 to 100 per cent of the weighted average of fees charged by non-profit-making kindergartens, or the actual fee, whichever is lower. In 1992-93, $35.74 million was granted to 14 410 kindergarten pupils.

Local Student Finance Scheme

      Full-time students in UPGC-funded institutions may apply for means-tested assistance under the Local Student Finance Scheme. This provides for loans to meet living expenses and grants to cover tuition fees, academic expenses and student union fees. In 1992-93, 14 168 students received loans totalling $173 million. Of these, 11 475 also received grants totalling $99.4 million. In the 1993-94 academic year, the scheme was extended to students of sub-degree courses transferred from the polytechnics to the VTC's technical colleges and the Prince Philip Dental Hospital.

Student Finance Assistance Scheme

Loans and grants are awarded to eligible full-time students of the colleges of education and Hong Kong Shue Yan College. In 1992-93, 1 448 students received loans totalling $10.8 million. Of these, 1 428 also received grants totalling $7.1 million.

United Kingdom-Hong Kong Joint Funding Scheme

A joint funding arrangement between the governments of the United Kingdom and Hong Kong provides grants and loans, on a means-tested basis, to full-time students on first degree or higher national diploma courses in the United Kingdom. The grant meets the difference between fees for United Kingdom home students and fees for overseas students. In 1992-93, grants of £4.4 million and loans of $33.4 million were made to 1 836 students. With the expansion of tertiary education in Hong Kong, the scheme will be phased out over three years from 1994-95.

United Kingdom-Hong Kong Scholarships Scheme

This scheme aims to help outstanding students from Hong Kong to pursue tertiary education in the United Kingdom. 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 1992-93.

Sir Edward Youde Memorial Fund

The fund was established to manage public donations made in memory of the late Governor, Sir Edward Youde, who passed away in service in 1986. The fund promotes education and learning among Hong Kong people, and encourages research. In 1992-93, $7 million was disbursed. Eleven students were awarded fellowships or scholarships for postgraduate or undergraduate study overseas. Locally, 47 postgraduate research students were awarded fellowships; and 80 undergraduate, diploma and certificate students received scholarships. Awards were also made to four students excelling in public examinations, eight disabled students at secondary, post-secondary and tertiary levels, and 615 out- standing senior secondary students nominated by school heads.

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Other Scholarships and Assistance Schemes

In addition to the above, there are other scholarships and assistance schemes for school students, endowed by private benefactors. A large number of scholarships are administered by the Education Department under the Education Scholarships Fund Ordinance.

Schools and Kindergartens

Kindergartens

In September, 187 549 children aged three to five years were enrolled in 730 kindergartens, all of which were privately operated. Kindergartens run on a non-profit-making basis are eligible for rent and rates reimbursements, and may be allocated premises in public housing estates. Most kindergartens operate two half-day sessions, but the number of whole-day places is increasing.

The Education 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. It 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 competition for entry to popular schools.

   Most primary schools operate bi-sessionally. The normal class size in public sector schools is 40. Where classes use the activity approach (a less formal and more pupil- oriented approach to teaching now adopted by 266 schools), the class size is 35. In September, the size of public sector Primary 1 classes was reduced by five places, and this reduction in class size will be extended to higher levels a year at a time.

In September, 485 061 children were enrolled in primary schools. A total of six 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 three special rooms. A new design was introduced in 1990 to provide more accommodation, needed as a result of changes in education policy. It provides 30 classrooms, four special rooms and three remedial teaching rooms accommodating 60 classes in two half-day sessions or 30 classes in a whole-day school. These premises can be converted into a secondary school, if necessary, by adding a special room block.

   Whole-day schooling for all primary students is a long-term goal. In the meantime, any primary school wishing to convert to whole-day operation is allowed to do so if this will not adversely affect the supply of places in the district. New primary schools operate as whole-day schools wherever possible. During the year, 32 half-day primary schools converted to whole-day operation.

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All teaching posts in primary schools are in non-graduate ranks. The standard staffing ratio allows for remedial teaching to help slow-learning pupils, and additional teachers are provided where schools need to operate resource classes for pupils requiring special educational help. Staffing ratios are currently being improved. For whole-day classes, a ratio of 1.4 teachers per class was introduced in 1992. For bi-sessional classes, a phased improvement to 1.3 teachers per class began to be implemented in 1993.

Chinese is the language of instruction in most primary schools, with English taught as a second language. In many schools, Putonghua is taught as either a timetabled subject or an after-school activity. A few schools use English as the language of instruction.

The primary school curriculum aims to provide a broad, balanced and general education, appropriate to the age group and the local environment. A core curriculum including Chinese, English, mathematics, social studies, science, health education, music, physical education, and arts and craft is followed by all primary schools, but other learning programmes may be offered on a cross-curricular basis or as separate, optional, subjects. A new core subject - general studies is being planned, to integrate social studies, health education and primary science. A syllabus for each core subject is prepared by the Curriculum Development Council, and is regularly revised and updated to meet changing educational and community needs.

During the year, an advisory committee on implementation of the Target Oriented Curriculum (TOC) - comprising school principals, teachers, parents, teacher educators and Education Department officials was set up to advise the Director of Education. Schools began trying out the TOC in some classes on a voluntary basis, with guidance and support from the department. This helped schools to identify operational problems and prepare for full-scale implementation of the TOC.

The class library scheme provides supplementary reading materials to support classroom learning, encourages the habit of leisure reading, and paves the way for effective use of the library in secondary schools. The annual reading award scheme for Primary 5 and Primary 6 pupils attracted 52 000 pupils from 244 primary schools. A booklet containing the winning book reports was issued to all schools.

At the end of the primary course, students are allocated places in government or aided secondary schools, or offered bought places in private schools. 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 regions. In the 1993 allocation, 86 069 primary pupils took part. Of these, 75 385 (87.58 per cent) were allocated places in government and aided grammar secondary schools, 4 800 (5.58 per cent) in prevocational schools, and 5 884 (6.84 per cent) in private schools in the Bought Place Scheme.

Secondary Schools

      In 1978, universal free education was extended to junior secondary classes. The policy for public sector provision after Secondary 3 is broadly to meet the demand for places on senior secondary or vocational courses. In 1993, the number of subsidised Secondary 4 places was equivalent to 85 per cent of the 15-year-old population, with places for a further 10 per cent on full-time craft courses of vocational training. The target for the sixth form is to provide one public sector Secondary 6 place for every three public sector Secondary 4 places two years earlier.

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   Secondary 3 leavers are selected for a subsidised place in Secondary 4 or for a vocational course according to internal school assessments and parental preference. The selection process aims to enable as many students as possible to progress to Secondary 4 within the same school. In 1993, 75 968 students took part in the process of whom 64 491 secured Secondary 4 places in the public sector, and 4 384 were admitted to craft courses.

   The Secondary 6 admission procedure aims to match applicants with places until all places are filled. In 1993, all of the 23 190 places available were filled.

   To meet provision targets, new secondary schools are built and places are bought from private schools. During the year, nine new secondary schools were completed, providing 10 440 places. Most new schools are built to new standard design introduced in 1990,

which provides more teaching space and better facilities.

There are three main types of secondary school: grammar, technical and prevocational. In 1993, the 403 grammar schools had a total enrolment of 413 319. These offer a five-year secondary course in a broad range of academic, cultural and practical subjects leading to the HKCEE. Most also offer 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 21 736. Qualified candidates can continue their studies in the sixth form or in technical institutes.

   The 23 prevocational schools, with an enrolment of 20 880, offer an alternative form of secondary education 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 consists 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 prevocational Secondary 3 may enter an approved apprenticeship scheme, or continue studying to Secondary 5 and take the HKCEE. Qualified students can then proceed either to the sixth form, or to a polytechnic or technical institute.

   To improve the quality and diversity of education, the Direct Subsidy Scheme was introduced in 1991 to strengthen the private secondary school sector. Private secondary schools meeting specified standards can receive a government subsidy for each eligible student. They are free to decide on their own curriculum, and to set entrance requirements and fee levels. One more school was admitted in September, bringing the number of such schools to 11.

   As part of the same policy package, the Bought Place Scheme will be phased out. Schools in the scheme are being helped to raise their standards so that they may, if they wish, apply to join the Direct Subsidy Scheme. Nineteen private schools were operating under contracts with the government which specify improvements in areas such as whole-day operation, class structure, teacher qualifications and school facilities. The contracts will expire in 2001, unless terminated earlier by either party or when a school joins the new subsidy scheme.

Secondary education is divided into two levels: junior secondary and senior secondary. At the junior secondary level years of universal education all students in the age group,

the final stage in the common core curriculum for the nine the aim is to provide a balanced basic education suitable for whether or not they continue formal education beyond

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Secondary 3. The senior secondary curriculum aims to prepare students for education beyond Secondary 5 as well as for employment, and offers a range of subjects from which schools and students may select according to the needs and interests of the individual, school traditions and the facilities available. Most students sit for the HKCEE at the end of Secondary 5.

Teaching syllabuses are prepared by the Curriculum Development Council for all subjects offered at secondary level, while examination syllabuses for senior secondary subjects are prepared by the Hong Kong Examinations Authority. There is close co-ordination between the two bodies, and syllabuses are kept under review and revised as necessary to meet changing needs. During the year, new syllabuses for additional mathematics, and travel and tourism were developed; and the syllabuses for computer literacy, physics, social studies and typewriting were revised. Travel and tourism, which will be examined in the HKCEE in 1995, was introduced as a pilot scheme in 27 grammar, technical and prevocational schools in September.

Since 1992, all sixth form courses last two years and offer students a broader range of subjects at advanced and advanced supplementary (AS) levels. In September, AS-level music was introduced as a new subject, bringing the number of subjects available to 22 at advanced level and 18 at AS-level. Under the Incentive Award Scheme recommended by the Chinese Textbooks Committee, 10 sets of reference books in Chinese, covering five sixth-form subjects, were published in September with government assistance totalling $9.1 million.

To help teachers implement the new sixth form curriculum, and to make them more familiar with syllabuses, teaching approaches and strategies, the Curriculum Development Institute and the Advisory Inspectorate offered short courses and seminars. The institute conducted a seminar for principals and assistant principals on implementing the new curriculum. The department funded in-service teacher education programmes on individual AS-level subjects, mounted by tertiary institutions.

Some important aspects of education are covered on a cross-curricular basis. They include civic education, moral education, sex education and environmental education. Civic and moral education are promoted through learning opportunities in various subjects and in extra-curricular activities. Sex and AIDS education are also integrated into various subjects at primary and secondary levels, with the aim of helping students to understand sex as part of their overall personal and social development. During the year, teaching resources for sex and AIDS education were developed and issued to schools, and a regular newsletter for teachers was published. Leaflets on AIDS were issued to schools, and a booklet, Facts About AIDS, was published to help teachers and parents understand the medical, moral and social issues related to the disease. In December, a teaching kit on AIDS was issued to all primary schools, providing teachers with basic information and suggestions on learning activities suitable for primary school students.

Environmental education is promoted through relevant topics and themes in primary social studies and science; and social studies, integrated science, economics and public affairs, geography, biology, physics and chemistry in secondary schools. Extra-curricular activities also help to raise students' environmental interest and awareness.

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. In March, an exhibition was held on school

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library support for curriculum implementation in schools. The annual reading award scheme for secondary students attracted 4 100 participants from 218 schools, and a booklet containing the winning book reports was sent to all schools. A newsletter for school librarians is published regularly.

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. Following recommendations in the Education Commission's fourth report in 1990, a framework is being established for grouping secondary students according to their ability in the two languages. To help school authorities develop a clear policy on their medium of instruction, they were given information on the language abilities of students entering the school in the past few years. To help parents decide on the most appropriate medium of instruction for their children, they were also given information on the child's language ability.

In government and aided secondary schools, the staffing ratio is 1.3 teachers per class in Secondary 1 to 5, and two teachers per class in the sixth form. Additional teachers are available to strengthen language teaching, provide remedial teaching, careers guidance, counselling, extra-curricular activities and library services; and to offer split-class teaching of such subjects as second languages, domestic science, woodwork, metalwork, computer studies, art and design, and music, as well as some sixth form subjects. The ratio of graduate to non-graduate teachers is about 7:3. The pupil to teacher ratio is about 21:1. In government and aided secondary schools, the class structure provides either six classes each in Secondary 1 to 3, four classes each in Secondary 4 and 5, and two classes in each sixth form year; or five classes each in Secondary 1 to 5, and two in each sixth form year.

Extra-Curricular Activities

  Extra-curricular activities are an integral part of school life, complementing and enriching formal learning in the classroom. They are usually conducted outside school hours, in the school premises or elsewhere, under the supervision of teachers. The department provides professional guidance and advice to teachers through in-service training programmes and school inspections, and subsidises some activities. Many inter-school activities are organised or co-ordinated by the department. They include the Community Youth Club, the Duke of Edinburgh's Award Scheme, the Lions Club Sister Schools Scheme, the Music Festival, the Schools Drama Festival, the Schools Dance Festival and sports and recreational activities.

   The Community Youth Club aims to build a strong community spirit among students through organised activities. Its motto is 'Learn, Be Concerned and Serve'. Its member- ship, from 1 127 primary and secondary schools, totals about 121 200. Up to June, 54 236 members had gained awards under the club's Merit Award Scheme. A group of 38 outstanding members visited Singapore during the summer holidays.

   To mark the club's 15th anniversary, special activities were arranged. A huge poster made by members was recognised by the Guinness Book of Records as the largest poster in the world. The paper used was sent to schools to be converted into cards, and sent to teachers and parents as a gesture of love and respect. A first day postal cover was released at the end of the year to celebrate the anniversary and raise funds for the Community Chest.

   Of the 20 operating authorities of the Duke of Edinburgh's Award Scheme in Hong Kong, the department is the largest, with 22 500 members from 190 participating schools.

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Over 115 training courses and functions at bronze, silver and gold levels were organised during the year.

       The Lions Club Sister Schools Scheme matches ordinary and special schools, to promote social interaction and friendship among students. During the year, 57 ordinary schools and 46 special schools were made sister schools.

       In the 1992-93 academic year, the music festival organised by the Hong Kong Schools Music and Speech Association attracted 72 800 participants from 925 schools, while 61 300 took part in the speech festival. The Schools Dance Festival drew entries from 4078 students in 228 primary, secondary and special schools. The Schools Drama Festival, organised under the guidance of the School Drama Council, encouraged drama pro- ductions involving about 8 400 students from 140 schools. Sporting activities organised by the Hong Kong Schools Sports Association and the New Territories Schools Sports Association attracted over 102 000 participants from more than 1200 schools. The Inter-Primary School Quiz Competition, a joint venture of the Education Department, Radio Television Hong Kong and the City and New Territories Administration, attracted participants from 27 schools.

Special Education

The main policy objective of special education is to integrate the disabled into the community through the co-ordinated efforts of the government and voluntary agencies.

Early identification is an important preventive measure. Screening and assessment services identify special educational needs among school-age children, so that appropriate follow-up and remedial treatment can be given before 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 integrated into ordinary schools as far as possible. 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 children who are blind, deaf, physically handicapped, mentally handicapped, maladjusted, socially deprived, unmotivated, or who have severe learning difficulties. Seventeen schools provide residential places. In addition to 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 and partially- hearing children, and children with learning difficulties. Services for children integrated into ordinary classes include remedial support, based either in special centres or special schools; a peripatetic teaching service; and 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. The Curriculum Development Council's special education co-ordinating committee, with members from government departments and schools, advises on special educational needs. Special schools give particular attention to daily living skills, and offer

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extra-curricular activities to enrich the practical life experiences of day and residential pupils.

   During the year, a research project on education for the gifted was commissioned, and planning proceeded for a resource centre for gifted children. Various improvements in services for academically less able pupils also began to be implemented.

International Schools

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

The English Schools Foundation (ESF) operates nine primary schools (known as junior schools) and 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 in temporary premises during the year, pending completion of its new building. The ESF receives public grants based on grants paid to local aided schools, and charges fees to meet additional costs.

   Other international schools provide education on the American, Canadian, French, Japanese, Swiss-German and Singaporean patterns. In the school year 1993-94, there were 18 such schools operating up to secondary level, 19 at primary level and 27 kindergartens. Some have received help from the Hong Kong Government in the form of favourable land grants and reimbursement of rates, while some are sponsored by their own governments or communities. Others receive assistance from both sources. Four international secondary schools have joined the Direct Subsidy Scheme.

Teacher Education

Four colleges of education offer full-time, 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. They also offer refresher courses to acquaint serving teachers in primary and secondary schools with modern teaching methods and approaches, and advanced courses of teacher education for non-graduate secondary school teachers of cultural, practical and technical subjects. Full-time pre-service courses last three years for those with HKCEE qualifications, and two years for those with two A-level passes. In October, 2 315 trainees were on full-time courses and 1910 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 innovation, development of teaching resources, educational psychology, student guidance and counselling, professional development of teachers, and educational administration. Some Bachelor of Education degree programmes are also offered by the two universities.

   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-focussed research and development work; 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

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conference. During the year, 672 teachers attended full-time ILE courses, and 908 attended part-time courses. Of these, 137 attended a summer immersion programme in the United Kingdom. The annual international conference in December was jointly organised by the ILE, the Department of Curriculum Studies of the University of Hong Kong and the Hong Kong Association for Applied Linguistics. The conference, on the theme of language and learning, attracted over 300 local and overseas scholars, and more than 100 papers were delivered.

The colleges of education and ILE continued to be run by the Education Department, but planning proceeded to merge and upgrade them into a new autonomous Institute of Education, as recommended in the Education Commission's fifth report. In February, the Governor appointed a Provisional Governing Council to prepare for the creation of the institute in 1994. The institute will initially focus on upgrading its courses at pre-degree level, while planning to develop degree programmes.

Support Services

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

       The Advisory Inspectorate advises schools on curriculum implementation, teaching methodology 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.

To strengthen the student guidance service in schools, the department encourages a whole-school approach, which emphasises a caring and positive learning environment and the involvement of all staff in solving students' problems. Its 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 two local television stations. Syllabus-based programmes for students in Secondary 1 to 3 cover the Chinese and English languages, mathematics, social studies and science. Programmes for pupils in Primary 3 to 6 include health education.

In April, consultants proposed a five-year plan for developing information systems for schools and the department, covering 11 projects. The proposed computer systems will aim to alleviate the administrative workload of schools, enhance the quality of education services, and improve communication between schools and the department.

       The Hong Kong Teachers' Centre, set up in 1989 to promote professionalism and a sense of unity among teachers, 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, sponsored or hosted over 700 activities with 50 000 participants. It maintains a professional library and publishes news bulletins.

       The department's Educational Research Section conducts research, develops tests, evaluates education programmes and monitors educational standards. During the year, the section developed a new series of standardised Hong Kong Attainment Tests for junior

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secondary levels in the three core subjects of Chinese, English and Mathematics. These tests are administered yearly by primary and secondary schools, so that they can diagnose areas of strength and weakness in these subjects and provide appropriate guidance, counselling and remedial teaching. The results also help the department to monitor standards across years and levels. Research projects conducted by the section included studies into the continuity of curriculum and teaching practices between the various levels of education, the effects of changing the medium of instruction at junior secondary level, and imple- mentation of the new curriculum for Secondary 6 students.

   The 19 district education offices, each headed by a senior education officer, provide advice and assistance to schools, teachers, parents and students; and facilitate com- munication between this group and the department. District education officers attend district board meetings to assist in discussions of educational matters.

The Careers and Guidance Services Section gives advice and information on educational establishments overseas. During the year, 3 477 students went to study in Britain, 2 828 to Canada, 5 025 to the United States of America, and 3 153 to Australia. Exhibitions promoting overseas education were staged by British, Canadian, American and Australian organisations.

   Reduced class sizes and improvements in staffing ratios have increased the demand for qualified primary teachers. To increase the supply of such teachers, a new scheme was introduced, as recommended by the Education Commission, to assess non-graduate teacher qualifications obtained outside Hong Kong. The scheme aims to identify a wider pool of potential teachers and to enable suitable applicants, including those whose degrees were not previously recognised, to become qualified non-graduate teachers once their academic and professional competence has been demonstrated. Applications were invited in February and a series of written, oral, listening and practical tests was held in April and May. Nearly 100 candidates passed.

   The Students Division of the Hong Kong Government Office in London maintains close contact with Hong Kong students and encourages them to be young ambassadors, promoting Hong Kong in the United Kingdom. During 1992-93, students in Birmingham, Liverpool, Edinburgh, Nottingham, Loughborough, Swansea, Bradford and London organised successful Hong Kong exhibitions and seminars, which were well attended, both by Hong Kong students and by people who have developed an interest in the territory through the goodwill of its students. The division works closely with the Student Financial Assistance Agency in administering the UK-HK Joint Funding Scheme.

   Following the Governor's announcement in October 1992 that all government depart- ments providing services directly to the public would make performance pledges, the department quickly began to draw up pledges. The Director of Education announced these at the end of August. Leaflets were distributed to students, parents, teachers and members of the public. The Board of Education began monitoring the department's performance through an educational services liaison sub-committee.

   In preparation for launching the pledges, staff received training in customer service skills. A comprehensive review of all forms was carried out, and about half the forms were eliminated. To provide customers with better information, a 24-hour automatic telephone enquiry system was introduced, attracting over 2 500 calls a day during peak periods. The service environment in many offices was improved, and further improvements were planned.

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Technical Education and Industrial Training

A comprehensive system of technical education and industrial training offers school-leavers an alternative to further academic study, and helps to prepare them for specific careers. Publicly-funded technical education is provided through the Vocational Training Council (VTC), which operates two technical colleges and seven technical institutes, and provides industrial training for 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 identified by regular manpower surveys conducted by the VTC's training boards and general committees. During the year, 11 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, the New Technology Training Scheme, training seminars and trade tests, and the preparation of job speci- fications, trade test guidelines, training curricula, and glossaries of common technical terms.

Technical Education

Technical education at the higher technician level is provided by the VTC's two tech- nical colleges. Disciplines cover applied science, business administration, computing and mathematics, construction, design, electrical and electronic engineering, hotel catering and tourism management, manufacturing engineering and mechanical engineering. The colleges offer full-time higher diploma courses, and higher certificate courses on a part-time day-release or evening basis.

In October, the colleges enrolled 1 468 students on 33 full-time courses. The 43 part-time courses attracted 935 day students and 2 541 evening students.

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

Courses leading to a recognised qualification are offered at two levels, with several modes of attendance. Courses for craft apprentices, usually Secondary 3 leavers, are offered on a part-time day-release or block-release basis. At technician level, full-time day, part-time day and part-time evening courses are offered, mostly for Secondary 5 leavers. Most technician courses are validated by the United Kingdom's Business and Technology Education Council (BTEC). Upon their completion, students may register for BTEC awards.

In September, the technical institutes offered 315 courses taught by 818 full-time teaching staff and about 740 supporting staff. Evening courses were delivered by 1913 part-time lecturers. Enrolment in the 1993-94 academic year totalled 9 000 full-time, 15 300 part-time day and 24 400 evening students. In addition, about 7 000 people in employment attended 208 short courses to upgrade their knowledge and skills.

In July, 4 700 full-time, 5 300 part-time day and 8 600 evening students graduated from the technical institutes. The employment of graduates from full-time courses was surveyed

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during the year. Findings again showed that graduates were readily recruited, and that most found work relevant to the training they had received.

Industrial Training

  The VTC's 24 industrial training centres provide basic training and skills upgrading for industrial craftsmen and technicians, and for clerical and supervisory personnel in the service sector. In 1993, over 40 000 trainees attended full-time or part-time courses. Trade tests for serving employees were offered in six industries- building and civil engineering, the automobile and electrical industries, machine shop and metalworking, 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 en- gineering students and graduates complete the professional training which will gain them recognition by the Hong Kong Institution of Engineers or other professional bodies. In 1993, 80 engineering firms took part in the scheme, which provided 295 training places.

The VTC's Management Development Centre conducts research and development projects, and promotes management training. Its projects include work with owner- managers and entrepreneurial firms, development of learning materials, and activities with management trainers and business executives.

The Clothing Industry Training Authority operates two training centres, funded by a levy on the export value of clothing and footwear. In 1993, about 6 000 trainees attended courses. Jointly with the Hong Kong Productivity Centre, the authority also operated a clothing technology demonstration centre, keeping the industry abreast of the latest technology by demonstrating it in a real-life setting. The Construction Industry Training Authority, funded by a levy on the value of construction works exceeding $1 million, operates three training centres, providing about 4 000 training places. Full-time courses are offered for new craftsmen, operatives and supervisors, and part-time upgrading courses are organised for those already working in the construction industry.

Training in New Technologies

The VTC's Precision Tooling Training Centre houses a training unit for precision sheet metal processing, 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.

The New Technology Training Scheme provides matching grants to companies wishing to help their staff acquire skills in new technologies. Between the scheme's launch in June 1992 and the end of 1993, 49 applications were approved.

Re-training for Local Workers

A statutory Employees Retraining Board was set up in October 1992 to administer an employees' re-training scheme, in which older workers displaced by economic restructuring are reoriented to new jobs and acquire new skills through specially devised programmes. They receive a training allowance of up to $3,400 per month for attending day courses, and $30 per day for evening courses. By the year's end, 6 900 had been re-trained. The scheme is

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financed by a government injection of $300 million, and by levies paid by employers who import skilled labour from outside Hong Kong. Various agencies, including the VTC, provide re-training courses, and employers are encouraged to offer on-the-job training.

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 one of these trades 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 years, 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, may lead to exemption from the first year of the apprenticeship.

The Office of the Director of Appenticeship advises and helps 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 interested in apprentice training. In 1993, 4 266 contracts were registered. Of these, 914 were in non-designated trades. The contracts covered 3 664 craft apprentices and 602 technician apprentices. By the year's end, 8 996 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 have a capacity of 840 places, of which 358 are residential.

The VTC also provides support services. The vocational assessment service assesses the potential of the disabled person, and helps in selecting a suitable training programme. Internationally-recognised tests are used, as well as work samples designed to match local industrial skill profiles. All mildly mentally disabled school students undergo a one-week vocational assessment in their final school year. An eight-week programme provides an in-depth assessment of more complex cases.

The Technical Aids and Resource Centre designs and makes technical aids for disabled trainees, students and workers to enhance their training, employment prospects and productivity. It also provides information and resource materials on vocational rehabilitation, which are made available to disabled people and professionals in the field.

An 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 85 per cent either entered open employment, or were enrolled in mainstream technical education courses.

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Tertiary Education

  Ten years ago, less than five per cent of the 17-20 years age-group could receive tertiary education in Hong Kong. By 1994-95, this figure will increase to 18 per cent, with 14 500 places available for first-year first degree courses.

   Degrees up to doctorate level awarded by local institutions are widely-recognised by institutions of higher learning around the world. Academic standards are guaranteed by the appointment of external examiners from prominent overseas universities and colleges. Degree-level courses at non-university institutions have been subject to external validation by the Hong Kong Council for Academic Accreditation on behalf of the UPGC, but in July the government decided that the two polytechnics and Hong Kong Baptist College should assume responsibility for accrediting their own degree-level courses.

The Tertiary Institutions

The oldest tertiary institution is the University of Hong Kong, founded in 1911. Its 9 631 full-time and 2760 part-time students are enrolled in nine faculties: arts, architecture, dentistry, education, engineering, law, medicine, science, and social sciences.

   The Chinese University of Hong Kong was established in 1963 by bringing together three colleges: New Asia College, founded in 1949; Chung Chi College (1951) and United College (1956). A fourth college, Shaw College, was founded in 1986. The university has 9 428 full-time and 2 185 part-time students in seven faculties: arts, business adminis- tration, education, engineering, medicine, science and social sciences.

The Hong Kong Polytechnic, established in 1972, offers postgraduate, first degree and sub-degree courses in six faculties: applied science and textiles; business and information systems; communications; construction and land use; engineering; and health and social studies. Concurrent work and study are encouraged by providing part-time and sandwich courses, and the polytechnic has close links with industry, commerce and the community in general. Enrolment in October was 10 192 on full-time and sandwich courses and 12 252 on part-time courses.

Hong Kong Baptist College was founded in 1956 by the Baptist Convention of Hong Kong. In 1983, it was incorporated under its own ordinance and became fully funded by the government. Since 1986, it has been empowered to award degrees, and all courses are now at first degree level or above. It has 3.813 full-time and 1 159 part-time students in five faculties and schools: arts, business, communications, science and social sciences.

   The City Polytechnic of Hong Kong, founded in 1984, has 8 452 full-time, 6 545 part- time and 391 sandwich course students. The four faculties of business, humanities and social sciences, law, and science and technology offer first degree courses, postgraduate diplomas and taught master's degrees, as well as Master of Philosophy and Doctor of Philosophy degrees by research. Diploma and higher diploma courses are offered by the College of Higher Vocational Studies through its divisions of commerce, humanities and social sciences, and technology.

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   The Hong Kong University of Science and Technology was incorporated in 1988 and admitted its first students in October 1991. Three schools science, engineering, and business and management - offer first and higher degrees. The fourth school, humanities and social sciences, offers higher degree programmes and provides general education to all undergraduates. In October, the university had 3 120 full-time undergraduate students, 450 full-time postgraduate students and 350 part-time postgraduate students. At its first

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congregation in October, 66 postgraduate students received the first degrees conferred by the university.

The Open Learning Institute of Hong Kong was established in 1989 to provide adults with more opportunities for higher education through open access and distance learning courses. At its first graduation ceremony in November, 161 graduates received Bachelor's degrees. In October, about 15 000 students were enrolled in degree courses in three schools: science and technology, arts and social sciences, and business and administration. The Centre for Continuing and Community Education began offering sub-degree and short courses early in 1993, and 2 400 students enrolled for such courses during the year. The new School of Education plans to launch a Bachelor of Education degree programme for serving primary school teachers, in association with two other local tertiary institutions. The institute is financially self-supporting but, during the year, the government provided a one-off grant of $150 million towards the cost of building a new campus, and another $100 million for course development. Construction of the institute's permanent headquarters in Ho Man Tin began in October.

Lingnan College was founded in 1967 to continue the tradition of Lingnan University. The college was put under the aegis of the UPGC in 1991, and was incorporated as a degree-awarding institution under its own ordinance in 1992. It has three faculties - arts, business, and social sciences and a general education division. In October, enrolment was 1 718 full-time students, of whom 853 were pursuing honours degree studies and 865 were honours diploma students. Enrolment is planned to increase to 1 900 by 1994. The college is expected to be relocated at a new campus in Tuen Mun by 1995.

Each institution publishes detailed information about admission criteria, courses, staff and other matters in its annual report, calendar and prospectus, obtainable through the institution's information office.

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 sciences and commerce include 13 departments, which offer day and evening courses to 2 787 students. The college receives no public funding, but its students may apply for government grants and loans.

Adult Education

Many formal and informal opportunities are available for adults to study in their spare time, either for personal development or to update knowledge and skills relevant to their work. Numerous private schools offer language, business and computer courses. The British Council, Alliance Française, Goethe Institute and Japanese Consulate all offer language courses.

All tertiary institutions, except the Hong Kong University of Science and Technology and Lingnan College, operate extra-mural departments or divisions of continuing education. They offer a large 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 courses of second chance education for adults at primary and secondary level, and courses of personal development at post-secondary level.

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  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 397 adult education projects organised by 68 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 English language teaching and learning, science and technology, and the arts, 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 courses, 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 1993. In addition, the council arranged for 62 trainees and 25 lecturers from the colleges of education to visit the United Kingdom for courses jointly funded with the Education and Manpower Branch.

   The council provides access to British expertise to help develop local industry through promoting technology transfer. It works closely with the Industry Department and Hong Kong Polytechnic on the provision of post-experience training. The council also works with the government, higher education and other organisations in areas such as the environment, law, planning, education, medicine and nursing-in some cases through joint academic programmes linking Hong Kong and Britain with China. The annual Science Alive lecture series for young people took place at the Hong Kong Science Museum, with the theme of life, science and technology. In 1993, 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 in Britain. In 1993, 33 000 students used the service.

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HEALTH

      ACCESS to affordable health care for all is the cornerstone of the government's health policy. The comprehensive range of health services available, together with improvements in the standard of living, have fostered a good general level of health in Hong Kong.

Under an extensive development programme, there was continued progress on the planning and improvement of medical facilities, including public hospitals, general out-patient clinics and specialist out-patient services.

The year 1993 saw an increase of 626 hospital beds, bringing the total number of beds to 27 038― representing 4.6 beds per thousand population.

New medical landmarks appeared with the opening of the Pamela Youde Nethersole Eastern Hospital and the Hong Kong Eye Hospital.

In addition, the go-ahead was given for the construction of a $1.7 billion, 600-bed hospital for North District, to be completed by 1997.

A special fund of $350 million was set up to provide assistance to haemophiliacs infected with HIV through the transfusion of blood products in Hong Kong prior to 1985, to help finance projects to prevent AIDS and provide medical and support services to those with the virus.

A $50 million grant to the Hospital Authority was also announced, to fund research programmes to assess the cost-effectiveness of new technologies and treatment techniques.

Another highlight was the publication of the consultation document, 'Towards Better Health', in July. The document, which seeks to remove any remediable flaws in the health care system, rationalise the financial structure of public health services and offer possible options for change for the better, generated keen public debate.

In the 1993-94 financial year, $13,823 million in funds was allocated to medical and health services in the public sector, including $12,342 million for the Hospital Authority. In addition, subventions totalling $195 million were provided for other medical institutions and organisations. Capital expenditure on new hospitals and related buildings, including equipment and furniture, was about $1,242 million.

The Organisational Framework

The Department of Health is the government's health adviser and the agency for executing health care policies and statutory functions.

It safeguards the health of the community through a comprehensive programme of promotional, preventive, curative and rehabilitation services. These include personal health

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  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, clinical genetics, dental health, occupational health, 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, specialist clinics and outreaching services operated by the authority. Since 1992, management reforms have been introduced in most public hospitals, with the emphasis on defining clear lines of accountability and greater devolution of responsibilities.

Of the 27 038 hospital beds in Hong Kong, 23 165 are in public hospitals under the Hospital Authority, 2927 are in private hospitals and 131 in institutions under the Department of Health.

   In November, 6 493 doctors were registered with the Hong Kong Medical Council 2 749 in the public sector and 3 744 in the private sector. The number of nurses registered with the Hong Kong Nursing Board was 33 361.

Health of the Community

The health of the population compares favourably with that of developed countries. The infant mortality rate remains at five per 1 000 live births. The average life expectancy at birth is 81 years for females and 75 years for males.

   Cancers, heart diseases and cerebrovascular diseases (strokes) continued to be the leading causes of death during the year, accounting for 30 per cent, 16 per cent and 10 per cent, respectively, of the mortalities in the territory. These diseases generally affect older people. Given the continual ageing of the population, it is anticipated that they will remain prominent in the near future.

   Communicable diseases are well under control. In 1993, there were 30 sporadic cases of cholera, 13 being imported cases and 17 local cases. There were 6 537 notifications of tuberculosis, with a notification rate of 110 per 100 000 population. The number of notified hepatitis A cases dropped to 860 compared to 3 626 in 1992.

   To protect the population from infectious diseases, children in Hong Kong are immunised against nine infectious diseases at an early age. These are tuberculosis, diphtheria, pertussis, poliomyelitis, tetanus, hepatitis B, measles, mumps and rubella. The average coverage for primary school children is 99 per cent. As a result of the high coverage of immunisation, diphtheria and poliomyelitis have been virtually eradicated from the territory and the incidences of other diseases among children are kept at low levels.

HIV Infection and AIDS

The menace of HIV (Human Immunodeficiency Virus) infection and AIDS (Acquired Immunodeficiency Syndrome) is increasing worldwide, in particular in Asian countries.

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With no cure for AIDS and no effective vaccine against infection, HIV continues to pose a serious threat.

In 1993, 79 cases of HIV infection were reported, an increase of 11 per cent compared with the previous year. This brought to 416 the total number of such cases reported since the beginning of the surveillance programme in April 1985. Nineteen new patients with AIDS were reported in 1993, giving a cumulative total of 92 patients, of whom 63 have died.

In April, the Finance Committee of the Legislative Council approved the allocation of $350 million to set up a special fund to provide assistance to those infected with HIV, through transfusion of blood or blood products in Hong Kong prior to August 1985. This manifested the government's commitment to respond with speed and compassion to those in need. The AIDS Trust Fund is administered by a council which is appointed by the Governor. The council also gives support to projects which augment the medical and support services provided by the government, and to publicity and public education which aim to enhance awareness of AIDS prevention and to remove discrimination against HIV-infected persons.

The Advisory Council on AIDS also plays a key role. The council operates through three committees the Committee on Education and Publicity on AIDS, the Scientific Committee on AIDS and the AIDS Services Development Committee. The Committee on Education and Publicity on AIDS helps to promote community involvement in AIDS education; sustain public awareness; co-ordinate the training of intermediaries to provide education and counselling; foster support towards HIV-infected individuals; and co-ordinate activities for target groups such as students, youth, drug abusers, and others practising high-risk behaviour. To achieve these objectives, working groups have been formed under the committee. The Scientific Committee on AIDS is concerned with the technical aspects of the AIDS programme. It concentrates on the production of comprehensive guidelines for the prevention of HIV transmission in health care settings, oversees HIV surveillance programmes, undertakes quality assurance programmes on HIV antibody testing and carries out studies and scientific research projects. The AIDS Services Development Committee was established in 1993 to advise the government on the development of clinical and support services for HIV-infected individuals. Secre- tarial and operational support to the three committees is provided by the Department of Health.

       The department's AIDS Unit provides counselling and medical consultation for persons at risk of HIV infection. Members of the public can use a special telephone hotline (780 2211) to obtain advice in confidence. This service was upgraded by the incorporation of an interactive voice-processing system in April. Other hotlines using pre-recorded messages in Putonghua, Thai, Tagalog and Vietnamese languages became operational in July.

The AIDS Unit regularly arranges talks, exhibitions, seminars and other educational programmes for community groups. Blood tests may be arranged under conditions of complete anonymity. Publicity materials, notably television advertisements, were produced with the support of the Information Services Department.

       The Hong Kong AIDS Foundation and AIDS Concern are two non-government organisations which supplement and complement the government's efforts. Activities include counselling, publicity and education, as well as patient support services.

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Primary Health Care

Primary health care, which emphasises the promotion of general health and prevention of disease, is recognised worldwide 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 primary health care services. 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 and preventive health programmes for the elderly. A feasibility study for a Clinic Operations Support System, which looked into improvement of the health information system and computerisation of the department's general out-patient clinics, was completed in 1993.

Training in family medicine is a priority area for improvement. Vocational training opportunities were offered in training centres, universities and hospitals. A series of lectures and clinical attachments were arranged for doctors keen to improve the quality of their service by participating in continuing medical education activities.

District Health System

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

   A pilot District Health System programme was initiated in 1992 in Kwun Tong. The six government health institutions in the district were organised into a network for better co-ordination and were administered by a multi-disciplinary district management committee with wide clinic representation. To facilitate co-ordination among the health institutions, other community service providers and the public, a multi-sectoral district health committee was set up with members drawn from the health and other sectors. Its functions include provision of a forum for information exchange and enhancing the role of the community in the identification of health needs.

   During 1993, a Healthy Lifestyle campaign was launched at Telford Gardens. A pilot scheme was introduced with the district hospital on joint care for diabetic patients to enhance the interface between primary care and secondary care and to provide better continuity of care for chronic disease patients. A patient liaison group was established to facilitate communications with clinic customers, who also assisted in monitoring the performance pledge of clinics. Another pilot scheme to train volunteers for the district-based diabetic support group involving multi-sectoral collaboration was initiated and is being implemented in phases. Progress towards integration of the general out-patient service and the family health service within the district was made. At the end of the year, an evaluation of the pilot programme was underway.

Hospitals and Development Programmes

Public hospitals provide low-charge services which are easily accessible to the community.

   During the year, the demand for hospital services remained high, as reflected by the large number of hospital admissions, and attendances at out-patient and specialist clinics, and accident and emergency departments.

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A total of 745 000 patients were treated in public hospitals, while there were 4 622 680 attendances at specialist clinics.

       The accident and emergency departments of major public hospitals, which handle cases of acute illness and accident casualties free of charge, saw 1 342 080 attendances an average of 3 677 per day.

Projects in the hospital development programme progressed satisfactorily.

The 1620-bed Pamela Youde Nethersole Eastern Hospital in Chai Wan opened in October. At the end of the year, 244 beds were in operation.

The Hong Kong Eye Hospital opened in Mongkok in September and is the first hospital of its kind offering a full range of care and treatment for eye patients in the territory. Reorganised from what was previously the Argyle Street Ophthalmic Centre, it offers specialist ophthalmology services at both the secondary and tertiary referral levels.

The number of beds available at Tuen Mun Hospital, which opened in 1990, increased to 1 175 at the end of the year. The hospital will provide a total of 1 606 beds upon full operation.

The year also saw the reopening of Siu Lam Hospital to provide 300 beds for mentally handicapped patients.

The first cancer centre is being built at the Prince of Wales Hospital to conduct multi-disciplinary cancer research, diagnosis, treatment, counselling and public education.

New or additional services are being progressively introduced at Tuen Mun Hospital, Queen Mary Hospital Extension, Ruttonjee Hospital, Shatin Cheshire Home, Shatin Hospital and Yan Chai Hospital.

Major projects under construction include the extension of the United Christian Hospital, refurbishment and air-conditioning of Queen Elizabeth Hospital, extension and refurbishment of Princess Margaret Hospital, construction of the 618-bed North District Hospital, redevelopment of Haven of Hope Hospital and Castle Peak Hospital, relocation of Nethersole Hospital to Tai Po, extension of the out-patient department of Kwong Wah Hospital, establishment of a geriatric day hospital at Wong Tai Sin Hospital, and construction of the Tai Po Infirmary and Convalescent Hospital.

Clinics

General out-patient services form a vital part of the health care system. The government operates 66 general out-patient clinics. In the more densely-populated areas with higher demand, evening, Sunday and public holiday sessions are also provided. Total attendances came to 10.4 million in 1993. To cater for increasing demand, 10 additional clinic projects have been included in the medical development programme for 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 Government Flying Service.

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.

At the end of the year, a total of 89 clinics were operated by various charity organisations registered under the Medical Clinics Ordinance and 139 were registered as exempted clinics.

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Performance Pledge

The Department of Health has set performance pledges with the aim of improving the delivery of services to the public and developing a more customer-oriented culture of service. Phase I of the programme covered 15 general out-patient clinics starting from December 1992. Phase II extended the programme to another 13 clinics from August 1993. Improvements achieved included the use of medical records and patient-held records to enhance continuity of care, shortened waiting times, labelling of all dispensed medicine, a better clinic environment, health education and counselling by nurses.

Family Health

  The Family Health Service of the department operates 47 maternal and child health centres, providing a comprehensive health programme for women of child-bearing age and children aged 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 92 per cent of newborn babies attended maternal and child health centres.

   Under the Comprehensive Observation Service, 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.

   There are four government (and one government-assisted) child assessment centres. These provide comprehensive physical, psychological and social assessment as well as treatment, parental counselling and referrals for the 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's medical development programme.

   Health education is an essential component of the Family Health Service. In addition to health talks and counselling on child care at centres, health education for expectant mothers has been 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, sterilisation, vasectomy and advice on sub-fertility. It also provides health education and publicity on family planning and sex education.

Medical Care for the Elderly

The provision of hospital facilities for acute geriatric cases has been made an urgent priority. The government announced that by 1997, an additional 461 acute beds and day-places would be provided for elderly patients, bringing the total to 1 735.

   A network of nursing homes with medical and nursing facilities is also being developed for elderly patients who would otherwise have to remain in hospital or in an infirmary. By 1997, an initial seven nursing homes providing 1 400 beds at a capital cost of about $800 million will be in operation.

   In 1994-95, a total of six new specialist medical teams will be formed to provide health care, assessment and rehabilitation services for a total of 55 700 elderly people.

School Health

The School Medical Service Scheme is operated by an independent School Medical Service Board. Participation is voluntary and all students from Primary 1 to Form 3 of

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the participating schools can join the scheme by paying a token fee of $20 a year. At the end of 1993, more than 335 900 children from 1 114 schools participated in the scheme representing about 45 per cent of the eligible school population and about 516 general medical practitioners had enlisted. Since November, a student pays $18 for a consultation at the chosen medical practitioner's office. The government contributes $136 a year for each pupil enrolled and also bears the administrative cost.

A new Student Health Service, with emphasis on health promotion, disease prevention and continuity of care, will replace the existing School Medical Service. Preparations for its implementation are underway.

The school health service also 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 concerning the health of children, and organise health education activities and immunisation campaigns.

Port Health

The Port Health Service is the control authority for preventing the entry of quarantinable diseases into Hong Kong by air, land or sea. It enforces 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 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. The service also provides medical assistance to ships and aircraft within the territory, and gives medical advice to vessels at sea. The food catering service for international airlines is kept under close surveillance by its health staff, to ensure that food and water supplied to flight kitchens are clean and safe. The hygiene and sanitation of the airport is also covered.

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 Service of the department provides an advisory service to the 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. The objectives of the service are to maintain and improve the physical and mental well-being of workers, to protect them against any health hazards arising from employment and to help them adjust to their jobs. The emphasis is on occupational disease prevention and health promotion.

In 1993, the service continued to participate in occupational health activities organised to promote public awareness of the importance of health at work. With the assistance of the Occupational Safety and Health Council as a co-organiser, the service also organised a week-long, large-scale exhibition and a seminar on occupational health in the office environment in October.

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The Expert Working Group on Occupational Health Services, which was established by the Director of Health in December 1991 to improve the provision of occupational health services in Hong Kong, submitted its report in September 1992. Of its 39 recommendations, some 30 have been implemented or are at various stages of implementation through redeployment of staff, improving work systems and procedures, and mobilising resources from non-government agencies such as the Occupational Safety and Health Council, the universities and the Pneumoconiosis Compensation Fund Board. These recommendations included, among other things, the setting up of an occupational health clinic the first of its kind in Kwun Tong. The clinic opened on November 30 to provide the working population with a new specialised service specifically for the consultation, treatment and investigation of work-related diseases.

Dental Services

The School Dental Service aims to promote dental health among primary school children. Services include regular dental examinations, treatment and oral health education. Participation is voluntary at an annual fee of $20 per child. In the 1993-94 school year, 385 938 children from 954 schools participated, representing 80 per cent of the primary school population.

A pilot Youth Dental Care Programme was launched in 1993. It aimed to transfer primary six school-leavers from the existing School Dental Service to a private practice- based dental programme in their secondary school years. The pilot scheme was carried out in Tuen Mun and Yuen Long in collaboration with the Hong Kong Dental Association, involving a target of 9 765 primary six students and over 50 dentists working in the area.

The department's Oral Health Education Unit organises oral health education activities for the community. In February, the unit launched a pilot three-year education programme for 400 000 pre-school children. Plans are also in hand to procure and outfit an education bus for wide dissemination of oral health messages throughout Hong Kong.

A pilot scheme began operating at the Tuen Mun Hospital Dental Unit on August 1 to provide comprehensive dental treatment for patients classified under the special need group.

The Government Dental Service provides emergency treatment for the public at a number of district dental clinics. Dental treatment is also provided for patients in public hospitals and inmates of correctional institutions.

Services for the Mentally Ill and Mentally Handicapped

Medical services for mentally ill persons include treatment in hospitals, outpatient clinics and day hospitals, and outreaching services. The Hospital Authority, in conjunction with various government departments and non-government 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 1993, 3 322 beds were provided in psychiatric hospitals, and 1 157 beds in public psychiatric units of general hospitals. An additional 1 510 beds are being planned for psychiatric patients in public hospitals by the year 2000. 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 discharged patients. The community psychiatric nursing service and domiciliary occupational therapy service, in particular, aim to provide continual care and treatment programmes for discharged

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mental patients in their home settings

                       in this way assisting in their social readjustment, and educating patients as well as their families on mental health. Three community psychogeriatric teams have been set up to provide designated care and rehabilitation programmes to psychogeriatric patients. There are 11 Community Psychiatric Nursing. Service centres. Other complementary rehabilitative services include day-centres, half-way houses, long-stay care homes, vocational training, selective placement and social clubs, run by government departments and non-government organisations.

Severely mentally handicapped persons requiring intensive nursing care and rehabili- tation services are cared for at Tuen Mun Hospital (which offers 204 beds), Caritas Medical Centre (300 beds), the Duchess of Kent Children's Hospital (25 beds) and the re-opened Siu Lam Hospital (300 beds).

       The Castle Peak Hospital is being redeveloped to provide a better physical environment, as well as medical treatment and rehabilitation, for psychiatric patients.

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 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' inquests.

       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.

The Institute of Immunology undertakes the monitoring and quality control of biological products, including vaccines for use in local health services.

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 provides pharmaceutical services to all government clinics. It also 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 1993, there were 75 prosecutions.

Radiation Health

Regular visits are made by the staff of the Radiation Health Unit to medical, commercial and industrial premises to inspect the working conditions of people working with radiation. The unit issues radiation licences to proprietors in accordance with the Radiation Ordinance and Regulations and operates a centralised radiation monitoring service for all occupationally-exposed individuals. It also assists in the Environmental Radiation Monitoring Programme organised by the Royal Observatory to monitor the changes in background radiation levels in Hong Kong.

Community Nursing Service

The Community Nursing Service of the Hospital Authority provides rehabilitative nursing care and treatment to the sick, the elderly infirm and the disabled, in their own homes. The

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service is provided through a network of eight hospital stations and 40 satellite centres. During the year, 19 439 patients were served and 277 335 home visits were made.

Health Education

The Central Health Education Unit of the Department of Health is responsible for the planning, organisation and promotion of health education activities. In 1993, it focussed on the prevention of communicable diseases such as hepatitis A and diarrhoeal diseases, organ donation, mental health, self-care and prevention of cancer, among other areas.

The theme of the major health education campaign for the year was 'Treasure Life, Prevent Injury'. A series of programmes - including a 24-hour, pre-recorded telephone information service, competitions for students and the public, and health news was arranged. An exhibition was also held in October.

Special training courses were arranged for students and teachers, notably the 14th Young Health Leaders' Training Course in July. Health talks and presentations were delivered to schools, voluntary agencies, private companies and government departments. Health education materials, such as pamphlets, cassettes, slides, videos and exhibits, were produced for distribution or loan. Selected video titles have been on sale since July.

   A new health education centre in Tsuen Wan was opened in August to improve services for the region.

   Close liaison is maintained with both government and non-government organisations in promoting health education activities.

Smoking and Health

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 the government on matters relating to smoking and health. During the year, the council conducted publicity campaigns with particular emphasis on discouraging young people from smoking. Its volunteer anti-smoking ambassadors also travelled around Hong Kong, reminding passengers that smoking has been prohibited in all forms of public transport since 1992.

Following a public consultation exercise, the government announced a package of new anti-smoking proposals in September. These will extend existing requirements for health warnings on cigarette packaging and advertising to cigars and pipe tobacco; prohibit the sale (or giving for the purpose of promotion) of tobacco products to persons under the age of 18; and require all restaurants to display a sign stating whether they have a no-smoking area. Legislation giving effect to these proposals is expected to be introduced in 1994.

Medical Charges

The government is committed to the policy that no one should be 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 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.

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       The charge for a consultation at general out-patient clinics is $21, while that at specialist clinics is $33. Charges for physiotherapy, occupational therapy and child assessment services are $33 per session. Attendances at geriatric or psychiatric day centres and home visits by community nurses cost $34 per session. 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.

        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.

Towards Better Health

The consultation document, 'Towards Better Health', which was published in July, included discussion of various health care reforms. It attracted 494 submissions from the public during the four-month consultation period, which ended in October.

The government, in issuing the document, wished to ensure that the existing policy

that no-one should be denied adequate medical treatment through lack of means remained paramount. It also wished to ensure that a balance was struck between the provision of services and level of subsidy for these services.

Increased accessibility to health services in the form of reduced waiting times, better services and more choice; simpler administration and improved efficiency were also targets behind the document.

Training of Medical and Health Personnel

      Basic training of doctors is provided by the University of Hong Kong and the Chinese University of Hong Kong. Graduates of the two medical schools are awarded degrees which are recognised by the General Medical Council of Great Britain. The medical student intake in 1993 was 165 at the University of Hong Kong and 167 at the Chinese University of Hong Kong.

Under the Licentiate Scheme of the Hong Kong Medical Council, 25 externally-trained doctors passed the local licentiate examination in 1993. After satisfactory completion of an externship programme in public hospitals, they will become registered medical practitioners.

The Hong Kong Academy of Medicine, which is an independent statutory body with the authority to approve, assess and accredit all post-internship medical training, was inaugurated in December.

Basic training for nurses is provided in 16 Hospital Authority nursing schools. Eleven schools provide training programmes for registration and five provide programmes for enrolment. Among the 16 schools, three provide both registration and enrolment programmes. The total number of trainees recruited in 1993 was 1 561, including 1041 student nurses and 520 pupil nurses. There are also three private nursing schools, which had an intake of 61 student nurses and 111 pupil nurses during the year.

       Training in dentistry is available at the University of Hong Kong, which produced its ninth group of 33 graduates in January 1993. Training of dental therapists is provided at the Tang Shiu Kin Dental Therapists Training School.

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

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radiographers, optometrists, physiotherapists, occupational therapists, medical laboratory technicians and dental technicians. Training for speech therapists and pharmacists is provided by the University of Hong Kong and the Chinese University of Hong Kong. Both universities offer masters degree courses in the training of clinical psychologists. The Sha Tin 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. These cover the supply of audiologists, audiological technicians, orthoptists and chiropodists. There are also opportunities for overseas training in specialised areas for medical, nursing, para-medical and para-dental staff.

School of Public Health Nursing

The School of Public Health Nursing, under the Public Health Nursing Division, provides full-time and part-time public health nursing training programmes for the professional development of nurses in the Department of Health. Its main training programme is a nine-month, full-time course which leads to a diploma in public health nursing studies for registered nurses.

The school's new premises at Lam Tin Polyclinic in Kwun Tong were officially opened in January. With its expanded facilities and additional staff, the school will double its yearly student intake of public health nursing students to 60 for the full-time course.

Government Laboratory

The Government Laboratory provides a wide range of chemical testing services to government departments, and other institutions, for the protection of public health. This includes the provision of analytical and advisory services on environmental protection. The laboratory has statutory responsibilities for testing under a number of ordinances and regulations.

  During the year, food products were regularly tested for composition, additives, toxic residues and contaminants. Services were rendered to the Department of Health, Urban Services Department and Regional Services Department in cases of food-related com- plaints and suspected food poisoning.

  Pharmaceutical products, for use in hospitals managed by the Hospital Authority and public clinics, were tested for compliance with pharmacopoeia or other specifications. Products intended for use and sale locally were examined for compliance with registration and labelling requirements. Herbal medicines were checked for the presence of synthetic drugs and toxic metals.

  A product safety laboratory was set up to undertake testing of toys and children's products for compliance with safety standards and specifications under the Toys and Children's Products Safety Ordinance, which was enacted in November 1992. Before the ordinance came into operation in July 1993, a project was conducted with the Consumer Council to test toys supplied locally.

Examination of a wide range of commodities submitted by the Customs and Excise Department continued. These included dutiable commodities tested for duty assessment purposes, weighing equipment for compliance with the Weights and Measures Ordinance,

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suspected forged commodities for identification, gold and platinum articles for fineness determination, and jade suspected of being resin-impregnated for differentiation.

The laboratory also provided analytical and advisory services to the Fire Services Department, in relation to the storage, carriage and classification of dangerous goods. A round-the-clock service was available to assist fire services personnel at scenes of emergencies 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, to eradicate drug abuse from the community.

Data collected by the government's Central Registry of Drug Abuse in 1993, based on 36 000 reports on 17 000 persons, indicated that 91 per cent of drug abusers were male and nine per cent female. Fifty-nine per cent of the reported individuals were aged over 30 years, 27 per cent were in the 21 to 30 bracket and 14 per cent were aged under 21 years.

The most common drug of abuse was heroin, which was used by 93 per cent of the persons reported to the registry. In the case of young persons aged below 21 years, the common drugs of abuse included heroin, cannabis and cough medicines.

A total of 4 000 drug abusers came to the notice of the registry for the first time in 1993. Of the new cases, 83 per cent were male and 17 per cent were female. Most of them, or 73 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, cannabis and cough medicines.

Overall Strategy and Co-ordination

The government has a comprehensive anti-drug programme which has achieved con- siderable success. The programme adopts a four-pronged approach - 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 the government and a number of voluntary agencies which offer a wide range of facilities to meet the different needs of drug abusers from varying backgrounds. The effectiveness of these treatment programmes reduces the demand for illicit drugs. At the same time, the government places great emphasis on preventive education and publicity to heighten public awareness of the drug problem and to promote the advantages of a drug-free lifestyle. Co-operation at the international level, through exchange of information and experience, and joint action against illicit trafficking, enhances the effectiveness of efforts in these 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, including those undertaken by non-government agencies. It is serviced by the Narcotics Division, which is headed by the Commissioner for Narcotics.

Legislation and Law Enforcement

The major anti-drug laws are the Dangerous Drugs Ordinance, which prohibits trafficking, possession, unlawful manufacture and consumption of dangerous drugs; the Pharmacy and

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Poisons Ordinance, which provides for controls over pharmaceutical products; and the Acetylating Substances (Control) Ordinance, which controls the use of the main precursors in the manufacture of heroin. The Drug Trafficking (Recovery of Proceeds) Ordinance provides for the confiscation of the proceeds of drug trafficking and the countering of drug money-laundering in Hong Kong.

The Royal Hong Kong Police and the Customs and Excise Department seized some 230 kilogrammes of heroin, 590 kilogrammes of cannabis and 20 kilogrammes of cocaine during the year. 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 1993, police and customs action resulted in the arrest of 12 100 persons for drug offences.

Treatment and Rehabilitation

The voluntary Methadone Treatment Programme, operated by the Department of Health in 23 clinics, provides both maintenance and detoxification for out-patients. Methadone maintenance aims to reduce or eliminate an abuser's reliance on opiate drugs, while the detoxification programme aims to eliminate dependence on drugs. The programme has proved to be very effective in serving both drug abusers and the community.

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 39 women at Sha Tin. Linked to these centres are four regional social service centres, five halfway houses, a job skills training laboratory and a clinic which provides pre-admission medical examination, counselling and detoxification services, urine analysis and post-discharge medical care.

  A compulsory in-patient treatment programme is operated by the Correctional Services Department under the Drug Addiction Treatment Centres Ordinance. Its drug addiction treatment centres accommodate 784 men on the island of Hei Ling Chau, and 100 women at Tai Lam Chung and Tai Tam Gap. The treatment ranges 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 aftercare.

  In 1993, the two voluntary treatment programmes and the Correctional Services Department's compulsory treatment programme admitted 14 200 abusers. On average, 11 000 drug abusers and ex-drug abusers were receiving some form of treatment, rehabili- tation or aftercare every day.

  The counselling centre, PS33, set up in Tsim Sha Tsui in 1988 to provide counselling and telephone advice for psychotropic substance abusers, handled 144 cases and 1 455 telephone and 'drop-in' enquiries during the year. PS33 is operated by the Hong Kong Christian Service, with financial support from the Social Welfare Department.

Preventive Education and Publicity

The government and the community continued to promote anti-drug preventive education and publicity. The anti-drug publicity campaign in 1993 focussed on encouraging young people to adopt a healthy lifestyle and to say 'no' to all drugs; and reminding them of the legal consequences of drug-related offences. At the same time, parents were reminded of their responsibility to guide their children away from drugs.

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Eight district campaigns were held, involving the community through carnivals, variety shows, competitions and exhibitions.

The Narcotics Division's school talk team gave 242 drug education talks to 83 000 students in 226 primary and secondary schools and technical institutes. Starting from September, drug education talks using different approaches were extended to Primary 6 students. Apart from school students, talks were also organised for members of youth organisations, parents, and juvenile offenders at the boys' and girls' homes operated by the Social Welfare Department.

      To better equip prospective teachers and social workers for the fight against drug abuse, a series of drug education workshops were organised for students of the four colleges of education and a territory-wide seminar was held for social workers. A seminar for private medical practitioners was also organised to appeal for their support in reporting drug abuse cases.

      In support of the annual International Day Against Drug Abuse and Illicit Trafficking, a large-scale exhibition was held in Sha Tin in June. The anti-drug message 'Say NO to Drugs' was also applied as a post mark on all mail for two weeks in June.

The Community Against Drugs Scheme continued to provide encouragement to interest groups to plan and implement their own anti-drug education and publicity projects. Under the scheme, financial support of up to $5,000 is granted for each project. The 75-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, advised on educational and publicity materials and activities.

The ACAN Drug Abuse Telephone Enquiry Service was enhanced and automated in February, providing information on 12 types of commonly abused substances. Information on treatment facilities was also available. A total of 370 000 calls were received during the year.

International Action

Hong Kong continued to play an active international role, maintaining close links with the United Nations, inter-governmental agencies such as the Financial Action Task Force, Interpol and the Customs Co-operation Council, as well as with individual governments. The territory took part in 34 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, 306 people from 19 countries and international bodies came to the territory 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 with regard to the tracing and confiscation of the proceeds of drug trafficking.

Auxiliary Medical Services

The Auxiliary Medical Services (AMS), formed in 1950, is a disciplined medical civil defence corps. Its primary mission is to provide supplementary resources to augment regular medical and health services in times of natural disasters and emergencies.

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The AMS had an establishment of over 5 200 volunteer members at the end of the year. They comprised physicians, nurses, pharmacists, dispensers, radiographers, paramedical personnel, civil servants and laymen in the private sector.

  By statutory requirement, the Director of Health is the Commissioner and Unit Controller of the AMS. Assisted by a number of Deputy and Assistant Commissioners appointed on a voluntary basis, he is responsible to the Governor for the efficient operation of the corps.

  Volunteer members receive comprehensive training as and where necessary in 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. In November, an expert from Australia was commissioned to conduct training courses on disaster medicine for volunteer members who are medical and nursing professionals, to enhance their operational efficiency and effectiveness.

  During emergencies, volunteer members would be deployed and supplied with the necessary medical resources to provide immediate first-aid treatment for the injured at the disaster scene, to convey casualties to hospitals, to render nursing care to patients at both acute and convalescent hospitals and to work in collaboration with other rescue forces.

  If paramedical assistance is required, the AMS Emergency Response Task Force would be available at short notice. Medical officers, nurses and trained members of the force are equipped to provide nursing aid, minor surgery and other life-saving measures on the spot.

  Apart from being in full readiness to perform emergency roles and functions, the AMS is committed to providing supplementary medical services to government departments and outside agencies for ambulance manning; lifeguard duties; clinical services in methadone clinics and refugee camps; and first-aid coverage at country parks, cycling tracks, school activities and major public functions.

  During the year, the AMS continued to assist in the daily manning of 23 methadone clinics and to provide round-the-clock clinical manning at eight sick bays in five Vietnamese boat people centres. More than 681 966 man-hours were committed to operational tasks.

  The AMS also provides first-aid training to frontline civil servants. A total of 4 050 government officers completed the basic first-aid certificate course and qualified as first-aiders in 1993 under this training scheme.

Environmental Hygiene

The Urban Council and Regional Council are responsible for environmental hygiene. Working under the two councils, respectively, the Urban Services Department and the Regional Services Department are responsible for street cleaning, collection and removal of refuse and nightsoil, the cleansing of gullies, management of public toilets and bathhouses, pest control and services for the dead.

  A workforce of about 8 199 people is employed in cleansing duties, deploying a fleet of 583 specialised vehicles which include refuse collection vehicles, street-washers, mechanical sweepers, nightsoil collectors and gully emptiers.

Streets are swept, either manually or mechanically, from up to six times a day for busy thoroughfares to once every second day for village lanes. Streets and lanes are also hosed

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down when local conditions warrant. Hawker areas and refuse collection points are washed regularly.

       There are 2 640 refuse collection points in the territory, with 1 466 bin sites in the New Territories. During the year, four permanent off-street refuse collection points were completed in the urban area. Two are in Mong Kok District, at Mong Kok Road and Bedford Road. The refuse collection point at Third Street, in Western District, was funded by the Land Development Corporation. The one at Hok Yuen Street, in Kowloon City District, is equipped with a water scrubber system, a much more effective de-odourising ventilation system than that used previously. The new system is now the standard for all other refuse collection points currently under construction or under planning. Refuse collection vehicles, equipped with compacting devices, call at refuse collection points up to three times daily to convey refuse to transfer stations and an incinerator for disposal.

About 5 204 tonnes of refuse and junk are collected daily, including 124 tonnes removed from outlying islands by a contractual barging service. Desludging services are provided free for public aqua privies and septic tanks. This service is provided for private facilities on a charge basis upon request. A daily nightsoil collection service is also provided free of charge to areas without a water-borne sewage system.

In a further effort to improve environmental hygiene, the Regional Services Department started night collection of market refuse in Tai Po and Sai Kung in May. This service will be extended in phases to other districts upon the commissioning of more refuse transfer stations.

Eleven public toilets were renovated under the Urban Council's public toilet refurbish- ment programme. The programme aims to provide well-lit, clean and well-managed public conveniences. A total of 37 toilets have been refurbished over the past three years and the programme will continue until all old-style toilets have been modernised.

The two departments continued to contract-out some of the cleansing services to private contractors, to reduce the direct involvement of departmental labour and enhance cost-effectiveness. In the urban area, the contracts covered 201 public toilets and bathhouses; and manual street-sweeping of Tai Kok Tsui, part of Wan Chai, and two squatter villages. The waste collection service in Tai Po township was contracted-out for a period of five years commencing in May. Meanwhile, the contracting-out of street cleansing was introduced in Kwai Tsing, and extended to Tsuen Wan, Yuen Long, Tai Po and Sha Tin in July. This was followed by the contracting-out of cleansing in remote areas in Sai Kung in September. The overall exercise brought significant savings and enabled the Regional Council to retrench some 530 staff. The performance of the contractors is closely monitored by supervisory staff.

The Regional Services Department commissioned two market research companies to conduct opinion surveys in areas where street cleansing was newly contracted-out, before and after the commencement of contracts. With the findings of the surveys as general guidelines, further proposals for the contracting-out of refuse collection and street cleansing will be explored.

During the year, the Keep Hong Kong Clean Campaign, organised by the Joint Urban Council/Regional Council Keep Hong Kong Clean Steering Committee, marked its 21st anniversary. In order to spread the 'keep clean' message throughout the year, the steering committee mounted a six-phase clean-up programme, covering the environment; water areas; roads; homes; squatter areas and villages; and the countryside and country

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parks. The campaign focussed on direct community involvement, education, and publicity through the media. The steering committee also introduced a Keep Hong Kong Clean Activities Funding Scheme. Under the scheme, voluntary agencies, local organisations and schools were encouraged to organise clean-up activities and apply to the two municipal councils for subsidies.

Law enforcement remained a major weapon against litter offenders. During the year, 36 766 litterbugs were fined a total of $11.9 million.

Controls

Staff of the two municipal services departments enforce the Public Health and Municipal Services Ordinance to ensure that standards of hygiene are 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 and vermin infestation.

For the prevention of vector-borne diseases, pest control staff carry 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 is 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.

Environmental Health Education

The Health Education Unit of the Hygiene Division of the Department of Health promotes environmental health through education on a territory-wide basis. Under the auspices of the two municipal councils, the unit launched a number of educational campaigns in 1993. The most notable were the Environment and Health Drive held early in the year, and the Food Hygiene Campaign organised during the summer for members of the food trade and school teachers.

Publicity campaigns directed at the prevention of rodent infestation and nuisances caused by mosquitoes and dripping air-conditioners, as well as the promotion of good personal habits, were also staged during the year. Apart from talks 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 health inspectorate of the Hygiene Division of the Department of Health, backed by a hygiene consultant, controls both imported and locally-produced food for sale. Supported by laboratory resources and assisted by a scientific advisory arm, the inspectorate ensures that consumers are able to buy good, wholesome food which is 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.

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The growing number of food establishments, and the quantities and variety of food items available 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 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 to facilitate international trade in foods.

       On the international scene, Hong Kong maintains close ties with the World Health Organisation, the Food and Agriculture Organisation of the United Nations and other international authoritative bodies on foods. As the bulk of the local food supply comes from China, the territory works closely with the Chinese authorities to promote food safety and better food hygiene. Regular meetings are held with officials from the Guangdong and Shenzhen Commodities Inspection Bureaux.

Food Premises

The Urban Services Department has categorised licensed food premises in the urban area into different grades according to their standards of hygiene. Its frequency of inspections is determined by the grades of the premises, to better utilise manpower and resources.

The department continued to adopt a demerit points system for suspension or can- cellation of food business licences or permits in order to deter breaches of licensing and hygiene regulations. The system is regularly reviewed to ensure its effectiveness.

To assist applicants for restaurant licences and to better co-ordinate inter-departmental efforts, a central vetting panel was set up. It advises the applicants in the early stages whether the intended premises are suitable for licensed restaurants. The panel also gives initial advice on steps and actions to be taken to meet the licensing requirements.

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. The weekly prosecution of repeated offenders has had the effect of drama- tically reducing the number of unlicensed food businesses.

       The two departments also work closely with the Department of Health in the investigation and control of food-poisoning outbreaks, substandard foods and infectious diseases.

Markets

The Urban Council operated 62 retail markets in the urban area in 1993. In these markets, 10 108 stalls offered commodities ranging from fresh food to household items.

Old and outdated markets have been gradually replaced by multi-purpose complexes managed by the council. The 16 existing complexes house new markets and cooked food centres on the lower floors, while the upper floors provide a variety of facilities for indoor sports activities, cultural and recreational pursuits. New markets with cooked food centres are built to meet not only hawker resiting commitments, but consumer demand.

The Electric Road Complex was opened to the public in March. The redevelopment of Tai Shing Street Market in Wong Tai Sin District was undertaken jointly with the Hong Kong Housing Society in late 1993, as part of the latter's redevelopment scheme for Kai Tak Estate. Also earmarked for redevelopment is Sai Ying Pun Market in Western District. To prepare for this, the renovation of Centre Street Market was completed to

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provide temporary accommodation for the stall lessees of Sai Ying Pun Market. Improve- ment works to the existing To Kwa Wan Market in Kowloon City District started. The works include the provision of air-conditioning for the cooked food centre. The cooked food centre at Sai Wan Ho Market was also under renovation for installation of air-conditioning. If the air-conditioning scheme proves successful and cost-effective, consideration will be given to extending it to other existing cooked food centres.

  A scheme for contracting-out cleansing operations has been implemented in 28 markets in the urban area 18 on Hong Kong Island and 10 in Kowloon. A pilot scheme was introduced for markets in the New Territories, at Sha Tin Market, Plover Cove Road Market and Tung Yick Market, in November. If successful, the scheme will be extended to other markets in future.

·

  The Regional Council is responsible for the management of public markets in the New Territories. In 1993, a new market with 35 stalls was commissioned at Mui Wo. This brought the number of markets managed by the council to 47 - providing a total of 5 257 market stalls and 278 cooked food stalls. Another new air-conditioned market with 365 market stalls and 28 cooked food stalls is under construction at Shek Wu Hui and is scheduled for completion in mid-1994.

  During the year, the council continued to improve its existing markets. Minor improvement works were carried out in nine markets nominated by the council's district committees. Sha Tin Market was identified as a pilot scheme for implementing long-term measures, including improvements to toilets, drainage, lighting and ventilation.

  Other improvements are in the pipeline. The council's Working Group on Management of Markets has concluded a review on market policy and related management matters, and a report will be submitted to the council in early 1994.

Hawkers

The Urban Council is responsible for the licensing of street hawkers in the urban area while the Regional Council is responsible for their management in the New Territories. At the end of December 1993, there were 13 606 licensed hawkers in the territory - 780 less than in 1992. The decrease was due to a policy of not issuing or allowing succession of itinerant hawker licences, and to the resiting of on-street hawkers into new markets. The completion of the Java Road Market, Wong Nai Chung Market, Electric Road Market and Ap Lei Chau West Industrial Area Cooked Food Market in 1993 made it possible to resite 210 licensed hawkers formerly trading in the vicinity.

The Urban Council's policy of eventually eliminating itinerant hawker licences was announced in March. Itinerant hawker licences will cease to exist in April 1996. Until then, licence holders are offered the option of surrendering their licences in exchange for either an ex gratia payment at the revised rate of $30,000, a fixed-pitch hawker licence, or a market stall tenancy. By the end of 1993, 640 itinerant hawker licences had been surrendered under this policy.

Following the recommendations of the 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 263 fixed-pitch newspaper hawker licences have been issued. The issue of other licences will depend on the availability of suitable sites.

The report of a Regional Council working group tasked to examine the legislation, policies and operational strategies against illegal hawking and illegal shop extensions

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was presented in June. Some of the report's 36 recommendations have already been implemented.

Control over on-street trading is maintained by the municipal councils through the deployment of general duties teams, comprising 2977 civilian staff trained in law enforcement. During the year, the teams secured 125 980 court convictions for hawking offences and helped to reduce the number of unlicensed hawkers to 7 641, a drop of 739 compared to the year before.

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 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, these abattoirs and slaughterhouses handled 3 437 915 pigs, 171 259 head of cattle and 18 514 goats, which accounted for virtually all of the local fresh meat supply. To ensure the wholesomeness of the meat, all slaughtered animals were inspected by qualified health inspectors of the municipal services departments.

The two departments also maintain vigilance against illegal slaughtering. In 1993, health inspectors carried out 40 raids on suspected illegal slaughterhouses, and two offenders were successfully prosecuted. Staff also carried out spot checks on meat stalls and 20 persons were prosecuted for possessing unstamped carcasses for sale.

Cemeteries and Crematoria

     It is government policy to encourage cremation, rather than burial, of the dead. During the year, over 68 per cent of the territory's dead were cremated. Human remains buried in public cemeteries have to be exhumed after six years and are either cremated or re-interred in an urn cemetery.

The Urban Council operates one public funeral parlour in Kowloon which provides free funeral services for the needy. Two service halls at the parlour are also open for public use free-of-charge.

In the urban area, the council manages five public cemeteries and two public crematoria, and monitors 18 private cemeteries. Two war cemeteries are under the management of the Commonwealth War Graves Commission.

Additional cremators and columbaria are under construction at Cape Collinson Crematorium to cater for the increasing demand for cremation.

The Regional Council manages six public cemeteries and four public crematoria in the New Territories. It also oversees nine private cemeteries and six private crematoria.

Columbaria managed by the council are provided at Kwai Chung, Fu Shan, Cheung Chau, Wo Hop Shek, Lamma and Peng Chau for the deposit of cremated ashes.

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HONG KONG, as a society, cares deeply about the welfare of its citizens. To achieve targets for the protection of the disadvantaged, spending on social welfare in 1993-94 was increased by 25 per cent to $7,963 million. This followed a government pledge to increase recurrent spending on social welfare by 26 per cent in real terms by 1997. To secure funding for major improvements during that period, a capital injection of $2.3 billion was made into the Lotteries Fund.

  The Director of Social Welfare is responsible for carrying out government policies on social security and social welfare, based on the objectives set out in three White Papers - Integrating the Disabled into the Community: A United Effort (1977), Primary Education and Pre-primary Services (1981), and Social Welfare into the 1990s and Beyond (1991).

  The government is advised on social welfare policy by two committees the Social Welfare Advisory Committee, covering the whole area of social welfare, and the Rehabilitation Development Co-ordinating Committee, on matters of rehabilitation. Members of these committees are appointed by the Governor, with non-officials as chairmen.

In the provision of welfare services, the Social Welfare Department maintains a close working partnership with non-governmental organisations, most of which are affiliated to the Hong Kong Council of Social Service. A list of the council's member agencies is shown in Appendix 32.

  During the year under review, five new nurseries, 15 small group homes, 240 foster care places, nine home help teams, 16 family aides and 60 places of integrated programme in child care centres were established. Two combined children and youth centres were also established through reprovisioning of existing centres. For the elderly, a further 1 061 meal and care-and-attention places, 11 social centres, three day care centres, two multi-service centres and a holiday centre were set up. For the disabled, three new sheltered workshops, five day activity centres, seven hostels, two care and attention homes for severely disabled persons and 17 places in supported housing were established. A total of two outreaching service teams for the elderly at risk and four outreaching social work teams were set up. Eight extra family life education workers and 18 school social workers were made available.

  A thorough overhaul of the social security system was undertaken and a Comprehensive Social Security Assistance Scheme was introduced on July 1 to improve means-tested benefits. The package provides, as a consolidated sum, income support for the special

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needs of particular groups who formerly received assistance under two separate schemes, the Public Assistance Scheme and the Special Needs Allowance Scheme. The rates of benefits were increased between four per cent and 37 per cent for different groups of beneficiaries.

       The Protection of Women and Juveniles (Amendment) Ordinance 1993 was enacted in April. 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. The amendment ordinance was implemented on November 1 under the name of the Protection of Children and Juveniles Ordinance (Cap. 213).

      Co-ordinated efforts from multi-disciplinary professionals and various government departments are needed to tackle the problems of young people at risk, child abuse, teenage suicide, drug abuse, triad influence and premature sexual involvement, which have attracted considerable public concern. The Coordinating Committee for the Welfare of Children and Youth at Risk was appointed in April under the chairmanship of the Secretary for Health and Welfare to co-ordinate services and advise on policy directions. Under this committee, two working groups - the Working Group on Child Abuse and the Working Group on Services for Youth at Risk - were established under the chairmanship of the Director of Social Welfare in mid-1993 to examine the wide range of issues related to the problems and welfare of children and young people.

       Taking into account the changed needs of young people, the Secretary for Health and Welfare appointed a working party in 1992 to review the services provided by children and youth centres. The working party produced a draft report in June 1993, proposing, inter alia, that an integrated model should be adopted in providing services for young people. Public views were invited and a final report was submitted for policy consideration in late 1993.

Community Chest

The Community Chest, which organises and co-ordinates fund-raising activities for its member agencies, raised $145 million in 1992-93, compared with $132 million in 1991-92. More details about the Community Chest are given at Appendix 32.

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 Comprehensive Social Security Assistance Scheme and Social Security Allowance Scheme are the key elements in the non-contributory social security system. They are supplemented by three other schemes: the Criminal and Law Enforcement Injuries Compensation Scheme, the Traffic Accident Victims Assistance Scheme and Emergency Relief.

Comprehensive social security assistance, 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. But an able-bodied unemployed person aged between 15 and 59, who is available for work, is required to register with the Labour Department for job placement to qualify for assistance.

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Under the pre-July scheme, public assistance payments used to comprise four com- ponents: basic allowance, rent allowance, supplements and special grants. Essential needs such as food, clothing, fuel and light were met by the basic allowance. Rates of the basic allowance were increased across-the-board by nine per cent, in April, to keep pace with inflation. The eligibility criteria under the two schemes remain the same.

The Comprehensive Social Security Assistance Scheme is built on three simple com- ponents: a range of standard rates for different categories of applicant, rent and special grants to meet individual needs. Depending on the needs of the applicant, the monthly standard rates range between $1,035 to $2,835 for a single adult; $1,260 to $3,055 for a single child; $895 to $2,570 for an adult family member; and $995 to $2,795 for a child in the family. To cover the cost of accommodation, a separate allowance is paid. Those who have received comprehensive social security 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: $1,145 for a single person; $2,290 for a family with two to four members; and $3,435 for a family with five or more members. In addition, special grants are given, where necessary, to meet other needs such as school fees, travel or special diets. To encourage self-help, an individual's monthly earnings of up to $775 may be disregarded in the calculation of assistance payable.

  At the end of 1993, the number of comprehensive social security assistance cases was 92 000, compared with 79 700 public assistance cases in 1992. The majority of recipients were the elderly, the disabled and single parent families. Expenditure on comprehensive social security assistance during the year amounted to $2,073.8 million, representing an increase of 54.9 per cent from the previous year.

  The Social Security Allowance Scheme, which replaced the Special Needs Allowance Scheme on July 1, 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 in Hong Kong for at least five years since the age of 60.

  Under the new scheme, persons receiving comprehensive social security assistance would be no longer eligible to apply for these payments. Their level of benefits will, however, be maintained under the new arrangements.

The allowances were revised upwards by nine per cent in April 1993 to reflect the rise in the cost of living.

A higher disability allowance, which is twice the normal rate, is payable to severely disabled persons who require constant attendance from others in their daily life but are not receiving such care in a government or subvented institution. The current monthly rate for the disability allowance is $900 and, for the higher disability allowance, $1,800. The allowance is non-means-tested.

Old age allowance is also non-means-tested for those aged 70 and above, and they are entitled to $510 per month. For those aged 65 to 69, the monthly allowance is set at $450, subject to a declaration that income and assets do not exceed the prescribed levels.

The number of people receiving disability and old age allowances at the end of the year was 468 600, compared with 501 200 at the end of 1992. Expenditure on social security allowances during the year was $3,051.9 million, representing an increase of 6.7 per cent over the previous year.

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       The Criminal and Law Enforcement Injuries Compensation Scheme provides cash assistance to people who are injured in crimes of violence or while 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. The secretariat to the board is provided by the Social Welfare Department, which is also responsible for the assessment and payment of compensation.

During the year, total payments amounted to $9.3 million, compared with $9.0 million in the preceding year.

The Traffic Accident Victims Assistance Scheme is a no-fault and non-means-tested scheme. It provides cash payments to victims of traffic accidents or their dependants. It is administered by the Director of Social Welfare in consultation with an advisory committee. For a person to be eligible, the accident must be within the definition of the Traffic Accident Victims (Assistance Fund) Ordinance 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 his right to claim legal damages or compensation from other sources for the same accident. In case of a successful claim, he is required to refund either the payment received from the scheme or the amount of damages or compensation, whichever is the less.

During the year, 5850 applications were received and 5 270 were approved for assistance, with payments totalling $89 million compared with $69 million in 1992.

Emergency relief is provided to victims of natural or other disasters in the form of material aid such as hot meals, eating utensils and other essential articles. Grants from the Emergency Relief Fund are also paid to disaster victims or their dependants to relieve hardship arising from personal injury or death.

During the year, emergency relief was given to 1 721 registered victims on 83 occasions. The Social Welfare Department also assisted in providing hot meals to refugees and boat people from Vietnam.

Aside from burial grants, the rates of grants payable under the Criminal and Law Enforcement Injuries Compensation Scheme, the Traffic Accident Victims Assistance Scheme and the Emergency Relief Fund were increased in September 1993 to cover the rise in living costs.

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 74 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 comprehensive social security assistance, social security allowance and traffic accident victims assistance payments. During the year, 145

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appeals were heard by the board. Of these, 10 related to the comprehensive social security assistance, 131 to the social security allowance and four to the 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 objective is to rehabilitate offenders through probation supervision, the Community Service Orders Scheme, residential training for young offenders and after-care services with the aim of reintegrating the offenders into the community.

  A probation service is provided in 11 probation offices which serve 10 magistracies, the District Courts and the High Courts. Probation officers make inquiries into the background and home surroundings of offenders, as the court may direct, and of prisoners for consideration of sentence reduction. 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-oriented approach. To promote community involvement in the rehabilitation of offenders, volunteers are recruited to befriend probationers and residents of institutions, and to 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, who is convicted of an offence punishable by imprisonment, to perform unpaid work of benefit to the community and to receive counselling and guidance from a probation officer. The scheme covers the 10 magistracies.

  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 each consist of a remand home and a probation institution for juvenile offenders and youths in need of statutory care and protection. The Pui Yin Juvenile Home is a remand home for boys. 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. Greater emphasis has been placed on group counselling, work with parents, development of volunteerism and participation in community activities among the boys and girls undergoing residential training all with very encouraging results. One of the projects planned and undertaken by the trainees was nominated to represent Hong Kong in the Commonwealth Youth Service Award 1993.

SOCIAL WELFARE

Plans are in hand to improve the residential. and training facilities, including the conversion of a youth centre and hostel into a probation home for girls, building a new workshop block at the 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, two subvented non-governmental organisations also provide hostel, employment, casework and volun- teer services to help ex-offenders and young people with behavioural problems to be reintegrated within the community.

Family and Child 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 problems or to prevent them altogether.

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. A total of 67 family life education workers provide a wide range of family education programmes in the territory. The 1992-93 family life education publicity campaign adopted the main theme of Happy Marriage and Responsible Parenthood, and used a wide variety of publicity media, including television and radio programmes, and booklets on effective parenting. 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 supports social workers in promotional and education work by providing resource materials and audio-visual equipment on loan.

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 people aged under 21; and referrals for schooling, housing, employment and financial assistance.

       As a complement to the casework service, a family aide service is provided by 19 family services centres to develop clients' home management skills and child care techniques and to help families attain self-reliance.

       The home help service, subvented by the government and operated by non-governmental organisations, provides meal services, personal care and household work services to those in need. At the end of the year, there were 73 home help teams.

       Wai On Home, run by the 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 a day relief service for street-sleepers. The department is also 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 Adoption Units are responsible for the local and overseas adoption of orphans, abandoned babies and children available for adoption. The Central Foster Care Unit promotes foster care services in Hong Kong, while the Child Custody Services Unit carries out statutory duties in respect of super- vision or care arising from custody and guardianship matters handled in Family Courts or the High Court. The Child Protective Services Unit caters for abused children. The Working Group on Child Abuse advises the government on measures to tackle the problem of child abuse.

  The Chuk Yuen Children's Reception Centre and the Sha Kok Children's Home provide temporary care to young children who may be abandoned or whose families are unable to provide care.

  The department also runs the Wai Yee Hostel, which is a home for teenage girls with behaviour problems and who are in need of care and protection.

  In addition to the department's work, subvented welfare organisations also provide residential child care services through children's homes, homes and hostels for boys and girls, foster care and small group homes. The 1991 Social Welfare White Paper stipulated that residential services are to be developed on the principle that a family setting is the best environment for the healthy development of a child and should be the preferred choice over an institutional setting, particularly for those under teen-age. While there will continue to be a diversity of options, so that children can be placed in the type of residential facility that best suits them, non-institutional care in the form of foster homes and small group homes will take precedence over institutional care in future developments. In 1993, there was expansion in both foster care places, from 240 to 480 places, and in small group homes, from 17 to 32 homes. Opportunities are also taken to convert existing large children's homes from institutional into non-institutional facilities when the need arises for the reprovisioning of these homes. Two large children's homes run by non-governmental organisations were in the process of being converted into small group homes during the

year.

Child care centres are available for children under the age of six. Such centres must comply with the standards laid down in the Child Care Centres Ordinance and Regulations. They are subject to registration and inspection. At the end of the year, there were 35 778 places in day child care centres and 577 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. Seventy-five day nurseries provide an occasional child care service which is a flexible and temporary form of child care service on a half-day or full-day sessional basis for families who are unable to take care of children for brief periods. Families with a low income and a social need for their children to attend a child care centre, may make use of the Fee Assistance Scheme in meeting nursery fees. A total of 8 550 children were receiving fee assistance at the end of the year.

  The Social Welfare Department operates a telephone hotline service, answering enquiries and providing professional advice to the public on social welfare matters.

Medical Social Service

The Social Welfare Department continues to provide medical social services in public hospitals and clinics to help patients and their families deal with the personal and family problems arising from illness and disability.

SOCIAL WELFARE

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. 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, community support services are provided. These include home help, day care, social and recreational facilities, canteen services, community education and respite care. At the end of 1993, there were 73 home help teams, 140 social centres, 19 multi-service centres, 13 day care centres and 13 respite care places. Financial assistance includes social security assistance and allowance. Housing assistance comprising compassionate rehousing and priority allocation of public housing continues to be available for those eligible. Sheltered housing is provided in private housing flats as well as in public housing estates for 2 725 elderly people who are capable of living independently. To provide timely services to the elderly at risk, two outreaching projects are funded by government subventions.

       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 1993, there were 1 273 hostel places, 6 137 home places and 4716 care-and-attention places.

       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, the Residential Care Home (Elderly Persons) Bill has been introduced in the Legislative Council.

Services for Young People

A wide range of services and activities are aimed at helping young people to become mature, responsible and contributing members of society. The services are designed for young people aged from six to 24 to foster the development of their personality, character, social aptitude, sense of civic responsibility and 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 volunteer groups through its youth offices. Since 1974, the department has been running the Opportunities for Youth Scheme. Every year young people are helped with funds to implement a variety of community service projects to meet specific social needs. Awards are given for outstanding projects to recognise the contributions of participants.

Children and youth centres, operated by subvented non-governmental organisations, serve as focal points for a variety of programmes and activities for the personal and social development of young people. The service is well developed and the provision meets 94 per cent of the demand. Hong Kong's youth population is projected to decline from 27.45 per cent of the general population in 1993-94 to 23.2 per cent in 1999-2000. To achieve cost-effectiveness, there is a need to redistribute resources by reprovisioning existing centres from areas where there is over-provision to newly-developed or redeveloped areas where

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there is a need for new centres. Two combined children and youth centres were opened in 1993 through reprovisioning, making a total of 216 children centres and 216 youth centres.

  Outreaching social work attempts to cater for groups of young people at risk who do not normally participate in organised youth activities. To establish contact with these young people, social workers visit the places they are known to frequent. They provide counselling and guidance and other forms of services to help the young people overcome problems, develop their potential and become socially re-integrated. In 1993, four new outreaching social work teams were established. There were a total of 28 outreaching social work teams serving in priority areas with large youth populations, high population density and high juvenile crime rates.

  All secondary schools are covered by the school social work service. Social workers based in schools identify and help students with personal, behavioural or family-related problems in adjusting to school life. Eighteen additional school social workers were provided in 1993, bringing the total to 168.

  Uniformed organisations offer young people opportunities to join organised activities with progressive training programmes for the development of character and leadership to help them become responsible, self-reliant and caring members of the community. There are eight subvented welfare organisations with over 91 967 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 focussing on development of the potential of young people, attracting a membership of 37 006 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 assist 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. The future development of rehabilitation services is being examined after the publication in 1992 of the Green Paper on rehabilitation entitled Equal Opportunities and Full Participation: A Better Tomorrow for All.

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The Department of Health is responsible for providing immunisation programmes against various communicable diseases and for promoting health education to prevent disabilities. It also provides screening services for the 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 and mentally handicapped, and discharged mental patients. 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 the disabled.

SOCIAL WELFARE

At the end of the year, the Social Welfare Department and non-governmental organisa- tions provided a total of 766 integrated programme places, 987 special child care 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. For disabled adults, there were 2 293 day activity centre places providing day care, daily living skills and work training for the mentally handicapped; 4 575 sheltered workshop places providing employment for disabled persons unable to compete in the open job market; and 2 548 hostel places and 17 supported housing 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 who were in need of care and attention, 339 places were provided in homes and care-and-attention homes for the aged blind. In addition, 200 long-stay care home places, 809 halfway house places and 110 day activity centre places were provided for discharged mental patients. Twenty-one social and recreational centres were provided for all categories of disabled persons.

       The supported employment scheme introduced by the department continues 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, occu- pational therapists and physiotherapists is provided in all rehabilitation day centres and hostels. Other support services include the 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 while they await placement.

The Queen Elizabeth Foundation for the Mentally Handicapped, set up in August 1988, aims 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 appointed by the Governor. During the year, the foundation allocated $9 million in the form of grants or sponsorships to 42 non-governmental organisations and three government departments, enabling them to undertake projects for the benefits of mentally-handicapped persons. The fund stood at $119 million on March 31, 1993.

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 organisations assist in the provision of practical work placements for social work students from these institutions.

The department, through its Lady Trench Training Centre, provides various types of in-service training programmes such as orientation courses for newly-recruited staff, basic social work training for non-professional grade staff, induction training for staff transferred to a new service area and staff development programmes to provide knowledge and skills to help handle the increasingly complicated social problems. During the year, the training centre organised 266 programmes, seminars and workshops for 10 001 participants. It also operates a child care centre for 113 children aged between two and six years, which serves as a training facility for child care personnel.

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  To equip its staff with up-to-date, specialist skills in the various fields of professional practice, the department sponsors experienced members of staff to attend advanced local and overseas training courses and international conferences. During the year, 82 staff attended 38 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 1993, a total of 94 applicants were awarded either full or partial grants. It also provides funding support for other purposes, such as enlisting the services of overseas experts to provide training and consultation, and the printing of resource training materials for social workers.

The Advisory Committee on Social Work Training and Manpower Planning 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. Eight 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 10 other data systems: 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; the Director of Social Welfare Wards of High Court 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 164 non-governmental organisations for the provision of social welfare services in accordance with government policies. Financial assistance for capital and recurrent expenditure is also provided through the Lotteries Fund.

The Evaluation Unit of the department is responsible for monitoring and assessing services provided by the 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 five in-depth evaluations of experi- mental 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.

SOCIAL WELFARE

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 community work aimed at promoting the development of individuals and groups and at fostering a sense of community responsibility.

Commission on Youth

The Commission on Youth was established in February 1990 with members appointed by the Governor. The main objectives were to advise the Governor on matters pertaining to youth, to initiate research, to promote co-operation and co-ordination in the provision of youth services and to serve as a focal liaison point with other international youth organisations for exchange programmes.

In April 1993, the commission completed the task of developing a Charter for Youth. The charter sets out important principles and ideals on youth development; it covers the protection and promotion of young people's interests and outlines the roles of all concerned in promoting youth affairs. To commemorate the formal launching of the charter, a promulgation conference was held on July 22.

The charter operates on a system of subscription, with organisations and individuals interested in promoting youth development becoming subscribers on a voluntary basis. By the end of the year, 332 organisations and 1 203 individuals had become subscribers to the charter.

The commission conducted two studies during the year. These were a study on youth participation in community activities; and on the education and career plans of young people. Working groups were also set up to examine the support system for the territory's youth, underage drinking and the moral values of Hong Kong's young people. To provide essential information for policy-makers and service providers, the commission also updated the publication Youth in Hong Kong - A Statistical Profile.

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The commission has started to build a liaison network with youth and youth-related organisations to facilitate its work and to promote better co-ordination in furthering the welfare of youth.

Committee on the Promotion of Civic Education

The Committee on the Promotion of Civic Education was set up by government in May 1986 to promote civic awareness and responsibility throughout the community. Made up largely of non-government members, the committee advises 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.

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  The committee focussed on the concept of the rule of law and human rights in 1993-94. Its programmes included a four-day Civic Education Exhibition in July featuring human rights; the production of teaching kits for use in secondary schools; and seminars. A territory-wide civic education survey was also conducted to gauge public views on civic education subjects.

  With the help of the Information Services Department, teleline messages on human rights were available free of charge to the public between July and September. A series of 13 radio programmes was produced in co-operation with Commercial Radio to promote key concepts of human rights and the rule of law.

  The committee continued to offer sponsorship under the Community Participation Scheme to voluntary agencies and district civic education bodies to encourage them to organise civic education activities. A total of $1.2 million has been made available for 35 projects in 1993-94.

  The committee continued to liaise with voluntary agencies and district civic education bodies, from whom its work has received strong support.

13

HOUSING

THE public housing programme is well on the way to achieving its objective of providing homes by the turn of the century for all those in need.

      Of the 72 100 public sector flats produced in 1993, 36 700 were rental units and 35 400 were for sale.

half the population

About three million people

                                  now live in subsidised public housing in some 874 000 flats in 286 estates throughout Hong Kong. Some 2.6 million live in 688 000 rental units while some 500 000 live in purchased flats.

      The year saw public housing on a large scale enter its 40th year in Hong Kong, having begun after the Shek Kip Mei squatter fire in December 1953 left 53 000 people homeless. Significantly, 1993 also saw the award of ISO 9001 certification to the authority's Construction Branch.

      The first phase of the 'sandwich' class housing loan scheme was implemented to help middle-income families buy homes. The scheme, offered to 1000 families in 1993, was over-subscribed three-and-a-half times.

      The government continued to provide land for the private sector to sustain a high level of supply of competitively-priced private flats.

      The government estimates that, by 1997, nearly 55 per cent of families in Hong Kong will own their own homes.

The Housing Strategy

The government's Long Term Housing Strategy, on which the public housing programme is based, calls for the Hong Kong Housing Authority and the Hong Kong Housing Society to build a further 175 000 public rental flats and 187 000 public flats for sale between 1993 and the year 2001.

      Of this, the Housing Society, a non-profit-making housing agency, is to produce 26 000 flats.

      These public housing projections do not include the output of 281 000 flats in that period by the private sector, which is forecast to meet about 45 per cent of the overall needs of the community.

      Public housing estates are developed as total living environments and include a wide range of community, commercial and transport facilities.

      There is also a continuing programme to redevelop the older estates, to bring them up to the latest designs and standards.

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  A feature of the public housing effort is the increasing proportion of flats being offered for sale below market prices to those who are eligible, according to certain income criteria. This is in keeping with economic development and the rising aspirations of the people.

Housing Authority

The Housing Authority, which evolved from a number of bodies, was established on April 1, 1973, under the Housing Ordinance.

It was re-organised in April 1988 and given a separate financial identity and autonomy, together with sufficient flexibility to deal with the priorities set by the 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 sector housing, either for rent or ownership, and temporary housing areas.

The authority also manages public housing estates, home ownership courts, temporary housing areas, cottage areas, transit centres, flatted factories and ancillary commercial facilities throughout the territory, and administers the Private Sector Participation Scheme and the Home Purchase Loan Scheme. It acts as the government's agent to clear land, prevent and control squatting, and implement improvements to squatter areas.

The authority is made up of members appointed by the Governor for two-year terms. It is chaired by a non-official, and comprises 20 other non-official members and four official members. Its nine standing committees, on which sit 35 non-official committee members, deal with various aspects of housing policies such as development, building, commercial properties, establishment and finance, home ownership, management and operations, and the allocation and standards of vacant flats. Many of the members of the authority and the committees also serve the Hong Kong community as executive, legislative, urban or regional councillors, or as members of the Heung Yee Kuk, district boards, area committees, mutual aid committees and other government boards and committees. Some members are themselves residents of public housing estates.

An ad hoc committee was set up in November 1993 to conduct an overall review of the provision of housing for the elderly. Three other committees completed or were about to complete their work. The special committee on the clearance of the Kowloon Walled City, established in January 1987, is expected to end its work soon. Two other ad hoc committees completed examining the housing needs of the 'sandwich' class and the review on the policy on housing subsidy.

The authority will continue to provide homes at affordable rents and prices for the public. 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, 1993, the government's capital investment and contribution to housing stood at about $125.9 billion. This comprised permanent capital of $26.3 billion, contribution to domestic housing of $89.2 billion and non-domestic equity of $10.4 billion.

In the 1992-93 financial year, recurrent expenditure on the authority's domestic operations, covering mostly management and maintenance costs, totalled $5,383.7 million, while income from domestic operations was $5,861.6 million, generating a surplus of $477.9 million. However, after paying interest on the government's permanent capital, a deficit of $589.1 million was incurred.

HOUSING

The authority was able partly to offset this deficit from the net income derived from its non-domestic operations which, over the same period, generated a surplus of $609.5 million, after paying to the government interest on its permanent capital and the required dividends.

The authority itself financed capital programmes amounting to $7,851.4 million.

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 tenants moving into public housing could in future choose to live at the minimum internal floor area allocation standard of seven square metres per person with the median rent-to-income ratio not exceeding 18.5 per cent, or at the existing minimum standard of 5.5 square metres per person with the rent-to-income ratio not exceeding 15 per cent.

With rents being charged at $47 per square metre for the newest urban estates and $26 for the newest New Territories estates, public housing tenants pay on average about eight per cent of their income on rent.

      Rents are reviewed every two years and adjusted to take account of rates increases; maintenance and other costs; estate values in terms of location, facilities and services provided; and the tenants' ability to pay.

Housing Subsidy Policy

A modified housing subsidy policy was introduced in April. Under this policy, tenants who have lived in public housing for 10 years or more and whose incomes exceed twice the waiting list income limit, but are less than three times the waiting list income limit, are required to pay 1.5 times net rent plus rates. Only tenants whose incomes exceed three times the waiting list income limit are required to pay double net rent plus rates.

There are some 300 000 households with 10 years' residence in public housing, and 18 per cent of these are required to pay extra rent.

Rent Assistance

Domestic tenants facing financial hardship are granted temporary rent relief under the rent assistance scheme. In 1993, 300 families received assistance under the scheme.

       Those tenants whose rent-to-income ratio exceeds 25 per cent, as a result of an increase in rent or a reduction in household income, may apply for a reduction of rent for a period of six months, renewable for a further six months.

The amount of reduction will be 25 per cent for tenants whose rent-to-income ratio exceeds 25 per cent, and 50 per cent for tenants whose ratio exceeds 33 per cent.

       Tenants who still face financial difficulty after 12 months may seek a transfer to cheaper housing in the same district. They will be granted 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 rent-to-income ratio still exceeds 25 per cent will be entitled to further rent assistance, subject to review every six months.

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Allocation

In 1993, 27 500 new flats and 12 600 vacated flats were let to the various categories of eligible applicants.

  The largest allocation of some 14 500 flats (36 per cent) went to waiting list applicants. Applicants for public housing rentals through the waiting list are considered in the order of their registration and in accordance with their choice of districts. 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 $7,600 for a family of two, to $20,000 for a family of 10 or more. The number of applications at the end of the year stood at 151 000. In addition, there were 19 000 applications on the single-person waiting list, established in January 1985. The income limit for single persons is $4,600.

  The next largest group allocated flats were tenants affected by the comprehensive redevelopment programme (30 per cent), followed by families affected by development clearance (10 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, and com- passionate cases recommended by the Social Welfare Department.

  Computerisation of information on about 3.5 million applicants and tenants now enables housing allocation and duplication checks to be carried out effectively. It also produces useful statistical information.

Housing the Elderly

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. During the year, 1700 people were rehoused under this scheme, bringing to 800 the number of flats allocated under this category.

  Under a separate incentive scheme, families with elderly persons are allocated housing two years ahead of their normal waiting time. So far, 7 500 families have benefited from this scheme.

  Since the introduction of the sheltered housing scheme in 1987, more than 2 000 housing units have been provided for able-bodied elderly persons aged 60 years or over who are self-reliant and independent. A warden service is also provided to deal with emergency situations.

  Cases in which a higher level of health care is required are referred to the Social Welfare Department for transfer to more suitable housing.

Home Ownership Scheme

The Home Ownership Scheme (HOS) was established in 1978 to provide flats for sale at prices below market value to lower and middle-income families and public housing tenants. Since then, 191 800 flats have been sold to eligible families. This figure includes 61 500 flats produced under the complementary Private Sector Participation Scheme (PSPS), which aims to make more use of the resources of the private sector to produce flats for sale at subsidised prices.

  About 45 per cent of the families who bought under the schemes were public housing tenants who were required to surrender their rental flats in return.

HOUSING

       Private sector applicants are not allowed to own domestic property and are subject to a household income limit of $20,000 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.

As an encouragement, public housing tenants are accorded higher priority than private sector applicants in selecting HOS flats. This incentive has been extended to prospective tenants, so that more rental flats will be available for applicants in greater need.

      During the year, the allocation quota of flats for the private sector and public housing rental applicants was changed. Previously, private sector applicants were allocated one third of the flats in each development phase, but this figure was increased to 50 per cent.

      Favourable mortgage terms are provided by 48 financial institutions for the purchase of HOS and PSPS flats, in return for the authority's indemnity against loss in cases of default. This enables purchasers to borrow between 90 and 95 per cent of the flat price, with repayment periods of up to 20 years.

      During the year, the HOS and PSPS schemes were over-subscribed by 12 times. Some 13 300 flats were sold under the HOS scheme, and 5 600 flats under the PSPS scheme. A total of 1 200 flats were sold to eligible public housing rental applicants under the trial scheme allowing the option to rent or buy.

      The prices of flats sold ranged from $441,900 for a flat with a saleable floor area of 37.3 square metres at Yan Shing Court, Fanling, to $1,587,200 for a flat of 59.9 square metres at Fu Keung Court, Wang Tau Hom. Prices were, on average, 43 per cent below market values.

      The annual production of ownership flats will range from around 10 000 to 25 000 flats between 1994 and 1998. Of these, about 45 per cent will be upgraded flats in blocks originally intended for rental housing estates, thus providing a wider choice of flat sizes, standards, locations and prices.

Home Purchase Loan Scheme

      Under the Home Purchase Loan Scheme, lower and middle-income families are given assistance to buy flats in the private sector. In 1993, 570 families benefited.

       Eligible applicants are offered an interest-free loan of $200,000, repayable over the same period as the bank mortgage on the property, up to a maximum of 20 years.

       A new option allows eligible applicants to opt for a monthly subsidy of $2,600 for 36 months, which is not repayable.

        Since the start of the loan scheme in 1988, 8090 loans and 250 subsidies have been granted. As a result, 4 550 public housing units have been recovered for allocation to other families.

Building Projects

      Some 110 000 flats were at various stages of construction during the year, with most of the work being carried out on redevelopment of old housing estates in the urban areas.

       Several phases of work had begun on rebuilding Sau Mau Ping Estate and Tsz Wan Shan Estate in Central Kowloon, while work on estates in Lam Tin and Ko Chiu Road in East Kowloon was well underway. The final phase of the redevelopment of Tsui Ping Estate in Kwun Tong had also started.

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  In Tseung Kwan O new town, not far from Kwun Tong, nearly 10000 flats were under construction.

  In the longer term, the area currently known as Tiu Keng Leng will be cleared to form part of the Tseung Kwan O new town. A total of 53 hectares will be produced to provide homes for 86 000 persons, half of them in public housing estates. The authority has agreed to undertake the site formation work for this area, including the necessary roads and infrastructure. Overall planning for the Tiu Keng Leng project has been completed and clearance will start next year, with completion of the first housing blocks expected in the year 2000.

  Within the urban area, three sites will be developed for public housing on the West Kowloon Central Reclamation. The three separate sites, with a total area of seven hectares, will be developed comprehensively as a single project. The sites are constrained, however, by environmental factors and building height restrictions. Upon full development in 1999, they will house about 17 000 people in 5 250 flats, including 2 430 Home Ownership Scheme units.

  The housing estate at Ma Hang Village, Stanley, in the southern part of Hong Kong, has been designed for development in three phases, with the aim of preserving and enhancing the characteristics of the original settlement and land form. The authority's proposals extend right to the shoreline, to the area around the Tin Hau temple, and will create an extension to the existing heart of Stanley. The focal point of this new development will be the rebuilt Murray House, which will be used as a commercial centre.

The housing projects in the new towns are generally on schedule.

  The development plan for Tung Chung, the newest of the new towns, has been endorsed by the authority. Construction of public housing in Tung Chung will coincide with the work on Phase 1 of the North Lantau Development, which forms part of the new airport core projects. Up to 15000 people will be accommodated in public housing and 5000 people in private housing by late 1997.

Maintenance

 Expenditure on maintenance and improvement works for the year amounted to $2.1 billion, representing an increase of 43 per cent over the previous year.

  Several major improvement programmes were initiated during the year, including the refurbishment of 14900 vacant flats and the upgrading of some commercial centres, at a total cost of $100 million. New and higher standards of refurbishment were introduced.

The improvement programme covering the reinforcement and re-wiring of the elec- trical supply to older blocks is also continuing and $85.6 million worth of electrical reinforcement work was completed within 102 buildings before the summer peak electrical demand.

  Every opportunity is taken to improve the general environment of existing estates, and a programme has started on the extensive environmental upgrading of middle-aged estates. The first estate to receive this treatment, valued at $20 million, was Fuk Loi Estate in Tsuen Wan. At the same time, 30 estates were being redecorated.

  The comprehensive repair programme for older estates is continuing, with structural repairs being completed on 56 blocks during the year.

  To overcome the debonding problem of mosaic tiles used as an external finish for high-rise buildings, a consultancy was appointed to determine suitable survey techniques

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and to implement an action plan to supplement the extensive on-going remedial works programme.

The new comprehensive maintenance planning works system, referred to as CARE (Condition, Appraisal, Repair and Examination), was formally implemented. During the year, 18 estates came within the initial stages of the CARE programme, with extensive condition surveys being undertaken on each estate.

The Maintenance Assessment Scoring System was developed during the year to cover the authority's maintenance work. It aims to assess the performance of contractors and to form a basis for offering more tendering opportunities for those contractors who have done good work and can provide the required quality and service.

Redevelopment

     Redevelopment of the older estates to bring them up to current standards is an integral part of public housing development.

      Since the comprehensive redevelopment programme began in 1988, 225 old blocks have been redeveloped, improving living conditions for 65 000 families. The current five-year rolling redevelopment programme, covering 1993-94 to 1997-98, and involving 156 blocks and 58 000 families, began in May.

Affected tenants are formally notified 18 to 24 months before the clearance dates.

Construction

The first Harmony blocks completed in late 1992 in Tin Yiu Estate and Tin Shui Estate in Tin Shui Wai, Yuen Long, marked the start of a new era in public housing construction. Since then, there has been a continuing effort to enhance the design of the Harmony blocks.

Development studies were carried out to enhance the design through further improvement of the bathroom and kitchen layout, and to provide a better standard of finishes and fittings. Building services layout and pipe routes were also reviewed, and improved and built-in gondolas were introduced to facilitate maintenance to drainage and water supply pipes on external walls. The facades of domestic units in Harmony blocks contracted out after 1994 will have to be constructed of pre-cast units, a move which will further improve both efficiency of the building process and the quality of the finished product.

      To deal effectively with building defects which have been reported and to provide feedback for further enhancement of designs, details and specifications, a defects- monitoring centre was established during the year.

Quality Assurance

      Hong Kong's continuing efforts to improve the design, quality and general living environment of public housing gained further recognition during the year with the certification of the authority's Construction Branch to ISO 9001.

This certification confers international recognition on the branch as an organisation of assessed capability in respect of 'professional services for the planning; design; project management; and contract administration for the construction, maintenance and improve- ment of public housing developments'.

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Through its leadership and encouragement, the authority also helped pave the way for more than 20 building contractors, including those on its own approved list of contractors, to be certified to ISO 9000, raising the overall standard of building construction in the territory.

The attainment of ISO 9000 certification by the construction industry, following audits carried out by the Hong Kong Quality Assurance Agency during the year, clearly demonstrates the progress that has been made in building construction. This is expected to further develop, giving assurance that all objectives pertaining to good professional services are achieved.

PASS System

Since the Performance Assessment Scoring System (PASS), which objectively monitors the performance of building contractors on the authority's projects, went into full operation in April 1991, the benchmark Target Quality Score (TQS) for contractors has been moving upwards to a high of 92 per cent. This indicates that the contractors are achieving better quality.

  As an incentive towards better quality, contractors were selectively invited during the year to tender for new building contracts on the basis of their performance as measured by the scoring system.

Site Safety

Site safety has always been of major concern to the authority and stringent measures are enforced on all its sites in the interest of workers.

  Site safety campaigns have been held in collaboration with the Labour Department and employer and workers' groups with much success, and will continue to be an yearly event.

Management

 Visits to the estates are made regularly by the chairman and members of the authority to meet tenants and community representatives, and exchange views.

  These visits are in addition to regular meetings with the community representatives, either at the authority's headquarters or at other venues. Open meetings of the authority are also held regularly, so that the public may attend and observe the proceedings.

  Tight control is exercised over the cleansing services provided by contractors to ensure that a high standard of service is maintained.

Information Centres

For the benefit of residents of private buildings affected by redevelopment, the authority has 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.

The two information centres, at the Mongkok and Wan Chai District Offices, have proved popular and there are plans to provide a similar service in Tsuen Wan.

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Welfare Services

     At the end of the year, 950 welfare premises in the authority's estates and courts were let for welfare and community services at a concessionary rent of $25 per square metre a month. Non-domestic premises at less popular locations were also let at a fair market rate to community organisations.

      The authority undertakes fitting-out works for some welfare projects and since 1984, 155 welfare projects have been fitted out.

      The estate liaison officer scheme, providing outreaching services to elderly public housing tenants in various estates, has been extended. Under the scheme, housing management staff visit the elderly to offer assistance and encourage them to take part in various activities. Emergency alarm systems for elderly people are also being installed and, by the end of the year, 180 alarm sets had been provided in four estates.

Commercial Properties

The authority manages 1.28 million square metres of commercial space for shops, market stalls, banks, supermarkets, restaurants and flatted factory units. It also provides 65 000 carparks.

      During the year, 14 more shopping centres with 44 000 square metres of lettable floor area, were built.

      The authority's commercial space is let under some 30 300 separate tenancies and generated a rental income of $2.7 billion 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 3 400 graded shops in former resettlement estates. These shops were initially let at very low rents which, despite moderate biennial increases since 1976, remain well below market levels.

      In line with the policy not to subsidise commercial tenants, rents for commercial premises are fixed at market levels. During the year, 534 commercial premises were let by rental tendering, while another 113 premises with a total floor area of 21 200 square metres were let on negotiated terms. Negotiation provides a more flexible approach and assists in attracting anchor tenants, especially those who take up large spaces for the operation of superstores, Chinese restaurants and food courts.

Following the success of a trial scheme under which an entire market was let to a single operator in Yiu On Estate in Ma On Shan, three new markets were let to single operators. These are Fu Heng Market in Tai Po, Wah Kwai Market in Pok Fu Lam and Tin Shui Market in Tin Shui Wai.

Under a further trial scheme, an entire small shopping centre at Yiu Tung Estate in Shau Kei Wan was to be let to a single operator who would be responsible for comprehensive services from leasing to subsequent day-to-day management.

      Improvements to shopping centres continue to play an important role in enhancing the trading potential of the shopping facilities. Such work was underway at 15 shopping centres. In particular, major upgrading schemes were being undertaken at two large district shopping centres at Lok Fu and Wong Tai Sin.

      A co-ordinated strategy for the improvement of older shopping centres has been formulated and a five-year programme has been drawn up for the upgrading of 25 to 30 selected centres.

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Parking

 Since 1987, carparks and roads in 55 estates have been placed under the management of three private companies. In view of its success, the privatisation scheme will be extended to the authority's other rental estates.

  Illegal parking in public housing estates remains a problem requiring constant attention. During the year, 18 800 offenders were prosecuted, resulting in fines totalling $5.3 million. Some 77 000 vehicles were impounded, costing the owners $15.5 million in charges.

  As a further means to combat illegal parking, a recently approved fixed penalty ticket system will be introduced in 1994.

Squatter Control

As a result of rehousing through clearance and the waiting list, the squatter population has been reduced to 42 500 in the urban area and 223 000 in the New Territories.

  The 1982 squatter structure survey provides a baseline for control of new squatting on government land and private agricultural land. Squatter control has been effectively maintained by carrying out daily patrols and regular hut-to-hut checks.

  Meanwhile, the authority continues to undertake repairs and maintenance of services and facilities provided under the squatter area improvement programme. It is also responsible for settling electricity charges for public lights installed under this programme.

Squatter Clearance

 During the year, 270 hectares of land were cleared, with 11000 affected people given permanent rehousing and 6500 given temporary rehousing. Some 300 industrial, commercial and agricultural undertakings affected by the clearances were awarded ex gratia allowances.

  On the advice of the Geotechnical Engineering Office of the Civil Engineering Department, which carried out re-inspections of 70 villages in the New Territories, a non-development clearance programme was drawn up. Some 1200 persons living in squatter huts on slopes vulnerable to landslips, in the event of heavy rain, were provided with either permanent or temporary housing.

  A total of 2 000 people who lost their homes as a result of fires or natural disasters were given either permanent or temporary housing.

Temporary Housing

Temporary Housing Areas (THAS) consist of single or two-storey structures built to re-house people not yet eligible for permanent public housing upon clearance, fires or natural disasters.

There were 52 THAs in the territory, housing some 62 000 persons. In the next three years, 37 THAs will be cleared and 48 500 persons living in them will be rehoused.

The government aims to offer flats to all THA residents by 1997. By 1996, all THAs built before 1984 should be cleared.

Transit Centres

There were eight transit centres in the territory, with a capacity for 1 300 people. Transit centres provide short-term emergency accommodation for the homeless and victims of fires or natural disasters.

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Cottage Areas

There were six cottage areas in the territory, housing 9 900 people. The largest one, at Tiu Keng Leng, is due for clearance.

Private Housing

In 1993, some 27 700 residential flats were built by the private sector. To increase the housing supply by the private sector, the government announced plans in October to provide additional staff for the Lands Department in 1994 to speed up the processing of lease modifications and land exchanges. In this way, an extra 2 000 flats, on top of the current 15 000 from this category, should reach the market each year.

      To combat speculation activities in the property market, the administration introduced a series of measures, including stringent requirements on the presale of flats under construction and amendments to the Stamp Duty Ordinance to require the payment of stamp duty on all sale and purchase agreements for residential properties. Some local banks have tightened their mortgage lending policies. Residential property prices have steadied since August.

'Sandwich' Class Housing Scheme

A new middle-income housing scheme for the 'sandwich' class was introduced during the year, aiming to help families that are neither eligible for public housing nor able to afford to buy their own homes in the private sector.

      The scheme, operated by the Housing Society, comprises a short-term and long-term programme.

       Under the short-term scheme, a low-interest loan fund of $2 billion was set up to provide beneficiaries with a one-off loan as part of a down-payment for a flat.

       In August, the first phase of the loan scheme was launched, offering to 1 000 beneficiaries low-interest loans of 20 per cent of the sale price of a flat, up to a limit of $500,000. Repayment at a low interest rate would only begin in the fourth year, when the beneficiary's financial position has improved.

The applicants had to have at least seven years' continuous residence in Hong Kong and the total monthly family income had to be within the range of $20,001-$40,000, among other requirements.

A total of 3 435 applications were received.

Under the long-term scheme, land is to be given to the Housing Society at a con- cessionary premium to build flats for sale to the 'sandwich' class at affordable prices.

Six sites were earmarked under the 1993-94 land disposal programme for this purpose. These sites are expected to produce about 5 000 flats for sale by 1996-97, with the first flats available in 1995.

Rent Control in the Private Sector

Statutory controls on rents and security of tenure in Hong Kong date back to 1921. The governing legislation is the Landlord and Tenant (Consolidation) Ordinance. Parts I and II of the ordinance apply controls over 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.

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  The ordinance provides that, 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. It also operates a scheme under which rent officers attend District Offices on certain days each week to deal with referred cases and answer enquiries on landlord and tenant matters.

  The legislation is kept under review to improve its operation and to achieve the objective, recommended in 1981 by the Committee of Review, Landlord and Tenant (Consolidation) Ordinance and endorsed by the government, that as soon as circumstances permit, rent controls should be phased out. To this end, the ordinance was amended in July 1993, principally to allow controlled rents under Parts I and II to increase progressively up to market levels, so that rent controls can be removed by the end of 1996. However, security of tenure under Part IV will continue to apply.

Pre-war Premises

 Legislation controlling rents and providing security of tenure for pre-war premises was introduced immediately after World War Two. In 1947, it was embodied in the Landlord and Tenant Ordinance and has since been re-enacted as Part I of the Landlord and Tenant (Consolidation) Ordinance.

  Part I previously applied to both domestic and business premises, but 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 (that is, the rent payable, on an unfurnished basis, on or most recently before December 25, 1941). The rent lawfully chargeable under the ordinance is the permitted rent, which cannot exceed the prevailing market rent of the premises.

  In order to implement the policy of phasing out rent controls, the legislation was amended in July 1993 to allow permitted rents to be increased to 55 times the standard rent of the premises. The multiplier will be increased to 65 in July 1994, to 75 in July 1995 and to 85 in July 1996. In addition, the legislation provides that the new rent shall not be less than a specified percentage of the prevailing market rent. The minimum percentage has initially been set at 60 per cent but will be adjusted upwards to 70 per cent in July 1994, to 80 per cent in July 1995, and to 90 per cent in July 1996. The Commissioner of Rating and Valuation is empowered to certify the standard rent and the prevailing market rent.

  The legislation provides for premises to be excluded from control if they are to be redeveloped, and generally, possession is subject to compensation being paid 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

Apart from the period between 1966 and 1970, comprehensive legislation to control rent increases in post-war domestic premises has been in force in one form or another since

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1963. 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, or 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 less than 75 per cent of the prevailing market rent, the permitted increase will be the amount necessary to bring the new rent up to that percentage of the prevailing market rent. The minimum percentage will be increased in stages to 80 per cent, 85 per cent and 90 per cent in the month of July in 1994, 1995 and 1996, respectively, to allow rent controls to be phased out by the end of 1996. Both the landlord and tenant may apply to the Commissioner for a review of his certificate and may also 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 control rents. Under the legislation, 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.

      Parts II and IV of the ordinance provide for the payment of statutory compensation to tenants dispossessed by the rebuilding of premises. Since July 1993, the basis of compensation has been revised to a multiple of 1.7 times the current rateable value of the concerned property.

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A CONSULTATION document on the future development pattern of Hong Kong, outlining options for the territory's growth up to the year 2011, was published in September.

  The 'Territorial Development Strategy Review - Development Options' reviews the long-term land use, environmental and transport planning framework for the territory, taking into consideration Hong Kong's increasing integration with the Pearl River Delta and other parts of Southern China. The preferred development pattern will be finalised in 1994.

The year 1993 marked the 20th anniversary of new town development in Hong Kong. To date, over 8 800 hectares of land have been formed for the new towns, where as many as 2.5 million people live. Work has begun on a ninth new town at Tung Chung on Lantau.

Torrential rain brought by Typhoon Dot in September and Typhoon Ira in November caused serious flooding in parts of the territory, particularly in the northern New Territories.

Illegal land use, including the haphazard conversion of farmland into storage and dumping sites, has aggravated the flooding problem.

The government announced in October the setting up of a task force to clean up the New Territories over the next decade. It will take tougher enforcement action against unauthorised land use and undertake major improvement works.

The government, which has drawn up a comprehensive programme to reduce flood risks, is also looking at how to improve flood forecasting and warning capabilities.

The Organisational Framework

The primary objectives of the government's lands and works policies are to ensure an adequate supply of land to meet the short-term and long-term needs of the public and private sectors, to optimise the use of land within the framework of land use zoning and development strategies, and to ensure co-ordinated development in infrastructure and buildings.

Policy responsibility for land, private development and the implementation of the public works programme rests with the Planning, Environment and Lands Branch, and the Works Branch, each headed by a policy secretary. Both secretaries are members of the Land Development Policy Committee, which is chaired by the Chief Secretary and is responsible for overseeing all aspects of the physical development of the territory and for giving broad approval to all major proposals affecting the development or planned use of land.

LAND, PUBLIC WORKS AND UTILITIES

The Secretary for Planning, Environment and Lands is chairman of the Development Progress Committee and the Port Progress Committee. These two committees are responsible for monitoring the general progress of the physical development of the territory, as well as considering and approving detailed planning briefs, layouts and development plans. He is also chairman of the Town Planning Board, and has policy responsibility for conservation.

In addition to his policy functions, the Secretary for Planning, Environment and Lands oversees the operation of the Buildings Department, Drainage Services Department, Environmental Protection Department, Lands Department and Planning Department, as well as the Land Registry, which is operated on a trading fund basis. He also oversees part of the work of the Agriculture and Fisheries Department, Civil Engineering Department, Electrical and Mechanical Services Department, Marine Department and Territory Development Department.

The Secretary for Works oversees, and has policy responsibility for, the operation and works agency activities of the Architectural Services Department, Civil Engineering Depart- ment, Drainage Services Department, Electrical and Mechanical Services Department, Highways Department, Territory Development Department and Water Supplies Depart- ment. The New Airport Projects Co-ordination Office (NAPCO) was set up in February 1991 under the Secretary for Works to co-ordinate the implementation of the Airport Core Programme (ACP).

Planning

Given the limited land resources in Hong Kong, it is a great challenge to plan for the competing demands of housing, commerce, industry, transportation and the utilities, as well as for recreation, education, medical and health care, and other community facilities.

Town planning is carried out by the Planning Department under policy directives from the Planning, Environment and Lands Branch. The department comprises two functional units: the Territorial and Sub-Regional Planning Branch and the District Planning Branch.

During the year, the department was involved with the drafting of a White Bill for the new Planning Ordinance; updating and reviewing the Territorial Development Strategy, the Northwest and Southwest New Territories Sub-Regional Development Strategies and the Hong Kong Planning Standards and Guidelines; and follow-up work on the Port and Airport Development Strategy, the Metroplan Selected Strategy, and the Rural Planning and Improvement Strategy.

It was also engaged in forward planning and development control for the districts, including co-ordination of various urban renewal efforts; and in undertaking enforcement action against unauthorised developments in designated rural areas.

Review of Town Planning Ordinance

The Town Planning Ordinance was first enacted in 1939. In 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 to meet Hong Kong's changing circumstances.

Public consultation on the comprehensive review of the Town Planning Ordinance was carried out in 1992. As part of the comprehensive review, a special committee was set up to

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consider specifically the complex and contentious issue of compensation and betterment arising from planning actions. After careful consideration of the submissions and views from various sectors, the special committee completed its work and submitted a report to the Governor in the same year.

  The administration completed analysis of the public comments received and the recommendations of the special committee. Proposals for the new Planning Ordinance have been drawn up. A White Bill is being drafted and will be published for further public consultation in 1994.

Hong Kong Planning Standards and Guidelines

The Hong Kong Planning Standards and Guidelines is a government manual of planning criteria and guidelines for determining the quantity, scale, location and site requirements of various land uses and facilities. The document is applied to planning studies, preparation or revision of town plans and development control. It is constantly under review to take account of changes in government policies, demographic characteristics as well as social and economic trends. Major work undertaken during the year included the formulation and revision of planning standards and guidelines for social welfare facilities, utility services, potentially hazardous installations as well as landscaping and conservation.

To promote public awareness of planning and to facilitate the use of the manual by non-government bodies, the document has been made available in various libraries. The document is also available for sale to the public, on a chapter by chapter basis.

Territorial Development Strategy

The Territorial Development Strategy (TDS) is the highest tier in the hierarchy of town plans in Hong Kong. It provides a broad, long-term framework on land use, transport and environmental matters for the planning and development of the territory. It aims to facilitate the continued growth of Hong Kong 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 in China.

  The TDS review consists of three main streams of work. The first stream comprised appraisal and review studies, including identification and assessment of goals and objectives, key issues, development constraints and opportunities, evaluation criteria, and sectoral land use studies. The latter studies covered industry, housing, offices, recreation, rural land, landscaping, conservation and the environment. The second stream comprised formulation and evaluation of TDS development options on the basis of the results of the first stream. These two streams have been completed.

  The result was the Territorial Development Strategy Review - Development Options, published in September for public consultation.

  In the formulation of the TDS development options, which cover a time frame up to 2011, two development scenarios have been postulated to take account of the development in China. The first scenario assumes the Pearl River Delta area as Hong Kong's primary economic hinterland, while the second scenario includes both the Pearl River Delta area and some inner provinces of China as Hong Kong's economic hinterland.

LAND, PUBLIC WORKS AND UTILITIES

The review has identified two major directions of growth in Hong Kong. First, there is the east to west development axis, comprising the new port and airport facilities on North Lantau and the Western Harbour, plus the Metroplan proposals in the downtown area.

      Second, with the rapid development along the east bank of the Pearl River and the Shenzhen Special Economic Zone, a southeast to northwest development axis from Hong Kong to Guangzhou is also gradually emerging.

Based on the broad development scenarios and directions of growth, six development options have been formulated on the basis of varying rates of economic growth, varying demand and supply of land for different uses, and varying roles of the public and private sectors as development agents.

The third stream of the TDS review will consist of the production of a recommended development strategy and a medium-term implementation plan. The TDS review is expected to be completed in 1994.

Sub-regional Development Strategies

The Sub-regional Development Strategies serve as a bridge between the TDS and district plans. They translate long-term, broad-brush territorial goals into district planning objectives for the five sub-regions of Hong Kong the Metro area, Northeast New Territories (NENT), Southeast New Territories (SENT), Northwest New Territories (NWNT) and Southwest New Territories (SWNT).

The Metroplan Selected Strategy was approved by the Governor-in-Council in 1991 to provide a planning framework for public and private sector development. 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 follow up the Metroplan recommendations, work has started, with input from consultants, on a series of development statements for districts including West Kowloon, Southeast Kowloon (including the Hong Kong International Airport site), Tsuen Wan-Kwai Tsing, and Hong Kong Island West. A consultancy study has also been undertaken 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 first three studies were largely completed in 1993. The preparation of the Hong Kong Island West Development Statement, which commenced in late 1993, is expected to be completed in 1994.

      Following the government's decision in 1989 on the Port and Airport Development Strategy (PADS), 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 strategic development framework on land use, transport and the environment for the target year 2011.

      An Interim Recommended Strategy on the NWNT Development Strategy is being formulated after examining the various development options. Strategic growth areas have also been identified. However, a recommended strategy cannot be finalised until the recommendations of the other territorial studies, such as the TDS, are ready. In the interim, existing Development Permission Area (DPA) Plans are required to be replaced by Outline Zoning Plans (ÖZPs) under the Town Planning (Amendment) Ordinance 1991. In

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order to provide a planning context for the preparation of these OZPS, the NWNT Development Statement Study has been commissioned. This study has produced Recom- mended Outline Development Plans, which will provide input in the preparation of OZPs in the rural NWNT.

  An Interim Recommended Strategy has been formulated for the SWNT. It proposes that urban-type development be concentrated in North Lantau and the existing centres. Countryside areas will be conserved by the extension of country parks, and the designation of coastal and landscape protection areas. Suitable areas have been identified for recreation and tourism development in the sub-region. The strategy will be reviewed when the results of the TDS are available in 1994, before the SWNT Development Strategy is finalised.

  Work on the NENT Development Strategy Review commenced in September 1993 to review current issues and formulate an up-to-date strategy for the sub-region. Results are expected to be available by early 1995. The SENT Development Strategy Review will commence in due course.

District Planning

Development projects are implemented in accordance with statutory or departmental district plans. These plans aim to regulate and provide guidance to development in terms of land use, building density and development characteristics, to ensure that they are in line with the planning objectives of the districts.

Statutory Planning

 Statutory plans are prepared and published by the Town Planning Board (TPB) under the provisions of the Town Planning Ordinance. There are two types of statutory plans: Outline Zoning Plans (OZPs) and Development Permission Area Plans (DPA plans).

  In 1993, one new OZP was published and 29 existing plans were amended by the TPB. In the same period, four new DPA plans were published and seven amended. At the end of the year, there were a total of 51 OZPs and 35 DPA plans.

  The OZPs are prepared for existing and potential urban areas and show the proposed land uses, specific development restrictions within respective land use zones, and major road and other transport systems of individual planning scheme areas.

  DPA plans have been prepared after the enactment of the Town Planning (Amendment) Ordinance 1991 for areas not previously covered by OZPs. So far, they have been prepared mainly for rural areas in the New Territories. DPA plans provide interim planning control and development guidance for selected areas, pending the preparation of OZPs within three years. While DPA plans may also indicate land use zones, the zonings are not comprehensive and there are many 'unspecified' areas where planning permission is required for developments other than those listed as always permitted. Development without the necessary planning permission will constitute an unauthorised development and will be subject to enforcement. The provisions for enforcement will continue to be applicable in the subject areas after the DPA plans are replaced by OZPs.

  Under the provisions of the ordinance, any person affected by the statutory plans can make objections to the TPB. DPA plans are subject to the same publication and objection hearing procedures as OZPs.

  During the year, a total of 96 objections to the statutory plans were lodged and 74 objections were considered by the TPB.

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       Attached to each statutory plan is a schedule of notes showing the uses which are always permitted in particular zones and other uses for which the TPB's permission must be sought. The provision for application for planning permission allows flexibility in land use planning and better control of development, to meet community needs and changing circumstances.

       Under the provisions of the ordinance, an applicant who is aggrieved by a decision of the TPB may apply for a review of its decision. During the year, the board considered 735 applications for planning permission and reviewed 97 applications, compared to 608 and 96 applications, respectively, in 1992.

       The Town Planning Appeal Board, which was set up in 1991, deals with appeals lodged by applicants who feel aggrieved by the decisions of the TPB upon review of their planning applications. During the year, 20 appeal cases were lodged. A total of 11 cases were heard by the appeal board, all of which were dismissed.

       The TPB has promulgated 12 sets of guidelines for applications for various types of development. These are available to the public.

Departmental Plans

Apart from statutory plans, the Planning Department also prepares departmental Outline Development Plans (ODP) and Layout Plans (LP) for individual districts or parts of districts, to show the planned land uses, development restrictions and transport network in greater detail. These plans serve as a guide for land formation, implementation of public work projects as well as land sales and allocations. At the end of the year, there were a total of 32 ODPs and 246 LPs.

Enforcement

According to the Town Planning Ordinance, no person should undertake or continue development in a development permission area unless it is an existing use, or is permitted under the DPA plan, or has been approved by the TPB. Any development that does not satisfy any of these criteria is an unauthorised development. The Director of Planning can serve notices on the respective land owners and occupiers, requiring the unauthorised development to be discontinued by a specified date or demanding a reinstatement of the land. If the requirements of the notices are not complied with, the Director can initiate prosecution proceedings.

Frequent patrols were undertaken during the year within the DPAs by patrol teams established in the Planning Department. The teams also carried out detailed site inspections on suspected unauthorised developments. Most of the unauthorised uses were related to pond filling; site formation; open storage of vehicles, containers and construction materials as well as vehicle repair workshops. Overall, 540 warning letters for 91 cases, 503 enforcement notices for 73 cases, 15 stop notices for three cases and four reinstatement notices for one case were served in 1993. Prosecution was initiated with respect to 16 cases and 14 defendants in eight cases were found guilty.

Rural Planning and Improvement Strategy

The Rural Planning and Improvement Strategy (RPIS) aims to improve the quality of life in the rural areas of the New Territories. It is implemented at both strategic and district levels.

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  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 private investments. In this regard, a number of reviews and studies have been, or are being, undertaken. They include the study on better utilisation of agricultural land and the review of the rural improvement concept.

At the district level, improvement projects are undertaken under the rural development programmes. These 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 rural development programmes are overseen and monitored by the Rural Development Steering Committee, while the overall policy and development management aspects of the RPIS are monitored by the RPIS Monitoring Group.

New Towns and Rural Townships

The 20th anniversary of new town development in Hong Kong saw continued expansion in this area. This took the form of additional land formation, especially in the newer generation of new towns such as Tseung Kwan O and Tung Chung, and improvements to infrastructure and community facilities.

The extensive and rapid growth in the new towns has carried over to adjacent rural areas and even to the old urban areas. They are providing a new reference standard for future developments.

The over 8 800 hectares of land that have been formed for new town development is anticipated to increase by about 40 per cent when all the new towns are fully developed.

  The quality of life for the 2.5 million new town residents has been improved. With careful planning and landscaping, the scenic assets and greenery in the new towns have generally been preserved or improved, along with some of the historic locations and civic heritage. A wealth of opportunities for recreation, leisure and culture is also available through the provision of town parks and open spaces, the generous reserve of green belts, active afforestation and planting, the provision of sports complexes, and recreation and cultural centres. Residents have a wide range of choices to suit their individual lifestyles.

The environmental impacts of the massive developments were carefully studied before the projects were launched. Air and noise pollution has been largely eliminated by landscaping works, buffer zones, attention to detail in building orientation and spacing. A careful mix of strategically positioned high-rise buildings with low-density developments blends easily with the natural landscape. These are often enhanced by local open spaces, creative use of river banks and water features, amenity areas and roadside planting. About five million trees have been planted, averaging two trees for every new town resident.

The new towns are served by a network of over 700 kilometres of roads which provide efficient traffic circulation and easy access to the old urban areas. Depending on the destinations, commuters also have alternative means of transport with the Mass Transit Railway, the Light Rail System, the Kowloon-Canton Railway, buses, ferries and taxis.

LAND, PUBLIC WORKS AND UTILITIES

       The sewage from the immense developments is conveyed by over 230 kilometres of trunk sewers to treatment plants installed in the respective new towns. Domestic and industrial discharge, topography and the ecology of the receiving waters have been taken into consideration.

       The new towns are served by over 500 schools, 13 hospitals with over 8 400 beds, a large number of clinics and ambulance depots, and facilities for the aged, the young and the handicapped. There are 47 post offices catering for communications needs and over 100 markets supplying daily necessities. The provision of these community facilities and services, which grow with the towns, add to the social cohesion and civic pride of the new town communities.

With the continuing improvements to facilities, it is expected that more people will be attracted to make their homes in the new towns. The number of residents is expected to grow to the design capacity of 3.5 million people. The new towns symbolise the government's commitment to provide a sound basis for the further growth and prosperity of the territory. While each new town has an atmosphere and a character of its own, there is a common theme: a strong engineering, architectural, planning and landscaping framework is there to provide the basis and flexibility for sustained development and a closely-knit social fabric.

       The experience gained in 20 years of new town development was shared with overseas delegates in September at the New Town Experience Conference, co-hosted by a local organising committee, supported by the government and local professional and develop- ment institutions, and the International Urban Development Association.

Tsuen Wan

Tsuen Wan new town embraces the areas of Tsuen Wan, Kwai Chung and Tsing Yi Island. Its population is expected to stabilise over the next 10 years at around 720 000. While new development and redevelopment continues, the gradual reduction in family sizes and increased provision of larger flats will result in a decrease in population in some areas, resulting in no overall increase.

       In addition to the district's historic elements, the new town is characterised by the location of Hong Kong's container terminals in its midst in the Kwai Chung area. In September, the first berth of the new Container Terminal 8 (CT8) was commissioned. Completion of CT8 development is expected by March 1995. Container Terminal 9 (CT9) is planned for Southeast Tsing Yi. Detailed design for the duplicate Tsing Yi South Bridge has been finalised and the bridge's completion is tied to the opening of the first berth of CT9.

       Major highway projects will further extend and reinforce the principal road network. In Kwai Chung, the completion of improvements to Kwai Chung Road South and Container Port Road has substantially benefited the traffic conditions along the Kwai Chung Road Corridor between Castle Peak Road and Mei Foo Bridge. Road improvement works to Hing Fong Road and Texaco Road (Phase II), and the realignment and dualling of Castle Peak Road in Tsuen Wan Area 2 are progressing satisfactorily.

School children in the new town will have more choices of conveniently located schools with the addition of the Shek Yam Estate primary school in Kwai Chung and the Cheung Hang Estate primary school in Tsing Yi. The indoor recreation centres in Wai Tsuen Road, Tsuen Wan and Lai Cho Road, Kwai Chung will be welcomed by a wide range of

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age groups. The completion of the sub-divisional fire station in Tsing Yi will cope with the future development there. Also under construction are the Tak Wah Park Phase II, the Tsing Yi Town Park Phase II and a divisional fire station at Lai King.

Sha Tin

Sha Tin new town is, to a large extent, complete and already home to over half a million people. Sha Tin, well known for its planning and integrated development, is situated at the head of Tolo Harbour.

The final reclamation contract at Ma On Shan, to be completed by early 1994, will add 23 hectares of land, boosting the total to over 1 850 hectares. Work on the last section of the primary road link to Ma On Shan Town Centre started in August and is scheduled for completion in 1996.

The programme to improve conditions in the many old villages in and around Sha Tin continued during the year. The village improvement schemes for Fo Tan and Tai Shui Hang were completed, and the combined scheme for the villages of Hin Tin, Sheung Keng Hau and Ha Keng Hau was in progress.

Community facilities were being reviewed for this mature new town, with additional schools added during the year.

The water quality in Shing Mun River and Tolo Harbour is expected to continue improving, with the completion in mid-1993 of the scheme to export the effluent from the Sha Tin sewage treatment works to the Kai Tak Nullah.

Tai Po

In the last 20 years, Tai Po has grown from a small market town of 25 000 into a new town with a population of 263 000, accommodated in 1 260 hectares of development area.

Most of the new town's engineering infrastructure is in place. Its infrastructure was further improved by the completion of several pedestrian bridges and subways. A further expansion of the Tai Po sewage treatment works was in progress to cater for the remaining development in the town area and the industrial estate.

  Construction of the Nethersole Hospital started in April, while work on the Tai Po Convalescent/Infirmary Hospital started in September. On completion of these two hospitals, the needs of the region will be adequately met with a combined capacity of 1 662 beds in 1997.

Fanling and Sheung Shui

Fanling and Sheung Shui, just a few kilometres from China, have grown from a group of villages in 1973 to a town of 164 000 people. Their combined population is expected to increase to 215 000 by the turn of the century.

During the year, 26 hectares of land were formed for development, in addition to the nearly 500 hectares already produced for various uses. Flood control measures continued with the completion of the training of a section of the River Indus Minor and the rehabilitation of a moat at the village of Sheung Shui Tsuen.

The school building programme continued, while the Ta Kwu Ling Rural Centre was completed. Construction of the Regional Council's market complex at Shek Wu Hui was in progress. Design work on the North District Hospital started and construction will begin in 1994.

Previous page: Tallest of the tall, Central Plaza dominates the skyline on Hong Kong Island.

     Above and right: Art deco influences lend elegance to the interior of Central Plaza.

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Left: Newly-completed, Entertainment Building rises on the prime Central site of its former namesake. Below: Citybank Tower reflects the changing face of Central.

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Public housing has won many accolades for outstanding design. A recent award- winner was the commercial complex at the Housing Authority's Kwong Yuen Estate in Sha Tin (above and left). Next page: Nine Queen's Road Central makes a striking new addition to the downtown area.

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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. Up to late 1993, about 1 000 hectares of land had been provided by the government and the private sector for development.

About 70 per cent of the town's population of some 430 000 live in public housing developments, which comprise 11 public rental estates and 14 home ownership and private sector participation schemes. Within the next five years, three more home ownership and private sector participation schemes will be developed to accommodate an additional 23 000 people. Together with some low-density private housing developments along the southeastern coast, the new town will provide homes for about 460 000 people by the mid-1990s.

      A marina was substantially completed along the southeastern coast of the town during the year. This private development consists of 19 residential buildings, hotels, shops and recreational facilities, including berths for 300 boats.

Light manufacturing industries, including plastics, garments, metal, electronics and textiles, dominate in Tuen Mun. 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. Provision has been made for its future extension within the Tuen Mun region.

       A 125-hectare site in western Tuen Mun has been earmarked for special industries and a terminal for river trade with China to be developed by the private sector. Reclamation work for the special industry area is scheduled to commence in 1994. In late 1993, a planning and engineering feasibility study was completed for an even larger reclamation to the north of Tap Shek Kok in Tuen Mun West, for both deep waterfront industries and cargo-working terminal development. Construction work is about to begin on a new thermal power station, with a 5 000MW capacity, at Black Point.

Yuen Long, Tin Shui Wai and the Northwestern New Territories

Yuen Long town was first developed in the early 1970s. Its population, which stood at 120 000 at the end of the year, is expected to grow to 140 000 early in the next decade.

Development is spreading to the Tuen Mun-Yuen Long Corridor. The rural area is being rejuvenated, with new infrastructure providing for improved rural development.

To keep pace with the rapid development, five major infrastructure contracts in Tin Shui Wai were completed during the year, while another is in progress. Phased completion of these contracts provide access and service facilities to private and public housing developments.

       Land formation for the first stage of the Light Rail Transit link to Tin Shui Wai was completed in late 1992 and train services commenced in early 1993. Both the Tin Shui Wai light rail routes to Yuen Long and Tuen Mun and the new town itself were officially opened by the Governor on March 26.

The two public housing estates, Tin Yiu Estate and Tin Shui Estate, are being completed in phases. The first residents moved into their new flats less than five years after major engineering works started in late 1987. They were followed shortly afterwards by the

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residents of the private development, Kingswood Villa. A third public housing develop- ment will commence in early 1994. Upon 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 the population intake.

The first three parks to be developed in Tin Shui Wai opened to the public in March. The largest, forming a centrepiece for the town, was Phase One of the Tin Shui Wai District Park. The completion of large-scale roadside landscaping works contributed greatly to the greening of the town.

   Long Tin Road and Long Ping Road, which connect the southeast of Tin Shui Wai to Yuen Long, were completed in early 1992. The Tuen Mun-Yuen Long Eastern Corridor was opened to traffic in July 1993. Construction of the Yuen Long Southern By-Pass and the Tin Shui Wai West Access was continuing. As these major roads move to completion, the traffic around this area will improve progressively.

   For the disposal of sewage from existing and future developments, the Northwest New Territories Sewerage Scheme, comprising a sewage treatment plant, pumping station, nine-kilometre sewer tunnel and 3.1-kilometre submarine outfall, was commissioned early in the year. The $1.1 billion scheme represents the culmination of 10 years of planning and construction, and bears testimony to the government's effort to combat pollution, particularly to protect the ecology of the Deep Bay area.

The large tracts of low-lying land to the north and west of Yuen Long are particularly susceptible to flooding during heavy rains. A series of major flood prevention projects are planned to solve this problem and the year under review marked the commencement of another series of flood control works in the low-lying areas.

Tseung Kwan O and Sai Kung

The development of Tseung Kwan O new town, which started in 1982, is divided into three phases. The major part of the new development areas will be formed by reclaiming Tseung Kwan O Bay. About 66 million cubic metres of fill material will be required to complete the whole reclamation. The Phase I area has been substantially completed. Reclamation for the other phases has started, with the drawn-up programme extending beyond the year 2000. The population of the new town, which was 127 000 at the end of the year, will reach over 400 000 upon full development by 2010.

   About 420 hectares of land have been formed at Tseung Kwan O new town. Engineering infrastructure has been provided to cater for private and public housing and the development of community facilities. Four public rental estates, six home ownership schemes and three private sector participation schemes have been occupied. More public housing and private sector development is on the way. Reclamation of the town centre area, currently in progress, is expected to be completed by the end of 1999.

   Work continues for the provision of land and services for the Tseung Kwan O Industrial Estate. Upon completion in early 1996, 71 hectares of land will be available for industrial development. Reclamation is also in progress to develop the southern part of Siu Chik Sha for industrial use.

   In preparation for further industrial development, a plan is being drawn up to develop a 100-hectare site to the south of Tseung Kwan O for deep waterfront industries and potentially hazardous installations.

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Construction work is underway on the first major district open space in Tseung Kwan O, near the Po Lam housing estate. On completion in early 1994, the project will provide extensive sports facilities and sitting-out areas.

At Sai Kung, reclamation of Sai Kung Creek is in progress to provide land in 1994 for a rural public housing site.

Islands District

Hong Kong's ninth new town is beginning to rise at Tung Chung and Tai Ho on northern Lantau Island, to provide a supporting community for the new airport at nearby Chek Lap Kok.

A comprehensive development - incorporating residential, industrial and commercial facilities and all the necessary supporting infrastructure - is being designed to modern international standards.

The new town will comprise about 760 hectares of land. As well as playing a pivotal role at the gateway to Hong Kong, it will respond to the need for further development space. The contract for the first phase of the development at Tung Chung was in progress during

the year.

The new town will comprise two discrete urban development areas at Tung Chung and Tai Ho, with proposed populations of 150 000 and 50 000, respectively, by the year 2011. Residential and commercial developments will be 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 will provide the retail, commercial and cultural core of the new town. Other necessary retail and commercial facilities will be distributed in the 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 centre, a sewage treatment works centre, 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, 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 work, involving substantial reclama- tion, is in progress.

Elsewhere, the design of the North Lantau sewage treatment works was nearing completion. Work is expected to commence on site in 1994, and is scheduled for completion in 1996.

Improvements to the living environment and facilities for residents and visitors to the Islands District continued during 1993.

In Cheung Chau, site clearance for the rural public housing estate and Home Ownership Scheme in Sin Yan Tseng had started, with site formation work to be completed in mid-1995. This rural public housing development, planned for completion in 1998, will provide about 400 housing units for some 1 550 residents.

       Foundation work for the first rural public housing estate on Peng Chau was completed and building works began in mid-1993. Planning was also in hand for a fire station in Peng Chau, with construction to begin in 1994-95. Construction of a sewage treatment plant will start on the island in January 1994.

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In Mui Wo, the construction of a fireboat berthing point and the upgrading of the existing sewerage system were in progress. An indoor recreation centre-cum-library was completed during the year.

Open space facilities and rehabilitation planting on North Lantau were under planning during the year.

Urban Development Areas

Work on the new urban development areas generally take account of the Metroplan. This document sets out a broad pattern of land use and guidelines for the planning and development of new areas, which integrate with the replanning and redevelopment of adjoining old areas in a co-ordinated manner.

Six development areas at Aldrich Bay, Siu Sai Wan, Hung Hom Bay, West Kowloon, Central and Wan Chai, and Belcher Bay - all involving reclamations in Victoria Harbour are under planning or construction to meet forecast requirements in the 1990s and beyond.

On completion, they will provide more than 580 hectares of land for urban area expansion, as well as make up for land use deficiencies, such as lack of open space and other facilities, in adjacent old urban areas.

The Aldrich Bay development will produce about 28 hectares of land for private residential and public housing, open space and other 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 phases between 1995 to 1999.

The Siu Sai Wan development includes the formation of about 56 hectares of land for industrial, residential, government, institutional, community and other uses. Land formation has been completed and developments have already taken place.

Twenty hectares of land have so far been formed at Hung Hom Bay, with a further 16 hectares due for completion in 1994. The reclamation is destined for residential, commercial and community facilities, open space, transport interchange facilities and expansion of the existing Kowloon-Canton Railway freight yard. Two new ferry piers and a bus concourse, constructed near Whampoa Garden, were opened in 1991.

Steady progress was maintained in the West Kowloon Reclamation, which is being implemented in stages up until 1996. The reclaimed area of some 340 hectares, extending from Lai Chi Kok and Stonecutters Island in the north to Yau Ma Tei in the south, will provide land for private and public housing, commerce and industry, government, institutional and community facilities, open space and other uses. In accordance with the Metroplan, it will provide opportunities for thinning out the existing high-density developments in the West Kowloon hinterland, as well as providing strategic transport links to serve the new airport at Chek Lap Kok, namely the Airport Railway, the West Kowloon Expressway and Western Harbour Crossing.

   More than half of the area has been reclaimed. The project commenced in August 1990 and is estimated to cost $12.5 billion. A new 70-hectare Yau Ma Tei replacement typhoon shelter, 14 hectares larger than the previous one, was completed and opened in October 1992, and reclamation of the original shelter commenced shortly afterwards with a target completion date of 1995. A new wholesale market, occupying 10 hectares of the new reclamation, was opened in September 1993. The opening was achieved only 21 months after the first section of reclamation appeared above sea level.

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      The Central and Wanchai Reclamation, extending along the Hong Kong Island waterfront from Sheung Wan to Causeway Bay, will cover an area of 108 hectares. Reclamation work started in late 1993 to create the 20 hectares needed in Phase I, adjoining Exchange Square. Upon completion in mid-1997, it will provide the site for the Central Terminus of the Airport Railway and allow for much needed expansion of the area's business district.

       The Belcher Bay reclamation will create about 11 hectares of land, mainly for the construction of the Belcher Bay Link, a dual carriageway connecting the existing, upgraded, Connaught Road West with Smithfield in Kennedy Town. Both the reclamation and the construction of the link commenced in May for completion by 1996-97, to tie in with the opening of the Western Harbour Crossing.

Urban Renewal

In the course of preparing the Metroplan, the older urban districts were seen as offering redevelopment opportunities for comprehensive urban renewal, to create a better urban environment.

The government and private developers are both involved in the redevelopment of the older urban districts, where buildings are old and in dilapidated condition and where the provision of various community and infrastructure facilities is inadequate.

The Land Development Corporation (LDC) was established in 1988 to undertake, encourage, promote and facilitate urban renewal. Since its inception, about 30 projects have been initiated within the designated old urban districts. At the end of 1993, plans for five comprehensive redevelopment projects had been drawn up and gazetted under the Town Planning Ordinance.

Of the five redevelopment plans, the Jubilee Street, Wing Lok Street and Queen Street plans were approved by the Executive Council over the past two years. The Argyle Street/Shanghai Street plan was approved in July 1993. The Shamchun Street Scheme was abandoned by the LDC.

       All private properties in the Wing Lok Street Scheme have been resumed and construction work has started. Resumption in the Jubilee Street Scheme had been largely completed by the year's end, with construction work about to commence. Upon completion, the two schemes will provide high-quality commercial buildings and much-needed open space and community facilities for the district. Acquisition of the properties in the Queen Street Scheme was in progress. The scheme will provide space for residential, commercial and office uses, supplemented by the provision of a multi-purpose social welfare complex, public open space, a cooked food centre and a day nursery to offset the shortfall of government, institutional and community facilities in the district.

In Kowloon, acquisition of the properties in the Argyle Street/Shanghai Street Scheme was underway. In addition to the provision of commercial space, there will be a public light bus terminus, a cooked food centre, a neighbourhood community centre and public open space facilities.

Apart from these schemes, the LDC has also undertaken several smaller commercial and residential redevelopment projects. On Hong Kong Island, the commercial development in Queen's Road Central and residential developments in Third Street and Tai Yuen Street were completed. Still under construction were residential development schemes in Li Chit Street and Wan Chai Road. In Kowloon, the construction of the residential development

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in Soy Street was in progress. Three other projects in Yim Po Fong Street, Dundas Street and Sai Yeung Choi Street, to provide commercial and residential space, were under active planning and construction work will start soon.

A survey on social attitudes towards urban renewal was completed early in the year. Its findings will provide useful information for 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 older areas. Four such projects were under construction one in Yau Ma Tei, one in Sham Shui Po and two in

Sheung Wan. They are expected to be completed in the next two years.

Planning Studies

During the year, the Planning Department provided planning input for a number of major reclamation and development projects, notably the Central and Wan Chai, the West Kowloon and the Green Island reclamations.

Studies were completed on the restructuring of obsolete industrial areas, and on a review of building density and height restrictions in Kowloon and New Kowloon. Studies on planning for vehicle repair workshops, density guidelines for private residential areas and the redevelopment of under-developed government sites were near completion.

In the New Territories, major forward planning studies covering North Lantau and the Lantau port peninsula were completed. Studies were being undertaken to identify 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 associated transport and storage activities.

Other planning studies relating to the Territorial Development Strategy and the Sub-regional Development Strategies were also conducted during the year.

Building Development

The Private Sector

The administration of private buildings and building works control took a significant step forward on August 1, 1993, with the separation of the Buildings Ordinance Office from the former Buildings and Lands Department to become the new Buildings Department.

The reorganisation will lead to more effective management of building control activities, and help to ensure that statutory standards of safety and health are met in all buildings and building works in the private sector. With a clearer identity and greater autonomy in the control and use of its resources, the Buildings Department will respond more effectively to its expanding responsibilities, improve the delivery of services to the public and achieve greater cost-effectiveness.

Headed by the Director of Buildings, who is the Building Authority under the Buildings Ordinance, the department comprises the Control and Enforcement Division, Develop- ment Division, Specialist Division, Structural Engineering Division, and Litigation and Legislation Division.

During the year, the department continued to emphasise building safety in existing buildings. The on-going enhanced planned survey exercise, which commenced in 1989, continued to target its list of 16 700 identified buildings in need of detailed inspection. A total of 2 980 of these buildings were surveyed, resulting in the issue of 1 088 statutory orders requiring repair and, in a few instances, demolition.

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Extensive operations to remove unauthorised and potentially dangerous projections from the external walls of buildings proved successful. Eighty-five buildings were targeted during the year, with over 11 000 projections from more than 6 000 flats being pinpointed for demolition. Due to the widespread publicity of earlier operations, flat-owners and owners' corporations were more aware of the serious problems inherent in unauthorised building works and, as a consequence, a large proportion of the projections were removed voluntarily. The impact of these clearance operations on the urban environment can be clearly seen. The department's success is underlined by the fact that it now receives requests from owners to initiate action on their buildings.

During the year, 416 occupation permits were issued for completed buildings, compared with 443 in 1992. The amount of usable floor area provided was three million square metres and the total cost of new building works was $28,164 million.

Following the relaxation of the airport height restrictions, the monotonous skyline of the Kowloon peninsula is being broken by building redevelopment.

A new concept in the design of industrial buildings is emerging. Curtain walling, neo-classic motifs and pinnacle roofs have been widely employed recently to enhance the appearance of these buildings. Another change is that factory units are becoming smaller in size and provided with air-conditioning.

A large luxury residential project, the Gold Coast Development, was completed at Castle Peak Bay. The suburban resort includes a 450-room hotel with international conference facilities, a Mediterranean-style shopping mall, a 300-berth marina and country club, plus high-rise residential towers and low-rise beach houses.

Site formation work commenced for a new power station at Black Point, Tuen Mun. Two 600MW blocks of additional generating capacity will be installed in the station in 1996 and 1997, respectively.

Environmental initiatives continue to be pursued. Following the completion of the con- sultation exercise on the draft handbook on Overall Thermal Transfer Value in buildings, the department is following up with amendments to the Buildings Ordinance. The aim is to achieve energy efficiency in buildings through mandatory control. To promote energy efficiency, the department participated in an annual award scheme for the design of energy- efficient buildings, organised by the Energy Efficiency Advisory Committee.

The Public Sector

The Architectural Services Department is a large multi-disciplinary organisation with responsibility for providing technical advice on building-related matters to all government departments, financial and project management of public building developments under the Public Works Programme and for subvented building projects financed by the government. It is also responsible for professional design services for government, Urban Council and Regional Council buildings; and provides maintenance and management services for buildings owned or occupied by the government, the municipal councils, and the British Forces in Hong Kong.

       During 1992-93, the department had over 500 projects under study, design and construction, valued at $38 billion. In addition, the value of subvented projects monitored by the department amounted to $13 billion. Actual expenditure on building projects undertaken or monitored by the department came to $5.8 billion, while expenditure on routine maintenance and minor alteration works to properties amounted to $1 billion.

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In the 12-month period to March 1993, tender prices for the projects undertaken dropped by about one per cent. Over the same period, labour and basic material costs rose by 10 per cent and 15 per cent, respectively.

The year saw considerable progress in implementing the government's policy of self-sufficiency in office buildings. The fitting-out of the third tower of the North Wanchai complex was completed and the tower is now occupied by the Inland Revenue and Environmental Protection Departments. Previous phases of the complex accommodated the Immigration Department, the Wanchai North Law Courts and other government departments.

A purpose-built office in Ho Man Tin now accommodates branches of the Highways Department under one roof. Also sharing the building is the Government Laboratory, and a fire services and ambulance depot.

In Tsuen Wan, a government office has been combined with a Regional Council library in a distinctive mid-town complex- the latter officially opened by the Governor in July.

Much of the planned infrastructure for the new airport has necessitated relocation of other facilities, such as the wholesale markets at Cheung Sha Wan and Kennedy Town. This work progressed well during the year, with Phase I of the relocated Cheung Sha Wan market being opened in October.

The government's continued commitment to improving facilities for handicapped persons was reflected in the completion of the third phase of a core programme to modify existing public buildings to facilitate access for the disabled. In total, 125 locations, ranging from hospitals and post offices to markets and playgrounds, have been provided with ramped access and, where feasible, special toilets.

Less evident to the public, but of significance, are the continuing series of buildings on hill-top sites across the territory. Most are for telecommunications or radar for the airport; others are related to communications links with China. There is an on-going programme to improve access to such sites by constructing helipads, where these are not already provided.

Major medical projects started during the year included the Extension Block at Princess Margaret Hospital, with a planned completion date of 1995; the redevelopment of the Jockey Club Institute of Radiology and Oncology at Queen Elizabeth Hospital, and the Phase I Redevelopment of the Castle Peak Hospital, both due to be completed in 1996. Also begun were the Princess Margaret Hospital refurbishment, and the Tai Po Infirmary and Convalescent Hospital, both planned for completion in 1997. Other projects under construction included the Queen Elizabeth Hospital refurbishment, due for completion in 1996; the Queen Mary Hospital extension and improvement, due for completion in 1995; the Cancer Centre at the Prince of Wales Hospital and the Shum Wan Laundry, both due for completion in 1994; the refurbishment of the existing Yau Ma Tei Jockey Club Polytechnic; the Wong Chuk Hang Complex for the Elderly; and a well-woman clinic. Projects completed during the year included the Siu Lam Hospital Extension, the Yau Ma Tei Jockey Club Polyclinic Extension, the Tin Shui Wai Clinic, the Tuen Mun Clinic and the new X-ray unit for accident and emergency services at the Tai Po Jockey Club Clinic.

Construction was completed on a number of Urban Council projects, including Quarry Bay Park, Wanchai Park, Shek Kip Mei Park Stage III, the greenhouse at the Hong Kong Zoological and Botanical Gardens, the Indoor Games Hall Lam Tin South, Sam Ka Tsuen Recreation Ground and Cape Collinson Columbarium. Work began on four market

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complexes and two leisure pools. Other projects under construction included the Squash Court Complex at Cornwall Street and the Un Chau Street Complex.

Regional Council projects completed included the Mui Wo Complex; the indoor recreation centre, swimming pool complex and sportsground at Tin Shui Wai; and two air- conditioned indoor recreation centres at Kwai Chung and Tsuen Wan. An air-conditioned market complex at Shek Wai Hui was nearing completion, and construction work commenced for a swimming pool complex and sportsground at Tsing Yi.

For the disciplined services, completed projects included a police post at Tap Mun, departmental quarters for Correctional Services staff at Lai Chi Kok and the final phase of Police Tactical Unit premises at Fanling. Projects underway included additional accommodation for the Sai Kung Police Station, a sub-divisional fire station at Tsing Yi, a divisional fire station at Lai King and police staff quarters at Tsing Yi. Other projects under construction were the new Police Headquarters Complex Phase II, the permanent container cargo-examination compound at the Kwai Chung Container Port Area, and quarters for the disciplined services at Fanling, Wong Tai Sin, Tseung Kwan O and Ngau Chi Wan.

In March, the reprovisioning of the HMS Tamar naval facilities was completed at Stonecutters Island, to enable relocation of the base from Central.

Five secondary schools were completed under the School Building Programme, and construction work on one primary school and five secondary schools was started during the year. Four special schools for handicapped children were completed during 1993 (including the Caritas Lok Yi School for severely mentally handicapped children at Lei King Wan), and work started on another three special schools.

The department's Subvented Projects Division has a vetting and advisory role to other departments and private organisations on buildings, repairs, and maintenance work funded by subvention. These include a wide range of schools and social welfare facilities, as well as the seven universities and polytechnics, the Hospital Authority and the Vocational Training Council.

The Property Services Branch provides routine maintenance and minor alteration works to over 7000 buildings used by the government, Urban Council, Regional Council, Hospital Authority, subvented schools and agencies, and the British Forces. The number of major refurbishment and fitting-out projects again increased. These included noise-abatement measures at government and subvented schools, the refurbishment of the City Hall and the renovation of Caine House at Police Headquarters.

The department also gives advice on facilities to be provided to the government by private developers as a condition of land grants. Examples include office accommodation, transport interchanges and neighbourhood social welfare facilities.

Its Building Services Branch provides professional support in the design and supervision of the installation of all building services and electrical and mechanical systems for building projects undertaken by the department.

With the government committed to improving the environment, the branch is taking action to resolve the issue of chlorofluorocarbons (CFCs), and to improve indoor air quality and waste disposal systems.

As the commonly used refrigerants CFC and HCFC (hydrochlorofluorocarbons) are not ozone-friendly, and to follow the spirit of the revised Montreal Protocol, they are not specified as far as possible in all new air-conditioning designs for government-funded and

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subsidised projects with effect from June 1993. With the installation of Hong Kong's second non-CFC/HCFC refrigerating machine in Revenue Tower, Wanchai, two years ago, the department has been at the forefront in introducing good environmental practices to help protect the Earth's ozone layer. As a second step, the department, in collaboration with the Electrical and Mechanical Services Department, will retro-fit existing refrigerating machines with non-CFC refrigerants under a 10-year programme. The first project to be completed under this programme will be the Prince of Wales Hospital, where work commenced in July.

As today's multi-functional buildings accommodate not only offices but other facilities, such as computer centres and laboratories, the indoor environment is more vulnerable to air contamination. Air purifiers have been installed at Revenue Tower. Other important areas where the commitment to environmental awareness has been demonstrated include the installation of waste disposal and treatment systems in buildings where sewers are not available, as well as to boilers and incinerators.

It was altogether a significant year for the department. The design of the Kowloon Walled City Park received international recognition when the department was presented a Diploma of the Central Society of Horticulture of Germany at the fifth International Horticulture Exhibition (IGA Stuttgart Expo '93) in October. The achievement was the result of the concerted efforts of the project team, comprising architects from the new works group, landscape architecture group and antiquities group.

Land Administration

The Lands Administration Office of the new Lands Department, which was established on August 1 following the reorganisation of the Buildings and Lands Department, co-ordinates all aspects of land administration throughout the territory.

The office's main functions are to acquire land and make land available for the government's development programmes; to dispose of land in accordance with a programme approved by the Sino-British Land Commission; to manage all unallocated government land; and to ensure the use of private land complies with its lease conditions.

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 the 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 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

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urban area. Additionally, an ex gratia Home Purchase Allowance is normally paid upon resumption of domestic units within the urban area.

During 1993, about 0.19 million square metres of private land was acquired in the New Territories to carry out various public works projects. The total land acquisition and clearance costs amounted to about $790 million. These projects included the Southeast New Territories Landfill at Tin Ha Wan in Tseung Kwan O, the thermal power station at Black Point in Tuen Mun, the Au Tau 'B' pumping station and the Western aqueduct in Yuen Long, the North Lantau Expressway (Phase II) on Lantau Island and a village sewerage disposal pipeline in the North District.

In the urban areas of Hong Kong Island and Kowloon, about $2.76 billion was paid in compensation for land and buildings acquired during the year for public works projects, either under compulsory powers or by agreement. These projects included the Ma Hang Redevelopment at Stanley, Rock Hill Street Extension in Sai Wan and open space development at Pak Tsz Lane in Sheung Wan.

       Private streets continued to be resumed to facilitate their repair and maintenance by the government.

The Lands Administration Office was also much involved in acquisition and clearance work in connection with the implementation of urban renewal projects to be carried out by the Land Development Corporation and the Hong Kong Housing Society.

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 on the Question of Hong Kong.

The new land to be granted is not to exceed 50 hectares a year, excluding land granted to the Hong Kong Housing Authority for public rental housing (the Land Commission may increase this limit and regularly does). The land disposal limit for 1993-94 is 127.8 hectares, with a five-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.

Land grants and leases are normally made for terms expiring not later than June 30, 2047. They are made at premium and nominal rental until June 30, 1997, after which an annual rent equivalent to three per cent of the property's rateable value will apply.

A land sales programme is issued at the beginning of each financial year and updated regularly, showing the details of public auctions and tenders normally held each month. Land in the New Territories is often sold by way of tender, restricted to holders of land exchange entitlements. These entitlements were used in the past for the acquisition of land in the New Territories, but since 1983 are no longer issued.

As a result of the buoyant property market, the premium received from the sale of sites in all sectors of the market showed significant increases.

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 Scheme, and to non-profit- making charitable, medical and educational institutions which operate schools, hospitals, and social welfare and other community services.

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During the year under review, a site in Fanling, with an area of 1.57 hectares, was sold under the Private Sector Participation Scheme. Eight sites were granted to the Housing Authority for the development of Home Ownership Scheme projects. These included three large sites comprising 3.46 hectares, 5.16 hectares and 3.11 hectares in Hong Kong East, Kowloon East and Ma On Shan, respectively.

Land for the construction of about 5 000 flats was granted in 1993-94 to the Hong Kong Housing Society, for an assisted housing scheme for Hong Kong's 'sandwich' class (those families not eligible for existing public housing assistance but unable to afford private sector flats).

  Major land transactions and negotiations included the granting of a 46-hectare site in Tuen Mun for the Black Point Power Station; an 8.61-hectare site in Tuen Mun for the relocation of Lingnan College; five hectares of land for the first phase of the Third Industrial Estate at Tsueng Kwan O; and a nine-hectare site in Tuen Mun to relocate the Shiu Wing Steel Mill.

In the New Territories, six sites with a total area of 5.85 hectares were sold by tender restricted to holders of land exchange entitlements. These included a 2.08-hectare site in Fanling and two sites with a total area of 2.74 hectares at Tseung Kwan O. These sites were for commercial and residential use.

Land Registration

The Land Registration Ordinance provides for registration of all instruments affecting land in the Land Registry.

  On August 1, 1993, the Land Registry became one of the first government departments to operate on a trading fund basis. A trading fund is a financial and accounting arrangement which requires a department, whose services are of a commercial nature, to operate on a commercial basis while remaining a government department. The basic objective is to improve the quality of service to customers.

Registration of land documents in Hong Kong is effected by means of a memorial form, containing the essential particulars of the instrument, which is then placed on a register showing the particular piece of land or individual premises affected. 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 by the public on payment of a fee.

  The records of transactions affecting land on Hong Kong Island, Kowloon, New Kowloon and some of the urban areas of the New Territories are kept at the Urban Land Registry located at the Queensway Government Offices. Those relating to transactions affecting land in the remainder of the New Territories are kept at eight district land registries in the New Territories. Before any land transaction is completed, a land search to ascertain property ownership is made. During the year, 3 328 390 such public land searches were made and 631 849 instruments registered throughout the territory, compared with 3 207 280 and 685 136, respectively, in 1992. At the end of the year, there were 1 580 877. property owners, an increase of 75 874 over the previous year.

All instruments and memorials presented for registration in the Urban Land Registry are microfilmed, and the particulars of the land transactions are stored in computerised registers. To improve public search services in the urban areas, the registry is developing a

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computer network to provide on-line, direct search facilities at the offices of solicitors and other professional firms. This public network access for the land search service will be implemented around mid-1994. Instruments and memorials presented to the New Territories district land registries are still registered manually. They are made available to the public for search in their original form. Microfilming of the land documents registered in the New Territories has started. Conversion of the information kept in these registries into computerised data will start in mid-1994. The microfilming and computerisation of New Territories land records will provide a more efficient service.

      The Land Registration 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 essential to the protection of title, but does not guarantee it. Approval in principle has been given by the government to change the present system of land registration to one of title registration. Legislation to implement the titles registration system is being drafted.

Land registration statistics are at Appendix 34.

Government Conveyancing

     Following the reorganisation of the Buildings and Lands Department, its Legal Advisory and Conveyancing Office has become part of the new Lands Department. The 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 land, the apportionment of government rents and premia, and the recovery of outstanding rents. It 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's Consent Scheme. During the year, 14 applications involving 3 820 units in the urban areas were approved and in the New Territories, 46 applications involving 26 665 units were approved.

Survey and Mapping

     The Survey and Mapping Office of the Lands Department 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 other government purposes, and managing a computerised land information system.

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Geodetic control systems, which are horizontal and vertical control networks covering the whole territory, have been established and are maintained to a high degree of accuracy. These systems provide the necessary origin and control points for cadastral (property boundary), topographical mapping, engineering and other surveys.

Cadastral surveying is one of the more important functions of the office, defining land boundaries for disposal and redevelopment, among other administrative purposes. The office maintains a comprehensive record of all leasehold and government land boundaries in the territory, with most urban area records stored in digital form and the New Territories records kept in graphical form.

The office's mapping coverage of Hong Kong is extensive. The most definitive series of maps and the foundation of all other mapping is the large-scale (1:1 000) basic topographic series (3 000 sheets). Smaller-scaled maps include the monochrome map series at 1:5 000 (157 sheets) and the coloured map series at 1:20 000 (16 sheets). 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 GuideStreets and Places. Demand for leisure maps, in the form of the Countryside Series and the Tourist Guide, is strong.

The Survey and Mapping Office provides cartographic services for many government departments. These include full-colour mapping for geological purposes, 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.

A computerised land information system is being installed in District Survey Offices in phases, as digital map data and land records become available. The system processes and analyses land information, and is a useful tool for handling enquiries on land status. 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. Mapping information in digital form may be supplied to the public on payment of a fee. Direct on-line access to the central mapping data is also possible. Data conversion for the districts is being speeded up by contracting-out the work and is scheduled for completion in 1994.

The office's Photogrammetric Survey Section provides aerial photographs and photogrammetric mapping, as well as data for engineering design work, environmental studies and town planning work, and volumetric calculations for quarry and controlled tipping operations. 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 committed to a programme of works to upgrade Hong Kong's drainage systems to significantly reduce water pollution and flooding as far as possible, at an estimated cost of some $20 billion over the next 10 years.

It is responsible for planning, designing, constructing, operating and maintaining the sewerage, sewage treatment and stormwater drainage infrastructures.

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To serve the community, the department has pledged to attend expeditiously to complaints on drainage matters, such as blocked drains, and to promptly process applications for drainage connections for private developments.

Treatment and Disposal of Foul Water

The treatment and disposal of foul water, including domestic sewage and trade and industrial effluent, is based on standards, strategies and programmes drawn up by the Environmental Protection Department.

The projects on foul water disposal are broadly divided into three categories: sewerage or sewage treatment projects which were in the public works programme before the new strategy to combat water pollution evolved; 'sewerage masterplan schemes' which are territory-wide sewerage rehabilitation and improvement projects; and the 'strategic sewage disposal scheme' under the new strategy. The latter is a massive project to collect all the sewage from Hong Kong Island, Kowloon, Tsuen Wan, Kwai Chung and Tseung Kwan O into a deep tunnel, intercepting sewer system that will discharge the sewage, after treatment on Stonecutters Island and Mount Davis, through a long sea outfall into the Dangan Channel, south of Lamma Island.

Under the existing projects category, the largest project in hand was the Tolo Harbour Effluent Export Scheme. This will export the sewage effluent from the Sha Tin and Tai Po sewage treatment works, away from the enclosed Tolo Harbour, into Victoria Harbour, where it can be more satisfactorily diluted through tidal flows. The works comprise sewage pumping stations, rising mains, submarine pipelines and a sewer tunnel, of 3.2-metre in diameter and 7.5 kilometres in length, under Tsz Wan Shan. Stage I of the works between Sha Tin and Victoria Harbour will be completed in 1994 and includes the construction of the sewer tunnel. Stage II of the works between Tai Po and Sha Tin started in late 1992, for completion in mid-1995, and includes the construction of a one-metre diameter, six-kilometre long, steel rising main buried under the seabed of Tolo Harbour.

Other projects underway in this category included the construction of a sewage screening plant to serve a population of 1.2 million in the Tsuen Wan and Kwai Chung area, a sewage pumping station and intercepting sewer at Ap Lei Chau, and a sewerage system at Hung Hom. The Northwest New Territories Sewerage Scheme was commissioned in March.

Under the sewerage masterplan schemes, planning and design work was in hand to improve the sewage collection, treatment and disposal facilities in Tsuen Wan; Kwai Chung and Tsing Yi; North, South and Northwest Kowloon; Central; Western and Wanchai West.

Construction work was underway in the Southern district of Hong Kong Island. In Stanley, a sewage treatment works was being constructed underground, in a cavern, and is due for commissioning in mid-1994, along with the completion of other sewerage rehabilitation and improvement works in the Stanley and Tai Tam areas. The works in Repulse Bay and Shek O are expected to be completed towards the end of 1995. In East Kowloon, a system of new trunk sewers and pumping stations is expected to be completed in early 1994.

Engineering feasibility studies for the implementation of the strategic sewage disposal scheme were completed during the year. Detailed design work for the Principal Collection and Treatment System started and construction is planned to commence in mid-1994.

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Stormwater Drainage and Flood Control

The North and Northwest New Territories are particularly vulnerable to flooding.

Damage caused by flooding was widespread when typhoons Dot and Ira struck the territory in September and November, respectively. During the November typhoon, some 400 000 Tuen Mun residents were left without running water for four days due to the flooding of the Fu Tei fresh water pumping station.

The Drainage Services Department completed a study reviewing rainfall, stream flows and flooding predictions in 1993, with the aim of drawing up basin management plans for the main rivers in the North and Northwest New Territories and examining in more detail potential local flood mitigation measures. This was a follow-up to a territory-wide study in 1990.

In addition, pamphlets giving advice on what to do and what not to do in a flooding situation were distributed through the District Offices to people living in flood-prone areas.

The government commenced work during the year on the first stage of its largest scheme to alleviate the flooding problem in Northwest New Territories. Valued at $1.1 billion, this involves the construction of 14 kilometres of flood-ways and concrete-lined nullahs for the improvement of the Kam Tin River and Shan Pui River in Yuen Long. Design work for the remaining stages of this scheme and for the construction of main drainage channels in Ngau Tam Mei and San Tin, also in Northwest New Territories, is now in progress.

As an associated measure, about a dozen flood water pumping systems have also been constructed and are in operation to mitigate the impact of flooding in low-lying villages in the New Territories. Six more are planned.

The government is also working closely with the Shenzhen Municipality to resolve the flooding problem associated with the Shenzhen River, which divides Hong Kong and Shenzhen. The solution proposed involves the straightening, widening and deepening of some 17 kilometres of the river, to enhance its flow to reduce the flood risk in the catchments on both sides of the river. Preparatory work has been agreed upon by the two sides and is in progress.

The Land Drainage Bill, introduced in the Legislative Council in the middle of the year, is an essential component of the strategy to alleviate flooding in the New Territories. When passed into law, it will authorise government staff to access, inspect, clear and maintain important watercourses running through or bordering on private land, as a further attempt to reduce the risk of flooding.

Operation and Maintenance of the Drainage System

With the commissioning of each additional item of infrastructure, there is a consequential increased commitment in operations and maintenance. The volume of sewage treated territory-wide has increased from 385 million cubic metres in 1989 to 635 million cubic metres in 1993, of which 146 million cubic metres receive full biological treatment.

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. The efficient maintenance of the drainage infrastructure is essential to ensure the proper and effective disposal of foul and storm water, and to prevent blockages and leaks which also cause foul odours, flooding or other nuisances to the public. The department now maintains 2900 kilometres of watercourses, drains and sewers. These are increasing at the rate of 130 kilometres per year. Some 45 000 clearance

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exercises are carried out yearly to remove over 250 000 cubic metres of silt from drains and watercourses, to keep them free-flowing and their pollution level low.

The department also operates an Emergency Storm Damage Organisation. The organisation is run by staff working on a rotational basis and is supported by the department's own labour force and contractors. Its operation ensures that emergency situations are dealt with efficiently.

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 7 000 design proposals during the year.

Work to upgrade unsatisfactory old slopes to modern safety standards is continuing. Private sector resources are now being employed to accelerate the Landslip Preventive Measures Programme. During 1993, landslip preventive works were completed on 90 slopes and retaining walls, at a cost of $70 million, within the programme. Preliminary studies were carried out on 1200 slopes and retaining walls, and detailed geotechnical investigations were finished on 100 slopes and retaining walls. Work was completed on the extension to the Mid-Levels boulder fence above Conduit Road, together with the in situ stabilisation of large boulders in the boulder field behind the fence, at a cost of $5.6 million. Upgrading work on the slopes of an old landfill borrow area at Fung Shing Street, Ngau Chi Wan, was also completed at a cost of $7 million.

The GEO operates the Landslip Warning System and a 24-hour emergency service to provide advice to protect public safety when landslips occur. Exceptionally heavy rainfall on June 16 resulted in about 100 landslip incidents, one of which involved a fatality. GEO staff attending these incidents gave advice on immediate measures to reduce danger, as well as on permanent remedial measures.

The GEO's public education campaign continued, to increase awareness of the importance of slope maintenance and the responsibility of land owners to maintain their slopes.

A revised edition of Geoguide 1: Guide to Retaining Wall Design was produced. Publication of the document will provide upgraded technical standards in this area. The GEO also published a document on granular and geotextile filters with the same objective.

The Hong Kong Geological Survey prepared 1:20 000 scale geological maps for the Tung Chung, Tai O and Cheung Chau districts. Compilation of memoirs relating to the Northeast New Territories and Lantau Island neared completion during the year, with publication scheduled for 1994. Work also started on the compilation of a comprehensive publication on the geology of Hong Kong.

      A programme of systematic land inspections continued to identify old fill slopes and retaining walls, using aerial photography. Following publication of engineering geology maps and reports on the North Lantau development area, work commenced on a study of potential hazards related to slopes in the Tung Chung Valley. New geophysical techniques were introduced to assist with developing the stratigraphic model for offshore sediments. Other geophysical surveys were completed in Tolo Harbour, North Lantau and North Lamma. These will help to identify geological structures and buried marble in development

areas.

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The computerised borehole database for Lantau was completed, and work commenced on the database for the urban areas of Hong Kong and Kowloon. Standards were also being established for the computerisation of ground investigation records by contractors and consultants. Satellite photographs covering the territory were obtained to generate special purpose images, partly for monitoring suspended sediment offshore; while digital terrain models were under development for use in on-going landslide studies.

The Geotechnical Information Unit (GIU) houses the largest collection of geotechnical data in Hong Kong. It served more than 3 100 users during the year.

  The Marine Geotechnology Section carried out research and development work for Port and Airport Development Strategy (PADS) projects, notably on foundations for marine structures and reclamations, and the sea-bed pits for the containment of contaminated mud dredged from development areas.

During the year, there were further improvements to ground investigation, geophysical surveys and soil and rock testing services provided for public works projects. An in-house quality assurance system was in the process of being implemented in the Ground Investigation Section of the Materials Division. A requirement has been introduced for ground investigation data to be submitted in a digital format, with the ultimate aim of setting up a territory-wide database.

A number of major ground investigations were undertaken for the Lantau Port and Tseung Kwan O Development Studies, the Strategic Sewage Disposal Scheme, various reclamation projects, new highway tunnels and for environmental studies at landfill sites. Major marine ground investigation and geophysical surveys were also carried out for the Fill Management Studies. Geophysical and hydrographical surveys were executed to study the environmental effects of dredging activities and marine dumping in Hong Kong waters. An increasing number of chemical analyses, including heavy metal testing, were undertaken for studies on contaminated marine mud.

The GEO manages the Public Works Central Laboratory at Kowloon Bay and seven public works regional laboratories in various parts of the territory. Over 300 000 tests on various construction materials were carried out during 1993. The laboratories are accredited under the Hong Kong Laboratory Accreditation Scheme to carry out tests on construction materials, in addition to providing laboratory calibration services. They are currently preparing for accreditation of soils testing.

Fill Management

The territory's fill resources are managed by the Fill Management Committee, whose secretariat is a unit of the Geotechnical Engineering Office (GEO) of the Civil Engineering Department. The committee was set up in 1989 to make decisions on the reservation, allocation and efficient utilisation of fill resources for government and major private projects.

   Up to the end of 1993, some 270 million cubic metres of marine fill had been allocated or reserved and of this amount, approximately 120 million cubic metres had been extracted from the seabed for the construction of reclamations. A further 250 million cubic metres of fill from marine sources and a similar quantity from land sources are needed for reclamations over the next 15 years.

A second role of the committee is to plan the marine disposal of dredged mud, including contaminated mud, and to allocate disposal capacity at the gazetted marine spoil grounds.

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During the year under review, 100 million cubic metres of uncontaminated mud and five million cubic metres of contaminated mud were disposed of under licences issued by the Environmental Protection Department. The uncontaminated mud was dumped in spoil grounds and in worked-out borrow areas, and the contaminated mud was placed in disposal pits specially designed to ensure containment.

Water Supplies

Water from China

China is the major single source of water supply for Hong Kong, and all future increases in demand will be met from this source. This arrangement dates back to 1960, when a scheme was first formulated for receiving a piped supply of 22.7 million cubic metres a year. The annual supply from China stipulated under the agreements has increased to 630 million cubic metres for the period from March 1993 to February 1994, and this will continue to increase in stages to 840 million cubic metres by the year 2000. Apart from the fixed quantities of supply stipulated in the agreements, there are provisions for the purchase of additional supplies from China in years of low rainfall in Hong Kong.

Following the agreement reached with the Chinese authorities in December 1989 to increase the China water supply up to a maximum of 1 100 million cubic metres per year to cope with anticipated demands beyond 1994 and into the early 2000s, a conceptual plan was developed for the necessary works to receive and distribute the additional supply. The works are being implemented in stages, with Stage I works to be substantially completed by the end of 1994. These 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 major improvements to an existing pumping station at Tai Mei Tuk. Work on the first contract commenced in December 1991, and work on all the pumping stations and pipelines is now in progress.

Water Storage and Consumption

      Full supply was maintained throughout the year. At the end of 1993, there were 386 million cubic metres of water in storage, compared with 315 million cubic metres at the end of 1992, with 331 million cubic metres being stored in Hong Kong's two largest reservoirs, High Island and Plover Cove. Rainfall for the year was 2 344 millimetres, compared with the average of 2214 millimetres. Water piped from China during the year totalled 627 million cubic metres.

A peak consumption of 2.78 million cubic metres per day was recorded, compared with the 1992 peak of 2.82 million cubic metres. The average daily consumption throughout the year was 2.51 million cubic metres, an increase of 3.3 per cent compared with the 1992 average of 2.43 million cubic metres. The consumption of potable water totalled 915 million cubic metres, compared with 889 million cubic metres in 1992. In addition, 129 million cubic metres of sea water for flushing was supplied, compared with 127 million cubic metres in 1992.

Water Works

The water distribution system continued to be extended and enlarged to meet urban and rural demands in the territory. This included expansion of the distribution network to supply remote villages in the New Territories.

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Construction for the Au Tau Treatment Works Stage II, a new intake tower in Tai Lam Chung Reservoir, Sham Tseng Treatment Works Stage I, and extension of the Sheung Shui Treatment Works and Yau Kom Tau Treatment Works were in progress.

The detailed design for the Ma On Shan Treatment Works was completed in December. Tenders were invited from pre-qualified contractors, with a view to starting construction in April 1994.

  Planning was in hand for the major new treatment works at Ngau Tam Mei. Further planning for the improvement of system capacity was also in progress to meet the demand arising from new developments in central and western Hong Kong Island-including the new reclamation areas in Central and Wan Chai-Sham Tseng, Kwun Tong, Yuen Long, Tin Shui Wai and the northwestern New Territories.

  Design work for additional service reservoirs, pumping stations and water supply networks in Ap Lei Chau and Repulse Bay was completed, while that for Tuen Mun, Yau Kom Tau, Tsuen Wan, Tsing Yi, Tseung Kwan O, and the western Mid-Levels was in progress. The design for the flushing water supply system for Ma On Shan and Tai Po was substantially completed.

  Design work was also in hand for the improvement of water supply to the metropolitan southeastern area of Kowloon, the enhancement of Tai Tam Tuk Pumping Station and the major renovation of the sea water supply system for central Kowloon.

Consultants were commissioned to carry out a feasibility study on the treatment and disposal of sludge generated by the existing treatment works. The consultancy agreement commenced in August and will be completed in early 1994.

  Work on the permanent water supply system for the new airport at Chek Lap Kok and other developments in North Lantau associated with the Port and Airport Development Strategy was being implemented in stages. The Stage I works, to be commissioned by mid-1996, include submarine and land mains, a water treatment works, pumping stations, a service reservoir and an aqueduct between Siu Ho Wan and Silvermine Bay.

  Tai Wan Salt Water Pumping Station, which provides flushing water to a large area of East Kowloon, was upgraded by replacing the diesel-driven pumps with electrically-driven units capable of a greater output.

  Improvements to chlorine storage facilities in the Tsuen Wan Treatment Works, Yau Kom Tau Treatment Works, Tai Po Tau Treatment Works, Tuen Mun Treatment Works and Tai Lam Chung Prechlorination House were completed at the end of the year. The improvements formed part of the mitigation measures recommended by consultants to improve the safety of chlorine storage. Major design work commenced for the extension of Tai Lam Chung Prechlorination House.

Water Accounts and Customer Relations

The number of the Water Supplies Department's consumer accounts continued to rise at a rate of about three per cent and the consumer account base expanded to approximately 2.01 million accounts at the end of 1993. Computer systems were widely employed to provide efficient enquiry services; to handle applications for water supply and change of consumer particulars; and to issue demand notes for water charges, connection fees and water deposits. In July, a new Electronic Meter Reading System, employing hand-held computers, was introduced to further improve the efficiency of the meter reading and billing processes. An Interactive Voice Response System will be introduced in early 1994 to

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provide a round-the-clock enquiry service on water supply matters. Efforts to promote the autopay service continued, and the number of consumer accounts using autopay for payment of water charges reached 251 000, or about 12 per cent of all consumers.

A number of computer systems were being developed for the handling of water quality complaints, automating the process of closing water accounts, and preparing cost estimates of capital works projects.

The department issued its performance pledges in March. Standards of service were publicised. In July, a customer liaison group, comprising members randomly selected from the department's computerised database of consumers, was set up to provide a channel of communication on customers' needs and expectations of service standards.

Electricity

Electricity is 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 supply to consumers is at 50 Hz alternating current, while the voltage is being upgraded to 220 volts single phase and 380 volts three phase from 200 and 346 volts, respectively.

       The two supply companies are investor-owned and do not operate on a franchise basis. The government monitors their financial arrangements through mutually agreed scheme of control agreements. New agreements with CLP and HEC came into effect on October 1, 1993 and January 1, 1994, respectively. Both will last for 15 years. The agreements require each company to seek the approval of the government for certain aspects of their financing plans, including projected tariff levels.

In 1985, the Hong Kong Nuclear Investment Company (a wholly-owned subsidiary of CLP) and the Guangdong Nuclear Investment Company (wholly owned by the Chinese Ministry of Nuclear Industry) signed the joint venture contract for the formation of the Guangdong Nuclear Power Joint Venture Company, to construct and operate a nuclear power station at Daya Bay in Guangdong.

When completed, the Guangdong Nuclear Power Station will comprise two 985MW pressurised water reactors. The first unit will be put to commercial operation in February 1994, while the commissioning of the second unit is scheduled for mid-1994. 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 operations of the three generating companies affiliated to CLP- 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 the 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 6 432MW. 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 will be fuelled by natural gas piped from the Yacheng 13-1 gas field off Hainan Island in China.

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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 transmission system operates at 400kV, 132kV and 66kV, and distribution is effected mainly at 33 kV, 11kV and 380 volts.

CLP has more than 173 primary and over 7916 secondary sub-stations in its trans- mission and distribution network. An extra high voltage transmission system at 400kV was completed in 1986 to transmit power from the Castle Peak Stations to the various load centres. Currently it comprises a double-circuit overhead line system encircling the New Territories, underground cables and eight extra high voltage sub-stations. Construction and planning work for the addition of new extra high voltage sub-stations and for reinforcement of the existing system is in progress.

In HEC's supply areas, electricity is supplied entirely from the Lamma Power Station. At the end of 1993, the total installed capacity at the Lamma Power Station was 2 605MW. There are plans to add a further 350MW unit to Lamma in late 1995.

  HEC's transmission system operates at 275kV, 132kV and 66kV, and distribution is effected mainly at 11kV and 380 volts. With the exception of a small proportion of 132kV overhead transmission lines, all supplies are transmitted and distributed by underground or submarine cables.

The transmission systems of CLP and HEC are interconnected by a cross-harbour link. This provides emergency back-up and achieves 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 as spinning 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 the Guangdong General Power Company of China and electricity is exported to Guangdong province. Such sales, which are made from existing reserve generating capacity, 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, for a 10-year period starting from late 1986, to the industrial zone of Shekou and the adjacent Chi Wan area, both in Guangdong. The arrangements, which afford Shekou 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.

  CLP, through its affiliated company, the Hong Kong Pumped Storage Development Company Limited, has purchased the right to use 50 per cent of the capacity of the Guangzhou Pumped Storage Power Station, located at Conghua. The total installed capacity of the current phase is 1 200MW. The first two 300MW units were commissioned in 1993, with the other two scheduled for commissioning in 1994. Off-peak electricity from the Castle Peak Stations and Guangdong Nuclear Power Station is used to pump water from a lower reservoir to an upper one. The water is allowed to flow downhill during the day to generate electricity to meet Hong Kong's peak demand.

  The 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

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the necessary experience and qualifications. The registration of electrical workers and contractors started in November 1990 and November 1991, respectively. At the end of December 1993, over 53 000 and 7 200 qualified electrical workers and contractors, respectively, had been registered.

       To further enhance public safety, the government is planning to introduce statutory controls over electrical products and the power supply industry. Initially, legislation will provide control over plugs and adaptors. Comprehensive legislation on electrical product safety will be enacted in 1995 to provide control over all domestic electrical products. The introduction of the new Electricity Supply Regulations is scheduled for 1996.

       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 being carried out in two phases and will be completed in about six years. Phase I conversion, covering existing installations inside government buildings, started in August 1990 and was completed in November 1992. Phase II conversion, covering existing installations in Housing Authority and private sector buildings, commenced in January 1993 and will take about four years to complete.

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 the 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, Concord Oil and China Resources. 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 per cent and 25 per cent, respectively.

       The total number of gas customers is about 1.865 million. In 1993, Towngas accounted for 65 per cent of the total fuel gas sold in energy terms and LPG for 35 per cent.

       HKCG manufactures Towngas at two plants, at Ma Tau Kok and the Tai Po Industrial Estate. Both use naphtha as a feedstock. They currently have output capacities of 2.2 million and 8.4 million cubic metres per day, respectively.

       Towngas is distributed through an integrated distribution system to about 985 000 customers for cooking and heating purposes. The mains network extends to the urban areas of Hong Kong Island, including Aberdeen, Repulse Bay, Stanley and Ap Lei Chau; Kowloon; and many new towns in the New Territories, including Sha Tin and Tai Po, Yuen Long and Tsing Yi Island. HKCG is currently constructing a 90-kilometre network transmission pipeline in the New Territories. The new transmission line is designed to operate at elevated pressure and will provide an additional 0.8 million cubic metres of line pack storage capacity.

       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 the new town. The plant will remain in situ until the new transmission pipeline connecting Tai Po to Tuen Mun has been completed.

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  LPG is imported to Hong Kong by sea. About 59 per cent of total sales is distributed to customers, via dealer networks, in portable cylinders. The remaining 41 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.

  There are about 444 LPG distributors operating within the territory. Additionally, 23 LPG site operators manage 510 bulk storage installations under government-monitored arrangements. Altogether, there are 880 000 LPG customers.

  In 1982, the government introduced a piped gas policy to discourage the use of gas cylinders in domestic dwellings. At the same time, it also began a programme of encouraging the upgrading of sub-standard gas water heaters. The percentage of domestic dwellings using cylinders fell to less than 30 per cent in 1993, and the number of upgraded gas water heaters amounted to some 67 815. Apart from suicide cases, there were three fatalities arising from fuel gas incidents during the past year.

  As a further means of safeguarding the general public and gas consumers, the Gas Safety Ordinance was introduced in 1991. The ordinance and its subsidiary regulations constitute a comprehensive package of gas 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 the Gas Authority, and the Gas Safety Advisory Committee was established for the purpose of advising the authority on all relevant matters. Since April 1992, it has been necessary for all gas supply companies, gast installers and contractors to be registered with the Gas Authority in order to carry out their operations. In 1993, seven gas supply companies, 2 759 gas installers and 371 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 were 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. Registration boards were set up and, by the end of 1993, there were 960 registered architects and 930 registered professional engineers. The Surveyors Registration Ordinance and the Planners Registration Ordinance were enacted in 1991, leading to the registration of about 240 professional surveyors and 100 professional planners. 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.

15

TRANSPORT

A NEW franchised bus service on Hong Kong Island, the start of work on the third harbour road crossing, increased expenditure on transport infrastructure and the release of a report on future strategic rail development topped the transport agenda during the year.

To promote healthy competition in the provision of public transport services, Citybus Limited successfully took over, from the China Motor Bus Company (CMB), the operation of 24 Hong Kong Island routes and two cross-harbour tunnel routes in September. Despite initial teething problems, the new service was soon having a positive impact on the overall quality of bus services on the island. The remaining island routes continue to be operated by CMB under a new franchise.

Work began in October on the Western Harbour Crossing, linking new reclamations on both sides of the harbour, following the award of a 'build, operate and transfer' franchise to a private consortium. On completion in 1997, the crossing will provide a fast road link from Hong Kong Island, via the West Kowloon Expressway and North Lantau Express- way, to developments on Lantau Island and the new airport.

Work also began on the construction of additional climbing lanes on the Tuen Mun Highway, to improve traffic flow between the Northwest New Territories and urban Kowloon.

At the year's end, a prequalification exercise was underway to select a contractor to build the Ting Kau Bridge, which will be funded by the government. The bridge, together with the Tai Lam Tunnel and the Yuen Long Approach Road, will form the country park section of Route 3, which will provide a fast link between the border and the container port in Kwai Chung. Construction of the latter two sections of Route 3 will be privatised under a 'build, operate and transfer' franchise, tenders for which were invited on December 3.

       Proposals for future railway development were mapped out in the Railway Development Study, published in April for public consultation. The study recommends that priority should be given to a Mass Transit Railway extension to Tseung Kwan O and to the construction of a railway line in the Western New Territories. This proposed railway line could accommodate a freight service between the border and the container port, long- distance passenger services to China, and commuter services to the Northwest New Territories. Public opinion collected in the consultation exercise is being assessed, before the government decides on the railway development strategy.

       During the year, construction work continued on the major transport links from the new airport at Chek Lap Kok to the urban area.

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  Emphasis continued to be placed on improving the efficiency with which transport and related services are delivered to the public.

  Another significant event was the introduction of fare concessions by the franchised bus and ferry companies for elderly passengers.

This chapter also looks at Hong Kong's port and aviation services.

The Administrative Framework

The Transport Branch of the Government Secretariat, headed by the Secretary for Transport, is responsible for overall policy formulation, direction and co-ordination of internal transport matters. The Secretary for Transport 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, and is supported by a Transport Complaints Unit, which received 12 793 complaint cases on traffic and transport matters in 1993. The Secretary for Transport also chairs the Transport Policy Co-ordinating Committee, which oversees the formulation and implementation of major internal transport policies. On local transport matters, the government is advised by the district boards, and their traffic and transport committees.

  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 roads 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 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 1993, the unit handled 23 prosecutions in respect of buses, 5 158 cases for which disqualification was sought under the Driving Offence Points System, and 433 prosecutions in respect of breaches 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 the registration and licensing of vehicles, the issue of hire car permits and passenger service licences, and designation of car-testing centres.

  The Transport Department also operates an Emergency Transport Co-ordination Centre, which co-ordinates special traffic and transport arrangements during serious traffic and transport disruptions, rainstorms and typhoons. The centre undertook 13 operations in 1993.

To tackle the area-wide traffic congestion at the Kwai Chung container port, the police operate, when necessary, the Emergency Container Port Traffic Control Centre jointly with representatives of the Transport Department, Kwai Tsing District Office, the three terminal operators, the Container Tractor Owners Association and the Container Transportation Employee's General Union. The control centre is located within the

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container port and is equipped with a Closed Circuit Television system and efficient communication links. During the year, it operated three times.

      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 proposals.

Planning

The updating of the Second Comprehensive Transport Study was completed during the year. This facilitates the planning of territorial transport networks and the managing of the demand for road use up to the year 2011.

A freight transport strategy, to meet the projected freight demand and improve the efficiency of goods movements up to 2011, is being developed through the Freight Transport Study.

Meanwhile, the railway development strategy is being formulated, taking account of views expressed following public consultation on the Railway Development Study.

The Travel Characteristics Survey, which provides up-to-date information on house-hold trips and socio-economic data, was completed in early 1993. The results are being used for transport planning purposes, including updating the existing transport planning models.

A Parking Demand Study has commenced, to update the parking inventory and to forecast future demand, so as to identify the shortfalls in parking provisions for the territory.

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. The total capacity of the three crossings is about 40 000 vehicles per day. The crossings open at 7 am each day and while the Sha Tau Kok crossing closes at 6 pm, the other two close at 10 pm.

Cross-border vehicular traffic increased by about 12 per cent during the year, compared with 1992. The increase was registered mainly at Lok Ma Chau. The average daily traffic figures at the three crossing points in 1993 were about 1 700, 9 400, and 9 000 at Sha Tau Kok, Man Kam To and Lok Ma Chau, respectively. Goods vehicles accounted for 96 per cent of the traffic, reflecting the rapid growth in trade and industrial links with China. At the end of the year, 25 companies operated tourist coach services across the border.

The Kowloon-Canton Railway continued to play an important role in carrying freight and passenger traffic between Hong Kong and China. Some 2.28 million revenue tonnes of freight were brought into Hong Kong by rail, compared to 2.81 million tonnes in 1992. Exports to China by rail accounted for 1.21 million revenue tonnes, an increase of 2.5 per cent from the 1.18 million tonnes carried 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. A Hung Hom-Daleng railway container shuttle service was commissioned on December 7, 1992. Some 41 million rail passengers crossed the border in 1993, compared to 38 million the previous year. 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.

Ferry services between Hong Kong and China carried 6.5 million passengers, compared with 5.1 million in 1992. At the end of the year, there were 29 ferry routes between Hong Kong and China, operated by eight companies.

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  The opening of the Shenzhen Airport in October 1991 provided a further impetus to the growth of cross-border traffic, and coach and ferry services now operate between the airport and Hong Kong.

  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.

The Road Network

Hong Kong's roads have one of the highest vehicle densities in the world. At the end of 1993, there were 439 719 licensed vehicles and about 1 625 kilometres of roads

- 418 on Hong Kong Island, 394 in Kowloon and 813 in the New Territories, representing 271 vehicles per kilometre of road. This high vehicle density, combined with the difficult terrain and dense building development, poses a constant challenge to transport planning, road construction and maintenance. There are eight major road tunnels, over 818 flyovers and bridges, 446 footbridges and 278 subways to assist the mobility of vehicles and people.

  To cope with increasing transport demands, the Highways Department has continued an extensive construction programme, with about 60 road projects currently under construction and 30 being actively planned.

  The department's budget for the financial year ending March 1994 totals $7,681 million, of which $7,043 million is for major highway construction, and $638 million for road and public lighting maintenance.

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 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.

Route 6 covers the Eastern Harbour Crossing, Kwun Tong Bypass, Tate's Cairn Tunnel and the approach road linking Tate's Cairn Tunnel to the Tolo Highway.

Improvements to Major Road Networks

In the northern New Territories, the remaining section of the New Territories Circular Road from Pak Shek Au to Au Tau was completed during the year under review.

TRANSPORT

       The Yuen Long to Tuen Mun Eastern Corridor was completed in July 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, connecting 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 access to the northwest New Territories, the country park section of Route 3 is under planning, for completion by late 1998. It will be a dual, three-lane carriageway, connecting Ting Kau with Yuen Long. The private sector will be invited to build the section from Au Tau to Ting Kau under a franchise arrangement.

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. Work is underway on the major highway projects which will cater for airport traffic, including the Western Harbour Crossing, the West Kowloon Expressway, the Kwai Chung and Tsing Yi sections of Route 3, the Lantau Fixed Crossing and the North Lantau Expressway.

      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. The rail link will, in addition, serve new developments on the West Kowloon Reclamation and in Tung Chung new town, and provide a third cross harbour rail link.

For more details, see Chapter 16.

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. Measures taken include the application of pre-cast decorative concrete panels to the retaining wall of the Gascoigne Road Flyover project, and the installation of an enclosed-type noise barrier in a section of the Tate's Cairn Tunnel approach road near Richland Gardens in Kowloon Bay. 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.

Road Opening Works

The highways provide space to install various utility services, such as water and gas mains, sewers, and electricity and telephone cables, besides serving as carriageways for vehicles and pedestrians. To cope with the demand resulting from the rapid development of Hong Kong, utility companies often have to excavate the carriageways and footpaths to maintain services by renewal, repair and enlargement of pipes, cables and ducts. On average, 170 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 traffic disruption, the department holds monthly Road Opening Co-ordinating Committee meetings with the utility companies, police and the Transport Department. Consideration is being given to improving the management of road openings, to reduce their duration and frequency.

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Tunnels

In January, the management of the Lion Rock Tunnel, Airport Tunnel, Shing Mun Tunnels and Tseung Kwan O Tunnel was contracted out, following competitive tendering, to reduce the need for staff resources and to improve efficiency. The contractors are responsible for operating and managing the tunnels on behalf of the government. Toll charges remain under government control.

Lion Rock Tunnel, which links Kowloon and Sha Tin, began single tube operation in 1967, with a second tube added in 1978. It is the most heavily-used government tunnel and was used by 78 000 vehicles a day in 1993.

The toll-free Airport Tunnel provides direct road access from Hung Hom to Hong Kong International Airport. It also passes underneath the airport runway to Kowloon Bay. Opened in 1982, it was used by an average of 55 000 vehicles per day in 1993.

  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 47 000 vehicles during the year under review.

  Tseung Kwan O Tunnel was opened in 1990. Linking Kowloon to Tseung Kwan O new town, it was used by 23 000 vehicles daily.

The Aberdeen Tunnel was opened in 1982. It links the north and south sides of Hong Kong Island, with a daily traffic volume of 56 000 vehicles in 1993.

The Cross Harbour Tunnel, the Eastern Harbour Crossing and the Tate's Cairn Tunnel were all built by the private sector under 'build, operate and transfer' franchises.

The Cross Harbour Tunnel, opened in 1972, connects Causeway Bay on Hong Kong Island and Hung Hom in Kowloon. Used by an average of 122 000 vehicles each day in 1993, it is one of the world's busiest four-lane road tunnels. The tolls ranged from $4 to $30, including a government passage tax.

The Eastern Harbour Crossing is Hong Kong's second cross-harbour road tunnel. Opened in 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 the Tate's Cairn Tunnel. At the end of the year, traffic in this tunnel averaged 80 000 vehicles per day. The tolls ranged from $5 to $30.

Tate's Cairn Tunnel was opened to traffic in 1991, to provide an additional direct road link between the northeastern New Territories and Kowloon. Measuring four kilometres from portal to portal, it is the longest road tunnel in the territory. The daily traffic flow at the Tate's Cairn Tunnel increased to 78 000 vehicles a day at the end of 1993. The tolls ranged from $4 to $8.

In August, automatic tunnel toll collection (autotoll) was introduced in the Cross Harbour Tunnel and the Aberdeen Tunnel, to enable motorists to drive through toll booths without stopping and to reduce tunnel operating costs.

The automatic toll collection, based on microwave technology, was initially for one toll lane in each direction, following amendments to the Road Tunnels (Government) Ordinance and Cross Harbour Tunnel Bylaws. Drivers need not stop to pay tolls as the toll is automatically deducted from the vehicle user's account. At the end of the year, there were about 23 800 registered autotoll users, making daily averages of 18 600 and 14 400 trips through the Cross Harbour and the Aberdeen Tunnels, respectively.

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Traffic Management and Control

      To facilitate a smoother traffic flow, an extensive programme of traffic management and control measures is being implemented.

At the end of the year, there were 1 130 signalised junctions in the territory, comprising 440 in Kowloon, 300 on Hong Kong Island and 390 in the New Territories.

       In Kowloon, 360 signalised junctions were under the control of the existing Kowloon Area Traffic Control (ATC) System, which has been in operation for more than 16 years. The system is now being replaced to increase its capacity and update the technology. One notable feature of the new system, to be commissioned in 1995, will be 'traffic responsive control', under which signal timings can be automatically adjusted in response to changes in traffic flows. This should minimise delays for road users. In addition, planning work has started on the enhancement of the Closed Circuit Television (CCTV) system in Kowloon to provide a wider area coverage for traffic surveillance.

       On Hong Kong Island, the majority of the signalised junctions on the northern shore, from Kennedy Town to Shau Kei Wan, are under the control of the Hong Kong Area Traffic Control system. The system is being expanded to Chai Wan and the Southern District. At the end of 1993, 240 junctions on Hong Kong Island were under ATC control and 35 CCTV cameras were in use.

       A new ATC System is now being installed in Tsuen Wan. At the end of the year, about 70 signalised junctions in Tsuen Wan, Kwai Chung and Tsing Yi were under computer control. The final system, to be completed in 1995, will include traffic responsive control and a CCTV system.

       Following the installation at Tsuen Wan new town, the ATC system will be extended to Sha Tin new town, and planning work has already started for implementation in early 1995.

Parking

The management and operation of on-street, metered parking spaces are scheduled to be contracted out in early 1994 to improve efficiency.

On-street parking, usually metered, is provided only at locations where traffic conditions permit. At the end of the year, there were 13 000 metered spaces throughout the territory, most of which operate between 8 am and midnight from Mondays to Saturdays. In Causeway Bay, Happy Valley and Tsim Sha Tsui, where parking demand is high, their operation has been extended to include Sundays and public holidays to facilitate a better turnover of parking spaces. In June 1993, tenders were called to invite a contractor to take over the management of parking meters from the Transport Department from March 1994.

The government also owns 14 multi-storey carparks, which provide 8 200 parking spaces. They are operated and managed by two private companies under two separate management contracts. 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 carparks in commercial buildings, public and private housing estates and open-air lots - providing over 100 000 parking spaces.

Licensing

The total number of licensed vehicles in all classes was 439 719 at the end of the year an increase of 7.8 per cent over 1992.

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  The number of new private cars registered fell from 41 878 in 1992 to 41 480 in 1993, a decrease of 0.95 per cent. Despite the use of financial restraint measures which included increasing the first registration tax of new private cars from a range of 80-100 per cent to 90-120 per cent of the cars' Cost Insurance Freightage values in March 1991 - the total number of licensed cars in December was 259 874, a growth of 9.64 per cent over the past

year.

  Registered goods vehicles increased to 143 805 in December, up by 2.36 per cent compared with the 140 491 goods vehicles of a year earlier. Included in these were 106 068 light goods vehicles, which increased by 0.44 per cent from 1992. 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 in 1991 by 50 per cent and 90 per cent, or $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. At the year's end, the number of licensed light goods vehicles stood at 86 709, a decrease of 1.95 per cent from the same period in 1992. Meanwhile, the number of medium goods vehicles increased by 7.93 per cent to 32 386 by end-1993.

  There were 1 008 270 licensed drivers at the year's end, an increase of 4.89 per cent from 1992. The average number of new learner-drivers increased from 6 164 per month in 1992 to 6 541 per month in 1993.

  Since the introduction of the Driving Offence Points System in August 1984, 22 076 drivers have been disqualified. A total of 242 718 warning notices have been served and 380 757 drivers have incurred penalty points for committing offences scheduled under the Road Traffic (Driving Offence Points) Ordinance. The figures for 1993 were 5 158, 41 767 and 25 737, respectively.

  A performance pledge scheme for the services provided by the Transport Department in the issue of learner and full driving licences, and registration and licensing of vehicles was introduced in December 1992. Plans are in hand to extend the scheme to other licensing and vehicle examination services. Two customer liaison groups, covering the licensing services on Hong Kong Island, and in Kowloon and the New Territories, were formed in September to gauge customers' opinions on services provided and improvements desired. A Best Licensing Service Award Scheme was launched in June and 10 licensing staff were given awards.

Vehicle Examination

 Vehicle examination activities continued to expand, through the efforts of examination centres operated by the government or its contractors, and the private sector.

  Two lanes of computer-controlled equipment were put into full operation in September at the Kowloon Bay Vehicle Examination Centre for urban taxi inspections. A taximeter test machine was also installed in August at the Sheung Kwai Chung Vehicle Examination Centre for New Territories taxis.

  With effect from June, it became necessary for all light goods vehicles to pass a roadworthiness inspection every year, before they can be relicensed. Medium and heavy goods vehicles manufactured before 1989 also require annual inspection. It is planned that all goods vehicles should be inspected annually by the end of 1994.

  Private cars over six years old are also required to pass an inspection before relicensing. The private car inspection scheme was operated at 24 designated car testing centres. From

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Opposite page: An extensive assort- ment of working craft ply the local

waters.

Hong Kong's port services provide rapid turnaround times for the world's shipping (above).

Left: Like neat rows of slippers, fishing boats at Shau Kei Wan await nightfall.

PUBLIC

Private motor yachts form an exclusive colony in a section of the Causeway Bay Typhoon Shelter (above).

Left: A range of sailing and motor yachts lie at their moorings at the Royal Hong Kong Yacht Club, which celebrates its centenary in 1994.

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June, these testing centres also inspected all light goods vehicles over one year old and with a gross vehicle weight under 1.9 tonnes.

All public transport vehicles continued to be inspected annually, while the random daily spot checks of in-service franchised buses were increased.

Road Safety

Traffic accidents involving injury increased by one per cent in 1993. There were 15 420 accidents, of which 3 395 were serious and 333 fatal. This compares with 15 322 accidents in 1992, of which 3 438 were serious and 318 fatal. In-depth investigations were carried out at 149 traffic accident blackspots in order to identify accident causes. Remedial accident prevention measures were recommended at 130 of these locations. Similar measures, when implemented, have been shown to reduce accidents by 30 per cent on average.

Accident records are updated daily with the microcomputer-based traffic accident data system, installed in 1991. Accident statistics and map plots are retrieved, compiled and analysed for traffic accident blackspot analysis and road safety strategy formulation. (Accident statistics are at Appendix 39.)

As an aid to police enforcement, a red light camera pilot scheme was commenced in January to deter red light running at signal-controlled junctions. The experiment showed the equipment was effective and a plan is being drawn up to expand the system.

Road safety campaigns continued to play an important role in reducing traffic accidents. The major themes of the year's campaigns were pedestrian safety, targeted at young people and the elderly; and safety for drivers, targeted in particular at light goods vehicle, private car and motorcycle drivers. Posters, television announcements and leaflets were produced and widely distributed. A series of radio and television road safety programmes were broadcast. In anticipation of new legislation on the fitting and wearing of rear seatbelts in private cars, efforts have been made to educate the public on the subject. Two new short films, on seatbelt wearing and drink-driving, were produced and broadcast on television during the year.

       At the year's end, the Road Safety Association of Hong Kong operated 224 school road safety patrols, while school staff patrols operated at 562 schools, 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 transport services extends to almost every part of the territory.

Railways

There are five rail systems, comprising a heavily-utilised 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 corporations, wholly owned by the government. The others are owned by private operators.

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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.

Patronage increased slightly during the year, and by the year's end, the railway was carrying 2.13 million passengers a day. It is one of the busiest underground railways in the world. Adult fares ranged from $3.50 to $9 per trip, according to distances travelled.

Plans for the construction and financing of the Airport Railway are in hand. The new railway, when built, will consist of two separate rail services: a dedicated express service linking the new airport at Chek Lap Kok 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 with the Island Line at Central, 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. Operation of the system, formerly run by a government department, was vested in the Kowloon-Canton Railway Corporation (KCRC) in 1982.

The 34-kilometre railway provides a suburban service to the new towns in the northeastern New Territories, a freight service to and from China, and passenger services to and from Guangzhou and Foshan. The suburban service has grown substantially since the introduction of electric trains, and in 1993, the railway handled 569 500 passenger journeys daily. 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. In the 10 years beginning late 1993, the KCRC plans to spend about $600 million to further reduce noise levels at major residential developments along the entire line, by constructing covered or semi-covered noise barriers at 18 locations.

Light Rail Transit

The KCRC also owns and operates the 31-kilometre Light Rail Transit (LRT) system, in the northwestern New Territories, which began operating in 1988. An extension was opened in January 1993, between Tin Shui Estate and Castle Peak Road at Tong Fong/Hung Shui Kiu. The extension increased to 55 the stops served by the system. Nine services are provided on the network by a fleet of 100 cars, which operate either singly or in pairs. At the end of the year, 291 942 boardings a day were handled on the LRT and its feeder bus services within the transit service area between Tuen Mun and Yuen Long. The LRT operates zonal fares and provides free transfers from one route to another within the zone and to and from feeder buses. Ordinary adult fares ranged from $3 to $4.30.

In June, the boarding and alighting restrictions on buses operated by the Kowloon Motor Bus Company (1933) Limited in the transit service area were lifted, to provide a greater choice to passengers travelling within the area.

   A further extension of the LRT in Tin Shui Wai new town, from Tin Shui Estate to the Tin Shui Wai town centre, is expected to be completed in 1994. The system route length will then be increased to 31.8 kilometres, and the number of stops to 57.

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Trams

Electric trams have been operating on Hong Kong Island since 1904. Hongkong Tramways Limited has six overlapping services, using 13 kilometres of double track along the north shore of Hong Kong Island, between Kennedy Town and Shau Kei Wan, and nearly three kilometres of single track around Happy Valley. The 163 trams, including two open-balcony trams for tourists and private hire, make up the only fully double-decker tram fleet in the world. All of the original trams had been rebuilt by 1991. Tramway patronage rose marginally during 1993, with an average of 340 000 boardings daily. Fares remained at $1 for adults and $0.50 for children.

Funicular Rail

      Hong Kong's other 'tramway' is a cable-hauled funicular railway, operated by the Peak Tramways Company Limited from Central to The Peak. 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 1989. The service caters largely for sightseers but also serves Peak district commuters. The line serves an average of 9 000 passengers a day. One-way fares for adults and children were $10 and $4, respectively.

Road Passenger Transport

Road passenger transport accounted for two-thirds of all public transport journeys. Over half of the journeys made by road were on franchised buses, with the remainder handled by green minibuses, public light buses, taxis and non-franchised buses.

Franchised Buses

The standard and capacity of franchised bus services continued to improve through planning and co-ordination. There are four franchised bus companies, which together carried 3.4 million passengers daily on a network of 469 regular routes.

The largest operator is the Kowloon Motor Bus Company (1933) Limited (KMB), which ran 299 bus routes in Kowloon and the New Territories; 38 cross-harbour routes jointly with the China Motor Bus Company; two cross harbour routes with Citybus Limited and three cross harbour routes of its own. As a continuing effort to improve service quality, KMB has introduced 11 air-conditioned bus routes. KMB also operates 'Airbus' services to and from the airport, comprising three routes to Hong Kong Island and two within Kowloon.

The KMB fleet at the end of the year comprised 3 197 registered vehicles, with 2 579 double-decker conventional buses, and 312 and 306 air-conditioned double and single- decker buses, respectively. Each can seat between 24 and 164 passengers. In 1993, KMB made 966 million passenger trips and operated 243 million kilometres, compared with 970 million passenger trips and 234 million kilometres in 1992. KMB's current franchise extends until August 31, 1997. Fares ranged from $1.00 to $23.00 for non air- conditioned services, and from $2.20 to $25.50 for air-conditioned services.

To attract commuters who might otherwise have used and overloaded the section of the Mass Transit Railway (MTR) along Nathan Road, a total of 29 air-conditioned 'Nathan' bus routes were operated during the year, from the New Territories and North Kowloon to Hong Kong Island and South Kowloon. These services helped keep the MTR passenger flows along Nathan Road at acceptable and safe levels.

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From April, elderly passengers aged 65 and over became entitled to concessionary fares on every KMB route, except the Airbus services.

Bus services on Hong Kong Island are provided by two operators. The China Motor Bus Company (CMB) operates 91 routes on the island and, jointly with KMB, 38 cross- harbour routes. At the end of 1993, CMB's fleet comprised 991 double-deckers and 23 single-deckers. Eighty-one double-deckers and all the single-deckers were air-conditioned. They made 236 million passenger trips and travelled 48 million kilometres during the year, compared with 263 million and 52 million, respectively, the previous year. CMB purchased 20 air-conditioned double-deckers in 1993 to improve services. Fares ranged from $1.80 to $25.50. With effect from June 6, elderly passengers aged 65 and over became entitled to concessionary fares on most CMB routes. The company's franchise has been extended to August 31, 1995.

Citybus Limited (Citybus) is the other franchised operator on Hong Kong Island. The company had been running non-franchised bus services since 1979. In August 1991, it was awarded a franchise to operate a route between Central and MacDonnell Road.

To promote healthy competition among transport operators, 24 Hong Kong Island routes and two cross-harbour tunnel routes, withdrawn from CMB, were awarded to Citybus under a three-year franchise which took effect on September 1, 1993. The cross- harbour routes are operated jointly with KMB. At the end of the year, Citybus had a fleet of 200 franchised double-decker buses, of which half were air-conditioned. Fares ranged from $1.80 to $4.50 for non-air-conditioned trips, and from $2.50 to $12.00 for air- conditioned services. Elderly passengers aged 60 and over became entitled to concessionary fares from September on Hong Kong Island routes. Overall, Citybus's franchised bus services made 22 million passenger trips and travelled 3.6 million kilometres during the year.

The New Lantao Bus Company (1973) Limited (NLB) operates six regular, and one recreational, franchised routes on Lantau Island, with a fleet of 51 single-decker and five double-decker 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 patronage rate for NLB in 1993 was 8 920 passengers. Boosted by recreational traffic, the average patronage on Sundays and public holidays was 21 847 passengers. Fares ranged from $1.20 to $21.00. With effect from September, elderly passengers aged 65 and above can pay half-fare on all NLB services on Mondays to Saturdays, except public holidays. To 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. During the year, the average patronage on this special service was 3 605 passengers per day. In July, NLB was awarded a new two-year franchise until March 31, 1997.

Minibuses

Hong Kong's minibuses are licensed to carry a maximum of 16 seated passengers. There were 6 904 minibuses in 1993. Of these, 4 350 were public light buses (PLB), and 2 554 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 244 PLBs. Green PLBs provide services according to fixed schedules. There were 1 620 of these,

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operating on 230 approved routes, each with fixed fares and timetables. They carried 728 000 passengers a day. Red PLBs operate without a schedule. They do not have fixed routes, timetables and fares. In 1993, there were about 2 709 red PLBs, which carried about 1 007 000 passengers daily.

In line with government policy to convert more red PLBs to operate on scheduled routes, more new scheduled routes will be identified. During the year, one green minibus selection exercise, with 16 routes requiring 80 minibuses, was conducted, for competitive bidding by minibus operators.

Taxis

At the end of 1993, there were 14 950 urban taxis, 2 738 New Territories taxis and 40 Lantau taxis, carrying, respectively, an average of 1 085 000, 192 000 and 1 070 passengers daily.

A Transport Advisory Committee (TAC) working group continued its review of the government's policies on taxis. An exercise launched by the TAC in 1992 to seek public views on various measures, identified by the working group, for improvement of taxi services was completed during the year. The working group is formulating recom- mendations for the consideration of the TAC.

Non-Franchised Bus Operators

Residents' coach services were introduced in 1982 to give commuters an extra choice. These services operate primarily during peak hours, supplementing services provided by the franchised bus operators. They are flexible, to respond to local market demands. This helps keep down the number of franchised buses that would otherwise be left idle during off-peak hours. Residents' organisations may invite a non-franchised bus operator to operate such a service under a passenger service licence issued by the Transport Department. Residents' services operate in accordance with approved schedules, which specify the routing, timetable, and stopping places.

At the end of the year, there were 91 residents' services running 85 000 passenger trips a day. Vehicles used on these services ranged from small coaches to double-decker buses. Thirteen 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.

Non-franchised bus operators also serve the needs of factory employees, tourists and students on a group hire basis.

At the end of 1993, the licensed fleet of non-franchised buses totalled 4 098 vehicles, of which 219 were double-deckers. An increasing proportion of these vehicles were air-conditioned.

Ferries

      Ferries are essential for travelling to Hong Kong's outlying islands and provide an important link to the new towns in the northwest New Territories. In the inner harbour, they are a supplementary mode of transport to cross-harbour buses and the Mass Transit Railway. Existing services are provided largely by two franchised operators - the 'Star' Ferry Company Limited and the Hongkong & Yaumati Ferry Company Limited (HYF).

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The Star Ferry operated 12 vessels across the harbour and, during the year, carried 35 720 673 passengers on its three routes. Fares ranged from $1.50 to $1.80. Passengers aged 65 and above can enjoy free travel on all Star Ferry services.

  HYF owned 83 licensed vessels and operated 16 ferry routes, including passenger and vehicular services across the harbour, hoverferry services to the northwest New Territories, services to the outlying islands and charter services. In 1993, the company carried 99 807 passengers and 6 565 vehicles daily. Elderly passengers aged 65 or above can enjoy half-fare concessions during off-peak hours in ordinary class services from Mondays to Fridays, except on public holidays.

  A further 18 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, 89 kaitos were in operation.

The Port

Hong Kong has the busiest container port in the world, handling more than nine million TEUS (20-foot equivalent units) in 1993. It is also one of the busiest in terms of vessel arrivals, and cargo and passenger throughput. Some 165 000 ocean-going and river trade vessels arrive in Hong Kong annually, handling over 100 million tonnes of cargo, and over 20 million international passengers, most of whom are carried on the world's largest fleet of high-speed ferries.

Details of international movements of vessels, passengers and cargo are given at Appendix 37.

  The port has always been, and continues to be, crucial to Hong Kong's economy and prosperity. It handles about 90 per cent of the territory's trade. Port and related industries generate about 15 per cent of Hong Kong's Gross Domestic Product, provide some 350 000 jobs and keep 20 per cent of all companies in business.

To maintain its strategic significance as a conduit for Hong Kong's trade, as an entrepôt for China and as a hub port for world trade, the port must continue to grow. Planning for growth flows from the Port and Airport Development Strategy to a Port Development Plan, covering container terminals and other less obvious but equally vital facilities such as cargo-working areas, typhoon shelters, anchorages, container back-up land, shipyard sites and berths for deep waterfront industries. The pace of development is geared to meet the forecast demand up to the year 2011. It is reviewed regularly to ensure that facilities are available when they are needed, taking into account the latest forecasts of demand.

  The government has always taken the view that generally it should not undertake commercial activities which can be provided more efficiently by the private sector. Hong Kong leads the world in this respect and the port is an excellent example. Most port facilities, such as the container terminals and dockyards, are privately built, owned and operated. Services such as stevedoring, tugs and pilotage are also provided directly by the private sector. The Port Development Plan envisages a continuing high level of private sector involvement in providing port facilities and services.

The valuable advice given by users and operators of port facilities is an important factor in the port's success. A wide range of interests from the private sector are represented in advisory and consultative bodies, including the Port Development Board, which advises the government on port planning and development; the Port Operations Committee, which

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advises the Director of Marine on the operational needs of the port; and the Provisional Local Vessel Advisory Committee, which advises on local craft matters.

The Container Port

Of the 9.2 million containers loaded and discharged in 1993, about 63 per cent (or 5.8 million TEUs) were handled at the Kwai Chung Container Port, and another 30 per cent (or 2.8 million TEUs) were handled by ships at mid-stream mooring buoys and anchorages. All eight container terminals at Kwai Chung are privately owned and operated, and will have a total of 16 berths for ocean-going vessels by early 1995. The first of four berths of the latest terminal, Container Terminal 8, became operational in July 1993. The other three berths are under construction and will be completed at about six-month intervals. While Container Terminal 8 is being built, planning for the con- struction of Container Terminal 9, at southeast Tsing Yi Island, is at an advanced stage and preliminary design work is underway for Container Terminals 10 and 11.

International Ferry Services

The number of international passengers using the ferry terminals managed by the Marine Department is increasing. In 1993, 6.7 million passengers used the China Ferry Terminal in Tsim Sha Tsui and 13 million used the Macau Ferry Terminal in Central. The total was a three per cent increase from 1992. Most of these passengers travelled on the world's largest fleet of modern, high-speed passenger craft, comprising jetfoils, hydrofoils, sidewall hovercraft and catamarans operating from Hong Kong to Macau and various ports in China.

       The department has introduced statutory requirements to enhance safety, by predicting and minimising the effects of shipboard system failures and improving crew training.

Port Services

The port is administered by the Marine Department. The department's mission is to enhance Hong Kong's role as one of the world's great ports by ensuring that ships can enter port, work their cargoes and depart as quickly and safely as possible. In line with the government's public sector reform programme, the department has published a performance pledge, outlining the standards of service its customers can expect. In a further step to improve and meet the ever-growing demand for its services, the department is commercialising its operations. It aims to become a trading fund department and a self-financing commercial entity within the government in two years.

Hong Kong waters are covered by a Vessel Traffic Service (VTS), to ensure a safe and expeditious marine traffic flow in the densely-populated port. The system is run by the department and participation is compulsory for ocean-going vessels of 300 gross registered tonnes (GRT) and above. The system comprises a computer-assisted radar network, a computer database and VHF radio telephone communications. Coupled with a comprehensive system of navigational aids, fairways, traffic separation schemes and harbour patrols, it helps Hong Kong maintain a low level of marine accidents by world standards.

       Ships over 5000 GRT and certain other vessels are required to engage pilots when moving within the port and its approaches. The Director of Marine regulates and controls the pilotage service, although the pilots themselves operate as a private company.

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The number of vessels using the port and requiring pilotage is increasing rapidly. A Pilotage Review Consultancy Study was commissioned by the department in March, to review the present pilotage system and to make recommendations for any changes necessary to meet the needs of the port in the most efficient and cost-effective manner for the period 1994 to 2011.

The main recommendations of the consultants include shifting the present pilot boarding station located at Green Island to the outer entrance of East Lamma Channel; extending compulsory pilotage to all ships exceeding 3000 GRT; creating a corporate body responsible for pilotage services and all related matters; and establishing a close operational relationship between the VTS and pilots for improved efficiency and safety in the port. These recommendations are currently under examination and consideration by the department prior to implementation.

The department's launches patrol the main harbour area and its approaches, maintain order and respond to emergencies. They are in continuous radio contact with the VTS through the department's Vessel Traffic Centre (VTC). Well-equipped fleets of fire boats, tugs, oil-pollution control vessels and marine police launches are also available to respond to emergencies.

Immigration and quarantine services, including advance clearance, may be applied for by radio through the VTC. The Western Quarantine Anchorage provides these services round-the-clock while services are available between 6 am and 6 pm daily at the Eastern Quarantine Anchorage.

The department provides and maintains 76 mooring buoys within the port for ships to work cargo in the stream. The buoys can be booked through the VTC. There are two classes of buoys, suitable for vessels up to 137 and 183 metres in length. Most are typhoon moorings to which vessels may remain secured during tropical storms.

A large number of harbour craft are essential to the efficient running of the port. During the year, over 1 700 lighters and 400 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 16 000 local vessels which include ferries, barges, workboats, fishing boats and pleasure vessels.

Bunkering facilities within the port are readily available 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 water boats.

The port has extensive facilities for repairing, dry-docking and slipping all types of vessels of up to 150 000 deadweight tonnes, including oil rigs. Smaller shipyards are able to build and maintain workboats and pleasure vessels.

In the latter part of the year, the department initiated a prototype Dangerous Goods Control System in an attempt to establish more accurately the quantities and types of dangerous goods being moved into and out of Hong Kong. When the results of the prototype control system are established, the department will introduce a stricter control regime utilising the International Maritime Dangerous Goods (IMDG) Code as a cornerstone.

The increase in the number and size of ships visiting the port and the increasing pace of reclamation have increased the need for accurate and up-to-date hydrographic surveys and charts. The department is establishing its own hydrographic office to meet this demand.

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The department also provides refuse collection and scavenging craft, which collect and scavenge some 5100 tonnes of refuse annually from ocean-going ships and Hong Kong

waters.

The Chemical Waste Treatment Centre commissioned on Tsing Yi Island during the year provides, among other things, reception facilities for treating oily and chemical wastes from ships as required under the International Convention for the Prevention of Pollution from Ships (MARPOL).

Port State Control

A total of 50 ocean-going ships visiting Hong Kong were inspected in 1993, to check compliance with international safety and environmental protection conventions. This represented about 0.9 per cent of ships visiting Hong Kong. Of the ships inspected, about 75 per cent required deficiencies to be made good before they could sail. Hong Kong supports international co-operation in maritime safety and in December 1993, signed an Asia-Pacific region Memorandum of Understanding on Port State Control to enhance the effectiveness of these inspections at sea.

Local Vessel Survey and Related Services

A plan-approval and safety survey service is provided for local vessels operating within the waters of Hong Kong. The requirements for the certification, safety and control of local craft are being rationalised to enhance safety, by clearly delineating the duties and responsibilities of owners, operators and the government.

A free inspection and advice service is provided to promote safe working practices in ship repairing, ship-breaking and cargo-handling afloat.

Government Fleet

The Government fleet of about 330 powered vessels provided by the Marine Department is highly visible in 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, and surveys of international shipping. The fleet also includes lighters, airport rescue craft, pollution control craft, floating clinics and launches for transporting government staff.

       All government vessels are specially designed to meet their users' needs. The 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 and command launches. The six launches were delivered in 1992 and 1993.

Maritime Search and Rescue

      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 Search and Rescue Co-ordination Centre (MRCC) is manned con- tinuously and monitors all emergency communications channels. Radio communications equipment for the Global Maritime Distress and Safety System (GMDSS) is also available and used in the centre. Search and rescue missions can be activated and run by

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professionally-trained staff. Fully-equipped search and rescue vessels and aircraft are available, and additional assistance can be obtained from other rescue co-ordination centres in the region.

In 1993, the MRCC responded to over 200 distress calls, of which at least 75 involved major operations. These cases varied from simple casualty evacuations of injured fishermen from vessels, to the rescue of an entire crew from a sinking vessel in a typhoon. In between, there were groundings, fires, collisions, sinkings and man overboard cases.

During the year, three major incidents highlighted the work of the MRCC. The first involved the rescue of crew members from a sinking vessel during Typhoon Koryn on June 27. Five helicopters and a fixed wing aircraft were involved in the rescue some 71 miles east-southeast of Hong Kong, under appalling weather conditions, and 24 persons were saved.

The second case, on August 21, involved co-ordination with the rescue centre at Stavanger, Norway, which was first advised by satellite of a sinking vessel in heavy weather 332 miles southeast of Hong Kong. The MRCC subsequently tasked a Super King Air of the Government Flying Service (GFS) to the scene, and assisted in locating the sinking vessel and guiding other ships in the vicinity to the distress position. The MRCC instigated urgent marine information broadcasts over the NAVTEX service and 15 vessels responded. Three vessels arrived at the scene and effected the rescue of all 21 persons on board, before the vessel eventually sank.

The third case, on October 29, involved the rescue of a Korean seaman who fell overboard before midnight from his ship 270 miles southeast of Hong Kong and was not discovered missing until the following morning. The MRCC, having considered the sea surface currents in that area, tasked a Super King Air from the GFS to do a track line search. Eventually, the man was rescued and returned to his ship just before dusk, after being in the water for 18 hours.

Seafarers

The falling levels of recruitment of local seafarers is a major concern to the government and Hong Kong shipowners. Together with the Merchant Navy Training Board, training institutions and seafarers' unions, they are trying to increase the recruitment of trainee officers by promoting seafaring careers. As part of this effort, the Hong Kong Shipowners' Association is sponsoring 40 cadets and trainees.

  In addition, the government, the Merchant Navy Training Board and the training institutions have given considerable attention to improving training for Hong Kong seafarers. The Vocational Training Council, a quasi-government body, has built and operates a modern and well-equipped Seamen's Training Centre. The 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, Certifica- tion and Watchkeeping for Seafarers, as well as other marine courses for local seafaring needs.

  The Marine Department monitors training leading to the acquisition of maritime qualifications. It then examines candidates for certificates of competency for service on vessels of all sizes and types, operating both internationally and locally.

  The department's Seamen's Recruiting Office and the Mercantile Marine Office register and supervise the employment of about 3 000 seafarers.

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Participation in the International Maritime Organisation

Hong Kong is independently represented as an associate member of the International Maritime Organisation, and in accordance with the Sino-British Joint Declaration on the Question of Hong Kong, this status will continue after 1997. The territory has made a considerable contribution to the International Maritime Organisation's work in the development of the Protocol to the 1977 International Convention for the Safety of Fishing Vessels, international eyesight standards, and the Code of Safety for High Speed Craft.

Hong Kong's Shipping Register

The Hong Kong Shipping Register is administered by the Marine Department. It recognises the commercial realities of the shipping industry but, more importantly, reflects the government's commitment to the highest international standards of maritime safety and environmental protection. Its supporting legislation embodies international 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 certifica- tion of crew, and protection of the marine environment. Statutory surveys of Hong Kong-registered vessels are undertaken worldwide by the department's surveyors or authorised classification societies, to ensure that these standards are met.

The register had a total fleet of 597 vessels, amounting to 7.75 million gross registered tonnes (GRT) at the end of 1993. This represents an increase of 14 ships (2.4%) and 0.43 million GRT (5.87%) over 1992.

Shipping

Hong Kong is a prominent centre for ship-owning, ship-financing and ship-management. Most local shipowners and connected businesses are represented by the Hong Kong Shipowners Association, whose members control a significant percentage of the world's tonnage.

The association promotes and protects Hong Kong shipowners and ship-managers, plus the growing number of companies which support them.

At the end of 1993, its members' fleet stood at 1 294 ocean-going vessels totalling 60.5 million deadweight tonnes and 33.9 million GRT. The association is either a member of, or works closely with, all significant international maritime bodies to contribute to major developments in merchant shipping worldwide.

At the end of 1993, membership of the association comprised 85 ship-owning and ship-managing companies, 124 associate members and one honorary member (the Director of Marine). The associate members include the major banks, classification societies, maritime lawyers, average adjusters, ship agencies, ship brokers, shipbuilders, ship repairers, surveyors and insurers. This broad-based membership makes a particularly effective forum for liaison with the government and international bodies.

       The combined fleet of the association's members was registered in 32 different countries in early 1993, chiefly Liberia and Panama followed by Hong Kong; total tonnages on those three registers were 20.8 million, 17.3 million and 8.5 million deadweight tonnes, respectively.

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252

Civil Aviation

It was another year of strong growth, both in passenger and cargo throughput, at Hong Kong International Airport, at Kai Tak.

A total of 24.5 million passengers passed through the terminal, an increase of 10.9 per cent over the 22.1 million in the previous year.

Some 1.14 million tonnes of cargo, valued at $390,096 million, were handled, compared with 956 906 tonnes, valued at $332,655 million, in 1992. 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 carried about 19 per cent, 30 per cent and 14 per cent in value terms, respectively. The United States remained the major market for exports and re-exports by air, accounting for 38 per cent and 27 per cent, respectively.

An increase of 11.7 per cent in aircraft movements was recorded in 1993, bringing the annual total to 135 100, of which 78 per cent were wide-bodied aircraft.

On November 4, a Boeing 747 aircraft from Taipei overran the runway at Kai Tak on landing and ended up in Victoria Harbour. At the time, Hong Kong was affected by weather associated with Severe Tropical Storm Ira, which was some 300 nautical miles to the south-southwest. All 296 passengers and crew of the China Airlines jet were rescued. Twenty-three passengers were sent to hospital for observation or treatment and two were admitted in fair condition. None of the crew was injured. An investigation team is looking into the cause of the accident.

Following three incidents involving a loss of standard separation between aircraft in the first six months of the year, the Director of Civil Aviation commissioned the United Kingdom's Civil Aviation Authority (UKCAA) Air Traffic Control Inspectorate to carry out an independent audit of air traffic control procedures at the airport. Among other findings, the UKCAA Inspectorate pointed out that the opposite runway' mode of operating at Kai Tak posed a hazard to flight safety and recommended that it be withdrawn as soon as possible. Based upon this advice, the Director of Civil Aviation suspended this mode of operation with effect from October 29.

Improvements to Hong Kong International Airport

The programme of improvements to the airport at Kai Tak, which started in 1988, is expected to continue until 1994. 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 in 1997.

In February, work started on the construction of additional accommodation for airline commercially important persons, to replace an existing facility. Upon its completion in the first quarter of 1994, the area occupied by the existing facility will be converted into a waiting area.

Other improvements being implemented within the passenger terminal building include the widening of the departure pier in the departure lounge, the construction of an additional bus dock to serve passengers transferring to aircraft positioned on outer parking bays, and the installation of escalators for disembarking passengers.

A new Check-in Information Display System was commissioned and brought into use in the middle of the year. To further optimise check-in counter utilisation, a computerised Check-in Counter Allocation System is being planned for implementation in early 1995.

TRANSPORT

To improve ground access to the airport, a number of road works are being carried out. They include the provision of a roundabout connecting Concorde Road and Prince Edward Road East, a bridge crossing the Kai Tak Nullah, an upramp from Concorde Road, and further improvements to the transport terminus to increase taxi queuing space. The second floor of the airport's multi-storey carpark is being converted to a passenger set-down area to supplement the existing departures kerbside. This work is due to be completed in early 1994. The new passenger set-down area will be connected to the existing terminal building via an additional link bridge and two lifts, which are expected to be completed towards the end of 1994.

The runway resurfacing and regrooving works were completed in February 1993, two months ahead of schedule.

During the year, 10 additional parking bays for B747-sized aircraft and two new taxiway bridges, which provided a taxiway system linking the new South Apron with the runway, were brought into operation. Construction of one more B747 parking bay on the South Apron also commenced, with completion expected in June 1994.

A computerised aircraft parking bay allocation system was commissioned in August. The system automates the assignment of parking bays, optimising the utilisation of the aircraft parking areas.

      As part of a continuing process to upgrade security at the airport, work commenced in November to replace the airport perimeter fence. This is expected to be completed in late 1994. Tenders for an Integrated Access Control and Permit Production System were called in June. This system, when fully operational in May 1994, will facilitate the issue of airport permits and enhance access security.

       The Airport Fire Contingent took delivery of a specially-designed low draught fire rescue vessel that can pass underneath the newly-completed Taxiway Bridge No. 3, linking the South Apron with the runway. This ensures that adequate fire and rescue cover is provided in waters surrounding the runway promontory. To further enhance the fire-fighting and rescue capability at Kai Tak, a contract for an additional fire appliance equipped with a jackless hydraulic rescue platform was concluded in November. Delivery is expected in late 1994.

Air Services

      Hong Kong is home to three international airlines. During the year, Cathay Pacific Airways (CPA), the largest of the three, commenced scheduled passenger services to Cairns and Colombo in October, and to Mauritius in November; and scheduled cargo services to Vancouver in October. To cope with the increasing scale of its operations, CPA acquired three B747-400s and one L1011. At the end of 1993, its fleet comprised 19 L1011s, seven B747-200s, six B747-300s, 17 B747-400s and four B747-200 freighters - a total of 53 aircraft.

       Hong Kong Dragon Airlines (Dragonair) continued to operate scheduled services to seven cities in China and four other destinations in Asia, together with non-scheduled passenger services to a number of other cities, mostly in China and Japan. The airline commenced scheduled services to Phnom Penh, Kota Kinabalu and Sendai in August, October and December, respectively, and regular passenger charters to Ningbo in June; but suspended its scheduled service to Kathmandu in January. With the completion of its B737 replacement programme, Dragonair now operates six A320 and two L1011 aircraft.

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Air Hong Kong (AHK) continued to operate scheduled all-cargo services to Manchester, Brussels, Nagoya, Ho Chi Minh City and Singapore, and non-scheduled cargo services to a number of destinations in Asia, using three B747F and one B707F aircraft. In September, the airline commenced scheduled all-cargo services to Kuala Lumpur.

The year saw the introduction of scheduled air services to Hong Kong by Varig Brazilian Airlines in January, Biman Bangladesh Airlines and British Asia Airways in March, Southern Air Transport in May and Cambodia International Airlines in August. As a result, the number of scheduled airlines serving Hong Kong increased to 55. During the year, these airlines operated about 1 200 direct round-trip services weekly between Hong Kong and some 94 other cities. In addition to the scheduled services, an average of 240 non-scheduled flights were operated by both scheduled and non-scheduled airlines each week.

In accordance with the relevant provisions of the Sino-British Joint Declaration, the process of separating Hong Kong's air services agreements from those of the United Kingdom continued. Two more agreements, with Sri Lanka and Australia respectively, were signed during the year, bringing the total to 10.

In 1993, the Air Transport Licensing Authority granted nine licences to Hong Kong airlines: one to CPA, four to Dragonair and four to AHK. At the end of the year, CPA held licences to operate scheduled services to 63 cities, Dragonair to 60 cities and AHK to 37 cities.

16

THE AIRPOREA PROGRAMA

CONSTRUCTION Work on the Airport Core Programme (ACP) saw good progress in 1993. By the end of the year, 39 contracts worth a total of over $46 billion had been placed, within budget estimates, by the government, the Provisional Airport Authority (PAA) and the franchisee for the Western Harbour Crossing (WHC).

Over one-third of the 1 248-hectare site for the new international airport, at Chek Lap Kok off North Lantau, had been formed by December.

      Major developments during the year included the start of physical work on the West Kowloon Expressway in August, and on the WHC - Hong Kong's third cross-harbour tunnel and Phase I of the Central reclamation in September.

Hong Kong's externally-oriented economy depends greatly on modern, efficient and expanding air transport for its continued growth. Efficient road and rail transport facilities are also essential, along with land for development.

The ACP is designed to provide these facilities in 10 interlinked projects, which will build a base for economic expansion well into the next century. Hong Kong's key role as a centre for international and regional aviation will be enhanced by the new modern airport located away from centres of urban population and capable of operating round-the-clock. Associated infrastructure developments will relieve traffic congestion, and open up new land for urban development and the further expansion of port facilities. The new land will also provide space for recreational activities and have substantial overall environmental benefits.

The 10 projects in the ACP comprise the new airport, which will replace the existing one at Kai Tak; six road and rail projects, including extensive tunnels and bridges, stretching from Central District under the harbour, along the west shore of Kowloon peninsula, across the islands of Tsing Yi and Ma Wan, and along the North Lantau coast; two major land reclamations in West Kowloon and Central District (in addition to the land reclaimed for the airport); and a new town at Tung Chung on North Lantau.

Overall, the programme is based on sound financial principles, with good returns for government investments and extensive involvement of the private sector. Cost-effective concepts and designs have been drawn up for individual projects. Contracts are placed on the basis of open and fair tender evaluations, and there are strong and comprehensive financial and project management controls. Comprehensive consultative arrangements and community and public relations programmes have been developed.

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The Need to Replace Kai Tak

A new airport is urgently needed because the international airport at Kai Tak, which has only one runway, is approaching its full capacity of around 28 million passengers a year and cannot viably be enlarged. In terms of international traffic, it is already the world's fourth busiest airport for passengers and third busiest for freight. It handles about 67 per cent of Hong Kong's nine 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 1993, the throughput of passengers was growing at about 12 per cent. This level of growth means that Kai Tak will be unable to accommodate forecast passenger demand before the new airport's planned opening date in 1997. Hong Kong's economy will, therefore, 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, in money of the day (MOD), over the period 1997-2010. This represents only quantifiable losses; it does not include indirect losses caused by the declining effectiveness of Hong Kong as an international trading and financial centre providing comprehensive business services, 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 covers major extensions to Hong Kong's container port and other developments, which are proceeding separately; while the 10 ACP projects are all associated with the opening of the airport at Chek Lap Kok (with the first of two planned runways).

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). The 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 states that the Chinese Government will 'support the construction of the new airport and related projects'.

During 1993, the Airport Committee, which was set up in accordance with the MOU under the auspices of the Sino-British Joint Liaison Group (JLG), held four meetings. Agreement was reached on the award of the Western Harbour Crossing franchise, and the start of the Central Reclamation Phase I works. Discussions continued on overall financing arrangements for the airport and airport railway projects.

The Consultative Committee on the New Airport and Related Projects (ACC) and its four sub-committees (on the airport and its related land development projects; planning, environment and people's livelihood; traffic and transport; and financial matters) held a total of 14 meetings during the year. A wide range of subjects related to the ACP were discussed. The second term of the ACC began in November.

The MOU provides that an Airport Authority will be established and that the ordinance setting up the body will be modelled, as far as possible, on the Mass Transit Railway Corporation Ordinance. A draft Bill has been passed to the Chinese side of the Airport Committee for comment. Public views will also be sought on the draft Bill in early 1994.

THE AIRPORT CORE PROGRAMME

Implementing and Financing the ACP

The ACP is being implemented by the government, two statutory corporations wholly owned by the government, and a franchisee appointed for the 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 PAA is responsible for planning and developing the airport until a permanent statutory body is established. The Mass Transit Railway Corporation (MTRC) is responsible for building and operating the airport railway. The WHC is being designed, built and operated by the Western Harbour Tunnel Company Limited under a 30-year franchise.

       The cost of the 10 ACP projects was estimated in 1992 to be $163.7 billion in MOD. (Sometimes known as out-turn prices, MOD takes into account the impact of inflation on the value of the dollar while projects are designed and built, providing a realistic projection of out-turn prices. This is particularly relevant to the ACP because most contracts are let on a fixed-price lump sum basis, which means that contract prices have been adjusted to cover inflation over the contract period.)

Within the $163.7 billion, the government's capital expenditure is estimated at approximately $60 billion. This is expected to amount, between 1992-93 and 1996-97, to 25 per cent of the government's total capital expenditure. The remaining 75 per cent of its capital expenditure will be spent on social services projects and other essential construction activities.

       The ACP cost estimate is being reviewed and is expected to be reduced to $158.2 billion in MOD.

The programme provides extensive opportunities for private sector participation. Besides the franchise for the WHC, these include a range of important commercial franchises at the airport, plus commercial lending and real estate development associated with the airport and the airport railway.

Benefits for the Community

      The main benefits for the community, in addition to the airport itself, will come from improved road and rail facilities, which will ease congestion in West Kowloon and open up North Lantau. The closure of Kai Tak will also provide substantial environmental benefits for the 350 000 residents living under its flight paths, who will escape the noise of aircraft. The overall benefits to Hong Kong's economy will also be substantial.

The government's proposed financial investment in the projects will yield substantial benefits for taxpayers. It is estimated that by the year 2020, the new airport, the Lantau Fixed Crossing, and the airport railway will generate over $300 billion in additional revenue for the government.

Formation of Land

The ACP involves the creation of 1 669 hectares of new land, comprising a 1 248-hectare platform for the new airport (composed of 920 hectares of reclaimed land, and the islands of Chek Lap Kok and Lam Chau off northern Lantau, which will be levelled); 67 hectares of reclamation along the northern shore of Lantau for Phase I of Tung Chung new town; a 334-hectare reclamation at West Kowloon; and a 20-hectare section of a larger reclamation adjacent to Central and Western districts on Hong Kong Island.

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  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 northwestern New Territories. By the end of 1993, the reclamation was about 65 per cent complete, with about 220 hectares of land formed.

  Construction of Phase I of the Cheung Sha Wan wholesale market complex on the West Kowloon reclamation was completed on time and within budget, and opened for use in October. It is designed to operate round-the-clock, every day of the year, and to handle more than 1 000 tonnes of fresh produce every day.

  Phase I of the Central 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. Reclamation work, which began in September, necessitated the relocation of the Discovery Bay Ferry Pier to the Star Ferry East Pier, and the Tsim Sha Tsui East hoverferry service to Queen's Pier.

  Tung Chung new town will ultimately occupy two valleys at Tung Chung and Tai Ho on northern Lantau and a coastal strip of reclamation in between. It is planned to house 20 000 people by 1997 and up to 200 000 people 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 52-hectare industrial park. Extensive landscaping will shield the town from the airport to the northwest and provide generous recreational areas, supplemented by the backdrop of the Lantau Country Park to the south. Strong emphasis has been placed on community facilities and both local and long-distance rail and bus transport. At the year's end, about 50 hectares of land had been formed.

The Airport at Chek Lap Kok

Detailed planning of the airport facilities, and construction of the airport platform at Chek Lap Kok, progressed rapidly in 1993. The PAA, a statutory corporation set up in April 1990 with the Hong Kong Government as its sole shareholder, is planning and developing an airport which will be operationally safe and efficient, environmentally friendly, and commercially viable. Operationally, the new airport will expand on the quality and range of aviation services available at the existing airport. At the same time, it will set new directions in terms of commercial operations and expand the role of Hong Kong's airport as the regional transportation hub.

  The new airport has been scheduled to open the first of its two runways in 1997. It will be able to handle 35 million passengers and 1.5 million tonnes of air cargo a year. Airport facilities are being designed by the PAA so that they can be expanded in stages and cater for forecast growth, in both passenger and cargo throughput, to 87 million passengers and nine 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's urban areas.

  Out of a total of 100 works contracts planned by the PAA for the new airport, four major construction contracts and various smaller contracts with a total value of $9.7 billion - have been awarded. The $9 billion airport site preparation contract, which is the largest contract in the ACP, covers a period of 41 months. Work started in December 1992

THE AIRPORT CORE PROGRAMME

      and involves moving an average of 400 000 cubic metres of fill a day. More than 450 hectares of land had been formed by the end of 1993. Three smaller works contracts let by the PAA for advance works at Chek Lap Kok, and for trans-shipment facilities at Lok On Pai, have been completed.

The detailed design of the passenger terminal building is continuing and is expected to be substantially completed by the second quarter of 1994. The airport's passenger terminal complex will provide a dynamic gateway to Hong Kong. It is to be a large, low building with a roof line inspired by the concept of flight. With a length of 1.2 kilometres and a floor area of over 490 000 square metres, it will be the focal point of the airport.

A ground transportation centre located adjacent to the passenger terminal will make the airport easily accessible. The centre will contain arrivals and departures platforms for the Airport Express railway, a designated coach staging area, tour group check-in facilities, a limousine pick-up area, a 24-taxi simultaneous pick-up system, and facilities for short and long-term parking. There will also be a ferry terminal nearby. More than 35 000 square metres of space will be provided in the arrivals and departures halls and the concourse area for 150 commercial outlets.

By the end of 1993, 18 design consultancies had been awarded. They covered the designs of the permanent utilities, stormwater drainage, sewerage and irrigation, temporary utilities, airfield tunnels, airfield pavements, airfield ground lighting, apron lighting, marine geology of Chek Lap Kok, waste management, airport expressway, rail link and roads, modularisation and workforce accommodation, integrated transportation centre and approach roads, airport railway, on-airport aviation fuel services system, communications systems, security systems, perimeter fence and ancillaries as well as urban design guidelines and standards.

The PAA is preparing to award more than 80 works contracts. Tenders were invited in mid-July for the development of an automated people-mover system and an automated baggage-handling system within the terminal.

The commercial opportunities at Chek Lap Kok will be as diverse as Hong Kong's own economic profile. As a business, the airport will encourage competition, quality services and private sector participation. It will offer a world-class service to all of its users passengers, airlines, air-cargo shippers, the travel and tourism industry, and the commercial licensees and concessionaires who will establish their businesses at the airport.

There will be more than one licence for most airside developments including air-cargo handling, aircraft maintenance and aircraft catering. The first drafts of the business plan specification brief on cargo-handling and aircraft maintenance were issued to potential franchisees for comments in March and May, respectively. The first draft of the brief for the aviation fuel supply system was issued in August. The market assessment for the licensed provision of aircraft catering services has been completed. Expressions of interest for the design of the on-airport fuel distribution service system were called for in July and processing work for the licence continues.

      By the end of the year, the Finance Committee of the Legislative Council had approved a total advance of $14,591 million to enable the PAA to fund the site preparation contract and the key consultancies mentioned above, and to proceed with the airport development in general. Such funding enabled the PAA to take important steps forward on the airport, while the government continues to seek agreement with China on the overall airport financing plan.

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  The Finance Committee had further approved a sum of $289 million for key consultancies relating to the provision of government facilities at the new airport. These covered civil aviation and meteorological equipment, and advance site investigations. Consultancies for a mechanisation system for the Air Mail Centre and for terminal doppler weather radar and operational windshear warning systems have been awarded.

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 WHC, West Kowloon Expressway, the Kwai Chung and Tsing Yi sections of Route 3, the Lantau Fixed Crossing, and the North Lantau Expressway. Contracts to construct all five projects are now underway.

Together with the airport railway, these highways will also provide a rapid transit system between Tung Chung new town and the Central District, stimulating developments on North Lantau in the same way that the Kowloon-Canton Railway triggered development in the eastern New Territories when it was first double-tracked and electrified over a decade

ago.

  Congestion will also be relieved in West Kowloon, Kwai Chung and Tsing Yi. For example, when the West Kowloon Expressway opens, the peak hour traffic volume on the existing West Kowloon Corridor is projected to drop by as much as 40 per cent.

New Highways

The WHC will be a dual, three-lane, immersed tube road tunnel linking the West Kowloon Expressway on the West Kowloon reclamation with a new section of elevated road in the Western district on Hong Kong Island, connecting with Connaught Road Central. It will comprise a two-kilometre tunnel, associated approach roads, a major road interchange on Hong Kong Island and a toll plaza on Kowloon side. Aside from providing a key part of the airport highway route, it will relieve congestion at the two existing cross-harbour tunnels. On June 18, the JLG's Airport Committee endorsed the WHC project, and the Western Harbour Crossing Bill was subsequently passed by the Legislative Council in July. The formal project agreement was signed on September 2, with the Western Harbour Tunnel Company Limited, to finance, construct and operate the tunnel under a 30-year franchise. Physical work, which started in September, is aimed at completion by mid-1997.

  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 help relieve pressure on existing local and distributor roads in central and western Kowloon. Physical work on the expressway started in August. 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. Three major contracts on Route 3, covering the construction of the Cheung Ching Tunnel, Kwai Chung Viaduct and Rambler Channel Bridge, were awarded in 1993 for completion in early 1997.

The two-deck Lantau Fixed Crossing, carrying a railway as well as roads, 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 internationally-known as a major Hong Kong landmark. Its

THE AIRPORT CORE PROGRAMME

main span of about 1.4 kilometres will be the world's longest carrying both road and railway, and its concrete towers will be 206 metres tall, as high as some of the tallest office buildings in Central District. Construction of the Tsing Ma Bridge was about 37 per cent complete at the end of the year. Design of the Kap Shui Mun Bridge was underway, with preliminary site clearance and physical works starting concurrently in March 1993.

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. Work on the Tai Ho and Yam O sections started in 1992 and were about 51 per cent and 25 per cent complete, respectively, at the year's end. The contract to construct the Tung Chung section was awarded in September 1993.

Airport Railway

The 34-kilometre airport railway has been planned to provide two separate rail services, operating mainly on the same tracks but with separate platforms. These will be: a fast passenger link to the airport at Chek Lap Kok, called the Airport Express, 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 Mass Transit Railway (MTR) lines.

       The Airport Express is designed as an all-seated, business class-type express service providing a 23-minute link between the Central District on Hong Kong Island and the airport, with only two stops at Kowloon and Tsing Yi. It is envisaged that six-car trains will be used initially at eight-minute frequencies, increasing, as required, to a maximum of 10-car trains, operating at 4.5-minute frequencies.

Serving northern Lantau, western Kowloon, and Central, the Lantau Line is designed as a conventional mass transit commuter service. It will bring much needed relief to the MTR's Tsuen Wan Line, particularly along the Nathan Road Corridor where the railway is presently carrying its capacity of 77 500 passengers during the morning peak hours. Stations are planned at Central, West Kowloon, Tai Kok Tsui, Lai King, Tsing Yi and Tung Chung new town, with provision for additional stations later.

Five sites, totalling approximately 62 hectares, have been identified along the railway route for residential and commercial property development. They are at Central, West Kowloon, Tai Kok Tsui, Tsing Yi and Tung Chung.

       During 1993, the MTRC carried out detailed design and planning work for the railway. Tender documentation was well advanced and the corporation began calling tenders for civil, electrical and mechanical works.

       To avoid interface problems that may arise between the government works on the Central reclamation and the MTRC's railway station works, the government has entrusted management of the Phase I Central reclamation work to the corporation. Work on this $1.7 billion (MOD) contract commenced on September 1. The contract will provide the site for the railway's Hong Kong Central station, which will be the terminus for both the Lantau Line and the Airport Express Line.

Government Contracts and Tenders

A total of 34 government construction contracts, worth about $31.3 billion, had been awarded by the end of 1993. Sixteen of these contracts, worth more than $12 billion, were

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awarded in the course of the year. All were awarded within budget estimates and were proceeding smoothly. They represented 78 per cent of the total value of the government's ACP contracts, and over 90 per cent of the total highways.

   The contracts awarded during the year included the Tung Chung section of the North Lantau Expressway at a cost of $920 million; three sections (for the Cheung Ching Tunnel, Kwai Chung Viaduct and Rambler Channel Bridge) of Route 3 for a total of $3.4 billion; the north and south sections of the West Kowloon Expressway for a total of $2.1 billion; the Lantau Fixed Crossing toll plaza advance works and traffic control system for a total cost of $456 million; a variety of land formation and sewerage and drainage works on the West Kowloon reclamation for a total of $3.1 billion; engineering works for the Phase I Central reclamation awarded at a cost of $1.6 billion; and water supply works to North Lantau at a total cost of $942 million.

   The government welcomes international participation in the contracts and is strictly applying its traditional 'level playing field' approach on tendering procedures and the award of contracts.

A significant number of international companies, from a wide range of countries, have won construction and site investigation contracts, often in joint ventures. By the end of 1993, Japan had won the largest share by value with 27 per cent of the total, followed by Hong Kong (17 per cent), United Kingdom (14 per cent), the Netherlands (11 per cent), the People's Republic of China (eight per cent), France (seven per cent), Belgium (six per cent), Australia (four per cent), the United States of America (two per cent), New Zealand (two per cent), Germany (one per cent), Italy (0.6 per cent), and South Africa (0.4 per cent). Firms winning consultancies have come from the United Kingdom, United States of America, the Netherlands, Germany, Australia, Canada, Denmark, Sweden, Switzerland, New Zealand, France, Japan and Hong Kong.

   The selection of contractors, whether local or multi-national, is strictly based on their ability to meet the government's requirements in terms of completion time, standards and specifications, and the lowest acceptable price.

Management and Cost Controls

  Following the establishment of an overall strategy on the scope of the ACP, its critical programme objectives, and its budget, regular reviews were conducted in 1993. The strategy is the basis for the overall programme and its project management system. Fixed-price, lump sum contracts are being used for most projects to minimise risks to the government, especially from inflation and changes in 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 possible cost increases are reported to the New Airport Projects Co-ordination Office (NAPCO) and relevant department heads. Proposed design changes leading to higher costs have to be fully justified and approved before detailed design can start. This system enables upward trends, which could lead to cost increases, to be identified early. If cost increases are accepted, off-setting savings are sought in the same or other ACP projects.

   Government works departments, and other participants such as the PAA, MTRC, and the Western Harbour Crossing franchisee, have full responsibility for their own project- level planning, execution, control and management. They are required to complete projects

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on time and within budget, and to report progress and co-ordinate their work through NAPCO.

       NAPCO's job is to ensure compliance with ACP plans, programmes and budgets, and to act as a focal point for the management of project interfaces and resolution of problems. It is made up of staff from the government and the ACP project management consultant.

In addition to the cost control systems, its highly competitive tendering system has also enabled the government to obtain value for money on the ACP contracts.

Protecting the Environment

Environmental impact assessment (EIA) studies have been undertaken for each of the ACP projects, sometimes at both the feasibility and detailed design stages, 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 being formed at Chek Lap Kok for the airport platform has been designed to allow tidal water to flow between the airport and the North Lantau coastline, thereby flushing partially enclosed areas of water to the east. Most of the natural coastline to the west of Tung Chung will be retained. Several mitigation measures have been initiated for the loss of wildlife habitats along North Lantau and at Chek Lap Kok. These include ecological studies of local wetlands, seagrass beds and mangrove communities; relocation of a colony of Romer's Tree Frogs from Chek Lap Kok; and replanting of mangrove communities and woodlands.

Extensive environmental monitoring and audit programmes are being put in place by the respective project offices to ensure acceptable environmental performance of individual projects. To supplement the efforts of the project offices, an environmental project office for the West Kowloon project area was established by the Environmental Protection Department (EPD) in 1992. A similar office was set up for the Kwai Chung and Tsing Yi area in 1993. Both offices consist of EPD staff and specialist environmental consultancy teams. Their task is to monitor and audit the cumulative environmental effects of the construction works and to ensure that environmental issues are quickly identified and acted upon by the works agents. The offices also assist the government in dealing with local community concerns on environmental issues arising from the construction works.

Safety at Work

The government continues to promote safety at work and is making headway in the implementation of safety measures on the ACP construction sites.

The Airport Core Programme Construction Safety Manual was published in 1992, setting out the government's policy and objectives, and safety measures.

During 1993, a package of safety measures was implemented on the construction sites. Contractors were required to prepare safety plans, employ full-time safety personnel on site, provide training to their workers and management, and establish site safety committees. These measures, which were incorporated in each contract, were intended to ensure there was an effective safety management system on each site from the moment work commenced.

Safety standards on sites were closely monitored. A site safety management committee was established in each site to monitor each contractor's compliance with safety

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requirements. A safety management unit was established by the government to visit the ACP sites to audit their construction safety standards. In addition, a database was compiled to assist with the monitoring of accident rates, analysis of the causes of accidents, and formulation of prevention measures.

Other measures taken to complement these safety efforts included accident prevention and safety management training courses conducted for site staff. Safety promotion campaigns and awards were organised to increase awareness, especially among con- struction workers. Up to the end of 1993, the industrial accident rate for ACP contracts was 98 per thousand workers per year, compared with the corresponding rate for the construction industry as a whole of 302 in 1992. The government has committed itself to further improvements in the safety records of ACP and non-ACP works sites.

Community and Public Relations

A comprehensive programme of community and public relations activities was implemented during 1993. For schools, a primary teaching kit was produced and two exhibitions were organised. Publications included six ACP newsletters and three regional pamphlets on ACP projects for West Kowloon, Kwai Tsing, and Central and Western districts. Boat tours of ACP sites were also organised for various groups, including members of the Legislative Council, the ACC, the Urban Council, the Regional Council and district boards, consular representatives and the media. Four overseas exhibitions were mounted in Osaka, Seattle, New York and Singapore, and two local exhibitions were held in Sham Shui Po and Kwai Tsing districts. Briefings were given to a wide range of audiences, including about 800 visitors to Hong Kong.

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PORT DEVELON

HONG KONG'S port throughput continued to record a strong growth rate. In 1993, the number of containers handled increased by 15 per cent to total 9.2 million TEUs (20-foot equivalent units). This followed increases of 29 per cent in 1992 and 21 per cent in 1991. The massive increases ensured that Hong Kong retained its position as the world's busiest container port.

The port handles more containers a year than does the whole of Britain. Only the United States and Japan have a bigger container throughput than Hong Kong.

       To meet rising demand, Hong Kong must, between now and the year 2011, increase its handling capacity by one million TEUS each year. That is the equivalent of building, every year, a port the size of Oakland, California, or Felixstowe, Britain's busiest container port.

The territory will build a completely new port on the northeast of Lantau Island to handle this huge rise in throughput. This will involve one of the world's biggest civil engineering projects.

       A total of 17 new container berths are planned for Lantau, but it is envisaged that as many as 24 berths could be in operation by 2011. Hong Kong's present container port at Kwai Chung has 15 berths, with another seven to be built by 1995.

       Aside from container berths, the new port at Lantau 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. New channels must be dredged to provide marine access and breakwaters constructed to shelter working container vessels from wave action. Eventually a link, by tunnel or bridge, will connect Lantau directly with Hong Kong Island.

       Planning is also underway for a dedicated rail link that will connect the new port and the present facilities at Kwai Chung with China's upgraded rail network. This will enable containers to be sent by rail from most of mainland China.

       For, like Kwai Chung, the new port will not just serve Hong Kong. The territory 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.

       The port at Lantau will begin to operate in 1997, when the Lantau Fixed Crossing- which includes 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.

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While Hong Kong awaits the new facilities on Lantau, the port must handle ever- increasing amounts of cargo. To cope with this demand, two new container terminals have been planned close to the present container port at Stonecutters Island (Terminal 8) and Southeast Tsing Yi Island (Terminal 9).

The first berth at Terminal 8 started operations in July 1993 and three more berths will come into operation by early 1995.

The Terminal 8 project involves the reclamation of 111 hectares of land to the north of Stonecutters Island. Of this, 58 hectares will house the four-berth terminal, while 53 hectares will be used for back-up facilities.

As with Hong Kong's other seven terminals, private companies are designing, building and operating Terminal 8. The government awarded the development rights to a consortium formed by Modern Terminals Limited, Hong Kong International Terminals Limited (the two major terminal operators at Kwai Chung), and China Ocean Shipping Company.

In November 1992, the government announced the offer of development and operating rights for Terminal 9 to a consortium comprising Modern Terminals Limited, Hongkong International Terminals Limited and the Tsing Yi Container Terminal Consortium. The terminal will comprise 60 hectares containing four berths, with a total capacity of 1.6 million TEUS a year- the same start-up capacity as Terminal 8. A further 26 hectares will be available for back-up purposes and 39 hectares for industrial and community use.

It was originally planned that the first berth at Terminal 9 would be operating by mid-1995, when Terminal 8 is expected to be at full capacity. Although there has been some difficulty in meeting the August 1993 date for starting construction work, plans to minimise the delay and to mitigate its effects are being developed. (For further details on the port, see Chapter 15.)

Port Development Board

As the majority of port facilities and services are provided by private companies, Hong Kong has never created a port authority. However, with a development as massive and extensive as the new Lantau 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) fills 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 port expansion.

Originally, the PDB had three committees to help it plan for special needs in the port: the Ship Repair Facilities Committee, the River Trade Cargo Activities Committee and the Mid-Stream Operations Committee. In 1991, board members endorsed the setting up of the Port Land and Transport Committee, and the Container Handling Committee.

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 shortage of land for mid-stream operations was one of its main concerns during the year under review.

The Container Handling Committee provides data, analyses and advice to the government on container handling facilities. It examines worldwide containerisation trends, Hong Kong's position in the Asia-Pacific Region and the increased potential for containerisation in China.

A working group was also established in 1992 to examine institutional arrangements for future port development.

Future Growth

The PDB's Port Cargo Forecasts Study of 1993 found that total port traffic would continue to grow by 6.7 per cent a year between 1992 and 2011, when total throughput would reach 349.4 million tonnes. This would comprise 207.6 million tonnes of inward cargo and 141.8 million tonnes of outward cargo. More than 75 per cent of the cargo would be carried by ocean-going vessels and the rest by river vessels.

Trans-shipment traffic would account for seven per cent of the ocean traffic in 2011, a substantial decrease from the 20 per cent in 1992.

Analysed by commodity, inward cargo carried by ocean-going vessels in 2011 would consist mainly of petroleum products (31 per cent), coal (12 per cent), and chemical and related products (10 per cent). About 47 per cent of the cargo is expected to be containerised, 31 per cent liquid bulk, 18 per cent dry bulk, and four per cent break-bulk.

Outward cargo would comprise mainly manufactured articles (40 per cent), machinery and transport equipment (19 per cent), and petroleum products (14 per cent). Analysed by cargo type, 83 per cent of the cargo would be containerised, 14 per cent liquid bulk and three per cent break-bulk.

From these figures, a preliminary estimate is that by 2011, the new port will need at least 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 back-up areas; 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 vessels, 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 the PDB has recommended 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.

Port Layout at Lantau

In October 1989, the government announced that both the new airport and new port would be built on Lantau Island. Although its Port and Airport Development Study (PADS) determined the general site of the port, stretching southeast from Penny's Bay on Lantau towards Hong Kong Island, the study did not decide its exact pattern.

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Since August 1991, consultants have been carrying out the Lantau Port and Western Harbour Development Studies, on behalf of the government, to decide the best layout for the new port. They delivered their final report to the government in May 1993.

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. Among the main advantages, its long-term development potential is much higher than for other configurations.

The preferred western approach channel allows for better marine traffic arrangements and manoeuvring into and out of the port basins. Ship-to-ship and ship-to-ferry encounter risk would be low, typhoon evacuation fast, and traffic control needs small.

Water quality impacts are similar for all concepts. But 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. From an on-shore and general planning viewpoint, the layout is also compatible with developments in Discovery Bay and on Peng Chau.

While there are no great differences for traffic and transport arrangements, the west-facing island layout will give better direct port access.

It will also 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.

Since planning and construction of new terminal facilities need a five-year lead time, close attention is paid to throughput figures to determine when to trigger the next phase of development. During the year, Terminal 11, the second to be built on Lantau, was triggered. Terminal 10 was triggered in 1992.

Mid-Stream and River Traffic

While 63 per cent of Hong Kong's container throughput in terms of TEUS was handled by the container terminals in 1993, 30 per cent was handled by mid-stream operations and seven per cent by river trade vessels. The 1993 Port Cargo Forecasts Study has estimated that container traffic carried by ocean-going vessels will continue to grow by 6.9 per cent per annum between 1992 and 2011, when total throughput to be handled at the container terminals and mid-stream will reach 26.7 million TEUS. River trade container throughput is expected to increase at 14 per cent per annum during the period, amounting to 5.1 million TEUs in 2011.

   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. Some ships are also worked at anchor. Even with the growth of containerisation, the port still handles much of its cargo in these ways. Lighters carry containers to and from ships moored or anchored mid-stream.

Mid-stream container throughput grew at an average annual growth rate of 27 per cent over the past five years. The year under review saw a 14 per cent increase in mid-stream container handling, to a total of 2.8 million TEUS.

PORT DEVELOPMENT

While there has been a huge increase in the number of containers handled mid-stream, it has not been possible to increase to the same extent the amount of land available for mid-stream operators. This is largely due to the demand for land by Hong Kong's other development projects. This problem is being addressed by the Port Development Board, which has initiated an extensive search for both short-term and permanent sites.

An increasing volume of goods trans-shipped to and from China through Hong Kong now moves by river boats down the Pearl River, for generations the gateway to trade with China. In 1993, 21 million tonnes of goods were handled by 76 000 river trade vessels in this manner. To cater specifically for this growth, private companies will build and operate a River Trade Terminal at Tuen Mun on the mainland north of Lantau. Expressions of interest in this connection were being evaluated within the government. The terminal is planned to be available in 1997.

Development Studies

The port development plan and its associated 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.

As part of this process, the PDB's Secretariat conducted a survey of Chinese ports, from the Vietnam border extending to the northeast along the coast of China. Although some ports showed potential for development, none emerged as a serious rival to Hong Kong as the main port to serve the rapidly developing South China region. While other ports in the region will be developed or expanded, these will be complementary to, rather than in competition with, Hong Kong.

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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  HONG KONG is one of the safest cities in the world. The crime rate in 1993 was the lowest in the past 10 years.

There remain areas of concern, however, and the fight against crime continues without remission. There is an increased police presence on the streets and better cross-border co-operation against crime.

The Royal Hong Kong Police was up to its full establishment for the first time in a decade. The police recruited 1 367 junior police officers, while in the same period 1 010 left the force. The wastage rate was about two per cent lower than that of the previous year.

There was increased alarm, however, about corruption, with a 44 per cent rise in complaints recorded by the Independent Commission Against Corruption. In October, the government announced additional resources for the commission in 1994.

The Fire Services Department celebrated its 125th anniversary during the year. The department, which started out modestly as a fire brigade of 66 officers and 100 volunteers in 1868, is now completely localised with more than 8 000 staff, operating more than 90 fire stations and ambulance depots.

New Year's Day began with a tragic event. Twenty-one people were trampled to death in crowd revelry in Lan Kwai Fong, Central, where thousands gathered to welcome in 1993. The Governor ordered an immediate inquiry to look at how to prevent similar tragedies.

The Organisational Structure

The 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 270 plays a major part in combating smuggling and enforcing the Copyright Ordinance.

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       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 five 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 main ambulance service.

Fight Crime Committee

In 1993, the Fight Crime Committee continued to provide advice on measures to combat crime. Specific subjects considered included measures to counter organised and serious crimes, the regulation of the security and guarding services industry, witness protection, the post-release supervision scheme for ex-offenders, student triad activities, and crime involving juvenile and young offenders.

       An ad hoc group of the Legislative Council continued a detailed study of the Organised and Serious Crimes Bill. The Bill was introduced into the council in July 1992. Its objective is to effectively tackle organised crime, including triad-related crime, and other serious crimes through, among other things, enhanced investigative powers and provisions to enable heavier sentences to be imposed.

       The Security and Guarding Services Bill was introduced into the Legislative Council on November 10, 1993. The Bill aims at regulating the security and guarding services industry through a licensing system to be run on two levels, namely, the licensing of persons who undertake security work (including watchmen) and the licensing of security companies.

The Fight Crime Committee set up an ad hoc committee to review existing witness protection arrangements in late 1992. It endorsed the ad hoc committee's final report and recommendations in April 1993. Major recommendations on witness protection endorsed by the Fight Crime Committee include the establishment of a witness protection pro- gramme and provision of sufficient funding for the programme; the review of witness accommodation in court and in custody; improvements to the existing witness assurance and assistance arrangements; and the launching of an education programme to inform the public of the witness protection programme, and the assurance and assistance arrangements.

       The committee examined, in July 1991, how the post-release supervision scheme could operate. The scheme aims to rehabilitate ex-offenders, reduce the threat posed by some to public safety, reduce the chances of recidivism and turn them into useful members of society. The Post-Release Supervision Bill, which sets out the framework of the scheme, is under preparation. It is expected that the Bill will be introduced into the Legislative Council in early 1994.

       The committee has devoted much of its attention to the problem of juvenile crime, in particular, triad activities in schools. An inter-departmental working group was set up in August 1992 to consider ways to provide support to schools to tackle student triad activities. The committee examined, in November 1993, the final report of the working group and endorsed its recommendations, which include integration of community resources to tackle the problems; provision of guidelines and training for discipline teachers to handle student behavioural problems; stepping up police presence near schools; and strengthening liaison among the police, discipline personnel and social workers.

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A sub-committee of the Fight Crime Committee commissioned, in September 1992, the research team of the Social Science Research Centre of the University of Hong Kong to conduct a study on the social causes of juvenile crime. The research team completed all major field work during the year and it is expected that the research study will 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 Correctional Services Department facilities.

District Fight Crime Committees continued to play an important role. 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.

Police Force

The overall crime rate remained steady in 1993, with a slight reduction in violent cases. While armed gangs continued to be a cause for concern, better intelligence and improved co-operation with China led to the arrest of several ringleaders and the break-up of gangs responsible for some of the most violent crimes over the past two years.

In addition to the return of criminals from China, cross-border liaison helped to eliminate a number of syndicates involved in the theft and smuggling of luxury cars to China. The anti-smuggling task force set up in 1991 successfully curtailed the activities of speedboats, while intelligence passed to Chinese security forces enabled them to capture smugglers at their home bases. Several batches of stolen luxury cars recovered in China were returned to Hong Kong during the year.

Further afield, Hong Kong police collaborated in the detection of a major credit card forgery syndicate and played a major role in the worldwide crackdown on drug trafficking.

To maintain Hong Kong's record of being one of the safest cities in the world, the Police Force places high priority on deploying sufficient manpower to counter, prevent and reduce crime. Recent recruitment has brought the Force up to its full establishment of 27 263 disciplined officers. The year under review saw the former New Territories Region split into two and the opening of several new police stations.

Equipment and support services are also keeping pace with the latest technology. New revolvers, with more effective ammunition, were issued to officers for better protection against criminals who carry powerful weapons. The officers can now practise their marksmanship at a state-of-the-art firing range, at the Police Tactical Unit base at Fanling, which is believed to be unrivalled in the world. The marine police also completed a major reprovisioning exercise during the year when it commissioned five new command launches and six inshore patrol boats, bringing its fleet up to 166 boats the biggest fleet of its kind. In the air, the Force gained the use of two Black Hawk helicopters operated by the newly-formed Government Flying Service. They will enable rapid deployment of personnel, as well as support, for other operations.

The Force has also promulgated performance pledges to improve its service to the public. In addition, a public opinion survey, on views and perceptions of the police by the public, was being conducted. The results will provide valuable input for projecting a positive image of the Force to the public. Also under study was a consultant report on possible ways to improve the senior command structure of the Force.

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Crime

The total number of crimes reported to the police in 1993 was 82 564, a decrease of 1.8 per cent compared with 84 056 in 1992. The crime rate stood at 1 395 cases per 100 000 of the population. This represented a drop of 3.6 per cent, compared with 1992.

       Violent crime, which includes murder, wounding, serious assault, rape, indecent assault, kidnapping, blackmail, criminal intimidation, robbery and arson, registered a decline in the year, with a total of 17 454 cases recorded, compared to 18 567 in 1992. Robbery, wounding and serious assault accounted for some 21 per cent of the total number of violent crimes in 1993.

The situation regarding vehicle theft improved considerably. Overall, 4630 motor vehicles were reported missing in 1993, a sharp decrease of 33.1 per cent compared with 1992.

The number of robberies involving the use of firearms both genuine and pistol-like objects was 291, a drop of 127 compared with 1992.

A total of 40 227 crimes, or 48.7 per cent, were detected in 1993, and some 45 042 persons were arrested for various criminal offences. Of the persons arrested, 6 644 were juvenile offenders (aged under 16 years) and 8 733 were young persons (aged between 16 and 20 years).

Organised Crime and Triads

In 1993, there was a marked decrease in armed robberies. The decrease was attributed to a series of successful police operations against armed criminal syndicates and improved co-operation with the Chinese authorities. This co-operation led to more criminals seeking refuge in China being arrested and sent back to Hong Kong.

The overall decline in the number of missing vehicles could be attributed to the vigorous enforcement by the Hong Kong and Chinese authorities. Action taken included the neutralisation of a number of major cross-border smuggling syndicates and increasing the maximum sentence for taking a conveyance without authority from three to seven years. Improved car security by manufacturers and owners, as a result of mounting pressure from insurance companies, was also a factor.

A new trend emerged in 1993, featuring an upsurge in the theft and smuggling of left-hand-drive vehicles. It was assessed that the majority of stolen luxury cars were smuggled into China.

Action against triads remained a priority, and resulted in successful prosecutions against both office-bearers and members.

       The Organised and Serious Crimes Bill, under study by an ad hoc group of the Legislative Council, will enable the police to tackle organised and serious crimes more effectively. The Bill was designed to give the police more power to obtain information from witnesses; allow the courts to confiscate the proceeds of crime; and enable the prosecution, in respect of certain offences, to provide the courts with more information upon conviction, to assist the courts in awarding more deterrent sentences.

Commercial Crime

The Commercial Crime Bureau's Fraud Division continued investigation into fraud in the trading and financial sectors. The activities of unscrupulous foreign exchange companies caused much public concern, and in one case alone, some 300 investors suffered losses of

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over $100 million. New legislation on fringe foreign exchange trading, in the form of the Leverage Foreign Exchange Trading Bill, was put before the Legislative Council. Upon enactment of the Bill, the Commercial Crime Bureau will be able to resolve this longstanding and difficult problem.

  In April, the Computer Crimes Ordinance was enacted and a special section was established in the bureau to investigate the new offences created by the ordinance. For the first time, hacking and damaging computers or their software became offences. This brought Hong Kong into line with other jurisdictions.

  During the year, the Counterfeit and Forgery Division was successful in combating both the manufacture and use of forged credit cards, and the production of counterfeit currency. In one case, a major international forged credit card syndicate was neutralised in an operation involving Hong Kong, European and North American law enforcement agencies. In another case, a raid on a printing workshop yielded counterfeit US$100 notes with a face value of over US$7 million.

Narcotics

The territory continued to suffer from its relative proximity to the production area in the Golden Triangle, which accounted for almost 70 per cent of the world's total output of opiates.

  The year saw an abundant supply of (almost exclusively) No. 4 heroin in the local market, the price and purity of which continued to show a downward trend. By the year's end, the purity was 41.36 per cent, compared to a high in the early 1990s of more than 70 per cent. The retail price was approximately $332 per gram.

  Some 269.15 kilogrammes of opiate drugs, comprising opium and No. 4 heroin, were seized, compared with 611.99 kilogrammes in 1992. There were 12 600 arrests for narcotics offences, compared with 9 600 in the previous year.

  Heroin remained the major drug abused by more than 90 per cent of the total addict population. Although also popular with young persons, increases were noted in cough mixture abuse (up 25 per cent) and cannabis abuse (up 23 per cent). Continuing the trend of the last few years, there were also increases in the number of young persons arrested for drug offences. They comprised almost 19 per cent of the total drug arrests during the year.

Narcotics enforcement recorded a productive year, with noticeable successes against local distribution syndicates, particularly heroin-cutting centres. Successes in 1993 included the neutralisation of 30 such facilities, as well as seizures of 72.91 kilogrammes of heroin.

  In August 1992, Section 25 of the Drug Trafficking (Recovery of Proceeds) Ordinance, which contains the offence of 'assisting another to retain the benefit of trafficking', was overruled by a High Court Judge. The section was considered inconsistent with Article 11 of the Bill of Rights Ordinance. In May 1993, the Privy Council of the House of Lords reversed that decision. The total amount of assets seized by police since the enactment of the ordinance was HK$145,460,359.

Crime Prevention

The Crime Prevention Bureau continued to promote the principles of crime prevention through public awareness programmes and the provision of professional advice to the community. The security of high-risk premises, particularly banks, was accorded high priority, followed by domestic security and vehicle-related crime.

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Anti-crime education for juveniles continued through the medium of the 'Robotcop', which was used in more than 200 displays in schools, youth organisations and public exhibitions throughout the year. Shop theft by juveniles was further targeted by the introduction of the life-size cardboard policeman', which attracted a positive response from retail outlets.

       A new unit dedicated to the security of computers was set up, to undertake specialist training of crime prevention officers and the formulation of advisory publications for public dissemination.

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 wanted persons, suspected offenders, missing persons, stolen property, outstanding warrants and missing vehicles. At the end of the year, the indices held particulars of some 548 447 criminal records, 11 180 wanted persons, 1201 missing persons, 6227 outstanding warrants and 5 404 missing vehicles. During 1993, the Enhanced Police Operational Nominal Index Computer System (EPONICS) dealt with a total of 2 701 186 enquiries.

Ballistics and Firearms Identification

The Ballistics and Firearms Identification Bureau handled 318 cases involving the use or possession of a firearm during the year. This was a slight decrease over the previous year's figure of 338 cases. Weapons recovered were mainly self-loading pistols, although two fully-automatic Chinese type 56 assault rifles were also seized in one armed incident. As in previous years, the pistols recovered were mainly of the very powerful and penetrating 7.62 x 25 mm calibre, with countries of manufacture as diverse as China, Poland, Russia, Czechoslovakia and Hungary.

        In addition to the forensic examination of firearms and ammunition, the bureau also dealt with the scientific aspects of gunshot residue examinations. These tests, which can prove beyond reasonable doubt whether a person has or has not recently fired a weapon, have proved invaluable in the investigation of armed crime incidents.

Identification

The Identification Bureau provides support to all formations in the Force in respect of fingerprint technology and forensic photography.

In terms of fingerprint identifications, improved levels of efficiency and service were achieved by the bureau in 1993, following the partial computerisation of the Force's fingerprint records. The Computer Assisted Fingerprint Identification System (CAFIS) reduced considerably the time taken to process fingerprints found at scenes of crime. The computer, coupled with the more traditional methods of searching fingerprints, led to 1201 persons being identified as being linked with 1 279 criminal cases during the year. Computerisation of the remainder of the bureau's fingerprint records continued.

During the year, officers from the Scenes of Crime Section attended 25 220 crimes scenes. Various measures were introduced to shorten the time taken to reach the scene of crime.

The Main Fingerprint Collection Section, which is principally responsible for confirming people's previous criminal convictions, processed the fingerprints of 205 928 persons, leading to the discovery of 83 796 persons who had criminal records.

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Interpol

The Hong Kong National Central Bureau of the International Criminal Police Organisa- tion, more commonly known as Interpol, is one of its most active members in the Southeast Asian region.

  The bureau aims to ensure and promote the widest possible mutual assistance among all police authorities, within the limits of the laws existing in different member countries and in the spirit of the Declaration of Human Rights.

It acts as a co-ordination centre in dealing with criminal information and associated inquiries between Hong Kong and the rest of the world, and disseminates information on behalf of the Force to participating countries. It also maintains close liaison with most local consulate officials.

Two officers are seconded to the Interpol General Secretariat in Lyons, France, to maintain close liaison with the secretariat there.

  As part of the improved liaison and co-operation with China, two Chinese liaison officers were stationed in Hong Kong during the year.

Public Order

There were no incidents of major public disorder in Hong Kong in 1993.

  During the year, the Police Tactical Unit (PTU) Companies were deployed in a wide variety of roles, including a number of large-scale anti-illegal immigrant operations. They also assisted the Correctional Services Department in duties related to Vietnamese migrants.

  PTU tactical training continued to expand, with an emphasis on weapons tactics and Internal Security (IS) training. Several improvements in equipment were made. It is expected that the PTU Companies will soon have the capability to operate using Black Hawk helicopters. By the end of the year, a total of 2 210 officers were trained in the PTU Companies. In addition, officers of District IS Companies, CID officers and women police also underwent training under scheduled programmes of the PTU.

Illegal Immigration

It was another busy year for the police dealing with increased numbers of illegal immigrants. A total of 35 193 illegals from China were arrested in the territory by the police, representing a 4.4 per cent increase over 1992.

  Among those arrested, 62 per cent claimed to have entered the territory by boat and the remainder over land. An increasing number of those coming by land resorted to hiding in trains or cargo vehicles, rather than risking climbing the border fence.

  The police continued their responsibility for the border and, on average, deployed over 500 officers each day to counter the influx.

About 60 per cent of arrested illegals had entered the territory on previous occasions. There were also indications that the majority came in to look for job opportunities. Many returned to the mainland voluntarily after working for several months and remitting money back home. This resulted in the police targeting anti-illegal immigrant operations at work premises. Prosecutions were directed against employers breaking the law.

Vietnamese Migrants

Vietnamese migrants (VMs) are held in detention centres throughout Hong Kong, with the majority detained at the Whitehead Detention Centre. The screening of VMs was near

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completion at the year's end, with over 90 per cent of the group having been processed. The majority of these people were screened out, pending repatriation to Vietnam either through the Voluntary Repatriation Scheme or the Orderly Repatriation Scheme. Those screened in either have been resettled or are awaiting resettlement in other countries.

It was agreed with the Vietnamese authorities in 1991 that those who were screened in would be resettled, while those screened out would be repatriated to Vietnam. This policy had an immediate deterrent effect, and in 1992 and 1993, the number of arrivals dropped remarkably. There were only 101 arrivals in 1993, compared to 12 in 1992. Every effort was also made to encourage those VMs who had been screened out to return voluntarily to Vietnam. Flights were arranged every month and resettlement programmes were in operation in Vietnam.

There were no major incidents in the VM detention camps. However, searches of camps for homemade weapons, illegal items and alcohol-brewing equipment, and the transportation of VMs between centres and from the centres to the airport under the Orderly Repatriation Programme continued to place heavy demands on police resources.

From June to August, over 2 400 ex-China Vietnamese (ECVIIs) arrived in Hong Kong. All of them were from Beihai in Guangxi Province. The influx apparently stemmed from a re-zoning of the ECVIIS, who were living in illegal squatter areas there. Discussions were held with the mainland authorities and it was agreed that all the ECVIIs would be repatriated to China.

On December 31, the total number of Vietnamese migrants in Hong Kong stood at 32 052, of whom 1 846 were accorded refugee status, 27 564 were classified as non-refugees, 1 687 were awaiting screening and 955 were ECVIIS. Resettlement accounted for 2 571, and 318 births were recorded. A total of 450 were repatriated to Vietnam under the Orderly Repatriation Programme. The figure for voluntary repatriation was 12 301, while 1 518 ECVIIS were returned to China.

Traffic

      Traffic congestion was another main area of concern in 1993. Vehicle registrations approached the half million mark at the end of the year. With the steady increase in trade between Hong Kong and other countries, long queues at border crossing points and container terminals led to instances of chronic congestion. Urgent action was being taken by the government to control the length of these queues. A number of well-publicised serious accidents on expressways, which caused severe delays to traffic, highlighted the additional problems associated with high traffic densities and shortage of road space. The increase in vehicular traffic was also keenly felt with regard to parking. About 1.91 million tickets for parking offences were issued, an increase of 41.4 per cent. It became apparent that the deterrent effect of a parking ticket at its existing fine level had been eroded by inflation and prosperity, putting increased pressure on scarce police resources. Legislative amendments were in hand to deal with the situation.

Although traffic accident and casualty rates remained at the same level as that of two years ago, the fatality and serious injury rates were three times greater than those arising from criminal activity. The most common causes of accidents were, again, speed-related. Police action continued to focus on offences which were most likely to result in accidents, through a Selective Traffic Enforcement Policy (STEP), which directs priorities for enforce- ment action according to accident causation factors.

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Marine Region

It was a year of change for many in the sea divisions of the marine police, as the Marine Region of the Royal Hong Kong Police brought into service 21 new launches, of three different types, as part of a fleet modernisation programme.

The upsurge in illegal immigration placed considerable demands on the Marine Region. The problem of smuggling also persisted during 1993, but suitable resources were deployed to combat such illegal activities. A dramatic decrease was recorded in the large-scale smuggling of electrical goods and stolen vehicles. Factors behind this included changes to the law in China to restrict the import of vehicle parts and a ban on the registration of right-hand-drive vehicles. Fluctuations in the value of the Chinese currency also made the smuggling of electrical goods less profitable. Smugglers continued to vary their methods of operation, and enforcement agencies maintained a flexible approach to tackle the problem. This sustained high-priority effort on all fronts saw record seizures of goods and vessels during the year.

  Policing of the remote communities in Mirs Bay received a boost with the opening of a new police post on the small island of Tap Mun, and the installation of improved communications equipment in the post on Peng Chau Island. The construction of a police post on Kat O Island commenced in December.

Bomb Disposal

The Explosive Ordnance Disposal (EOD) Unit expanded to an establishment of six full-time operators, with the recruitment of the first local Assistant Force Bomb Disposal Officer. The operators rendered safe over 5 025 explosive devices, ranging from improvised bombs made by criminals to unexploded shells, aircraft bombs and pyrotechnics.

  Fortunately, the year saw a reduction in the use of hand grenades by criminals in Hong Kong, and much of the work of the EOD Unit involved the safe defusing and recovery of large pieces of ordnance from the many dredgers operating in the territory's waters.

  The unit continued to upgrade its equipment and response capabilities in line with worldwide improvements in EOD technology. Together with the increased use of helicopter deployment, this resulted in a faster response time, with a corresponding reduction in disruption to the public.

Community Relations

The long-standing objective of enlisting public support in the fight against crime continued through 1993, with emphasis on preventive measures to protect personal property. A wide range of publicity materials was issued to spread the messages that individual crime victims suffered losses, that the community as a whole bore the costs and that these effects could be minimised by individual watchfulness.

   The Good Citizen Award Scheme and the Good Citizen of the Year Award Scheme, introduced in 1972 and 1984, respectively, continued to serve as effective means of promoting public involvement in the fight against crime. Jointly administered by the police and the Hong Kong General Chamber of Commerce, the two schemes have so far seen 2 342 and 26 persons, respectively, presented with the awards.

  In its 13th year of operation, the police hotline, 527 7177, was still the most popular channel for the public to report crime information. A total of 6 974 calls were received, resulting in 822 arrests for various crimes.

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Crime information forms, an alternative means of reporting crime information, were also widely used, with 2 570 completed forms received, leading to 428 arrests.

The Junior Police Call (JPC) remained popular, with some 178 030 active members at the year's end. Apart from involvement in fight crime activities and crime prevention campaigns, members were provided with a wide range of sports, recreational and academic programmes, organised with a view to fostering a positive attitude towards a healthy life. Members also participated in a wide range of community services such as flag-selling and fund-raising for charity, tree-planting and environmental protection programmes. The JPC helps to guide its members towards becoming responsible and law-abiding citizens.

The Force jointly produced the television programmes Crime Watch, Police Call and Police Report with Radio Television Hong Kong. These programmes are broadcast on a regular basis on both the English and Chinese channels of the two local television stations. In addition to the reconstruction of undetected crime cases and delivering appeals to witnesses for related information, special features were made of current crime trends and problems, as well as the various facets of police work. The programmes enjoyed a consistently high audience rating.

During the year, there were altogether 97 visits to the Force by 1 126 local and 397 overseas personalities.

Planning and Development

On April 1, the New Territories Region was split into two regions, North and South, with their regional headquarters at Tai Po and Ma On Shan, respectively.

Force planning concentrated on developments taking place on North Lantau, and on building up resources for newly-developed areas in the New Territories. An interim police station at Tung Chung on North Lantau was completed in November. It provides a base for enhanced police coverage until the permanent police stations at the new airport at Chek Lap Kok and Tung Chung new town become operational.

The West Kowloon Reclamation project was closely monitored, as was the Southeast Kowloon Development Study, in anticipation of additional police services required in Southeast Kowloon after the redevelopment of Kai Tak Airport.

A $111 million firing range complex was completed at the Police Tactical Unit base at Fanling during the year. This houses a 100-metre range, nine indoor ranges and a Close Quarter Battle House.

In Kowloon East Region, work commenced on an indoor firing range, comprising eight mini-ranges and an indoor conventional 25-metre range. When this project is completed in 1995, the Force will have five indoor firing ranges equipped with the most sophisticated weapons training facilities.

Elsewhere, the Ma Liu Shui Marine North Division Base and Tap Mun Island Police Post were completed, while work commenced on the construction of a new post on Kat O Island and a new Marine Police Training School at the former Sai Wan Ho Pier.

       Refurbishment or expansion programmes at seven police stations were also completed, and work to improve the Police Training School ranges continued.

       Construction of married quarters for junior police officers at Tsing Yi was completed, providing 288 units for occupancy in December. Another 408 units are due for completion at Fanling in July 1994. During 1993, funds were approved for the construction of another two blocks at Wong Tai Sin, comprising 429 married quarters. Piling work for both of

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these blocks started in July and completion is expected by mid-1996. Funds were also sought for the refurbishment of 152 quarters at Queen's Hill Camp near Fanling. Planning was well advanced for a new Marine Regional Headquarters complex at Sai Wan Ho, to replace the existing one in Tsim Sha Tsui.

The construction of a 32-storey tower block at Police Headquarters in Arsenal Street commenced in mid-1992. On completion in late 1995, this building will accommodate most of the Police Headquarters crime and security formations.

Communications

The programme to replace outdated and inefficient telephone exchanges in police facilities was concluded during the year, and the network of facsimile machines expanded to reduce the time of routine transmission of documents throughout the Force. Facsimile machines were also installed in the Regional Command and Control Centres in Kowloon, Hong Kong Island and the New Territories to enable members of the public who have a hearing' impairment to access the '999' emergency system.

  A computer-based Force Directory Enquiries System was commissioned in June to enable quick tracing of key officers in the Force, with a view to answering urgent enquiries from both within and outside the Force.

  A Casualty Enquiry System, with sufficient lines to handle public enquiries in the event of a major disaster, was installed. To back up internal security and anti-crime activities in the territory, new portable radios, mobile radios and associated repeater equipment, designed specially for these needs, were provided to Regional Crime Units and the Police Tactical Unit.

  Sophisticated navigation and communications equipment was installed in each of the six new divisional command launches put into service, to make police operations at sea possible even under the most severe weather. The Marine Radio Workshop also enhanced its capability to take up first line support of the advanced technologies employed in these systems.

Planning for the communications needs of police facilities at the new airport and all associated rail links continued during the year, alongside the design of a new and better radio system for traffic police.

Information Technology

In January, the government accepted the financial implications, estimated at some $526 million, for the implementation of the Force's Information Technology Strategy. Throughout the year, the Information Technology Branch was heavily committed to planning for the five major groups of computer systems which are integral to the strategy.

These systems are the Communal Information System, Force Criminal Investigation System, Force Operations Support System, Force Administrative Support System and Free-standing Systems.

The Communal Information System will facilitate day-to-day operations and the collation of management information at district, regional and headquarters levels. A pilot project, which has been running in Wanchai district for two years, has been successful, establishing the conceptual basis for future force-wide application. The Force Criminal Investigation System will provide enhanced computer facilities for the investigation and detection of crime. The Force Operations Support System will maintain a comprehensive

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database for the support of operations throughout the Force. The Force Administrative Support System will support the general administration of the Force by centrally maintaining personnel, training, leave, allowances, accounting and financial records, as well as a database from which related management and statistical information can be obtained. The Free-standing Systems will cater for specific local needs which are largely self-contained within specific formations, such as the Police Training School, police stores, marine police and Special Branch.

Planning also commenced for the Police Data Communications Network, which will link the various systems within the strategy with one another and with existing systems.

       At the end of September, implementation of the first stage of Phase II of the Enhanced Command and Control Computer System was completed, with the incorporation and/or enhancement of three sub-systems to assist in managing resources and incidents; the provision of terminals to all police stations and district, regional and Force headquarters; and the provision of separate operational environments for internal security and training duties. Work also continued throughout the year on the three final sub-systems to provide management information, location identification and intruder alarm identification. Its completion is expected by mid-1994.

       System development work for the extension of the Criminal Intelligence Computer System to the Narcotics Bureau and Commercial Crime Bureau was completed, and the fully-expanded system went into operation in August. This has enhanced the Force's intelligence gathering and analysis capabilities in these complex areas of law enforcement.

Transport

The police vehicle fleet continued to expand and modernise to keep pace with developments. At the end of the year, it stood at 2 314. Significant progress was also made to obtain improved performance from the fleet by the evaluation of several major vehicle types prior to purchase. The introduction of a charging system by the Electrical and Mechanical Services Department placed fleet maintenance on a commercial footing, and resulted in the Force exercising tighter control over servicing standards and vehicle availability.

       During the year, increased emphasis was placed on the standard of police drivers. An operational driving course was introduced in early 1993 to enhance the ability of the Force to respond to emergencies and other difficult situations. Several instructors attended overseas driving courses as part of a continuing programme to upgrade driving skills and, in pursuit of Force policy, to become fully self-sufficient in driver training.

       Planning also continued to upgrade the Force Transport Management Information System and to acquire an automated Fuel Dispensing System.

Research

The Research Branch completed a comprehensive study into the posts held and the tasks undertaken by women police officers within the Force during the year. Also studied and reported on were projects concerning the future use of bilingual forms within the Force, the value and necessity of the 'morning conference' system of management, the need for and level of protection required to combat firearm threats to police vehicles and their occupants, and a study into the effectiveness of the transfer of responsibility to regions of the Enhanced Command and Control Computer Systems.

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  Other projects under review included a proposed development of the management functions of the driver cadre to regions, and a proposed study of the beat patrol system.

Inspection Services Wing

 Regular Force inspections to ensure effective and efficient operations and administration, which resumed in April 1992, were suspended in June 1993, to concentrate resources on a major management, manning and command structure study of the Force as a whole. A total of 20 inspections were conducted during this fourth cycle inspection period.

Police Licensing Office

The Commissioner of Police, through the Police Licensing Office, is the Licensing Authority for various licences and permits. As the Societies Officer, he also accepts notification of the establishment of local societies.

  In 1993, 709 societies notified the Societies Officer of their establishment and 381 societies were dissolved. At the year's end, a total of 6 127 societies had provided notifica- tion of their establishment.

  An average of 2 153 people applied for registration as watchmen each month. In 1993, 21 158 watchmen were registered, of whom 1 173 were licensed to carry firearms. At the end of 1993, a total of 134 810 watchmen were registered.

  A total of 1669 persons were licensed to possess arms for competition or target shooting, while 178 persons applied for arms licences.

  At the end of the year, 1 026 notifications of public meetings were processed. A further 290 licences for public processions, 1 297 permits for the use of loudspeakers and 768 lion dance permits were issued.

  A total of 27 applications for massage establishment licences, 40 applications for auctioneer licences, nine applications for marine store dealer licences, four applications for pawnbroker licences and 53 applications for temporary liquor licences were processed during the year.

Police Dog Unit

The Police Dog Unit located at Ping Shan in Yuen Long recorded an establishment of 104 dogs, including labradors and springer spaniels, trained to patrol, track and detect dangerous drugs and explosives. The unit ran a variety of training courses, and the successful handlers and dogs were deployed throughout Hong Kong. Numerous demons- trations were also performed for social and charity activities.

Complaints Against Police

 The Complaints Against Police Office investigates all complaints from the public con- cerning the conduct and behaviour of members of the Police Force, including civilian staff and auxiliary police officers. The investigation of the complaints is monitored by the independent Police Complaints Committee.

  In 1993, 3374 complaints were received, an increase of 145 cases or 4.5 per cent over 1992. Over 97.7 per cent of complaints were made by persons either involved with or subjected to constabulary action. Complaints of assault, neglect of duty and conduct/ manner made up the majority of cases, comprising 79.7 per cent of total complaints. Investigations into 3 520 cases were completed, with 100 cases or 2.8 per cent substantiated

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and 34 cases or one per cent classified as false. Altogether, 2 338 cases or 66.4 per cent of all complaints were either withdrawn or not pursuable. A total of 576 cases, representing 16.4 per cent of all complaints, were dealt with by way of the new Informal Resolution Scheme. Overall, 17 police officers were disciplined and two charged with offences resulting from the complaints. In addition, 204 officers were the subject of 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 were organised for junior police officers, with the aim of improving public relations and reducing situations of conflict. A Complaints Prevention Committee, made up of various ranks in the Force, was set up in 1992 to identify and eradicate areas which may lead to complaints.

Recruitment

As at December 31, 1993, the Force establishment stood at 27 263 and 6 026 for disciplined and civilian staff, respectively. The strength of the Force had improved and was 27 251 and 5 782, respectively.

During the year, 8 879 applications for the post of constable were received, with 1 367 recruits subsequently taken on strength.

With regard to the recruitment of inspectors, 37 local direct-entry officers were appointed, while 41 junior police officers were promoted. In addition, 20 overseas officers were taken on strength.

The year saw a healthy recruitment situation and a significant reduction in wastage levels.

Training

Training is a vital part of a police officer's career, starting with initial training on recruitment, followed by in-service training (which takes place both locally and, in some cases, overseas) and training after promotion.

Newly-recruited inspectors and constables are sent to the Police Training School at Wong Chuk Hang, a modern 18-hectare campus, for their initial training. The 36-week inspectors' and the 24-week constables' courses cover similar subjects, including criminal law, social studies, police and court procedures, drill, firearms, first aid, physical fitness, swimming, life-saving and self-defence. Inspectors also study management theory and practical leadership. As part of recruit training, expatriate inspectors study colloquial Cantonese, while functional English is taught to local inspectors.

An officer is kept up-to-date with new legislation and procedures by in-service training at regular intervals throughout his service. In addition, there are tailor-made courses for officers in more specialised branches involved, among other things, in marine, traffic, financial investigation and instructional work. Language courses on English, Mandarin and Vietnamese are also run in conjunction with the Civil Service Training Centre. During the year, about 50 officers were sent to the United Kingdom, Canada, the United States, New Zealand, Australia and Malaysia for management, specialist and technical training.

The Higher Training Division provides progressive levels of management training and self-development courses for inspectors, chief inspectors and newly-promoted superintendents. The courses are designed to be mind-broadening and to provide a wider perspective of social and political developments in Hong Kong, as well as an opportunity

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to practise research techniques, and operational and strategic planning. This is achieved through lectures and discussions with senior police officers, academics and members of the Legislative Council. Visits to commercial and industrial organisations are arranged. The emphasis is on researching and solving contemporary management problems affecting diverse areas of the police force.

Promotion training for junior police officers takes place as soon as possible; after an officer's promotion, at the Police Training School. The instruction is designed to equip officers with the management and decision-making skills necessary for their new ranks.

At the Detective Training School, courses at standard and advanced levels are conducted to improve the standard of criminal investigation throughout the Force. A number of specialised courses are also run there, including an 11-day training course for officers who may be required to deal with victims of sexual assault and child abuse.

  Throughout the year, emphasis continued to be placed on weapons training. All male officers were trained to use the new type of revolver, ammunition and associated equipment before these items were introduced for normal duty study. Further training was provided to front-line officers to induce greater awareness of shooting tactics on the street.

Following the trampling disaster in Lan Kwai Fong on January 1, plans are in place to upgrade the level of First Aid Refresher Training given and to make supervisory officers more aware of crowd psychology.

Promotions

Promotion prospects in the Force remained good at most levels. During the year, a total of 40 officers were promoted to the rank of senior superintendent of police and above, 31 chief inspectors advanced to superintendent, 60 senior inspectors to chief inspector, 104 sergeants to station sergeant and 367 constables to sergeant. In addition, 10 exceptionally experienced station sergeants advanced to the rank of inspector.

Overall, 267 officers retired from the Force, 31 officers were invalided, 530 resigned, six were compulsorily retired and 33 were either dismissed or had their services terminated in 1993.

Awards

A total of 882 officers were awarded the Colonial Police Long Service Medal after 18 years of continuous police service; 366 officers were awarded the 1st Clasp to the Medal after 25 years' service and another 292 officers were awarded the 2nd Clasp after 30 years' service. In addition, four officers were awarded the Queen's Police Medal for Distinguished Service and 27 officers the Colonial Police Medal for Meritorious Service. Three officers received the Queen's Gallantry Medal and four officers were awarded His Excellency the Governor's Commendation.

Welfare

The Welfare Branch provides a wide range of services, including personal welfare, psychological consultation, assistance on retirement, catering, and sports and recreation for all members of the force and their families.

During the year, social work staff conducted 3 605 casework interviews in the five regional welfare offices and the two sub-offices, and made 6 352 casework visits to sick officers and family members of officers in hospital, places of work or their home.

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Family life education continued to play an important part in the welfare programme, with emphasis on good parental guidance and personal finance management.

       A total of 1 877 children of regular and auxiliary police officers were awarded bursaries from the two police education trust funds. The Police Children's Education Trust distributed $4,152,000 and the Police Education and Welfare Trust distributed $1,075,325, to assist them to pursue various levels of education.

Force Housing

The Force manages a total of 11 586 quarters, of which 10 403 are for junior police officers. These include 288 new quarters at the Tsing Yi Police Married Quarters and 152 ex- military quarters at Queen's Hill Camp. The construction of 408 quarters in Fanling and 429 quarters in Wong Tai Sin are underway and scheduled for completion by 1994 and 1996, respectively. In 1993, the Force was again allocated 400 units under the Disciplined Services Quota of the Government Public Housing Scheme. Other alternative sources of accommodation which remain open to eligible junior police officers include the Home Purchase Scheme, Housing Loan Scheme and Home Ownership Scheme.

The programme to refurbish 4 500 married quarters for junior police officers over a nine-year period was progressing well. Since the introduction of the scheme in 1987, 1 621 quarters have been refurbished, resulting in a marked improvement in the structural condition and standard of these old blocks of quarters.

The policy to provide housing for all eligible married police officers, including those in the inspectorate and superintendent cadres, continued to be implemented progressively. Efforts were made to acquire more quarters of higher grading to replace the current sub- standard ones, rather than opting for sheer numbers.

Royal Hong Kong Auxiliary Police Force

Manned entirely by part-time volunteers from all walks of life, the Royal Hong Kong Auxiliary Police Force has a proud history dating back to 1914.

The traditional role of the Force was to provide the regular police with additional manpower for emergencies. Subsequent to the Fight Violent Crime Campaign in 1973, the auxiliary police have provided increasing support and are presently fully integrated with their regular counterparts in a wide variety of daily constabulary duties in the field of crime prevention, neighbourhood policing, traffic control, special duties and community relations. The auxiliary police also provide support in communications duties in police command and control centres.

The strength of the Force at the end of the year was 5 629, out of a total establishment of 5746 officers of all ranks. Approximately 10.8 per cent of the Force was composed of women officers.

Between January to March, the average daily turnout for normal constabulary duty was 850 officers. From April to the end of 1993, this turnout was reduced to 750 officers in the light of improvements in the operational strength of the regular force.

Customs and Excise

The Customs and Excise Department is organised into five major branches - the Headquarters Branch, Operations Branch, Investigation Branch, Trade Controls Branch and the Civil Secretariat. It is primarily responsible for the collection and protection of

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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 rights protection.

The department has an establishment of 3 914 posts.

Revenue Protection

The department is responsible for collecting and protecting duty revenue on four groups of dutiable commodities in Hong Kong - liquor, tobacco, hydrocarbon oil and methyl alcohol.

  The smuggling of dutiable cigarettes into Hong Kong from China continued to be a problem during the year, primarily due to the substantial difference in cigarette prices across the border. Illegal sales of dutiable cigarettes have proliferated in Hong Kong as a result. To combat these activities, enforcement action was stepped up, leading to the detection of 3 272 cases and the seizure of 50 million cigarettes with a duty potential of $29 million.

The illegal use of industrial diesel oil by motor vehicles remained prevalent. Some 244 persons were arrested and 69 659 litres of industrial diesel oil were seized.

In addition to enforcement action, the Dutiable Commodities (Amendment) (No. 2) Ordinance 1993 was enacted on July 23 to streamline the procedures for the forfeiture and disposal of seized articles.

Anti-Narcotics Operations

The department plays an important role in the prevention and suppression of illicit trafficking in narcotics and other dangerous drugs.

  The strategy in attacking drug offenders is directed at all levels, including import, export, manufacturing, distribution and peddling.

  Apart from suppressing drug trafficking activities locally, the department also exchanges intelligence and co-operates closely with the Royal Hong Kong Police, overseas customs authorities and other law enforcement agencies in the fight against drug traffickers at the international level. In 1993, the department successfully extradited six persons to the United States for trial in connection with drug offences.

During the year, the department prosecuted 1 010 persons for drug offences and seized 75 kilogrammes of heroin, 38 kilogrammes of opium and 137 kilogrammes of cannabis.

Recovery of Drug Trafficking Proceeds

The department and the police have joint responsibility for enforcing the Drug Trafficking (Recovery of Proceeds) Ordinance, which is an effective tool in confiscating assets derived from drug trafficking.

During the year, the department successfully obtained four court orders restraining realisable properties suspected to be the proceeds of drug trafficking, with a total value of $0.7 million. Five cases wer