For information on 9 December 1996

Legislative Council Economic Services Panel


This paper informs Members of the publication of the first Post Office Trading Fund report and the proposed amendments to the Post Office Regulations for meeting changing needs.


2. The Post Office changed to trading fund operation on 1 August 1995 with a view to improving the range and quality of its services. The 1995-96 Annual Report which gives an account of the financial and operational results in the first eight months of its trading fund operation was tabled in the Legislative Council on 23 October 1996 and circulated to Members for information.

3. 1995-96 was a successful year for the Post Office. It has met all its performance pledge targets except next day delivery of local letters which, though improving, still fell 0.3% below the target of 98%. Financial performance for the period was good: the rate of return on average net fixed assets was 9.0%, as against the target rate of 6.5%.

4. The Post Office has set out its vision, mission and values to develop a more customer-focused business and achieve high levels of customer satisfaction. To meet changing needs and continue to improve its services, the Post Office has devised detailed plans for 1996-97: 100 projects for better services have been identified. To-date, some 37 projects have been completed. Examples include the decentralisation of call-for arrangements for packets and parcels, resumption of collection of letters from street posting boxes on Sundays and public holidays, advancing opening hours of 22 post offices on days of issue of new stamps, and introduction of posting boxes at the MTR stations on a pilot basis. A pamphlet "100 Projects for Better Services 1996-97" is attached.


5. The Post Office Regulations (the Regulations) need to be amended to cater for new/improved services, and to meet changing needs. We intend to make the Post Office (Amendment) Regulation 1997 in early January 1997. Proposed amendments to the Regulations are set out below.

(a) Introduction of the Recorded Delivery service to the public

The Post Office intends to extend to the public the Recorded Delivery service which it currently offers to government departments. The Recorded Delivery service is very similar to the mail registration service in that the Post Office has to provide proof of posting and delivery, but the tracking of the mail item at each processing stage is not provided as in registered mail. Since the provision of Recorded Delivery service requires less manpower, its fee (at $11) will be lower than that for registered mail (currently $13). Recorded Delivery service will thus offer the public, especially companies, a means to reduce the cost of mailing items which require only a proof of posting and delivery for record purpose.

(b) Cancellation of inquiry fee for parcels and registered items

At present, a sender of a parcel or registered item is required to pay a fee (currently $7) for making inquiries about the delivery of the parcel or registered item. Following a review of the arrangement, we consider it unreasonable to demand a customer, who has already paid for a postal service, to pay an additional fee for lodging an inquiry regarding the delivery of that service, and in most cases, regarding the non-performance of that service. In the interest of a more customer-focused service, the Post Office proposes to cancel such inquiry fee.

(c) Introduction of a Local Standing Order Service for philatelic products

At present, customers can place advance orders for serviced first day covers only. To provide better customer service to stamp collectors, a new Local Standing Order Service will be introduced on 1 January 1997. Under this service, local customers can order mint stamps, souvenir sheets, serviced first day covers for new stamps and serviced souvenir covers for stamp sheetlets for one year. A fee of $50 is charged for maintaining an account for 12 months to cover the administrative and handling costs. For orders covering serviced first day covers or souvenir covers, a fee of $2.5 for servicing each cover will also be charged.

(d) Cessation of certain free postal services

The Post Office began operating as a trading fund on 1 August 1995. The Post Office Regulations currently require certain postal services to be provided free of charge. These include government mail marked "On Her Majesty’s Service" ("OHMS") to the United Kingdom (UK) and British possessions or protectorates, and letters on postal business addressed to the Postmaster General. These arrangements do not accord with the trading fund concept that all services should, as far as possible, be provided on a cost recovery basis. An administrative arrangement has already been put in place to charge government mail marked "OHMS" to the UK and British possessions or protectorates. Consistent with the financial objectives of a trading fund, the Post Office will cease providing free postal services for letters on postal business addressed to the Postmaster General. Accordingly, the relevant regulations of the Regulations should be amended to reflect the cessation of free postal service for such mail.

(e) Other minor amendments to the Post Office Regulations

The opportunity is also taken to make certain amendments to the Regulations. These include:

(i) Prescribing the fees for ordering philatelic products

At present, a fee of $10 is charged for handling each order of special issue(s) of philatelic products under the Overseas Mail Order Service, and a fee of $2.5 per cover is charged for servicing a first day cover or a souvenir cover. These fees need to be set out in the Regulations.

(ii) Deletion of the statutory specimen of Business Reply Envelope or Card

The statutory specimen of Business Reply Envelope or Card used in connection with the Business Reply Service needs to be revised in order to be compatible with the requirements for mechanised sorting. Accordingly the statutory specimen in Regulation 23(4) of the Regulations would need to be updated. However, bearing in mind that Regulation 23(4) already stipulates that the Business Reply Envelope or Card must conform to certain specified terms and conditions and be approved by the Postmaster General, it is not necessary to retain the statutory specimen of Business Reply Envelope or Card in Regulation 23(4). The Postmaster General is able to specify the format of any requisite specimen in the application form for the Business Reply Service. The Post Office therefore proposes to delete the statutory specimen from Regulation 23(4) of the Regulations.

Economic Services Branch
21 November 1996

Last Updated on 14 August 1998