PLC Paper No. LS 59

Paper for the House Committee Meeting of the Provisional Legislative Council on 5 December 1997

Legal Service Division Report on Resolution under section 23 of the Hong Kong Export Credit Insurance Corporation Ordinance (Cap. 1115)

The Secretary for Trade and Industry has given notice to move the above motion at the meeting of the Council on 17 December 1997.

2. The Hong Kong Export Credit Insurance Corporation (懀he Corporation� was established by the Hong Kong Export Credit Insurance Corporation Ordinance (Cap. 1115) in 1966 to provide insurance protection for Hong Kong exporters against non-payment risks arising from commercial and political events which are not normally insured with commercial insurers. The Government guarantees its contingent liability the maximum amount of which is currently standing at $7,500 million since 1991. Any change to this maximum limit has to be determined by the Provisional Legislative Council (LC� by resolution (section 23 of the Ordinance).

3. As of 31 October 1997 the amount of the corporation contingent liability stood at $7,303 million. The Corporation has therefore recommended that the maximum contingent liability be increased to $10,000 million, as supported by the statutory advisory board of the Corporation.

4. The Administration is of the view that failure to raise the maximum limit would render the Corporation unable to accommodate its normal business expansion and would discourage exports of both goods and services. The Administration also stresses that the maximum liability is a theoretical contingent amount which is most unlikely to be at risk in totality at any one time.

5. The above motion seeks the PLC approval to raise the maximum contingent liability from $7,500 million to $10,000 million.

6. The draft resolution is in order from the legal point of view.

Prepared by

Ho Ying-chu, Anita
Assistant Legal Adviser
Provisional Legislative Council Secretariat
3 December 1997

Last Updated on 10 December 1997