PLC Paper No. CB(1)351
(These minutes have been seen by the Administration)
Ref: CB1/PL/ES/1

Provisional Legislative Council
Panel on Economic Services

Minutes of meeting held on Wednesday, 10 September 1997, at 10:45 am in Conference Room A of the Legislative Council Building

Members present :

    Hon James TIEN Pei-chun, JP (Chairman)
    Dr Hon LAW Cheung-kwok (Deputy Chairman)
    Hon HO Sai-chu, JP
    Hon Allen LEE, JP
    Hon Henry WU
    Hon Henry TANG Ying-yen, JP
    Hon YUEN Mo
    Hon CHAN Choi-hi
    Hon CHAN Yuen-han
    Hon Howard YOUNG, JP
    Dr Hon Charles YEUNG Chun-kam
    Hon Mrs Miriam LAU Kin-yee, JP
    Hon LO Suk-ching

Members absent :

    Dr Hon David LI Kwok-po, JP
    Hon CHAN Kam-lam
    Hon Ambrose LAU Hon-chuen, JP
    Hon Paul CHENG Ming-fun, JP
    Hon TAM Yiu-chung, JP

Public officers attending:

Mr Stephen IP, JP
Secretary for Economic Services
Mr Richard YUEN
Deputy Secretary for Economic Services/3

For Agenda Item IV
Deputy Secretary for Economic Services/1
Ms Linda LAI
Principal Assistant Secretary for Economic Services

For Agenda Item V
Mr I B Dale
Director of Marine
General Manager/Services, Marine Department
General Manager/Vessel Traffic Services, Marine Department

Clerk in attendance :

Ms Estella CHAN
Chief Assistant Secretary (1)4

Staff in attendance :

Mr Daniel HUI
Senior Assistant Secretary (1)5

I Confirmation of minutes
(PLC Paper No. CB(1)144)

The minutes of the meeting held on 22 July 1997 were confirmed.

II Information papers issued since last meeting
(PLC Papers No. CB(1)99, CB(1)134 and CB(1)203)

2. Members noted the three information papers issued since the last meeting.

III Items for discussion for the next meeting scheduled for 6 October1997

3. Members agreed to discuss the following items at the next meeting :

  1. Implications of China Light and Power Company Limited's corporate restructuring; and
  2. Policy on development of the agriculture and fisheries industry.

IV Briefing by Secretary for Economic Services on policy objectives of the Economic Services Bureau (ESB)

4. With the aid of computer projection equipment, the Secretary for Economic Services (SES) conducted a presentation on policy objectives of ESB. (Post meeting note : A set of the presentation materials has been circulated to members vide PLC Paper No. CB(1)228 dated 11 September 1997.)

Air Services Agreement (ASA)

5. Noting that 22 ASAs had been signed between Hong Kong and other countries, members enquired whether Hong Kong had any ASA with Taiwan and whether approval from the Central People's Government was required before Hong Kong signed any ASA. SES advised that the existing air services between Hong Kong and Taiwan was covered by a commercial agreement which had been working well. As provided in the Basic Law, the Hong Kong Special Administrative Region Government would require the Central People's Government's authorisation before signing any ASA.

6. In response to members?concern about the adverse effects of delays in the signing of ASAs with other countries, SES responded that negotiations of ASAs with other countries were an on-going exercise and existing air services between these countries and Hong Kong were maintained. As a matter of fact some requests for additional flights had to be turned down because capacity of the Kai Tak Airport had been fully utilized. The situation would improve after the opening of the new airport at Chep Lap Kok next year.

New Airport at Chek Lap Kok

7. In response to members?enquiries on the progress of the construction of the new airport, SES advised that the target opening date for the new airport still remained as April 1998. Relevant works were on schedule and testing of various systems were being undertaken to ensure safety. According to the latest data available, there was no reason to believe that the new airport could not be opened for use as scheduled. A formal announcement on the opening date would be made as soon as a decision was made.

8. Members pointed out that in addition to the important issue of safety, other supporting services/facilities, such as the airport railway, should be opened at the same time as the new airport in order to enhance efficiency. SES noted members?view and said that the Administration would ensure that the new airport was safe and that the necessary supporting services were available before the opening of the new airport. As regards the second runway for the new airport, SES advised that it was scheduled for commissioning at the end of 1998 and the construction cost was $4.9 billion.

9. Mr Howard YOUNG enquired about the progress of the development of airport charges. SES responded that there had been on-going discussions between the concerned parties. He reiterated that the airport charges to be levied should aim at maintaining the competitiveness of the new airport and enhancing Hong Kong's position as the centre of international and regional aviation .

10. In response to Ms CHAN Yuen-han's concern about the prospect for existing airport employees, SES advised that the Administration had been monitoring closely labour issues relating to the removal of the airport to Chek Lap Kok. These issues included possible lay-offs of staff due to relocation; compensation to employees who refused to work in the new airport because of the long distance from home and recruitment problems for some companies. The Labour Department had been discussing with relevant trade unions on the issues.

11. Members enquired about the conditions and procedures under which the People's Liberation Army could use Hong Kong's airport. SES explained that there was a set of established procedures to be followed should the army needed to use the airport. Of these procedures, safety would be one of the major consideration.

12. Having noted the proximity of the new airport at Chek Lap Kok to the international airports in Macau and Shenzhen, members enquired about co-ordinating measures to ensure safety of flight paths to these three airports. SES said that he was appreciative of the co-operation offered by the authorities in Macau and Shenzhen in this respect. Measures to ensure safety of flight paths to the airports had been agreed among the parties.

13. In regard to the issues of introducing more competition into the air travel industry in Hong Kong, SES advised that the Administration was closely monitoring the demand for and quality of air services available in the market and would take appropriate measures as necessary.


14. Members noted the decline in the number of overseas visitors to Hong Kong in July and August and enquired about the Administration's plans to promote Hong Kong's tourist industry. SES replied that tourism was very important to Hong Kong because Hong Kong's tourism receipt ranked eighth in the world. The Administration recognized the need for both the Government and the private sector to put in more resources in promoting Hong Kong's tourist industry.

Scheme of Control Arrangement (SCA) with utility companies

15. In response to members?enquiries, SES said that the review on the SCAs with China Light and Power Company Limited (CLP) and Hongkong Electric Company Limited would begin on 1 October 1997 and 1 January 1998 respectively. The reviews to be overseen by a working group within the Administration would take one year to complete. Progress reports would be provided to the Panel at a later stage. One of the main issues for discussion in the review was the establishment of a system whereby assets related to excess generating capacity of electricity companies would be excluded from the Average Net Fixed Assets for calculation of tariff.

16. Members expressed concern about the implications of CLP's recently announced corporate restructuring and doubted whether this would affect the controls provided in its SCA with the Government. SES replied that the coverage of the SCA was clear. Some of CLP's existing businesses such as property development and investments in mainland China were excluded from the SCA. CLP's proposed corporate restructuring should therefore not contravene the provisions of the SCA.

V An update on port services

Public Cargo Working Areas (PCWAs) Management Reform
(PLC Paper No. CB(1)194(02))

17. Members noted that 90% of existing operators in PCWAs had tendered for 80% of the berth lengths currently available and enquired whether this would mean that some existing operators would be forced out of the trade in view of the keen competition in the tendering. The Deputy Secretary for Economic Services/3 (DSES/3) replied that this was not the situation because some existing berth lengths were idle and data available showed that all existing operators who had submitted tenders in the first phase of the tendering exercise should succeed in their bidding. The final results would be announced by the Central Tender Board. For those existing operators who had not participated in the first phase of the tendering, they could submit tenders in the next open tender phase which was open to all interested parties. Competition in the open tender phase was expected to be keener than in the first phase.

18. Referring to paragraph 9 of the information paper, members pointed out that the trade was worried about the review to be undertaken after three years which would lead to the contracting out of the entire management of PCWAs. It was feared that this would lead to existing operators being forced out of business by large consortia. SES responded that he had discussed with representatives from the trade. It appeared that the trade understood the need to reform the management of PCWAs and they had participated in the reform. The trade needed not to worry about the results of the review after three years. He assured that the effects of the first phase of the reform would be taken into account and there would be thorough consultation with the trade before deciding on the next move. DSES/3 added that one of the objectives of the reform was to assist the trade to modernise and improve their efficiency. Reforms would be implemented by stages.

19. Referring to paragraph 8 of the information paper, members hoped that the review on land side management of PCWAs would lead to reduced vehicle parking fees and cargo storage fees and that the review could be completed in six months. SES replied that members?views would be considered in the review.

20. Members noted that mid-stream cargo operators were in the process of merger and acquisition and enquired whether the strengthened mid-stream cargo operators would compete with PCWA operators. DSES/3 advised that merger and acquisition among mid-stream cargo operators were rationalization processes. He could not see PCWA operators, who ran smaller operations and were more flexible, to be in direct competition with mid-stream cargo operators, whose businesses were more capital intensive.

Port control and management
(PLC Paper No. CB(1)194(01))

21. Members noted that while ocean-going vessels were required to have third party insurance coverage before entering Hong Kong waters, local craft and river cargo/passenger vessels were not subject to such insurance requirement, and queried the rationale for the differential treatment. The Director of Marine (D of M) clarified that the insurance coverage requirement on ocean-going vessels was provided in international convention and was therefore a standard requirement in most ports including Hong Kong. However, control on local vessels and river cargo/passenger vessels was a matter for individual maritime authorities. Hong Kong could by legislation impose the third party insurance requirements on local vessels and river cargo/passenger vessels. The Administration was examining the types of vessels to be subject to such requirements and the practicalities of enforcing the requirements. The review on the subject should be completed by early next year. DSES/3 supplemented that as many river cargo/passengers from the mainland would be affected, the Administration would consult relevant authorities in the mainland before finalising any proposal.

22. Some members enquired whether ship master licences issued by mainland authorities were recognized by the Marine Department (MD). D of M advised that licences issued by mainland authorities to masters of ocean-going vessels were accepted internationally and therefore were also acceptable to Hong Kong. As regards masters and operators of river-going vessels, they were allowed to navigate in Hong Kong waters if they possessed the proper qualification i.e. Near Coastal Master Certificate. To ensure the master and operators were equipped with local knowledge for navigating in Hong Kong waters, MD had organized seminars jointly with mainland authorities which were well received. An increasing number of these seminars were being organized..

23. In response to members?enquiries about qualifications of masters and operators of mainland vessels, General Manger/Services, Marine Department said that according to the mainland authorities, the standards for issuance of masters and operators licences for in-shore vessels were more stringent than relevant standards used in Hong Kong. D of M remarked that there was no cause to think that small vessels from the mainland were dangerous. In fact, statistics showed that the total number of marine accidents was reduced by 9% in 1997 compared with same period in 1996. MD had put in much efforts in recent years to ensure safety in Hong Kong waters and these efforts had borne results. The safety of local craft from the Pearl River should not be a concern as long as Hong Kong continued with its efforts on enhancing marine safety. Besides, the increase in marine traffic did not rise above the expected growth rate of 7.5% per annum.

24. SES assured that the Administration would continue to adopt a long term perspective in monitoring and tackling the issue relating to safety in Hong Kong waters.

25. Mr YUEN Mo opined that the mainland maritime authorities had placed particular emphasis on safety with regard to its in-shore and off-shore shipping fleet. The quality of vessels and training of masters and operators had been improving. There was no need for concern over safety of vessels from the mainland.

26. Members enquired about the practicality of requiring all vessels entering Hong Kong to have a VHF radio communication system in order to enhance port safety. D of M advised that due to the large number of vessels entering or leaving Hong Kong each day, which amounted to about one vessel every 1.2 minutes, there would not be enough frequency bands to accommodate all the radios even if the Administration could impose such a requirement. He reiterated that the existing system for port control management had been working well.

27. Some members enquired about the possibility of having the MD to operate under a trading fund arrangement in order to enhance efficiency. DSES/3 responded that the Administration had considered the issue before and concluded that MD could not become financially independent in three to five years. The matter would be kept under review.

VI Any other business

28 Members agreed to defer the discussion on "Location and development of Container Terminals 10 and 11" to the next meeting on 6 October 1997.

29. The meeting ended at 12:55 pm.

Provisional Legislative Council Secretariat
17 October 1997

Last Updated on 5 November 1997