Provisional Legislative Council
PLC Paper No. CB(1) 270
(These minutes have been seen by the Administration)
Ref: CB1/PL/TI/1

Panel on Trade and Industry

Minutes of meeting held on Monday, 8 September 1997, at 10:45 am in Conference Room A of the Legislative Council Building

Members present :

    Hon NGAI Shiu-kit, JP (Chairman)
    Dr Hon Charles YEUNG Chun-kam (Deputy Chairman)
    Hon James TIEN Pei-chun, JP
    Hon HO Sai-chu, JP
    Hon NG Leung-sing
    Hon Mrs Selina CHOW, JP
    Hon Henry WU
    Hon Henry TANG Ying-yen, JP
    Hon MA Fung-kwok
    Hon CHIM Pui-chung
    Dr Hon LAW Cheung-kwok
    Hon CHOY So-yuk

Members absent :

    Prof Hon NG Ching-fai
    Hon YUEN Mo
    Hon Mrs Sophie LEUNG LAU Yau-fun, JP
    Hon CHAN Kam-lam
    Dr Hon Philip WONG Yu-hong
    Hon Paul CHENG Ming-fun, JP

Public officers attending :

For all items
Mr Augustine CHENG
Deputy Secretary for Trade and Industry

For item IV
Ms Salina YAN
Principal Assistant Secretary for Trade and Industry (A)

For item V
Ms Elizabeth TSE
Principal Assistant Secretary for Trade and Industry (D)
Mr Vincent POON
Assistant Commissioner of Customs and Excise

For item VI
Mr Bobby CHENG
Principal Assistant Secretary for Trade and Industry (B)
Mr Francis HO
Director-General of Industry

Clerk in attendance :

Ms LEUNG Siu-kum
Chief Assistant Secretary (1)2

Staff in attendance :

Miss Becky YU
Senior Assistant Secretary (1)3

I Confirmation of minutes of meeting
(PLC Paper No. CB(1) 103)

The minutes of the meeting held on 22 July 1997 were confirmed subject to an amendment to paragraph 6 of the Chinese version where the name should read .

II Date of next meeting and items for discussion

2. The next meeting would be held on Monday, 13 October 1997, at 10:45 am and members were invited to suggest items for discussion to the Panel Clerk.

III Information paper issued since last meeting
(PLC Paper No. CB(1) 177)

3. Members noted that the Administration had provided two copies of the report entitled "Made by Hong Kong" published by the Massachusetts Institute of Technology Industrial Performance Centre.

IV Briefing on policy objectives and work of Trade and Industry Bureau
(PLC Paper No. CB(1) 192(01))

4. At the invitation of the Chairman, the Deputy Secretary for Trade and Industry (DS for TI) briefly introduced the roles and objectives of the Trade and Industry Bureau (TIB). The work of TIB mainly covered bilateral and multilateral trade; support for industry; intellectual property and consumer protection; trade controls of textiles, strategic commodities and reserved commodities; regional and multilateral economic co-operation; overseas offices; and electronic data interchange. Apart from taking policy and housekeeping responsibilities for the Trade Department, Industry Department, Custom and Excise Department (C&ED), Intellectual Property Department, and ten Hong Kong Economic and Trade Offices overseas, TIB also had policy responsibilities for the following statutory bodies: the Hong Kong Trade Development Council, Hong Kong Productivity Council, Consumer Council, Hong Kong Export Credit Insurance Corporation, Hong Kong Industrial Estates Corporation, Hong Kong Industrial Technology Centre Corporation, and the Community Electronic Trading Service.

Trade promotion

5. While acknowledging TIB's efforts in enhancing the competitiveness of the manufacturing and services industries, Mrs Selina CHOW considered that more should be done in promoting the creative industry having regard to its increasing importance to the economy of Hong Kong. She emphasized that this industry, including film and record production, was more of a business than just a form of arts and should therefore be accorded equal attention as the manufacturing and services industries. Expressing similar concern, Mr MA Fung-kwok said that although the creative industry constituted an integral part of Hong Kong's economy, the industry lacked a designated policy bureau to assist in its development, in particular when it was experiencing difficulties such as increased protectionism and copyright infringements. He considered a need for the Administration to review its policy in this respect.

6. In response, DS for TI advised that TIB recognized the importance of industrial designs and had established a company under the Hong Kong Productivity Council to promote design innovation. A Services Support Fund was also made available to fund projects which were beneficial to the overall development of services industry in Hong Kong. However, in view of the extensive purview of the creative industry, some sectors might fall outside the remit of TIB. For example, the promotion of the film and record production would come under the jurisdiction of the Broadcasting, Culture and Sport Bureau, while issues relating to intellectual property protection were the responsibility of TIB. Mr NG Leung-sing suggested that the Administration should define clearly the role of each policy bureau so as to avoid the straddling of responsibilities as was the case with the film and record industries, and that the public should be consulted in this regard. This would help to ensure a fair distribution of resources in promoting the growth and development of different sectors. Dr YEUNG Chun-kam considered that the differences between the manufacturing and the services sectors had become less distinctive as a result of economic restructuring over the past years. He asked if the Administration would consider establishing a separate department to oversee the trade and industry-related services industry. DS for TI took note of members' concern but advised that the Task Force on Services Promotion under the chairmanship of the Financial Secretary and the formation of the Business Services Promotion Unit were moves towards this direction.

Competition policy

7. Dr LAW Cheung-kwok said that when the Consumer Council published the report entitled "Competition Policy: The Key to Hong Kong's Future Economic Success" in November 1996, the Administration had undertaken to respond to this within six months. He asked for an update. DS for TI said that TIB had undertaken a public consultation exercise in late 1996/early 1997 and would take the opportunity of the Chief Executive's coming Policy Address to clarify the way forward.

Community Electronic Trading Service (CETS)

8. On the progress of implementation of CETS, DS for TI advised that Tradelink was running satisfactorily and he envisaged no financial difficulties. Applications for Restrained Textiles Export Licences and Trade Declarations had been processed since 1 January and 1 April 1997 respectively. Counter service for the former was expected to be phased out in two years' time and the latter three years. While welcoming the progress, the Chairman emphasized the need to expedite the development of CETS as this was a vital piece of infrastructure required by Hong Kong in pursuing continued economic growth. At the Chairman's request, the Administration undertook to report further progress of CETS to the Panel in January 1998.

9. As for the interfacing of TIB and various trade-related Chambers in the issuance of Certificates of Origin, DS for TI advised that the Information Technology Services Department, Trade Department and Customs and Excise Department were working on the development and implementation of the system. The Panel would be consulted on the plan before final implementation.

V Enforcement against copyright piracy activities
(PLC Paper No. CB(1) 192(02))

10. In response to the Chairman, DS for TI highlighted the salient points in the information paper. The Administration was committed to putting in place and enforcing a robust regime for the protection of intellectual property rights, including copyright. Over the past few years, the Commissioner of Customs and Excise had stepped up enforcement actions against copyright piracy activities at all levels, including the importation, distribution and retailing of infringing goods. With the additional powers conferred upon the Intellectual Property Investigation Bureau, the unit launched operations "Thunderbolt" and "Terminator" against the notorious piracy retail black spots in mid-July. Apart from these on-going efforts, the Administration was positively considering additional actions such as short-term closure orders on shops which had been convicted of copyright piracy, a reward scheme to facilitate intelligence-gathering, regulation of compact disc (CD) manufacturing equipment and factories, identification coding on CD products, treating copyright infringements as a kind of organized and serious crime under the Organized and Serious Crimes Ordinance, and training opportunities in the fight against piracy through INTERNET environment. Since some of these initiatives would require legislative amendments, the Panel and relevant parties would be consulted in due course. DS for TI added that the Intellectual Property Department also joined forces with other organizations, such as the Hong Kong Intellectual Property Society, in promoting a better understanding of the significance of protecting intellectual property rights.

11. While supporting the enforcement initiatives put forward by the Administration in principle, Mrs Selina CHOW expressed reservation at the proposed imposition of closure orders as this might unfairly prejudice the landlords' interests. She emphasized that landlords should not be held responsible for enforcement actions and pointed out that the impact of raids would subside shortly after stepping up of enforcement actions. She suggested that a more long-term operation should be mapped out to fight against copyright piracy, and that the Administration should pursue quickly such initiatives as the reward scheme, regulation of CD manufacturing equipment and factories as well as identification coding, in particular the second proposal as pirates were moving their manufacturing lines locally. Expressing similar concern on illicit production of pirated goods, Mr MA Fung-kwok suggested that a registration system on copyright works should be in place to facilitate checking by manufacturers to ensure that production orders received were properly authorized, as was the case with the United States of America. This would deter manufacturers from claiming innocence in the illegal production process in the event of legal proceedings and could help to contain piracy at source.

12. DS for TI conceived that it might not be possible to eradicate copyright piracy completely. Notwithstanding this, the Administration already had in mind a number of additional measures to step up enforcement actions. With the concerted efforts of the Government, rights owners, and relevant authorities, the Administration was confident that copyright piracy would be controlled and contained. The Assistant Commissioner of Customs and Excise (ACCE) supplemented that operations "Thunderbolt" and "Terminator" already had an impact on many operators in the more notorious black spots. In addition to seizure of infringing goods, related equipment such as computers was also confiscated. C&ED would re-visit the black spots the following days after the raids to ensure a sufficient deterrent effect. ACCE said that the important point was to make the public understand that they could no longer get pirated goods from these outlets. In reply to a member's question on publicity and education, DS for TI advised that the Administration planned to increase public awareness of intellectual property rights through the media viz. television, radio and newspaper. A progressive and comprehensive public education programme such as a student ambassador scheme would also be launched shortly.

13. As regards the suggestion for a registration system on copyright works, DS for TI considered this technically not feasible because the existing copyright protection regime was an open one and mandatory registration could involve an immense number of copyright works world-wide. The system currently adopted in the States was a voluntary one. He considered that the proposed identification coding would achieve similar purpose. Mrs CHOW also expressed reservation at such a system taking into account the amount of additional work incurred if every piece of copyright works were to be registered. She said that copyright was an unregistered right; it would not be appropriate to limit the exercise of copyright by imposing a registration or formality requirement. While agreeing that registration of copyright works might not be mandatory, Mr MA considered it beneficial for rights owners to register their works. He however did not agree that the proposed system would incur tremendous workload having regard to his experience with the Hong Kong Kowloon and New Territories Motion Picture Industry Association Limited in pursuing recognition from the Mainland authorities in respect of distribution of its members' copyright films.

14. Referring to a recent seizure in Cheung Sha Wan where an illegal CD factory was found to have equipped with manufacturing machinery capable of producing 40,000 CDs a day, the Chairman pointed out that this superseded the point in paragraph 24 of the information paper which stated that there was no evidence showing that CD factories in Hong Kong were engaged in the production of infringing copies. ACCE admitted that the information paper was prepared before the seizure took place. He added that the Administration maintained close liaison with the trade and relevant enforcement authorities in sharing information on copyright piracy.

VI Helping development of industries
(PLC Paper No. 192(03))

Industrial Estates

15. A member remarked that the leasing of part of the Tseng Kwan O Industrial Estate to container operators had caused much inconvenience to residents nearby; he asked if factors such as impact on transport infrastructure had been taken into consideration in leasing out the industrial land. The Director-General of Industry (DG of I) advised that the established practice was to commission a feasibility study on the planning, environmental and infrastructure issues before a site was designated for the purpose of industrial estate. All applications for occupancy would be assessed by the Hong Kong Industrial Estates Corporation in accordance with the standard eligibility criteria. Nevertheless, to maximize the utilization of the site, short-term leases were granted under the purview of the Lands Department before the site was taken up by an industrial estate.

The Science Park

16. Some members asked if the Administration would consider offering incentives such as the introduction of tax exemption in order to attract potential tenants to the Science Park. DG of I advised that efforts, including the provision of accommodation for visiting scientists and technological infrastructure such as the installation of optical fibre network within the Park, would be made to enhance the attractiveness of the Park to foreign investors. As for the proposed tax exemption, DG of I said that this would be considered in the context of the consultation document published by the Secretary for Treasury. While welcoming a member's suggestion for bringing in more professionals from the Mainland in order to enhance the technological development in Hong Kong, DG of I cautioned that this had to be considered carefully having regard to the existing immigration policy and the effect on local labour market. He added that the Secretary for Education and Manpower was conducting a review to ascertain the adequacy of the Pilot Scheme to bring in 1,000 professionals from the Mainland. DG of I also undertook to relay to TIB members' request for the final report of the Planning Committee on Science Park.

Business Park

17. In reply to a member's question, DG of I explained that the business park was a concept originated from a recommendation in a land use and planning related consultancy study commissioned by the Planning Department. As the operational requirement of the manufacturing sector had been moving towards greater integration of industrial and service-oriented activities, the existing design of industrial or industrial/office buildings might not be able to offer the flexibility to meet the changing physical and layout requirements. The setting up of a business estate was aimed at providing an additional choice for enterprises, such as those engaged in business activities as well as industrial design and product development etc. The feasibility and desirability of establishing such a park however had yet to be explored.

Technological infrastructure

18. Noting that a total of $920 million had been approved under the Industrial Support Fund (ISF), Dr LAW Cheung-kwok enquired about the effectiveness of ISF in improving both the productivity and technological development of Hong Kong. In response, DG of I said that it would be difficult to quantify the technological improvement which had been achieved by Hong Kong with the availability of ISF. The objectives of ISF were to support applied research and development of products/processes and to facilitate technology transfer and upgrading. Pioneer projects, including those in the area of biotechnology, could not have been materialized in the absence of ISF. The Fund had also enabled the upgrading of technological capabilities of certain sectors as a whole, such as the watch and jewellery industries. In reply to members' questions, DG of I advised that funding to projects under ISF was approved in the form of grants, and that applications from individual enterprises would be accepted provided that the projects concerned would be beneficial to the overall development of the industry.

19. Referring to some overseas countries where amount equivalent to a certain percentage of the Gross Domestic Product (GDP) would be deployed to fund research and development projects, Dr YEUNG Chun-kam asked if the Administration would consider adopting similar approach so as to bring Hong Kong on a par with these countries. DG of I said that Hong Kong did not compile official statistics on research and development expenditure as a percentage of GDP. He cautioned that a direct comparison would be inappropriate having regard to the different circumstances of individual economies. For example, Hong Kong had no aerospace science programmes nor a defence budget, which in the US these had spun off major basic and applied research and development programmes in universities and research institutions. He reiterated that the Administration was committed to enhancing the research and development base in Hong Kong, and that the establishment of a number of support funds was a step towards this direction. Further injection to these funds would have to be worked out among the Government, educational institutions and trades concerned.

VII Any other business

Asian Productivity Organization (APO)

20. Some members noted that Hong Kong had suspended its affiliation with APO since the transfer of sovereignty on 1 July 1997 and sought clarification on such an arrangement. DS for TI explained that as Hong Kong had become a part of China after the handover, it would be inappropriate for Hong Kong, under the one China policy, to participate in APO unless the question of Taiwan's membership under the name of the Republic of China had been resolved. He emphasized that this was a foreign affairs issue and had to be dealt with at the diplomatic level. Notwithstanding this, the bilateral relationship between Hong Kong and other APO members outside the context of APO would remain unaffected. In reply to a related question, DS for TI confirmed that the question of Taiwan's nomenclature had been brought to the attention of the Sino-British Joint Liaison Group before the handover.

21. While welcoming the Administration's assurance that this was an individual case, and that other existing bilateral and multilateral arrangements would not be similarly affected, Mr James TIEN expressed disappointment that Hong Kong had to suspend its affiliation with APO on political ground in view of the latter's contribution to the overall productivity of Hong Kong. DS for TI said that Hong Kong would restore its connection with APO once the question had been resolved.

22. There being no other business, the meeting closed at 12:30 pm.

Provisional Legislative Council Secretariat
3 October 1997

Last Updated on 5 November 1997