Report of the Panel on Trade and Industry
for submission to the Provisional Legislative Council


This report gives an account of the work of the Panel on Trade and Industry during the term of the Provisional Legislative Council. It will be tabled at the meeting of the Council on 1 April 1998 in accordance with Rule 77(14) of the Rules of Procedure of the Council.

The Panel

2. The Panel was formed by resolution of the Council on 16 July 1997 for the purpose of monitoring and examining Government policies and issues of public concern relating to trade and industry matters. The terms of reference of the Panel are at Appendix I.

3. The Panel comprises 18 members. Hon NGAI Shiu-kit and Dr Charles YEUNG Chun-kam were elected Chairman and Deputy Chairman of the Panel respectively. The membership list of the Panel is at Appendix II.

Major work

4. The support of the Government to the development of manufacturing and service industries in Hong Kong was a subject of major concern of the Panel. Apart from deliberating on the Government's general industrial support policy, the Panel also gave views on the various initiatives outlined in the Chief Executive's 1997 Policy Address, namely the Science Park, Credit Guarantee Scheme, and the enhancement of the Applied Research & Development Scheme and the Co-operative Applied Research & Development Scheme.

5. To increase Hong Kong's competitiveness in international markets, members urged the Administration to put in additional efforts in supporting the manufacturing industries, in particular, the small and medium enterprises. They welcomed the introduction of the pilot credit guarantee scheme whereby the Government would guarantee a certain percentage of the loan application of these enterprises. Members also expressed concern about the increase in operating costs due to Government regulation. In this respect, the Administration assured the Panel that continuous efforts would be made to streamline procedures and improve efficiency, which in the long run would cut down operating costs. The Government was committed to providing a favourable and business-friendly environment for investments. As regards consultation with trades, members urged the Administration to maintain close liaison with the manufacturing and service sectors to ensure a good understanding of the needs of the industries.

6. On the protection of intellectual property rights, members exchanged views with the Administration on the enforcement actions against copyright piracy activities at a Panel meeting. Members noted that the Administration was considering a series of actions such as short-term closure orders on shops convicted of copyright piracy, greater reward for intelligence-gathering, more stringent regulation of compact disc factories and manufacturing equipment, etc. With members' support for preventing and controlling the copyright piracy at source, the Administration introduced the Prevention of Copyright Piracy Bill to the Council on 21 January 1998. This Bill aimed to introduce a licensing system for the manufacture of optical discs and to require the use of source coding on all optical discs produced in Hong Kong. To further understand the operation of the Customs and Excise Department in combating infringement of copyright and its other duties, members of the Panel on Trade and Industry and Panel on Security conducted a joint visit to the Department in February 1998.

7. On competition policy, the Panel was briefed on the Administration's report entitled "Competition Policy for Hong Kong" which was a response to Consumer Council's proposals on this policy. Members noted that instead of introducing a comprehensive competition law at this stage, the Administration would establish a Competition Policy Advisory Group (COMPAG) under the chairmanship of the Financial Secretary. COMPAG would monitor the degree of compliance and the progress of reviews on trade practices in sectors and assess the feasibility of new initiatives. Members were concerned about the absence of non-government representatives on COMPAG. The Administration assured that whilst government officials would be the core members of COMPAG at the initial stage of operation, relevant local or overseas experts would be invited to participate in the deliberations on a need basis. The Administration undertook to review the need for non-government representatives in COMPAG after it had operated for a period of time.

8. As regards rice trade, members generally supported the retention of the rice control scheme as rice was still the staple diet of the local population. During the review of the rice control scheme, members noted the Government had implemented a series of measures to enhance competition in the rice trade, including increasing the number of stockholder, modifying the level of reserve stock from absolute tonnage to number of days of consumption, removing the admission criterion on prior experience for registration as a stockholder, and introducing the Optional Quota Scheme. Members also supported the Administration to conduct an overall review on trade practices in the rice market to ensure a fair competition in the rice trade.

9. From July 1997 to March 1998, the Panel held a total of seven meetings and conducted one visit.

Provisional Legislative Council Secretariat
12 March 1998