LC Paper No. CB(1)1394/98-99
(These minutes have been
seen by the Administration)

Ref : CB1/PL/ITB/1

Legislative Council
Panel on Information Technology and Broadcasting

Minutes of meeting
held on Monday, 8 March 1999, at 2:30 pm
in Conference Room A of the Legislative Council Building

Members present :

Hon SIN Chung-kai (Chairman)
Hon MA Fung-kwok (Deputy Chairman)
Hon Kenneth TING Woo-shou, JP
Dr Hon Raymond HO Chung-tai, JP
Hon Eric LI Ka-cheung, JP
Hon James TO Kun-sun
Hon Howard YOUNG, JP
Hon Emily LAU Wai-hing, JP
Hon CHOY So-yuk
Hon Timothy FOK Tsun-ting, JP
Hon LAW Chi-kwong, JP

Members attending :

Hon Christine LOH
Hon CHAN Kwok-keung

Members absent :

Hon David CHU Yu-lin
Hon Fred LI Wah-ming
Prof Hon NG Ching-fai
Hon YEUNG Yiu-chung

Public officers attending :

Items III and IV

Secretary for Information Technology and Broadcasting

Item III

Mrs Jessie TING
Deputy Secretary for Information Technology and Broadcasting

Mr Stephen MAK
Principal Assistant Secretary for Information
Technology and Broadcasting

Director of Information Technology Services

Mr Anthony S K WONG
Director - General of Telecommunications

Acting Director of Electrical and Mechanical

Mr Michael LEUNG
Business Development Manager/Electrical &
Mechanical Services Department

Item IV

Deputy Secretary for Information Technology
and Broadcasting (Special Duties)

Clerk in attendance :

Miss Polly YEUNG
Chief Assistant Secretary (1)3

Staff in attendance :

Ms Sarah YUEN
Senior Assistant Secretary (1)4

I Confirmation of minutes of meeting and matters arising
(LC Paper No. CB(1)900/98-99)

The minutes of the Panel meeting held on 14 December 1998 were confirmed.

II Date and items for discussion for next meeting

2 Members agreed to discuss the following items at the next meeting to be held on Monday, 12 April 1999, at 2:30 p.m. -

  1. Opening of the external telecommunications services market;

  2. Implementation of the mobile phone number portability scheme; and

  3. Issue of further Fixed Telecommunications Network Service licences.

(Post-meeting note: As a policy decision on (c) was still pending, it was subsequently replaced by the item of "secure Central Internet Gateway System".)

III Progress of Year 2000 compliance exercise in Government, Government-funded and Government-regulated organizations
(LC Paper No. CB(1)942/98-99(01))

Overall position

3 On whether the Administration distinguished between "Y2K compliance" and "Y2K readiness", the Secretary for Information Technology and Broadcasting (S/ITB) confirmed that as far as Government systems were concerned, the two terms had essentially the same meaning. But apart from ascertaining the Y2K compliance status of individual systems, the Administration would also need to ensure that those systems which were in close interface with Government systems were also Y2K compliant. Thus, joint testing should be conducted with other parties where appropriate. He added that testing was part and parcel of Y2K compliance work and in planning for the compliance programme, the Government took into account the time required for testing.

4 In response to Members' enquiries about the remaining 3% of Government systems which could not be rectified by June 1999 as mentioned in para 3 of the Administration's paper, the Deputy Secretary for Information Technology and Broadcasting reported that they included the tunnel toll collection system, traffic control and surveillance system, vehicle inspection centre appointment booking computer system and taxi inspection system of the Transport Department, the China Ferry Terminal sailing schedule display system of the Marine Department, the Tsing Ma Control Zone toll collection system of the Highways Department, the designated automatic telephone exchange system and interactive voice response system of the Inland Revenue Department, the Treasury and the Electrical and Mechanical Services Department (EMSD), and the computerised booking system of the Regional Services Department. S/ITB supplemented that most of the above systems would achieve compliance by the end of 1999 while their contingency plans would be ready by the third quarter of 1999.

5 At members' request to enhance the transparency of the Y2K compliance exercise to facilitate monitoring, S/ITB undertook to provide a breakdown of the progress of Y2K compliance work within the Government by department/bureau, including further details on the aforesaid non-compliant systems. He however said it might be difficult to provide details on the progress of Y2K compliance work undertaken by non-Government organizations (NGOs) as some of them might not be ready to release such details.

(Post-meeting note: The information was circulated to members vide LC Paper Nos. CB(1)1079 and 1111/98-99.)

6 Some members were concerned about the overall progress of the Y2K compliance exercise as reported in the paper. In response, S/ITB assured members that Hong Kong's progress was in general comparable to that of the United States and better than Japan and there was no cause for alarm. While Government could not guarantee a flawless transition to the new millennium, he assured members that the Administration was making every effort to ensure a smooth transition and would closely monitor the progress of the overall Y2K compliance both within Government and among the essential service providers.

Y2K compliance positions of the Airport Authority (AA) and related companies

7 Members were generally dissatisfied with AA's Y2K compliance position. In their view, as the new airport's systems had been procured recently, they should be Y2K compliant unless the purchasing procedure had not been conducted properly. Members therefore urged the Administration to provide further details on the Y2K compliance status of AA's various systems, as well as their contingency plans and arrangements for testing within one week after the meeting. To address their concern, S/ITB agreed to relay members' request to AA. However, he pointed out that according to his understanding, even for those systems procured lately, they might also be affected by the Y2K problems if the suppliers of the component parts had not rectified the defect. In this regard, Dr Raymond HO commented that such cases should be the exception rather than the norm.

8 Noting that AA's systems would achieve full compliance only by September 1999, Dr Raymond HO referred to reports that the Y2K problem might attack computer systems before 1 January 2000, e.g. 9 September 1999 and enquired about measures to ensure aviation safety. Addressing his concern, S/ITB pointed out that such problem would affect only a small number of systems. In any event, in testing for Y2K compliance, account had been taken of such Y2K critical dates.

9 Mr James TO expressed disappointment at the Administration's replies and opined that as some Panel members' concern about AA's ability to achieve Y2K compliance in a timely manner had already been reported in some newspapers, the Administration should be fully prepared for questions related to AA's compliance position. S/ITB explained that he could not confirm such details on behalf of AA and members agreed that AA should be requested to provide details on their compliance position to LegCo.

10 S/ITB further advised that AA was under the purview of the Economic Services Bureau (ESB) and in view of the Panel's concerns, the Information Technology and Broadcasting Bureau (ITBB) would request ESB to closely monitor AA's Y2K compliance progress. In response to Mr James TO's enquiry about the ESB's monitoring procedure, he confirmed that ITBB had already issued guidelines to policy bureaux to assist them in assessing the progress of Y2K rectification work undertaken by the essential service providers. He undertook to clarify with ESB how the latter monitored AA's Y2K compliance, including what type of information AA had made available to enable ESB to perform its monitoring role.

(Post-meeting note: The required information referred to in paras 7, 8 and 10 was circulated to members vide LC Paper No. CB(1)1056/98-99.)

11 As regards the related information on the compliance positions of the Hong Kong Air Cargo Terminals Ltd. (HACTL) and airlines using the Hong Kong airport, S/ITB reported that the three airlines registered in Hong Kong were expected to complete their Y2K rectification work by June 1999, and the progress of such work was monitored mainly through the Civil Aviation Department (CAD). As for the other airlines, CAD was considering issuing a notice to them in mid-1999 requesting them to confirm that the flight systems and equipment on their planes were compliant. AA, on the other hand, would co-ordinate the Y2K compliance work for all airport-related services, including HACTL.

(Post meeting note : The Y2K compliance position of AA and related organizations has been discussed at the meetings of the Economic Services Panel on 14 April, 26 April and 11 May 1999)

Manpower resources

12 Concerning the manpower resources within Government dedicated to the Y2K compliance exercise, S/ITB said that it was difficult to quantify the manpower resources deployed to Y2K related duties as some of the resources had been redeployed to other duties upon the completion of the rectification work. It was also noteworthy that rectification was sometimes conducted as part of routine maintenance.

Rectification and testing

13 On the applicability of the rectification method of simply resetting the clock on or after 1 January 2000, S/ITB pointed out that this rectification method was not applicable to all systems. Neither was it as simple as it appeared since testing had to be conducted to ensure its viability.

14 As to the availability of scientific procedures to verify the accuracy of the reported compliance status, in particular rectification of the compliance status of NGOs and whether a third party was present during testing, S/ITB advised that for the rectification of Government systems, bureaux/departments were assisted by three professional departments, namely, the Information Technology Services Department (ITSD), the Office of the Telecommunications Authority and EMSD.

15 Members stressed the importance of conducting spot checks for mission-critical systems even though they had been reported to be compliant. S/ITB confirmed that plans had already been made to test those systems in September and towards the end of 1999. As for details of the Government's plan to conduct site visits to essential service providers in view of the critical nature of their services, S/ITB explained that the purpose of such visits by the three professional departments was to find out whether the rectification procedures adopted by the concerned NGOs were up to the best industry standard. The Director of Electrical and Mechanical Services supplemented that EMSD staff had already visited the two electricity suppliers and the major gas company to get a better understanding of the way in which they had tackled the Y2K problem. The Department was generally satisfied with the progress made by these companies.

16 Commenting on Miss CHOY So-yuk's proposal of designating a working day in the last quarter of 1999 as a public holiday to conduct joint Y2K compliance testing for all computer systems in Hong Kong to ensure Y2K compliance across the board, S/ITB referred members to his answer to a similar LegCo question on 27 January 1999 and emphasized that such a move might cast doubt on the overall Y2K readiness of Hong Kong.

Contingency planning

17 On making preparation to handle Y2K-induced failures on Y2K critical dates such as 9 September 1999, 1 January 2000, and 29 February 2000, the Director of Information Technology Services (D of ITS) assured members that in ascertaining the compliance status of computer and embedded systems, account had been taken of the ability of these systems to continue to function smoothly on the Y2K critical dates. For those mission-critical systems within Government which could not be rectified by 30 June 1999, contingency plans would be drawn up.

18 On the practicability of designating 3 January 2000 a public holiday to minimise any possible confusion caused by the Y2K problem, S/ITB emphasized that the most important thing was to ensure satisfactory progress of the Y2K compliance exercise and to formulate contingency plans as necessary. He reiterated that the Y2K compliance work was on the whole proceeding according to schedule and the designation of a holiday for Y2K purposes might send a wrong signal that Hong Kong might not be able to cope with the Y2K problem. Mr Howard YOUNG clarified that according to his understanding, Britain had made 3 January 2000 a holiday not so much for Y2K reasons but to make up for the 1 January holiday, which fell on a Saturday.

19 As regards the membership of the Working Group on Y2K Contingency Planning, S/ITB confirmed that apart from ITBB and the three professional departments, the Working Group also comprised representatives from the Financial Services Bureau, the Health and Welfare Bureau, the Security Bureau and the Police.

ITBB's role

20 In reply to members on ITBB's role in the Y2K compliance exercise in different sectors, S/ITB clarified that ITBB primarily played a co-ordinating role and that the implementation of the Y2K compliance work, including contingency planning and testing, in different sectors was the responsibility of the NGOs concerned. Their progress in turn was subject to close monitoring and scrutiny by the respective policy bureau(x). ITBB would urge the bureaux and NGOs to expedite rectification work, ensure that such rectification work proceeded according to schedule and formulate contingency plans.

The way forward

21 Considering the subject a grave concern to the community at large, Miss Emily LAU urged the Panel to pursue the matter in a vigorous manner. Noting the Administration's explanation that individual policy bureaux were accountable in principle for Y2K compliance in their respective policy areas and that the relevant Panels might be in a better position to assess the impact of non-compliance and the need for contingency arrangements in their respective purview, Panel members present at the meeting generally agreed that the relevant LegCo Panels should be requested to examine Y2K compliance of the essential service sectors by policy areas as set out in paras 6 to 21 of the paper. They also agreed that the Security Panel should also be requested to examine Y2K compliance in public security and emergency services. Miss Christine LOH pointed out that the Economic Services Panel should also address concerns about hazardous substances emitted from chemical plants and possibly, the Daya Bay Nuclear Plant. Panel members would also appreciate it if the other Panels concerned would discuss the subject in March, April or May 1999, and would schedule the item as the first item on the agenda to facilitate attendance by non-Panel Members upon invitation. They also suggested that apart from the relevant Government representatives, the NGOs providing the essential services should also be invited to attend the meeting where practicable. Miss Emily LAU further requested the Clerk to inform the ITB Panel of the schedule of meetings arranged for discussion of the Y2K issue. Members also agreed that issues not covered by any Panels would be taken up by ITB Panel, which would consider the subject at its meetings in May and if necessary, in August 1999.

(Post-meeting note: A memo to this effect was issued to the Clerks of the Panels on Financial Affairs, Economic Services, Transport, Health Services, Welfare Services, Education and Security on 9 March 1999. The item was subsequently discussed at the House Committee meetings on 12 and 19 March 1999 where Members agreed that the House Committee Chairman should bring up this matter during his meeting with the Chief Secretary. The House Committee also decided that all LegCo Panels should follow up the progress of Y2K compliance work in the key sectors under their respective purviews. The schedule of Panel meetings lined up for such purpose was issued vide LC Paper Nos. CB(1)1117, 1155 and 1327/98-99.)

22 Members suggested and the Administration agreed that where necessary, the Y2K progress reports to the Panel should be issued at more frequent intervals in future by ITBB, say, at bi-monthly intervals.

IV Any other business - briefing by the Administration on the proposed Cyberport development
(A set of powerpoint presentation material tabled at the meeting and circulated to members thereafter vide LC Paper No. CB(1)992/98-99)

23 With the aid of powerpoint presentation, S/ITB briefed members on the Administration's proposed Cyberport project which had been announced in the Financial Secretary's Budget speech on 3 March 1999.

24 Providing details on Government's investment in the project, S/ITB explained that while Pacific Century Group (PCG)'s capital contribution was about $7 billion, Government's commitment mainly included contribution of 26 hectares of land, provision of essential infrastructure and grant of the development right of the land for the residential portion, whose value roughly amounted to $5 billion according to the latest estimate. As for costs of the infrastructure, they were estimated to be in the order of $1 billion.

25 As regards how profits from the project would be shared between Government and PCG, members noted that all the rental income from the Cyberport portion wholly owned by the Government would be received by the Government. Profits from the sale of the residential portion would be shared between PCG and Government according to the ratio of their respective capital contribution.

26 Some members queried whether the Administration had handled the project equitably since the open and competitive tendering procedure had not taken place. The Chairman said that in his opinion, the Government should implement the project on funding derived from land sale of the residential portion. In response, S/ITB acknowledged that the arrangement in question involving direct negotiation with one single company was not common. He nevertheless emphasized the need to make a quick decision because of stiff competition from Hong Kong's neighbours in the fast developing information technology market. If open tendering was to be conducted, the project would be delayed by at least one to two years. In endeavouring to become an information hub, Hong Kong simply could not afford such a delay in the provision of essential infrastructure for the formation of a strategic cluster of information technology and information services companies. He further pointed out that funds from the land sale, at its present valuation, could hardly cover the costs of this project, not to mention that construction costs might go up. S/ITB confirmed in reply to members that of all the information technology companies approached by the Government, PCG was the only company willing to undertake the investment and bear the development-related risks. He stressed the establishment of the Cyberport would benefit Hong Kong at large. Moreover, the Government's equity interests in the project could be sold as necessary to enable other parties to benefit from this project.

27 Miss Emily LAU cast doubt on the need for the Government to sponsor the project to attract investment because Hong Kong was not presently perceived as a leader in the area of information technology. In response, S/ITB said that Government involvement was necessary to drive the project. He also disagreed that the present approach was a deviation from established practice, referring to the case of the Science Park and the industrial estates where land was also provided by the Government. He also informed members that the Staten Island Teleport of New York was an example of a joint venture by the Government and private sector, and many other Asian countries were also developing special hi-tech zones with economic incentives. He further clarified that the Government was not directly subsidising the project for the following three reasons. Firstly, the value of Government's investment in the form of land contribution would be determined according to the prevailing market price. Secondly, the Administration had to provide such essential infrastructure as roads and sewage treatment systems to the site of the project irrespective of the nature of the future development. Thirdly, apart from profit sharing, Government would also own the completed Cyberport portion at no cost and receive its rental income.

28 As to whether there were plans to make Cyberport a new tourist attraction, S/ITB pointed out that the Cyber mall, one of the components of the Cyberport which mainly consisted of demonstration facilities, exhibition and trade show facilities, would be used to display new applications and services to attract visitors just like the Epcot Centre of Disney World. Mr Howard YOUNG found the comparison somewhat far-fetched as the two were different in nature.

29 As for the target number of tenants, S/ITB reported that apart from eight major corporations which had already signed letters of intent to become anchor tenants, the Cyberport was also expected to attract over 30 medium and large size tenant companies and 100 small-size tenant companies. The Administration expected that with the clustering effect created by the above line-up, the Cyberport would be able to attract even more tenants. In fact, many companies had already indicated interest since the announcement of the project. Regarding the level of rents, S/ITB advised that reference would be made to similar schemes in the region to ensure competitiveness of the rents offered.

30 Addressing members' concern about the traffic impact of the project on the Southern District, S/ITB assured members that a traffic impact assessment of the project had been conducted. He noted that as additional traffic arising from the offices of the Cyberport would be going in the opposite direction of normal peak traffic to and from Central, the project should not bring adverse traffic impact to the district. He added that with road improvement works implemented over the past few years and a few additional improvement schemes, the road network should be able to accommodate the anticipated increase in traffic flow.

31 As to whether funding approval of the Finance Committee had to be sought for works under the project, S/ITB confirmed that the only funding request would be the one required for implementing the engineering infrastructure at Telegraph Bay for the project.

32 On the need to establish a statutory body for the project, S/ITB did not contemplate such a need but advised that the Administration was considering setting up a company wholly-owned by the Government to take up the management of the Cyberport.

33 The meeting ended at 5:00 p.m.

Legislative Council Secretariat
10 May 1999