LC Paper No. CB(1)1628/98-99
(These minutes have been seen by the Administration)

Ref: CB1/PL/TI/1

Legislative Council
Panel on Trade and Industry

Minutes of meeting held on Monday, 3 May 1999, at 2:30 pm in Conference Room A of the Legislative Council Building

Members present :

Hon CHAN Kam-lam (Chairman)
Dr Hon LUI Ming-wah, JP (Deputy Chairman)
Hon James TIEN Pei-chun, JP
Hon David CHU Yu-lin
Hon NG Leung-sing
Hon Mrs Selina CHOW LIANG Shuk-yee, JP
Hon MA Fung-kwok
Hon CHEUNG Man-kwong
Hon HUI Cheung-ching
Hon CHAN Kwok-keung
Hon Mrs Sophie LEUNG LAU Yau-fun, JP
Hon SIN Chung-kai

Members absent :

Hon Kenneth TING Woo-shou, JP
Hon Cyd HO Sau-lan
Prof Hon NG Ching-fai
Dr Hon Philip WONG Yu-hong

Public officers attending:

For Agenda Item IV

Miss Yvonne CHOI
Deputy Secretary for Trade and Industry (1)

Miss CHEUNG Siu-hing
Deputy Secretary for Trade and Industry (2)

Mr Anthony CHAN
Departmental Secretary, Trade Department

Mr Edmund CHEUNG
Principal Trade Officer (Computerized Systems), Trade Department

Mrs Stella AU YEUNG
Customs Civil Secretary, Customs and Excise Department

Miss Mamie CHAN
Principal Intellectual Property Examiner,
Intellectual Property Department
Attendance by invitation:
For Agenda Item IV

Mrs Anna LAI
Deputy Executive Director, Hong Kong Trade
Development Council

Head of Information Technology Services
Department, Hong Kong Trade Development

Senior Manager, Information Technology, Hong
Kong Export Credit Insurance Corporation

Mrs Joyce YAN
Senior Manager, Business Unit of HKECIC

Mr YUNG Kai Tai
General Manager, Information Technology
Division, Hong Kong Productivity Council

Mr KWAN Shiu Keung, Ronald
MIS Manager, Information Services Division,
Hong Kong Productivity Council

Mr Joseph LEUNG
Manager, Information Technology, Hong Kong
Industrial Technology Centre Corporation

Mr Brian CHENG
Chief Research and Survey Officer,
Consumer Council

Mr David LO
Analyst/Programmer, Consumer Council

Mr Justin YUE
Chief Executive Officer, Tradelink
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 and matters arising
(LC Paper No. CB(1)1221/98-99- Minutes of meeting held on 1 March 1999)

The minutes of the meeting held on 1 March 1999 were confirmed.

II. Information paper issued since last meeting

(LC Paper No. CB(1)1215/98-99- A Guide to Pollution Control Legislation Affecting Manufacturing Industries 1999)

2. Members noted the information paper issued since last meeting.

III. Date of next meeting and items for discussion

3. Members agreed to discuss the following items at the next regular meeting of the Panel scheduled for 7 June 1999 :

  1. Report on public consultation on "Combating Intellectual Property Rights Infringement in the HKSAR";

  2. Regulatory mechanism of outbound travel industry; and

  3. Report by three venture capital companies on Applied Research Fund.
(Post-meeting note : The agenda of the meeting on 7 June 1999 has subsequently been revised with the concurrence of the Chairman.)

4. Members also agreed to request the Administration to brief the Panel in future meetings on the Innovation and Technology Fund and the Science Park project.

IV. Year 2000 compliance in Government and non-government organizations funded or regulated by Government under the purview of the Trade and Industry Bureau

(LC Paper No. CB(1)1220/98-99(01)-Information paper provided by the Administration
LC Paper No. CB(1)1220/98-99(02)-Checklist of key issues related to the Y2K problem prepared by the LegCo Secretariat)

5. The Deputy Secretary for Trade and Industry (1) (DS/TI(1)) introduced the latest position of year 2000 (Y2K) compliance programmes and development of contingency plans in the Trade and Industry Bureau (TIB), as well as in Government and non-government organizations under the purview of the Bureau, and the initiatives to assist small and medium enterprises (SMEs) to address the Y2K problem as set out in the information paper provided by the Administration.

Y2K Compliance in Government Departments under the Purview of the Trade and Industry Bureau

6. Mr James TIEN Pei-chun pointed out that the Restrained Textile Export Licence (RTEL) system in the Trade Department (TD) was one of the mission-critical systems which had not yet been confirmed as Y2K compliant as at 15 April 1999. He was concerned that the malfunctioning of the RTEL due to Y2K problems might lead to hold-up of exports of textile goods during the roll-over to year 2000, hence affecting the quota entitlement of quota-holders. He also enquired whether TD had discussed with exporters and manufacturers in ensuring that all parties were well prepared in addressing the Y2K problems, in particular those in relation to the RTEL system. The Principal Trade Officer (Computerized Systems) (PTO/CS) advised that the quota for restrained textiles for year 2000 would be allocated to qualified quota holders in early December 1999 and export licences issued against Year 2000 restrained textiles quota would be approved as from mid-December 1999. It was foreseen that any disruption to RTEL system due to Y2K problem would not occur prior to 1 January 2000. To prepare for scenarios of exporters being unable to apply for textiles licences through Tradelink's Electronic Data Interchange (EDI) System on 1 January 2000, TD had contingency plans which would provide for additional manpower resources to accept and process export licence applications on a manual basis.

7. Mr HUI Cheung-ching enquired about progress regarding joint tests for the EDI-related systems which were scheduled to be completed by May 1999. In response, PTO/CS advised that joint tests between TD's systems and Tradelink's systems had been completed and the test results confirmed that the systems were Y2K compliant. Mr Justine YUE of Tradelink further advised that joint tests involving computerized systems of Tradelink and relevant Government Departments had been carried on for some time. The testing related to RTEL system and trade declarations had completed and test results showed that both systems were Y2K compliant. The testing on other systems was scheduled to be completed in mid-May 1999. Relevant Government Departments had also developed contingency plans, including deployment of additional staff to process export licence applications and trade declarations in paper form if necessary. These measures should be able to avoid major disruption to Tradelink's clients if processing through EDI was affected during the roll-over to year 2000. Mr YUE supplemented that to assist Tradelink's clients to achieve Y2K compliance, Tradelink had issued a questionnaire to all of its clients requesting them to provide data on the computer hardware and software systems being used. Based on the data collected, Tradelink would advise their clients if their systems were likely to encounter Y2K problems. Moreover, Tradelink had also formulated a contingency plan including provision of additional staff at Tradelink's service centres during the roll-over to year 2000 to provide assistance to clients if necessary.

Initiatives to assist Small and Medium Enterprises (SMEs) to address the Y2K problem

8. Mr HUI Cheung-ching pointed out that non-compliant computerized systems of SMEs interfacing with Government and Tradelink's EDI-related systems could cause adverse impact on the latter systems. He enquired about the Administration's initiatives to assist SMEs to address the Y2K problem. DS/TI(1) advised that the Administration had through various channels organized extensive publicity activities to raise the awareness of the business sector, including SMEs, to tackle the Y2K problem. These activities included surveys by the Hong Kong Productivity Council (HKPC), seminars and symposiums organized by industrial and trade organizations, as well as notices issued by Trade Department and Tradelink to exporters and manufacturers. She further advised that Information Technology and Broadcasting Bureau (ITBB) and HKPC would conduct a third round of survey in mid-1999 to assess the latest progress of Y2K compliance of the business sector.

9. Referring to paragraph 9 of the information paper provided by the Administration, Mrs Selina CHOW LIANG Shuk-yee pointed out that whilst the survey conducted by HKPC in 1998 revealed that an increasing proportion of companies surveyed was aware of the Y2K problem and taking action to tackle the problem, she was more concerned about the portion of companies, in particular SMEs, which were unaware of the Y2K problem or lacked the initiative to tackle the problem. She also opined that in order to be effective, the initiative designed to assist SMEs should be sector-specific, rather than a generalized approach covering all sectors of the business community. In this regard, she urged the Administration to pay particular attention to the retailing and service sector which comprised many SMEs. She was also of the view that the Administration's initiatives should aimed at providing practical assistance to SMEs in addressing the Y2K problem, rather than just conducting surveys. Mr CHEUNG Man-kwong echoed the views on the need to provide additional assistance to SMEs. He pointed out that HKPC had in previous occasions opined that SME's Y2K problem could also affect other companies' computer systems thereby leading to a more serious chain effect which could bring major disruption to the economy. Hence, assistance to SMEs in this respect was important.

10. In response, DS/TI(1) and the Deputy Secretary for Trade and Industry (2) (DS/TI(2)) advised that the Administration's initiatives to assist SMEs to address the Y2K problem would not be limited to surveys conducted by HKPC and ITBB. Nonetheless, the surveys were useful in identifying problem areas and would facilitate development of measures to assist the business sector, including SMEs, to address the problem. Since the last survey was conducted in 1998, the Administration believed that it was necessary to conduct another survey to assess the latest progress of Y2K compliance of the business sector. As regards practical assistance to SMEs, DS/TI(1) advised that funding had been made available for HKPC to launch various support services including production of a "Year 2000 Date Problem Guidebook", establishment of a "Y2K Service Centre", setting up of a "Y2K Helpline", and launching of the "888 Bug-buster Programme" which provided consultancy service on a non-profit making basis.

11. Mr CHEUNG Man-kwong reiterated that the Administration should focus on initiatives to assist those SMEs which were unaware of the implications of the Y2K problem to their operation or unwilling to tackle the problem even though they were aware of the problem. In response, Mr YUNG Kai-tai of HKPC advised that HKPC's "888 Bug-buster Programme" aimed to provide consultancy service to SMEs on a non-profit making basis. HKPC had promoted the Programme through the mass media as well as industrial and trade organizations. He opined however that the decision on whether to take action to address the Y2K problem in a private sector business lied with the responsible person of the business concerned. He supplemented that those private sector business which had not taken action to address the Y2K problem were mainly those whose computer systems were used for supporting those functions the disruption of which would not have serious implications to the companies' operation.

12. On members' enquiry about the extent of usage of the "888 Bug-buster Programme" (the Programme), Mr YUNG advised that there were about 40-50 enquiries each week regarding the Programme. To enhance promotional efforts, HKPC had also extended the enquiry hotline for the Programme to a 24-hour basis. HKPC expected that demand for service under the Programme would increase in September/October 1999 when the roll-over to year 2000 was approaching. As requested by Mr SIN Chung-kai, he agreed to provide further data regarding the number of user companies in the Programme. As to Mrs Sophie LEUNG LAU Yau-fun's request to reduce the price of the service provided under the Programme, DS/TI(1) reiterated that services rendered under the Programme had already been priced on a non-profit making basis. She agreed however that HKPC should further review the practicability of reducing the price having regard to the cost of rendering the service.

13. Mrs Sophie LEUNG pointed out that SMEs might lack qualified employees who could appreciate potential Y2K problems. In order to further promote the Programme to SMEs and to assist them to better focus on the problem, she suggested that HKPC should consider providing a self-assessment sheet for SMEs to determine whether they would require any service under the Programme. Moreover, HKPC should also consider promulgating specific equipment/systems known to have Y2K problems. DS/TI(1) agreed that HKPC should consider Mrs LEUNG's suggestion. She supplemented that Tradelink had issued questionnaires to its clients to find out the computer equipment/systems being used and, based on the data collected, would advise the clients if their equipment/systems were likely to have Y2K problem. Mr Justin YUE futher advised that Tradelink had so far issued about 10,000 questionnaires and the response rate was about 10%.

14. On promulgating specific equipment/systems known to have Y2K problems, Mr CHAN kwok-keung advised that the Government had issued such information last year. Moreover, SMEs should also be able to find relevant data for addressing the Y2K problem on the Internet.

15. Mr LUI Ming-wah opined that suppliers of computer systems had details regarding its customers' hardware and software systems and should know which of them would require attention in respect of Y2K compliance. He suggested that the Administration/HKPC should enlist the co-operation of computer systems suppliers in promoting the importance of addressing the Y2K problem. DS/TI(1) responded that the Administration had organized joint promotional activities with computer suppliers in respect of the Y2K problem and that such efforts would continue.

16. Noting that the third survey in assessing the latest progress of Y2K compliance of the business sector would be carried out jointly by ITBB and HKPC, members expressed reservations about TIB's lack of involvement in the exercise. They pointed out that if TIB was the policy Bureau responsible for development of SMEs, the Bureau should play a proactive role in developing initiatives to assist SMEs in addressing the Y2K problem. In response, DS(TI)1 and DS(T1)2 clarified that as SMEs comprised all sectors of the business community, ITBB had therefore assumed a co-ordinating role in formulating policies to assist SMEs to address the Y2K problem. One of the major areas of concern of the Information Infrastructure Advisory Committee, chaired by the Secretary for Information Technology and Broadcasting and comprising representatives from both the private sector and Government officials, was about Y2K compliance of SMEs. TIB's representative was a member of the Advisory Committee and provided input in formulating the relevant policies. Moreover, for those sectors with particular relevance to TIB's policy areas, including the manufacturing, service, import/export sectors, etc., TIB had developed various practical assistance programmes to assist them to address the problem as set out in the information paper (LC Paper No. CB(1)1220/98-99(01)). They agreed however that TIB would continue to consider additional measures to assist SMEs.

17. Mrs Selina CHOW and Mrs Sophie LEUNG were of the view that to be efficient, TIB should tailor-make promotional activities and assistance programmes targetting different sectors of SMEs. Generalized measures might fail to attract target clients and meet their requirements. They suggested that TIB should examine and analyse data available in the last survey and identify any trend of particular sectors of SMEs that would require special attention in respect of Y2K compliance, and to develop specific assistance programmes. DS(TI)1 advised that the Administration had already discussed with specific sectors of SMEs in devising the existing assistance programmes. The Industry Department had close contacts with the manufacturing sector while the Trade Department has liaison with the service sector. The Trade Development Council could also reflect the requirements of the import and export sector. As requested by members, DS(TI)1 and DS(TI)2 agreed to review data available on SMEs and consider if additional sector-specific measures to assist SMEs in achieving Y2K compliance were required.

Other issue

18. Mr HUI Cheung-ching enquired whether insurance policies issued by the Export Credit Insurance Company (ECIC) would cover damage caused as a result of Y2K problem. Mrs Joyce YAN of ECIC advised that ECIC's policies covered credit risks. The policies would cover damages arising from credit risks as a result of Y2K problem. This practice was in line with overseas credit insurance companies.

(Post-meeting note : A follow-up paper on further information and response from the Administration as requested by Members has been circulated vide LC Paper No. CB(1)1429/98-99)

V Any other business

Arrangements for lodging Trade Declarations

19. Mrs Selina CHOW pointed out that under the existing arrangement, importers/exporters were allowed to lodge trade declarations by post. This arrangement facilitated retail exporters who might be retailers exporting only a small quantity of goods. With the impending Trade Declarations through the EDI systems of Tradelink, there was a proposal to disallow Trade Declarations by post. Some retailers/exporters were concerned about the revised arrangements as their small export quantity would not justify investment in installation of a computer system for making trade declarations through Tradelink's EDI system. Moreover, it would create difficulties for the small importers/exporters if they would be required to lodge Trade Declarations in person. She urged Tradelink to retain the arrangements for lodging Trade Declarations by post.

20. In response, Mr Justin YUE advised that Tradelink was considering different options for lodging Trade Declarations, including dropping the Trade Declarations in collection boxes in Tradelink's 12 service centres and its agents or lodging the Declarations by post. He further advised that allowing importer/exporters to lodge Trade Declarations with Tradelink by post involved some technical consideration in relation to compliance with the legal requirement for Trade Declarations. Under the existing legislation, importer/exporters were required to lodge Trade Declarations with the Customs and Excise Department (C&ED) within 14 days after the goods were exported or imported and C&ED used the post marked date on the envelope to determine whether a Declaration by post had complied with the law. Sufficient time allowance would be required if importers/exporters were allowed to lodge the Declarations with Tradelink by post and for Tradelink to convert the paper Trade Declarations into electronic form for submission, bearing in mind that the whole process had to be completed within the 14-day limit. As such, importers/exporters might be required to lodge Trade Declarations with Tradelink within 7 days after the goods were imported/exported if the Declarations were lodged by post. Tradelink would need to consider the legal implications of these different options. As requested by Mrs Selina CHOW, he agreed to consult Tradelink users before arriving at a decision on whether Tradelink would allow lodging of Trade Declarations by post.

(Post-meeting note : A response provided by Tradelink through the Administration has been circulated to Members vide LC Paper No. CB(1)1429/98-99).

21. There being no other business, the meeting ended at 4:10 pm.

Legislative Council Secretariat
30 June 1999