LC Paper No. CB(1)51/99-00
(These minutes have been seen by the Administration)

Ref: CB1/PL/TI/1

Legislative Council

Panel on Trade and Industry

Minutes of special meeting held on
Monday, 14 June 1999, at 10:45 am
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 Kenneth TING Woo-shou, JP
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
Dr Hon Philip WONG Yu-hong

Members attending :

Hon Eric LI Ka-cheung, JP
Hon James TO Kun-sun
Hon Ambrose CHEUNG Wing-sum, JP
Hon LAU Kong-wah
Hon Emily LAU Wai-hing, JP

Members absent :

Hon James TIEN Pei-chun, JP
Hon David CHU Yu-lin
Hon Cyd HO Sau-lan
Prof Hon NG Ching-fai

Public officers attending :

For Agenda Item I

Mr CHAU Tak-hay
Secretary for Trade & Industry

Mr Francis HO
Director-General of Industry

Miss CHEUNG Siu-hing
Deputy Secretary for Trade and Industry

Ms Annie CHOI
Assistant Director-General of Industry

For Agenda Item II

Mr CHAU Tak-hay
Secretary for Trade & Industry

Miss Yvonne CHOI
Deputy Secretary for Trade and Industry

Ms Salina YAN
Principal Assistant Secretary for Trade and Industry

Mr Edward YAU
Deputy Director-General of Trade

For Agenda Item III

Miss CHEUNG Siu-hing
Deputy Secretary for Trade and Industry

Mr Sammy LI
Acting Registrar of Travel Agents

Clerk in attendance :

Ms Estella CHAN
Chief Assistant Secretary (1)4

Staff in attendance :

Mr Daniel HUI
Senior Assistant Secretary (1)5

I Innovation and Technology Fund
(LC Paper No. CB(1)1483/98-99(01) - information paper provided by the Administration)

Introducing the proposal for the establishment of the Innovation and Technology Fund (ITF), the Secretary for Trade and Industry (STI) advised that the establishment of the ITF was one of the major recommendations of the First Report of the Commission on Innovation and Technology (CIT). The proposed framework for the ITF had been set out in the information paper provided by the Administration. He highlighted that the ITF would be used to fund the four categories of activities, as detailed in paragraph 8 of the information paper, which would contribute to innovation and technology upgrading in both the manufacturing and service industries. The Administration would establish a suitable advisory structure to undertake project assessment and monitoring, and conduct post-completion evaluation to measure the results of the projects against their original objectives. Moreover, the Administration would periodically review the ITF to ensure that the Fund meet its mission and operate efficiently. The Administration woud recommend to the Legislative Council to set up, by resolution, the ITF as a statutory fund under the Public Finance Ordinance (Cap. 2) and would seek Finance Committee's approval to allocate $5 billion to the ITF thereafter. He hoped that members of this Panel would support the proposal to establish the ITF which should contribute to the enhancement of the competitiveness of Hong Kong's manufacturing and service industries.

Broad principles and ambit of the ITF

2. Mr SIN Chung-kai enquired whether the establishment of ITF would be viewed by others as a departure from HKSAR's stated non-intervention economic policy. In response, STI said that the proposed initiative should not be regarded as an interventionist measure. The proposed establishment of the ITF and the Applied Science and Technology Research Institute (ASTRI) were only means to provide an appropriate infrastructure for industries and individuals engaging in innovation and technology development activities. Similar to the Hong Kong Productivity Council (HKPC) and the Trade Development Council (TDC) established by the Government many years ago, the proposed ASTRI should be viewed as an additional infrastructure facility.

3. Mr LUI Ming-wah welcomed the Administration's initiative to support innovation and technology development in HKSAR. He considered the $5 billion a bare minimum for this kind of support activities, as compared with similar expenditure provisions in other countries including Japan, Singapore, the United States of America (USA) and South Korea, in which expenditure on research and development work amounted to about 2% of their respective GDP. Referring to paragraph 8(a) of the information paper provided by the Administration, he queried the rationale for limiting the innovation and technology support activities to midstream/downstream research and development projects. He opined that upstream research and development projects were more important in respect of innovation and technology. He also enquired about the criteria in determining the areas of focus of research and development projects and the rationale for making general promotional activities on innovation and technology eligible for funding by ITF. STI said that it would not be appropriate to compare Hong Kong's proposed expenditure in ITF with the published research and development (R&D) expenditure in overseas countries such as the USA and Japan, since R&D expenditure of these countries included those for national defence purposes and those in the private sector. As regards the types of R&D projects to be funded by ITF, the Director-General of Industry (DGI) advised that based on the experience of developed countries such as the USA, upstream R&D projects required substantial funding and would rarely involve the commercial sector. Given the amount of funds to be made available to ITF, he doubted whether it was advisable for Hong Kong to put in a lot of resources in upstream R&D projects. Furthermore, he pointed out that some R&D projects being undertaken by tertiary education institutions in Hong Kong were upstream R&D projects. As regards areas of focus of future R&D projects to be funded by the ITF, he advised that the Working Group on the establishment of the ASTRI had found it difficult to make specific recommendations given the speed with which technologies were changing. But two broad areas, namely information technology and biotechnology, were obvious candidates. However, more refined research targets under these broad areas of interest were yet to be examined. On funding of general promotional activities on innovation and technology, he explained that ITF would replace some of the funding schemes currently operated by the Industry Department. These existing funding schemes had sponsored major international conferences on innovation and technology development which were considered contributory to innovation and technology upgrading. The policy should be maintained under the ITF.

4. Referring to paragraph 17 of the information paper provided by the Administration, Mr Kenneth TING Woo-shou indicated his support for evaluation of a project's accomplishment based not only on financial returns, but also on indirect and intangible returns, such as the project's contribution to broadening Hong Kong's technological horizon or strengthening our technological capabilities. He enquired whether the Administration had any target industry in mind in enchancing its technological horizon. DGI advised that the criteria in evaluating projects accomplishments had taken into account Legislative Council Members' views in the context of discussions on the Industrial Support Fund. The Administration accepted that project accomplishments should be evaluated against financial as well as non-financial criteria. As regards projects to be supported by ITF, he said that an important user of ITF funding would be the proposed ASTRI whose establishment had been recommended by the CIT. The projects to be supported should be focussed on areas where Hong Kong could do well so as to optimise the impact of public investments.

5. In reply to Mrs Sophie LEUNG LAU Yau-fun's concern about the usefulness of the university-industry collaboration activities as set out in paragraph 8(b) of the information paper, DGI said that the main aim of the collaborative activities was to create opportunities for the private sector to make use of the knowledge and resources of universities in R&D work; and for university graduates to acquire experience in handling research projects.

The proposed ASTRI

6. Mr CHEUNG Man-kwong pointed out that the pace of development in innovation and technology was very fast and opined that the organization and staffing structure of ASTRI had to maintain a high level of flexibility in order to ensure that R&D projects undertaken by ASTRI would not fall behind market needs. He suggested that researchers of ASTRI should be employed on contract terms to maintain flexibility. Mrs Sophie LEUNG echoed the concern about the possibility of ASTRI becoming just another research institute for universities. STI advised that a working group under the chairmanship of DGI had been formed to examine details on the establishment of the ASTRI. The Administration recognized the need to maintain organizational flexibility of ASTRI. Apart from the administrative staff, there should be flexibilities in employment terms regarding other personnel, including researchers. DGI supplemented that ASTRI would adopt the following approaches in ensuring projects undertaken by it would not fall behind market needs. Firstly, researches would be carried out on a project-by-project basis and the related research staff would also be project specific. Secondly, ASTRI would adopt a forward-looking view in the project selection process so that the technology to be developed would facilitate the envisaged future development of Hong Kong industries. Thirdly, ASTRI's researches should focus on developing a technology platform which would have wide application to different production processes rather than product specific technologies the usefulness of which would be affected by product life cycles.

7. Responding to some members' concern about the need to know details of the proposed establishment of ASTRI, a major user of funds under ITF, before Finance Committee could consider the funding proposal for ITF, STI said that although details on the establishment of ASTRI were yet to be worked out, the Administration's position was that ASTRI should be a statutory organization similar to HKPC and similar institutions. Members of the Legislative Council would be able to further examine the establishment of the ASTRI when the relevant legislative proposal was introduced into the Council. He further advised that it was the Administration's intention to establish the ITF as soon as possible so that funding of projects other than those to be undertaken by ASTRI could commence soon.

Project assessment and monitoring

8. Mrs Sophie LEUNG opined that one of the elements to ensure successful application of the ITF was that persons with insights and broad perspectives with regard to innovation and technology should be given the responsibility of selecting projects for ITF funding. She enquired how the redeployment of existing staff responsible for administering existing funding schemes and the creation of one Trade Officer post would be contributory to the quality of project selection. DGI advised that the Trade Officer and supporting staff would be responsible for the administrative work of ITF. The Administration would put in place a suitable advisory structure to undertake project assessment and monitoring. This should comprise businessmen, academics and Government officials to provide the necessary commercial, technical and policy input in the assessment and monitoring process.

9. Referring to paragraph 4 in Annex A to the information paper provided by the Administration, Mr HUI Cheung-ching was concerned that setting a funding ceiling each year for university-industry collaboration projects and entertaining proposals on a first-come-first-served basis as long as they met the objectives of the concerned scheme might lead to an overwhelming number of proposals bidding for funds at the same time. In response, DGI advised that as the university-industry collaboration projects required co-operation from the industries, it would be too rigid to specify a deadline for submitting proposals. Instead, processing on a first-come-first-served basis was considered more appropriate in meeting the needs of industries.

10. Mrs Selina CHOW LIANG Shuk-yee pointed out that past experience showed that enterprises and universities had difficulties in negotiating the ownership of intellectual property rights (IPR) of collaborative proprietary R&D projects. She opined that since funding of projects under the 'Matching Grant for Joint Research' Scheme would be equally shared between a company and ITF, it would facilitate negotiation of IPR if the Scheme specified that IPR of the project results would be equally shared between the company and the university. DGI responded that ownership of IPR was a sensitive issue. If a project involved two or more parties, ownership of IPR of the project results had to be negotiated between the parties concerned. Nonetheless, in line with existing policy in the Industrial Support Fund, the Government had no intention to share any of the ownership of IPR of the project results.

11. Addressing Mrs Selina CHOW's concern about the cumbersome procedures and the large quantity of data required for submitting funding proposals under ITF as set out in Annex C to the information paper, DGI advised that a certain amount of data would be necessary in order to enable a systematic and meaningful assessment of merits of project proposals. He further advised that the data required as set out in Annex C had taken into account relevant comments of the Director of Audit on the administration of the Industrial Support Fund. Moreover, some of the data provided in the project proposal would be useful for monitoring of project progress and for post-completion evaluation of project accomplishment. He emphasized however that without compromising the principle of proper public accountability, the ITF should be administered efficiently without cumbersome procedures.

12. Mrs Selina CHOW observed that the proposed yardsticks for post-completion evaluation as set out in Annex D to the information paper seemed to emphasize on quantitative factors. She opined that excellence could not be measured just by quantitative yardsticks in many circumstances. DGI noted Mrs CHOW's comments and advised that the yardsticks had been proposed after taking into account relevant suggestions of the Director of Audit on the Industrial Support Fund. He agreed however that the quantitative yardsticks should not be the only criteria in assessing the accomplishment of a project.

13. Mr NG Leung-sing was supportive of the proposed establishment of ITF which would contribute to overall development of industries. He enquired about the mechanism in ensuring fairness, in particular with respect to avoidance of conflict of interest in the project assessment. He was also concerned about the protection of commercially sensitive data provided in project proposals as persons from the commercial sector would be involved in the project assessment. In regard to avoidance of conflict of interest in the project assessment process, DGI advised that in administering the Industrial Support Fund and the Services Support Fund, the secretariat of the Funds had strictly applied the rules on avoidance of conflict of interest throughout the project assessment, monitoring and evaluation stages. Members of the advisory body who were directly or indirectly related to the project being considered would abstain from discussions on the projects. According to the experience with administering of existing Funds, the current mechanism for prevention of conflict of interest was effective and would be adopted in the ITF. Regarding protection of commercially sensitive information, DGI said that a balance had to be struck in enahncing transparency to the public and protecting sensitive data. He agreed that the matter had to be handled with care and in the light of different situations specific to individual projects.

Other issues

14. Mr SIN Chung-kai noted that the recommendation on the establishment of an ITF was included in the First Report of the CIT. He wondered whether it was more appropriate to wait for the Second Report of the Commission before the Administration sought funding approval for the ITF. STI responded that the First Report of the CIT was a self-contained report. The Second Report would deal with issues which were not covered in the First Report. Moreover, in his Policy Address in October 1998, the Chief Executive of HKSAR had indicated his acceptance of the recommendations of the CIT, in particular with respect to the establishment of the ITF and the ASTRI. The Administration had therefore acted on the strength of the First Report of CIT.

15. Replying to Mr SIN's question on the Administration's advisory structure on innovation and technology after CIT ceased operation, STI advised that CIT was not intended to be a standing advisory committee and would cease to operate after completion of its Second Report. He further advised that the Second Report of CIT would make recommendations on a revised advisory structure on innovation and technology policy. Without pre-empting the views of CIT, he said that there would be a revised advisory structure on Government's policy on innovation and technology after CIT ceased to operate but the details of the revised advisory structure were yet to be decided.

16. Mr CHAN Kwok-keung enquired whether interest received by ITF would be ploughed back to the Fund for funding projects. STI confirmed in the affirmative and said that this would mean that the amount of funds available for funding purpose would exceed $5 billion, which should be sufficient for the coming five to seven years. DGI supplemented that based on the seed money of $5 billion plus interest income for allocation in five to seven years, funds available from ITF for projects would amount to about $1 billion each year, which was substantially more than the $250 million available each year under the existing Industrial Support Fund. He emphasized however that the policy of funding high quality and worthwhile projects would be strictly adhered to despite the increase in financial resources available.

17. Regarding Mr CHEUNG Man-kwong's question on the Technology Entrepreneurship Promotion Activities, DGI clarified that this category of projects would provide financial support for small technology-based enterprises to carry out pre-venture-capital stage R&D activities on a commercial basis. Funding would be provided on a matching basis. However, the possibility of providing loans to an entrepreneur in addition to the grant provided would not be ruled out.

18. In reply to the Chairman's question on the time-table for establishing the proposed ITF, the Deputy Secretary for Trade and Industry said that the Administration intended to move a motion at the Legislative Council meeting on 30 June 1999 to seek approval to set up the ITF and seek funding approval of the Finance Committee at its meeting on 2 July 1999.

    (Post-meeting note: The Administration has subsequently advised that the funding approval would now be sought at the Finance Committee meeting on 9 July 1999.)

II Control over trade in strategic commodities
(LC Paper No. CB(1)1483/98-99(02) - information paper provided by the Administration)

19. Mr James TO referred to paragraph 12 of the information paper provided by the Administration regarding existing customs check on Garrison personnel and vehicles crossing the HKSAR/Mainland boundary. He understood that the decision of Hong Kong Customs officers on whether to inspect Garrison personnel and vehicles at the cross-boundary control points was made on the basis of intelligence, whereas random checks were conducted on non-Garrison vehicles and personnel. He opined that the credibility of Hong Kong's customs control on cross-boundary traffic would be greatly enhanced if Garrison vehicles and personnel were also subject to random checks. He also sought clarification on whether search and inspection of Garrison vehicles under the existing arrangement were conducted by the Garrison team sent from the Garrison Headquarters in HKSAR or Hong Kong's Customs officers. In response, the Secretary for Trade and Industry (STI) advised that under the existing arrangement, the Garrison would give prior notification to the HKSAR Government of the detailed information of personnel and vehicles involved in cross-boundary movements. If any breaches of HKSAR laws were suspected, HKSAR customs officials would contact the Garrison Headquarters in HKSAR. A Garrison team would be sent to the scene to conduct search and inspection in the presence of HKSAR customs officials. He supplemented that the privileges offered to the Garrison were the same as those enjoyed by the British Garrison before the reunification. He further advised that the United States Consul-General in Hong Kong was aware of the existing arrangement with respect to inspection of the Garrison personnel and vehicles crossing the boundary. The Consul-General had commended Hong Kong's system of control over strategic commodity trade.

20. Mr James TO opined that the inspection should be conducted by Hong Kong customs officers in the presence of the Garrison representatives from the Garrison Headquarters in HKSAR because Hong Kong customs officers should be in a better position to carry out enforcement duty on HKSAR laws. STI responded that the Garrison stationed in HKSAR abided by the Basic Law as well as the Garrison Law, both of which were passed by the National People's Congress. HKSAR Government had to design a control system over import and export of strategic commodities which was acceptable to Hong Kong's trading partners on the one hand and which would not affect the signification of national sovereignty by the Garrison on the other. He considered that the existing arrangement on customs control on cross-boundary Garrison movement was clear and acceptable to Hong Kong's trading partners. He reiterated the U.S. Consul-General's commendation on Hong Kong's control system over strategic commodities during a recent press interview, and the Consul-General's indication that the U.S. policy of having different control regimes over export of strategic commodities to HKSAR and the Mainland would continue. STI pointed out that the Cox Report only represented the views of a small portion of U.S. Congressmen and the focus of the Report was on the Mainland rather than HKSAR.

21. Mr CHEUNG Man-Kwong pointed out that Hong Kong had a strong need to ensure continued access to high-tech products from the U.S. and HKSAR Government should not treat the possible adverse consequences of the Cox Report so lightly. He opined that the current sentiment in the U.S. Congress should be taken into account seriously despite the positive comments on Hong Kong's control system made by the U.S. Government. He asked whether the HKSAR Government would explore with the Garrison stationed in HKSAR on conducting random checks on Garrison personnel and vehicles crossing the boundary. In response, STI remarked that the Administration had not taken the Cox Report lightly but the Administration's assessment was that with the support of the U.S. Government on Hong Kong's control system over trade in strategic commodities, there should not be sufficient support in the U.S. Congress for taking action against Hong Kong on the basis of the allegations in the Cox Report. He further advised that positive comments on Hong Kong's trade control system had been included in the Report prepared by the U.S. Congressional Hong Kong Transition Task Force chaired by Congressman Bereuter. As regards proposed random inspections by customs officials on Garrison personnel and vehicles during cross-boundary movements, STI emphasized that the existing arrangement was consistent with the Basic Law and the Garrison Law and our system of control was acceptable to Hong Kong's trading partners. He considered the existing arrangement adequate and expressed confidence that the Central Government would continue to implement the "one country two systems" with utmost efforts and the Garrison would continue to observe HKSAR laws.

22. Referring to the 37 high performance computers exported from the U.S. to Hong Kong during 1992 to 1997 mentioned in the Cox Report, Mr LAU kong-wah enquired whether there was any evidence that any of these computers were transhipped to elsewhere. He was also concerned whether the U.S. was considering tightening up its export control on high-tech products to Hong Kong as a result of the Cox Report. STI replied that the few cases of breaches of Hong Kong's control system mentioned in the Cox Report in fact reflected the strength of our system, because in each case quoted, HKSAR customs officials were able to institute active investigation and prosecute the offenders on the strength of the evidence. He quoted a case occurred after the reunification in which an armoured vehicle of the People's Liberation Army was found being transhipped through Hong Kong without a licence. The armoured vehicle was eventually confiscated despite petitions made to the Chief Executive of HKSAR. He remarked that the case reflected the tight control and impartiality of Hong Kong's system. As regards whether further action would be taken by the U.S. after release of the Cox Report, STI advised that hitherto there was no evidence that any further action would be taken by the U.S. against Hong Kong in this regard.

23. In response to Mrs Selina CHOW's enquiry about the response of the U.S. general public to the Cox Report, STI advised that no survey had been conducted in this respect but based on the information collected from press reports in the U.S., it appeared that the U.S. general public was generally interested in the subject of export of high-tech products to the Mainland and most of those interviewed had indicated that they had not read the Report. He further advised that the U.S. media's focus on the Report was mainly related to those parts on the Mainland rather than HKSAR.

24. Mr James TO considered that HKSAR Government should seek clarification from the U.S. Customs on a statement quoted from the Cox Report that " Customs officials also concur that transhipment through Hong Kong is a common PRC tactic for the illegal transfer of technology", since this was inconsistent with the U.S. Government position that it was satisfied with Hong Kong's control system. STI responded that the Economic and Trade Office in Washington had sought clarification from the U.S. Customs who advised that the statement quoted in the Cox Report had been taken out of context from a speech made by a U.S. Customs official at a congressional hearing.

25. Mr MA Fung-kwok noted the Administration's continuous lobbying efforts in the U.S. and enquired whether there was any plan to step up its efforts specifically targeting at the Cox Report. STI advised that the Administration had carried out a lot of lobbying activities prior to the reunification in order to ensure that Hong Kong's control system over trade in strategic commodities was acceptable to the developed countries such that HKSAR could have continuous access to high-tech products after the reunification. He pointed out that due to Hong Kong's multi-faceted links with the Mainland, overseas trading partners were traditionally concerned about the adequacy of Hong Kong's control system in maintaining its independent customs territory status. Their agreement in allowing continued export of strategic commodities to Hong Kong reflected their confidence in Hong Kong's control system. He also drew members' attention to the additional lobbying efforts which would be undertaken by the Administration as set out in paragraphs 17 and 18 of the information paper provided by the Administration.

26. Mr NG Leung-sing said that as the Cox Report was formally documented in the U.S. Congress, he enquired whether the Administration would consider issuing a formal response to the U.S. Government on the Cox Report, or provide relevant information to the Legislative Council and the Central Government for their preparation of any similar responses. STI replied that it was not appropriate for the Administration to advise the Legislative Council on further action, if any, that it should take. He also remarked that while he noted that the Foreign Affairs Office of the Central Government had publicly responded to the Cox Report, the HKSAR Government should refrain from advising the Central Government under the "one country two systems" principle. The Administration's response to the Cox Report was already set out in the information paper provided to the Legislative Council, which was also made available to the media, key contacts in the U.S. Government, members/staffers of the U.S. Congress as well as the U.S. business community.

The way forward

27. Mrs Selina CHOW opined that as pointed by the Administration the focus of the Cox Report was not on Hong Kong, it was inappropriate for the HKSAR Government to adopt a high profile approach at this stage. Mrs Sophie LEUNG LAU Yau-fun shared this view and added that comments expressed in the Cox Report represented the views of only a small number of the U.S. Congressmen.

28. Mr NG Leung-sing agreed that the Administration should continue to collect more data for assessment of possible adverse impact of the Cox Report on Hong Kong, and before then it was not appropriate to react to the Cox Report in a high profile manner.

29. Mr SIN Chung-kai opined that the Administration should step up its lobbying efforts targeting at Congressmen, assistants to Congressmen, etc. He agreed that it was not appropriate at the moment for the Legislative Council to adopt a high profile approach to respond to the Cox Report.

30. Summing up the discussion, the Chairman said that members agreed that it was not appropriate for the Council to respond to the Cox Report in a high profile manner at the moment. He would inform the House Committee the Panel's decision.

III Regulatory Regime for Outbound Travel Industry
(LC Paper No. CB(1)1425/98-99 - information paper provided by the Administration)

31. Noting that the Travel Agents Ordinance (TAO) governed the operation of the outbound travel industry, Mr CHEUNG Man-kwong questioned whether there was any legislation for regulating the inbound travel industry. He remarked that there were numerous reports recently on defaults of travel agents organizing inbound tours from the Mainland. In response, the Deputy Secretary for Trade and Industry (DS/TI) advised that the existing regulatory regime of travel agents was established in the 1980s against the background of a series of defaults of travel agents organizing outbound tours. She added that inbound tourists' interests as consumers were protected by existing legislation on consumer protection. Moreover, she was aware that the Economic Services Bureau, which was the policy bureau for development of inbound tourism, was considering the need to regulate travel agents organizing inbound tours in Hong Kong. She further advised that the Travel Industry Council of Hong Kong (TIC) had issued a code of practice which should be followed by all registered travel agents in Hong Kong.

32. Mr CHEUNG Man-kwong opined that a code of practice would not be adequate for regulating travel agents organizing inbound tours. He remarked that inbound tours from Mainland brought substantial economic benefits to Hong Kong's economy and wondered whether authorities in Hong Kong and the Mainland could explore means to sanction those irresponsible travel agents. Mrs Selina CHOW shared Mr CHEUNG's view on the importance of inbound travel industry to Hong Kong. Being a member of the Board of the Hong Kong Tourist Association (HKTA), she advised that HKTA attached much importance to handling of complaints from tourists. The complaints received would be investigated quickly aiming to provide preliminary results of the investigations to the tourists concerned before their departure from Hong Kong. She urged the Administration to take swift action in relation to recent problems in the inbound travel industry. DS/TI said that she would refer members' views in this regard to the Economic Services Bureau for further action. She reiterated that the Consumer Council as well as HKTA currently had mechanisms to handle complaints from tourists. Admin.

33. Mr Ambrose CHEUNG Wing-sum opined that it would be more efficient if regulation of the outbound and inbound travel industries could be grouped under one policy bureau. He suggested that a survey should be conducted to find out the proportion of travel agents which organized both outbound and inbound tours. He was of the view that travel agents engaging in inbound tours should also be regulated by legislation. DS/TI noted Mr CHEUNG's view.

34. Noting that there was a balance of some $282 million in the Travel Industry Compensation Fund (TICF) as at April 1999, Mr Kenneth TING asked whether the 0.15% levy on package tours could be abolished or reduced in order to promote the outbound travel industry during the current economic recession. DS/TI replied that there was a mechanism to review the levy for TICF, which would take into account factors such as balance of the Fund, investment income etc. She said that the levy rate had in fact been reduced in 1997. She further advised that the TICF Management Board would keep the levy rate under review and propose changes as appropriate.

IV Any other business

35. There being no other business, the meeting ended at 1:00 pm.

Legislative Council Secretariat
5 October 1999