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Eric¡¦s Bits & Bites   Issue 30    September 2003

Dear friends,

The July 1 rally reflected the pent-up emotions of the people of Hong Kong and scotched the claim that ¡§protesters had been ¡¥misled¡¦ into taking to the streets¡¨. The appeal expressed by the people, in a nutshell, was for the government to do better instead of wrongfully assuming that she was doing well. Although the core of the problem is of an economic nature, economic issues are distinct from political issues. Political issues will eventually have to be resolved by political means and be tackled within the political framework, or they will never be eradicated completely.

Some might question that the survey of the National Security Bill was conducted at too late a stage. This, however, was not the case. Some professional sectors started their consultation process at a very early stage to widely collect the views of their constituents. Their initial conclusion was that the majority was for the legislation of the ordinance rather than against. However, as things developed, the situation reversed and when another consultation was conducted, there were more ¡§against¡¨ than ¡§for¡¨. As the saying goes, ¡§A day is a long time in politics¡¨.

My friends, the political environment is indeed constantly changing. Our accounting profession has also undergone some changes. We have shown more concern for both political and social affairs as well as our own interests. From some of your emails, I can tell that you have addressed different issues in a more mature manner. As your representative in the LegCo, I have listened attentively to your views. I have been through thick and thin with you. Personal reputation is not my main concern. As the poem ¡§Ode to the Plum Blossom¡¨ by Lu You goes:

Let other flowers their envy pour.

To spring she lays no claim.

Fallen in mud and ground to dust, she seems no more,

But her fragrance is still the same.

Eric Li


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Attending the 3rd anniversary dinner of the IT Accountants Association.

As the officiating guest at the prize presentation ceremony of the Association of Chartered Certified Accountants.

As the officiating guest at the Inauguration Ceremony of the Society of Accountancy, Chinese University of Hong Kong.
Officiating at the new office opening ceremony of the Hong Kong Sports Association for The Mentally Handicapped.
Pictured after meeting with the core members of the Hong Kong Federation of Business Students.

Pictured with the young ambassadors after officiating at the Appointment and Awards Ceremony of the Hong Kong Young Ambassador Scheme

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FORESIGHT

Survey results on National Security Bill clear and conclusive

Since the HKSAR Government announced the enactment of the National Security (Legislative Provisions) Bill, grave public concerns were raised about the issue. Many accountants hoped that I could conduct a thorough consultation with the sector first before casting my vote so that I could reflect the most representative view.

After almost a month of discussion with the HKSA, we finally reached consensus on 26 June 2003. I was allowed to conduct a survey among Hong Kong¡¦s 22,000-plus registered professional accountants through HKSA¡¦s communication network to seek their views on the issue. According to the independent statistics provided by the HKSA, during the period from 27 June 2003 (the day after consensus was reached) when the survey was dispatched to 9 am on 7 July 2003 (just before the start of the first working day after the government announced the postponement of the second reading of the Bill), a total of 5,273 valid questionnaires were received.

With regard to the original National Security (Legislative Provisions) Bill,

421 votes (8.0%) were in support of it;

4,612 votes (87.5%) were against it;

95 (1.8%) abstained from voting;

145 votes (2.7%) authorized me to vote on their behalf.

I would like to express my heartfelt gratitude to the HKSA for its full support in making the consultation possible. I would also like to thank you all for your enthusiastic response to the questionnaire survey. This has enabled me to present a powerful and steadfast voice on behalf of the sector through which the concerns and commitment of the accounting profession were demonstrated. (Press release by the Hon. Eric Li, 8 July 2003)


COMMITMENTS AT THE LEGISLATIVE COUNCIL (2002-2003): A SUMMARY

For details, please go to http://www.ericli.org.

19 important speeches delivered at the Legislative Council:

¡¯    Debate on the Policy Address (Vibrant Economy) on 15 January 2003

¡¯    Debate on the Policy Address (Enlightened People with a Rich Culture) on 16 January 2003

¡¯    Speech at the tabling of the PAC Report No. 39 at a LegCo meeting (19 February 2003)

¡¯    Speech delivered as Chairman of the Bills Committee on Inland Revenue (Amendment) (No. 2) Bill 2001 (26 February 2003)

¡¯    Speech on Appropriation Bill 2003 at the Budget Debate (2 April 2003)

¡¯    Speech delivered as Chairman of the Bills Committee on Revenue (No. 2) Bill 2003 (25 June 2003)

¡¯    Speech on the Report of the IPCC 2002 (2 July 2003)

¡¯    Speech at the tabling of the PAC Report No. 40 at a LegCo meeting (9 July 2003)

 (Other debates and speeches are not included.)


18 questions raised at the Legislative Council:

2 oral questions:

¡¯¡§Access to the Mainland aviation market¡¨ (Oral question raised at the LegCo meeting on 19 March 2003)

¡¯¡§Attract overseas students to pursue tertiary education in Hong Kong¡¨ (Oral question raised at the Chief Executive¡¦s Question and Answer Session on 9 January 2003)

14 written questions:

¡¯¡§AFCD¡¦s efforts in controlling termites and mosquitoes¡¨ (Written question raised at the LegCo meeting on 16 October 2002)

¡¯¡§Schools operating on block grants¡¨ (Written question raised at the LegCo meeting on 11 December 2002)

¡¯¡§Road excavation works on the pavements along Nathan Road in Tsim Sha Tsui¡¨ (Written question raised at the LegCo meeting on 18 December 2002)

¡¯¡§Outsourcing winding-up cases by the Official Receiver¡¦s Office¡¨ (Written question raised at the LegCo meeting on 15 January 2003)

¡¯¡§Handling reports of unknown gases¡¨ (Written question raised at the LegCo meeting on 22 January 2003)

¡¯¡§Cases of obtaining CSSA payments by deception¡¨ (Written question raised at the LegCo meeting on 12 February 2003)

¡¯¡§Income and expenditure of foreign domestic helpers¡¨ (Written question raised at the LegCo meeting on 19 February 2003)

¡¯¡§Nutrient composition and hygiene standard of school lunchboxes¡¨ (Written question raised at the LegCo meeting on 26 February 2003)

¡¯¡§Accreditation charges for overseas academic qualifications¡¨ (Written question raised at the LegCo meeting on 19 March 2003)

¡¯¡§New tender requirements for gas filling stations¡¨ (Written question raised at the LegCo meeting on 2 April 2003)

¡¯¡§Policies on oil reserves¡¨ (Written question raised at the LegCo meeting on 2 April 2003)

¡¯¡§Passenger clearance at boundary crossings¡¨ (Written question raised at the LegCo meeting on 9 April 2003)

¡¯¡§Expenditure relating to Waste Separation and Recovery Programme¡¨ (Written question raised at the LegCo meeting on 9 April 2003)

¡¯¡§Road excavation works carried out on the pavements along Nathan Road and King¡¦s Road¡¨ (Written question raised at the LegCo meeting on 30 April 2003)

2 supplementary questions:

¡¯¡§A&E charges at public hospitals¡¨ (Supplementary question raised at the LegCo meeting on 30 October 2002)

¡¯¡§Access to the Mainland aviation market¡¨ (Supplementary question raised at the LegCo meeting on 19 March 2003)


Served as member of 17 Committees

Served as member of 5 Standing Committees

¡¯   Chairman, Public Accounts Committee

¡¯   Finance Committee

¡¯   Public Works Subcommittee

¡¯   Establishment Subcommittee

¡¯   House Committee


Served as member of 4 Panels

¡¯   Panel on Economic Services

¡¯   Panel on Education

¡¯   Panel on Financial Affairs

¡¯   Panel on Information Technology and Broadcasting


Served as member of 8 Bills Committees

¡¯   Bills Committee on Stamp Duty (Amendment) Bill 2002

¡¯   Bills Committee on National Security (Legislative Provisions) Bill

¡¯   Bills Committee on Revenue (No. 2) Bill 2003, Chairman

¡¯   Bills Committee on Betting Duty (Amendment) Bill 2003

¡¯   Bills Committee on Deposit Protection Scheme Bill

¡¯   Bills Committee on Companies (Amendment) Bill 2003

¡¯   Subcommittee on Solicitors (Group Practice) Rules

¡¯   Subcommittee on Karaoke Establishments (Licensing) Regulation and Karaoke Establishments (Fees) Regulation


4 reports submitted to HKSA

9 articles published in The Hong Kong Accountant

1 consultation with the sector on the important issue of ¡§National Security Bill¡¨


ACTIVITIES

A vote of thanks from the Hong Kong Federation of Business Students

In an email sent to the Hon. Eric Li, the chairman of the Hong Kong Federation of Business Students said that Mr Li¡¦s views expressed during their one-hour meeting were of paramount importance to them.


ADVICE FOR ACTION

The first legislator to raise this debate topic

¡¯   Guidelines issued on the weight of school bags not to exceed 15% of students¡¦ body weight

The Education and Manpower Bureau yesterday issued for the first time a set of clear guidelines on the weight of school bags, recommending that the weight should not exceed 15% of students¡¦ body weight.

Overweight school bags will cause additional stress and fatigue to primary and junior secondary students. According to an EMB spokesman, the Department of Health recommended that students should avoid carrying school bags which exceed 15% of their body weight over a long period of time. That means that should a student weigh 100 lbs, the school bag should weigh no more than 15 lbs. (Ta Kung Pao, 12 June 2003)

Back on 21 October 1992, the Hon Eric Li had already raised a written question on the weight of school bags of primary students, making him the first legislator to bring this issue to the attention of the LegCo. He followed up on the issue again on 13 January 1993. Ten years later on 30 January 2002, Eric Li further raised a written question at the LegCo regarding the feasibility of ¡§electronic schoolbags¡¨ in the hope of reducing the weight of students¡¦ school bags and promoting the application of information technology.


¡¯ Proposed a number of amendments to the Companies (Amendment) Bill 2002

The Hon Eric Li proposed a number of amendments or deletions to the Companies (Amendment) Bill 2002 in accordance with the views of the HKSA, all of which obtained feedback.

¡§¡K If those who are reluctant to disclose their identity as ¡¥shadow director¡¦ are forced to reveal the detailed information, they may not be willing and it is also impractical to do so. There was a period of time when these people would consider not registering with the Companies Registry or not disclosing any related information for record purpose¡K. It would be extremely difficult for auditors to perform their duty under s161B as the existing scope of auditing work did not cover the auditing of these procedures or the location of who the company¡¦s ¡§shadow directors¡¨ or behind-the-scene directors were.

After several debates at the Bills Committee meetings, I am very pleased that the Administration finally accepted the submission of the Society and agreed to suspend the suggestion of making it a mandatory requirement for companies to submit such details to the Companies Registry for record. The suggestion has already been withdrawn at this stage.

If all transactions or related transactions were to be disclosed, the accounts of the large-sized international corporations could end up in hundreds of pages or even more. Besides, the revelation of such details would be useless to the general public.

After repeated explanations, I am glad to know that the Administration finally took note of this and accepted our views, and agreed to introduce a Committee Stage Amendment. The issue was now tackled in a more reasonable way, including allowing companies to disclose such information in combined form. The disclosed information, however, needed to be kept at the Registry for 10 years for company members¡¦ information or inspection.

Although it took us a series of heated debates and a thorough explanation process, the government finally accepted in full the many and various views raised by the HKSA and solved the problems for us. On behalf of the accountancy profession, I would like to thank the government for her cooperation in various aspects, and I hope that this spirit of cooperation would continue to be upheld. (Summary of Eric Li¡¦s speech at the LegCo meeting on 2 July 2003)


¡¯ Take the lead to propose abandoning the target to eliminate the fiscal deficit in 2007

The Hon Eric Li Ka-cheung, representing the accounting profession, thought that the resignation of Antony Leung from the post of Financial Secretary created a good opportunity for the government to abandon the unrealistic target of restoring fiscal balance in the 2006-07 year.

In the RTHK programme ¡§Letter to Hong Kong¡¨, Eric Li took the lead to suggest that the target should be abandoned in view of the fact that the speed of economic revival and the recovery of property prices had failed to materialize as anticipated. This was aggravated by the fact that the existing fiscal policy has substantially increased the burden of the middle income group who are already suffering from asset depreciation, job insecurity and heavy tax burdens.

He pointed out that the dual objectives of the government to revitalize the economy and to attain a fiscal balance within a short span of three-odd years were rash and chaotic. The authorities should make it clear to the Hong Kong people that the fiscal balance could in fact wait for two to three years and that the present priority is to revitalize the economy. With the CEPA and the recovering US economy, this was an opportune time to do so. At the same time, the authorities could also issue bonds instead of raising the taxes of the already hard-pressed middle income group. (21 July 2003, Hong Kong Economic Journal)

The editorial of Sing Pao on 21 July 2003, headlined ¡§Financial Management not solely for eliminating fiscal deficit¡¨, agreed with the viewpoint of the Hon Eric Li that ¡§It is high time to amend the financial budget.¡¨


¡¯ Eric Li urged government to disburse funds from disaster relief fund

Legislator Eric Li, convener of the Breakfast Group, pointed out that the government has established a disaster relief fund to provide humanitarian aid in the case of major disasters that occur outside Hong Kong. He said the government should consider disbursing grants from the fund to help flood victims of the Huai River region.

He recalled that in 1991, the government had disbursed funds to help victims of the severe flooding in eastern China. As the Huai River flooding was more devastating than the one in 1991, he strongly urged the government to take immediate action to express on behalf of the Hong Kong people their concerns to the mainlanders. He said: ¡§Although the remaining amount of the disaster relief fund is not much, and that the normal disbursed amount was in the region of a few to 10 million dollars, an amount which was more indicative of our concern than of real assistance, the government should act now that the society has already made a concerted effort to help.¡¨ (Ming Pao, 24 July 2003)

As a Joint Committee member of the Huai River Flood Relief Campaign, legislator Eric Li is mainly responsible for donation monitoring and auditing. So far, the campaign has received a donation of more than 6 million dollars. (Photo) Huai River Flood Relief Campaign


NEWS DIGEST

¡¯  Eliminate resentment, pull the community together, stimulate the economy:  Eric Li suggested to first alleviate the burden of middle class

Winning the support of the general public will be the key focus of the SAR government in the future, said Eric Li, convener of the Breakfast Group, in an exclusive interview with Ta Kung Pao. He suggested that the government should ¡§lock¡¨ this target and do a comprehensive policy review on issues that affect the middle class most such as housing and taxes. This is to strengthen the mutual trust between this pivotal group and the government.

On 2 July, the day following the July 1 rally, Eric Li communicated to the Chief Executive, Tung Chee-hwa, that the government should make concrete concessions on the National Security Bill and should cancel the deadline for completing the legislation procedures to allow for further public consultation. Eric Li¡¦s proposals ¡§materialized¡¨ one by one after half a month. There was, however, an unexpected twist in the political situation: top government officials, Secretary for Security Regina Ip and Financial Secretary Antony Leung, tendered their resignations consecutively.

Eric Li¡¦s remarks regarding the resignation of the two ministers were positive. He said, ¡§One of the positive functions of the accountability system is that when there is community resentment against the government, the retainment or dismissal of the minister(s) concerned can help tackle the issue and give the public a proper account, thus allowing the government to make a fresh start. The proper functioning of this mechanism will help enhance the stability of the government.¡¨

Eric Li opined that one of the imminent prime tasks of the government is to narrow the gap between she and the various sectors of society, the middle class and the professionals in particular, in order to strengthen the cohesion of society. He said, ¡§The middle class has always been the core of society. But in recent years, they have gradually become ¡§heavy damaged¡¨ victims of the economic downturn: they were turned into bearers of ¡§negative assets¡¨ by the slump in property prices; and they again became victims when the government made an upward adjustment in salaries tax. They pay heavy taxes but they enjoy the least social benefits.¡¨

Among the people who participated in the July 1 rally, many were middle class and professionals, indicating that their resentment has built up to a level that was no longer neglectable. Eric Li suggested that the government should immediately review the housing and tax policies to alleviate the heavy burden of the middle class.

Although a tax reduction will certainly be welcomed by the middle class, is it a feasible solution given the government¡¦s present burgeoning fiscal deficit?

Eric Li remarked, ¡§Why not? Who can guarantee that the new Financial Secretary will not consider this solution?¡¨ He analyzed that it was difficult to stimulate the economy and eliminate the fiscal deficit at the same time. And with the existing political climate, the government should promote economic recovery in full gear and defer the target of eliminating the fiscal deficit for two or three years.

He said, ¡§The local economy has started to show signs of improvement after SARS. With the signing of the CEPA, which represents an important step forward in the economic convergence between Hong Kong and China, and the likely construction of the Hong Kong-Zhuhai-Macau Bridge, the government should waste no time to leverage on this golden opportunity to revitalize the economy.¡¨ (Ta Kung Pao, 20 July 2003)


¡¯ Collect rates surcharge from buildings with no owners¡¦ corporation to subsidize cleaning expenses

Eric Li, representing the accounting profession, proposed collecting a rates surcharge from private buildings with no owners¡¦ corporation to make up for the additional expenses incurred in the cleaning of these buildings. (Hong Kong Economic Times, 29 July 2003)


¡¯ Deviation of the accountability system

Legislator Eric Li, who represented the accounting profession and voted for the motion, said: ¡§The accountability system has deviated from the promised version. The lack of accountability and the failure to execute the system have disappointed the professionals. We have waited for one year and can tolerate no more.¡¨ (Oriental Daily, 11 July 2003)


¡¯  Eric Li: LegCo must strike the right balance between the wishes of Hong Kong people and the influence of Beijing regarding the election of the Chief Executive by universal suffrage

In yesterday¡¦s RTHK programme ¡§Letter to Hong Kong¡¨, Eric Li said that the government should learn a lesson from the Article 23 legislation that ample time should be allowed to conduct extensive consultations and discussions on any sensitive issues to achieve a satisfactory outcome. The government should not harbour any fantasies about a smooth road to success without any objections at the 11th hour. Consultation on political reform should be initiated ¡§within a short and reasonable timeframe¡¨.

Eric Li has suggested in the past that the number of seats in the legislature should be increased to 90 in 2008, 60 of which would be returned by direct elections from geographical constituencies while the remaining 30 seats would still be assigned to functional constituencies. Yesterday, he suggested turning the existing 30 functional constituencies into an ¡¥Election Committee¡¦ to select 30 legislators from different sectors so that these legislators would all be recognized by the professional sectors. As regards the election of the Chief Executive in 2007, the candidates must first be nominated by this election committee. Those who obtain 25% or more of the votes can become CE candidates who will then be elected by universal suffrage. Li pointed out that the design of this election system can openly and rationally balance the wishes of the people of Hong Kong and the influence of Beijing. (The Sun, 21 July 2003)


¡¯  Clear criteria for the mid-term review of the renewal of sound broadcasting licences urged

Eric Li, convener of the Breakfast Group, said a mid-term review is a good thing but the government should state clearly the criteria for such a review. (Ming Pao, 23 July 2003)

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